Martin Garbus, Esq. (MG 6261)

Edward Hernstadt, Esq. (EH 9569)

FRANKFURT, GARBUS, KLEIN & SELZ, P.C.

488 Madison Avenue

New York, New York 10022

(212) 826-5582

Attorneys for Defendant Eric Corley a/k/a

EMMANUEL GOLDSTEIN

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

X

UNIVERSAL CITY STUDIOS, INC., PARAMOUNT PICTURES CORPORATION,. METRO-GOLDWYN-MAYER STUDIOS INC., TRISTAR PICTURES, INC., COLUMBIA PICTURES INDUSTRIES, INC., TIME WARNER ENTERTAINMENT CO., L.P., DISNEY ENTERPRISES, INC., and TWENTIETH CENTURY FOX FILM CORPORATION,

Plaintiffs,

- against -

ERIC CORLEY a/k/a "EMMANUEL GOLDSTEIN" and 2600 ENTERPRISES, INC.,

Defendants

00 Civ. 0277 (LAK)

X

AFFIDAVIT OF MARTIN GARBUS IN SUPPORT OF DEFENDANTS' MOTION PURSUANT TO RULE 65 TO HAVE PLAINTIFFS POST A SECURITY BOND, AND IN SUPPORT OF DEFENDANTS' APPLICATION PURSUANT TO RULE 37 OF THE FEDERAL RULES OF CIVIL PROCEDURE TO DISMISS THE COMPLAINT OR, IN THE ALTERNATIVE, TO VACATE THE PRIOR RESTRAINING ORDER AND TO COMPEL PLAINTIFFS TO UNDERTAKE DISCOVERY

MARTIN GARBUS, being duly sworn deposes:

1. Defendants, Eric Corley and 2600 Enterprises, Inc. ("2600) need the aid of the Court. I will go through the history briefly so that it cannot be said that defendants did make a full and complete trial record and because defendants cannot continue to be required to respond to the claim that they did not appeal quickly. The Court is aware of the history of this case, and defendants incorporate all the previous pleadings, motions and cross motions had in this case as part of the instant application.

2. I submit this affidavit in support of defendants' motion pursuant to Rule 37 of the Federal Rules of Civil Procedure to dismiss the complaint or, in the alternative, to vacate the preliminary injunction, to compel specific discovery and document production dates, to impose costs and sanctions, and, pursuant to Rule 65(c) of the Federal Rules of Civil Procedure, to require plaintiff to post an appropriate bond.

3. Rule 37 is directed at the failure by a party to cooperate in discovery and/or to make disclosure. It requires the movant to make a good faith effort to resolve these issues. We have done that; our efforts have failed. Rule 37 permits the Court to order sanctions up to and including dismissal of the complaint. Rule 37(g) permits the Court, to determine if a litigant has failed to participate in the framing of a discovery plan and to impose expenses, including attorney fees. We believe this is appropriate.

THE SERIOUS AND CONTINUING DAMAGE TO THE FIRST AMENDMENT,

TO THE COUNTRY, TO THIRD PARTIES, AND TO DEFENDANTS CAUSED

BY THE PRIOR RESTRAINT MUST BE ADDRESSED

4. This is a First Amendment case with a four (4) month prior restraint in effect. The interpretation of Rules 37 and 65(c) should be considered in light of the past and present litigation in this Court, the values at stake, and the reasons why plaintiff has been non- cooperative. This Court, and the Courts that will ultimately be dealing with the procedural and substantive issues presented in this case, including the interpretation the of the Ditgital Millenium Copyright Act are dealing with issues of great significance. Court and counsel have enormous responsibility. This is, if possible, more than "a prior restraint" and First Amendment case, more than the first interpretation of this new law, more than another instance of Courts' being asked to determine if Congress has, or has not acted constitutionally. People are being hurt. I am told that plaintiffs have sent an unknown but substantial number of cease and desist letters to persons wholly unconnected with this case, and that the threats in these letters have silenced a great deal of speech. In fact, I understand that at least one individual who had posted DeCSS and received a letter, was fired. Universities and academics have chanted their practices. The MPAA and Jack Valenti have vigorously waged a national campaign of intimidation. Discovery matters affect and may be dispositive of these issues.

RULE 65 REQUIRES A SUBSTANTIAL BOND BE POSTED

5. There is presently a $10,000 bond. The value of that bond may be appropriate in a $20,000 commercial case, when an injunction has been issued. But this is not that case. The FRCP Rule 65 bond is of great significance; it allows the courts to play a very important role, especially in case of constitutional significant, that no other branch of government can play. Many feel, as I do, that the role of the Court as the arbiter of last resort is essential to this Country's freedom. Only it can protect individual litigants and third parties affected by their decision. I recognize the differing degrees of deference that must be given to Congress when it passes [legislation]. Given the political and economic pressures placed on Congress by plaintiffs' lobbyists, and given the respective power of the plaintiffs and Emmanuel Goldstein, it is not surprising that Congress was less than clear in balancing the First Amendment rights of academicians, scientists, and Universities to unfettered speech. Given these stakes, a very significant bond is obviously required.

6. This Court's ruling, coming as it did in the midst of the Copyright Office's current rule making procedure for 1201(a)(1), has enormous significance. See, Declaration of Martin Garbus dated May 3, 2000, ("Garbus Decl.") Exhibits "A-C." The longer the prior restraint order is in effect, the longer the Court's initial interpretation of the Digital Millenium Amendment to Copyright Act lingers, the longer the public will be "chilled" by the fear its speech can be silenced. This Court's Order, and the plaintiffs' enthusiastic cease and desist campaign based on it, has affected a very substantial number of people in different ways, even more than prior restraints Courts have rejected in the past.

7. Every academic, every Justice of The Supreme Court, and every Federal and State Trial Judge will agree that the First Amendment, the defendants and American Society suffer, minute by minute, when a unprecedented improper prior restraint order is in effect. Nonetheless, plaintiff treats this as it would a commercial case, and it treats the discovery issue as a cumbersome sideline, to hide the fact that it is using discovery to delay the end of the Order.

8. The damage to academic research occasioned by plaintiffs' conduct and this Court's resulting Order is significant. The Harvard Berkman Center, citing Professor Nimmer, takes particular issue with the plaintiffs' position in this case in the document previously submitted as Exhibit "B" to my May 3rd declarations, at page 8: "The Supreme Court has ruled on Fair Use several times in the last two decades alone on decisions that were overturned at every review" (emphasis added). It is my understanding scientist and scholars that the injunction has already had a significantly chilling effect; we have witnesses prepared to testify to that. See, e.g., on the question of the present immediate and serious harm caused by the Preliminary Injunction, see the documents submitted to Congress by scientists working at the Massachusetts Institute of Technology Media Lab (Garbus Decl., Exhibit "B") refers at page 2 to this Court's decision and its chilling effect.

9. On the other hand, plaintiffs have suffered absolutely no damage to date, and can only speculate wildly about the possibility' of damage in the immediate or foreseeable future. This is not a balancing test. No Court would permit the government to do this unless bombs were on their way to our cities or our national security was in jeopardy".

DISCOVERY OF PLAINTIFF

10. On April 3, 2000, defendants served plaintiffs' counsel with notices of the plaintiffs' depositions. The first deposition of non-party witnesses was to start on Monday at 10:00 a.m. May 8, 2000, the second on Tuesday. Plaintiffs refused to let them take place. I scheduled plaintiff's depositions to take place the week after; Proskauer has refused to produce any of its clients on those dates. On Friday, April 29, 20000, the plaintiff sent a letter requesting a stay of discovery pending a decision on the disqualification motion they filed on the day before. On Tuesday, May 2, 2000, the Court rejected plaintiffs' application. However, plaintiffs advise me that the Court ruled in their favor on May 2. In any event, they have, as a practical matter, chosen to ignore the Court's ruling.

11. Sadly, the plaintiffs have refused thus far to produce one document, to schedule one party deposition, or even to identify one piece of paper for document production. Instead they have made it clear they why will use every avenue of delay. For example, when I asked Proskauer for a schedule for the production of documents they claim

12. The plaintiffs' evasion of this Court's May 2, 2000 ruling is actionable under Rule 37.

13. Proskauer talks of June dates for discovery of the plaintiffs, as if they prevailed on May 2 and discovery were stayed. I refused to agree: A prior restraint is in effect. By plaintiffs' acts, the stay is, as a practical matter, now in effect and will, unless the Court acts now, remain in effect at least until the disqualification motion is submitted and decided. Plaintiffs' refusal to permit discovery will contribute to the length of the restraining order.

THE MPAA WITNESSES, MICHAEL EISNER, JACK VALENTI AND THE DEPOSITIONS OF THE PLAINTIFFS

14. Plaintiffs delayed at every step. I advised Proskauer that I wanted to examine Mr. Valenti. Plaintiff refused and tried to raise the issue of Mr. Valenti's deposition on May 2, 2000. I implored Proskauer to let me examine one of MPAA's witnesses on a scheduled date. The Federal Rules of Civil Procedure have some meaning and give parties and witnesses who object to either document demands or notices of depositions to make appropriate motions. Plaintiffs did not make a motion, they stonewalled. In order to be cooperative and to get the MPAA deposition started this morning, I asked to depose Fritz Attaway of the MPAA if Mr. Valenti or Mr. Goeckner were not available on the noticed date. His February 16, 2000 letter to the copyright office deals with when 1201(a)(1)(A) becomes effective and shows his full knowledge of the facts. His office is in Washington where Proskauer also maintains offices. Instead, plaintiffs offered two (2) MPAA witnesses in two different states, a day apart. This is totally unacceptable. They do this without contacting my offices, after refusing to meet me, by letter sent at the end of business on Friday, May 5, 2000.

15. This Court can see the MPAA officers listed on the MPAA Website (MPAA.org). The proposed deponents are not among them, although I understand that Ken Jacobsen is the head of the MPA's world-wide piracy division. Robert Schumann is, of course, the outside consultant who has submitted several highly technical declarations on behalf of plaintiffs in this matter, and is a limited witness. He owns his own company, and is not so far as he has disclosed, a MPAA employee; he is, I believe, a consultant to the MPAA. On the MPAA's Board of Directors are the Chairman and Presidents of the following company of the seven major producers and distributors of motion pictures and television programs in the United States. They include The Walt Disney Company, headed by Mr. Eisner, Sony Pictures Entertainment, Inc., Metro Goldwyn Mayer Inc., Paramount Pictures Corporation, Twentieth Century Fox Film Corp., Universal Studios and Warner Bros.

16. Mr. Valenti and Mr. Eisner of Disney (a member of the MPAA) have put themselves at the forefront of this case, and in particular regarding the irreparable harm that Disney and the other plaintiffs will allegedly suffer from piracy. See, Garbus Decl. Exhibit "G" (letter to employees from Eisner, the CEO of one of the plaintiffs, a spokesman for the MPAA). We believe that Eisner as been furnished with reports which will show that the basic allegations placed before the Court were seriously misleading. Disney's depositions are set for this month, and we are confident Mr. Eisner will seek to avoid testimony.

17. I recognize each plaintiff's right to make the initial choice of witness to proffer on its behalf. I have, as the correspondence indicates, suggested to plaintiffs a number of alternative people for me to examine. The Court directed Proskauer to cooperate; they have not done so. I previously advised the Court of the schedule of depositions. Garbus Decl., Exhibit "J." Plaintiffs were all noticed well in advance (at least six weeks). No motions have been made other than the disqualification motion.

18. Instead, Proskauer's late afternoon letter to me Friday, May 5, 2000 states "We are getting deposition dates for you, as promised but plaintiffs will take the position that defendants cannot resume the deposition at a later time on the ground that certain documents were not produced before the depositions." Obviously, this is completely unacceptable. I suggested that we defer the MPAA depositions Proskauer unilaterally moved to May 16 and 18, if I could use this week to depose the plaintiffs. Proskauer refused. Furthermore, they will only produce the MPAA witnesses if I execute a confidentiality stipulation that I have never seen. Again, this is not a good faith discovery process.

19. Moreover, plaintiffs seem confused not just about who to produce, but about the nature of depositions. There is simply no reason I should run around the country examining witnesses such as Mr. Schumann, in a variety of Proskauer offices, on the date and at the time set by Proskauer. Can plaintiffs give me any reason why they should be permitted totally to ignore the rules of this Court and common courtesy, dignity and cooperative relationships with opposing counsel? I suggested compromises; they claim they do not have the resources to deal with this case. In my letter of May 5, 2000 I advised Plaintiff in an effort to resolve these issues and expedite discovery:

"In addition to Mr. Attaway's letter, I can give you letters and documents filed by other representatives of the plaintiffs. You have them all and you know were they are. The Congressional Record that is available, which we will bring to the Court's attention, selectively, so as not to burden the Court, is in large part based on information furnished by your clients. It is inconceivable to me that it has not been carefully indexed and is available nearly at the push of a button.

20. Proskauer and their clients are as sophisticated in this technology of retrieving, saving and making available information as perhaps anyone in country.

21. The plaintiffs are following a practice that, particularly in a First Amendment prior restraint cases, is unconscionable. Plaintiffs have a prior restraint on the basis of evidence submitted to the Court in such a way that foreclosed even a barely adequate response, possible, by means of declarations that, as we have shown, are at the least incomplete, misleading and inaccurate.

22. I should not be forced to defend a client on issues likes these, with vital First Amendment values involved, in this way. I am prepared, now, to examine Mr. Valenti; Proskauer has never responded to my inquires regarding him. If the Court is, because of its press of business, unable to act now, I request that all depositions be held before a Magistrate Judge immediately, with costs to be borne by plaintiffs.

23. Plaintiff resist defendants' urgency. They complain defendants could have done more before and they should not be pressed. As Plaintiffs are aware, until last week there was no record from which defendant would reasonably appeal. The reasons for this, and the Court process to date, have been thoroughly discussed in the previous affidavits and will not be repeated. It is not due to the fault of the Court or Defendant.

DVD WITNESSES

24. We sought to set a date for a non-party deposition of the DVD CCA in California. Their attorneys refused to go ahead on May 5th and we agreed to a June date, if it was convenient for Proskauer, given their personal schedules. I called Proskauer regarding the June date; I have never heard back.

25. I have also tried to deal with the DVD CCA witness personally, but unsuccessfully. They, too, cannot comply with deposition dates. Mr. Gold is unavailable on the dates that the DVD CCA says it is available. In the meantime, I have been advised that Matsushita Electric Industrial Co., which makes Panasonic brand products, will soon launch new DVD audio products and is developing a new security system for it. Yoshihiro Kitadeya at Matsushita publicly said that Matsushita and its partners are nearly finished on a successor to CSS2 (the proposed version of the CSS for audio discs, which had to be replaced when the manifest weakness of CSS became obvious), with a stronger key and a new encoding system. I understand Matsushita with other entities, DVD CCA. To think that the two litigations, the first in California and the second in New York, are unrelated, is foolish. To think that the MPAA, the plaintiffs and the DVD CCA are separate groups, is also foolish. They are all related and thier refusal to agree to discovery is coordinated by plaintiffs.

THE MEDIA DEFENDANT

26. Plaintiffs have extraordinary resources and can move quickly when they want to. For example, the original Order to Show Cause in this case was served late on Friday, January 14, 2000. Monday was Martin Luther King Day, so Eric Corley couldn't seek to retain counsel until Tuesday on Wednesday, January 20, 2000, the Court entered a decision. An Order was immediately entered; two week later, the Court filed its Memorandum Opinion. Plaintiffs then initially resisted defendants' request to file a late answer, claiming prejudice. That was four months ago. Had plaintiff sued The San Jose Mercury News or The New York Times, the result and the resultant outcry would have been different.

27. Plaintiffs ignore Eric Corley/Emmanuel Goldstein and the media because they refuse to see the obvious First Amendment issues in this case. Goldstein's rights and our rights have been abused. Goldstein is a first time media defendant, has been working as hard as he can on the issues this case since he and I met. So to have we. The press, including The New York Times are freely linking in the same way 2600 links. Goldstein walked into a storm and faced the potential of millions of dollars in potential damage claims based on the hundreds of thousands of alleged downloads of DeCSS and the millions of "pirate" DVDs plaintiffs assert are now inevitable. Of course, as many or more downloads of DeCSS are attributable to The San Jose Mercury News, The New York Times, University, libraries, The Associated Press, whose downloads probably exceed defendants by many multiples.

28. The plaintiffs who have engineered the entrance of a prior restraint, are waging a war of delay, cost, attribution and exhaustion against Emmanuel Goldstein, his supporters and my firm.

29. Plaintiff believes the values that determine the path of this case are:

(1) The motions they want to make, how they want to make them and when. They have already made three motions including a disqualification, all for tactical reasons, filed several complaints. They wanted to stay this proceeding.

(2) The convenience of their parties.

(3) The convenience of their lawyers.

(4) The conveyance of their witness.

30. Given what is happening each day, given what is at stake, and given the assets of each of the plaintiffs, an appropriate bond must be a considerable figure, which we will address with the Court at the appropriate time. The bond should be increased the longer the injunction stays in effect. We are prepared to immediately take deposition testimony of the plaintiffs on the damage and value of the bond to be set. It should be sufficiently high to discourage exactly what is happening here.

THE PRACTICAL REALITIES

31. I have noticed the eight plaintiffs, the MPAA, and the DVD CCA for depositions; I have mentioned Valenti and Goeckner; there are many others. I told the Court I need three months for discovery and had planned to finish any discovery by August 1. I expect the injunction to be vacated long before that.

32. Although I am a partner in a substantial law firm, only two lawyers, my associate Edward Hernstadt and I and two paralegals, are working on this case: My clients do nothave plaintiffs' resources. Nonetheless, I am prepared to go ahead immediately, today, with the discovery of each of the plaintiffs. I should not be forced into a different state every day or even other day, as Proskauer seeks to do with the MPAA witnesses. This Court, as busy as it is, should not be forced to restrain this type of strategic conduct.

33. We have previously spoken of plaintiffs' assets, which they can use to run the defendants and their lawyers "ragged." That is exactly what has been happening. My colleague and I have spent well over 300 hours a month since this case began. Many unpaid volunteers of the caliber of Professor Elsen Moglen of Columbia University, and professors at Harvard, New York University, and Stanford have, I am sure, have spent as much or more time. Only the Court can stop the waste of time and money caused by plaintiffs' refusal to engage in discovery.

34. I have been contacted by representatives of the press who wish to be present at the depositions. I have been contacted by numerous parties who wish to file amicus brief. I have no objection to the filing of any amicus briefs that the Court feels is appropriate and I have no objection to the press presence. I would presume that media plaintiffs also have no objection.

35. The complaint should be dismissed and the preliminary injunction vacated.

36. No prior request for the relief sought herein has been made to this Court.

Dated: New York, New York

May 8, 2000

____________________________

MARTIN GARBUS