Thomas R. Hogan, SBN 042048 LAW OFFICES OF THOMAS R. HOGAN 60 South Market Street, Suite 1125 San Jose, CA 95113-2332 (408) 292-7600 Roger M. Mugrim William M. Hart PAUL, HASTINGS, JANOFSKY & WALKER 399 Park Avenue Thirty-first floor New York, New York 10022-4697 (212) 318-6000 Helena K. Kobrin, SBN 152546 7629 Fulton Avenue North Hollywood, CA 91605 (213) 960-1933 Attorneys for Plaintiff RELIGIOUS TECHNOLOGY CENTER UNITED STATES DISTRICT COURT RELIGIOUS TECHNOLOGY CENTER, ) Case No. C-96-20271 California non-profit corporation, Plaintiff, ) VERIFIED COMPLAINT FOR ) INJUNCTIVE RELIEF AND DAMAGES ) FOR: (1) COPYRIGHT V. ) INFRINGEMENT; AND (2) TRADE ) SECRET MISAPPROPRIATION (CAL H. KEITH HENSON, an individual, ) CIV. CODE ß 3426.1) ) Defendant. ) ) ) ORIGINAL FILED APR ()4 1996 RiCHARD W. WIEKING CLERK US. DISTRICT COURT NORORTHERN DISTRCT OF CALIFORNIA SAN JOSE Plaintiff Religious Technology Center ("RTC") alleges as follows: INTRODUCTORY AVERMENTS 1. Defendant H. Keith Henson ("Henson") has engaged in a scheme of infringing certain copyrights and misappropriating certain trade secrets belonging to plaintiff. Henson has posted portions of plaintiff's proprietary materials onto the international computer network known as the Internet without authorization from plaintiff and continues to do so despite warnings from plaintiff to cease and desist from his activities in violation of plaintiff's rights Recent Internet postings by Henson indicate that he is now threatening and poised to engage in massive violations of plaintift's proprietary rights, is publicly soliciting assistane to do so, and threatens impending copyright infringement and trade secret misappropriation of a host of works which have been judicially recognized as trade secrets and have not previously been posted to the Internet by Henson or anyone else. The need for injunctive relief as to such threatened unlawful undertaking is therefore critical. JURISDICTION AND VENUE 2. Subject matter jurisdiction of this action exists pursuant to 28 U.S.C. ßß 1331 and 1338(a) and (b) and 28 U.S.C. ß 2201(a) in that this is an action for declaratory relief as to copyright infringement and for copyright infringement under 17 U.S.C. ß 501. This court has pendent jurisdiction over the trade secret misappropriation claims alleged herein, as unfair competition claims that arise out of the same transactions and occurrences. 3. Venue is proper in this District pursuant to 28 U.S.C. ß 1391(b) in that events or omissions giving rise to the claims occurred in this district and the defendant resides in this judicial district. THE PARTIES 4. Plaintiff RTC is, and was at all times relevant herein, a California non-profit religious corporation having its principal office in the City of Los Angeles, County of Los Angeles, State of California. 5. Plaintiff is informed and believes, and on that basis alleges, that defendant Henson is a citizen and resident of the City of San Jose, County of Santa Clara, State of California. GENERAL AVERMENTS A. The Copvritthted Unpublished Works of L. Ron Hubbard 6. L. Ron Hubbard, a United States citizen who died in 1986, was a world-renowned philosopher and the prolific author of numerous original works on applied religious philosophy and spiritual healing technology, including training materials and course manuals of the Scientology religion (hereinafter the "Religion") of which Mr. Hubbard was the founder. Certain of Mr. Hubbard's original written and recorded works have been published and made generally available, while others have not. Among the unpublished works is a body of special works, sometimes referred to as "Advanced Technology materials," which contains confidential and proprietary information ("the Advanced Technology") constituting trade secrets (the "Works") 7. Lists of the Works that were created by Mr. Hubbard and are relevant to this action are attached as Exhibits A and B, showing the titles of the works along with the numbers and dates of the applicable United States copyright registrations. Due to the imminence of the harm now threatened by defendant's acts with respect to the Exhibit B Works (which, except for six out of the 55 works, have never been the subject of any postings on the Internet), and in order to seek immediate judicial relief, RTC has not pleaded every Work which defendant may be threatening to infringe. RTC therefore reserves the right to amend this Complaint to add additional Works, and/or to add additional claims and/or parties at a later date and as a result of further factual development and discovery. 8. In 1982, L. Ron Hubbard assigned to plaintiff RTC his entire right, title and interest (apart from copyrights) in and to the Advanced Technology, including all rights to use and to license the use of the Advanced Technology in the United States. This assignment includes the obligation to protect the confidentiality of the Advanced Technology. A true and correct copy of this assignment is annexed as Exhibit C to this Complaint. 9. Following Mr. Hubbard's death in 1986, ownership of the copyrights in the Works passed to his Estate, which granted to plaintiff RTC, on September 17, 1987, an exclusive license in the copyrights pertaining to the Works, with the right and obligation to enforce all the copyrights in those works. A true and correct copy of this License Agreement is annexed to this complaint as Exhibit D. 10. All of the assets of the Estate of L. Ron Hubbard, including the copyrights pertaining to the Works, were distributed in 1993. The successor in interest to the copyrights affirmed RTC's September 17, 1987 copyright license. A true and correct copy of this Assignment and Assumption is annexed to this complaint as Exhibit E. 11. The Works were wholly original with Mr. Hubbard and are copyrightable subject matter under the laws of the United States. Mr. Hubbard and his successors and licensees have complied in all respects with the copyright laws of the United States, have secured the exclusive rights in and to the copyrights in the Works, and have received from the Register of Copyrights Certificates of Registration of these copyrights. Attached hereto as Exhibit F are true and correct 1 copies of the Certificate of Registration for the Works listed in Exhibits A and B. 12. The Advanced Technology contained in the Works is of immense value to plaintiff, which has taken in the past, and continues to take, extraordinary measures to protect the confidentiality of the Advanced Technology. Physical access to the materials has always been limited and carefully monitored and the materials made available only to a limited group of people for limited purposes. The efforts used to maintain such secrecy have always been more than reasonable under the circumstances including, but not limited to, storage in locked cabinets in locked rooms with access permitted only to select Scientology parishioners who have met stringent requirements, transport of any portion of the materials only in locked briefcases, the presence of security personnel and the execution of written confidentiality agreements. 13. RTC derives independent economic value, actual and potential, from the Advanced Technology, which is secret and of considerable value. RTC receives from the advanced Churches of Scientology which are licensed by RTC to use the Advanced Technology licensing fees equal to six (6) percent of the income received for delivery of Advanced Technology services. These licensing fees provide substantial financial support for RTC's operations. B. Defendant's Violations of Plaintiffs Ri~hts 14. On March 29, 1996, this Court, the Honorable Ronald M. Whyte, United States District Judge, presiding, stated that he would issue a preliminary injunction against the defendant in the case encaptioned Relittious Technolotty Center v. Grady Ward, and assigned case number 96- 20207 RMW (the "Ward case"). That injunction was issued by the Court on April 1, 1996, in response, inter alia, to plaintiffs showing that the defendant in the Ward case had made postings of RTC's copyrighted and trade secret material, was threatening additional postings of a similar, unlawful nature, and had solicited public assistance in that enterprise by soliciting copies of plaintiffs proprietary materials from anyone in possession thereof. The Court announced in open court that a preliminary injunction would issue in a proceeding at which defendant Henson was present. Henson- -with no prior relationship whatsoever to either RTC or Scientology--thereupon set out to duplicate the very conduct that justified the injunction against the defendant in the Ward case, justifying his conduct and intended conduct on the grounds that the Court's order did not apply to his own actions, and that in his view, the plaintiff is not entitled to exercise the very intellectual property rights underlying the preliminary injunction issued in the Ward case~ 15. On or about March 30, 1996, Henson infringed RTC's copyrights in the Work listed in Exhibit A by reproducing this Work in its entirety and by electronically displaying or distributing it on the Internet. Henson titled his electronic display or posting, "An Open Letter to Judge Whyte," and stated in the posting that he had read, in its entirety, the Temporary Restraining Order issued by this Court on March 21, 1996 in the Ward case against Grady Ward, "his officers, agents, servants, employees, and attorneys, and to those persons in active concert or participation with him." A true and correct copy of the Temporary Restraining Order is attached hereto as Exhibit G. The Temporary Restraining Order plainly prohibited the displaying or distribution on the Internet of a series of plaintiffs Works, including the Work displayed by Henson. In that posting, he also solicited copies of the Exhibit B Works to be sent to him. 16. On March 30, 1996, counsel for RTC notified Henson, via electronic mail, that he had violated RTC's copyright and trade secret rights and the Court's Temporary Restraining Order by posting the Exhibit A Work and soliciting the Exhibit B Works, and demanded that Henson "cease and desist from any and all further posting, reproduction, display, distribution, solicitation or acquisition" of the Work or any of the Advanced Technology works of the Scientology religion. 17. Henson responded to RTC's notice and cease and desist demand by: a. Telling RTC's counsel that she could "take your demand, fold it till it is all corners, and stick it where 'the Sun don't shine.'"; b. Reposting the Work identified in Exhibit A on the Internet; c. Soliciting additional copies of the Exhibit B Works "acquired by legal, or *illegal* means" from any and all readers on the Internet; d. Threatening to post some or all of these Works to the Internet. A true and correct copy of Mr. Henson's communication to counsel is attached hereto as Exhibit H. 18. No one has access to the Works without permission from plaintiff or unless they were obtained through illicit means. As the only way the Exhibit A and B Works have ever left authorized possession was through theft, Henson could only have obtained copies of these materials by having received stolen property or the fruits thereof from another. 19. Plaintiff is informed and believes, and on that basis alleges, that Henson has copied and/or induced others to copy and has wrongfully acquired and now threatens to and intends imminently to post to the Internet the Works listed in Exhibit B hereto, in whole or in part, thereby causing serious, irreparable harm to RTC's copyright and trade secret rights, if not immediately restrained from doing so. The prayer for interlocutory relief below relates to the Works in Exhibit B only. 20. As a result of the foregoing, Henson has reproduced, displayed, and distributed RTC's Work listed on Exhibit A, all without the authorization of plaintiff. Henson has thereby infringed RTC's copyrights to the Exhibit A Work and, on information and belief, is threatening to misappropriate RTC's trade secrets and to infringe it copyrights in the Exhibit B Works. 21. Plaintiff is informed and believes, and on that basis alleges, that at all times relevant herein, Henson knew or had reason to know that the Works listed on Exhibits A and B had been acquired under circumstances giving rise to a duty to maintain their secrecy. 22. Plaintiff is informed and believes, and on that basis alleges that, at all times relevant herein, Henson knew or had reason to know that the Works listed in Exhibit B had been acquired from or through a person who owed a duty to plaintiff to maintain their secrecy. 23. Plaintiff is informed and believes, and on that basis alleges that, at all times relevant herein, Henson knew or had reason to know that the Works listed in Exhibit B had been obtained through improper means. 24. All copying and actual or attempted acquisition of the Works listed in Exhibits A and B has been unauthorized and constitutes or threatens copyright infringement and trade secret misappropriation, and the electronic display or distribution of the Work listed in Exhibit A has been unauthorized and constitutes wilful copyright infringement. 25. Upon information and belief, defendant has caused and/or induced others to participate in the aforesaid and threatened infringements and violations of plaintiffs rights, has provided the means and instrumentalities for doing so, has actively participated in the aforesaid and threatened infringements and violations, has the right, opportunity and means to supervise and control such activities and has exercised the same to plaintiffs severe detriment, and will continue to do so and has derived and will derive direct and indirect benefits from all of the foregoing activities, which defendant has engaged in knowingly, wilfully and with the intent to injure plaintiff and irreparably impair its rights. 26. Unless restrained by this Court, defendant will continue to engage in the acts complained of herein and will carry out the threatened acts complained of herein, and RTC will incur irreparable injury, for which there is no adequate remedy at law. 27. As a direct and proximate result of the foregoing acts of defendant, plaintiff has suffered and will suffer damages in an amount which cannot now be ascertained or computed. FIRST CLAIM FOR RELIEF (Declaratory Judgment of Copyright Infringement 17 U.S.C. ß 101 et seq. and 28 U.S.C. ß 2201(a)) 28. Plaintiff incorporates by reference the allegations contained in paragraphs 1 through 27 above as though set forth fully herein. 29. The Works are protected under the Copyright Act of 1976, 17 U.S.C. ßß 101 et seq. 30. An actual case or controversy has arisen in which plaintiff contends that defendant has recently solicited and engaged in making unauthorized copies of RTC's copyrighted, unpublished Works and has also been threatening the posting of the Works listed in Exhibit B hereto, which threat is real, imminent, and likely to be carried out. 31. In light of defendant's pattern of behavior and his current activities, plaintiff contends defendant intends imminently to engage in massive infringements of RTC's copyrighted, unpublished Works listed in Exhibit B hereto and that, based upon the facts relevant hereto, plaintiff entertains a real and reasonable apprehension of infringement. 32. The acts, including the threatened acts set forth in paragraphs 1, 15, 17, 19, and 25 above are imminent and do and will infringe RTC's exclusive rights, inter alia to publish, reproduce, display, and distribute the unpublished Works listed in Exhibit B hereto, all in violation of RTC's exclusive copyrights under 17 U.S.C. ß 106. Such acts constitute copyright infringement under 17 U.S.C. ß 501; and wilful copyright infringement under 17 U.S.C. ß 504. 33. RTC seeks, pursuant to Rule 57 of the Federal Rules of Civil Procedure, a declaratory judgment that defendant has no right to engage in any such reproduction, distribution, display or other exploitation, by any means, of RTC's copyrighted unpublished Works set forth in Exhibit B, that plaintiff never authorized defendant to do so, but instead, repeatedly notified defendant that such acts would constitute, inter alia copyright infringement and that such acts, separately and together, constitute wilful copyright infringement of the Works set forth in Exhibit B pursuant to 17 U.S.C. ß 501, et seq. SECOND CLAIM FOR RELIEF (Copyright Infringement of Unpublished Works 17 U.S.C. ßß 101 et seq.) 34. Plaintiff incorporates by reference the allegations contained in paragraphs 1 through 27 and 29 through 33 above as though set forth fully herein. 35. The foregoing acts of defendant, as undertaken and threatened, infringe plaintiffs exclusive rights, inter a/ia, to publish, reproduce, distribute and display the Works listed in Exhibits A and B hereto, all in violation of plaintiffs exclusive copyrights under 17 U.S.C. ß 106. Such acts constitute copyright infringement under 17 U.S.C. ß 501 and have contributed to infringement by others. 36. Defendant's unlawful acts set forth above constitute wilful copyright infringement under 17 U.S.C. ß 504. THIRD CLAIM FOR RELIEF (Misappropriation of Trade Secrets) 37. Plaintiff incorporates by reference the allegations in paragraphs 1 through 27 above as though set forth fully herein. 38. By his aforesaid acts, defendant has wrongfully acquired, or is about to, and threatens imminently to disclose, all without authorization, confidential, trade secret information constituting portions of the Advanced Technology that are contained in the Works listed in Exhibit B hereto. 39. Defendant's acts, as undertaken and threatened, as aforesaid, were and are done with full knowledge that the Works contain confidential trade secrets information, and with intent to destroy that property interest in confidential information~ 40. By his aforesaid acts as undertaken and threatened, defendant has misappropriated and threatens to further misappropriate RTC's trade secrets in violation of RTC's rights under California law, California Civil Code ß 3426.1 et seq. WHEREFORE, plaintiff prays for the entry of judgment against defendant as follows: 1. ON THE FIRST CLAIM FOR RELIEF: For a declaratory judgment in favor of RTC and against defendant that any publication, reproduction, derivation, distribution, display or performance of the Exhibit B Works by defendant constitutes copyright infringement, entitling RTC, inter alia to temporary, preliminary and permanent injunctive relief, to actual damages, a disgorgement of profits, and in lieu of such monetary remedies, should plaintiff so elect, for statutory damages for wilful infringement. 2. ON THE FIRST AND SECOND CLAIMS FOR RELIEF: (a) For an order that defendant and all of his agents, servants, employees, partners, privies and attorneys, and all persons acting or purporting to act under his authority, direction or control, and all persons in active concert or participation with him, or acting on his behalf, having advance notice of this order, be enjoined from directly or indirectly, in whole or in part, publishing, reproducing, distributing, performing, or creating derivative works based upon, during the pendency of this action, the Exhibit B Works, or any of them, and permanently thereafter, any of the copyrighted works of L. Ron Hubbard including, but not limited to, the Works identified in Exhibits A and/or B, in any media now known or hereafter developed in any time, place or fashion, and in particular, from engaging in any such acts in, on, or in connection with any computer, database, information service, electronic bulletin board service, network, storage facility, or archives, or other electronic or computer device, service, network or facility, including, without limitation, the transmitting or loading of any such materials onto, or downloading any copies thereof from any such device, service, network or facility and that all such copies which defendant, his agents, servants, employees, partners, privies, and attorneys and those in active concert or participation with them have caused to be copied or copied onto any such device, service, network, or facility be removed; (b) For an award of plaintiff's attorneys' fees and costs pursuant to 17 U.S.C. ß 505. 3. ON THE SECOND CLAIM FOR RELIEF: (a) For an order impounding all copies made or used in violation of RTC's exclusive rights, and of all plates, molds, matrices, masters, tapes, film negatives, or other articles in any media, electronic or otherwise, by means of which such copies may be reproduced including but not limited to all such copies and articles located in any so-called "off-site" storage areas, electronic or otherwise; (b) For an award of damages to plaintiff against defendant, according to proof at trial, and for all gains, profits and advantages directly or indirectly derived by defendant from his infringement of the copyrights of plaintiff in the Works; or in lieu thereof, should plaintiff so elect, for an award of statutory damages to plaintiff under 17 U.S~C. ß 504(c)(l) of $100,000.00 for each of the Works infringed by defendant, pursuant to 17 U.S.C. ß 504(c)(2); and 4. ON THE THIRD CLAIM FOR RELIEF; (a) For an order that defendant and all of his agents, servants, employees, partners, privies and attorneys, and all persons acting or purporting to act under his authority, direction or control, and all persons in active concert or participation with him, or acting on his behalf, having advance notice of this order, be enjoined: (1) directly or indirectly, from engaging in the further unauthorized disclosure, or display of the Exhibit B Works (excluding only NOTs series 1, 24, 34, 35 and 42, which are also the subject of other pending litigation), during the pendency of this action, and permanently of the Exhibit B Works, or portions thereof, and specifically from disclosing, displaying, transmitting or otherwise loading any of those Works, or portions thereof, in any media now known or hereafter developed in any time, place or fashion, or onto any computer, database, information service, electronic bulletin board service, network, storage facility, or archives, or other electronic or computer device, service, network or facility and that all such copies which defendant, his agents, servants, employees, partners, privies, and attorneys and those in active concert or participation with them have caused to be copied or copied onto any such device, service, network, or facility be removed; (2) directly or indirectly, from engaging in the further unauthorized solicitation and/or acquirement, during the pendency of this action and permanently of the Exhibit B, and specifically from soliciting, acquiring, seeking to acquire, or otherwise downloading any of the Exhibit B Works, or portions thereof, from any media now known or hereafter developed in any time, place or fashion, or from any computer, database, information service, electronic bulletin board service, network, storage facility, or archives, or other electronic or computer device, service, network or facility and that all such copies which defendant, his agents, servants, employees, partners, privies, and attorneys and those in active concert or participation with them have caused to be copied or copied from any such device, service, network, or facility be removed; (b) For an order directing defendant, and all of his agents, servants, employees, partners, privies and attorneys, and all persons acting or purporting to act under his authority, direction or control, and all persons in active concert or participation with him, or acting on his behalf, having advance notice of this order, to return immediately to counsel of record herein for plaintiff Religious Technology Center all documents in their possession, custody or control (including but not limited to those documents located in any so-called "off-site" storage facility, electronic or otherwise) that contain any of the Advanced Technology; and (c) For an award of attorney fees under California Civil Code ß 3426.4. 5. ON THE FIRST, SECOND, AND THIRD CLAIMS FOR RELIEF: For an order that defendant and all of his agents, servants, employees, partners, privies and attorneys, and all persons acting or purporting to act under his authority, direction or control, and all persons in active concert or participation with him, or acting on his behalf, having advance notice of this order, be enjoined from: (a) directly or indirectly destroying, altering or concealing, or in any way disposing of, any reproduction, copy, facsimile, excerpt, or derivative of any work of L. Ron Hubbard that is in defendant's possession, custody or control, in whole or in part, including, but not limited to, those materials located in any so-called "off-site" storage areas, electronic or otherwise, or otherwise despoiling or causing the despoliation, or alteration of any evidence, in whole or in part, in any form, place or media relating to defendant's conduct complained of in this action; and (b) causing or inducing any other person to engage in any of the foregoing prohibited acts; and, (c) filing with the Court, except under seal, any documents that contain any of the Advanced Technology. 6. For such other and further relief as this Court deems just and proper. DATED: April 4, 1996 Thomas R. Hogan LAW OFFICES OF THOMAS R. HOGAN Roger M. Milgrim William M. Hart PAUL, HASTINGS, JANOFSKY & WALKER -and- Helena K. Kobrin [Hogan signed this one] Attorneys for Plaintiff RELIGIOUS TECHNOLOGY CENTER