Copyright 1995 American Lawyer Newspapers Group Inc.
Legal Times
July 3, 1995

HEADLINE: Scientologists, Secrets, and Cyberspace; Church Sues Over Posting Training Papers on Internet

BYLINE: BY MARK WALSH; Mark Walsh is a reporter in the San Jose, Calif., bureau of The Recorder. This article was distributed by the American Lawyer News Service.

DATELINE: SAN JOSE, CALIF.

As the legal dimensions of cyberspace are still being shaped, far-reaching questions about who is liable for copyright violations on the Internet are being played out amidst highly contentious litigation involving the Church of Scientology.

In the four months since the church sued an Internet access provider and a bulletin-board service operator in San Jose, Calif., federal court for copyright infringement, the parties' filings have filled up nine volumes.

"[The church] loves to bury you in paperwork," says Daniel Leipold, who represents defendant bulletin-board operator Tom Klemesrud. A partner at Orange County, Calif.'s Hagenbaugh & Murphy, Leipold is a veteran of Scientology litigation.

The case file will provide lots of reading for cyberlaw observers, who are watching to see how Religious Technology Center v. Netcom On-Line Communications, deals with basic issues about Internet liability.

"This case is a very serious one for determining what a systems operator and a systems administrator are liable for," says Shari Steele, litigation director for the Washington, D.C.-based Electronic Frontier Foundation.

The electronic-rights advocacy group has taken a keen interest in the litigation because of what it sees as the potential for censorship that could result from a ruling against access provider Netcom and Klemesrud, Steele says. Indeed, EFF is assisting defense counsel in the case by helping to line up expert witnesses on the Internet and on the operation of bulletin-board services.

On June 23, U.S. District Judge Ronald Whyte heard summary judgment motions on whether Klemesrud and Netcom, represented by San Francisco's Pillsbury Madison & Sutro, can be liable for copyright infringement for transmitting messages from an outspoken critic of the church. Whyte took the summary judgment motions and other matters under advisement after a three-hour hearing.

The judge was also asked to determine in this case whether Dennis Erlich, an ex-minister in the church, violated copyright and trade-secret laws by posting messages that excerpted the writings of Scientology founder L. Ron Hubbard.

"I don't know of any other case in which an access provider has been sued because of alleged copyright violation perpetrated by someone who's not even a subscriber," says Randolf Rice, a Pillsbury partner representing San Jose-based Netcom.

'INTELLECTUAL PROPERTY ISSUE'

Helena Kobrin, one of the church's attorneys, asserts the defendants have mischaracterized this as a First Amendment battle.

"We don't see it that way at all," says Kobrin, a North Hollywood lawyer. "This doesn't have to do with free speech. It's an intellectual property issue."

One thing both sides can agree on is that the four months of litigation have been intense and sometimes testy. Responding to the church's request for sanctions, Erlich's attorney, Carla Oakley, a partner at San Francisco's Morrison & Foerster, wrote, "This court should refuse to put itself in a position where a proven abuser of the litigation process can monopolize the court's limited resources by repeated ex parte applications, contempt requests, and mountains of correspondence each time its opponent appears in public."

The church, which has tapped six firms so far for this case, has turned the tables on Morrison & Foerster by seeking $ 760 in sanctions against the firm, in part for filing excessive papers opposing ex parte applications filed by the church.

The underlying dispute began when minister-turned-critic Erlich posted portions of church documents on an Internet discussion group called "alt.religion.scientology." Erlich subscribed to Klemesrud's bulletin-board system, which allows access to more than 900 discussion groups through Netcom.

The church, claiming the documents were copyrighted and protected trade secrets, on Feb. 10 convinced Judge Whyte to issue a temporary restraining order prohibiting Erlich from posting any more allegedly infringing material. He also issued a writ of seizure that allowed church officials and local police to enter Erlich's Glendale home Feb. 13 and confiscate more than 300 computer disks and boxes of documents. Morrison & Foerster asked the judge at the June 23 heating to dissolve the TRO.

Oakley and Morrison & Foerster partner Harold McElhinny are also trying to vacate the writ of seizure against their client. They maintain the seizure was invalid because Erlich's messages threatened no "irreparable injury" and he wasn't given notice of the raid.

The judge denied a preliminary injunction against Netcom and Klemesrud, which would have prohibited them from posting Erlich's allegedly infringing messages.

The church says that Erlich has infringed at least 230 of the church's copyrighted materials, including the "Advanced Technology" spiritual-instruction material that it claims constitutes trade secrets.

The church claims Erlich has since violated the TRO by uploading additional confidential documents on the Internet.

To handle arguments before Judge Whyte, the church added Earle Cooley of Boston's Cooley, Manion, Moore & Jones to its team. The gravelly voiced Cooley has represented the church in other cases in the last 10 years and is the church's trial lawyer of choice.

EDITORIAL CONTROL

Pillsbury and Morrison & Foerster argue that their clients aren't liable for contributory copyright infringement because they were simply passive transmitters of Erlich's messages. Pillsbury asserts that Netcom can't possibly control the editorial content of the millions of messages passing through its system daily. It also notes that its contract with subscribers doesn't say that the company will screen for violations in advance of a posting.

Likewise, Morrison & Foerster maintains in court papers that a requirement that bulletin-board operators ensure that messages are infringement-free would be "tantamount to ordering the operators to shut down the [bulletin-board systems] altogether."

Just last month, a New York state judge ruled in Stratton Oakmont Inc. v. Prodigy Services Co. that Prodigy could be liable for an allegedly defamatory posting on a computer bulletin board because it was a "publisher" of the material. Judge Stuart Ain explained that since the service screened postings, it was more than just a distributor of the message.

Pillsbury's Rice says he welcomes the Prodigy decision because it clarifies how that company's service differs from the kind of service Netcom provides. He points out that Prodigy regulated the content of bulletin boards as a "family oriented" computer service, while Netcom does not.

The decision also noted that Prodigy had created an editorial staff to monitor transmissions and censor inappropriate notes.

"They [Prodigy] provide content-based services," Rice says. "We don't monitor, we don't control, we're not a publisher."

Church lawyer Kobrin declined to comment on the impact of the Prodigy decision, and none of the church's pleadings cite the case. But the church contends in pleadings that Netcom does exert some editorial control over postings on its system. It states that discovery has shown that the company has imposed 1,180 account suspensions for abuse of its system, including copyright infringement. Kobrin says the company simply chose not to respond to the church's complaints.

Rice says that Netcom only removes messages that violate "Netiquette," the unwritten code of conduct developed by electronic service providers to police the Internet. Netiquette would preclude, he says, any postings deemed by users to be deliberately offensive to a discussion group.

Rice, also points out that Erlich was not a Netcom subscriber, but a third-party user of the system. To bar his messages from the Internet would require disconnecting Klemesrud's bulletin board entirely, along with its 500 subscribers.

Kobrin says the church is not asking Netcom or Klemesmd to screen messages for copyright violations, acknowledging that that could have a "devastating" effect on the online industry. Rather, Kobrin contends, they should remove postings once notified of a violation. She also notes that the church has not tried to stop Erlich from posting hundreds of critical messages that have not involved infringing documents.

Klemesrud counters that deleting material based on the "mere allegation" of possible infringement would require constant judicial intervention to decide what is a copyright violation and what is simply fairuse commentary.

The defendants also distinguish this case from Playboy Enterprises Inc. v. Frena, in which a bulletin-board operator was found liable for copyright infringement for the appearance of unauthorized Playboy magazine pictures on his board.

They point out that, unlike that operator, they are not actively encouraging users to download copyrighted material for the operator's own profit.

"My client didn't start alt.religion.scientology," says Leipold, who represents Klemesrud.

The defendants also contend their actions would be protected under copyright law's "fair use" doctrine, which allows copyrighted materials to be used for criticism or satire.

In addition, Pillsbury's Rice notes that the electronic anti-obscenity law passed by the U.S. Senate recently exempts from criminal liability access providers who have no control over the content of material put on the Internet. (The law, however, does not address copyright issues.) But Leipold warns that this could be just the beginning: "The real discovery has not started yet."

Editor's note: The Church of Scientology's complaint, Tom Klemesrud's motion for judgment on the pleadings, and the church's memorandum opposing Netcom's motion to dismiss can be accessed electronically over Lexis Counsel Connect. See Page 32 for instructions.