00407-20020214 Dvdcca Merits Brief

Court of Appeal No. HO21961

IN THE SUPREME COURT OF THE STATE OF CALIFORNIA MATTHEW PAVLOVICH,'

Supreme Court No. S100809

Petitioner v,

SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SANTA CLARA,

Trial Judge: Hon. William J. Elfving Santa Clara County Superior Court Trial Court CaseNo. CV 786804

Respondent. DVD COpy CONTROL ASSOCIA nON, INC., Real Party in, Interest

REAL PARTY IN INTEREST DVD COpy CONTROL ASSOCIATION'S BRIEF ON THE MERITS

CHRISTOPHER J. COX (Bar No. 151650) WElL, GOTSHAL & MANGES LLP Silicon Valley Office

201 RedwoodShoresParkway RedwoodShores,CA 94065 Telephone:(650) 802-3000

ROBERT G. SUGARMAN JEFFREYL. KESSLER GEOFFREYD. BERMAN WElL, GOTSHAL 767 Fifth Avenue

& MANGES

New York, NY 10153 Telephone: (212) 310-8000 Attorneysfor Real Party in InterestDVD Copy Control Association,Inc.

NYI :\I0t262~I.~27J

8.0003

LLP

TABLE OF CONTENTS Page PRELIMINARY

2

STATEMENT ..

9 14

HISTORY

PROCEDURAL

STATEMENT OF FACTS

ARGUMENT

State

Test

This

Prong

Effects

Of

The

Aiming" Of

Prong

The

Of

Intent

The

Himself

Meet The "Expressly Meet

Availed

Actions Actions

Purposely

Pavlovich's Pavlovich's

1.

Pavlovich

2.

Privileges

The Court Of Appeal Properly Ruled That Pavlovich Is SubjectTo The JurisdictionOf The California Courts

A.

I.

15 15

17 19

3.

Pavlovich's Of

Should

The

Effects

Have

Conduct Caused Harnl That He Knew Or Reasonably Test

Known

Was

Likely

To

Cause

Harnl

In

20

California

B The Court Of Appeal's Decision Is ConsistentWith The DictatesOf Calder

n

The Claims Arise From Pavlovich's Forum-RelatedActivity

31

m.

JurisdictionHere ComportsWith Notions Of Fair Play And SubstantialJustice

32

CONCLUSION

36

OFAUTHORInES

TABLE

FEDERAL CASES 300 Co. v. PoP/oPSoftware,Inc., 49 U.S.P.Q.2d 1469(N.D. CaI. 1998)

21,22

Ballard v. Savage,65 F.3d 1495(9th Cir. 1995)

.31

Bancroft & Masters,Inc. v. AugustaNational, Inc., 223

F.3d

1082

(9th

Cir.

7,24,25,26

,

2000)

CableNewsNetwork v. GoSMS.Com,56 U.S.P.Q.2d 1959(S.D.N.Y. 2000) Calder v. Jones,465 U.S. 783 (1984)

22

2, 16, 17?, 20, 25

caOowayGolf Corp. v. Royal CanadianGolf Association, 125

F.

Supp.

2d

1194

(C.D.Ca!.

2000)

23,26

,

Core-VentCorp. v. Nobel Industrial, 1 F.3d 1482(9th Cir. 1993)

.7,21,23,33

Cybersell/nc. \I. Cybersell,/nc.,'130 F.3d 415 (9th Cir. 1997)

31

Gordy, Gordyv. Dai/yNews, L.P. (9th Cir. 1996)95 F.3d 819 Gutie"ez v. Givens, 1 F. Supp.2d 1077(S.D.Ca. 1998)

,

24

Hansonv. Denck/at357 U.S. 235 (1958) McGeev. International Life InsuranceCo., 355 U.S. 220 (1957)

.18,21,32 Panavisionlnter'l, L.P. v. Toeppen,141F.3d 1316(9thCir. 1998)

,

NY 1:\ I 0I2627\06\N7CZ06!

.JXx:\42711.0003

11

7

16,34

13 2000)

Y.

1)

200

(SD.N.

Cir.

294

2d

(2nd.

429

Supp.

.3d

F.

F

UniversalStudios,Inc. v. Reimerdes,

11

273

Corley,

v.

Inc.

Studios,

Universal

PanavisionL.P. v. Toeppen,938 F. Supp.616 (CD. Call996), oD'd, 141F.3d 1316, 1321(9th Cir. 1998)

8,

,13

TABLE OF AUTHORITIES

(1985)

473-74

462,

U.S.

471

Rudzewicz,

v.

King

Burger

STATE CASES

CassierMining Corp.v. SuperiorCourt,(1998)66 Ca!.App.4th 550

24

City and County of San Francisco v. Sainez, (Ct. App. 1st Dist. 2000) 77 Cal.App. 4th 1302, 1313.

18

Edmundsv. Superior Court, (1994) 24 Cat. App. 4th 221 Fisher Governor Co. v. Superior Courl, 53 Cal. 2d 222

33,3S

In re Marriage of Flaherty, (1992) 31 Cal. 3d 637 ...

18

JewishDefenseOrganization,Inc. v. Superior Court, 72 Cat. App. 4th 1045(1999)

31

Pavlovichv. Superior Court, 109cat. Rptr. 2d 909 (2001) ..

2

Quattronev. Superior Court, 44 Ca!. App. 3d296 (1975)

17

Rodriguez v. Solis, (5th Dist. 1992)

Cat. App. 4th 495

VonsCompanies,Inc. v. SeabestFoods,Inc., (1996) 14 Ca!. 4th 434 cert. denied522 U.S. 808

NYI:\ I ~27I4)6\N7C1JI6!;0CK:\427I'.OOO3

111

18

16, 24

By andthrough its undersignedcounsel,Real Party in Interest OVD Copy Control Association,Inc. ("OVD CCA") herebyrespondsto PetitionerMatthew Pavlovich's (the "Petitioner" or "Pavlovich") Brief on the Merits ("Pet.Br .").

PRELIMINARY STATEMENT The decisionof the Court of Appeal sustainingthe jurisdiction of the California courts over PetitionerMatthew Pavlovich follows and applieswell settledprinciples laid down by the SupremeCourt of the United Statesandthe courtsof this state. In particular,the Court of Appeal properly appliedthe "effects test" articulatedby the United States SupremeCourt seventeenyearsago in Calder v. Jones

As the Court of

Appeal correctly noted [T]he fact that Pavlovich usedthe new mediumof the Internet to inflict harm on a California plaintiff, insteadof the print mediathat was usedin Calder, is irrelevant. It shouldnot matterwhetherthe delivery systemusedto inflict the injury is the traditional delivery systemof air, land, or sea transportation,or the cutting-edgetechnologicalsystemof cyberspace,satellites,cable,and electro-magneticwaves. California's long- arm statutelooks at the effects,not at the systemthat deliveredand producedthoseeffects. Pavlovich v. Superior Court (hereinafter, the ""Appellate Opinion"), 109

Cal.Rptr.2d909,914 (2001).

465 U.S. 783 (1984).

2

In his attemptto convincethis Court to departfrom theselong establishedprinciples, Petitioner: 1

Misreadsand mischaracterizesthe decisionin Calder;

,

Selectivelyquotesand fundamentallymisinterpretsthe

decisionsof this Court, lower California courtsand FederalCourts;and

3.

Asserts,for the first time andwithout any record

support,that "Matt Pavlovich himself did not post the codeon the LiVid site or anywhereelse," Pet.Br.,p. 10, and suggests,also for the first time andwithout record suppo~ that his involvementin the misappropriationof DVD/CCA ' s trade secretswas minimal In fac~ Pavlovi,:h's role in the misappropriationof DVD/CCA's trade secretsby posting ofDeCSS on the Interner was neither minimal, innocentnor inadvertent. Pavlovich is a leaderin the "open source"movement,which generallyseeksto makematerialavailableover the Internet for free. In particular,Pavlovich foundedand operateda group called the "LiVid Video Project," a key purposeof which, in Pavlovich's 2 This actionwascommenced in orderto stopthetheftofDVD

CCA's

tradesecretsthat are utilized in an encryption-basedcopy protectionsystem known asthe ContentScrambleSystem("CSS"). CSSis employedto encryptand therebyprotectthe copyrightedmotion picturescontainedon Digital VersableDiscs ("DVDs"). Pavlovich and the other defendantsin the underlying action developedand/or disseminatedcomputerprogramson the Internet,including a programcalled DeCSS,that misappropriateDVD CCA's tradesecretsand are designedto defeatthe CSSencryption technology. Suchactionsfacilitate the wholesaleinfringementof cfJpyrightedmotion picturesby individuals worldwide. 3

own words "was to aid in the developmentof an unlicensedsystemfor DVD playbackand copying.,,3 As statedby the Court of Appeal, Pavlovich cannotclaim innocentintent. As a computer engineeringstudent,a technicianin the computerand telecommunicationsindustry, a founder and presidentof a technologystart-upcompany,and a leaderin the "open source"movement,Pavlovichknew, or shouldhave known, that by posting the misappropriatedinformation on the Internet,he was making the information availableto a wide rangeof Internetusersand consumersthroughoutthe Internet world, including usersandconsumersin California. Appellate Opinion at 916. In disseminatingDeCSSon the Internet, Pavlovich engaged in purposeful,unlawful conductdirectedat three substantialindustriesin the Stateof California - the motion picture industry, the computerindustry andthe consumerelectronicsindustry. He did so knowing that his actions would adverselyaffect thesebusinessenterprisesand that his actionshad the effect of circumventingtrade secretprotectionsestablishedby and for the benefit of thosebusinessenterprises.Without denyingany of these facts,Pavlovichseeksto escapethe jurisdiction of this court by arguingthat 3 AppellateOpinionat 912. In

a message postedon October1, 1999,

Pavlovichstated: "I havebeenlimiting my work in other projectsand really changinggearsfor LiVid." And, on November 10, 1999Pavlovich posteda messageentitled: "[LiVid-dev] More legal trouble" in which he stated: "It seemsto me that at leasttwo things needto happenASAP: # I Move the mailing list and CVS site to a friendly country, where lawyers like thesehave limited (and perhapsno) ability to harassmailing list hosts,

4

he did not know the preciseidentity of the plaintiff, and that his acts targeted generalindustriesratherthan a specificpersonor entity. This argumentis untenableunderthe California long arm statuteand relatedcase iW.

Pavlovich identifies threeissuesfor review by this Court: (i) whetherjurisdiction in California is properunderthe Calder effectstest "a defendantknew or shouldhaveknown that his actswould have an effect on industriesgenerallyreputedto exist in California" (Pet.Br.,p. 1); (ii) whetherthe 'expressaiming' requirementof the Calder effectstest may be satisfiedby "general,untargetedacts" (Id.); and (iii) whetherjurisdiction in

California

is proper

under

the I

Calder

effects

test

where

a defendant

"is

responsiblefor a passive,non-commercialwebsitethat enablesan unknown third party to post infonnation subsequentlyclaimedto have causedhanD in California, without 'somethingmore.'" (Id) Pavlovich suggeststhat the answerto eachof thesequestions is no andthat the Court of Appeal's decisionshouldthereforebe overturned. In fact, however,the Court of Appeal's decisionshouldbe afflrIned regardlessof the answersto the questionsposedby Pavlovich, With regardto the first question,Pavlovich aimedhis conduct at particular,known, California parties,not just at "industries generally CVS contributorsandthe like. c.

."

Attached to the Shapiro Decl. as Exhibit

~

reputedto exist in California." He actedwith the knowledgethat his conductwould harm the sole entity licensingCSS(DVD CCA, a California domiciliary), its California licensees - computerhardwareand software

companies-- and the California-basedmotion picture companiesthat

Thus,whetherjurisdiction would be proper over a defendantwho knew or shouldhaveknown Qnlythat his conductwould havean effect on "industries generallyreputedto exist in California" is of no relevancehere. Moreover,evenif that questionwere relevant,the answer would be yes. The Calder effectstest is satisfied,andjurisdiction is therefore appropriate, so long :asthe defendant engaged in intentional

conductaimedill ~ furnm~,

knowingthatsuchconductis likely to

causehanDto forum residents. Thoseresidentsmay be specific individuals or entities,or generalindustries.To rule otherwisewould permit out of statedefendantsto target broad-basedCalifornia industries- like the citrus industry,the softwareindustry, or the movie industry without fear of being haled into court heresimply becausethey did not have a specific citrus, softwareor movie companyin mind when they acted. With regardto the secondquestionposedby Pavlovich, it is clear from the record,and from the fmdings of the SuperiorCourt and Court of Appeal, that, far from "general,untargetedacts," Petitioner's conductwas directedat entities in California - the motion picture 6

companies,the computercompaniesand Real Party in InterestDVD CCA. Thus,whethergeneraluntargetedactssatisfy the Calder effectstest, hasno bearingon an evaluationof Pavlovich's conduct. Even if that questionwere relevantto the circumstanceshere, it is clear that a defendant'sactsneednot be targetedat specific California individuals or organizationsin order to trigger Californiajurisdiction. 'Expressaiming' underthe Calder effectstest meansexpressaiming m ~

well-establishedthat if California is the placewherethe brunt of the injury is felt, then California jurisdiction is proper..s As

to the

third

question I

identified

by

Pavlovich,

again,

the

recordand the findings of the courtsbelow are clear that Petitionerdid engagein 'somethingmore' than participation in a passive,noncommercialInternet site. In its opinion, the Court of Appeal notesthat Pavlovich: 1) "developedand/orpostedcomputerprogramson the Internet . that misappropriateDVD CCA's trade secrets;"2) knew that a license was requiredto use suchtradesecrets;3) failed to apply for or obtain a license;and 4) "sought to and actually disseminated[DVD CCA's] trade secrets"anyway. Appellate Opinion at 912. Moreover, 'expressaiming' at 4

Appellate Opinion at 918; Bancroft & Masters,Inc. v. AugustaNational,

Inc., 223 F.3d 1082 (9th Cir. 2000). S

Core. Vent Corp. v. Nobel Indus.,

F.3d 1482,1486(9th Cir. 1993). T

the forum statehas beenheld to constitutethe 'somethingmore' required by Calder. That is exactly what Pavlovich did here. Thus,whether Pavlovichcould be subjectto California jurisdiction without this 'somethingmore' is of no relevancehere and cannotwarrant a reversalof the Court of Appeal's decision. Finally, it is irrelevant,underthe effectstest,whethera web site is passiveand non-commercialas opposedto interactiveand commercial. Thosefactorsarerelevantonly to inquiries -- outsideof the effectstest framework --into whetherthe defendant'scommercialcontacts with a forum subjectthat defendantto jurisdiction there.6 As

the

Superior

Court 1

and

Court

of

Appeal

correctly

recognized,defendantswho misappropriatevaluabletradesecretsand inflict injury on major interestsin California cannotbe immunizedsimply by conductingtheir illegal activities from afar over the Internetand can be requiredto answerfor their actionsin this State. In this regard,it should not matterwhetherthe defendant'sactionstarget a person,an entity or a groupof entities. The ideathat an individual, out-of-statecyber-terrorist, for example,could set loosea computervirus with the intent of paralyzing energydelivery, or businesscommunication,or water flow in the Stateof California, yet somehowavoid the jurisdiction of the California courts

6

Panavision Inter'l, L.P. v. Toeppen, 14 F.3d 1316, 1321(9th Cir. 1998). 8

becausethat individual was not targetinga particular individual or entity makesno sense.The actionsof that defendantare aimed at the forum state and are,thus, under Calder, sufficient to subjecthim to thejurisdiction of the courtsof that forum state. Accordingly, as further detailedbelow, the Court of Appeal's decisionshouldbe affinned. STATEMENT OF FACTS Real Party in InterestDVD CCA is the sole authorized licensorof the encryptiontechnologyknown asCSS.7 DVD CCA licensees CSSandthe associatedproprietarytechnologyfor usein an array of computeroperatingsystems,including Microsoft's Windows,Macintosh's MacO/Sandthe Linux operatingsystern.8 Pavlovich himself hasadmittedin sworn testimonythat he is the presidentof a technologystart-upcompany(Pavlovich Aug. Depo.,p 8), a fonner computerengineeringstudent,and a technicianin the computer 7 Contraryto Petitioner's assertion,DVD CCA is not maintainingthis action asan assignee.DVD CCA cameinto existenceprior to the time DeCSSwaspostedon the Internet and,after an interim period during which it administeredlicenseson behalf of its predecessorin interest,took over all licensingresponsibilitiesin Decemberof 1999. Petitionertsactionsprior to and sinceDecember1999havehannedDVD CCA's businessinterests. Further,whetheror not DVD CCA were pursuingthis action as an assignee hasno bearingon the jurisdictional issuesbeforethis Court. 8Thereis no record supportfor Petitioner'sclaims that "the entitieswho licenseCSShadnot permitted CSS-equippedDVD playersto be built for the Linux operatingsystemor for other open-sourceoperatingsystems." C>p Br. p.3. In fact, CSStechnologyhasbeenlicensedto thoseseekingto developa player for the Linux environment. Hoy Decl ~~ 5-20. 9

andtelecommunicationsindustry.9 At the time he postedDeCSSon the Internet,he was a leaderin the "open source"movement,which is dedicatedto making material availableover the Internet. At that time, Pavlovichhad foundedand was operatinga groupcalled the LiVid video

Although Pavlovich's Brief on the Merits statesthat he did not have"sole control" over the website,he testified under oath that he was the "founder" and"project leader" of the LiVid video project andthat the website in question was the host site for that project. I I Pavlovich also

testified that the membersof$e LiVid video project communicated

9 SeeJuly 7, 2000 Depositionof Matthew Pavlovich ("Pavlovich July Depo.") p. 18,cited pagesattachedto the ShapiroDecl. asExhibit B. 10 Appellate Opinion at 912; Seealso Depositionof

Matthrew Pavlovich, August 4, 2000 ("Pavlovich Aug. Depo") pp. 15-16,40, cited portions attachedasExhibit A to the Declarationof JonathanShapiro("Shapiro Decl."), filed with DVD CCA's original appellatepapers;seealso Declarationof Matthew Pavlovich in Supportof his Motion to Quash ("Pavlovich Decl."),' 9, containedin Exhibit B to the Petitioner's original appellatepapers. 11Pavlovich August Depo. pp. 15-17,40.

10

of Appeal's decision,Petitionerand the other defendantsdevelopedand/or postedon the Internet a computerprogram called DeCSS,13 which misappropriatesDVD CCA' s proprietary tradesecretsand is designedto defeatthe CSSencryptiontechnology.14 At the time DeCSSwas postedon the LiVid project website, Pavlovich knew that "there was an organizationwhich you had to file for or apply for a license"to usecertainDVD technology(PavlovichAug. Depo., pp. 24-25, 86-87) (pavlovich July Depo., pp. 86-89). Despitethis knowledge,the LiVid project, which Pavlovich founded,never soughtor 13

For the first time, in his Brief on the Merits, Pavlovichstatesthat "Matt

Pavlovichhimself did not post the code on the LiVid site or anywhere else." This claim hasno factual supportin the record. In fact, the record showsthat Pavlovich refusedto answerdirect questionsabouthis role in postingDeCSSon the Internetaspart of his agreementto be deposedon jurisdictional issues. ~ Pavlovich Aug. Depo.pp. 36-37, 94-95,~ ~ pp.9, 18. Further, Pavlovich's new and cleverly wordeddenial allows Pavlovichto appearto deny involvementin the posting ofDeCSS even if he (i) instructed,aidedor encouragedsomeoneelseto post DeCSSon the website;and/or(ii) simply posteda "button" or text line which, when clicked, depositedthe codeon users' hard drives. Even Pavlovichhimself, later in his Brief, characterizeshis involvementin this caseas "input to a websiterun by his not-for-profit volunteer group." Pet.Br.,p. 36. Whether "Pavlovich himself' actuallypostedDeCSSon the Internetor whetherhe allowed or encouragedsomeoneelseto do so on his websiteis irrelevant. Either way, he knowingly participatedin the disseminationof wrongfully acquiredtradesecrets. 14Appellate Opinion at 911-912. Contrary to Petitioner'sclaim that he innocentlyrepublishedDVD CCA's trade secretson the Internet,the SuperiorCourt ruled that "circumstantial evidence,availablemostly due to the various defendants'inclination to boastabouttheir disrespectfor the law, is quite compelling on ... Defendants'knowledgeof impropriety." ~ Order GrantingPreliminaryInjunction, p. 4. 11

obtaineda licenseto useDVD technology, It neverthelessutilized DVD CCA's trade secrets,including thosecontainedin DeCSS. (pavlovich Aug. Depo.,pp. 51, 57-58). When Pavlovich misappropriatedDVDCCA's trade secrets, he alsoknew that suchactionswould adverselyimpactthreesignificant industrieslocatedin California - the motion picture industry,the consumer electronicsindustry and the computerindustry. Appellate Opinion at 912. Pavlovichknew the motion picture industry was centeredin California (PavlovichAug. Depo.,pp. 29-30); that DVDs were key instrumentsof the motion picture industry in that they serveto deliver motion picture contentto their;purchasers(Pavlovich Aug. Depo.,pp. 28); that DeCSSfacilitatesthe pirating of DVDs (Pavlovich Aug. Depo.,pp. 5960); andthat pirating DVDs is wrongful conduct{PavlovichAug. Depo, p. 71). His conducthas in fact injured the motion picture industry by making availablesoftwarethat allows the illegal copying of its copyrighted motion pictures. Further,at the time he misappropriatedDVD CCA's trade secrets,Pavlovich knew that the computertechnologyindustry hasa substantialpresencein California (Pavlovich Aug. Depo.,pp. 41-44). Indeed,of the more than 400 CSSlicensees companiesthat makethe computerhardwareand softwarewhich allow consumersto view digital imageson DVDs - 73 are locatedin California, 42 are locatedin Santa 12

Clara County and an additional 17 are in other Bay Area locations. See Complaint, 1 53.

Thus,the Court of Appeal properly found that Petitioner misappropriatedDVD CCA 's trade secretsknowing that suchactions "were injuriously affecting the motion picture and computerindustriesin Califomia"ls and that suchconductthreatensthe economicwelfare of the more than 400 CSS licensees - companiesthat makethe hardwareand

softwareenablingconsumersto view digital imageson DVDs, 73 of which are locatedin California.16 Finally, Pavlovich's familiarity with CSS,DeCSSand the consequences of his actionsis,demonstratedby the fact that he was designatedas a potential expertwitnessby the defendan~and was deposed, in UniversalStudios,Inc. v. Reimerdes,11 F .Supp.2d294 (SD.N. Y 2000),a casedecidedin the United StatesDistrict Court, SouthernDistrict of New York which involved the sameconductasthat at issuehere. That decision,which enjoinedthe defendantstherefrom posting DeCSSto the Internet,was affirmed just threemonthsago by the United StatesCourt of Appealsfor the SecondCircuit. UniversalStudios,Inc. v. Corley, 273 F 3d 429 (2nd. Cir. 2001). IS

Id. at 915-16.

16See Complaint,

, 53, attachedasExhibit D to the ShapiroDecl.;

AppellateOpinion at 912, 915-916. 13

PROCEDURAL mSTORY On January21, 2000, JudgeJ. William Elfving of the RespondentSuperiorCourt grantedin part DVD CCA's requestfor preliminary injunctive relief to preventdisseminationof its proprietary information. The Preliminary Injunction preventsthe defendants,including

Pavlovich,from Postingor otherwisedisclosingor distributing, on their websitesor elsewhere,the DeCSSprogram. .. or any other information derived from this proprietary information. See Order Granting Preliminary Injunction, p. 2.17

Six monthslater, on June6, 2000, Pavlovich movedthe trial court for an order quashingserviceof process. After full briefmg and oral argument,on August 30, 2000, JudgeElfving deniedPavlovich's motion On September11, 2000,Pavlovich petitionedthe Court of Appeal for the Sixth AppellateDistrict for a Writ of Mandatecompelling the trial court to quashserviceof process. The court deniedthat petition on October 11 2000. Pavlovichthen petitionedthis Court to review that decision, Upon instructionsby this Court, the Court of Appeal, on January16,2001, orderedthat the SuperiorCourt show causewhy the relief requestedby 17That Orderremainsin effect. On review, the Court of Appeal for the Sixth AppellateDistrict ruled that the orderviolates the First Amendment. I>VD CCA haspetitionedthis Court to review that decision. The injunction remainsin effect pendingdisposition. 14

Petitionershouldnot be grantedand directedthat Petitionerand Real Party In InterestDVD CCA file additional briefs on the matter. On August 7, 2001,the Court of Appeal filed an unanimousopinion, againruling that Pavlovich is subjectto California courtjurisdiction in this matter. Pavlovich againpetitionedthis Court for review of that decision. On December12,2001, this court grantedreview. ARGUMENT

I.

The Court Of Anneal Pronerly Ruled That Pavlovich Is Subject To The Jurisdiction Of The California Courts The Court of Appeal's ruling correctly appliedtraditional,

well-settledrules governingpersonaljurisdiction to the modemworld of the Internet. As the court notedin its opinion: The Internet,asa mode of communicationand a systemof infonnation delivery is new, but the rules governing protectionof property rights [on the Internet] neednot be. Thereis, for instance,sufficient guidanceprovided by the United StatesSupremeCourt in Calder v. Jones. Appellate Opinion at 912-13(citation omitted). Contraryto Petitioner's doomsdayrhetoric, the Court of Appeal's ruling doesnot "completely eviscerate"the SupremeCourt's ruling in Calder v. Jones(Pet.Br.,p.30), nor doesit basejurisdiction on "random" or "fortuitous" acts(Id.). Rather,the exerciseof jurisdiction over Petitionerfollows the establishedprecedentof the U.S. SupremeCourt, this Court andthe Court of Appealsfor the Ninth Circuit. As the U.S. Supreme

15

Court statedin Calder v. Jones,where a defendant"knew the brunt of the injury would be felt" in the forum state,he or she"must reasonably anticipatebeing haled into court thereto answerfor" his or her conduct. 465 U.S. 783, 788-89(1984). Petitionerprovidesno legitimatereasonwhy this Court shoulddisturb the Court of Appeal's ruling. It is well-settledthat California courtsmay exercisespecificjurisdiction over nonresident defendantswhen "the statehas 'a manifestinterestin providing its residentswith a convenientforum for redressinginjuries inflicted by outof-stateactors.'" VansCompanies,Inc. v. SeabestFoods,Inc., (1996) 14 Cal.4th

434,

447

cert.

denied I

522

U.S.

808,

citing

Burger

King

v.

Rudzewicz,471 U.S. 462, 473-74 (1985).18"The defendantneednot ever havebeenphysically presentin the forum statefor specificjurisdiction to

aff'd, 141F.3d 1316, 1321(9th Cir. 1998). Courtsapply a three-parttest to determinewhetherspecific jurisdiction exists in a particular instance. Ejrn, the defendant must have

purposefullyavailedhimself or herself of the forum. Second,the controversymust arise from the defendant'scontactswith the forum. ThirQ,the exerciseof jurisdiction must comportwith notionsof ' 'fair play

18The limits of the California long-ann statuteare co-extensivewith the limits of dueprocess. Cal. CodeCiv. Proc. § 410.10. 16

and substantialjustice." See,e.g.,PanavisionInter 'I, L.P. v. Toeppen,141 F.3d 1316,1321(9th Cir. 1998). In its decision,the Court of Appeal followed this framework. Appellate Opinion at 913-15 As detailedfurther below, Pavlovich's conductclearly satisfiesall three prongsof this test and, thus,his requestthat this Court reversethe Court of Appeal's decision shouldbe rejected.

A.

Pavlovich Purposely Availed Himself Of The Privileges Of This State California Courtshavelong held that the "purposeful

availment" requirementis satisfiedwherea defendant'sintentionalconduct causesharmful effectswithin the state. See,e.g.,Panavision, 4 F.3d at 1321,citing Calder, 46Su.s. 783; Quattronev. Superior Court, 44 Cal.App.3d296 (1975); Hansonv. Denckla, 357 U.S. 235 (1958);McGee v. International Life Ins. Co., 355 U.S. 220 (1957).

Under the "effects test," a defendant'sactionsconstitute 'purposefulavailment' if thoseactionsare (1) intentional actions (2) expresslyaimedat the forum state(3) causingharm which is sufferedandwhich the defendantknows or reasonablyshouldhaveknown is likely to be suffered - in the forum state. Panavision, 141F.3d at 1321

When evaluatinga petition for writ of mandate(which is what Pavlovich seeks)~an appellatecourt is confined "to an inquiry as to whetherthe findings andjudgment of the trial court are supportedby

17

substantial,credibleand competentevidence." Rodriguezv. Solis, (5th Dist. 1992) Cal.App.4th495. And, under California law, whereneither party requestsfactual findings from the lower court, "an appellatecourt must presumethat the factswould supportthe trial court's judgement." In

nothing to rebutthis presumption. Further,on motions to dismissfor lack of personal jurisdiction, the allegationsof the complaint are taken astrue, with disputes being resolvedin favor of the plaintiff. See,e.g.,NissanMotor Co., Ltd. v. Nissan ComputerCorp., 89 F. Supp.2d 1154, 1158(CD. Cat. 2000), aff'd, 246 F.3d 675 (9th Cir. Dec. 2(>,2000). In its Complaint, DVD CCA allegedthat Pavlovich and the other defendantsintentionally developedand distributedcomputerprogramsutilizing DVD CCA's trade secretswithout authorization,and with the knowledgethat suchactionswould adversely affect threeof California's most prominentand internationally-known industries- the computerindustry, the consumerelectronicsindustry and the motion picture industry (seeComplaint,~ 45-74). Thus the Complaint

19By citingbothCalderandPanavision in supportof his ruling,Judge

Elfving clearly ruled that Pavlovich's conductmeetsthe effectstest standardscontainedin thosecases.Factualfindings that can be inferred from a lower court opinion are entitled to the samedeferenceon appellate review as factual findings that are expresslystated. SeeCity and Countyof SanFrancisco v. Sainez,(Ct. App. 1stDist. 2000) 77 Cal.App. 4th 1302, 1313. 18

allegesthat Pavlovich expresslyaimedhis intentional conductat this State with the knowledgethat suchconductwould causesubstantialhanDhere. This aloneis enoughto establishjurisdiction over Pavlovich in California. In additio~ as detailedbelow, substantialand credible evidenceon the record supportsjurisdiction over Pavlovich in California.

1.

Pavlovich's Actions Meet The Intent Prong Of The Effects Test

It is beyonddebatethat Pavlovich's conductwas intentional. If a defendanthad accidentallypostedDeCSSto the Internet, or accidentallycreateda programwhich, without a licenseto do so, decrypted the copyrightedcontentofDVDs, suchconduct,without more, might not be consideredintentionalconduct. By contrast,however,Pavlovich, has admittedthat (i) he was the founderandproject leaderof the LiVid project, which was createdto help createan unlicensedDVD player; (ii) the livid.on.openprojects.net websiteon which DeCSSwas postedwas the host site for his LiVid video project; Pet.Br.,p. 36; PavlovichAug. Depo.,pp. 15-17,40; Appellate Opinion, p. 12; (iii) Petitionerknew DeCSSwas developedby reverseengineering(Appellate Opinion at 912; Pavlovich Aug. Depo.,pp. 32-33) and that suchreverseengineeringis illegal (Appellate Opinion at 912; LiVid posting,October 1, 1999,attachedas Exhibit C to ShapiroDecl.); and (iv) Petitionersoughtto distribute DVD CCA's tradesecretswhile knowing that suchaction was illegal (Appellate

19

Opinion at 912; LiVid postings,November 10, 1999,attachedas Exhibit C to ShapiroDecl.). Moreover,Pavlovich was limiting his role on other projectsand "really changinggearsfor LiVid.~~Id. Even Pavlovich himself characterizeshis involvementin this caseas "input to a websiterun by his not-for-profit volunteergroup." Pet.Br.,p. 36. Nowheredoes Pavlovich claim - nor could he - that his role in the unlawful dissemination ofDVD CCA's trade secretswas accidental. In arguingthat the Court of Appeal misconstruedCalder's intent requirement,Pavlovich confusingly scramblesCalder's "intent" requirementwith its "expressaiming" requirementand contendsthat the Court of Appeal "lowered the intent elementof the expressaiming requirement." Pet.Br.,p.19. Under the intent requirementof the effectstest, it is a defendant'sactionswhich must be intentional,asPavlovich's were. It was the defendants'"intentional, and allegedly tortious, actions" that the Calder court cited in ruling that California jurisdiction was proper in that case. Calder at 789 (emphasisadded). As setforth above,Pavlovich's actionsclearly satisfy this intent standard,and he doesnot claim otherwise. The Court of Appeal properly appliedthis standardand did not, as Pavlovich confusingly asserts,createa negligencestandardor "lower the intent standardof the expressaiming requirement." Pet.Br.,p.19

2.

Pavlovich's Actions Meet The "Expressly Aiming" Prong Of The Effects Test

The "expressaiming" requirementof the effectstest requires that the defendantaimedhis conduct~ ~ fQn!m~.

20

As statedby the

Calder court itself, "[i]n judging minimum contacts,a court properly focuseson 'the relationshipamongthe defendant,the forum, andthe litigation", (Id. at 788), not the defendantand the plaintiff. Indeed, knowledgethat "the brunt of the hanDwould be sufferedin California" has beendeemedthe "[ m]ost significant" factor favoringjurisdiction underthe effectstest. Core-VentCorp. v. Nobel Indus., 11 F.3d 1482, 1486(9th Cir. 1993). In Panavision,for example,the court found that the express aiming requirementwas satisfiedwhere, inter alia, the defendantregistered the plaintiff's motion picture cameratrademarksas "domain names"on the Internetknowing that plainti~ did substantialbusinesswith the motion picture industry and that "the heartof the theatricalmotion picture and television industry is located[in California]." Id; seea/soNissan,89 F.Supp.2d1154(C.D. Ca. 2000)(holdingthat a North Carolinadefendant was subjectto California jurisdiction for trademarkinfringementover the Internet). In 3DO Co. v. Pop/oPSoftware,Inc., 49 U.S.P.Q.2d 1469 (N.D. Cal. 1998), a California plaintiff sued for misappropriation of trade secretsassociatedwith computer games. In upholding jurisdiction over the nonresident defendant, the court held that: The computer game indus:tr.Yis primarily located in California. Therefore, defendant's conduct is likely to have an effect in the forum state. As Defendants should know their 21

actionsare likely to causehanDin California, underthe 'effects test,, the purposefulavailmentrequirementnecessary for specificjurisdiction is satisfied. 49 U.S.P.Q.2dat 1473(emphasissupplied);seealso CableNewsNetwork v. GoSMS.Com, 56 U .S.P.Q.2d 1959 (S.D.N.Y. 2000) (holding that a

California defendantwas subjectto New York jurisdiction where defendant "should havereasonablyexpectedthe transmittal of copyright infringing content. . .to have consequencesin New York.").

The recordprovidessubstantial,credible and competent evidence,much of it from his own sworn statements,that Pavlovich expresslyaimedhis intentional conductat the Stateof Califomi~ knowing that significant injury would be felt by threeof California's largestand most importantindustries,and,specifically, by DVD CCA. As DVD CCA demonstrated, and as the Court of Appeal found, Petitioner has admitted

that:

.

Petitioner's goal-- through the LiVid project -- wasto developan unlicensedDVD player that would useDeCSSto decryptDVD data- copyrightedmotionpictures(Appellate Opinion at 912; Pavlovich Aug. Depo.,pp. 28, 30-33);

.

At the time PetitionerpostedDeCSSon the Internet,he knew that DeCSSfacilitatesthe pirating of motion pictureson DVDs (Appellate Opinion at 912; Pavlovich Aug. Depo.,pp. 59-60) andthat pirating DVDs is wrongful conduct (Appellate Opinion at 912; Pavlovich Aug. Depo.,p. 71); Indeed,asthe Court of Appeal opinion notes,"Pavlovich

admittedin his depositionthat 'there was an organizationthat you had to apply for a licenseor whatever' to use certainDVD technology." Appellate 22

Opinion at 912. Nonetheless,"Pavlovich neversoughtor obtaineda license,""admittedthat his LiVid project utilized DVD CCA's trade secrets,"and "soughtto and actually disseminatedthosetrade secrets.

picture industry,the consumerelectronicindustry and the computer industry was centeredin California. [d. Thus,Petitionertargetedhis conductat the motion picture, consumerelectronicand computerindustriesin California and did not simply engagein "general," "untargeted"acts,ashe claims.21 Petitioner'scontentionthat the effectstest requiresa defendantto intentionally target a specific, known plaintiff ratherthan an "industry" beforejurisdiction can be exercised(Pet.Br.,pp. 24-30) is

20Pavlovi.ch'sclaim that he did not know DVD CCA's actualnameor precise location until commencementof this lawsuit (petition, p. 25) is similarly irrelevant. The salientfacts are that Pavlovich (I) knew "there was an organizationwhich you had to file for or apply for a license" to usecertainDVD technology(pavlovich Aug./ Depo.,p. 24-25, 86-87; Pavlovich July Depo.,pp. 86-89; and (ii) knew or shouldhaveknown that his conductwould affect this licensingentity's California interestsbecausehe knew the motion picture, consumerelectronicsand computerindustriesarelocatedin California. See,e.g., Core-Ven!v. Nobel Indus., 11 F.3d at 1486.

It is for this reasonthat Pavlovich's relianceon Callaway Gol/Corp. v. Royal CanadianGolf Ass'n, 125F.Supp.2d1194(C.D.Ca!.2000), is unfounded. Whereasthe defendantthere "merely" knew that "a corporate defendantmight be locatedin California," (Id. at 1206)(emphasis supplied),Pavlovich knew that DVD CCA and others"~Q.Y1.Q feel the brunt of the effects of [his] actionsin California." [d. (emphasissupplied). 21

23

completelyunfounded. As the California Court of Appeal for the Fourth District recently stated: [T]he defendant's forum related activities need not be directed at the plaintiff in order to give rise to specific jurisdiction [T]he nexus reQuired to establish s}2ecific jurisdiction is between the defendant. the forum. and the litigation - not between the }21aintiff and the defendant.

CassierMining Corp. v. Superior Court (1998) 66 Cal.App.4th 550, 557, citing VansCompanies,Inc. v. SeabestFoods,Inc. 1996) 14 Cal.4th 434, 455 (emphasissupplied), The Ninth Circuit has madeit equally clear that "express aiming" means express aiming at the forum state, not necessarily

at a specificparty. SeeBancroft & Masters,Inc. v. AugustaNational, Inc. 223 F.3d 1082(9th Cir. 2000) In the instantcase,the Court of Appeal similarly statesthat Neither does Calder ISlanguage suggest that the defendant location

and

identity

plaintiffs

the

of

known

have

must

As the court keenly observed in Cassiar Mining Corp. v.

jurisdiction

specific jurisdiction specific

to

rise

to establish give

to

order

in

,T]he nexus required plaintiff

the

Superior Court (1998) 66 Cal.App.4th 550, 557, 78: "[T]he defendant'sforum [related] activities neednot be directedat is

between the defendant, the forum, and the litigation--not between the plaintiff and the defendant.

Appellate Opinion at 918. (Italics in Appellate Opinion, citations omitted). 22

22Similarly, in Gutierrezv. Givens,1 F .Supp.2d1077(SD.Ca. 1998),the defendants,non-residentsof California, attemptedto hide assetsfrom potential creditors. Thesepotential creditorswere more than 29,000class plaintiffs in a classact\onlaw suit. Despitethe fact that the defendantsdid 24

Pavlovich citesBancroft & Masters,Inc. v. AugustaNational, Inc., 223 F.3d 1082, 1088(9th Cir. 2000), for the propositionthat a defendant'sout-of-stateconductmust be aimed at an individual or particularentity in order to meetthe expressaiming standard.This contentionis belied by the very wording of the effects test itself, as stated by the Calder court and reiteratedby very the Bancroft court cited by Pavlovich. The relevantjurisdictional test is expressaiming "at the forum state,"not at a particular entity in the state,much lessat the particular plaintiff in the suit. Thus, in Calder, the SupremeCourt statedthat the defendants"intentional, and allegedlytortious, actionswere expressly aimedm California," (465 U.~. at 783) not "at the plaintiff in California". And, in Bancroft, the court statedthat: "the letter was expresslyaimed.@! California, becauseit individually targetedB &M, a California corporation...." Bancroft & Masters,Inc. v. AugustaNational, Inc., 223 F.3d 1082, 1088(9th Cir. 2000) (emphasissupplied). As the Court of Appealspointed out below: Pavlovich misreadsBancroft. Bancroft did not interpretthe "expressaiming" requirementof Calder to meanthat the defendantmust know the identity and location of the plaintiff when it undertakesthe wrongful acts. Bancroft statedmerely that it understoodthe expressaiming requirementof Calder not aim their conductat any particular, known, California party, the court ruled that they "knew or shouldhaveknown that their actionswould later iRjurejudgementcreditorsin California." Id. at 1082. Thus,the court

feund,jurisdictionwasproper.Id. 2S

to be "satisfied when the defendantis allegedto have engaged in wrongful conducttargetedat a plaintiff whom the defendantknows to be a residentof the forum state." (Bancroft,supra, 223 F.3d at p. 1087.) Bancroft did not say that targetingthe wrongful conduct"at a plaintiff whom the defendantknows to be a residentof the forum state" is the only way to satisfy Calder IS"expressaiming" requirement. AppellateOpinion at 918 (emphasissupplied). The Edmundscase,also cited by Pavlovich, is not an "effects test" caseandthereforedoesnot evenaddressthe issueof expressaiming. Rather,in Edmunds,as Pavlovichhimself states,jurisdiction was found to be improperbecausethe defendant'saction merely "set into motion events which ultimately injured a California resident." Pet.Br.,p. 23, citing Edmundsv. Superior Court, (1994) 24 Cal.App.4th221.23 By contrast, Pavlovichengagedin intentionalconductknowing and intendingthat the conductwould affect partiesin this State. Similarly, Cybersell,24Calloway25 and Gordy26(cited by

Petitioner)are inapplicableto the questionspresentedhere. Thosecases involved only injury to individual plaintiffs, not to any industry. Thus~ thosecourtsdid not needto reachthe "industry" question. Eachof those 23The defendantwas an Hawaii attorneyrepresentinga California company in a Hawaii lawsuit. Edmundsat 224.

2SCalloway Golf Corp. v. Royal CanadianGolf Ass'n, (C.D. Cat. 2000) 2000U.S. Dist. LEXIS 19032.

26

cases,however,doesspecify that the relevantquestionunderthe effectstest is the targetingof the fQn!m ~. According to Pavlovich's contraryview, a personwho tired a bullet into California could be suedin California only if he fired with the intent to hurt a particular, known, California party. A personwho simply stoodat the Nevadaborder and fired randomly into this Statecould not, underPavlovich's framework, be broughtto answerfor his conducthere. Similarly, underPavlovich's formulation, a party could cometo the Nevada borderand,without fear of California courtjurisdiction, releasefruit flies into this Statein order to generallysabotagethe citrus industry. According to Pavlovich,only if the sabot~urhad a particular companyin mind as a target- ratherthan a generalindustry could he be called to answerfor his conducthere. The law cannotturn on suchdistinctions,asthe Stateof California clearly is entitled to protect its citizens,its businessesand its industriesfrom out-of-statetortfeasors.

3.

Pavlovich's Conduct Caused Harm That He Knew Or Reasonably Should Have Known Was Likely To CauseHarm In California

As a leaderin the "open source"movement,a computer engineeringstudent,the presidentof a technologystart-upcompany,and a technicianin the computerand telecommunicationsindustry, Pavlovich was certainly awarethat posting infonnation on the Internet would make that infonnation availableto a large and geographicallyscattered 27

populationof individuals and organizations. Indeed,that was his intention asthe founderandproject leaderof the LiVid group,which seeksto create unlicensedDVD decryptionapplications. PavlovichAug. Depo.,pp. 2225. Pavlovich cannotnow claim to havebeennaIveor unsophisticatedin his understandingof the impact his actionswould have. The record,indeed,demonstratesthat Pavlovich's intentional actionsdid, in fact, causehanDin California, ashe knew they would. Specifically,by intentionally posting or participating in the dissemination ofDVD CCA's proprietarytechnologyon the Internet,Petitioner threatenedthe very existenceofDVD CCA, a California trade association, which

is the

sole

licensor

of the I

intellectual

property

misappropriated

by

Petitioner. Petitioner's conductalsojeopardizedthe economicviability of the dozensof CSSlicenseesin the computerand consumerelectronics industriesin California. SeeComplaint,' 52-53;Appellate Opinion at 912 Finally, Petitioner's conductput at risk one of the principle assetsof the motion picture companies their copyrightsin their motion pictures, Petitionerknew thesecompanies~

in fug (not simply "reputedto be")

in Califomia.27

21

AppellateDecision at 912, citing DepositionAdmissions. 28

B.

The Court Of Appeal's Decision Is Consistent With The Dictates Of Calder Pavlovich identifies eight points which he claims

meaningfully distinguishthis casefrom Calder. He is wrong. The m!

point raisedby Pavlovich is the allegedly"non-

commercial"natureof his activities. No caselaw cited by Pavlovich and no caselaw in existence,to DVD CCA's knowledge- makesjurisdictional detenninationsbasedon whethera tort was committed"for profit" as opposedto for other motives. Pavlovich offers no rationalewhy such considerationsshouldmatter,and indeedthey shouldnot. Thus, this is a distinction without a difference. Second,Pavlovich claims that becauseDVD CCA "does businessworld-wide" it is lesslikely to suffer harm in one geographic location. As Panavision,3DO and other casesdemonstrate,however, where a defendantknew or shouldhaveknown that the brunt of his conduct would be felt in a particular forum --because,for example,the movie industry is centeredthere- he shouldexpectto be called into court in that forum to answerfor his conduct. Thi!.4,Pavlovich allegesthat his conducthannedonly the Japaneseentitieswho originally licensedCSS. This is incorrectbecausehis conducthasharmedand continuesto harm DVD CCA, its licensees,and the movie, computerand consumerelectronicsindustries.

29

Fourth, Pavlovich allegesthat he had no interactionwith California residents. This is of no relevanceunderthe effectstest. Further, Pavlovichadmitsthat somemembersof his LiVid video project, including somewho contributedto the host website,may have beenlocatedin California. SeePavlovich Aug. Depo.,p. 19. fifth, Pavlovichallegesthat the websiteat issuewas not underhis "sole control." On the one hand,Pavlovich allegesthat the websitewas "passive" (seePavlovich's ~

point, infra) and could not

thereforereceiveinput from California users. On the other hand,he now claimsthat the websitewas not underhis sole control and receivedinput from an "unconstructedgrouP.of contributors," someof which may have beenin California. Legally, however,all that mattershereis that Pavlovich foundeda group, for which this websiteservedas a host, that was dedicated to the developmentof an unlicensedDVD player utilizing wrongfully obtainedintellectual property. WhetherPavlovich misappropriatedthose tradesecretsaloneor in concertwith an "unconstructedgroup of contributors,"jurisdiction is proper in California. ~,

Pavlovich claims that the LiVid websitewaspassive

and did not solicit information from California. This is inconsistentwith Pavlovich's other statements(seehis Eif1hpoint, supra) and with his sworn statementthat certain contributorsto his LiVid site may havebeenin

30

California. Pavlovich Aug. Depo.,p. 19. Further,the passivity and commercialnatureof a websiteare irrelevantunderthe effectstest. Seventhand Eighth, Pavlovichreiteratesthe "intent" and "targeting" points that were addressed,supra, in point I.A The Court of Appeal decisionis fully consistentwith Calder and correctly determinedthat Pavlovichpurposefully availedhimself of a California forum.

II.

The Claims Arise From Pavlovich's Forum-Related Activitv There is similarly no merit to Pavlovich's assertionthat DVD

CCA's claims do not arise directly from Pavlovich's forum-relatedconduct. In California, courtsusea "bu,t-for" test to detenninewhethera particular claim arisesout of forum-relatedactivities. See,e.g.,Ballard v. Savage,65 F.3d 1495,1500(9th Cir. 1995). Thus,the questionis: but for Pavlovich's forum-relatedconduct,would DVD CCA's claims againstPavlovichhave arisen? The answeris clearly no. If Pavlovichhad not misappropriated 28Petitionerclaimsthat the Court of Appeal's decisionis in conflict with JewishDefenseOrganizati~n,Inc. v. Superior Court, 72 Cal.App.4th 1045 (1999) and CybersellInc. v. Cybersell,Inc. 130F.3d 415 (9th Cir. 1997). He is incorrect. Pavlovich relies on thesecasesfor the propositionthat the degreeof interactivity and the commercialnatureof a web site are relevant underthe effectstest. This argumentignoresthe initial holdings in Jewish DefenseOrganizationand Cybersellthat the effects test had not beenmet becausethe defendant'sactionsdid not createa "foreseeablerisk of injury" in California. Only after making this thresholddecisiondoesthe court look to the interactivity and commercialnatureof the web site in questionasan alternativemeansof determining'purposeful availment' for jurisdictional purposes.That is not the casehere,nor doesPetitioner argueotherwise. 31

DVD CCA's trade secrets,then DVD CCA's claims for misappropriation againstPavlovichwould not have arisen. Pavlovichclaims that the Court of Appeal erredin evaluating this issuewhen it consideredthe effect misappropriationofDVD CCA's tradesecretshad on the unlawful "distribution of copyrightedmaterial of California Companiesor the pirating ofDVDs." Pet.Br.,p. 37 (citations omitted). Pavlovich claimstheseeffects are irrelevantherebecause"there is no allegationthat Petitionerwas involved in either activity." Id. To the extentthis argumentis relevantat all, it is incorrect. DVD CCA does allegethat Pavlovich andthe other defendantsfacilitated the unlawful distribution

of copyrighted

motion ,

pictures

and

the

pirating

ofDVDs

by

disseminatingDVD CCA's trade secretsin the fonD of computer decryptiondevicesincluding DeCSS. Complaint~ 45-74. III.

Jurisdiction Here Comnorts With Notions of Fair Pla~ and Substantial Justice Finally, not only is it fair andjust for the SuperiorCourt to

exercisejurisdiction over Pavlovich, any otherresult would run contraryto accepteddueprocessanalysis. "An otherwisevalid exerciseof personal jurisdiction is presumedto be reasonable.Accordingly, once a court fmds purposefulavailment,it is the defendant'sburdento presenta compelling casethat the exerciseof jurisdiction would be unreasonable."Nissan

32

Motor Co.,Ltd., 89 F.Supp.2dat 160. Here, Pavlovich comesnowhere nearmeetingthis burden. In detern1iningwhetherjurisdiction over a nonresident comportswith notions of fair play and substantialjustice underthe due processclause,courtsweigh sevenfactors: (1) the extentof the defendant'spurposefulinterjection into the forum state'saffairs; ,.}

the burdenon the defendantof defendinga suit in the

forum; (3) the extentof conflict with the sovereigntyof the defendant's state; (4)

the forum state'sinterestin adjudicatingthe dispute;

(5)

the most efficient judicial resolutionof the controversy; the importanceof the forum to the plaintiff's interestin convenientand effective relief; and the existenceof an alternativeforum.

Core-Vent Corp.,

F.3d at 1487-88. No single factor is dispositive..Id.

In the Court of Appeal below and in his Petition to this Court, Pavlovich lists just five of thesesevenfactors(numbersone,two, four, five, and seven)29 and discussesonly four of them (numbersone,two, four and

29 The 1959casecitedby Pavlovich(FisherGovernorCo.v. Superior

Court, 53 Cal.2d222), fails to list factor three:the importanceof the forum to the plaintiff's interestin convenientand effective relief; and factor six: the extentof conflict with the sovereigntyof the defendant'sstate. See PavlovichPA, p. 9. As demonstratedbelow, both of thesefactorsoperate in of favor exercisingjurisdiction here. 33

seven). In his Brief on the Merits to this Court, he lists and discussesall sevenfactorsfor the first time. All sevenfactorsfavor the exerciseof jurisdiction over Pavlovich. Factorsfour through seven,in particular, strongly militate in

With regardto factor four, California hasan immeasurably large interestin adjudicatingthis dispute. Even Pavlovich recognizesthis interest. Pet.Br.,p. 41. DVD CCA is a trade associationfonned by three industries with a tremendous presence in the California economy - the motion picture industry, the computer industry and the consumer electronics industry. Complai,nt, ~ 40-44, Pavlovich's actionsstrike at the

core of theseindustriesand affect their ability to operateeffectively in the 30 With

regardto the first three factors: The extent of Pavlovich's intrusion into California -- factor one -- hasbeenestablishedabove. SeeSectionI.A., supra. The burdenon Pavlovich in defendingthis suit in the forum - factor two -- is minimal. Pavlovich is representedby the samecounsel representingthe California defendantwho hasappearedin this action. If this suit were filed in anotherjurisdiction, Pavlovichwould haveto incur the additional expenseof hiring counselin that state. At most, Pavlovich would haveto cometo California for the trial itself. This would be true in the caseof any nonresidentdefendantand thereforecannotoperateas a reasonto denyjurisdiction. Further,Pavlovichwillingly traveledfrom Texasto New York to participatein UniversalStudios,Inc. v. Reimerdes. Thus,Pavlovich's complaintsabouthaving to travel to California for this trial ring hollow. Moreover,the burdenon the defendantis no longer heavily weighedby courtsin determiningjurisdiction. SeePanavisionat 1323. And, Pavlovichhastraveledto California to attendoral argumenton this jurisdictional issuein the Court of Appeal. As for factor three,there is no conflict with the defendant'sstate,nor doesPavlovich claim so. In fact,

34

emergingInterneteconomy. Thus, California maintainsa stronginterestin providing an effective meansof redressfor its residentsinjured by commercialmisappropriation. With regardto factor five, the efficient resolutionof this controversyclearly requiresthat all defendantsbe tried in onejurisdiction. In fact, the one casecited by Pavlovich on this point highlights "the avoidanceof a multiplicity of suits and conflicting adjudications"as a major factor to be consideredwhen deciding whetherto exercise jurisdiction. Fisher Governor Co., 53 Cal.2d at 225-26, y e~ if jurisdiction over Pavlovich is not upheld,DVD CCA will be forcedto suethe defendantsin this casein the ~ozensof jurisdictions in which they reside Nothing could be lessefficient. The underlying facts and legal issues surrounding each defendant are virtually identical - they all postedthe trade

secretson their web sites. Arguing and re-arguingthesefactsand legal issuesin many different jurisdictions ensuresthe wasteof valuablejudicial resourcesandrisks the promulgationof conflicting verdictsand court rulings. California, asDVD CCA's primary place of businessand as the site of the greatestinjury, is undeniablythejurisdiction in which this case shouldbe tried. Pavlovich claims that many witnesseswith relevant infonnation to this casemay exist in Norway, England,New York and

evenPavlovichcontendsthat this factor is of only slight relevancehere Pet.Br.,pp. 40-41. 35

Connecticut. This point is irrelevant herebecausePavlovich would surely contestjurisdiction in thoseforums aswell. Further, asPavlovich admits, at leasttwo key witnesses,aswell asplaintiffDVD CCA, are locatedin California.

Pet.Br.,p. 4 For thesesamereasons,factor six the plaintiffs interestin

convenientand effective relief. demandsthat this casebe heardin a single jurisdiction: California. The expenseand inconvenienceof pursuing identical casesin a multiplicity of jurisdictions would be an extraordinary burdenfor DVD CCA. Further, the possibility of conflicting adjudications risks renderingany reliefDVD CCA doesobtain ineffective. With regardto f~ctor seven,thereis no alternativeforum in which DVD CCA's claims can be as effectively pursued. It is California which hasthe greatestinterestin the outcomeof the litigation and California wherethe brunt injury hasoccurred. California is uniquely appropriateasa site to pursueclaims againstall the defendants. .cONCLUSION Contraryto Pavlovich's contention,the SuperiorCourt's order and the Court of Appeal's affmnation of that order, do not undermine the establishedrules of personaljurisdiction. Rather,they recognizethe well-establishedprinciple that when a defendant'sintentional conduct causeshanDfuleffectswithin this State,he canbe called to answerfor that

36

conducthere. Defendantswho misappropriatevaluabletrade secretsand inflict injury on major interestsin California cannotbe immunizedsimply by conductingtheir illegal activities from afar over the Internet. If the courtsof this Statecannotredressinjuries directedat this Statethroughweb site activity, then the power of the Internetwill becomea dangerous resourcefor intellectual property thieves. It is fair and it is the law that defendantswho deliberatelychoseto injure interestsin California be requiredto answerfor their actionsin California. WHEREFOREDVD CCA respectfullyrequeststhat this Court affIrm the decisionof the Court of Appeal and reject Pavlovich's Petition

for

a Writ

of

Mandate.

\

Dated: February13, 2002 WElL, GOTSHAL & MANGES LLP Silicon Valley Office 201 Redwood Shores Parkway Redwood Shores, CA 94065 Telephone: (650) 802-3000

By:

ROB RT . SUGARMAN JEFFREYL. KESSLER GEOFFREYD. BERMAN WElL, GOTSHAL & MANGES LLP 767 Fifth Avenue New~York,NY 10153 Attorneys for Plaintiff DVD INC.

COpy

37

CONTROL

ASSOCIA

nON.

.

conducthere. Defendantswho misappropriatevaluabletradesecretsand inflict injury on major interestsin California cannotbe immunizedsimply by conductingtheir illegal activities from afar over the Internet. If the courtsof this Statecannotredressinjuries directedat this Statethroughweb site activity, then the power of the Internetwill becomea dangerous resourcefor intellectualpropertythieves. It is fair and it is the law that defendantswho deliberatelychoseto injure interestsin California be requiredto answerfor their actionsin California. WHEREFOREDVD CCA respectfullyrequeststhat this Court affirm the decisionof the Court of Appeal and reject Pavlovich's Petition for a Writ of Mandate. Dated: February14,2002 WElL, GOTSHAL & MANGES LLP Silicon Valley Office 201 RedwoodShoresParkway RedwoodShores,CA 94065 By: (Bar No. 151650) ROBERT G. SUGARMAN JEFFREYL. KESSLER GEOFFREYD. BERMAN WElL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, NY 10153 Attorneysfor Plaintiff DVD COpy CONTROL INC.

31

ASSOCIA nON,

CERTIFICATE OF SERVICE I, JeanWirdzek, herebycertify that on February14,2002, I causeda copy of Real Party in Interest DVD Copy Control Association's Brief on the Merits to be sentvia U.S. Mail to:

Allon E. Levy HS LAW GROUP 210 North Fourth Street,Suite 400 SanJose,CA 95112 Fax: (408) 295-5799

Robin D. Gross ELECTRONIC FRONTIER FOUNDATION 454 Shotwell Street SanFrancisco,CA 94110 Fax: (415) 436-9993

I causeda copy of the foregoingto be handdeliveredto: Trial Court: Clerk of the SantaClara County SuperiorCourt to be deliveredto Hon. William J. Elfving

191NorthFirst Street

'

SanJose,CA 95113 Appellate Court: Clerk of the Court of Appeal Sixth Appellate District 333 West SantaClara St., Suite 1060 SanJose,CA 95113 I declareunderpenalty of perjury, underthe laws of the Stateof California, that the foregoingis true and correct,andthat this Declarationwas executedat RedwoodShorestCalifornia on February14t2002.

J

SVI :\12~1\2

S@OI!.n0c-.42711.0003