California court reversal leaves DVD-cracking code case in legal limbo

Internet disclosures of trade secrets aren’t necessarily protected by the U.S. Constitution’s guarantee of free-speech, the California Supreme Court has ruled in a case followed closely by electronic media companies.

Last week’s decision reversed a California appeals court that had ruled disseminating trade secrets is protected by First Amendment rights. The specific case involved the publishing over the Internet of software to break the encryption code used to prohibit copying of video DVDs.

The California Supreme Court’s ruling was a narrow one, and not a complete victory for Hollywood’s content owners. Legal experts said it sets the stage for further legal scrutiny of the balance between the rights of free speech and intellectual property ownership of digital media.

Last week’s ruling dealt only with trade secrets in general and did not address the specific question of whether the posted DVD code is still a trade secret. For that decision, the case will go back to a lower court.

San Francisco computer programmer Andrew Bunner posted the DVD code to circumvent DVD encryption technology in 1999 and, according to the motion picture industry, helped users freely replicate copyrighted movies.

The DVD Copy Control Association, an arm of the Hollywood motion picture studios, argued that it controls the DVD encryption system, which scrambles data to prevent unauthorized copying. The association sued Bunner and others under California’s Uniform Trade Secrets Act.

Bunner did not devise the encryption-cracking code, but posted it on one of his Web sites. The Norwegian teen who cracked the code, Jon Johansen, was acquitted in Norway in January of charges he stole trade secrets.

The California case is not fully resolved. The Supreme Court ordered the San Jose appeals court to analyze whether the code is still a protected trade secret given its widespread exposure.

Bunner, 26, said he has removed any reference to the code from the Internet and is fighting the case to stand up for free speech rights. He said he posted the code to let others play DVDs on their computers.

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