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.
Aug. 30, 1995.
Church brought action against newspaper publisher, seeking to enjoin publisher
from copying, disclosing, using, displaying or reproducing copyrighted
materials obtained from court files. On church's motion for temporary
restraining order and preliminary injunction, the District Court, Brinkema, J.,
held that: (1) balance of harm favored newspaper; (2) newspaper was likely to
prevail on its fair use defense; and (3) availability of confidential church
documents on Internet precluded finding that documents were "not generally
known," as required to find existence of "trade secret" under Virginia law.
Motion denied.
[1] INJUNCTION
Decision to grant or deny requests for interlocutory injunctive relief is
determined by flexible interplay of four factors: risk of irreparable harm to
plaintiff if relief is denied, risk of harm to defendant if relief is granted,
likelihood of plaintiff's success on the merits, and interest of public.
[2] INJUNCTION
First step in court's analysis when determining whether to grant preliminary
injunctive relief is to balance risk of irreparable harm to plaintiff
against risk of harm to defendant.
[3] COPYRIGHTS AND INTELLECTUAL PROPERTY
Balance of harm favored newspaper in church's action seeking to enjoin
newspaper from publishing copyrighted church documents; injunction would
prohibit newspaper from using documents and reporting on newsworthy subject and
would constitute prior restraint on expression, and church would only suffer
slight harm from risk of future copyright infringement or trade secret
misappropriation. U.S.C.A. Const.Amend. 1.
[4] INJUNCTION
Where balance of harms favors defendant, likelihood of plaintiff's success on
the merits assumes heightened significance in determining whether to grant
preliminary injunctive relief.
[5] INJUNCTION
Where likelihood of irreparable injury to plaintiff is merely possible,
plaintiff's likelihood of success on the merits can be determinative in
determining whether to grant preliminary injunction.
[6] COPYRIGHTS AND INTELLECTUAL PROPERTY
Fair use doctrine allows reasonable use of copyrighted materials and is
designed to balance exclusive rights of copyright holder with public's interest
in dissemination of information regarding areas of universal concern. 17
U.S.C.A. s 107.
[7] COPYRIGHTS AND INTELLECTUAL PROPERTY
Newspaper was likely to prevail on its fair use defense in church's copyright
infringement action arising when newspaper published portions of church's
copyrighted materials; documents were copied for purpose of newspaper article,
documents appeared to be factual or informational, market for documents did not
exist independently of church's services, and documents were obtained from
unsealed court file. 17 U.S.C.A. s 107.
[8] TORTS
Availability of confidential church documents on Internet precluded finding
that documents were "not generally known," as required to find existence of
"trade secret" under Virginia law. Va.Code 1950, s 59.1-336.
*261 Bruce B. McHale, Chamowitz & Chamowitz, P.A., Alexandria, VA, R.V.
Lupo, Susan Somers Neal, Edward E. Kubasiewicz, Willian Brinks Hofer Gilson &
Lione, Washington, DC, and Earl C. Cooley, Cooley, Manion, Moore & Jones,
Boston, MA, and Helena K. Kobrin, North Hollywood, CA, for plaintiff, Religious
Technology Center.
Christopher Wolf, Proskauer Rose Goetz & Mendelsohn, Washington, DC and John
P. Corrado, Hazel & Thomas, Alexandria, VA, for defendant, the Washington Post.
MEMORANDUM OPINION
BRINKEMA, District Judge.
This case comes before the Court on plaintiff's Motion for a Temporary
Retraining Order and a Preliminary Injunction; for Impoundment of Infringing
Articles; and for Expedited Discovery against the defendants The Washington
Post ("the Post"), Marc Fisher, and Richard Leiby (collectively "the Post
defendants").
Plaintiff alleges that it holds the license to the copyrights of the writings
of L. Ron Hubbard, the founder of the Church of Scientology. Defendant Lerma
is a former church member who plaintiff accuses of infringing its copyright on
various Advanced Technology ("AT") documents by posting these documents on the
Internet. Defendant Digital Gateway Systems ("DGS") is defendant Lerma's
access provider to the Internet. Plaintiff originally filed this action
against defendants Lerma and DGS to enjoin the posting of the AT documents on
the Internet. On August 11, 1995, this Court entered a Temporary Restraining
Order, Order to Show Cause Regarding a Preliminary Injunction, Order for
Impoundment, and Order for Expedited Discovery. The Court also ordered the
Clerk to issue a writ of seizure for defendant Lerma's personal computer
equipment, *262 floppy disks, and any copies of the copyrighted works of L.
Ron Hubbard.
At some point after the seizure, plaintiff learned that defendant Lerma had
given copies of the AT documents in issue to the Post. When the plaintiff
confronted the Post about these documents and advised that they might be
stolen, the Post voluntarily turned them over to the plaintiff. However, on
August 14, 1995, the Post sent a reporter to the Clerk's office of the United
States District Court for the Central District of California to copy a public
court file which allegedly contained copies of the same AT documents. The
documents were contained in the record of a case pending in that jurisdiction
and were not then subject to a sealing or protective order. The file was
subsequently sealed, however that later sealing is of no moment to the pending
motion.
On August 19, 1995, the Post published an article written by defendant Marc
Fisher regarding this lawsuit and the seizure of Lerma's computer equipment
(hereinafter "the Article"). The Article contained several brief quotations
from the AT materials obtained from the California case.
On August 22, 1995, plaintiff filed a First Amended Verified Complaint For
Injunctive Relief and Damages for (1) Copyright Infringement; and (2) Trade
Secrets Misappropriation, adding the Post, Fisher, and Leiby as defendants.
Along with the First Amended Verified Complaint, plaintiff filed the pending
motion seeking to enjoin the Post defendants from copying, disclosing, using,
displaying, or reproducing the AT materials obtained from the California case.
A hearing was held on August 25, 1995 and the matter was taken under
advisement.
I. Balance of Harms
[1][2] The decision to grant or deny plaintiff's request for interlocutory
relief is determined by the "flexible interplay" of four factors: the risk of
irreparable harm to the plaintiff if relief is denied, the risk of harm to the
defendant if relief is granted, the likelihood of the plaintiff's success on
the merits, and the interest of the public. Blackwelder Furniture Co. of
Statesville v. Seilig Manufacturing Co., 550 F.2d 189, 196 (4th
Cir.1977) (citations omitted). The first step in our analysis is to balance
the risk of irreparable harm to the plaintiff against the risk of harm to the
defendant. Id. at 195.
[3] The harm to the Post defendants if the plaintiff's motion is
granted is self-evident. This lawsuit, and similar actions in other
jurisdictions, and the conflict between the Church of Scientology and its
critics are newsworthy subjects. These defendants are professional news
reporters and publishers, and the relief sought by plaintiff would prohibit
them from using the documents at issue in reporting on these matters. Such
limitations on their ability to report on the news would clearly work a
profound harm on these defendants. Moreover, to the extent that the requested
relief would place limitations on the defendants' reporting, it would
constitute a prior restraint on expression. Near v. Minnesota, 283 U.S.
697, 51 S.Ct. 625, 75 L.Ed. 1357 (1931). There is a strong presumption against
the constitutionality of such action. New York Times Co. v. United States,
403 U.S. 713, 713-14, 91 S.Ct. 2140, 2141, 29 L.Ed.2d 822 (1971). As a result,
the plaintiff "carries a heavy burden of showing justification for the
imposition of such a restraint." Id. Plaintiff has not met that burden in
this case.
In New York Times Co. v. United States, the United States government sought
to enjoin the New York Times and the Washington Post from publishing a
classified study of the government's decision-making process with regard to its
policy towards Viet Nam. The classified document, known as the Pentagon
Papers, contained military and diplomatic secrets, the disclosure of which
posed a potential threat to national security. See id. at 730-32, 91 S.Ct.
at 2150 (White, J., concurring) ("revelation of these documents will do
substantial damage to public interests"). Despite this threat, a plurality of
the Court found that the government had failed to overcome the presumption
against prior restraint.
Plaintiff argues that dissemination of the AT documents would cause an
irreparable injury, namely future copyright infringement and trade secret
misappropriation. This is the sole justification plaintiff offers to
support *263 its argument for prior restraint of the press. If a threat to
national security was insufficient to warrant a prior restraint in New York
Times Co. v. United States, the threat to plaintiff's copyrights and trade
secrets is woefully inadequate.
Moreover, plaintiff's arguments to date suggest that the extent to which
plaintiff would be harmed by any future copyright infringement or trade secret
misappropriation is at best slight. The documents in question are so esoteric
as to require years of training in Scientology to understand them. As a
result, the only financial harm that the plaintiff could suffer as a result of
any alleged infringement would be if Church followers chose to forsake the
Church's elaborate system of instruction in favor of self-administration of the
texts. Scientology's status as a religious organization undermines any theory
of loss that would depend on its followers' desire to cheat the Church by
obtaining these teachings through unauthorized means. Accordingly, this Court
fails to recognize any significant risk of financial loss to the plaintiff if
the motion is denied.
II. Likelihood of Success on the Merits
[4][5] Where, as here, the balance of harms favors the defendant, the
likelihood of the plaintiff's success on the merits assumes heightened
significance. Blackwelder, 550 F.2d at 195 ("The importance of probability
of success increases as the probability of irreparable injury diminishes.")
Where the likelihood of irreparable injury to the plaintiff is merely
"possible," the plaintiff's likelihood of success on the merits can be
determinative. Id. Without opining on the merits of this case, it can
fairly be said that plaintiff's success is far from a foregone conclusion.
[6][7] Plaintiff asserts two claims against the Post defendants: copyright
infringement and trade secret misappropriation. As a defense to the copyright
infringement claim, defendants argue that plaintiff's allegations are
insufficient to state a claim of copyright infringement because the plaintiff
has not shown a substantial similarity between the Article and any copyrighted
text and because the quotations contained in the Article represent a de minimis
use of the allegedly copyrighted works. Furthermore, the Post defendants argue
that any copying of the AT documents was within the fair use exception of the
Copyright Act. 17 U.S.C.A. s 107 (West Supp.1995). While the questions of
whether the subject documents are copyright protected and whether defendants'
acts constituted a copying will be significant issues in this case, we assume
for the purposes of this motion that the Post defendants copied copyrighted
materials, and solely address the fair use issue. The fair use doctrine allows
the reasonable use of copyrighted materials and is designed to balance the
exclusive rights of the copyright holder with the public's interest in
dissemination of information regarding areas of universal concern. See
Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200,
205-206 (2d Cir.1979).
Section 107 of the Copyright Act provides:
the fair use of a copyrighted work ... for purposes such as criticism,
comment, news reporting, teaching ... scholarship, or research, is not an
infringement of copyright. In determining whether the use made of a work in
any particular case is a fair use the factors to be considered shall include--
(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) (emphasis added).
The purpose of defendants' use of the subject work was two-fold. The Article
constituted news reporting, one of the specific uses included in the statute as
examples of fair use. The August 14, 1995 copying constituted research for the
Article. Defendants argue *264 that the copying of the California court
file should be considered together with the publication of the Article because
"[n]ews gathering is an essential aspect of news reporting. The Post has
gathered a copy of the materials in question and those materials,
unquestionably, are news." Memorandum of The Washington Post, Marc Fisher, and
Richard Leiby in Opposition to Plaintiff's Motion for a Temporary Restraining
Order at 19 (hereinafter "Post Memorandum"). Indeed, the Post's copying of the
California court file can easily be viewed as research for the Article and,
therefore, as an integral part of that act of news reporting. In addition, an
accurate copy of the AT documents was necessary for the Post defendants'
ability to accurately report on, and quote from, their contents.
The scope of the fair use doctrine is greater with respect to factual
works than creative or literary works. Without having reviewed the AT
documents, this Court is at a disadvantage with regard to classifying them as
either factual or expressive. Even courts with fuller records than this have
encountered difficulty in classifying Hubbard's writings. 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 information."
In the instant litigation, plaintiff has characterized the AT documents more
as informational than as creative fiction. Specifically, the First Amended
Verified Complaint describes Hubbard's writings as "works on applied religious
philosophy and spiritual healing technology, including training materials and
course manuals of the Scientology religion." Amended Complaint at P 26.
Therefore, at this point, this Court adopts the Second Circuit's view, and
finds that because the AT documents appear to be factual or informational the
broader view of fair use is appropriate in this case.
Plaintiff argues that the unpublished nature of some of the AT documents
militates against a finding of fair use, relying on the Supreme Court's
decision in Harper & Row v. Nation Enterprises, 471 U.S. 539, 105 S.Ct.
2218, 85 L.Ed.2d 588 (1985) to support this argument. In Harper & Row, the
defendant published excerpts from an unpublished manuscript of the
autobiography of Gerald Ford. The defendant's article was timed to "scoop" a
competing publication that had agreed to purchase the exclusive right to print
excerpts of the work. The Court noted that the fact that a work is unpublished
is a "critical element" of its nature and that "the scope of fair use is
narrower with respect to unpublished works." Id. at 564, 105 S.Ct. at
2232. The facts of the Harper & Row case differ strikingly from the case at
hand. In the Harper & Row decision the defendant timed publication of its
article to deprive the planned publication of its full impact. Here, no such
motivation exists. Moreover, the Article contained only minimal excerpts from
plaintiff's documents and can in no way be said to have deprived the plaintiff
of the right of first publication, on which the Harper & Row decision is
largely based. In addition, after the Supreme Court's decision in Harper &
Row, Congress amended Section 107 of the Copyright Act to make clear that
"[t]he 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). Assuming that all of the AT documents
at issue are unpublished, the Post defendants' use of those documents does not
implicate the concerns expressed by the Court in Harper & Row and therefore
their unpublished nature plays a minimal role in this Court's consideration.
*265 With regard to the amount of the work used, defendants' Article
quoted only a minute portion of the AT documents. The August 14, 1995 copying
of the California court files involved a considerably larger amount of the
subject works: allegedly 103 pages were copied. However, although a large
number of pages were copied, only a few lines of the documents were quoted in
the Article. This Court therefore finds that the sheer quantity of the
documents copied does not defeat the Post defendants' claim of fair use.
With respect to the effect of the Post defendants' use on the market value of
the AT documents, it is doubtful that the defendants' copying can have a
significant negative effect. As mentioned above, the Article contained only
scant quotations from the AT documents. Scientologists in search of advanced
training could not possibly consider these short quotes as substitutes for the
full texts. Furthermore, the affidavits filed in support of plaintiff's
complaint and motions provide that part of the Advanced Technology program
involves "confidential counselling, or 'auditing' from a trained minister of
the Church." McShane Aff. at PP 9-10. Even the confidential levels that do
not require auditing involve supervision "on each step to ensure that [the
Scientologist] delivers the Advanced Technology to himself correctly and that
he obtains the exact expected results from each level." Id. at P 11.
Accordingly, the "market" for these writings does not exist independently of
the Church's services.
Finally, the plaintiff argues that the Post defendants cannot enjoy the
shelter of the fair use doctrine because their acquisition of the subject
documents was unlawful. Plaintiff's argument stems from its assertion that, as
a result of stringent security measures, any copy of the AT documents existing
outside the Church was necessarily at one time stolen. Plaintiff further
argues that the unlawful acquisition of copyrighted materials precludes any
fair use defense. See Atari Games Corp. v. Nintendo of America, Inc., 975
F.2d 832, 843 (Fed.Cir.1992); [FN1] Sega Enterprises Ltd. v. Maphia, 857
F.Supp. 679, 687 (N.D.Cal.1994) (citing Atari Games, 975 F.2d at 843).
However, unlike the facts in the cases relied on by plaintiff, the facts in
this case are that the Post defendants obtained the documents from a legitimate
source. When the Post defendants obtained the copies at issue, the AT
documents were contained within the unsealed files of the United States
District Court for the Central District of California. As such, they were
available to the general public at the office of the Clerk of the Court.
FN1. In the Atari case, the defendant misappropriated a copy of the
plaintiff's source code by obtaining a copy from the Copyright Office in
violation of Copyright Office regulations. The court in that case stated
that "[t]o invoke the fair use exception, an individual must possess an
authorized copy of a literary work." Atari Games, 975 F.2d at 843
(citing Harper & Row, 471 U.S. at 563-64, 105 S.Ct. at 2232 (holding
that knowing exploitation of purloined manuscript is not compatible with
"good faith" and "fair dealings" underpinnings of fair use doctrine)).
Defendants argue that the copying of the AT documents, by the Clerk of the
Court on defendants' behalf, cannot be infringement "given the ancient common
law right of access to publicly filed court documents and the recognized
importance of granting access to such documents to the press." Post Memorandum
at 15. Indeed, the Supreme Court has explicitly recognized the right of the
press to publish facts contained in public court records. In Cox
Broadcasting Corp. v. Cohn, 420 U.S. 469, 95 S.Ct. 1029, 43 L.Ed.2d 328 (1975),
the Supreme Court held that the First and Fourteenth Amendments barred a cause
of action for damages for invasion of privacy for publication of information
contained in an open court record. In Cox, a reporter employed by the
defendant included the name of a deceased rape victim in a news report of the
trial of her alleged attackers. The father of the victim sued the broadcast
company for invasion of privacy, relying in part on a state statute making it a
misdemeanor for any news media to publish the name of any rape victim. The
Supreme Court, relying on the "special protected nature of accurate reports of
judicial proceedings" and the inclusion of the information in the public
record, found that the defendant's actions were constitutionally protected.
Id. at 492, 95 S.Ct. at 1044-47. In so holding, the Court stated:
*266 By placing the information in the public domain on official
court records, the State must be presumed to have concluded that the public
interest was thereby being served. Public records by their very nature are of
interest to those concerned with the administration of government, and a public
benefit is performed by the reporting of the true contents of the records by
the media.
Id. at 495, 95 S.Ct. at 1046.
Plaintiff argues that the Post defendants had no right of access to the AT
documents in the California court file because those documents were never
relevant to that litigation and had been dumped into the record merely for the
purpose of improperly making them available to the public. Plaintiff's
argument neglects the fact that at the time that the Post obtained copies of
those documents from the public court records, no sealing order was in place.
In fact, the plaintiff had moved the district court to seal the file and the
court had denied that request.
When the district court refused to seal the file, plaintiff appealed that
decision to the Ninth Circuit which reversed the district court in an
unpublished opinion on August 30, 1994. The Ninth Circuit remanded the case
with instructions to the lower court to determine whether the disputed
documents contain trade secrets or were irrelevant to any of the issues in the
case. In reaching their decision, the Ninth Circuit recognized the tension
between the public's right of access to judicial records and the supervisory
power of the court to ensure that its files not become "vehicle[s] for improper
purposes." Church of Scientology Int'l v. Fishman, No. 94-55443, 1994 WL
467999 (9th Cir. Aug. 30, 1994). However, despite these concerns, the court's
opinion did not direct the lower court to seal the file, which remained open to
the public until after the Post copied the documents. Given the well
recognized public right of access to court records and these facts, there is
little likelihood that the plaintiff will prevail on the argument that the Post
had no right of access to the AT documents in the court file on August 14,
1995.
Our discussion of the fair use doctrine must be understood in the context of
the pending motion. We do not here rule on the merits of plaintiff's claim,
nor on the Post defendants' response. Rather, at this preliminary stage of the
proceedings the analysis favors the defendants, ruling out a finding that
plaintiff has shown a likelihood of success on the merits sufficient to
overcome the likelihood of harm to the defendants.
[8] The likelihood of success of the plaintiff's trade secret
misappropriation claim is at least as uncertain as the copyright claim. To
prevail on a trade secret misappropriation claim, the plaintiff must prove that
the AT documents are indeed trade secrets. In Virginia, a "trade secret" is
defined as information that:
[d]erives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use, and ...
Is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
Va.Code Ann. s 59.1-336 (Michie 1992).
Unquestionably, the plaintiff has taken extraordinary measures to try to
maintain the secrecy of the AT texts. Plaintiff and the Church of Scientology
employ numerous and elaborate security measures to prevent church members from
removing the texts from the Church. In addition, while the California court
file remained unsealed, Church members conducted a daily vigil in which they
signed out the file and retained it until the Clerk's office closed. Despite
these efforts, the AT documents have escaped into the public domain and onto
the Internet. Significantly, the record in this case indicates that defendant
Lerma is not the only source of AT documents on the Internet. Accordingly, for
the purposes of this motion, it would seem that plaintiff cannot establish that
the AT documents are "not generally known." Additionally, plaintiff has not
demonstrated that the AT documents provide plaintiff with any economic
advantage over any competitors.
III. The Public Interest
The final consideration dictated by the Blackwelder opinion is the public
interest. *267 This factor weighs heavily in favor of denying the
plaintiff's motion. The public interest lies with the unfettered ability of
the Post to report on the news. See Richmond Newspapers, Inc. v. Virginia,
448 U.S. 555, 572-73, 100 S.Ct. 2814, 2825, 65 L.Ed.2d 973 (1980) (stating that
print and electronic media are the public's chief source of information about
trials and that media coverage of legal proceedings contributes to public
understanding of the rule of law) (citing Nebraska Press Ass'n v. Stuart,
427 U.S. 539, 586-87, 96 S.Ct. 2791, 2816, 49 L.Ed.2d 683 (1976) (Brennan, J.,
concurring in judgment)).
IV. Conclusion
Having performed the analysis required under Blackwelder, this Court
concludes that the plaintiff's Motion for a Temporary Retraining Order and a
Preliminary Injunction; for Impoundment of Infringing Articles; and for
Expedited Discovery against the Post defendants must be denied. The balance of
harms is heavily tilted towards the defendants, and the plaintiff's likelihood
of success on the merits is insufficient to right the scale. Finally, the
public interest and the constitutional presumption against prior restraint
weigh heavily against the plaintiff. For these reasons, plaintiff's motion is
DENIED.
Defendants must maintain the status quo as to the possession of the AT
documents and may make fair use thereof. However, defendants are prohibited
from making additional copies of the AT documents and distributing or
transferring the documents. Should the defendants incorporate or attach any of
the AT documents to their papers in this action, such filings must be made
under seal.