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
 
 
 
 
 
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                                                            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?
 
 
 
 
 
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                                                            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
 
 
 
 
 
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                                                            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
 
 
 
 
 
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         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
 
 
 
 
 
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                                                            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
 
 
 
 
 
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                                                            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.
 
 
 
 
 
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         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
 
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         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
 
 
 
 
 
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         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.)
 
 
 
 
 
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         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.
 
 
 
 
 
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         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.
 
 
 
 
 
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         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
 
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         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
 
 
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         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
 
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         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
 
 
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         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
 
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         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
 
 
 
 
 
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         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?
 
 
 
 
 
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         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?
 
 
 
 
 
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         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
 
 
 
 
 
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         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
 
 
 
 
 
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         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
 
 
 
 
 
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         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
 
 
 
 
 
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         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
 
 
 
 
 
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         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.
 
 
 
 
 
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         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
 
 
 
 
 
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         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
 
 
 
 
 
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         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?
 
 
 
 
 
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         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.
 
 
 
 
 
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         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.
 
 
 
 
 
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                                                            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
 
 
 
 
 
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         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.)
 
 
 
 
 
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         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
 
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         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.
 
 
 
 
 
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         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
 
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         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
 
 
 
 
 
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         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
 
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         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
 
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         1                     Jacobsen  
 
         2   
 
         3   
 
         4   
 
         5   
 
         6   
 
         7   
 
         8   
 
         9   
 
        10   
 
        11   
 
        12   
 
        13   
 
        14   
 
        15   
 
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         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  
 
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        20  
 
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        22  
 
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         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
 
 
 
 
 
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         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      
 
 
 
 
 
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         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.
 
 
 
 
 
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         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?
 
 
 
 
 
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         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
 
 
 
 
 
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         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.
 
 
 
 
 
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         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.)
 
 
 
 
 
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         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,
 
 
 
 
 
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         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
 
 
 
 
 
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         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
 
 
 
 
 
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         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
 
 
 
 
 
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         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.)
 
 
 
 
 
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         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
 
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         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.
 
 
 
 
 
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         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
 
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         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?
 
 
 
 
 
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         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
 
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         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?
 
 
 
 
 
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         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
 
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         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.
 
 
 
 
 
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         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.
 
 
 
 
 
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         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
 
 
 
 
 
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         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?
 
 
 
 
 
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         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.
 
 
 
 
 
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         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
 
 
 
 
 
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         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
 
 
 
 
 
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         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
 
 
 
 
 
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         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
 
 
 
 
 
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         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
 
 
 
 
 
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         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
 
 
 
 
 
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         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?
 
 
 
 
 
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         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 
 
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        23 
 
        24 
 
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                              INTERIM COURT REPORTING
 
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         2 
 
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         2 
 
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                              INTERIM COURT REPORTING
 
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         2 
 
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        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    
 
 
 
 
 
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         1                     Jacobsen  
 
         2  
 
         3  
 
         4  
 
         5  
 
         6  
 
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         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
 
 
 
 
 
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         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
 
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         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
 
 
 
 
 
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         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.
 
 
 
 
 
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         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
 
 
 
 
 
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                                                            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.
 
 
 
 
 
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         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
 
 
 
 
 
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         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?
 
 
 
 
 
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         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
 
 
 
 
 
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         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
 
 
 
 
 
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         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  
 
 
 
 
 
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         2  
 
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         2  
 
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        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    
 
 
 
 
 
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         1                     Jacobsen  
 
         2   
 
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         1                     Jacobsen  
 
         2   
 
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         1                     Jacobsen  
 
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         1                     Jacobsen  
 
         2   
 
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        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
 
 
 
 
 
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         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   
 
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        25   
 
 
 
 
 
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         1                     Jacobsen  
 
         2   
 
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        10   
 
        11   
 
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        13   
 
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         1                     Jacobsen  
 
         2   
 
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        10   
 
        11   
 
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        13   
 
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                              INTERIM COURT REPORTING
 
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         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
 
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         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?
 
 
 
 
 
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         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
 
 
 
 
 
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         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
 
 
 
 
 
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         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?
 
 
 
 
 
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         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
 
 
 
 
 
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         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
 
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         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
 
 
 
 
 
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                                                            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
 
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         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
 
 
 
 
 
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