14 June 2000. Thanks to Anonymous.
See part 1 of the Kenneth Jacobsen deposition: http://cryptome.org/mpaa-v-2600-kjd.htm
207 1 2 UNITED STATES DISTRICT COURT 3 FOR THE SOUTHERN DISTRICT OF NEW YORK 4 UNIVERSAL CITY STUDIOS, INC., ) 5 PARAMOUNT PICTURES CORPORATION, ) METRO-GOLDWYN-MAYER STUDIOS, INC.,) 6 TRISTAR PICTURES, INC., COLUMBIA ) PICTURES INDUSTRIES, INC., TIME ) 7 WARNER ENTERTAINMENT CO., L.P., ) DISNEY ENTERPRISES, INC., and ) 8 TWENTIETH CENTURY FOX FILM ) CORPORATION, ) 9 ) Plaintiff(s), ) 10 ) vs. ) 11 ) ERIC CORLEY a/k/a "EMMANUEL ) 12 GOLDSTEIN" and 2600 ENTERPRISES, ) INC.,, ) 13 ) Defendant(s). ) 14 ----------------------------------) 15 16 CONTINUED DEPOSITION OF 17 KENNETH A. JACOBSEN 18 New York, New York 19 Thursday, May 18, 2000 20 21 22 23 24 Reported by: 25 MAYLEEN CINTRON INTERIM COURT REPORTING 208 1 2 3 May 18, 2000 4 9:30 a.m. 5 6 Continued Deposition of Kenneth A. 7 Jacobsen, held at the offices of Frankfurt 8 Garbus Klein & Selz, PC, 488 Madison Avenue, 9 New York, New York, pursuant to adjournment, 10 before MayLeen Cintron, a Notary Public of 11 the State of New York. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 209 1 2 A P P E A R A N C E S: 3 4 PROSKAUER ROSE, LLP 5 Attorneys for Plaintiffs 6 2049 Century Park East, Suite 3200 7 Los Angeles, California 90067-3206 8 BY: SCOTT P. COOPER, ESQ. 9 10 MARK D. LITVACK, ESQ. 11 Vice president and director, 12 Legal Affairs, Worldwide Anti-Piracy 13 Motion Picture Association 14 15503 Ventura Boulevard 15 Encino, California 91436 16 17 FRANKFRUT GARBUS KLEIN & SELZ, PC 18 Attorneys for Defendants 19 488 Madison Avenue 20 New York, New York 10022 21 BY: EDWARD HERNSTADT, ESQ. 22 23 o0o 24 25 INTERIM COURT REPORTING 210 1 2 K E N N E T H A. J A C O B S E N, having 3 been previously sworn, resumed as a witness 4 and testified further as follows: 5 CONTINUED EXAMINATION BY 6 MR. HERNSTADT: 7 Q. Good morning. I'm Ed Hernstadt for 8 the Defendants in this case. I will be deposing 9 you today. 10 I take it that you have been deposed 11 before? 12 A. I'm not sure that I have been. I 13 can't remember ever being deposed. 14 Q. Really? 15 A. Yes. 16 Q. 25 years in the FBI and you never 17 had -- 18 A. No, I don't think so. 19 Q. Have you testified at trial? 20 A. Yes. 21 Q. So you are aware of what's implicated 22 in testifying under oath and the seriousness of 23 that? 24 A. Yes. 25 Q. Let me ask you: During your career INTERIM COURT REPORTING 211 1 Jacobsen 2 with the FBI, did you ever handle cases that 3 dealt with piracy or with some of the types of 4 things that you're responsible for now? 5 A. I don't recall ever being assigned to 6 a squad that worked copyright violations. 7 Q. But any kind of an overlap in terms of 8 your prior experience? 9 A. No. 10 Q. What kind of cases were you doing? 11 A. During my career, I worked fugitives; 12 I worked national security cases; I worked white 13 collar crime investigations; I was our in-house 14 legal advisor for a number of years; I worked 15 drug cases on the task force with the DEA. 16 I then became a supervisor of the 17 first drug squad in Los Angeles when the FBI had 18 and ran that program. I then became the 19 supervisor of our major case squad which would 20 have been high-jacking, extortions, fugitives, 21 kidnappings. Those types of violations. 22 I then became the supervisor of our 23 special operations group, which was a 24 surveillance group that supported Investigations. 25 And at the end of my career I was the bank INTERIM COURT REPORTING 212 1 Jacobsen 2 robbery squad supervisor. 3 MR. COOPER: That's all. 4 Q. Yesterday you mentioned the names of 5 people at the Plaintiffs who dealt with piracy. 6 Let me ask you: Are there any people at each of 7 the Plaintiffs, of course, excluding Time Warner, 8 that deal with the non-proliferation of DeCSS? 9 MR. COOPER: Why don't you read back 10 that question? 11 (Record read.) 12 MR. COOPER: I just want to take us 13 back to the limitation on the answer that 14 was given yesterday. I think the witness 15 clarified that he was referring to people 16 other than the in-house litigators at each 17 of the studios who were involved in one way 18 or the other with this and the other DeCSS 19 litigations. 20 So are you asking a different question 21 than that? 22 MR. HERNSTADT: Yes. 23 MR. COOPER: In what way are you 24 asking; people who may be tangentially 25 involved? INTERIM COURT REPORTING 213 1 Jacobsen 2 MR. HERNSTADT: No. People that he 3 works with other than the lawyers. 4 Q. Or people you have talked to other 5 than the lawyers who have anything to do with 6 DeCSS or the non-proliferation of DeCSS? 7 MR. COOPER: All such people at the 8 studios? 9 MR. HERNSTADT: Yes. 10 A. Any people that I have been involved 11 with in discussions on DeCSS have been within the 12 context of the attorney/client relationship. 13 Q. Can you be a little more clearer on 14 that? 15 MR. COOPER: I just want to 16 distinguish. I think what you are saying I 17 understand. He's entitled, even if a 18 conversation may be privileged as to a 19 substance, the fact of the conversation and 20 the persons with whom you may have had it 21 are fair areas of inquiry. 22 THE WITNESS: Okay. 23 MR. COOPER: So the question, as I 24 understand it, is who besides the lawyers at 25 the studios and besides the seven people INTERIM COURT REPORTING 214 1 Jacobsen 2 that you identified yesterday are persons 3 with whom you had communications at the 4 studios specifically regarding the efforts 5 to curtail the proliferation of DeCSS. 6 Correct? 7 MR. HERNSTADT: Yes. 8 A. You are asking me people who are not 9 involved as the lawyers representing the studios 10 in putting together this litigation? 11 MR. HERNSTADT: Let's go off the 12 record for a second. 13 (Discussion off the record.) 14 BY MR. HERNSTADT: 15 Q. The names of the people that you spoke 16 to. I'm not asking about the substance of the 17 conversation. 18 A. Including the lawyers. 19 Q. Including the lawyers. 20 A. I've been involved in numerous 21 conference calls and I will try to remember to 22 the best of my ability the name of the lawyers 23 who have been involved in those calls. 24 Let me see. It does not include Time 25 Warner. INTERIM COURT REPORTING 215 1 Jacobsen 2 Q. Right. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 216 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Q. Who from the MPAA was present? 23 A. It would be Simon Barsky, Greg 24 Goeckner, Mat Litvack, myself. I think that's 25 normally the four that are involved. INTERIM COURT REPORTING 217 1 Jacobsen 2 Occasionally Brad Hunt. And it is possible that 3 4 two calls. 5 Q. When did these calls take place? 6 A. Since I know, ever since the 7 litigation commenced. 8 Q. These are all since the litigation 9 commenced? 10 A. There were some discussions prior to 11 the commencement of litigation. 12 Q. With some or all the same people you 13 just mentioned? 14 A. Yes. 15 Q. Do you know if there is a joint 16 defense agreement in place? 17 A. I do not, no. 18 RQ MR. HERNSTADT: We would call for the 19 production of such agreement if there is 20 one. 21 MR. COOPER: I will take it under 22 advisement. 23 MR. HERNSTADT: Just to clarify this 24 point. It is the position of the Plaintiffs 25 in this case that if the MPAA is party to INTERIM COURT REPORTING 218 1 Jacobsen 2 conversations, that does not destroy the 3 privilege? 4 MR. COOPER: That's correct. 5 MR. HERNSTADT: Okay. 6 Q. Mr. Jacobsen, yesterday -- I don't 7 want to hold you to this. I want to ask you 8 about this. You said piracy was the unauthorized 9 use of property owned by one of the MPAA 10 members. First of all, is that an accurate 11 description of what you said yesterday? 12 A. I don't think it is. 13 MR. COOPER: Neither do I. 14 Q. That was just my notes. Can you give 15 me a definition; the definition of "piracy" that 16 you used in your role as the head of anti-piracy? 17 MR. COOPER: Asked and answered. I 18 think really we are just now testing the 19 witness' memory. 20 MR. HERNSTADT: No. This is what I 21 wrote down. Obviously I got it wrong. 22 MR. COOPER: You have the transcript 23 from yesterday. It seems to me it is simple 24 enough to pick it up if you really want to 25 go back to that. INTERIM COURT REPORTING 219 1 Jacobsen 2 MR. HERNSTADT: Fair enough. I do. 3 Off the record. 4 (Discussion off the record.) 5 THE WITNESS: Can you read back the 6 question? 7 MR. COOPER: You know what, in order 8 to try to save time, rather than going back 9 to the record and trying to figure out where 10 the witness' testimony was from yesterday on 11 the definition of "piracy", we have agreed 12 that the witness will give a working 13 definition for purposes of counsel to take 14 off for some additional questioning on any 15 piracy efforts. 16 A. I believe what I said yesterday, when 17 asked that question by Mr. Garbus, was that our 18 program encompassed multiple areas. And within 19 the rubric of the term "piracy," I would include 20 circumvention devices; I would include 21 unauthorized public performance; I would include 22 unauthorized retransmission; I would also include 23 the illegal manufacture, the illegal distribution 24 and the illegal sale of audio visual products 25 owned by my member companies. INTERIM COURT REPORTING 220 1 Jacobsen 2 Q. Did you come up with that definition 3 of "piracy"? 4 MR. COOPER: He just did. Do you mean 5 is he the sole source of it from an 6 intellectual standpoint? 7 Q. Yes. Are you the person who devised 8 that general definition of "piracy" for the MPAA? 9 A. It is my definition of "piracy" for 10 the MPAA. It is not written down anywhere. 11 That's my definition. When you asked me what I 12 consider piracy for the MPAA, that's my 13 definition of "piracy". 14 Q. Does the MPAA have their own 15 definition of "piracy" apart from yours? 16 MR. COOPER: Calls for speculation. 17 MR. HERNSTADT: If he knows. I'm not 18 asking him to speculate. I'm asking him to 19 answer a question if he knows it. 20 MR. COOPER: I understand. This 21 witness is here as the person most 22 knowledgeable on the topics we identified. 23 He is able to testify from that knowledge. 24 I think he has given you his own 25 working definition and has told you there is INTERIM COURT REPORTING 221 1 Jacobsen 2 not a written policy articulating the answer 3 to your question. 4 MR. HERNSTADT: He didn't. He said 5 this definition is not written down. It is 6 his definition. What I'm asking is, Is 7 there a preexisting, is there some written 8 definition? 9 MR. COOPER: Written down? 10 MR. HERNSTADT: Written down for the 11 MPA or the MPAA. 12 A. Use of the term "piracy" is not a 13 legal term. What we are talking about when we 14 quote, discuss "piracy," is basically theft of 15 our member company product or violations of 16 statutes created by either state or federal 17 governments or international statutes which 18 protect the intellectual property of our members. 19 So, no, no one has ever sat down to my 20 knowledge and put together, these will be the 21 only things that will be included in piracy 22 because it is an ever changing world. 23 Q. Let me step back for a second. Is 24 there a person or persons you deal with at the 25 DVD CCA about piracy or proliferation of DeCSS? INTERIM COURT REPORTING 222 1 Jacobsen 2 MR. COOPER: I believe that's asked 3 and answered. 4 A. I don't personally. 5 Q. Do you work with anyone else at the 6 MPA or MPAA to determine what you include within 7 the rubric of piracy? 8 MR. COOPER: I think that you are 9 giving the rubric of piracy a more formal 10 meaning that it has in fact, based on the 11 witness' testimony. 12 MR. HERNSTADT: I mean it only in the 13 sense that the witness has testified about 14 it, which is that it is his personal 15 definition and he looks to various sources 16 for that personal definition. It is not 17 written down. 18 I understand it to be an informal 19 working definition for him. Within that, I 20 want to know if he talks to other people 21 about it in order to determine what's within 22 it. 23 MR. COOPER: If you allow me to finish 24 my comment. 25 He's testified about everybody who INTERIM COURT REPORTING 223 1 Jacobsen 2 works for him and I believe virtually 3 everybody who works with him. Given his job 4 responsibilities, I'm not sure what he can 5 do beyond repeating his answers on those 6 questions from yesterday, which is to 7 reidentify all the people who -- 8 MR. HERNSTADT: I actually have not 9 asked him to identify people yet. 10 Q. Let me rephrase the question. Maybe 11 this will make it easier. 12 When you developed this working 13 definition of "piracy," did you do it by yourself 14 or did you do it in conjunction with discussions 15 with other people? 16 A. The working definition of "piracy" is 17 meaningless in my job. 18 Q. Why is that? 19 A. Because. What I'm hired to do is to 20 construct strategies -- and implement them -- 21 that protect my member companies' product. 22 "Piracy" is just the term somebody at some point 23 in time decided to apply to the illegal theft of 24 our product. 25 I don't, when I work, try to define INTERIM COURT REPORTING 224 1 Jacobsen 2 "piracy." What I try to do is look at what 3 illegal actions are happening that are stealing 4 my member companies' products, and device 5 strategies to address them. It is not done under 6 a definitional term of piracy. It is done on a 7 situational-by-situational basis. 8 Q. Yesterday Mr. Garbus asked you a 9 number of questions about what was piracy and 10 what was not piracy. One question I don't think 11 we ever got an answer on is: Is it the position 12 of the MPAA that it is piracy to make fair use of 13 copyrighted materials on a video cassette? 14 MR. COOPER: The question was asked -- 15 A. I answered that. 16 MR. COOPER: The question was asked 17 and answered. To the extent that you didn't 18 get an answer, it would have been because 19 the formulation was such that it received 20 from me an objection on attorney/client 21 privilege and a variety of other grounds, 22 including that it called for a legal 23 conclusion and was beyond the ambit of this 24 witness' scope of testimony. 25 So I really don't think it is INTERIM COURT REPORTING 225 1 Jacobsen 2 productive to go back through that whole 3 area. We did spend a significant amount of 4 time yesterday on it. 5 MR. HERNSTADT: Thank you. I 6 disagree. The witness in answering that 7 question introduced a number of factors that 8 were not part of the question. 9 Q. What is your understanding, 10 Mr. Jacobsen, of "fair use," if you have one? 11 MR. COOPER: I simply cut off the 12 questioning altogether in this area because 13 I really do believe we are going right back 14 to where we were yesterday. 15 Give me some sense of why you want 16 this witness' legal interpretation of that 17 legal term? 18 MR. HERNSTADT: I didn't ask for a 19 legal interpretation. I asked for his 20 understanding, if he has one. If he doesn't 21 have one, he doesn't have one. 22 I understand he is not here as a 23 lawyer. He is here as the chief of 24 anti-piracy efforts for the MPAA. 25 MR. COOPER: He described what those INTERIM COURT REPORTING 226 1 Jacobsen 2 efforts are. 3 MR. HERNSTADT: Right. 4 MR. COOPER: For foundation purposes 5 and probably a vain effort to save some 6 time, I'm going to allow the witness to give 7 you his layman's understanding of the term, 8 but I will tell you we are not going to get 9 into a lengthy legal discussion today. 10 MR. HERNSTADT: I have one question on 11 this. 12 MR. COOPER: Go ahead. 13 A. I generally understand that within the 14 realm of copyright, there is something called 15 "fair use." And even though someone may have a 16 copyright to a particular piece of intellectual 17 property, if the usage that is made of a portion 18 of that property is for purposes of teaching, 19 let's say, purposes of library maintenance, let's 20 say, purposes of possibly scientific research, 21 purposes of possibly fair comment in a newspaper, 22 and it is done within the rubric of what the 23 courts have said constitutes "fair use" of that 24 product, you may not have a copyright violation. 25 Q. My question then is: Is it the MPAA's INTERIM COURT REPORTING 227 1 Jacobsen 2 position that making use of copyright materials 3 on a video cassette in the way that you have just 4 described is piracy? 5 MR. COOPER: It is an incomplete 6 hypothetical. You are asking a question 7 without sufficient information to be able to 8 answer the question given what the witness 9 just testified to. 10 Q. Mr. Jacobsen, can you answer the 11 question? 12 A. I can tell you "piracy" is not a legal 13 term. It is a meaningless term in your question 14 to my understanding. So I cannot answer your 15 question. 16 Q. Let me rephrase that. 17 Is it the MPAA's position that it is 18 not permissible for persons to make use of 19 copyrighted material on a video cassette in the 20 manner in which you just described? 21 A. It is -- 22 MR. COOPER: It is beyond the witness' 23 area of testimony. Calls for a legal 24 conclusion. Incomplete hypothetical. 25 Q. Can you answer that question? INTERIM COURT REPORTING 228 1 Jacobsen 2 A. I can tell you only that the 3 determination of "fair use" is something that has 4 to be described or made by lawyers. And if, in 5 fact, fair use is applicable, then the use of the 6 product within that limited scope of fair use is 7 not illegal, to my understanding. 8 Q. You device strategies for protecting 9 the intellectual property of the members of the 10 MPAA; is that correct? 11 A. That's correct. 12 Q. Have you devised a strategy that seeks 13 to prevent persons from using portions of 14 copyrighted materials on videocassettes in the 15 manner in which you described when you discussed 16 fair use? 17 MR. COOPER: Ambiguous. 18 Q. You can answer the question. 19 A. My understanding of your question 20 presupposes the finding of fair use. If there 21 has been a finding of fair use, we do not have a 22 strategy to take action against those people for 23 use of the product. 24 Q. As chief of anti-piracy, you device 25 strategies to protect the property of your INTERIM COURT REPORTING 229 1 Jacobsen 2 members, the intellectual property of your 3 members; what formats is this intellectual 4 property on when it goes to the public? 5 A. Basically, MPAA deals with audiovisual 6 products. Consequently, it could start with 7 preproduction items which are either on film or 8 on tape. After it has been, after the theatrical 9 showing, normally there is a release at some 10 point in time of the product on videocassette, 11 videocassette disk or DVD. 12 Now, in addition, my members own 13 product which is shown on cable and satellite and 14 on TV. So we have an interest in the actual bits 15 and bytes that are transmitted, or the analog 16 transmission of that data as it comes from the 17 place it is being sent from to the ultimate 18 receiver and what happens to it after that. So 19 we have an interest with anything that has to do 20 with that audiovisual product. 21 Q. Do you have responsibility for CDs or 22 cassette tapes of the soundtracks of films? 23 A. If you are talking about the CD that 24 is created separate from the actual movie? 25 Q. Yes. INTERIM COURT REPORTING 230 1 Jacobsen 2 A. No. 3 Q. Do you know what organization is 4 responsible for anti-piracy efforts with respect 5 to CD soundtracks? 6 A. There is a trade association known as 7 MIAA, and they are responsible for the products 8 of their member companies. 9 Q. With respect to these various formats 10 and media that you just described, what 11 percentage of your resources are devoted to each 12 of these different formats? 13 A. The majority of the resources would be 14 devoted to the product after -- well, it is hard 15 to make that determination. We are normally 16 looking at product that has been reduced from the 17 film or transferred the film into some type of 18 hard copy format. But often that is before our 19 members have actually released it. 20 So it is a videocassette or a VCD or 21 perhaps a DVD that has been illegally created by 22 some third-party without authority from our 23 member companies. 24 Q. What is a VCD? 25 A. Videocassette disk. INTERIM COURT REPORTING 231 1 Jacobsen 2 Q. What is that? 3 A. It is a disk-like a compact disk. It 4 holds, I don't know, maybe roughly 600 megs.. It 5 is not a popular format in the United States. It 6 is a popular format over in Asia, and it is an 7 inferior mpeg format to DVD. 8 Q. When you say "inferior," you mean the 9 quality? 10 A. The quality is inferior to what DVD 11 is. 12 Q. Both video and audio? 13 A. I don't know about the audio because 14 I'm not an expert. I'm not an expert on the 15 other either, but I'm not conversant with audio 16 compressions. 17 Q. What are DVDs played on? 18 A. On a CD. They can also be played on a 19 DVD player. 20 Q. Can they be played on a CD player on a 21 computer? 22 A. Yes, they could be. 23 Q. With a VCD driver? Do you need a 24 special driver for that? 25 A. I don't know the answer. INTERIM COURT REPORTING 232 1 Jacobsen 2 Q. Typically, if you can answer this 3 question, how are these hard copies made prior to 4 the release of the MPAA member of the DVD or VCD 5 or videocassette? 6 A. You are talking about how is the 7 illegal product created? 8 Q. Yes. 9 A. Normally, there can be several 10 sources. But the criminal who is violating the 11 law will locate a source for the audiovisual 12 product. It can be a camcording that was done 13 surreptitiously in a theater. It can be a stolen 14 pre-released cassette. It can be a screener 15 which has been pre-released prior to the release 16 in video format or DVD format. Anyway, any kind 17 of source like that. 18 Then depending upon the format that 19 they are going to convert that into, depends upon 20 the machinery that they need to finish the job. 21 Q. Roughly what percentage of stolen 22 goods does what you just described constitute? 23 A. What percentage of what? 24 Q. Of the stolen goods you devote your 25 time going after. Is this the majority of what INTERIM COURT REPORTING 233 1 Jacobsen 2 you are focused on? 3 MR. COOPER: I want to make sure we 4 are all clear. I know where you are going 5 with this, but I want to make sure everybody 6 is using terms the same way. 7 I think the witness has been 8 testifying about the creation of hard goods 9 that are pirated because they are created by 10 people who don't have the right to 11 distribute them. 12 MR. HERNSTADT: Right. 13 MR. COOPER: Are you asking what 14 percentage of the hard goods the MPAA goes 15 after that have been created in the fashion 16 he just described? 17 MR. HERNSTADT: That's exactly what 18 I'm asking. 19 Q. You just described hard goods created 20 by persons who get a hold of the material by 21 camcording it from the theater or stealing a 22 pre-released tape or somehow acquiring it and 23 then making VCD's, videocassettes or DVDs prior 24 to the release by the MPAA member of their own 25 VCD, DVD or videocassette. INTERIM COURT REPORTING 234 1 Jacobsen 2 The question is: What percentage of 3 the pirated goods, the hard goods that you go 4 after, does this type of pirated goods 5 constitute? 6 MR. COOPER: You are distinguishing 7 that from those where someone may take an 8 existing VCD and copy it? 9 MR. HERNSTADT: For example. That was 10 going to be my next question of him. 11 Q. If you want, I will do it the other 12 way around and ask you what other type of pirated 13 goods you spend your time looking for. 14 A. Other types of pirated goods would be 15 situations where someone actually takes a 16 legitimate cassettes and makes copies as opposed 17 to a purloined cassette or a screener. 18 Q. Do you find that in all the above 19 formats; VCD, videocassette and DVD? 20 A. I'm trying to remember if we have been 21 able to determine whether any DVDs have actually 22 been made from original released DVDs, and I 23 don't know the answer. Clearly VCD's are used 24 and so are videocassettes. 25 I'm not sure that we can certify or INTERIM COURT REPORTING 235 1 Jacobsen 2 conclusively state that a legitimate DVD has been 3 used to create an unauthorized product. 4 Q. When you say "a legitimate DVD," you 5 mean a DVD that was manufactured and sold -- 6 A. That's correct. A DVD that was 7 manufactured by one of other members company and 8 legitimately placed into the marketplace. 9 Q. How would you tell if a copy DVD was 10 made from a legitimate DVD? 11 12 13 14 15 16 Q. In October or November of last week, 17 did you work with Robert Schuman? 18 A. I did not. 19 Q. Do you know who at the MPAA did? 20 A. I think Mr. Litvack did. 21 22 23 24 25 INTERIM COURT REPORTING 236 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 237 1 Jacobsen 2 3 4 Q. In terms of number, how would you 5 break down the pre-released pirated copies that 6 are being sold compared to the post-release? 7 A. It is overwhelming, in the optical 8 disk area, which would be VCD and DVD, it is 9 overwhelming pre-legitimate release. 10 11 12 13 14 15 16 17 18 19 20 21 22 Q. How would you break down the hard 23 goods between videocassettes, VCD's and 24 videocassettes? 25 A. Overwhelmingly, the numbers we seize INTERIM COURT REPORTING 238 1 Jacobsen 2 are predominantly optical disk. However, that 3 varies by region. 4 Q. Optical disk being VCD? 5 A. VCD and DVD. 6 Q. Is there a breakdown between VCD and 7 DVD? 8 A. Yes. Overwhelmingly VCD. 9 Q. Do you have documents that reflect the 10 breakdowns I have been asking you about? 11 A. I don't recall if we break it out. We 12 have documents which would reflect statistics on 13 the numbers that are seized on an annual basis 14 and a quarterly basis, I believe. But I don't 15 remember if we break out DVDs out of VCDs or 16 not. I just know from our operations that it is 17 predominantly VCD. 18 RQ MR. HERNSTADT: I would call for the 19 production of the annual and quarterly 20 breakdowns as well as any documents that may 21 exist that show a breakdown between VCD and 22 DVD. 23 By that I mean memos or other internal 24 documents that might reflect that. I 25 understand from Mr. Jacobsen there is quite INTERIM COURT REPORTING 239 1 Jacobsen 2 possibly nothing. 3 MR. COOPER: Noted. For 4 clarification, you asked for the annual and 5 quarterly breakdowns between those that the 6 witness has testified to? 7 MR. HERNSTADT: Right. 8 MR. COOPER: To the extent they 9 exist. I take it you are looking for 10 documents sufficient to show, to the extent 11 they exist, rather than every document that 12 might contain some reference to them? 13 MR. HERNSTADT: That would be correct. 14 MR. COOPER: Thank you. 15 MR. HERNSTADT: In particular, 16 Mr. Jacobsen testified he believes there are 17 annual and quarterly breakdowns. That I 18 would want. 19 MR. COOPER: I understood that 20 perfectly well. 21 I want to make sure we are not on a 22 hunt for everything that would make an 23 anecdotal reference. 24 (Whereupon, a short recess was taken 25 from 10:20 to 10:25 a.m.) INTERIM COURT REPORTING 240 1 Jacobsen 2 BY MR. HERNSTADT: 3 Q. To the best of your knowledge, what 4 would the total percentage of DVD pirated goods 5 be out of all the products we have been talking 6 about? 7 MR. COOPER: Talking about -- 8 MR. HERNSTADT: VCD, videocassette and 9 DVD. 10 MR. COOPER: To formats in which they 11 are sold? 12 MR. HERNSTADT: Yes. Exactly. 13 A. I probably have to get out a pencil 14 and paper and work out the percentages. But it 15 is low. Let me see. I'm going to say in the 16 neighborhood of between one and two percent. 17 Q. Of that one to two percent, would you 18 say more than 75 percent is pre-released? 19 A. Of the one or two percent of the 20 DVDs? 21 Q. Right. 22 A. I don't know. 23 Q. Are there any documents that would 24 show that with that kind of detail? 25 A. Not that I'm aware of. INTERIM COURT REPORTING 241 1 Jacobsen 2 Q. Is there anyone who would know? 3 A. Not that would have created or have 4 that kind of statistic available. 5 Q. Do you work with the IIPA? 6 A. IIPA? Yes. 7 Q. I would like to ask you to take a look 8 at Exhibit 5, it is the declaration of Frank 9 Stevenson. If you can look at Paragraph 23. In 10 Paragraph 23 Mr. Stevenson says, "Bit-for-bit 11 copying, which precisely duplicates the content 12 of one DVD to another, results in a fully- 13 playable product." 14 If you just take a moment to review 15 this paragraph, I would like to know if what is 16 set forth in this paragraph is true. 17 MR. COOPER: Take time to read the 18 entirety of the paragraph. 19 (Witness reviewing document.) 20 A. I don't know, I don't have any 21 technical knowledge to know whether what he 22 claims is true or not about bit-for-bit copying. 23 And two, I don't know about the IIPA 1990 report 24 on Hong Kong. I've never seen it. So I don't 25 know whether this is accurate or not. INTERIM COURT REPORTING 242 1 Jacobsen 2 Q. If you look at the back of the report 3 that attaches Exhibit B, and if you look at 4 Page 5 of the report and the numbers in the 5 bottom right-hand corner, there is a section on 6 motion pictures. 7 A. Uh-huh. 8 Q. The paragraphs that I think are 9 relevant to the videocassette questions are on 10 the top of Page 6. But feel free to look at that 11 whole section if you want. The first part is VCD 12 and then they go to DVD. 13 MR. COOPER: After he has reviewed the 14 section, what would be the question? 15 MR. HERNSTADT: The question would be 16 is he familiar with this material. 17 MR. COOPER: Document you mean? 18 MR. HERNSTADT: Either the report; if 19 he's not familiar with the report, which 20 sounds likely that he is not, whether he is 21 familiar with the contents of the material 22 through some other source. 23 MR. COOPER: Let's take it a step at a 24 time. 25 Take a look at the entire report so INTERIM COURT REPORTING 243 1 Jacobsen 2 that you can answer the first question, 3 which is: Have you ever seen this report 4 before? 5 A. I can tell you from what I've looked 6 at that the answer is no. 7 MR. COOPER: Focusing on the last 8 paragraph of Page 5 leading on to the top of 9 Page 6 -- 10 MR. HERNSTADT: It is actually the 11 first full paragraph on Page 6. 12 MR. COOPER: Okay. You want him to 13 tell you whether he is familiar from some 14 other source with the material set forth in 15 that paragraph? 16 MR. HERNSTADT: That's correct. 17 (Witness reviewing document.) 18 A. I have never seen this data anywhere 19 else. 20 Q. And no one has ever told you? 21 A. That's correct. 22 Q. Do you receive the IIPA reports on 23 enforcement of intellectual property rights 24 throughout the world? 25 MR. COOPER: Objection to form. INTERIM COURT REPORTING 244 1 Jacobsen 2 A. I presume that I will. In the job 3 that I held prior to April, I would not have 4 received these. And if I had, I might not have 5 read them. 6 7 8 A. I assume that he did. I don't know 9 for a fact, but I assume that he did. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 245 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 246 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 247 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 248 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 249 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 250 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 251 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Q. Do you know what the relationship 25 between the MPA and the MPAA is? INTERIM COURT REPORTING 252 1 Jacobsen 2 A. Yes. The MPAA is the U.S. chartered 3 trade association; the MPA is the international 4 arm of the MPAA. 5 Q. Up until April 1st, were you an 6 employee of the MPAA? 7 A. Well, I've never quite been able to 8 figure that out to be perfectly candid. But yes, 9 I guess I was an employee of the MPAA. 10 Q. Did your paycheck change at all? 11 A. I never even looked. My business 12 cards changed. The paycheck comes from the same 13 company. I honestly don't understand who I'm 14 employed by. I think it is MPAA, but I'm not 15 sure. 16 Q. Well, I ask because your card says 17 MPA. 18 A. Right. It used to say MPAA. 19 Q. There is an overlap but there is 20 different people. 21 I note that on the current MPA 22 website, as opposed to the MPAA website, you're 23 still not listed. 24 MR. HERNSTADT: Off the record. 25 (Discussion off the record.) INTERIM COURT REPORTING 253 1 Jacobsen 2 BY MR. HERNSTADT: 3 Q. Yesterday we talked about the cease 4 and desist letters that went out and we asked 5 that all the letters be produced. To clarify one 6 thing, a box was delivered yesterday afternoon 7 that contained a number of responses. 8 MR. COOPER: Okay. I appreciate that 9 clarification. 10 MR. HERNSTADT: That was the 11 confusion. We had not gotten it as of the 12 time of the deposition or the discussion 13 yesterday, but it did arrive yesterday 14 afternoon. 15 Q. Is there a master list of every letter 16 that went out and of every response that came in? 17 A. You're asking me in regards only to 18 DeCSS from the very first one we sent out to the 19 last one? 20 Q. Yes. 21 A. I don't know if a master list of all 22 of them exists. 23 Q. How much of your time have you spent 24 on the cease and desist letters? 25 MR. COOPER: On the letters as opposed INTERIM COURT REPORTING 254 1 Jacobsen 2 to other matters related to DeCSS? 3 Q. The cease and desist letters as 4 opposed to other MPAA matters. 5 A. Very little. 6 7 8 9 A. My guess would be very little, because 10 we set up a protocol which basically funneled the 11 information through counsel to make the 12 determination. 13 Q. You said Mr. Litvack wrote the 14 letters, but was he in charge of that entire 15 protocol? 16 A. Yes. 17 Q. Do you know if he spent personally a 18 lot of time on the cease and desist letters? 19 A. I don't know. 20 21 22 23 24 25 INTERIM COURT REPORTING 255 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 256 1 Jacobsen 2 3 4 5 6 7 8 9 10 Sargoy Stein firm by the MPAA. 11 MR. HERNSTADT: I guess this part of 12 the transcript should be confidential. 13 MR. COOPER: Actually all of the 14 transcript starting yesterday is 15 confidential. I suppose we should have 16 noted that at the beginning. 17 You can pick up the commentary with 18 respect to that determination from the 19 beginning of yesterday's transcript. 20 MR. HERNSTADT: You are now 21 designating the entire transcript 22 confidential? 23 MR. COOPER: That's what we did 24 yesterday. 25 MR. HERNSTADT: No. You designated INTERIM COURT REPORTING 257 1 Jacobsen 2 certain portions. 3 MR. COOPER: No. We designated all of 4 it, unless otherwise designated. 5 MR. HERNSTADT: I will take a look at 6 it. I didn't understand that to be the 7 case. 8 MR. COOPER: Lest there be any doubt, 9 let me make it clear on the record that we 10 have designated all of the transcript 11 confidential subject to requests by the 12 Defendants for de-designation of any 13 portions they believe do not deserve 14 confidential treatment. 15 There is one section I believe 16 yesterday that we also designated highly 17 confidential pursuant to the Protective 18 Order. But the record should reflect what 19 portion that was. 20 MR. HERNSTADT: The Defendants object 21 to that designation, and on the record 22 request that the entire transcript be 23 de-designated, or that the Defendants do 24 what the Protective Order contemplates which 25 is use the period of time after receiving INTERIM COURT REPORTING 258 1 Jacobsen 2 the transcript to designate those sections 3 that should be confidential. 4 It is a gross over-designation to 5 start by designating the entire transcript 6 by confidential. 7 MR. COOPER: You and I disagree. 8 MR. HERNSTADT: It is inappropriate 9 and it is not what is called for in the 10 Protective Order, which says you are 11 supposed to designate portions at the time 12 or you have a period of time after receiving 13 a transcript to designate those portions. 14 It does not say you designate the entire 15 thing and then it is our burden to tell you 16 which portions should be undesignated. 17 Since you are putting that burden on 18 us, I, on the record, state that the 19 Defendants believe that no part of this 20 transcript is confidential and that, 21 therefore, we request that we shift the 22 burden back to you to designate those 23 portions of the transcript which you think 24 are confidential. 25 MR. COOPER: As I said, we disagree. INTERIM COURT REPORTING 259 1 Jacobsen 2 I put our position on the record yesterday. 3 If it requires amplification, we will do it 4 in due course. 5 Q. Documents M 130 to M 392 are a number 6 of cease and desist letters. 7 MR. COOPER: Can I have those numbers 8 again? 9 MR. HERNSTADT: 130 to 392. 10 MR. COOPER: Thank you. 11 12 13 14 15 16 17 Q. I would like to show you, I will give 18 you a handful, let's say 321 to 392. I note that 19 these letters are unsigned. My question to you 20 is: Do you know if they were sent? 21 A. Do I know for a fact that they were 22 sent? 23 Q. Yes. 24 A. No. 25 MR. HERNSTADT: Off the record. INTERIM COURT REPORTING 260 1 Jacobsen 2 (Whereupon, a recess was taken from 3 10:45 a.m. to 10:49 a.m.) 4 RQ MR. HERNSTADT: On the record, the 5 Defendants have requested that the 6 Plaintiffs review their records and in some 7 manner or form present us with an answer as 8 to whether the letters, the cease and desist 9 letters at documents 130 through 392 were, 10 in fact, sent out. 11 MR. COOPER: I understand the request 12 and appreciate the Defendant's willingness 13 to try to avoid unnecessary discovery. 14 I'm not sure what information we will 15 be able to provide from the MPAA records on 16 this topic. But we will investigate it and 17 endeavor to reach some kind of mutually 18 acceptable understanding with respect to 19 this issue. 20 21 22 23 24 25 Q. Or if such a list exists, whether it INTERIM COURT REPORTING 261 1 Jacobsen 2 would also set forth the responses? 3 A. I don't know if such a list exists. 4 RQ MR. HERNSTADT: As part of the 5 confirmation that the letters were sent, we 6 would also request production of any kind of 7 a master list that would set forth the 8 letters that were sent, whether they were 9 sent, whether there was response. 10 I would assume that any production 11 includes those responses, but I will ask for 12 them just in case. 13 MR. COOPER: So noted. 14 MR. HERNSTADT: Thank you. 15 Q. Mr. Jacobsen, have you ever heard of a 16 format called DivX? 17 A. I think we discussed it yesterday 18 briefly. I'm aware of two things which are 19 called DivX and format. You are interested in 20 the software? 21 Q. I'm talking about the recent DivX. 22 A. Yes, I am generally aware that there 23 is a software called DivX which is available on 24 the Internet. 25 Q. Are you aware of what it does? INTERIM COURT REPORTING 262 1 Jacobsen 2 A. Again, with the caveat I'm not a 3 technical person. My general understanding is 4 that it can be used to compress a DVD that has 5 been downloaded to a hard drive, so it can then 6 be played in a more playable format and copied in 7 a manner which does not create or does not need 8 multiple disks or multiple CDs. 9 Q. For purposes of that last question and 10 the future question, the question I'm about to 11 ask you, I'm not asking you as a technical 12 person. I'm asking you with respect to anti- 13 piracy. 14 MR. HERNSTADT: I want to make that 15 clear because I understand he is being 16 produced as an anti-piracy witness not a 17 technical witness. 18 Q. Do you know if the DVD movie that is 19 being compressed by DivX has to be decrypted? 20 A. My understanding is that it does have 21 to be decrypted. 22 Q. Do you know what the compression ratio 23 is? 24 A. I don't. 25 Q. Approximate? INTERIM COURT REPORTING 263 1 Jacobsen 2 A. I am informed that it is an mpeg four 3 compression, but I don't know what that is. 4 Q. I think you were asked this 5 yesterday. Have you ever viewed a movie that has 6 been compressed with DivX? 7 A. I believe I have seen one exhibition, 8 very short, of a DivX compressed movie. 9 Q. Did it have the same quality as a DVD 10 movie? 11 A. No. 12 Q. Would a movie that is compressed with 13 DivX be sold on a VCD? 14 A. It could be. 15 Q. Are you aware of any VCDs having been 16 made using the DivX compression? 17 A. I have no information about any 18 specific instances where VCDs have been created 19 using the DivX compression technology. 20 Q. We looked at yesterday at Defendant's 21 Exhibit 12, this article in Fast Forward. 22 MR. HERNSTADT: I would like to mark 23 as Exhibit 15 an article that appears in 24 MSBC Home, the CNBC and the Wall Street 25 Journal entitled "Movie Pirates Hitting INTERIM COURT REPORTING 264 1 Jacobsen 2 Prime Time." 3 (Defendant's Exhibit 15, MSBC website 4 article "Movie Pirates Hitting Prime Time," 5 marked for identification, as of this date.) 6 MR. COOPER: What is the first 7 question on this one? 8 Q. The first question is: Have you ever 9 seen this article? 10 MR. COOPER: Take your time. 11 (Witness reviewing document.) 12 A. I have seen this article. 13 Q. In fact, you are quoted in this 14 article; is that correct? 15 A. Yes. Misquoted. 16 MR. HERNSTADT: Off the record. 17 (Discussion off the record.) 18 BY MR. HERNSTADT: 19 Q. You say you are misquoted; what is the 20 misquote? 21 A. He said that most of the money is 22 spent on analog videotape copies, and I never 23 said that. That was a conclusion he drew from 24 the interview. 25 Q. That's part of the interview where it INTERIM COURT REPORTING 265 1 Jacobsen 2 quotes you as saying, or paraphrases you as 3 saying, "Traditional forms of piracy cost the 4 industry $2.5 billion. Most of that is spent on 5 analog videotape copies where film quality 6 obviously suffers." 7 My first question is: Is it true that 8 traditional forms of piracy cost the industry 9 $2.5 billion? 10 A. It is true that all forms of piracy we 11 estimate cost the industry 2.5 billion. 12 "Traditional," again, is not what I said. 13 Q. Is there such a thing as traditional 14 forms of piracy? What is the distinction being 15 made there? 16 A. I would not have made that 17 distinction, that's why I know I didn't say it. 18 Q. When you say cost the industry 19 $2.5 billion, what do you mean? 20 A. That is the estimate in lost revenues 21 that we make from unauthorized sales of our 22 audiovisual product. 23 Q. Who makes that estimate? 24 A. It is made, I would have to say, by 25 Mr. Valenti based on information that he INTERIM COURT REPORTING 266 1 Jacobsen 2 receives. 3 Q. Do you have any role in determining 4 the estimated amount of lost sales based on 5 piracy? 6 A. I have not in the past had a role in 7 making the determination. 8 Q. And in the future will you? 9 A. I would hope that I would, yes. 10 Q. What role do you hope to have in 11 making that determination? 12 A. The role of providing the statistical 13 information necessary to draw whatever 14 conclusions are going to be drawn. 15 Q. What statistical information will you 16 provide? 17 A. I will provide our estimate of the 18 number of illegal copies that have been sold or 19 exchanged or bartered. 20 I will provide information about 21 whether or not they were being sold in countries 22 where they were pre-theatrical or whether the 23 movies were still in theatrical release. 24 Provide information extrapolating the 25 seizures we have made and trying to estimate the INTERIM COURT REPORTING 267 1 Jacobsen 2 amount of goods that we do not find, or that the 3 police do not find, and try to come up with a 4 number of how much illegal copies are actually 5 being disseminated, sold, traded, bartered, 6 whatever. 7 Q. How is that information relevant to 8 the estimated loss? 9 A. It is relevant to the estimated loss 10 if you make the argument that the purchase or 11 transfer of an illegal copy may affect theater 12 ticket sales or may affect ultimate rental 13 revenue or may affect ultimate sale of the actual 14 item itself. 15 Q. Do you know the relationship between 16 the number of copies and the impact on theater 17 sales, theater ticket sales or sales of 18 authorized hard copies of member movies? 19 MR. COOPER: Objection to form. 20 A. I'm not sure I understand the 21 question, but if I do, I think I already told you 22 I have not been involved in this process in the 23 past. So if I understand your question, the 24 answer is no. 25 Q. Do you know who would I ask about that INTERIM COURT REPORTING 268 1 Jacobsen 2 at the MPA or the MPAA? 3 MR. COOPER: You are talking about the 4 relative interaction between various 5 statistics in coming up with the 6 $2.5 billion number? 7 MR. HERNSTADT: Basically how that 8 number is arrived at. What weight is given. 9 I understand from what Mr. Jacobsen 10 has said, there is estimated total number of 11 copies that are out there. There are 12 estimates that are extrapolated on the 13 number of copies that are actually seized. 14 There are estimates of how this impacts 15 theater sales, how this impacts sales of 16 hard copies. What I -- 17 Q. Please correct me. 18 MR. COOPER: That's fine. Can you 19 answer the question generally speaking? 20 A. Actually, that is not what I said. I 21 said if I were involved in the process in the 22 future, that's what I would expect to do. 23 MR. COOPER: That's fair. 24 Q. Do you know who is doing that today? 25 A. I don't. INTERIM COURT REPORTING 269 1 Jacobsen 2 Q. You said Mr. Valenti? 3 A. Mr. Valenti is usually the person who 4 talks about the loss numbers, so I'm assuming. 5 MR. COOPER: Don't assume. 6 A. I don't assume. 7 MR. COOPER: Testify to knowledge. He 8 is not asking for assumptions. He is 9 specifically not. 10 Q. Let me ask you, the prior quote, "Do I 11 feel there is a huge river damming up? Yes. 12 Yes, we see it coming. We are doing everything 13 we can to deal with it." Is that an accurate 14 quote? 15 A. No. I never talked about a river 16 damming up. 17 Q. What did you actually say? 18 A. We had a wide-ranging interview about 19 the Internet and whether or not it created 20 current problems for us, and whether or not we 21 suspected it would create future problems for us. 22 Q. Can you tell me what you said about 23 both of those areas? 24 A. Yes. I can tell you that we discussed 25 generally how our member company product is INTERIM COURT REPORTING 270 1 Jacobsen 2 illegally sold or transferred on the Internet. I 3 can tell you that we generally talked about the 4 four areas of the Internet which concern us, 5 which would be: circumvention devices which are 6 transferred via the Internet; hard good sales via 7 the Internet; downloadable media on the Internet; 8 and it would be streaming using the Internet. 9 And although I don't remember how 10 specific we were in this particular interview, 11 I'm sure we discussed what the problem looked 12 like today and whether we expected that it would 13 increase in the future. 14 Q. With respect to circumvention devices 15 currently available on the Internet, what are 16 they? 17 A. DeCSS in terms of a software utility. 18 We find on the Internet -- you are talking about 19 not what I would have discussed in terms of this 20 article, but what I'm -- 21 Q. Now I'm asking you more broadly. 22 A. Thank you. We look for unauthorized 23 Smart Cards which are sold via the Internet which 24 are used to illegally capture satellite 25 transmission. And we look for what are called INTERIM COURT REPORTING 271 1 Jacobsen 2 black boxes, which are basically a device that is 3 sold to defeat encryption or protection measures 4 on cable TV to steal signals. 5 Q. Are there other utilities on the 6 Internet that you look for besides DeCSS? 7 A. We would look for other utilities 8 located that in effect defeats the technological 9 measure that our industry has put on its 10 product. 11 I am not aware of the fact that we are 12 addressing anything right now besides DeCSS in 13 regards to a software utility. 14 Q. Are you aware of the existence of any 15 others? 16 A. No. 17 Q. For example, DODsripper or 18 PowerRipper. 19 A. I heard the term "ripper" before, but 20 I myself do not know whether these are 21 circumvention devices, whether they defeat the 22 encryption placed on DVDs or any other kind of 23 technological measure. 24 Q. For purposes of your job as 25 anti-piracy chief, do you know how CSS works? INTERIM COURT REPORTING 272 1 Jacobsen 2 A. CSS? 3 Q. Yes. 4 A. Generally. 5 Q. What is your general understanding of 6 what CSS does? 7 A. My general understanding is that there 8 is an encryption placed in the bit stream that is 9 on the disk. My general understanding is that 10 there is a series of keys that has been licensed 11 to people who make DVD players. 12 And that the system requires a key 13 exchange when the disk is placed into the player 14 so that it recognizes the disk and it recognizes 15 the player; they match. And then there is an 16 authorized -- I mean, the signal is played. It 17 is authorized to be played. 18 Q. Did you mention a disk locking 19 component? 20 A. I did not. 21 Q. Do you understand there is a disk 22 locking component to CSS? 23 MR. COOPER: Ambiguous. I don't know 24 what that means. 25 A. I don't know what it means either. INTERIM COURT REPORTING 273 1 Jacobsen 2 Q. Are you aware of a security provision 3 protecting DVDs that involve disk locking? 4 A. I don't know what disk locking is. 5 Q. Turning back to Exhibit 15. You are 6 familiar with this article? 7 A. I have read the article, yes, 8 previously. 9 Q. This article nowhere mentions DeCSS; 10 is that correct? 11 MR. COOPER: The article speaks for 12 itself. If you want us to take a look 13 through it and give you a specific response, 14 I suppose we can go through the exercise. 15 If you are looking at the same one I am. 16 MR. HERNSTADT: Yes. 17 MR. COOPER: I object to the question 18 on the grounds that it is misleading. I 19 have now turned to the first page of the 20 article. 21 A. It does mention DeCSS. 22 Q. Where is that? 23 MR. COOPER: Bottom of the first 24 page. 25 A. First page. INTERIM COURT REPORTING 274 1 Jacobsen 2 MR. COOPER: The one that has the 3 "Play For Free Fantasy Baseball" banner on 4 the top of it. 5 Q. My question is really that it does not 6 mention DeCSS as part of the DivX conversion 7 process. 8 MR. COOPER: The document speaks for 9 itself. 10 Q. As counsel says, the document speaks 11 for itself. 12 MR. HERNSTADT: I would like to mark 13 this as Defendant's Exhibit 16. 14 (Defendant's Exhibit 16, ZD Net News 15 website article "Inside the Online Movie 16 Underground," marked for identification, as 17 of this date.) 18 Q. First question is: Have you ever seen 19 this article before? 20 A. Which one are we looking at? 21 Q. Defendant's Exhibit 16, which I will 22 define as an article entitled "Inside the Online 23 Movie Underground" that comes from ZD Net News. 24 The subtitle of that is "Technology News Now." 25 A. I don't recall seeing this one INTERIM COURT REPORTING 275 1 Jacobsen 2 previously. 3 4 5 Q. Are you familiar with the Microsoft 6 ASF format? 7 A. I understand there is a Microsoft ASF 8 format, but I know nothing else about it. 9 Q. Without getting into the technical 10 merits, is that format a concern of your 11 organization in terms of piracy? 12 A. I don't know what it does. 13 MR. HERNSTADT: I would like to mark 14 as Defendant's Exhibit 17 an article 15 entitled "Piracy Intrigue in Palika Bazaar: 16 Hollywood Goes Toe-To-Toe With India's Video 17 Counterfeiters." 18 This is an article on the on-line 19 version of MSBC and it is dated May 11th. 20 (Defendant's Exhibit 17, MSNBC website 21 article "Piracy Intrigue in Palika Bazaar: 22 Hollywood Goes Toe-To-Toe With India's Video 23 Counterfeiters," marked for identification, 24 as of this date.) 25 (Witness reviewing document.) INTERIM COURT REPORTING 276 1 Jacobsen 2 Q. My first question is: Have you seen 3 this article before? 4 A. I don't recall seeing it before. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 277 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Q. I want to clear up something from 24 yesterday. Yesterday you mentioned a technology 25 called wireless. I believe you said you didn't INTERIM COURT REPORTING 278 1 Jacobsen 2 know if DVD could be sent from one place to 3 another by wireless transmission. 4 Do you know who at the MPAA would know 5 the answer to that question? 6 A. If I said that, I may not have been 7 thinking broad enough, because I probably have to 8 say that it can be given the -- well, let me 9 take that back. If I use the term "wireless" to 10 include satellite transmission. 11 Q. Is that how you were using it 12 yesterday? It seems to me you were using it as a 13 new technology that was coming to the front. 14 A. You know what, let me stick with my -- 15 I don't know how wireless actually works, so I 16 probably don't know the answer. 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 279 1 Jacobsen 2 Q. Do you know if the MPAA has 3 investigated whether it is possible to use 4 wireless transmissions to send DVD movies? 5 A. I don't know. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 280 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 illegal to resell DVDs? 24 25 INTERIM COURT REPORTING 281 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Q. Do DVDs state on them the countries in 24 which they are licensed to be sold? 25 A. I don't know the answer. INTERIM COURT REPORTING 282 1 Jacobsen 2 Q. Do you know what region coding is? 3 A. Generally. 4 Q. Can you describe it, please, what your 5 understanding is? 6 A. My understanding is the world has been 7 divided into -- I don't recall if it is five or 8 six regions. Six. 9 Q. Seven? 10 A. Seven regions, which -- I'm sorry. 11 Divided into seven regions. When the DVDs are 12 manufactured, they are manufactured for play in 13 one or more of those seven regions. They are 14 then authorized for sale only in those regions. 15 And that's basically my understanding of regional 16 coding. 17 Q. Your testimony a few minutes ago about 18 the resale may be unauthorized if a disk is 19 released for sale in one country but it is then 20 acquired and resold in a different country, is 21 that related to the region coding that we just 22 discussed? 23 A. Sometimes. 24 Q. Is it sometimes related to the scope 25 of the license owned by your client or by the INTERIM COURT REPORTING 283 1 Jacobsen 2 MPAA member to distribute movies? 3 MR. COOPER: I think it is confusing 4 as asked. He included in his description of 5 the region coding, the licenses. So I don't 6 know how you can separate them out in asking 7 that question. 8 In addition to which, sometimes the 9 member companies are licensors and sometimes 10 licensees, so I think it is a very complex 11 question. 12 MR. HERNSTADT: It is. Let me start 13 over again. 14 Q. In region coding you said the DVDs are 15 manufactured for play in one of the seven 16 regions? 17 A. I think I said in one or more. 18 Q. One or more of the seven regions. 19 Do you know whether the decision of 20 what region the DVD is manufactured for play in 21 is a function of any legal restriction on the 22 DVDs being played in regions other than the one 23 that it is manufactured to be played in? 24 MR. COOPER: Objection as to form. 25 A. I'm not sure I understand the INTERIM COURT REPORTING 284 1 Jacobsen 2 question. 3 Q. I will restate the question. I will 4 ask a more general question. 5 Do you know why DVDs are manufactured 6 for play in a limited number of regions? 7 A. Generally, my understanding is to 8 protect release windows. 9 Q. Can you expand on that answer? What 10 is release windows? 11 A. Well, the way the member companies 12 release their movies, they do not release 13 worldwide at the same time. 14 As an example, you may have a movie 15 that is released in the United States. That 16 movie has a theatrical run. That movie may then 17 be released into cable, Pay-Per-View. That movie 18 may then be converted into a videocassette and/or 19 a DVD. And all of that may be done prior to it 20 being played in another part of the world. 21 To protect the theatrical market, my 22 understanding is DVDs were regionalized so that 23 they would not be available in that part of the 24 world prior to the theatrical release. 25 That's just my general understanding. INTERIM COURT REPORTING 285 1 Jacobsen 2 That is not in conversations with anybody that 3 has made those decisions. 4 Q. Do you know who has made those 5 decisions? 6 A. I don't. 7 Q. Are DVDs and videocassettes released 8 at the same time? 9 A. Sometimes. 10 Q. Is there any regional restriction on 11 videocassettes? 12 A. Yes. 13 Q. What is that? 14 A. The format that it's played in. 15 Basically if my memory serves me correctly, there 16 is three formats; you have PAL, you have VHS, and 17 you have SEACAM, which is Asia Pacific as I 18 recall. PAL is Europe generally. And VHS is 19 generally the America. 20 Q. Is that NTSC? 21 A. I'm sorry. You're right, not VHS, it 22 is NTSC. 23 24 25 INTERIM COURT REPORTING 286 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 287 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 288 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 289 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 290 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 291 1 Jacobsen 2 3 4 5 MR. COOPER: Okay. We will talk about 6 it separate from the transcript for 7 Mr. Jacobsen's deposition. 8 MR. HERNSTADT: That's fine. If it 9 turns out that there is just not that much 10 stuff, that sort of answers a lot of the 11 questions. We can work it out. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 292 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 Q. Isn't that a web site? 12 A. It is not my definition of a website. 13 Maybe my definition of a website might be 14 different than yours or mine may be 15 inappropriate. I am not technically inclined. 16 Q. Neither am I. Why don't you give me 17 your definition of a website? 18 A. When I think of a website, I think of 19 a site that people go to. 20 This could be just a direct 21 conversation between you and I on the Internet. 22 There may be no web page. It could just be the 23 fact I access your computer or server. 24 Q. What different ways of uploading and 25 downloading media have you found to be in INTERIM COURT REPORTING 293 1 Jacobsen 2 existence? 3 A. I'm not sure I understand the 4 question. 5 Q. We identified a couple of different 6 ways, either through web pages or direct 7 conversations. Has the MPAA found both of those 8 to be in existence? 9 A. Actually, I guess we have. We have 10 found web pages that are devoted to the transfer 11 of our media. 12 Q. How many web pages have you found? 13 A. I don't know. 14 Q. Would it be more than 50? 15 A. I don't know. They are less likely to 16 be available because they draw extraordinary 17 attention to themselves than a website or a web 18 page. 19 20 21 22 23 24 25 INTERIM COURT REPORTING 294 1 Jacobsen 2 3 4 5 6 7 8 9 Q. What is the compression technique that 10 is used? Or if there is more than one, what 11 compression techniques are used? 12 MR. COOPER: You are talking about 13 formatting the video product for streaming 14 purposes? 15 MR. HERNSTADT: No, not for streaming 16 purposes. For uploading and downloading 17 purposes. Mr. Jacobsen said there is where 18 the audiovisual product is compressed and 19 then uploaded on to the net and then someone 20 at some point downloads it and uses it or 21 copies it or does whatever. 22 A. I don't understand the technology 23 behind the compression which creates the original 24 file, so I don't know how to answer your 25 question. INTERIM COURT REPORTING 295 1 Jacobsen 2 Q. I guess what I'm asking for is the 3 name of the compression. Like DivX, I take it 4 that would be one of them. DivX compression 5 would be one? 6 A. DivX could be one of them, yes. 7 Q. Do you know any other? 8 A. It started, as I recall, with VIVO, 9 which is probably no longer used. You asked me 10 earlier about ASF. I believe ASF is a 11 compression technology created by Microsoft that 12 might be used. I'm sure there are others. I 13 just can't remember what they are and I don't 14 recall how they work. 15 Q. In this category or this area of 16 Internet problems for the MPAA members, I take it 17 that the copyrighted material is being 18 transmitted via modem or T1 line or T3 line? 19 A. It would be across the Internet. 20 Q. By whatever -- 21 A. Exactly. 22 Q. -- access they are using? 23 A. (Witness nodding.) 24 Q. The last one is streaming. What is 25 the problem with streaming? INTERIM COURT REPORTING 296 1 Jacobsen 2 A. Streaming is a, it can be several 3 things. But basically what it is is a technology 4 where you broadcast a media, which in our case 5 would be either TV programs or cable programs or 6 a movie. It is actually broadcast out. And the 7 receivers actually have the ability to just watch 8 it. It is like TV. 9 Q. Are entire movies streamed or is it 10 portions of movies that are streamed? 11 A. I don't know that we have -- I think 12 the answer is entire movies can be. But the 13 source in that instance is -- yes, they can be. 14 Let me just say it can be. 15 Q. Have you ever found that to be the 16 case? Have you ever found an entire movie to be 17 streamed? 18 A. I can't think of the specific, but I 19 believe that we have. 20 Q. How much resources does the MPAA 21 devote to policing the Internet and seeking to 22 prevent these four categories of problems you've 23 identified? 24 A. An ever increasing amount of 25 resources. This is a problem which has just INTERIM COURT REPORTING 297 1 Jacobsen 2 begun to develop for us over the last couple of 3 years. So it is a new problem. And as the 4 Internet expands and as the technology increases, 5 as the compression gets better, as the bandwidth 6 gets better, as the ability to stream gets 7 better, this becomes a larger and larger problem 8 for us. 9 Q. You anticipate that it will become a 10 larger and larger problem? 11 A. Absolutely. 12 Q. Is the MPAA working on security 13 systems to prevent this from becoming a larger 14 and larger problem? 15 A. The MPAA itself does not develop 16 security systems. 17 Q. Do you know who does? 18 A. Any technological company out there 19 that wants to work on a security system. I don't 20 think there is an answer to that question. It 21 can be anybody anywhere. 22 Q. Do you know if MPAA members are 23 developing security systems? 24 A. Developing it themselves? 25 Q. Yes. INTERIM COURT REPORTING 298 1 Jacobsen 2 A. I don't know the answer. 3 Q. Do you know if they are working with 4 third-parties to develop security systems? 5 MR. COOPER: You know, I think the 6 witness knows what he means by security 7 systems. It is not clear to me that you are 8 both using it the same way. For the clarity 9 of the record we should get some kind of 10 definition. 11 MR. HERNSTADT: Sure. 12 Q. How are you using "security systems"? 13 A. I'm using a security system to mean 14 some form of technology which will protect our 15 product from being illegally copied, illegally 16 screened, illegally downloaded. 17 MR. HERNSTADT: That is essentially 18 the definition I was using. 19 MR. COOPER: I just wanted to make 20 sure. I'm not sure that the average reader 21 would know what either of you meant even if 22 it was the same thing. 23 MR. HERNSTADT: That's fine. What was 24 the last question? 25 (Record read.) INTERIM COURT REPORTING 299 1 Jacobsen 2 MR. LITVACK: Off the record. 3 (Whereupon, a recess was taken from 4 11:42 a.m. to 11:49 a.m.) 5 MR. COOPER: Can you read back the 6 last question and answer? 7 (Record read.) 8 MR. COOPER: The area of current 9 development of future security systems is 10 one of particular concern to the member 11 companies. I want to make sure that in 12 allowing the witness to answer foundation 13 questions regarding his general knowledge in 14 the area, we don't waive objections of any 15 type with respect to propriety of inquiry 16 into this general subject matter. 17 With that understanding, I will let 18 him answer additional foundational questions 19 you have to determine whether the witness 20 has information on this subject. 21 MR. HERNSTADT: That's understood. 22 That's fine. 23 A. I think yesterday we talked about the 24 Copyright Protection Group, the working group. 25 Although I have not been involved in that group, INTERIM COURT REPORTING 300 1 Jacobsen 2 my understanding is it is a group which meets to 3 talk about the development and implementation of 4 security measures. 5 Since I know that the member companies 6 are involved in that group, I assume that the 7 answer to your question is yes, they are working 8 with third-parties to develop technology. 9 Q. Apart from the CPWG, working group, do 10 you know of any other third-party that the MPAA 11 member companies are working with on security? 12 A. Not specifically, no. 13 Q. You discussed yesterday a meeting some 14 time in mid to late October and December at which 15 the DVD CCA, the MPAA and the MIAA were present? 16 A. That's not an accurate depiction. I 17 don't recall I said the DVD CCA was there. 18 Q. Weil Gotshal was. 19 A. That's different. To be clear, I did 20 not say the DVD CCA was present. 21 Q. That is correct. I made that 22 assumption based on the fact that Weil Gotshal 23 represents the DVD CCA. What you said is there 24 was a lawyer or lawyers from Weil Gotshal and 25 yourself and others from the MPAA and INTERIM COURT REPORTING 301 1 Jacobsen 2 representatives, I think you said five, that was 3 your best recollection of representatives from 4 MIAA. My question now is: What was said at that 5 meeting? 6 MR. HERNSTADT: You were going to -- 7 MR. COOPER: Yes, I do assert the 8 attorney/client privilege. My understanding 9 is the subject of that meeting would be 10 covered by that privilege, and that anything 11 the witness remembers from those 12 conversations, therefore, would be subject 13 to the privilege. 14 MR. HERNSTADT: What is the basis of 15 the privilege if there were lawyers for a 16 third-party present, the Weil Gotshal 17 lawyers? Weil Gotshal is not representing, 18 as far as I know, as far as you told us, do 19 not represent either the MPAA or the 20 Plaintiffs in this matter. 21 In fact, we know they represent the 22 DVD CCA. So how is there a privilege when 23 there is a third-party present. 24 MR. COOPER: My understanding is that 25 the privilege would apply here because of a INTERIM COURT REPORTING 302 1 Jacobsen 2 joint interest. This falls within the joint 3 prosecutorial interest portion of the 4 privilege. 5 MR. HERNSTADT: At that time. 6 Q. My understanding, let me clarify: Did 7 this meeting take place prior to December 24th? 8 MR. COOPER: The witness testified he 9 does not know the answer to that question. 10 I think the prior question was asked in 11 reference to the filing of the California 12 Superior Court action filed by the DVD CCA. 13 MR. HERNSTADT: Exactly. 14 MR. COOPER: The witness has testified 15 twice that he does not recall whether or not 16 it was. 17 MR. HERNSTADT: He recalls it was some 18 time between October and December. 19 Q. Does that fairly state what your 20 recollection is? 21 A. Yes. 22 MR. HERNSTADT: It is my understanding 23 that no action had yet been filed. And 24 really depending on when this meeting took 25 place, it could have been shortly after INTERIM COURT REPORTING 303 1 Jacobsen 2 DeCSS was released or up to a month and a 3 half after the DeCSS was released. 4 Was there a joint defense agreement in 5 place or are you asserting a sort of 6 common-law joint defense interest? 7 MR. COOPER: It is not defense, just 8 to be clear. 9 MR. HERNSTADT: Joint prosecutorial. 10 MR. COOPER: I don't know all of the 11 facts and circumstances surrounding the 12 meaning. But let me say that I believe it 13 was in the interest of the protection of the 14 parties' joint legal right that the meeting 15 took place and that the discussions 16 occurred. In that respect, it is covered by 17 the attorney/client privilege. 18 MR. HERNSTADT: Are you going to 19 direct Mr. Jacobsen not to answer? 20 DR MR. COOPER: I am. 21 MR. HERNSTADT: We object to that 22 direction. 23 MR. COOPER: Both sides reserve their 24 rights 25 (Luncheon recess taken at 12:00 p.m.) INTERIM COURT REPORTING 304 1 Jacobsen 2 A F T E R N O O N S E S S I O N 3 (Time noted: 1:00 p.m.) 4 K E N N E T H A. J A C O B S E N, resumed as 5 a witness and testified as follows: 6 CONTINUED EXAMINATION BY 7 MR. HERNSTADT: 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Q. Do you have any estimate -- when I say 22 "you," I mean the MPAA -- some kind of official 23 estimate that is in place today of what that will 24 look like in a year? 25 A. No. INTERIM COURT REPORTING 305 1 Jacobsen 2 Q. Do you personally have any kind of an 3 estimate of where that's going any year? 4 A. I would think there will be an 5 increase. I do not yet have an idea of how large 6 that increase will be. 7 Q. With respect to the four areas, taking 8 them in reverse order, has DeCSS been implemented 9 in any way in streaming of movies on-line? 10 A. Not to my knowledge. 11 Q. Has DeCSS been implemented in any way 12 in downloadable media? 13 A. I think I testified yesterday there 14 have been people who have indicated that they 15 used the utility to decrypt DVDs. I can't recall 16 whether any of those people are also offering 17 downloadable media. I can't give you a definite 18 yes or no answer. 19 Q. Does this include like Reimerdes, the 20 former Defendant in this action? When you say 21 "people." 22 MR. COOPER: Asked and answered. 23 MR. HERNSTADT: I just want to make 24 clear we are talking about the same thing. 25 A. Yes. INTERIM COURT REPORTING 306 1 Jacobsen 2 Q. On Reimerdes, let me show you very 3 quickly a Complaint. This is a download of the 4 Complaint. 5 MR. COOPER: This is a download from 6 the FES site from the original Complaint in 7 this action? 8 MR. HERNSTADT: Yes. I can go find 9 the original Complaint if that's not 10 acceptable. 11 MR. COOPER: I accept your 12 representation that this is in substance the 13 original Complaint. 14 Q. The reason I'm bringing this to your 15 attention is I want to clarify, what it said on 16 Mr. Reimerdes' website, and the distinction 17 between claiming that he had, in fact, used DeCSS 18 to copy and distribute movies or whether you 19 "can" use DeCSS to do so. The claim that you 20 can as opposed to the statement that it has been 21 done. 22 Looking at Paragraph 23 of the 23 Complaint, my question is: Does that refresh 24 your recollection as to the substance of the 25 claim on the Reimerdes website? INTERIM COURT REPORTING 307 1 Jacobsen 2 (Witness reviewing document.) 3 MR. COOPER: You are asking whether 4 this refreshes his recollection? There is 5 no suggestion this is the entirety of his 6 statement on his website? 7 MR. HERNSTADT: No. The suggestion is 8 this is a quote from the website that was 9 included in the Complaint. I take it that 10 Mr. Jacobsen has at some point, probably in 11 the fairly distant past, reviewed the 12 website. 13 Q. My question is simply: Does this 14 refresh your recollection? 15 A. I have never reviewed the website 16 myself. What I referred to yesterday was the 17 fact that I had seen the Complaint where this 18 allegation was set forth. 19 Q. Then the question is really: Does it 20 refresh your recollection as to what is in the 21 Complaint in terms of the content of the 22 substance of the claim on the Reimerdes website? 23 A. Yes. 24 Q. In fact, the claim is that DeCSS gives 25 you the ability to decrypt and copy DVD movies? INTERIM COURT REPORTING 308 1 Jacobsen 2 A. It does more than that. It indicates 3 it gives you the ability to decrypt DVD movies 4 and transfer them across the Internet. And then 5 talks about the number of people apparently he 6 has found out there in chat rooms who are, in 7 fact, trading DVD movies back and forth. 8 So my conclusion is he was referring 9 to people he thinks are using the DeCSS utility 10 to do precisely that. 11 Q. But there is no claim it has actually 12 been done? 13 MR. COOPER: Now you are really 14 seeking to compare your conclusion from the 15 witness'. I'm not sure that's a fair area 16 for inquiry. 17 MR. HERNSTADT: Okay. 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 309 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Q. Neither you nor the MPAA has any 24 knowledge of anyone actually doing that, except 25 for that newspaper article to which you refer? INTERIM COURT REPORTING 310 1 Jacobsen 2 MR. COOPER: The witness has testified 3 now on numerous times as to the information 4 that has led the MPAA to draw the conclusion 5 that people are doing it. 6 In continuing to ask for him to state 7 it differently than he has -- 8 MR. HERNSTADT: I'm not asking him to 9 state it any differently. 10 MR. COOPER: Then I think the record 11 is clear the basis on which he and the MPAA 12 have drawn the conclusion they have drawn. 13 MR. HERNSTADT: Can you go back to the 14 answer before? 15 (Record read: "A. I think what I 16 testified to is, I have no conclusive 17 knowledge -- and I don't know of anybody 18 else in the MPAA that does -- that, in 19 fact, copies are actually being made using 20 the DeCSS utility. However, as far as I 21 know, there is one purpose and one purpose 22 only for the DeCSS utility and that is to 23 decrypt DVDs. If people are trafficking the 24 DeCSS utility on the volumes we have seen, 25 it leads me to the conclusion that, in fact, INTERIM COURT REPORTING 311 1 Jacobsen 2 the utility is being utilized.") 3 Q. Mr. Jacobsen, what are the roles you 4 have seen? 5 A. I think I testified yesterday we have 6 located -- this, of course, would go back to the 7 last information that I have, since we update it 8 on a weekly basis, but somewhere between 600 and 9 1,000 different websites which offer the DeCSS 10 utility either for -- I mean, either posted or 11 linked. 12 Q. Again, you have no knowledge -- "you" 13 being you or MPAA -- how many, if any, people 14 have actually downloaded DeCSS? 15 MR. COOPER: Again, that is a 16 conclusion which seeks to interpret the 17 witness' answer. I don't know what you mean 18 when you distinguish between those sites in 19 which it is currently present and how many 20 they know have downloaded it. 21 Is that a distinction between up and 22 downloading it? 23 Q. Do you know of any person having 24 downloaded DeCSS? 25 MR. COOPER: Same objection. INTERIM COURT REPORTING 312 1 Jacobsen 2 Q. You can answer. 3 A. I know people have claimed to do so. 4 I don't have any firsthand conclusive knowledge 5 that anyone on the web has downloaded. 6 MR. COOPER: To be clear, you are 7 making a distinction between uploading and 8 downloading? 9 MR. HERNSTADT: I'm making a 10 distinction between it being posted and 11 people downloading from the post. 12 MR. COOPER: From the post? 13 MR. HERNSTADT: Yes. Downloading. 14 The reason I keep coming back to this is, to 15 make the record clear, Mr. Jacobsen is very 16 carefully distinguishing between conclusive 17 and inconclusive knowledge. 18 Really all I'm trying to get at, Is 19 there actual knowledge. Instead of saying 20 there is no actual knowledge, Mr. Jacobsen 21 is saying there is no conclusive 22 information. That is an interpretive 23 answer. 24 The reason I keep asking the question 25 is because I really want just a yes or no. INTERIM COURT REPORTING 313 1 Jacobsen 2 MR. COOPER: Here is my problem. 3 Mr. Jacobsen has testified at length over a 4 day and a half of all of the evidence that 5 exists that he is aware of to support the 6 conclusion that the MPAA has drawn. 7 You want him now to say that evidence 8 does not constitute knowledge. That is 9 looking for a legal conclusion. 10 MR. HERNSTADT: I want him to say 11 whether he has actual knowledge. 12 MR. COOPER: Everything he has 13 testified to is his actual knowledge. 14 MR. HERNSTADT: What he has testified 15 to is claims by people he does not know and 16 has not sought out on the Internet that they 17 have used a facility in a certain way, and 18 newspaper articles that refer to this. Then 19 he has drawn a conclusion. 20 I'm not asking him to say that is not 21 a fair conclusion. That is a conclusion he 22 has drawn and it is not for me, or you or 23 him to determine whether that's a fair 24 conclusion. 25 I'm trying to get the difference INTERIM COURT REPORTING 314 1 Jacobsen 2 between the evidence he has explained to us 3 is the basis of his inference and actual 4 knowledge. That is a real distinction. 5 That's all I'm trying to get on the record. 6 MR. COOPER: I think that he has made 7 it clear that he has testified to the best 8 of his recollection of knowledge that exists 9 on this issue. I don't know that asking it 10 again is something that you are entitled 11 to. 12 I just don't like the characterization 13 that you are seeking to get him to adopt, 14 which is that what he does now and has 15 testified to doesn't constitute a form of 16 actual knowledge. 17 MR. HERNSTADT: I understand your 18 point. But he has distinguished between 19 conclusive and inconclusive. I am following 20 up on the distinction he himself has made. 21 Maybe that's the question I should ask. 22 Q. Is the distinction you make between 23 conclusive and inconclusive knowledge the 24 distinction between inference based on evidence 25 and actual personal knowledge of a fact? INTERIM COURT REPORTING 315 1 Jacobsen 2 MR. COOPER: Objection to the use of 3 the word "inference" as it is used in a 4 legal term. You can answer. 5 MR. HERNSTADT: Let me change the word 6 "inference" to "deduction." 7 Q. A deduction based on evidence and 8 actual personal knowledge of a fact? 9 A. I view my answer as the difference 10 between a deduction based upon evidence of which 11 I am aware, and my personal attendance or 12 eyewitness at the actual act of somebody doing 13 that. 14 Q. The personal attendance of an actual 15 act could include, for example, finding a person 16 and asking that person, did you actually do 17 this? Did you do what you claim? 18 MR. COOPER: We can quibble whether 19 that is a correct conclusion. 20 MR. HERNSTADT: I'm asking. 21 Q. Would you consider that to be -- 22 MR. COOPER: Would you include that? 23 Q. Would you include that? 24 A. No. Unless they show me the actual 25 evidence of what they had done. INTERIM COURT REPORTING 316 1 Jacobsen 2 Q. So, for example, Mr. Reimerdes said, 3 Mr. Jacobsen, I claim in my website that I did 4 this and in fact I did this, I admit to you and I 5 swear to you that I did this, that would not 6 constitute actual personal knowledge? 7 A. To me that is inference which can be 8 used to draw a conclusion. When I actually see 9 it done and sit there and watch it, I would say 10 that is absolutely conclusive evidence to me that 11 it was done. 12 Q. Thank you. Has DeCSS been implicated 13 in any way in the sale of hard goods on websites 14 as you described before? 15 MR. COOPER: Asked and answered, I 16 believe. 17 Q. You can answer. 18 A. I don't know of any websites. I'm not 19 aware of any websites which have claimed they 20 have used DeCSS to hack a DVD and, thereby, 21 create the product they're selling. 22 MR. HERNSTADT: Off the record. 23 (Discussion off the record.) 24 BY MR. HERNSTADT: 25 Q. Is DeCSS implicated in the INTERIM COURT REPORTING 317 1 Jacobsen 2 availability of circumvention devices on the 3 Internet? Obviously, yes? 4 MR. COOPER: Object to the form. 5 A. I'm sorry. Are we on the record or 6 off the record? 7 MR. COOPER: On the record. 8 Q. I just want to narrow down the four 9 areas and whether DeCSS is implicated or not. I 10 take it DeCSS is obviously implicated? 11 A. I consider DeCSS to be a circumvention 12 device, the way I use that term, and within the 13 meaning of the Digital Millennium Copyright Act. 14 MR. HERNSTADT: Off the record. 15 (Discussion off the record.) 16 BY MR. HERNSTADT: 17 Q. Mr. Jacobsen, can you take a look at 18 Defendant's Exhibit 10? 19 MR. COOPER: Do you want him to review 20 it? 21 MR. HERNSTADT: I just want him to 22 look at Paragraph 6. 23 (Witness reviewing document.) 24 Q. My question is: Do you know that it 25 is, in fact, the MPAA's position that a license INTERIM COURT REPORTING 318 1 Jacobsen 2 is required in order for the public to make fair 3 use of materials on a DVD? That's a yes or no 4 question. Do you know? 5 A. No, I don't. 6 Q. Is this a question that you have ever 7 addressed with anyone at the MPAA? 8 MR. COOPER: Well, let me distinguish 9 any discussions you may have had with 10 non-lawyers from those you've had with 11 lawyers in connection with this matter. 12 MR. HERNSTADT: Let's do non-lawyers. 13 Q. Let's do non-lawyers first. 14 A. The issue has not arisen. 15 MR. HERNSTADT: I think I'm entitled 16 to ask if he has had a discussion of fair 17 use with an attorney but not the content of 18 that discussion or the substance of that 19 discussion. 20 MR. COOPER: We disagree on how one 21 can inquire about the subject matters of 22 discussion with counsel. 23 MR. HERNSTADT: I would certainly 24 agree that for him to answer that question 25 would not constitute a waiver. If the INTERIM COURT REPORTING 319 1 Jacobsen 2 answer is yes, then the privilege would 3 apply. 4 MR. COOPER: Let's imagine, for 5 instance, that he and I have had a 6 discussion on fair use as it might relate to 7 his deposition since the issue came up 8 yesterday. 9 How is it appropriate for you to ask 10 whether we've had such discussions and to 11 identify the various lawyers with whom he 12 engaged in such discussions? It just does 13 not seem to me an appropriate line of 14 question. 15 MR. HERNSTADT: If it is a position 16 that MPAA is taking -- and Greg Goeckner is 17 apparently deputy general counsel, and he 18 apparently stated this publicly, that's what 19 the affidavit says. I'm not asking anybody 20 here to verify that's, in fact, what he 21 said -- then I think it is, in fact, 22 appropriate for me to inquire as to that. 23 MR. COOPER: I don't know what to say 24 here. The witness has testified he does not 25 know whether it is the MPAA's position. You INTERIM COURT REPORTING 320 1 Jacobsen 2 got that on the record. 3 Now you're asking whether he's had 4 discussions on fair use generally as it 5 relates to DVDs with lawyers? 6 MR. HERNSTADT: No. On the question 7 of fair use with DVDs with anyone. He said 8 not with anyone who is not a lawyer, and 9 then the question is with lawyers. 10 MR. COOPER: How is that not intruding 11 the privilege? 12 Q. Let me be specific. Have you had a 13 conversation with Mr. Goeckner about this? 14 MR. COOPER: About the statement? 15 MR. HERNSTADT: No. The subject 16 matter fair use and DVDs. 17 (Counsel and the witness exiting the 18 room.) 19 (Discussion off the record.) 20 MR. HERNSTADT: Mr. Cooper and I have 21 agreed that Mr. Jacobsen answering the 22 question of whether he's had a conversation 23 with Mr. Goeckner about fair use and DVDs 24 does not constitute a waiver of any 25 privilege that Mr. Cooper may be able to INTERIM COURT REPORTING 321 1 Jacobsen 2 assert with respect to such conversations. 3 MR. COOPER: And with that 4 understanding, I'll allow the witness to 5 answer the question in a yes or no fashion. 6 A. No. 7 Q. Based on your testimony yesterday and 8 today thus far, is it fair to say that the MPAA 9 cannot attribute a lost sale of a DVD to DeCSS? 10 MR. COOPER: Will you read it back, 11 please? 12 (Record read.) 13 MR. COOPER: Objection as to the form 14 of the question. 15 Q. You can answer. 16 MR. COOPER: It calls for the witness 17 to draw a conclusion from his own 18 testimony. It is also been asked and 19 answered. 20 A. I cannot conclusively establish that 21 DeCSS has been used in one instance to hack a DVD 22 and thereafter create an illegal copy. 23 I would surmise, however, from the 24 information that I know about DeCSS which is its 25 use and one and only use, as far as I know, its INTERIM COURT REPORTING 322 1 Jacobsen 2 availability on the Internet, and what I know 3 generally about people who are involved in 4 transferring DVDs back and forth that, in fact, 5 DVDs have been hacked; that, in fact, DVDs have 6 probably been transferred. 7 Whether or not that would result in a 8 lost sale, I cannot conclusively establish. I 9 would surmise somewhere along the line there 10 would be a lost sale, yes. Yes, that there would 11 be a lost sale. 12 Q. You say "would be," do you mean some 13 time in the future? 14 A. Or some time in the past. That that 15 chain of events has -- either has led to a lost 16 sale or will in the future lead to a lost sale. 17 Q. Let's separate that into past and 18 future. Looking at the past, has the MPAA ever 19 taken a position, either publicly or within the 20 offices, that a dollar figure can be attributed 21 to lost sales because of DeCSS? 22 A. I'm not aware of any such 23 attribution. 24 Q. Would anyone other than you make such 25 an attribution? INTERIM COURT REPORTING 323 1 Jacobsen 2 MR. COOPER: Calls for speculation. 3 A. I'm not aware of anybody else having 4 made such an attribution. 5 Q. With respect to lost sales in the 6 future, lost sales that haven't come, has any 7 dollar figure been attributed to lost sales that 8 will occur because of DeCSS? 9 A. No, not that I'm aware of. 10 Q. The pirated DVDs that the MPAA has 11 seized, do they contain CSS? 12 A. I don't know the answer to that. 13 Q. Have you personally played any of 14 these pirated DVDs? 15 A. I have not. 16 Q. Do you know anyone in the MPAA who has 17 played these DVDs? 18 A. Yes. 19 20 21 22 23 24 25 INTERIM COURT REPORTING 324 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 325 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 326 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 327 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 MR. HERNSTADT: Off the record. 14 (Discussion off the record.) 15 MR. COOPER: Let it be clear for the 16 record that my silence is not 17 acquiescence -- 18 MR. HERNSTADT: Understood. 19 MR. COOPER: -- that the Defendants 20 are entitled to have the witness back to 21 talk about that or anything else. 22 BY MR. HERNSTADT: 23 24 25 INTERIM COURT REPORTING 328 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Q. Are videocassettes ever the source of 24 the material that ends up on a optical disk? 25 MR. COOPER: Will you read back the INTERIM COURT REPORTING 329 1 Jacobsen 2 question, please? 3 (Record read.) 4 MR. HERNSTADT: To his knowledge. 5 MR. COOPER: We have a continuing 6 understanding that this witness' testimony 7 on technical matters is limited to his 8 general nontechnical knowledge in his 9 capacity as worldwide anti-pyracy. 10 MR. HERNSTADT: My assumption is 11 always with respect to the source that he 12 has been informed of it and he has not made 13 any personal assessment or investigation. 14 MR. COOPER: Nor that we are offering 15 him for his technical expertise, if any. 16 MR. HERNSTADT: Absolutely. You made 17 that clear and I accept that. 18 A. Yes. 19 Q. Is that a common source? 20 A. Again, because of the numbers I quoted 21 you to make a determination about common source 22 versus uncommon source, it is impossible to 23 make. It does happen. 24 Q. Does it happen more often than DVDs 25 being the source? INTERIM COURT REPORTING 330 1 Jacobsen 2 A. I would say yes. 3 Q. Does it happen more often than 4 camcorder recordings of live sources being the 5 source? 6 A. Again, within the constrictions I put 7 on it was a very small sampling of a huge amount 8 of things seized, my estimate would be camcording 9 would be a larger problem than the videocassette 10 as the source. 11 MR. COOPER: For clarity, I wouldn't 12 want to suggest that the witness adopt the 13 use "in live performance" in that last 14 question. I think it has a different 15 meaning in the entertainment industry than 16 the one you referred to. 17 Q. I meant only by that someone standing 18 in the movie theater and somebody making a 19 recording. I understand that's what you mean by 20 someone making a camcording? 21 A. Yes. 22 Q. Based on the samples you have seen of 23 the approximately 15 million samples seized, in 24 the order of more problem to lesser problem, it 25 could be camcording, videocassettes and DVDs? INTERIM COURT REPORTING 331 1 Jacobsen 2 A. That's correct. 3 Q. In descending order. 4 MR. HERNSTADT: Let's mark this. This 5 is the Second Amended Complaint in this 6 case. 7 (Defendant's Exhibit 18, Second 8 Amended Complaint, marked for 9 identification, as of this date.) 10 Q. Turning to Defendant's Exhibit 18 11 which is the Second Amended Complaint. I know 12 you said you reviewed the Complaint. I don't 13 know if you had an opportunity to review the 14 Second Amended Complaint. 15 I'm going to ask you about 16 Paragraph 19 and 20. You should feel free to 17 look at as much of the Complaint as you want. 18 (Witness reviewing document.) 19 Q. I'm going to limit my question because 20 I understand you are not a technical expert. 21 To your knowledge, DeCSS has been 22 available on the Internet for approximately six 23 months; is that correct? 24 A. That's correct. 25 Q. What you said in your lay INTERIM COURT REPORTING 332 1 Jacobsen 2 understanding of DeCSS, is that it permits the 3 user of DeCSS to decrypt the DVD and have it in 4 essentially a plain text form; is that correct? 5 A. Yes. Yes. 6 Q. Let me just ask. Has your experience 7 as the worldwide head of anti-pyracy for the 8 MPAA, that there has been ready and unlimited 9 copying of DVDs as a result of DeCSS's 10 availability for the last six months? 11 MR. COOPER: Is that different from 12 all the questions you asked him up to now 13 about the knowledge of actual copying? If 14 so, I don't understand the question. 15 MR. HERNSTADT: It is different in a 16 quantitative sense. I can rephrase it if 17 you want. 18 Q. Has there been unlimited copying of 19 DVDs using DeCSS over the last six months? 20 MR. COOPER: Ambiguous. The witness 21 has, I think, plainly testified to his 22 knowledge on the subject of use of DeCSS. 23 Since you made reference to the 24 Complaint, are you now asking him about a 25 particular use of the word in the INTERIM COURT REPORTING 333 1 Jacobsen 2 Complaint? 3 MR. HERNSTADT: Yes. 4 MR. COOPER: In which case I will tell 5 you that is not the purpose for which he is 6 here; i.e., to interpret words used in a 7 Complaint. A Complaint that he has not 8 drafted. 9 MR. HERNSTADT: I'm not asking him to 10 interpret words that are used in the 11 Complaint. I'm asking him if DeCSS has led 12 to unlimited copying of DVDs. That's a 13 quantitative difference. 14 MR. COOPER: I don't understand the 15 words you used. 16 MR. HERNSTADT: If Mr. Jacobsen 17 understands the question, please answer it. 18 MR. COOPER: My objection stands. 19 A. To restate what I said before, I have 20 no conclusive knowledge that DeCSS has been used 21 to copy or to decrypt -- I'm sorry or decrypt the 22 DVD. However, based upon the purpose and only 23 purpose that I know of for DeCSS, and the fact 24 that it continues to be readily available on the 25 net for downloading and use by people, I can only INTERIM COURT REPORTING 334 1 Jacobsen 2 assume that, yes, copying is going on. 3 Now, what do you mean by "unlimited"? 4 I have no idea. 5 Q. Let me say then: How about vast 6 amounts? 7 A. I would guess there is a large amount 8 of copying going on, decrypting going on using 9 DeCSS and creating decrypted DVDs on computers. 10 Q. And this guess is based on what you 11 said before? 12 A. That's correct. 13 Q. Have you read the affidavit of John 14 Gillmore, his declaration? 15 MR. COOPER: Asked and answered. 16 A. I don't remember who John Gillmore 17 is. I didn't read it before I came here. So 18 unless it was shown to me here during the 19 deposition, I have not read it. 20 Q. This is a yes or no question. Do you 21 know if DeCSS can defeat region coding on DVD 22 players? 23 A. Do I know if it defeats regional 24 coding on a DVD player? I do not know. 25 Q. Or whether it can be used to avoid INTERIM COURT REPORTING 335 1 Jacobsen 2 regional coding on DVD players? 3 A. I do not know. 4 Q. Let us assume that it can. 5 MR. COOPER: Keep going. If DeCSS. 6 Q. If DeCSS can be used to avoid regional 7 coding such that someone living in England could 8 play a recently released DVD purchased over the 9 Internet in the United States and mailed to them 10 in England, would that be another use of DeCSS 11 other than decrypting and copying? 12 MR. COOPER: Will you read it back, 13 please? 14 (Record read.) 15 MR. COOPER: I think that is outside 16 of this witness' expertise, knowledge and 17 area of designation for testimony. 18 I think it is also a hypothetical 19 question. It is incomplete. 20 Q. Can you answer? 21 A. If I understand the question, you are 22 asking me, if we establish the fact in your 23 question that it defeats regional coding, is that 24 a use that could be made of? 25 Q. Right. INTERIM COURT REPORTING 336 1 Jacobsen 2 A. The answer is clearly yes. 3 MR. HERNSTADT: Off the record. 4 (Discussion off the record.) 5 BY MR. HERNSTADT: 6 Q. Are you aware whether DeCSS can be 7 used to play DVDs on a computer that does not 8 have a DeCSS equipped DVD player? 9 A. I don't know. 10 Q. Are you aware whether DeCSS can be 11 used to decrypt a portion of a DVD so that a 12 ten-second segment of the movie can be clipped 13 and used, for example, as a screensaver or used 14 for a presentation on the history of movies? 15 A. No. 16 Q. Do you know if DeCSS can be used to 17 clip and burn an audio CD of some songs that 18 might appear on the soundtrack of a movie for use 19 in the person who has purchased the DVD's 20 automobile? 21 MR. COOPER: Objection to the form of 22 the question. 23 Q. I will direct your attention to the 24 first half of the question which is: Do you know 25 if DeCSS can be used to extract an audio portion INTERIM COURT REPORTING 337 1 Jacobsen 2 of the soundtrack of a movie so as to make a CD 3 or a tape of a song that appears in a movie? 4 MR. COOPER: Ambiguous. 5 A. Assuming in your question it can be 6 used for that and only that. Because clearly if 7 it decrypted the whole DVD and it was in an 8 nonencrypted form, you can take whatever you 9 wanted from a DVD. I understand that. You are 10 saying without decrypting the entire DVD, it can 11 be used solely and only for that? 12 Q. No. My question is can it be used to 13 do that. If your answer is that it can be used 14 to do that but only if you decrypt the entire 15 movie, then that should be your answer. 16 MR. COOPER: Look, the witness 17 answered it. What he said is -- 18 MR. HERNSTADT: He said he doesn't 19 know. 20 MR. COOPER: No. What he said is you 21 are asking a logical conclusion. If you use 22 DeCSS to decrypt a movie, can you then use 23 the digital information that you've 24 decrypted in a variety of ways? Plainly. 25 That's the beauty of digital technology. INTERIM COURT REPORTING 338 1 Jacobsen 2 So the answer is plainly, once you've 3 decrypted it, you can do things with it. 4 Q. I guess my follow-up we would be: 5 According to the MPAA, is any use of decrypted 6 information unauthorized? When I say "decrypted 7 information," I mean decrypted information taken 8 from a DVD. 9 MR. COOPER: He has testified he is 10 not aware of a policy that gets to that 11 level of factual detail. 12 MR. HERNSTADT: This is a different 13 question. So let me ask the witness. 14 MR. COOPER: Let me hear the question 15 back, please? 16 (Record read.) 17 MR. COOPER: Yesterday we struck upon 18 a compromise he can testify to policies he 19 is aware of rather than the product of 20 discussions between him and attorneys. Can 21 you import that agreement into your 22 question? 23 MR. HERNSTADT: I think it depends on 24 his answer. Let him tell you if he's got a 25 privilege problem. INTERIM COURT REPORTING 339 1 Jacobsen 2 MR. COOPER: No. I have to tell him 3 if he's got a privilege problem. That's my 4 job. 5 What we did with Mr. Garbus yesterday 6 at great length is to distinguish between 7 policies he was aware of, which I think is a 8 more appropriate area of questioning, than 9 the subject matters which he has discussed 10 with counsel for the MPAA. 11 MR. HERNSTADT: That's fine. Let's 12 make that distinction. 13 A. I lost the question again with all the 14 discussion. Please repeat it. 15 (Record read.) 16 A. I cannot answer the question without 17 specific factual situations. I don't think a 18 broad statement of that type can be made one way 19 or the other. 20 Q. Let me ask it the other way around. 21 Is it the MPAA's position that some use of 22 decrypted material taken from a DVD would be 23 permissible? 24 MR. COOPER: Same objection. 25 A. In the absence of a specific factual INTERIM COURT REPORTING 340 1 Jacobsen 2 circumstance, I don't think that a decision 3 can -- that I can say there is a policy one way 4 or the other. 5 Q. It seems to me you said the policy is 6 a case-by-case analysis of the particular 7 circumstances; is that a fair statement? 8 A. About the use of the data, not about 9 using DeCSS to decrypt. But about the use. 10 Q. Use of the data? 11 A. Use of what may eventually come off 12 the decrypted data? 13 Q. Yes. 14 A. It could well be a case-by-case 15 situation, yes. 16 Q. I gave you a couple of scenarios. One 17 was taking a clip from a movie for use as a 18 screensaver or part of a presentation on the 19 history of cinema, another one was taking a song 20 or two songs from a soundtrack for use in the car 21 of the person who purchased the DVD, those are 22 two factual cases. 23 Is that enough factual specificity to 24 permit you to say whether that would be a 25 permissible use of the information? INTERIM COURT REPORTING 341 1 Jacobsen 2 MR. COOPER: Now we have gotten to the 3 point where I think based on the witness' 4 prior testimony, it is clear that to the 5 extent he has an answer to that question, it 6 is derived exclusively from his discussions 7 with counsel. It is not an area that the 8 MPAA has a policy which he implements in his 9 job. 10 And he is only not here to testify on 11 matters of legal conclusion, but he would 12 necessarily be giving you privileged 13 information in order to give you a response. 14 Q. Is that the case? 15 A. Let me clarify something. In the 16 example you gave me earlier, whether or not I 17 understood that DeCSS can be used to perform the 18 functions that you suggested and I answered that 19 I don't know, I misunderstood your question. 20 I was assuming that you were asking 21 the question whether DeCSS can be used on a 22 selective basis to perform those functions, I did 23 not know the answer. 24 If, in fact, you are asking me can 25 DeCSS be used to decrypt the entire DVD and then INTERIM COURT REPORTING 342 1 Jacobsen 2 somebody can take the decrypted DVD and pull 3 portions of it, I do understand that's possible. 4 I want to clear up my prior testimony because I 5 didn't understand what you said. 6 Q. I did understand you to make that 7 distinction, that and only that. 8 Let me ask you, if you would, to 9 clarify a prior statement when you said the only 10 purpose, the one and only purpose of DeCSS is to 11 decrypt information on a disk. 12 When you say that is the one and only 13 purpose of the utility, you are limiting that 14 statement, are you not, to the utility; is that 15 correct? 16 A. Yes. My understanding is what the 17 utility itself does is it decrypts the disk and 18 renders it in a nonencrypted format. Thereafter, 19 the digital material on that disk, you can do all 20 sorts of things with it. 21 Q. There can be impermissible uses and 22 there can be permissible uses? 23 MR. COOPER: Now you are asking for a 24 legal conclusion. That is, again, an area 25 which I think is inappropriate for this INTERIM COURT REPORTING 343 1 Jacobsen 2 witness to testify. 3 MR. HERNSTADT: I'm not asking for a 4 legal conclusion. 5 MR. COOPER: You are. 6 MR. HERNSTADT: I'm not. Let me limit 7 it. I really don't want a legal conclusion. 8 Q. What I want to know is: Based on your 9 experience at the MPAA and your discussions with 10 non-lawyers at the MPAA or discussions that 11 include lawyers and non-lawyers, policy 12 discussions, as opposed to legal strategy 13 discussions or discussions in preparation for 14 your deposition or as part of this litigation, 15 has the question of whether there are permissible 16 as well as non-permissible uses of decrypted 17 copyrighted material from a DVD come up? 18 MR. COOPER: Answer the question yes 19 or no. 20 Q. Yes or no? 21 A. I already answered it I believe 22 earlier when I said I had not had those 23 discussions with non-lawyers. 24 25 INTERIM COURT REPORTING 344 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 345 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 MR. HERNSTADT: Why don't we take a 21 short break? 22 (Whereupon, a recess was taken from 23 2:03 p.m. to 2:12 p.m.) 24 BY MR. HERNSTADT: 25 INTERIM COURT REPORTING 346 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 347 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 348 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 349 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 350 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 351 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Q. Let me ask you about some of the 17 things that you said before. 18 Yesterday you were talking about 19 hacking of DVD and making an unauthorized copy. 20 Is there such a thing as an authorized copy of a 21 DVD? 22 A. Yes. It is what our member companies 23 sell. 24 Q. Do you know if DVDs come with any 25 statement on them, either on the box or the INTERIM COURT REPORTING 352 1 Jacobsen 2 packaging or the wrap anywhere, that states what 3 the region code for that DVD is? 4 A. It is the same answer that I gave you 5 this morning, no, I don't know. 6 Q. I asked you about the region code? 7 I'm sorry. 8 You're correct. What I want to ask 9 you is the same question in terms of information 10 beyond a disk in someplace or another that says 11 it can only be played using a DVD player that has 12 been licensed by the DVD CCA? 13 A. I don't know. 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 353 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 354 1 Jacobsen 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERIM COURT REPORTING 355 1 Jacobsen 2 3 4 5 6 7 8 MR. HERNSTADT: Off the record. 9 (Whereupon, a recess was taken from 10 2:26 p.m. to 2:29 p.m.) 11 BY MR. HERNSTADT: 12 Q. I asked you before about the IIPA. 13 Are you the liaison between the MPAA and the 14 IIPA? 15 A. No. 16 Q. Who is? 17 A. It really depends what the issue is. 18 I'm not sure anyone is designated as the sole 19 liaison. IIPA is involved in a lot of different 20 areas and it would depend. 21 Q. Specifically anti-pyracy efforts 22 worldwide. 23 A. Anti-pyracy efforts worldwide have 24 that have to do with enforcement would probably 25 theoretically be me. INTERIM COURT REPORTING 356 1 Jacobsen 2 3 4 5 Q. Does the IIPA conduct its own 6 international investigations? 7 A. Not to my knowledge. I'm sorry. 8 Q. Does the IIPA conduct any raids? 9 A. Not to my knowledge. 10 Q. Has the MPAA found counterfeit DVDs 11 for sale in the United States? 12 A. Can you tell me -- once again, we have 13 the Taiwan problem. I consider those to be 14 unauthorized in the United States. I don't know 15 if you meant that by counterfeit. 16 Q. I mean what the MPAA, your members 17 would consider pirated DVD disks. Setting apart 18 the question whether they are legal in the place 19 of origin. 20 MR. COOPER: What is the question? 21 Q. Has the MPAA found pirated DVDs for 22 sale in the United States? 23 A. I would consider those to be 24 unauthorized disks and, therefore, pirated. 25 Q. The disks made in Taiwan? INTERIM COURT REPORTING 357 1 Jacobsen 2 A. Correct. 3 Q. For the purposes of this question, I'm 4 asking you to ignore the legality or illegality 5 of the disks in the place they are manufactured 6 and only the legality of the disks in the place 7 of sale. 8 In other words, if the Taiwanese law 9 permits you to make copies of pre-1965 movies, I 10 don't care about that. But whether operating 11 under this law you consider them to be pirated 12 disks. 13 A. Yes. If I find them in the United 14 States for sale, there is an argument that they 15 violate our copyright law. 16 Q. And you found such disks? 17 A. Yes. 18 Q. How many? 19 A. I wouldn't have an estimate, but it is 20 a small amount. 21 Q. Is there any other offshore 22 manufacturer that is sending disks to the United 23 States for sale? 24 A. We have seen and seized -- Customs has 25 seized other DVD disks coming in that were not INTERIM COURT REPORTING 358 1 Jacobsen 2 pre-'65 but that also had been manufactured in 3 Taiwan that were unauthorized. 4 Q. How do you know if the disk is 5 manufactured in Taiwan? 6 A. Well, it is a deduction based upon the 7 fact that they are shipped from Taiwan. And when 8 we examine the disks, they have all the indicia 9 with a Taiwan company name on them. 10 Q. Has the MPAA found any homegrown DVD 11 piracy? By that I mean pirated DVDs or 12 counterfeit DVDs being manufactured in the United 13 States? 14 A. I think the answer is no. 15 Q. Mexico, same question? 16 A. No. 17 Q. Canada? 18 A. No. 19 Q. Has the MPAA found pirated VCDs that 20 are made in the United States? 21 A. No. 22 Q. How about videocassettes? 23 A. Oh, yes. 24 Q. Is it safe to say from your last 25 response, that the overwhelming majority, more INTERIM COURT REPORTING 359 1 Jacobsen 2 than say 95 percent of counterfeit products, hard 3 goods that are made in the United States are 4 videocassettes? 5 A. That's correct. This is still the 6 videocassette market primarily. 7 Q. Approximately how many videocassettes 8 were seized last year? 9 A. Approximately 500,000. 10 MR. COOPER: You were talking 11 domestically, right? 12 MR. HERNSTADT: Domestically. 13 A. In the vicinity of 500,000. 14 Q. Can you extrapolate from that what the 15 market is for the total number of pirated 16 videocassettes that the MPAA believes is being 17 sold annually in the United States? 18 MR. COOPER: Being an old antitrust 19 lawyer, I want to make sure we are using the 20 concept of "market" the same. 21 You are really saying having seized 22 500,000 videocassettes last year, do we have 23 any sense of the number that might have been 24 manufactured and not seized in the United 25 States? INTERIM COURT REPORTING 360 1 Jacobsen 2 MR. HERNSTADT: Yes. 3 A. I would have an estimate. Five 4 million. 5 Q. Of the 15 million optical disks, was 6 that 15 million optical disks seized last year? 7 A. Worldwide. 8 Q. Worldwide that were seized? 9 A. Yes. 10 Q. Based on that, can you extrapolate? 11 Would the MPAA make an estimate of what the total 12 number of counterfeit or pirated optical disks 13 that were made and distributed? 14 A. We could, but I will have to tell you 15 I have not had a chance in my new job yet to 16 assimilate the data necessary to make that kind 17 of extrapolation. I would have to have some 18 sense. 19 There is many other factors I would 20 have to look at before I can make that 21 extrapolation. 22 Q. Of the 15 million optical disks 23 worldwide, virtually none of them were found in 24 this country? 25 A. A very small amount were found in this INTERIM COURT REPORTING 361 1 Jacobsen 2 country. 3 Q. Less than 50,000? 4 A. That's a good estimate, yes. 5 MR. HERNSTADT: Basically, subject to 6 the review of the documents that have just 7 started to be produced and I guess we can 8 work out questions of privilege and the 9 further document production we have 10 requested, maybe we can also work out some 11 way of getting a couple of answers to some 12 of the questions Mr. Jacobsen says he does 13 not know now but anticipates maybe in the 14 next month or so he might have an answer, 15 I'm done. 16 17 18 (Continued on next page to include jurat.) 19 20 21 22 23 24 25 INTERIM COURT REPORTING 362 1 Jacobsen 2 MR. COOPER: I appreciate that. 3 Obviously we reserve our position with 4 respect to the timing of document production 5 and what implication, if any, that has on 6 the closure of this witness' testimony. 7 I welcome the opportunity to talk 8 about the various document issues that have 9 arisen during the deposition and I thank 10 you. 11 (Time noted: 2:40 p.m.) 12 __________________________ 13 KENNETH A. JACOBSEN 14 15 Subscribed and sworn to before me 16 this _____ day of ________, 2000. 17 __________________________ 18 NOTARY PUBLIC 19 20 21 22 23 24 25 INTERIM COURT REPORTING 363 2 C E R T I F I C AT E 3 STATE OF NEW YORK ) 4 : ss. 5 COUNTY OF NEW YORK ) 6 7 I, MAYLEEN CINTRON, a Shorthand 8 Reporter and Notary Public within and for 9 the State of New York, do hereby certify: 10 That KENNETH A. JACOBSEN, the witness 11 whose deposition is hereinbefore set forth, 12 was previously duly sworn by a Notary Public 13 and that such deposition is a true record of 14 the testimony given by the witness. 15 I further certify that I am not 16 related to any of the parties to this action 17 by blood or by marriage, and that I am in no 18 way interested in the outcome of this 19 matter. 20 IN WITNESS WHEREOF, I have hereunto 21 set my hand this 18th day of May, 2000. 22 23 __________________________ MAYLEEN CINTRON 24 25 INTERIM COURT REPORTING 364 2 -------------------- I N D E X ----------------- 3 WITNESS EXAMINATION BY PAGE 4 K. Jacobsen Mr. Hernstadt 210 5 6 REQUESTS: PAGE 216, 217, 238, 256, 260, 261 7 288 8 DIRECTIONS: PAGE 303 9 ---------------- E X H I B I T S ---------------- 10 EXHIBITS: FOR I.D. 11 Defendant's Exhibit 15, MSBC website 12 article "Movie Pirates Hitting Prime Time.... 264 13 Defendant's Exhibit 16, ZD Net News website 14 article "Inside the Online Movie 15 Underground,"................................ 274 16 Defendant's Exhibit 17, MSNBC website 17 article "Piracy Intrigue in Palika Bazaar: 18 Hollywood Goes Toe-To-Toe With India's 19 Video Counterfeiters,"....................... 275 20 Defendant's Exhibit 18, Second Amended 21 Complaint.................................... 331 22 23 o0o 24 25 INTERIM COURT REPORTING