IN THE UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
MICROSYSTEMS SOFTWARE, INC.
and MATTEL, INC.,
SCANDINAVIA ONLINE AB, a Swedish corporation; ISLANDNET.COM, a Canadian corporation; EDDY L. O. JANSSON, a Swedish citizen; and MATTHEW SKALA, a Canadian citizen,
WALDO L. JAQUITH, LINDSAY HAISLEY, and BENNETT HASELTON,
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
BRIEF OF APPELLEES
Irwin B. Schwartz C.A. # 41819
William C. Nystrom
Colleen C. Cook
SCHWARTZ and NYSTROM, LLC
419 Boylston Street
Boston, Massachusetts 02116
RULE 26.1 STATEMENT
Appellees Microsystems Software, Inc. and Mattel, Inc. state that Microsystems Software, Inc. is a wholly-owned subsidiary of Mattel, Inc., a Delaware corporation. Mattel, Inc. is publicly traded.
Microsystems Software, Inc. and Mattel, Inc.
By their attorney,
Irwin B. Schwartz C.A.#41819
SCHWARTZ and NYSTROM, LLC
419 Boylston Street
Boston, Massachusetts 02116
(617) 421-1810 (fax)
TABLE OF CONTENTS
TABLE OF AUTHORITIES iii
JURISDICTIONAL STATEMENT 1
ISSUES PRESENTED 1
STATEMENT OF THE CASE 2
STATEMENT OF FACTS 5
STANDARD OF REVIEW 8
SUMMARY OF ARGUMENT 9
I. Appellants Have No Standing To Appeal 11
II. The District Court Had Jurisdiction To Enter The Injunction 16
III. The Injunction Is Properly Tailored Pursuant
to Rule 65 18
CERTIFICATE OF SERVICE 24
TABLE OF AUTHORITIES
Cable/Home Communication Corp. v. Network Productions, Inc., 902 F.2d 829 (11th Cir. 1990) 20
Caplan v. Fellheimer Eichen Braverman & Kaskey, 63 F.3d 828 (3d Cir. 1995) 15
Curtis v. City of Des Moines, 995 F.2d 125 (8th Cir. 1993) 15
Dallas Cowboys Cheerleaders, Inc., v. Scoreboard Posters, Inc., 600 F.2d 1184 (5th Cir. 1979) 20
Dopp v. HTP Corp., 947 F.2d 506 (1st Cir. 1991) 11, 14, 16
Felzen v. Andreas, 134 F.3d 873 (7th Cir. 1998) 12
Flast v. Cohen, 392 U.S. 83 (1968) 22
Fortin v. Commissioner of Mass. Dept. of Public Welfare, 692 F.2d 790 (1st Cir. 1982) 8
G. & C. Merriam Co. v. Webster Dictionary Co., 639 F.2d 29 (1st Cir. 1980) 19
GB Marketing USA Inc. v. Gerolsteiner Brunnen, 782 F. Supp. 763 (W.D.N.Y. 1991) 9, 17
Hamil America, Inc. v. GFI, 193 F.3d 92 (2d Cir. 1999) 9
Hispanic Society Of New York City Police Dept., Inc. v. New York City Police Dept., 806 F.2d 1147 (2d Cir. 1986) 11, 12, 16
In re Public Serv. Co. of New Hampshire v. Richards, 148 B.R. 702 (D.N.H. 1992) 15
Junger v. Daley, 209 F.3d 481 (6th Cir. 2000) 14
Kaplan v. Rand, 192 F.3d 60 (2d Cir. 1999) 12, 13
Keith v. Volpe, 118 F.3d 1386 (9th Cir. 1997) 15
Kenny v. Quigg, 820 F.2d 665 (4th Cir. 1987) 15
Liberty Toy Co. v. Fred Silber Co., 149 F.3d 1183, 1998 WL 385469 (6th Cir. 1998) 17
M. Kramer Mfg. Co. v. Andrews, 783 F.2d 421 (4th Cir. 1985) 16
Marino v. Ortiz, 484 U.S. 301 (1988) 11, 12, 14, 19
Metzke v. May Dept. Stores Co., 878 F. Supp. 756 (W.D.Pa. 1995) 9
Microsoft Corp. v. Grey Computer, 910 F. Supp. 1077 (D. Md. 1995) 16
National Enquirer, Inc. v. News Group News, Ltd., 670 F. Supp. 962 (S.D. Fla. 1987) 17
National Football League v. TVRadioNow Corp., 53 U.S.P.Q.2d 1831, 2000 WL 255989 (W.D.Pa. 2000) 17, 18
NBA Properties, Inc. v. Gold, 895 F.2d 30 (1st Cir. 1990) 19
New York State Club Ass'n v. City of New York, 487 U.S. 1 (1988) 15
Pacific and Southern Co. v. Duncan, 744 F.2d 1490 (11th Cir. 1984) 21
Paramount Film Distr. Corp. v. Civic Center Theatre, Inc., 333 F.2d 358 (10th Cir. 1964) 13
Penelope v. Brown, 792 F. Supp. 132 (D. Mass. 1992) 22
Regal Knitwear Co. v. National Labor Relations Board, 324 U.S. 9 (1945) 19
Religious Technology Center v. Netcom On-Line Communication Services, Inc., 923 F. Supp. 1231 (N.D. Cal. 1995) 21
Scusa v. Nestle U.S.A. Co., 181 F.3d 958 (8th Cir. 1999) 13
Sea Shore Corp. v. Sullivan, 153 F.3d 51 (1st Cir. 1998) 16
Sega Enter. LTD. v. Accolade, Inc., 977 F.2d 1510 (9th Cir. 1993) 5, 16, 18
Sierra Fria Corp. v. Evans, 127 F.3d 175 (1st Cir. 1997) 8, 9
Sony Computer Entertainment, Inc. v. Connectix Corp., 203 F.3d 596 (9th Cir. 2000) 5
Triad Systems Corp. v. Southeastern Express Co., 64 F.3d 1330 (9th Cir. 1995) 22
Unistrut Corp. v. Power, 280 F.2d 18 (1st Cir. 1960) 9
United States ex rel. Louisiana v. Jack, 244 U.S. 397 (1917) 11
Update Art, Inc. v. Modiin Publishing, Ltd., 843 F.2d 67 (2d Cir. 1988) 18
Virginia v. American Booksellers Ass'n, 484 U.S. 383 (1988) 13
15 U.S.C. § 1121 16
17 U.S.C. § 101 1
17 U.S.C. § 106(2) 16
17 U.S.C. § 107 22
17 U.S.C. § 502(a) 18
17 U.S.C. § 1201 23
28 U.S.C. § 1291 1
28 U.S.C. § 1331 1
28 U.S.C. § 1332 1
28 U.S.C. § 1338 1, 16
47 U.S.C. § 231 4
Fed. R. App. P. 3(c) 1, 11, 12
Fed. R. App. P. 28(a)(5) 13
Fed. R. App. P. 28(a)(7) 4
Fed. R. App. P. 28(a)(9)(A) 13
Fed. R. App. P. 28(d) 1
Fed. R. App. P. 28(e) 4
Fed. R. App. P. 30(a)(2) 4
Fed. R. Civ. P. 24 12
Fed. R. Civ. P. 52(a) 8
Fed. R. Civ. P. 65 19, 21
Fed. R. Civ. P. 65(d) 18, 19
Pub. L. 105-277, Div. C. Title XIV, § 1402 (October 12, 1998) 4
Rules for the First Circuit Court of Appeals LOC R. 36.1 17
Rules for the Sixth Circuit Court of Appeals LOC R. 24(c) 17
Jansson and Skala, The Breaking of Cyber Patrol4 (2000) 5
Lawrence Lessig, Battling Censorware, The Industry Standard (Apr. 3, 2000) 23
Appellees Microsystems Software, Inc. and Mattel, Inc. (together "Microsystems") asserted jurisdiction below pursuant to 28 U.S.C. §§ 1331 and 1332, alleging violations of the Copyright Act, 17 U.S.C. § 101 et. seq., through the publication into the United States of materials derived in violation of Microsystems copyrights in its Cyber Patrol Internet screening software. The District Court properly found that it had jurisdiction pursuant to 28 U.S.C. § 1338.
This Court has jurisdiction pursuant to 28 U.S.C. § 1291 over an appeal by a party to the District Court's final injunction order entered March 28, 2000 (the "Injunction"). See Fed. R. App. P. 3(c). No party sought to appeal the order below. Instead, appellants, three non-parties who never sought to intervene, filed a notice of appeal on April 4, 2000.
Whether non-party appellants have standing to challenge entry of a stipulated permanent injunction where they did not move to intervene?
Whether the District Court properly found jurisdiction to enter a stipulated permanent injunction where the record demonstrated that defendants' computer code was derived from United States copyrighted software and was promoted and published over the Internet into the United States?
Whether the District Court violated non-parties' due process rights by including in the stipulated permanent injunction's scope "those persons in active concert or participation with" defendants, which language is taken directly from Fed. R. Civ. P. 65?
STATEMENT OF THE CASE
The District Court's March 28, 2000 Order captures the essence of the case: "[t]his case involves a dispute between private parties relating to federal copyright law and [was] resolved by a stipulation entered into by the parties." (Stipulated Permanent Injunction at 2 (the "Injunction") (Addendum to Brief of Appellants ("Add.") at 17).
Microsystems commenced the action below on March 15, 2000 seeking, among other things, a temporary restraining order, and preliminary and permanent injunctive relief against defendants' further publication over the Internet of "CP4break.zip" and "cphack.exe", which programs were derived from Microsystems' Cyber Patrol software. (Findings of Fact and Conclusions of Law ("Findings and Conclusions") ¶ 12 (Add. at 3); Verified Complaint ¶ 1 (Joint Appendix ("JA") at 8)). On March 17, 2000, the District Court entered a temporary restraining order against further publication of "CP4break.zip" and "cphack.exe" by defendants "and those persons in active concert or participation with them." (Order On Motion For Temporary Restraining Order, Expedited Discovery and For Hearing Date On Preliminary Injunction Motion ¶ 2 (JA at 42-43)). The District Court set the preliminary injunction hearing for March 27, 2000 (id. at ¶ 4).
On March 24, 2000, the individual defendants, each represented by counsel, entered into settlement agreements with Microsystems (Findings and Conclusions ¶¶ 23-24 (Add. at 5)). Among other things, the settlement agreements provide for:
(1) the entry of a permanent injunction against the individual defendants and anyone in active concert with them from further publication of "CP4break.zip" and "cphack.exe" or any derivative thereof; and (2) the individual defendants' assignment to Microsystems of their interests in "CP4break.zip" and "cphack.exe". (Findings and Conclusions ¶¶ 25-26 (Add. at 5-6)).
On March 27, 2000, the District Court heard Microsystems' motion for entry of stipulated permanent injunction and entertained argument from appellants' counsel (Docket entry no. 11 (JA at 4)). Appellants did not seek to intervene and submitted no evidence to contradict any of Microsystems' evidence. On March 28, 2000, the District Court entered the Injunction and released the Findings and Conclusions (Docket entry no. 11 (JA at 4)).
On April 11, 2000, on appellants' motion to stay pending appeal, the District Court found that appellants have no standing:
The movants-nonparties have no standing to pursue any appeal . . . in view of the fact that they have never intervened in the case and no contempt action against them has been initiated . . . . .
(Order [on motion to stay pending appeal] ("Stay Order") at 2 (RA at 97)).
By this appeal, appellants and amici ask this Court to convert the true parties' private copyright dispute into an abstract debate over the social utility of Internet screening software. In order to do so, appellants claim speculative "due process" injury grounded in their own failure to move to intervene and the lower court's proper refusal to advise them as non-parties regarding prospective application of the Injunction. Appellants want the benefits of being heard on appeal as a party without the corresponding burdens below, including exposure to discovery and potential liability. Appellants can not have it both ways and this appeal should be dismissed.
STATEMENT OF FACTS
As the District Court correctly found, the "CP4break.zip" and "cphack.exe" computer code written by defendants Jansson and Skala was derived through decompilation or disassembly of Microsystems' copyrighted Cyber Patrol software program (Findings and Conclusions ¶ 6 (Add. at 1)). These findings are based on uncontroverted evidence, including verified allegations, affidavits and admissions by the individual defendants. (Verified Complaint ¶¶ 12, 16 & Exh. A (JA at 10, 11, 17)). See also Jansson and Skala, "The Breaking of Cyber Patrol4" at Overview (2000) ("We quite simply disassembled the target and browsed it for suspicious code.") (cited in Appellants' Br. at 4). The Cyber Patrol license agreement expressly prohibited such decompilation (Findings and Conclusions ¶ 4 (Add. at 2)).
The individual defendants proclaimed themselves "youth rights activists" (Findings and Conclusions ¶ 9 (Add at 3)). They admitted -- and the District Court so found -- that the purpose of "CP4break.zip" and "cphack.exe" was to implement "cryptographic attacks against [Cyber Patrol's] authentication system" to defeat the effectiveness of Cyber Patrol (Findings and Conclusions ¶¶ 6, 9 (emphasis added) (quoting defendants' promotional e-mail) (Add. at 2-3)). Simply put, "CP4break.zip" and "cphack.exe" defeated Cyber Patrol's parental authentication system and permitted someone to bypass its screening mechanisms (Verified Complaint ¶¶ 14, 18 (RA 10-12)).
Cyber Patrol software contains trade secrets, including a list of sites that the software uses to block users from accessing those sites over the Internet (Verified Complaint ¶ 36 (RA 14) (contains proprietary and confidential trade secrets)). Most of appellants' and amici's arguments rest on their factual contention that "CP4break.zip" and "cphack.exe", when executed on a computer running Cyber Patrol software, permits a user to peruse Cyber Patrol's list of blocked sites (Appellants' Br. at 10; Amici Br. at 18-19). But that claimed functionality is nowhere in the record and appellants and amici have no record cites to support it.
The District Court also correctly found that the individual defendants promoted their "CP4break.zip" and "cphack.exe" code into the United States (Findings and Conclusions ¶¶ 9-10 (Add. at 3)). The uncontroverted evidence and the individual defendants' own promotional e-mail support this finding (Verified Complaint ¶¶ 16-17 & Exh. A (JA at 11, 17)). It also is undisputed that the individual defendants published "CP4break.zip" and cphack.exe" into the United States to various individuals, including appellants (Findings and Conclusions ¶¶ 11, 14 (Add. at 3-4); Schwartz 1st Aff. ¶ 6 & Exh. D (JA at 2, 39-40); Supplemental Affidavit of Irwin B. Schwartz ("Schwartz 2nd Aff.") ¶ 2 (JA at 62); Declaration [of Waldo Jaquith] ("Jaquith Decl.") ¶ 2 (JA at 91); Declaration [of Lindsay Haisley] ("Haisley Decl.") ¶ 2 (JA at 93)).
In other words, the purpose of "CP4break.zip" and "cphack.exe" was to attack Cyber Patrol's password authentication system and render Cyber Patrol useless -- not to contribute to public debate:
Jansson and Skala created and promoted ["CP4break.zip" and "cphack.exe"] and published it through software download links originally located on Jansson's Web page to make available to children in the United States and around the world software that enables the child to defeat parents' efforts to screen inappropriate material posted on the Internet.
(Findings and Conclusions ¶ 11 (Add. at 3)).
STANDARD OF REVIEW
In an effort to shoehorn into a de novo standard, appellants avowedly do not contest the factual findings below (Appellants' Br. at 15 (only legal issues on appeal), 25-26 n.3 (if the trial court finds facts for Microsystems on a contested record, appellants will appeal based on clearly erroneous standard)). Accordingly, this Court should adopt the Findings of Fact as undisputed. Fortin v. Commissioner of Mass. Dept. of Public Welfare, 692 F.2d 790, 794 (1st Cir. 1982) ("In this circuit district court findings based on undisputed facts or documentary evidence are reviewable only for clear error, the standard prescribed by Fed. R. Civ. P. 52(a) for all factual findings."); Sierra Fria Corp. v. Evans, 127 F.3d 175, 178 (1st Cir. 1997) (affirming findings of fact and conclusions of law) (cited in Appellant's Brief at 15).
As the appellants' cases make clear, however, the standard of review applicable to the mixed questions of fact and law raised on appeal here depends upon the nature of the issue. Sierra Fria Corp., 127 F.3d at 181. More "fact-denominated" issues receive a more deferential "clear-error" standard while more "law-denominated" issues receive a less deferential "de novo" standard. Id. The jurisdictional and copyright legal issues raised here are heavily fact-denominated and this Court should accord the Conclusions of Law here ample deference. See e.g. GB Marketing USA Inc. v. Gerolsteiner Brunnen, 782 F. Supp. 763, 773 (W.D.N.Y. 1991) (facts like location of infringing acts and "location of the ultimate direct infringement" determine subject matter jurisdiction); Hamil America, Inc. v. GFI, 193 F.3d 92, 100 (2d Cir. 1999) (copying is "fact-intensive inquiry" warranting deference); Metzke v. May Dept. Stores Co., 878 F. Supp. 756, 760 (W.D.Pa. 1995) (evidence in affidavit of knowledge that infringing copies would be distributed in the United States determined liability). Moreover, this Court reviews the scope of the injunction entered below on an abuse of discretion standard. Unistrut Corp. v. Power, 280 F.2d 18, 23 (1st Cir. 1960) (scope of permanent injunction "not a matter of review unless we are satisfied that there was an abuse of discretion").
SUMMARY OF ARGUMENT
This Circuit's long-standing precedent requires dismissal of this appeal because appellants do not have standing. Appellants did not move to intervene below as required by Supreme Court precedent. Moreover, nothing in the record supports appellants' claimed due process injury. Section I, infra.
Even if appellants have standing, the District Court properly found jurisdiction below. District courts have jurisdiction under the Copyright Act to hear claims by United States copyright holders arising from infringing activities that result in distribution of derivative works in the United States. This case is just such a dispute. Microsystems, a Massachusetts-based copyright holder, alleged that foreign defendants copied its software by decompilation and created a derivative work, which was promoted and published into the United States. There is no dispute over service of process or the consent to jurisdiction by the two defendants against whom the Injunction was entered. Section II, infra.
Appellants suffered no "due process" injury by the District Court's entry of the stipulated permanent injunction. Appellants have no First Amendment right to distribute copyright violative material. Moreover, they suffered no "due process" injury when the lower court found that "fair use" did not excuse the individual defendants' copying because that affirmative defense was never asserted and neither appellants nor anyone else sought to introduce evidence of "fair use".
Likewise, there was no due process injury in the scope of the Injunction. The Federal Rules of Civil Procedure expressly provide for injunctive relief to include those "in active concert or participation" with the enjoined defendants. The District Court properly refused to advise non-party appellants regarding the prospective application of the Injunction, given they did not move to intervene and submitted no evidence regarding their relationship with the defendants, how they obtained the software code in question or what they planned to do with it. Section III, infra.
Appellants Have No Standing To Appeal
Appellants' lead standing case, Dopp v. HTP Corp., 947 F.2d 506 (1st Cir. 1991) (cited in Appellants' Br. at 16, 20), prohibits their appeal:
We think it plain beyond peradventure that a person (a) who is not a party in the case when judgment is entered, (b) is not a party to some earlier judgment called into question by the appeal, and (c) who has not been treated as a party to the appealed judgment enjoys no right to appeal therefrom.
Id. at 512 (citations omitted). See also Fed. R. App. P. 3(c) ("notice of appeal must . . . specify the party or parties taking the appeal . . .").
This is in harmony with the United States Supreme Courts instructions on attempted non-party appeals:
The rule that only parties to a lawsuit, or those that properly become parties, may appeal an adverse judgment, is well settled. See, e.g., United States ex rel. Louisiana v. Jack, 244 U.S. 397, 37 S.Ct. 605, 607, 61 L. Ed. 1222 (1917); Fed. R. App. Proc. 3(c) ("The notice of appeal shall specify the party or parties taking the appeal"). The [Second Circuit] Court of Appeals suggested that there may be exceptions to this general rule, primarily, "when the nonparty has an interest that is affected by the trial court's judgment." 806 F.2d, at 1152. We think the better practice is for such a nonparty to seek intervention for purposes of appeal. . . .
Marino v. Ortiz, 484 U.S. 301, 304 (1988) (affirming appellate dismissal of non-parties appeal of consent decree).
In Felzen v. Andreas, 134 F.3d 873 (7th Cir. 1998), aff'd sub nom. California Public Employees v. Felzen, 525 U.S. 315 (1999) (equally divided Court), the Seventh Circuit expressly followed the Supreme Court's instructions in Marino v. Ortiz and dismissed an appeal by non-party objecting shareholders who sought to appeal a court-approved derivative suit settlement. 134 F.3d at 876, 878. The Seventh Circuit noted its precedent previously allowing such objecting shareholder appeals, but explained that the intervening Marino decision as well as Fed. R. App. P. 3(c) negated appellate jurisdiction. Id. at 874, 877.
Here, the District Court noted that appellants never sought to intervene and, citing Marino v. Ortiz, held they had no standing to appeal (Stay Order at 2 (RA at 97)).
Claiming for the first time that they could not intervene without conceding personal jurisdiction (Appellants' Br. at 13), appellants seek to argue the Injunction's merits. But the appellants articulate no "affected interest" that supports appellate standing -- even under the Second Circuit's Kaplan v. Rand case. Nothing in the record below demonstrates that appellants have any "affected interest" in publishing "CP4break.zip" and "cphack.exe".
Appellants cite the Sixth Circuit's recent decision in Junger v. Daley, 209 F.3d 481 (6th Cir. 2000) (finding that computer source code contained in text book is protected by the First Amendment) for the proposition that appellants' claimed desire to publish "CP4break.zip" and "cphack.exe" is protected "speech." (Appellants' Br. at 21, 46). But the Sixth Circuit did not so hold. Instead, the Junger Court found only that human-readable source code is protected speech:
Because computer source code is an expressive means for the exchange of information and ideas about computer programming, we hold that it is protected by the First Amendment.
Id. at 485 (emphasis added). The Sixth Circuit focused on the fact that computer programmers at times prefer to "communicate" in source code. Id. at 484. Appellants admittedly want to publish only the computer-readable object code -- not the human-readable source code -- but cite no authority that the First Amendment protects object code.
Moreover, appellants' own cases establish that they do not have standing to appeal. In Dopp v. HTP Corp. (cited in Appellants Brief at 16, 20) -- decided well before Marino -- this Court recognized an "isthmian exception" where "a lower court specifically directs an order at a non-party or enjoins it from a course of conduct". 947 F.2d at 512. But the Dopp case denied standing because -- as here -- the order below was not specifically directed at the non-party appellant. Id. And in New York State Club Ass'n v. City of New York, 487 U.S. 1 (1988)(cited in Appellants' Br. at 18), the Court found standing based on traditional association/membership grounds -- inapplicable here -- but then denied appellant an advisory ruling on First Amendment issues. Id. at 10-11.
This Court should do the same. The fact that appellants' counsel was permitted to argue and submit briefing below gives them "no more standing than individuals selected at random from a telephone book." Hispanic Society, 806 F.2d at 1154; Dopp v. HTP Corp., 947 F.2d at 512 ("Pandora's jar would be open, and strangers to a litigated case could pop in and out of the proceedings virtually at will."). Accordingly, the non-party appellants have no standing to prosecute this appeal and it should be dismissed.
The District Court Had Jurisdiction To Enter The Injunction
United States district courts have subject matter jurisdiction to protect copyright holders. 28 U.S.C. § 1338; 15 U.S.C. § 1121. The Copyright Act's protections include the right to create derivative works from the copyright protected material, including software. 17 U.S.C. § 106(2); Sega Enterprises Ltd. v. Accolade, Inc., 977 F.2d at 1518-19 (intermediate copy of software created through decompiling yielded derivative work); M. Kramer Mfg. Co. v. Andrews, 783 F.2d 421, 442 (4th Cir. 1985)(copying part of computer program infringed copyright); Microsoft Corp. v. Grey Computer, 910 F. Supp. 1077, 1083-85 (D.Md. 1995) (derivative work applies to software and limited copying constitutes infringement).
Federal district courts have authority to enjoin violations of United States copyrights, regardless of where they occur, if the infringing product is distributed into the United States. Liberty Toy Co. v. Fred Silber Co., 149 F.3d 1183, 1998 WL 385469 **3-4 (6th Cir. 1998) (reversing district court's refusal to enjoin distribution of infringing toys made in China and shipped through Canada to the United States). See also GB Marketing USA Inc., 782 F. Supp. at 772-773 (jurisdiction over unlawful copying in Germany when infringing goods shipped to United States); National Enquirer, Inc. v. News Group News, Ltd., 670 F. Supp. 962, 969 (S.D. Fla. 1987) (jurisdiction over infringing actions in Britain then published into the United States).
Appellants claim reversible error by arguing that any copyright violation occurred only overseas when the individual defendants decompiled the Cyber Patrol software (Appellants' Br. at 35). Appellants also contend without support in the record that even if "CP4break.zip" and "cphack.exe" were distributed in the United States -- as found by the District Court -- they were not infringing works. Id. at 38. In effect, appellants claim that because decompilation took place overseas, the District Court had no authority to stop publication of the derivative works into the United States. This is not the law.
Indeed, in Update Art, Inc. v. Modiin Publishing, Ltd., 843 F.2d 67 (2d Cir. 1988) (cited in Appellants' Br. at 35, 39), the Second Circuit affirmed jurisdiction of United States district court magistrate over copyright violations in a magazine published in Israel and distributed in the United States. Id. at 73 & n.6. Accordingly, the District Court had jurisdiction to enjoin defendants' distribution of "CP4break.zip" and "cphack.exe" into the United States.
The Injunction Is Properly Tailored Pursuant to Rule 65
Copyright law expressly grants federal courts the authority to enjoin violations and to permanently order defendants to discontinue publication of copyright violative material. 17 U.S.C. § 502(a). Courts have discretion to craft injunctive relief on terms they "deem reasonable" and the scope of such injunctions generally includes "persons in active concert or participation" with the defendants. Id.; Fed. R. Civ. P. 65(d); see National Football League v. TVRadioNow Corp., 53 U.S.P.L.Q.2d at 1831 (preliminary injunction against defendant Canadian Internet site contains "active concert" language). Non-parties may not collaterally attack the "validity of the underlying order" unless it is made applicable to them by a contempt proceeding. Marino v. Ortiz, 484 U.S. at 304.
Nevertheless, appellants evidently contend that the Injunction violates their "due process" rights based on the words "in active concert" contained in the Injunction. Even though that language is derived from Fed. R. Civ. P. 65 itself, appellants claim it is not specific enough and they might be held in contempt absent guidance from the lower court (Appellants' Br. at 22). But appellants need look no further than their own authority for comfort on this issue. NBA Properties, Inc. v. Gold, 895 F.2d 30, 33 (1st Cir. 1990) (cited in Appellants' Br. at 24) (reversing contempt finding on almost identical language); G. & C. Merriam Co. v. Webster Dictionary Co., 639 F.2d 29, 40 (1st Cir. 1980) (cited in Appellants' Br. at 19, 23, 24) (reversing contempt finding for violation of "successors or assigns" language in Fed. R. Civ. P. 65(d)). Indeed, appellants' own authority rejects this kind of semantical attack. Regal Knitwear Co. v. National Labor Relations Board, 324 U.S. 9, 15 (1945) (cited in Appellants' Br. at 20) (rejecting attack on "successors or assigns" in injunction because, among other reasons, "it is apparent from Rule 65 . . . that whether one brings himself in contempt as a 'successor or assign' depends on an appraisal of his relations and behavior and not upon mere construction of the terms of the order.").
Notwithstanding, appellants assert on due process grounds that they are "at least chilled from speaking by the order" (Appellants' Br. at 25). Appellants concede, however, their only claimed injury was their "removal" of "CP4break.zip" and "cphack.exe" object code "from their mirror sites" in the United States. (Appellants' Br. at 12).
First, as discussed above, appellants have no "due process" or First Amendment rights to publish the "CP4break.zip" and "cphack.exe" object code files. See supra at nn.13-14 and associated text. Moreover, even if there were First Amendment rights, "[t]he first amendment is not a license to trammel on legally recognized rights in intellectual property." Dallas Cowboys Cheerleaders, Inc., v. Scoreboard Posters, Inc., 600 F.2d 1184, 1187 (5th Cir. 1979). "Since the Copyright Act is the congressional implementation of a constitutional directive to encourage inventors by protecting their exclusive rights in their discoveries, copyright interests also must be guarded under the Constitution, and injunctive relief is a common judicial response to infringement of a valid copyright." Cable/Home Communication Corp. v. Network Productions, Inc., 902 F.2d 829, 849 (11th Cir. 1990).
Indeed, in enjoining copyright violations, courts may properly balance the public's interests against any incursion on defendants' First Amendment rights. See, e.g., Pacific and Southern Co. v. Duncan, 744 F.2d 1490, 1498 (11th Cir. 1984)(weighing First Amendment arguments against copyright enforcement efforts in reversing denial of injunction). The District Court did exactly that in entering the Injunction:
Under our Constitution all have the right to disseminate even evil ideas and such ideas cannot by law be suppressed by the government. On the other hand, parents, in the exercise of their parental obligations to educate their young children, have the equal right to screen and, thus, prevent noxious and insidious ideas from corrupting their children's fertile and formative minds.
(Injunction at 3).
In this case, the District Court appropriately rejected appellants' unsupported assertions of First Amendment injury and entered the Injunction, which is consistent with Fed R. Civ. P. 65 and no broader than necessary to protect Microsystems copyrights. See Religious Technology Center v. Netcom On-Line Communication Services, Inc., 923 F. Supp. 1231 (N.D. Cal. 1995) (rejecting "prior restraint" argument in entering injunction against Internet posting of infringing material). Appellants "cannot complain of the harm that will befall [them] when properly forced to desist from [their] infringing activities." Triad Systems Corp. v. Southeastern Express Co., 64 F.3d 1330, 1338 (9th Cir. 1995) (affirming preliminary injunction against software copyright violation).
Finally, appellants cannot attack the Injunction based on the "fair use" doctrine because, as the District Court found, "fair use" was never asserted as an affirmative defense and no evidence of fair use exists in the record. (Findings and Conclusions ¶¶ 44-50 (Add. at 11-12)). 17 U.S.C. § 107 (fair use affirmative defense to conduct otherwise actionable under the Copyright Act); Penelope v. Brown, 792 F. Supp. 132, 136 n.5 (D. Mass. 1992) (defendant "carries the burden of proving the defense of fair use"). Nor did the District Court err in refusing to render an advisory opinion as to the Injunction's applicability to appellants' prospective conduct. Flast v. Cohen, 392 U.S. 83, 96 (1968) ("the oldest and most consistent thread in the federal law of justiciability is that the federal courts will not give advisory opinions").
In sum, appellants simply have no cognizable due process rights or injury here.
For the foregoing reasons, appellees Microsystems Software, Inc. and Mattel, Inc. respectfully request that the Court dismiss this appeal based on appellees' lack of standing or deny the appeal on the merits.
Dated: Respectfully submitted,
Irwin B. Schwartz C.A.#41819
William C. Nystrom
Colleen C. Cook
SCHWARTZ and NYSTROM, LLC
419 Boylston Street
Boston, Massachusetts 02116
(617) 421-1810 (fax)
Counsel for Microsystems Software, Inc. and Mattel, Inc.
CERTIFICATE OF SERVICE
On , I caused a copy of the foregoing Brief of Appellees to be served by hand upon Sarah R. Wunsch, Esq., American Civil Liberties Union of Massachusetts, 99 Chauncy Street, Suite 310, Boston, Massachusetts 02110, counsel for appellants and an electronic copy to be served by email upon Christopher A. Hansen, ACLU Foundation, 125 Broad Street -18th Floor, New York, New York 10004, counsel for appellants and by facsimile upon Ulf Svalling, Esq., Careliigatan 7A, SE-632 20 Eskilstuna, Sweden, counsel for defendant Eddy L.O. Jansson, and Edmund Letain, Esq., Cardinal, Emberton, Rusk & Carfra, Barristers & Solicitors, 760 Hillside Avenue, Victoria, British Columbia, V8T 1Z4, Canada, counsel for defendant Matthew Skala.
Irwin B. Schwartz