IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 95-K-2143
RELIGIOUS TECHNOLOGY CENTER, a California nonprofit corporation, and BRIDGE PUBLICATIONS, INC., a California nonprofit corporation,
Plaintiffs,
v.
F.A.C.T.NET, INC., a Colorado nonprofit corporation; LAWRENCE WOLLERSHEIM, an individual; and ROBERT PENNY, an individual,
Defendants.
______________________________________________________________________________
MEMORANDUM IN OPPOSITION TO MOTION OF PLAINTIFF
BRIDGE PUBLICATIONS, INC. FOR SUMMARY JUDGMENT
AGAINST ALL DEFENDANTS FOR COPYRIGHT INFRINGEMENT
______________________________________________________________________________
Clifford L. Beem
BEEM & MANN, P.C.
One Norwest Center, Suite 3901
1700 Lincoln Street
Denver, Colorado 80203
(303) 894-8100
TABLE OF CONTENTS
Page
I. PRELIMINARY STATEMENT AND SUMMARY OF DISPUTED FACTS. 1
II. SUMMARY OF ARGUMENT. 2
III. STATEMENT OF FACTS. 4
A. The Parties. 4
1. BPI/Scientology. 4
2. Defendants. 4
B. Scientology's Litigation History 7
C. Scientology's Sixteen Years Of Litigation Against
Defendant Wollersheim. 12
D. The Lewis, D'Amato, Brisbois & Bisgaard Secret
Settlement Agreement. 15
E. The Wrongful Seizure. 16
F. Nature Of Works At Issue. 17
IV. ARGUMENT. 21
A. BPI Has Not Met Its Burden Of Proving That It
Has Valid Copyrights. 21
B. BPI Has Not Met Its Burden Of Proving That Copyrightable
Elements Were Taken By Defendants 26
C. On Its Face, The Evidence Provided By BPI Shows That A
Significant Number Of The Works At Issue Are In The Public Domain 29
D. The First Amendment Protects Defendants' Compilation
Of Scientology Materials. 32
1. The First Amendment Cannot Be Subordinated To A Statute. 32
2. First Amendment Requires A Finding Of No Liability 34
E. Defendants Have Engaged In A "Fair Use" Of The Works At Issue. 38
1. Defendants' Use Of The BPI Materials Falls Squarely
Within Recognized Fair Uses. 38
a. Reproduction Of The BPI Materials Constitutes
The Established Fair Use Of Reproduction In
Connection With A Judicial Proceeding. 38
b. Defendants' Making Of "Backup" Copies Of The
Database Qualifies As Fair Use Pursuant To The
Policies Embodied in 17 U.S.C. § 117 As Well As
Standard Industry Practice And Necessity. 44
1. Multiple Triable Issues Of Fact Preclude Summary Judgment
For BPI On Fair Use. 46
a. BPI Has Not Established Any Facts, Much Less
Undisputed Facts, Supporting Their Arguments
Concerning Fair Use. 47
b. Even Without Litigation Fair Use, Defendants'
Activities Were Clearly Fair Use. 51
(i) Factor #1: The Purpose And Character
Of The Use. 54
(ii) Factor #2: The Nature Of The Copyrighted
Work. 55
(iii) Factor #3: The Amount And Substantiality
Of The Portion Used In Relation To The
Copyrighted Work As A Whole 57
(iv) Factor #4: The Effect On The Potential Market 58
(v) Other Factors. 59
F. Scientology Has Already Released Defendants From Liability
Herein. 61
G. Factual Disputes Preclude An Award Of Statutory Damages On
This Motion. 64
1. Standards For The Statutory Damage Award. 64
2. Defendants' Conduct Was Innocent Under
17 U.S.C. § 504(c)(1). 66
3. Other Factors Favor A Limited Award. 67
4. BPI Has Produced No Evidence of Willfulness. 68
5. BPI Has Inflated The Number Of Works At Issue. 69
6. No Statutory Damages Should Be Awarded Against
Wollersheim Or Penny. 69
H. All Evidence Stemming From The Search Of Wollersheim's
And Penny's Residences And F.A.C.T.Net's Offices Should
Be Excluded From Consideration Of BPI's Summary Judgment
Motion Because All Such Evidence Was Obtained As A Result
Of An Illegal Search And Seizure. 70
1. The Writ Of Seizure Is Invalid Because Judge Babcock
Relied On Material False Statements When Finding
Probable Cause, And The Material False Statements
Were Knowingly And Recklessly Included In The
Declarations Supporting RTC's Motion. 71
2. The Writ of Seizure Is Invalid Because The Documents
Upon Which Judge Babcock Relied Failed To Disclose
Crucial Relevant Information 75
3. All Evidence Obtained During The Raids Should Be
Excluded From Consideration Because The Execution
Of The Writ Of Seizure Was An Exercise In Gross
Abuse By RTC. 77
V. CONCLUSION. 78
TABLE OF AUTHORITIES
CASES
Page
Allard v. Church of Scientology,
58 Cal. App. 3d 439, 129 Cal. Rptr. 797 (1976) 8
American Telegraph & Telegraph Co. v. Grady,
594 F.2d 594 (7th Cir. 1978) 39
Apple Computer v. Microsoft Corporation,
35 F.3d 1435 (9th Cir. 1994) 26,27
Apple v. Franklin Computer Corp.,
714 F.2d 1240 (3rd Cir. 1983) 26
Atari Games Corp. v. Nintendo, Inc.,
975 F.2d 832 (Fed. Cir. 1992) 60
Baker v. Liggett Group, Inc.,
132 F.R.D. 123 (D. Mass. 1990) 39
Bateman v. Mnemonics, Inc.,
79 F.3d 1532 (11th Cir. 1996) 28,29
Bridge Publications, Inc. v. Vien,
827 F. Supp. 629 (S.D. Cal. 1993) 9
Bruzzone v. Miller Brewing Co.,
202 U.S.P.Q. (BNA) 809 (N.D. Cal. 1979) 37,38
Campbell v. Acuff-Rose Music, Inc.,
510 U.S. 569 (1994) 51,52
Cass County Music v. CHLR, Inc.,
88 F.3d 635 (8th Cir. 1996) 65
Christofferson v. Church of Scientology,
57 Ore. App. 203, 644 P.2d 577 (Or. 1982) 8
Church of Scientology v. Armstrong,
232 Cal. App. 3d 1060 (1991) 8,10
Church of Scientology v. Cazares,
638 F.2d 1272 (5th Cir. 1981) 9
Church of Scientology v. Commissioner of Internal Revenue,
83 U.S. Tax Ct. Rpt. 381 (1984) 8
Church of Scientology v. Dell Publishing Co.,
362 F. Supp. 767 (N.D. Cal. 1973) 9
Church of Scientology v. Fishman,
No. CV 91-6426 HLH (Tx) (C.D. Cal.) 9,18,62
Church of Scientology v. Flynn,
744 F.2d 694 (9th Cir. 1984) 9
Church of Scientology v. Foley,
640 F.2d 1335 (D.C. Cir.), cert. denied, 452 U.S. 961 (1981) 9
Church of Scientology v. Green,
354 F. Supp. 800 (S.D.N.Y. 1973) 9
Church of Scientology v. Minnesota State Medical Ass'n Foundation,
264 N.W.2d 152 (Minn. 1978) 9
Church of Scientology v. Siegelman,
475 F. Supp. 950 (S.D.N.Y. 1979) 9
Church of Scientology v. Wollersheim,
42 Cal. App. 4th 628, 49 Cal. Rptr. 2d 620 (1996) 13,14,15
Church of Scientology California v. Superior Court
CV86-1352 14
Church of Scientology of California v. Wollersheim,
96 Daily Journal D.A.R. 1162 (1996) 15
Church of Scientology International v. Daniels,
992 F.2d 1329 (4th Cir.), cert. denied, 114 S. Ct. 195 (1993) 9
Church of Scientology International v. Eli Lilly & Co.,
778 F. Supp. 661 (S.D.N.Y. 1991) 9
Church of Scientology International v. Fishman & Geertz,
USDC Ca. No. CV 91-6426 7,15,18,19,62
Church of Scientology International v. Time Warner, Inc.,
806 F. Supp. 1157 (S.D.N.Y. 1992) 15,35
Church of Scientology International v. Time Warner, Inc.,
903 F. Supp. 637 (S.D.N.Y. 1995) 9
Church of Spiritual Technology v. United States,
26 Cl. Ct. 713 (Cl. Ct. 1992), aff'd, 991 F.2d 812 (Fed. Cir.),
cert. denied, 114 S. Ct. 197 (1993) 4
City Consumer Serv., Inc. v. Horne,
100 F.R.D. 740 (D. Utah 1983) 39,40
Coats v. General Motors Corp.,
3 Cal. App. 2d 340, 39 P.2d 838 62
Computer Associates International, Inc. v. Altai, Inc.,
982 F.2d 693 (2d Cir. 1992) 27,28
Consumers Union of U.S., Inc. v. General Signal Corp.,
724 F.2d 1044 (2d Cir. 1983), cert. denied, 469 U.S. 823 (1984) 56
Crow v. P.E.G. Constr. Co.,
156 Cal. App. 2d 271, 319 P.2d 47 (1957) 62
D.C. Comics v. Reel Fantasy, Inc.,
696 F.2d 24 (2d Cir. 1982) 58
DeLoach v. Bevers,
922 F.2d 618 (10th Cir.), cert. denied, 502 U.S. 814 (1990) 75
Diamond v. Am-Law Publishing Corp.,
745 F.2d 142 (2d Cir. 1984) 56
Douglas Int'l Corp. v. Baker,
335 F. Supp. 282 (S.D.N.Y. 1971) 40
Dow Jones & Co. v. Board of Trade,
546 F. Supp. 113 (S.D.N.Y. 1982) 56
East/West Joint Venture v. Wurmfield Assoc., P.C.,
722 F. Supp. 1064 (S.D.N.Y. 1989) 60
Eckes v. Card Prices Update,
736 F.2d 859 (2d Cir. 1984) 56,58,60
Encyclopedia Britannica Educ. Corp. v. Crooks,
447 F. Supp. 243 (S.D.N.Y. 1978) 58
Faye v. Feldman,
128 Cal. App. 2d 319, 275 P.2d 121 (1954) 61
Feist Publications v. Rural Telephone Service,
499 U.S. 340 (1991) 25,56
Founding Church of Scientology v. American Medical Ass'n,
377 N.E.2d 158 (Ill. App. Ct. 1978) 9
Founding Church of Scientology v. Verlag,
536 F.2d 429 (D.C. Cir. 1976) 9
Founding Church of Scientology v. Webster,
802 F.2d 1448 (D.C. Cir. 1986), cert. denied, 484 U.S. 871 (1987) 10
Franks v. Delaware,
438 U.S. 154 (1978) 71,75
Garnier v. Andin Int'l, Inc.,
36 F.3d 1214 (1st Cir. 1994) 30
Gates Rubber Co. v. Bando Chemical Industries, Ltd.,
9 F.3d 823 (10th Cir. 1993) 21,26,28,29
Golden West Credit & Adjustment Co. v. Wilson,
119 Cal. App. 627, 7 P.2d 345 (1932) 62
In Re Grand Jury Subpoena,
829 F.2d 1291 (4th Cir. 1987) 70
Grundberg v. Upjohn Co.,
137 F.R.D. 372 (D. Utah 1991) 39,41
In re Halkin,
598 F.2d 176 (D.C. Cir. 1979) 39
Harper & Row, Publishers, Inc. v. The Nation,
471 U.S. 539 (1984) 33,38,44,55,58,59
Honda Research & Dev. Co. v. Loveall,
687 F. Supp. 355 (E.D. Tenn. 1985) 40,42
Illinois v. Gates,
462 U.S. 213 (1983) 70
Jartech, Inc. v. Clancy,
666 F.2d 403 (9th Cir. 1982) 39
Lippert v. Bailey,
241 Cal. App. 2d 382, 50 Cal. Rptr. 478 (1966) 63
Lipton v. The Nature Company,
71 F.3d 464 (2nd Cir. 1995) 64
Marcus v. Rowley,
695 F.2d 1171 (9th Cir. 1983) 26
Marshall v. Barlow's Inc.,
436 U.S. 307 (1978) 70
Marvin Worth Prod. v. Superior Films Corp.,
319 F. Supp. 1269 (S.D.N.Y. 1970) 40
Missouri Church of Scientology v. Adams,
543 S.W.2d 776 (Mo. 1976) 9
Mitek Holdings, Inc. v. ARCE Engineering Co., Inc.,
89 F.3d 1548 (11th Cir. 1996) 25
NAS Import Corp. v. Chenson Enters., Inc.,
968 F.2d 250 (2nd Cir. 1992) 65,66
National Council on Compensation, Inc. v. Insurance Data Resources, Inc.,
40 U.S.P.Q. 2d 1362 (S.D. Fla. 1996) 25
New Era Publications Int'l, ApS v. Henry Holt & Co.,
884 F.2d 659 (Newman, J., dissenting from denial of rehearing en banc) 60
New Era Publications Int'l v. Carol Publishing Group,
904 F.2d 152 (2d Cir.), cert. denied, 498 U.S. 921 (1990) 9,30,56
New Era Publications Int'l v. Henry Holt & Co.,
873 F.2d 576 (2d Cir. 1989), cert. denied, 493 U.S. 1094 (1990) 9,33
Nichols v. Universal Pictures Corp.,
45 F.2d 119 (2d Cir. 1930), cert. denied, 282 U.S. 902 (1931) 27
Patterson v. Ford Motor Co.,
85 F.R.D. 152 (W.D. TExh. 1980) 39
Pellett v. Sonotone,
26 Cal. 2d 705, 711, 160 P.2d 783 (1945) 61
Public Citizen v. Liggett Group, Inc.,
858 F.2d 775 (1st Cir. 1988), cert. denied, 488 U.S. 1030 (1989) 39
Publications International, Ltd. v. Meredith Corporation,
88 F.3d 473 (7th Cir. 1996) 25,27
Religious Technology Center v. F.A.C.T.Net, Inc.,
901 F. Supp. 1519 (D. Colo. 1995) 15,17,36,49,52,53,57
Religious Technology Center v. Lerma,
908 F. Supp. 1353 (E.D. Va. 1996) 11,35,69
Religious Technology Center v. Netcom Online Communications Servs.,
907 F. Supp. 1361 (N.D. Cal. 1995) 9,22
Religious Technology Center v. Scott,
869 F.2d 1306 (9th Cir. 1989) 11,15
Religious Technology Center v. Scott and Wollersheim,
No. 85-711-JMI (C.D. Cal. Jan. 20, 1993) 9
Religious Technology Center v. Wollersheim,
971 F.2d 364 (9th Cir. 1992) 10,14,15,19,39
Rivera v. United States,
928 F.2d 592 (2nd Cir. 1991) 75
Roy Export Co. Establishment v. Columbia Broadcasting System, Inc.,
672 F.2d 1095 (2d Cir.), cert. denied, 459 U.S. 826 (1982) 33
Salinger v. Random House, Inc.,
811 F.2d 90 supplemented and reh'g denied, 818 F.2d 252 (2d Cir. 1987) 58
Seattle Times Co. v. Rhinehart,
67 U.S. 20 (1984) 39
Sony Corp. of America v. Universal City Studios, Inc.,
464 U.S. 417 (1984) 38,41,51,55,57
Specht v. Jensen,
832 F.2d 1516 (10th Cir. 1987) 70
Stokes Seas Limited v. GEO. W. Park Seed Co.,
783 F. Supp. 104 (W.D.N.Y. 1991) 69
Triangle Publications v. Knight-Ridder Newspapers, Inc.,
626 F.2d 1171 (5th Cir. 1980) 59
United States v. Campino,
890 F.2d 588 (2nd Cir. 1989), cert. denied, 494 U.S. 1068 (1990) 75
United States v. Hubbard,
474 F. Supp. 64 (1979) 8
United States v. Katter,
840 F.2d 118 (1st Cir. 1988) 8
United States v. Mitchell,
386 F. Supp. 639 (D.D.C. 1975) 40
In re Upjohn Co. Antibiotic Cleocin Prod. Liab. Litig.,
81 F.R.D. 482 (E.D. Mich. 1979), aff'd, 664 F.2d 114 (6th Cir. 1981) 39
Van Schaick v. Church of Scientology,
535 F. Supp. 1125 (U.S.D.C. Mass. 1982) 8
Vault Corp. v. Quaid Software, Ltd.,
847 F.2d 255 (5th Cir. 1988) 44,45
Wainwright Sec., Inc. v. Wall Street Transcript Corp.,
558 F.2d 91 (2d Cir. 1977), cert. denied, 434 U.S. 1014 (1978) 56
Ward v. Ford Motor Co.,
93 F.R.D. 579 (D. Colo. 1982) 39
Warner Bros. Inc. v. Dae Rim Trading, Inc.,
877 F.2d 1120 (2nd Cir. 1989) 68,77
Wauchop v. Domino's Pizza, Inc.,
138 F.R.D. 539 (N.D. Ind. 1991) 39
Whelan Associates, Inc. v. Jaslow Dental Lab., Inc.,
797 F.2d 1222 (3rd Cir. 1986), cert. denied, 479 U.S. 1031 (1987) 27
Williams v. Johnson & Johnson,
50 F.R.D. 31 (S.D.N.Y. 1970) 39
Williams & Wilkins v. United States,
487 F.2d 1345 (1973), aff'd by equally divided court, 420 U.S. 76 (1975) 44,45
Wollersheim v. Church of Scientology,
212 Cal. App. 3d 872, 260 Cal. Rptr. 331 (1989) 8,12,36
STATUTES
17 U.S.C. § 10 et seq. (1909 Act) 30
17 U.S.C. § 14(c) 22
17 U.S.C. § 19 et seq. (1909 Act) 30
17 U.S.C. § 101 29
17 U.S.C. § 102(a) 56
17 U.S.C. § 102(b) 25,56
17 U.S.C. § 103 31
17 U.S.C. § 107 45,51,53
17 U.S.C. § 108 3,45,46
17 U.S.C. § 108(f)(4) 45
17 U.S.C. § 117 3,44,45
17 U.S.C. § 201(a) 24
17 U.S.C. § 401 30
17 U.S.C. § 401(a) 30
17 U.S.C. § 402 30
17 U.S.C. § 402(a) 30
17 U.S.C. § 405 30
17 U.S.C. § 410(c) 22
17 U.S.C. § 503 76,77
17 U.S.C. § 504 64
17 U.S.C. § 504(c)(1) 65,66
17 U.S.C. § 504(c)(2) 66
17 U.S.C. § 504(c)(2)(i) 70
37 C.F.R. § 201.2(d)(2)(ii) (1993) 40
37 C.F.R. § 202.3(b)(3)(i)(B) (1990) 42
42 U.S.C. § 1983 14
47 C.F.R. § 202.3(c)(2) 23
Federal Rule Civil Procedure Rule 56(c) 47
Federal Rule Civil Procedure Rule 56(f) 16,63
House Report No. 1476, 94th Cong., 2d Sess. 156-157 (1976) 22,41,65
MISCELLANEOUS
1 Nimmer on Copyright § 2.04[c], at 2-52 (1996) 269
1 Nimmer on Copyright, supra, § 1.10[C] 33,36
2 Nimmer on Copyright, supra, § 7.02[C] 30
3 Nimmer on Copyright, supra, § 13.05[D], at 13-91 38,40,58
Cal Jur 3d, "Compromise, Settlement And Release," § 92, at 402 (1974) 61
Cal Jur 3d, "Compromise, Settlement And Release," § 70, at 377 (1974) 62
Corbin on Contracts, Vol. 5A, § 1238, at 555-560 61,62
Rest. 2d., Contracts, Introductory Note, Vol. 2, Chapter 12, at 361 61
Rest. 2d., Contracts, Vol. 2, Chapter 12, § 284, comment a, at 392 62
I. PRELIMINARY STATEMENT AND SUMMARY OF DISPUTED FACTS.
In this case, Plaintiff Religious Technology Center, Inc. ("RTC") improperly obtained an ex parte writ of search and seizure without advising the Court (i) of the litigation history between Scientology and Lawrence Wollersheim; (ii) more specifically, that most of the documents at issue had been part of the sixteen years of litigation history between Scientology and Lawrence Wollersheim; (iii) that the rest of the documents at issue were provided to Defendants as expert consultants and expert witnesses in litigation; (iv) that Scientology had executed a release agreement in favor of Defendants in connection with those very same documents; (v) that throughout their sixteen years of continuous litigation with Scientology, during all of which time Wollersheim had many of the documents at issue here, Defendants had never published any of the documents at issue outside of the courtroom; (vi) that Plaintiffs knew that they intended to claim exemption from any orders of Court to return the seized material, on the grounds that their religious doctrine prohibited such return; and (vii) that the requested raid would enable Scientology to access the most privileged, private, and confidential of Defendants' documents, including those relating to Wollersheim's own prior and even pending litigation versus Scientology. This Court reversed the seizure order after learning of some of this information.
Even more egregiously, the pending motion for summary judgment (the "Motion") of Plaintiff Bridge Publications, Inc. ("BPI") is similarly unmeritorious. An analysis of BPI's arguments and evidence reveals the following: (i) many of the works for which BPI claims a copyright are already in the public domain; (ii) the authorship of many of the relevant documents is disputed; (iii) the number of alleged copyright violations is vastly overstated; (iv) the copyright assignment process was defective and fraudulent; and (v) any allegedly "infringing" conduct by Defendants was clearly privileged and/or a fair use on a number of different grounds and levels.
In short, there are a plethora of genuine issues of material fact that must be resolved by the trier of fact at the trial herein. Accordingly, BPI's pending Motion should be denied.
II. SUMMARY OF ARGUMENT.
BPI misstates and invents facts to create a "strawman" scenario that exists only in the minds of its attorneys, and seeks to distort and misapply applicable principles of copyright law, to prevail on its inherently defective and overreaching summary judgment motion. The Motion should be denied, inter alia, for the following reasons:
• Defendants copied all of the materials for which BPI seeks to hold Defendants liable for "copyright infringement" in the course of defending themselves, and assisting others to defend themselves, against meritless litigation and other forms of harassment brought by Scientology pursuant to its judicially recognized "fair game" policy. Such use by Defendants of Scientology's works in connection with ongoing litigation and to assist others in ongoing litigation is "fair use";
• Far from engaging in "wholesale infringements," "commercial exploitation," "pirate sales of infringed works," or "copyright terrorism" as alleged by BPI, Defendants' actions for which BPI seeks to hold them liable for copyright infringement are (i) loading materials onto a computer for use in current and future litigation; (ii) loading unknown materials onto a computer so that Defendants could discover what they were; and (iii) making a handful of backup copies of Defendants' confidential, computerized database;
• BPI has not met its burden of proving that it has, or ever had, valid copyrights in many of the works at issue;
• BPI has not met its burden of proving through the requisite "abstractions" analysis that copyrightable elements of its works were copied by Defendants;
• A number of the works at issue are in the public domain because they were published without required copyright notice;
• Factual disputes concerning authorship, publication, copyrightability, assignment and use of the works at issue preclude summary judgment;
• Defendants' actions qualify as "fair use" pursuant to the policies of the library exceptions set forth in 17 U.S.C. § 108;
• Defendants' actions qualify as "fair use" pursuant to the policies of 17 U.S.C. § 117, involving computer programs;
• Plaintiffs have already released Defendants from liability for much, if not all, of the conduct engaged in here when they executed a release in favor of Defendants; and
• Factual disputes preclude an award of statutory damages on summary judgment.
III. STATEMENT OF FACTS.
A. The Parties.
1. BPI/Scientology.
It is not only appropriate but necessary to view the individual corporate entities herein, such as Plaintiffs RTC and BPI, that make up what is commonly referred to as the Church of Scientology ("Scientology") as components of a "wider structure," because its nominal corporate structure "is something of a deceptis visus." Church of Spiritual Technology v. United States, 26 Cl. Ct. 713, 718 (Cl. Ct. 1992), aff'd, 991 F.2d 812 (Fed. Cir.), cert. denied, 114 S. Ct. 197 (1993). Like virtually all of the hundreds of entities and organizations that make up Scientology, BPI is run and partly staffed by members of the "Sea Org," id. at 724-26, an unincorporated association through which "[g]reat control is exercised . . . ." Id. at 718. Thus, any attempt to draw distinctions between BPI and other Scientology organizations is counterproductive. See generally, id. at 716 n.9.
2. Defendants.
As the Court is aware, there are a variety of counter organizations that have been formed in response to Scientology and other controversial religious or psychological systems sometimes called "cults." Each of these counter organizations has its own mode of responding to these groups. A number of counter organizations have opted to pursue active intervention with individuals under the influence of what is perceived to be a coercive psychological system, a method commonly known as "deprogramming."
Defendant F.A.C.T.Net, Inc. (short for Fight Against Coercive Tactics Network, Inc.) ("F.A.C.T.Net") is a nonprofit, tax-exempt Colorado corporation that has avoided the confrontational methods of other organizations and instead operates on the premise that such systems can best be evaluated by widespread access to information about them. F.A.C.T.Net's mission purpose is to maintain a library and archive to promote the assembly, organization and dissemination of information about a variety of coercive psychological systems, including Scientology. (Wollersheim Decl. ¶¶ 1, 38) F.A.C.T.Net believes that its approach can be successful in the 90s and beyond in light of recent and expected advances in electronic communications, including specifically the powerful information tool known as the Internet, and in methods of storing, organizing and retrieving electronically stored information. F.A.C.T.Net is nonprofit and subsists on a shoestring budget pulled together from contributions of supporters of free information. Id.
In carrying out its mission purpose, F.A.C.T.Net has made voluminous nonproprietary information concerning a wide variety of psychological systems such as Scientology widely available to members of the public, first through a bulletin board and an Internet site and now only through an Internet site. However, F.A.C.T.Net shields substantial portions of its library and archives from all but a few persons. These portions include confidential information concerning cult victims, information which may be protected by copyright, and some information uploaded via the Internet or sent via floppy disk that F.A.C.T.Net has not scanned for viruses and reviewed. (Wollersheim Decl., ¶ 23) Accordingly, F.A.C.T.Net withholds a great deal of the information in its library and archive from the public. For example, F.A.C.T.Net does not make confidential information concerning cult victims available to the public. F.A.C.T.Net does not make potentially copyrighted material available to the public without the copyright owner's permission or where it otherwise has a legal right to do so, and also takes reasonable steps to ensure that such material is not placed on the public section of the Internet site. (Wollersheim Decl., ¶ 25)
The few persons who have access to the confidential or potentially copyrighted information in F.A.C.T.Net's archives must have a specific need and a valid purpose. For example, other victims seeking support and counseling have access to the confidential information about victims of Scientology. Further, attorneys seeking information for use in litigation with Scientology and researchers seeking an accurate historical record of materials that Scientology has since altered or purged have access to the searchable databases of potentially copyrighted information detailing coercive psychological systems. (Wollersheim Decl., ¶ 38)
Defendant Lawrence D. Wollersheim is the Executive Director of F.A.C.T.Net. Wollersheim is a former Scientologist who has been involuntarily engaged in continuous litigation against Scientology since late 1979 or 1980. (Wollersheim Decl., ¶¶ 2-3) Indeed, Wollersheim has been responsible for winning and sustaining important court victories against Scientology, including a $2.5 million judgment. (Wollersheim Decl., ¶ 2(e)) However, every time Wollersheim prevails against Scientology, Scientology responds by filing a new lawsuit against Wollersheim. Consequently, the instant case is referred to as "Wollersheim V," i.e., the fifth suit Scientology has filed against Wollersheim. Moreover, if history is a guide, Scientology can be expected to file Wollersheim VI when this litigation is concluded. (Wollersheim Decl., ¶¶ 3, 11)
Defendant Robert Penny ("Penny") is also a former Scientologist and was director of F.A.C.T.Net until incapacitated by a terminal illness. RTC raided Penny's home pursuant to the improper ex parte writ of search and seizure at the commencement of this action.
B. Scientology's Litigation History.
The reasonableness of Defendants' actions herein, and the propriety of the fair use, First Amendment, and other defenses they raise, can only be understood in the context of Scientology's attitudes towards litigation, Scientology's litigation history, and Scientology's sixteen-year litigation campaign against Defendants. Those matters are summarized below for these reasons. L. Ron Hubbard ("Hubbard"), the founder of Scientology and the purported author of the materials at issue in this case, stated plainly the policy that Scientology's use of the courts is to punish its perceived critics and enemies. Reflecting on the "purpose" of Scientology litigation, Hubbard wrote:
[It] is to harass 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 edge anyway, well knowing that his [sic] is not authorized, will generally be sufficient to cause his professional decease. If possible, of course, ruin him utterly.
(Berry Decl., Exh. 1 ¶¶ 5-27 [Aznaran]) Thus, Scientology's "Fair Game" policy specifically authorizes the use of copyright suits to destroy enemies such as the Defendants herein.
Consistent with the above purpose, Scientology instituted the "Fair Game" policy, which states that an "enemy" of Scientology: "May be deprived of property or injured by any means by any Scientologist without any discipline of the Scientologist. May be tricked, sued or lied to or destroyed." (V. Young Decl., Exh. 1, pp. 16-17)/
As one landmark decision involving Scientology summarized it, "'Fair Game' was a practice of retribution Scientology threatened to inflict on `suppressives,' i.e., people who left the organization or anyone who could pose a threat to the organization. Once someone was identified as a `suppressive,' all Scientologists were authorized to do anything to 'neutralize' that individual: economically, politically and psychologically." Wollersheim v. Church of Scientology, 212 Cal. App. 3d 872, 879-80, 260 Cal. Rptr. 331 (1989) (hereinafter referred to as "Wollersheim I")./
Scientology's litigation tactics leave no doubt that Hubbard's organizations have strictly followed his directive. A search of the Lexis or Westlaw databases reveals hundreds of cases to which Scientology was or is a party./ Its abusive conduct has resulted in several substantial verdicts against it. See, e.g., Wollersheim v. Church of Scientology, 6 Cal. Rptr. 2d 532 (1992) (describing prior history of case in which Mr. Wollersheim successfully sued Scientology for damages arising from coercion and psychological manipulation), cert. denied, 114 S. Ct. 1216 (1994); Allard v. Church of Scientology, 129 Cal. Rptr. 797 (1976) (court affirmed jury verdict of $150,000 in compensatory damages in favor of a former member who brought charges of malicious prosecution after Scientology had him arrested on false charges of robbery), cert. denied, 429 U.S. 1091 (1977).
Scientology entities regularly invoke the law of defamation/ and, more recently, the law of copyright to embroil their critics in costly and time-consuming litigation./ Courts confronted with Scientology's claims have criticized and even sanctioned it for its frivolous and abusive tactics. For example, in Religious Technology Center v. Scott and Wollersheim, No. 85-711-JMI (C.D. Cal. Jan. 20, 1993), Scientology brought an action for copyright infringement and violation of the Lanham Act, which was dismissed for its discovery misconduct./ The Special Master appointed to consider the defendants' application for attorney's fees under the Copyright and Lanham Acts found that Scientology
abused the federal court system by using it, inter alia, to destroy their opponents, rather than to resolve an actual dispute over trademark law or any other legal matter.
Id. at 2. The Special Master also found that, although Scientology's complaint was not frivolous, it was filed in an attempt to harass the individual defendants and destroy the church defendants through massive over-litigation and other highly questionable litigation tactics. The Special Master had never seen a more glaring example of bad faith litigation than this./ Scientology's failure to comply with discovery orders "consisted of evasions, misrepresentations, broken promises and lies, but ultimately with refusal." Id. at 4. Accordingly, the Special Master granted the defendants' request for attorney's fees in the amount of $2.9 million. Id. at 2, 4./
Of late, Scientology has been especially vigorous in its pursuit of litigation under the copyright laws to punish critics who dare to possess what Scientology characterizes as its "sacred scriptures." See, e.g., Religious Technology Center v. Wollersheim, 971 F.2d 364 (9th Cir. 1992) (after Scientology sued Wollersheim, his attorney, his expert witnesses and another ex-Scientologist alleging RICO violations, copyright infringement, and misappropriation of trade secrets, the court dismissed the RICO claim and held that use of material by experts and attorneys was fair use under copyright law); Religious Technology Center v. Scott, 869 F.2d 1306 (9th Cir. 1989). Indeed, Scientology's own publication affirmatively boasts about its ability to use the courts to "make squirrels [i.e., persons who have left Scientology] cease suppressive acts against Scientology" and includes vivid accusations about the character and conduct of Church critics. (See V. Young Decl., Exh. B [issue of Scientology newspaper], pp. 4-5) As Scientology itself put it when describing one raid on a critic, "Scientology's raid and seizure was the worst wake-up call this SP [suppressive person] has ever had[.]" Id. at 5.
In one of the more recent lawsuits, a related case to the one herein, RTC v. Lerma, 40 U.S.P.Q.2d (BNA) 1569 (E.D. Va. 1996) (Civil Action 95-1107-A), the court found that:
Notwithstanding the insistence of plaintiff Religious Technology Center (the "RTC" or the "Church") that it brought this lawsuit against defendant Arnaldo P. Lerma ("Mr. Lerma") for the secular purpose of enforcing its copyrights, this Court already has recognized that the primary motivation of RTC in suing Lerma, DGS and The Post is to stifle criticism of Scientology in general and to harass its critics. As the increasingly vitriolic rhetoric of its briefs and oral argument now demonstrate, the RTC appears far more concerned about criticism of Scientology than vindication of its secrets.
Memorandum Opinion in Support of Order of September 15, 1995, and Amended Order of November 29, 1995, at 13 (Dkt. 234). The court later found:
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.
40 U.S.P.Q.2d (BNA) 1569 (E.D. Va. 1996) (November 28 Opinion at 11).
C. Scientology's Sixteen Years Of Litigation Against Defendant Wollersheim.
Scientology has continuously engaged in "Fair Game" against Wollersheim from 1979 to the present. A list of specific acts of "Fair Game," many of them established or confirmed in judicial proceedings, include:
a. Driving Wollersheim into "a deep depressive episode and causing him severe mental anguish" (Wollersheim I, 212 Cal. App. 3d at 878);
b. Holding Wollersheim captive and subjecting him against his will to Scientology's "religious" practices (Wollersheim I, 212 Cal. App. 3d at 878-879);
c. Forcing Wollersheim to "disconnect" from his wife, parents and other family members (Wollersheim I, 212 Cal. App. 3d at 879);
d. Destroying Wollersheim economically by destroying his business enterprise (Wollersheim I, 212 Cal. App. 3d at 879-880);
e. Continuously subjecting Wollersheim, his family, friends, acquaintances, lawyers, expert witnesses, creditors and landlords to constant harassment;
f. Filing four frivolous and harassing lawsuits against Wollersheim in state and federal court in three separate jurisdictions;
g. Subjecting Wollersheim to almost constant "investigation" by "private detectives" and FSMs (field staff members) from 1979 to the present;
h. Refusing to pay in excess of $6 million in judgments in favor of Wollersheim and purposely stripping one of their corporate entities of all assets to prevent collection;
i. Conducting a widespread and exhaustive public relations campaign to destroy Wollersheim's reputation. This campaign was directed by the "Wolly Unit" of Scientology as part of Scientology's campaign of "Not One Thin Dime for Wollersheim";
j. Breaking into the offices of Wollersheim's attorneys and placing agents within the offices of Wollersheim's attorneys;
k. Engaging in and systematic spoliation of evidence and willful destruction and alteration of evidence ordered to be produced by the court and absolute refusal to produce any evidence favorable to Wollersheim in the possession of Scientology;
l. By 1995, forcing Wollersheim to " . . . liquidate all of his assets, personally spend about $300,000, and go over $900,000 into debt, not including attorney fees, during the litigation of the main action and related litigation over an 11-year period." Church of Scientology v. Wollersheim, 42 Cal. App. 4th 628, 641, 49 Cal. Rptr. 2d 620 (1996) (petition for review denied Cal. Supreme Ct. May 22, 1996) (hereinafter "Wollersheim IV").
Scientology, through its members and labyrinthine corporate structure has maintained continuous litigation with Wollersheim since July 28, 1980. For example, when defendant Church of Scientology of California's motions for summary judgment were denied in the Los Angeles County Superior Court and it appeared that the Wollersheim I case would go to trial, the Scientology entity RTC filed a RICO suit in federal court against Wollersheim, his lawyers and his expert witnesses. RTC v. Wollersheim, et al., CV85-7197 (USDC, Central District of California) (hereinafter, "Wollersheim II").
When this maneuver failed to deter trial and the judge ordered Scientology to produce documents, Scientology filed a 42 U.S.C. § 1983 action for civil rights violations directed at Wollersheim, various judges and the Los Angeles County Superior Court. Church of Scientology of California v. Superior Court, CV86-1352 (USDC, Central District. of California) (hereinafter, "Wollersheim III").
When every conceivable appeal of the Wollersheim I judgment was about to be exhausted, and Wollersheim II and Wollersheim III had been dismissed, Scientology filed the Wollersheim IV case in 1993, alleging that they had just discovered that the judge in the Wollersheim I case (who had died six months previously) had had a hidden prejudice against them. Ultimately, just as the Wollersheim IV case was failing, the within action (Wollersheim V) was filed in the District Court for Colorado.
Thus, every time one legal maneuver is about to fail, Scientology files a new lawsuit against Wollersheim, usually in another jurisdiction, as described at length above. Despite so many attempts and the great disparity in resources, Wollersheim has never lost a case to Scientology and currently has three outstanding judgments against Scientology. Further, Wollersheim has continued to exercise his First Amendment right to make public the "religious" doctrines of Scientology and the abuses of its management.
Such litigation has been so pervasive and so abusive that another appellate court held that Scientology's abusive litigation against Wollersheim had "constitutional implications" (i.e., depriving him of due process): "When a litigant continuously and unsuccessfully uses the litigation process in filing unmeritorious motions, appeals and lawsuits, such actions have constitutional implications which may be reviewed on a motion under [the California SLAPP Suit Act]." (emphasis added). Wollersheim IV, 42 Cal. App. 4th at 649./
D. The Lewis, D'Amato, Brisbois & Bisgaard Secret Settlement Agreement.
On May 6, 1991, Time magazine published a cover story entitled "Scientology: Thriving Cult of Greed and Power." (Berry Decl., Exh. 15) Scientology retaliated with litigation that it strategically chose to fragment around the nation. For instance, Time magazine was sued for $485 million in New York./ Steven Fishman ("Fishman") and Dr. Uwe Geertz ("Geertz") were sued for $1 million in California, even though they resided in Florida./ In the latter action, Geertz was insured through a psychologist's malpractice policy issued by Landmark Insurance, which is one of the American Insurance Group (AIG) Companies. AIG retained the Los Angeles law firm of Lewis, D'Amato, Brisbois & Bisgaard ("Lewis, D'Amato") to defend Geertz. As part of his defense, Geertz sought to prove that the allegations of Scientology-related financial fraud, instructions to murder and commit suicide in the Time article were either true or substantially true. For this reason, among others, Lewis, D'Amato employed Wollersheim and F.A.C.T.Net as expert consultants and later designated Wollersheim as an expert witness. (Berger Decl., ¶¶ 7-8) Wollersheim and F.A.C.T.Net assisted Lewis, D'Amato to assemble evidence of Scientology involvement with psychotic breaks, suicides, deaths, financial fraud and tax fraud. Ultimately, Wollersheim filed a voluminous declaration in the Fishman litigation.
Scientology dismissed the Fishman action immediately before trial, but then attempted, first in the District Court and then in the Ninth Circuit, to seal the file. On January 25, 1995, Scientology, Lewis, D'Amato and Landmark Insurance entered into a confidential settlement agreement. Lewis, D'Amato concealed the existence and terms of the settlement agreement from its own client, Geertz, who was still engaged in current and prospective litigation against Scientology. The secret settlement agreement contained a broad general release of Lewis, D'Amato and its "employees, agents, representatives." (See Declaration of Graham E. Berry filed in support of F.A.C.T.Net's Motion for a Continuance Under Rule 56(f) ("Berry Rule 56(f) Decl.") Scientology concealed such agreement from Judge Babcock when Scientology sought the ex parte writ of search and seizure herein.
E. The Wrongful Seizure.
RTC improperly obtained an ex parte seizure order from the Court and, without notice to Defendants, seized not only Defendants' computer database but Defendants' actual computer, hard copies of numerous documents, and other materials including attorney-client/work product privileged materials relating to current litigation between the very same parties. (Wollersheim Decl., ¶ 8) This Court subsequently vacated the seizure order on the grounds that, inter alia, the Plaintiffs were not likely to prevail on the merits of their action herein. RTC nevertheless refused to return all seized materials, requiring a subsequent hearing. Religious Technology Center v. F.A.C.T.Net, 901 F. Supp. 1528 (1995). In fact, RTC is still in breach of the Court's order to return seized items to the exact location, and in the same condition, from where they were taken.
F. Nature Of Works At Issue.
The basis of Scientology's indoctrination system is set forth and illustrated in the writings attributed to its founder, American science fiction writer L. Ron Hubbard. Among these writings are two series of works detailing Scientology's system--the eight-volume Organization Executive Course, known as the "OEC" or the "Green Volumes," and the twelve-volume "Technical Bulletins," known as the "Red Volumes." Scientology itself touts these series as "[t]he full technology to build and run the strongest organizations this universe has ever known," and admits that these series are essential to understanding Scientology's system.
As it refines its psychological system, and as it attempts to cleanse the historical record of evidence of its historical origins and purposes, Scientology has over the years continuously "revised" the OEC and the Technical Bulletins, changing Scientology's public face in significant ways and purging materials deemed not to advance Scientology's agenda. (V. Young Decl., pp. 4-7) Unlike legitimate organizations, however, Scientology makes no effort to preserve a historical record of the original materials on which the "religion" once operated. Id. Therefore, if a historical record is to be maintained for the benefit of future scholars, the heavy burden of maintaining and preserving that historical record must be undertaken by persons or organizations outside of Scientology. (Wollersheim Decl., ¶ 11)
F.A.C.T.Net began to maintain databases of Scientology materials in part to preserve a historical record of Scientology's coercive indoctrination system. In addition to preserving the historical record, F.A.C.T.Net's searchable electronic database vastly increased the utility of the dense and voluminous OEC and the Technical Bulletins to those who could benefit from it. Indeed, F.A.C.T.Net's maintenance of the searchable database is a perfect example of the manner in which F.A.C.T.Net hoped that advancing information systems technology would assist in the dissemination of the kind of usable information that it believes will be most effective in combating coercive psychological systems and human rights abuses. (Wollersheim Decl., ¶ 38)
In light of Scientology's alleged copyright interests, however dubious, and in contrast to the public database available to the general public via the Internet, F.A.C.T.Net has severely limited access to the nonpublic database in which any OEC or Technical Bulletins may be kept. F.A.C.T.Net allows only historians, mental health professionals, victims of Scientology's psychological coercion, attorneys litigating against Scientology, and others who have a legitimate need for access to work with the material. (Wollersheim Decl., ¶¶ 6-7, 11 and 25)
In addition to its preservation functions, F.A.C.T.Net has provided research and expert consulting services to attorneys engaged in litigation against Scientology. In particular, F.A.C.T.Net and Wollersheim were hired by Lewis, D'Amato, Brisbois & Bisgaard from 1993 to 1994 to assist in the defense of CSI v. Fishman, Case No. 91-6426 HLH (Tx) (C.D. Cal.), a defamation action brought by Scientology against a former Scientologist and his psychologist. (Berger Decl., ¶ 8)
F.A.C.T.Net created the nonpublic database from three primary sources. First, Wollersheim had amassed a significant collection of Scientology materials of all types during his sixteen years of litigation with Scientology. In fact, in one of its numerous actions against Wollersheim (Wollersheim II), Scientology unsuccessfully sued Wollersheim, his lawyers, and his expert witnesses for copyright infringement for providing and possessing some of the very documents at issue in this case. See Religious Technology Center v. Wollersheim, 971 F.2d 364, 367 (9th Cir. 1992). In another action, the OEC and the Technical Bulletins made up a significant part of the materials offered into evidence during trial of the matter. (Berry Decl., Exh. 5)
Second, Lewis, D'Amato provided F.A.C.T.Net and Wollersheim with boxes of materials and a collection of CD-ROM disks containing press articles and other materials on Scientology in connection with their retention of F.A.C.T.Net and Wollersheim as expert consultants and witnesses in the CSI v. Fishman Geertz litigation.
Third, both anonymous and named donors regularly submit various unknown materials via hardcopy, floppy disk, and upload to F.A.C.T.Net's Internet site. In fact, based on Wollersheim's knowledge of Scientology tactics and the nature of the materials it received, F.A.C.T.Net suspected that Scientology itself was uploading materials to inflate, if not manufacture, the present suit. (Wollersheim Decl., ¶ 14) Due to F.A.C.T.Net's limited budget and manpower, however, most of these materials remained in a nonpublic database or storage area awaiting review for categorization and scanning for computer viruses by members of F.A.C.T.Net. If they were "copied" onto F.A.C.T.Net's computer, it was only so Defendants could determine what the submitted materials were and whether such materials had viruses. (Wollersheim Decl., ¶¶ 5, 7 and 14)
Consistent with the well-accepted business practice of creating electronic backups to safeguard data maintained on a computer system from possible machine failure, and in response to information received in December 1994 or January 1995 that someone had infiltrated F.A.C.T.Net's organization and that F.A.C.T.Net's computer records would likely be a target of Scientology sabotage, F.A.C.T.Net, by January 1995, created between six and ten CD-ROM backup sets of all of the information in its library and archives. (Jeffrey Jacobsen Declaration ("Jacobsen Decl")) Three or four of these sets remained in the possession of Defendants. (Wollersheim Decl., ¶ 24)
Because of the extraordinary measures Scientology will take to silence its critics and destroy access to information, F.A.C.T.Net reasonably believed it to be prudent to create more than the normal two to three backup copies of the information in its library and archives and to arrange to have at least five of the backups stored off-site in different locales. F.A.C.T.Net specifically instructed each person to whom an off-site backup was entrusted that they could not use the CD unless F.A.C.T.Net's library and archive were destroyed, including through a wrongful seizure by Scientology, and then could only use the CDs in a manner considered to be fair use under the copyright laws. (Wollersheim Decl., ¶ 24)
One such off-site storage location for some of the CDs was the Arizona home of Jeff Jacobsen ("Jacobsen"), volunteer and contributor to F.A.C.T.Net. Jacobsen has testified that he made no use of the portion of the CD information that includes the works here at issue. (Wollersheim Decl., ¶¶ 1, 3, 4, 5, 6 and 9) F.A.C.T.Net did not "sell" the Research CD, or any other CD, to Jacobsen or any other person./ Jacobsen was a F.A.C.T.Net volunteer assisting F.A.C.T.Net by providing a safe location for backups of a portion of F.A.C.T.Net's library and archives. (Jacobsen Decl., ¶ 5) Jacobsen took the CDs as a service to F.A.C.T.Net, and had no intention of making any independent use of the CDs; as a volunteer working with F.A.C.T.Net, he plainly had no interests or reason to "purchase" the CDs from F.A.C.T.Net. (Jacobsen Decl., ¶ 6) Further, the storage of a backup copy was in no way tied to the making of a donation. Some volunteers stored CDs and made donations. Some volunteers stored CDs and made no donations. Finally, most volunteers did not store CDs and made donations. As an organization that lives hand-to-mouth on donations from friends and volunteers, F.A.C.T.Net of course asked anyone who would listen for donations. (Wollersheim Decl., ¶ 24)
Even in the case of Jacobsen, the donation offered did not cover the actual cost of making the backup set of CDs. The expense of the CDs themselves, the CD recorder, the software, the computers, and the like averaged far more per set of CDs than anyone, including Jacobsen, donated. (Wollersheim Decl., ¶ 24)
IV. ARGUMENT.
A. BPI Has Not Met Its Burden Of Proving That It Has Valid Copyrights.
BPI must shows ownership of a valid copyright and copying of protected components of the copyrighted material to establish a claim for copyright infringement, as even BPI admits. Gates Rubber Co. v. Bando Chemical Industries, Ltd., 9 F.3d 823, 831 (10th Cir. 1993); BPI's Memorandum at 15. BPI has met neither burden here, and its admissions and other facts raise significant questions concerning the ownership and copyrightability of the works-at-issue. Summary judgment must be denied in such circumstances.
BPI has presented certificates of registration for the works-at-issue, and such certificates generally constitute prima facie proof of validity and ownership. 17 U.S.C. § 410(c). That statutory presumption codifies recognition that the Copyright Office has reviewed the works presented to it. H.R. No. 1476, 94th Cong., 2d Sess. 156-157 (1976) (Register of Copyrights to issue a registration if it determines that "the material deposited constitutes copyrightable subject matter and that the other legal and formal requirements of this Title have been met"). However, that presumption does not apply here because BPI waited too long to register most of the works at issue to qualify for the statutory presumption. The statutory presumption of validity only adheres to works registered for copyright within five years of their initial publication. 17 U.S.C. § 410(c) (statutory presumption of validity applies only to works registered "before or within five years after first publication of the work"). As the very registrations which BPI submits demonstrate, however, about 85% of the "1900" works at issue were published much more than five years before, and often were published decades before, their belated registration. (V. Young Decl., ¶ 18; Berger Decl., ¶¶ 2-4 and Exh. "A.") Thus, BPI has the burden of proving, through admissible evidence, the "multitude of facts" necessary to show that the information in each registration is truthful and that the copyright claimed for each work is valid.
Though a statutory presumption does not apply, this Court can give the registrations the evidentiary weight which, in its discretion, it believes appropriate. 17 U.S.C. § 14(c); RTC v. Netcom, 923 F. Supp. 1231, 1242 (N.D. Cal. 1995) (evidence disputing the accuracy of information contained on the registration favors a finding that little or no evidentiary weight should be given those registrations). There are several reasons why the presumption should not apply. The huge time gap between the dates of creation and/or publication of the works and the filing of the applications to register the copyrights in those works raises substantial doubt as to whether any of the persons filling out and signing the registration applications either remembered facts accurately or ever even had personal knowledge of the facts that were being represented to the Copyright Office. The "Certification" box on every copyright registration application requires the person signing the application to certify "that the statements made by me in this application are correct to the best of my knowledge" (See, e.g., Plaintiff's Exhibit B-1 to Declaration of Helena K. Korbrin), as required by Copyright Office Regulations. 47 C.F.R. § 202.3(c)(2). This statement would be pointless if it were merely a representation that the signer has no affirmative knowledge of the untruth of any statement made in the application. Obviously, it is intended to inform the Copyright Office, and the world at large, that the application is based upon some knowledge of the facts set forth in the application by the person signing it. In this instance, due to the vast time that passed between creation and registration, the signature cannot be taken as an affirmation of the truth of the facts in the application, so the application cannot have any presumptive weight whatsoever.
In addition, credible evidence disputes the authorship of Hubbard as to some or all of the works at issue, which authorship forms the basis of BPI's ownership claims. Vicki J. Aznaran ("Aznaran"), a former president of RTC, the owner of most of Scientology's copyrights, testified that RTC made a practice of claiming that materials it submitted to the Copyright Office for registration were authored by Hubbard, when in fact RTC knew that those materials were authored by other persons, such as David Mayo ("Mayo"). (V. Young Decl., Exh. 2 [Mayo]) Where material was falsely registered listing Hubbard as the author, it indicates a conscious and deliberate deception on the part of Scientology in the registration process, which negates any basis for presuming validity of Plaintiffs' copyrights based on the "facts" set forth in the copyright registration certificates. Vaughn Young ("V. Young") also disputes Hubbard's authorship claims as to specific works at issue, stating that V. Young himself authored some of the works in a non-work-for-hire situation. V. Young describes the routine practice of persons other than Hubbard creating materials attributed to him. (V. Young Decl., ¶¶ 29-31) Since "copyright in a work . . . vests initially in the author or authors of the work," 17 U.S.C. § 201(a), authorship by other individuals would mean that the materials were never owned by Hubbard, and thus any assignment from Hubbard, or his estate, to RTC or BPI would be invalid as to those works. Copyright registrations submitted 6, 10, 15, 20, or more years after the date of initial publication which retroactively claim that a deceased Hubbard wrote tens of thousands of pages of material should be given no evidentiary weight in such circumstances.
Factual disputes concerning initial publication dates for many of the works at issue also negate the evidentiary weight of the copyright registrations. As is described in the V. Young declaration, as many as 30% of the works at issue were initially published as individual works and widely disseminated by Scientology for a number of years without copyright notice. Only later, when concerns were raised about copyright protection, were those works assembled, slight language changes made, and either copyright notices placed on individual documents or the works "compiled" and registered together. (V. Young Decl., ¶ 18) Although significant additional discovery as to each of the works at issue is needed so that the particulars concerning the publication of each such work can be ascertained, the present evidentiary record establishes the existence of factual disputes which should defeat summary judgment.
Finally, BPI has not even attempted to meet its burden of establishing the originality or copyrightability of the works-at-issue here. To the contrary, BPI has already admitted facts which raise significant doubt as to the copyrightability of some or all of the works-at-issue. BPI has repeatedly characterized the subject works as "scientific formula" (McShane Testimony at Preliminary Injunction Hearing 107:17-20), "technology" (Berry Decl., Exh. 18 [McShane], ¶ 4), "processes" (Berry Decl., Exh. 18 [McShane], ¶ 10), "techniques" (Berry Decl., Exh. 18 [McShane], ¶ 10), "systems" and/or historical "facts." Such matters are not protectable by copyright. 17 U.S.C. § 102(b) ("In no case does copyright protection . . . extend to any idea, procedure, process, system, method of operation, concept, principle or discovery . . ."); Feist Publications v. Rural Telephone Service, 499 U.S. 340, 345 (1991) ("it is fundamental to copyright law that facts cannot be copyrighted"); Mitek Holdings, Inc. v. ARCE Engineering Co., Inc., 89 F.3d 1548, 1556 n.20 (11th Cir. 1996) (based on the Tenth Circuit's Gates opinion, the Eleventh Circuit holds that a mathematical formula is uncopyrightable because it "may be expressed in only a limited number of ways; to grant copyright protection to the first person to devise the formula effectively would remove that mathematical fact from the public domain"); Publications International, Ltd. v. Meredith Corporation, 88 F.3d 473, 480 (7th Cir. 1996) (recipes in cookbook not protectable by a copyright because "the identification of ingredients necessary for the preparation of each dish is a statement of facts"); National Council on Compensation, Inc. v. Insurance Data Resources, Inc., 40 U.S.P.Q.2d 1362 (S.D. Fla. 1996) (court dismisses copyright infringement action involving codes and formulas "because the codes and formulas at issue here are not copyrightable as a matter of law").
BPI's failure to present evidence in support of this most basic copyright requirement as to any of the works-at-issue requires denial of the present motion.
B. BPI Has Not Met Its Burden Of Proving That Copyrightable Elements Were Taken By Defendants.
To prevail on its copyright infringement claim, BPI must prove not only that it owns valid copyrights in the works-at-issue, but that Defendants copied "protected components" of the copyrighted materials, as described above. Gates Rubber Co., 9 F.3d at 831. Determination of when "protected components" of copyrighted materials have been copied is not difficult in connection with many creative works. However, copyright law also protects "functional" works which contain many unoriginal and/or noncopyrightable elements such as facts, processes,/ systems, formulae, etc. Examples of such works, which all serve the "function" of instructing how to accomplish a certain task or achieve a certain result, include cookbooks, instruction manuals and computer programs./ See, e.g., Marcus v. Rowley, 695 F.2d 1171 (9th Cir. 1983) (instruction book for cake decoration copyrightable); Apple v. Franklin Computer Corp., 714 F.2d 1240, 1251 (3rd Cir. 1983) (computer program whose sole purpose is to manage the internal functions of a computer and facilitate use of application programs in the computer copyrightable); Publications International, Ltd., 88 F.3d at 480 (although cookbook may be protectable by a copyright, specific recipes in cookbook not protectable because of their functional nature); Apple Computer v. Microsoft Corporation, 35 F.3d 1435 (9th Cir. 1994) (computer program copyrightable, but contains numerous nonprotectable elements). Where such works are involved, courts have long recognized that a more sophisticated analysis of the works at issue must be undertaken to delete the unprotectable elements of the original work before a comparison is made of the copied portion of the allegedly infringing work so that the court can determine whether protectable elements were taken. Although the precise mode of analysis by which such a filtering out should take place has differed slightly,/ the leading method for such analysis is the "abstractions" test developed by the Second Circuit Court of Appeal. See Nichols v. Universal Pictures Corp., 45 F.2d 119, 121 (2d Cir. 1930), cert. denied, 282 U.S. 902 (1931); Computer Associates International, Inc. v. Altai, Inc., 982 F.2d 693 (2d Cir. 1992). Under the "abstractions" test, a court must break a work down in various levels of "abstraction," from most to least abstract. The court then must "filter out" all elements of the original work which are not protectable by copyright. The court must finally "compare" the remaining protectable portions of the original work to the copied portions of the allegedly infringing work to determine if they are "substantially similar" for copyright purposes. Altai, Inc., 982 F.2d 693, 709-10 (2d Cir. 1992).
The Tenth Circuit adopted the Second Circuit's "abstractions" analysis for copyright infringement in Gates Rubber Co., 9 F.3d at 834-835. It requires a multilevel evaluation of abstractions and a filtering out of unprotectable elements, such as facts, processes, etc. Id. at 834. Only then can a court compare the respective works to determine whether "protected components have been taken." Id.
The "abstractions" analysis has often been applied to what is known as "non-literal" copyright infringement, that is, the taking of elements other than the actual text of the copyrighted work. However, the Eleventh Circuit Court of Appeals recently established that abstractions analysis is also necessary where literal infringement of largely "functional" works such as computer software or BPI's "technology" are involved. Bateman v. Mnemonics, Inc., 79 F.3d 1532 (11th Cir. 1996), reversed a judgment of copyright infringement for plaintiff and ordered a new trial because, inter alia, the trial court refused to instruct the jury on an "abstractions" analysis. The Eleventh Circuit rejected plaintiff's argument that jury instructions on an "abstractions" analysis was not necessary because "literal" infringement of the computer software was involved, stating:
[Defendant] PAC asserts that the district court committed reversible error by instructing the jury to filter out only non-literal similarities in applying the "abstraction-filtration-comparison" test for substantial similarity that the Second Circuit adopted in Computer Associates International v. Altai, Inc. . . . PAC requested jury instructions that allowed for filtering out all unprotectable (that is, unoriginal) expression, without regard to whether the similarity existed on the literal or non-literal level. . . .
* * *
Where the district court erred . . . was in not requiring the jury to consider the connection between the Altai test and the challenges to originality, such as merger, scenes à faire, standard technique or practice, . . . [etc.]. Since the district court instructed the jury that Altai filtration was limited to non-literal copying, the jury must have concluded that any instances of literal copying of Bateman's code by PAC were by definition acts of copyright infringement. This conclusion is a manifest distortion and misstatement of the law.
79 F.3d at 1543, 1545 (citations omitted and emphasis added).
The Bateman court's ruling relied heavily upon and is consistent with the analysis entered into by the Tenth Circuit in Gates Rubber Co., in which the Tenth Circuit held that in applying the "abstractions" the court should "eliminate from comparison the unprotectable elements of ideas, processes, facts, public domain information, merger material, scenes à faire material, and other unprotectable elements suggested by the particular facts of the program under examination." Gates, 9 F.3d at 834, cited with approval in Bateman, 79 F.3d at 1545.
BPI here has presented no evidence that any portion of any of its works are protectable as described above. It has further admitted that the works contain many nonprotectable elements as described above. BPI's motion has not even attempted to engage in the requisite abstractions analysis by filtering out such unprotectable elements before conducting a comparison of its and Defendants' works. This failure to introduce evidence on this basic issue further supports denial of summary judgment.
C. On Its Face, The Evidence Provided By BPI Shows That A Significant Number Of The Works At Issue Are In The Public Domain.
BPI admits that 93 of the "1900" works at issue were published without notice of copyright before January 1, 1978, and often were published decades before any copyright registration was sought. This publication without notice injects those works into the public domain, and precludes any copyright infringement as to them for the reasons described below.
Two different copyright statutes apply to the works at issue herein. Works published before January 1, 1978, are governed by the Copyright Act of 1909; works published after that date are governed by the Copyright Act of 1976, as amended. 2 Nimmer on Copyright, supra, § 7.02[C].
The Copyright Act of 1909 contained a strict "notice" requirement. Publication of a work without a valid copyright notice on the work itself automatically injected the work into the public domain. 17 U.S.C. §§ 10, 19 et seq. (1909 Act); New Era Publications International, APS v. Carol Pub. Group, 904 F.2d 152, 161 (2d Cir.), cert. denied, 111 S. Ct. 297 (1990).
The Copyright Act of 1976 became effective as of January 1, 1978. Works first published between that date and March 1, 1989, also had to bear a copyright notice. Publication without notice, and failure to take appropriate steps to cure omitted notice within 5 years of initial publication, also would inject those works into the public domain. See 17 U.S.C. §§ 401, 402, 405 (pre-Berne Convention Implementation Act of 1988); Garnier v. Andin Int'l, Inc., 36 F.3d 1214, 1219 (1st Cir. 1994).
The notice requirement was eliminated in the Berne Convention Implementation Act of 1988. Pursuant to that Act, copyright notice is no longer required for all works first published after March 1, 1989. 17 U.S.C. §§ 401(a), 402(a).
The evidence BPI submits with its Motion at very least creates a dispute of fact as to whether many of the works at issue are in the public domain. Ninety-three of the works at issue on their face have no copyright notice. (Berger Decl., ¶ 3) The copyright registration certificates accompanying those works admit that they were published before January 1, 1978, the effective date of the Copyright Act of 1976. Such admitted publication without notice automatically injects those works into the public domain as described above.
There also is a significant factual dispute as to the initial publication dates of many other of the works at issue. As is described at length in the Young declaration, hundreds of the works at issue were first published before the "initial publication dates" reflected in the copyright registrations attached with BPI's Motion and without notice, injecting those works irretrievably into the public domain. (V. Young Decl., ¶ 17) Years after such initial publication, BPI or its predecessors retroactively sought to make slight alterations in the public domain works, then republish them with belated notice. Although such derivative works might qualify for copyright protection covering only the new material added, they could not provide protection for the public domain materials contained within the derivative works. See 17 U.S.C. § 103. Thus, factual disputes concerning the public domain nature of those works requires denial of summary judgment.
Finally, BPI's failure to provide deposit copies of 258 of the works which it alleges were infringed has prevented Defendants from reviewing those works to determine whether they, too, were published without notice and had fallen into the public domain. BPI's failure to meet its initial burden of proof as to those works requires denial of summary judgment.
D. The First Amendment Protects Defendants' Compilation Of Scientology Materials.
1. The First Amendment Cannot Be Subordinated To A Statute.
BPI asserts that there can be no separate First Amendment defense (Motion, pp. 30-32) to copyright infringement. However, this cannot be true, since no statute or judge-made rule can override the Constitution.
BPI's proposition is that any First Amendment defense must be encompassed within a fair use defense. There are two ways that this assertion can be applied, but only one of these is constitutionally valid.
The first, and valid, way to apply this proposition is to say that any First Amendment defense will be classified as a fair use defense, but that the statutory and common law boundaries of fair use cannot be used to narrow the constitutional protections of the First Amendment. This is essentially a semantic exercise, not a restriction on the enforceability of the First Amendment. It merely says that whenever there is a cognizable First Amendment interest, it will be deemed to be a fair use.
The second, and invalid, way is to say that if a compelling First Amendment defense can be stated, but cannot be reconciled with the fair use doctrine, the First Amendment defense cannot be recognized. Clearly this application must fail, since it would subordinate the Constitution to statute and case law. As every first-year law student learns, no court--not even the Supreme Court--can elevate a statute above the Constitution.
Thus, any pronouncement by any court, including those in the cases cited by BPI, can be at most a prediction that there will never be a First Amendment value that does not also qualify as a fair use, but no court can make such a categorical ruling. In fact, a careful reading of the cases cited by BPI shows that they are by and large consistent with this, in that while they allowed no First Amendment exception in the cases before them, they did not purport to state absolute bars to any First Amendment defense not accommodated by fair use. See, e.g., Roy Export Co. Establishment v. Columbia Broadcasting System, Inc., 672 F.2d 1095 (2d Cir.), cert. denied, 459 U.S. 826 (1982) ("In this Circuit, while we have acknowledged in passing the conceivable occurrence of some 'rare,' 'almost unique' circumstance . . . in which [a First Amendment defense might lie] . . . we have also stated the general rule that "[c]onflicts between interests protected by the first amendment [sic] and the copyright laws have thus far been resolved by application of the fair use doctrine.") (emphasis added; citations omitted)./
Furthermore, in each of the cases cited by BPI, the respective courts were being asked to create categorical exceptions to copyright under the First Amendment, i.e., exceptions that would apply generally to certain kinds of activities and not just to the specific facts of the particular cases. In the instant case, however, Defendants assert that the First Amendment protects their specific actions (whether as a form of fair use or independently) and do not seek a broad ruling that activities of the type at issue here are always privileged under the First Amendment. Here, Defendants argue that on the facts of this case, these Defendants' First Amendment rights need to be protected against an unrelenting destructive campaign by Scientology and its minions. Ultimately, it may be of no great moment whether the Court accepts Defendants' First Amendment protections as a part of their fair use defense or as a separate basis. In either case, the Court must give the First Amendment its proper primacy over statute and case law.
2. First Amendment Requires A Finding Of No Liability.
Defendants here seek only to make the information contained in the works at issue available to responsible researchers and attorneys in litigation so that there can be informed discussion and debate of Scientology and its principles. Scientology's current copyright action is only the latest in a sixteen-year litigation campaign to silence Defendants and prevent any dissemination of any of the information contained in the works at issue so that Scientology can control all discussion concerning itself. Scientology's apparent strategy is to make it legally or economically impossible for Defendants to make information available to others so as to deprive third parties of access to the information concerning Scientology that it has taken Defendants decades to acquire. Scientology's attempt to abuse copyright law and litigation procedures to impoverish debate is barred by the First Amendment.
In Defendants' view--and in the view of many of Scientology's critics--Scientology is a huge profit-making corporate enterprise that uses mind control, intimidation, psychological trickery, quackery, coercion, paranoia, and even blackmail to attract and retain adherents, and to take vast sums of money from them and others. Scientology is subsidized by taxpayers in that, in spite of being enormously profitable, it pays no taxes./ It harasses its enemies, not just by its members' temperament but also by doctrine. It uses litigation and intimidation to attempt to silence anyone who either criticizes the church or its religion, or seeks to expose the religion so that potential adherents can make a more informed choice as to whether to involve themselves. Accordingly, Scientology and its practices are not only matters of public interest, but also of public welfare, safety, and finance.
Furthermore, it is clear that there is no lesser degree of use which Scientology would tolerate. Although Scientology complains that Defendants did "not even attempt a transformative use" of the BPI materials, Scientology's abundant litigation makes it clear that Scientology shows no less tolerance for even a slight use which is transformative use. A most compelling example of this is one with which the Court is already familiar (See F.A.C.T.Net, 901 F. Supp. at 1526-27), the Lerma action, in which Scientology sued The Washington Post over a newspaper article in which 43 words out of Scientology's vast body of works were included in a lengthy article criticizing Scientology. The quotations were used to illustrate points of criticism, a "classic" fair use, to use Scientology's own term. (Motion, p. 21)/ Since Scientology admits of no possible fair use of any copyrighted Scientology materials, it is useless to argue that Defendants' First Amendment rights are protected by fair use. Indeed, even in instances in which no Scientology material was copied, Scientology has filed lawsuits for slander against its critics. See, e.g., Church of Scientology International v. Time Warner, Inc., 806 F. Supp. 1157 (S.D.N.Y. 1992) ($415 million libel claim for critical article dismissed on summary judgment).
Moreover, Scientology is waging a war against Wollersheim. Its intentionally crushing cruelty is documented in Wollersheim I, 212 Cal. App. 3d 872, 260 Cal. Rptr. 331 (1989)./ In its opinion, the California Court of Appeals told a story that sounds like a thriller novel, detailing how Wollersheim was held against his will and literally driven insane, and how later his business and life were destroyed, all intentionally by Scientology. No doubt a substantial motivation for Scientology to conduct such war is to stop Wollersheim from his criticism of Scientology and dissemination of information showing what Scientology is really like.
Thus, there are two very fundamental First Amendment rights at stake here. First, for Defendants there is their basic right to speak out about matters of public concern and governance. Second, there is a public interest/First Amendment stake for nonlitigants who are concerned about the activities of Scientology, such as taxpayers, potential cult members, and parents and other loved ones of cult members. If Scientology can silence these Defendants, and shut off the flow of information about Scientology, then the right of the public at large to know Scientology's true nature is abridged.
The apparent conflict between the First Amendment and the copyright laws has been reconciled by recognizing that society's interest in freedom of speech must be balanced against, and give some way to, copyright as a mechanism used to promote creative activity. See 1 Nimmer on Copyright, supra, § 1.10. However, "[w]here the assertion of a copyright interest conflicts with the free flow of information in an open society, and so impairs the dissemination of research and intellectual works, the copyright owner's interest should yield to the public welfare lest the very purpose of the Copyright Act be frustrated." Bruzzone v. Miller Brewing Co., 202 U.S.P.Q. (BNA) 809, 812 (N.D. Cal. 1979) [emphasis added].
Scientology does not respect this balance, and in fact has undertaken numerous lawsuits, at what must be a horrific cost (certainly for its opponents), specifically for the purpose of denying that balance. As demonstrated by Scientology's unsuccessful lawsuits against Time magazine and The Washington Post, and the other litigation and behavior described above, Scientology wields its copyright rights as a massive club to suppress as much critical discussion as it can. Where a copyright claimant tries to misuse the copyright to not merely protect the creative incentive, but to beat down First Amendment interests, then the copyright should not be enforced. In such a case, as here, the conflict between copyright law and the First Amendment is no longer a matter of the competing policies of protection of the incentive to create and protection of freedom of speech. Instead, the copyright intrudes on the First Amendment's protections, without a legitimate copyright interest to protect or to weigh against the constitutional protection. When a copyright holder repudiates the balance between copyright and the First Amendment, as Scientology has done in general and specifically as to Wollersheim, then the First Amendment must prevail, as all constitutional principles must.
Finally, it must also be pointed out that Defendants have never contended that the First Amendment (or any other legal principle) gives them "the unfettered right" to copy Scientology's works, as alleged in the Motion (at p. 30). This childish and offensive assertion demonstrates Scientology's "take no prisoners" attitude towards its enemies.
E. Defendants Have Engaged In A "Fair Use" Of The Works At Issue.
1. Defendants' Use Of The BPI Materials Falls Squarely Within Recognized Fair Uses.
The Supreme Court stated in Harper & Row v. Nation, 471 U.S. 539 (1985), that "copyright is intended to increase and not to impede the harvest of knowledge . . . . 'It is intended to motivate the creative activity of authors and inventors by the provision of a special reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired. The monopoly created by copyright thus rewards the individual author in order to benefit the public.'" Id. at 545-546 (quoting Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 429, 477 (1984)). More specifically:
Where the assertion of a copyright interest conflicts with the free flow of information in an open society, and so impairs the dissemination of research and intellectual works, the copyright owner's interest should yield to the public welfare lest the very purpose of the Copyright Act be frustrated.
Bruzzone v. Miller Brewing Co., 202 U.S.P.Q. (BNA) 809, 812 (N.D. Cal. 1979).
a. Reproduction Of The BPI Materials Constitutes The Established Fair Use Of Reproduction In Connection With A Judicial Proceeding.
Defendants' copying of Scientology's works in connection with Wollersheim's long litigation against Scientology and Wollersheim's and F.A.C.T.Net's role as expert witnesses against Scientology was protected fair use. Reproduction of a work even in its entirety in connection with a judicial proceeding is fair use because it "serves a qualitatively different function and does not satisfy the reader demand for the original."/ 3 Nimmer on Copyright, supra, § 13.05[D], at 13-91. See Religious Technology Center v. Wollersheim, 971 F.2d 364, 367 (9th Cir. 1992); Jartech, Inc. v. Clancy, 666 F.2d 403 (9th Cir. 1982) (the copying of an allegedly obscene motion picture film for the purpose of bringing a nuisance abatement action against the producers of such motion picture is defensible as fair use); Grundberg v. Upjohn Co., 137 F.R.D. 372, 338 (D. Utah 1991) (defendant's copyright ownership of documents cannot prevent products liability plaintiff from using documents in litigation); City Consumer Serv., Inc. v. Horne, 100 F.R.D. 740, 747-48 (D. Utah 1983) (this Court held that an index of documents compiled by the plaintiff for use in the lawsuit was protected by copyright, but still discoverable)./ See also United States v. Mitchell, 386 F. Supp. 639 (D.D.C. 1975); Douglas Int'l Corp. v. Baker, 335 F. Supp. 282 (S.D.N.Y. 1971); Marvin Worth Prod. v. Superior Films Corp., 319 F. Supp. 1269, 1271 (S.D.N.Y. 1970). Compare Honda Research & Dev. Co. v. Loveall, 687 F. Supp. 355, 356 (E.D. Tenn. 1985).
As one noted commentator summarized:
[W]orks are customarily reproduced in various types of judicial proceedings, including obscenity and defamation actions, to say nothing of copyright infringement actions, and it seems inconceivable that any court would hold such reproduction to constitute infringement either by the government or by the individual parties responsible for offering the work in evidence.
3 Nimmer on Copyright, supra, § 13.05[D], at 13-91 (citing Religious Technology Center v. Wollersheim, 971 F.2d at 367 (emphasis added)./
Wollersheim II is especially appropriate and applicable here. There, Scientology sued Wollersheim, his attorneys, and the expert witnesses hired by his attorneys alleging RICO, copyright, and tort claims on the ground that, during his state court action against Scientology, "Wollersheim's attorneys obtained copies of stolen religious scriptures from former members of the Scientology Church and gave them to Wollersheim's expert witnesses." 971 F.2d at 365. In particular, Scientology alleged that one of Wollersheim's attorneys provided his expert witness with copies of copyrighted works, in fact some of the very same works involved in this case. Id. at 367./ The court held that such reproduction and dissemination was fair use. Id. The court reasoned that "use that has no demonstrable effect upon the market for, or the value of, the copyrighted work need not be prohibited in order to protect the author's incentive to create." Id. (quoting Hustler Magazine, Inc. v. Moral Majority Inc., 796 F.2d 1148, 1155 (9th Cir. 1986) (quoting Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 450 (1984))). Such holding is just as appropriate here where Defendants copied all of the works for the purpose of defending and prosecuting litigation against Scientology and serving as expert witnesses in litigation brought by Scientology.
In Grundberg, 137 F.R.D. 372, Grundberg sued the Upjohn Company over the alleged side effects of the drug Halcion. The district court entered a stipulated blanket protective order that generally prohibited copying and disseminating confidential documents produced by Upjohn during discovery. Id. at 381. Upjohn designated as confidential each page of each document that it produced to Grundberg. Id. Grundberg filed a motion challenging such designation for numerous documents. Id.
Upjohn responded by registering a copyright for 90,000 pages as a single work. Id. The Copyright Office waived the deposit requirement for the documents sought to be registered except for 100 "masked" representative documents and allowed all of the documents to be registered as a single "unpublished collection" despite the fact that many of the documents had been previously published and were written by many different authors unaffiliated with Upjohn. Id. at 384. Upjohn then instituted a separate action for copyright infringement against Grundberg and her attorneys seeking to enjoin them from disseminating copies of the documents. Id. at 381. That action was consolidated with the original action. Id.
After finding that Upjohn's copyright registration was invalid and casting grave doubt as to Upjohn's ability to copyright significant portions of the 90,000 pages,/ the district court held that "to whatever extent Upjohn may have [had] a copyrightable interest in the litigation documents, such [could] not be asserted or maintained to impede or prevent the free use and accessibility of such documents in the context of th[e] litigation." Id. at 388 (emphasis added). See id. at 392.
The only court that restricted a litigant's right to reproduce copyrighted materials in connection with litigation still recognized such right and based its decision on facts distinguishable from those here. In Honda Research & Development Co. v. Loveall, 687 F. Supp. 355 (E.D. Tenn. 1985), Loveall sued American Honda Motor Co. and Honda Motor Co. in state court over alleged design defects in a vehicle manufactured by Honda. Id. at 359. Loveall propounded discovery to a non-party subsidiary of one of the defendants, Honda Research & Development Corporation ("Honda R&D"), and obtained certain confidential documents. Id. at 356. Honda R&D moved unsuccessfully for a protective order in the state court litigation to prevent its confidential documents from being placed in the public record. Id. Honda R&D then registered the confidential documents for copyright protection and sued Loveall and his attorneys in federal court pursuant to Section 502 of the Copyright Act to enjoin them from disseminating the confidential documents or placing them in any public record. The district court found that Honda R&D would be irreparably harmed if the confidential documents were placed in the public record, where the documents could be reviewed by Honda's competitors, and granted a preliminary injunction sealing the court records containing the documents. Id. at 356-57.
Significantly, in granting the preliminary injunction, the district court applied a trade secret rather than a copyright analysis, focusing on the harm Honda R&D would suffer if its confidential documents were disclosed to competitors rather than Honda R&D's copyright interests. Id. at 357 ("This Court need only point out that the Tennessee Supreme Court found that this information was a trade secret and was not convinced by defendants' arguments to the contrary in that proceeding."). Like the courts cited above, the district court never expressed any doubt, and even impliedly recognized, that Loveall's reproduction in connection with the state and federal actions did not infringe Honda R&D's copyright. In fact, the district court did "have some question presently as to the extent th[e] plaintiff is protected by federal copyright law . . . ." Id.
As discussed above, Wollersheim and F.A.C.T.Net obtained almost all or all of the materials stored in the nonpublic database and submitted by Scientology as evidence of copyright infringement from Wollersheim's sixteen-year litigation with Scientology and from Lewis, D'Amato, Brisbois & Bisgaard during CSI v. Fishman and Geertz. (Wollersheim Decl., p. 36; Berger Decl., ¶¶ 7-8) Under the authority cited above, such reproduction is fair use in connection with a judicial proceeding.
b. Defendants' Making Of "Backup" Copies Of The Database Qualifies As Fair Use Pursuant To The Policies Embodied In 17 U.S.C. § 117 As Well As Standard Industry Practice And Necessity.
One factor courts have considered in the fair use analysis and Congress in codifying some of the fair use factors is the "industry practice" or "custom" and the need underlying such practice or custom. See, e.g., Harper & Row, Publishers, Inc. v. Nation Enter., 471 U.S. 539, 593-94 (1985) (Brennan, J., dissenting) ("defendants' activity was consistent with standard journalistic practice"); Williams & Wilkins v. United States, 487 F.2d 1345, 1356 (1973), aff'd by equally divided court, 420 U.S. 76 (1975) (stating that photocopying by libraries is customary and well accepted in the industry).
The need for and the practice of the making a backup copy of computer applications and especially data is universally recognized in the computer and information systems industry and field. See Vault Corp. v. Quaid Software, Ltd., 847 F.2d 255 (5th Cir. 1988) (discussing the need for backups and interpreting broadly the 17 U.S.C. § 117 exception). In Vault, the trial court found that "[i]t is an ordinary practice of computer users to purchase computer software and immediately make archival backup copies of that software. This is done in order to assure the user that in the event of mechanical, electrical or physical damage to the software program or disks, a functional backup copy is available for use." Vault, 655 F. Supp. 750, at 754. The court based this finding on extensive testimony from four experts on computer software and systems administration. Vault, 847 F.2d at 264 n.18. Congress codified the creation of backup copies of computer software in 17 U.S.C. § 117.
Further, a library's or archive's need for making backup copies of copyrighted works is so well recognized as to enjoy codification in 17 U.S.C. § 108. Section 108 authorizes libraries and their employees to make and distribute single copies of copyrighted works as long as: a. the copies are made without direct or indirect commercial motivation; b. the libraries are open to the public or available to researchers in a specialized field; and c. the copies made include a copyright notice. Id. at 108(a).
Even where copying activities do not fit squarely within the statutory fair use exceptions, courts apply the policies underlying such statutory exceptions in a fair use analysis under 17 U.S.C. § 107. See 17 U.S.C. § 108(f)(4); Williams & Wilkins Co. v. United States, 487 F.2d 1345, 1362 (Ct. Cl. 1973) (permitting library/educational institutions to engage in widespread photocopying), aff'd, 420 U.S. 376 (1975).
It appears beyond dispute that any organization that spent tens of thousands of dollars for computer equipment and database software and thousands of hours inputting information into such database software on such hardware would be nothing short of reckless if it did not make regular and complete backups of the resulting databases. Thus, under any circumstances, F.A.C.T.Net had a legitimate need to make backups of its databases on CD-ROM disks. The need was even more pressing here, however. First, the database served as Mr. Wollersheim's and his counsel's source of information for his litigation against Scientology and for the CSI v. Fishman litigation in which Mr. Wollersheim and F.A.C.T.Net were expert consultants. (Wollersheim Decl., ¶ 5) Further, Scientology's long history of sabotage, evidence tampering, and other improper litigation tactics enhanced the need for multiple backup copies stored at multiple and secret locations. (Stacy Young Decl., pp. 3-7; Wollersheim Decl., ¶¶ 9, 24) In fact, there is no better example of the need for a backup than Scientology's success in obtaining the improper seizure order in this case and then either refusing to return the materials seized despite the Court's order or altering data prior to returning the materials. (Wollersheim Depo., pp. 100-101)
Finally, F.A.C.T.Net's conduct was consistent with the policies underlying the 17 U.S.C. § 108 exception for libraries and archives. First, as discussed above, F.A.C.T.Net had no commercial motivation. It was and is a nonprofit organization subsisting on donations from persons who share its beliefs. In addition, while it did not give the general public access to the database containing copyrighted material, F.A.C.T.Net did make such database available to historians, victims of Scientology, and parties and their counsel litigating against Scientology. Lastly, as BPI's own evidence shows, F.A.C.T.Net included copyright notices on the BPI materials.
1. Multiple Triable Issues Of Fact Preclude Summary Judgment For BPI On Fair Use.
Even if there were no "judicial" fair use, the activities of the Defendants clearly constitute fair use, as the Court concluded in denying Scientology's motion for a preliminary injunction.
a. BPI Has Not Established Any Facts, Much Less Undisputed Facts, Supporting Their Arguments Concerning Fair Use.
As has already been noted, for BPI to prevail on this motion for summary judgment, it must show that there is "no genuine issue as to any material fact and that it is entitled to a judgment as a matter of law." Fed. R. Civ. P. Rule 56(c). Yet BPI's entire argument against Defendants' fair use defense is premised on either disputed facts or no facts.
The primary theme of BPI's argument is that the Defendants engaged in widespread commercial sale of copies of BPI's works. It repeats this accusation thirteen times on pages 21 through 27 of the Motion (the section concerning the Defendants' fair use defense). But all BPI does is say it; it offers no evidence that it is true, and no amount of repetition of the claim can overcome the utter lack of evidence. As discussed above, the only evidence BPI has of any transfer of the BPI works is the out-of-context deposition testimony of Wollersheim and Jacobsen that Jacobsen was provided with one set of CDs. Even as to that single set, there is a dispute as to what was F.A.C.T.Net's purpose in delivering the disks to Jacobsen and as to whether Jacobsen paid for the disks (as opposed to making contributions to F.A.C.T.Net). (Jacobsen Decl., ¶ 6; Wollersheim Decl., ¶¶ 11, 24) BPI has not established that any other copies were transferred, and apparently has not even tried to develop corroborative evidence that F.A.C.T.Net was trying to sell CDs.
Beyond the unsupported allegation of sales of CDs, as to all of the other supposed "facts" supporting BPI's arguments against application of the fair use doctrine, BPI does not even attempt to offer evidence, even though the Court rejected these same contentions for lack of evidence when it denied the application for a preliminary injunction. Certainly, BPI cannot claim these "facts" are undisputed, except to the extent that BPI has failed to give the Court any basis on which to find the existence of such "facts." These putative--but utterly unsupported--"facts" are:
• Defendants engaged in copying "of unprecedented scope. . . ." (Motion, p. 22)
• "Defendants engaged in unrestrained copying . . . ." (Motion, p. 22)
• Defendants copied the works "again and again . . . ." (Motion, p. 22)
• The CDs allegedly created by Defendants "function as direct market substitutes for the Published Literary Works . . . ." (Motion, p. 22).
• The alleged infringements "threaten the potential future market for the works. . . ." (Motion, p. 24)
• The CDs allegedly created by Defendants "could have an adverse future effect on the market for the legitimate works [of BPI] . . . ." (Motion, p. 24)
• The Published Literary Works are "inherently creative" . . . . (Motion, p. 25)
• The alleged infringements by Defendants can be characterized as "ambitious . . . ." (Motion, p. 26)
• The quantity of material allegedly infringed was substantial relative to the Plaintiffs' copyrighted whole. (Motion, p. 26)
• The alleged infringements by Defendants have a broad "scope." (Motion, p. 26)
• Wollersheim and Penny scanned the allegedly infringing materials onto F.A.C.T.Net's computers. (Motion, p. 26)
• Wollersheim and Penny spent "hundreds of hours" scanning the allegedly infringing materials onto F.A.C.T.Net's computers. (Motion, p. 26)
• Defendants' alleged copying was "calculated." (Motion, p. 27)
• Defendants' alleged copying was "wholesale." (Motion, p. 27)
• Defendants' alleged copying was "purely nontransformative," i.e., not for any transformative purpose. (Motion, p. 27)
• Defendants made a number of copies large enough to be called "sheer." (Motion, p. 27)
• Defendants "intended . . . to distribute multiple copies of BPI's Published Literary Works." (Motion, p. 27)
• Defendants "had the means to distribute multiple copies of BPI's Published Literary Works." (Motion, p. 27)
• Defendants' alleged copying "has potentially usurped a demand for BPI's products." (Motion, p. 27)
Not only are all of these contentions unsupported by any evidence, but several of them merely repeat assertions of Scientology's that the Court has already found to be unsupported. BPI seems to hope that by merely repeating these unsupported--and, frankly, implausible--contentions, the Court will somehow change its mind.
Specifically, the Court earlier found that "no evidence was presented as to the effect of the Defendants' copying of the Works upon the potential market for them." Religious Technology Center v. F.A.C.T.Net, Inc., 901 F. Supp. 1519, 1525 (D.C. Colo. 1995). In the Motion, BPI has done nothing more than to reassert the same conclusory statements (See Declaration of Marilyn Pisani In Support of Motion of Plaintiff Bridge Publications, Inc., for Summary Judgment Against All Defendants For Copyright Infringement, ¶¶ 5-6), and the Court has no more basis to credit them than before, particularly since the very notion that potential customers of BPI would patronize a known and outspoken opponent of Scientology is simply not credible.
Similarly, the Court found that Scientology had not introduced the entirety of the allegedly infringed works, so that the Court could determine the relation between the quantity of materials allegedly infringed and the total quantity of works. Id. at 1525. BPI has not remedied its failure in the Motion, and, indeed, has compounded it by contradicting its own supporting declaration on this topic. In the Motion, at page 26, BPI alleges that Defendants "have made verbatim copies of the entirety of the Published Literary Works." (Emphasis added) However, in the Declaration of Ryland Hawkins ("Hawkins") attached to the Motion (the "Hawkins Declaration"), Hawkins defines the Unpublished Literary Works through the following:
L. Ron Hubbard was a prolific, world-renowned philosopher and author. Many of Mr. Hubbard's creative and original works pertain to the religion of Scientology, which was founded by Mr. Hubbard. These works are subject to protection under the applicable copyright laws of the United States of America. Copyright registrations were obtained for all of those works (`the Published Literary Works').
Id. at ¶ 4. Hawkins' definition includes every work ever published by Hubbard--clearly more than BPI has produced to the Defendants and provided to the Court. Thus, it is impossible to know whether BPI has even given the Court a complete set of works from which to make the quantity comparison referred to.
The Court also found that "the alleged copying by Defendants was not of a commercial nature. Rather, it was for non-profit purposes to advance understanding of issues concerning Scientology which are the subject of ongoing public controversy." 901 F. Supp. at 1525. Even assuming arguendo that F.A.C.T.Net sold a set of CDs to Jacobsen for purposes of making a profit--an allegation which is not true, much less a fact proven beyond dispute--that does not establish that F.A.C.T.Net was engaged in commercial activities to the extent of barring a finding of fair use. If charging money did prove commercial purpose, then how would the huge money-making machine that is Scientology justify its own self-characterization as a nonprofit entity? BPI has not offered any evidence beyond the Jacobsen episode that Defendants were engaged in any commercial activity or were otherwise not engaged in nonprofit purposes of the highest character.
BPI has clearly failed to establish by undisputed facts that Defendants' alleged activities do not constitute fair use.
b. Even Without Litigation Fair Use, Defendants' Activities Were Clearly Fair Use.
Independent of the fact that Defendants' activities constitute fair use of copyrighted material in connection with litigation, those activities constitute fair use under general principles.
The fair use determination is fact-intensive and calls for case-by-case analysis. Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577 (1994); Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 450 (1984); H.R. Rep. No. 94-1476 (House Report on the Copyright Act of 1976) ("House Report"), at 65-66 (1976). Further, the primary focus is balancing the equities. See, e.g., House Report, supra, at 65 (fair use has no real definition, but has a "set of criteria which, though in no case definitive or determinative, produce some gauge for balancing the equities") (emphasis added).
Section 107 of the Copyright Act codifies the fair use defense to copyright infringement. 17 U.S.C. § 107 (1992). Section 107 explains that the fair use of a copyrighted work, which includes making copies of the work, "for purposes such as criticism, comments, news reporting, teaching . . . , scholarship, or research, is not an infringement of copyright." Id. Section 107 identifies four nonexclusive factors to be considered in determining if a particular use is fair:
a. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
b. the nature of the copyrighted work;
c. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
d. the effect of the use upon the potential market for or value of the copyrighted work.
The Supreme Court has warned that "the four statutory factors [should 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, 510 U.S. at 578. It is instructive here to look at the "big picture" of Defendants and their activities, and then to analyze the four statutory factors in light of that "big picture." This Court has eloquently agreed: "Each fact must be assessed in light of the total circumstances of the case and then a conclusion can be made as to whether the doctrine applies." F.A.C.T.Net, 901 F. Supp. at 925.
The "total circumstances of the case" are well established, and despite BPI's attempts to substitute name-calling for evidence, BPI has not established any serious dispute as to those circumstances. As previously described, Defendants have dedicated themselves, at great personal sacrifice, to resisting what they consider dangerous, destructive cults, including but not limited to Scientology. Defendants pursue this course of resistance through the operation of F.A.C.T.Net, a 501(c)(3) nonprofit corporation./ Among its other activities, F.A.C.T.Net obtains and collates information, acts as an expert to litigants against Scientology, and counsels individual victims of cults, including Scientology.
F.A.C.T.Net obtains information from diverse sources about Scientology and other cults, in some instances seeking out the information, but in other instances receiving unsolicited submissions from sources who often do not identify themselves. Notwithstanding those sources, the bulk of the documents F.A.C.T.Net has about Scientology are documents Wollersheim has obtained in the course of his own litigation against Scientology or while acting as an expert for other litigants. Because of the volume of documents (many of which were originated by persons or entities other than Scientology), F.A.C.T.Net has created an electronic database to keep track of the documents and their contents.
As the Court has already recognized, the database (including its document contents) is not made available to the public, for money or otherwise (F.A.C.T.Net, 901 F. Supp. at 1524), and that copying documents into the database "falls within the well established limitation on the exclusive right of copyright ownership recognized in the Copyright Act, 17 U.S.C. § 107." Id. Similarly, the Court has already recognized F.A.C.T.Net's activities are "for non-profit purposes to advance understanding of issues concerning the Church which are the subject of ongoing public controversy." 901 F. Supp. at 1525.
BPI tries to avoid the clear fair use, public interest nature of F.A.C.T.Net and its activities by focusing on the making of backup copies of the database on CD. However, BPI has failed to make any but the thinnest case that F.A.C.T.Net was acting commercially with respect to the backup CDs, and if the Court does not reject that "evidence" outright, then at a minimum a jury, or trier of fact, must decide whether BPI's or Defendants' version of the facts concerning the CDs is true. However, even if one accepts the actual evidence of commercialization offered by BPI (as opposed to BPI's hyperbolic repetition of unsupported assertions, such as references to "pirate CDs"), the "commercial" activity is di minimis in relation to F.A.C.T.Net's overall activities./
Applying the four statutory factors to "the total circumstances of the case" demonstrates that Defendants' activities constitute fair use.
(i) Factor #1: The Purpose And Character Of The Use.
The purpose of F.A.C.T.Net's use of the copyrighted works is to combat the destructive effects of Scientology by giving information about Scientology to litigants, former cult members, and others who need it to protect their lives and assets, and to exercise the First Amendment rights of F.A.C.T.Net and its principals to speak out on matters of public concern./ F.A.C.T.Net's use is entirely unselfish and without financial reward. There is no "undisputed evidence" that F.A.C.T.Net's acts are in any respect commercial, and even BPI's disputed evidence is so weak that the Court may reject it and find a second time that F.A.C.T.Net's activities are noncommercial.
In addition, the database is a work in progress, and not an end result. Its purpose is to assist in the study and criticism of Scientology and other activities viewed by Defendants as coercive psychological systems. To focus on the database itself, even in the context of the CDs, is to ignore "the total circumstances" in that the goal of the database is to facilitate transformative uses and other uses which serve the public interest. The database is a means, not an end.
If the use of copyrighted material is noncommercial in nature, the burden is on the Plaintiff to show the harm caused by the Defendants' copying activity, or to show the potential harm if the copying activity should become widespread. Harper & Row, 471 U.S. at 458; Sony, 464 U.S. at 449. This presumption is based on the recognition that the severity of probable harm to the copyright owner's potential market is greater when the use is commercial in nature. Id. BPI has not even seriously attempted to meet its burden of showing harm, other than offering the Hawkins Declaration with its short, conclusory assertions. The Court has already rejected this notion once before.
The first factor supports a finding of fair use.
(ii) Factor #2: The Nature Of The Copyrighted Work.
The unauthorized copying of a work that is factual or "informational" in nature, even if copyrightable in the first instance, is generally more readily accepted as a fair use than is the unauthorized copying of a publication that is nonfactual in nature (i.e., fiction). Harper & Row, 471 U.S. at 548; New Era Publications Int'l, ApS v. Carol Publishing Group, 904 F.2d 152, 157 (2d Cir.), cert. denied, 498 U.S. 921 (1990); Diamond v. Am-Law Publishing Corp., 745 F.2d 142, 148 (2d Cir. 1984); Eckes v. Card Prices Update, 736 F.2d 859, 862 (2d Cir. 1984); Consumers Union of U.S., Inc. v. General Signal Corp., 724 F.2d 1044, 1049 (2d Cir. 1983), cert. denied, 469 U.S. 823 (1984); Wainwright Sec., Inc. v. Wall Street Transcript Corp., 558 F.2d 91, 95 (2d Cir. 1977), cert. denied, 434 U.S. 1014 (1978); Dow Jones & Co. v. Board of Trade, 546 F. Supp. 113, 120 (S.D.N.Y. 1982). The differing scope of protection given to factual and nonfactual publications arises from the recognition that copyright law does not protect facts or ideas, but only protects the expression of these facts and ideas. See Feist Publications, Inc. v. Rural Tele. Serv., 499 U.S. 340, 352-53 (1991) ("sweat of the brow" theory expressly rejected by the Supreme Court). Compilations and other factual works must display at least a modicum of original authorship to warrant copyright protection. Id.
In this case, Scientology represents to the world at large that the works describe a system of thought and ethics, and processes for achieving advanced states of self-realization. Scientology cannot copyright the system, processes or ideas comprising Scientology. (17 U.S.C. § 102(b)) The actual expression of the system, processes and ideas can be protected (17 U.S.C. § 102(a)), but the protection is narrower, particularly to the extent that there are limitations on the manner in which the unprotectable elements can be expressed, i.e., where according copyright protection to the expression might effectively give the copyright holder a monopoly on the uncopyrightable ideas. The value of the works, if any, is in the unprotectable concepts, and not in the expression.
Furthermore, the nature of the works here, especially in light of their tax-subsidized status and the public safety concerns Scientology engenders, makes it more important than usual that the public have the ability to discuss and criticize Scientology. The furtherance of that ability to discuss and criticize is the very heart of Defendants' activities. The nature of the works is that they are highly controversial. Accordingly, the second factor strongly supports a finding of fair use.
(iii) Factor #3: The Amount And Substantiality Of The Portion Used In Relation To The Copyrighted Work As A Whole.
As previously noted, Scientology has presented an inconsistent case as to what constitutes the "whole" of the copyrighted work so that the Court can determine what portion Defendants allegedly took, and so summary judgment must be denied to BPI on that basis alone. However, in light of "the total circumstances," the quantity taken is largely immaterial, since the purpose of F.A.C.T.Net's use is to enable self-defense against, and public debate about, Scientology. The completeness of the information on which the resistance to Scientology is based is vital to the recognized public interest purposes of Defendants. In fact, arguably Scientology itself has an interest in the completeness of F.A.C.T.Net's information, since incomplete information increases the difficulty of creating an accurate picture.
Furthermore, as the Supreme Court has said, and this Court has agreed, "[E]ven if a work is introduced in its entirety, the copying may nevertheless constitute fair use." F.A.C.T.Net, 901 F. Supp. at 1125 (citing Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984)). Although BPI attempts to suggest that copying a work in its entirety is somehow a sign of gross evil that catapults the copying out of fair use,/ the rule that the fair use factors must be considered together and not in isolation precludes any such conclusion here. When considered in light of all the circumstances, the third factor does not militate against a finding of fair use./
(iv) Factor #4: The Effect On The Potential Market.
The effect of unauthorized copying on the potential market for the copyrighted work is generally considered to be the most important determining factor in the fair use analysis. See Harper & Row, 471 U.S. at 566; Salinger v. Random House, Inc., 811 F.2d 90, 97, supplemented and reh'g denied, 818 F.2d 252 (2d Cir. 1987); Eckes v. Card Prices Update, 736 F.2d 859, 864 (2d Cir. 1984); 3 Nimmer on Copyright, supra, at 13.05[A][4]. Here, as the Court has already noted (F.A.C.T.Net, 901 F. Supp. at 1525), Defendants' use could have had no effect on the market for the BPI Materials. See Harper & Row, 471 U.S. at 568-69; D.C. Comics v. Reel Fantasy, Inc., 696 F.2d 24, 28 (2d Cir. 1982); Encyclopedia Britannica Educ. Corp. v. Crooks, 447 F. Supp. 243, 247-48 (S.D.N.Y. 1978). There is no logic to the proposition that Scientology adherents would consider F.A.C.T.Net a source for scriptural materials, particularly since Scientology makes so much of the fact that the materials must be used in conjunction with instruction and guidance that only Scientology can provide (and which Scientology does not suggest the Defendants try to provide).
Furthermore, although Scientology tries to turn the Defendants' transfer of backup copies for safekeeping into a massive scheme of distribution, Scientology has not one shred of evidence that any member of the public could actually acquire any of the backup disks from F.A.C.T.Net, or even that F.A.C.T.Net has advertised the availability of any copies in any form. Indeed, Wollersheim has been in possession of most of the very same documents as at issue here, for sixteen years, but has never published them. (Wollersheim Decl., ¶ 36) Therefore, even if Scientology could somehow rationalize the ludicrous proposition that Scientology adherents would buy from Scientology's most vocal and successful opponent, Scientology has not shown that they could actually do so.
The fourth factor strongly favors Defendants.
(v) Other Factors.
Since these factors are nonexclusive and are included for illustrative purposes, a court may look to other factors as well in considering a claim of fair use. See Harper & Row, Publishers, Inc. v. Nation Enter., 471 U.S. 539, 560 (1985); Triangle Publications v. Knight-Ridder Newspapers, Inc., 626 F.2d 1171, 1175 n.10 (5th Cir. 1980).
An important factor, discussed above, is the First Amendment interest of Defendants and of other citizens and taxpayers in understanding and expressing their views about what their tax dollars subsidize. For the reasons set forth previously, the First Amendment requires a finding of fair use here.
Finally, Scientology's own secretive, revisionist, and coercive conduct justifies--even requires--Defendants to make copies. (Wollersheim Decl., ¶¶ 11, 24, 26 and 27; V. Young Decl., pp. 4-7; Stacy Young Decl., pp. 3-7) Courts have recognized that the reproduction of copyrighted materials is necessary, and therefore fair use, in certain situations. See, e.g., New Era Publications Int'l, ApS v. Henry Holt & Co., 884 F.2d 659, 663 (Newman, J., dissenting from denial of rehearing en banc) (quoting Consumers Union of U.S., Inc. v. General Signal Corp., 724 F.2d 1044, 1049 (2d Cir. 1983) (stating that "expressive words sometimes need to be copied in the interest of accuracy not piracy.")); Eckes v. Card Prices Update, 736 F.2d 859, 864 (2d Cir. 1984) (holding that if prices and other information in appellant's book established the market, an argument under the fair use doctrine could be advanced that the copying of such information by a competitor was necessary). See also Atari Games Corp. v. Nintendo, Inc., 975 F.2d 832, 842 (Fed. Cir. 1992) (The Copyright Act permits an individual to take necessary efforts to understand the concepts or ideas upon which a copyrighted work is based, even if this includes "intermediate copying" of the copyrighted work); East/West Joint Venture v. Wurmfield Assoc., P.C., 722 F. Supp. 1064, 1068 (S.D.N.Y. 1989) (asserting that if property is of such a unique nature that only one practical development scheme exists, a second architect's copying of the development scheme used by the first architect may be necessary).
Scientology has a long-standing practice of changing its written materials and then denying the existence of the contents of the earlier materials. (V. Young Decl., pp. 4-7) F.A.C.T.Net's database is vital to preserving records of Scientology's revision of its own acts and history for litigants, for ex-cult members and for the public at large. (Wollersheim Decl., ¶¶ 11, 24, 26 and 27)
For all of the foregoing reasons, and in light of all of the circumstances of this case, the Court should reject BPI's argument that Defendants' activities do not constitute a fair use, and should rule that the Defendants are not liable for copyright infringement.
A. Scientology Has Already Released Defendants From Liability Herein.
The secret settlement agreement executed on January 25, 1995, and expressly governed by the provisions of California law, contained a wide general release of Lewis, D'Amato and its employees, agents, representatives, etc. It is well established that a release is an abandonment of a claim that might otherwise be enforced and constitutes a defense to the assertion of such claim. As the California Supreme Court held long ago in Pellett v. Sonotone:
[a] release has been defined as the abandonment, relinquishment or giving up of a right demanded or enforced and its effect is to extinguish the cause of action; hence it may be pleaded as a defense to the action.
26 Cal. 2d 705, 711, 160 P.2d 783 (1945). See also Faye v. Feldman, 128 Cal. App. 2d 319, 328, 275 P.2d 121 (1954) ("[a] valid release conclusively estops the parties from reviving and relitigating the claim released"); Rest. 2d., Contracts, Introductory Note, Vol. 2, Chapter 12, at 361 ("[d]ischarge of a duty extinguishes the obligor's duty and terminates the obligee's correlative right and any claim based on that right"); Corbin on Contracts, Vol. 5A, § 1238, at 555-560 ("[o]ne who has a contractual right against another, or a right to compensation or to restitution by another's breach of his contractual duty, has the power to discharge his right and the other's duty by the execution and delivery of a release . . . a release executed and delivered by the claimant will be a good additional defense in any action by him for its enforcement"); 12 Cal Jur 3d, "Compromise, Settlement And Release," § 92, at 402 (1974) ("[t]he effect of a release is to extinguish the cause of action released. A release is a defense against the released claim and prevents any recovery on it. It conclusively estops the parties to revive and relitigate the released claim").
Specifically, a release is defined as "a contract for the abandonment, relinquishment, or giving up of a right or claim, to the person against whom it might have been demanded or enforced." 12 Cal Jur 3d, "Compromise, Settlement And Release," § 70, at 377 (1974). A release requires no particular form or set of words. Coats v. General Motors Corp., 3 Cal. App. 2d 340, 39 P.2d 838. See also Rest. 2d., Contracts, Vol. 2, Chapter 12, § 284, comment a, at 392 ("[n]o special words are required . . ."); Corbin On Contracts, Vol. 5A, § 1238, at 560 ("[t]here is no particular form of words that is required in order to make a written release effective")--and it requires no new consideration. Crow v. P.E.G. Constr. Co., 156 Cal. App. 2d 271, 277, 319 P.2d 47 (1957). All that is really necessary is that the words should manifest a present intention to discharge. Golden West Credit & Adjustment Co. v. Wilson, 119 Cal. App. 627, 636, 7 P.2d 345 (1932). See also Corbin On Contracts, Vol. 5A, § 1238, at 560.
In the case at hand, as part of the settlement of the CSI v. Fishman, Case No. CV 91-6426 HLH (Tx) (C.D. Cal.), the Church of Scientology International executed a release which states, in part, as follows:
Church of Scientology and LDB&B [Lewis, D'Amato, Brisbois & Bisgaard] agree, pursuant to this Release, that, on the one hand, Church of Scientology hereby fully, forever, and irrevocably releases and discharges LDB&B and each of its partners, associates, employees, agents (emphasis added), representatives, whether past or present . . . from any and all claims, demands, damages, losses, accounts, reckonings, debts, liabilities, indemnities, obligations, actions, causes of action (emphasis added), settlement costs, attorneys fees, court costs and expenses, of every kind and nature whatsoever, whether or known or unknown, which they now have, may have, claims to have, ever formerly had, or may at any time in the future acquire and which arise from, are based upon, or in any way relate to the following: (1) the Scientology Action; (2) all claims, causes of action, and defenses asserted in the Scientology Action; (3) any and all claims, causes of action, and defenses related to the subject matter of the Scientology Action; and (4) any fact, event, occurrence, wrongful act, situation, circumstance, or matter asserted in, at issue in, or underlying the Scientology Action.
(See Berry Rule 56(f) Decl.)
There can be no doubt but that this is a valid release. Although no particular form of words is required, this release constitutes a writing which clearly provides, inter alia, within the four corners of the document that all "agents" of Lewis, D'Amato are thereby released from all "claims" or "causes of action" "based upon or in any way related to the Scientology Action." Furthermore, by its terms the Release plainly manifests a present intent to discharge all employees, agents and representatives of Lewis, D'Amato from all such claims or causes of action. As a result, the effect of such a valid release is to conclusively estop Scientology from reviving and relitigating against any employees, agents or representatives of Lewis, D'Amato any of the claims or causes of action released in the Scientology Action.
Under applicable California law, the release of a principal also releases an agent. For example, in Lippert v. Bailey, 241 Cal. App. 2d 382, 384, 50 Cal. Rptr. 478 (1966), it was held that an action against insurance agents for failure to obtain the requested amount of insurance could not stand given plaintiff's release of the agent's principal, the insurer. When releasing Lewis, D'Amato, Scientology was aware that F.A.C.T.Net and Wollersheim had acted on behalf of Lewis, D'Amato and so the release of "all claims" extinguished Scientology's claims, if any, against F.A.C.T.Net and Wollersheim. At the very least, the nature of the relationship between Lewis, D'Amato, on the one hand, and F.A.C.T.Net and Wollersheim, on the other, and whether the works at issue herein fall within the scope of the release, are issues of fact for the jury.
Here, Defendants were, in fact, paid research and consulting employees, agents and representatives of Lewis, D'Amato in the Scientology Action. (Wollersheim Decl., ¶ 7) Indeed, to assist with Defendants' research in the Scientology Action, Lewis, D'Amato sent Defendants CDs and thousands of pages of hard copy material. (Wollersheim Decl., ¶ 7) Defendants loaded those works onto their computer to assist in that litigation as described above before the execution of the release. (Wollersheim Decl., ¶ 7) In such circumstances, there is at least a triable issue of fact as to whether Defendants in this action were the employees, agents and representatives of Lewis, D'Amato in the Scientology Action. Moreover, it should also be noted that all of the purported instances of infringement that are alleged by Scientology in the present action relate either directly or indirectly to the research Defendants performed for Lewis, D'Amato in the Scientology Action. Thus, at a minimum, there is also a triable issue of fact as to whether any potential copyright infringement in this action was discharged pursuant to the release in the Scientology Action.
B. Factual Disputes Preclude An Award Of Statutory Damages On This Motion.
BPI seeks $100,000 in statutory damages for each of the "1900" works which it alleges have been infringed by Defendants pursuant to 17 U.S.C. § 504. Their argument should be rejected for the following reasons.
1. Standards For The Statutory Damage Award.
Although statutory damages are recoverable pursuant to 17 U.S.C. § 504, the propriety of awarding such damages must be evaluated under the ordinary standards applicable to summary judgment motions generally. Factual disputes concerning infringement, the innocence or willfulness of any infringement, and the amount of the statutory damages precludes an award of such damages on a summary judgment motion. Lipton v. The Nature Company, 71 F.3d 464, 472 (2nd Cir. 1995) (genuine issues of fact concerning willfulness of defendants' asserted infringement precluded statutory damage award on summary judgment motion). Where factual disputes are present, statutory damages can be awarded only after a trial on the merits before the fact finder. Cass County Music v. CHLR, Inc., 88 F.3d 635 (8th Cir. 1996)./
Facts relevant to an award of statutory damages include the number of works involved and the innocence or willfulness of any infringement. Statutory damages are awarded based on the number of works infringed, not the number of times an individual work was copied. 17 U.S.C. § 504(c)(1) ("plaintiff may be awarded statutory damages of $500 to $20,000 with respect to any one work"). However, for statutory damages purposes, "all the parts of a compilation or directive work constitute one work." 17 U.S.C. § 504(c)(1); See also H.R. No. 94-1476 ("subsection (c)(1) makes clear . . . that, although they are regarded as independent works for other purposes, 'all parts of a compilation or a directive work constitute one work' for this purpose.").
Other factors which this Court may consider in determining the amount of statutory damages include the expenses saved by Defendants in connection with the infringements, the revenues lost by Plaintiff as a result of Defendants' conduct, the infringer's state of mind, and the wrongfully acquired gains or unjust enrichment of the Defendants. NAS Import Corp. v. Chenson Enters., Inc., 968 F.2d 250, 253 (2nd Cir. 1992). This Court can also "take into account the attitude and conduct of the parties," including whether Plaintiff conducted the action "in a vexatious," "oppressive," and "unreasonable" manner in determining the statutory award. Warner Bros. Inc. v. Dae Rim Trading, Inc., 877 F.2d 1120, 1126 (2nd Cir. 1989).
Although the general statutory damage minimum is $500 per work infringed, this Court "in its discretion may reduce the award of statutory damages to a sum of not less than $200" if "the Court finds that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright . . . ." 17 U.S.C. § 504(c)(2). This Court has the discretion to increase the statutory damages up to $100,000 per work infringed if it finds that the infringement was "willful." However, "willfulness for statutory damage purposes means a defendants' affirmative knowledge that his or her actions infringed the copyrights of another." NAS Import, 965 F.2d at 252.
Finally, statutory damages are not available against a certain category of defendant at all. 17 U.S.C. § 504(c)(2) provides that an infringer who "believed and had reasonable grounds for believing that his or her use of the copyright, copyrighted work was a fair use under § 107" is not liable for statutory damages if he or she was "an employee or agent of a non-profit educational institutional, library, or archives acting within the course and scope of his or her employment, who, or such institution, library or archive itself, which infringed by reproducing the work and copies or phonorecords . . . ."
Statutory damages are not recoverable by the present Motion under these standards for the following reasons.
2. Defendants' Conduct Was Innocent Under 17 U.S.C. § 504(c)(1).
Significant evidence demonstrates that Defendants here acted in a way which they reasonably believed did not infringe Scientology's rights. The only actions they engaged in which even arguably constitutes an infringement of BPI's copyrights are: a. scanning documents obtained by counsel into a computer database for use as an expert witness in connection with ongoing litigation; b. loading voluntarily submitted computer disks onto Defendants' computer so that Defendants could discover what those voluntary submissions contained; and c. making a handful of backup copies of the database to safeguard against degradation, vandalism, or loss. (Wollersheim Depo., pp. 100-101) In fact, Defendants undertook reasonable efforts not to infringe Scientology's rights by maintaining the works at issue in the non-public portion of its database, and by refusing to post such materials on F.A.C.T.Net's own web site or any other web site. Defendants reasonably believed, and continue to believe, that such conduct does not violate the copyright laws. (Wollersheim Depo., pp. 30-33) As BPI has no evidence disputing Defendants' good faith or the reasonableness of their belief, the Court should, even if it finds infringement, rule that the infringement was innocent and award BPI statutory damages for no more than $200 per work infringed against defendant F.A.C.T.Net.
3. Other Factors Favor A Limited Award.
The "other factors" cited above all support a minimal award here. Defendants have not saved any "expenses" in connection with their so-called copying, as many of the materials F.A.C.T.Net had in its database were earlier versions and, as such, not publicly available and thus could not be obtained through a commercial purchase. Similarly, BPI has added no evidence of loss of revenues as a result of Defendants' conduct. Defendants' "state of mind" favors a low award, as their infringement was innocent as described above. Finally, there has been no "unjust enrichment" of Defendants here; the few "backup" copies they created were not sold for profit, and thus no income was derived from them. (Wollersheim Depo., pp. 57-59) Finally, Scientology's acting in a "vexatious," "oppressive," and "unreasonable" manner towards Defendants over the course of many years favors a minimal award. Warner Bros., Inc. v. Dae Rim Trading, Inc., 877 F.2d 1120 (2d Cir. 1989).
4. BPI Has Produced No Evidence Of Willfulness.
Unencumbered by evidence, BPI argues that the statutory maximum should be awarded because there supposedly is "no dispute that the defendants' infringements were and are willful." Nothing could be further from the truth as described at length above. Acceptance of BPI's argument would require the Court to find that use of documents in litigation, viewing of unknown computer disks on a computer to discover their contents, and making of backup copies of a database not only constitute copyright infringement but amounts to a willful "retail business in pirate CDs." Such fantasies do not constitute evidence, and may not legitimately be the basis for a grant of summary judgment on the willfulness issue.
Defendants, on the other hand, have presented considerable evidence that they believed in good faith that their actions violated no copyrights. (Wollersheim Depo., pp. 30-33) They also presented substantial evidence as to the reasonableness of their belief. (Wollersheim Depo., pp. 30-33) This at least creates a material issue of fact as to whether there is "innocent" infringement, if there has been any infringement at all.
5. BPI Has Inflated The Number Of Works At Issue.
BPI seeks to recover the maximum statutory damages of "1900" works./ However, these "works" are in fact portions of 13 volumes of a 22-volume set comprising two series of Scientology "technology." As parts of these compilations, this Court should consider the works at issue to constitute, at most, 13, rather than "1900," works under the authorities cited above. See also RTC v. Lerma, 40 U.S.P.Q.2d (BNA) 1569 (E.D. Va. 1996) (Civil Action 95-1107-A) (33 works reduced to 5 for statutory damages purposes because part of a compilation); Stokes Seas Limited v. GEO. W. Park Seed Co., 783 F. Supp. 104, 106-107 (W.D.N.Y. 1991) (122 photographs constituted 1 work for statutory damages purposes because they were collected in a book.) Thus, no more than $2,600 should be awarded against F.A.C.T.Net, if any damages are awarded at all.
6. No Statutory Damages Should Be Awarded Against Wollersheim or Penny.
Defendants Wollersheim and Penny were agents and employees of Defendant F.A.C.T.Net. F.A.C.T.Net is a nonprofit library and archive. (Wollersheim Depo., pp. 60-62) It has been granted section 501(c)(3) status by the Internal Revenue Service. (Wollersheim Depo., p. 352)
Wollersheim's and Penny's actions in loading copies of BPI's materials onto the F.A.C.T.Net computer and the making of backup copies took place within the course and scope of their agency for and employment by F.A.C.T.Net. (Wollersheim Decl., ¶ 10) They engaged in these activities out of a reasonable, good faith belief that they were not infringing the rights of BPI or others, and in fact took reasonable precautions to avoid infringing BPI's potential rights as described at length above. (Wollersheim Decl., ¶ 38) No statutory damages should be awarded against these individual Defendants in such circumstances. 17 U.S.C. § 504(c)(2)(i).
C. All Evidence Stemming From The Search Of Wollersheim's And Penny's Residences And F.A.C.T.Net's Offices Should Be Excluded From Consideration Of BPI's Summary Judgment Motion Because All Such Evidence Was Obtained As A Result Of An Illegal Search And Seizure./
The Fourth Amendment of the United States Constitution protects against unreasonable searches and seizures. These protections apply not only to individuals, but also to businesses and other organizations. Specht v. Jensen, 832 F.2d 1516 (10th Cir. 1987); In Re Grand Jury Subpoena, 829 F.2d 1291 (4th Cir. 1987). Further, these protections apply in civil as well as in criminal contexts. Marshall v. Barlow's Inc., 436 U.S. 307, 311-13 (1978). Under the Fourth Amendment, warrants and seizure orders may only be issued upon a finding of "probable cause." In deciding whether probable cause exists, a court must look to the "totality of the circumstances." Illinois v. Gates, 462 U.S. 213, 238 (1983). Plaintiff RTC obtained a writ of seizure from Judge Babcock on August 21, 1995, by providing declarations and moving papers which contained lies, untruths, half-truths, misinformation, statements taken out of context, and material omissions of crucial information. As such, it was impossible for Judge Babcock to have considered all of the relevant circumstances surrounding RTC's motion, and the resulting Writ was therefore invalid. Consequently, the Court, when weighing the merits of BPI's Motion for Summary Judgment, should not consider any evidence obtained during, or as a result of, the illegal raids which were made on Wollersheim's and Penny's residences and the F.A.C.T.Net offices pursuant to the invalid writ of seizure. Defendants are requesting an exclusionary hearing in connection with this argument.
1. The Writ of Seizure Is Invalid Because Judge Babcock Relied On Material False Statements When Finding Probable Cause, And The Material False Statements Were Knowingly And Recklessly Included In The Declarations Supporting RTC's Motion.
A defendant may challenge the validity of a court order authorizing searches and seizures by contesting any assertion in the affidavit upon which the order was issued. The order will be invalidated under a "Franks challenge" if the party makes a substantial showing by a preponderance of the evidence that a false statement was included in the affidavit, that the false statement was necessary to find probable cause, and that the affiant knowingly or recklessly included the false statement. Franks v. Delaware, 438 U.S. 154 (1978).
In this matter, numerous false and misleading statements were made to the Court in documentation upon which Judge Babcock was asked to rely in granting the Writ of Seizure. A sampling of some of the untruths is provided below. Taken together, it can easily be seen that the myriad falsehoods in the moving papers filed by RTC in order to obtain the seizure order were misleading and vitiate any finding of probable cause.
Helena Kobrin, one of the attorneys for Plaintiffs, states, in her declaration supporting Plaintiffs' motion for writ of seizure, that Defendants had copied portions of copyrighted and trade secret information in this case to a World Wide Web site called "xs4all." This is a complete, utter, and material falsity.
In its motion, RTC asserted that F.A.C.T.Net published computer addresses so that others might access and download unauthorized and infringing materials. This statement is false. Although F.A.C.T.Net did provide links to other Internet resources--as do the vast majority of Internet sites--these other Internet resources provided information concerning, and a format for discussing, the dangers of Scientology. F.A.C.T.Net did not publish computer addresses so that others might download unauthorized material. (Wollersheim Decl., ¶ 28)
A similar gross mischaracterization is provided at the top of page four of RTC's Motion for Writ of Seizure where it is stated that Defendants made a statement calling for "100-1000 times more" infringements. This characterization is extremely misleading. The statement to which RTC refers called for dialogue and discussion, but in no way called for any infringement to take place. Specifically, the statement called for the distribution of "public records." It did not call for any infringement of copyright law. (Wollersheim Decl., ¶ 29)
The Declaration of Warren McShane (See Berry Decl. Exh. 18), a 21-page document which provides foundation for the Motion for Writ of Seizure, is similarly filled with half-truths, statements taken out of context, and omissions of crucial facts. Much of the McShane Decl. is dedicated to creating the illusion that elaborate security precautions have always been in place to ensure that the "Advanced Technology" never be taken outside of a limited number of Scientology compounds. (See McShane Decl., ¶¶ 13-22) For example, McShane states in paragraph 14 that measures have "always" been taken to ensure the physical security of the materials. He states in paragraph 17 that access to the materials has "always" been closely and carefully monitored. In fact, however, security for many years was quite lax with respect to protection of these documents. (Wollersheim Decl., ¶ 31)
McShane states in paragraph 30 of his declaration that Dennis Ehrlich ("Ehrlich") is a "close ally" of Defendants and that they work in concert to "destroy" the Scientology religion. This statement is a complete and utter falsehood. In fact, F.A.C.T.Net, Wollersheim and Penny had almost nothing to do with Ehrlich at all, and Wollersheim has never engaged in efforts to "destroy" the Scientology religion or adversely affect RTC's property rights, but rather only to engage in a discussion of the dangers of coercive psychological tactics. Wollersheim estimates that he had only approximately two conversations with Ehrlich in the two to three years preceding the issuance of the seizure order. (Wollersheim Decl., ¶ 32)
McShane similarly states in paragraph 39 that Wollersheim and Penny spend a great deal of their time "attacking and harassing" Scientology. This is patently false. Again, RTC is using misleading hyperbole in the extreme to mischaracterize the facts. The activities of F.A.C.T.Net, Wollersheim and Penny have been limited to maintaining an electronic library and historic preservational archive of documents relevant to the dangers of coercive psychological tactics engaged in by cults. (Wollersheim Decl., ¶ 33)
McShane states in paragraph 40 that the "only purpose" Wollersheim had in forming F.A.C.T.Net was to attack Scientology, publish anti-Scientology propaganda, and attack Scientology properties. Aside from the fact that Wollersheim and F.A.C.T.Net never attempted any of this, the F.A.C.T.Net organization tracks information on approximately 300 groups which utilize insidious psychological techniques. (Wollersheim Decl., ¶¶ 28, 34; Wollersheim Depo., 67-70)
Paragraph 40 also sets forth an allegation that Lerma engaged in a "pattern of deliberate harassment" of Scientology. No evidence of any such pattern was adduced to support that contention other than a reference to ongoing litigation commenced by Scientology against Lerma, and no such pattern exists. (Wollersheim Decl., ¶ 35)
Finally, RTC simply misrepresented to the Court that it controlled the copyrights in all of the materials it listed. In fact, many of the materials were in the public domain.
Taken as a whole, the Motion for Writ of Seizure, as well as the McShane Declaration, portray Wollersheim, Penny and F.A.C.T.Net as being set on spreading falsehoods, lies, and untruths about Scientology, as being intent on destroying Scientology property rights, and as posting protected Scientology writings. All of these untruthful and misleading statements and implications would have been exposed had Defendants had an opportunity to be heard prior to the issuance of the Writ of Seizure.
Moreover, McShane has been intimately involved in the 16-year litigation battle between Scientology and Wollersheim. In the various Wollersheim cases, McShane executed documents concerning the very documents at issue herein. Thus, McShane knew that the works-at-issue, or at least most of them, were subject to the litigation prong of the fair use exception. He also knew Scientology had entered into the secret settlement agreement with Lewis, D'Amato and Landmark Insurance in connection with, among other things, the copying of many of the very same documents as are at issue herein. The McShane Declaration mentions nothing of Scientology's litigation history with Wollersheim, and the inevitable presence of attorney-client and other privileged documents at the premises to be raided, Operation Snow White, Scientology's criminal history or any of the other matters that would have been relevant to a proper consideration of Plaintiffs' ex parte application for a writ of seizure and the subsequent handling arrangements for the materials.
2. The Writ Of Seizure Is Invalid Because The Documents Upon Which Judge Babcock Relied Failed To Disclose Crucial Relevant Information.
Perhaps it is what was unstated in RTC's Motion for Writ of Seizure and the supporting papers that is most appalling and was most misleading to Judge Babcock. Omissions of material information, either intentional or reckless, may serve as the basis for a Franks challenge to the validity of a seizure order. Rivera v. United States, 928 F.2d 592, 604 (2nd Cir. 1991); United States v. Campino, 890 F.2d 588, 592 (2nd Cir. 1989), cert. denied, 494 U.S. 1068 (1990). Material omissions from an affidavit which supports a search warrant are governed by the same rules as false statements in affidavits. Campino, 890 F.2d at 592. Recklessness may be inferred where the omitted information was clearly critical to the probable cause determination. Rivera, 928 F.2d at 604, DeLoach v. Bevers, 922 F.2d 618, 622 (10th Cir.), cert. denied, 502 U.S. 814 (1990).
RTC failed to inform Judge Babcock that the instant action is the fifth action filed by a Scientology-controlled organization against Wollersheim.
RTC failed to inform Judge Babcock that, at the time of the proposed raid, Wollersheim was serving as an expert witness in Scientology-related litigation.
RTC failed to inform Judge Babcock that F.A.C.T.Net is a nonprofit electronic library and preservational historic archive dedicated to archiving data and promoting public discussion pertinent to cults, including but not limited to Scientology, which practice coercive psychological tactics.
RTC failed to inform Judge Babcock that this library and archive was being used by various governments around the world for ongoing investigations into Scientology.
RTC failed to inform Judge Babcock that it knew that, by seizing documents and hardware from F.A.C.T.Net, it would be seizing documentation protected by the attorney-client and work product privileges and otherwise obstructing justice in other ongoing litigated matters involving Scientology.
In stating to Judge Babcock that it was urgent that the raid on Wollersheim's and Penny's residences occur forthwith and without notice to either Wollersheim or Penny, RTC failed to inform Judge Babcock that Wollersheim had been in legal possession of sensitive Scientology documents for sixteen years, but had never published them.
Finally, when its attorneys prepared the (Proposed) Writ of Seizure for Judge Babcock's signature, they included a provision directing law enforcement officials to deliver seized items to counsel for RTC, failing to apprise Judge Babcock of the fact that 17 U.S.C. § 503, the statutory authority for their Motion for Writ of Seizure, specifically requires that such seized property be returned to the court for safekeeping, not to the party seeking the Writ of Seizure. Such an omission clearly rises to the level of direct concealment of applicable law, and clearly misled Judge Babcock as to the state of the law. Furthermore, RTC failed to disclose that it would be using the Norton Utilities "WipeInfo" function to permanently erase information from Defendants' hard drives and permanently and seriously corrupting Defendants' data files. (Berry Decl., Exh. 2 [Tencati]; Berry Decl., and Wollersheim Decl., ¶ 36; and RTC's Motion for Order Concerning Full Compliance With The Court's Order of September 15, 1995, Directing Return of Seized Materials)
3. All Evidence Obtained During The Raids Should Be Excluded From Consideration Because The Execution Of The Writ Of Seizure Was An Exercise In Gross Abuse By RTC.
Plaintiff RTC obtained its Writ of Seizure from Judge Babcock on the basis of 17 U.S.C. § 503. Section 503 specifically authorizes a court to authorize the impoundment of offending articles. However, the statute does not authorize the search of any facility in order to carry out an impoundment. This distinction is not minor or technical in nature. In a factual scenario strikingly similar to the case at hand, the court in Warner Bros., Inc. v. Dae Rim Trading, Inc., held that an order directing a copyright holder's private investigators to perform a search and seizure on business property and to return the seized items to the copyright holder (as opposed to the court for safekeeping, as the Code requires) was unlawful, unconstitutional, and could not have been granted ex parte. 677 F. Supp. 740, 765-768 (S.D.N.Y. 1988). The court noted that:
It must be emphasized that the copyright statutory law [17 U.S.C. § 503] does not authorize any search of any premises, "business" or otherwise; it only authorizes an impounding of claimed infringing articles in the custody of the Court for eventual destruction if found after trial to infringe . . . .
Id. at 766 (emphasis in original).
The Writ of Seizure issued by the Court at Judge Babcock's direction authorized RTC's agents, accompanied by law enforcement officials, to "seize" specified items at Wollersheim's and Penny's residences. No mention is made of searching the premises. However, RTC's agents engaged in a wholesale rummaging of Wollersheim's and Penny's homes. For example, the individuals who searched Wollersheim's residence not only searched the one-room F.A.C.T.Net office inside the home, but also searched under Wollersheim's bed, through his closets, in his bathroom, his kitchen (including appliances), leaving no stone unturned. (Wollersheim Depo., pp. 37-38) In so doing, RTC's agents grossly overstepped the authority granted by Judge Babcock.
I. CONCLUSION.
For all of the foregoing reasons, Defendants F.A.C.T.Net, Wollersheim and Penny respectfully request that the Court deny the Motion for Summary Judgment of Plaintiff Bridge Publications, Inc.
DATED: February 6, 1997.
BEEM & MANN
By:____________________________
Clifford L. Beem
One Norwest Center, Suite 3901
1700 Lincoln Street
Denver, Colorado 80203
(303) 894-8100
MUSICK, PEELER & GARRETT
By:____________________________
Graham E. Berry
One Wilshire Boulevard
Los Angeles, California 90017
HAGENBAUGH & MURPHY
By:____________________________
Daniel A. Leipold
701 South Parker Street, #8200
Los Angeles, California 90017
A