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Sony v. Hotz Begins - Updated 2Xs: Hotz Responds
Wednesday, January 12 2011 @ 09:34 PM EST

PCWorld is reporting that Sony is going after what it describes as "iOS jailbreaker Geohot". The article expresses some confusion about whether or not it's a real lawsuit:
Hotz, better known as iOS jailbreaker Geohot, revealed on his site last night that he'd been "served" by Sony, prompting speculation about the legal ramifications and causing confusion over whether the paperwork was preliminary or actual notification of a lawsuit.

A quick read of the documents suggests the former. The "proposed order" is just as it sounds: A proposal that the Northern District Court of California find that Sony Computer Entertainment America "has shown a likelihood of success on the merits of its claims for violation of the DMCA [Digital Millennium Copyright Act] and CFA [Computer Fraud & Abuse Act]...that it will suffer irreparable harm" unless the court issues a restraining order shutting down sites that offer the hack, and impounds any computing technology involved in its creation.

I can try to help clear up any confusion. This is indeed litigation, and not just against Mr. Hotz, with the kind of papers that you find typically, meaning the Complaint [PDF], but it's also asking for immediate relief in addition, and that's the Motion for Temporary Restraining Order [PDF], with a written up proposed order [PDF] that the judge can just sign if the motion is granted. I'll show you how you can tell if papers filed mean real litigation, and I have the pertinent documents for you and the docket listing.

I note that Sony has chosen James G. Gilliland, Jr. of Kilpatrick Townsend & Stockton to represent the company. He represented Apple against Psystar, if you recall. I would not underestimate him, if I were a defendant.

Update: Hotz has provided an affidavit that says Sony has its facts all wrong. See end of the article for the details.

First, here's the docket, and I've provided links to the most relevant filings, because the links on PCWorld don't resolve properly, and afterward I'll explain some things:

Sony Computer Entertainment America LLC v. Hotz et al
Susan Illston, presiding
Date filed: 01/11/2011
Date of last filing: 01/12/2011


- Filed & Entered: † 01/11/2011
Case Referred to ECF
Docket Text: CASE DESIGNATED for Electronic Filing. (gba, COURT STAFF) (Filed on 1/11/2011)

- Filed: 01/11/2011 - Entered: 01/12/2011
Terminate Deadlines
Docket Text: ***Deadlines terminated. (cmc statement due date and cmc date) (ys, COURT STAFF) (Filed on 1/11/2011)

1 Filed & Entered: †01/11/2011
Docket Text: COMPLAINT for Injunctive Relief and Damages against Hector Martin Cantero, George Hotz, Sven Peter (Filing fee $ 350.00, receipt number 34611054944). Filed by Sony Computer Entertainment America LLC. (Attachments: # (1) Civil Cover Sheet) (gba, COURT STAFF) (Filed on 1/11/2011)

2 - Filed & Entered: † 01/11/2011 - Motion for TRO
Docket Text: Ex Parte MOTION for Temporary Restraining Order, Order to Show Cause Re: Preliminary Injunction, and Order of Impoundment; Memorandum and Authorities in Support filed by Sony Computer Entertainment America LLC. (Attachments: # (1) Proposed Order) (gba, COURT STAFF) (Filed on 1/11/2011)

3 - Filed & Entered: † 01/11/2011
Declaration in Support
Docket Text: Declaration of Riley R. Russell in Support of [2] MOTION for Temporary Restraining Order filed by Sony Computer Entertainment America LLC. (Related document(s)[2]) (gba, COURT STAFF) (Filed on 1/11/2011)

4 - Filed & Entered: † 01/11/2011
Declaration in Support
Docket Text: Declaration of Ryan Bricker in Support of [2] MOTION for Temporary Restraining Order filed by Sony Computer Entertainment America LLC. (Related document(s)[2]) (gba, COURT STAFF) (Filed on 1/11/2011)

5 - Filed & Entered: 01/11/2011
Administrative Motion to File Under Seal
Docket Text: Administrative Motion to File Under Seal Exhibits D, G, U, V, W, Y, and CC to Declaration of Ryan Bricker in support of [2] Ex Parte Motion for Temporary Restraining Order filed by Sony Computer Entertainment America LLC. (Attachments: # (1) Proposed Order) (gba, COURT STAFF) (Filed on 1/11/2011)

6 - Filed & Entered: † 01/11/2011
Declaration in Support
Docket Text: Declaration of Holly Gaudreau in Support of [5] Administrative Motion to File Under Seal filed by Sony Computer Entertainment America LLC. (Related document(s)[5]) (gba, COURT STAFF) (Filed on 1/11/2011)

7 - Filed & Entered: †01/11/2011
Docket Text: NOTICE of Manual Filing Notification by Sony Computer Entertainment America LLC (gba, COURT STAFF) (Filed on 1/11/2011)

8 - Filed & Entered: † 01/11/2011
Notice (Other)
Docket Text: NOTICE of Related Case by Sony Computer Entertainment America LLC (gba, COURT STAFF) (Filed on 1/11/2011)

9 - Filed & Entered: † 01/11/2011
Summons Issued
Docket Text: Summons Issued as to Hector Martin Cantero, George Hotz, Sven Peter. (gba, COURT STAFF) (Filed on 1/11/2011)

10 - Filed & Entered: † 01/11/2011
ADR Scheduling Order
Docket Text: ADR SCHEDULING ORDER: Case Management Statement due by 4/15/2011. Case Management Conference set for 4/22/2011 01:30 PM in Courtroom A, 15th Floor, San Francisco. (gba, COURT STAFF) (Filed on 1/11/2011)

11 - Filed & Entered: †01/11/2011
Declination to Proceed Before a U.S. Magistrate Judge
Docket Text: Declination to Proceed Before a U.S. Magistrate Judge by Sony Computer Entertainment America LLC. (gba, COURT STAFF) (Filed on 1/11/2011)

12 - Filed & Entered: † 01/11/2011
Clerk's Notice of Impending Reassignment
Docket Text: CLERK'S NOTICE of Impending Reassignment to U.S. District Judge (gba, COURT STAFF) (Filed on 1/11/2011)

13 - - Filed & Entered: † 01/11/2011
Docket Text: ORDER REASSIGNING CASE. Case reassigned to Judge Hon. Susan Illston for all further proceedings. Magistrate Judge Joseph C. Spero no longer assigned to the case. Signed by Executive Committee on 1/11/11. (gba, COURT STAFF) (Filed on 1/11/2011)

14 - Filed & Entered: †01/11/2011
Patent/Trademark Copy
Docket Text: REPORT on the filing or determination of an action regarding Copyright Infringement (cc: form mailed to register). (gba, COURT STAFF) (Filed on 1/11/2011)

15 - Filed & Entered: 01/11/2011

16 - Filed & Entered: 01/11/2011
Certificate of Interested Entities
Docket Text: Certificate of Interested Entities by Sony Computer Entertainment America LLC (Gaudreau, Holly) (Filed on 1/11/2011)

17 - Filed & Entered: 01/12/2011
Clerks Notice
Docket Text: CLERKS NOTICE re Motion to Relate Cases: The Court has reviewed the motion and has determined that no cases are related and no reassignments shall occur. (cl, COURT STAFF) (Filed on 1/12/2011)

How do we know it's litigation and not just some preliminary steps? If you want to know for sure, check PACER. Anyone can get an account, and that way you'll know if it's assigned to a judge and moving forward, because if it's listed on PACER with a judge assigned, it's litigation.

But let's say you don't want to pay for documents. You can still know. If you look at the complaint, notice the title of the document, which tells you what it thinks the offense is:

Complaint for Injunctive Relief and Damages Based on Violations of Digital Millennium Copyright Act; Violations of the Computer Fraud and Abuse Act; Contributory Copyright Infringement; Violations of the California Comprehensive Computer Data Access and Fraud Act; Breach of Contract; Tortious Interference with Contractual Relations; Common Law Misappropriation; and Trespass.
What does that mean? Every complaint has two sections that can tell you.

Right at the beginning, there's a section title "Nature of the Case". That's where you find out what the plaintiff says the case is about.

First, it says it's a complaint for injunctive relief and damages. That means it wants some activity stopped and it wants money paid by the defendants. It goes on to say that it's about "unlawful circumvention and distribution of circumvention devices in violation of the Digital Millennium Copyright Act" so it's a DMCA case. It's also claiming violations of the Computer Fraud and Abuse Act. Uh oh. Sony also claims it's about "contributory copyright infringement" under Copyright Law. That means Sony thinks others are guilty of infringement, and they were encouraged or enabled by the defendants. By defendants, plural, I mean that the defendants are listed as George Hotz, Hector Martin Cantero, Sven Peter, and Does 1 through 100. That last tells you that Sony expects it will find others involved that it will be adding to the litigation as defendants once it finds out their names, presumably in discovery.

Then it adds to the complaint violation of local California computer laws, then breach of contract, meaning I assume terms of use, which is attached to the complaint at the end, then tortious interference with contractual relations -- meaning others broke the terms too, thanks to the defendants' activity. Finally Sony alleges trespass and common law misappropriation.

If you read paragraph 2, it goes into more detail about the defendants' actions that Sony objects to, circumvention of "protection measures" Sony uses "to protect against unauthorized access to and copying of SCEA's proprietary PlayStation 3" and trafficking in circumvention devices "and components thereof". In addition, Sony claims they "intentionally accessed" without authorization "and/or trafficked in passwords or similar information used to gain access to the system." So that's what the complaint is about.

The next section lists the parties, and Sony lists the nyms of some of the Does, and in some cases it lists where the individual is believed to reside. But Sony believes there are more who it believes are "legally liable and responsible directly or indirectly for the matters alleged herein."

What does indirectly mean? Paragraph 10 lays it out:

By working together, cooperating with one another, expressing a common interest, publishing instructions and demonstrations that induce and encourage fellow Defendants to engage in the unlawful conduct alleged herein, and by ratifying fellow Defendants' unlawful conduct by announcing such conduct with approval and encouraging the furtherance of such conduct, Defendants joined and participated in tortious scheme to commit the acts alleged herein in furtherance of a conspiracy.
In other words, if you did any of the things Sony lists in the complaint, Sony would like to add you to this litigation as a defendant to those already listed if it can find you.

Finally go to the last section of the document, where the plaintiff asks the court for the relief it wants. The first thing Sony asks for is that the court enter judgment against the defendants. That's litigation language, not preliminary. Then Sony asks for two kinds of injunction -- a preliminary injunction, which is what the motion is about, and also a permanent one at the end of litigation, "enjoining and restraining Defendants and their agents, servants, employees, successors and assigns, and all other persons acting in concert with or in conspiracy with or affiliated with Defendants" from doing any of the things Sony is complaining about. And it asks the court to force the defendants to hand over at the end of the litigation "any and all computer hardware and peripherals containing circumvention devices, technologies, programs, parts thereof, or any unlawful material, including but not limited to code and software, hard disc drives, computer software, inventory of CD-ROMs, computer diskettes or other materials containing circumvention devices, technologies, programs, parts thereof, or other unlawful material" so Sony can destroy it all. I don't know what it can do about knowledge inside peoples' heads. I guess that's where the threats come in.

Next Sony asks for money, called "damages", and any profits the defendants might have made, as well as statutory damages, trebled, under copyright law, plus interest, plus attorneys' fees and costs.

What does it mean? It means Sony wants you to stop messing with its stuff, and it's pulling out all the stops.

Update Details:

Hotz has responded [PDF] to the motion for the TRO with an interesting affidavit [PDF] attached. In the affidavit, he claims Sony has its facts wrong in the following respects: first, he says he doesn't live in California or have sufficient contacts with California to give Sony jurisdiction over him. And he wasn't served. He just got an email saying there would be a hearing the following day. To explain that, an ex parte hearing is for the benefit of just one party, who must claim it's an emergency requiring urgent action, and any order by the court is followed up with a regular hearing afterward, with both parties there and prepared.

Hotz doesn't have a Playstation Network account, Hotz says, so he's not bound by the Terms of Service and User Agreement. Wait. There's more:

5. I have not engaged in any unlawful conduct.

6. To the best of my knowledge and belief, I do not have a Playstation Network ("PSN") account. As such, I am not bound by the "Playstation Network Terms of Service and User Agreement."

7. I have never utilized an account with PayPal in connection with any activity relating to the Playstation 3 computer entertainment system.

8. I have never distributed a circumvention device or component through YouTube.

9. I do not currently have an account with Twitter, nor have I had an account with Twitter since on or about June 13, 2010.

10. I have not worked in concert with Defendants "Bushing," Hector Cantero, Sven Peter and "Segher". I have no association or connection with "FAILOVERFLOW," the purported group or organization that is allegedly composed of Defendants "Bushing," Hector Cantero, Sven Peter and "Segher".

11. I do not support piracy or counterfeiting.

Now the case is getting really interesting. You can't sue someone unless you can get personal jurisdiction over the person, and if the above is true, Mr. Hotz may slip right out of Sony's grasp. Moreover, if it's true, he should. We haven't heard from the others, but Sony doesn't seem to know how to serve them, or provide evidence, the opposition points out, that Sony has any jurisdiction over them either, and without Mr. Hotz, now what will they do?

The Hotz opposition to the TRO says his lawyer, Stewart R. Kellar, will be filing a Motion to Dismiss for Lack of Personal Jurisdiction, and it asks the court to put the TRO hearing on hold until after it rules on the motion. To tip the scales, it tells the court this:

This case is not about Sony Computer Entertainment America LLP ("Sony") attempting to protect its intellectual property or otherwise seek bona fide relief from the court. Rather, it's an attempt for Sony to send a message to any would-be individual that attempting to use any hardware it manufactures in a way it does not deem appropriate will result in harsh legal consequences irrespective of any legal basis or authority for such action. It is for this reason that Sony filed a motion for ex parte protective relief, complete with numerous misstatements of fact and law, and providing Mr. Hotz, who is a resident of New Jersey, with a copy of the documents mere hours before a preliminary hearing for this matter was set in this Court in California, denying Mr. Hotz's counsel the opportunity to file a properly-drafted response.

Contrary to Plaintiff's depiction, Mr. Hotz is a computer prodigy, a little over 21 years of age, that is well-known for his accomplishments in the field of iPhone development, such as for creating the ability to unlock the phone to provide for interoperability between various cellular network carriers. Mr. Hotz has also gained fame through his numerous accomplishments in the Intel International Science and Engineering Fair, and provided numerous interviews on major television networks including the Today Show, Fox, CNN, NBC, CBS, and ABC. More recently, Mr. Hotz discovered the ability to install programs on the Playstation 3 Computer Entertainment System ("Playstation Computer"), which has angered Sony. Accordingly, Sony has filed this ex parte motion for relief, which is devoid of jurisdiction over Mr. Hotz, and which grossly mis-categorizes the underlying facts and fails to meet the minimum burden required to obtain the extraordinary relief it seeks.

As a cursory matter, Defendant Hotz vehemently objects to Plaintiff's attempt to classify him as a hacker and to assert, without authority or a good faith basis, that Defendant Hotz has any association or connection with Defendants "Bushing," Hector Cantero, Sven Peter and "Segher". It is also noteworthy that Plaintiff has asserted no basis for personal jurisdiction over Defendants "Bushing," Hector Cantero, Sven Peter and "Segher," leaving Plaintiff's basis for personal jurisdiction over Mr. Hotz based on a few incorrect and conclusory assertions regarding Mr. Hotz. Moreover, Defendant Hotz has not produced, manufactured, sold, nor does he have any intent whatsoever to produce, manufacture, or sell, any devices that facilitate piracy or counterfeiting.

Wow. If this is so, Sony has done real damage to a man's reputation. And if you read Sony's filing, you saw it claims jurisdiction because Hotz allegedly has a Paypal account, and Paypal is in California, but Hotz's opposition denies ever using the account in connection with any activity related to the Playstation:
In fact, Mr. Hotz expressly tells people on his website not to give him donations for his efforts. Even more harmful to Sony's personal jurisdiction argument, the only evidence put forward of Mr. Hotz' Paypal account appears to be a transaction initiated by the plaintiff.
Yuck. This is what I'd call a lawyer's nightmare -- you rely on what your client told you, and it turns out not to be exactly so. It's more common than you'd imagine. Well. More than I'd imagine, if I hadn't seen it with my own eyes. One lawyer I worked for told me that the stress from being a lawyer is that you have two fronts to the war -- the other party, plus you have to watch your back so your client doesn't sink your ship. It looks bad for Sony. But let's wait for Sony's response before we reach any final conclusions. I have a lot of respect for Mr. Gilliland, Sony's lawyer, and I'm sure he wouldn't take a case he didn't think had merit.

Update 2: Orin Kerr writes at The Volokh Conspiracy that he has nominated Sony's lawyers for "Todayís Award for the Silliest Theory of the Computer Fraud and Abuse Act":

The argument: Youíre guilty of felony computer hacking crimes if you access your own computer in a way that violates a contractual restriction found in the fine print of the licensing restriction of the product imposed by the manufacturer.

I realize the complaint characterizes the defendants as hackers, and the CFAA is supposed to be about hacking. But think for a moment about the nature of this claim. You bought the computer. You own it. You can sell it. You can light it on fire. You can bring it to the ocean, put it on a life raft, and push it out to sea. But if you dare do anything that violates the fine print of the license that the manufacturer is trying to impose, then youíre guilty of trespassing onto your own property. And itís not just a civil wrong, itís a crime. And according to the motion for a TRO, itís not just a crime, itís a serious felony crime.

Iíve seen a lot of civil cases trying to use the vague language of the Computer Fraud and Abuse Act in creative ways. But this is the first case I know of claiming that you can commit an unauthorized access of your own computer. And that claim justifies todayís award for the Silliest Theory of the Computer Fraud and Abuse Act.

Given that Hotz says he doesn't have a Playstation Network account anyhow, and thus isn't under any Sony Terms of Use which is the foundational premise of Sony's theory, it's not just a *silly* theory. I'd have to guess it's a failed theory, since it doesn't match reality. Sony gets to amend the complaint, of course, so stay tuned.

And speaking of failure, has Sony given thought to the fact that the information it wishes to destroy on Hotz's computers and CDs and thumb drives is all over the internet, which means it's on potentially millions of computers and CDs and thumb drives all over the world?

And for those who might not realize it, Sony, the creator of an infamous rootkit that accessed and damaged people's computers, but without facing any felony charges under the Computer Fraud and Abuse Act (details), sold Playstations as being able to run Linux, or "OtherOS". A lot of people bought them precisely for that purpose. The US Air Force did, for example, ars technica points out. Later, in April, Sony insisted that you install a firmware patch that made that no longer possible. The Air Force and other research work was impacted, as the ars technica article explains:

We checked in with the Air Force Research Laboratory, which noted its disappointment with the Sony decision. "We will have to continue to use the systems we already have in hand," the lab told Ars, but "this will make it difficult to replace systems that break or fail. The refurbished PS3s also have the problem that when they come back from Sony, they have the firmware (gameOS) and it will not allow Other OS, which seems wrong. We are aware of class-action lawsuits against Sony for taking away this option on systems that use to have it."

A similar issue will confront academic PS3 clusters, which have sprung up in labs across the country. In 2007, a North Carolina State professor built himself a small cluster that he cobbled together after "he spent a few hours one day in early January driving from store to store to purchase the eight machines."

The University of Massachusetts has 16 machines networked into a cluster called the "Gravity Grid," used to look at gravitational waves and black holes. According to the physicists at UMass, the PS3's "incredibly low cost make[s] it very attractive as a scientific computing node, i.e., part of a compute cluster. In fact, it's highly plausible that the raw computing power-per-dollar that the PS3 offers is significantly higher than anything else on the market today."

The so-called felony Hotz is accused of by Sony in such over the top language has to do with trying to retain functionality that people paid for and that Sony later reneged on, not for piracy purposes. Not saying whether or not Hotz or anyone went over any legal line, because I'm not familiar enough with the facts to know yet. But it doesn't seem right to people for Sony to allow something and then take it away after it takes your money. In fact, there's at least one class action lawsuit that was filed right after Sony did the deed:
This decision, in the words of the lawsuit, was an "intentional disablement of the valuable functionalities originally advertised as available with the Sony PlayStation 3 video game console. This disablement is not only a breach of the sales contract between Sony and its customers and a breach of the covenant of good faith and fair dealing, but it is also an unfair and deceptive business practice perpetrated on millions of unsuspecting consumers."
Just for context.

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