That was the answer the man in the case gave. The judge believes he's lying. His 16 months of imprisonment show that his problem is far from solved.
The better answer is to have a second encrypted volume on the disk. Perhaps put a few pirated movies on it or some personal documents as a justification for why it's encrypted. That way, when they ask you to enter your password, you enter that one and unlock the volume that's mostly not incriminating. The way that TrueCrypt and other encryption programs work, it's impossible to prove that there is a second encrypted volume.
People say they didn't commit murders, too. Sometimes they claim that their wife ran off to Russia and that the whole murder case is an attempt by the Russian Mafia to frame the defendant.
Strangely enough, the courts are happy to decide something smells like bullshit and imprison people because of it.
Surprisingly easy to do. I have a LUKS laptop drive that I doubt I will ever get back into. Went on vacation and that was it. All I could remember is it's strong, random, >15chars and started with a S.
Since it was a laptop boot PW I generated (ranpwd), wrote it down, memorized over a week or so and then lost the piece of paper. Wasn't too concerned because I "had it"... until I didn't.
"I'm sorry sir, as personal encryption is classified as a munition there is a legal requirement that you must take proper care to ensure that you are able to respond to all lawful requests for decryption. This carries a penalty of 2-5 years in prison and a fine of $10,000."
I'm not saying that this would actually become a reality but its just to point out that technology alone can't solve what is really a human problem.
Assuming that the courts maintain the 'safe' metaphor over the 'speech' metaphor for encryption I would expect a court to have some criterion like the the following.
The prosecution must prove beyond reasonable doubt that:
(0. That the search of the encrypted data is lawful)
1. There is actually encrypted data on the drive.
2. The data has not been modified or corrupted.
3. That the defendant actually knows the password.
Because you're completely right that people do forget their passwords all the time. You could being thousands of IT people on the stand who will rant all day about how their users cant remember a stupid eight character password without a post-it note. So the prosecution would have to give evidence that shows that the defendant is lying and knows the password. For example, if they're trying to access the defendant's computer the could show a video of them logging into it right before it was seized.
The better answer is to have a second encrypted volume on the disk. Perhaps put a few pirated movies on it or some personal documents as a justification for why it's encrypted. That way, when they ask you to enter your password, you enter that one and unlock the volume that's mostly not incriminating. The way that TrueCrypt and other encryption programs work, it's impossible to prove that there is a second encrypted volume.