Tuesday, November 26, 2002
Internet Posting Not Enough to Establish California Jurisdiction—S.C.
From Staff And Wire Service Reports
A group licensing DVD encryption software to the motion picture industry cannot use California’s courts to sue a Texas man for posting on the Internet the codes to break such software, the state Supreme Court ruled yesterday.
In a ruling that helps define when using the Internet conveys personal jurisdiction, the court rejected a suit by the California-based DVD Copy Control Association
The association licenses its software to film studios to block the illegal copying of DVD movies. Texas resident Matthew Pavlovich had posted codes to break the software and allow for the copying of DVDs—digital versatile discs.
Ruling 4-3 and without addressing the merits of the case, the Supreme Court said the association must sue Pavlovich for trade secret infringement in Texas, or in Indiana, where he was when he posted the language in 1999.
Justice Janice Rogers Brown said that the association’s allegation against Pavlovich, co-founder of Dallas-based Media Driver LLC, is that he “should have known” that his conduct may harm any industry associated with the motion picture industry, which is largely based in California.
But those allegations alone don’t require out-of-state residents to answer complaints in California, the court said.
State Not Targeted
There was no evidence that the web site that published DVD source codes targeted California, Brown said, or that Pavlovich knew when he set up the site that the association’s primary place of business was California. He found out about the California connection only after he was sued here.
He may well have known that there would be an impact on the entertainment industry, Brown said, and he certainly would have known that the industry is based in California. But she said his knowledge that industries here might suffer is insufficient to establish minimum contacts for California jurisdiction.
Under the DVD association’s logic, Brown wrote, “Plaintiffs connected to the auto industry could sue any defendant in Michigan, plaintiffs connected to the financial industry could sue any defendant in New York and plaintiffs connected to the potato industry could sue any defendant in Idaho.”
The three-judge minority said that, under the majority’s decision, the association may have to litigate its case in several states with conceivably different outcomes because there are 21 defendants from various states being sued. Three are in California.
The country’s judicial system, Justice Marvin R. Baxter wrote, has a “strong interest” in an efficient resolution of the dispute.
That interest, Baxter wrote, is not served by requiring the association “to pursue individual defendants in separate fora, if a single suit in one fair logical forum is possible.”
Still, the justices have not answered the key question of whether the same charges in the same case against a California man can withstand a free speech defense.
That part of the litigation stems from a San Jose-based state appeals court that ruled last year it was a “prior restraint” to prohibit the posting of the encryption-breaking code on the Internet.
The Sixth District Court of Appeal lifted an injunction prohibiting Andrew Bunner of San Francisco from posting the encryption software, a move that the DVD Copy Control Association said was akin to giving crooks the technology to reproduce protected material—such as movies—en masse.
The association controls a program named the content scramble system, or CSS, which prevents unauthorized use of a movie recorded on DVD. Bunner and Pavlovich and others posted a program with the codes to play or reproduce DVDs on computers.
“At the end of the day, this is code posted on a Web site,” said Pavlovich’s attorney, Allonn Levy. “There is nothing illegal about that.”
Robert Sugarman, an attorney for the Morgan Hill-based association, said the group was exploring its options, including suing Pavlovich in Texas or another state in which all the defendants can be sued in one court.
“We believe the dissenting opinion was on the mark,” Sugarman said.
The court of appeal, in overturning a judge’s order forbidding Bunner from posting the code, ruled that protecting trade secrets is not as important as “the First Amendment right to freedom of speech.”
That case, DVD Control Association v. Bunner, is pending before the justices.
The case decided Monday was Pavlovich v. Superior Court, 02 S.O.S. 5717.
Copyright 2002, Metropolitan News Company