"On Nov. 29, Magistrate Judge Jerome J. Niedermeier ruled that compelling Sebastien Boucher, a 30-year-old drywall installer who lives in Vermont, to enter his password into his laptop would violate his Fifth Amendment right against self-incrimination. "If Boucher does know the password, he would be faced with the forbidden trilemma: incriminate himself, lie under oath, or find himself in contempt of court," the judge said.
The government has appealed, and the case is being investigated by a grand jury, said Boucher's attorney, James Boudreau of Boston. He said it would be "inappropriate" to comment while the case is pending. Justice Department officials also declined to comment. "
There are some filesystem/full-disk encryption programs that claim they can get around this. Apparently (I've never used it), if one is required to provide the adversary or authorities with the passphrase, they only get so far - into the virtual disk, which then presents the illusion that there is nothing else on the disk, further claiming their product makes it literally impossible for them to detect the real contents of the partition... I'd name one of the programs here but I'm generally uncomfortable with listing links to products in forums like this- it's almost spammy like (it's a popular utility and came up when searched for hard drive encryption).
Yes, plausible deniability is possible. Look at Off-the-record messaging (http://en.wikipedia.org/wiki/Off-the-Record_Messaging) for an example. Cipher texts is these system can be decrypted to anything you like --- not only the real plain text.
