A California court has dealt a potentially serious setback to the movie industry's attempt to rid the online world of software that can help break through copy protections on DVDs. The appeals court released a decision on Thursday overturning an earlier order that barred hundreds of people from publishing the code for a software program called "DeCSS" online. Posting the code is just like publishing other types of controversial speech and is protected by the constitution, the appellate judges said. "Although the social value of DeCSS may be questionable, it is nonetheless pure speech," the decision reads. "Our respect for the legislature and its enactment of the (trade secrets law) cannot displace our duty to safeguard the rights guaranteed by the First Amendment." The decision, while not a final one on the legality of the software program, nevertheless marks a severe blow for the movie industry's legal battle against online threats. Hollywood studios have contended that software that can break through their anti-piracy techniques is simply a tool and does not warrant free-speech protections. A federal judge has agreed with much of that reasoning. The California appeals court's ruling on Thursday goes the furthest to date in explicitly defining software code as speech. Under that legal reasoning, programmers could still be prosecuted for posting illegal software but could not be prevented from doing so in the first place. The difference is important for both sides, particularly in software cases. If publishers can release something online, even if it might be deemed illegal later, it can take on a life of its own as it is read, copied, and distributed by others. If copyright holders could get a prior restraint on publication, the spread of a piece of software or information could more effectively be stopped. The DeCSS software, in several legal manifestations, has become a cause célèbre among open-source programmers and much of the computer underground. Allegedly created by a 15-year-old Norwegian programmer named Jon Johansen, the DeCSS software was designed to let DVDs play on computers running the Linux operating system. But it wound up being a tool useful to those who want to copy movies stored on DVDs and distribute them online. The movie industry has sued to stop the spread of the software in several ways. A federal case is still going on, in which the industry argues that the code is explicitly designed to break through a copyright protection system and therefore illegal under the Digital Millennium Copyright Act. In that case, publisher Eric Corley has been blocked from posting the code online or linking to other sites that post the code. He's appealing that ruling, saying that the decision violates his free-speech rights. Prior to the federal case, the movie industry filed its suit in California against hundreds of people who had posted the code online. In this case, the DVD Copyright Control Association, an industry group aimed at fighting DVD piracy, claimed that Johansen and anyone who posted the code was illegally spreading trade secrets. The unusual argument states that Johansen reverse engineered the anti-piracy technology to create DeCSS. Although he didn't actually have access to trade secrets to steal, the reverse engineering was barred by a licence agreement distributed along with software DVD players. The judges did not evaluate that argument Thursday, as they looked only at the issue of whether blocking the code's publication was appropriate. The court said that blocking publication would amount to "prior restraint." Judges typically see this as a legal no-no and have used the term to allow publication of instructions for building a nuclear weapons and to protect The New York Times' ability to print the Pentagon Papers documents on Vietnam. The movie industry's "statutory right to protect its economically valuable trade secret is not an interest that is 'more fundamental' than the First Amendment right to freedom of speech," the judges wrote. Nor is it "on equal footing with the national security interests and other vital governmental interests that have previously been found insufficient to justify a prior restraint." The Motion Picture Association of America declined comment on the ruling on Thursday, saying that members had not yet had a chance to study the ruling. But the decision has re-energised online civil liberties activists. "I really think the court of appeals reinstituted the cyberliberties of individuals worldwide," said Allonn Levy, an HS Law Group attorney working for the defense. "We are a free society, and we are entitled to free speech." The California case is currently in the middle of a pretrial phase, with both parties seeking information from the other. See the Internet News Section for full coverage. See the Software News Section for full coverage. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet news forums. Let the editors know what you think in the Mailroom. And read other letters.