14 June 2000. Thanks to Anonymous.
See part 1 of the Kenneth Jacobsen deposition: http://cryptome.org/mpaa-v-2600-kjd.htm
207
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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
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Reported by:
25 MAYLEEN CINTRON
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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.
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2 A P P E A R A N C E S:
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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
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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
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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
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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?
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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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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.
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2 Q. Right.
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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.
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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
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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.
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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.
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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
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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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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
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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
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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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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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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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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?
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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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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.
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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.
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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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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
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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.
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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
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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?
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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.
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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.
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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
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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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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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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
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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.
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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
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23
24 Q. Do you know what the relationship
25 between the MPA and the MPAA is?
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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.)
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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
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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
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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
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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
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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.
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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.
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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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2 Q. My first question is: Have you seen
3 this article before?
4 A. I don't recall seeing it before.
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25 called wireless. I believe you said you didn't
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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.
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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.
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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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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
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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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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.
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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.
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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.
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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.
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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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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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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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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:
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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.
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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?
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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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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
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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,
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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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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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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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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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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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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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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
22
23
24
25
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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
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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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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?
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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?
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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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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
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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
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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
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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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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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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.
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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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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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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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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.
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22 (Whereupon, a recess was taken from
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24 BY MR. HERNSTADT:
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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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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.
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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.
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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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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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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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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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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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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.
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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
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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
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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
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