Biased Journalism Vol. 2, issue 13

Biased Journalism: a net magazine designed to compensate for the shortcomings of the professional news media.

Copyright 1996 Shelley Thomson; all rights reserved.

Mail, articles and comment may be directed to Netiquette will be observed with all communication, except for the following: harassing or threatening mail will be posted to the net immediately.

Table of Contents for Biased Journalism.

Biased Journalism Volume 2, issue 13 July 30, 1996.


  1. Henson nukes the church
  2. A Message From Vorlon
  3. The Empire Strikes Back [RTC against Ward]
  4. Rodent Report
Read at your own risk! This is Biased Journalism!

1. Nuke 'em from space. It's the only way to be sure.

[The following document is H. Keith Henson's response to RTC attorneys with reference to the case management (scheduling) conference. The document contains a powerful indictment of the church's assault on the internet, pointing to a weak spot in church strategy. He complains that the church cancelled his posts, committed wire fraud, and conducted a spam attack on the newsgroup which amounts to a denial of service. We have reprinted it in full for the public interest.]

[The next event in this case will be a hearing on August 2 before Judge Whyte. Biased Journalism will report this hearing.]

Thomas R. Hogan, SBN 042048
60 South Market Street, Suite 1125
San Jose, CA 95113-2332
(408) 292-7600

Roger M. Migrim
William M. Hart
399 Park Avenue Thirty-first floor
New York, New York 10022-4697
(212) 318-6000

Helena K. Kobrin, SBN 152546
7629 Fulton Avenue
North Hollywood, CA 91605
(213) 960-1933

Eric M. Lieberman
740 Broadway - Fifth Floor
New York, New York 10003
(212) 254-1111

Attorneys for Plaintiffs

H. Keith Henson
799 Coffey Ct.
San Jose, CA 95123
(408) 521-0614

pro se

                      UNITED STATES DISTRICT COURT
California non-profit corporation, )
        Plaintiff,                 )  CASE MANAGEMENT
                                   )  STATEMENT, ADR           
                                   )  CERTIFICATION       
        v.                         )  AND ORDER
                                   )  FOLLOWING CASE
        Defendant.                 )                           
                                   )  Date: August 2, 1996
                                   )  Time: To be set          
                                   )  Ctrm: Honorable 
                                   )  Ronald M. Whyte          
Pro se defendant H. Keith Henson submits this Case Management Statement and Proposed Order and request the Court to adopt it as its Case Management Order in this case.


1. Events Underlying the Action

While the events underlying this action have a history trail of several decades, the involvement of this defendant started January 11, 1995 when Helena K. Kobrin, counsel for plaintiff issued a special computer command called a RMGROUP ("remove group") in order to automatically destroy the Internet discussion group called alt.religion.scientology. Because of this destructive act, the availability and services of that discussion group was denied to many individuals around the United States. While Ms Kobrin later admitted that this act was in retrospect unwise, she cited trademark and copyright rights as justification for this act apparently in violation of California penal code 502 (referring to tampering and unlawful destruction of computer data) and U.S. wire fraud statutes.

Because of this destructive act, hundreds of persons not previously involved in Scientology or the Religious Technology Center became critical of scientology using criminal acts to suppress negative comments about their belief system and the highly abusive management system which distributes scientology "services." One such person was the defendant, H. Keith Henson.

During several months in the preceding year and continuing throughout 1995 portions of material allegedly copyrighted and or claimed as a trade secret by Scientologists were published to alt.religion.scientology by persons largely unknown. While Ms Kobrin did not repeat the RMGROUP error (at least openly) the posts of material allegedly the intellectual property of plaintiff (in many examples as few as 6 lines) were unlawfully canceled by persons acting in concert and participation with the plaintiff by forging electronic signatures, and as Ms Kobrin had cited, each of these forgers cited copyright and trade secret violations as justification for their fraudulent and destructive acts. At least two of those unlawfully canceled posts belonged to the defendant.

While these postings might have contained material claimed as intellectual property by the plaintiff defendant claims they were well within the bounds of "fair use." Over two hundred and seventy instances of such wire fraud by person(s) working in concert and participation by plaintiff have been collected during the period 1995 and first quarter of 1996. Beginning in the second quarter of 1996 person(s) working in concert and participation with the plaintiff have begun a new tactic to extirpate free criticism of Scientology by mechanically issuing tens of thousands of posts to the newsgroup alt.religion.scientology. Such flooding of the newsgroup, which continues to this very day, denies the right of its service to tens of thousands of individuals around the world who subscribe to that group and continues to flout U.S. wire fraud statutes to prevent criticism of scientology. For an extended period, the flood of repeated postings from "What is Scientology" prevented Netcom subscribers (including defendant) from reading alt.religion.scientology at all. (The process of indexing the flood of postings took longer than Netcom's inactivity timeout period.)

On June 27, 1996, the plaintiff implicitly admitted to acting in concert and participation with such unlawful denial of service attacks by introducing as a deposition exhibit in a related case against Grady Ward a document signed by one the individuals, Vera Wallace, who has been documented as being part of the fraudulent cancel scheme.

Counsel for the plaintiff, Eric Lieberman, subsequently sought to justify such cancels by individuals working in concert and participation with the plaintiff by suggesting that that response was justified to protect the plaintiff's intellectual property. Counsel for the plaintiff, Roger Milgrim also stated during a hearing in a related case (Netcom) in this court that since the alleged infringements of plaintiff's intellectually property rights were promptly canceled they had not become "generally known" in the language of the California trade secret statutes. These implied admissions continue to add weight to the overwhelming evidence that the plaintiff is engaged in a wide-ranging clandestine scheme to commit multiple acts of wire fraud in violation of Federal Racketeer Influenced and Corrupt Organizations statutes and California felony computer statutes.

The cancel forgeries and denial-of-service flooding of alt.religion.scientology has only been one prong of the unlawful attacks against critics of the scientology belief and management system. The plaintiff has good reason to attempt to suppress criticism of scientology, since the "religion" is in fact, a cover for a criminal fraud--to a considerable extent a *medical* fraud--which only "works" because of its use of coercive brain washing techniques, of which "auditing" with an "emeter" is a part. Scientology considers itself in competition with the medical profession, especially the psychiatric branch, and David Miscavige has publicly vowed that Scientology will destroy the entire profession by the end of the century.

Suppression of criticism is a tenant of CoS in all of its corporate shells. Proof of this allegation will be provided at trial by both testimony and introducing internal CoS policy letters as evidence.

One method of surprising criticism is the abuse of critics or former members through the legal system. A recent example of how this works is detailed in an attached published article (Appendix A) from the Washington Post where is it reported that threats by CoS lawyers prevented CNN from reporting part of the story about CoS's loss in a suit against Time Magazine. "Loss" in this case is relative. Time spent over 7 million dollars defending itself, and, if one takes the Washington Post article as true, the $7,000,000 example the "Church" of Scientology made of Time Magazine certainly had the desired effect of "chilling" CNN. If this defendant were not representing himself, his legal expenses would at this point greatly exceed his net worth. It should be noted that this tax exempt, rich set of shell corporations, spends over one third of its total income in largely meritless lawsuits, and simply considers dishing out legal abuse a cost of doing business. It is all to often effective. Scientology has managed to bankrupt the Cult Awareness Network through filing over 70 suits against it and its officers. Scientology is believed to have filed more lawsuits than any other entity save only the Federal Government.

The events which led to this lawsuit are related to a similar meritless case against another critic, Grady Ward (96-20207 RMW).

The defendant in the case at hand had so little interest in the secret "teachings" of Scientology that he had not bothered to read the examples posted over and over again to the news group alt.religion.scientology. However, when CoS sued Mr. Ward, defendant became curious about what the fuss was about. Defendant searched the news spool on Netcom and found several of the documents cited in the Ward case. The first such documents defendant examined, NOTs 34, was clearly, on the face of it, a criminal instruction manual, containing instructions, which if carried out, would amount to the unlicensed practice of medicine. NOTs 34 also made medical claims expressly forbidden by Judge Gesell in a 1971 decision. The Scientology shell suing defendant has presented the facile argument that the branch sued by the FDA in the case decided by Judge Gesell "is not us." Defendant claims, and will prove at trial, that Scientology corporations are not independant, but are run as an integrated criminal racket controlled by David Miscavige. David Miscavige is the successor to L. Ron Hubbard, unindicted co-conspirator in the case in which Mary Sue Hubbard, his wife, went to Federal prison.

Defendant is a person who has long been active in civic affairs, and so attempted to bring the information he found before the Court, and when the court was unresponsive, to the public. In retrospect, this seems to have been an error on the part of the defendant, at least in the matter of using his name in posting to the news group. At this point, defendant is under an injunction which he believes prohibits a citizen from reporting criminal activity to the proper authorities on pain of contempt charges.

Defendant believe that defendant has stayed well within the guidelines for copyright "fair use," especially since defendant can and has cited an overriding public interest in exposing criminal activities. [Defendant does not believe that "trade secret" arguments should even be considered by the court.) The negative consequences upon the public interest of using the judical branch of the government to suppress exposure of criminal activities by the use of copyright or trade secret law should be carefully weighed by this Court, as should the practice of cloaking a criminal enterprise by calling it a "religion." This is not to say that the beliefs of individuals who consider themselves Scientologists are less rational than those of other religions. The problem is not with the public members, but with the criminal management structure they support. The very idea of a non-profit "religious" organization trying to take advantage of commercial trade secret laws is enough to gave a thoughtful person pause--as it did the Ninth Circuit.

Defendant did, as detailed in a letter and a posting supplied to the Court some time before this suit was filed, ask for other examples of "copyrighted, trade secret" documents which show criminal activity stating clearly defendant's intent to use these solely for exposing criminal activity. Defendant was somewhat surprised that this Court would accept a suit which was clearly designed to keep criminal material from public view. (Though, as a result of the Internet, such attempts are futile.)

Defendant would be willing to submit this suit to ADR services but the plaintiff's agenda is clearly directed to making an example of defendant by imposing a massive waste of money and time on defendant to suppress criticism of their criminal enterprises. Defendant has no intent of signing away his rights to free speech, and that is what CoS has insisted on when it ends litigation after (typically) a decade of wearing down opponents by abusing them through the courts.

The Court may wish to examine the recently sealed Mayo case for an example only a month old of Scientology's effective litigation strategy which they use to suppress criticism.

In spite of the defendants pro se status, and limited resources, defendant will be filing a motion to amend defendant's original counter claim to a civil RICO suit. Defendant will present a case that CoS in all of its corporate shells qualifies as a Racketeering Influenced and Corrupt Organization.

2. Principal Disputed Factual Issues

Whether the defendant did infringe plaintiff's copyrights and/or misappropriated plaintiff's trade secrets. (Though how defendant can "misappropriate" material found in a public place is beyond him.) If either are decided in the affirmative, is acting in the public interest to expose criminal activity a defense?

Whether the plaintiff is working in concert and participation with other scientology organizations such as Church of Scientology, San Francisco, Church of Spiritual Technology, Church of Scientology International and multiple individuals and should be considered a single entity with respect the Racketeering Influenced and Corrupt Organization statutes.

Whether Chairman of the RTC Board David Miscavige is directly responsible for the unlawful executing the Racketeering activities of RTC, Scientology, inter alia.

Whether Eugene Martin Ingram is working in concert and participation with the plaintiff to commit wire and mail fraud, specifically if Mr. Ingram or those working with him have manipulated the NCIC to avoid extradition and prosecution for felonies committed on orders from David Miscaviage.

Whether Vera Wallace and multiple John Does are working in concert and participation with the plaintiff to unlawfully deny service to participants in alt.religion.scientology, thus violating federal wire fraud statutes.

Whether Helena K. Kobrin is working in concert and participation with the plaintiff to commit various felony violations of California law, federal wire fraud statutes, barratry, and libel.

Whether Mike Sutter, David Miscavige and other board members of the plaintiff are obstructing justice by wrongfully interposing attorneys between themselves and their investigators such as Eugene Martin Ingram or feloniously participating in the plaintiff's racketeering enterprise.

3. Disputed Legal Issues.

Whether the entire set of plaintiff's claims ought to be dismissed for lack of any credible evidence of wrong-doing on the part of the defendant.

Whether all incidental quoting of the intellectual property of the plaintiff was "fair use" under the Copyright Act.

The number of scientology organizations that should be considered as one organization under RICO statutes.

4. Other legal issues -- none known at this time.

5. Unserved parties -- multiple John Does who fraudulently forged cancels on the newsgroup alt.religion.scientology.

6. Additional Parties -- not aware of any at this time, however since the defendant is pro se with little legal knowledge, this may change when he commences his discovery.


7. The parties do not consent to a trial by Magistrate.

8. The parties have not been assigned to an ADR process.

9. Request for ADR referral. In order to conserve judicial resources, the pro se defendant does hereby request in-person mediation by a magistrate judge in order to seek a mutually agreeable settlement.


10. Defendant certifies that he has made full initial disclosures. Plaintiff admits not making such a full disclosure under the pretext that it would endanger its intellectual property. The plaintiff has also not made required disclosures with respect to Eugene Martin Ingram, Jeffrey George Quiros, David Miscavige, Helena K. Kobrin, Vera Wallace and other facts alleged in the defendant's counterclaim.


11. Discovery Plan -- the plaintiff has already indulged in accelerated discovery.

The defendant has not yet been allowed to commence discovery. As much as the defendant is able to afford given his unsupported pro se status, he will be taking depositions from principals such as David Miscavige (Chairman of the Board of RTC), Eugene Martin Ingram (RTC private investigator wanted on felony charges in Florida), Vera Wallace (forger on a.r.s. and admitted intelligence agent for RTC), David Elrod, of, many former members and staff of Scientology, government officials, news reporters, and certain celebrities who have experienced Scientology's "practice of medicine," and will attempt to obtain depositions from a number of persons such as Pat and Annie Broeker, Weibke Hanson, -AB-, and others whose fate is known only to Scientology. Defendant is very likely to need the assistance of the Court in serving such witnesses since Scientology is well known for devoting vast resources to defeating process servers, and in fact, has kept David Miscavige from being served in other cases for a number of years.

Other depositions may be required as discovery is commenced. The defendant will propound interrogatories, third party requests for production of documents, admissions, and other written discovery.

Discovery Schedule:

The defendant proposes the following dates related to discovery and designation of experts: The defendant needs a substantial time for discovery as his resources are extremely limited compared to the plaintiff--who as a matter of course spends in the order of 10 million dollars of tax exempt revenue on suing critics every year and can be expected to fight every effort of defendant to conduct discovery. In addition through accelerated discovery the plaintiff has acquired a three month "head start" in discovery. Finally, the legal and factual issues and multiple actors involved in the serious racketeering allegations will require much more additional time for discovery than the relatively simple allegations and issues presented by the plaintiff. Defendant may seek and involve government agencies in this investigation and may require time well beyond the dates proposed. Defendant may need to ask the Court for permission to depose many more than the numbers normally permitted under the Fed.R.Civ.P. 30.

    Discovery Cut-off                          August 8, 1997
    Expert Designation, including reports      August 27, 1997
    Rebuttal Expert Designation, including reports  
                                              October 10, 1997
    Depositions of Experts                    October 31, 1997


12. Trial Date.

The defendant proposes the following dates related to trial and pre-trial activities:

    Filing of Dispositive Motions            January 3, 1998
    Hearing of Dispositive Motions           January 31, 1998
    Pre-trial conference                     February 28, 1998
    Trial                                    March 28, 1998
13. Length of Trial.

The defendant expect that trial will last for 21-30 days.


Pursuant to Civil L.R. 16-6, the undersigned certifies that he or she has read the brochure entitled "Dispute Resolution Procedures in the Northern District of California," discussed the available dispute resolution options provided by the court and private entities and has considered whether this case might benefit from any of the available dispute resolution options.

Dated: _________________ _________________________________     
                         H. Keith Henson, defendant pro se


The Case Management Statement and Proposed Order is hereby adopted by the Court as the Case Management Order for the case and the parties are ordered to comply with this Order. In addition the Court orders:

[Space left for gods know what. To us, this looks like tempting fate, but we assume it is a standard legal format.]

Dated: _________________ _________________________________
                             Ronald M. Whyte
                             United States District Judge

2. Message from Vorlon

"The avalanche has started. It is too late for the pebbles to vote."

--Ambassador Kosh

3. The Empire Strikes Back (RTC replies to Ward)

In our previous issue we printed Grady Ward's request that the injunction be dissolved. We liked Ward's document. The church reply follows. For netizens who have become fans of the lawyer fights in San Jose this is valuable background reading. On the surface it appears to be a dull piece of boilerplate, but the arguments are interesting. These are the arguments RTC will make on August 2. [Readers who are bored by legal paper are invited to skip to the MOFO summary and then to the Rodent Report.]

Among the highlights, Ward is accused of being the author of SCAMIZDAT. Plaintiffs take credit for the removal of NOTS from the net, presumably admitting to any forged cancellation messages that may have been involved. Just five days after "the entirety of NOTS first flitted across cyberspace" defendant moved to have the injunction dissolved. RTC suggests that Ward was responsible for the May NOTS posting and should not be allowed to use it as a defense [re. trade secrets]. The argument is made that Trade Secrets should not be destroyed by "unauthorized" net posts. Posts to the net are ephemeral and they were removed by the prompt action of the plaintiffs.

Plaintiff has new allegations but no new information, despite extensive discovery efforts. To our eye, the case looks thin; but it will be argued by the national authority on intellectual property law, and Judge Whyte cannot ignore it.

We apologize for the errors in the document. This is scanner output; we did not have access to the originals to make corrections.

California non-profit corporation,      )
                                        ) MEMORANDUM IN OPPOSITION TO
                        Plaintiff,      ) DEFENDANT'S MOTION TO DISSOLVE
                                        ) PRELIMINARY INJUNCTION
                                V.      )
                                        ) Date: August 2, 1996
GRADY WARD, an individual,              ) Time: 9:00 a.m.
                                        ) Hon. Ronald M. Whyte
                        Defendant.      )

_________________________________________________________ )
II.     Facts
III.    Argument        7
        A.      Applicable Standards for a Requested Dissolution of
                Injunction      8
        B.      Ward Cannot Rely Upon Either Scamizdat or the
                Anonymous May NOTs Posting or Any File That Copied
                the May NOTs Posting    8
        C.      Internet Postings Do Not Divest Trade Secret Status     
        D.      Legal   Standard: The Anonymous Postings Did Not    9
                Destroy the Trade Secret Status Of The Works            
                1.      Loss Of Secrecy Only Occurs Where
                        Manor Is Generally Known        I I
        2.      Whether Information Is Generally Known
                Is A Fact Question Mandating Inquiry Into
                The Consequences Of Posting     12
        3.      Internet Postings Are Not Akin To
                Traditional Publications        14
        4.      The Posting Did Not In Fact Render NOTs

                     Generally Known    16
        E.      The Balance of Hardships Tips Decidedly in RTC~s Favor
IV.     Conclusion              20

ABBA Rubber Co. v. Seaguist,
235 Cal. App. 3d 1,286 Cal. Rptr. 518 (1991)            11. 12
Boein~ Co. v. Sierracin Corp
108 Wash. 2d 38, 738 P.2d &6'5 (1987)           13
Bnd~e Publications v. Vien,
827 F. Supp. 629 (S.D. Cal. 1993)               17
Components for Research. Inc. v. Isolation Products. Inc.,
241 Cal. App. 2d 726, 50 Cal. Rptr. 829 (1966)          17
Favia v. Indiana University of Pennsylvania,
7 F.3d 332 (3d Cir. 1993)               8
FTC v. Ma~ui Publishers. Inc.,
1990 WL 132719, *2 (CD. Cal. 1990)              7
Gates Rubber Co. v. Bando Chem. Indus.. Ltd.,
9 F.3d 823 (10th Cir. 1993)             13
Harolds Stores. Inc. v. Dillard Department Stores,
82 F.3d 1533 (10th Cir. 1996)           16
Lamb-Weston. Inc. v. McCain Foods. Ltd.,
941 F.2d 970 (9th Cir. 1991)            18
Masonite Corp. v. County,
42 Cal. App. 4th 436, 49 Cal. Rptr. 2d 639 (1996)               13, 14
Metallurgical Indus.. Inc. v. Fourtek. Inc.,
790 F.2d 1195 (5th Cir. 1986)           18, 19
Miami Herald Publishin~ Co. v. Tornillo,
418 U.S. 241, 94 5. Ct. 2831(1974)              15
Mor2an v. Veach,
59 Cal. App. 2d 682, 139 P.2d 976 (1943)                19
Motorola. Inc. v. Comnuter Displays Int'l. Inc.,
739 F.2d 1149 (7th Cir. 1984)           14
People ex rel. Younger v. F.E. Crites. Inc.,
51 Cal. App. 3d 961, 124 Cal. Rptr. 664 (1975)          19
Reli~ious Technolo~v Center v. Scott,
869 F.2d 1306 (9th Cir. 1989)   . . .   .    17

Reli~ious Technology Center v. Wollersheim,
796 F.2d 1076 (9th Cir. 1986), cert. denied, 479 U.S. 1103 (1987) . .     


Salsbury Laboratories. Inc. V. Merieuux Laboratories. Inc.,
908 F.2d 706 (11th Cir. 1990)   17

Tanner Motor Livery. Ltd. v. Avis Inc.,
316 F.2d 804 (9th Cir. 1963)    7

Underwater Storage. Inc. v. United States Rubber Co.,
371 F.2d 950 (D.C. Cir. 1966),
cert. denied, 336 U.S. 911(1967)        18

Vacco Indus. Inc. v. Van Den Ber~,
5 Cal. App. 4th 34, 6 Cal. Rptr. 2d 602 (2d Dist. 1992) 12, 14

Wilkes v. Pioneer Am. Ins. Co.,
383 F. Supp. 1135 (D.S.C. 1974) 15


1 A. Lindey, Lindey on Entertainment
Publishing and the Arts, Form 1.01-1(1996)      15
1 Mi/grim on Trade Secrets ' 1.03       12
3~Milgrim on Trade Secrets ' 15.01      12

4 M. Nimmer, Nimmer on Copyright,
Form 26-1 at 26-9 (1995)        15

Restatement (Thind) of the
Law of Unfair Competition ' 40(b)(3) (1995)     19
Restatement of Torts ' 758(b)(1939)     17

S.      Deutch, SuperLiability on the Superhig~vav?
A Te le corn m unications Industiy Perspective,
1 Multimedia L. Rep. 4 (1994)   16
L 1ntn~duction ~'md Statement of Issues

        On April 4, 1996, this Court entered a preliminary injunction 
(attached, for the Courts convenience, as Appendix A) which prohibited 
defendant Ward from engaging In two basic activities: (1) infringing 
copyright in plaintiffs works, which Ward had theretofore infringed 
either by downloading (copying) and/or posting (copying and 
distributing) on the Internet; and, based upon a showing that Ward had 
solicited and threatened, directly or indirectly, to post to the 
Internet theretofore unpublished works, and (2) acquiring, using or 
disclosing plaintiffs trade secrets.11 

        On May 6, 1996, an anonymous posting (which was reposted on 
May 7 and 9) ~the "May NOTs Posting") of the entirety of NOTs appeared 
on the Internet for the first time. McShane Ded. 6 5. That posting was 
immediately detected by the plaintiff. There is no dispute that 
through plaintiffs vigorous efforts this posting of NOTs was 
virtually, immediately removed from the Internet as was a single May 7 
"echo" posting that appeared for a day before it, too, was removed. 
McShane Deci. 6 7. The entirety of NOTs has not, since that brief 
presence on May 6, 7 and 9, appeared or been available again on the 
Internet except for an instance of theoretical but not real 
availability on a web site in Germany which was not listed in any web 
index. McShane Ded. 6 8.~ 

1/Expressly excluded from the trade secret restraint, however, were 
those Advanced Technology Works that had been the subject of prior 
Internet postings which this Court had preliminarily concluded in its 
September 22, 1995 Order (the "Sep~ 22 Oi~er") in the Netcom/Erlich 
case, filed herewith, for the Court's convenience, as Appendix B, 
ceased therefor to have trade secret status. Among the Advanced 
Technology Works so excluded from the preliminary injunction were 
eight issues of NOTs, which is a work consisting of 55 issues. McShane 
July 12, 1996 Ded. 6 4 ("McShane Deci."). The preliminary injunction 
by its terms does not afford relief from Ward's acquiring those eight 
NOTs issues which had previously been posted. 

        Whether, in fact, those past postings of those issues of NOTs 
terminated trade secret status is a key issue in plaintiffs action 
against Erlich, et al. See Religious Technology Center V. Netcom et 
al., Case No. C-95-20091, and plaintiffs June 18, 1996 Post-Hearing 

2/      Grady Ward filed a July 3, 1996 Ded. with respect to 
propagation and general availability of Scientology "Advanced 
Technology" documents (the "Ward July 3 DecI.'9). It is out of time, 
is riddled with hearsay, expresses opinions without foundation and 
largely addresses postings that prior to the entry of the Preliminary 
Injunction, thus are not in issue on this (continued. On May 11, 1996, 
just five days after the posting of the entirety of NOTs first flitted 
across cyberspace, defendant moved to dissolve the Preliminary 

        There is no basis for dissolving the Preliminary Injunction, 
either insofar as it enjoins defendant's (a) further copyright 
violations; or (b) wrongful acquisition, use, disclosure or 
solicitation of any of plaintiff's trade secrets. Below plaintiff 
explains the basis for its contention that the May NOTs Posting did 
not terminate the trade secret status of the 47 previously unpublished 
issues of NOTs. Plaintiff also establishes why there is a serious 
question going to the merits: whether Ward himself is responsible for 
(and therefore cannot assert as a defense) the May NOTs Posting (and, 
therefore, any downloading of it, such as the unindexed file in 
Germany), and, therefore, has no basis for dissolving the trade secret 
preliminary injunction. 

II. Facts 

        1.    Postings Preceding the May NOTs Posting. A few weeks 
before the April 4, 1996 issuance of the Preliminary Injunction, Ward 
had solicited a "copy of the NOTs pack" and wondered whether 
"Scamizdat .   will publish the NOTs pack and remove the trade secret 
status from all of those documents." Ex. C to McShane Ded. Although 
Scamizdat disappeared with the issuance of the Preliminary 
Injunction,-31 the anonymous May NOTs Posting nonetheless occurred, 
again just as Ward had predicted. 

        RTC's Memorandum of Points and Authorities in Support of its 
Ex Parte Application for a Temporary Restraining Order, dated March 
21, 1996 (the "Memorandum") reviews in detail the history of Ward's 
pre-April 4, 1996 postings. The Memorandum shows that it was Ward who 
coined the term "Scamizdat" (in a March 16, 1995 posting to the a.r.s. 

       continued) motion. The only grounds for Ward's Motion to 
Dissolve are the May NOTs Posting and the~ sole instance of 
reappearance, the arcane, admittedly nonlocatable ("readable but 
not/never pointed to, in the directory by web site") and now removed 
"Scott" file, attached as Ex. A to the Ward July 3 DecI. The "Scott" 
file was voluntarily removed before June 29, ~996. Id. 

3/      There have been no Scamizdat postings since the issuance of 
the Preliminary Injunction McShane Ded. 6 8. The Scamizdat postings 
that occurred prior to the Preliminary Injunction by issue, title and 
date (the "Works"), are listed as Ex. A to the McShane Decl. 
newsgroup)  That it was Ward who encouraged others to copy and post 
Advanced Technology works. That it was Ward who instructed readers on 
the use of anonymous remailers "in order to conceal their identity" 
and expressed "Thanks to everyone for making this Scamizdat possible." 
Declaration of Warren L. McShane, dated March 21, 1996 ("McShane Mai~h 
96 DecI.") 615, Ex. 11. That over the next several days, it was Ward 
who posted similar messages of gratitude for the receipt of Advanced 
Technology materials, coupled with promises to distribute it all in "a 
suitable widespread fashion." Id Ex B  That. sure enough, Scamizdat 2 
and 3 (containing portions of certain Advanced Technology works) 
followed closely on April 2 and 6, 1995. Id. 6 19, 20. 

        In a series of messages in April 1995, Ward then challenged 
the Church of Scientology to stop the forthcoming Scamizdat while 
repeating his requests for others to send to him RTC materials. Over 
the next several months, Ward's postings predicted with uncanny 
accuracy what Scamizdat would publish. For example, a posting on July 
22, 1995 by an a.r.s participant named Jim Byrd stated "[I] am trying 
to locate #1, #2, #4, #6, #7, #8." Ward Dep. Ex. 52, Ex. D to McShane 
Ded. With easily-understood confidence, Ward promptly responded to 
Byrd by predicting that Scamizdat #10 would contain "a grand summary 
of previous material, [so] you will only need to get, say, Scamizdat 
#10 in order to get everything." lid. 

        Miracolo. Lo and behold, just as Ward predicted, when 
Scamizdat #10 was posted on August 6, 1995, it did contain "a 
compilation of all previous Scamizdats . . . ." Ward Dep. Ex. 40, Ex. 
E to McShane Ded. All except, however, three published works "which 
can be found in a variety of places now." Id.41 

        At the March 29, 1996 hearing, Ward did not deny that the 
postings on which the complaint was based were his and he did not 
contest the entry of the copyright/trade secret preliminary 

4/ For completeness, we note that Scamizdat #10 itself was an 
ephemeral posting which, Iike other postings of this genre, came and 
went. Moreover, in his deposition, Ward testified that he is unaware 
that anyone has archived a.r.s. or Scamizdat. Ward Dep. 34, Ex. F to 
        McShane Decl. Ward's current motion is premised solely upon 
that anonymous May NOTs Posting which, for the first and only time, 
included the entirety of NOTs.  It is not disputed that the May NOTs 
Posting was virtually immediately removed from all newsgroups and 
websites and has not appeared on the Internet since May 9. McShane 
Ded. 66 5-7. Nor is it disputed that there has been no further posting 
of the May NOTs posting on the Internet. lid. 6 8. Moreover, on June 
27, 1996, Ward testified that he is currently unaware of "where" the 
entirety of NOTs can be found.-61 

        On March 12 of this year, again it was Ward who wondered 
whether RTC "had stopped Scamizdat yet" and warned that "maybe they 
will publish the NOTs pack and remove the trade secret status from all 
of those documents. That would be shocking." Ward Dep. Ex. 14, Ex. A 
to McShane Ded. (Ward's March 12 prophesy merits analysis in context. 
But a few months earlier Scamizdat had written this: "Please remember 
that according to Judge Whyte, any posting by Scamizdat removes any 
trade secret protection that this material may have had." Dep. Ex. 54, 
Ex. H to McShane Ded. Thus, within a few weeks of the Preliminary 
Injunction, it was 'anonymous" -- not Scamizdat this time -- that made 
the short- lived May NOTs Posting that Ward's March 12, 1996 posting 
had predicted, and almost immediately thereafter Ward moved to 
dissolve the entire Preliminary Injunction.) 

        Thus, prior to the issuance of the Preliminary Injunction, 
Ward unerringly predicted what Scamizdat would publish, and after Ward 
was enjoined, his considerable prophetic powers still were able to 
foreshadow what anonymous posters would do: the May NOTs Posting. 

        The May NOTs Posting occurred in the particular way that Ward 
himself had repeatedly instructed others on a.r.s. to adopt in order 
to "conceal their identity": 

5/      Ward's July 3 DecI. primarily provides a history of the 
postings of other works, ones which had been expressly excluded from 
the trade secret Preliminary Injunction  N.~ supra 

6/      He did, however, posit that it could be located with search 
engines. Ward Dep. at 471, 474-476, Ex. G to McShane Ded. RTC had been 
searching daily and also undertook a search to ensure it covered every 
search engine Ward mentioned and any others of which RTC was aware and 
did not locate anywhere any of the 47 NOTs Works that are the basis 
for Ward~s current motion, except for locating the unindexed Scott web 
site. anonymously. Ward Dep. at 167:9-11, Ex. I to McShane Dccl.: "I 
remember writing instructions in many of my messages on how to use 
anonymous remails." In fact, the initial posting of the NOTs pack on 
May 6 occurred via the same Dutch anonymous remailer that Scamizdat 
had often used for its postings: 

        2.    The likely Identity of the Anonymous Poster. Since the 
Preliminary Injunction issued, Scamizdat has not reemerged. McShane 
Dccl. 6 4. Just as the facts leave little to conjecture that Ward is 
Scamizdat, the facts also unerringly point to Ward as the anonymous 
culprit behind the May NOTs Posting. 

        Ward's fingerprints are found within the body of Scamizdat #10 
(posted Aug. 6, 1995). Scamizdat #10 contained, among other things, 
the Fishman declaration and its attachments setting out various 
Advanced Technology issues. Analdo Lerma, a defendant in another 
action, had four days earlier, posted it to a.r.s. (one of the acts 
for which Lerma was later found guilty of copyright infringement). 
Smack in the middle of Scamizdat #10 is a "continued" e-mail message 
from Lerma to Ward, dated July 30, 1995, which states, "here is rest 
of Fishman's that contains the STUFF . . .9' Ex. E (Depo. Ex. 40). 

        Lerma has testified (in the case he is defending) that he sent 
that very "stuff" to Ward. Lerma Dep. 115, Ex. J to McShane Ded. It 
seems plain that Lerma e-mailed the "stuff" to Ward in several parts 
on July 30; that Lerma posted it himself on August 1 and 2; and that 
Ward also posted it under the rubric "Scamizdat #10" on August 10, but 
failed to remove one of the e-mail headers in the middle of the 
document. Ward himself has recognized in a posting that "Scamizdat #10 
had 'direct evidence' of who the wog [non- Scientologist] is that is 
utterly degrading the criminal cult of Scientology." Ex. 42 to Ward 
Dep., Ex. K to McShane Dccl. 

        RTC posits that (a) Ward's direct efforts to procure NOTs in 
its entirety, (b) the circumstantial evidence that points to Ward 
and/or him and accomplices as Scamizdat, (c) the April 4, 1996 
injunction crimping his use of Scamizdat to accomplish his March 12, 
1996 prophesy that NOTs would be published, and (d) the anonymous May 
NOTs Posting, points to Ward as the anonymous poster of the May NOTs 
Posting. Circumstantially, but strongly 3.      The Posting Ward 
Relies On Did Not Result In NOTs Becoming Generally 

'("own. Ward's July 3 DecI. caption vaunts "general availability" of 
Advanced Technology documents. However, the statutory standard is 
"generally known." And there is simply no evidence -- Ward's motion to 
dissolve presents none -- that the May NOTs Posting caused the content 
of the entirety of NOTs to become "generally known." 

        Fortuitously, in preparation for the June 10 hearing in the 
Netcom/Erlich Case (C-95-20091), RTC had commissioned a survey to 
discern whether there was any evidence of any Advanced Technology 
having become "generally known" by reason of any postings. That survey 
was completed on June 6, 1996 and it is appended as Ex. B to McShane 
Ded. That survey covers and inquires into the very period -- May 
1996-- in which the May NOTs Posting occurred.Z The survey, which was 
conducted solely among Internet users and which concentrated on a.r.s. 
subscribers, shows that at the end of May 1996 there was no evidence 
whatsoever of NOTs or any other Advanced Work being "generally known." 

        Thus, the survey shows that, in the welter of the myriad 
postings each day on the Internet, the transitory passage over a
matter of less than three days of the May NOTs Posting is more likely
than not to have gone unattended and to have disappeared from

Indeed, Scott advises that he "had left NOTs around, readable but 
not/never pointed to. 

And once he was informed of RTC's rights, he took "the whole page 
down" as the Max-Planck Institute "is very skittish about legal
matters."  Ward July 3 DecI. Ex. A. Other facts corroborate the survey
evidence. Most significantly, numerous a.r.s participants have
expressed frustration over their inability to locate the Advanced
Technology works on the Internet, resulting in the reposting of those
works by Ward, Scamizdat, and other defendants in actions before this
Court, such as Erlich.  Here are examples.

A.      When an a.r.s. participant named Jim Byrd revealed in a July 
22, 1995 posting that he was "trying to locate #1, #2, #4, #6, #7, #8 
(Ward Dep. Ex. 52, Ex. D to McShane Ded), Ward responded not by 
telling Byrd how to locate the material 

7/      And -- if the Scott file was, as is probable, a copy of the 
May NOTs Posting -- that survey would also have picked up any general 
knowledge flowing from the Scott file. Byrd sought but rather by 
advising Byrd to await the next posting of Scamizdat As Ward 
predicted, Scamizdat #10 reposted materials that Byrd had found were 
unavailable via the Internet. 

B.      On June 1, 1995, immediately after Scamizdat #6 had been 
posted (which occurred on May 29, 1995, McShane DecI. 618), an a.r.s. 
subscriber, using yet another picturesque name, "Raskolnikov," posted 
this inquiry: "Is anyone archiving the Scamizdat postings. I haven't 
seen #6 yet, and I missed [i.e., presumably cannot find) 1-4." Ward 
Dep. Ex. 34, Ex. F to McShane Ded. 

C.      Similarly, on June 15, 1995, Scamizdat #8 reposted "the actual 
'scripture' that the cult of Scientology is suing Erlich, Netcom, and 
Klemesrud over publishing on the net," so that "you now get to see 
them for free~" McShane Deci. Ex. L. 

D.      In March 1995, only nine weeks after the heaviest period of 
Erlich's echo postings of the Works in question in that action, 
interested a.r.s. participants went on the Internet to request a "copy 
of the illegal file and wonder[ed] what the file contained and why 
they [plaintiff] got so upset . . . ." Ex. M to McShane Ded. 

These undisputed facts -- including reposting -- constitute 
contemporaneous proof that prior Internet postings of the Advanced 
Technology works did not render those works generally known (nor, for 
that matter, even "readily ascertainable," the claim in the Ward July 
3 Dccl.), precisely because of the ephemeral nature of the postings 
and the difficulty of even interested parties in locating them.-81 

III. Argument 

A.      Applicable Standards for a Requested Dissolution of Injunction 

        To prevail on this motion, Ward bears a heavy burden of 
showing "'changed circumstances [that] make the continuation of the 
injunction inequitable"' pending a trial on the merits. FTC v. Maitui 
Publishers Inc., 1990 WL 132719, *2 (C.D. Cal. 1990) (citation 

omitted). As the Ninth Circuit cautioned in Tanner Motor Livery Ltd. 
v. Avis Inc., 316 F24 

8/      Recall, the California UTSA rejected a "readily ascertainable" 
exception to the definition of a trade secret. See Argument at 3, 
infra. 804, 810 (9th Cir. 1963), orders rendered on a motion for 
preliminary injunction are "not lightly to be changed by any judge of 
the trial court." Accord,, Favia v. Indiana University of 
Pennsylvania, 7 F.3d 332, 338 (3d Cir. 1993) (Since "[b]y its very 
nature a preliminary injunction will be ultimately be reviewed again 
by the issuing authority,    [the defendant] must demonstrate that it 
will suffer significant inequity prior to the entry of a final 
decreet'). Ward has not in any way addressed, let alone met, his 
burden here. 

B.      Ward Cannot Rely Upon Either Scamizdat or the Anonymous May 
NOTs Posting or Any File That Copied the May NOTs Posting 

        A serious question going to the merits is the identity of 
Scamizdat and of the anonymous poster of the May NOTs Posting. To the 
ordinary observer, the uncanny correlation between Mr. Ward's 
predictions and ensuing actuality would clinch the issue.~' However, 
Mr. Ward, in his deposition testimony, offers an alternative 
explanation which merits the Court's attention. 

        Ward has categorically denied that he is Scamizdat or is 
associated with Scamizdat. Here is how he explains his unbroken record 
of accurate predictions concerning future Scamizdat (and, now, the 
anonymous May 6, 1996 NOTs) postings. He testifies that Scamizdat must 
have been looking to his predictions (his terminology is "keying off" 
them) in order to persuade plaintiff into believing that Scamizdat and 
Ward were one. Ward Dep. 250- 51; Ex. I to McShane Ded. 

        Lest this aspect alone of Ward's testimony not overstrain 
credulity, he has more in stock. Although he was aware of them, and 
never protested the attribution to him, he now testifies that 
materials that appeared under his own name in February 1995 were not 
posted by him either. His theory on this one is that plaintiff was the 
direct source of the posting 

9/For completeness we note that in response to RTC's cease and desist 
letter, ante litem Ward denied that the first two postings under his 
name were his. His response is Ex. N to McShane Ded. However, in his 
deposition Ward makes it clear that, although an avid Netizen and 
poster, he never took any steps to disclaim any authorship. Ward Dep., 
Ex. G to McShane Ded. attributed to him. Ward Dep. at 198, Ex. I to 
McShane Decl.

        These denials and explanations of course merit being 
considered in context  Here we are aided by a "smoking gun" (or, 
should we say, cannon?) within Scamizdat #10, the posting that 
contained what appears to be a "continued" e-mail message from Lerma 
to Ward (Ward Dep. 40, Ex. E to McShane Ded.) and Lerma's testimony 
that he sent that very "STUFF" to Ward. Lerma Dep. at 115, Ex. J to 
McShane Ded. Ward's glib attempt to explain away this smoking gun 
speaks for itself. In his deposition, Ward denied that he had received 
the Lerma July 30 e-mail and presumed that the e-mail header had been 
included in Scamizdat #10 by Scamizdat himself, "perhaps to point a 
finger at me or Lerma." Ward. Dep. 254, Ex. I to McShane Dec. Then, 
when confronted with Lerma's testimony that Lerma had in fact sent 
Ward the "STUFF," Ward surmised that perhaps Lerma suffered from a 
"mental defect." Id. 255, Ex. I to McShane Deci. 

        The Court may or may not at this time tentative~y conclude 
that despite his denials Ward is surely Scamizdat and that given 
Ward's prediction shortly before the Preliminary Injunction issued 
that NOTs would be posted, and the May NOTs Posting that shortly 
followed the Preliminary Injunction, that Ward is, again, the poster 
just as he was for Scamizdat posting that fulfilled his prophecies. 
But even if the Court is unwilling to so conclude at this time, that 
should not deter the Court from keeping the trade secret aspects of 
the Preliminary Injunction in effect because there surely is a serious 
question going to the merits as to whether Ward seeks that which the 
law forbids: to excuse his acknowledged unauthorized postings by 
reliance upon "anonymous" postings that circumstantially appear to 
be his own. 

        RTC submits that, as Magistrate Judge Infante has already had 
the occasion to observe, Ward's own testimony belies his credibility 
and allows the Court to reach its own conclusions. There is no need 
under the standards for maintaining a preliminary injunction for RTC 
to establish that Ward's testimony is not to be believed. But without 

IOIRTC's unremitting efforts to prevent any dissemination of the 
Advanced Works are well known to this Court, here and in Netcom 
(C-95-20091) and Henson (C-96-2027~) evaluating Ward's "explanations," 
it is plain that there is a serious question going to the merits as to 
whether it is Ward himself who is the author of the very postings, 
Scamizdat and, if the Court finds Ward's explanations simply 
incredible,il/ the May NOTs Posting, upon which Ward relies to excuse 
his conduct. Of course, a wrongdoer cannot rely upon his own 
disclosure of the trade secret to render it public as a defense to his 
own conduct. Sept.22 Order 31:16-32:4. 

C.      Internet Postings Do Not Divest Trade Secret Status 

        We put aside, for a moment, the seemingly logical conclusion 
that Ward is not only Scamizdat, but also the anonymous poster of the 
May NOTS Posting. 

        Surely, because of its fleeting presence on the Internet, the 
May NOTs Posting of the entirety of NOTs did not occasion, as a matter 
of fact, the termination of the trade secret status of NOTs. Nor did 
the Scott nonindexed NOTs file. 

        At the very least, this presents a serious question going to 
the merits. Even were a court inclined to recognize that, as "a matter 
of law," a sustained posting or multiple postings terminates trade 
secret status, nonetheless the Court can recognize that there is 
necessarily some correlation between the duration of a posting and the 
impact on the trade secret status of the matter posted. Would, as a 
matter of law, a posting of a few seconds destroy trade secrecy? If 
not, a few minutes? A few hours? Parts of a day? Two? Three? Does 
residence in a hidden, nonindexed (Scott) file destroy trade secret 

        This Court's reasoning with respect to nominally "public" 
records in the Fishman file is instructive on both the May NOTs 
Posting and the Scott file. Despite the matter being lodged in a 
public court file for about two years, the Court determined, as a 
matter of fact, such "public" lodging did not result in the loss of 
the trade secret status of that information. Sept.22 Order 
28:14-29:13. Indeed, this Court expressed skepticism that technical 
public availability (there, in a court file) "even for a short time,"
could destroy trade secret status lid. 29:8-10. See authority
collected at nil infra. 

11/Magistrate Judge Infante, in granting RTC's request to require Ward 
to resume his deposition, determined that in his initial testimony 
Ward had been "evasive and contradictory~ 2:17 (reiterated, 3:3-4) and 
observed that Ward admittedly had engaged in "'game' playing during 
his deposition." For the Court's convenience, Magistrate Judge 
Infante's June 3, 199() Order is Appendix B. 

D.      Legal Stand~~i: The Anonymous Postings Did Not Destroy the 
        Trade Secret Status Of The Works 

1.      loss Of Secrecy Only Occurs Where Matter Is Generally Known 

        The California UTSA defines a trade secret as information 
which derives independent economic value "from not being generally 
known to the public or to other persons who can obtain economic value 
from its disclosure and use" and is "the subject of efforts that are 
reasonable under the circumstances to maintain its secrecy." Cal. Civ. 
Code ' 3426.1(d). This Court found in Netcom -- and Ward in no way 
disputes -- that RTC fully met the reasonable safeguards and that the 
Works met the competitive value elements of this statutory definition. 
Sept.22 Order 25:20-27:24. Ward has not placed in contention RTC's 
safeguards. Therefore, RTC's Works are entitled to trade secret 
recognition unless the Scamizdat or anonymous postings rendered them 
"generally known" before Ward posted any such Works to the Internet. 

        The California UTSA definition of a trade secret is 
information that is not "generally known." Cal. Civ. Code '3426.1(d). 
The California legislature rejected the additional UTSA requirement 
that a trade secret not be "readily ascertainable by proper means by" 
the plaintiff's actual or potential competitors. See the Comment to 
Cal. Civ. Code ' 3426.l(d)(i) at p.111 of the West annotation. Yet 
Ward July 3 Ded. is premised upon general "availability." ~ Ld. 
caption, i~. caption Ex. A, caption Ex. B, caption Ex. C. 

        ABBA Rubber Co. v. Seaguist, 235 Cal. App. 3d 1, 286 Cal. 
Rptr. 518 (1991), explains the significance of the omission of the 
term "readily ascertainable" from the California UTSA definition of a 
trade secret. It determined that a customer list was a trade secret 
even though its contents were "readily ascertainable" in that the 
"identity of those consumers is revealed in trade directories, 
telephone books, and other sources which list the names of 'several 
types of businesses which commonly use rubber rollers . . . ."' Id. at 
2 1, 286 Cal. Rptr. at 528-29 because This contention [that such 
nominal availability defeats trade secret status] must fail, because 
whether a fact is "readily ascertainable" is not part of the 
definition of a trade secret in California. . . . [The Legislature's 
rejection of that phrase] apparently resulted from arguments that 
conditioning the scope of a trade secret on the extent to which the 
information was not readily ascertainable would "muddy the meaning of 
the term 'trade secret"' and "invite[J the various parties to 
speculate on the time needed to discover a secret."' 

        Thus, the core fact inquiry under the California UTSA is not 
whether the May NOTs Posting rendered NOTs, in its entirety, readily 
ascertainable (an issue which itself is open to serious debate),'~' 
but whether, even if readily ascertainable, the anonymous postings 
rendered NOTS "generally known." 

2.      Whether Information Is Generally Known Is A Fact Question 
Mandating Inquiry Into The Consequences Of Posting 

        Whether matter qualifies as a trade secret is a question of 
fact. See,, Vacco Indus. Inc. v. Van Den Berit, 5 Cal. App. 4th 
34, 50, 6 Cal. Rptr. 2d 602, 611 (2d Dist. 1992) (upholding 
sufficiency of evidence to support jury finding that trade secrecy had 
not been lost by public sale of products); 1 & 3 Mi/grim on Trade 
Secrets '' 1.03 text at n.j T and 15.01[l][a][i]. 

        Whether the May NOTs Posting, a posting of extremely 
short-lived duration, rendered NOTs generally known is a fact 
question, one that mandates inquiry into the consequences of the 
postings. See ABBA Rubber Co. v. Seaquist, supra, 235 Cal. App. 3d at 
21, 286 Cal. Rptr. at 528-2 ("only that information which the industry 
already knows, as opposed to that which the industry could easily 
discover" is statutorily denied trade secret status). 

        Thus, the statutory "generally known" phraseology poses a fact 
question. In assessing the consequences of an Internet posting or the 
presence of information in an unindexed file -- to ascertain whether 
it in fact makes the information that plaintiff claims as 

12/Among other things, as set out in the Facts, numerous postings and 
repostings, both those~ in evidence in Erlich (Ex. M to McShane Ded.) 
and Ward's own posting observations and repostings, are compelling 
proof that even a.r.s. newsgroup subscribers could not locate any 
Advanced Technology works on the Internet. its trade secret "generally 
known" -- this Court should apply the very analysis the Court used in 
plaintiff's action against Erlich when the Court considered the 
consequences of the temporary public availability in an open court 
file of the so-called Fishman declaration. Recognizing that as a 
result of RTC's efforts, the court in Fishman had ultimately sealed 
the court file Oust as RTC has contained the sporadic postings, and 
just as RTC nipped the M_ NOTs Posting in the bud, McShane Ded. 66 
5-7), this Court declined to "assume that their contents have been 
generally disclosed" and ruled that the availability of the Fishman 
declaration, "without evidence that the secrets have become generally 
known, does not necessarily cause RTC to forfeit its trade secrets." 
Sept.22 Order 29:1 5~L3' 

        Here, the May NOTs Posting on which Ward bases his motion to 
        dissolve was 

both ephemeral and of very brief duration (certainly when compared to 
the continuous nominal availability over many months of the Fishman 
declaration in an open court file). Just as the Court declined to 
"assume" the fact consequences of the presence of the Fishman 
declaration in a "public" court file, so, too, it should not assume 
that short-lived presence on the Internet destroyed the secrecy of 
NOTs "without evidence that the secrets have become generally known." 
Sept.22 Order 29:1-5. The California UTSA requires nothing less. Not 
only is there no evidence of NOTs having become generally known, the 
June 6, 1996 survey that had been commissioned for use in RTC's action 
against Erlich -- which covers the period in which the May NOTs 
Posting occurred and in which NOTs may have been resident, albeit 
unindexed, in Scott's file -- proves the contrary. Ex. B to McShane 

        Moreover, adopting a per se rule -- that equates an ephemeral 
        posting with general 

13/That analysis correctly anticipated the California judiciary's own 
interpretation of the California UTSA when it recently ruled that even 
inadvertent disclosure by a public agency does not destroy a trade 
secret lodged with the agency. Masonite Corp. v. County, 42 Cal. App. 
4th 436, 49 Cal. Rptr. 2d 639, 648 (1996). Accord Gates Rubber Co. v. 
Bando Chem. Indus.. Ltd., 9 F.3d 823, 848-49 (10th Cir. 1993) 
(temporary public-file status of court documents did not cause loss of 
trade secret status where, after the trial and after defendant lodged 
its appeal brief pointing to trial nonsealing as a fatal defect to the 
plaintiff's appeal, the plaintiff succeeded in procuring an order from 
the trial court to seal the record and the Tenth Circuit determined 
that the technical "public record" status had not ended trade secret 
status); Boeing Co. v. Sierracin Corp., 108 Wash. 2d 38, 5~-53, 738 
P.2d 665, 676 (1987) (court-ordered publication of trade secret 
exhibits at trial did not defeat trade secret status) knowledge 
resulting in a loss of trade secret status -- is contrary to 
traditional trade secret principles. Courts are loathe to adopt per se 
rules resulting in a loss of secrecy. Thus, secrecy is not 
automatically lost even where a plaintiff -- unlike RTC, which used 
"elaborate~' means to maintain confidentiality (Sept.22 Order 
27:12-24)-- itself, had placed its secrets ~t risk through acts of 
apparent disclosure to (a) the public, see Vacco Indus. Inc. v. Van 
Den Berit, supra, 5 Cal. App. 4th at 50, 6 Cal. Rptr. 2d at 611 
(whether a plaintiff has disclosed its trade secrets by the sale of a 
product is an issue of fact for the trier of fact), or (b) even actual 
or potential competitors. See Motorola. Inc. v. ComDuter DisDlays 
Int'l, Inc., 739 F.2d 1149, 1151(7th Cir. 1984) (plaintiff had 
displayed its new device to 50-75 select customers). Further, where 
(as Ward alleges is the case here) the alleged disclosures result from 
the unauthorized acts of third persons, equity would not decree 
forfeiture of trade secrecy. Masonite Corp. v. County, suDra, 42 Cal. 
App. 4th 450-51, 49 Cal. Rptr. 2d at 649 (no loss of trade secret 
where a third party, without plaintiff's authority, procured it from a 
public agency which had impermissibly disclosed the information to an 
environmental group). 

3.      Internet Postings Are Not Akin To Traditional Publications 

        The Court discerned that "the Internet has not reached the 
status where a temporary posting on a newsgroup is akin to publication 
in a major newspaper or a television network.~' Sept.22 Order 
30:18-19. Yet, in essence, in that case the Court did, without further 
inquiry, equate the mere fact of posting on the Internet with general 
knowledge of the matter so posted. (Of course, unlike the May NOTs 
Posting, all the postings in question had occurred over several days 
and were then reposted one or more times.) 

        However, under California law, even the publication of matter 
in traditional media, such as trade journals, learned publication and 
books, does not automatically destroy trade secret status. Rather, the 
California UTSA Legislative Comment recognizes that "information is 
readily ascertainable if it is available in trade journals, reference 
books, or published materials," all of which are permanent, tangible 
sources. Cal. Civ. Code ' 3426.] at p III ot the West annotation. The 
California legislature intentionally omitted the "not readily 
ascertainable" element from the statutory definition of a trade 
secret. Therefore, secrecy is not negated merely because information 
may be readily ascertainable, even if published in such permanent 
tangible sources.L4/ 

        In short, there is no evidence that the Works have become 
generally known to anyone, the general public or actual or potential 
competitors, let alone under circumstances that would entitle such 
recipients to lawfully use or disclose them. The secrecy of the Works 
has not been lost. 

        Moreover, even were the "not readily ascertainable" element a 
        bar under the 

California UTSA, the "processing" differences between traditional 
publications and the Internet strongly militate against the adoption 
of a rule that unauthorized, anonymous Internet postings destroy trade 
secret status. Publishers are held to direct liability for injuries 
caused by the publication of materials supplied by others.~ Perhaps 
for this reason, publishers customarily require representations and 
warranties of no copyright infringement from authors and, generally, 
book and other print media exercise a degree of editorial control over 
the content of their publications. This publishing procedure serves to 
protect against plagiarism and other intellectual property misconduct 
and reflects the dynamic setting 

14/This court should be reluctant to equate transient availability, 
here, short-lived Internet postings, with permanent availability. See 
Wilkes v. Pioneer Am. Ins. Co., 383 F. Supp. 1135, 1141 (D.S~C. 1974) 
(plaintiff's disclosure of trade secret forms to customers did not 
destroy their secrecy because customers were not permitted to retain 
the forms; "[s]uch limited disclosures ... do not comport with the 
'complete public disclosure' which would destroy the secrecy 
envisioned here"). 

15/See ett., Miami Herald Publishin~ Co. v. Tornillo, 418 U.S. 241, 
258, 94 5. Ct. 2831, 2840 (1974) ("A newspaper is more than a passive 
receptacle or conduit for news, comment and advertising"). 

16/See e.~., 1 A. Lindey, Lindey on Entertainment, Publishing and the 
Arts, Form 1.01-1 (1996) (example of standard industry clause); 4 M. 
Nimmer, Nimmer on Copyright, Form 26- 1 at 26-9 (1995) (containing 
same standard warranty). Substantially similar warranties appear in 
contracts entered into between authors and publishers of collective 
works; Nimmer, supra, Form 26-2 at 26-26 (contributor warrants that 
manuscript does not "violate any copyright law"); and between authors 
and magazine publishers; Lindey, suDra, Form 2.01-4 at 2-26 (author 
represents and warrants that his work "does not infringe upon any 
statutory or common law copyright, proprietary right, or any other 
right of any other person"). 

        Indeed, "publishers will always include representations and an 
indemnity clause in their contracts and will rarely make changes of 
them in the negotiation process." I A. Lindey, sunra, Practice 
Commentary 1-16 (emphasis supplied). underlying traditional 
publication, which setting is the context in those jurisdictions where 
the "readily ascertainable" test is a factor. 

        In contrast to traditional tangible media, the Internet is a 
hit and run medium where "'the rules of the road are so loose that the 
law of the Net is often described as consensual anarchy."' S. Deutch, 
SuperLiability on the Superhighway? A Telecommunications Industry 
Perspective, 1 Multimedia L. Rep. 4, 5 (1994). 

        The chaotic, unruly, undisciplined nature of the Internet, 
coupled with the use of anonymous posters that, quite understandably, 
so deeply troubled this Court in Erlich (Sept.22 Order 30:23-31:3), 
demonstrate the need for painstaking fact scrutiny of the actual 
consequences of posting before determining that unauthorized Internet 
posting of NOTs (widely known to have illicit origins) sporadically on 
May 6, 7 and 9, destroyed the trade secret status of the Works. 

4.      The Posting Did Not In Fact Render NOTs Generally Known 

        The independent survey that plaintiff has filed, Ex. B to 
McShane Deci., proves that general knowledge of the contents of NOTs 
did not occur as the result of the May NOTs Posting. Survey evidence 
is, of course, admissible and probative to support the expert 
testimony of the person offering testimony based on the survey. See,, Harolds Stores Inc. V. Dillard Denartment Stores, 82 F.3d 1533, 
1544-46 (10th Cir. 1996). 

        RTC acknowledges here, as it did in its June 18, 1996 Post 
Hearing Memorandum in Erlich, that a trade secret can be lost upon the 
secret's becoming generally known to the plaintiff's actual or 
potential competitors, even if not generally known to the public at 
large. Cal. Civ. Code ' 3426.1(d)(1) ("generally known to the public 
or to other persons who can obtain economic value from its disclosure 
or use . . . ."). Ward July 3 Ded. 2:13-19 refers to the value of the 
information to potential competitors but, notably, offers no evidence 
that a single such person has become informed by reason of the May 
NOTs Posting or the Scott file. The mere definition of the target 
group whose acquisition of general knowledge could negate trade secret 
status does not satisfy that statutory test. That test can be met only 

proof that the information claimed as a trade secret became generally 
known to the defined target group. 

        Both logic and RTC's experience dictate that the most likely 
source of actual or would-be competitors are former Scientologists who 
have been trained in the Advanced Technology, are familiar with its 
unique terminology, and have at least some capability to 


administer it to others.   As this Court has found in RTC's action 
against Netcom, however all such persons entered into confidentiality 
agreements as a condition of their access to the 

Works while members of the Church of Scientology, and are thus under a 
subsisting duty of confidence. See Sept.22 Order 27:12-28:5. 

        However, the record is devoid of any evidence that any actual 
or potential competitors have in fact obtained copies of the May NOTs 
Posting from the a.r.s. newsgroup Indeed, the postings which sought 
references to various Internet postings of other Advanced Works 
(referred to at Facts, Exs. D, F, L and M to the McShane Deci.), are 
strong evidence suggesting precisely the opposite. 

        Moreover, even if a potential competitor had, innocently, by 
reason of the May NOTs Posting, acquired a copy of the entirety of 
NOTs, he or she could be enjoined from using it upon receiving notice 
of its secrecy. See Restatement of Torts ' 758(b)(1939); Saisbury 
Laboratones. Inc. v. Merieuux Laboratories. Inc., 908 F.2d 706 (11th 
Cir. 1990) (plaintiff's former employees took important documents 
reflecting plaintiffs trade secret process but removed the plaintiffs 
name and used the information at the defendant new employer; held, the 
first employer's letter placed the second employer on notice); 
Components for Research, Inc. v. Isolation Products. Inc., 241 Cal. 
App. 2d 726, 729-30, 50 Cal. Rptr. 829, 831(1966) (defendants held 
liable for continuing use of trade secrets after they had received 
notice in their capacity as corporate directors that their corporation 
was using trade 

17/See Religious Technology Center v. Scott, 869 F.2d 1306 (9th Cir. 
1989); Religious Technology Center v. Wollersheim, 796 F.2d 1076 (9th 
Cir. 1986), cert. denied, 479 U.S. 1103 (1987); Bridge Publications V. 
Vien, 827 F. Supp. 629 (S.D. Cal. 1993). 

        Ward's premise that whereas he could not understand the May 
NOTs Posting someone like Erlich, a former advanced Scientologist, 
could, tends to support this assessment of potential competitors. Ward 
Dep. at 524-525, Ex. G to McShane DecI.; July 3 fled. 2.13-19 secrets 
that had been improperly disclosed to the corporation by fellow 

        This rule applies with equal force to Ward. Although Ward is 
not a competitor of RTC (Ward July 3 DecI. 2:13-19), nonetheless, for 
more than one year he has waged a campaign to destroy RTC's trade 
secrets in the Advanced Technology works by posting the works to the 
Internet and encouraging others to do so. At all times he has been 
keenly aware of RTC's trade secret claims. Despite his explicit 
acknowledgement of RTC's claims of "'trade secrets"' and 
"'irreparable' harm" arising from unauthorized Internet postings, 
Ward, in a March 16, 1995 posting, encouraged a.r.s. participants to 
send him as much "authentic" Scientology materials as possible and to 
"use an anonymous remailer to conceal your identity." McShane Deci. 6 
29, Ex. 0. He concluded by thanking "everyone for making this 
scamizdat possible." Subsequent issues of Scamizdat postings refer to 
the "previously-secret" nature of the works posted and to RTC's action 
against Erlich. 

        Under these circumstances, it is clear that Ward is on notice 
that the May NOTs posting is an unauthorized posting of secret matter 
that was acquired by or from a person who used improper means to 
acquire it. Hence, Ward's acquisition of such matter would constitute 
unlawful "misappropriation" under the California statute. See Cal. 
Civ. Code 

' 3426.1(b)(1)(B) (misappropriation encompasses "acquisition of a 
trade secret of another by a person who knows or has reason to know 
that the trade secret was acquired by improper means").  See, e.~., 
Lamb-Weston. Inc. V. McCain Foods. Ltd., 941 F.2d 970, 972-74 (9th 
Cir. 1991) (defendant could not rely upon representation that there 
had been no breach of confidentiality when he knew the contrary was or 
was likely to be true); Underwater Storage, Inc. v. United States 
Rubber Co., 371 F.2d 950, 955 (D.C. Cir. 1966), cert. denied, 386 U.S. 


        Ward's motion to dissolve is based entirely on the May NOTs 
Posting. But even if he is not the poster, Ward still cannot hide 
behind the anonymous identity of the poster as a means of avoiding 
liability for trade secret misappropriation, as he is bound to make 
reasonable inquiry into the source of any anonymous postings on which 
he relies. See Metallurgical Indus.. Inc. v. Fourtek Inc., 790 F.2d 
1195, 1204 (5th Cir. 1986) (person who acquires information with 
reason to know that its owner is claiming trade secret status has a 
duty to make reasonable inquiry into the facts); Restatement (Third) 
of the L~v Qf Unfair Competition ' 40(b)(3) (1995); ji ' 40, comment 
(d), p.457 ("[s]tudious ignorance of the circumstances surrounding the 
acquisition of the information" is insufficient to avoid liability ~if 
a reasonable person in the position of the actor would have inferred 
that he or she was in wrongful possession of another's trade secret"). 
Ward knows perfectly well that the posting of the entirety of NOTs, a 
posting he had himself prophesied in March 1996, is unauthorized and a 
violation of RTC's rights. 

        Inasmuch as Ward could not rely on a posting he knows to be 
wrongful to defend his own subsequent posting, he should not be 
permitted to dissolve the Preliminary Injunction to legitimize that 
intended conduct. 

E.      The Balance of Hardships 'lips Decidedly in RTC's Favor 

        Here, as in RTC's initial application for a TRO, all equities 
weigh heavily in favor of RTC and against the granting of Ward's 
motion to dissolve the Preliminary Injunction. If the Preliminary 
Injunction were dissolved or modified to allow Ward's acquisition, use 
and disclosure of the NOTs issues, RTC would suffer severe and 
irreparable harm pending a trial of RTC's claims against Ward. Indeed, 
Ward has threatened the widespread distribution and disclosure of NOTs 
in an effort to destroy their secrecy before trial, thereby leaving 
RTC with a hollow judgment in the event that it prevails on its claims 
at trial. By contrast, Ward will incur no prejudice by continuing the 
Preliminary Injunction, as that would merely maintain the status quo 
for the time being and, in all events, Ward has no legitimate interest 
in destroying RTC's intellectual property rights. Indeed, where, as 
here, the defendant has acted with full knowledge of the plaintiff's 
rights and of the consequences that might ensue (see McShane March 
1995 Ded. 665-8 and Ex. 1), there should be no balancing of equities. 
People ex rel. Youn~er v. F.E. Crites. Inc., 51 Cal. App. 3d 961, 968, 
124 Cal. Rptr. 664, 668 (1975); Mor~an v. Veach, 59 Cal. App. 2d 682, 
690, 139 P.2d 976, 980 (1943). IV. Conclusion 

        While the trade secret before the Court today is not of the 
common variety, the implications of the Court's decision are not 
limited to this dispute. They can touch upon virtually the entirety of 
American industry and commerce. RTC submits that utilization of this 
unsupervised, chaotic new medium, which has none of the brakes of 
traditional media, such as prior editorial review and contractual 
provisions designed to ferret out intellectual property violations, 
should not be judicially converted into a universal solvent of 
valuable trade secrets. 

        In this case, RTC should prevail on its trade secret claims 
because (a) Ward cannot hide behind the very brief, singular May NOTs 
Posting, all the more if there is a serious question as to whether 
that posting is likely his, as his unerring prophecies reveal, and (b) 
in fact, that posting did not make the information in NOTs generally 
known. Similarly, the Scott file appears based on the posting and, for 
the same reasons, cannot be relied on by Ward. 

        RTC urges this Court to not methodically apply to the Internet 
rules that have at best limited pertinence to traditional tangible 
media and which are ill suited to the Internet, and thereby convert 
the Internet into an intellectual property black hole. The existing 
UTSA "generally known" test is fact-based and therefore the effect of 
the sporadic postings on May 6, 7 and 9 (and the unindexed presence in 
the Scott file) should be carefully evaluated based on fact and 
tradition with underlying principles of commercial morality. 

        The Court was right to be troubled by the mischief that, 
unchecked, Internet postings can occasion (Sept.22 Order 30:23-31:3) 
and has available to it the statutory "generally known" requirement 
and principles of trade secret law and equity to keep the trade secret 
preliminary injunctive relief in place. Dated:  July 12, 1996   
Respectfully submitted, 

By_____________________ Thomas R Hogan Attorneys for Plaintiff 

4. The Rodent Report [a gossip column]

A sensational story which has been kept under wraps for almost a month can now be told. Ex-scientologist Kim Baker has been visiting the United States. Ms. Baker arrived at the beginning of July and toured the country, meeting a number of important critics. A mouse informed us that she spent time with Ron Newman and several other important persons, but did not meet Arnie Lerma, Dennis Erlich, Steve Fishman or Lavenda Van Schaick. Ms. Baker's visit was shrouded in secrecy in an apparently successful effort to foil the church's intelligence apparatus. Ms. Baker has now left the United States. We surmise that one more stop may be made before she returns to South Africa.

A vole imparted to us a few details of the secret settlement negotiations between Grady Ward and the church of scientology. The rumor posted to the net is true, the vole averred: Ward was pressured to sign statements implicating Dave Touretzky, Dennis Erlich and Ron Newman in a conspiracy to destroy the church's copyrights and trade secrets by exposing the material to public view, via the SCAMIZDAT postings. Ward was then told how much money investigating and suing him had already cost the church. He was stunned. The amount, which the vole did not know, was much larger than Ward had guessed.

Last week the Special Master in charge of examining Ward's backup disks made her report to the court. No scientology proprietary documents were found. Of the several pgp encrypted files on Ward's disks the church managed to decrypt only one, which contained *viruses*. In an odd lapse for such a careful netizen, Ward had chosen a simple 5-letter pass phrase and the church was eventually able to guess it. Was it, er, "virus?" The vole giggled appreciatively but would not say. We prefer to think that the passphrase was a five letter word starting with "w."

We asked what was in the large encrypted files that the church failed to decode. Well, I wouldn't be surprised if one of them had several million copies of the letter "a", the vole said craftily.

On another topic, a certain romantic relationship which appeared to be heading for the rocks has apparently been rescued. We applaud the good intentions of all concerned.

----Arlene Fortiori

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