IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division

AUG 30, 1995

RELIGIOUS TECHNOLOGIES CENTER )
)
Plaintiff, )
) Civil Action No. 95-110
v. )
)
ARNALDO PAGLIARINA LERMA, )
DIGITAL GATEWAY SYSTEMS, )
THE WASHINGTON POST, )
MARC FISHER, and )
RICHARD LEIBY, )
)
Defendants )



MEMORANDUM OPINION

This case comes before the Court on plaintiff's Motion for a
Temporary Restraining Order and a Preliminary Injunction; for
Impoundment of Infringing Articles; and for Expedited Discovery against
the defendants The Washington Post ("the Post"), Marc Fisher, and
Richard Leiby (collectively "the Post defendants").

Plantiff alleges that it holds the license to the copyrights of the
writings of L. Ron Hubbard, the founder of the Church of Scientology.
Defendant Lerma is a former church member who plaintiff accuses of
infringing its copyright on various Advanced Technology ("AT")
documents by postings these documents on the Internet. Defendant
Digital Gateway Systems ("DGS") is defendant Lerma's access provider
to the Internet. Plaintiff originally files this action against
defendants Lerma and DGS to enjoin the posting of the AT documents on
the Internet. On August 11, 1995, this Court entered a Temporary
Restraining Order, Order to Show Cause Regarding a Preliminary
Injunction, Order for Impoundment, and Order for Expedited Discovery.
The Court also ordered the Clerk to issue a writ of seizure for
defendant Lerma's personal computer equipment, floppy disks, and any
copies of the copyrighted works of L. Ron Hubbard.

At some point after the seizure, plaintiff learned that defendant
Lerma had given copies of the AT documents in issue to the Post. When
the plaintiff confronted the Post about these documents and advised
that they might be stolen, the Post voluntarily turned them over to
the plaintiff. However, on August 14, 1995 the Post sent a reporter
to the Clerk's office of the United States District Court for the
Central District of California to copy a public court file which
allegedly contained copies of the same AT documents. The documents
were contained in the record of a case pending in that jurisdiction
and were not then subject to a sealing or protective order. The file
was subsequently sealed, however that later sealing is of no moment to
the pending motion.

On August 19, 1995, the Post published an article written by
defendant Marc Fisher regarding this lawsuit and the seizure of
Lerma's computer equipment (hereinafter "the Article"). The Article
contained several brief quotations from the AT materials obtained from
the California case.

On August 22, 1995, plaintiff filed a First Amended Verified
Complain For Injunctive Relief and Damages for (1) Copyright
Infringement; and (2) Trade Secrets Misappropriation, adding the Post,
Fisher, and Leiby as defendants. Along with the First Amended
Verified Complaint, plaintiff filed the pending motion seeking to
enjoin the Post defendants from copying, disclosing, using,
displaying, or reproducing the AT materials obtained from the
California case. A hearing was held on August 25, 1995 and the matter
was taken under advisement.

I. Balance of Harms

The decision to grant or deny plaintiff's request for interlocutory
relief is determined by the "flexible interplay" of four factors: the
risk of irreparable harm to the plaintiff if relief is denied, the
risk of harm to the defendant if relief is granted, the likelihood of
the plaintiff's success on the merits, and the interest of the public.
Blackwelder Furniture Co. of Statesville v. Seilig Manufacturing
Co., 550 F.2d 189, 195 (4th Cir. 1977) (citations omitted). The
first step in our analysis is to balance the risk of irreparable harm
to the plaintiff against the risk of harm to the defendant. Id. at
195.

The harm to the Post defendants if the plaintiff's motion is
granted is self-evident. This lawsuit, and similar actions in other
jurisdictions, and the conflict between the Church of Scientology and
its critics are newsworthy subjects. These defendants are
professional news reporters and publishers, and the relief sought by
plaintiff would prohibit them from using the documents at issue in
reporting on these matters. Such limitations on their ability to
report on the news would clearly work a profound harm on these
defendants. Moreover, to the extent that the requested relief would
place limitations on the defendants' reporting, it would constitute a
prior restraint on expression. Near v. Minnesota, 51 S. Ct. 625
(1931). There is a strong presumption against the constitutionality
of such action. New York Times Co. v. United States, 91 S. Ct. 2140,
2141 (1971). As a result, the plaintiff "carries a heavy burden of
showing justification for the imposition of such a restraint."
Id. Plaintiff has not met that burden in this case.

In New York Times v. United States, the United States government
sought to enjoin the New York Times and the Washington Post form
publishing a classified study of the government's decision-making
process with regard to its policy towards Viet Nam. The classified
document, known as the Pentagon Papers, contained military and
diplomatic secrets, the disclosure of which posed a potential threat
to national security. See id. at 2150 (White, J., concurring)
("revelation of these documents will do substantial damage to public
interests"). Despite this threat, a plurality of the Court found that
the government had failed to overcome the presumption against prior
restraint.

Plaintiff argues that dissemination of the AT documents would cause
an irreparable injury, namely future copyright infringement and trade
secret misappropriation. This is the sole justification plaintiff
offers to support its argument for prior restraint of the press. If a
threat to national security was insufficient to warrant a prior
restraint in New York Times Co. v. United States, the threat to
plaintiff's copyrights and trade secrets is woefully inadequate.

Moreover, plaintiff's arguments to date suggest that the extent to
which plaintiff would be harmed by any future copyright infringement
or trade secret misappropriation is at best slight. The documents in
question are so esoteric as to require years of training in
Scientology to understand them. As a result, the only financial harm
that the plaintiff could suffer as a result of any alleged
infringement would be if Church followers chose to forsake the
Church's elaborate system of instruction in favor of
self-administration of the texts. Scientology's status as a religious
organization undermines any theory of loss that would depend on its
followers' desire to cheat the Church by obtaining these teachings
through unauthorized means. Accordingly, this Court fails to
recognize any significant risk of financial loss to the plaintiff if
the motion is denied.

II. Likelihood of success on the Merits

Where, as here, the balance of harms favors the defendant, the
likelihood of the plaintiff's success on the merits assumes heightened
significance. Blackwelder, 550 F.2d at 195 ("The importance of
probability of success increases as the probability of irreparable
injury diminishes.") Where the likelihood of irreparable injury to
the plaintiff is merely "possible," the plaintiff's likelihood of
success on the merits can be determinative. Id. Without opining on
the merits of this case, it can fairly be said that plaintiff's
success is far from a foregone conclusion.

Plaintiff asserts two claims against the Post defendants: copyright
infringement and trade secret misappropriation. As a defense to the
copyright infringement claim, defendants argue that plaintiff's
allegations are insufficient to state a claim of copyright
infringement because the plaintiff has not shown a substantial
similarity between the Article and any copyrighted text and because
the quotations contained in the Article represent a deminimis use of
the allegedly copyrighted works. Furthermore, the Post defendants
argue that any copying of the AT documents was within the fair use
exception of the Copyright Act. 17 U.S.C.A. 107 (West Supp. 1995).
While the questions of whether the subject documents are copyright
protected and whether defendants' acts constituted a copying will be
significant issues in this case, we assume for the purposes of this
motion that the Post defendants copied copyrighted materials, and
solely address the fair use issue. The fair use doctrine allows the
reasonable use of copyrighted materials and is designed to balance the
exclusive rights of the copyright holder with the public's interest in
dissemination of information regarding areas of universal concern.
See Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604
F.2d 200, 205-206 (2d Cir. 1979).

Section 107 of the Copyright Act provides:

the fair use of a copyrighted work . . . for purposes such as
criticism, comment, *news reporting*, teaching . . . scholarship
or research, is not an infringement of copyright. In
determining whether the use made of a work in any particular
case is a fair use the factors to be considered shall include --

(1) the purpose and character of the use, including whether
such use is of a commercial nature or is for nonprofit
educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in
relation to the copyrighted work as a whole;
(4) the effect of the use upon the potential market for or
value of the the copyrighted work.

The fact that a work is unpublished shall not itself bar a
finding of fair use if such finding is made upon consideration
of all the above factors.

17 U.S.C.A. 107 (West Supp. 1995) (emphasis added).

The purpose of defendants' use of the subject work was two-fold.
The Article constituted new reporting, one of the specific uses included
in the statute as examples of fair use. The August 14, 1995 copying
constituted research for the Article. Defendants argue that the
copying of the California court file should be considered together
with the publication of the Article because "[n]ews gathering is an
essential aspect of news reporting. The Post has gathered a copy of
the materials in question and those materials, unquestionably, are
news." Memorandum of The Washington Post, Marc Fisher, and Richard
Leiby in Opposition to Plaintiff's Motion for a Temporary Restraining
Order at 19 (hereinafter "Post Memorandum"). Indeed, the Posts'
copying of the California court file can easily be viewed as research
for the Article and, therefore, as an integral part of that act of
news reporting. In addition, an accurate copy of the AT documents was
necessary for the Post defendants' ability to accurately report on,
and quote from, their contents.

The scope of the fair use doctrine is greater with respect to
factual works than creative or literary works. Without having
reviewed the AT documents, this Court is at a disadvantage with regard
to classifying them as either factual or expressive. Even courts with
fuller records than this have encountered difficulty in classifying
Hubbard's writings. As the Second Circuit stated in New Era
Publications Int'l v. Carol Publishing Group, 904 F.2d 152,158 (2d
Cir.), cart. denied, 111 S. Ct. 197 (1990), "reasonable people can
disagree over how to classify Hubbard's works." However, that court
also concluded that the works "deal with Hubbard's life, his views on
religion, human relations, the Church, etc. -- [and] are more
properly viewed as factual or informational." Id. at 157. The United
States District Court for the Southern District of California is of
another view, however. In Bridge Publications, Inc. v. Vien, 827
F. Supp. 619, 636 (S.D. Cal. 1993), the court stated that "[t]he
undisputed evidence shows that L. Ron Hubbard's works are the product
of his creative thought process, and not merely information."

In the instant litigation, plaintiff has characterized the AT
documents more as informational than as creative fiction.
Specifically, the First Amended Verified Complaint describes Hubbard's
writings as "works on applied religious philosophy and spiritual
healing technology, including training materials and course manuals of
the Scientology religion." Amended Complaint at P26. Therefore, at
this point, this Court adopts the Second Circuit's view, and finds
that because the AT documents appear to be factual or informational
the broader view of fair use is appropriate in this case.

Plaintiff argues that the unpublished nature of some of the AT
documents militates against a finding of fair use, relying on the
Supreme Court's decision in Harper & Row v. Nation Enterprises, 105
S. Ct. 2218 (1985) to support this argument. In Harper & Row, the
defendant published excerpts from an unpublished manuscript of the
autobiography of Gerald Ford. The defendant's article was timed to
"scoop" a competing publication that had agreed to purchase the
exclusive right to print excerpts of the work. The Court noted that
the fact that a work is unpublished is a "critical element" of its
nature and that "the scope of fair use is narrower with respect to
unpublished works." Id. at 2232. The facts of the Harper & Row case
differ strikingly form the case at hand. In the Harper & Row decision
the defendant timed publication of its article to deprive the planned
publication of its full impact. Here, no such motivation exists.
Moreover, the Article contained only minimal excerpts from plaintiff's
documents and can in no way be said to have deprived the plaintiff of
the right of first publication, on which the Harper & Row decision is
largely based. In addition, after the Supreme Court's decision in
Harper & Row, Congress amended Section 107 of the Copyright Act to
make clear that "[t]he fact that a work is unpublished shall not
itself bar a finding of fair use if such a finding is made upon
consideration of all the above factors." 17 U.S.C.A. Sec. 107 (West
Supp. 1995). Assuming that all of the AT documents at issue are
unpublished, the Post defendants' use of these documents does not
implicate the concerns expressed by the Court in Harper & Row and
therefore their unpublished nature plays a minimal role in this Court's
consideration.

With regard to the amount of the work used, defendants' Article
quoted only a minute portion of the AT documents. The August 14, 1995
copying of the California court files involved a considerably larger
amount of the subject works: allegedly 103 pages were copied.
However, although a large number of pages were copied, only a few
lines of the documents were quoted in the Article. This Court
therefore finds that the sheer quantity of the documents copied does
no defeat the Post defendants' claim of fair use.

With respect to the effect of the Post defendants' use on the
market value of the AT documents, it is doubtful that the defendants'
copying can have a significant negative effect. As mentioned above,
the Article contained only scant quotations from the AT documents.
Scientologists in search of advanced training could not possibly
consider these short quotes as substitutes for the full texts.
Furthermore, the affidavits filed in support of plaintiff's complaint
and motions provide that part of the Advanced Technology program
involves "confidential counseling, or 'auditing' from a trained
minister of the Church." McShane Aff. at P 9-10. Even the
confidential levels that do not require auditing involve supervision
"on each step to ensure that [the Scientologist] delivers the Advanced
Technology to himself correctly and that he obtains the exact expected
results from each level." Id. at P11. Accordingly, the "market" for
these writings does not exist independently of the Church's services.

Finally, the plaintiff argues that the Post defendants cannot enjoy
the shelter of the fair use doctrine because their acquisition of the
subject documents was unlawful. Plaintiff's argument stems from its
assertion that, as a result of stringent security measures, any copy
of the AT documents existing outside the Church was necessarily at one
time stolen. Plaintiff further argues that the unlawful acquisition
of copyrighted materials precludes any fair use defense. See Atari
Games Corp. v. Nintendo of America, Inc., 975 F.2d 832, 843
(Fed. Cir. 1992),[1] Sega Enterprises Ltd. v. Maphia, 857
F. Supp. 679, 687 (N.D. Cal. 1994) (citing Atari Games, 975 F.2d at
843). However, unlike the facts in the cases relied on by plaintiff,
the facts in this case are that the Post defendants obtained the
documents from a legitimate source. When the Post defendants obtained
the copies at issue, the AT documents were contained within the
unsealed files of the United States District Court for the Central
District of California. As such, they were available to the general
public at the office of the Clerk of the Court.

Defendants argue that copying of the AT documents, by the Clerk of
the Court on defendants' behalf, cannot be infringement "given the
ancient common law right of access to publicly filed court documents
and the recognized importance of granting access to such documents to
the press." Post Memorandum at 15. Indeed, the Supreme Court has
explicitly recognized the right of the press to publish facts
contained in public court records. In Cox Broadcasting Corp. v. Cohn,
95 S. Ct. 1029 (1975), the Supreme Court held that the First and
Fourteenth Amendments barred a cause of action for damages for
invasion of privacy for publication of information contained in an
open court record. In Cox, a reporter employed by the defendant
included the name of a deceased rape victim in a news report of the
trial of her alleged attackers. The father of the victim sued the
broadcast company for invasion of privacy, relying in part on a state
statute making it a misdemeanor for any news media to publish the name
of any rape victim. The Supreme Court, relying on the "special
protected nature of accurate reports of judicial proceedings" and the
inclusion of the information in the public record, found that the
defendant's actions were constitutionally protected. Id. at 1044-47.
In so holding, the Court stated:

By placing the information in the public domain on official
court records, the State must be presumed to have concluded
that the public interest was thereby being served. Public
records by their very nature are of interest to those
concerned with the administration of government, and a public
benefit is performed by the reporting of the true contents of
the records by the media.

Id. at 1046.

Plaintiff argues that the Post defendants had no right of access to
the AT documents in the California court file because those documents
were never relevant to that litigation and had been dumped into the
record merely for the purpose of improperly making them available to
the public. Plaintiff's argument neglects the fact that at the time
that the Post obtained copies of those documents from the public court
records, no sealing order was in place. In fact, the plaintiff had
moved the district court to seal the file and the court had denied
that request.

When the district court refused to seal the file, plaintiff
appealed that decision to the Ninth Circuit which reversed the
district court in an unpublished opinion on August 30, 1994. The
Ninth Circuit remanded the case with instructions to the lower court
to determine whether the disputed documents contain trade secrets or
were irrelevant to any of the issues in the case. In reaching their
decision, the Ninth Circuit recognized the tension between the
public's right of access to judicial records and the supervisory power
of the court ot ensure that its files not become "vehicle[s] for
improper purposes." Church of Scientology Int'l v. Fishman,
No. 94-55443 (9th Cir. Aug. 30, 1994). However, despite these
concerns, the court's opinion did not direct the lower court to seal
the file, which remained open to the public until after the Post
copied the documents. Given the well recognized public right of
access to court records and these facts, there is little likelihood
that that the plaintiff will prevail on the argument that the Post had
no right of access to the AT documents in the court file on August 14,
1995.

Our discussion of the fair use doctrine must be understood in the
context of the pending motion. We do not here rule on the merits of
plaintiff's claim, nor on the Post defendants' response. Rather, at
this preliminary stage of the proceedings the analysis favors the
defendants, ruling out a finding that the plaintiff has shown a
likelihood of success on the merits sufficient to overcome the
likelihood of harm to the defendants.

The likelihood of success of the plaintiff's trade secret
misappropriation claim is at least as uncertain as the copyright
claim. To prevail on a trade secret misappropriation claim, the
plaintiff must prove that the AT documents are indeed trade secrets.
In Virginia, a "trade secret" is defined as information that:

[d]erives independent economic value, actual or potential,
from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use, and . . .
Is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.

Va. Code Ann. Sec. 59.1-336 (Michie 1992).

Unquestionably, the plaintiff has taken extraordinary measures to
try to maintain the secrecy of the AT texts. Plaintiff and the Church
of Scientology employ numerous and elaborate security measures to
prevent church members from removing the texts from the Church. In
addition, while the California court file remained unsealed, Church
members conducted a daily vigil in which they signed out the file and
retained it until the Clerk's office closed. Despite these efforts,
the AT documents have escaped into the public domain and onto the
Internet. Significantly, the record in this case indicates that
defendant Lerma is not the only source of AT documents on the
Internet. Accordingly, for the purposes of this motion, it would seem
that plaintiff cannot establish that the AT documents are "not
generally known." Additionally, plaintiff has not demonstrated that
the AT documents provide plaintiff with any economic advantage over
any competitors.

III. The Public Interest

The final consideration dictated by the Blackwelder opinion is the
public interest. This factor weighs heavily in favor of denying the
plaintiff's motion. The public interest lies with the unfettered
ability of the Post to report on the news. See Richmond Newspapers,
Inc. v. Virginia, 100 S. Ct. 2814, 2824 (1980) (stating that print and
electronic media are the public's chief source of information about
trials and that media coverage of legal proceedings contributes to
public understanding of the rule of law) (citing Nebraska Press Ass'n
v. Stuart, 96 S. Ct. 2791, 2816 (1976) (Brennan, J. concurring in
judgment)).

IV. Conclusion

Having performed the analysis required under Blackwelder, this
Court concludes that the plaintiff's Motion for a Temporary
Restraining Order and a Preliminary Injunction; for Impoundment of
Infringing Articles; and for Expedited Discovery against the Post
defendants must be denied. The balance of harms is heavily tilted
towards the defendants, and the plaintiff's likelihood of success on
the merits is insufficient to right the scale. Finally, the public
interest and the constitutional presumption against prior restraining
weigh heavily against the plaintiff. For these reasons, plaintiff's
motion is DENIED.

Defendants must maintain the status quo as to the possession of the
AT documents and may make fair use thereof. However, defendants are
prohibited from making additional copies of the AT documents and
distributing or transferring the documents. Should the defendants
incorporate or attach any of the AT documents to their papers in this
action, such filings must be made under seal.

The Clerk is directed to forward copies of this Order to counsel of
record.

Entered this 30th day of August, 1995.

Leonie M. Brinkema
United States District Judge

Alexandria, Virginia


[1] In the Atari case, the defendant misappropriated a copy of the
plaintiff's source code by obtaining a copy from the Copyright Office
in violation of Copyright Office regulations. The court in that case
stated that "[t]o invoke the fair use exception, an individual must
possess an authorized copy of a literary work." Atari Games, 975 F.2d
at 843 (citing Harper & Row, 105 S. Ct. 2232 (holding that knowing
exploitation of purloined manuscript is not compatible with "good
faith" and "fair dealings" underpinnings of fair use doctrine)).