PILLSBURY MADISON + SUTRO RANDOLF J. RICE #083712 BARBARA R. SHUFRO #128857 MELISSA A. BUR

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PILLSBURY MADISON & SUTRO RANDOLF J. RICE #083712 BARBARA R. SHUFRO #128857 MELISSA A. BURKE #171710 Ten Almaden Boulevard San Jose, CA 95113-2226 Telephone: (408) 947-4000 Attorneys for Defendant NETCOM ON-LINE COMMUNICATION SERVICES, INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA ____________________________________ No. C95-20091 RMW RELIGIOUS TECHNOLOGY CENTER, a California non-profit corporation; and BRIDGE PUBLICATIONS, INC., a California non-profit corporation, Plaintiffs, VS. NETCOM ON-LINE COMMUNICATION Date: February 21, 1995 SERVICES, INC., a Delaware Time: 9:00 a.m.. corporation; DENNIS ERLICH, an Courtroom: 6 individual; and TOM KLEMESRUD, an Before the Honorable individual, dba CLEARWOOD DATA Ronald Whyte SERVICES, Defendants. ____________________________________ MEMORANDUM OF POINTS AND AUTHORITIES OF DEFENDANT NETCOM ON-LINE COMMUNICATION SERVICES, INC. IN OPPOSITION TO PLAINTIFFS' REQUEST FOR INJUNCTIVE RELIEF TABLE OF CONTENTS Page I. INTRODUCTION..................................... 1 II. BACKGROUND....................................... 1 III. ARGUMENT........................................ 4 A. Plaintiffs cannot demonstrate irreparable harm..................................... 5 1. The threat of harm to plaintiffs has been dissipated in light of the execution of the Court's order of seizure.............................. 5 2. In contrast, the threat of harm to NETCOM and the public at large, if the injunctive relief is granted, is extraordinary because it would terminate the service of hundreds of individuals against whom the plaintiffs allege no wrong................................. 6 B. Plaintiffs cannot show a probability of success on the merits.................................. 7 1. Plaintiffs are demanding an unprecedented extension of copyright infringement liability to passive transmitters of electronic information, who have no control of the information third parties convey over their lines..... 7 2. Courts have always deferred to Congress the issues of copyright protection and technological innovation........................ 8 3. There is no support in the law for plaintiffs, request..................... 11 4. NETCOM cannot be held liable under the contributory infringement doctrine because it cannot exercise editorial control over the messages transmitted on the USENET.............................. 13 C. The Order plaintiffs request is completely unnecessary to address their concerns .............. 14 D. An order against NETCOM would not prevent access to these materials by other means...... 14 IV. CONCLUSION..................................... 15 TABLE OF AUTHORITIES Page(s) Cases Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968)............................. 10 Los Angeles Memorial Coliseum v. National Football, 634 P.2d 1197 (9th Cir. 1980)................. 4 Oakland Tribune, Inc. v. Chronicle Pub. Co., 762 F.2d 1374 (9th Cir. 1985)................ 4 Playboy Enterprises, Inc. v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993)........................................ 11 Religious Technology Center v. Wollersheim, 796 F.2d 1076 (9th Cir. 1986), cert. denied, 479 U.S. 1103 (1987)........................................ 14 Sega Enterprises Ltd. v. MAPHIA, 857 F. Supp. 679 (N.D. Cal. 1994) ............ 11 Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984)......................... 8, 9, 10, passim Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U.S. 394 (1974)............................. 10 Statutes and Codes United States Code Title 17, section 111............................ 10 Other Authorities R.T. Nimmer, The Law of Computer Technology,  15.11B at S15-36 (2d ed. 1994)................. 12 Sarah B. Deutsch, "Superliability on the Superhighway?", The Multimedia Law Report, at 4-6 (November 1994)........................... 12 Defendant NETCOM ON-LINE COMMUNICATION SERVICES, INC. ("NETCOM") submits this memorandum of points and authorities in opposition to plaintiffs, application for temporary restraining order, order to show cause, and for order of impoundment. I. INTRODUCTION. Plaintiffs are seeking to obtain an order from this Court which has never previously been granted by a court, or to defendant NETCOM's knowledge, ever even requested of a court. Plaintiffs are demanding an unprecedented extension of infringement liability that, if recognized by this Court, would impact each of the estimated 36 million users of the Internet. Moreover, the granting of the requested relief against NETCOM is wholly unnecessary since an order against defendant Dennis Erlich, if the court finds a basis for that to be established, will entirely address Plaintiffs, claims. Further, there is no showing of irreparable harm, since the allegedly offending materials have already been seized. No extraordinary relief is necessary in order to prevent defendant Erlich from posting documents no longer in his possession. II. BACKGROUND. The Internet is a worldwide, constantly changing, 7 network of private and public computer networks. Declaration of Rick Francis (hereinafter "Francis Decl."), at  3. The computers communicate through a common computer language which is in the public domain. Id. The Internet network is connected in a variety of ways, including regular telephone lines, high speed dedicated leased lines, and fiber optic links. Id. It is estimated that the number of Internet users is approximately 36 million. Id. Millions of messages are transmitted on the Internet daily. Id. at 12. Once connected to the Internet, users can exchange messages, access forums for Internet users on various topics, and access vast amounts of data including text, graphics, video and audio information, anywhere in the world. Id. at 3. NETCOM is a provider of Internet connectivity services. Francis Decl. at 7. NETCOM markets a computer software product which permits access to the Internet. Id. It provides the technological key for direct navigation of the Internet system. Id. NETCOM does not maintain any database, bulletin board or any content-based service for its subscribers, except as a means of communicating to them or facilitating communications among them about the NETCOM service. Id. at 11. NETCOM simply markets a computer program and maintains a computer switch which allows its subscribers to access the Internet themselves. Id. Defendant Klemesrud is a NETCOM subscriber. Francis Decl., at 13. He in turn reportedly runs a "bulletin board service" ("BBS"), a computer network, to which approximately 500 people subscribe. Through his BBS, Klemesrud allows his individual subscribers to gain access to the Internet via the connection he maintains with NETCOM. Defendant Dennis Erlich is apparently one of Klemesrud's 500 reported subscribers. Erlich can 'dial-up" Klemesrud's computer and cause messages to be generated by Klemesrud's computer which are posted to any number of newsgroup categories on the USENET. Newgroups are simply the name for subject matter categories assigned by an Internet participant to his or her posting. Any material posted to a USENET newsgroup will eventually end up being transmitted to everyone on the USENET system, no matter where the message is posted from. NETCOM, along with tens of thousands of others, is a link for USENET News, a world-wide distribution chain for local postings on a BBS. Id. at 5. Klemesrud's BBS allows its subscribers to access approximately 900 newsgroups through the USENET system via NETCOM. Rice Decl., Exh. B. One of these newsgroups is dedicated to the discussion of Scientology ("alt.religion.scientology"). It is on this newsgroup that defendant Erlich has allegedly posted excerpts of plaintiffs, copyrighted materials. Compl.,  27. The BBS can be accessed from any other computer on the Internet through the USENET that has access to one of thousands of USENET participants. Any material loaded onto the Internet from any source connected to USENET will eventually end up on the NETCOM system, whether or not it is generated by a NETCOM subscriber and whether or not the subscriber is "cut-off" by NETCOM. Rice Decl., Exh. A. III. ARGUMENT. Plaintiffs, as the party seeking the drastic remedy of injunctive relief, bear the heavy burden of demonstrating either (1) a combination of probable success on the merits and the possibility of irreparable injury or (2) that serious questions are raised and the balance of hardships tips sharply in its favor. Los Angeles Memorial Coliseum v. National Football, 634 F.2d 1197, 1201 (9th Cir. 1980). These two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases. Oakland Tribune, Inc. v. Chronicle Pub. Co., 762 F.2d 1374, 1376 (9th Cir. 1985). Under any formulation of the test, however, plaintiffs must demonstrate that there exists a significant threat of irreparable injury. Id. Plaintiffs have not and cannot make that showing. In addition, and significantly, it is beyond cavil that the purpose of injunctive relief is "to preserve the status quo ante litem pending a determination of the action on the merits." Larry P. v. Riles, 502 F.2d 963, 965 (1974). Furthermore, a court must resist the moving party's attempt to turn the hearing for injunctive relief "into a trial of the merits of the action upon affidavits, and it is not usually proper to grant the moving party the full relief to which he might be entitled if successful at the conclusion of a trial. This is particularly true where the relief afforded, rather than preserving the status quo, completely changes it." Id. It is perhaps impossible to imagine a situation wherein the status quo would be more drastically changed than if the plaintiffs obtain the relief they seek against Netcom. The relief, if granted, will fundamentally alter the functioning of the world's largest electronic public library and potentially expose each of its millions of users to unlimited tort liability. A. Plaintiffs cannot demonstrate irreparable harm. 1. The threat of harm to plaintiffs has been dissipated in light of the execution of the Court's order of seizure. NETCOM is aware that the Court issued an order of seizure against defendant Erlich and that pursuant to that order Erlich's home was searched and all copies of the allegedly copyrighted materials are now in the possession of plaintiffs. As a result of the seizure of these materials on Monday, February 20, 1995, there is no imminent threat that Erlich will continue his allegedly infringing practices and, consequently, plaintiffs cannot demonstrate that they will suffer irreparable harm if an injunction is not granted.1 On this basis alone, the Court should deny plaintiffs' requested injunction. _________ 1. Messages posted on the USENET have an exceedingly short 'shelf life,, and are deleted automatically every several days. Thus, all messages posted by Erlich prior to Monday cannot be retransmitted. 2. In contrast, the threat of harm to NETCOM and the public at large, if the injunctive relief is granted, is extraordinary because it would terminate the service of hundreds of individuals against whom the plaintiffs allege no wrong. Internet users often gain access to the Internet through multiple intermediate access providers. Often, the intermediate access provider is a bulletin board service ("BBS") to whom individuals directly subscribe. The BBS, in turn, subscribes to an access provider, like NETCOM, to gain access to the Internet for all of its subscribers. Given the nature of this multi-tiered access process, NETCOM has no way to discretely terminate Erlich's access to the Internet. He is not a subscriber of NETCOM and has no direct relationship with it. Francis Decl., at 15. Accordingly, plaintiffs' demand, if granted, would require NETCOM to cut off its subscriber defendant Klemesrud in order to defeat Erlich*'s access to the Internet. This action, however, would also simultaneously terminate the Internet access of all of Klemesrud's 500 active subscribers. Id. As a result, hundreds of innocent users who rely upon Klemesrud to provide their link to the Internet would also have their access terminated because of the alleged misconduct of one. The law does not countenance such a baseless result or imposition of liability. B. Plaintiffs cannot show a probability of success on the merits. To obtain the requested injunctive relief, plaintiffs must demonstrate a likelihood of success on the merits. Plaintiffs have not and cannot make such a showing. 1. Plaintiffs are demanding an unprecedented extension of copyright infringement liability passive transmitters of electronic information, who have no control of the information third parties convey over their lines. Plaintiffs are asking this Court to issue extraordinary relief that is without precedent and cannot be supported. As discussed further below, no case has held that such liability exists. Plaintiffs, request, to extend liability for copyright infringement to Internet access providers over whose transmission lines Internet users may convey infringing material, is akin to seeking redress against the telephone company for torts committed by telephone. Passive transmitters have no knowledge or control of the content of communications that pass over their access lines. If the Court were to grant Plaintiffs, request, it would have profound implications for millions of people and for the future of the "information superhighway." In reality, a finding of liability on NETCOM's part under the facts of this case would inevitably prompt the dismantlement of the Internet because it would establish a precedent whereby every user faces the potential of committing copyright infringement simply by the act of accessing the Internet. Because everyone who accesses the USENET system automatically receives a complete copy of the postings transmitted by others, all USENET users could be subject to liability for direct infringement if any posting contains unauthorized, copyrighted material. 2. Courts have always deferred to Congress the issues of copyright protection and technological innovation. In Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984), the Supreme Court was faced with a dilemma similar to the one presently confronting this Court. It was asked to fit into the landscape of copyright law a technological innovation--video cassette recorders ("VCRs")--that Congress did not envision at the time the Copyright Act was drafted. Sony manufactured millions of video recording devices primarily used for making copies of television shows and audio-visual works subject to copyright protection. The Court of Appeals held that Sony was chargeable with knowledge of the infringing activity because the reproduction of copyrighted materials was a major use of the product. The Supreme Court reversed. "There is no precedent in the law of copyright for the imposition of vicarious liability on such a theory." Id. at 438. It concluded that since the Sony "Betamax" was also capable of substantial non-infringing use, (in that case, "time shifting" of program viewing which the court found to be subject to the defense of fair use), that Sony could not be held contributorily liable. It stated "one may search the Copyright Act in vain for any sign that the elected representatives of the millions of people who watch television every day have made it unlawful to copy a program for later viewing at home, or to have enacted a flat prohibition against the sale of machines that make such copying possible." Id., at 456. Similarly, in this case, the Internet, and the NETCOM access station, are used for millions of legitimate communications. There is no support in the statute for holding NETCOM liable for a third party act. The import of the Plaintiffs' request is breath-taking: anyone accessing or passively transmitting material on the Internet may be liable for infringement and/or may be cut-off the Internet because of another party's posting. The Supreme Court quoted the district court, which found in favor of Sony, for reasoning which is instructive here: Selling a staple article of commerce - e.g., a type-writer, a recorder, a camera, a photocopying machine - technically contributes to any infringing use subsequently made thereof, but this kind of 'contribution,' if deemed sufficient as a basis for liability, would expand the theory beyond precedent and arguably beyond judicial management . . . . Commerce would indeed be hampered if manufacturers of staple items were held liable as contributory infringers whenever they 'constructively' knew that some purchasers on some occasions would use their product for a purpose which a court later deemed, as a matter of first impression, to be an infringement. Id., 417 U.S. at 426 quoting 480 F. Supp. 429 (1979). The same is true here, where plaintiffs seek an order against a means of communication and not against a wrong-doer. "The judiciary's reluctance to expand the protections afforded by the copyright without explicit legislative guidance is a recurring theme." See, e.g., Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968) and Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U.S. 394 (1974) (technology that makes possible the retransmission of television programs by cable or microwave systems did not constitute copyright infringement).2 As the Supreme Court has noted, Sound policy, as well as history, supports our consistent deference to Congress when major technological innovations alter the market for copyrighted materials . . . . In a case like this, in which Congress has not plainly marked our course, we must be circumspect in construing the scope of rights created by a legislative enactment which never contemplated such a calculus of interests. Sony, 464 U.S. at 431. The Supreme Court closed with a acknowledgement that applies with equal force to this case: "It may well be that Congress will take a fresh look at this new technology, just as it so often has examined other innovations in the past. But it is not our job to apply laws that have not yet been written." Id. at 456. _________ 2. These cases were codified in a complex statutory scheme at 17 U.S.C.  111, which makes exempts secondary transmissions in the broadcast industry from the provisions of the copyright act. 3. There is no support in the law for plaintiffs' request. In the only two reported-decisions that address the issue of copyright infringement and the Internet, two federal courts have found that a BBS may be liable for direct copyright infringement, if it stores copyrighted material on its database and allows subscribers to download and copy the material without the permission of the copyright owner. Sega Enterprises Ltd. v. MAPHIA, 857 F. Supp. 679 (N.D. Cal. 1994); Playboy Enterprises, Inc. v. Frena, 839 F. Supp. 1552 (M.D. Fla. 1993). Neither of these cases involve the access providers that linked the BBS in question to the Internet. An equally significant indication that such liability is not contemplated by the Act is the July 1994 Report of the Working Group on Intellectual Property Rights ("Working Group"). The Working Group is a subcommittee of the Clinton Administration's Information Infrastructure Task Force and is charged with recommending changes to the Copyright Act to accommodate the realities of the information superhighway. Rice Decl., Exh. C, Intellectual Property and the National Information Infrastructure: A Preliminary Draft of the Report of the Working Group on Intellectual Property Rights ("Report"). The Working Group's recommendations were uniformly aimed at safeguarding the rights of intellectual property owners whose works appear on the Internet. However, the Working Group did not suggest any amendments to the Copyright Act that would extend infringement liability to companies, like NETCOM, that passively transmit protected works over the Internet. See, Id. In addition, it is clear that such liability is not contemplated by the Task Force under the existing law. Commentators have also uniformly concluded that the extension of infringement liability to passive information conduits is wholly unwarranted. The leading authority on copyright law concurs with the court's decision in Sega to hold a BBS operator liable as a contributory infringer based on his personal solicitation and encouragement of infringing practices. However, he concludes that a finding of infringement is not appropriate in cases where "the information service is less directly involved in the enterprise of creating unauthorized copies . . . . " R.T. Nimmer, The Law of Computer Technology,  15.11B at S15-36 (2d ed. 1994). That is exactly the situation present here. See also, Sarah B. Deutsch, "Superliability on the Superhighway?", The Multimedia Law Report, at 4-6 (November 1994), (Rice Decl., Exh. D). "Should the law of contributory and vicarious (copyright infringement) liability be allowed to apply to activities outside Information Conduits, knowledge and control, the [National Information Infrastructure) will suffer greatly. Companies would be discouraged from providing services or building the NII infrastructure, which would hinder a fully interactive and open environment as envisioned today."). Accordingly, there is do support in the case law or commentary for the position which Plaintiffs ask the Court to take here. Further, such extraordinary relief will be devastating to the operation of the Internet and the industry it has created. 4. NETCOM cannot be held liable under the contributory infringement doctrine because it cannot exercise editorial control over the messages transmitted on the USENET. In Sony, the Supreme Court recognized the longstanding rule that contributory infringer status has traditionally been given to those who were "in a position to control the use of copyrighted works by others and had authorized the use without permission from the copyright owner." Sony, 464 U.S. at 437. NETCOM does not fit this definition because, short of discontinuing its service in its entirety, it has no control over the use of copyrighted works by subscribers who post on the USENET and it has in no way authorized the use of copyrighted works without permission of the copyright owner. Furthermore, given the speed and volume of the digital messages transmitted via the *USENET, it would be impossible for access providers like NETCOM to attempt to exercise editorial control. There are approximately 150 megabytes, or 150 million key strokes of information passing over NETCOM's transmission lines per day.3 _______ 3. Furthermore, the Court must also consider the application of the fair use defense in this case, if liability could be found. In particular, NETCOM makes no use whatsoever of the information and derives no pecuniary benefit from any item posted on the Internet. NETCOM merely provides the means for access to it. Similarly, the parties should have an opportunity to fully brief the applicability of the fair use doctrine to Erlich's use of the allegedly copyrighted materials once information about such use can be obtained. C. The Order plaintiffs request is completely unnecessary to address their concerns. Plaintiffs allege that certain copyrighted written works and trade secret materials are being published without their consent by defendant Mr. Erlich. To the extent that plaintiffs can prove such to be the case,4 an order impounding the materials and prohibiting publication against Mr. Erlich will address this problem entirely. ________ 4. NETCOM has had limited time to investigate the merits of such claims, however, NETCOM directs the Court to Religious Technology Center v. Wollersheim, 796 F.2d 1076 (9th Cir. 1986), cert. denied, 479 U.S. 1103 (1987) in which the court held that Plaintiffs' religious materials do not constitute trade secrets under California law. D. An order against NETCOM would not prevent access to these materials by other means. The relief requested against NETCOM would be fruitless. It wrongly assumes that NETCOM is the sole access point available to Erlich and Klemesrud. Internet users, however, may gain access to the information, database or newsgroup that they seek through multiple access points and by multiple means of communicating with the Internet. In addition, experienced "hackers" can gain nondirect access to the Internet without special software or an access service. Francis Decl., at  6. In the instant matter, for example, it is not clear that NETCOM is Klemesrud's only link to the Internet and, if this is not the case, a severing of his NETCOM subscription would be entirely meaningless. Second, and assuming that NETCOM is the only access provider upon which Klemesrud relies and that a termination of his NETCOM account will consequently defeat the Internet access of Erlich and Klemesrud's 500 other subscribers, Erlich could gain access through any commercial on-line service, such as America OnLine, Prodigy and CompuServe, or through his local university to name just a few available alternatives. Accordingly, the relief requested is unnecessary and, further, would be fruitless. In contrast, the harm to the public and NETCOM, if the injunctive relief is granted, would be immense. IV. CONCLUSION. For the foregoing reasons, plaintiffs, request for a Temporary Restraining Order should be denied. Dated: February 17, 1995. PILLSBURY MADISON & SUTRO RANDOLF J. RICE BARBARA R. SHUFRO MELISSA A. BURKE Ten Almaden Boulevard San Jose, CA 95113-2226 By /s/ Attorneys for Defendant NETCOM ON-LINE COMMUNICATIONS

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