FRANK W. HUNGER Assistant Attorney General MICHAEL J. YAMAGUCHI United States Attorney MARY BETH UITTI Assistant United States Attorney 450 Golden Gate Avenue San Francisco, California 94102 Telephone: (415) 436-7198 VINCENT M. GARVEY ANTHONY J. COPPOLINO Department of Justice Civil Division, Room 1084 901 E Street, N.W. Washington, D.C. 20530 Tel. (Voice): (202) 514-4782 (Fax) : (202) 616-8470 or 616-8460 Attorneys for the Defendants IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO HEADQUARTERS ________________________________ ) DANIEL J. BERNSTEIN, ) C 95-0582 MHP ) Plaintiff, ) DEFENDANTS' NOTICE OF ) MOTION AND MOTION FOR v. ) A STAY PENDING APPEAL AND ) TO SHORTEN TIME. UNITED STATES DEPARTMENT OF ) STATE, et. al., ) ) EX PARTE MOTION Defendants. ) ) ________________________________) ---------------------------------------------------------------------- NOTICE OF MOTION AND MOTION PLEASE TAKE NOTICE that defendants hereby move for a stay pending appeal of the Court's Order dated August 25, 1997. Because of the immediate impact the Court's Order will have, and plaintiff's refusal to stipulate to a short stay, defendant moves ex parte in conjunction herewith to shorten the time for consideration of this motion. L.R. 7-8(c). Defendants also move, in the alternative, for a stay of the Court's August 25, 1997 Order to September 15, 1997, to allow more time to complete consideration of defendants' motion for a stay pending appeal from the Court of Appeals. Defendants have provided the plaintiff with notice of this motion. This motion is based on this notice, the following memorandum in support of this motion, and such other evidence as may be presented to the Court. REQUESTED RELIEF For the reasons set forth below, defendants request a stay of the Court's order pending appeal or, in the alternative, for a stay of the Court's Order to September 15, 1997. MEMORANDUM OF POINTS AND AUTHORITIES INTRODUCTION On August 25, 1997, the Court issued an Opinion and Order ("Aug. 25 Order") granting in part plaintiff's motion for a summary judgment. As part of its Order, the Court issued a permanent injunction which enjoins the defendants from "further and future enforcement, cooperation or execution of the statutes, regulations, rules, policies, and practices declared unconstitutional under this order, including criminal or civil prosecutions with respect to plaintiff or anyone else who uses, discusses or publishes or seeks to use discuss or publish plaintiff's encryption program and related materials..." Aug. 25 Order 6(a). Defendants are also enjoined from "threatening, detaining, prosecuting, discouraging or otherwise interfering with plaintiff or any other person described in paragraph (6) above in the exercise of their federal constitutional right as declared in this order." Id. 6(b).1/ ____________________ 1/ In the declaratory aspect of the Court's order, to which the injunction applies, the Court declared that "the Export Administration Regulations, 15 C.F.R. Pt. 730 et seq. (1997) and all rules, policies and practices promulgated or pursued insofar as they apply to or require licensing for encryption [continued] [- 1 -] ---------------------------------------------------------------------- Defendants hereby seek a stay of the Court's Order pending appeal. This case presents serious questions of law, and the Court's injunction would, unless stayed pending appeal, impose immediate and irreparable harm on the government's interests by authorizing the plaintiff to export the very encryption software program at issue in this case before a final judicial resolution. Given the significance of the policy matters involved, the status quo in this action should be maintained until the constitutional questions at issue are finally decided. ARGUMENT I. Standard for Granting a Stay Pending Appeal The grant of a stay pending appeal is governed by the familiar test that weights both the likelihood of success on the merits and the relative equities regarding irreparable injury. To obtain a stay, "the moving party must demonstrate either a combination of probable success on the merits and the possibility of irreparable injury or that serious questions are raised and the balance of hardships tips sharply in the moving party's favor." Beltran v. Meyers, 677 F.2d 1317, 1320 (9th Cr. 1982). These tests "are merely the extremes of a single continuum." Benda v. Grand Lodge of Int'l Ass'n of Machinists, 584 F.2d 308, 314 (9th Cir. 1978), cert. dismissed, 441 U.S. 937 (1979). II. Serious Questions Are Presented And The Balance of Hardships Favors Defendants Defendant recognizes that the Court has ruled on the merits in plaintiff's favor on whether export licensing controls on encryption software constitute a prior restraint. As noted above, however, the Court is not obligated to find that it ruled erroneously in order to grant a stay pending appeal. Rather, the Court need only find first that "serious questions are raised." that is undoubtedly the case. Indeed, the Court stated its view that "the legal questions are novel, complex, and of public importance". See Aug. 25 Order at 30. Moreover, the balance of hardships tips decidedly in the government's favor. The key issue in ____________________ and decryption software and related devices and technology are in violation of the First amendment on the grounds of prior restraint and are, therefore, unconstitutional as discussed above, and shall not be applied to plaintiff's publishing such items, including scientific papers, algorithms, or computer programs." Aug. 25 Order 5. - 2 - ---------------------------------------------------------------------- this case is whether the plaintiff and others may export cryptographic software without a license, as presently required by the Export Administration Regulations. See 15 C.F.R. 742.2. The President has specifically found that encryption products (including software), when used outside the United States, "can jeopardize our foreign policy and national security interest," and the "exportation of encryption products accordingly must be controlled to further U.S. foreign policy objectives, and promote our national security, including the protection of the safety of U.S. citizens abroad."2/ The Court has enjoined application of this policy to plaintiff with respect [to] the exportation of his encryption software, and as to anyone else who would export plaintiff's encryption software. See Aug. 25 Order at 31. Defendants do not seek relief that would preclude plaintiff from teaching, publishing, or publicly discussing ideas concerning encryption, since, as repeatedly stated, such activities are unregulated.3/ Rather, defendants seek a stay of the Court's injunction so that plaintiff may not export actual encryption software programs pending appelate review. See Providence Journal Company v. FBI, 595 F.2d 889 (1st Cir. 1979); Azurin v. Von Raab, 792 f.2d 914, 915 (9th Cir. 1986) (granting stay pending appeal to preserve status quo in cases of public importance). Defendants desired to present this motion on a more orderly basis by seeking agreement from plaintiff for a short stay of the Order to September 15, 1997, in part to address the issues raised herein. By way of background, counsel for defendants received the Court's Order by facsimile from the U.S. Attorney's Office after close-of-business on August 25, 1997. See Declaration of Anthony J. Coppolino In Support of Ex parte Motion 2.4/ At eh opening of business (Pacific time) the next morning, August 26, 1997, counsel for defendants contact plaintiff's counsel in response to a request by the district court (conveyed by telephone through the presiding judge's law clerk on the afternoon of August 25, ______________________ 2/ Presidential Memorandum, November 15, 1996, Tab A to Defendants' Second Summary Judgment Memorandum. 3/ See Defendants' Second Summary Judgment Memorandum at 19-20 (citing 15 C.F.R. 734.7, 734.8, 734.9). 4/ See Local Rule 7-11(b)(2). - 3 - ---------------------------------------------------------------------- 1997) that the parties discuss the wording and form of the Court's order and advise the court if there is [sic] any issues therewith. Id.5/ In the course of that conversation, counsel for defendant proposed that the parties agree to a short-term stay until September 15, 1997, in the entry and effectiveness of the Court's order to allow additional time for consultation. Id. 3. Counsel for defendant also raised the possibility that the government might seek a stay pending appeal of the Court's Order, and specifically sought assurance that the plaintiff would agree to maintain the status quo and not export his encryption software program until the government could filed such a motion. Id. Plaintiff's counsel indicated that she thought the plaintiff was unlikely to agree to this, but would confer with plaintiff and respond. Id. Counsel for defendants thereafter faxed to plaintiff's counsel a proposed short-term stay to September 15, 1997. Id. 4. On the evening of August 26, 1997, counsel for plaintiff advised counsel for defendants that plaintiff would not agree to defendants' proposal for this short stay. Id. 5. In response to a question as to whether plaintiff intended to export encryption software through an Internet posting, plaintiff's counsel indicated that plaintiff had waited a long time for the Court's decision, and she provided no assurance that plaintiff would forbear exporting his software before the issue could be raise[d] with the courts. Id. Counsel for defendants advised plaintiff's counsel that, absent such assurance, defendants would file a motion with the district court as soon as the next day. Id. Thus, even after plaintiff was on notice that defendants desired to seek a stay pending appeal in an orderly fashion, he provided no assurance that he would not export his encryption software in the interim. While plaintiff may now desire to export his software, the judicial process in this case has not yet ______________________ 5/ In fact, as the parties began to discuss, defendants raised three issues needing clarification. First, the injunction portion of the Order at 6(a) appears inconsistent with the Court's description on page 30 of the scope of the injunction as limited to "plaintiff or against anyone else who seeks to use, discuss, or publish plaintiff's encryption program." It appears as if a comma [,] should have been inserted on page 32 after the word "prosecutions." Defendant construes the injunction as described on page 30 of the opinion. Also, 6(a) of the Order refers to encryption and decryption software "and related devices..." This reference is unclear since encryption devices, such as hardware products, have never been at issue in this case. In defendants' view, this term should be deleted. Finally, 6(a) declares plaintiff's rights with respect to "computer programs." In defendants' view, the words "source code" should be inserted therein since, from the beginning, this case has concerned the encryption source code programs, not machine executable object code which the court did not determine to be protected by the First Amendment. - 4 - ---------------------------------------------------------------------- run its course. Defendants have the right to pursue further review, and it is possible that plaintiff may not prevail in this case. Since plaintiff was unwilling to forbear on his apparent intention to immediately act upon the Court's decision and export encryption software, it became necessary for defendants to seek this stay pending appeal. Regardless of the Court's ultimate view of the merits, a stay is warranted to preclude the export of the encryption software program at issue until appelate review is completed. Since the government has repeatedly made clear that it does not regulate the mere teaching or publication of ideas concerning encryption, or the distribution of encryption software in the United States, including to students, any prejudice to plaintiff by such a stay would not outweigh the harm to the defendants' interests. CONCLUSION For the foregoing reasons, defendants' motion for a stay pending appeal should be granted. In the alternative, the Court should stay the entry and effectiveness of its August 25 Order to September 15, 1997, to allow more time to complete consideration of this motion and to ensure the government an opportunity to seek a stay pending appeal from the Court of Appeals. Respectfully Submitted, FRANK W. HUNGER Assistant Attorney General MICHAEL J. YAMAGUCHI (Cal. SBN 84984) United States Attorney MARY BETH UITTI (Cal. SBN 64452) Assistant United States Attorney 450 Golden Gate Avenue San Francisco, California 94102 Telephone: (415) 436-7198 [AJC Signature] VINCENT M. GARVEY ANTHONY J. COPPOLINO Department of Justice Civil Division, Room 1084 901 E Street, N.W. Washington, D.C. 20530 Tel.: (202) 514-4782 Attorneys for the Defendants Date: August 27, 1997 - 5 - ---------------------------------------------------------------------- FRANK W. HUNGER Assistant Attorney General MICHAEL J. YAMAGUCHI United States Attorney MARY BETH UITTI Assistant United States Attorney 450 Golden Gate Avenue San Francisco, California 94102 Telephone: (415) 436-7198 VINCENT M. GARVEY ANTHONY J. COPPOLINO Department of Justice Civil Division, Room 1084 901 E Street, N.W. Washington, D.C. 20530 Tel. (Voice): (202) 514-4782 (Fax) : (202) 616-8470 or 616-8460 Attorneys for the Defendants IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO HEADQUARTERS ________________________________ ) DANIEL J. BERNSTEIN, ) C 95-0582 MHP ) Plaintiff, ) DECLARATION OF ) ANTHONY J. COPPOLINO v. ) IN SUPPORT OF EX PARTE ) MOTION. L.R. 7-11(b)(2) UNITED STATES DEPARTMENT OF ) STATE, et. al., ) ) Defendants. ) ) ________________________________) I, Anthony J. Coppolino, do hereby state and declare as follows: 1. I am a Trial Attorney for the Department of Justice, Civil Division, Federal programs Branch, and counsel of record for the defendants in this action. I submit this declaration in connection with defendants' ex parte motion for a stay pending appeal and to shorten time. 2. On the afternoon of August 25, 1997, I received a telephone call from the Court (through [- 1 -] ---------------------------------------------------------------------- a law clerk for the presiding district judge) indicating that the Court wished for the parties to review the wording and form of the "Order" portion of the Court's decision on pending summary judgment motions in this action, which was filed that day, and, if necessary, to schedule a telephone conference with the Court regarding any issues in connection therewith. I received a copy of the Court's Order by facsimile from the U.S. Attorney's office in San Francisco shortly after 7 p.m. (easter time) on August 25, 1997. Shortly after 9:00 a.m. (Pacific time) on the morning of August 26, 1997, I called the office of counsel for plaintiff, Cindy Cohn, was advised she was not yet in, and left a recorded voice mail message for her to return my call. Counsel for plaintiff returned my call s short time later and I advised her of the Court's request to discuss the wording and form of the Court's Order. 3. In the course of that conversation, counsel for plaintiff indicated that she was preparing a proposed "judgment" that she requested that I review. We then discussed the Court's August 25 Order and I noted three aspects of the Order that, in my view, needed clarification. I proposed that the parties agree to a short- term stay until September 15, 1997, in the entry and effectiveness of the Court's Order to allow additional time for consultation. I also raised the possibility that the government might seek a stay pending appeal of the Court's order, and specifically sought assurance that plaintiff would agree to maintain the status quo by not exporting his encryption software program until the government could file such a motion. Plaintiff's counsel indicated that she thought plaintiff was unlikely to agree to this, but would confer with plaintiff and respond. I also indicated that I had contacted the Court's courtroom deputy to determine the Court's availability for a telephonic status conference. 4. At approximately 3:30 p.m. (eastern time) on August 26, 1997, I faxed a letter to plaintiff's counsel and attached a proposed Order which would stay the entry and effectiveness of the Court's August 25 Order to September 15, 1997, to allow time to address the clarification and stay issues with the Court in a more orderly fashion (attached hereto).1/ _______________________ 1/ At approximately 9:30 p.m. (eastern time) on August 26, 1997, plaintiff's counsel left a voice message indicating the fax had not transmitted completely. I received this message the next morning (August 27), and sent the fax again at approximately 8:50 a.m. (eastern time). - 2 - ---------------------------------------------------------------------- 5. At approximately 6:30 p.m. (eastern time) on August 26, 1997, I called plaintiff's counsel and inquired again as to whether plaintiff would agree to a stay to September 15, 1997. Plaintiff's counsel stated that plaintiff would not agree to defendants' proposal for a short stay. I inquired if plaintiff intended to export his software by posting to the Internet. Plaintiff's counsel indicated that plaintiff had waited along time for the Court's decision, and she provided no assurance that plaintiff would forbear on exporting his software before the issue could be raised with the courts. I advised plaintiff's counsel that, absent such assurance, I would file a motion with the district court as soon as Wednesday, August 27, 1997. 6. At approximately 9:30 p.m. (eastern time) on August 26, 1997, plaintiff's counsel left a voice message for me that, in part, reiterated that she had talked with the plaintiff and that he would not agree to defendants' proposed stay. 7. I spoke with plaintiff's counsel on the afternoon of Wednesday, August 27, 1997, and again provided notice of defendants' intent to file the instant motion. I declare under penalty of perjury that the foregoing is true and correct. DATE: 8/27/97 [Signature] ANTHONY J. COPPOLINO - 3 - [End AJC declaration] ---------------------------------------------------------------------- U.S. Department of Justice Civil Division Washington, D.C. 20530 August 26, 1997 (202) 514-4782 BY FACSIMILE Ms. Cindy A. Cohn McGLASHAN & SARRAIL 177 Bovet Road, Sixth Floor San Mateo, California 94402 Re: Bernstein v. Department of State et al. (C-95-0582 MHP N.D. Cal.) Dear Ms. Cohn: This letter is to follow-up our discussion concerning the wording and form of the Court's order. As you know, Judge Patel asked us to confer on these matters and advise her of our views. You indicated that you are preparing a proposed judgment for us to consider, and that some of the issues I raised should be discussed with the Court. Enclosed is a draft proposed order that would stay the entry or effectiveness of the Court's order until September 15 to allow the parties to complete these consultations and, if necessary, confer with the Court concerning the Order. We think it is in the best interests of all parties to confer and present our views to the courts in an orderly fashion. Please advise of your views in the event a telephone conference with the Court is necessary. Sincerely, [Signature] ANTHONY J. COPPOLINO Trial Attorney Civil Division enclosure: draft order ---------------------------------------------------------------------- DRAFT FRANK W. HUNGER Assistant Attorney General MICHAEL J. YAMAGUCHI United States Attorney MARY BETH UITTI Assistant United States Attorney 450 Golden Gate Avenue San Francisco, California 94102 Telephone: (415) 436-7198 VINCENT M. GARVEY ANTHONY J. COPPOLINO Department of Justice Civil Division, Room 1084 901 E Street, N.W. Washington, D.C. 20530 Tel. (Voice): (202) 514-4782 (Fax) : (202) 616-8470 or 616-8460 Attorneys for the Defendants IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO HEADQUARTERS ________________________________ ) DANIEL J. BERNSTEIN, ) C 95-0582 MHP ) Plaintiff, ) ) v. ) ) UNITED STATES DEPARTMENT OF ) STATE, et. al., ) ) Defendants. ) ) ________________________________) ORDER Upon conferring with the parties, and good cause appearing, it is HEREBY ORDERED THAT the entry and effectiveness of the Order of the Court dated August 25, 1997, shall be stayed until September 15, 1997, in order to permit the parties additional time to confer as to the wording and form of the Order and, if necessary, to confer further with the Court or to seek clarification or other relief in connection with the Order. [- 1 -] ---------------------------------------------------------------------- SO ORDERED: DATE: [None] [No signature] Marilyn Hall Patel United States District Judge Norther[n] District of California - 2 - ---------------------------------------------------------------------- FRANK W. HUNGER Assistant Attorney General MICHAEL J. YAMAGUCHI United States Attorney MARY BETH UITTI Assistant United States Attorney 450 Golden Gate Avenue San Francisco, California 94102 Telephone: (415) 436-7198 VINCENT M. GARVEY ANTHONY J. COPPOLINO Department of Justice Civil Division, Room 1084 901 E Street, N.W. Washington, D.C. 20530 Tel. (Voice): (202) 514-4782 (Fax) : (202) 616-8470 or 616-8460 Attorneys for the Defendants IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO HEADQUARTERS ________________________________ ) DANIEL J. BERNSTEIN, ) C 95-0582 MHP ) Plaintiff, ) ) v. ) ) UNITED STATES DEPARTMENT OF ) STATE, et. al., ) ) Defendants. ) ) ________________________________) ORDER Upon consideration of defendants' motion for a stay pending appeal, the record of this case, and good cause appearing, it is HEREBY ORDERED THAT defendants' motion shall be and hereby is GRANTED; and it is FURTHER ORDERED THAT the Court's Opinion and Order filed August 25, 1997, shall be and hereby is stayed pending appeal in this action and until the completion of all appellate proceedings. [- 1 -] ---------------------------------------------------------------------- SO ORDERED: DATE: [None] [No signature] Marilyn Hall Patel United States District Judge Northern District of California - 2 - ---------------------------------------------------------------------- FRANK W. HUNGER Assistant Attorney General MICHAEL J. YAMAGUCHI United States Attorney MARY BETH UITTI Assistant United States Attorney 450 Golden Gate Avenue San Francisco, California 94102 Telephone: (415) 436-7198 VINCENT M. GARVEY ANTHONY J. COPPOLINO Department of Justice Civil Division, Room 1084 901 E Street, N.W. Washington, D.C. 20530 Tel. (Voice): (202) 514-4782 (Fax) : (202) 616-8470 or 616-8460 Attorneys for the Defendants IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO HEADQUARTERS ________________________________ ) DANIEL J. BERNSTEIN, ) C 95-0582 MHP ) Plaintiff, ) ) v. ) ) UNITED STATES DEPARTMENT OF ) STATE, et. al., ) ) Defendants. ) ) ________________________________) ORDER Upon consideration of defendants' motion for a stay, and good cause appearing, it is HEREBY ORDERED THAT the entry and effectiveness of the Order of the Court dated August 25, 1997, shall be and hereby is stayed until September 15, 1997, to allow time to complete consideration of defendants' motion for a stay pending appeal and to ensure the government an opportunity to seek a stay pending appeal from the Court of Appeals. [- 1 -] ---------------------------------------------------------------------- SO ORDERED: DATE: [None] [No signature] Marilyn Hall Patel United States District Judge Norther[n] District of California - 2 -