1
2 UNITED STATES DISTRICT
3 NORTHERN DISTRICT OF CALIFORNIA
4 SAN JOSE DIVISION
5 ONLINE POLICY GROUP, ) CV-03-4913-JF
)
6 Plaintiff )
)
7 vs. ) San Jose, California
) November 17, 2003
8 DIEBOLD INC., )
)
9 Defendant. )
_ _ _ _ _ _ _ _ _ _ )
10 )
11
TRANSCRIPT OF PROCEEDINGS
12 BEFORE THE HONORABLE JEREMY FOGEL
UNITED STATES DISTRICT JUDGE
13
A P P E A R A N C E S:
14
For the Plaintiff: ELECTRONIC FRONTIER FOUNDATION
15 By: CINDY ANN COHN, ESQ
454 Shotwell Street
16 San Francisco, CA 94110
17
For the Defendant: JONES DAY
18 By: ROBERT A. MITTELSTANDT, ESQ
ADAM R. SAND ESQ
19 555 Caliornia Street
26th Floor
20 San Francisco, CA 94104
21
22
Court Reporter: JORDONNA LOBESE, RPR
23 Number 069305
24
25
1
JORDONNA LOBESE, RPR 069305
1 San Jose, California November 17, 2003
2 P R O C E E D I N G S
3 THE COURT: So we have the remainders -- Online
4 Policy Group vs. Diebold Inc.
5 MS. COHN: Cindy Cohn for the plaintiffs.
6 MR. MITTELSTANDT: Robert Mittelstandt and Adam Sand
7 for Jones Day for the defendants.
8 THE COURT: Why don't you all make yourselves
9 comfortable. Good morning. There are a lot of paths that we
10 want to go down in this case. But let me see if I can frame
11 the one that has interested me most. If there are no
12 copyright infringements, are the parties nonetheless required
13 to avail themselves of the "safe harbor provisions" of the
14 DMCA?
15 In other words, if what OPG is doing something it
16 has a right to do, are the ISPs nonetheless required to take
17 down the material and wait for the procedure of counter
18 notices and so forth to be done? Or can a party decide
19 simply to not bother with a safe harbor provision and say,
20 "You know what? We're not doing anything wrong. We don't
21 need to go through that." And, in fact, the efforts of the
22 defendants to invoke the DMCA are having a chilling effect on
23 their rights.
24 And I think what is implied in that question is that
25 the safe harbor provisions were really intended to protect
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1 the ISPs. In other words, you have an infringer or the
2 copyright holder, and the congress was concerned that the
3 people who run the websites or who provide links or so forth
4 not be caught in the crossfire between those two people. And
5 so, a safe harbor provision was provided. But if the
6 material in question isn't infringing, and if the alleged
7 infringer is confident, why do they have to wait for this
8 entire procedure to be exhausted?
9 In other words, if they can demonstrate not only are
10 they not infringing but that they -- that their first
11 infringement rights are infringed, irespective of what's in
12 the DMCA's declaratory judgment that they're not infringing
13 on a copyright? That's the take I have. After wading
14 through the papers, OPG's position is that there isn't any
15 infringement. This is fair use. Certainly, all these
16 statutory provisions exist.
17 But in the meantime, we're suffering a diminution of
18 our rights. There isn't any validity to the copyright claim.
19 And the purpose of these provisions was to protect people
20 against getting caught in the crossfire of these suits. And
21 if someone in the position, the plaintiffs here, doesn't care
22 about that because they don't think there's any bullets in
23 the crossfire, then why can't they simply come to court and
24 seek declaratory relief in the manner that they're doing?
25 That's where I'd like to start. I think I'd like to hear
3
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1 from defendants about that.
2 MR. MITTELSTANDT: Thank you, Your Honor. Bob
3 Mittelstandt for the defendants. I think Your Honor has,
4 basically, analyzed the DMCAs correctly in that it provides a
5 safe harbor for ISPs if they comply with the provisions. But
6 they are free at the outset to disregard the notifications
7 that the copyright holder gives and to take their chances on
8 what's going to happen in the future.
9 The real point, though, is that the remedies in the
10 provisions provided in the DMCA given adequate legal remedy
11 for purposes of considering injunctive relief.
12 THE COURT: Let me ask you, if you don't mind --
13 you're right. If as far as ISPs concerned, once the counter
14 notices are filed, then they're off the hook. But that
15 process still takes time. There's still awkwardly a chilling
16 effect while that process is being exhausted. There is in
17 this case a party who is not a party to the case, Hurricane,
18 who according to OPG, is threatening to shut them down.
19 They can't -- OPG can't really prevent that from
20 happening without some type of declaration of rights. So
21 given everything you're saying, there is still a situation
22 where there might be a claim of reperable injury not
23 withstanding the remedies. The part that troubles me -- you
24 take your point, you have this whole statutory scheme that
25 provides a remedy for people wrongly accused of infringement.
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JORDONNA LOBESE, RPR 069305
1 But is that meant to be an exclusive remedy? Are
2 there not situations where people might suffer harm while the
3 process is underway?
4 MR. MITTELSTANDT: Your Honor, even if that were the
5 case, I think the motion should be denied for a whole host of
6 other reasons. Just to focus on that, congress had in mind
7 given the Internet and how that exchanges a procedure that
8 would balance the interest of everybody. And there is a way
9 for the DMCA to say that primarily protects IMCs. But it
10 protects copyright holders and the subscriber in that fairly
11 complicated dance they set forth.
12 What the congress was telling an ISP is you take
13 your chances. If you want to benefit from the safe harbor,
14 you have a counter notice. And then that puts the copyright
15 holder to file a copyright infringement action or not. But
16 in a way it does seem to me consistent. The congressional
17 intent for an ISP to have it in both cases on to say, "I'm
18 going to go into court right away and try to get off the
19 hook. I'm going to avoid this dilemna of taking the safe
20 harbor or not."
21 In other words the ISP has to decide, is it going to
22 take advantage of safe harbor, or does it feel strongly
23 enough that there is no infringement, and it's going to take
24 its chances.
25 THE COURT: What if they can allege -- and what if
5
JORDONNA LOBESE, RPR 069305
1 they can show that they are suffering some type of collateral
2 damage while the DMCA progresses in taking place? In other
3 words, what OPG alleges here is that simply takes advantage
4 of the safe harbor isn't an adequate remedy for us for a
5 number of reasons that they identify. And they talk about --
6 and I think I agree with them -- because the point you're
7 making is that they have to show irreparable injury.
8 Your position is that they can't because they have
9 this remedy under the DMCA. Their position is that the DMCA
10 remedy is sufficient and not meant by congress to be --
11 MR. MITTELSTANDT: But as things stand now,
12 Hurricane has not shut them down.
13 THE COURT: It's threatened to, according to them.
14 MR. MITTELSTANDT: Well, what does that mean? They
15 say, "You can do what you're doing, and we won't shut you
16 down." Even though Hurricane has a provision in this
17 contract to allow Hurricane to suspend notice, Hurricane
18 would be justified in complying with the notice. But it's
19 chosen not to. And OPG, from its standpoint, hasn't done
20 anything to breach its contract with its subscribers.
21 THE COURT: Is it really suffering from any injury?
22 MR. MITTELSTANDT: Not that I can tell. So, you
23 know, when I started thinking about this case, Your Honor, I
24 was reminded of the Justice Holmes' admonition -- if I could
25 just refer to this great case. He said, "Like hard cases
6
JORDONNA LOBESE, RPR 069305
1 make bad law." And what he had in mind or he said that
2 "great cases" were so called because of some accident and so
3 forth. It's easy to think about the big policy issues here.
4 But it seems to me that when we're here on a preliminary
5 decision, the real issue is: Have they met the test?
6 When I look at the first call of action they alleged
7 -- I think it's somewhat they pick a state law on a cause of
8 action. Their first cause of action is "interference with
9 contract." And now I'm going to get into the other issues.
10 THE COURT: Please do.
11 MR. MITTELSTANDT: I look for a contract, and the
12 two students have not alleged the existence of a contract.
13 And they have not told the Court, If I have a contract what
14 the terms are. And so there can't be a breach of a contract
15 if they haven't alleged the contract. What appears to have
16 happened is Swarthmore College has a policy against using the
17 Internet for infringement purposes. There's a provision in
18 that policy that allows a student to object once a notice is
19 received.
20 And if I may read from Swarthmore's policy, it says,
21 "If the subscriber or a member or the fair use committee that
22 the college has set up believes that a claim of fair use is
23 plausible, the individual notices the director. Within three
24 days they decide what to do," and so forth. What we can tell
25 from the public and college supervisors is that Swarthmore
7
JORDONNA LOBESE, RPR 069305
1 advised students as set forth in our opposition that fair use
2 would let them describe the contents of memos. And this was
3 implicit but not simply have a wholesale provision of these
4 materials. These materials, Your Honor, I think it's
5 important to note on the outset are not just casual E-mails
6 back and forth among employees.
7 These materials are materials related to development
8 of the election system software. They are as available as
9 any information this company or any other company generates.
10 For this reason, they have tremendous value to competitors.
11 Diebold is not the only company that makes this kind of
12 software.
13 THE COURT: Are they -- how do you make them a more
14 reliable type of information? Some of the E-mails --
15 MR. MITTELSTANDT: I'm reluctant --
16 THE COURT: I'm asking you to because,
17 categorically, you're saying they're proprietary information.
18 I'm not suggesting anything specifically but sources how-to
19 or how-not-to kind of information?
20 MR. MITTELSTANDT: Absolutely.
21 THE COURT: In those E-mails -- well, how do you
22 respond to the argument that OPG is making if you're going to
23 accuse the critics of quoting the materials out of context,
24 you need to provide the context.
25 MR. MITTELSTANDT: Well, I don't think a company
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JORDONNA LOBESE, RPR 069305
1 defending itself is saying that -- let me put it this way.
2 The context was -- Diebold has a variety of checks and
3 balances for protecting the integrity of its systems. And a
4 lot of it is manual. A lot of it depends on people. A lot
5 depends on the states and the counties. There's a whole
6 system of checks and balances. I think what Diebold was
7 referring to was the extent it made that statement which you
8 have. Look at the overall checks and balances.
9 It wasn't saying you need to look at all of these
10 risks -- development materials. So that's a bootstrap
11 argument. I don't think that it's wrong.
12 THE COURT: Is there any way short of somebody
13 whether it be the Court or the parties going through this,
14 and I have inches of materials to decide what's fair use and
15 what's proprietary -- has an effort even been undertaken?
16 MR. MITTELSTANDT: Well, we certainly have looked at
17 it. Internally, I think the reason there's another aspect of
18 this the plaintiffs advocate open source code for election
19 software. And that goes contrary to Diebold. And in a
20 closed proprietary system, once the source code and the other
21 materials, Your Honor, are in the public and out there long
22 enough that people can manipulate and understand them, that
23 then really provides what is close to commercial advantage to
24 somebody who's trying to develop another system or advocating
25 an open system.
9
JORDONNA LOBESE, RPR 069305
1 And so all of these materials are part and parcel of
2 that kind of thing. It certainly would be possible to go
3 through a four-inch stack. But now they say they want to
4 publish all the E-mails. Certainly, it would be possible to
5 go through that and weed out some stuff. That's irrelevant.
6 But what I'm talking about the basic risk and development
7 materials, that would be of value to Diebold's competitors.
8 THE COURT: What I'm looking for is is there some
9 way to distinguish the public interest material? In other
10 words, the internal criticism those kinds of things that
11 arguably really are important to the public debate about the
12 reliablity of these machines from the more techinical state?
13 Is there a line that can be drawn? Is that an impossible
14 task?
15 MR. MITTELSTANDT: I think it's a very difficult
16 task, because the way the plaintiffs describe this
17 information is really just the other side of the coin. And
18 so if you take this outside the context of election
19 machines -- and talk about Microsoft, for example -- if
20 Microsoft is internally is part of this RND identifying bugs
21 in their software, that would be of great importance to their
22 competitors. Somebody could come along and say, "This is
23 unsatisfactory Microsoft Software." To Microsoft they could
24 be saying, "This is the crown jewels."
25 THE COURT: Should they let any of the E-mails be
10
JORDONNA LOBESE, RPR 069305
1 published?
2 MR. MITTELSTANDT: Yes.
3 THE COURT: If that has the effect of stifling
4 criticism, that's obviously a matter of great public
5 interest. Is that an appropriate use of the copyright act?
6 MR. MITTELSTANDT: Yes, for this reason. You start
7 off with the provision, I think, that these materials are
8 intended to be secret and private and proprietary for, I
9 think, obvious reasons. Somebody stole these materials by
10 hacking into a computer. I don't think there's any question,
11 at the outset, that Diebold has a copyright interest in those
12 risk and development materials.
13 And the question is: Can somebody come along and
14 make use of those? And that's where we get into the fair use
15 doctrine. And if anything is clear in the fair use doctrine,
16 it's that you can't make wholesale reproductions of all the
17 materials even if your purpose is a lottery one.
18 THE COURT: That's what those scientologist cases
19 are all about.
20 MR. MITTELSTANDT: Yes.
21 THE COURT: That's essentially what they say. But
22 the importance of the case wasn't that you can't use some of
23 the secret scientology cases. You can't publish them
24 wholesale. That's why I'm pushing you on this point. Is
25 there a line that can be drawn with some specificity as to
11
JORDONNA LOBESE, RPR 069305
1 what was posted even though it was something that was
2 originally was not properly obtained that there might be a
3 fair use exception?
4 MR. MITTELSTANDT: Let's put trade secrets aside,
5 because you think these matters are trade secrets. I think
6 that would justify not publishing any of them. If we put
7 that to one side, and we only look at fair use, I think it's
8 clear. But some information can be used as part of an
9 analysis or a critique. The cases are full of examples of
10 that. I'm hesitant to, you know, draw the line for the
11 plaintiffs at this point. Their colleagues agree. And it
12 said you can describe some of the memos and talk about their
13 implications for the American democracy.
14 It seems to me if they wanted to pick out a couple
15 of E-mails -- and here's the significance of this. And there
16 could have been a debate about that. But they're up to the
17 wholesale publication of these copyright secret materials.
18 And as I say, if anything's clear, under the copyright laws
19 is that that is inappropriate.
20 THE COURT: Yeah.
21 MR. MITTELSTANDT: But it seems that we're right on
22 the fair use point. But you started on this under the first
23 cause of action. There's no contract they allege, and
24 therefore, no breach. And what it really seems to be is
25 going on here, at least with respect to students, is that
12
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1 Swarthmore College has a policy, "You should not use our
2 Internet policy to infringe." Swarthmore made the intitial
3 decision to tell the students to remove this material.
4 But in keeping with Justice Holmes' admonition,
5 there's nothing to it. Diebold's notification to Swarthmore
6 College did not refer to the -- these student's websites.
7 Swarthmore tracked down these materials based on its own
8 policy. We think they were right in doing that. We applaud
9 them for doing that. This was not the result of a
10 notification with risks to these students. So that's another
11 reason. Yeah, their first cause of action, I think, is
12 without merit.
13 The final reason perhaps is two related reasons.
14 One is there is no threat firmly laid. This is infringing
15 material. In our view, we have not threatened to sue anyone.
16 But if we have the ARISA [Phonetic] Case applying California
17 law says -- if I can read one sentence -- Production of a
18 copyright by a third party that copyright is being infringed
19 constitutes a defense to that claim. "That claim" being
20 California state law of interference with contract. So it
21 seems to that any of those four or five counts to the first
22 cause of action fails.
23 With respect to a claim of injunctive relief, under
24 that, the plaintiffs would have to show irreparable injury.
25 And when they first came to Your Honor they said there were
13
JORDONNA LOBESE, RPR 069305
1 irreparable injuries because they couldn't publish this
2 material. When Your Honor denied the TRO, they filed the
3 counter notification two or three days later. We are now
4 within that 10- to 14-day window, or congress has denied that
5 a 10- to 14-day window is a satisfactory balancing of the
6 interests. Now, one could say the First Amendment -- but in
7 the area of copy right law, the courts have made clear that
8 they defer to congress' judgment.
9 And so it seems to me on a request for injunctive
10 relief, we shouldn't be here.
11 THE COURT: Unless they have an extremely compelling
12 fair use argument, it seems to me thats where they started.
13 If they had a very compelling fair-use argument, one could
14 argue that the First Amendment would trump any of these
15 procedures because there would be some direct or collateral
16 injury from having to go through them.
17 That presumes that the fair-use argument is taken.
18 But in terms of the contents of the materials and the extent
19 of use that's involved.
20 MR. MITTELSTANDT: And if anything, that's not the
21 case here if that's a clear-cut answer. So fair use it's
22 what the ninth circut has given where it says -- 1783 case
23 Marcus against Railway [Phonetic] on Page 12 of our
24 provision. This precludes application of fair-use doctrine
25 and then Whyte applies 13 and says even if the purpose is
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1 critism, the other ways of looking at this whole thing is
2 whether an injunction would avail the First Amendment. And
3 under Norse Pendington [Phonetic], it's clear that the
4 company has not a right to file a copyright action if it
5 chooses.
6 And it hasn't filed one. It would also have a right
7 to threaten to file one, but it hasn't even threatened to
8 file one.
9 THE COURT: All it's done is invoke the DMCA.
10 MR. MITTELSTANDT: Right. But if those other steps
11 were taken the question would be: Is it protected from doing
12 that under Norton? And the aswer is, of course, unless
13 plaintiffs could show that it would be a whole frivolous
14 lawsuit.
15 THE COURT: It would have to be a sham action.
16 MR. MITTELSTANDT: At this stage of action, their
17 burden is to show they're likely to prevail for showing if we
18 threatened, if we sued, it would be a sham action. And
19 what's the harm? And the harm is we wait for a 10- to 14-day
20 window that congress was right.
21 THE COURT: Which is going to run in about a week.
22 MR. MITTELSTANDT: Yes. The other point, finally,
23 Your Honor, is I think that's enough to deny the motion. But
24 if it weren't, and the Court were concerned about the 10-day
25 period or week-day period, then the question would be: Why
15
JORDONNA LOBESE, RPR 069305
1 do we have a week left running? And the answer is: When the
2 students were told by Swarthmore, they filed the counter
3 notification if they thought they were right, they decided
4 not to do that.
5 And putting aside the issue of whether they had the
6 right or whether it was preempted and so forth, they made
7 that choice. And so to the extent there's a problem with
8 having a week left that really, truly is self-inflicted.
9 THE COURT: Okay. Thank you. I'd like to give
10 plaintiffs equal time.
11 MS. COHN: Thank you, Your Honor. I'd like to clear
12 up a couple of things. First on facts, I think Counsel would
13 have to believe that their source code or the schematics,
14 internal works -- I think that's simply not the case. This
15 is a bug tracker, sir. It's, frankly, copyright infringement
16 because it's wholesale news articles that they are
17 republishing without permission. So that's nothing. This
18 isn't a trade secret case. They haven't made trade secret
19 claims.
20 They alleged copyright claims. So there isn't any
21 even if this was a trade secret action. It's not -- I think
22 they would have a very hard time pleading their burden about
23 the value of the information in this code. A second issue
24 that seems -- that comes into play that is a bit muddled is
25 the notice and the irreparable injury -- Online Policy Group
16
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1 was the targets of a notice, a cease and desist notice under
2 12A to use up -- there's not counter notice provision under
3 5-12A.
4 THE COURT: Hurricane targets notice, and there's
5 nothing that OPG can do with respect to the notice to
6 Hurricane.
7 MS. COHN: That's right. For the purposes of
8 argument, this helps the Swarthmore students and doesn't help
9 OPG. It's under a threat from them. The cease and desist
10 notice to be received from Diebold would render a copyright
11 action..
12 THE COURT: What's the status of that threat at this
13 point?
14 MS. COHN: It's still out there. There is a
15 declaration Hurricane. We're not going to hold the OPG
16 responsible for linking should an OPG client hold the whole
17 archive, we should end. We have a cease and desist notice.
18 With that we would have to consider cutting off OPG. What we
19 find with the cease and desist notices is a good example.
20 As Counsel points out the notice was about somebody
21 else posting this information in response. ISP said, "We're
22 going to get that off of our system."
23 THE COURT: But that really gets to the policy
24 behind the copyright act -- doesn't it -- whether it's good
25 policy or bad policy. It's a legislative act rather than an
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1 official judgment.
2 MS. COHN: But what if it has fair issues? Then I
3 think it's important to note the bad effects of this. If
4 this was a cease and desist notice, there was, clearly,
5 copyright infringement. Then I think it's hard to get a
6 little upset about that.
7 THE COURT: Let me say this back to you, Counsel. I
8 think we're seeing this from the same framework. But maybe
9 disagreeing as to the facts. But you're not saying that the
10 framework of the digital copyright is a problem. In other
11 words, if there's a standard commercial dispute about
12 copyright infringement, that's something wrong. Congress
13 tried to provide some reason and order in that process and
14 provide a safe harbor for the providers.
15 But what you're saying is if there is a case with
16 the copyright infringement claim, it's because the use
17 involved is clearly fair use or it's not infringement for
18 some other reason. And as a result of that, there is damage
19 to the rights of individuals as there is alleged here or to
20 the site hosting. In other words, you can go to -- and under
21 those circumstances having to go through the procedures of
22 digital copyright act does not adequately protect the
23 interests of the people claiming. Is that a fair statement?
24 MS. COHN: Yes. I think that's very fair. It's
25 important to remember again the procedures under the digital
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JORDONNA LOBESE, RPR 069305
1 copyright apply to two or three of our clients. They don't
2 apply to OPG. Yes. I think you're right in your statement.
3 The problem is I don't think that it's the case that congress
4 simply by regardless or whether you're right, regardless of
5 whether you pass even the single test with your claim, you
6 get censorship, 14-day censorship.
7 In fact, you get censorship 14 days from when the
8 notice is received not from when you send out your notice, I
9 think.
10 THE COURT: Saying that the alleged infringer can
11 take their chances by not filing the counter notice
12 consistent with that in taking their chances with respect to
13 getting sued, they also have the right to seek remedies of
14 their own such as declaratory relief saying they're not
15 infringing anything.
16 MS. COHN: Exactly. It's very clear that congress
17 weren't going to change the copyright balance here. They
18 were intending to give the ISP an extra bit of protection so
19 that ISP can get the way out of the middle. There was
20 nothing about the copyright balance. This is where the First
21 Amendment resides in copyright laws.
22 THE COURT: You're certainly -- if I boil this down
23 in simpler terms -- you're seeking not only an injunctive,
24 but you're seeking declaratory relief?
25 MS. COHN: That's right, Your Honor.
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1 THE COURT: Does that have to do with the entire
2 body of material?
3 MS. COHN: It does, Your Honor. We have the box
4 with us.
5 THE COURT: I've seen part of it. It's a big box.
6 And I agree with you that because it happened in this
7 courthouse, that the scientology case has some relevance to
8 what happened later. But how do you apply the various
9 exemption to this entire body of material given that it's
10 supposed to be --
11 MS. COHN: It's clear in the scientology case the
12 Court said that simply per se a copyright violation you have
13 to go through the four factors. I think once you go through
14 the four and step back a bit -- what Diebold is trying to
15 claim with copyright here, you'll see, one is the amount used
16 favor the plaintiffs here. First, it's the nature of the use
17 here. It's obviously criticism.
18 It's clearly a use that is non-commercial, and it's
19 critical of Diebold in the future of these systems. If you
20 look at these ninth circuit cases, you're looking at the
21 purpose of use that was upheld by the ninth circuit. It's
22 clearly transferative. It's a very thin copy or rights at
23 best here. There's a bug. What are we going to do about the
24 bug? We've got this. We've got to be -- they want us to do
25 a system -- those are factual statements.
20
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1 THE COURT: Sure.
2 MS. COHN: Expressive purpose, but for the factual
3 purpose --
4 THE COURT: What is that material in there that
5 tells us you engineer a better one?
6 MS. COHN: Well, Your Honor, I think it's still fair
7 use to publish them. If I wanted to break a trade secret
8 claim and bring the questions about whether there is,
9 clearly, trade secret protection here, they could have. They
10 chose another -- I think their struck with the road they
11 chose. I think it's possible we'll be back in another month.
12 I hope not, but that's not the road they chose.
13 We picked the DMC because it's faster. Well,
14 they're stuck with that here. If I want to make a trade
15 secret claim, we can come back to you and talk about the
16 difficulties of trade secret claims. But that's in front of
17 the Court today.
18 THE COURT: Let's talk about the standard on an
19 injunction. You're seeking a fair use exemption from that
20 big box.
21 MS. COHN: Yes, Your Honor.
22 THE COURT: And I think it's pretty much
23 indisputable that within that there are things that are
24 fairly standard various kinds of stuff -- First Amendment
25 criticism. And there also may be things like source code and
21
JORDONNA LOBESE, RPR 069305
1 technical information that goes to the design and manufacture
2 and efficiency of the voting machines. You're seeking a
3 preliminary injunction when they haven't filed suit. When
4 the DMCA process is still going, and the Court has to balance
5 the equities. Why should the Court take extraordinary steps
6 of saying all of that stuff is fair game when we're still
7 pretty early in the day, and we haven't exhausted the DMC's
8 procedure?
9 MS. COHN: Well, because they don't apply to the
10 OPG, they're having to censor its customers until such time
11 you render the decision. We told them, "Look. We're going
12 to go to court and have them clarify this to Hurricane.
13 THE COURT: Is there a way to protect OPG and
14 Hurricane short of turning loose this document box?
15 MS. COHN: I don't see one that would put OPG whose
16 the host of -- they provide Internet service. Stuff doesn't
17 reside on OPG computers. They provide Internet access to
18 someone who merely infringed on the material. To put them in
19 this position of having to review that banker's box and
20 decide which of it they think is fair use, I think is fair.
21 THE COURT: Well they haven't -- I was asking
22 counsel about that, and he said he couldn't do it. But I'm
23 asking you a narrower question and, particularly, an issue in
24 preliminary injunction. Is there a way of protecting OPG?
25 Because it seems to me the students they've exercised their
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1 rights under the DMCA. And that may be severe protection for
2 them. Is there a way of protecting OPG and by exempting
3 Hurricane with out deciding the entire case on the question
4 of fair use? Is there a more limited type of injunction that
5 the Court can issue?
6 MS. COHN: I think there is. The OPG is the ISP of a
7 linker. If this Court were to hold that ISP that the ISP of
8 a linker has copyright liability under contract, it would be
9 the first Court to do so. I think the reason you haven't
10 seen decisions like that is that it's very far removed from
11 infringement. A link is not a copyright infringement. It's
12 important to information -- there's only one case that's ever
13 held that a link could be copyright -- it's a very -- in the
14 Utah Lighthouse case four years ago, I think perhaps the
15 Court didn't understand what links were.
16 The ISP was not a target. I think that this Court
17 could hold that, regardless of the fair use question, OPG is
18 not a proper target because tertiary liability doesn't exist
19 under copyright law and that Hurricane is not a proper
20 recipient of cease of desist notice. No. I haven't seen
21 tertiary liability. The only one is the Judge Patel decision
22 in Napster. That says it doesn't exist.
23 THE COURT: How would you craft an order that says
24 whatever the merits of the fair use argument are -- and that,
25 frankly, strikes me as something more fact extensive than the
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1 Court can deal with at this stage with this answer with this
2 very time frame that we're dealing with. Regardless of that,
3 OPG and Hurricane are not subject to liability for simply
4 putting links on this website. It doesn't mean that the
5 people who posted the materials are continuing to post
6 materials or are not liable for anything. Is that a
7 provisional remedy that would satisfy at least some of the
8 interests that plaintiffs have here?
9 MS. COHN: I think it's terribly a small part. If I
10 could get back to that -- the fair-use doctrine is very
11 strong. I think that the only factor they have going for
12 them is a particular argument that some of the information is
13 not protected. I think that it certainly could -- the OPG --
14 out of the position of having to please the user. They've
15 had to tell two people to take down -- take it down. So OPG
16 is going to have to be the policemen here.
17 And the only thing they don't have to police under
18 your order, would be the very small category of people who
19 link. But if Diebold is successful in carrying all of them
20 the linking right is not very useful.
21 THE COURT: But the fair-use question -- and this is
22 what I'm having a hard time with. I get the big picture. A
23 big point is these are voting machines. We can't get much
24 more public interest than that. Some of the archive
25 materials is criticism of the integrity of the voting
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1 machines. You can't get much more public interest than that.
2 But you've got a box full of E-mails.
3 MS. COHN: 13,000.
4 THE COURT: And not all of those E-mails are that
5 kind of criticism. Some of them are more technical and how
6 to/how not to kind of material, and the Court has said on
7 accelerated breifing. Because we're talking about amendment
8 issues, if the Court were to grant the injunction that you're
9 seeking that essentially decides the case, the material is
10 out in the public domain. It's out there for good. You
11 can't bring it back.
12 MS. COHN: I have a couple of points on that, you
13 know. First, I think that the materials are already out
14 there in terms of there are people who were publishing it. I
15 think there are far fewer. I think that the horse is out of
16 the barn in terms of the information in here. I think that
17 the defendants have really created a situation where
18 supplication of it is necessary.
19 They have publically let the cat out of the bag and
20 said, "You have to look at the whole thing in context." It
21 was clear that what the spokesman from Diebold said to the
22 press is they're taking a couple messages in context. You
23 have to look at the whole message theat to know the context.
24 These are admissions.
25 There's nothing more powerful than Diebold's own
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1 words about this. I don't think there is any other way to do
2 that then to provide the entire admissions even though some
3 peices of it, some small peices of it, might not be relevant.
4 I think to -- remember, this is a campaign that's going on.
5 This is a very public and very -- the public is interested in
6 this debate. This isn't a situations where, you know,
7 there's some background dealings going on or whatever. The
8 public is extremely -- it's extremely timely right now
9 because of two deadlines that have been set right now.
10 We have to replace all of our pink-card voting
11 machines by March 2003 elections. There are decisions being
12 made now about manufacturing and under the federal law to
13 help the America Voting Act. There's federal funding, which
14 I think is critical here for people, local elections, and
15 jurisdictions who rely on these voting machines by November
16 2004 elections.
17 So and do a long, drawn-out fair-use case, which I
18 think -- which I know Midstaff [Phonetic]. I've been in
19 discovery with him for a while. It will be a very long time.
20 This information will lose its relevance. This is "hot"
21 news. I think it deserves the protections.
22 THE COURT: Okay. Let me ask you one last question.
23 If you're not questioning for an injunction against Diebold
24 for filing a suit, but you're asking for the next best thing
25 which would be a declaratory judgment, there isn't any
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1 copyright infringement. And they haven't sued yet. And I
2 think there's nothing in the record saying that they
3 threatened to sue. They sent the "Cease and Desist" letters.
4 What about the argument that an injunction would be over
5 reaching in the court authority in terms of the other cases/
6 MS. COHN: The Norpendington [Phonetic] has gone
7 beyond antitrust. Now, it's clear in the case, you don't get
8 to send out phony threats under the right to possession and
9 that threatening letters aren't protected anyway. If they
10 had filed suit, we would be talking about Rule 11. I can't
11 talk about Rule 11 yet. I think that section debates the
12 letters. Just because you have the right to send the letter,
13 doesn't mean you have the right to abuse that process.
14 You have the right to issue supeonas, but you can be
15 --
16 THE COURT: But if somebody had said -- and I think
17 this much I can say with some confidence -- if the only stuff
18 that had been posted had been these E-mails, this doesn't
19 work that kind of thing. And it was just that a threat of
20 copyright infringement for that doesn't pass the goggle test
21 and even under the other cases it doesn't.
22 But can you say that if what they're objecting to is
23 the release of their entire archives --
24 MS. COHN: I think you can. But there is no effect
25 on the market for the work here. There is not market for
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1 Diebold's internal E-mails. They hint that they publish
2 them. When you're talking about critical works, the idea
3 where there's a market where they would license them, these
4 are debates to Diebold. I think that's why we're here.
5 THE COURT: You're saying that the Court shouldn't
6 apply a trade secret to a fair-use case?
7 MS. COHN: Exactly, Your Honor. There is not market
8 for those E-mails. They're not going to be sold. They
9 weren't created for the purpose of being sold. There isn't
10 going to be the next -- the archive box we went -- again,
11 this E-mail archive does not look pretty for Diebold.
12 They're not going to be making market use. Again, they're
13 trying to impart a trade secret or a breach of confidential
14 analysis into a copyright claim, and it doesn't fit this --
15 doesn't work.
16 They wanted a trade-secret claim. They could have
17 bought one. We could talk about the problems in the trade
18 secret case. When you look at four factors together, the
19 purpose is non-commercial in its criticism.
20 THE COURT: If they think trade secrets are being
21 jeopardized, they haven't sought the right remedy.
22 MS. COHN: Right. We'd be here on those and perhaps
23 under Rule 11 if they tried that, but that's not what they
24 said. I think it's -- they've been very plain, I think, in
25 talking to the press about why did you pick copyright,
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1 because the DMC gave them an easy way to censor it off the
2 Internet. It would have been harder if they had to use
3 traditional remedies under trade secret law. They made that
4 decision. But then they're stuck with that copy right law.
5 THE COURT: A fair-use finding would not preclude a
6 trade secret claim from being asserted.
7 MS. COHN: I don't think so. There are some
8 overlapping, independent, economic interests and, of course,
9 the public interest. In the Bunner[Phonetic] Case, in the
10 California Supreme Court, the public interest matters very
11 much in a trade secret case. But they're not exactly the
12 same copyright law.
13 THE COURT: But it would necessary preclude -- it's
14 a different analysis.
15 MS. COHN: No, Your Honor. I think it's absolutely
16 a different analysis. I think while we're confident we would
17 given under different grounds --
18 THE COURT: All right. I want to counsel two
19 minutes to reply.
20 MR. MITTELSTANDT: Thank you, Your Honor. The fact
21 that material is produced by copyright, doesn't mean that
22 it's not also produced by trade secret and vice versa. I
23 have in court with me the Director of Security and Global
24 Intelligence for Diebold, who if there's any question about
25 the propietary nature of this material, and that it contains
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1 what I refer to and what -- he's here to answer any
2 questions.
3 THE COURT: Let's assume that is does. You have
4 remedies for misappropriation of trade secrets. Why are they
5 not in play here?
6 MR. MITTELSTANDT: I think the plaintiffs are right
7 initially that the DMCA provides the rapid response, the
8 rapid remedies that congress had in mind. And they never --
9 you can't use the DMCA if it's also protected by trade
10 secrets. I think the -- in the way the plaintiffs are
11 looking at this case, is that the Supreme Court made clear in
12 the Harper and Roe Case, that there's no public interest in
13 the copyright laws.
14 The fact that there's public interest in Diebold's
15 risk and development means -- and not protected by copyright
16 and doesn't mean that somebody can republish it on this idea.
17 There's no market for this stuff. Your Honor, that is
18 absolutely without merit. Competitors would pay a lot to get
19 hands on this material. And part of the copyright protection
20 as stated in Harper and Roe is that the person providing the
21 materials, the authors have the right whether or not it
22 should be made public.
23 So just because somebody decides I don't want to
24 make this public, doesn't mean that somebody else can come
25 along and get the fruits of the stolen material and then
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1 publish it and then say well they were never going to make it
2 public anyway. How can they claim copyright permission? I'd
3 like to focus on the declaration of Mr. Ing, I-n-g. He says
4 at Paragraph 14 that he received a notice from Diebold.
5 Paragraph 15, "If I received additional notice from Diebold,
6 If I would forward them to OPG." And we might then need to
7 discuss further whether Hurricane felt compelled to terminate
8 the contract or not.
9 Steps were -- the First Amendment, Your Honor,
10 doesn't cut both ways. The law is clear that if copyright
11 material is not subject to First Amendment. In other words,
12 somebody doesn't have a First Amendment right to infringe
13 contracts. On the other side though, the second sentence of
14 the First Amendment does protect Diebold's right to
15 protection from greivance. The Cartoon Case simply says if
16 it's a private letter not required but is statutory or not
17 part of the statutory scheme, then it may not be encaged.
18 But the case we cite, Page 17, made clear that
19 Norpendington does permit the sending of notifications where
20 it's reasonable and normally attendant upon protected
21 litigation. The real point though, as I said before, Your
22 Honor, is we haven't sued anybody. We haven't threatened to
23 sue anybody. We simply did what congress said we could do in
24 sending out the notification. Finally, on fair use, it can't
25 be that publishing in the entirety stolen -- proprietary
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1 information can be considered fair use.
2 Otherwise, copyright laws would be out the window.
3 When Diebold people come up with fixes to bugs, that's
4 creative. When the plaintiffs take a box of this stuff and
5 make photocopies and hand it out in front of court -- that's
6 not creative. That's simply providing to our competitors and
7 to the public stolen materials that's protected by copyright.
8 THE COURT: Thank you all very much.
9 MS. COHN: Your Honor, one minute. I just wanted to
10 point out that Harper and Roe the issue, and finally, I want
11 to point out the First Amendment.
12 THE COURT: All right. Thank you. What I was going
13 to say is that I think there are some very important issues
14 here. And because there are some very important issues here
15 and not withstanding, it's going to take me a while to both
16 digest everything that's been said and and written and issue
17 a decision that will articulate by reason in a way that
18 others cannot. So I wouldn't expect anything in the next few
19 days. I'll move quickly to get a decision made quickly on
20 the pending application. So the matter is submitted. Thank
21 you very much.
22
23 ---oOo---
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1
2 CERTIFICATE OF REPORTER
3
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5 I, Jordonna LoBese, registered professional reporter of
6 the United States District Court for the Northern District of
7 California, 280 South First Street, San Jose, California, do
8 hereby certify:
9 That the foregoing transcript is a full, true and
10 correct transcript of the proceedings had in Online Policy
11 Group vs. Diebold Inc., Case Number CV-03-4913-JF, dated
12 November 17, 2003; that I reported the same in stenotype to
13 the best of my ability, and thereafter had the same
14 transcribed by computer-aided transcription as herein
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