8 Sept 95 - Colorado Hearing

1 IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

2 Civil Action No. 95-B-2143

3 RELIGIOUS TECHNOLOGY CENTER,

4 Plaintiff,

5 vs.

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

7 Defendants.

8

9 REPORTER'S TRANSCRIPT

10 MOTION FOR PRELIMINARY INJUNCTION

11

12

13 Proceedings before the HONORABLE JOHN L. KANE, JR.,

14 Judge, United States District Court for the District of

15 Colorado, commencing at 10:00 p.m., on the 8th day of

16 September, 1995, in Courtroom C-401, United States Courthouse,

17 Denver, Colorado.

18

19

20

21

22

DEBORAH A. STAFFORD, Official Reporter

23 P.O. Box 3592

Denver, Colorado, 80294

24 (303) 571-0530

25 Proceedings Reported by Mechanical Stenography

Transcription Produced via Computer

2

1

APPEARANCES

2

For the Plaintiff: EARLE C. COOLEY, ESQ.

3 Cooley, Manion, Moore & Jones

21 Custom House Street

4 Boston, MA 02110

5 TODD P. BLAKELY, ESQ.

Sheridan Ross & McIntosh

6 1700 Lincoln Street, 3500

Denver, CO 80203

7

ERIC M. LIEBERMAN, ESQ.

8 Rabinowitz, Boudin, Standard

Krinsky & Lieberman, P.C.

9 740 Broadway at Astor Place

New York, New York 10003

10

HELENA K. KOBRIN, ESQ.

11 7629 Fulton Avenue

North Hollywood, CA 91605

12

For the Defendants: THOMAS B. KELLEY, ESQ.

13 NATALIE HANLON-LEH, ESQ.

Faegre & Benson

14 2500 Republic Plaza

370 17th Street

15 Denver, CO 80202

16 KEN LIEBMAN, ESQ.

DANIEL A. TYSVER, ESQ.

17 Faegre & Benson

90 South Seventh Street

18 Minneapolis, MN 55402

19 * * * * *

20 PROCEEDINGS

21 THE COURT: This is 95-B-2143, Religion Technology

22 Center against F.A.C.T.Net, Inc. and others, and the cause

23 comes on for hearing of the preliminary injunction. Before

24 the court came into session and for some days previous to

25 today, briefs have been filed, and in fact one this morning.

3

1 And it appears to me from an examination of the documents on

2 file that in all likelihood we are not going to finish today

3 with the hearing. And if that is the case -- well, Monday is

4 available, and we'll go over into Monday, if necessary. So I

5 do not want the attorneys thinking that somehow or other there

6 is a visage of the grim reaper with a stopwatch in his hand.

7 That does not mean I am inviting you to whetter on endlessly.

8 So we'll take what time the case needs, and we'll proceed, but

9 let's proceed expeditiously. Are you ready to proceed?

10 MR. COOLEY: Yes, Your Honor.

11 MR. BLAKELY: Yes, Your Honor.

12 THE COURT: Defendants ready?

13 MR. KELLEY: My office is in the process of

14 delivering my exhibit notebooks. They are not here yet. I

15 don't know what to say except that I am going crazy. I do

16 expect they will be here any minute. I have a couple of

17 preliminary matters I need -- we need to raise.

18 THE COURT: Be seated. Do you need your exhibit

19 notebooks before we hear any opening statement from the

20 plaintiff?

21 MR. KELLEY: No, not unless the Court does or

22 Mr. Case does.

23 THE COURT: What about your preliminary matters?

24 What are you talking about?

25 MR. KELLEY: We have a protective order I would like

4

1 to tender to the court and get that out of the way. I think

2 that's all I have.

3 THE COURT: Protective order regarding this hearing?

4 MR. KELLEY: Regards discovery and what happens at

5 this hearing with confidential matters, yes, sir.

6 MR. BLAKELY: It's a stipulated protective order,

7 Your Honor, because of the trade secrets that are involved in

8 the case.

9 THE COURT: Well, okay. I am willing to listen to

10 whatever you are talking about.

11 MR. KELLEY: We also have motions pro hac vice for

12 two other members of my firm from our Minneapolis office who

13 are not admitted in Colorado.

14 THE COURT: Okay. Well, I am going to grant the

15 motion for admission pro hac vice, but I do need to tell you

16 it says that Mr. Liebman graduated from Yale Law School, and

17 it's my understanding it's so hard to get there, that there

18 isn't one.

19 MR. LIEBMAN: I apologize for going there.

20 THE COURT: Don't they just give you a degree once

21 you get the admission standard?

22 MR. KELLEY: In redemption for or mitigation he is

23 steeped in midwestern values and only spent a brief period of

24 time out there.

25 THE COURT: Anybody from Minnesota is admitted.

5

1 What's next?

2 MR. KELLEY: Your Honor, we do have a stipulated

3 protective order, which I have signed, tender an original and

4 a copy to Mr. Case. The only thing I want to be on the record

5 is that at this stage that protective order does not permit me

6 to disclose confidential material to any insurer involved in

7 the defense of this case. We have agreed in principle that

8 order will be amended to so provide. We have to hammer out

9 the language simply. With that caveat, that order is tendered

10 as agreement of the parties. It deals with materials

11 exchanged during the course of the discovery that are claimed

12 to be confidential and trade secrets. I think it makes it

13 clear that however the court feels about confidentiality

14 matters, once they are offered as evidence is up to the court.

15 THE COURT: Well, that's all I am really concerned

16 about. The agreement you have for things that happen before

17 or after court are entirely up to counsel. What happens here

18 is another matter.

19 MR. KELLEY: I understand that and attempted to make

20 that very clear.

21 THE COURT: Okay.

22 MR. COOLEY: May it please the Court.

23 THE COURT: Yes.

24 MR. COOLEY: With respect to that last point, we'll

25 be presenting in the course of the evidence in support of the

6

1 application for preliminary injunction the materials that were

2 located on the computers and in the hard copies of the

3 defendants pursuant to the Order of Seizure. And we'll have

4 notebooks for the court comparing those infringing materials

5 with the actual materials. We would ask that those

6 notebooks -- that Mr. McShane will be the witness, that he

7 compare, he point out the portion of the notebook that makes

8 the comparison but that those matters not be made a matter of

9 public record because that of course would expose us to losing

10 the secrecy that we are here trying to protect. We, of

11 course, will have copies of those books for counsel and for

12 the court, but we would ask that under the protective order

13 that the counsel have all agreed to that the matters be

14 designated as confidential and that we not in the course of

15 litigating the matter lose the very rights we are trying to

16 protect.

17 THE COURT: To the extent we can, that's fine. I

18 respect trade secrets. I do not respect confidential court

19 hearings. That's the problem.

20 MR. COOLEY: I understand. Sometimes, however, the

21 courts have entered these kinds of procedures to protect

22 against a pyrrhic victory with the thing being disclosed on

23 the record.

24 THE COURT: We'll try to avoid that. I understand

25 what you are saying. All right. Did you get your exhibit

7

1 books?

2 MR. KELLEY: No, I have not seen the doors part and

3 exhibits come in. All I can do is apologize, Your Honor.

4 THE COURT: That's all right but can't we go ahead

5 now.

6 MR. KELLEY: I can go ahead if everyone else can.

7 THE COURT: All right, okay.

8 MR. COOLEY: Your Honor, I have one housekeeping

9 matter Your Honor mentioned that you received a brief from the

10 defendants this morning.

11 THE COURT: I think it was this morning. It could

12 have been late last night.

13 MR. COOLEY: It was served on us around late

14 yesterday afternoon, so I don't know when it was filed. We

15 didn't file anything since we were in discovery the last

16 couple of days and we have been in Virginia. I had been

17 informed that this court had a 72-hour rule, and I didn't want

18 to run a foul of it, so I obviously was too late to meet it

19 and I didn't expect that I would be -- I was going to ask the

20 court permission this morning to file something.

21 THE COURT: Sure you can.

22 MR. COOLEY: If the court is going to consider that

23 brief.

24 THE COURT: I am going to consider any briefs that

25 are filed, and you have permission to file them. The 72-hour

8

1 rule doesn't apply to extraordinary proceedings which by

2 definition an injunction is. We wouldn't -- that's the reason

3 we have preliminary injunctions is to suspend the normal rule.

4 If you want to file something, you go ahead, and if you want

5 me to wait to make up my mind until you get it, why, I will do

6 that.

7 MR. COOLEY: That will be fine. Thank you, Your

8 Honor. I had planned to make an opening statement if it meets

9 with the Court's approval.

10 THE COURT: Sure. I want to hear from you then. I

11 will hear from Mr. Cooley, and then we'll start with the

12 testimony.

13 OPENING STATEMENT

14 MR. COOLEY: This case is here because of

15 trademark -- of copyright infringement and trade secret

16 misappropriation. That's what the case is all about. The

17 Complaint in this case was filed. A temporary restraining

18 order was entered against the defendants as well as an

19 impoundment order and a seizure order. Seizure was executed

20 under the supervision of the United States Marshals, and we

21 have continuously through an independent computer expert been

22 conducting the searches for infringing material. Over here

23 are the boxes of the infringing material that have been taken

24 from the computers and the hard copies of the defendants.

25 There are two boxes of unpublished upper level materials on

9

1 their computers. There are two boxes of unpublished materials

2 in hard copy. Since the order extended to all writings of

3 L. Ron Hubbard, we located 12 boxes of published materials

4 that are copyrighted in hard copy and on the computer and six

5 boxes of published material and a copyright of some of the

6 unpublished upper level O.T. II material which were on CDs,

7 and copy of which F.A.C.T.Net distributed for $200 or $225 a

8 piece. This massive infringement search is not complete

9 because there are huge quantities of documents on tapes that

10 Mr. Wollersheim and apparently Mr. Penny have made that are

11 encrypted. And at his deposition the day before yesterday,

12 Mr. Wollersheim was asked to furnish us with the encryptions,

13 so we could examine those to determine the existence of

14 infringing materials there, and he refused to do so. My

15 colleague, Mr. Blakely, has a motion with respect to that

16 refusal, and we cannot complete the search until we have that

17 encryption. In any event, we have this massive quantity of

18 material that we believe more than supports a preliminary

19 injunction. What we are dealing with here is Mr. Wollersheim,

20 a former Scientologist who has been for 15 years obsessed with

21 the destruction of the Church of Scientology and the religion

22 of Scientology and has come upon the device of applying for

23 and obtaining from the Internal Revenue Service a 501(c)(3)

24 status for his corporation, F.A.C.T.Net, by parading himself,

25 parading that corporation, as an electronic lending library

10

1 and an archive preservation site. In fact, the evidence which

2 we'll introduce will show that under the false cover of that

3 so-called charitable educational enterprise, what in fact is

4 going on is that Mr. Wollersheim in conjunction with another

5 man that is going to testify here today, apparently a

6 Mr. Vaughn Young, are running a litigation support service for

7 lawyers who are engaged in litigation against the Church of

8 Scientology or who are planning litigation against the Church

9 of Scientology.

10 In Mr. Wollersheim's case this takes several forms.

11 In addition, to being a director of F.A.C.T.Net, he has his

12 own private business, a consulting business, in which among

13 other things he furnishes consulting services to lawyers in

14 connection with suits against the Church of Scientology. He

15 gets paid for that, but he uses the F.A.C.T.Net database in

16 furnishing that service. He then pays F.A.C.T.Net a portion

17 of his income, and we have uncovered some 20 to $30,000 of

18 that and from his testimony. And sometimes F.A.C.T.Net does

19 itself permit Mr. Wollersheim with his F.A.C.T.Net director

20 hat on or employee hat on to furnish these services which in

21 fact is going on right now in litigation with Time Magazine.

22 The database of F.A.C.T.Net is being employed to mount a

23 litigation campaign against the Church of Scientology.

24 Mr. Vaughn Young who is described by Wollersheim as a

25 voluntary worker for F.A.C.T.Net is engaged in the same

11

1 business. In fact, I know of no other business that he is

2 beyond working for lawyers engaged against the Church of

3 Scientology. I raise this because it impinges upon the claim

4 rather directly that Wollersheim -- that F.A.C.T.Net is a

5 quote "library" end of quote or a preservation archive which

6 is entitled to some lofty constitutional protection that

7 permits it to destroy the constitutional protections that

8 pertain to the Religious Technology Center and the religion of

9 Scientology which it protects.

10 There is no doubt whatsoever that there is a twofold

11 purpose that is going on here. The publication of the posting

12 of the upper level materials O.T. I through O.T. VII to the

13 Internet by Arnaldo Lerma, a resident of Arlington, Virginia,

14 and a director of F.A.C.T.Net without any comment, just

15 putting them on, according to Mr. Lerma, was done upon receipt

16 of those materials in the Fishman affidavit from

17 Mr. Wollersheim. Mr. Wollersheim denies that that happened.

18 So we have the unusual circumstance of one director of

19 F.A.C.T.Net saying one thing, and the other director of

20 F.A.C.T.Net saying another. We'll point those contradictory

21 pieces of testimony out to you in the deposition excerpts that

22 we have for Your Honor's consideration.

23 The purpose that is involved here is to destroy the

24 Church of Scientology in a twofold manner. One, by cutting

25 off at the entry level, the opportunity for the church to

12

1 proselytize and expand and like all proselytizing religions

2 the church considers the entire world a proselytizing area.

3 The upper level materials are a sacred part of the religion

4 that by religious doctrine are not made available to a

5 parishioner until he has gone through the gradient steps

6 necessary to bring him there and then and only then is he

7 entitled to see them. There is no more deeply held religious

8 belief, conviction in the church than that. The plan is to

9 take those upper level materials and expose them before their

10 time and before people are ready to so as to ridicule and

11 demean the Church of Scientology by preventing people or

12 discouraging people from entering and exposing them to

13 materials that they should not as a matter of religious

14 conviction have been exposed to until they had gone through

15 the other gradient steps. This has a double-barrel effect of

16 wiping out the church's First Amendment rights under the

17 banner of somebody else's First Amendment rights, wiping out

18 the church's intellectual property rights, which incidentally

19 have root in the constitution of the United States that

20 predates the Bill of Rights even. Copyright and protecting

21 original writings has been recognized in the constitution

22 before we even had the First Amendment. But in any event,

23 this has a double barrel impact.

24 It has an economic impact of huge dimensions because

25 the church depends upon -- the churches that use these

13

1 materials depend upon the influx of parishioners who provide

2 fixed donations for these materials. So it's a double

3 barreled economic impact of huge dimensions, combined with the

4 intention to wipe out the religion by strangling it

5 financially and destroying its rights under the First

6 Amendment to the free exercise of its religion. That's what's

7 going on here. This is not a case of any attempt on the part

8 of Religious Technology Center or the Church of Scientology to

9 interfere with anybody else's legitimate First Amendment

10 rights. Those rights they have. There are thousands and

11 thousands and thousands of postings on this religion,

12 Scientology, attack on the Church of Scientology and

13 Scientologists in the most scatological materials, in

14 particular, obscene and vial terms applied to my woman

15 colleague, Helena Kobrin, who has been working on this

16 litigation. No finger has been raised to seek judicial

17 intervention in this matter until we got into the area of

18 copyright infringement and trade secret infringement. When

19 that happened, Ms. Kobrin started giving notices of

20 infringement and warnings to cease and desist. Instead of

21 following that, Mr. Wollersheim and people like him

22 participated in an effort to execute this plan that had been

23 articulated on the Internet.

24 They can sue ten of us. They can sue 20 of us, but

25 they cannot sue 10,000 of us, so copy, copy, copy, copy.

14

1 That's the game plan. That's the game plan that

2 Mr. Wollersheim is about. He is not about it in any

3 educational context. That simply is not so. He is relying

4 upon an exception for a library archive under 17 U.S.C.

5 Section 108. This exception only applies to unpublished works

6 that are properly in the possession of an archive in the first

7 place. That is in this Carey case at 873 F.Supp. at 889. It

8 says Congress did not intend Subsection 108 to apply to

9 photocopying and distribution of unpublished work by libraries

10 or archives for their patrons. Once the copyright owner has

11 made the decision not to publish, this choice must be honored.

12 It goes on, if the archive could copy and distribute this

13 material, it could also copy and distribute any author's

14 creative work though unpublished.

15 MR. KELLEY: Your Honor, this is more of a closing

16 than an opening.

17 MR. COOLEY: I am trying to set the legal context in

18 which the evidence is going to be introduced, Your Honor.

19 THE COURT: It's all right. It's to the court. Go

20 ahead.

21 MR. COOLEY: So long as the materials came into the

22 archive's possession, says the archive could copy and

23 distribute this material and could also copy and distribute

24 any author's creative material, so long as the materials came

25 into the archive's possession. Solely, if the possession was

15

1 by illegitimate means, such a result would be totally at odds

2 with the intent of Congress with enacting the Federal

3 Copyright Act.

4 That's an important concept, legitimate means,

5 because there is a red herring that has been drawn across the

6 path here and will be placed in front of the court. And that

7 is that this material, O.T. I through VII that is involved

8 here was in a court file in the United States District Court

9 for the Central District of Los Angeles for a period of time.

10 That allegation lends nothing to the defendants' position.

11 The mere existence of a file in a court file does not destroy

12 copyright, and it does not destroy trade secrets. In that

13 case, the so-called Fishman case, the material was dumped into

14 the record after the case was dismissed in ostensible support

15 of a motion for fees and costs, and the Judge said what is

16 this? This has nothing to do with it and wouldn't consider it

17 in any way. We then attempted to get it sealed. It went to

18 the Ninth Circuit, went back to Judge Hupp for findings and

19 that was completed and was awaiting an order when the only

20 person ever to go to the clerk's office and obtain it out of

21 the file was a representative of The Washington Post, which

22 then proceeded to publish material from it.

23 Parenthetically, the defendants have in the papers

24 filed with you today or last night included our position --

25 our Motion for Reconsideration before Judge Bringama in the

16

1 Eastern District of Virginia on that Washington Post matter.

2 They mischaracterized our position, so we have made the full

3 submission to the court, so the court will see what our

4 position is there and what the issues are that are involved to

5 the extent that the court considers them relevant for its

6 consideration.

7 In any event, nobody ever obtained these documents

8 from the Church of Scientology or any church-related entity by

9 any means other than theft, and the record will show that in

10 the evidence that we introduce, extraordinary security

11 precautions were taken to protect the confidentiality of these

12 materials. The defendants will say that because they were in

13 that court file, they became fair game and could be copied,

14 distributed, and sent around the world. That simply is not

15 the law. The trade secret was not lost. We had somebody at

16 the courthouse checking that file out every single day that

17 the court was on. And that file did not get copied and that

18 file did not even get used by anyone else for all the time

19 that it was there. And as soon as Judge Hupp learned that it

20 had been copied by The Washington Post, he sealed it. The

21 Washington Post then published after it was sealed, and that

22 file is not in any way accessible. But whether it would be

23 accessible or whether it wouldn't, I emphasize, is not a

24 relevant consideration. That does not permit, for example, if

25 there had been litigation over Gone With the Wind, one would

17

1 hardly expect that one could go in and take a copy that was in

2 the court file, post it to the Internet and distribute it to

3 the eternal financial harm and ruin of the author or whoever

4 owns the copyright. That is a preposterous proposition, and

5 to suggest that a trade secret can be lost in that way when

6 you are dealing with a compilation of materials, a universe of

7 trade secrets by having it a little out here and a little out

8 there is also preposterous.

9 What it comes down to, if there is value to be

10 derived, and there is, for R.T.C. and for Scientology, if

11 there is value to be derived from the trade secret by virtue

12 of its secrecies in the universe of people who might gain from

13 it, the mere fact that a little is here and a little is there

14 or some people have it and some people don't, that universe of

15 one billion people is an irrelevant consideration. The value

16 is there. The owner has done all in its power to protect it.

17 It has taken reasonable steps which is what the Trade Secret

18 Act requires and the material has never passed into anybody's

19 hands by any legitimate means. It was stolen. There was an

20 actual theft in Denmark of these materials in 1983. One of

21 the thieves or participants in that ring was a director of

22 F.A.C.T.Net, recently resigned and replaced. One of the

23 others went to jail over there for the theft, prosecuted --

24 the prosecution pressed by Scientology and so the church and

25 R.T.C. has done all in their power.

18

1 F.A.C.T.Net has no contract. There is no express

2 contractual right to do this. Express criminal act,

3 prohibition against reproduction for any purpose, Section 108

4 shall not be construed as justifying a violation of the

5 contract. F.A.C.T.Net doesn't even have a contract and did

6 not obtain these lawfully. All three F.A.C.T.Net directors

7 had confidentiality agreements when they were permitted access

8 to these documents, Mr. Penny, Mr. Wollersheim, Mr. Lerma, and

9 they have violated those contracts and the trade secret

10 statute by acquiring and disclosing them. And those

11 confidentiality agreements will go into evidence before the

12 court in this hearing. We'll show that -- they rely on this

13 Pentagon Papers case. They ignore the fact that the Pentagon

14 Papers case expressly stated through Justices White, Stewart

15 and Marshall, concurring but emphasizing, that that injunction

16 could not issue against The New York Times because of the

17 absence of express and appropriate limited statutory

18 authority, such as that provided by the copyright statute and

19 so to cite the Pentagon Papers case is to deal with a totally

20 inappropriate and inapplicable situation. If copyright

21 existed there, they probably covered that that, enjoined the

22 arguments made Justices White and Stewart, drew specific

23 comparisons with copyright and unfair competition. Where

24 Congress had authorized prior restraint against the private

25 parties in certain instances -- that's a quote -- Justice

19

1 White further emphasized no one denies that a newspaper can

2 properly be enjoined from publishing the copyrighted works of

3 another and that injunctions may be obtained against unfair

4 methods of compensation.

5 Now, far from standing for the proposition advanced

6 by the defendants, the Pentagon Papers case supports the

7 position advanced here. For Mr. Wollersheim to try to even

8 disguise himself as The Washington Post is ludicrous because

9 his activities don't bear any resemblance to those of a news

10 person. Even in its application to The Washington Post, the

11 Pentagon Papers case was erroneously applied and Judge

12 Bringama will be hearing that issue next Friday. There are a

13 large number of distorted references to Scientology cases that

14 the defendants are going to rely upon the Wollersheim case,

15 case against the Church of Scientology of California, and they

16 distort what the text in issue here, how they were impacted by

17 that case.

18 In fact, they say that the text in issue were ordered

19 released to the public as part of the court file on November

20 4, 1995 -- 1985 rather. On 4 November 1985 the files have

21 been sequestered and the court vacated the sequestration and

22 were not ordered released. The only text in issue was O.T.

23 III not O.T. I, II, IV, V, VI, VII. The church had

24 approximately 1,500 Scientologists lined up at the court to

25 get the files and no others got access to them. Almost

20

1 immediately, the state stayed its order to unseal the files to

2 obtain these documents and there was -- they were never in an

3 unsealed court file after that. There was no evidence that

4 the Los Angeles Times actually obtained copies from the brief

5 files. It could have happened because the Scientologists had

6 custody of them and more than likely obtained them from

7 Mr. Wollersheim's attorney.

8 The Religious Technology Center v. Wollersheim case,

9 the statement in that case, but not applicable here, the use

10 was found to be fair was copying of the documents by a lawyer

11 for use by two expert witnesses. And the sole use -- that was

12 permitted was that use. The court says that it's

13 uncontroverted that Lawyer Schlatter earmarked the documents

14 confidential and never offered them in evidence. Discussed

15 copy issues only and not trade secret issues and dismissed

16 state claims as pendant claims because the federal claims were

17 dismissed. The R.T.C. v. Wollersheim and Scott case -- they

18 talk -- is a case on remand alleged to economic advantages for

19 the first time and no misappropriation was found they say.

20 That's not true. We didn't amend the trade secrets claim.

21 Always alleged it in the same terms. We amended to add a

22 copyright claim because the Ninth Circuit had noted that we

23 hadn't made one, and we took that as an invitation to get on

24 board with one and we did. R.T.C. v. Scott did not say there

25 was no misappropriation. It referred to the new church, that

21

1 is the competing church's misappropriation but found that we

2 had not argued economic harm, so we didn't meet the standard

3 of economic advantage. When we went back, we did argue

4 economic harm which had already been placed in the record. We

5 are in this case arguing a vigorous combination of both

6 factors economic harm, and notwithstanding the defendants'

7 characterization of what we are doing, economic harm resulting

8 from the activities of Mr. Wollersheim, Mr. Young, and his

9 colleagues and the destruction of our First Amendment rights

10 in the whole process. That the court has to engage in by

11 the -- by the misapplication of alleged First Amendment rights

12 of Mr. Wollersheim being attempted to be invoked in a

13 circumstance in which they have no application.

14 The continuous -- in the case of BPI v. Beene, that's

15 cited to the court by the defense, we won that case. The

16 court found economic advantage. And I guess whether they cite

17 it or not, we cite it, the court found economic advantage and

18 ruled as a matter of law that the very materials here in issue

19 were trade secrets. So that case stands in the U.S. District

20 Court in California as persuasive authority for what we are

21 asking the court to do here.

22 They have made the statement -- and one of the things

23 that we have to keep in focus here is that the defense makes

24 bald statements about copies being made. And they have no

25 evidence of that, and we have evidence of the contrary. There

22

1 were no copies made from that file except by The Washington

2 Post. To say that the motions on file with the court six

3 months with a Motion to Reconsider Change of Venue that they

4 had filed -- what happened was this case, the Fishman case was

5 first in Florida then came back to California. There was a

6 pending motion. These things were not exposed in files. They

7 were under protective order. After the protective order

8 expired with the dismissal of the case, then this Graham Berry

9 who is the very lawyer with whom Mr. Wollersheim is getting

10 consulting services -- furnishing consulting services, using

11 the F.A.C.T.Net database, dumped them into the record, so we

12 have a sort of circular motion here. Wollersheim and his

13 friend get them dumped into the record gratuitously. They

14 know that they are in a chain of theft from beginning to end

15 and then try to rely on that -- the material being in that

16 file as an excuse to post them to the Internet. And in fact

17 the copy that was posted to the Internet did not come from the

18 court, went from Wollersheim to Lerma, who received it knowing

19 that he was to post it to the Internet. He sent it back to

20 Wollersheim and posted it and that is a fragrant violation of

21 both copyright and trade secret misappropriation.

22 Bearing upon the issue of Mr. Wollersheim's denial in

23 this regard, we have extracted the entire Fishman affidavit

24 from Mr. Wollersheim's computer with a covering he mailed to

25 Mr. Wollersheim on the 29th of July, sending the material back

23

1 to Mr. Wollersheim, the first two-fifths and the remainder the

2 next day and the posting occurred the day after that. So

3 we'll ask the court to compare that to Mr. Wollersheim's sworn

4 testimony.

5 I think that I don't want to have an opening that

6 goes so long that we lose track of the evidence, but I do want

7 to address trade secrets for a moment because I want to

8 emphasize to the court that trade secrets are as important as

9 copyright in this case. Mr. Wollersheim argues and will, I am

10 sure, advance the theory to the court that the secrets are in

11 the public domain. Once disclosed he will say a trade secret

12 loses its protection. He assumes that a mere disclosure

13 destroys protection, and this is simply not so. Absolute

14 secrecy is not required. Relative, partial, or qualified

15 secrecy is sufficient under the Restatement Third, Section 39,

16 Comment F. And that's confirmed in Jostens v. National

17 Computer Systems, 214 U.S.P.Q. 918, even distribution to

18 thousands of people does not destroy secrecy. Data General

19 Corporation v. Digial Computer Controls, Inc., 357 Atlantic

20 2d. 105, only reasonable efforts to maintain secrecies are

21 required. National Legal Research Group v. Latham, 1993 WL

22 169789 out of the Western District of Virginia. Du pont v.

23 Christopher, 431 F.2d 1012, out of the Fifth Circuit in 1970,

24 trade secret status protection is not lost because documents

25 are filed in court, and the key case on that is Gates Rubber

24

1 Company, 9 F.3rd 823 out of this circuit in 1993. The key

2 point is the mere fact that the materials may temporarily have

3 been available for copy such as in a court file or even on the

4 Internet does not mean that secrecy status is destroyed. And

5 our evidence will show that it's not critical that the secrecy

6 potentially could have been compromised. The burden is on the

7 defendant and they cannot show a compromise under any

8 circumstances that is sufficient to wipe out the trade secret.

9 The proper standard is whether there is sufficient

10 evidence to conclude that the secrecy status has in fact been

11 destroyed so as to render trade secret protection ephemeral,

12 and whether the holder of the secret took reasonable steps to

13 protect it. There is no way that the trade secret here is

14 ephemeral. It cuts across the very fundamental beliefs of the

15 Church of Scientology and has application to a universe of

16 people that in fact embraces the planet. There is no evidence

17 that secrecy has been breached and overwhelming evidence that

18 will come from Mr. McShane that the plaintiff undertook all

19 precautions. The argument against economic value Mr. McShane

20 will give the court evidence that shows that the R.T.C.

21 derived substantial economic value and that these materials

22 have been the subject of a number of attempts at piracy and

23 exploitation by others and is only because we have succeeded

24 in protecting secrets that there is presently no viable

25 competing entities using these materials. Our success cannot

25

1 be converted perversely into evidence of no economic value.

2 Again, the Vien case upholds that. There is no way that

3 Mr. Wollersheim can show that he got the materials through

4 lawful means. Mr. McShane will testify that nobody ever got

5 those materials outside of the church through anything but

6 unlawful means. Mr. Wollersheim knew of the secrecy status

7 for years, signed contracts to that effect. Calls them

8 invalid, and he won't honor them whereas his colleague

9 Mr. Penny recognizes that they are valid and that he has

10 honored them himself, and so we can compare the differing

11 views of the directors of the same corporation on that matter.

12 The concept of fair use does not apply at all to

13 trade secrets. Has no application in the trade secret area,

14 and the fair use that Mr. Wollersheim is claiming is wiped out

15 by the fact that he is really in a commercial business of

16 Scientology bashing with lawyers, as this case will show. He

17 is not in the business of educating anyone because an

18 educational exemption from the IRS requires a balance to life

19 and his approach is simply anti-Scientology from beginning to

20 end and only to educate people through his views of what

21 Scientology is, how it should be treated. That isn't what an

22 educational institution does, and this business of

23 archiving -- he is not under the statute entitled to do that

24 or claim a fair use for that or for anything else under the

25 statute. He simply has no fair use defense on copyright and

26

1 there is no fair use defense on trade secret.

2 I'm sorry I took so long, but that's the context in

3 which the evidence will go in and perhaps as --

4 THE COURT: Can you tell me who you are going to call

5 as witnesses, please?

6 MR. COOLEY: Yes, Your Honor. Mr. Warren McShane,

7 the president of Religious Technology Center. He will be the

8 first witness. The second witness will be the computer

9 expert, Ron Tencati -- I shouldn't have trouble with an

10 Italian name -- then we'll be putting on deposition testimony

11 that will be furnished to the court, notebooks, exhibits, and

12 affidavits, and that will be the totality of the case.

13 THE COURT: Thank you. Mr. Kelley.

14 OPENING STATEMENT

15 MR. KELLEY: That you, Your Honor. I am going to

16 hold off having the people barge in with my exhibits now.

17 They are here. If Your Honor please, I will wait until I am

18 finished with the opening statement.

19 Your Honor, first of all, I appreciate Mr. Cooley's

20 efforts to put things in focus, and I am going to try to do

21 the same thing, and I am going to begin by telling you what we

22 are not going to prove here today.

23 Your Honor, as you know, this is an expedited

24 proceeding, and we have proceeded as quickly as we can to get

25 ready. It has been impossible to get ready on all issues, and

27

1 I want to make it clear to the court that there are some

2 issues that we simply do not intend to present evidence on

3 today and reserve for later, develop through discovery,

4 presentation at the ultimate trial of this case. I am

5 thinking if I take this position, it's going to save some time

6 today and simply get out in the open what we are not requiring

7 the plaintiff to prove today. And if Your Honor will accept

8 that, we can deem these as facts that are admitted strictly

9 for purposes of this hearing but not for purposes of the

10 ultimate determination.

11 THE COURT: All right.

12 MR. KELLEY: We are not going to contest the

13 originality of the work by Mr. Hubbard. We are not going to

14 contest the ownership of the copyright to that work, nor the

15 chain of title of the plaintiff. Nor are we going to contest

16 the registrations or validity of the registrations, although,

17 given the lack of contest to the copyright, I think that's

18 probably moot. We have a number of defenses on which we are

19 not going to present evidence, including the misuse of

20 copyright, unclean hands and other defenses, which we also

21 would like to reserve. With that, I hope I have saved a

22 couple of hours.

23 THE COURT: Thank you.

24 MR. KELLEY: Further attempting to focus this case,

25 Your Honor, what the case is about is seven copyrighted works

28

1 which the plaintiff also claims at the same time are trade

2 secrets. They are known as O.T. I through O.T. VII. These

3 are the only works as to which any intellectual property

4 rights are in issue in this case. To basically simplify what

5 this case is all about is simply this. Which of those

6 materials do the defendants, my clients, have in their

7 possession. How did they get them and what have they done

8 with them. In issue also is the status of the secrecy of

9 these materials. And when Your Honor hears all of the

10 evidence in the case, Your Honor is going to find we believe

11 that is simply contention that cannot be taken seriously.

12 F.A.C.T.Net is a library and an archive. It collects

13 and gathers information concerning dangerous cults or related

14 to be dangerous cults. Granted, the primary purpose for the

15 use of that information is the victims of what it considers to

16 be dangerous cults and certainly the religion of Scientology

17 is high on their list, and that certainly is what most of

18 their material is about. They are a 501(c)(3) corporation. A

19 fact which incidentally wasn't disclosed in the moving papers,

20 seeking the right of seizure in this case. What's more

21 important is that they are a library and archive and also are

22 in the age of electronic communications a newspaper. They

23 publish over the Internet on a regular basis. They publish a

24 quarterly newspaper. At least, they did until their printing

25 press, so to speak, was seized. The court is going to hear a

29

1 lot about the new technology in this case. The Internet is an

2 extraordinary medium of communication that permits instant

3 communication of vast amounts of information electronically.

4 Permits that to happen worldwide. No medium that I have ever

5 worked with before comes anywhere near close to what can

6 happen over this medium. Perhaps more importantly, this

7 medium comes closer than anything I have ever seen to a true

8 speaker's corner or public forum. It's a medium where

9 communication is from many to many as opposed to one to many

10 and in which concentration of ownership of newspapers and

11 broadcast media has led us to where one medium basically

12 broadcasts or distributes to the world. Here anyone can

13 communicate their message to the world instantaneously. One

14 other aspect of this medium is that these communications can

15 be made unanimously and without accountability. And that's

16 one of the problems the legal system is facing in dealing with

17 this medium, but my client is not anonymous. My client is

18 accountable. My client is here. And for that reason, we are

19 going to ask the court to treat my client the way it would

20 anybody who serves the function of a library and a newspaper

21 at the same time.

22 And counsel has suggested that this is a very biased

23 newspaper and very biased library in its orientation. Putting

24 aside 501(c)(3), which has nothing to do with this case, under

25 the First Amendment, Your Honor, I have never heard any

30

1 distinction between a biased newspaper and unbiased newspaper

2 except in the forum of public opinion.

3 Never have I suggested that a court insist and impose

4 any distinction between those two. We think that is a

5 nonissue in this case, and we want the court just to consider

6 what the court is dealing with is the impoundment of both a

7 printing press and a newspaper in one fell swoop. With this

8 new medium, the court has more power than the court had in the

9 Near v. Minnesota case in terms of what it might do in

10 silencing someone in the new world -- world of public forum.

11 The Church of Scientology is an organization that has

12 made a number of claims concerning the emotional and healing

13 properties of its religion. It's an organization that is

14 reaching deeper and deeper into society. And essentially it

15 has religious tenets that were the word of the founder L. Ron

16 Hubbard who claimed and in his belief he learned from research

17 and his memory how mankind came to be the way he is as a

18 result of events that occurred in intergalactical

19 confederation some 75 million years ago. What I am talking

20 about now is no secret. It has been in hundreds of newspaper

21 articles. Many of which will be offered here. The level of

22 intergalactical confederation dealing with an over population

23 problem took --

24 MR. COOLEY: I object and ask -- this is -- this is a

25 direct accounting of one of the O.T. levels. To be done in

31

1 this fashion is to defeat our very effort to try to protect

2 it. I understood that we had an understanding that there

3 would be efforts to maintain confidentiality. The court can

4 certainly see what it is that that level says for the purpose

5 of comparing it with what was done, but to have counsel

6 speaking it out loud in the courtroom, I object to it. I ask

7 if counsel wants to show the court the written material, that

8 counsel do so and make whatever arguments he wishes to make

9 from that. I object with everyone else present to try to

10 violate our rights by having them destroyed in this fashion.

11 MR. KELLEY: Your Honor, I am describing something

12 that has been published all over the world, in The Washington

13 Post, Los Angeles Times, over the Internet time after time

14 after time.

15 MR. COOLEY: That's one of the very issues we are

16 here to contest.

17 THE COURT: The objection is overruled. If there is

18 anything specifically secret, that's fine, but he's free to

19 talk about what's already a matter of public knowledge.

20 MR. COOLEY: We haven't gotten to the point in the

21 hearing where the court's in a position to make a ruling as to

22 what or is not in the public domain.

23 THE COURT: I have to rely upon counsel who says it's

24 in the public domain.

25 MR. COOLEY: I say it isn't, and I object.

32

1 THE COURT: I understand. Mr. Kelley, do you have

2 something that says it's in the public domain.

3 MR. KELLEY: Yes, sir, Your Honor. I am just talking

4 about the basic story which appeared in the Washington Post

5 August 19, has appeared in the Los Angeles Times in 1986 and

6 that series of stories has appeared in countless stories that

7 will be offered into evidence and has appeared time after time

8 in the last year over the Internet.

9 THE COURT: The objection is overruled. Go ahead.

10 MR. KELLEY: The current state of mankind occurred as

11 a result of the leader of the galactic confederation, someone

12 by the name of Xemu, chaining a number of -- or somehow

13 binding a number of persons from that galactic confederation

14 to volcanoes on the planet earth, bombs those volcanoes with

15 H-bombs and the souls of those persons', those souls known as

16 Thetans which inhabit human beings now and account for all of

17 their psychological and some physical ills, and the religion

18 is the process of expurgating those things. The plaintiff

19 attempts to keep this secret because they say that it's

20 inappropriate to expose people to this until they have had

21 adequate spiritual conditioning to receive it and to accept it

22 and to practice it. My clients and a number of other people

23 out there, a number of credible people and a number of people

24 that Your Honor is going to read about take the position that

25 this is a system of psychological coercion, i.e.,

33

1 brainwashing.

2 We are not here to ask this court to decide who is

3 right in the course of this, but we are going to show the

4 court that this is a matter of intense public debate right

5 now, and I think given what adherents to this religion are

6 asked to believe, the argument that there is some brainwashing

7 going on is not implausible. Given that situation and the

8 fact that my client is aware and has documented hundreds of

9 cases of casualties from this brainwashing process, emotional

10 injuries, suicides, what have you. It has set up an

11 information system for the aid of victims, victims' families

12 and for which it has a public archive and library and private

13 archive and library. And Mr. Wollersheim will testify to how

14 this is set up and the efforts that are made to maintain that

15 distinction.

16 The evidence is going to be that materials such as

17 the ones here where they feel they can anticipate a claim of

18 copyright are kept in the private section of the library which

19 means they are not accessible by people that have electronic

20 access to the library. They are not downloadable. And since

21 Mr. Wollersheim came into possession of what's known as the

22 O.T. materials, they have been kept in the private portion of

23 the library, and Mr. Wollersheim has had those materials since

24 the mid 1980s.

25 Now, a little bit needs to be said about how

34

1 Mr. Wollersheim got those materials. What we are talking

2 about here primarily is the affidavit of Stephen Fishman,

3 filed in the spinoff suit, which the Church of Scientology

4 filed against him for being a source in a 1981 article

5 concerning Scientology in Time magazine. In that affidavit he

6 asked the court for certain relief and took the position that

7 he had been brainwashed and in support of that attached as

8 exhibits portions of the O.T. documents we are talking about

9 here. My client, since that time, has had a copy of that

10 document. He has a copy of it with a court filing stamp on

11 it. In addition, my client had his own case against the

12 Church of Scientology in which he recovered millions of

13 dollars for intentional infliction of emotional distress.

14 That judgment is final. Appeals have been exhausted. The

15 judgment is unpaid.

16 In the course of that litigation, he obtained copies

17 of some of the same materials and some additional ones. And

18 that case was tried in 1986. The evidence is going to be that

19 over this ten-year period he has had those materials and has

20 not disseminated them in any public way.

21 One other thing the court needs to know is that these

22 materials, the attachments to the Fishman affidavit and the

23 other materials I am talking about are a very small portion of

24 the entire O.T. works. Mr. McShane has testified that the

25 entire O.T. I through VII works in issue in this case amount

35

1 to something in the neighborhood of I believe it's 800 to

2 1,000 pages. I don't have the exact number here. They will

3 be in evidence. Nonetheless, the only thing that is claimed

4 in our possession that's infringing of the O.T. I through VII

5 is somewhere between 60 and 70 pages. And that's going to be

6 something very important in this case, and I want to be on the

7 record right now that we have asked for production of the

8 entire works, so that we might submit to the court the entire

9 works and the court might see what kind of use has been made

10 of those works. They have not been provided to us. And from

11 my cursory look at the exhibit book this morning, it doesn't

12 look like they are being offered to the court. I want to

13 object to that very strenuously if I am right about that. The

14 evidence is going to be that from the beginning there were

15 security problems with these materials. They were outside the

16 church system through many sources long before the theft in

17 Copenhagen in 1983. They were the subject of newspaper

18 articles, they were in the possession of newspaper

19 organizations. After the theft of 1983, documents were filed

20 in court proceedings. It's through that process that my

21 client obtained copies of those documents and obtained copies

22 of them lawfully.

23 After that time, these documents have been not only

24 the continuing subject of newspaper publicity. We now know

25 that The Washington Post has them and has published articles

36

1 concerning them. We also know that they have been posted on a

2 regular basis on the Internet throughout 1995, and we will

3 have evidence of that. Significantly, Your Honor, the

4 document was on file in the Central District of California for

5 nearly two years. It was not sealed. It was there to be

6 copied, and The Washington Post did copy it.

7 Our position on the matter of trade secrets is that

8 this is not in any sense a secret and given the importance of

9 this information and in the course of the public debate in

10 which the Church of Scientology declares that all of their

11 teachings are taken out of context, it's not something that's

12 appropriate for injunction, as a matter of trade secrets. As

13 a matter of copyright, Your Honor, our position is very simply

14 that what document is on file in a Federal Court and not under

15 seal, a media organization of any kind under the First

16 Amendment and under the common law right of access to the

17 judicial branch of government which is recognized throughout

18 the country, a media organization has the right under the

19 doctrine of fair use to make a copy of that document for

20 whatever use it might want to make and in reporting or storing

21 information. I would say that's particularly so under the

22 doctrine of fair use when there is no other available source

23 for the copy. You can't go out and buy it at a bookstore.

24 When a media organization takes that copy, it has the right to

25 make the same use of it under the doctrine of fair use that

37

1 one might make with a book bought at a bookstore.

2 It's our contention that the use made of these

3 materials by my client as a library and archive copying it

4 within the organization is fair use.

5 The evidence is going to be that the only public

6 posting of the Fishman document was the one by Mr. Lerma that

7 occurred August 1 or 2 1995. Our evidence is going to be

8 that it was contrary to Mr. Wollersheim's policies. It

9 happened as a miscommunication. But in any event, our

10 position will be that it was fair use.

11 It's going to be difficult for the court to analyze

12 the issue of fair use as to whether the few pages copied and

13 transmitted on August 1 or 2, without having the entire works

14 in front of the court, and we are going to object unless that

15 happens, or if my understanding of the state of the record is

16 incorrect, it's straightened out. But in any event, we

17 contend it's fair use. If the court should disagree with

18 that, my clients are prepared to abide by whatever decree the

19 court enters, defining what fair use means with respect to a

20 document such as that. Surely, my clients no less than the

21 Washington Post are permitted to comment concerning what's in

22 that document and make fair use of copying it with

23 appropriately limited excerpts, and that's the relief we'll be

24 asking for Your Honor, that Your Honor discharge the writ,

25 order my clients' printing press and library returned to them,

38

1 and at the very least permit them to make whatever Your Honor

2 feels fair use permits of the materials in their possession.

3 Thank you.

4 THE COURT: Who are you going to call as witnesses,

5 please?

6 MR. KELLEY: We are calling Professor Richard Cleek,

7 Professor of Geography and Computer Science at the University

8 of Wisconsin in Westbend. He will be called to discuss the

9 nature of the Internet and postings of O.T. materials he has

10 seen on the Internet.

11 We'll be calling Mr. Robert Vaughn Young to testify

12 simply concerning some of the past media publicity concerning

13 disclosure of the O.T. materials.

14 And we'll be calling Mr. Wollersheim to testify to

15 essentially what I have -- what I have outlined in this

16 opening statement. Mr. Penny is also here. Mr. Penny is in

17 ill health, suffering from multiple sclerosis. I am going to

18 try to avoid calling him as a witness, but it's possible he

19 may have to be called as well.

20 THE COURT: Thank you very much. Call your first

21 witness, please.

22 MR. COOLEY: Warren McShane, please.

23 THE COURT: I think everyone should know when the

24 oath is being administered, I do not allow any other conduct

25 to be taking place. The witness is entitled to that respect.

39

1 So we'll just wait a minute until these exhibits come in and

2 then we'll proceed with the taking of the oath. Since there

3 are a number of spectators, I might point out to you that you

4 are free to come and go as you wish except as the oath is

5 being taken, I don't want people moving around at that time.

6 MR. KELLEY: It's my fault, Your Honor. I told them

7 to come in.

8 THE COURT: Mr. Case said he hadn't notified people

9 before. It may be an idiosyncrasy, but it's one that I am

10 comfortable with.

11 MR. KELLEY: I am familiar with it, too, and I

12 apologize.

13 (Warren L. McShane was sworn.)

14 THE COURTROOM DEPUTY: State your name for the

15 record. Please spell your last name.

16 THE WITNESS: Warren L. McShane, M-C-S-H-A-N-E.

17 DIRECT EXAMINATION

18 BY MR. COOLEY:

19 Q What position do you hold with Religious Technology

20 Center, sir?

21 A I am the president of the corporation.

22 Q How long have you held that position since?

23 A Since January 1994.

24 Q How long have you been with Religious Technology Center

25 and in what capacities?

40

1 A I first became employed with R.T.C. in August 1983.

2 I have held various positions within R.T.C. mainly

3 dealing with the protection of intellectual property rights.

4 Q Have you worked continuously in the area of having primary

5 responsibility for the enforcement of the R.T.C.'s

6 intellectual property rights?

7 A Yes.

8 Q Would you tell us, sir, what steps are taken to maintain

9 the confidentiality of the O.T. levels?

10 A Okay. From the very beginning of time when they became

11 available to the church from Mr. Hubbard, he has always

12 stressed their confidentiality. When the materials were sent

13 to trusted aids of his back in 1966, they were instructed to

14 copy them.

15 MR. KELLEY: I don't think there is any foundation

16 for this.

17 THE COURT: Overruled.

18 THE WITNESS: They were instructed to maintain their

19 confidentiality. In fact, they weren't even allowed to look

20 at them when they copied them, and they were to be held in a

21 safe, so that there would be an additional copy to the one

22 that Mr. Hubbard had at the time in case anything happened,

23 natural disaster, whatever happened, he had copies. From that

24 point when they were allowed to be viewed by the parishioners

25 who had obtained the correct spiritual level, parishioners

41

1 were made to sign confidentiality agreements and the materials

2 were always kept under lock and key, usually in separate

3 rooms, separate filing cabinets and only allowed to be viewed

4 when the qualified person is in the room usually with a

5 supervisor to oversee the person's study of those materials.

6 If the materials went anywhere within the church, they were

7 always couriered within locked briefcases always accounted

8 for. They were logged in and out of their secured filing

9 cabinet, so they would always be maintained and always be kept

10 track of. Over the years, the technology has increased and

11 improved, and we have hopefully kept up with technology and

12 increased our security to what it is today. I can go into the

13 details what it is today. If you would like me to.

14 MR. COOLEY: Could the exhibits be given to

15 Mr. McShane? Does the court have its book of exhibits.

16 THE COURT: Mr. Case will get them to me now.

17 THE COURTROOM DEPUTY: He will.

18 THE COURT: I have it now.

19 MR. COOLEY: Your Honor, the first 27 exhibits relate

20 to the area which Mr. Kelly has said is not going to be in

21 dispute, at least at this hearing, namely, the copyrights, the

22 title to the copyrights, be the copyright registrations, those

23 are all in the exhibit book as Exhibits 1 through 27.

24 THE COURT: Thank you.

25 BY MR. COOLEY:

42

1 Q I am asking the witness now to focus on the photographs

2 which have been marked as Exhibits 29 through 58, and tell us

3 generally what those depict, what they reflect with respect to

4 security procedures?

5 A Certainly. Like I stated, the technology has increased

6 over the years, especially in the advent of computerization.

7 In modern times when a parishioner requests access to the

8 materials, as his next step in the spiritual bridge, he has to

9 apply for permission to obtain access. That is not contingent

10 on any donation fee he would pay. The eligibility for him to

11 have access comes to R.T.C. R.T.C. approves everyone who goes

12 onto the O.T. levels. We ensure that the person is ethically

13 of the standard that we require, that they have no

14 qualifications which would not allow them access.

15 Q Disqualifications?

16 A Disqualifications, sorry. Once we have approved that

17 person, then he is allowed to have access to the materials at

18 the text level that is next on his sequence.

19 Q Do these photographs all show security procedures that are

20 in place?

21 A Yes, they do. The first one which is Exhibit 29 I believe

22 shows the eligibility for O.T. levels. That's something that

23 the person who would receive -- once he has had clearance from

24 R.T.C., then the photographs depict the sequence that he would

25 go through and the various stages to ensure their security.

43

1 The important break through that we have affixed to these

2 materials is computerization. All of the documents themselves

3 are in binders which you can see. I will point to one.

4 Exhibit 48, for instance, this shows one of the O.T. levels.

5 This happens to be O.T. VI, and you will notice they are in

6 binders. These binders are sealed and cannot be opened. The

7 rings within them cannot be opened, and the packs themselves

8 are wired into the computer system. When the course

9 administrator removes these packs from their secure cabinets,

10 they are unplugged. As soon as they are unplugged, the door

11 to that course room is locked magnetically, so no one can

12 leave the room with the materials. The course administrator

13 has a specific amount of time, usually about 20 seconds, to

14 plug in the pack at the table where the parishioner would be

15 studying his materials. Once that's plugged in, the alarm

16 system is turned off. That is the same procedure that's done

17 for all of the O.T. levels.

18 Q Have the O.T. levels been kept under lock and key from the

19 beginning in locked cabinets?

20 A Yes, they have.

21 Q Have they been logged out consistently from the beginning?

22 A Yes, each pack has been given a number has since the very

23 beginning, and when a parishioner -- when a course

24 administrator assigns it back for a parishioner for study in

25 the course room, then that particular number is logged out to

44

1 him.

2 Q In an effort to place the advanced technology, which are

3 these upper levels that you have referred to, in perspective

4 can you tell us the origin of the Scientology scriptures?

5 A The origin -- the beginning started in 1950 when

6 Mr. Hubbard wrote the first book -- Dianetics The Modern

7 Science of Mental Health. That technology addressed man and

8 his relationship to the body of the physical universe. From

9 that -- and as he continued his research he discovered that

10 mental image pictures that a person records at the time of

11 traumatic experiences were recorded in the mind and

12 specifically in a mind that he called a reactive mind which is

13 a portion of the mind that is not under the person's control.

14 It's a stimulus response mechanism that controls the

15 individual in times where certain traumatic experiences might

16 be -- I want I don't want to use any Scientology terms. I am

17 trying to keep this as simple as possible. Certain instances

18 in present time may rekindle some of the past experiences or

19 certain things that are in that traumatic experience. Maybe

20 it's the same time of day or same sound that would rekindle

21 that thought and then have that negative reaction on the

22 person at the present time. These negative impulses and

23 pictures or stories in the reactive mind Mr. Hubbard

24 discovered this and discovered a way of alleviating that. In

25 this process of doing that he discovered that looking at these

45

1 pictures, he asked the question who was actually looking at

2 them. What entity was looking at these pictures. If you say,

3 okay, get a picture of a cat in your mind, and everybody sees

4 a cat. Who is looking at that cat? That was the question

5 that he asked of himself. He discovered and actually kind a

6 phrase or an identity for that person at that time was called

7 just the I. The person himself not his body or the mind but

8 the actual spiritual being himself. From that point that has

9 led into more of the spiritual realm. He then coined a word

10 for that person I, he called it Thetan, T-H-E-T-A-N, which is

11 taken from the Greek letter Theta.

12 Q Is the word Thetan the T in O.T.?

13 A Yes.

14 Q What is the O?

15 A Operate. I can get to that in a minute. Once he

16 discovered this Thetan as this spiritual being, he then

17 continued his research and discovered that there have been

18 certain instances in the past far back in history that have

19 debilitized the Thetan and all Thetans. Have led to what the

20 present condition is of most Thetans, that they are not aware

21 of who they are. They are not aware of their inherent

22 abnormalities, and that many of us are stuck in the physical

23 universe and do not have a clue of what occurred or how to

24 deal with these inabilities.

25 Through his research and discoveries over the years

46

1 he found the way out. He found what had happened many, many

2 years ago, traumatic and devastating circumstances to all

3 Thetans and discovered and developed a way out, so to speak, a

4 particular series of processes and things that a person can do

5 in Scientology that can rekindle the person's native abilities

6 and his natural spiritual awareness of himself and others. He

7 also found at that time period that that unknowingness or the

8 blocks that occurred were done intentionally and that those

9 blocks were designed to stop anyone from discovering what had

10 occurred way back then.

11 That is the reason why these materials are kept very

12 confidential because in the wrong hands, since he discovered

13 how to reverse that, negative instances that occurred and put

14 a person back into his native spiritual sense, that if in the

15 wrong hands that that technology could be used to further

16 degradate the individual and stop him from regaining his

17 natural abilities and natural spiritual awareness of himself

18 and others.

19 From that point on, materials have always been kept

20 confidential, and it's inherent within the materials

21 themselves that they have to be kept that way. And that's why

22 we protect them so vigorously.

23 Q And the confidentiality of these upper level materials

24 doesn't apply to all Scientology scripture, does it?

25 A Not at all.

47

1 Q Are there a vast body of Scientology religious technology

2 that is available to the public in libraries and published

3 books and the like?

4 A The majority of Mr. Hubbard's works are publicly

5 available. The confidential levels are a portion of the

6 materials that he discovered but are a small portion in

7 comparison to what he has discovered and written out and

8 published in books since the early fifties. These are

9 publicly available, sold in church book stories, sold in

10 regular book stores. They are available in libraries.

11 But the key thing to confidentiality is to understand

12 that a person who is not spiritually at that stage to be able

13 to confront what has occurred way back in time, the materials

14 can be harmful to the person or could be harmful to the person

15 spiritually. Mr. Hubbard discovered a gradient of bringing a

16 person up and building, so he can confront those instances

17 that occurred and achieve the spiritual benefit. That's why

18 it's very, very important, and we stress strongly that the

19 person has to do Scientology in the exact sequence Mr. Hubbard

20 discovered and created.

21 Q Is that an article of religious conviction and faith by

22 the Church of Scientology and all Scientologists?

23 A Absolutely.

24 Q Now, at the time that these advanced technologies --

25 religious technology materials were made available to people

48

1 who had reached the proper level so as to have them, were new

2 organizations, church organizations formed to deliver their

3 level?

4 A Yes, they were. In 1966 Mr. Hubbard made his major break

5 through when he discovered a lot of these instances that

6 occurred in the past. And that level was called O.T. III. He

7 had to develop a way of obviously being able to present that

8 to parishioners who had obtained that state. And in order to

9 maintain their confidentiality, he actually started an

10 organization or an organization was formed of the most trusted

11 staff in the church. And this organization was called the Sea

12 Organization. This organization consisted of, like I said,

13 the most dedicated staff in the history of the church. They

14 are mainly responsible for keeping the materials protected and

15 secured. They are also the ones who are only the ones who are

16 authorized to deliver this material to parishioners. Special

17 advanced churches were created to deliver this material to

18 parishioners. There are six of them actually in the world.

19 They are specifically licensed by R.T.C. to have this

20 material. They are all staffed by Sea Org members in order to

21 keep the materials secure and to ensure their standard

22 delivery to parishioners.

23 Q Just identify the six advanced organizations for the court

24 that deliver these levels?

25 A The largest advanced church that we have is located

49

1 Clearwater, Florida, called the Flag Service Organization.

2 There is an advanced organization in East Grinstead in Sussex,

3 England. There is an advanced organization in Copenhagen,

4 Denmark. There is an advanced organization in Sydney,

5 Australia, and an advanced organization in Los Angeles,

6 California.

7 Q The reference to the Sea Organization, had Mr. Hubbard in

8 fact done research on advanced technology aboard a ship?

9 A That's how the Sea Organization got its name. He was

10 aboard a ship. Mr. Hubbard was a decorated naval officer

11 during the war. He loved the sea and chose to do his research

12 and his upper research levels at sea, where he could be

13 totally undisturbed. He chose a select few staff members to

14 go with him that he trusted, and that's how the Sea

15 Organization was formed.

16 Q Are the advanced organizations that you have identified

17 staffed solely by Sea Organization members.

18 A Yes, absolutely.

19 Q About how many Sea Org members are there?

20 A Overall, internationally about 5,000.

21 Q Now, the first advanced organization and every one since

22 then, has it applied the confidentiality provisions that you

23 have described?

24 A Absolutely. It was upon instruction from Mr. Hubbard. In

25 fact, it was a requirement that these materials be maintained

50

1 secure. They would not be authorized to have them unless they

2 were authorized to and they required the parishioners to sign

3 for instance the confidentiality agreements.

4 Q When you say the parishioners had to sign confidentiality

5 agreements, would you look at Exhibits 59, 60, 61 and 62.

6 A Okay.

7 Q Will you tell me what those are please. Tell the court

8 what they are.

9 A They are the confidentiality agreements that I was

10 referring to. They have taken different forms, but

11 essentially the essence of the agreement is the same; that is,

12 to maintain confidentiality of materials.

13 Q Whose agreements are these?

14 A These specific ones are all the ones that Mr. Wollersheim

15 signed when he was in the church.

16 Q And was Mr. Wollersheim -- had Mr. Wollersheim been at

17 O.T. III completion?

18 A I believe he actually got up to O.T. V.

19 Q With respect to Exhibits 63, 64, would you tell me what

20 those are?

21 A These are the confidentiality agreements -- called a

22 security pledge. Security pledge that Bob Penny has signed.

23 Q Mr. Penny is one of the other directors of F.A.C.T.Net,

24 correct?

25 A That's correct.

51

1 Q Okay. Now, going on with his passing on, we don't have to

2 get into it in any detail, is it fair to say that R.T.C. today

3 is the party or corporation in the church charged with the

4 protection of the upper level materials?

5 A Yes, they are.

6 Q And is it R.T.C. who licenses the use of those materials

7 to other churches?

8 A That's correct.

9 Q And does it in fact license those materials to the mother

10 church, Church of Scientology International?

11 A That's one of the organizations.

12 Q And other organizations as well. These -- were these

13 works, these upper level materials, which I take it covers the

14 range of power through O.T -- what O.T. level? Should I wait

15 for Mister --

16 THE COURT: No, it's all right. You can wait if you

17 wish, but that's okay.

18 BY MR. COOLEY:

19 Q Give me the range of upper level materials.

20 A The ranges from level which is called power which is the

21 first confidential level and goes all of the way to the level

22 called O.T. VIII. That's the level that have been released

23 for delivery to the public. There are levels that are above

24 that.

25 Q Incidentally, the so-called O.T. VIII that is contained in

52

1 the Fishman affidavit, is that a legitimate O.T. VIII?

2 A No, it's not. It's a complete forgery.

3 Q It bears a date of 1980. Was O.T. VIII even out in those

4 early days?

5 A No, O.T. VIII came out in 1986.

6 Q So the R.T.C. is claiming no copyright or intellectual

7 property interest in that forgery whatsoever, is it?

8 A That's correct.

9 Q Now, could you tell us what the activities of R.T.C. has

10 been over the years to protect the upper level materials and

11 particularly to protect their confidentiality or any

12 infringement of them as well as any attempted violations

13 thereof? What activities has R.T.C. engaged in?

14 A Well, from the very beginning RTC was formed in 1928.

15 Just as a little background, Mr. Hubbard when he was doing his

16 estate planning, obviously he knew he wasn't going to be

17 around forever, he was very concerned about maintaining the

18 integrity and confidentiality of the materials. And an

19 organization was formed which was the Religious Technology

20 Center with the sole purpose of the protection of the religion

21 itself. He assigned to R.T.C. all of the trademarks that are

22 contained within the religion and the advanced technology

23 itself. From that point on, R.T.C.'s job has been to maintain

24 the integrity and the confidentiality of the materials. We

25 have taken great steps over the years to ensure that the

53

1 security of the materials are increased as the technology

2 increases. We do various inspections of the advanced churches

3 to ensure that they are standardly delivering the materials to

4 the parishioners and maintaining the security requirements.

5 They have logs that show people who are on a

6 particular level that the materials are logged in and out to

7 them. R.T.C. is also responsible, as I testified a while

8 ago, responsible for ensuring that all people are eligible to

9 come on to the O.T. levels, and there is a section within my

10 office that their responsibility is to check the

11 qualifications of these people. We maintain a log, which we

12 have produced here that has the peoples' names that are listed

13 and shows what we do and what we checked to ensure that they

14 do and why. Once we do, then we give the okay to be advanced

15 to allow them onto other levels.

16 Q Is that in one of these exhibits?

17 A I am not sure.

18 Q I don't see it. I don't see it here.

19 A It was produced.

20 Q Produced in the document production?

21 A That's correct.

22 Q Now, has the Religious Technology Center run into

23 situations in which it has had to deal with theft of documents

24 in an attempt to set up a competing church with those

25 documents?

54

1 A Yes, we have.

2 Q Would you tell the court about that?

3 A Well, the person -- in April or May of 1983, in England,

4 where some apostates, ex-members, had arranged to steal some

5 of the lower O.T. levels, I believe it was O.T. I, II, and

6 III. Then they planned out the theft of O.T. V materials,

7 which we call the NOTS materials. It's another name for O.T.

8 V. It's important to know that these individuals who

9 attempted to set up splinter organizations or competitive

10 groups needed to have the material in order to attract

11 anybody. This was why they believe the money was -- with the

12 materials themselves, they could attract people away from the

13 church or attract new people. Without these materials, it was

14 impossible to operate. They have tried over time to create

15 the materials themselves either out of memory or whatever.

16 MR. KELLEY: Your Honor, I object on the grounds of

17 foundation.

18 THE COURT: Overruled.

19 THE WITNESS: Thank you, Your Honor. They attempted

20 this throughout this period of time unsuccessfully, so they

21 figured they had to have originals -- the copies of

22 Mr. Hubbard's works in order to make the money they intended.

23 This is where the thefts -- these two instances that I

24 described came to fruition. The theft in Copenhagen, Denmark,

25 is the most important one, I think, because there the O.T. V

55

1 materials were stolen. These individuals -- there were three

2 of them -- in coordination with Mr. Atack, who was director at

3 that time of the F.A.C.T.Net worked out and planned the theft.

4 They dressed themselves up in uniforms that are worn by the

5 Sea Organization, specifically, by my organization, R.T.C.

6 They went in impersonating as being members of R.T.C. in order

7 to quote "inspect their materials," which is something that we

8 do. The staff at that particular organization in Copenhagen

9 fell for the pretense, allowed them to view the materials in a

10 secure room. They preceded then to put them in a briefcase

11 and walk out to the car that was sitting outside in front of

12 the church with its motor running. The whole bit, just like

13 the movies. The gentleman who was driving the car, Mr. Robin

14 Scott, subsequently came back to Copenhagen, where he was

15 arrested at the airport by the Copenhagen police. He was

16 imprisoned, convicted of theft and eventually deported from

17 the country. We didn't get the other two thieves as they

18 never reentered the country. If they do, the same fate will

19 be waiting for them. These materials were then taken back to

20 England and over to Mr. Atak's home, copied and distributed.

21 MR. KELLEY: Your Honor, I object. The witness has

22 no way of knowing this other than hearsay.

23 THE COURT: I am admitting this as a recitation of

24 history by the president of the organization. It's not

25 admitted for the truth of the facts asserted. Objection is

56

1 overruled.

2 BY MR. COOLEY:

3 Q Did you indicate that Jon Atak was a director of

4 F.A.C.T.Net at the time of the theft?

5 A I don't know that. He was a director at some point in

6 time.

7 Q He later became?

8 A I don't think F.A.C.T.Net existed back then.

9 Q I wanted to make sure that you weren't misstating --

10 A I do state -- Your Honor, I participated in the recovery

11 of those materials and the prosecution of Mr. Scott. I

12 attended all the depositions that occurred there. We obtained

13 injunctions in both England and Scotland. Impoundment orders

14 were issued by the courts. All of the materials were

15 recovered. The defendants in the UK case were supposed to

16 turn everything in, all copies, to our solicitors in England.

17 We subsequently found out that they did not. They violated

18 the law there and copies were sent out to the states and a few

19 other places. Wherever these materials have cropped up, we

20 have sued. The first one was in 1985 when they showed up in

21 California to a gentleman by the name of David Mayo. He set

22 up a competing organization in Santa Barbara, specifically, to

23 offer the upper level materials and substantially made a lot

24 of money from that. As we proved in that court case, he made

25 over $2 million from doing this. An injunction was issued at

57

1 the time in 1985. All of his materials were impounded. They

2 are in the court to this date. Both sides or both cases were

3 dismissed and are both up on appeal at this point. Other

4 people, other members of his organization attempted to set up

5 other splinter organizations and in each one of those cases

6 have been shut down.

7 Q Are you aware of a concept known as the "free zone?"

8 A Yes.

9 Q What does that mean?

10 A A "free zone" is a loose term that describes mainly

11 ex-members of the church, who want to be out in the field, so

12 to speak, and deliver these materials or deliver Scientology

13 without any authorization from the church.

14 Q They want to use the material but not within the church?

15 A That's correct.

16 Q In addition to the efforts that you have described, have

17 you -- was one of those a case involving Enid Vien?

18 A Yes. Enid Vien was an ex-member of the church who had

19 possessed a copy of one of these materials that were stolen in

20 Copenhagen. She was sued in San Diego. An impoundment order

21 was issued. All of her materials were impounded by the court.

22 We subsequently then filed a series of Summary Judgment

23 Motions which were granted by the court and a preliminary

24 injunction was issued and damages of some $52,000 was awarded

25 for both copyright infringement, trade secret infringement,

58

1 which are almost the identical issues that are at issue here.

2 Q That are involved here including O.T. III that Mr. Kelly

3 recited to the court?

4 A Yes, sir, they are.

5 Q And that was held to be a trade secret, was it?

6 A Yes, it was.

7 Q As a matter of law?

8 A Yes, the same type of evidence, newspaper articles, et

9 cetera, were attempted to dissuade the judge in that case that

10 that material was not trade secrets and were public domain and

11 she issued her order.

12 MR. KELLEY: Your Honor, I object to his reciting

13 court records.

14 THE COURT: Sustained.

15 BY MR. COOLEY:

16 Q The AAC, that is the Advanced Ability Center of David Mayo

17 that was attempting to use these materials, closed its doors

18 at point, did it not?

19 A Yes, it did.

20 Q When was that?

21 A Sometime in 1986, I believe.

22 Q How many months -- that was after the entry of the

23 preliminary injunction denying them the right to use these

24 materials?

25 A It was shortly thereafter.

59

1 Q And have the illicitly obtained materials, including

2 copies, were they to have been returned to the church pursuant

3 to orders by both the criminal court in Denmark and the United

4 States Federal Court in Los Angeles?

5 A Yes, they were.

6 Q And did the thieves as well as Mr. Mayo claim not to have

7 kept copies?

8 A That's what he says.

9 Q But have copies cropped up from time to time?

10 A They have, yes.

11 Q As has the church done everything in its power to track

12 down those copies and to litigate the possession of them

13 wherever it could?

14 A Yes, once we became aware that anybody had possession, my

15 normal reaction would be to contact them usually via our

16 attorneys and ask for their return and a stipulation that they

17 would not be exposed. And if not, then we would take whatever

18 relevant legal action would be called for.

19 THE COURT: We'll take a recess until 1:30.

20 (Recess at 12:00 to 1:25 p.m.)

21 THE COURT: Mr. McShane can come back to the stand.

22 BY MR. COOLEY:

23 Q Mr. McShane, to your knowledge, has any upper level

24 material or advanced technology ever left the possession of

25 the church by any legitimate means whatsoever?

60

1 A No, it has not.

2 Q And has there in fact ever been any of the advanced

3 technology made available to any parishioner of the church for

4 use under any circumstances and allowed them to keep it?

5 A No, not at all.

6 Q And if anybody ever took a copy, would it have been in

7 violation of their confidentiality agreement?

8 A Yes.

9 Q Now, while you have testified to some theft and

10 misappropriation on your prior testimony, have each of these,

11 to the extent that they occurred, occurred in breach of

12 confidentiality agreements?

13 A Yes, they have.

14 Q And in violation of the procedures under which the

15 materials are held and made available to parishioners?

16 A Yes.

17 Q And has R.T.C. done everything that it possibly can to

18 track those down and enforce its rights?

19 A Yes, we have.

20 Q Has it succeeded wherever it has found these materials in

21 either obtaining a new agreement or in having an injunction

22 entered or having a case pending on the matter?

23 A Yes, in every instance that we are aware of where these

24 materials have been stolen or distributed in some form after

25 the theft, we have taken the necessary steps. Normally, we

61

1 would contact the person, request that they return the

2 materials to us and agree to keep the materials confidential.

3 If the person refuses, then we end up usually in litigation.

4 Q Now, were any of the -- Strike that.

5 You testified to the competing church set up by David

6 Mayo; do you recall that testimony?

7 A Yes.

8 Q That went out of operation in April of 1986?

9 A Yes, late April of 1986.

10 Q And that happened as a result of a court injunction

11 entered against the use of those materials?

12 A Yes, sir.

13 Q Now, in the Fishman case; do you recall the Fishman case?

14 A Yes, I am familiar with it.

15 Q Were measures taken to protect the confidentiality of the

16 materials in that case?

17 A Yes, several measures.

18 Q What was done? Will you tell the court?

19 A When the material I believe that was attached to the

20 Fishman affidavit first came into the case, the plaintiff in

21 that action, which was the mother church, Church of

22 Scientology International who was the only plaintiff in that

23 action, moved the court for a confidentiality order, I believe

24 concurrently when that occurred, the case was transferred from

25 Los Angeles to Florida. And then in that interim time period

62

1 nothing was ruled on. The documents were not available, the

2 whole court file was in transit. And at some point -- it was

3 in late July -- the judge in Florida transferred the case back

4 to Los Angeles. And once the court finally got it and the

5 record was there, we moved again to seal the record. I

6 believe there was a ruling from the Magistrate to maintain the

7 confidentiality of anything that was produced, and it stayed

8 that way until the case was finally resolved when we dismissed

9 the action. And then when the court file became then

10 available, then we moved -- CSI moved to seal the records.

11 That was denied by the District Court Judge. Although he did

12 not rely upon those records at all throughout that whole

13 proceeding. That went up to the Ninth Circuit and the Ninth

14 Circuit remanded it back down, basically instructing the judge

15 to make a determination on whether they were secret or not

16 secret, and it has been pending ever since.

17 Q Was that fully briefed and submitted by November of 1994?

18 A Yes, in fact the R.T.C. moved to intervene which was

19 accepted by the District Court Judge.

20 Q Does the court still have that under submission?

21 A Yes.

22 Q It does?

23 A It does.

24 Q Has the court now sealed that file?

25 A Yes.

63

1 Q Are confidential religious scriptures unique to

2 Scientology in any way?

3 MR. KELLEY: Irrelevant, Your Honor.

4 THE COURT: Sustained.

5 MR. COOLEY: I was trying to get into a question of

6 comparative religion, and it's a very common thing, Your

7 Honor, historically.

8 THE COURT: I know that.

9 MR. COOLEY: That's enough for me.

10 THE COURT: Okay.

11 BY MR. COOLEY:

12 Q Is Scientology what you would call a missionary religion?

13 A Yes, I would call it that.

14 Q Does it ultimately seek to reach communicants throughout

15 the universe?

16 A Yes, Scientology is nondenominational, and it's our intent

17 hopefully at some point in time that all people on earth and

18 elsewhere would partake in Scientology service.

19 Q And as a matter of religious belief and scriptural dogma

20 in the church, is it harmful for these to be viewed out of

21 sequence?

22 A Absolutely, yes.

23 Q Does that harm in the religion of Scientology accrue not

24 only to Scientologists but to others?

25 A Yes. If I can explain briefly? To a non-Scientologist

64

1 who was unfamiliar with the technology itself, the harmful

2 effect or the spiritual harmful effect may not be evident

3 until a point where he has progressed up the levels. The

4 closer to the O.T. levels one becomes, the more spiritual harm

5 would ensue from prior exposure, if he was not ready for it.

6 Q Is it a central belief and practice in Scientology that

7 the spiritual destiny and salvation of every man, woman, and

8 child in the universe depends upon the precise application of

9 the Scientology religion?

10 A Absolutely.

11 Q Now, were there policies written by Mr. Hubbard regarding

12 the security of these materials?

13 A Yes, there have been many policies.

14 Q And is there specifically a policy entitled no

15 unauthorized copies of upper level materials are to be made?

16 A There is a policy referenced the first of that, yes.

17 Q Is that a 1981 reference?

18 A I believe there is one issue.

19 Q Do you happen to have that available to you?

20 A If it's in here.

21 MR. COOLEY: May I approach the witness, Your Honor?

22 THE COURT: Yes.

23 BY MR. COOLEY:

24 Q Have you policy reference in front of you now, sir?

25 A Yes, I do.

65

1 Q Could you tell the court what it provides and who wrote

2 it?

3 MR. KELLEY: Your Honor, is this an exhibit? If so,

4 it ought to be offered before he reads from it? If not, it

5 shouldn't be gone into at all.

6 THE COURT: I don't know what it is yet. Let him

7 identify it first.

8 THE WITNESS: This is the policy extract from a

9 policy that was written by Mr. Hubbard in 1981 which covers

10 emphasizes strongly the fact that no copies, no notes, no

11 nothing are to be made of the materials.

12 THE COURT: Then it should be marked as an exhibit.

13 MR. COOLEY: I can't recall whether we did it, but I

14 will. I don't have it on my list of exhibits, so I will pass,

15 Your Honor, and furnish it on a supplemental submission to

16 counsel and to the court.

17 THE COURT: All right.

18 MR. COOLEY: I have to retrieve my document.

19 THE COURT: Okay.

20 BY MR. COOLEY:

21 Q In any event, was the policy of confidentiality created by

22 the author of the materials, namely, L. Ron Hubbard?

23 A Yes, Mr. Hubbard authored all the policies.

24 Q Is it pursuant to that teaching that they are kept

25 confidential?

66

1 A Yes.

2 Q Now, is any student allowed to keep notes of it when he is

3 doing the process?

4 A No. When a student is on the level as in a course room

5 setting, he is supervised by the course supervisor, a minister

6 who is trained to deliver that level and no notes or any type

7 of notes or anything or tape recordings are made.

8 Q No cribbing?

9 A No.

10 Q Any study aids allowed?

11 A None at all.

12 Q Any flash cards or films or anything like that allowed?

13 A Nothing of that nature whatsoever.

14 Q When is anyone, any Scientologist, ever accepted on to the

15 O.T. levels without having met all the requirements and

16 signing a covenant of confidentiality promising never to

17 disclose the contents of the materials?

18 A None at all.

19 Q Is this a procedure agreed upon by all Scientologists

20 before they are given access to the material?

21 A If a parishioner when he makes his way up the spiritual

22 level wants to partake in the next level which is a

23 confidential level, then he is explained the requirements to

24 be allowed onto that level. He reads the confidential issues

25 that cover the level and if he agrees to abide by that in

67

1 keeping the materials confidential, then he is permitted.

2 Q Suppose he says he won't agree to that?

3 A Then he is not allowed onto that level.

4 Q Have you yourself taken the upper level advanced

5 technology courses?

6 A Yes, I have done up to O.T. VII back in 1976.

7 Q And have you yourself signed those confidentiality

8 agreements?

9 A Yes.

10 Q Do you know what level Mr. Penny reached?

11 A I believe it was O.T. III.

12 Q And Mr. Wollersheim went to O.T. V?

13 A I believe so.

14 Q Is that old O.T. V or new O.T. V?

15 A It's new O.T. V. There was a change in 1978 where

16 Mr. Hubbard made some additional discoveries and the upper

17 part of the O.T. levels from V, VI and VII were changed and

18 that's what we call new O.T. V, new O.T. VI and new O.T. VII.

19 Q Now, is there anything in the confidentiality that relates

20 to the -- to the matters of eternal spiritual significance

21 being achieved in a unique step by step way?

22 MR. KELLEY: I don't see the relevance and the

23 document speaks for itself.

24 THE COURT: Overruled.

25 THE WITNESS: The O.T. levels are done in an exact

68

1 sequence and one is built upon the other. And that's why it's

2 imperative that a parishioner do them in the exact order that

3 Mr. Hubbard laid out and the documents themselves mandate

4 confidentiality and mandate the order in which they are made

5 out.

6 Q Is there any concern for the altering of the materials by

7 shorthand expressions or by paraphrasing or things of that

8 nature if they are in hands other than the church and is that

9 a reason for keeping them confidential?

10 A Absolutely.

11 MR. KELLEY: No foundation, Your Honor.

12 THE COURT: Overruled.

13 THE WITNESS: There cannot be any alteration at all

14 of Mr. Hubbard's work. The way he had laid it, there is an

15 exact sequence of steps. It's very detailed, and there can't

16 be any alteration to it.

17 Q Some of these newspaper articles alluded to buy Mr. Kelley

18 in his opening statement this morning have seen some

19 alterations and paraphrasing?

20 A There have. In all the newspapers articles I have seen

21 since 1982 and before have all contained to some degree some

22 alteration. I don't believe that I can remember sitting here

23 exact quotes from any of the materials.

24 Q Did Mr. Kelley's statement itself constitute some serious

25 paraphrasing of the material?

69

1 A Absolutely.

2 Q Is that considered spiritually harmful by the Church of

3 Scientology?

4 A Yes, alteration or pre-exposure to materials we believe is

5 harmful.

6 Q I want to turn, Mr. McShane, to the question of economic

7 harm resulting to the Religious Technology Center by the

8 publication of these materials, failure to keep these

9 materials confidential; is there such economic harm?

10 A Absolutely, yes.

11 Q Would you tell us what it consists of?

12 A Scientology has a system of donations that are fixed per

13 each level and the donation rates for the O.T. levels are

14 known about ahead of time, and parishioners agree to make that

15 particular donation for that level. It's one of our strongest

16 tenets of the religion -- is that there be fair exchange in no

17 matter what you do in life. For allowing someone to go onto

18 these services, there has to be exchange and that is an agreed

19 upon exchange that all parishioners agree to be able to do the

20 level. R.T.C. licenses the six churches -- advanced churches

21 to deliver those materials. As part of this license agreement

22 R.T.C. receives a 6 percent licensing fee that is paid from

23 the advanced organizations from the donations that are

24 received from those levels. That 6 percent is used to fund

25 our organization, our expenses, our promotion, and also we

70

1 make donations to an archival organization to maintain an

2 archive of Mr. Hubbard's works for life. If there is any

3 hindrance of anyone coming into the church that will

4 eventually arrive at those upper level materials, there is

5 economic harm.

6 Q When you say 6 percent, is that 6 percent of the donations

7 received by the church that holds the license to use the

8 materials?

9 A It's 6 percent of the donation once the service has

10 actually been delivered to that parishioner. It's not upon

11 the payment of the donation but the upon the completion of a

12 level.

13 Q And so that whatever the donation is for that level, 6

14 percent of that would go to Religious Technology Center?

15 A That's correct.

16 Q Is that a substantial factor in the support and survival

17 of Religious Technology Center to provide the services that it

18 provides?

19 A Very substantial, yes.

20 Q Could you give us an idea of what percentage of the total

21 income of Religious Technology Center that represents?

22 A I would say probably 94, 95 percent.

23 Q And is that basically how Religious Technology Center

24 staffs itself, pays its bills, and survives to protect the

25 religious technology of the Scientology religion?

71

1 A Yes, it is.

2 Q Now, in all of your experience since 1983 and in all of

3 the things that we have been talking about, including postings

4 to the Internet and the -- and the Vien case and cases where

5 you track down copies and the theft in Denmark and the whole

6 thing, have you ever encountered a situation in which it may

7 be said that those materials are generally available?

8 A No, not at all.

9 Q When it's considered in the universe of people to whom

10 they may be administered and delivered or on a lesser basis

11 are they generally available anywhere?

12 A No, they are not.

13 Q Have you seen any evidence to the contrary?

14 A No, not even on the Internet.

15 Q Do you have any clue as to how many people on the Internet

16 have these?

17 A I have no clue. There is a handful of people on the

18 Internet that communicate their views on the church, critical

19 views or whatever. Many allege that they have this or they

20 have that. There have been some quotations, alterations of

21 snippets of materials, and in all circumstances, I have

22 instructed our counsel if anything does come on the Internet,

23 that they are immediately contacted. We have gotten great

24 cooperation from the service providers on the Internet, that

25 if any violation is found, they take the material off and

72

1 delete it. They send warnings to people who put it on,

2 telling them not to violate the copyrights any more or else

3 they will be suspended. We have cooperated with many, many

4 service providers, in fact, working with service providers to

5 actually form rules and regulations internationally, so that

6 copyright and intellectual property are protected.

7 Q In your view as president of the R.T.C. charged with the

8 primary responsibility of dealing with these matters, do these

9 materials still have significant value to R.T.C. by virtually

10 not being generally available?

11 A Absolutely, yes.

12 Q Completely aside from that, these materials are materials

13 that the various advanced organizations that you have

14 identified earlier intend to continue to deliver on a

15 confidential basis pursuant to the advanced security

16 precautions you have described in those photographs, correct?

17 A Yes, they have to.

18 Q Provided that of course that those materials are continued

19 to be protected?

20 A Yes.

21 Q Now, in terms of the administration of those materials,

22 let's say by the Flag Service Organization which is an

23 advanced organization, correct?

24 A That is right.

25 Q If you get the 6 percent of their income from it, do you

73

1 have an idea of what it represents to them in terms of

2 essential income to survival?

3 A Well, the income from the upper level materials is the

4 majority of their income overall.

5 Q Does this apply across the board in the Scientology

6 religion to all Scientology organizations, include Religious

7 Technology Center?

8 A That's true, yes.

9 Q Now, the harm that might be -- the harm that accrues to

10 the church is that limited in any way to the -- somebody

11 administering these levels to himself or to his friend or

12 using them in that fashion? Is that what the harm is limited

13 to or is it broader?

14 A That's part of the harm but it's broader than that.

15 Q By broader than that, does it cut across the board, strike

16 the whole income fabric of the Religious Technology Center?

17 A Yes, certainly.

18 Q Scientology in the terms of the great sweep of time is a

19 relatively new religion having been in existence how long?

20 A I think the first church was formed in 1953 or 1954.

21 Q So we are talking something on the order of 41 or 42

22 years?

23 A We celebrated our 40th anniversary recently.

24 Q It hasn't been around for hundreds of years, and does it

25 rely solely upon the donations of its parishioners to survive?

74

1 A That's our sole income, yes.

2 Q Is that part of the funding system whereby fixed donations

3 are set for religious services to ensure the survival of the

4 religion?

5 A Yes, that's the system of donations we use.

6 Q Now, Scientology parishioners need assistance from church

7 staff for application of the confidential religious materials,

8 don't they?

9 A Yes, all levels have assistance.

10 Q But does that mean that there is no market for

11 unauthorized access?

12 A No, there is a market, put it that way, yes.

13 Q That market is a bootleg market, is it not?

14 A Yes.

15 Q Is the concern what existing Scientologists will do with

16 the materials if they fall into their hands or what outsiders

17 will do with them?

18 A It's plainly outsiders. Existing Scientologists would not

19 expose the materials. They have agreed to that tenet of the

20 religion and they abide by that. They are very strongly

21 supportive of that.

22 Q Now, did you personally deal with the copyrights in these

23 works and the registration applications filed with the

24 copyright office for the advanced technology?

25 A Yes.

75

1 Q Are each of the O.T. levels covered by a single copyright?

2 A Well, it depends on the level. There are some levels that

3 are a series -- registered as a series.

4 Q Each series is listed in the copyright?

5 A The contents of the series is listed in the registration

6 certificate, yes.

7 Q So I understand, give me an example of an O.T. level of

8 which that is true?

9 A O.T. II, for example, has the main body of the materials

10 and it has 21 steps that are attached to it. And each of

11 those steps are listed out in the certificate itself along

12 with the main body of the work.

13 Q So each one of them is separately covered under the main

14 registration number; is that right?

15 A Yes.

16 Q How many of the O.T. I through VII are copyrighted as a

17 series?

18 A There are three levels O.T. I, II, and O.T. V.

19 Q How many series in I, do you recall, in O.T. I?

20 A O.T. I consists of several issues. There isn't a series.

21 Q By Scientology an issue is something that's issued, not a

22 debatable issue, but something that's issued?

23 A Issued, yes, but not published.

24 Q I am trying to get the term use in the proper context.

25 Sometimes we in the law talk about issues as things we fight

From bobpenny@delphi.comSun Oct 1 22:15:27 1995

Date: Sun, 01 Oct 1995 02:41:39 GMT

From: Bob Penny <bobpenny@delphi.com>

To: alerma@dgs.dgsys.com

Subject: part 3

76

1 over.

2 A Okay.

3 Q In Scientology an issue is something that is a written

4 Scientology matter?

5 A Yes, either handwritten by Mr. Hubbard or typed.

6 Q And in connection with the -- with the copyrights, did you

7 personally supervise the manner in which they were

8 copyrighted?

9 A Yes, I did.

10 Q Did the copyright office permits you to retain the trade

11 secret aspect of the copyright of the material by copyrighting

12 it in a masked fashion?

13 A Yes.

14 Q Is that the same technique that was developed by the

15 copyright of office for software?

16 A Yes, that's where I got the idea from.

17 Q Tell us from that masking consists of and how it's

18 accomplished?

19 A When I started on this project, I contacted the copyright

20 office to see what method would be allowed to be able to

21 register trade secret material. The gentleman at the

22 copyright office informed me that they deal with software a

23 lot and that they permit a mask to be placed over the work and

24 the mask is a piece of paper that would have slots cut in it,

25 and then the work itself would be copied on a copy machine

77

1 with the mask over it, so the result would be a sheet of

2 paper, the trade secret work itself, with the slots which

3 would hide text. You would see text from in between the slots

4 which would be for the copyright office to identify there was

5 actually something there. And we allowed at least the

6 identification for the title to be apparent so the copyright

7 office could identify it somehow and all of the levels are

8 done that way and identified -- accepted by the copyright

9 office.

10 Q Accepted by the copyright office and continue to maintain

11 secrecy?

12 A They were all registered as unpublished works, yes.

13 Q Is that so on all upper level materials that have been

14 copyrighted?

15 A Yes.

16 Q Are you familiar with the so-called Fishman affidavit that

17 is at the heart of this litigation?

18 A Yes, I am.

19 Q Could you tell us how many pages, excluding the phony O.T.

20 VIII material, dealing with O.T. I through VII, how many pages

21 of copyrighted and trade secret material are included in that

22 affidavit?

23 A I believe between 60 and 70. I believe it's 63 or 69. I

24 am not totally sure.

25 Q Have you -- have you had the opportunity to review the

78

1 Fishman affidavit -- Strike that.

2 Was the Fishman affidavit with that material attached

3 retrieved from Mr. Wollersheim's F.A.C.T.Net system?

4 A Yes, it was.

5 Q And in how many separate places did it appear?

6 A In Mr. Wollersheim's hard drive it was in one file. I

7 think it was C drive in two different locations in its

8 entirety. We also found a hard copy in the materials that we

9 seized and then bits of it, meaning that various exhibits that

10 were attached to it, various O.T. levels were found in other

11 areas of the hard drive.

12 Q How many -- do you remember how many copies of it you

13 found in there?

14 A I don't remember. I did a chart that listed out

15 everywhere any of the O.T. materials were found.

16 Q Is that chart -- what's the exhibit number? Is that chart

17 an exhibit?

18 A I'm not sure, sir.

19 Q Exhibit 28?

20 A I am not sure, sir.

21 Q Do you have the exhibits there, Mr. McShane, Exhibit 28?

22 A Yes, I do.

23 Q And would you describe what this chart shows?

24 A I put this chart together to show the various confidential

25 materials that were found in either Mr. Wollersheim's

79

1 apartment or in Mr. Penny's residence which would include

2 either a soft copy or a hard copy.

3 Q What copy -- does this cover copyrighted works in addition

4 to O.T. I through VII?

5 A We found -- well, O.T. I through VII is copyrighted.

6 Q In addition, but in addition to them were there

7 copyrighted works that were in Mr. Wollersheim's possession?

8 A Yes, a lot.

9 Q Now, if we read across these columns, the first item, for

10 example, is power and it says, Wollersheim apartment, Box 1,

11 is that a box of hard copies?

12 A Yes, it was.

13 Q And so was it in the computer file?

14 A Correct.

15 Q N/A in the next column indicates that?

16 A That's true, yes.

17 Q And the amount of the work that was copied was 100

18 percent, Hubbard communication bulletin?

19 A All of these issues, they are policy letters or bulletins.

20 Q So an HCOPL is a Hubbard policy letter and Hubbard

21 communication office bulletin and the date -- also indicates

22 the date on which it was issued, correct?

23 A That's correct.

24 Q So you found -- and power, you indicated that the upper

25 level material starts with power?

80

1 A Correct. That's the first confidential element, yes.

2 Q I note that the first three items are copies of that

3 copyrighted work, correct?

4 A In Mr. Wollersheim's apartment, yes.

5 Q So were all three of them found in his Box No. 1?

6 A Well, the box No. 1 is the designation that I gave to the

7 box when it was seized. It was found in various different

8 places.

9 Q But it was a hard copy?

10 A Yes.

11 Q Not a computer copy?

12 A That's correct.

13 Q In each instance it was 100 percent of the work and the

14 copyright registration number for that work is in the extreme

15 right-hand column?

16 A Yes, there were photocopies. Yes.

17 Q This chart goes on for quite a few pages, and as a

18 concession to the shortness of life, I am not going to go

19 through every item, but could you tell us whether there were

20 O.T. levels that are on this chart?

21 A Yes, there were several O.T. levels.

22 Q Could you pick them out for us?

23 A Certainly. On page 2 of the chart, line 18 starts with

24 O.T. I.

25 Q O.T. I, 30 November 1966. And that was found in the Penny

81

1 computer?

2 A That's correct, in the designation below that the D stands

3 for the D drive which was one of his hard drives. And then

4 the following identification, either words or letters,

5 identify the file name itself or where it was found in the

6 computer.

7 Q And the dates saved into the computer is given -- what's

8 that date there, August 14?

9 A That date is August 14.

10 Q I'm sorry. December 22, 1993.

11 A That would be the date that the file itself was created on

12 the computer, wherever.

13 Q Was it scanned in or loaded into his computer?

14 A That was the date that that filed was created.

15 Q This says that 90 percent of the work was copied?

16 A Yes.

17 Q And does that mean 90 percent of the total work was

18 copied?

19 A No, 90 percent of that particular issue, 30 November 1966.

20 Q So that was a separate issue, that was a copyrighted issue

21 part of O.T. I, correct?

22 A Yes, the O.T. I consists of two, three, or four individual

23 issues.

24 Q This was 90 percent of one of them?

25 A That's correct.

82

1 Q It was covered under the copyright number listed in the

2 extreme right-hand column?

3 A Yes, sir.

4 Q I notice that O.T. I is repeated at item 20, 21, 22, 23

5 through 26. Does that indicate that it's the same item each

6 time?

7 A The dates are there in the second box. The first 18, 19.

8 20, 21, 22 were all the same issue found in different

9 locations.

10 Q Those were all the issue of 30 November 1966 found in

11 different locations on either Mr. Penny's computer or in

12 Mr. Wollersheim's home box, right?

13 A Correct.

14 Q Going onto the item 23, we have O.T. I instruction, 21

15 July 1968, was that a separate issue?

16 A Yes, that's a separate issue for O.T. I.

17 Q That was found where in the Penny computer?

18 A Yes, in the Penny computer. Again, the hard drive and the

19 identification for the file.

20 Q On that one it says date saved if computer file, 12-22-93.

21 What does that date indicate?

22 A It indicates when that file was created.

23 Q What percentage of that issue was copied?

24 A All we found on that particular file was 25 percent of the

25 issue.

83

1 Q That was covered by the copyright in the extreme

2 right-hand corner?

3 A I would like to clarify. When we found some of these

4 things in the computer file, we found several files that had

5 been deleted. And the computer experts ran an undelete

6 program to recover the text to see what it was. When that's

7 done, computers don't file the whole document in one section

8 of the computer file. Usually it's in various different

9 sectors on the disk itself. So this was all that we would be

10 able to recover from that particular section of the disk.

11 Q I take it that in the computer world if you delete a file

12 and don't write over it, it still remains there subject to

13 undeleting?

14 A That's what I was told, yes.

15 Q If you write over it, it disappears all together?

16 A Yes.

17 Q Going down, I see several O.T. I's on that July 21, 1968

18 issue and various percentages. Were these also undelete

19 files?

20 A I believe so, yes, that's why the percentage is so small.

21 Q The next one is O.T. I. We are dealing with a different

22 date, part one, 14 August 1966, and that was found in

23 Mr. Penny's computer?

24 A Yes, it was.

25 Q 30 percent of that issue was found there, correct?

84

1 A Correct.

2 Q The file having been opened August 14, 1995?

3 A That's correct. And there again you have the copyright

4 listed.

5 Q Now, as we go through these, did you personally make this

6 chart, assess the percentage copying that was involved,

7 cross-reference it to the registration, copyright

8 registration, and identify where it was found either on the

9 premises of Mr. Wollersheim or Mr. Penny or on their

10 respective computers?

11 A Yes, I did, sir.

12 Q Is there anything additional that you would like to point

13 out about this, because I noticed page after page of O.T.

14 III -- for example, I just turned to page 33, and I see item

15 378, O.T. III additional -- additional O.T. III material,

16 Wollersheim computer, and you give the drive that it's on.

17 Saved on August 21, 1995, 100 percent of that work. What was

18 that?

19 A It was a specific issue that was part of O.T. III. It's

20 entitled additional O.T. III material. And that was found in

21 a particular file in Mr. Wollersheim's computer on the C

22 drive. The entire issue. I think it's a three-page issue. I

23 see that that item repeats itself time and again, 378, 379,

24 381, the percentages varying from 80 to 100 percent.

25 A That's correct, they were found in different locations

85

1 during the seizure.

2 Q Is there anything that you would like to point out to the

3 court about this schedule that you made, that I haven't

4 brought out because I don't want to go over every item, it

5 would be too cumbersome.

6 A No.

7 MR. KELLEY: I object, Your Honor.

8 THE COURT: He has already said no.

9 Q Nothing else?

10 A That's it.

11 MR. COOLEY: All right. The court will have it as an

12 exhibit then.

13 BY MR. COOLEY:

14 Q Mr. McShane, do you have the book in front of you? Have

15 you the notebook in front of you that comprises exhibit --

16 excuse me, Your Honor -- 79.

17 A Is that a separate book?

18 Q Yes, it is.

19 A I have, it Mr. Cooley.

20 Q Would you explain to the court what this is, Mr. McShane?

21 A Okay. In the time that I had, I have taken what was part

22 of the attachments to the Fishman declaration that contain the

23 confidential material, and I have taken the page by page of

24 that, what was on the computer what was posted by Mr. Lerma

25 and Mr. Wollersheim and did a comparison to the actual text of

86

1 the church's material. What I attempted to do was to do a

2 side-by-side comparison, as best I could; although our search

3 is continuing since a lot of this material is fairly old and

4 some of it is archived, we are attempting to determine if

5 there was any other infringement but this is what I put

6 together so far.

7 MR. COOLEY: Your Honor, I would request that

8 Mr. McShane be allowed to point out to the court without

9 reading it the specific comparisons that he would -- he would

10 like to bring to the Court's attention and that the matter be

11 confidential.

12 THE WITNESS: Your Honor, I would discuss the

13 contents I tried to lay out as simply as I could. If you take

14 number one, it's entitled "Operating Thetan, Section Three."

15 MR. COOLEY: May I sit down, Your Honor?

16 THE COURT: Yes, please go ahead.

17 THE WITNESS: This is the -- this is part of the O.T.

18 III level materials. This is one particular issue. And the

19 section that's highlighted there I have compared that to the

20 item -- handwritten version from Mr. Hubbard that's used in

21 the church. I believe that you can see that it's a verbatim

22 copy. Again, this is one of our confidential levels. A very

23 significant level for us in the church. It continues to go

24 on. Tab No. 2 is the rest of that paragraph, and as you can

25 see it goes onto the next page which is the data continued,

87

1 part two. I go through the whole text that way and so you can

2 see on this particular section O.T. III, it runs from No. 1 to

3 No. 43. In fact, I can say honestly that in the years that I

4 have been doing this, this is one of the most substantial

5 copies that I have seen.

6 Q What level is that, sir?

7 A This is O.T. III. We go on from there. The next section

8 is O.T. II. Your Honor, I put these in an order that would

9 show you like from the most amount of copying backwards to

10 paraphrasing that was done. Section O.T. II, again as you can

11 see, it says on tab under O.T. course. O.T. Course Section

12 Two, 24 of April 1967, which is the exact title of the typed

13 version of that -- the actual church issue which is also

14 called O.T. Course Section Two, the same date. This goes

15 through -- all of the way through to tab No. 22, yes, tab

16 No. 22. Then under O.T. IV, which is the next O.T. level that

17 I did the comparison to, which is called O.T. IV which matches

18 the church issue, which is dated -- HCOB -- September 8, 1971,

19 R-1. At the bottom of the page there you can see it says O.T.

20 IV run down. And the rest of the words that are there. This

21 goes through tab No. 6. Then it goes onto O.T. VII, and I

22 have just included in this, Your Honor, the page that says

23 page No. 7 on the church issue, the page where the

24 infringement was found. Especially these levels O.T. I, O.T.

25 VII, O.T. VI -- I am still searching for the earlier issues to

88

1 determine if there is any other infringement.

2 This will give a fairly good example of the text that

3 was taken. And these -- Your Honor, you see a lot of these

4 are in question form. Statements, instructions to the

5 parishioner on what to do once he is in his counseling

6 session. These are part of the work that Mr. Hubbard

7 discovered as to undo the harmful and devastating effects that

8 occurred many years ago. As you can see, this is why they are

9 highly confidential because we don't want people to take those

10 simple statements there and do that with themselves until they

11 are totally prepared to do that.

12 There are many different particular processes that

13 contained in O.T. VII. And not all of the processes were

14 attached to the Fishman affidavit, which is why you don't see

15 the entirety of the work here. When I produced these

16 materials to the defendants and to the court here, I only

17 produced the copies that have been infringed. I did include a

18 full set of materials that were submitted to the copyright

19 office that were passed, so that the defendants would see the

20 volume that's included here, but I only in order to protect

21 the trade secrets that were not included in the Fishman

22 affidavit, I did not produce those.

23 Then towards the back, Your Honor, you will see as we

24 get into O.T. VI and O.T. VII, you will see different color

25 highlighting. The blue highlighting, this is where the

89

1 paraphrasing comes on.

2 THE COURT: Can you give me the exhibit number,

3 please?

4 THE WITNESS: Under O.T. VI towards the back, Your

5 Honor, under tab No. 1 you can see yellow highlighting and

6 blue highlighting. What I tried to do here is to illustrate

7 the paraphrasing that was done. This is an example where

8 someone has attempted -- where it appears not having the

9 actual material itself -- has attempted to reconstruct or some

10 form remember what these issues are.

11 MR. COOLEY: Are we both -- the court and the witness

12 on the right page?

13 THE COURT: I'm sorry, but --

14 MR. COOLEY: Let's back up Mr. McShane and give the

15 court a precise location.

16 THE WITNESS: Towards the back, Your Honor, you will

17 see the last section is called O.T. I. Towards the very back

18 of this binder, Your Honor. I'm sorry.

19 MR. COOLEY: That volume is Exhibit 79, Your Honor,

20 itself.

21 THE COURTROOM DEPUTY: We have O.T. I.

22 THE WITNESS: In this one, Your Honor, this is the

23 blue highlighting. This is basically the paraphrase of what

24 Mr. Hubbard has written. You can see the concept, the general

25 concept is there. Like I said earlier, I am continuing my

90

1 search to see if I can find earlier references than what I

2 included to see if there was any more direct infringement or

3 any other paraphrasing that has taken place here.

4 THE COURT: Okay.

5 BY MR. COOLEY:

6 Q With respect to the paraphrasing, have you attempted to

7 pick out those items that are substantially similar in

8 expression?

9 A Yes.

10 Q Have they also included in the trade secret context a

11 substantial similarity of ideas?

12 A Yes.

13 Q So what you have attempted to highlight for the court

14 deals with both copyright and trade secrets?

15 A Yes, as best I could. The O.T. VII or O.T. I or O.T. VI

16 materials, Your Honor, they only consisted of maybe 15 pages

17 in total, so the amount of copying is not as big as in O.T. II

18 or O.T. III. We are talking a couple hundred pages a piece.

19 Q Now, with respect to how much more there is to search on

20 these computers?

21 A What I have requested from our archives people to see if

22 they can go back and find any other revisions or any other

23 earlier works to determine there is any other copy --

24 copyright infringement. The works have been revised over the

25 years. O.T. VII, for instance, was originally written by

91

1 Mr. Hubbard in 1970. As Mr. Hubbard's research continued, he

2 would develop new discovery would which would then amend the

3 level or change the level in some form or add to it. What I

4 have attempted to do since these materials are in archives is

5 try to find exactly what other materials are there that have

6 been infringed.

7 Q Did L. Ron Hubbard who authored the materials intend them

8 for use by anybody but Scientologists?

9 MR. KELLEY: I have an objection. No foundation.

10 THE COURT: Sustained.

11 BY MR. COOLEY:

12 Q Were they given to anybody except Scientology churches?

13 A No, they were not.

14 Q Were they authorized for use other than for Scientology

15 churches or other Scientology parishioners?

16 A No, they were not.

17 Q Does the Religious Technology Center have any concern

18 about the potential loss of parishioners through ridicule by

19 taking portions of the materials out of context?

20 A Yes, very much so.

21 Q Does the Religious Technology Center have any concern

22 about potentially loss of income and donation of parishioners

23 from competing churches, competitive knockoff materials and

24 essentially black market trafficking in protected works?

25 A Yes.

92

1 Q Does the Religious Technology Center have a concern about

2 violation of the instructions of their Scientology founder and

3 the author of the materials concerning the use of the

4 materials precisely as written?

5 A Yes.

6 Q Does the Religious Technology Center have a concern about

7 the violation of the instructions issued by Mr. Hubbard, the

8 religion's founder who gave them to the church for use in a

9 precise and exact way if they are exposed to people not

10 spiritually ready for them?

11 MR. KELLEY: Leading and irrelevant.

12 THE COURT: He has already answered the question in

13 his testimony.

14 MR. COOLEY: Okay. If Your Honor heard it, I am

15 delighted.

16 BY MR. COOLEY:

17 Q Are you concerned about irreversible alteration of

18 religious beliefs?

19 A Of course.

20 Q And spiritual harm to Scientologists everyone and every-

21 where?

22 MR. KELLEY: Irrelevant, Your Honor.

23 THE COURT: Overruled.

24 A That's one of our primary concerns, yes.

25 BY MR. COOLEY:

93

1 Q Are you concerned about violation of the intended use of

2 these materials as strictly unpublished materials?

3 MR. KELLEY: Asked and answered, Your Honor.

4 THE COURT: Sustained.

5 MR. COOLEY: I think that's all.

6 CROSS-EXAMINATION

7 BY MR. KELLEY:

8 Q Good afternoon, Mr. McShane. I have a couple of

9 questions. First of all, on your Exhibit 79, which is your

10 comparison of original text with text you say you found at the

11 defendants' residences; is that what that exhibit is?

12 A Yes.

13 Q I didn't understand what you said when said you were

14 including only the Fishman-Geertz materials. Do I understand

15 that Exhibit 79 contains the entirety of each of the works

16 claimed to be infringed in this case?

17 A It contains the pages where the infringing work was found.

18 There may be other pages that make up that 63 or 69 pages

19 where I haven't found an infringement yet or where we are

20 still searching for infringement.

21 Q For example O.T. III consists of approximately 200 pages,

22 does it not?

23 A The whole level, yes.

24 Q As registered?

25 A I believe so.

94

1 Q How many pages are in that exhibit?

2 A Do you want me to count them? I don't know.

3 Q Would it be easy to count? That might be the fastest way

4 to do it.

5 A Sure.

6 THE COURT: Do you mean how many pages relating to

7 O.T. III?

8 MR. KELLEY: Yes.

9 THE COURT: Okay.

10 THE WITNESS: If you take just the pagination itself

11 or the tabs, there are 46.

12 BY MR. KELLEY:

13 Q 46 pages out of 200?

14 A Yes, but you also have to understand that the 200 pages --

15 I would have to see what was dispositve to count those pages,

16 but I believe you took that 200 from an affidavit I did. I

17 don't recall as I sit here right now if that's the whole work,

18 including nonconfidential stuff -- issues that are included in

19 that level or that's just all the confidential materials. I

20 believe we supplied to you the deposit copies which contained

21 all of the confidential materials. If we can have those,

22 then, I can give you the exact page number.

23 Q We'll do that.

24 MR. KELLEY: Your Honor, could I return to my table

25 for a minute?

95

1 BY MR. KELLEY:

2 Q I am going to hand you, sir, what was produced to us as

3 the deposit for O.T. III.

4 A Okay. Just a second, sir. I am not finding O.T. III in

5 here, Mr. Kelly.

6 Q Which deposits are those, sir?

7 A It starts with O.T. VII. They seem to be out of sequence.

8 There are some O.T. IV in here.

9 Q Do you see the deposits for O.T. III there?

10 A Not in that first folder. I don't see it in the second

11 folder either. I'm sorry, Mr. Kelley, we don't see it in

12 here.

13 Q We are not seeing it in the materials produced as well.

14 Put that question aside for a moment. Are you able to tell us

15 how many pages, as you say, nonconfidential material that was

16 part of the registration pack in O.T. III?

17 A Nonconfidential issues would not be part of the

18 registration pack. The only materials -- the only materials

19 that got registered were the confidential materials as a

20 series.

21 Q How many pages were registered for O.T. III?

22 A I thought we were looking for deposit copies.

23 Q You don't can't do it without looking at that?

24 A No, I have to see what was deposited.

25 Q Let me ask you to take a look at your declaration,

96

1 Exhibit N.

2 Mr. Case, would you hand the witness Exhibit N.

3 A I have it, sir.

4 Q This is a declaration you filed in the case now pending in

5 the Northern District of California where a seizure was made

6 at the home of Mr. Dennis Erlich?

7 A That's correct.

8 Q And at paragraph 14 of that page 9?

9 A I have it.

10 Q Do you see that?

11 A Yes.

12 Q In that case, did you make this declaration, "To put this

13 in perspective, the following is a list of advanced levels and

14 the amount of pages of material contained in each level?"

15 A That's what it says, yes.

16 Q Could you tell us how many are in O.T. I?

17 A It says 25 pages.

18 Q O.T. II?

19 A 300 pages.

20 Q O.T. III?

21 A 200 pages.

22 Q And O.T. IV?

23 A 63 pages.

24 Q O.T. V?

25 A 35 pages.

97

1 Q O.T. VI?

2 A Ten pages.

3 Q And O.T. VII?

4 A 80 pages.

5 Q Now, at the home of my clients, Messrs. Wollersheim and

6 Penny, you found O.T. materials that corresponded to those

7 attached to the Fishman affidavit; is that right?

8 A That's correct.

9 Q And the only additional materials were a few pages out of

10 O.T. II; is that correct?

11 A That's not correct.

12 Q What additional pages of the O.T.s did you find of those

13 contained in the attachments to the Fishman-Geertz affidavit?

14 A We found -- I'm sorry. You are correct as far as the

15 attachments to the Geertz affidavit, you are right. O.T. I

16 through VII.

17 Q All right. Did you find any O.T. materials at Mr. Penny's

18 or Mr. Wollersheim's residence in addition to those attached

19 to the Fishman-Geertz affidavit as Exhibit G?

20 A Yes, we did.

21 Q Which ones?

22 A Additional O.T. II materials.

23 Q That's about two or three pages?

24 A No, a lot more than two or three pages.

25 Q Well, how many was it?

98

1 A I am not sure. I would have to count.

2 Q Let me ask you to take a look at Exhibit P. Thank you,

3 Mr. Case.

4 A I don't see it in here.

5 Q It may be in the same notebook, but I don't think it is.

6 Before I ask you that, whether they are confidential or not,

7 these page numbers that you just rattled off from your

8 declaration in the Erlich case, are the numbers contained in

9 the series of each of those works?

10 A Yes, both confidential and nonconfidential.

11 Q But either way for purposes of what work is or is not,

12 those are the number of pages included; isn't that right?

13 A Yes.

14 Q That's what's on file with the copyright office masked or

15 unmasked?

16 A There are no unmasked.

17 Q You masked the whole 200 pages for O.T. III?

18 A No, we took which was confidential and on O.T. II, for

19 instance, and took those copies, those issues, and registered

20 them as being masked. There may be several other issues that

21 are part of that level that are nonconfidential, and those are

22 not included in the Fishman affidavit. But they are part of

23 the O.T. II level.

24 Q As part of the work in which you claim a copyright?

25 A Yes.

99

1 Q Is Exhibit P, in fact, the Fishman affidavit?

2 A Yes, it does appear that way.

3 Q Are those the attachments to it that we have been

4 referring to in Exhibit G?

5 A Yes.

6 Q For the record, in compliance with the court order, Your

7 Honor, that is submitted as a confidential exhibit. Where it

8 goes from here is up to the court. I think you told us that

9 there are pages of the confidential portions of the O.T.s that

10 you have not submitted in Exhibit 79; is that right?

11 A That's correct, yes.

12 Q We don't know how many pages there are without looking at

13 the registration deposits?

14 A If I knew exactly how many there were that were

15 registered, then we can subtract what's included in those.

16 Q You haven't submitted those to us or to the court?

17 A No, I haven't. They were not fringed, so I didn't include

18 them.

19 Q What was infringed of the work, was it not --

20 A Issues within the work was infringed.

21 Q You only included those portions of the work that you

22 think are infringed?

23 A Correct.

24 Q You have not included the nonconfidential portions of the

25 work in any submissions so far, have you?

100

1 A No, the nonconfidential portions were not infringed.

2 Q We'll let the court decide whether we look at portions

3 being infringed or the entire work being infringed, but it's

4 clear that the court doesn't have the entire work,

5 confidential or nonconfidential, to use to compare against the

6 Fishman affidavit material; isn't that right?

7 A Yes, that's correct. If that's needed, I will gladly it.

8 Q Could you please take a look at Exhibit double I, please.

9 A I have it, Mr. Kelly.

10 Q Is this a letter by your counsel with a copy to you

11 addressed to me dated September 7, 1995?

12 A Yes, sir.

13 Q What does that purport to address?

14 A You asked me in my deposition that if I could identify the

15 files, either soft copy or whatever, where additional

16 materials were found. The Fishman affidavit where they were

17 specifically found in the hard copy files -- sorry -- the soft

18 copy files and anything in addition to the Fishman affidavit.

19 Q Does this cover in a less detailed form all of the matters

20 that you referred to in the exhibit you just went through that

21 contains a list of all of the infringing materials and so

22 forth?

23 A Yes, it includes that, yes, sir.

24 Q This is just simply a much more generalized form of the

25 same information?

101

1 A Yes.

2 Q It refers to all of the confidential materials you claim

3 are infringing?

4 A I believe so, yes.

5 Q Thank you. I was just hoping to have something a little

6 less cumbersome to deal with.

7 A Okay.

8 Q Now, regarding security, the high tech procedures what

9 that you have described are something that has come into being

10 pretty much in the last ten years; isn't that right?

11 A Yes, as I explained as the technology improved, we

12 improved our security.

13 Q In days before that, parishioners were permitted to take

14 the O.T.s home in locked briefcases, were they not?

15 A No, they were not, sir.

16 Q At least part of them?

17 A As we went over in detail in the deposition, there were

18 plattens which are sections of materials that a person would

19 need to audit to take it with them, yes.

20 Q The Church of Scientology claims some 8 million adherents?

21 A Internationally, yes, I believe that's correct.

22 Q Of those 8 million adherents, we can assume that many

23 thousands have had access to these materials at one time or

24 another, can we not?

25 A I think there are probably thousands that have done the

102

1 O.T. levels at some time in their life, yes.

2 Q Now, you have described the licensing have these materials

3 to churches of Scientology and the fact that those churches

4 receive donations. As a condition of permitting a parishioner

5 to receive a given O.T. level, what's the required donation

6 for O.T. I?

7 A I don't know. I believe we supplied you an exhibit of the

8 entire donation rate. If I could see that, I could tell you.

9 Q Can you give us a range for O.T. I?

10 A I think around 1,500 or 1,800.

11 Q How about O.T. II?

12 A I don't know, sir. If I could see the list, I could tell

13 you.

14 Q Can you tell us for O.T. III?

15 A No, I can't.

16 Q In any event, 6 percent of those donations go to R.T.C.?

17 A Correct.

18 Q And isn't it also true that 90 percent of that money is

19 paid out -- where does it go, the archive center, what's that

20 the name of that organization?

21 A It's called the Church of Spiritual Technology.

22 Q The 10 percent remains and deals with all R.T.C. expenses

23 including legal?

24 A That's correct.

25 Q You say in terms of the overall fabric of the church

103

1 income, this was basically it. Doesn't the church have

2 substantial income from an endowment?

3 A Which are you referring to?

4 Q Any of the Scientology organizations.

5 A I know of no endowment.

6 Q You know of no endowment anywhere?

7 A No.

8 Q Now, as far as the contracts that you have, parishioners

9 sign for confidentiality?

10 A Yes.

11 Q Those apply to both confidential and nonconfidential

12 information; do they not?

13 A I believe there is a clause in there that protects

14 nonconfidential information which is not publicly disclosed,

15 yes.

16 Q It prevents disclosure of that information to people

17 opposed to Scientology?

18 A I believe the word is hostile, yes.

19 Q Your position, both of those clauses lie in perpetuity

20 even after someone leaves the church and even if they obtain

21 information totally independent of that relationship?

22 A Well, I believe that the person who entered into that

23 could answer that yes or no. I'm sorry. You will have to

24 repeat.

25 Q It is your position that those provisions lie in

104

1 perpetuity as to both confidential and nonconfidential

2 information even after the person leaves the church and even

3 if he obtains the information independent of that

4 relationship, true or false?

5 A That's true.

6 Q Just for clarification the NOTS are the rewrite of O.T. V?

7 A That's not correct, sir.

8 Q IV?

9 A No, it's not a rewrite of O.T. V.

10 Q It's something that replaces and has now become O.T. V?

11 A It was a new discovery by Mr. Hubbard which replaced

12 O.T. V.

13 Q You testified I think that in the thefts in the UK and

14 Copenhagen what were taken were levels of O.T. I through IV

15 and the NOTS material; isn't that right?

16 A I believe I said I think out of UK was I, II, and III and

17 then NOTS material from Copenhagen, in other words, also O.T.

18 III materials in Copenhagen and a pack which was called the

19 Class Eight Auditor's Pack which was also stolen.

20 Q But not O.T. VI and VII?

21 A Maintained within the Class Eight Pack is I believe IV, V,

22 VI, and VII.

23 Q It's your position that as far as you know those are the

24 only thefts or breach of security that have taken place where

25 materials have been taken from the church?

105

1 A It's the only instances of operated theft that I know of,

2 yes.

3 Q How about the other misappropriation or missing documents

4 from the church, were there any other occasions prior to that

5 1983 occasion?

6 A I know of no other missing materials. There have been

7 other misappropriation.

8 Q Before 1983?

9 A I believe so.

10 Q Tell us about those.

11 A Well, like I tried to explain before in deposition with

12 you, there were newspapers articles, publications that came

13 out before 1983 that contained bits of snippets of the

14 materials usually taken by what appears to be from people's

15 memories. If someone had decided to leave the church,

16 breached his confidentiality agreement and talked to a

17 reporter about what his experiences were or what he believed

18 was in the O.T. levels, that might have occurred.

19 Q That's not an indication to you that the materials were

20 actually given to somebody, repeating something from memory?

21 A That's correct.

22 Q You know of no other information of any kind that the

23 church had that any materials were gone or missing prior to

24 the 1983 theft; is that your testimony?

25 A Yes, sir, to the best of my recollection, that's true.

106

1 Q Is it your view that -- I assume it's your view from what

2 you have said that a parishioner needs to get the whole of a

3 given O.T. level to get the whole benefit from it?

4 A Yes.

5 Q It's the previous answer, is it not, of the faith that one

6 should get the entire package, the entire O.T. series, if

7 possible, if he can, he or she can get through it; isn't that

8 right?

9 A We want everyone to go through all of the levels, yes.

10 Q Now, you have described that these are based upon

11 Mr. Hubbard's research and recall of events in the past which

12 continue to cause us trauma today, if you will forgive another

13 bad paraphrase, is that the gist of it?

14 A I believe I testified that they were his discoveries, yes.

15 Q The O.T. levels, at least one portion of them, contains a

16 recitation of Mr. Hubbard's discoveries in that respect?

17 A Yes.

18 Q These are discoveries largely of his memory of what

19 occurred 75 million years ago and before and after those kinds

20 of time periods; isn't that --

21 A I don't know if memory is the correct word or not. There

22 are things that he discovered, reasons for our spiritual

23 decline.

24 Q Did he discover them through research other than

25 consulting his memory?

107

1 A I don't know, sir.

2 Q In any event, it was researched and what we are talking

3 about is a recount of history, are we not?

4 A I am not sure if you can put it in that way. All I can

5 tell you, it was his discovery of events that occurred many,

6 many years ago.

7 Q It's believed that those events did in fact occur by

8 parishioners of the Church of Scientology?

9 A Yes.

10 Q It's not a science fiction story, it's a something that is

11 accepted as fact; isn't that true?

12 A That's true.

13 Q Other parts of the O.T.s contain essentially

14 methodological material on how to get rid of the things that

15 cause these traumas to persist in our spirits; isn't that

16 right?

17 A I am not sure of your definition of that, sir. They

18 contain formulas -- I hate to use the word scientific -- the

19 scientific formula as to what a person needs to do to reverse

20 what has happened to him.

21 Q Isn't it a process of asking one's self questions or

22 having the auditor ask questions and observing the response of

23 the lie detector that he or she is hooked up to? E-meter.

24 A We use an E-meter which is a religious device which is

25 used to --

108

1 Q Is it based upon the same principles as the polygraph?

2 A No, it's not.

3 Q But the device, that has a needle on it?

4 A There is a needle on the device to register emotional

5 trauma, yes.

6 Q What else is included, what other types of materials are

7 included in these O.T.s?

8 A Well, as I explained, there are recitations of

9 Mr. Hubbard's discoveries. They describe what occurred to an

10 individual, they describe how the traps, so to speak, was

11 formed and how the degradation of the spiritual being has

12 progressed over the years and describes a process and how you

13 reverse that. It is all done, as I said, in gradient steps.

14 Q You never intend to publish these materials; is that

15 right?

16 A That's correct, sir.

17 Q Now, in November of 1985 there was pending in Los Angeles

18 Superior Court a lawsuit by Mr. Wollersheim against the Church

19 of Scientology for fraud and outrageous conduct, intentional

20 infliction of emotional distress; is that right?

21 A There was a lawsuit, yes.

22 Q He was claiming significant personal injuries from the

23 church?

24 A I don't remember exactly what the claims were.

25 Q It resulted in a verdict in favor of Mr. Wollersheim, did

109

1 it not?

2 A Yes.

3 Q On November 5, 19 --

4 A Yes, it did.

5 Q On November 5, 1984 portions of the O.T.s were made part

6 of the court file and that file was available to the public,

7 was it not?

8 A There was a very brief point in time when the judge

9 unsealed, I believe, the file.

10 Q At that time the Los Angeles Times obtained some or all of

11 that material, did they not?

12 A I don't believe so. That's what they claim. I don't

13 believe it's true.

14 Q You know they obtained some of it?

15 A They claim that, sir.

16 Q They claimed they obtained some?

17 A Yes.

18 Q You saw some articles published after that that referred

19 to those materials?

20 A I believe there was like a paragraph or two that referred

21 to O.T. III.

22 Q And a number of people in connection with this case also

23 had possession of these documents, did they not?

24 A In connection with Mr. Wollersheim's case?

25 Q Yes.

110

1 A I don't know that, sir.

2 Q You knew that Mr. Wollersheim had them?

3 A I think they came into the case. I am not sure if he

4 provided the documents or someone else did. I don't know.

5 Q Now, we have talked about the Fishman affidavit?

6 A Yes, sir.

7 Q That was filed by Mr. Fishman with the O.T. exhibits as

8 Exhibit G in support of his claim that he had been brainwashed

9 by Scientology, was it not?

10 A That was his claim. It was hard to believe since he never

11 took those levels.

12 Q It was filed in April of 1993?

13 A I believe that's correct.

14 Q And after the case was sent back to Los Angeles Superior

15 Court a request was made from the judge to keep that under

16 seal and the judge denied that; is that right?

17 A I believe the request went to the magistrate and she

18 issued some form of protective order for all discovery which

19 was in place until the case was dismissed, from my

20 understanding.

21 Q This is the Fishman-Geertz --

22 A Yes, sir.

23 Q Isn't it a fact that the R.T.C. and the church asked the

24 Central District of California to seal the Fishman affidavit

25 and the court declined to do that?

111

1 A Yes, sir, it's true. That was after the case was

2 dismissed.

3 Q You described that case going to the Ninth Circuit. Could

4 I ask you to take a look at Exhibit M.

5 A I have it, sir.

6 Q Is that the unpublished opinion of the Ninth Circuit in

7 that case?

8 A It appears to be, yes.

9 Q Now, that appeal has a 94 number on it, does it not?

10 A It said August 2, 1994, argued, submitted, Pasadena,

11 California.

12 Q Isn't it true that that Fishman affidavit remained as part

13 of the open public file in the Los Angeles Superior Court

14 until August 1995?

15 A That's true.

16 Q It's true that reporters for The Washington Post obtained

17 a copy of that?

18 A That's what they say, yes.

19 Q They published an article dated August 19, which will be

20 offered later, that detailed some of the materials in that

21 affidavit?

22 A I believe there was about two or three sentences that they

23 quoted from it.

24 Q And that affidavit had been on file and a part of the

25 public record in the Central District of California for that

112

1 time, is what you are complaining about in terms of what my

2 clients had in their possession with the exception of a couple

3 of additional pages?

4 What you are claiming about as far as what my clients

5 possess in this case is O.T. materials attached to the Fishman

6 affidavit plus some additional pages from O.T. materials?

7 A As the Complaint is currently structured, yes, that's

8 true.

9 Q The fact that most of the materials in issue in this case

10 were a part of the public file in the Central District of

11 California wasn't disclosed in your moving papers in this case

12 when you sought a writ, was it?

13 A I don't know, sir. I would have to see the writ.

14 Q Would you be startled if you found that it was not in

15 there?

16 A No.

17 Q You don't know how Mr. Wollersheim came into possession of

18 the Fishman-Geertz affidavit, do you?

19 A I believe he testified he got them from Graham Berry.

20 Q Do you know from personal knowledge?

21 A No, sir, I don't.

22 Q Now, on the raid of Mr. Erlich's premises in the Bay area

23 that occurred in February, in the Northern District of

24 California case, you found that Fishman-Geertz materials

25 there, too, did you not?

113

1 A Not that I recall.

2 Q Did you find any O.T. material at all at Mr. Erlich's

3 premises?

4 A Yes, sir, I did.

5 Q Were they materials other than what was in the Fishman-

6 Geertz affidavit?

7 A Much more.

8 Q Do you have any idea where he got those?

9 A No, I do not.

10 Q Those included materials that weren't found in the

11 defendants' premises in this case, didn't they?

12 A I'm sorry. I didn't get --

13 Q The materials that you found at the Erlich premises

14 included materials you did not find at the defendants'

15 premises in this case?

16 A The majority were the same. There were NOTS materials

17 that were found there. We found them in Wollersheim's place

18 basically. There were some other O.T. materials.

19 Q You told me that you found much more than what was in the

20 Fishman-Geertz affidavit in the way of O.T. materials, didn't

21 you.

22 A That's true.

23 Q You didn't find much more than what's in the

24 Fishman-Geertz affidavit in the way of O.T. materials at my

25 clients' house, did you?

114

1 A We did. There were NOTS materials that were found which

2 were substantial.

3 Q The NOTS materials are not in issue in this case, are

4 they?

5 A No, at the present time, no, sir.

6 Q Did you find anything at the Erlich premises that you

7 didn't find at my clients' house?

8 A I would have to see how many pages of issues that were

9 there.

10 Q Mr. Erlich testified he got these materials off the

11 Internet, did he not?

12 A That's what he claims.

13 Q You have talked about the fact that a number of newspaper

14 articles have contained these materials, at least references

15 to them, quotes from them?

16 A Yes.

17 Q You say you have seen the same thing on the Internet. Is

18 it your testimony that you have never seen quotes or entire

19 portions of O.T. material on the Internet?

20 A I didn't say that, no, sir.

21 Q Now, you said your big concern about publication of these

22 materials is that it tends to ridicule the church; is that

23 right?

24 A That's one of the concerns, yes.

25 Q Because you feel that they are quoted out of context and

115

1 makes the church look weird?

2 A Yes, I think to the initial -- the uneducated person

3 seeing that for the first time may think it's strange.

4 Q You have taken the position publicly that the media

5 coverage distorts -- takes out of context the church's

6 teachings and makes it look weird, have you not?

7 A Something to that effect.

8 Q The reason is you feel that if the church is made to look

9 weird, you might lose parishioners before you have a chance to

10 condition them spiritually?

11 A That's not the only reason.

12 Q One of the reasons?

13 A One of the reasons, and the fact that the preexposure to

14 individuals is very much of concern to us.

15 Q You think that's spiritually harmful?

16 A Absolutely.

17 Q Can it be psychologically harmful?

18 A I don't know that.

19 Q Can it result in physical manifestations?

20 A I don't know, sir.

21 Q Does it ever cause someone to commit suicide?

22 A No.

23 Q Do you feel that someone reading, for example, the

24 coverage that's contained in the Washington Post of August 19

25 might dissuade someone from becoming a Scientology

116

1 parishioner?

2 A That's possible, yes.

3 Q Whereas if they are spiritually conditioned to the

4 teachings concerning Xemu and the volcanoes, they are not

5 going to be dissuaded?

6 A They need the works written by Mr. Hubbard in the sequence

7 that he wrote them. They will understand it.

8 Q You have expressed some concern about economic harm, and

9 it was the fact that perhaps some of these people might be

10 disuaded because the cases are taken out of context and find

11 them weird. You have also talked about the possibility too of

12 copycats; is that right?

13 A Copycats -- I am not sure if I used that word.

14 Q The word you used in your declaration was knockoff?

15 A Knockoffs.

16 Q Knockoff Scientology churches?

17 A Yes.

18 Q It's your position that anyone could take the

19 Fishman-Geertz document and go start their own church?

20 A When we were in deposition, I told you that I believed

21 people who took those materials could try to set up their own

22 church or their own organization. Whether they succeeded or

23 not, I don't know, but they could try it.

24 Q Your position is they could do it with the Fishman-Geertz

25 affidavit?

117

1 A Possibly, yes.

2 Q But they couldn't do it without it?

3 A I don't understand your question.

4 Q If they couldn't have the Fishman-Geertz affidavit, they

5 wouldn't be able to start a knockoff church; is that right?

6 A No.

7 Q You think they could do it without it?

8 A They could set up a competing church, I guess, with lower

9 level materials. They could try that, and some have tried

10 that.

11 Q Do you mean lower level nonconfidential materials?

12 A Yes.

13 THE COURT: Mr. Kelley, can we take a break now for

14 15 minutes? All right. We'll recess.

15 (Recess taken.)

16 MR. KELLEY: Your Honor, we have a witness, Professor

17 Cleek, from Wisconsin here today. He has difficulty getting

18 back here next week. We don't know what we can work out, but

19 I was hoping we could put him on right now and try to get him

20 done today.

21 MR. COOLEY: My expert witness is from Virginia, who

22 is our next witness. He has a real problem coming back on

23 Monday.

24 THE COURT: How much time are you going to take on

25 this examination on direct?

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1 MS. HANLON-LEH: 45 minutes.

2 THE COURT: 45 minutes on your expert. How much on

3 your expert on direct?

4 MR. COOLEY: About half -- three-quarters of an hour,

5 half an hour on direct.

6 THE COURT: Why don't you step down, sir. We'll

7 finish your cross-examination later. You are going to be

8 around any way?

9 THE WITNESS: I will be here, sir.

10 THE COURT: After last Saturday, I don't want to do

11 anything to anybody from Wisconsin that hasn't already been

12 done to them. But I think maybe we had better take the

13 plaintiff's witness since we have the same problem. If we

14 can, we'll call your witness after that. I don't mind staying

15 a bit late if the rest of you don't.

16 MR. BLAKELY: Plaintiffs call Ron Tencati.

17 (Ron Tencati was sworn.)

18 THE COURTROOM DEPUTY: Please be seated. State your

19 name for the record. Please spell your last name.

20 THE WITNESS: Ronald Tencati, T-E-N-C-A-T-I.

21 DIRECT EXAMINATION

22 BY MR. BLAKELY:

23 Q Mr. Tencati, whom are you employed by?

24 A I-NET, Incorporated.

25 Q What's the business of I-NET?

119

1 A They are an information system security corporation. They

2 do computer network computer security.

3 Q What's your position and responsibilities with I-NET?

4 A I am the program manager in the network security division

5 in Falls Church, Virginia.

6 Q What does a program manager do?

7 A I direct the work of senior analysts relating to the

8 business of our company which is risk analysis and other

9 computer security matters and contracts.

10 Q Could you briefly summarize your educational background?

11 A Sure. I attended high school in Gardena, California. I

12 attended the University of Southern California from 1977 to

13 1983.

14 Q What areas did you study there?

15 A Entered the university in 1977 as an electrical

16 engineering major. In '78 I changed to computer science,

17 attended to 1983, where I left after having completed 112 or

18 128 units.

19 Q Could you also trace your employment history for the

20 court?

21 A I served as a FORTRAN programmer at a corporation called

22 Martin & Stern Corporation from approximately 1978 to 1984. I

23 then moved to the Jet Propulsion Laboratory where I held

24 various roles until 1989 as a computer system manager, network

25 security manager and eventually the manager of computer

120

1 network security for the laboratory.

2 I left the Jet Propulsion Laboratory in 1984 to take

3 a job at the Goddard Space Flight Center as security manager

4 for NASA. The company I work for is now Hughes STX

5 Corporation. It has changed its name a few times. After

6 having served in the role of the security manager for the

7 physics analysis network, I secured the position of security

8 manager for NASA Internet, where I helped establish security

9 policies and procedures and set operational security policies

10 in concert with NASA headquarters. My most recent position.

11 Q When you are talking about the security position you have

12 had, is that with respect to computers?

13 A Yes, NASA wide area network. Basically NASA's Internet

14 networking environment. My job was to be the security manager

15 of NASA's entire nationwide network, as well as it reached

16 into the international aerospace partnerships.

17 Following that responsibility, I became the project

18 manager for NASA Automated Systems Incident Response

19 Capability which was a computer security support function,

20 reporting to the head of computer security at NASA

21 headquarters. This was a position where training and

22 awareness was provided to all of the NASA centers to the

23 senior managers at NASA centers, again, security policy and

24 procedures -- they are developed at headquarters -- and this

25 function was an assisting

From bobpenny@delphi.comSun Oct 1 22:15:41 1995

Date: Sun, 01 Oct 1995 02:42:12 GMT

From: Bob Penny <bobpenny@delphi.com>

To: alerma@dgs.dgsys.com

Subject: part 4

function to help disseminate and

121

1 educate the other NASA centers in those roles.

2 I also participated in computer security enforcement

3 activities on behalf of NASA as it related to computer hacking

4 against the NASA computers.

5 Q After NASA did you go to I-NET?

6 A After NASA I left and went to I-NET, and I am in the role

7 I am in currently which is program manager.

8 Q How long have you been with I-NET?

9 A Since May of 1995.

10 Q Do you have any training or instruction in computer

11 forensic analysis?

12 A During the course of my employment and work with NASA,

13 since those systems were federally-owned systems, I had

14 occasion to interface with the Computer Crime Squad of the

15 FBI, the Inspector General's Office at NASA, and also the Air

16 Force Cryptologic Support Team in San Antonio, Texas, all of

17 which have provided instruction into computer forensic

18 analysis as it relates to gathering of evidence for

19 prosecution, since my job at the time was to assist in the

20 prosecution and support information relating to intrusions

21 into NASA systems.

22 Q Do you belong to any professional associations or

23 organizations which are relevant to the subject matter of this

24 lawsuit?

25 A The Forum of Incident Response and Security Teams. It's

122

1 an organization which I cofounded, and I am currently a

2 steering committee member in my second term. This is a

3 worldwide organization that brings together response teams.

4 Has a computer emergency response team in Pittsburgh. NASA

5 has had their own, which is the organization I was the manager

6 of, as well as other federal computer security organizations,

7 as a means of sharing computer security related information

8 and also includes the law enforcement component in the federal

9 government.

10 Q Has I-NET been retained to perform any service in

11 connection with this litigation?

12 A Yes, we have.

13 Q What are those services?

14 A To assist in the seizure of computer equipment and also to

15 perform an independent analysis of that computer equipment and

16 the data contained thereon.

17 Q What has I-NET done to fulfill or discharge these

18 responsibilities?

19 A We traveled here to Colorado, assisted in the seizure of

20 equipment pursuant to the Writ of Seizure. We have been

21 performing ongoing analysis of the computer systems based upon

22 key words that have been provided to us by the law firm of

23 Sheridan Ross & McIntosh and have been gathering information

24 based upon that analysis.

25 Q Did you participate in the seizure on August 22?

123

1 A Yes, I did.

2 Q In what capacity?

3 A My role there was to identify and take custody of any

4 computer-related equipment as was specified in the Writ of

5 Seizure for that location which included all computer systems,

6 peripherals, disks, magnetic media that was capable of storing

7 information, to catalog that information. We kept an

8 inventory and to make sure that it was properly collected and

9 transported to the law offices.

10 Q Did anyone assist you in performing that function?

11 A In the area that I was at -- in the portion of the house

12 that I was at Mr. Robert Brunelli of Sheridan Ross was also

13 collecting evidence.

14 Q You were at?

15 A I was at the Penny residence.

16 Q Were there any counterparts to you Mr. Wollersheim's at

17 residence?

18 A Yes, Mr. Salfiti.

19 Q Would you spell --

20 A S-A-L-F-I-T-I was essentially my counterpart at the

21 Wollersheim residence.

22 Q Did you provide any direction or instructions to

23 Mr. Salfiti as to his performing that role at the Wollersheim

24 apartment?

25 A Yes, I did. I provided him with a set of notes that I

124

1 wrote for him which was the procedure that he should follow at

2 the Wollersheim residence to assure that we had equivalent

3 processes going on in both locations and that information

4 would be properly logged.

5 Q Would you describe those procedures that were followed

6 during the seizure?

7 A Computer equipment was identified, and what I instructed

8 and what I did at the Penny residence was try to minimize the

9 number of people that were touching things. In the location

10 where I was at was Mr. Penny and myself in the main part of

11 the -- myself in the livingroom and the front bedroom area.

12 All evidence that was located -- it ranged from computer

13 systems, monitors, floppy disks, CD Roms, they all had a

14 slightly different procedure, but in general the items were

15 counted, put into Ziploc bags, the label of the Ziploc bag was

16 marked with an identification number of the contents of what

17 was being placed inside and quantity, the location where

18 that -- where that material was first being seized from, the

19 initials of the person who placed information and the material

20 into the bag. The bag was sealed, Ziploc bag, and then a

21 piece of duct tape was put over the top of the bag to ensure

22 that the bag would not inadvertently open and the contents

23 would therefore be lost. A log was kept which matched the

24 number that was put on the bag to the contents of the bag that

25 were put onto the log and the numbers matched.

125

1 The computer equipment itself -- every piece of

2 equipment was numbered and initialed on the back with a

3 permanent marker and that was also entered on to the log and

4 this process was repeated for various pieces of computer

5 equipment that were being seized and cataloged and also for

6 any magnetic media, be it CD Rom, floppy disk, or any -- and a

7 quarter-inch disk.

8 Q To your knowledge, were the same procedures followed at

9 Mr. Wollersheim's apartment?

10 A Yes, they were.

11 Q And what happened when all that stuff was collected at

12 the -- at the two residences.

13 A As the bags were being identified and matched, they were

14 being put into an empty box for collection upon the boxes

15 being filled. At the Penny residence they were taken outside

16 to the little courtyard area outside of the front door where

17 Mr. Penny was seated with his counsel and the box was turned

18 over to them for their review. When they were completed with

19 their review, the items were put back into the box and boxes

20 were covered and my initials were placed across the seal of

21 tape, then I transported them into the van which was parked at

22 the front of the residence. I unlocked the van, placed

23 material inside of the van, locked the van and returned to the

24 house.

25 Q Were you the only one with the keys to the van?

126

1 A Yes, I was.

2 Q Did you give them to anybody else during the seizure?

3 A No, I didn't.

4 Q When you arrived at Mr. Penny's residence were the

5 computer systems on or off? What status were they at?

6 A When I entered Mr. Penny's residence, there were two

7 computer systems that I observed and they were both on.

8 Q How did you dismantle them, what procedures did you

9 follow?

10 A What I did was I first observed what was displayed on the

11 screens of the two computer systems and wrote down everything

12 that was listed on the scope. I also took photographs of both

13 computer systems. Then I proceeded to disconnect any modum

14 lines that were hooked up to those computer systems. I

15 believe in the case there was a white CPU and black CPU. I

16 believe in the case of the white CPU, it had one modum line

17 attached to it. That was disconnected. The power cords

18 were -- the systems were turned off, the power cords

19 disconnected, and then I tagged each cable that was connected

20 to the back of the CPUs, so we could reconstruct the

21 configuration back at the law firm. As the components were

22 separated into their individual pieces, they were each tagged

23 in the manner described and moved into the van.

24 Q You have indicated you took photographs. Were there any

25 other photographers or videographers present?

127

1 A At the location where I was at there were two additional

2 persons. One was taking still photographs and one was taking

3 videotape.

4 Q Once all the materials were placed in the van, what

5 happened next?

6 A I drove them from Mr. Penny's residence directly to the

7 law offices of Sheridan Ross & McIntosh, where I turned them

8 over to the representatives of the law firm.

9 Q Can you please describe for the court where the materials

10 were then placed within the law firm, under what conditions.

11 A We were provided a corner office in the law firm to store

12 the materials. We put -- at this time also the materials from

13 Mr. Wollersheim were also arriving at the law firm. It was

14 placed in the same office at the opposite end of the office to

15 keep the two seized materials separate. The offices had a

16 lock on it. The members of the law firm had the keys. And

17 initially that first day, they were the only people with the

18 keys. All of the material -- all of the evidence and CPUs

19 were stored in that office and the door was locked.

20 Q Did any personnel from I-NET participate in the

21 preparation or development of the procedures that were

22 followed?

23 A Yes.

24 Q Who were they?

25 A My supervisor, Mr. James Settle.

128

1 Q Anyone else?

2 A No.

3 Q Could you look at Plaintiff's Exhibit 65 and identify what

4 that is.

5 A This is my biographical information that's included in

6 contracts that I-NET bids out.

7 Q Is the information in that accurate?

8 A Yes, it is.

9 Q Would you look at Exhibit 66, please, and identify what

10 that is?

11 A This is the biographical information for Mr. Albert E.

12 Lane.

13 Q Is Mr. Lane an employee of I-NET?

14 A Yes, he is.

15 Q Did he participate somehow in these seizures?

16 A Yes, he did. He came to Colorado after the seizure to

17 assist in the analysis of the computer software.

18 Q Do you understand the information contained in Mr. Lane's

19 biographical sheet to be accurate?

20 A Yes.

21 Q Would you look at Exhibit 67, please, and identify what

22 that is?

23 A This is the biographical information for Mr. Pooran

24 Rajkumar. He also worked for my company in my division.

25 Q Did Mr. Rajkumar participate in these procedures?

129

1 A Yes, he did. He also flew out to Colorado during the

2 first week to assist in the analysis of the computer

3 equipment.

4 Q Is the information contained in Mr. Rajkumar's

5 biographical sketch accurate, as far as you know?

6 A Yes, it appears to be.

7 Q Lastly, Exhibit 68, would you identify that?

8 A This is the biographical information for Mr. James Settle.

9 He is the director of our computer network security division

10 at I-NET.

11 Q He is your boss?

12 A Yes.

13 Q Did Mr. Settle participate in these procedures?

14 A Yes, he did.

15 Q In what fashion?

16 A He came out at the end of last week to assist in the

17 process of analyzing and cataloging the information that was

18 being collected.

19 Q Is the information contained in Mr. Settle's biographical

20 sketch accurate, as far as you know?

21 A Yes.

22 Q Were there any non-I-NET computer analysts that were

23 retained to assist in the review of the computer equipment?

24 A Yes.

25 Q What did these non-I-NET analysts do?

130

1 A They were engaged mostly in searching the hard drives of

2 the CPUs that were seized at both Mr. Penny's and

3 Mr. Wollersheim's residences, and because of the volume of

4 information that was seized, and at the time we thought the

5 information I had was that there was a possible hearing that

6 was coming up, so we procured rental computer systems and put

7 copies of the hard drives by performing a backup operation on

8 the floppy disks from the seized machines and moved them down

9 onto some of the rental machines, so some of these non-I-NET

10 employees could continue assisting in these scanning of key

11 words on the copies of the hard drives, as well as some of the

12 other rental machines were dedicated for the scanning of the

13 floppy disks and other media that was seized during these

14 activities.

15 Q Why wasn't that done on the seized equipment?

16 A We didn't want to -- as part of my training the last thing

17 you want to do is modify or provide any opportunity where

18 information on a person's computer system or the system under

19 review might be modified. So we chose to analyze as much of

20 the data as possible on machines other than the machines that

21 were seized so as not to contaminate any of the data that

22 might be on the hard drive or destroy inadvertently any of the

23 data that belongs to the defendant.

24 Q Did you satisfy yourself as to the competency of these

25 non-I-NET computer analysts?

131

1 A Yes, I did. They were retained by the law firm. Upon

2 their arrival, I had a short discussion with each of them

3 about their general background. The skill set that was

4 required for what we were doing wasn't that technical. They

5 needed to be briefed on what the procedures were, and I

6 satisfied myself that they were sufficiently qualified to

7 perform the activities that we were going to be asking them to

8 do.

9 Q Were there any characteristics that these people generally

10 had that you can identify?

11 A We looked for background people who had -- since we had

12 seized personal computer systems, DOS-based personal computer

13 systems, we looked for individuals that had experience with

14 DOS, that knew what the general commands in DOS were and how

15 to operate a personal computer system with that type of

16 operating system. They also had a Windows environment on

17 them, so we looked for people with that kind of background.

18 And I found all of the persons that were hired to be

19 sufficient.

20 Q Who instructed these non-I-NET computer analysts as to

21 what their job functions would be?

22 A I did.

23 Q What instructions did you give them?

24 A I told them that, first, I described for them what the

25 nature of the work was and that we had a situation where we

132

1 were looking at computer systems which had been seized in a

2 legal action, and our job was to analyze the information, but

3 we had an added component which was that we wanted to make

4 sure that the plaintiffs were only allowed to see information

5 that matched criteria that was specified for us by the law

6 firm. So there were a number of other people that they would

7 see around them, but they were not to allow those people

8 anywhere near the key board or to touch any of the evidence.

9 That the only people authorized to perform those functions and

10 execute the direct searches would be these people that were

11 hired.

12 Q Were those procedures followed?

13 A Yes, they were.

14 Q As an aside, can you guess or estimate how much volume or

15 quantity of data was seized in a computer form or computer

16 electronic media storage form?

17 A My estimate of what we seized was approximately 25

18 gigabytes of information.

19 Q Translate that into pages of paper.

20 A Approximately, the equivalent of 600,000 printed pages.

21 Q Did your analyze these computer files, uncover any

22 encrypted data?

23 A We found primarily backup tapes, quarter-inch backup tapes

24 that had been made, that upon attempting to restore them to

25 rental computer systems using tape drives, which we had

133

1 procured, the software reported that the backup save sets were

2 password protected.

3 Q Has anyone attempted to break those passwords?

4 A No, we informed the law firm that that was the case in

5 some of the issues, but we have taken no action to try to

6 break those codes.

7 Q Can you please generally explain procedures that were used

8 from to search and obtain the information or what -- let me

9 rephrase that.

10 Can you describe the particular assignment that you

11 were given and how you went about filling that assignment with

12 respect to looking for information in the computer files?

13 A My understanding was that members of the Church of

14 Scientology provided the law firm with key words. I was

15 provided a list of key words by the law firm. We initially

16 started with a program that -- Norton Utilities, one of the

17 programs in the suite of software allows for key word searches

18 of raw disk sectors. We initially started using this program

19 but due to the volume of data and the fact that it was taking

20 approximately three hours per key word and we had a lot of

21 data to go, we chose a different program which was able to

22 search for five key words at a time, and we ran these

23 programs. In the case of actual CPUs that were seized, we

24 made sure we ran these programs off the floppy drives, so as

25 not to load any software, because one of the other things we

134

1 are looking for -- any key word matches which maybe in the

2 deleted file sectors of these machines, and I didn't want to

3 overwrite any information on those hard drives. The

4 information, if it matched a key word, we had Scientologists

5 present. We were -- this program would display the key word

6 on the screen as well as about five lines prior to and five

7 lines following the line in the particular file that was being

8 searched. If that had the key word, we would then have the

9 Scientologists look at the information or fragment of the file

10 that was being displayed on the screen, and they would

11 identify for us whether or not that was what we called a hit.

12 If they felt that what was being displayed on the screen

13 contained potentially infringing material, they informed us of

14 that, and that file name was written down and was later copied

15 to a separate floppy. If they indicated that the fragment

16 that was being displayed was not of interest, did not contain

17 any potentially infringing material, the search was continued

18 until the next key word was matched by the program.

19 There was a special case, after the first day, we

20 were provided additional key words to add to our list,

21 including names of attorneys, which then raised the issue of

22 possibly attorney-client privilege information being

23 displayed, and I needed to protect that from being viewed by

24 the Scientologists, so the procedure I instituted was that in

25 the group of key words, we were -- we had more than five key

135

1 words total, so we had to do multiple searches of five key

2 words at a time. It so happened we had five lawyers' names.

3 What I instructed was that the first group of key word

4 searches be those lawyers names, and I think matches that were

5 picked out by the software not be referred to the

6 Scientologists at all, that those files be copied to floppy

7 disks. The method was any file with a hit, we would take a

8 copy of that file and put it onto two separate floppy disks.

9 I would take possession of one of those and in the case of the

10 attorney-client privilege, both copies went to Sheridan Ross &

11 McIntosh attorneys. In the case of a hit where the

12 Scientologists thought that there may be infringing material,

13 I still retained one copy of that. The second copy was then

14 given to the Scientologists in the evidence room. There was a

15 computer set up later when we had the full compliment of

16 rental machines, one of those had been set aside for the use

17 of the plaintiffs to review the information.

18 Q So as a file -- a copy of a single file was given -- was

19 put on a single floppy disk and given to a member of the

20 church to review?

21 A Right. In most cases when we were searching floppy disks

22 especially in the case of the hard drives and CD Roms, those

23 media contained more than one file. The key word hit may only

24 be in one file in a particular area or one file of many that's

25 located on a floppy disk. What we did, we took that entire

136

1 file that achieved the key word hit and copied it to a floppy

2 disk, so information -- every single file that achieved a hit

3 we generated two copies which were then in the case of the

4 possibly infringing material, one copy was given to the

5 Scientologists, so to clarify in detail that that was in fact

6 an infringement.

7 Q And the Scientologists review of that file was done in the

8 same room as you and the other computer analysts were working?

9 A That's right. There was one computer system that we had

10 reserved for use by members of the Church of Scientology,

11 where the rest of the computers in that room were reserved for

12 use either by I-NET or non-I-NET analysts. And at any time

13 that a -- at any time -- it was required that a

14 non-Scientologist was present at all times. And any time that

15 wasn't the case, the room was cleared and locked and all of

16 the evidence was either returned to its original location or

17 locked in the room.

18 Q Approximately, how many hours a day were people working on

19 these files?

20 A For the first three days, we had an operation going 24

21 hours a day. For the past three weeks, it has been

22 approximately 17 hours a day.

23 Q For those other six hours or five hours, whatever, 24,

24 seven hours -- it has been a long day -- what happened to the

25 information during those other seven hours? What was done

137

1 with the computer equipment?

2 A At the end of a shift, the information -- if it was

3 information that was coming from an evidence bag, it was

4 returned to the evidence bag. The bag was resealed, the

5 person who had opened the bag had already put their initials

6 and the time and the date on the bag that they opened it.

7 They would return the evidence to the bag, reseal it, and sign

8 their name again. That would be returned to the original

9 evidence room. Any floppies that were given to the

10 Scientologists were left locked in the room where the analysis

11 was being done. And also in the printouts that may have been

12 made by the Scientologists from those individual floppies were

13 also left locked in that room. The key to that office was

14 then turned over to a representative of Sheridan Ross &

15 McIntosh who was staying up late, and the rooms were secured

16 in that manner.

17 Q Did the key word search work in every instance or were

18 there files where key word search didn't work?

19 A There were some files where the key word search didn't

20 work because of the nature of the files. For example, there

21 were some files that were compressed. They take multiple --

22 you can have multiple files, and you would compress them into

23 one. Nature of that file is such that it's no longer really

24 possible to do a key word search. In addition, there were

25 some scanned in -- numerous scanned in images of files that

138

1 had been processed into the system via scanner. They were not

2 text. So pictures didn't work for those.

3 Q What was done to --

4 A We observed on the defendants' computer systems there were

5 some programs that could be used to view these. So we

6 initiated procurement of those copies of those software, but

7 we ran special software to view in graphical format these

8 types of files. In that case, the procedure had to be

9 slightly modified because we were not dealing with a fragment

10 of a file, and there was no way to do a key word search. What

11 we did, we had members of Scientology viewing pictures of the

12 pages. This is as they came up on the screen. And if it was

13 not infringing, it was passed over. If it was, then we would

14 follow that same procedure I described.

15 Q Were computer viruses a concern when you were reviewing

16 the data?

17 A Yes, they were.

18 Q How was that handled, if at all?

19 A On the bags of evidence that contained copied floppy

20 disks, every analyst was instructed and also provided a copy

21 of a program called F Prop which is a virus scanning program.

22 We scanned every floppy disk. That was the first operation

23 that was done -- was to run a virus scan against these floppy

24 disks to make sure they didn't have a virus on them.

25 Q Why were you concerned about that?

139

1 A If we had taken a floppy disk with a virus and ran --

2 processed it on one of the rental computers, we would have

3 infected that rental computer with the virus, and any

4 subsequent floppy we put into that drive would have been

5 infected with the virus.

6 Q Was there concern about the defendants' equipment -- about

7 the integrity --

8 A Yes. So we ran it so as to not propagate that to the

9 floppies that were being scanned.

10 Q Has the integrity of the defendants' computer files been

11 maintained, in your opinion?

12 A Yes, it has.

13 Q Did any of the procedures that you followed or that were

14 followed in conducting the review of this equipment add or

15 subtract any files to the existing storage on either of the

16 defendants' computer equipment?

17 A Not to my knowledge, no.

18 Q Was there any special software needed to undertake the

19 searches and the procedures you have outlined?

20 A Yes.

21 Q What was that?

22 A We used Norton Utilities Disk Edit to search the hard

23 drives for filing key word hits which may be in deleted file

24 sectors. We also used Norton Utilities and Erace to examine

25 for the presence of deleted files. And the first program I

140

1 mentioned would find fragments of files on those deleted file

2 sectors. The second program I mentioned would find entire

3 files where the file header was still resident which could

4 then be possibly restored. We also use a program called

5 P Search which was a utility which would search for five key

6 words at a time. It's a piece of software from a company

7 called PatraSoft in California. For viewing the image files

8 that were scanned or the result of scanned-in files, we used

9 programs called Scan Fix and Type Reader Professional, which

10 we procured copies.

11 Q Since this is a copyright infringment case, was all the

12 all software used properly purchased and licensed?

13 A Initially when we used the software, we used copies from

14 the defendants' machines. We also at the same time procured

15 multiple copies, one for each of the rental systems that we

16 were using and we are now fully in compliance with the

17 licenses for all the software we have been using.

18 Q Can I have you look at Exhibit 28 which is in the book in

19 front of you? Do you have that?

20 A I have it.

21 Q Did you participate in any way in the preparation of that

22 exhibit?

23 A Yes, I did.

24 Q Could you explain what your input was?

25 A On this chart, columns three and four are columns that

141

1 describe where the -- where the infringing works were found

2 and the date the computer file was saved. I provided

3 information for this chart based upon the logs that were being

4 taken by the -- or generated by the computer analysts as they

5 were going through the evidence in the hard drives and as

6 Scientologists were identifying possible infringed works.

7 These are the file names and creation dates of those files as

8 they appeared either on the hard drive or floppy disks or

9 other magnetic media.

10 Q Do you have an opinion as to the integrity of the search

11 procedures that were followed in this case by you and the

12 people working under you?

13 A Yes, I think they were fine.

14 Q Do you have an opinion as to reliability of the searching

15 that was done to find the files that are identified in

16 Exhibit 28?

17 A I think that the search procedure was very reliable. We

18 have run multiple programs in some cases against the same data

19 and we achieved the same file hits, so I have every reason to

20 believe that the procedures followed were accurate.

21 Q One last question -- two last questions. Have you ever

22 met Mr. Wollersheim before?

23 A Not until yesterday.

24 Q And did Mr. Wollersheim threaten you in any way yesterday?

25 A At the end of my deposition, Mr. Wollersheim informed me

142

1 that F.A.C.T.Net would probably be suing my company because of

2 our participation in this case.

3 MR. BLAKELY: No further questions, Your Honor.

4 CROSS-EXAMINATION

5 BY MR. TYSVER:

6 Q Mr. Tencati, you mentioned that you had some software to

7 search for deleted documents that have been found in the

8 storage media that you were -- that you were searching.

9 Did you discover any deleted documents that might

10 have had a key word hit in them?

11 A I discovered fragments of documents that had key word hits

12 in the deleted sectors on one of the computer systems.

13 Q How many fragments did you find?

14 A Two separate file fragments.

15 Q From your analysis, were you able to determine where on

16 that hard drive in terms of the directory those file segments

17 were originally found?

18 A No, the nature of the disks -- when the file is deleted,

19 especially in this particular instance, was such that there

20 was no residual information about where that file resided. It

21 was on the E drive of Mr. Penny's machine.

22 Q Were you able to determine when those files were deleted?

23 A No, I was not.

24 Q In the course of your work in this action, have you ever

25 been asked to determine whether or not the documents that you

143

1 may have found in your search were the source of the documents

2 that were placed onto the Internet?

3 A No, I was not asked that.

4 Q Did you ever make -- ever make a sufficient determination?

5 A If they were the source?

6 Q Right.

7 A No.

8 Q You mentioned that your search involved searching for

9 particular key words; is that correct?

10 A Yes.

11 Q Were you given an understanding as to why you were using

12 this key word technique?

13 A My understanding was that these key words had particular

14 significance to the plaintiffs because the material that would

15 be matching some of these key words was proprietary to the

16 church, and since none of the analysts were members of the

17 church, we would not be able to identify what was coming up on

18 the screen.

19 Q Were you ever told that one of the functions of using the

20 key word search technique was to prevent the Scientologists

21 from reviewing all of the documents that were seized?

22 A The only instructions I was given was with respect to the

23 attorneys' names and any key word matches relating to those

24 specific key words, we should assume attorney-client privilege

25 and not let any of the Scientologists see that material.

144

1 Q Were you given any instructions on any other materials

2 that may have been confidential to the defendants?

3 A Only that we should only allow the Scientologists to view

4 the files that matched these particular key words that we were

5 being given and no others.

6 Q When you found a file that had a key word in it, were the

7 Scientologists allowed to view all of those files?

8 A No, if we found a file that had a key word in it, they

9 were -- the program would put -- as I mentioned five lines

10 prior to the key word hit the line containing the key words

11 and five lines following that, so a total of 11 -- total of 11

12 lines. They were allowed to view that fragment, and then

13 based on that fragment, they would tell us whether or not that

14 appeared to be their material and they would identify for us

15 whether or not that was a potential infringement or whether

16 that was just a text document.

17 Q Did they see this file fragment from every file that had a

18 key word hit?

19 A Yes.

20 Q Was anybody other than the Scientologist viewing this file

21 fragment responsible for determining whether or not this file

22 had potentially infringing material, and therefore, was to be

23 subject for further review?

24 A When we got to the CDs which had these graphical

25 representations of pages, some of the analysts were instructed

145

1 as to the -- in some cases if I had the word "copyright," they

2 were then told that was something that they should bring

3 attention to. But in general, they were told all

4 Scientologists were -- all of the analysts were told to show

5 that material to Scientologists for their determination.

6 Q And when the Scientologists asked for a particular

7 document to review, were they given the entire document?

8 A If it was one that they had identified in the manner that

9 I described, they would be given a floppy coining that

10 document alone.

11 Q Did any attorney or computer consultant or employee of

12 your firm witness or watch over the Scientologists as they

13 reviewed that whole document?

14 A The analysts were present in the room, but no one

15 supervised the activities of Scientologists, no.

16 Q Would it be correct to say the key word list controlled

17 the documents that the Scientologists could review?

18 A That's correct.

19 Q Who provided you with this list of key words?

20 A The attorneys for Sheridan Ross & McIntosh.

21 Q Do you know who selected the key words?

22 A No, I don't.

23 Q Were you involved in the selection of the key words at

24 all?

25 A No, I was not.

146

1 Q Approximately, how many words were you allowed to search?

2 A I believe it was approximately 30, although, I would have

3 to see the list to have the exhibit number.

4 Q Did the -- did the number of words that you were told to

5 search ever change during the process, sir.

6 A Yes.

7 Q How many words were you originally told to search?

8 A Five.

9 Q When was the number of words increased to 30?

10 A I believe it was on the second day of the analysis. We

11 were provided with an additional list of words to add to the

12 initial list of five.

13 Q Were you ever told why the number of key words was

14 increased?

15 A No.

16 Q Do you know whether or not the increased number of key

17 words allowed the Scientologists to review more documents?

18 A I am sure they did because it would have resulted in

19 additional opportunities for a key word match on the documents

20 that were residing on the disks.

21 Q Do you have any idea about how many more documents, how

22 many times more?

23 A With the number of key words that were added, I would say

24 we probably got three to four times more than we had gotten

25 with just the five.

147

1 Q Is the analysis of the data that was seized complete at

2 this point?

3 A No, it's still ongoing with respect to the CD Roms and

4 cartridge tapes.

5 Q Are you planning on supervising the analysis of those

6 materials?

7 A I am not planning on directly supervising the remainder of

8 the analysis. It will be supervised however.

9 Q Will you be in town during the analysis of that material?

10 A Not next week, no.

11 MR. TYSVER: Your Honor, the defendants have some

12 concerns of the security procedures that may have been

13 employed during the procedure as well as to the analysis. But

14 I won't ask questions on those points right now because of

15 time constraints; however, the defendants want to reserve the

16 right to address those issues if and when the integrity of the

17 materials actually comes into issue at that point.

18 I have no further questions.

19 THE COURT: Any redirect?

20 MR. BLAKELY: Two questions, Your Honor.

21 REDIRECT EXAMINATION

22 BY MR. BLAKELY:

23 Q With respect to cross-examination when you indicated there

24 is still some searching to be done, but you may be the person

25 there to supervise it --

148

1 A Yes.

2 Q Will there be an I-NET employee present for the

3 supervision?

4 A Yes, there will.

5 Q One other question you were asked, I may have

6 misunderstood it. Just so we are clear, as key words were

7 found Scientologists or certain members of the church were

8 allowed to review those 11 lines?

9 A Yes.

10 Q Those were for key words that were not attorney names?

11 A That's correct. The only displays that the Scientologists

12 were shown were the displays containing key word hits that

13 were not the attorney names.

14 Q Do you know on those two deleted file fragments that you

15 were talking about if there were any key word hits in those?

16 A Yes, there were.

17 Q Do you know if those made it onto Exhibit 28 or they were

18 found to have found infringing material in them?

19 A My understanding is -- I performed that particular search

20 and the key word -- this was early when they were using the

21 Norton Utility disk, the key word that was being used was O.T.

22 in capital letters with spaces on either side and it matched

23 it -- achieved a hit in both of the contiguous deleted sectors

24 on this E drive.

25 MR. BLAKELY: No further questions, Your Honor.

149

1 THE COURT: You can stand down. Thank you

2 Mr. Tencati. Now, can we switch over and get the other

3 expert? This is one witness we don't want to badger, right?

4 (Richard K. Cleek was sworn.)

5 THE COURTROOM DEPUTY: State your name for the

6 record. Please spell your last name.

7 THE WITNESS: Richard K. Cleek, C-L-E-E-K.

8 DIRECT EXAMINATION

9 BY MS. HANLON-LEH:

10 Q Good afternoon, Professor Cleek. My name is, for the

11 record, Natalie Hanlon-Leh. I am also with the law firm of

12 Faegre & Benson, appearing here for the defendants.

13 Professor Cleek, where are you a professor?

14 A The University of Wisconsin Centers which is the site of

15 13 campuses within the University of Wisconsin system. I am

16 at Westbend, Wisconsin.

17 Q And what do you teach there?

18 A Geography and computer science.

19 Q How long have you been teaching?

20 A Since 1970.

21 Q What kind of education do you have?

22 A I have a master's in culture geography from the University

23 of Texas. A recertification in computer science back in the

24 early '80s at the University of Wisconsin-Milwaukee. Then an

25 ABD in geography from the University of Wisconsin-Milwaukee.

150

1 Q What kind of courses do you teach that are relevant to the

2 subject matter of this case?

3 A This semester I am teaching a course called Surfing the

4 Net.

5 Q What do you teach in Surfing the Net?

6 A I don't know for sure. We haven't finished it yet, but

7 the idea is to expose students to every basic type of

8 operation that's possible on the Net -- the Internet.

9 Q Have you taught this course before?

10 A No.

11 Q Is there quite a demand for this type of course?

12 A Oh, yes. When it closed, we had a waiting list of another

13 40.

14 Q How long have you been teaching computer science courses?

15 A Since about 1983.

16 Q Could you turn to Exhibit V, if you have it.

17 A I am not sure which book to look in. I'm sorry. Exhibit?

18 Q V as in Victor.

19 A Yes.

20 Q What is this?

21 A That's my curriculum vitae.

22 Q Is that up to date?

23 A Yes.

24 Q When did you start using the Internet?

25 A About 1984 or 1985. It wasn't called that then but the --

151

1 but the precursor --

2 THE COURT: Let me interrupt for just a minute. You

3 indicate that you got an ABD degree?

4 THE WITNESS: ABD is all but dissertation --

5 almost -- doing all the course work but not writing the

6 dissertation.

7 THE COURT: It's like a Ph.D. degree.

8 BY MS. HANLON-LEH:

9 Q In what ways do you use the Internet?

10 A Professionally both as a geographer and computer scientist

11 I use it to make instantaneous communication with colleagues.

12 You can hook right into the research labs and look at results

13 months before they ever get published. In terms of teaching

14 materials, it's almost impossible to keep up with the amount

15 of material that's out there that would be of value to one

16 course or another. I can't take my students into the field,

17 but I can get them to talking with Malayse students on a

18 Malayse Newsgroup.

19 Q Have you seen the uses of the Internet change during your

20 experience over the last ten years?

21 A Absolutely. Because the Internet has changed so much,

22 some of the key things are there, E-mail, file transfer

23 protocol, the ability to get a file from someplace, that has

24 been there for all of these years. Telenet, the ability to

25 link into another computer and look say in an library catalog,

152

1 that's always been there, but the new thing, the Web, the

2 Go-fer --

3 Q Explain, for example, what is the Go-fer?

4 A Go-fer -- can we do Web instead?

5 Q You can do Web instead, that's fine.

6 A The worldwide Web hypertext markup language situation.

7 Basically, what that means, you can put a document out there,

8 a piece of paper with text on it, but some of that text are

9 linked to other documents. A link to a photograph -- a link

10 to another computer somewhere in the world that has a

11 different set of information. So it's trivial to simply check

12 on any particular item in that document that interests you,

13 and suddenly you are somewhere else looking at whatever logic

14 lies behind that link. When I read a newspaper, modern news

15 readers, if the guy who wrote the article has a link in it to

16 a background site, I can go look at the raw documentation that

17 lies behind whatever the guy is talking about. We call it a

18 data-rich environment.

19 Q Explain to the court what a newsgroup is.

20 A It's one of the hardest things to describe because there

21 is no good analogy about it. We could start with a newspaper

22 that has no publisher and no editor.

23 THE COURT: We have got one like that in Denver.

24 THE WITNESS: And on that newspaper then because

25 there is no editor or no publisher, nobody is responsible for

153

1 what's published and nobody moderates or edits what is

2 published. But that analogy fails to some extent because a

3 newspaper usually has multiple topics and a newsgroup usually

4 has one topic. The news may illustrate all religion.

5 Scientology has the topic of Scientology. A newspaper comes

6 out once a day but a newsgroup is an ongoing continuous thing.

7 It never stops. You log in a day later or an hour later. You

8 will see whatever has come in since the last time that you

9 logged in. So there is a continuity to it that makes it quite

10 different from a newspaper and a news medium.

11 Q How many newsgroups are there out there?

12 A There are at least 4,000 world-wide newsgroups that are

13 distributed worldwide. That grows at about 10 percent per

14 month, which by the way is the growth way for most anything on

15 the Net. The number of users, number of Web sites which works

16 out for over 300 percent per year. So you have over 4,000 new

17 groups with new ones springing up every week. You have

18 another 4,000 or 5,000 newsgroups that are regional in scope.

19 They only reach the Boston or Atlanta area or Germany,

20 something like that.

21 Q You mentioned before that newsgroups have topics. What

22 kinds of topics are out there for newsgroups?

23 A Newsgroups are organized in hierarchies. Seven big ones.

24 For example, one hierarchy, the COMP hierarchy. To us a

25 newsgroup starts with COMP dot which is dealing with a

154

1 computer newsgroup. There was a group called COMPDI which is

2 a newsgroups that dealt with articles internationally. COMP

3 DOS. SOOS dot MAC would be a newsgroup of people that have

4 MacIntosh systems, so there are hundreds of COMP newsgroups.

5 REC would be a recreational newsgroup. Thers' REC dot

6 Quilt -- I have never looked at it -- but I assume they talk

7 about quilting. And REC dot CATS, that one I have looked at,

8 and that's a lot about cats. Most are female on that group,

9 by the way. But so you see there are hundreds of REC -- SOC,

10 social groups, hundreds of groups talking about social things.

11 All of those -- well, and the other hierarchy is ALT. ALT

12 groups are more varied. It's not exactly a miscellaneous

13 category but almost that. ALT groups are easier to start than

14 the other hierarchies, and there are several hundred ALT

15 groups of various sorts.

16 Q What various sorts -- kinds of things would they be in?

17 A Well, sometimes they will be quite scientific. ALT dot

18 Fusion would be a group that -- where a -- physics 80 -- where

19 they talk about cold fusion, and they will do that ALT group

20 inside of a side group because it's easier and quick to get

21 the group up. On the other hand, there is ALT ALI Visitors,

22 started by one of the guys that got kicked off ALT UFOs.

23 There are a variety of groups that are really there to get

24 work done. Scientists or people who share an interest like

25 cats or quilting or whatever. Incredible variety.

155

1 Q How many people would participate in one of these

2 newsgroups?

3 A Newsgroups -- the biggest one I have seen I think runs

4 probably about 44 -- 440,000 readers. Some are small, I

5 suspect. Probably not more than 100 readers. Those are

6 readers. On the Net we called those lurkers because they read

7 it, but they don't post, so you never see them. I think your

8 question was how many people actually post material.

9 Q Why don't we back up a step and explain what it means to

10 post something on a newsgroup, what the distinction is?

11 A It's very much like E-mail for those of you who have

12 E-mail. Basically, you are typing in a message that you want

13 to send to everybody who reads that group. You type in a

14 header or subject line so people know what your message is

15 about and you post-it. It goes to that group and shows up on

16 various peoples' computers at different times. The news

17 basically is propagated through the Internet or the part of

18 the Internet that does the news, so it may up show in a

19 Milwaukee news reader computer about a second after I post.

20 It may show up in Germany two minutes after I post it. It may

21 show up in southern California three hours after I post it,

22 depending upon traffic, but it will propagate around the

23 world. When somebody reads the news, there are all kinds of

24 news readers out there. Usually a news reader will log onto

25 the group, shows a screen, you will see the headers, the

156

1 subject. You will see how big the message is in bytes, and

2 then you will see who sent it, so you have three pieces of

3 information on your screen along with a list of subjects. If

4 you cite one of those subjects that you want to actually read,

5 you simply move the cursor to it, click, and the message

6 appears in full.

7 Q Let's go back. When we were talking about the numbers of

8 users, there are a couple groups in particular in this case

9 that are at issue, ARS, ALT dot Religion Scientology.

10 Approximately, how many users are on that newsgroup?

11 A I haven't seen the figures for this past August. They

12 aren't out yet. In July the figures were about 28,000. In

13 May when things were sort of hot and heavy, ARS it was about

14 66,000. ALT Religion Scientology.

15 Q When you talk about giving the figures on this, who keeps

16 track of this information?

17 A Well, there is a fellow named Reed somebody who is -- let

18 me see. I think I wrote it down -- he is at the DEC Network

19 Systems Lab. He has been tracking the news and trying to find

20 ways to count the number of readers. It's obviously got to be

21 an estimate. He has discovered a program which he has

22 distributed to many of the main frame computers and the larger

23 computers that people will volunteer to run. If one person on

24 a computer system remembers anyone, that program, once a month

25 they will go out and look at a file called a news RC file. We

157

1 are talking here a typical kind of university computer, large

2 company computer where many users, 1,200, whatever, are

3 basically using that computer to do disks which are either

4 computer terminals or PCs, personal computers, that are linked

5 to that computer, that the computer is in an operating system

6 like UNIX. In a system like they never ever use a news RC

7 file, you can then with this program that this fellow at this

8 DEC Lab has written basically scan through all of the users'

9 RCS files and it checks to see which newsgroups they have

10 actively opened within the last 14 days. Not every group

11 that's on their list but all the ones that have actually done

12 something, to go in and look.

13 This is probably a little Greek -- but a news RC file

14 is a list of all of the newsgroups that you have ever

15 subscribed to even if you are not actively looking at it any

16 more.

17 This program we are talking about goes and looks at

18 the one that you have looked at in the last 14 days, and it

19 then takes a sampling of sites around the world and simply

20 multiplies the figure out to reach an estimate like, for

21 example, in May of about 66,000. It's probably a very

22 conservative figure because it only measures new sites on big

23 UNIX type systems.

24 In the last two years the computer user isn't a guy

25 at a university or big company any more. It's a guy at home

158

1 who has a computer that links directly to the Net through

2 something like a slip or PPP account, but that's what happens.

3 Nobody is going to be able to see his news RC files there, so

4 there is a whole group of users out there that are no longer

5 in these figures. That's why I say these figures are quite

6 conservative.

7 Q Do people on a newsgroup typically share the same

8 viewpoint?

9 A No.

10 Q What is the discussion like in a newsgroup?

11 A This is a general question about newsgroups that's hard to

12 generalize because there are so varied types, REC dot Cats.

13 They do fight, and there are debates about whether you should

14 declaw them. It can get quite vociferous. By the way, when

15 you are talking about ARS the debate is much more volatile.

16 Q What do you mean by volatile?

17 A I think Mr. McShane talked about the word scatological

18 attacks on the church. That certainly happens. There is

19 swearing, a curse word. That certainly happens. What you can

20 find on ARS is everything from a 15 year old type of cafeteria

21 behavior to some of the most cogent reasoned articles that you

22 have ever seen. It's the kind of thing that ought to occur in

23 a scientific journal. You find people who primarily --

24 courtroom data, court transcripts. So there is just an

25 incredible variety of material that gets posted to ARS all

159

1 dealing with the church Scientology.

2 Q How did you first land at ARS?

3 A In January. I heard on another newsgroup that some one

4 had attempted to remove a group by issuing an RM command, RM

5 group command. Groups occasionally split up, and you have got

6 to remove -- get rid of the parent group. But to remove a

7 group that's active and healthy and thriving was pretty

8 disgusting.

9 I also heard -- the word was going around in the Net

10 that a number of peoples' messages were being cancelled. You

11 can always cancel your own words on the Net. If you type a

12 message and you want to take it back, you can issue a

13 cancelled command that will hopefully take it back before the

14 message gets too far. There was an issue of cancellation of

15 some anonymous posters based on the words that they said. I

16 found that intriguing at least. I wanted to look into it to

17 see if it was true. I began to read ARS then in probably

18 February.

19 Q What did you discover when you started reading ARS?

20 A That it was true. I saw the original removed group

21 message that Ms. Kobrin issued for the group. And I saw the

22 cancels first hand.

23 Q What did you do at that point?

24 A I tried to see if you could determine who the canceller

25 was. In those early cancelled messages, they were done quite

160

1 crudely by news area, the ComNet which is the Commercial

2 Internet service provider in northern California. In those

3 cases a number of people complained to NetCom and NetCom

4 ultimately cancelled those users' accounts. When I say we

5 know the name, I know the account name they posted under. I

6 don't know their real name behind that account name. We knew

7 those account names because those cancelled were done crudely.

8 NetCom cancelled their accounts. The cancels stopped for a

9 while and picked up again. Suddenly, we could tell they were

10 coming. The Internet service provider called Delta Net. We

11 complained to Delta Net about this unethical behavior. At

12 that time we were beginning to share that this is illegal and

13 it appears to violate Section 18 of the United States Code

14 which talks about unauthorized access to stored electronic

15 communications. So Delta cancelled their account and came

16 back with a story about how two guys had wandered in late at

17 night and had wanted an account, and we gave it to them. I

18 was sort of surprised. Here we got the guys account cancelled

19 or terminated rather. And then the cancels began to pick up,

20 but from an anonymous source where you couldn't tell where it

21 was coming from. And at that point that's when I began to get

22 out of my depth, that it was difficult to try to pin some of

23 these down. Since the message that cancels somebody else's

24 message is forged and anonymous, it's hard to disentangle the

25 origin. Do you want me to continue with that?

161

1 Q Yes.

2 A That occurred in March or perhaps April and May. I was

3 out of the country for late March, early April, doing field

4 work in England, so I didn't keep track for a while. But when

5 I came back, the cancellation had appeared to stop pretty

6 much. So the truth is I didn't do much in the month of June.

7 I had talked to the FBI, trying to get them interested back in

8 the spring with what I perceived to be a violation of United

9 States law. They were interested and they were willing to

10 listen and willing to look at all the paper that I sent them.

11 Okay, it happened, and the agent and I were talking about it

12 and I lost touch and the cancellations weren't occurring any

13 more. In early July the cancellations picked up again. At

14 that point one of the first messages that got cancelled was

15 from Martin Poulter of Bristol University who had published

16 six lines, O.T. VII-48 and O.T. VII-49, as I recall, and

17 Poulter's message was cancelled. So I E-mailed him. It was

18 cancelled from a computer in Dublin, appeared to come from a

19 Dublin college, so the FBI didn't seem to want to mess with

20 that because it seemed to be from out of the country. I wrote

21 to Martin that I wanted to repost your message and hopefully

22 they will cancel from here in the States and hopefully the FBI

23 will get their interest up. So I did that. I reposted

24 Mr. Poulter's message containing six lines of O.T. VII

25 material. I actually did that inadvertently. If I wanted to

162

1 do it advertently, I would, but that was inadvertent. But

2 nonetheless nobody cancelled me, so that didn't work out.

3 Instead my university got a message, E-mail message from

4 Ms. Kobrin basically accusing me of violating copyright,

5 misappropriating trade secrets, and there was an interesting

6 line in their about how the fair use of unpublished material

7 has never been found to be true in the courts in the United

8 States or something like that.

9 Q I would like to know what ARS is like, how often during

10 this period did you read ARS?

11 A At least every morning after coffee or with coffee, so on

12 a regular basis. The truth is newsgroups are fairly

13 addictive. ARS is incredibly addictive. It's like a mystery

14 and it's like a soap opera and a number of other things.

15 Q Who comes to chat and have coffee on the ARS?

16 A Lots of different kinds of people, Scientologists some.

17 Ex-Scientologists, several. If I had to guess, actually I am

18 almost certain that the bulk of the people that post to ARS

19 today are people just like me. The people who have got into

20 it because of the cancels and that kind of a behavior and

21 wanted to see what was really going on and stuck around for

22 the rest of it. I know that's probably true because ARS was a

23 group that -- although I didn't read it back in 1994, it was a

24 group in the bottom 50 -- it had very low readership, and now

25 it's in the top 10 of number of messages of traffic, at least

163

1 it was during the late spring and early summer and that tells

2 you something.

3 Q How many messages a day are posted on ARS?

4 A 400 for the last several months.

5 Q You mentioned that Scientologists participated in ARS?

6 A There seem to be three types of Scientologists on ARS.

7 There is a guy who posted, Rick Sherwood, who for late spring

8 and most of the summer basically posted one line messages,

9 never answers questions and never brings up any new points.

10 His purpose appears to be to flood the group with so much

11 traffic that it becomes difficult to read. Especially people

12 with old news readers, they have to look at every message that

13 gets posted. With him posting 50 to 100 messages a day --

14 MR. COOLEY: I object to this line of testimony, Your

15 Honor. I don't see its relevance to anything at this point.

16 We are getting pretty far afield, engaging in a great deal of

17 speculation on the part of this witness.

18 THE COURT: Overruled.

19 THE WITNESS: The second kind of Scientologists that

20 post commonly seem to be a rotating slot, that is, a user --

21 for example, Vera Wallace would post. That was virtually a

22 character assassination of most Scientologists on the Net.

23 When she would stop posting, another one would pick up. We

24 assume that those people who talk about this kind of thing on

25 ARS, that was an assignment that gets rotated through.

164

1 The third kind of posting from a Scientologist,

2 Mr. Andrew Milne, who releases the official church press

3 releases, for example, for the Wollersheim raid. From some

4 church documents that we have seen apparently writes dead

5 agent material for the church.

6 Q What do you mean "dead agent" material?

7 A When you read ARS enough, you pick up the terms. Dead

8 agent is character assassination material. The Wollersheim

9 press release, for example, had a fair amount of that in it.

10 Q Let's turn to that right now. Can you turn to Defendants'

11 Exhibit W.

12 A Okay.

13 Q Can you identify this document?

14 A Yes, this is the press release or a copy of it put out by

15 Mr. Milne after the Wollersheim raid.

16 Q Where did this come from?

17 A It was originally posted to ARS. I actually got this copy

18 and mailed it to you off of a Web page. That is a number of

19 postings on ARS are posted Web pages, so they are easily

20 available, so you can go look at them and you find what you

21 want, and I found this.

22 Q Can you explain to the court what a header is?

23 A Senator-bedfellow.mit. This is a header which is this

24 long string of what's called a path. I won't read it to you,

25 but it's senator-bedfellow.mit. It tells me it's stored on a

165

1 computer at mit. It refers to the path that -- let's see --

2 that in this case I got this message from -- the message -- as

3 you can see from Milne at crl.com which is -- Mr. Milne tells

4 you which newsgroups it was posted at. This case ALT Religion

5 Scientology. Sometimes you will see more than one newsgroup,

6 and we call it crossposting. There is a subject as you can

7 see. Date, organization. That top part is the subject line

8 and the name is what would show up when you would read a

9 newsgroup, that whole thing is what would show up if you

10 decided to read this article.

11 Q Is this what you would see in terms of what you would say

12 a posting looks like when we are talking about postings?

13 A Absolutely, this is the posting.

14 Q When you talk about downloading, what does it mean if you

15 download a posting?

16 A It can mean that you are simply reading the news on

17 another computer. I read my news at UWM about 45 miles away.

18 It comes down to my computer, Westbend, Wisconsin. You can

19 call that downloading. We use the word downloading referring

20 to a file from one place and putting it someplace else.

21 Q Can you turn to Exhibit X? Can you identify this

22 document?

23 A This was a document that was purportedly linked to ARS.

24 It occurred before -- as I recall, before I began reading it.

25 It's up on a number of Web pages whose subject is Scientology.

166

1 That is collections of material and Scientology, the church

2 itself, has one. And there are about 10 or 15 that are

3 maintained by critics of the church. And this was a letter

4 which was proposed by the master plan for handling the problem

5 way back in January of all of this scurrilous attack on the

6 church, on the ALT Religion Scientology group. And this plan

7 basically says that they were going to do it by putting

8 entheta or good news.

9 The truth is when I first started reading ARS, it was

10 full of two kinds of material and chuck full of two kinds of

11 material, hundreds of messages posted repeatedly on wins which

12 apparently is like I saw -- my dentist studied Scientology.

13 Now, his practice is up 50 percent. Others are called

14 expertises, and those tend to be like testimony, like they

15 have had a Mormon apply which was a Morman Deacon write and

16 say he saw no problem with Scientology's compatibility with

17 the religion of Morman.

18 I have a problem with all of those good nice

19 articles. Every time critics would ask a question, can you

20 cite an authority? It would never be answered.

21 Q Can we turn to Exhibit Y? Can you identify this?

22 A This is an example of a posting. This is one of the

23 Scientology posters, a number of critics think is in that

24 rotating slot, Robert Marcus. It was what many, many people

25 considered to be a death threat. The thing that I think

167

1 bothered people so much, not simply did it appear to be a

2 death threat, it was a death threat against Diane Richardson

3 who is one of the people who writes on the Net who posts court

4 cases. That's her big contribution. That's not the kind of

5 person who attacks Scientology.

6 Q When you say this is an example of a posting, that might

7 have been made by someone claiming to be a Scientologist?

8 A Yes.

9 Q What do people talk about on the ARS?

10 A They talk about lots of things. Let me -- they discuss

11 the court documents that are out there, Wollersheim and

12 Fishman, and they discuss the transcripts -- action of the

13 courts in terms of raids that occur.

14 There are common things that you see on any newsgroup

15 IANAL which is an acronym for I am not a lawyer, so there is a

16 lot of legal discussion that is not very legal.

17 There are discussions of history of church. L. Ron

18 Hubbard's war orders. I heard a comment earlier today in

19 testimony that Mr. Rub Hubbard was widely decorated in -- I

20 think in fact Mr. Hubbard had four ribbons. That's what the

21 war department files show. There is discussion of --

22 Mr. Cooley, for example, had an interview in 1985 on the

23 60 Minutes show in which he argued that there were two sets of

24 war records for Mr. Hubbard. So we discussed things like that

25 likely to be true or not.

168

1 There are discussions of this curious use of the term

2 donation. If you don't get to take O.T. III without a

3 donation, then how can you call it a donation. There is that

4 kind of argument about what is or isn't or what should be.

5 There are affidavits by ex-Scientologists, what it

6 was like for them. One of the things a lot of critics like me

7 don't understand is how could you get into this in the first

8 place. And a number of Scientologists have written in, ex-

9 Scientologists with their stories. So people understand what

10 it was like and how they got involved and how they got out.

11 Q Do people ever discuss any of the secret materials of the

12 church which have been mentioned here today?

13 A Yes.

14 Q How do they discuss those kinds of materials?

15 A Most of the secret materials that have been posted have

16 been performed anonymously. Not always. That is full

17 documents. A number of people -- me inadvertently -- have

18 posted partial -- famous six lines, for example. In fact, the

19 cancelled -- whoever was doing these cancellings would cancel

20 each of those partial posts and somebody would post it about

21 three more times to show there was that sense of anger at

22 having your postings cancelled. Partial message. At some

23 point they were canceling messages which told where you could

24 find Fishman documents. There was a point during July when as

25 all of these cancels were occurring somebody -- I think it was

169

1 a Mr. Peter Esquez who is a mathematician at Carney Mellon

2 actually posted the Fishman documents on Web page. You go and

3 look at them. His site got closed down after two days

4 apparently on account of a complaint from the church. So at

5 that point a number of other sites began carrying the whole

6 Fishman series from O.T. I through VII. There are at least

7 two German sites that I know about, one Finnish site. As

8 those would be begin to go off line and get closed down, a

9 site in Beijing began carrying the Fishman series, so there

10 was a period of four hours when we relied upon the Chinese for

11 this material. This material is still available on the

12 Internet. I just found it two days ago.

13 Q Where did you find it on the Internet? Was it in the ARS

14 newsgroup or another newsgroup?

15 A No, not in a newsgroup at all. Actually I was trying to

16 prepare for my course and I was showing -- I was looking for

17 some of these -- there were a couple new programs that have

18 been written that allow you to go search old news articles,

19 and so I was just searching key words, trying one out, and I

20 tried the key word SCAMIZDAT and, Bingo, I found check all of

21 the old SCAMIZDATs with the exception of number one. And not

22 just references to them and the whole things are there.

23 Q What's the SCAMIZDAT?

24 A S-C-A-M-I-Z-D-A-T. Combination of SCAM and IZDAT postings

25 that came out during the recent revolution. I didn't name it

170

1 that. I think somebody else did, but they are postings which

2 are compilations of secret church materials. There have been

3 ten of them. Nine of them have come out before the

4 Wollersheim raid. They contain all as far as I can tell of

5 the O.T. series, I through VII and VII. I know VIII is under

6 contention but it's there too. The SCAMIZDAT materials, they

7 are bundled up, a bunch of church materials, and usually

8 posted to a particular group. They are not usually posted to

9 ARS. In the early days they were posted anonymously, so we

10 don't know who is posting them, but they were posted to

11 numerous groups like amount 2600 which is a bunch hackers, as

12 near as I can tell they were. But posted to game groups kinds

13 of things.

14 However, for the last six or seven they have been

15 posted to com.eff.talk, a group set up by the Electronic

16 Freedom Foundation to talk about electronic freedom issues.

17 This is the poster that has been posting these SCAMIZDATs to

18 this group and from -- their people repost them to other

19 bases. Again, they contain multiple files on the O.T. series

20 as well as the line drill which is the church's -- contains

21 the R245 document, lists of suppressive persons that you can

22 apparently apply this R245 document -- one of the discussions

23 on ARS is what does that really mean. According to

24 ex-Scientologists that is a license to kill those suppressive

25 persons applying 245 to them.

171

1 MR. COOLEY: I object and move to strike.

2 THE COURT: Overruled.

3 BY MS. HANLON-LEH:

4 Q Why don't we jump to Exhibit D -- can you identify this --

5 E?

6 A This is SCAMIZDAT No. 2.

7 Q And explain the header on this one?

8 A The following files part?

9 Q Actually what -- does this show where the SCAMIZDAT came

10 from?

11 A It was posted from a user called anonymous. Purportedly

12 at a site -- University of California-San Diego. Dot EDU that

13 jogs with the university. I don't know if that's true, if

14 this was forged all of the way to the level of that header.

15 It was posted on 24 March 1995.

16 Q Can you turn to Exhibit AA? It's going to be in another

17 book.

18 A Okay.

19 Q Can you identify this document?

20 A SCAMIZDAT 3.

21 Q What information do you have from there as to when this

22 document was posted?

23 A 4/28/95.

24 Q Can you turn to Exhibit AB?

25 A SCAMIZDAT 4 posted on 5/6/95.

172

1 Q And is this a copy of the SCAMIZDAT as it would have

2 appeared when it was posted on line?

3 A It looks that way to me. I remember seeing it when it was

4 originally posted. I think this is -- I am not sure if this

5 one or not, but it looks like the ones I have seen, yes.

6 Q Can you turn to CC.

7 A SCAMIZDAT 5 posted on May 18.

8 Q The next one DD?

9 A SCAMIZDAT 7.

10 Q Where does this say that this would have been posted?

11 A There is the Netherlands, a Dutch anonymous mailer.

12 Q To what newsgroup is that posted?

13 A It's comp -- the newsgroup here says comp.org.eff.talk.

14 Q And what date does this indicate that the SCAMIZDAT 7 was

15 posted?

16 A June 14.

17 Q Turn to number EE, Exhibit EE.

18 A SCAMIZDAT 8.

19 Q What is this -- all of this stuff that's in the middle of

20 the page?

21 A This was saved from a Web page. That HTML code, this

22 document was sitting on a Web page somewhere and when it was

23 saved, it saved it with the -- there are two ways to save it

24 and whoever saved it forgot.

25 Q Does this indicate when this SCAMIZDAT was posted on the

173

1 Internet?

2 A It was posted to comp.org.eff.talk, usually there is a

3 date right in here of 6/14/95.

4 Q Do you want to turn to Exhibit FF.

5 A SCAMIZDAT 9.

6 Q When was this posted?

7 A 12 July.

8 Q And where was this posted?

9 A Again to comp.org.eff.talk.

10 Q When something is posted, again, what does that mean if

11 all of these documents were posted, what would that mean?

12 A It means that they appeared to that newsgroup. It could

13 be read just like any other article by anybody who subscribed

14 to that newsgroup and the readership of comp.org.eff.talk was

15 about 38,000 for May.

16 Q Did you see these postings at any time prior to seeing

17 them now?

18 A Yes.

19 Q Did you see them prior to August 1, 1995?

20 A Yes.

21 Q You have characterized ARS as a newsgroup, as somewhat of

22 a newspaper. Do they also tend to be a public forum?

23 A Absolutely. In fact more of a public forum. I said

24 newspaper, and it wasn't a good one. It was a place to start.

25 But the right direction to go from that I guess would be

174

1 towards a public forum. Because that's what it is, people

2 talking fairly unrestrainedly.

3 Q Have you been retained today as an expert in this case?

4 A I don't know.

5 Q Okay.

6 A I am not sure. You all asked me to come testify.

7 Q And have you gotten access to these documents in the

8 course of your providing assistance to us in this case?

9 A I hope so. Can I make a point? Is there a question

10 there? I'm sorry.

11 Q Are you a Scientologist or have you ever been a

12 Scientologist?

13 A No, I have not.

14 MS. HANLON-LEH: I have no further questions at this

15 time.

16 CROSS-EXAMINATION

17 BY MR. COOLEY:

18 Q How do you arrive at your numbers of -- your readership

19 numbers?

20 A The readership numbers come from -- come from the -- come

21 from the DEC Corporations Research -- let me get the correct

22 title -- Network Systems Lab. They are attempting to measure

23 certain kinds of traffic on various parts of the Internet.

24 Q And you gave a number for May of some 30 some odd thousand

25 reading that group -- that the reporter had a little trouble

175

1 handling?

2 A Yes, sir.

3 Q How do they conclude that there are 35,000 readers?

4 A Any main frame large computer in which users are reading

5 the news on that computer directly has a time called dot news

6 RC for each user. That news RC file is a list of the

7 newsgroups that have subscribed to it. It also keeps track of

8 the most current article, so the next time they go in to read

9 that newsgroup, they don't have to read stuff they have

10 already seen. So this program that this DEC Lab is using runs

11 on each computer where somebody agrees to do -- checks all

12 those news RC files and counts the number of people who have

13 looked at that newsgroup within the last 14 days.

14 Q That does not suggest in any way, however, that each of

15 those people has read everything on that group, does it?

16 A No, sir.

17 Q It doesn't even come close to suggesting that?

18 A Absolutely.

19 Q Because one of the common practices if you run the threats

20 that appear and you don't have any interest in it is to mark

21 them all as read, so you can go back to zero again and you

22 haven't read them at all; is that a fact?

23 A Absolutely, true.

24 Q You may get if you post to ARS, ALT Religon Scientology--

25 A Yes, sir.

176

1 Q Is that okay. There may be 2000 messages up there, and

2 you find two that you have an interest in and read the two and

3 mark all the others read and go home for the day; that's not

4 an uncommon practice on the newsgroup, is it?

5 A No, sir.

6 Q So those numbers that you give us doesn't tell anything

7 about what's being read, the scope of the readership; it

8 doesn't even tell us that that many people have read it, does

9 it?

10 A Certainly not absolutely, no.

11 Q You could have one person read a message three or four

12 times if or she had a great interest in it and would that show

13 up as three or four people or one person?

14 A One time.

15 Q Now, with respect to all of these discussions -- you

16 adopted the phrase that -- I think that I was the one that

17 used the word scatological, that there is much discussion on

18 ARS that is of that quality; isn't that right?

19 A Yes, sir.

20 Q There are from time to time and more often than just from

21 time to time some very obscene and disgusting exchanges on

22 that group, are there not?

23 A Yes, sir.

24 Q As a matter of fact, you have seen my colleague, Helena

25 Kobrin, referred to in the filthiest of terms, have you not

177

1 sir?

2 A I know her nickname.

3 Q That isn't the only name that has been applied to her

4 either, is it?

5 A No.

6 Q That is not something of which you approved?

7 A I do not.

8 Q But by the same token it's not anything that has ever

9 gotten cancelled or the subject of suit or anything other than

10 contradebate, isn't that correct?

11 A That's correct.

12 Q So there are thousands upon thousands of messages on ARS

13 that refer to Scientology and in the most demeaning of terms

14 and those messages are there and continue to be there. Nobody

15 ever asked for judicial intervention on them, isn't that a

16 fact?

17 A As far as I know, that's true.

18 Q You didn't get into that cancellation problem that you are

19 talking about, did you?

20 A I'm sorry.

21 Q This cancellation problem that captured your imagination

22 didn't rear its ugly head on any of that material?

23 A No, not that I know of.

24 Q And so despite the rage on ARS you got on it in January;

25 is that it?

178

1 A Yes, sir.

2 Q You came over to take a look because you heard of some

3 cancellation activity going on?

4 A Yes.

5 Q But is it fair to say that the overwhelming number of

6 messages on ARS which are antagonistic and opposed to

7 Scientology have never resulted in litigation or cancellation

8 of any kind, isn't that a fair statement?

9 A I think that's a fair statement.

10 Q You indicated that -- you indicated that you saw a message

11 from Ms. Kobrin attempting to cancel the group?

12 A The remove group command, yes.

13 Q Tell me what remove group command is, as far as you know.

14 A The remove group command is a command that is sent just

15 like you would send any other message to the control group or

16 you could simply send it to Net administrators but usually it

17 goes to the control group, and it's a request like all

18 commands are, they are not absolute, to cancel a particular

19 group.

20 Q That request went from a lawyer or Religious Technology

21 Center to a command center saying, cancel that group because

22 they are infringing on copyright, did it not?

23 A That's exactly what it did all right. Yes, sir.

24 Q And that was a formal legal notice that she sent to get

25 persons that were allowing those infringing materials to be

179

1 posted to cancel the group that was offending them; isn't that

2 a fair statement?

3 A It is except on the Net we use the word allegedly a lot.

4 Q I understand that, but parties are contesting over

5 something and you give a notice to cease and desist. One side

6 is saying this is my position. The other side certainly can

7 say this is my position, but the request is made and somebody

8 has to make a decision whether they are going to obey the

9 cease and desist; is that a fair statement?

10 A That's correct.

11 Q As a matter of fact, a number of access providers decided

12 to take the stuff down because of the infringement notice,

13 didn't they?

14 A As far as I know, nobody took it down.

15 Q Are you saying that no access provider ever took down a

16 posting in response to a notice from the church or from

17 Religious Technology Center?

18 A I am saying that no remove group command was honored on

19 any major university or ISP that I know of. The remove group

20 command that was not honored.

21 Q Let's go to individual access providers dealing with

22 individual notices on individual postings. Are you aware of

23 how many of those were taken down?

24 A If I understand your question -- I guess I don't

25 understand your question. A newsgroup posting?

180

1 Q A newsgroup posting.

2 A I think maybe I know of one or two cases where the actual

3 poster of a message actually sent his or her own cancelled

4 follow-up on his own message as a result of pressure from the

5 church. I think I only saw one or two of those, but I think

6 for the thousands of messages that I saw no -- I saw no

7 cancellations on those from the poster.

8 Q You are not aware -- I am not saying from the poster. I

9 am saying from the access provider taking a message down?

10 A I know of no case of an access provider canceling, and I

11 would know that because the cancellings occur -- any

12 cancellation that occurs show up in ARS as a Lazarath

13 announcement.

14 Q Are you sure of that? They all may get in there as a

15 Lazarath announcement because -- haven't you seen a notice

16 message where is so an so? He is not on the word. We are not

17 getting a Lazarath announcement?

18 A I know Lazarath was down from late June through mid July.

19 Q So that is no reliable indicator of what messages are up

20 or down in response to an infringement notice?

21 A Actually, it works beautifully except for June through

22 July.

23 Q Was that the whole month from June?

24 A At some date in June through about mid July if I

25 understand Lazarath was down.

181

1 Q You have mentioned FTP sites disappearing, and are you

2 aware that FTP sites disappeared in response to infringement

3 notices that went to those FTP sites and they decided that

4 they were going to honor the infringement notice rather than

5 allow the posting of the infringing material or as you put it

6 allegedly infringing material.

7 A I don't know that but I certainly think we all suspected

8 that was what was happening, yes.

9 Q You find something wrong with that?

10 A With what part?

11 Q You find that there is nothing unlawful about that, giving

12 notice to somebody that there is an infringment here and the

13 person decides to honor the notice of the infringement? There

14 is nothing wrong with that, is there?

15 A I might have questions about some of -- the way some of

16 this was handled. But if an ISP is asked by a party, an

17 Internet service provider is asked to do something about a

18 user, I have no problems with that, provided they follow their

19 own policies with regard to that user. To my knowledge, they

20 usually have -- in most cases it's a user itself who takes it

21 down after the ISP has -- look we have a complaint about your

22 stuff. You work it out with whatever.

23 Q Your gripe there is with the ISP not with the person who

24 complained about the use of the site; that is that right?

25 A I think so.

182

1 Q Now, you are aware, are you not, that big access providers

2 such as America On Line and Compuserve, Prodigy, Netcom -- I

3 haven't seen Gates new one yet but virtually every one of the

4 big access providers in terms of service under which they

5 agree to render service to people who want to access the Net,

6 have a rule against copyright infringement; you are aware of

7 that, aren't you?

8 A No, I am not aware of that.

9 Q You have not ever seen those terms of service?

10 A I have seen hundreds of them.

11 Q Have you ever seen them on America on Line? How many

12 subscribers do you think they have?

13 A I don't know much about AOL or Compuserve, those are only

14 recently attached to the Internet.

15 Q And you go way back to '84 before they came around. But

16 are you aware of how many people have access to the Internet

17 through those services?

18 A No, sir.

19 Q How many people do you say are out there on the Internet

20 all together?

21 A Between 30 and 60 million.

22 Q Who makes that estimate?

23 A I have seen that -- 30 number comes from the DEC Research

24 Lab. The 60 number actually I saw from another source but I

25 don't recall where. Somewhere on one of the newsgroups that

183

1 talk about the details of the Net.

2 Q Do you know how many come on through these large

3 commercial services?

4 A No, sir.

5 Q In they event, do you find it unusual for an access

6 provider upon notice from an owner of copyright to cancel a

7 posting that's alleged to fringe?

8 A I know of no access providers who have cancelled postings.

9 I think we have a semantic problem here.

10 Q I am trying my best not to. You don't know much about

11 America On Line, Netcom, or any of these people?

12 A I know about Netcom.

13 MS. HANLON-LEH: Objection, he has said that he

14 doesn't know the details of relationships between on line

15 providers and their subscribers.

16 THE COURT: He just said he knows one. So we'll go

17 ahead with that.

18 Q Netcom, are you familiar with their terms of service?

19 A I have seen it but a long time ago.

20 Q They have a rule against copyright infringement, don't

21 they?

22 A I don't recall. If they are like most of the ones -- I

23 have seen several hundreds, by the way -- the rule is

24 generally stated as you shall refrain from illegal activity.

25 They use the word pirating a lot.

184

1 Q Would you view copyright infringement and pirating as

2 illegal activity?

3 A Yes, sir.

4 Q You are one of these professors that does some publishing?

5 A Yes.

6 Q As an alternative to perishing.

7 A A teach at an institution but I have a book out this year.

8 Q It's a copyrighted book, I would imagine?

9 A That is right.

10 Q What does it deal with? I might want to run right out and

11 buy it.

12 A Probably not. It's an old barn book, A Field Guide to

13 North America Barns.

14 Q Probably not. I may develop a passion for old barns. In

15 any event, that's sold that book, is it, and for a price?

16 A Yes, sir.

17 Q If somebody were -- it wouldn't take much effort, would

18 it, to -- how many pages is that book?

19 A Probably about 300.

20 Q Wouldn't take much effort to scan that into a hard drive

21 and on the push of a button send that soaring around the world

22 for nothing, would it?

23 A Absolutely not.

24 Q And you would not consider that appropriate activity,

25 would you?

185

1 A I would not.

2 Q If somebody said we wanted to debate about barns and we

3 have a right to debate about barns, we can take Cleek's book

4 away and post it out there, so we can have a nice intelligent

5 debate about barns; you would call your lawyer, wouldn't you?

6 A Absolutely.

7 Q So you are not opposed to copyright law?

8 A Not the law, no, sir.

9 Q You are not opposed to copyright being protected, are you?

10 A No, sir.

11 Q You are aware of the fact that copyright is rooted in the

12 constitution before the first amendment, are you not?

13 MS. HANLON-LEH: Object to the extent he is asking

14 the witness about the law and legal issues.

15 THE COURT: Sustained.

16 BY MR. COOLEY:

17 Q You think that -- have you read the copyright paper that's

18 come out of the copyright office recently?

19 A No, sir. I did -- after I received Mr. Cochran's

20 letter -- read the actual law.

21 Q Did you do that?

22 A I did. Yes, sir, it has a Section No. 4 that talks about

23 unpublished material not being in fact different from

24 published.

25 Q It says that there is no difference between publish and

186

1 unpublished material?

2 A It says that fair use shall not be excluded because it is

3 unpublished.

4 MS. HANLON-LEH: Object to this line of questioning,

5 that it's irrelevant.

6 THE COURT: Sustained.

7 BY MR. COOLEY:

8 Q Well, sir, when you came in here to testify to tell about

9 these cancellations, you don't have any idea as to how these

10 cancellations came about, do you?

11 A Yes, sir, we have now solved the problem.

12 Q Where did they come?

13 A From -- they come from Taiwan which is an international

14 service provider in Southern California and Directness,

15 another Southern California service provider.

16 Q But you have no indication that the Religious Technology

17 Center ran that, do you?

18 A Let me think about this question. Do I have -- could you

19 rephrase it please?

20 Q Do you know that the Religious Technology Center was

21 involved in that operation?

22 A No, I do not know that.

23 Q You have gone to the FBI and you have made your complaints

24 there and no prosecution of anybody has resulted, has it?

25 A As far as I know no prosecution has resulted.

187

1 Q You are continuing to press with the FBI?

2 A No, sir, I am not.

3 Q You are of the view that there is civil liability for this

4 cancellation, are you not?

5 A I don't understand that.

6 Q Haven't you expressed on the Internet on ARS of your

7 opinion there is both civilian criminal liability for those

8 cancellations?

9 A If I did, I probably phrased it differently because I

10 don't recognize my words.

11 Q Do you view it as that?

12 A Do I believe that the person doing the cancellation has

13 criminal liability?

14 Q Yes.

15 A Yes, sir, I believe it's a violation of Section 18.

16 Q Do you believe there is also civil liability?

17 A I believe that a person whose message was cancelled

18 probably -- I see what you are getting at exactly -- has the

19 right to sue whoever cancelled his message.

20 Q Have any of your messages been cancelled?

21 A Not that I know of.

22 Q Are you aware of any criminal or civil litigation

23 instituted as a result of those cancellations?

24 A No.

25 MS. HANLON-LEH: Objection, there is no -- objection,

188

1 there is no evidence of any cancellations.

2 A I'm sorry.

3 Q Are you aware of any criminal or civil proceeding

4 instituted anywhere in the world based upon the cancellations

5 that you have testified in this courtroom?

6 A I know there were investigations at the FBI. I know that

7 those were forward to do the Department of Justice. I know

8 the Royal Canadian Mounted Police considered a case. That's

9 as much as I know.

10 Q And you were -- are you a member of a committee that

11 addresses this issue?

12 A I don't understand. A university committee? Do you mean

13 the Rabbit Hunters?

14 Q That's the one, the Rabbit Hunters. Are you a member of

15 that committee? Who is on that committee?

16 A I'm sorry, sir. I can't really answer that.

17 Q Why?

18 A The Rabbit Hunters is a group of people who tried to get

19 together to pool their technical expertise to find who was

20 canceling this material. When we finally tracked it down, we

21 released a press release basically laying out our techniques

22 and what we had found and made contact with the service

23 providers and notified them of the problem.

24 We had good help from the university along the way

25 where the cancels were being routed. We provided all this to

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1 the FBI. It was also a bunch of people who basically worked

2 on it anonymously.

3 Q That's one of the great problems on the Internet, isn't

4 it, sir, anonymity?

5 A And it can be.

6 Q Do you?

7 A Tom Payne didn't. I don't think it always is, no, sir.

8 Q Do you think it oftentimes is a method for evading

9 responsibility for unlawful acts?

10 A It can be that.

11 Q Incidentally, do you ever use remailers?

12 A No, sir, I do not.

13 Q The SCAMIZDAT that you have gone into here has been done

14 through remailers, has it not?

15 A Yes, sir, it has.

16 Q Remailers are people who are places that take the headers

17 off and redistribute so nobody can tell where it came from;

18 isn't that right?

19 A Yes, sir, that is right.

20 Q Anonymity is a very very common thing on ARS, is it not?

21 A It is.

22 Q For example, you say you don't know who publishes

23 SCAMIZDAT.

24 A No, sir, I don't.

25 Q Because he or she preserves their anonymity. What

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1 majority of postings on ARS would you say were anonymous?

2 A It would be a guess. 20, 30 percent maybe.

3 Q And what percentage of the postings on ARS that you have

4 seen of O.T. material of the Religious Technology Center is

5 anonymous?

6 A Almost all.

7 Q You haven't seen one person stand up and take

8 responsibility for that posting, have you?

9 A Which posting is that?

10 Q The posting of O.T. materials of the Church of

11 Scientology, the Religious Technology Center?

12 A I have seen a couple that weren't anonymous.

13 Q Who were they?

14 A Certainly Arnie Lerma stood up.

15 Q He certainly did and he took his responsibility and that

16 matter is being litigated. And who else?

17 A I don't remember it's name. Like a kid. A student who

18 probably got into something. They didn't understand what he

19 was doing. But no it was rare for people to actually post

20 full materials with their name. Partial materials wasn't

21 rare.

22 Q Arnie Lerma was posting the Fishman-Geertz affidavit with

23 the attached O.T. exhibits?

24 A Yes, sir. Yes, sir, it was a posting of the complete

25 material as I understand it for the entire case and that case

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1 came from that framework or discussion about that case.

2 Q A framework discussion originated by whom?

3 A The framework discussion has been going on on ARS for

4 several months now.

5 Q This material was posted on August 1 and 2 without

6 comment, was it not?

7 A In a data rich environment without comment makes little

8 sense.

9 Q When you talk about data rich environment, you are talking

10 about a history of discussion and then you are talking about a

11 posting of -- wholesale posting of copyrighted material but

12 the fact is it had no comment attached to it?

13 A There was no comment directly attached to any single one

14 of the multiple O.T. materials that I saw, no.

15 Q You have been critical of Scientology on the ARS, have you

16 not?

17 A Yes, sir, I have.

18 Q You have been critical of what they believe in and you

19 have been critical of what they do and you have been critical

20 of L. Ron Hubbard and nobody has ever sued?

21 A No, sir, not yet.

22 Q Nobody has ever sent you a letter in the context of six

23 lines of O.T. VII that you sent?

24 A No one has sent one directly to me.

25 Q Nobody has sent a letter to your university except in

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1 connection with copyrighted material?

2 A Except for the six line of text that is right.

3 Q There was never any libel suits or any other kind of

4 litigation or any kind of mail to you criticizing you in any

5 way for criticizing Scientology?

6 A No, sir. So far, no, sir.

7 Q Have you read the church O.T. materials?

8 A Yes, sir, I have.

9 Q And how do you know that what you have seen is in fact the

10 O.T. materials?

11 A I have no idea.

12 Q How do you know that what you saw in SCAMIZDAT was in fact

13 the O.T. materials?

14 A Again, I have no idea.

15 Q You take it on faith that's what it is, correct?

16 A Somebody kept trying to cancel it. I assume that probably

17 meant it was probably authentic, but I don't know for sure,

18 no.

19 Q You know, for example, that O.T. VIII, that's debated, has

20 been stated to be totally phony, don't you?

21 A I have seen the church's position on that, yes.

22 Q You know that most people on ARS know that it's phony but

23 continue to tie it to the church?

24 A There has been debate whether the language is consistent

25 Hubbard's language. There has been lots of argument about

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1 parts of that document such that the church would disown it

2 even if it was truly O.T. VIII, yes, sir.

3 Q You know there is in fact an O.T. VIII of the church that

4 didn't come out until '88; do you know that?

5 A No, sir, I don't.

6 Q And that that document is dated 1980. That's the phony

7 one; do you know that, don't you?

8 MS. HANLON-LEH: Objection, this witness is not an

9 expert in Scientology and a document of the church.

10 THE COURT: Sustained.

11 BY MR. COOLEY:

12 Q Have you a bias against Scientology as you sit here?

13 A Yes, sir. Bias as a result of reading ARS for eight

14 months?

15 Q Yes, sir.

16 A Yes, sir.

17 Q However you have acquired --

18 A I certainly have, yes, sir.

19 Q You are a strong supporter of the so-called Antis on the

20 ARS, are you not?

21 A No, sir that would be too gross a statement, I think.

22 Q It's enough to be antiScientology. Are you not -- you are

23 not pro ARS antis?

24 A Confusing terms. It's more complex than that, surely.

25 Q Do you know if any reader of a new group ever saw the

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1 SCAMIZDAT posting. Do you have any evidence of that?

2 A I certainly have no evidence. But if I was to look at a

3 group I would look at the star. And it's the secret stuff

4 that has been the star.

5 Q You don't know as you sit there who read it?

6 A No, sir.

7 Q How many people read it?

8 A No, sir.

9 Q What breadth of dissemination it received?

10 A I know how many newsgroups it was posted to.

11 Q But you don't know how many people read it, do you?

12 A Other than the estimate in the Arbitron ratings, no, sir.

13 Q You certainly have no idea of how many people downloaded?

14 A Certainly, I have a minimum number. But certainly not a

15 maximum.

16 Q What is your minimum number of downloads. Tell me where

17 you derive it from.

18 A Simply looking at FTP sites where the material existed.

19 As it was system like, expanded from one and went to another,

20 I think I counted 23 or 25, somewhere in there.

21 Q 23 or 25 downloads from place to place it was posting?

22 A Where the material was available.

23 Q These FTP sites kept getting closed down as a result of

24 infringement notices, correct?

25 A I don't know why they were closed down. That's probably

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1 why.

2 Q Do you know how many of these FTP sites closed down

3 against this infringement all told?

4 A No. I checked four or five the other day and they were

5 down. The material was no longer.

6 Q China closed down, didn't it?

7 A It did. They only had six. They only had -- China has a

8 very small pipeline into their Network, 64 kilobytes. And

9 what was happening is there was so much downloading of

10 probably the O.T. material that they simply overloaded the

11 whole Network for China, so the network administrator said

12 they had to take it down for that reason. That's what he

13 said.

14 Q Would you like to see the Church of Scientology cease to

15 exist, sir?

16 A It's a tough question. I think it's too close -- Do I

17 think that they have practices that need to stop? Yes.

18 Q That wasn't my question. My question is: Would you like

19 to see the Church of Scientology cease to exist?

20 A That may be difficult for some of your younger members who

21 depend upon it.

22 Q I am asking you whether you would like to see the Church

23 of Scientology cease to exist? It's a simple question as to

24 your own opinion and --

25 A I would never phrase my opinion in simplistic terms like

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1 that. I just wouldn't.

2 Q Would you like to see the Church of Scientology's upper

3 level materials in advanced technologies exposed to the world

4 for debate?

5 A Absolutely, yes, sir.

6 Q And having read what you believe -- you believe to be

7 those advanced technologies, would you ever consider joining

8 the Church of Scientology?

9 A Absolutely not, sir.

10 Q As a matter of fact, after being on this ARS group for

11 eight months, you wouldn't consider it either, would you, sir?

12 A I would not.

13 THE COURT: Redirect.

14 MS. HANLON-LEH: Yes, just a few questions Your

15 Honor.

16 REDIRECT EXAMINATION

17 BY MS. HANLON-LEH:

18 Q With regard to the SCAMIZDAT materials, were all of those

19 downloadable, if they would have been posted on a newsgroup?

20 A Do you mean could they have been saved to disk?

21 Q Yes.

22 A Absolutely anything that's on a newsgroup can be saved on

23 a disk.

24 Q When you mentioned -- they mentioned up going to 23 FTP,

25 could you explain what that means in terms of download ability

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1 from the FTP sites?

2 A Once the disk is at a publicly accessible FTP site, which

3 all of these were, anybody who knows about that site can link

4 it to a program called FTP and get any files that are on it.

5 That's what the sign is, full information file transfer

6 protocol.

7 Q You had mentioned when you were talking about cancellation

8 notices with the access providers a program. That term got

9 thrown in here without any explanation. Could you describe

10 what Lazarath is?

11 A Yes, apparently, there had been some users of ARS early on

12 in the spring or perhaps in late '94 -- I am not sure -- who

13 were complaining that messages were cancelled that's how you

14 can detect something that's not there. So finally a guy named

15 Homer Wilson Smith wrote the Lazarath program whose purpose is

16 to monitor the control group there which all cancels go and

17 check for any wording for posting to ALT posting to a

18 newsgroup ALT Religion Scientology. Lazarath put a

19 notification on ARS any time a message is posting, you don't

20 know what was in the message, but you will know the date and

21 sender and the subject line for the message, again, as long as

22 Lazarath was working and working through most of the spring it

23 was. It was off from somewhere in June through mid July. But

24 I know it worked again in July. It lets everybody know

25 exactly what's being cancelled.

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1 Q There was some discussion about different kinds of

2 cancels. I ask you to distinguish between a cancel message, a

3 cancel group. Are those the same thing or two different

4 things?

5 A Those are two different things. An RM group command says

6 to the various system administrators out there, please, take

7 this group off. A cancel message basically goes on and

8 eliminates this posting, this particular posting to a

9 particular group.

10 MS. HANLON-LEH: I have no further questions, Your

11 Honor.

12 THE COURT: All right. Thank you. You may stand

13 down. Thank you. We'll be in recess on this case. I have a

14 nine o'clock matter that's not going to take that long. Let's

15 start at 9:30 on Monday morning, and we have these files which

16 have been submitted to the court and are confidential which

17 will be locked up back here. The courtroom will be locked up.

18 But I can't tell you anything more than that.

19 MR. COOLEY: Will that include all the exhibit books,

20 Your Honor?

21 THE COURT: We are taking the exhibit books and

22 locking them up. These that we have. I don't know what you

23 have in those boxes. This courtroom will be locked up over

24 the weekend. Are you going to put, "Do not clean signs?"

25 THE COURTROOM DEPUTY: Yes.

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1 THE COURT: It's the only place in the government

2 where you have to put up a sign that says do not clean. The

3 other places you have to put up a sign saying, please clean.

4 We'll do that in that hopes that somebody reads it.

5 MR. COOLEY: We are taking our stuff out, Your Honor.

6 THE COURT: All right, you can. Have a nice weekend.

7 (Recess at 6:00 p.m.)

8 REPORTERS' CERTIFICATE

9 I certify that the foregoing is a correct transcript

10 from the record of proceedings in the above-entitled matter.

11 Dated at Denver, Colorado, this 16th day of September,

12 1995.

13

14 _______________________________

Deborah A. Stafford

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1 OPENING STATEMENTS

2 By Mr. Cooley 8

3 By Mr. Kelley 26

4 WITNESSES

5 Warren L. McShane

6 Direct Examination By Mr. Cooley 39

7 Cross-examination By Mr. Kelley 93

8 Ron Tencati

9 Direct Examination By Mr. Blakely 118

10 Cross-examination By Mr. Tysver 141

11 Redirect Examination By Mr. Blakely 147

12 Richard K. Cleek

13 Direct Examination By Ms. Hanlon-Leh 149

14 Cross-examination By Mr. Cooley 174

15 Redirect Examination By Ms. Hanlon-Leh 196

16

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