Megaupload Filings Show Massive Flaws In US Case, Ask Court To Dismiss

from the and-off-we-go dept

While we've been mostly focused on the New Zealand aspects of the Megaupload case, the company (and the individuals sued) have made two interesting filings with the district court in the US concerning the case. The first one (pdf) seeks a dismissal of the company from the case for an issue we discussed back in April: criminal law requires that the defendant be served, and you can't serve a foreign company. Thus, there is no legal way for Megaupload to be tried under criminal law:
The Federal Rules of Criminal Procedure prescribe specific requirements for serving a summons on a corporate defendant in a criminal case. These requirements are neither vague nor optional – they quite explicitly require both service upon an agent of the corporation and a mailing to the corporation’s last known address within the United States. The Federal Rules do not contemplate service of a criminal summons on a wholly foreign corporation without an agent or offices in the United States. Wholly foreign corporations, therefore, may not be prosecuted for alleged violations of federal criminal law unless they waive service. In short, a corporation such as Megaupload cannot be brought within the jurisdiction of this Court for criminal proceedings absent its consent.
That is, however, separate from the cases against the individuals involved in Megaupload. However, as Megaupload's lawyer is suggesting if the case is dropped against the corporate entity, it may require dismissing the orders freezing the firms' assets.

The second filing (pdf) doesn't get the same headlines, since it's not asking for complete dismissal, but in many ways it's the more interesting filing. That filing is an effort to get seized assets back in order to pay for their defense. But it also foreshadows the rather key issue in the case, which we've raised in the past about both this case and the Rojadirecta case: the US government is flat out making up a concept that inducement to infringe violates criminal copyright law.

To be clear, under the Grokster decision, the US Supreme Court made up a concept known as "inducement" as violating copyright law. Such "inducement" is not found anywhere in the copyright statute. To do so, the court relied on principles found in civil law, not criminal law. Criminal law -- for hopefully obvious reasons -- has very different standards, and "inducement" is certainly not possible under criminal copyright law as it's written today. There is, of course, the concept of "aiding and abetting" within criminal laws, but there are clear limits in which that can be used -- and the US government completely fails to show all the necessary elements for aiding and abetting (in part because it tries to mix and match the actions of Megaupload users with the defendants -- but you can't do that). That is, while users may have willfully infringed (one prong of criminal copyright infringement), the government needs to show that the defendants themselves were involved in direct willful infringement. Instead, the government assumes that if users were willful, but the defendants were not, it can simply use some sort of made up legal transitive property to pretend that they can hang the willful infringement on the defendants.

What's amazing is that all of these issues were clearly raised in the Rojadirecta case, but as has been clear from the filings in that case, the Department of Justice still doesn't understand how it's mixing and matching the law here... so it just went ahead and did the exact same thing in the Megaupload case. Perhaps it realizes that it's making up a legal concept and just hoping that judges accept such things (which judges aren't supposed to do in criminal cases, since such common law rulings by a judge can only apply to civil law), or perhaps the Justice Department attorneys really don't understand the law. It honestly feels like it may be the latter.
Federal crimes are delimited by statute. It is for Congress, not for the courts, to say (and to warn) what constitutes a crime. Dowling, 473 U.S. at 213-14 (quoting United States v. Wilberger, 5 Wheat. 76 (1820) (“It is the legislature, not the Court, which is to define a crime, and ordain its punishment”)). Courts interpreting penal statutes will exercise restraint and adopt a narrow statutory interpretation unless Congress has definitely indicated that it intended a harsher reading. Id. Because “[t]he Copyright Act does not expressly render anyone liable for infringement committed by another,” Sony Corp. of Am. v. Universal Studios, 464 U.S. 417, 434 (1984), reh’g denied, 456 U.S. 1112 (1984), the Act cannot be read to make secondary infringement a crime.
The filing also highlights, repeatedly, that the indictment fails to actually establish the basic facts necessary to bring the charges that are being brought:
These omissions are not small, they are not subtle, they are not few, and they are not inconsequential. The Government has attempted to make out an all-encompassing case of an alleged criminal copyright conspiracy without bothering to allege concrete specifics of the actual infringement allegedly committed. It has attempted to build one of “the largest criminal copyright cases ever brought by the United States” out of conclusory ipse dixit, reciting statutory verbiage and nothing more. Certainly Counts Four through Eight do not reflect facts supplying requisite probable cause.
Separately, the filing points out that the government's claims presume that every dollar earned by Megaupload was earned because of criminal activity. That, of course, is ridiculous for a number of reasons, not the least of which is that we know that there were a significant number of legitimate users and uses of Megaupload. Furthermore, the filing correctly points out that you can only use US copyright law against infringing acts that occurred inside the US, and yet the government assumes that every act of infringement is subject to US copyright law -- which is simply false -- and has resulted in much more straightforward cases being dismissed.
The Government seeks forfeiture of all of Defendants’ revenue because it has assumed all of the revenue is tainted by crime. But there is no probable cause to support that assumption, which by no means follows from—and is, indeed, at odds with—acknowledged aspects of Megaupload’s business that stand well removed from the alleged infringement. To put matters in perspective, consider the maximum statutory fine that might be imposed upon Megaupload and the individual Defendants were they convicted on all five criminal counts, Counts Four through Eight, concerning the alleged copyright infringement: The maximum fine per count for a first offense of criminal copyright infringement under 21 U.S.C. § 506(a) would be $250,000 for the individual and $500,000 for the corporation, see 18 U.S.C. §§ 2319(b), 3571(b)(3), 3571(c)(3), such that imposing the fine upon these Defendants consecutively across all five counts would result in a combined fine of $7,500,000.00. Yet tens of millions of dollars, more than ten times the amount of that maximum fine, have been seized from these Defendants as derived from the business. The math does not compute.
The filing also points out that Megaupload has substantial non-infringing uses, effectively using the Betamax ruling as a defense. I'm not sure this actually applies in the criminal context, but does raise some reasonable questions about whether or not you could even make a legitimate civil case against Megaupload.

Finally, the filing notes the basic First Amendment questions raised by the seizure itself, citing the Fort Wayne Books case:
The Government’s shuttering of Megaupload, purely on its own ipse dixit, is a modernday throwback to the unconstitutional prior restraints on speech that are a notorious enemy of the First Amendment. In Fort Wayne Books, Inc. v. Indiana, 489 U.S. 46 (1989), for instance, the State of Indiana filed a civil action against several owners of adult bookstores alleging RICO violations and, based on an ex parte showing of probable cause, seized “the real estate, publications, and other personal property comprising each of the three bookstores operated by the corporate defendants.” Id. at 51. Even assuming that the seized materials were obscene, and thus unprotected, the Court held that “our cases firmly hold that mere probable cause to believe a legal violation has transpired is not adequate to remove books or films from circulation.” Id. at 66; see United States v. Jenkins, 974 F.2d 32, 35 (5th Cir. 1992) (“It is, of course, well-settled that the government may not seize presumptively protected expressive materials without a prior judicial determination of obscenity”). The bottom line is that the Government cannot order seizure of “literally thousands of books and films [to be] carried away and taken out of circulation by [a] pretrial order” until “the claimed justification for seizing books or other publications is properly established in an adversary proceeding.” Fort Wayne Books, 489 U.S. at 67; see, e.g., Multi-Media Distributing Co., Inc. v. United States, 836 F. Supp. 606, 614 (N.D. Ind. 1993)...

Here, the Government has effectively accomplished what Fort Wayne Books foreclosed. It has shuttered Megaupload, and, with it, a treasure trove of books, films, videos, photos, digital expression of every stripe, without any adversarial proceeding at all. What is more, if the Government had its way, 1,100-servers worth of that collection would have been wiped, with members of the public (including rightful owners of that material) left the poorer for it. In this sense, what the Government has done in this case raises further alarms, for it has seized not only allegedly infringing copies, but effectively taken down everything that was on Megaupload.com, taking works out of circulation entirely. See Heller v. New York, 413 U.S. 483, 492 (1973) (explaining that “a single copy of a book or film may be seized and retained for evidentiary purposes based on a finding of probable cause” but it is when a book or film is “taken out of circulation completely” that the seizure rises to the level of a prior restraint). The parallels between this case and cases in which prior restraints have been denounced as unconstitutional are unsettling and, if nothing else, warrant heightened judicial skepticism and scrutiny
I'm sure we'll see these arguments show up again in a motion to dismiss, but for now, they're just being raised in an effort to get access to some of the seized funds. Either way, the further this case moves forward, the worse it looks for the feds case, which increasingly looks insanely weak (and highlights just how ridiculously over-aggressive the US government has been in pursuing the case).


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    :Lobo Santo (profile), May 31st, 2012 @ 7:22am

    Well know

    Hooray for competent attorneys.

    I hope Megaupload sues the DOJ (et al) for as much as they can get.

     

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      Anonymous Coward, May 31st, 2012 @ 7:30am

      Re: Well now

      I heard the DOJ just got 5 million dollars. That seems reasonable.

       

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      PaulT (profile), May 31st, 2012 @ 7:36am

      Re: Well know

      "I hope Megaupload sues the DOJ (et al) for as much as they can get."

      Probably the same as Veoh managed to get after they were forced into bankruptcy by these types of proceedings, I'll guess.

       

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        Anonymous Coward, Jun 1st, 2012 @ 1:03pm

        Re: Re: Well know

        not quite, veoh was a startup, in america, .... mega on the other hand ain't no chump startup, and kim dotcom isn't going to be playing by civilized rules.

        i have a feeling we're going to see that old arrogant hacker who reset the german chancellors credit rating for teh lulz, with millions of dollars, millions of fans, and...and we're going to see him go to War. it seems obvious the feds thought that judges would just roll over and let them make shit up, instead they handed him everything neccesary to countersue everyone and every agency involved, personally and en masse. the butthurt will be endless, i hope he rapes them so hard their grand childrin getting t-bagged in COD feel it.

         

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      Ninja (profile), May 31st, 2012 @ 7:47am

      Re: Well know

      Indeed the defense seems to be awesomely well structured. These lawyers are damn epic because they took the case without any warrant they would receive any money, turned the case from a very negative perspective from Kim D point into some nearly granted victory if the law is actually followed, jurisdictions respected and due process taken into account.

      I expect this case to keep rolling for a while, the US corrupt Govt won't let it go that easily. But these lawyers are awesome anyways.

      Also, I do hope Kim can rebuild his business. It would be one epic fail for the US, not to mention a huge embarrassment.

       

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        Kenneth Michaels, May 31st, 2012 @ 9:03am

        The Lawyers in this case

        The lawyers in this case do deserve credit. These are top-notch lawyers representing Megaupload. They have have other clients lining up to pay them in other matters, yet they risk never getting paid by representing Megaupload.

        But that is actually not the most surprising thing. Their firm also represents major content owners (i.e., Hollywood). Although not a legal conflict (as the Government argues), the firm risks loosing many clients because Hollywood is angry and vindictive. Look at the lobbying firms that represented the tech industry against SOPA - those lobbying firms were abandoned by their Hollywood clients. Hollywood is at war, and you are either with them or against them. Hollywood will not hesitate to pull their work from the firm representing Megaupload and send it to another firm. I'm sure not all the attorneys at that firm are happy about this decision to represent Megaupload, it means that some of those attorneys will be loosing their clients.

        We already know from the court filings in this case that any firm that dared to represent Megaupload got a call from the government and/or Hollywood "reminding" them that they also represented Hollywood. Some firms caved and withdrew from representation because they understood the warning - Hollywood would find other attorneys.

        It all goes to the Government's overall strategy: prevent Megaupload et al. from adequately representing themselves; cut off money, pressure the lawyers, eliminate exculpatory evidence.

         

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          JayTee (profile), May 31st, 2012 @ 9:43am

          Re: The Lawyers in this case

          I'm sure if they're that good, which they're doing a damn good job of showing, then they won't have any trouble finding clients after this.

           

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          Ninja (profile), May 31st, 2012 @ 10:34am

          Re: The Lawyers in this case

          You have a point there. Still, it's fairly obvious there is no conflict simply because Govt != MAFIAA. Or so we hope. So they are not going against the rights holders and this case is not similar to any other they took previously.

          And JayTee has a point. If you are so damn mighty you kicked the US Govt in the nuts I want you as my lawyer. Name your price.

           

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        gorehound (profile), May 31st, 2012 @ 9:09am

        Re: Re: Well know

        Yes ! Me too want to see our Government totally embarrassed.
        We are turning into a Police State Orwellian Nation and no big Media is taking the time to write about this disgusting CASE !!!
        Where are the Respected Reporters ? Where are the Respected Newspapers ?
        Fuck This Government and Fuck SCOTUS Too !

         

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      Kenneth Michaels, May 31st, 2012 @ 8:43am

      Criminal jurisdiction and Megaupload civil suits

      If Megaupload sues the Government in a civil case (assuming they can), then the funny thing is that even such a suit would not subject Megaupload to criminal liability in the US since they still would not have an agent or an office in the US.

      To demonstrate this, at the time the US brought down Megaupload, Megaupload had a civil suit pending against Universal (for the Megaupload song). But appearing in that civil suit in the US was not enough to bring Megaupload into the US jurisdiction in the criminal sense.

      If Megaupload wins for lack of jurisdiction, this case will be used as an "example" as to why we need SOPA and PIPA to stop foreign "rogue" sites. One response may be to reduce the service/notice requirement in the criminal context to be the same as the civil context. But forget that, we need the SOPA and PIPA firewall to break the internet!!

       

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        Lauriel (profile), May 31st, 2012 @ 6:10pm

        Re: Criminal jurisdiction and Megaupload civil suits

        Hmm. Much has been made of the timing of the raid on Mega, in regards to it being so close after SOPA/PIPA being shot down. I haven't seen much said about the timing based on the assumption that the laws passed (and I have to believe the USG believed these laws would pass with no difficulty).

        Interesting that the raid was planned for the days after these laws were slated to go into effect.

         

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      Jack Furlong (profile), May 31st, 2012 @ 2:02pm

      Re: Well know

      At this point, it doesn't matter if MegaUpload sues or not. The DOJ has accomplished their purpose... they totally disrupted MegaUpload and took it offline, and made their corporate (masters) sponsors happy.

       

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    Karl (profile), May 31st, 2012 @ 7:37am

    Second link is incorrect

    The second link in the story is actually to the same document as the first (they both point to "gov.uscourts.vaed.275313.96.1.pdf"). I know you have them both embedded, but you might want to correct that.

     

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    Anonymous Coward, May 31st, 2012 @ 7:45am

    Expecting angry troll in 5...4...3...

     

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    Dave, May 31st, 2012 @ 7:46am

    Didn't the entertainment industry already get what it wanted?

    No matter the outcome of this case, Megaupload is shut down and will never be what it was again. Since this was a government action, legal or not, no entertainment organization or company will be held directly responsible, so Megaupload isn't going to be able to go after Viacom for damages. And even if they win damages from some entity, it wont resurrect the company. They gone now and will never be back to previous form.

     

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      Ninja (profile), May 31st, 2012 @ 7:53am

      Re: Didn't the entertainment industry already get what it wanted?

      Sort of yes but I do believe they can rebuild MU stronger than ever. And if Kim can restore the data of all users he can even us MU system to issue an apology and explain everything that happened, making ppl aware of this madness. This would be awesome.

       

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      John Fenderson (profile), May 31st, 2012 @ 8:44am

      Re: Didn't the entertainment industry already get what it wanted?

      Perhaps, but this case is really about much more than Megaupload specifically. It's about whether the government will be allowed to engage in such improper behavior moving forward. If the government loses this case, it will make it harder for them to do this sort of thing again, regardless of whether MU itself survives.

       

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      DCX2, May 31st, 2012 @ 8:51am

      Re: Didn't the entertainment industry already get what it wanted?

      I don't think they got what they wanted. They won the battle, yeah, but if they lose the war...

      Consider that all the other file lockers pretty much rendered themselves useless after what happened to Mega. Well, if it becomes public that the US totally FUBAR'd the case against Mega, the other file lockers might come back online.

      And Mega would have a lot of freedom once they were ruled legal. This could set some amazing precedents that could really change the game.

       

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      Anonymous Coward, May 31st, 2012 @ 9:51am

      Re: Didn't the entertainment industry already get what it wanted?

      "No matter the outcome of this case, Megaupload is shut down and will never be what it was again. Since this was a government action, legal or not, no entertainment organization or company will be held directly responsible, so Megaupload isn't going to be able to go after Viacom for damages. And even if they win damages from some entity, it wont resurrect the company. They gone now and will never be back to previous form."

      I think your wrong about that, assuming megaupload can get their site more or less to the point they were left off, i predict we'll see a flog of going there, pretty sure the majority of people who used it will go back, just as a big fuck you to the establishment and with this big ass advertisement compliments of the us government, i think new users will be visiting just to see what all this was about, and ofcourse those who also feel that megaupload offers a great service

       

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        Fin, May 31st, 2012 @ 11:59am

        Re: Re: Didn't the entertainment industry already get what it wanted?

        If Kim can get this thrown out, as it should be, and get his site back up with a donate button then i will happily throw some money his way.

        Once his asset's are back in his hands it will stay back as everyone will be happy to make sure it survives as a point of principle :)

         

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    weneedhelp (profile), May 31st, 2012 @ 7:47am

    DOJ as the case continues:

    - That was wonderful!
    - Bravo!
    - I loved that!
    - Ah, that was great!
    - Well, it was pretty good.
    - Well, it wasn't bad...
    - Uh, there were parts of it that weren't very good though.
    - It could have been a lot better.
    - I didn't really like it.
    - It was pretty terrible.
    - It was bad.
    - It was awful!
    - It was terrible!
    - Take 'em away!
    - Bah, boo!
    - Boo!

     

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    Anonymous Coward, May 31st, 2012 @ 7:47am

    Megaupload's lawyers seem to have forgotten something very important.

    The United Police States of America Inc. is never wrong, because they have all the bombs and they torture and kill at will.

    Herr Commandant Obummer says so und der US media parrots the propoganda!

    And the United Police States of America Inc. only kill "enemy combatants" (made-up term which means "anyone they feel like"), never innocent people.

    Herr Commandant Obummer says so und der US media parrots the propoganda!

    And they only kill to preserve american Freedumb (the freedom to do what the United Police States of America Inc's Corporations tell them to do).

    Herr Commandant Obummer says so und der US media parrots the propoganda!

    USA Über Alles!
    USA Über Alles!
    USA Über Alles!

    Fucking brain-dead morons.

     

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      Anonymous Coward, May 31st, 2012 @ 7:52am

      Re:

      There's a petition right now at the White House petition site to make a Do No Kill list.

      It's like the Onion but for real life.

       

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      weneedhelp (profile), May 31st, 2012 @ 7:52am

      Re:

      Dont forget the Wealthy Anonymous Fascists out silence anyone and anything it bloody well pleases.

       

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      Anonymous Coward, May 31st, 2012 @ 8:35am

      Re:

      "enemy combatants" is not really a "made up term", read some Geneva and court findings, about a century or so of use, and backed by 1942 court hearings

      and your whole compare to Nazi's thing, makes you the moron

       

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        Chargone (profile), May 31st, 2012 @ 8:55am

        Re: Re:

        the US government does like to play a bit on the fast and loose side with the definition though.

         

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        The eejit (profile), May 31st, 2012 @ 10:52am

        Re: Re:

        I suspect it's the methods for stifling competition and criticism, rather than the underlying belief system, that's comparable.

        Although, yes, Godwinned the everloving hell out of this.

         

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        Anonymous Coward, May 31st, 2012 @ 10:58am

        Re: Re:

        "enemy combatants" is not really a "made up term", read some Geneva and court findings, about a century or so of use, and backed by 1942 court hearings


        The term may have existed for a long time - but the meaning given to it by the US in recent years is most definitely "made up".

        Prior to 2008 it simply had the obvious meaning of any person actively engaged on the opposing side in a conflict. The US used the term after 2001 to mean an unlawful combatant who could therefore (in the recent US government tradition of making stuff up whenever it suited them) be simultaneously denied the protections of the Geneva convention, the civil law of the country in which they were detained AND of US civil law.

         

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    Anonymous Coward, May 31st, 2012 @ 8:13am

    To do so, the court relied on principles found in civil law, not criminal law. Criminal law -- for hopefully obvious reasons -- has very different standards, and "inducement" is certainly not possible under criminal copyright law as it's written today"

    Mike, with all due respect to your knowledge and views on technology policy (which are both broad and deep), this is total bullshit. I can't believe you'd knowingly assert something so easy to confirm as untrue, so I'm going to assume that you're just overlooking this or perhaps misunderstanding something else in your zealous interest in this case. (I get that. It happens.)

    "Inducement" has been around in the criminal law a lot longer than the civil "inducement" theory in Grokster. If you look at Section 2 of the Title 18 (the title where they keep most of the federal crimes in the US Code), it defines a class of people who can be held responsible for crimes as "principals". We usually hear this referred to as "aiding and abetting," but it's more than that. Since there's no longer a "Section 1," these are the first words appearing in Title 18:
    "(a) Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal."

    The government is not "making this up." Even if you don't like the Grokster standard, or think the Supremes inappropriately expanded existing law by coming up with the inducement standard, the criminal law has covered "inducement" for a long, long time.

    Maybe you don't think the government can show that Mega's management was "willful" or actually intended for criminal infringement to occur. That's certainly what you seem to suggest in this sentence:
    "Instead, the government assumes that if users were willful, but the defendants were not, it can simply use some sort of made up legal transitive property to pretend that they can hang the willful infringement on the defendants."

    The government sure doesn't look like it's assuming that Mega's management can be guilty of criminal copyright infringement just because their users were willful, even if the defendants weren't. Perhaps you're suggesting that the government lacks evidence to show the Mega team was willful. If so, maybe you're right. I don't know. But the case isn't at the point where the government would have to show that, so the fact that we haven't seen enough evidence at this point doesn't really tell us much one way or the other.

     

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      Anonymous Coward, May 31st, 2012 @ 11:26am

      Re:

      the sound of crickets.

      Mike doesn't like to be so clearly wrong.

       

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      DCX2, May 31st, 2012 @ 1:20pm

      Re:

      Mike: "inducement" is certainly not possible under criminal copyright law as it's written today

      AC: "Inducement" has been around in the criminal law a lot longer than the civil "inducement" theory in Grokster.

      Just in case you aren't capable of seeing the difference, I italicized the word of interest. Next time try not to make a straw man; Mike's point was "search the copyright statutes and you see no mention of inducement anywhere".

       

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        Anonymous Coward, May 31st, 2012 @ 10:13pm

        Re: Re:

        If the difference you're pointing to is that Mike's sentence includes the word "copyright," then yes, of course I'm capable of seeing the difference. I take it from your post that you think the inclusion of that word in what Mike wrote is significant, and that you think that pointing out that "induce[ment]" is already part of criminal law as it's written today is somehow a "straw man." Here's why it's not significant: Mike's point wasn't (just) that "inducement" is not part of "criminal copyright law," but that it's not possible to be held criminally liable for "inducement." Here's the full sentence he wrote: "Criminal law -- for hopefully obvious reasons -- has very different standards, and 'inducement' is certainly not possible under criminal copyright law as it's written today." To his credit, Mike goes on to at least touch on "aiding and abetting," but that ignores the fact that the very same part of the law that describes "aiding and abetting" makes it a crime to "induce" another to commit a crime, including a copyright crime. So, you can parse some part of what Mike wrote to make that specific part sound true, but what I was criticizing as bull... - let's use the word "ludicrous" instead - is the Mike's claim that the government is just somehow inventing the idea of criminal inducement out of whole cloth.

        Even if we want to pretend that Mike intended to argue that "criminal copyright law" doesn't permit an inducement theory, even if criminal law does, that doesn't really change my criticism (or make it a "straw man"). If that was Mike's point, then, well, so what? The defendants here are charged (in the same count) with violating both section 2319 (the specific copyright crime) and section 2 (the part that mentions inducement). So even if inducement weren't part of "criminal copyright law" (whatever one means by that), it's still part of the law the Mega team were charged with.

        I think the point that Mike might be reaching for, but perhaps hasn't quite gotten there because he's fresh off reading the Mega lawyers' brief and is quite taken with it, is that "inducement" in the criminal law might not mean exactly the same thing as it does in the Grokster opinion and in civil copyright cases. I, for one, think that's probably right. If the government starts arguing that the court ought to apply the Grokster test to decide if the Mega team is guilty, then that would be a good time to complain. But right now, the Mega team's lawyers are complaining that the government's theory sounds a lot like the Grokster "inducement" theory, and everybody knows that "inducement" is only relevant to civil copyright cases, not criminal ones.

         

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          Karl (profile), Jun 1st, 2012 @ 8:29am

          Re: Re: Re:

          I think the point that Mike might be reaching for [...] is that "inducement" in the criminal law might not mean exactly the same thing as it does in the Grokster opinion and in civil copyright cases. I, for one, think that's probably right.

          (I "ellipsised out" the ad hom attack, just to keep things civil)

          I think it's pretty obvious that this is exactly what Mike said. The part you're referring to is known far and wide as the "aiding and abetting" statute. It has some very clearly delimited rules about who can and cannot be charged with it, and it is completely different from the Grokster "inducement" standard in civil cases.

          And, generally speaking, criminal "inducement" does not apply to copyright cases. How do we know? Because in 2004, Congress considered adding it to the copyright statutes. The bill was called the Induce Act, and it was defeated.

           

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      Anonymous Coward, Jun 8th, 2012 @ 5:51am

      Re:

      Yes - but the word "induce" in CRIMINAL law means something different.

      To "induce" a crime, you must "incentivize" it. That is because to "induce" a crime requires a showing of "persuasion".

      There was no persuasion by Megaupload - so no crime.

       

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    Kenneth Michaels, May 31st, 2012 @ 8:31am

    Substantial non-infringing use as a defense in criminal case

    The article says: "The filing also points out that Megaupload has substantial non-infringing uses, effectively using the Betamax ruling as a defense. I'm not sure this actually applies in the criminal context, but does raise some reasonable questions about whether or not you could even make a legitimate civil case against Megaupload."

    My take is that if secondary liability applies in the criminal context (the government's argument), then defenses to secondary liability would also apply. Substantial non-infringing use is a defense to secondary liability. The filing, for most of it, assumed that the government's arguments were legally and factually correct, for the sake of argument, showing that even then Megaupload should have some of its assets returned.

    So, yes, those defenses may not apply in the criminal context, but then secondary liability would also not apply.

     

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    identicon
    Anonymous Coward, May 31st, 2012 @ 8:33am

    You're such a delusional fucking idiot, Mike. You'd be saying that the government's case looks bad no matter what. Always defending your pirate buddies. You're just a horrible person.

     

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      Dog On a Teflon Floor (profile), May 31st, 2012 @ 8:45am

      Re:

      Anonymous troll is angry. Nobody talk to him until he calms down.

       

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      Glen, May 31st, 2012 @ 8:46am

      Re:

      Seriously, you need to step your trolling game up. You are just going through the motions. We need quality trolls, not wannabee trolls.

       

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      Lowestofthekeys (profile), May 31st, 2012 @ 9:37am

      Re:

      OLD MAN LOWERRRRRRRY

       

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      weneedhelp (profile), May 31st, 2012 @ 11:47am

      Re:

      You're such a delusional fucking idiot, Mike. Says the delusional fucking idiot.

      You ho Mateys away, there'll be treasure and adventure today. He ho here we go together as a team. (Yes, I watch too many kids shows)

      "Always defending your pirate buddies." But cmon pirates are just so freakin cool with the swashbuckling, swords, cannons and such.

      C'mon I know there's an arrrrghhhh in there somewhere.


      You're just a horrible person. (Why dont you just call him out in the school yard after school?)

       

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      The Groove Tiger (profile), May 31st, 2012 @ 11:55am

      Re:

      You're a meanie Mike! I'm gonna tell on you!

       

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      Anonymous Coward, May 31st, 2012 @ 6:41pm

      Re:

      Of course you'd say so; you hate any procedure that gets in the way of guilty before proven innocent.

       

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    Anonymous Coward, May 31st, 2012 @ 8:48am

    " we know that there were a significant number of legitimate users and uses of Megaupload."

    First off, how do you know this? The only things I have seen have been that 90% of users were downloaders only (never uploaded anything). We also have no breakdown of the number of users who purchased a "download pass" to access their own (legal) data. Where are you getting this information from?

    Kimdotcom is not a reliable source, you know. The accused will say anything to escape prosecution, and he is already be prosecuted in the past for lying to authorities.

     

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      DCX2, May 31st, 2012 @ 8:54am

      Re:

      A lot of the mods for games that I play have been hosted on Megaupload. Scripts, too. There have been many times I go looking for a mod, only to find that it was uploaded to Megaupload, and therefore I cannot access it anymore.

      I am personally one of those non-infringing users. And so are the other people that play games with me.

      When I was doing independent software development for a stint, I also used Mediafire to upload my releases. I liked Mediafire's interface better than Mega, personally, but it's all the same thing; file lockers have substantial non-infringing uses, and just because *you* don't use them that way doesn't mean that no one does.

       

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        DCX2, May 31st, 2012 @ 9:03am

        Re: Re:

        Here's one example I managed to find.

        Bananasaurus Rex, one of the very best Portal 2 players in the world (if not the best), compiled a set of scripts that allowed you to change the color of any entity in the game. This is really cool, I wanted to make purple turrets for my fiancee as a surprise.

        Unfortunately...he uploaded his scripts to Megaupload. So now I do not have access to this perfectly 100% non-infringing material. And it is not available anywhere else. I have even contacted Rex but he never replied.

        http://forums.steampowered.com/forums/showpost.php?p=23754259&postcount=33

         

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      Phillip (profile), May 31st, 2012 @ 9:11am

      Re:

      another example:
      many, many, many android roms and their supporting files were hosted on megaupload. If you were a user of the xda forums you've probably downloaded something from megaupload.

      Myself and many many others would get the latest roms and tools from megaupload, and it was great as the developers didn't have to pay for all the bandwidth to host these great community tools.

       

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        Anonymous Coward, May 31st, 2012 @ 9:22am

        Re: Re:

        I am one of those XDA users who was always on Megaupload getting the latest ROMs and various apps and tools the developers were sharing with the rest of us. Free hosting. Quick speeds. In fact, I wrote about a lot of this yesterday in the New Zealand article.

        A ton of great ROMs and tools that are no longer being updated were essentially lost due to this. Which sucks for the community and to say the XDA community is not a significant number of people/non-infringing use is to show complete and total ignorance. (Not aiming that at you, but at the trolls who will, and already have, shown up.)

         

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      Anonymous Coward, May 31st, 2012 @ 10:02am

      Re:

      " we know that there were a significant number of legitimate users and uses of Megaupload."

      "First off, how do you know this? The only things I have seen have been that 90% of users were downloaders only (never uploaded anything). We also have no breakdown of the number of users who purchased a "download pass" to access their own (legal) data. Where are you getting this information from?"

      Kimdotcom is not a reliable source, you know. The accused will say anything to escape prosecution, and he is already be prosecuted in the past for lying to authorities."

      First off, why are you focusing on users downloading, when its clear whats being talked about is users uploading?

      Copyright material, the whole point this whole thing started

       

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      Machin Shin (profile), May 31st, 2012 @ 10:37am

      Re:

      First off, How do you know it was NOT legal. Last I checked we are supposed to be innocent until proven guilty not the other way around.

      Also you point out that 90% of users were downloaders only, What's your point? Just because I downloaded a file from Megaupload without uploading a file does NOT mean it was illegal. You ever heard of open source? A lot of Android roms were hosted there, as were many other types of original content that was free.

      Yes we know Kim is not a reliable source but we also know Hollywood is also not reliable. This whole case stinks and no one is willing to step up and show any real evidence. Instead we have seen plenty of evidence lost or misplaced. We have also seen the government trying to destroy all the evidence on the servers. This is not acceptable.

       

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        ltlw0lf (profile), May 31st, 2012 @ 1:44pm

        Re: Re:

        Also you point out that 90% of users were downloaders only, What's your point?

        I uploaded pictures I took by myself to Megaupload and made available to many folks, for free, to download. I also used Megaupload (and other sites) to store pictures and written documentation (I wrote myself.) These were also placed on Google Docs, but I put them on Megaupload because Google Docs is notorious for "problems" when it comes to sharing documents with people who don't have accounts or who are coming in from foreign sites. Since I was sharing with people all over the world, Megaupload (and the other file lockers) were places where I could put stuff that would be available to anyone.

        Before I started using it myself, I was made aware of it through XDA and android mods (Cyanogenmod and Revolver) and various open source game companies who would use it to share their stuff.

        Anyone who says there wasn't legitimate reasons to use Megaupload is going to have to prove the negative.

         

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      Anonymous Coward, May 31st, 2012 @ 10:46am

      Re: legitimate users

      So, then, AC troll, are you prepared to state that each and every one of the roughly 15,000 Megaupload accounts held by people in the US government and military were all used solely for illegal purposes?

      http://torrentfreak.com/kim-dotcom-us-military-had-15634-megaupload-accounts-120326/

       

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        Anonymous Coward, May 31st, 2012 @ 11:31am

        Re: Re: legitimate users

        Wow.

        No, I am not claiming anything like that. Mike is claiming (and I quote) "a significant number of legitimate users". Do you consider 15,000 out of 50 million (or the KdC puffed up 150 million) users to be significant?

        Also, would you accept the concept that those accounts are likely not government officials, but rather soldiers in the field trading files and what not with loved ones at home? Are you suggesting that these are 15,000 official use accounts?

        Are you that dense?

         

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          Anonymous Coward, May 31st, 2012 @ 11:48am

          Re: Re: Re: legitimate users

          I'm not the one trying to argue that a file storage and collaboration site is inherently illegal. There are plenty of non-infringing uses of a site like Megaupload. Open source developers can use it. People collaborating long distance on audio/video files too large to use email for can use it. People can use it as a convenient way to share their photos and home movies.

          What I want to know is on what kind of logic can claim that Megaupload as a service is illegal, yet UPS or FedEx are not illegal.

           

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          Gwiz (profile), May 31st, 2012 @ 12:52pm

          Re: Re: Re: legitimate users

          Mike is claiming (and I quote) "a significant number of legitimate users". Do you consider 15,000 out of 50 million (or the KdC puffed up 150 million) users to be significant?

          I would say it doesn't matter at all.

          I think the standard put forth in Betamax case should apply here myself:

          ...does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses.... (emphasis mine)

          The Betamax case was about copying broadcast TV. This case involves tons of protected speech like personal writings, code, music & video and should be held to at least this standard, if not higher.

           

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          DCX2, May 31st, 2012 @ 1:31pm

          Re: Re: Re: legitimate users

          Think of the millions of VCRs that were sold. Do you really think that even 10% of them were used for legitimate copying? Isn't it true that probably 90% of the people using VCRs were copying videos that they rented, or shows and movies that were on TV?

          Have YOU ever recorded anything on the VCR that you shouldn't have? I would say there's a better than 50% chance that you did.

          Face the facts, AC. It doesn't matter how many people use Mega for piracy. Mega and other file lockers have substantial non-infringing uses, just like the VCR. There are multiple examples given in the replies to your own post. You and the US Government do not get to decide what I and others may use Megaupload for.

           

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      John Fenderson (profile), May 31st, 2012 @ 3:17pm

      Re:

      First off, how do you know this?


      From the significant number of people who were using it to legally distribute materials who loudly complained when they were harmed.

      The only things I have seen have been that 90% of users were downloaders only (never uploaded anything).


      I don't know why this "most people only downloaded" business keeps being brought up. It's totally without meaning. If absolutely 100% of everything on MU was legal, you'd still find the overwhelming majority of users were download-only.

      Kimdotcom is not a reliable source, you know.


      This is also completely meaningless. It is up to the accusers to prove their case, and as of yet they haven't even produced compelling evidence, let alone anything like proof.

       

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      PaulT (profile), Jun 1st, 2012 @ 1:24am

      Re:

      "The only things I have seen have been that 90% of users were downloaders only (never uploaded anything)."

      Despite your idiot attempts to distort the truth, they were still users and still had legitimate uses for the service, even if it was just to store their own files to be accessed in emergencies that never arose.

      So, by your own words, at least 90% of users were using it legitimately.

      "We also have no breakdown of the number of users who purchased a "download pass" to access their own (legal) data."

      If only your superiors would allow the data to be released instead of hiding the data away from Megauploads lawyers...

       

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        PaulT (profile), Jun 1st, 2012 @ 1:26am

        Re: Re:

        Hmmm, I got a couple of lines mixed up...

        Anyway, let's face it, you are making the stupid assumtpion that anybody who downloaded anything from Megaupload without uploading anything must be a pirate. That's an assumption as foolish as you are...

         

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    Karl (profile), May 31st, 2012 @ 8:50am

    Second one is a must-read

    I just finished reading the second filing, and I think it's a must-read for everyone here, as well as everyone who is interested in copyright law.

    An example. I've argued pretty consistently that the First Amendment makes it unlawful to take protected speech out of circulation when removing unprotected speech. This is pretty clear from numerous cases: Fort Wayne Books, Ashcroft v. ACLU, CDT v. Pappert, and so on.

    The usual trope from the legal trolls is "well, those are obscenity or child pornography, not copyright infringement." They do not ever cite any copyright case that says that taking non-infringing speech out of circulation is perfectly OK, of course. The thing is, I don't have access to PACER, so I haven't been able to look up the majority of copyright cases.

    Well, it turns out (unsurprisingly) that it's not acceptable in copyright cases, either. And this filing cites a number of cases that make this clear: Silverstein v. Penguin Putnam, Abend v. MCA, Bouchat v. Baltimore Ravens, Phelps LLC v. Galloway, New Era v. Henry Holt. I haven't actually hunted down these cases yet; I guess I've got a lot of reading to do.

     

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      Anonymous Coward, May 31st, 2012 @ 9:31am

      Re: Second one is a must-read

      Only if you want to see the actual docket from those cases do you need PACER. See http://scholar.google.com

       

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        Karl (profile), May 31st, 2012 @ 10:16am

        Re: Re: Second one is a must-read

        Only if you want to see the actual docket from those cases do you need PACER.

        It's less a matter of reading the cases, so much as it is finding them in the first place. PACER has a ton of search options that Scholar doesn't. Or so I'm told.

        Plus, a lot of things just aren't up on Scholar yet (mainly lower court cases).

        I'm not knocking Google Scholar, of course; I think it's brilliant. It's just not the same thing, really.

         

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      Jay (profile), May 31st, 2012 @ 9:52am

      Re: Second one is a must-read

      Thank you. But I have to inquire about unprotected speech. Where are the precedents for figuring out what is and is not protected?

       

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        Karl (profile), May 31st, 2012 @ 10:19am

        Re: Re: Second one is a must-read

        Where are the precedents for figuring out what is and is not protected?

        Depends on the type of speech that loses protection. Obviously it would be different for child pornography vs. libel or slander, for example.

         

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      Kenneth Michaels, May 31st, 2012 @ 10:39am

      Re: Second one is a must-read

      The timing of these motions by Megaupload et al. is also great. Not only does the US Government have to respond to the New Zealand order to produce evidence in the next three weeks, but they also have to respond to these two motions filed in the Eastern District of Virginia. The US Government will be very busy in the next few weeks, and will probably stumble and make errors (that would be expected by them in any case it seems).

      Also, if Megaupload et al. lose the motions in Virginia (at least the motion to release money), then this is great evidence that they do not have a chance of a fair trial in the USA. Such evidence can be used in the extradition hearings in August in New Zealand. So, if they don't get the money, they can argue they can't be extradited because they won't get a fair trial. If they get their money, then they will have won the motion in the USA (and maybe even Megaupload could be reborn). Wouldn't that be great if Mega is reborn in such short order, way before anyone would have guessed?!?!?!?

      Again, it is so clear that the US Government's strategy has been to prevent Megaupload et al. from adequately representing themselves. It is sickening, really.

       

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        The eejit (profile), May 31st, 2012 @ 11:19am

        Re: Re: Second one is a must-read

        Remember, Kenneth, Justice is blind.

        That's the key point that the US Government (especially the DoJ) are missing. They're prectiucally guaranteeing a mistrial with their actions, regardless of the merits of the case.

         

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      broca, May 31st, 2012 @ 3:27pm

      Re: Second one is a must-read

      I am kind of surprised. I am trying to follow this case closely but this seems like the first time that Fort Wayne Books has been broached. I think, I would just start screaming this over and over.

      Gov't - We took your stuff and laws broken and charges.
      MU - Fort Wayne Books.

      It seems to apply perfectly to this situation and how illegal this entire thing has been (the government side of things). Can someone explain why this isn't being pushed harder?

       

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        Karl (profile), May 31st, 2012 @ 5:12pm

        Re: Re: Second one is a must-read

        It seems to apply perfectly to this situation and how illegal this entire thing has been (the government side of things). Can someone explain why this isn't being pushed harder?

        It is being pushed, particularly in the Rojadirecta case. Sadly, after more than a year, the court proceedings have not reached a stage where such arguments could even be raised. (It's a long story, I suggest you search around for details.)

        Incidentally, the government's argument is that Arcara v. Cloud Books allows the stifling of free speech when non-protected speech is suppressed. Unfortunately, Arcara doesn't say anything of the sort; it was a case where a bookstore was shut down due to prostitution happening on its premises. Essentially, the government is arguing that the distribution of copyrighted materials is no more "speech" than prostitution.

        It's ridiculous, of course, and the text of Arcara makes it clear that it's ridiculous. That doesn't stop the government (and their apologists here) from making it.

         

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    akp, May 31st, 2012 @ 9:10am

    Mad

    The US gov't is just mad at Kim Dotcom's clever name.

     

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    Anonymous Coward, May 31st, 2012 @ 12:15pm

    Government not functioning

    Clearly the US government is not functioning as intended, and should be removed and replaced. It's broken. Get rid of it.

     

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    Ben (profile), May 31st, 2012 @ 12:42pm

    Commission

    "The Government seeks forfeiture of all of Defendants’ revenue because it has assumed all of the revenue is tainted by crime."

    Plus the Government gets 10% royalty, right?

     

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    Wally (profile), May 31st, 2012 @ 4:33pm

    Just an idea...

    There are two theories I have involving the Megaupload case. The first is sort of what is a common one, the second might be a little hard to wrap around until you think about it.

    1. DOJ is under the pocket of the MPAA....enough said, we've all heard this one.

    2. The US DOJ is so tired of hearing from the MPAA that they are getting their cases botched on purpose by letting the MPAA interpret the laws as they see fit....thereby making the MPAA realize that what they are doing holds absolutely no legal standing. A reverse psychology if you will.

    Number two is a particularly good tactic because it disallows the MPAA the use of their cookie cutter "Their users infringed...it's criminal" every time it is filed. They have been hearing from the MPAA since the days of BetaMax and VCR....You would get annoyed to after 30 years of (please forgive the meme) "They stoled muh buhquit

     

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    TDR, May 31st, 2012 @ 5:42pm

    A Megaupload rebirth would be a fitting end to this saga. I can see it now:

    Legolas Reddit:: Chris Dodd approaches...
    Aragorn Techdirt: Show yourself!
    *A figure steps out of the light — it is Gandalf Megaupload*
    Legolas Reddit: Forgive me. I mistook you for Chris Dodd.
    Gandalf Megaupload: I am Chris Dodd. Or rather, Chris Dodd as he should have been.
    Aragorn Techdirt: You fell!
    Gandalf Megaupload: Through takedowns, and seizures. From the lowest hearing to the highest courtroom I fought the Department of Injustice, until at last I struck down my enemy and smote its ruin upon America.
    Aragorn Techdirt: Megaupload...
    Gandalf Megaupload: Megaupload? Yes... Megaupload. That was my name. Megaupload.
    Gimli Torrentfreak: Megaupload!
    Gandalf Megaupload: I am the new Megaupload. And I come back to you now, at the turn of the tide.

     

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    Anonymous Coward, May 31st, 2012 @ 6:26pm

    MEEEEEEEEEEEEEEEEEEEEEEEEEEEEGA

     

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    That Anonymous Coward (profile), May 31st, 2012 @ 6:49pm

    The circus will be fun.
    I am sure at some point the DoJ will blame the RIAA for not following up their requests for the evidence of the charges they made. Like with dajaz1.
    The amazing contortions they went to to make this case fall together, will come undone and the US will look like idiots once again.

    The cartels will be happy because it "hurt" cyberlockers, which like the VCR, CDs, DVDs can only ever be used to steal from them.
    The country, in the midst of the ZOMG IP Most Valuable Asset dog and pony show, will have made sure that anyone thinking of anything new will make sure they are well the hell out of the US governments reach over fears one of the cartels will decide they are the next target.
    Society will loose again, as tinkerers, modders, coders, etc all lost an easy way to share what they have done with others. How many new ideas were stolen by the Government when they took the servers? How many of them will have lost ground without access to the public?

    All of this was done to keep some cartels stuck in the 1800's happy. How long until the pendulum finally swings the other way, and the public are finally allowed more access to their culture, ideas, thoughts without having to worry that someone somewhere will claim they are owed billions because you recited a story to your child.

    I enjoy seeing the people still desperate to tear down Dotcom, he's fat, he lied, hes an asshole, etc... completely blind to the fact that many of the "supporters" of Dotcom know he isn't the Mother Theresa poster child we would have liked, but if we refuse to stand up to something wrong they want to do to him we are setting ourselves up to face the same sorts of things happening to us. You claim it won't happen, look at the TSA and how what they do has crept, look at the words DHS monitors online... PORK. 2600. Agriculture. Mexican town names. this message has now been flagged to make sure its not some secret terrorist code. (oh hell I did it again). Tyranny is not to be given a pass because the current target "deserved" it, the law is to be fair, even, just... and this case has violated all of those ideals we claim matter in this country.

     

    reply to this | link to this | view in chronology ]


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