RELIGIOUS TECHNOLOGY CENTER, Plaintiff,
v.
Arnaldo Pagliarina LERMA, Digital Gateway Systems, The Washington Post, Marc
Fisher, and Richard Leiby, Defendants.
Civ. A. No. 95-1107-A.
United States District Court,
E.D. Virginia,
Alexandria Division.
Nov. 28, 1995.
Religious organization brought action against newspaper and reporters,
alleging copyright infringement arising from newspaper article which included
statements from religious works. On defendants' motion for summary judgment,
the District Court, Brinkema, J., held that: (1) fair use defense was not
barred by doctrine of unclean hands; (2) publication of article was "fair
use"; (3) newspaper was entitled to attorney's fees; and (4) newspaper did
not misappropriate organization's trade secrets.
Granted.
[1] FEDERAL CIVIL PROCEDURE
In ruling on motion for summary judgment, court must construe facts and all
inferences drawn from those facts in favor of nonmoving party. Fed.Rules
Civ.Proc.Rule 56(c), 28 U.S.C.A.
[2] COPYRIGHTS AND INTELLECTUAL PROPERTY
Fair use of copyrighted work is mixed question of law and fact. 17
U.S.C.A. s 107.
[3] EQUITY
Newspaper's claim that its use of religious organization's works in article
constituted fair use was not barred by doctrine of unclean hands, despite
organization's claim that newspaper officer failed to disclose that more than
one copy of works were made; newspaper's acts of copying did not constitute
unethical behavior, and officer did not mislead court or counsel by referring
to "one copy" in her affidavit. 17 U.S.C.A. s 107.
[4] COPYRIGHTS AND INTELLECTUAL PROPERTY
Statutory fair use factors may not be treated in isolation, one from another;
rather, all are to be explored and results weighed together, in light of
purposes of copyright. 17 U.S.C.A. s 107.
[5] COPYRIGHTS AND INTELLECTUAL PROPERTY
Newspaper's publication of article containing parts of works owned by religious
organization constituted "fair use," works were copied for purposes
of news gathering, news reporting, and responding to litigation, works, which
were characterized by organization as training materials, were informational
rather than creative, quoted material was used for illustrative purposes, and
newspaper did not economically exploit works. 17 U.S.C.A. s 107.
See publication Words and Phrases for other judicial constructions and
definitions.
[6] COPYRIGHTS AND INTELLECTUAL PROPERTY
Under fair use factor which evaluates nature of copyrighted work, scope of fair
use doctrine is greater with respect to factual works than creative or literary
works. 17 U.S.C.A. s 107.
[7] COPYRIGHTS AND INTELLECTUAL PROPERTY
Fact that newspaper chose to use particular quotes from religious works in
article about religious organization which owned works did not compel finding
that quoted material was significant for purpose of evaluating newspaper's fair
use defense; such conclusion would essentially destroy fair use doctrine.
17 U.S.C.A. s 107.
[8] COPYRIGHTS AND INTELLECTUAL PROPERTY
Mere existence of copyrighted work in open court file does not destroy owner's
property interests in that work, but copyright protection is still subject to
fair use exception. 17 U.S.C.A. s 107.
[9] COPYRIGHTS AND INTELLECTUAL PROPERTY
Whether to award attorney's fees to prevailing party in copyright infringement
action is matter left to court's discretion; in deciding appropriateness of
fee award, court should consider motivation of plaintiff in bringing action and
extent to which plaintiff's position is reasonable and well-grounded in fact
and law.
[10] COPYRIGHTS AND INTELLECTUAL PROPERTY
Newspaper which published article containing parts of works owned by religious
organization was entitled to attorney's fees as prevailing party in
organization's copyright infringement action, in light of organization's motive
in bringing action of stifling criticism and dissent of its practices and
absence of reasonable basis for bringing suit due to de minimis nature of
copying.
[11] TORTS
To prove misappropriation of trade secret, plaintiff must show that it
possessed valid trade secret, that defendant acquired trade secret, and that
defendant knew or should have known that trade secret was acquired by improper
means.
[12] TORTS
Religious works owned by religious organization were not "trade secrets," as
works were available in public court file for 28-month period, notwithstanding
organization members' attempts to control access to file by signing out file
and keeping it in their custody, and works were posted on Internet.
See publication Words and Phrases for other judicial constructions and
definitions.
[13] TORTS
Once trade secret is posted on Internet, it is effectively part of public
domain, impossible to retrieve; although person who originally posted trade
secret on Internet may be liable for trade secret misappropriation, party who
merely down loads Internet information cannot be liable for misappropriation
because there is no misconduct involved in interacting with Internet.
[14] TORTS
Under Virginia law, tort of misappropriation of trade secrets is not committed
by person who uses or publishes trade secret unless that person has used
unlawful means, or breached some duty created by contract or implied by law
resulting from some employment or similar relationship.
[15] TORTS
Under Virginia law, even if religious organization's works were trade secrets,
newspaper did not misappropriate trade secrets by publishing article about
organization which contained material from works; despite organization's
allegations that works were stolen and were trade secrets and
unpublished copyrighted works, newspaper was entitled to investigate further
and did not act illegally or unethically in copying works from public court
file or downloading works from Internet.
*1364 Bruce B. McHale, Local Counsel, Alexandria, VA, for Religious
Technology Center.
Jay Ward Brown, Washington, DC, for Arnaldo P. Lerma.
Michael A. Grow, Washington, DC, for Digital Gateway Systems.
Christopher Wolf and Charles S. Sims, Proskawuer, Rose Goetz & Mendelson LLP,
Washington, DC, John P. Corrado, Local Counsel, Alexandria, VA, for The
Washington Post, Marc Fisher, and Richard Leiby.
MEMORANDUM OPINION
BRINKEMA, District Judge.
[1] Before the Court is the Motion for Summary Judgment filed by
defendants, The Washington Post, and two of its reporters, Marc Fisher and
Richard Leiby (hereinafter referred to collectively as "The Post"). A court
may grant summary judgment "only when there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law."
Miller v. Leathers, 913 F.2d 1085, 1087 (4th Cir.1990) (citing
Fed.R.Civ.P. 56(c)). In ruling on such motions, the court must construe the
facts and all inferences drawn from those facts in favor of the non-moving
party. Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th Cir.1979).
Having performed this analysis, the Court finds that summary judgment should be
entered in favor of the defendants.
1. UNDISPUTED FACTS
The essential facts are not in dispute. In 1991, the Church of Scientology
sued Steven Fishman, a disgruntled former member of the Church of Scientology,
in the United States District Court for the Central District of California.
Church of Scientology Int'l v. Fishman, No. CV 91-6426. On April 14, 1993,
Fishman filed in the open court file what has come to be known as the Fishman
affidavit, to which were attached 69 pages of what the Religious Technology
Center ("RTC") describes as various Advanced Technology works, specifically
levels OT-I through OT-VII documents. Plaintiff claims that these documents
are protected from both unauthorized use and unauthorized disclosure under the
copyright laws of the United States and under trade secret laws, respectively.
In California, the RTC moved to seal the Fishman affidavit, arguing that the
attached AT documents were trade secrets. That motion was denied and the Ninth
Circuit upheld the district court's decision not to seal the file. Church
of Scientology Int'l v. Fishman, 35 F.3d 570 (9th Cir.1994). The case was
remanded for further proceedings and the district court again declined to seal
the file, which remained unsealed until August 15, 1995.
Defendant Arnaldo Lerma, another former Scientologist, obtained a copy of the
Fishman affidavit and the attached AT documents. Lerma admits that on July 31
and August 1, 1995, he published the AT documents on the Internet through
defendant Digital Gateway Systems ("DGS"), an Internet access provider. RTC,
which regularly scans the Internet, discovered the publication of documents and
on August 11, 1995, warned Lerma to return the AT documents and not publish
them any further. After Lerma refused to cooperate, RTC obtained a Temporary
Restraining Order prohibiting Lerma from any further publication of the
documents and a seizure warrant which authorized the United States Marshal to
seize Lerma's personal computer, floppy disks and any copies of the copyrighted
works of L. Ron Hubbard, the author of the AT documents.
During the same time period, on or about August 5 or 6, 1995, Lerma sent a
hard copy of the Fishman affidavit and AT attachments to Richard Leiby, an
investigative reporter for The Washington Post. On August 12, 1995, counsel
for RTC discovered this disclosure and approached The Post, which was told that
the Fishman affidavit might be stolen. In response to the RTC's
representations, The Post returned the actual copy which Lerma had given it.
However, The Post had by then learned that a copy of the *1365 same Fishman
affidavit was available in the open court file in the United States District
Court for the Central District of California. On August 14, 1995, The Post
sent Kathryn Wexler, a news aide stationed in California, to that court to
obtain a copy of the Fishman affidavit. The Clerk's office made a copy for
Wexler, who then mailed it to Washington. Although it is undisputed that RTC
staff members had been checking that file out and holding it all day to prevent
anyone from seeing it, the file was not sealed and obviously was available,
upon request, to any member of the public who wished to see it.
The day after The Post obtained its copy of the Fishman affidavit, the
RTC applied for a sealing order and the trial judge ordered the file sealed.
However, there is no evidence in the record that the judge ordered The Post to
return the copy made by the Clerk's office or that any kind of a restraining
order was issued by that court against The Post.
Five days later, on August 19, 1995, The Post published a news article,
entitled "Church in Cyberspace: Its Sacred Writ is on the Net. Its Lawyers
are on the Case," written by defendant Marc Fisher. In that article, RTC's
lawsuit against Lerma and the seizure of his computer equipment were discussed,
as was the history of Scientology litigation against its critics and the
growing use of the Internet by Scientology dissidents. The article included
three brief quotes (totalling 46 words) from three of the AT documents. On
August 22, 1995, the RTC filed its First Amended Verified Complaint for
Injunctive Relief and Damages in which it added The Washington Post and its two
reporters, Fisher and Leiby, as additional defendants. A Second Amended
Verified was later filed and is now the subject of this summary judgment
motion.
II. THE COPYRIGHT CLAIM
Although the Court has serious reservations about whether the AT documents at
issue in this litigation are properly copyrighted, for the purposes of this
motion, the Court assumes that the RTC holds properly registered, valid
copyrights for the AT documents attached to the Fishman affidavit.
[2] The Post does not deny that it copied the AT documents and quoted from
them. It argues, however, that this copying and these quotations fall squarely
within the "fair use" exception. Thus, the dispositive issue as to the
copyright claim is whether or not The Post's use of the AT documents falls
within the fair use exception to the copyright law. Under that exception, "the
fair use of a copyright ... for purposes such as criticism, comment, news
reporting ... or research, is not an infringement of copyright." 17
U.S.C.A. s 107 (West Supp.1995) (emphasis added). As the Supreme Court has
held "fair use is a mixed question of law and fact." Harper & Row
Publishers Inc. v. Nation Enters, 471 U.S. 539, 560, 105 S.Ct. 2218, 2230, 85
L.Ed.2d 588 (1985). In the instant case, the Court finds no material facts in
dispute; therefore, the issue can be resolved as a matter of law.
[3] At the outset of its opposition, the RTC argues that because the fair
use doctrine is an equitable one, The Post should not be allowed to rely on
this defense because of unclean hands. Specifically, the RTC points to The
Post's failure to disclose that it had made several copies of the Fishman
affidavit. In an affidavit signed on September 26, 1995, Mary Ann Werner, a
Post Vice President and counsel, averred that "only one copy of that [Fishman]
declaration has been made." In fact, through discovery RTC has learned, and
The Post does not dispute, that other copies were made. Wexler admits that she
made an additional copy of the materials received from the Clerk's office. She
sent that copy to Washington as well to ensure that Washington got a copy. A
second copy was created, not by copying the Fishman affidavit which had been
obtained in California, but by down loading a copy off the Internet. The Post
argues persuasively here that the presence of the AT documents on the Internet
was part of their very news worthiness and that making this copy was an act of
legitimate news gathering.
A third copy of the AT documents was generated after Lerma sent a
duplicate of the Fishman affidavit to Leiby via e-mail. That e-mail was copied
to a disk in response to a demand by RTC's counsel on August 12, *1366 1995,
that The Post secure any materials it had been sent by Lerma. (Second Werner
Decl. ss 4-5).
None of these acts of copying strike this Court as constituting unethical
behavior and the Court is satisfied from her second declaration that Ms. Werner
did not mislead the Court or counsel in referring to one copy. In any case,
the Court agrees with The Post that the issue of unclean hands is a weak
attempt by RTC to avoid the real issue of fair use.
[4] In determining whether the use of a copyrighted work is fair use and
therefore not an infringement, the Court must consider four factors:
1. the purpose and character of the use, including whether such use is of a
commercial nature or is for nonprofit educational purposes;
2. the nature of the copyrighted work;
3. the amount and substantiality of the portion used in relation to the
copyrighted work as a whole;
4. the effect of the use upon the potential market for or value of the
copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair
use if such finding is made upon consideration of all the above factors.
17 U.S.C.A. s 107 (West Supp.1995). These four statutory factors may not
"be treated in isolation, one from another. All are to be explored, and the
results weighed together, in light of the purposes of copyright." Campbell
v. Acuff-Rose Music Inc., 510 U.S. 569, ---- - ----, 114 S.Ct. 1164, 1170-71,
127 L.Ed.2d 500 (1994). The interplay of the four factors is recognized
elsewhere as well. See, e.g., Sony Corp. of America v. Universal Studios,
Inc., 464 U.S. 417, 449-50, 104 S.Ct. 774, 792-93, 78 L.Ed.2d 574
(1984) (reproduction of entire work "does not have its ordinary effect of
militating against a finding of fair use" as to home videotaping of television
programs); Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S.
539, 564, 105 S.Ct. 2218, 2232, 85 L.Ed.2d 588 (1985) ("[E]ven substantial
quotations might qualify as fair use in a review of a published work or a news
account of a speech" but not in a scoop of a soon-to-be-published memoir).
Thus, we may not evaluate any single fair use factor in isolation.
[5] As to the first factor, the purpose and character of the use, there is
no evidence in this record that The Post copied the AT documents for any
purposes other than news gathering, news reporting and responding to
litigation. Although the RTC has argued that The Post harbors some animus
towards Scientology, an unbiased observer would conclude that the Church of
Scientology and its treatment of critics is a newsworthy subject about which
The Post is permitted to investigate and report. There is no evidence that The
Post was trying to "scoop" the RTC in quoting the AT documents or trying to
avoid payment of a royalty, conduct to which other courts have looked in
finding that a media organization violated copyright. Harper & Row
Publishers, Inc., v. Nation Enterprises, 471 U.S. 539, 105 S.Ct. 2218, 85
L.Ed.2d 588 (1985); Iowa State University Foundation, Inc., v. American
Broadcasting Co., Inc., 463 F.Supp. 902 (S.D.N.Y.1978).
[6] Under the second factor, the scope of the fair use doctrine is
greater with respect to factual works than creative or literary works.
Hubbard's works are difficult to classify and courts dealing with this issue
have differed in their conclusion. As the Second Circuit stated in New Era
Publications Int'l v. Carol Publishing Group, 904 F.2d 152, 158 (2d Cir.),
cert. denied, 498 U.S. 921, 111 S.Ct. 297, 112 L.Ed.2d 251 (1990),
"reasonable people can disagree over how to classify Hubbard's works."
However, that court also concluded that the works "deal with Hubbard's life,
his views on religion, human relations, the Church, etc.--[and] are more
properly viewed as factual or informational." Id. at 157. The United
States District Court for the Southern District of California is of another
view, however. In Bridge Publications, Inc. v. Vien, 827 F.Supp. 629, 636
(S.D.Cal.1993), the court stated that "[t]he undisputed evidence shows that L.
Ron Hubbard's works are the product of his creative thought process, and not
merely informational."
*1367 However, in this litigation the RTC has characterized the AT
documents essentially as training materials. Therefore, this Court concludes
that despite their obtuse language the AT documents are intended to be
informational rather than creative and, therefore, that a broader fair use
approach is appropriate.
To evaluate the third factor, which essentially requires making a qualitative
as well as quantitative analysis of the use made of the work, the three quotes
need to be read in the context of the article. The first and longest quote is
obviously included merely as an example of the obtuse language used in the AT
documents. No fair-minded reader could possibly construe this quote otherwise.
Most of the 103 pages of disputed texts from the Fishman file are
instructions for leaders of the OT training sessions. They are written in the
dense jargon of the church. 'If you do OT IV and he's still in his head, all
is not lost, you have other actions you can take. Clusters, Prep-Checks,
failed to exercise directions.'
The second quote describes how in "one high-level OT session trainees are
asked to pick an object 'wrap an energy beam around it ' and pull themselves
toward the object." The last quote occurs in the very next sentence which
describes how trainees are to "be in the following places--the room, the sky,
the moon, the sun." These underlined words comprise the total of the
copyrighted materials quoted.
[7] The RTC argues that where quotes, although fragmentary, are of
"significant material," even de minimis copying infringes. It then bootstraps
this argument by claiming that because Fisher chose to include these three
quotes in his article, the quoted language must necessarily be significant.
Under this reasoning, no one, let alone a newspaper, could ever quote from
copyrighted materials without fear of being hauled into court for infringement
because any quote would be deemed significant. To accept this argument would
essentially destroy the fair use doctrine. It also clearly is unsupported by
the facts because as discussed above, the three quotes, read in context of the
entire article, are offered solely as illustrations of the author's claims
about Scientology. They are not intended to offer a complete definition of the
Scientology religion or to capture the total essence of what it means to be a
Scientologist.
Lastly, we must look at the effect of The Post's use upon the potential
market for or value of the copyrighted work. Although the RTC claims it has
demonstrated an enormous effect upon its potential market, a fair view of the
record discloses no evidence of any economic exploitation by The Post of RTC's
copyrighted material. As The Post cogently argues, no follower of Scientology
could possibly be satisfied by these three random fragments quoted in its
article so as to bypass the complete regime of indoctrination.
[8] Although both sides have raised numerous additional issues, the
essential analysis for the copyright claim comes down to these four factors.
Based on this analysis, we find for the defendants. RTC properly argues that
the mere existence of a copyrighted work in an open court file does not destroy
the owner's property interests in that work. In the same way, the placement of
a copyrighted book on a public library shelf does not permit unbridled
reproduction by a potential infringer. However, RTC cannot selectively avail
itself of only a segment of the copyright law. With the preservation of
copyright protection invariably comes the fair use exception, and on that
ground The Post's actions are proper.
III. ATTORNEY'S FEES
[9] Because The Post has been found to be the prevailing party on the
copyright claim, it qualifies for an award of attorney's fees and litigation
expenses. The RTC opposes such an award. Whether to award such fees is a
matter left to the Court's discretion. Fogerty v. Fantasy, Inc., 510 U.S.
517, ----, 114 S.Ct. 1023, 1033, 127 L.Ed.2d 455 (1994). In deciding the
appropriateness of a fee award, the Court should consider the motivation of the
plaintiff in bringing the action for copyright infringement and the extent to
which plaintiff's position *1368 is reasonable and well-grounded in fact and
law.
[10] On the first issue, the Court finds that the motivation of plaintiff in
filing this lawsuit against The Post is reprehensible. Although the RTC
brought the complaint under traditional secular concepts of copyright and trade
secret law, it has become clear that a much broader motivation prevailed--the
stifling of criticism and dissent of the religious practices of Scientology and
the destruction of its opponents. L. Ron Hubbard, the founder of Scientology,
has been quoted as looking upon the law as a tool to
[h]arass and discourage rather than to win. The law can be used very easily
to harass and enough harassment on somebody who is simply on the thin edge
anyway, well knowing that he is not authorized, will generally be sufficient to
cause his professional decease. If possible, of course, ruin him utterly.
(Declaration of Mary Ann Werner, Attachment A, at C5; see also The Post's
reply brief at p. 24, note 23).
The context and extent in which The Post copied and quoted from the AT
documents was so de minimis that this Court finds that no reasonable copyright
holder could have in good faith brought a copyright infringement action.
Although there are limits beyond which the media may not go, even in the
interests of news gathering and reporting, this case does not come anywhere
near those limits. Therefore, an award of reasonable attorneys' fees is
appropriate and granted.
IV. MISAPPROPRIATION CLAIM
[11] To prove misappropriation of a trade secret, the RTC must show
(1) that it possessed a valid trade secret, (2) that the defendant acquired its
trade secret, and (3) that the defendant knew or should have known that the
trade secret was acquired by improper means. Trandes Corporation v. Guy F.
Atkinson, 996 F.2d 655, 660 (4th Cir.1993), cert. denied, 510 U.S. 965, 114
S.Ct. 443, 126 L.Ed.2d 377 (1993).
[12] The Post argues persuasively that the AT documents were no longer trade
secrets by the time The Post acquired them. They point to the following
undisputed facts. First, the Fishman affidavit had been in a public court file
from April 14, 1993 until August 15, 1995, for a total of 28 months. Although
RTC has shown that it went to extraordinary efforts to control access to that
file by having church members sign out the file and keep it in their custody at
the courthouse, the file nevertheless was an open file, available to the
public. The Post was able to obtain a copy of the Fishman affidavit without
any difficulty, by merely asking the Clerk of the court to copy it. Thus,
having been in the public domain for an extensive period of time, these AT
documents cannot be deemed "trade secrets." Kewanee Oil Co. v. Bicron
Corp., 416 U.S. 470, 484, 94 S.Ct. 1879, 1887, 40 L.Ed.2d 315 (1974).
Of even more significance is the undisputed fact that these documents were
posted on the Internet on July 31 and August 1, 1995. (Lerma Affidavit). On
August 11, 1995, this Court entered a Temporary Restraining Order among other
orders which directed Lerma to stop disseminating the AT documents. However,
that was more than ten days after the documents were posted on the Internet,
where they remained potentially available to the millions of Internet users
around the world.
[13] As other courts who have dealt with similar issues have observed,
"posting works to the Internet makes them 'generally known' " at least to the
relevant people interested in the news group. Religious Technology Center
v. Netcom On-Line Communications Services, Inc., No. C. 95-20091 RMW (N.D.Cal.)
Slip Opinion entered 9/22/95 at 30. Once a trade secret is posted on the
Internet, it is effectively part of the public domain, impossible to retrieve.
Although the person who originally posted a trade secret on the Internet may be
liable for trade secret misappropriation, the party who merely down loads
Internet information cannot be liable for misappropriation because there is no
misconduct involved in interacting with the Internet.
[14] Even if one were to assume that the AT documents are still trade
secrets, under Virginia law, the tort of misappropriation of *1369 trade
secrets is not committed by a person who uses or publishes a trade secret
unless that person has used unlawful means, or breached some duty created by
contract or implied by law resulting from some employment or similar
relationship. Smith v. Snap-On Tools Corp., 833 F.2d 578, 581 (5th
Cir.1988); Aerospace Am., Inc. v. Abatement Tech., Inc., 738 F.Supp. 1061,
1071 (E.D.Mich.1990).
It is the employment of improper means to procure the trade secret,
rather than the mere copying or use, which is the basis of [liability] ...
Apart from breach of contract, abuse of confidence or impropriety in the means
of procurement, trade secrets may be copied freely as devices or processes
which are not secret.
Trandes Corporation v. Guy F. Atkinson Company, 996 F.2d at 660 (quoting
the Restatement (First of Torts)) (emphasis in original). The Trandes court
notes that abuse of confidence or impropriety in the means of procurement
represented the "essential element" and the "core" of a misappropriation
claim. Id.
[15] The RTC claims that because The Post was on notice of the RTC's
allegations that the AT documents were stolen and were both trade secrets and
unpublished copyrighted works, The Post was under a legal obligation not to
copy or use the documents. This Court knows of no law which required The Post
to sit on its hands and do no further investigation into what was obviously
becoming a newsworthy event and newsworthy documents. The RTC's allegations
are still just allegations. The very court from which the Fishman affidavit
was obtained still has under advisement the issue of whether the AT documents
are trade secrets. Although The Post was on notice that the RTC made certain
proprietary claims about these documents, there was nothing illegal or
unethical about The Post going to the Clerk's office for a copy of the
documents or downloading them from the Internet.
Because there is no evidence that The Post abused any confidence, committed an
impropriety, violated any court order or committed any other improper act in
gathering information from the court file or down loading information from the
Internet, there is no possible liability for The Post in its acquisition of the
information. This is true regardless of the documents status as trade
secrets. As for the disclosure of the information, The Post did nothing more
than briefly quote from publicly available materials. These acts simply do not
approach a trade secret misappropriation, and, therefore, summary judgment must
be entered for the defendants.
The Clerk is directed to forward copies of this Memorandum Opinion to counsel
of record.