Copyright 1996 Shelley Thomson; all rights reserved.
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Table of Contents for Biased Journalism.
Biased Journalism Volume 2, issue 13 July 30, 1996.
[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
LAW OFFICES OF THOMAS R. HOGAN
60 South Market Street, Suite 1125
San Jose, CA 95113-2332
Roger M. Migrim
William M. Hart
PAUL, HASTINGS, JANOFSKY & WALKER
399 Park Avenue Thirty-first floor
New York, New York 10022-4697
Helena K. Kobrin, SBN 152546
7629 Fulton Avenue
North Hollywood, CA 91605
Eric M. Lieberman
RABINOWITZ, BOUDIN, STANDARD
KRINSKV & LIEBERMAN, P.C.
740 Broadway - Fifth Floor
New York, New York 10003
Attorneys for Plaintiffs
RELIGIOUS TECHNOLOGY CENTER
H. Keith Henson
799 Coffey Ct.
San Jose, CA 95123
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA RELIGIOUS TECHNOLOGY CENTER, a ) Case No. C-96-20271RMW California non-profit corporation, ) Plaintiff, ) CASE MANAGEMENT ) STATEMENT, ADR ) CERTIFICATION v. ) AND ORDER ) FOLLOWING CASE H. KEITH HENSON, an individual, ) MANAGEMENT CONFERENCE 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.
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.
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.
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 theta.com, 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.
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
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, 199813. Length of Trial.
The defendant expect that trial will last for 21-30 days.
Dated: _________________ _________________________________ H. Keith Henson, defendant pro se
[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
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.
NORTHERN DISTRICT OF CALIFORNIA RELIGIOUS TECHNOLOGY CENTER, a ) CASE NO.96-20207 RMW 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. ) ) _________________________________________________________ ) TABLE OF CONTENTS TITLE PAGE 1.Introduction 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 TABLE OF AUTHORITIES CASE PAGE 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) . . 17 CASE PAGE 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 OTHER 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 Memorandum. 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 Injunction. 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 injunction. 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: hacktic.nl. 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 cyberspace. 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, e.it., 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 finally 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 status? 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, e.it., 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 Ded. 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, e.tt., 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 by 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 17/ 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 directors). 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. 911(1967). 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, LAW OFFICES OF THOMAS R. HOGAN By_____________________ Thomas R Hogan Attorneys for Plaintiff RELIGIOUS TECHNOLOGY CENTER
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.