Civil Action No. 95-B-2143

RELIGIOUS TECHNOLOGY CENTER,

Plaintiff,

vs.

F.A.C.T.NET, INC., et al.,

Defendants.

Proceedings before the HONORABLE JOHN L. KANE, JR., Judge, United States District Court for the District of Colorado, commencing at 4:00 p.m., on the 12th day of September, 1995, in Courtroom C-401, United States Courthouse, Denver, Colorado.

For the Plaintiff:

EARLE C. COOLEY, ESQ.
Cooley, Manion, Moore & Jones
21 Custom House Street
Boston, MA 02110

TODD P. BLAKELY, ESQ.
Sheridan Ross & McIntosh
1700 Lincoln Street, 3500
Denver, CO 80203

ERIC M. LIEBERMAN, ESQ.
Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C.
740 Broadway at Astor Place
New York, New York 10003

HELENA K. KOBRIN, ESQ.
7629 Fulton Avenue
North Hollywood, CA 91605

For the Defendants:

THOMAS B. KELLEY, ESQ.
KENNETH LIEBMAN ESQ.
NATALIE HANLON-LEH, ESQ.
Faegre & Benson
2500 Republic Plaza
370 17th Street
Denver, CO 80202

THE COURT: I have some remarks to make, some of which may be considered preliminary. But I think that they are important for a full understanding of what this kind of procedure is.

A preliminary injunction is an extraordinary remedy providing the potential for considerable harm, yet because of its emergency nature, it does not afford the Court the usual degree of careful consideration and examination of all relevant and material evidence which is afforded by the deliberative process of a so-called full-fledged trial. It is by its very nature an emergency matter, and as a consequence, the issuance of an injunction is tentative, and it's subject to later modification or for that matter even a complete rescission or vacation following trial on the merits. That is why in our legal tradition the question of whether to issue an injunction, what terms such an injunction should contain are to be approached with the utmost caution and prudence.

The power to issue an injunction, like the power to hold a person in contempt of court is a power which is best used sparingly, if at all. Moreover, the very purpose of an injunction is to preserve the status quo ante. That is a rather elegant piece of Latin which means the last existing state of peaceable, non-contested conditions which preceded the pending controversy. I will not dwell on this, but I do think it's helpful to observe that our legal forefathers were not fools, and the complete phrase from the Latin is the status quo ante bellum which literally means the state of things before the war began.

Given this purpose and the caution that the law prescribes, there are four basic considerations or findings which must be made before an injunction can issue. These same four factors likewise assist in determining the scope of an injunction and the conditions which would attach to it. Applying these conditions and factors to this case and reserving, as I had previously indicated, the right, if not indeed the obligation, to issue a more detailed document of a finding, finding of fact and conclusion of law, in other words, a more formal opinion at a later time, I am going to make the following ruling on the case from the bench. And if there is any ambiguity, the parties can obtain a copy of these comments from the court reporter.

The first consideration is probability of success on the merits. I find the plaintiff has not established a probability of success on the merits, either in relation to the copyright or the trade secret cause of action.

With regard to the copyright infringement, on the evidence before me, I find there is no probability of plaintiffs succeeding on their copyright claim because the evidence which has been presented shows that the defendants' use of the copyrighted works constitutes a fair use under Section 107 of the Copyright Act in that it is for the purposes of criticism, comment, or research, and as such is not an infringement.

With regard to the trade secrets violation claim, the plaintiff has not shown by a preponderance of the evidence that the materials in issue are secret or within the definition of trade secrets under Colorado law. The evidence shows the materials are in fact in the public domain, and I am not persuaded by the evidence presented here that they entered the public domain only through unlawful means.

The second consideration or factors is irreparable injury, and I find that the plaintiffs has not shown it will suffer irreparable injury of the use by defendants for the materials in issue. The evidence does not show that plaintiff will lose competitive advantage through defendants' use of the materials, nor that the defendants are using the materials for commercial purpose. In balancing the hardships to the plaintiff, I find the threatened injury of the plaintiff does not outweigh the damage the proposed injunction would cause the defendants. Whereas, the evidence has not shown the plaintiffs will suffer harm if the injunction is not issued. It shows the affect of issuing the injunction would amount to an infringement on defendants' right of fair use of copyright materials, and even more so in this case to barely prevent the functioning of the defendant F.A.C.T.NET in its entirety.

With respect to the final consideration of public interest, the public interest is served best by the free exchange of speech and ideas on matters of public interest. This is indeed a matter of public interest and to issue the injunction sought would not serve that interest.

Having weighed all of the factors, as I am required to do, I conclude the plaintiff has not shown a likelihood of success on the merits and the balance of harm lies in favor of the defendants. For these reasons, Plaintiff's Motion for Preliminary Injunction is denied.

I order, however, as follows: That the plaintiffs shall return and restore to the defendants immediately at the plaintiff's expense all seized materials, including defendants' hard drive in the exact conditions that they were taken and from the precise places from which they were taken. I also order the defendants in this case that they must maintain -- and each defendant must maintain the status quo as to the possession of all of the copyrighted materials at issue in this case and the defendants, and each of then, are restricted to making fair use and only fair use thereof. The defendants here are specifically prohibited from making any additional copies of the materials or transferring them in any manner or publishing them other than in the context of fair use. Those are the orders of the Court.

I thank counsel for the presentation, and the Court will be in recess until 9:00 a.m.

MR. COOLEY: Your Honor, we'll undoubtedly be appealing this to the United States Court of Appeals for the Tenth Circuit, and we would respectfully ask a stay of the Court's order of return pending that appeal.

THE COURT: No, I will not order a stay of the return of the materials. That would, in my view, cause the exact harm, which I am mot concerned with, and that is the inability of the defendants in the case to maintain their continued existence during this litigation.

(Recess.)

I certify that the foregoing is a correct transcript from the record of proceedings in the above-entitled matter. Dated at Denver, Colorado, this 13th day of September, 1995.

__________________________________
Deborah A. Stafford

Copyright © 1995, 1996 Faegre & Benson Professional Limited Liability Partnership
No claim is made to original U.S. government works including the text of Judge Kane's decision.