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DVD Copy Control Ass'n, Inc. v. Bunner - 116 CAL. APP. 4TH 241, 10 CAL. RPTR. 3D 185 (2004)

Rule:

The California Uniform Trade Secrets Act expressly provides for an injunction preventing the disclosure of a trade secret. Cal. Civ. Code § 3426.2. Injunctions in the area of trade secrets are governed by the principles applicable to injunctions in general. In deciding whether to issue a preliminary injunction, a trial court weighs two interrelated factors: the likelihood the moving party ultimately will prevail on the merits, and the relative interim harm to the parties from the issuance or nonissuance of the injunction. 

Facts:

Defendant Bunner, a part-time user of Linux coding/computer operating system, thought DeCSS, a computer program allegedly containing trade secrets of plaintiff DVD Copy Control Ass'n, Inc. (Association), would be useful to other Linux users. DeCSS is a "master key" for scrambling data that deters pirating movies produced on DVDs. Bunner claimed that at the time he posted the information on his Web site he had no information to suggest that DeCSS contained any trade secrets or that it involved the misappropriation of trade secrets. Accusing Bunner of disseminating trade secret information over the Internet, the Association filed an action under the California Uniform Trade Secrets Act (UTSA), Cal. Civ. Code § 3426 et seq., seeking injunctive relief, which the state trial court granted. After appeals to the state supreme court, the case was remanded for further consideration. The trial court again issued an injunction against Bunner, who again sought appellate review.

Issue:

Did the trial court err in issuing a preliminary injunction, pursuant to the  California Uniform Trade Secrets Act, to enjoin defendant computer user from further dissemination of plaintiff company's trade secrets?

Answer:

Yes

Conclusion:

The appellate court determined that the limited evidence in the record did not justify the issuance of an injunction under the UTSA. There was no evidence as to when Bunner first posted the information and no evidence to support the inference that the information was a trade secret when it was posted on the Internet. There was a great deal of evidence to show that, by the time that the Association sought an injunction, the information had been so widely disseminated that it had lost its trade secret status. Therefore, the issuance of the injunction constituted an unlawful prior restraint on Bunner's right to free speech.

Regarding the standard of review, the Court explained that in deciding whether to issue a preliminary injunction, a trial court weighs two interrelated factors: the likelihood the moving party ultimately will prevail on the merits, and the relative interim harm to the parties from the issuance or nonissuance of the injunction. The conclusions of the trial court on these points are typically subject to a deferential standard of review. The reviewing court must independently review the record to determine whether it supports the requisite factual findings with convincing clarity.

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