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Hotz Ably Fights for His Motion to Dismiss - Tells Court SCEA's Case Doesn't Belong in CA
Sunday, March 27 2011 @ 10:52 PM EDT

George Hotz's lawyers are truly fighting hard for him. This case, SCEA v. Hotz, they forcefully tell the court in a newly filed Reply [PDF] to SCEA's opposition brief along with Objections [PDF] to various SCEA declarations, doesn't belong in California. One important reason is that Hotz is just an individual, not an international corporation with bags of money to spend on litigation, and it's obvious that New Jersey would be more convenient for him. He lives there. The actions complained of happened there. Having a blog on the Internet shouldn't make you suable in every state in the union.

Besides, SCEA doesn't make Playstation 3, the Reply points out, "the Playstation Computer and its firmware is made by Sony Japan", so Hotz wasn't directing his actions at SCEA. After all the discovery SCEA forced Hotz through, it still can't prove a link to California that would justify suing him there. There's no evidence that blickmaniac is Hotz. The serial number that SCEA claimed was blickmaniac's doesn't match the serial number that Hotz provided the court. As for blickmanic, Hotz's lawyers have found a blog posting on the Internet from someone saying *she's* blickmanic, not Hotz. There's no evidence Hotz ever accepted the Playstation Network terms of service or opened an account. Personal jurisdiction over Hotz in California would be "unreasonable". And Hotz's motion should be granted because SCEA "has abused the jurisdictional discovery process".

The Playstation Network Terms of Use, Hotz's lawyers point out, relate only to software, not hardware, and to software obtained via the Playstation Network, and "Hotz has affirmed that he did not obtain any software he is alleged to have circumvented through the PSN", and that, they tell the court, is fatal to SCEA's attempt to get jurisdiction over him via that route. All the over-the-top allegations, in short, that some journalists published last week after reading SCEA's filing are now answered ably, about blickmaniac, the Playstation Network, the California downloads, the serial number, SCEA's jurisdictional arguments, everything.

I confess, this is getting exciting.

I'm posting it now so you can read it hot off the presses, but it's voluminous, so I'll just skim the surface and give you an overview, and later, I can add details. Here are the filings:

03/25/2011 - 112 - OBJECTIONS to re 105 Declaration in Opposition, 104 Declaration in Opposition,,, 107 Declaration in Opposition, Objections to Bricker Declaration by George Hotz. (Attachments: # 1 Objections to Law Dec, # 2 Objections to Liu Dec, # 3 Objections to Miller Dec, # 4 Objections to Pierce Dec)(Kellar, Stewart) (Filed on 3/25/2011) (Entered: 03/25/2011)

03/25/2011 - 113 - Declaration of Stewart Kellar in Support of Defendant Hotz's Reply to SCEA's Opposition Brief filed byGeorge Hotz. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit I, # 8 Exhibit J, # 9 Exhibit K, # 10 Exhibit L, # 11 Exhibit M)(Kellar, Stewart) (Filed on 3/25/2011) (Entered: 03/25/2011)

03/25/2011 - 114 - Declaration of Alexander Stamos in Support of Defendant Hotz's Reply to SCEA's Opposition Brief filed byGeorge Hotz. (Attachments: # 1 Exhibit A)(Kellar, Stewart) (Filed on 3/25/2011) (Entered: 03/25/2011)

03/25/2011 - 115 - Declaration of George Hotz in Support of Defendant Hotz's Reply to SCEA's Opposition Brief filed byGeorge Hotz. (Kellar, Stewart) (Filed on 3/25/2011) (Entered: 03/25/2011)

03/25/2011 - 116 - Administrative Motion to File Under Seal Exhibits F and M of Declaration of Kellar filed by George Hotz. (Attachments: # 1 Affidavit of Kellar, # 2 Proposed Order Granting Motion to Seal)(Kellar, Stewart) (Filed on 3/25/2011) (Entered: 03/25/2011)

03/25/2011 - 117 - REPLY (re 57 MOTION to Dismiss FOR LACK OF PERSONAL JURISDICTION AND IMPROPER VENUE ) DEFENDANT'S REPLY TO PLAINTIFFS OPPOSITION BRIEF filed byGeorge Hotz. (Attachments: # 1 Proposed Order)(Kellar, Stewart) (Filed on 3/25/2011) (Entered: 03/25/2011)

Terms of Service alone can't confer jurisdiction automatically, even if Hotz had agreed to them: "To the contrary, jurisdiction is only proper over a defendant pursuant to a Terms of Service Agreement if the dispute arises from such agreement." And this one doesn't. Check out this footnote:
1 It is also worth noting that SCEA has failed to proffer any PSN TOS that could be applicable to Mr. Hotz, even assuming everything SCEA has said is true, because the PSN TOS SCEA has proffered was created after Mr. Hotz purportedly created a PSN account.
The implication is that SCEA might be fighting dirty, providing misleading information to the court. Alternatively, SCEA goofed in a way that just happens to help them, if no one had noticed.

Hotz's Declaration tells the court what you suspected, that he never opened the documentation that came with his new Playstation3. He still has the sealed bag, or more accurately his lawyer does. You can see pictures of it in exhibits attached to Stewart Kellar's Declaration. The other consoles he got used didn't come with any instruction manuals, and consequently he never knew SCEA existed, let alone that it was in California or that it had any connection to Playstation3, and he thought and still thinks that Sony Japan owns Playstations3s. When he looks at his consoles, they all reference Japan, Sony Computer Entertainment. Not a word about SCEA.

Consequently, when he offered to help Sony improve its security, he surely wasn't talking to SCEA, an entity he'd never heard of and didn't know existed.

And on the issue of not playing fair, Hotz's attorneys have something to say about that in connection with the "blickmaniac" account:

Finally, SCEA has yet to offer any proof that Mr. Hotz accepted the PSN TOS. From the start of this case, SCEA has asserted dubious arguments, which are often contradictory, pertaining to the PSN. Initially, SCEA stated that Mr. Hotz had a PSN account under the name “Geo1Hotz”, which incidentally, does not include any information relating to Mr. Hotz. Dkt No. 31, Gilliland Dec. Ex. A. Nonetheless, SCEA argues that jurisdiction exists as a virtue of this account and points to the fact that Mr. Hotz frequently utilizes the username “geohot”, wholly ignoring that all other information indicates it has no connection with Mr. Hotz.

Now, SCEA claims that Mr. Hotz must have created a PSN account for the name “blickmaniac” because the serial number of one of the Playstation Computers that Mr. Hotz purchased-- including 3 Playstation Computers that were purchased used-- was used to register a PSN account. The serial number utilized by SCEA, however, is different from the serial number proffered by Mr. Hotz's attorney. Compare Law Dec., Ex. A, with Kellar Dec., Ex. L. Moreover, such information does not include any information relating to Mr. Hotz.3 The sole way SCEA attempts to demonstrate that “blickmaniac” is Mr. Hotz is an unauthenticated and hearsay blog posting where an individual attempts to sell an unlocked cell phone -- which is not unusual and major product retailers like Amazon.com sell. Curiously, a search for “blickmanic” also yields a hearsay blog posting where an individual using the name “eepog” claims that he is the owner of the “blickmanic” account and states “the PSN account was created by me!!!” Kellar Dec., Ex. K.

It is important to recognize the dubious nature of creating a PSN account. Just as someone can enter a false name or fake e-mail when entering personal information on a sweepstakes card, someone can enter the same false information when registering for a PSN account. Gilliland Dec. Ex. A.4 Similarly, an individual can also use a fake serial number or an improperly obtained serial number to create a PSN account.

_________
3 Curiously, the exhibit proffered by SCEA regarding the purported “blickmanic” account indicates that there was some form of purchase or transaction relating to this account. Law Dec. Ex. A. Consistent with SCEA's general refusal to provide Mr. Hotz with its requested discovery responses, SCEA has not provided any information pertaining to this transaction to Mr. Hotz's counsel.

4 Indeed, after this lawsuit was initiated, someone other than Mr. Hotz created a PSN account using Mr. Hotz's well-known e-mail address.

And as for the California downloads, they can't support jurisdiction for the following reason, in addition to the fact that Hotz was not selling anything or accepting money:
SCEA attempts to put a spin on this case by identifying a number of downloads in California. But that identification is a red herring. His Code was downloaded over 323,518 times. Stamos Dec. ¶ 8. In other words, (and taking for argument's sake the validity of SCEA's geolocation software objected to in connection with this reply brief) 4.1 percent of total downloads were performed by California residents. Is Mr. Hotz suddenly subject to jurisdiction in every single state where an individual downloaded this software? Further, SCEA identifies two numbers of downloads, 5,700 prior to filing of the lawsuit, and then the total number running until after the injunction issued, 13,300. As this Court well knows, a defendant must have sufficient contacts with California at the time the cause of action accrues or, at latest, when the complaint is filed.
They don't add that SCEA's lawyers most likely know that too, but the implication is floating free in the air that they once again have overstated their case and a bit misleadingly too.

Hotz's Reply begins with the Introduction, so here it is to give you a taste:

The message that Sony Computer Entertainment America ("SCEA") is conveying to George Hotz ("Mr. Hotz") and the public is of great consequence. SCEA advocates and encourages the Court to accept that simply by connecting to the Internet, you are consenting to jurisdiction anywhere in the world. SCEA has taken advantage of these unfamiliar concepts in order to present the Court with misleading sets of facts and affidavits.

Mr. Hotz is a 21-year-old individual who resides in New Jersey. He is not a multinational company, or even a company at all--he is just one person. He did not profit from his actions in question and he did not sell any circumvention devices. He is however, known for being a prodigy in the computer programming field. Mr. Hotz's actions which gave rise to the controversy are simple: (1) Mr. Hotz published code he independent created (“Code”)(2) Mr. Hotz used the Code on his Playstation Computer, and (3) Mr. Hotz posted his findings on his personal blog.

SCEA filed this action, claiming jurisdiction over Mr. Hotz is proper in California. SCEA then flooded the docket with affidavits from its lawyers and employees, offering ambiguous and misleading information. SCEA then indicated that it would undoubtedly confirm that jurisdiction in California is proper for Mr. Hotz through jurisdictional discovery. Now, after Mr. Hotz's computer hard drives, and a graphing calculator have been impounded, and Mr. Hotz' discovery responses have been timely submitted, SCEA still is unable to present evidence to refute the jurisdictional challenges asserted by Mr. Hotz. Instead, SCEA has only continued to flood the docket with dubious information, such as irrelevant hearsay blog postings filed under seal, and misleading affidavits from enigmatic employees with no explanations of the source of their personal knowledge.

I'll work on getting it all done as text, but one thing Hotz's lawyers point out is that there's some flimflam about what SCEA does:
To be clear, Sony Japan-- not SCEA-- is responsible for manufacturing, distributing, and marketing the Playstation Computer. Sony Japan is the owner of all rights, title, and interest in, to and under the copyrights in the PS3 Programmer Tools, although SCEA misleadingly lists this information under the heading “SCEA's Copyrights and Copyright Licenses”. Complaint, ¶30.

On the other hand, SCEA, which is not even a subsidiary of Sony Japan, focuses on the sales of products and video games. Complaint, ¶22. SCEA develops, markets and distributes video games, and speaks extensively about video games in its pleadings. Opposition, p2. However, Mr. Hotz' actions have nothing to do with video games and the Code does not provide users the ability to run pirated video games or any other pirated software, as SCEA claims. Opposition, p2.

Presumably, had one of Sony Japan's hundreds of affiliates initiated a lawsuit in a different forum, such affiliate would modify the discourse to argue that Hotz focused on music (e.g., Sony Music Entertainment, Inc.), movies (e.g., Sony Pictures Classics, Inc.), electric components (e.g., Sony Corporation, Inc.), or some other aspect tangentially related to the Playstation Computer in an attempt to confer jurisdiction in such forum. The Playstation Computer provides for many functions-- in fact, it's slogan is that “It Only Does Everything”. The fact that Mr. Hotz purportedly impacted the Playstation Computer does not mean that all of these affiliates, including component manufacturers in China, can suddenly claim that Mr. Hotz directed his activities toward them.

When one purchases a Playstation Computer and looks at its outer box, it has plastered on numerous places that it is a product of Sony Japan and all rights belong to Sony Japan. It only references Sony Japan-- not SCEA. When one takes the Playstation Computer out of its box and inspects it, it states it is a product of Sony Japan and all rights belong to Sony Japan. It does not reference California. When one installs the Playstation Computer firmware update that Mr. Hotz allegedly circumvented, which can legally be obtained through the internet as Mr. Hotz did, upon installation, it only refers to Sony Japan.

In the Kellar Declaration, reference is made to an agreement, filed as an exhibit, under seal, between SCEA and Sony Japan:
7. Attached hereto as Exhibit F is a true and correct copy of a Business Agreement between Sony Japan ("SCEI") and SCEA. The document was produced by SCEA on February 24 at 8:12pm. The Agreement contains acknowledgments by SCEA that SCEI is the owner of all rights in the Playstation 3 system and related IP rights. The produced business agreement has been modified to a shade of light grey. Because of the lightening of the file and the normal black text of the Bates stamps, I was unable to run optical character recognition software (OCR) on the file or any other file from SCEA that was produced in this form. Because the exhibit was marked by SCEA’s counsel as Attorneys Eyes Only, it has been filed under seal.
I'm sure Hotz is very grateful so many people donated money to help him add to his legal team. It can make a real difference.

Here is what Hotz's legal team writes about SCEA's abuse of discovery:

IV. MR. HOTZ' MOTION SHOULD BE GRANTED BECAUSE SCEA HAS ABUSED THE JURISDICTIONAL DISCOVERY PROCESS

On February 2, 2011, Mr. Hotz timely filed this Motion. Two days later, SCEA served a slew of premature and abusive discovery documents on Mr. Hotz and sent multiple third party subpoenas prior to any procedural milestone that would permit such acts. Clearly the tactic was to overwhelm Mr. Hotz by thwarting proper discovery procedure. On February 10, 2011, the abusive discovery demands were thrown out from the bench and SCEA was required to call back its abusive subpoenas. Feb. 10 Hrg. Transcript [Dkt. 77] 32:9-11 and 33:22-34:8.

Nevertheless, SCEA issued numerous frivolous subpoenas to harass Mr. Hotz. SCEA subpoenaed Twitter, Google, Youtube, Bluehost (webhost for Mr. Hotz's site), SoftLayer (webhost for psx-scene.com) and PayPal. As issued, none of those subpoenas limited categories of documents to "California" despite the limited jurisdictional discovery. After subpoenaing every entity it could think of, SCEA still has nothing (and certainly nothing admissible) to connect Mr. Hotz to California.

SCEA also propounded extensive discovery requests on Mr. Hotz. SCEA sought 31 categories of documents (SCEA eventually withdrew five categories). Mr. Hotz timely and appropriately produced documents and/or provided an appropriate statement of compliance for each request. In contrast, SCEA's document production failed to comply with the instructions to produce TIFF files and SCEA intentionally sabotaged its produced files to prevent the use of OCR software, disabling Mr. Hotz from searching for text therein. Kellar Dec. Ex. L (compare Bricker Dec. filed with Court with Bricker Dec. produced to Mr. Hotz). SCEA also propounded nine interrogatories on Mr. Hotz. Similarly, he responded to each one. Finally, SCEA demanded an inspection of Mr. Hotz's impounded hard drives and Mr. Hotz's PS3s. SCEA subsequently withdrew its request to inspect the impounded hard drives, but now has reasserted this request.

At a hearing with Judge Spero, SCEA said it needed to search Mr. Hotz’s hard drives for a Software Developer’s Kit (“SDK”) because, they claimed, it contains information that SCEA is in California. Dkt. No. 93, 10-12. Judge Spero ordered the parties to meet and confer and submit a joint letter by March 16. Order Dkt. No. 96 3:16-18. SCEA refused to meet in person regarding the letter. Once Mr. Hotz’s counsel discovered the SDK does not contain what SCEA stated, Mr. Hotz sought to bring this matter to the Court’s attention in the joint letter. To prejudice Mr. Hotz’s position, SCEA refused to timely provide its portion of the letter, preventing Mr. Hotz from rebutting its arguments. Dkt. 99. SCEA’s bad faith acts caused the March 16 letter to be delayed. Id. SCEA is not in a position to vilify Mr. Hotz when it is SCEA that continues to proceed in bad faith.

SCEA's task, which it failed at, was to connect Mr. Hotz, in some concrete way to California. Rather than submit admissible evidence, SCEA provided the declaration of an unqualified expert Dkt. No. 105-2, Peirce Dec. SCEA submitted the declaration of SCEA employees provided without any foundation beyond a vague title. Dkt. No. 105-1, Liu Dec.; Dkt. No. 105 Law Dec.) Further, the Law declaration was not even signed under penalty of perjury; its contents are clearly misleading and inadmissible as discussed above. SCEA also submitted the declaration of Ryan Bricker, which nearly entirely consisted of hearsay printouts from the Internet. Dkt. No. 104, e.g., Exhs. F, I, J, K, L, N, O, T, & U.

Further, SCEA abuses the sealing process by filing documents under seal which have no business being sealed. SCEA seals periodicals and publicly accessible web pages, falsely designating such items as Confidential. See e.g. Bricker Dec. Exhs. H, L, M, N, P (publicly available documents and web pages filed under seal). SCEA is thwarting the openness of the Courts with its abusive sealing, yet in its latest filing, SCEA intentionally published Mr. Hotz’s home address despite the fact it knows the massive media coverage this case receives. Dkt No. withheld for Mr. Hotz’s privacy. SCEA even withholds information from this Court. Pierce Dec. Exh. A, filed under seal, redacts all IP Address information, tainting any claim of California connections to Mr. Hotz' site. SCEA is preventing the Court from doing its job.

These acts are indicative of SCEA’s pattern of abuse throughout this action. SCEA’s counsel has not conferred in good faith with Mr. Hotz’s counsel regarding the scope and method of jurisdictional discovery. SCEA’s counsel refuses all efforts to meet and confer in person on essential matters, in direct violation of Judge Spero’s standing order regarding disputes of parties and moots any argument SCEA has made about Mr. Hotz’s noncompliance with discovery. Contrary to SCEA’s assertions, Mr. Hotz has complied and continues to comply with SCEA’s discovery requests. Mr. Hotz has not thwarted discovery by going on a planned vacation. Mr. Hotz has scheduled his deposition and the inspection of his Playstation Computers.

To put a cap on SCEA’s bad faith acts, SCEA waited until the eve Mr. Hotz’s reply brief was due to produce the most damning evidence of all: agreements between Sony Inc. and SCEA that eviscerate SCEA’s position that George’s acts were aimed at SCEA. SCEA produced these documents well after it agreed to produce all discovery documents. SCEA cannot be permitted to pervert the discovery process in this way.

So, now we know more about the difficulties we saw in the parties' filing of a joint letter. Hotz is saying that SCEA's lawyers were playing games, to withhold the very damning business agreement until it would be too late to file.

Update: The Declaration by Alexander Stamos is by the folks Hotz's lawyers hired to look at the logs produced by Hotz's webhosting firm. Their math doesn't match SCEA's, and you can see it all in Exhibit A, an Excel spreadsheet.

Here's the text of the Hotz Declaration:

STEWART KELLAR (SBN 267747)
[email]
E-ttorney at Law
[address, phone]

JACK C. PRAETZELLIS (SBN 267765)
[email]
MBV LAW LLP
[address, phone, fax]

YASHA HEIDARI (Pro Hac Vice)
[email]
HEIDARI POWER LAW GROUP LLC
[address, phone, fax]

Attorneys for Defendant George Hotz

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION

SONY COMPUTER ENTERTAINMENT
AMERICA LLC, a Delaware limited liability
company,

Plaintiff,

v.

GEORGE HOTZ, et al.,

Defendants.

___________________

Case No. 11-CV-000167 SI

DECLARATION OF GEORGE HOTS RELAT-
ING TO MOTION TO DISMISS AND IM-
POUNDMENT ORDER

Date: April 8, 2011
Time: 9:00 a.m.
Place: Courtroom 10, 19th Floor

_____________________________

I, George Hotz, declare:

1. I am of required age and competent in all respects to testify regarding the matter set forth herein. I have personal knowledge of the facts stated herein and know them to be true.

2. Prior to January 11, 2011 when plaintiff Sony Computer Entertainment America,

LLC ("SCEA") sued me, I had no knowledge of SCEA. Further, prior to that date I had no knowledge of SCEA's relationship to the Playstation Computer. I did not know that SCEA was located in California.

3. Prior to January 11, 2011, I had no knowledge of the location of SCEA's state of organization, the location of its headquarters, or the location of its principal place of business. In short, I had never heard of SCEA until they sued me.

4. While creating the code that achieves interoperability between computer programs ("the Code"), I believed the Playstation and its firmware were owned by the Japanese company Sony Computer Entertainment, Inc. I still believe this to be true.

5. The impounded hard drives and calculator were and are the only storage devices in my possession, custody or control, containing the Code that achieves interoperability between computer programs at the time of the the impoundment order.

6. The Blue USB Stick did contain the Code shown in my YouTube video but no longer contains such Code. I deleted the Code from it prior to this litigation.

7. The Code was stored on the web server for geohot.com but was deleted from the server on January 27, 2011 to comply with the Temporary Restraining Order [Docket No. 50]. The Code was also posted on Pastie. org and Github.com. Originally, it did not occur to me that these locations counted as within my custody or control. However, seeing as the Code was stored there, and in the interest of openness and completeness, I am now identifying those locations.

8. Other than the above-identified, I have not stored the Code anywhere else.

9. I did not receive any money, and specifically stated on my website that I did not want any money for the Code. I did not track users who accessed my website.

10. I never opened the instruction manual and related documentation that came with the Playstation3 that I purchased new. The instruction manuals were included in a sealed plastic bag that remains sealed, as I have not ever opened it. I placed all of my Playstation 3 consoles and the instruction manual in the custody and care of my attorney Mr. Stewart Kellar.

11. The Playstation 3 consoles I received used did not include any instruction manu-

-2-

als or other accompanying literature whatsoever. I believe the used Playstation I purchased from Gamestop may have come with instruction manuals, which I never opened or read. I believe I threw the manuals out when I threw away the ugly box that the used Playstation came with. The reason I kept the slim box (for the Playstation I purchased new) was because it was pretty.

12. Examining my Playstation computer only lists Sony Computer Entertainment, Inc. Nowhere on the Playstation computer does it list SCEA.

13. I downloaded the Playstation firmware version 3.55 via direct link and not from the Playstation network or us.playstation.com. During installation, the firmware only listed Sony Computer Entertainment, Inc. and did not refer to SCEA.

14. Although I have a blog, the number of responses to my posts is overwhelmingly large. I do not, and it is not feasible for me to, read all the comments. Nonetheless, I have never read any posting on my blog that alleges the existence of SCEA.

15. I could not have sought employment with SCEA because I did not know of SCEA's existence.

16. Communicating with my attorneys across the country has been difficult. Because SCEA has been actively pursuing me, I have had to communicate with my attorneys nearly every day, often numerous times each day, at all hours.

17. I believe SCEA is a huge company with comparatively limitless resources. I, in comparison, have very limited resources to devote to this lawsuit. At this time, New Jersey is clearly a more convenient forum for me.

I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct and that this declaration was executed on March 25, 2011.

signature
George Hotz

-3-


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