14 June 2000. Thanks to Anonymous.
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11 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK 2 ------------------------------x 3 UNIVERSAL CITY, et al 4 Plaintiff, 5 v. 00 Civ. 277 6 REIMERDES, et al 7 Defendant. 8 ------------------------------x 9 June 8, 2000 4:30 p.m. 10 Before: 11 HON. LEWIS A. KAPLAN 12 District Judge 13 APPEARANCES 14 PROSKAUER ROSE, LLP 15 Attorneys for Plaintiff LEON P. GOLD 16 CHARLES S. SIMS CARLA MILLER 17 18 FRANKFURT GARBUS KLEIN & SEIZ Attorneys for Defendant 19 EDWARD HERNSTADT MARTIN GARBUS 20 21 22 23 24 25 2 1 (In open Court) 2 THE DEPUTY CLERK: All rise. 3 THE CLERK: Universal -v- Reimerdes. 4 Is the plaintiff ready? 5 MR. GOLD: Ready. 6 THE DEPUTY CLERK: Is the defendant ready? 7 MR. HERNSTADT: Ready, your Honor. 8 THE COURT: So where are we? 9 MR. HERNSTADT: I'm Edward Hernstadt for the 10 defendants. Since we started the ball rolling on the 11 discovery conference, I guess we'll start, we handed up to 12 Ms. Reyes when we came to the courtroom, a two-page memo 13 called discovery discussions. We're all agreed we have to 14 resolve the discovery, the disputes that are out there. 15 The first thing I should tell you is that the 16 parties, counsel for the parties actually get along very well. 17 We have very pointed disagreements on the issues, on the law, 18 on the scope of discovery, the timing of discovery. 19 THE COURT: I read that in the letter. Let's go. 20 MR. HERNSTADT: We met yesterday for about three or 21 four hours after the deposition, and we reached -- we made a 22 lot of progress towards resolving a lot of discovery disputes. 23 There are a few things that remain outstanding. We're here to 24 propose a solution. I'll briefly frame the issues. 25 On May 12th, your Honor issued an Order to move the 3 1 trial from December 5th to July 17th, and the close of 2 discovery from October to July 5th. We now have 27 days left 3 in discovery, that's including July 4th. In the four weeks or 4 the 27 days since your Honor's order, we have started five 5 depositions. We finished four of them. The four depositions 6 that are completed are subject to the resolution of certain 7 privilege issues that have arisen. We have gotten a lot of 8 paper from the MTAA. We started getting documents from the 9 plaintiff. We got some production today from three of the 10 eight plaintiffs. 11 We now have 27 days left to take eight to 10 12 depositions. The plaintiff wants to take depositions too, 13 eight to 10 depositions. We're going to California to take 14 the DVDCAA deposition and review the documents out there. We 15 have witnesses to prepare and a trial to get ready for. There 16 has been a lot of delay in the past, we think. We're prepared 17 to move forward on that, and I think the parties have worked 18 together very well to come up with a reasonable solution. The 19 first thing that has to happen is a decision on the discovery 20 issues. We're prepared to brief that on an expedited basis 21 and get a decision. 22 THE COURT: Is that privilege issues alone or is that 23 something else? 24 MR. HERNSTADT: I'm sorry. 25 THE COURT: Privilege alone or something else? 4 1 MR. HERNSTADT: It's an assertion of work product 2 privilege, attorney-client privilege, joint interest or common 3 interest privilege, that had been asserted in the deposition, 4 I think in every deposition to date and also with respect to 5 documents that we requested during the course of the 6 deposition. 7 THE COURT: But they are all privilege issues that 8 you're talking about? 9 MR. HERNSTADT: Yes. 10 We cannot take some of the depositions we've agreed 11 to take place until the privilege issue is resolved because 12 there is no point. We'd end up going back and deposing the 13 people again. What we've proposed to the plaintiffs is that 14 they provide us with written objections and responses with 15 respect to the documents that we requested in the course of 16 the deposition. They haven't been produced, and I think they 17 have been -- they won't be produced because of privilege 18 issues. And the plaintiffs are going to work on that in the 19 next few days. 20 As soon as we get that, so we know the basis of the 21 privilege sources, we will do a brief in five days. They will 22 take five days to do the opposition. We would like two days 23 for a reply and submit them to your Honor. It's a pretty 24 extensive motion in the sense that this case is a bit unusual. 25 The DCSS appeared on the Internet, somebody discovered it. We 5 1 don't know who discovered it because that's privileged. 2 Someone discovered it and someone looked at it and the lawyers 3 got involved from day one, the plaintiff's have told us, and 4 it makes sense in the context of this case. Our contention 5 will be that the lawyers are involved in an investigatory role 6 or some other non-privileged role. We do need to see the 7 basis of the assertion of privilege before we can be more 8 specific about it. 9 What that means is a great deal of the initial, 10 factual information about the initial discovery and 11 plaintiff's response and investigations they conducted into 12 the efficacy of DCSS into the effect of DVD movies that have 13 been decrypted and placed on the Internet whether that works, 14 essentially whether DCSS is a threat of piracy. None of that 15 information is available to us. And I think we need that to 16 prepare for trial and to present our case at trial. 17 The problem is, Judge, we have 27 days and it's 18 simply not possible to do all of the work that has to be done 19 in that period. We have to get a resolution of the privilege 20 issues before we can do most of the depositions that are 21 scheduled. Then we have 20 depositions that both sides have 22 to conduct. There are a lot of documents. There are a lot of 23 witnesses to prepare. Huge amount of work to do. For 24 example, just two days ago Mr. Sims said it's not possible, or 25 that the lawyers need 15 days to designate deposition your 6 1 Honor gave them 10 days, but 10 days to designate a 2 deposition -- I think we need more than 27 days. 3 THE COURT: They don't need 10 days to designate 4 depositions either. There is a priority ordering here. They 5 can do it overnight. 6 MR. HERNSTADT: I understand that. We need more than 7 27 days. We think we're on track with discovery. I think 8 we're working very well together. In order for the defendants 9 to get the discovery that we need, the discovery that we're 10 permitted to get under the Federal Rules, we need more than 27 11 days. So we respectfully request an adjournment of the trial 12 to October and discovery to September. 13 THE COURT: Mr. Gold? 14 MR. GOLD: Your Honor, good afternoon. 15 I think that, as set forth in the letter, it does 16 look like we're well on the road to resolving who is going to 17 be deposed and when and for how long and when documents are 18 going to be produced, and it is true -- 19 THE COURT: The piece is finally breaking out here. 20 Nothing like an imminent execution to concentrate the mind. 21 MR. GOLD: I found that last night, but I think you 22 did focus us all on what needed to be focused on. It happens 23 every once in a while in the courtroom and the Judge does 24 that, and I think you did it very well. So we did all focus 25 and tried very hard to focus, and I think we did finally a 7 1 good job of it. 2 Now, in this case we've already -- not already, by 3 Friday we will produce 10,000 pages of the documents they have 4 asked for. We will be producing a couple more thousand next 5 week. I don't -- I don't know -- I don't actually know, but I 6 would imagine there are very, very few, far less than 100 that 7 are particularly relevant to the issues, because I don't think 8 there are any factual issues. That's what I want to say about 9 the adjournment. There is no question, they don't dispute, I 10 believe, that there was circumvention here. That they have 11 been trafficking in a circumvention device. That 12 circumvention is a protective program that protects 13 copyrighted material, they are trafficking in it. They are 14 not photographers, they are not doing reverse engineering. 15 And, obviously, your decision on the preliminary injunctive 16 focused on all of those issues. 17 If there are fact issues, I don't think there are 18 very many, they certainly wouldn't take more than one or two 19 experts to really be presented to your Honor. The more time 20 that you give, more affidavits will be submitted on the law, 21 the more depositions that will be taken, that are fascinating, 22 but perfectly irrelevant to the case. 23 I don't think there are any factual issues and I 24 think the fastest way and most efficient way for all of us to 25 deal with this is to keep the trial date and end it. I think 8 1 delay will only engender all sorts of irrelevancy and 2 ridiculous expenses. Therefore, I think we should keep the 3 trial date. What it will allow is for a continuation of what 4 I respectfully submit has been a bit of a circus, and there is 5 no point to it. 6 I submit we ought to keep -- the date will also focus 7 everybody on which of even these depositions are really 8 useful. We do need a privilege decision. I would have 9 scheduled it faster, because if you agree with us, then there 10 is really no reason it will cut out I think about 60 percent 11 of this. 12 THE COURT: You're the proponent of the privilege 13 claim? 14 MR. GOLD: Yes, I am. 15 THE COURT: When can you make the presentation? 16 MR. GOLD: They are going to make the motion. But if 17 you want me to submit a brief on it, we could do it in four 18 days. 19 THE COURT: So you have saved the day here. 20 MR. GOLD: Well, no. They are first. They are 21 making this motion. 22 MR. HERNSTADT: Your Honor, we will do it in four 23 days too, if necessary. We prefer five days. 24 MR. GOLD: So you could say two. But that's the 25 decision. If you are right, then there is not much to talk 9 1 about. Many of these names that we have agreed to produce, as 2 counsel has agreed, would not be relevant, or they may be for 3 one hour instead of a day, or a day and a half. 4 So I think that your Honor is going to rule in favor 5 of the privilege. It's a work product, with the 6 attorney-client privilege, primarily relating to the period 7 after we discover DECSS. There's nothing unusual or 8 remarkable about it. A trade group industry association was 9 involved, and throughout, their lawyers represented these 10 plaintiffs, in working with us on the litigation. That's 11 hardly new stuff. 12 So I think this can be done easily, and everyone will 13 focus a lot more on relevance issues and legal issues that 14 have been raise,d, and we can try the real issues real quick 15 and not waste a lot of time. 16 THE COURT: Who are the eight or ten depositions you 17 want? 18 MR. GOLD: Well, there are the defendants or whoever 19 else was involved in this company -- I'm not sure we know yet, 20 so maybe that's two. And whichever witnesses that they are 21 going to put on as expert witnesses, and they're going to let 22 us know really how many those are. They submitted 18 23 declarations. I don't think they will have more than six. So 24 that may be OK. But I don't know if they will have as many as 25 six. Right now I'm probably forgetting somebody very 10 1 important, but I just can't think of anyone right now. And 2 because I don't think the factual issues are all that intense, 3 I'm not talking about multiple days here. 4 THE COURT: All right. So what you're talking about 5 is the defendant or defendants and their experts. That's what 6 you want. 7 MR. GOLD: And any witnesses he tells us he is going 8 to put on. We have agreed that we will exchange witnesses 9 lists as quickly as, what? The 15th? 10 MR. HERNSTADT: I think we said the 19th. 11 MR. GOLD: 19th, I'm sorry. And that was my 12 suggestion. 13 MR. HERNSTADT: But we will give names of witnesses 14 we have struck out as soon as we can. 15 MR. GOLD: Then we won't subpoena them. We have no 16 interest in it. 17 THE COURT: Mr. Hernstadt, tell me who the 18 depositions are that you want to take from this point on. 19 MR. HERNSTADT: The depositions of Mark Litvak, Greg 20 Geazkner, Miguel -- 21 THE COURT: Slowly. 22 MR. HERNSTADT: Sorry. Mark Litvak. Greg Geazkner, 23 Mikhail Reider, M-i-k-h-a-i-l, R-e-i-d-e-r, Michael Eisner, 24 Rick Hirsch, depending on what we learn in Mr. Hirsch's 25 deposition, possibly Nathan Knight and Mike Ellis. If 11 1 Mr. Hirsch makes it clear that they're not going to tell us 2 anything that he hasn't told us, we are prepared to cancel his 3 deposition. Possibly Todd Cohen, again. Todd Cohen and Rich 4 Taylor. 5 We have the DVDCCA, two days of deposition. There's 6 a roomful of papers in Menlo Park that we have to go out there 7 to review. So there's a three-day event. Dean Marks. Brad 8 Hunt possibly. And, I'm sorry, with Todd Cohen and Rich 9 Taylor, those are both possibly. It depends on also the 10 depositions, and you'll see in our discussions, there is a 11 review of their depositions, and if they attest that they have 12 nothing more to tell it us, we are considering disposing them. 13 THE COURT: You have more? 14 MR. HERNSTADT: Yes. Michael Ostroff, which is also 15 possibly. Linda Sheer. And then there are six plaintiff 16 witnesses that were identified by Mr. Jacobson as being 17 involved in antipiracy. The plaintiffs have informed us that 18 they basically have very little if anything to tell us. We 19 have agreed on number 4, on a procedure whereby they will 20 review depositions and if they can satisfy us that they have 21 nothing to tell us, then we won't take them. Otherwise we 22 will go out to California and take them in a gang. But that 23 would be two days and probably a third day just for travel 24 back and forth. 25 THE COURT: Who is Litvak? 12 1 MR. HERNSTADT: Mark Litvak is the counsel for the 2 antipiracy efforts of the MPA. 3 THE COURT: And what do you need his deposition for? 4 MR. HERNSTADT: He was involved in the entire 5 investigation of DCSS. 6 THE COURT: That may be, but that hasn't answered my 7 question yet. 8 MR. HERNSTADT: OK. We need him to talk about the 9 discovery of DECSS, the response of the MPAA and the members, 10 what investigation did they undertake to discover what DECSS 11 is, what did they do, did they test DECSS, did they see if it 12 worked, did they see if it was effective, did they use it to 13 decrypt a DVD, did they test a decrypted DVD to see if it 14 could be placed on the Internet or to see if it could be 15 stored onto any kind of storage media. Was there a real 16 concern here? How far did they pursue those investigations? 17 What did they do to people that they found posting to DECSS? 18 Issues along those lines. 19 THE COURT: What about Geazkner? 20 MR. HERNSTADT: Geazkner has spoken publicly about 21 this case. We want to know the basis for this. Mr. Geazkner 22 is also a lawyer at the MPAA. He has made public statements 23 about copying, about fair use. Or not necessarily fair use. 24 There was a conference at Yale, and he stated there that -- to 25 questions posed by members of the audience, that there was no 13 1 evidence of any copying of DVD's using DECSS. 2 THE COURT: What do you think he's going to tell you 3 that's any better than what he said at Yale? 4 MR. HERNSTADT: I would like to know the basis for 5 that. I would like to know what they did to find that out. 6 And I'm also curious about what he said, that if some visual 7 artist asked him whether they could choose a visual artist who 8 said, what if I want to use a piece of a DVD in one of my art 9 pieces, he said you take it from a VHS cassette. It was 10 pointed out that there is material that is found only on DVD's 11 but not on the DECSS of the same movies, interviews with the 12 director, out takes, story, filming the films, a variety of 13 materials that are unique to DVD. And when that was put to 14 him, he said, you have to get a license. 15 THE COURT: How does that help resolve any issue in 16 dispute here? 17 MR. HERNSTADT: I think, your Honor, you go to the 18 heart of the matter. Plaintiffs think that it is a very 19 simple, straightforward case. It is not. When this case was 20 a preliminary injunction case, the facts were very important, 21 what people put on their Web sites, what they said on their 22 Web sites. There are DVD's, you can copy DVD's. Take this 23 utility, you can use it to copy. Facts were very important. 24 When they start with a detective lawyer, facts were very 25 important. Here are the threatening e-mails. Here are the 14 1 things that have happened to us. But when it comes to the 2 trial, they're saying, this is very simple. There has been 3 circumvention, we deny that there has been circumvention. 4 This is a is circumvention device. We're not sure about that. 5 There has been trafficking. We don't think that this 6 constitutes trafficking in the statutory language. 7 THE COURT: But that's a legal issue. 8 MR. HERNSTADT: I understand. 9 THE COURT: What you did with the DVD, or the DECSS, 10 is undisputed. You put it on the Web site. Now, that's 11 trafficking or it's not trafficking. 12 MR. HERNSTADT: That's correct, your Honor. 13 THE COURT: It's not getting better or worse 14 depending on what anybody said at Yale. 15 MR. HERNSTADT: There are other issues as well. 16 Specifically, whether there is any harm. We could make an 17 argument that there has to be some kind of element of harm, 18 that a utility has to pose some element of harm. You can't 19 just prohibit a utility if it doesn't do anything. So what it 20 does is relevant to that. Has there been waiver? Is this 21 ripe? There are a number of defenses where facts are quite 22 important. 23 THE COURT: What I am understanding the thrust of 24 your position to be, and I don't mean to state it completely, 25 but certainly at the heart of it is the notion that DECSS was 15 1 no real threat to their copyrighted material, at least in 2 conjunction with the Internet, because even if it could be 3 used as a step or more than a step in gaining access to and 4 copying the DVD material -- and I think you dispute the second 5 step, the copying part -- the file size would be so enormous 6 that it couldn't practically be downloaded from the Internet 7 anyway, at least in any quantity that's significant to 8 anybody, and that they basically sold me a bill of goods when 9 your clients in effect put up no defense on the facts. Am I 10 right about that? 11 MR. HERNSTADT: Your Honor, you are right insofar as 12 you go. That's one of the arguments. There are other 13 arguments, the reverse engineering defense -- 14 THE COURT: We will come back to the others. 15 MR. HERNSTADT: Very good. 16 THE COURT: But I want to work through this. Now, 17 the question of whether DECSS in fact decodes or gains access, 18 that's a yes or no question, to which you are going to have 19 experts testifying, and they may disagree. 20 MR. HERNSTADT: Right. 21 THE COURT: But Michael Eisner and some of these 22 other people are not going to add much to any of our knowledge 23 of this subject. Right? 24 MR. HERNSTADT: Not on that. 25 THE COURT: OK. Whether whatever is decoded using it 16 1 can then be copied falls into the same category. It's a 2 computer engineering question, right? 3 MR. HERNSTADT: I'm not sure. But I imagine that 4 that's something that experts will address. 5 THE COURT: All right. The file size is going to be 6 a technical question, a plain vanilla technical question. 7 Right? 8 MR. HERNSTADT: Yes. 9 THE COURT: Transmission rates on the Internet for 10 downloads. 11 MR. HERNSTADT: Your Honor, if I may, I think you're 12 right about all that. However, it is relevant whether they 13 waived any kind of claim, by being aware of all this and not 14 doing anything, or doing it in such a selective manner that 15 they acknowledge that there's a threat here. I think that 16 their conduct is one of the issues that we were entitled to 17 explore. Federal rules gives us a broad latitude to seek 18 discovery so long as such discovery is reasonably calculated 19 to lead to admissible evidence. 20 THE COURT: I believe that has actually been changed. 21 Am I not correct in that? Don't the new rules of evidence 22 actually narrow that? 23 MR. HERNSTADT: Your Honor, it's still fairly broad. 24 It is not as broad. 25 THE COURT: It is still fairly broad. But Rule 26 17 1 also makes clear that the trial judge also has the right to 2 limit discovery, whatever the technical scope is, by taking 3 into account what the real issues in the case are and how 4 important the incremental piece of discovery is to resolving 5 the real issues. 6 So it's not just as straightforward as you say. This 7 is not purely a question that you can go out to Seattle and 8 depose Bill Gates on the theory that maybe he'll say something 9 that helps you. 10 MR. HERNSTADT: Your Honor, none of the people that 11 we are seeking to depose fall into that category. Mr. Eisner, 12 for example, just testified in front of Congress using 13 materials that he -- 14 THE COURT: I understand that. And I'm not disputing 15 your point. I made a hyperbolic example to illustrate my 16 point. And the point that I was intending to illustrate was 17 only that the fact that maybe some piece of discovery would 18 produce something that somebody might regard as useful isn't 19 the end of the discussion. It is the beginning of the 20 discussion. 21 MR. HERNSTADT: I understand. 22 THE COURT: So on the point that I identified, I 23 think you and I agree that it's a matter for expert testimony. 24 Now, going to your next point, what else is really at issue 25 here? 18 1 MR. HERNSTADT: With respect to reverse engineering, 2 you're going to have a combination of expert testimony and 3 factual testimony. And with respect to fair use, it's going 4 to be mostly factual testimony. 5 THE COURT: Well, with respect to reverse 6 engineering, is there any reason to suppose that the 7 plaintiffs know anything about what your clients were doing 8 when they posted DECSS? 9 MR. HERNSTADT: Yes. The first thing they did is, 10 according to Mr. Schumann, who is plaintiff's expert on 11 that -- and by the way whose report has been designated as 12 furnished and all the information -- 13 THE COURT: Spare me the size. 14 MR. HERNSTADT: The first thing that the plaintiffs 15 did was send Mr. Schumann a stack of printouts from the Linux 16 postings, the Web site where people post messages back and 17 forth, this thick. Now, I've seen some of those postings, and 18 some of those postings say things like -- the tiny, tiny, tiny 19 minority say, you can use DECSS to decrypt a DVD. Most of 20 them talk about it in terms of what does it mean for the open- 21 source movement, what does it mean in terms of the 22 international project of creating a Linux or open-ended or 23 open-source DVD player, which is a reverse engineer project. 24 You're talking about the intraoperability between a DVD 25 player, program, and an operating system, a Linux or BSD or 19 1 other open-source operating systems. DECSS was a step, a tool 2 in the course of that reverse engineering. 3 THE COURT: What is the evidence that the defendants 4 in this case were engaged in reverse engineering? 5 MR. HERNSTADT: The defendants don't have to be 6 engaged in reverse engineering. I think the question is, what 7 is DECSS and what is its function? If you post something that 8 is a tool used in a reverse engineering project and that can 9 be used to reverse-engineer a DVD player that will work on an 10 open-source system, I don't think you're violating the DMCA. 11 And at least that's an argument that I think we have to make, 12 or are entitled to make, and I think it is a very persuasive 13 argument. 14 THE COURT: It may be, but what I'm getting at, is, 15 why did you need all this discovery? 16 MR. HERNSTADT: We need to know what they knew, and 17 they knew this from the start and they proceeded to pick one 18 or two people and sue them, I think that puts them in a very 19 different position. We can put a defense of waiver up, that 20 they, by knowing that this is -- or a defense of unclean hands 21 or something to that effect, that they knew that this was -- 22 THE COURT: Waiver, of course, is the voluntary 23 relinquishment of a known right. 24 MR. HERNSTADT: That's right. The fact that they 25 didn't go after anyone other than these three people, two of 20 1 whom are gone now, the fact that they let 400, 300, 400 sites 2 stay up and operating for at least a month, as where our 3 clients posted, and for months and months thereafter, and 4 since this case has been filed, they waited three months to 5 make the linking motion. They haven't gone after any of these 6 other sites. We don't post it anymore. We have been enjoined 7 from posting it. There are 300 sites whose addresses they 8 know, whose identities they know, and they don't do anything 9 about it. I think we're entitled to explore that. 10 And by the way, we have limited it. I mean, we 11 noticed 25 depositions because we didn't know what these 12 people would say. 13 THE COURT: I know. Your original number was 5. 14 Then it went to 30. And now it's now gone back down. It's 15 like the stock market. 16 MR. HERNSTADT: Your Honor, may I just explain the 17 five? That was very clearly a misunderstanding. What 18 Mr. Garbus meant was, I can take five depositions and know how 19 many I will need. If you can find out how many people know 20 something, who should I talk to, and if it's nobody, it's 21 nobody. 22 THE COURT: That's what he said when it became clear 23 I was going to give him five depositions in the trial. When 24 what he said before I got to that point was a little 25 different. 21 1 MR. HERNSTADT: We talked about it. That was the 2 theory that we were working under. 3 THE COURT: Well, maybe so. But it was not expressed 4 that way. 5 MR. HERNSTADT: And every deposition that we've 6 taken, like, for example, Mr. Jacobson, who is the designated 7 deponent for the MPAA and for the plaintiff, told us, I don't 8 know about this. This is the person we talked to. I don't 9 know that technical stuff. You have to go to Carol Ryder. 10 She's the person I always talk to about technical stuff. 11 We do not want to waste anybody's time. Our clients, 12 compared to the plaintiffs, have pockets about that big. We 13 want to get this done as officially as possible. But we need 14 to be able to prepare. And we need to be able to put on a 15 defense. 16 THE COURT: What else besides waiver? 17 MR. HERNSTADT: Well, I think the statutory defenses 18 involve fact questions about fair use and what is fair use, 19 what constitutes fair use. It's not simply legal. It's what 20 kind of use. And also encryption, the encryption exception. 21 And then also the First Amendment defense. That is a 22 balancing, to some extent, a balancing question. What is the 23 value of this feature? 24 THE COURT: But the value of the feature you need 25 discovery on like we all need a hole in the head. 22 1 MR. HERNSTADT: No, but it's also the value of 2 talking about DECSS. 3 THE COURT: And you've got all the witnesses in the 4 world at your fingertips on that. You don't need the 5 slightest bit of discovery. 6 MR. HERNSTADT: They are going to depose them all, 7 and that takes up time. This is not just a one-way street. 8 We have the people we want to depose and we know what we want 9 to get. And we can get in and out. 10 THE COURT: I'm focusing right now on the depositions 11 you want. That's the list I started going down. So I 12 understand your point about waiver. It's valid to a point. 13 Next. What's the next fact issue to which these depositions 14 go? 15 MR. HERNSTADT: I'm sorry. I'm not quite sure what 16 you mean. 17 THE COURT: Well, you have given me a list here of 18 the Litvak, Geazkner, Reider, Eisner, Hirsch, Knight, Ellis, 19 Cohen, Taylor, DVDCCA, Marks, Hunt, Ostroff. I want to know 20 what the factual issues are with these people. 21 MR. HERNSTADT: Mr. Ostroff said that the DVD audio 22 technology, the release of that was going to be delayed 23 because of the threat of DCSS. Where did he learn that? What 24 does he base that on? What are the facts that led him to say 25 that? 23 1 THE COURT: Who is he? 2 MR. HERNSTADT: Mr. Ostroff is from Universal, I 3 believe, record company or something, the audio arm of 4 Universal. And Mr. Ostroff is a maybe, because we have talked 5 to plaintiffs about getting some kind of, essentially, a 6 statement from him or a representation or a written response. 7 They are going to tell me how limited the information he can 8 give us is going to be. And if it's that limited, we won't 9 waste his time or our time on the deposition. 10 Same with Todd Cohen. Same with Rich Taylor. The 11 depositions that we think we absolutely have to have are 12 Litvak, Geazkner, Ryder, Eisner, or Sanford Litvak, Rick 13 Hirsch, Linda sheer -- although we may not take that one, 14 because she's got health problems and, again, we were informed 15 that she has limited knowledge, and maybe we can get that 16 limited knowledge in a different way. And Dean Marks. And 17 the DVDCCA, I think. I'm doing that from reading this sheet. 18 I don't want to promise that -- 19 THE COURT: I understand. 20 MR. HERNSTADT: And a lot of the other depositions 21 that are on this list, you will note that we have come up with 22 alternative ways of getting the information. 23 THE COURT: No, I do. And I don't want to be 24 misunderstood. I couldn't be happier at the progress you have 25 made since Tuesday. 24 1 MR. HERNSTADT: Remarkable. 2 THE COURT: It is remarkable, and I am prepared to 3 acknowledge that it is remarkable. And I appreciate that. It 4 is real progress. On the other hand, I want to keep that 5 going. I certainly know that, in 1992, in an analogous 6 situation of an accelerated trial, Judge Ward gave me and my 7 adversary about five and a half weeks to get ready for trial, 8 and we did 44 depositions in that period of time. And the 9 factual issues were comparable not in terms of substance but 10 in terms of how many and the level of difficulty. 11 It can be done. I know it can be done. I've done 12 it. 13 MR. HERNSTADT: Well, I hope your Honor remembers the 14 experience well enough not to want to inflict it upon us. 15 THE COURT: Well, to tell you the truth, it wasn't 16 that bad. 17 MR. HERNSTADT: Oh, no. 18 THE COURT: It's doable. 19 MR. HERNSTADT: Of course it's doable. Well, I would 20 say, of course it's doable. I think for us -- 21 THE COURT: Ms. Miller says, that's easy for me to 22 say. I know that. Mr. Gold is not going to lose any sleep. 23 MR. HERNSTADT: I think the truth is, for us it is 24 virtually essentially impossible to prepare adequately in that 25 period of time. We do not have the same resources as the 25 1 Proskauer firm. I hate saying that, but you look at the book 2 and it's true. 3 THE COURT: But yours is still a pretty 4 substantial-size law firm too. And it's not like you come to 5 this with a lack of experience either. 6 I am certainly not today prepared to alter the 7 schedule. Let's see how it goes. We're going to get this 8 privilege thing on very quickly, unless it requires something 9 that I don't anticipate. You should have a very quick 10 decision on it, and depending how it goes, it may shorten the 11 discovery, which is not to suggest I'm going to call it in a 12 way to shorten discovery for that reason. It just may. 13 So I'm not going to do it now. Now let's talk about 14 this privilege thing. Today is Thursday. Plaintiffs can file 15 Monday. Right? 16 MR. HERNSTADT: Your Honor, is this going to be 17 plaintiff's motion? I think this is our motion. 18 MR. SIMS: It was going to be defendants' motion. 19 THE COURT: You want to make a motion? You want to 20 file Monday? Here I was giving you a break. 21 MR. HERNSTADT: Well, they have to provide us with 22 the basis for the privilege. I don't know how long -- 23 whatever they -- 24 THE COURT: But, look, they're asserting the 25 privilege. The reason that I suggested that they should file 26 1 first it is that they have the burden of establishing it. So 2 I am giving them until Monday to establish it and to put in 3 their papers as to why the stuff is privileged. You want that 4 or do you want to go first? 5 MR. GARBUS: Let them go first. 6 THE COURT: Mr. Garbus got it. 7 MR. HERNSTADT: No, I understand. If they go first, 8 they go last. 9 THE COURT: Ah, now we're getting down to the nitty 10 gritty. 11 MR. GARBUS: But he's ahead of me, way ahead of me. 12 MR. HERNSTADT: But additionally, we still haven't 13 gotten from them, for example, Mr. Schumann's deposition, we 14 are asked for a lot of papers. We sent him a letter that day, 15 the 15th of May. The response was due the 24th of May. We 16 haven't gotten it. We have worked that out. That's history. 17 We're moving forward. I would like to get to written 18 responses so that we can make a motion to compel. 19 THE COURT: But suppose you get the response and you 20 get his showing by briefs and if necessary affidavits as to 21 why he says it is privileged, and then you answer it. 22 MR. HERNSTADT: Would we be permitted a surreply on 23 one day -- 24 THE COURT: I don't know. Privilege, unless you want 25 to accept the burden on this -- 27 1 MR. HERNSTADT: No, sir. 2 THE COURT: Normally the party with the burden goes 3 first and last, right? 4 MR. HERNSTADT: Well, if it's a motion to compel, 5 then they have to prove -- 6 THE COURT: Maybe it's a motion for a protective 7 order? 8 MR. HERNSTADT: Is it going to be a race to the 9 courthouse? 10 THE COURT: I don't think so. 11 MR. SIMS: Your Honor, Mr. Hernstadt wants to make a 12 motion. 13 MR. HERNSTADT: We also have our brief due on 14 Wednesday for the reply brief in the linking motion. 15 THE COURT: You want to toss a coin or something? 16 MR. GOLD: Ed, what do you want? We'll do what you 17 want. 18 MR. HERNSTADT: After you. What do you want? You 19 want to make a motion, we'll make a motion? 20 MR. GOLD: Perhaps if I can speak a sentence or two 21 about this mysterious privilege. The big part of it is, we 22 learned about DECSS and the seven plaintiffs working through 23 the MPAA, which has a lot of lawyers which represent them on a 24 lot of things, including this, and then with us, after we were 25 retained, we started to work on what's going on, what is this 28 1 thing, what experts can we talk to, who should we sue, what's 2 happening on the Internet. Sounds like work product to me, 3 because all the lawyers are getting ready for it, this 4 lawsuit. And that's the biggest part of it. 5 Now, following that up, there were communications 6 between the lawyer members of the plaintiff, who sit on the 7 appropriate committee at the MPAA, who talked to their clients 8 in-house, their in-house lawyers, that talk to their clients, 9 following up on programs and plans and ideas about the 10 litigation. Communications with Proskauer. I don't know if 11 I've left out one category. There is nothing -- everybody was 12 working on this litigation. 13 Now, there are a couple of letters that precede 14 finding out about DECSS, which are just lawyers writing to 15 clients soliciting legal advice. So that's a category also. 16 I think those are the mysterious attorney-client work 17 product privileges that we assert. 18 All of these documents that we are going to list on a 19 list for them, as we have to do under the rules, relate to 20 those categories of things. Are there two pieces of paper, 21 probably irrelevant, that we can't claim the privilege on? I 22 don't know that. Carla, I don't know that. Are there any? 23 Are there any in that period that we don't have a privilege 24 claim about? 25 MS. MILLER: Sure. 29 1 MR. GOLD: If we don't have it, we're not going to 2 assert it. 3 There are some. So we are going to be producing some 4 documents that Ms. Miller has decided are not privileged. But 5 those are the privilege claims. I don't know what else. 6 THE COURT: So take your time, Mr. Hernstadt, and 7 tell me why they are not going to succeed in it. 8 MR. HERNSTADT: Well, I think there's probably a 9 couple of documents they will succeed on it and we won't 10 challenge, but all of this took place in the course of an 11 investigation. There are two reasons. One is the MPAA 12 antipiracy office is an investigatory office. This thing hits 13 the net and they do what they do. They investigate it. There 14 are lawyers there who participate in the investigation. They 15 got to figure out, what is this thing, what does it do, is 16 this something that we need to be concerned about? How does 17 it work? They need to explore all of that. That's a standard 18 investigation they do with anything. They do it with DivX. 19 They do it with any kind of thing that hits the market. And 20 we are entitled to that. At a certain point, it moves from 21 investigation to litigation. And maybe that's when they can 22 assert the privilege. 23 I think we can also show that this investigation 24 segues directly into the litigation. They are litigating that 25 which they investigated. If we can't get that information, 30 1 then we have no idea what the basis of their claims are. 2 THE COURT: Mr. Gold, let's change the factual 3 assumptions here for a minute. Suppose this were a trademark 4 infringement case and the question was, who is out there 5 selling counterfeit goods and why do we think they are 6 counterfeit. One way of approaching that might be to send out 7 a private investigator. The private investigator would come 8 back and report to somebody and explain what he found. Then 9 the recipient of that information might consult their lawyer 10 and share the information. The lawyer might give legal 11 advice. There might be a suit. Is it crystal clear on those 12 facts that what the private investigator found is privileged? 13 MR. GOLD: It's not crystal clear to me as I stand 14 here, but that is not the situation. What happened was, when 15 we found out about this at night or in the morning, we 16 understood, we found out that it circumvented DECSS and that 17 you could get access to the copyrighted material. And then 18 everyone decided they were going to sue. They wanted to find 19 out things to develop that lawsuit, yes. It was a work in 20 anticipation of litigation. It's a different situation. 21 That's what happened. 22 MR. HERNSTADT: Actually, I'm not sure that's exactly 23 what happened, because we haven't been able to depose the 24 people who were meeting then. What we do know from 25 Mr. Schumann's deposition is that right about that time he was 31 1 hired by the MPAA to figure out what this was. And they sent 2 him a stack of postings from the Internet. He went through 3 all the postings. He's their expert witness on the technical 4 half of it. He went through their postings. He looked 5 through the Internet. He wrote a report, which we sent to 6 them. There were notes taken on them and then he wrote and 7 filed a report, which was sent to them too. They are claiming 8 privilege on all that stuff. That's clearly investigatory. 9 At least we think it is. 10 THE COURT: That may not be a total answer either, 11 because, for one thing, even if you divorce it from legal 12 advice, it may be material prepared in anticipation of 13 litigation. 14 MR. HERNSTADT: I understand that. I think that it's 15 different from that. I think that this is an investigatory 16 division of the MPAA. That is what they do. 17 THE COURT: But why would that matter? 18 MR. HERNSTADT: Because they are doing their job. If 19 their job is to investigate to find out what something is, 20 that's not necessarily in anticipation of litigation, you 21 know, it may lead to litigation. It may not. But this is 22 their job. They're doing their job. There are a number of 23 cases, none of which I can cite to you right now. But we are 24 prepared to make this argument. 25 MR. GOLD: Your Honor, this witness has not yet 32 1 actually right now we are much further along with our 2 knowledge that he is going to be our expert. We did not have 3 that knowledge when we produced him. We understand that if we 4 select him as our expert they have a right to depose him, as 5 we have agreed to, and they have a right to all the things one 6 must give under the rules if one is putting on an expert. And 7 we will follow the rules. 8 THE COURT: All right. Well, look, obviously I can't 9 resolve this now. It seems to me in all the circumstances it 10 makes sense for the plaintiffs to go first and to put in their 11 showing, and, Mr. Gold, it ought to be reasonably apparent to 12 you what the issues are that needs to be covered from a 13 factual basis. What were they doing? Was it in anticipation 14 of litigation? What relationship did it have to legal advice? 15 On all of which you have the burden. And Mr. Hernstadt, you 16 obviously know what the issues you have to address are. Why 17 is there any reason to suppose that, even if it was 18 investigative, it was not in anticipation of litigation or 19 indeed a situation no different from where a lawyer hires 20 somebody in connection with giving advice or preparing a 21 litigation to advise the lawyer? So that I think the lines 22 are pretty clearly drawn and you ought to be able to do it. 23 So we'll get your papers, Mr. Gold, by Monday. 24 MR. GOLD: Your Honor, may I just say a word on that? 25 The brief is not our problem. The problem is all the 33 1 affidavits that we need to get out. Tomorrow is Friday and 2 then there is a weekend, not for us but for the people who we 3 are trying to get hold of, and it might be doable, but it 4 might also be hard. So we are talking maybe by Tuesday late 5 if I could submit those affidavits. If you want the brief -- 6 but it would be nice to know exactly what's in the affidavits 7 before we wrote the finalized -- 8 THE COURT: We can see how that might be true. It's 9 always nice to know the facts before you -- 10 MR. HERNSTADT: We're happy to let them submit it 11 Tuesday. 12 THE COURT: So you will have until Tuesday. And if 13 today is Wednesday and you want until Tuesday, then you will 14 get to the next Monday. 15 MR. GOLD: Is today Thursday? I think it's likely 16 I'm wrong, because I've got a -- 17 THE COURT: Believe me, I've lost track of time. I 18 had a vacation last week but I can't remember. 19 MR. GOLD: Judge, if you say it's Wednesday, it's 20 Wednesday. 21 THE COURT: What day is it? Today's Thursday. All 22 right. So you get them in the following Monday anyway. 23 MR. HERNSTADT: Thank you, your Honor. 24 THE COURT: I'm not going to read it on Sunday. 25 MR. GOLD: Thank you, your Honor. 34 1 THE COURT: OK. And then, Mr. Gold, any response 2 from you by Wednesday. 3 MR. GOLD: Yes, your Honor. And I will do my very 4 best to decide it immediately. 5 OK. Anything else we can usefully accomplish? And I 6 must say that this is maybe the first useful such gathering of 7 the case. 8 MR. HERNSTADT: No, sir. 9 THE COURT: OK. Good. 10 MR. GOLD: Your Honor, that's another example. You 11 can teach a couple of old dogs at least one new trick. 12 THE COURT: I wouldn't refer to either one of you as 13 old dogs. Perish the thought. 14 OK. Thank you, folks. 15 o0o 16 17 18 19 20 21 22 23 24 25