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DOJ Argues That Even If Case Against Megaupload Is Dismissed, It Still Can Hold Its Assets

from the well-of-course dept

As the fight over whether or not the US can even charge Megaupload under criminal law continues, the US Justice Department continues to make quite extraordinary claims. If you don't recall, the US filed criminal charges against Megaupload and a bunch of its execs. However, as a US judge noted back in April, under US law it might actually be impossible for the case against Megaupload to proceed, because criminal law requires "serving" the defendant, and the law also says you can only serve companies at their US address. Megaupload is not based in the US and has no US address. The DOJ is trying to tapdance around what the law actually says, but (as Megaupload points out) they can't point to a single real legal citation that supports their position. The DOJ is basically arguing that the law should be what they want it to be... because otherwise the DOJ wouldn't like it very much.

Tim Lee continues his always excellent reporting, by providing some details of the latest court hearings on the matter where the judge definitely seems to recognize that Megaupload may be legally correct:
[Judge O'Grady] noted that the "plain language" of the law required sending notice to the company's address in the United States. "You don't have a location in the United States to mail it to," he said. "It's never had an address" in the United States.
Perhaps even more interesting is the claim by the DOJ that even if the Judge rules against them on this issue, they should still be able to freeze Megaupload's assets, because the cases against the individuals will continue.
Not only that, but the government believes it can continue to freeze Megaupload's assets and paralyze its operations even if the judge grants the motion to dismiss. That's because in the government's view, the assets are the proceeds of criminal activity and the prosecution against founder Kim Dotcom will still be pending. The fact that the assets are in the name of Megaupload rather than its founder is of no consequence, the government claimed.
That's a trickier argument to make, though, not a totally crazy one. It's more or less based on the same controversial theory under which the Justice Department seizes and forfeits things like hip hop blogs because someone might possibly get some infringing music from them. But here it's even more complex, because there is supposed to be a separation between the corporation as an entity and the execs who work there as entities. It's part of the reason why "limited liability" corporations exist. There are, of course, ways to get past that, but the government would need to make that case, and they may have a hard time doing so. Either way, it does appear that they're legitimately worried about this rather massive error on their part in bringing the case.

Perhaps, next time, the DOJ won't rush into highly questionable lawsuits just because the MPAA is upset about a website.


Reader Comments (rss)

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  1.  
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    Jacob Blaustein, Jul 27th, 2012 @ 2:13pm

    Wow the DOJ is really failling here aren't they?

     

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    pixelpusher220 (profile), Jul 27th, 2012 @ 2:16pm

    "Perhaps, next time, the DOJ won't rush into highly questionable lawsuits just because the MPAA is upset about a website."

    Ha ha ha ha ha ha ha ha ha...

    thanks I needed the laugh :)

     

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  3.  
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    gorehound (profile), Jul 27th, 2012 @ 2:41pm

    F-You DOJ
    Nothing but a corrupt piece of sh#t Government.
    Please Boycott Big Content and not let them into your Wallet.
    Buy & Support Local Art and INDIE Art.

     

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  4. This comment has been flagged by the community. Click here to show it
     
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    Anonymous Coward, Jul 27th, 2012 @ 2:52pm

    Once Obama is re-elected ...

    he won't need to suck zionist dick for sheckels any more.

     

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  5.  
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    Hephaestus (profile), Jul 27th, 2012 @ 2:54pm

    Day 65 - Showing film frame # 65 - Notes : Trains front headlight slightly cracked. Front wheel coming off track slightly.

    I love a good slow mo train wreck. ;)

     

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  6.  
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    Anonymous Coward, Jul 27th, 2012 @ 2:55pm

    The DOJ is getting desperate I see.

     

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  7.  
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    Anonymous Coward, Jul 27th, 2012 @ 2:55pm

    perhaps next time, instead of bending over and taking up the arse, the DoJ or whichever other law enforcement agency decides to do what is asked of them simply because the boss is friends of the boss of the other, will keep out of it and let a private organisation file the charges and issue court proceedings itself. if it then fails, the US doesn't look like prats, just the idiots in the particular selfish, shit scared of the future, industry itself!

     

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  8.  
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    gnudist, Jul 27th, 2012 @ 3:02pm

    Re: Once Obama is re-elected ...

    Fuck you anti-semite asshole.

     

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  9.  
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    Anonymous Coward, Jul 27th, 2012 @ 3:12pm

    If Megaupload ever comes back, I just hope they change the design theme from green to blue.

     

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  10.  
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    Anonymous Coward, Jul 27th, 2012 @ 3:13pm

    Re:

    I mean blue is really cool.

     

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  11.  
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    Christopher (profile), Jul 27th, 2012 @ 3:17pm

    Re: Once Obama is re-elected ...

    I think that is more Ex-President Bush who did that.

     

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  12.  
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    Anonymous Coward, Jul 27th, 2012 @ 3:32pm

    seems one thing hasn't changed. the US still thinks it rules the world and can do whatever it wants, to whomever it wants, wherever it wants regardless. i wonder how much longer the world is going to put up with this attitude and what steps will be taken to correct it?

     

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    Anonymous Coward, Jul 27th, 2012 @ 3:47pm

    Funny how neither Mike Masnick nor Tim Lee are reporting on the argument the government is putting forth that will actually permit service of process on Megaupload Ltd.'s agent for service of process in Virginia. As neither of them cares to admit or to report, the government has argued (quite soundly I should add) that the Clerk of the Commission was deemed to be Megaupload's agent for service of process (complete with mailing address in the district) by operation of Virginia state corporate law when Megaupload Ltd. transacted business in Virginia.

    There is no silly loophole where foreign corporations can transact business in a state free from criminal prosecution. It's hilarious that you guys are basically buying Megaupload's argument that they can violate U.S. criminal law without repercussions by simply neglecting to establish a mailing address. I mean, didn't that sound too good to be true? But yeah, milk this whole thing for all it's worth while you can, and take Megaupload's side no matter what. Make Megaupload look great and the government look dumb. Can't wait to see the looks on your faces when O'Grady denies the motion, though.

     

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    Anonymous Coward, Jul 27th, 2012 @ 3:50pm

    Have the attorneys pay the attorney fees

    I hope that the judge awards attorney fees to punish the DOJ for intentionally acting stupid. Furthermore, to prevent this from happening in the future, the US attorneys responsible (plus their supervisors?) should have their wages garnished to pay those fees, rather than having us taxpayers stuck with the bill.

     

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    Anonymous Coward, Jul 27th, 2012 @ 3:54pm

    well

    the sad part is that even though everyone sees how wrong this is, nobody or anyone is doing anything but complain on forums...

     

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  16.  
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    Stuart, Jul 27th, 2012 @ 4:12pm

    Re:

    Maybe if Holder spent more time prosecuting himself and the USTR he would not have the time to start cases like this.

     

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  17.  
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    Anonymous Coward, Jul 27th, 2012 @ 4:14pm

    As a neutral party I offer myself to hold the assets.

     

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  18.  
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    Anonymous Coward, Jul 27th, 2012 @ 4:14pm

    Re:

    Umm...I violate US law all the time when I'm outside the country, and have never answered for it within the States. That's possible because the US, you see, isn't the ruler of the world just because it says so...

     

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  19.  
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    Anonymous Coward, Jul 27th, 2012 @ 4:29pm

    Perhaps, next time, the DOJ won't rush into highly questionable lawsuits just because the MPAA is upset about a website.

    Of course they will, and they'll do it for the same reason they are trying to argue they can hold MegaUpload's assetts regardless of whether they can charge MegaUpload or not.

    They'll do it because their corporate paymasters have no legal means to shut the company down, and its pockets are to deep for them to keep tied up in court until they go bankrupt. It's the last resort of an industry trying to cut out any form of competition.

     

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  20.  
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    saulgoode (profile), Jul 27th, 2012 @ 4:31pm

    Re:

    Funny how neither Mike Masnick nor Tim Lee are reporting on the argument the government is putting forth that will actually permit service of process on Megaupload Ltd.'s agent for service of process in Virginia.
    That argument only addresses the first sentence of Federal Rules of Criminal Procedure 4(c)(3)(C):
    A summons is served on an organization by delivering a copy to an officer, to a managing or general agent, or to another agent appointed or legally authorized to receive service of process.

    It does not fulfill the second sentence's stipulation:
    A copy must also be mailed to the organization's last known address within the district or to its principal place of business elsewhere in the United States.

     

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  21.  
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    Anonymous Coward, Jul 27th, 2012 @ 4:33pm

    Re: Re:

    If you are a foreign corporation transacting business in Virginia, like Megaupload Ltd. did, then you would have, by operation of law, selected the Clerk of the Commission to be your agent for service of process. See e.g., http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+13.1-757 ("A foreign corporation may not transact business in the Commonwealth until it obtains a certificate of authority from the Commission."); http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+13.1-758 ("If any foreign corporation transacts business in the Commonwealth without a certificate of authority, it shall by transacting such business be deemed to have thereby appointed the clerk of the Commission its attorney for service of process.").

    Sorry, but idea that foreign corporations can violate U.S. criminal law in Virginia without being able to be prosecuted in Virginia is just laughable on its face. Without knowing the law, that claim should raise serious doubts in all who hear it. And it should come as no surprise whatsoever that Megaupload Ltd. didn't discover some magic get-out-of-court free loophole that no one's ever noticed before. Give me a break. That Mike Masnick and Tim Lee seem to think it's perfectly natural to let foreign corporations who do wrong go punishment-free (so long as Megaupload Ltd. wins the motion, of course) says a lot the pair of them, IMO. You know which side they're rooting for, that's for sure.

     

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  22.  
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    Anonymous Coward, Jul 27th, 2012 @ 4:44pm

    Re:

    The sentiment here seems to be that Megaupload Limited should never have been indicted, even if it resided in the US and all chargeable actions transpired in the US, because Megaupload Limited is not responsible for the acts of its users and because it merely provides a service that is capable of substantial non-infringing uses. Secondary liability, commonplace within our jurisprudence, thusly has no place insofar as websites like Megaupload Limited are concerned.

    It is a fool's errand to predict the outcome of any judicial proceeding, but I must admit that the argument made with respect to Virginia law appears to have merit, and that a summons served upon the Commission may be sufficient to meet the Rule 4 "mailing" requirement. Of course, this presumes that Megaupload Limited engaged in business within Virginia as defined under its statutes.

     

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  23.  
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    Anonymous Coward, Jul 27th, 2012 @ 5:02pm

    Re: Re:

    The argument here is over the second requirement of a mailing address in the U.S., as you point out. When Megaupload Ltd. transacted business in Virginia, it, by operation of law, appointed the Clerk of the Commission as its agent for service of process. [I don't think Megaupload Ltd. is even arguing that the first prong hasn't been satisfied, but I'm not positive.]

    See, e.g., http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+13.1-766 ("Whenever a foreign corporation authorized to transact business in this Commonwealth fails to appoint or maintain a registered agent in this Commonwealth, or whenever its registered agent cannot with reasonable diligence be found at the registered office, then the clerk of the Commission shall be an agent of the corporation upon whom service may be made in accordance with 12.1-19.1.").

    The Clerk of the Commission has a mailing address in the district, so Megaupload Ltd.'s "last known address within the district" is the address of the Clerk of the Commission, its agent for service of process. The very purpose of the sections of the Virginia Stock Corporation Act that I'm quoting is to prevent a foreign corporation from violating the law in Virginia without a way to serve process on that foreign corporation thereby enabling Virginia courts to execute binding judgments on said foreign corporations. The whole idea that Kim Dotcom figured out some fantastical loophole--and that the "break the internet" crowd is lapping it up--amuses me no end.

     

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  24.  
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    Bengie, Jul 27th, 2012 @ 5:14pm

    Civil

    "the assets are the proceeds of criminal activity"

    Except copyright infringement is a civil issue.

     

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  25.  
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    Anonymous Coward, Jul 27th, 2012 @ 5:19pm

    Re: Re: Re:

    Whom did they pay or receive money from in Virginia? Saying that they have a site anyone in the world can go to and Virginian's went there and violated their state/countries laws is now them doing business in Virginia is a long shot.

    They didn't set up shop in Virginia, Virginians came to them.

     

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  26.  
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    Hephaestus (profile), Jul 27th, 2012 @ 5:26pm

    Re: Re:

    Actually, wasn't their business in Hong Kong and renting servers in the US? With any payment processing done overseas they would not be transacting business in the US but Hong Kong.

     

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  27.  
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    Anonymous Coward, Jul 27th, 2012 @ 5:31pm

    Re: Re: Re: Re:

    Carpathia Hosting. Several thousand dollar a day contract for six years to lease several hundred servers that formed part of the heart of the Megaupload Ltd. business, which was cloud data storage. When Megaupload Ltd. leased servers from Carpathia Hosting in Virginia so that it could use those servers as a key part of its business, it subjected itself to Virginia law. Read the government's brief: http://ia700807.us.archive.org/2/items/gov.uscourts.vaed.275313/gov.uscourts.vaed.275313.117.0.pdf

     

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  28.  
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    saulgoode (profile), Jul 27th, 2012 @ 5:45pm

    Re: Re: Re:

    The Clerk of the Commission has a mailing address in the district, so Megaupload Ltd.'s "last known address within the district" is the address of the Clerk of the Commission, its agent for service of process.

    This to me seems a dubious argument, equating the Clerk's address with the business's address. Perhaps the judge will rule that way, I just think the ramifications of allowing it are just as daunting as of not.

    Nonetheless, what's more disconcerting to me than the procedural issues of serving the company, are the leaps in logic that are being argued to prosecute a civil infraction of secondary copyright liability as though it were a criminal act.

     

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  29.  
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    MrWilson, Jul 27th, 2012 @ 5:47pm

    Re:

    Can you cite a statement or ruling by the judge that confirms that he thinks this is a valid argument?

     

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  30.  
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    Anonymous Coward, Jul 27th, 2012 @ 6:08pm

    Re: Re: Re: Re:

    Dubious? The entire purpose and point of those sections from the Virginia Stock Corporation Act that I quoted are to make it so that a foreign corporation transacting business in Virginia can be served with process therein. Otherwise foreign corporations could do what Megaupload Ltd. is claiming they can do--transact business in Virginia yet be immune from prosecution there. The law doesn't work that way, for obvious reasons.

     

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  31.  
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    Anonymous Coward, Jul 27th, 2012 @ 6:14pm

    Re:

    There's no silly loop hole but a deliberate limit on jurisdiction and one that deliberately differs from the jurisdictional boundaries of civil courts.

    There's a good reason for that. Ask Cuba what an economy isolated from international trade is like and ask how many non-US people would do business with the US if they were brought to believe they might then be answerable to US criminal law despite never having left their homes.

    This is how far the DoJ will go to advance the interests of the government's cronies. They'll happily turn the US into the next Cuba in terms of international trade just to give the paymaster overlords what they want in the short term.

     

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  32.  
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    Anonymous Coward, Jul 27th, 2012 @ 6:17pm

    Re: Re:

    The transacting business test in Virginia for purposes of substituted service is quite broad--to the limits of the Due Process Clause if I'm understanding the law correctly.

     

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    stryx (profile), Jul 27th, 2012 @ 6:20pm

    the government believes it can continue to freeze Megaupload's assets and paralyze its operations even if the judge grants the motion to dismiss. That's because in the government's view, the assets are the proceeds of criminal activity and the prosecution against founder Kim Dotcom will still be pending.

    I don't know why you doubt this theory. I mean, it's the same one they used to put John Corzine in jail and froze all his assets and seized all his computers and business equipment, because MF Global stole 1.6 billion US dollars. From an office in the US. From US customers.

    Exactly like that.

     

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  34.  
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    Anonymous Coward, Jul 27th, 2012 @ 6:23pm

    Re: Re: Re: Re: Re:

    You've got that backwards.

    For obvious reasons, to do with the economic well being of the US and the undesirability of being shunned by the international trade community, the lawmakers decided that the US would not impose federal criminal law on anyone in the world who happened to have a transaction with someone in the US.

     

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  35.  
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    T.T. Joseph (profile), Jul 27th, 2012 @ 6:53pm

    Re:

    Tell your story walking to fox news or any other bullshit Murdock News outlets they are the perfect place to put your bullshit comment not that you would understand this but for what its worth you don't hang some one before he receives a proper trial and before that proper trial begins you provide complete disclosure of all prosecution evidence to the defendant so a proper defense can be developed and before all this happens a need to follow all proper legal procedures to obtain that evidence must be strictly followed they have been purposely written into our legal system to provide a safe guard against the DOJ's dangerous and legal deviants and criminals

     

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  36.  
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    Anonymous Coward, Jul 27th, 2012 @ 7:05pm

    Re: Re:

    States can create conditions for foreign corporations doing business therein, such as the Virginia statute that appoints the Clerk of the Commission as a foreign corporation's agent for service of process if that corporation fails to appoint an agent itself. As the Supreme Court stated almost eight decades ago:
    The state need not have admitted the corporation to do business within its borders. Admission might be conditioned upon the requirement of substituted service upon a person to be designated either by the corporation, or by the state itself, or might, as here, be upon the terms that if the corporation had failed to appoint or maintain an agent service should be made upon a state officer. *** It has repeatedly been said that qualification of a foreign corporation in accordance with the statutes permitting its entry into the state constitutes an assent on its part to all the reasonable conditions imposed.
    State of Washington v. Superior Court of State of Washington, 289 U.S. 361, 364-65 (1933).

    As far as I know, all states and the Model Business Corporations Act have similar provisions. The whole point of these provisions is to make it so that foreign corporations that do business in or cause injury in a state can be brought to justice in that state.

     

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  37.  
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    Anonymous Coward, Jul 27th, 2012 @ 7:12pm

    Re: Re: Re: Re: Re: Re:

    It is well-settled that foreign corporations transacting business in the U.S. are subject to U.S. law and binding judgments can be entered against them--only limited by the Due Process Clause. To argue otherwise is beyond silly.

     

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  38.  
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    Anonymous Coward, Jul 27th, 2012 @ 7:17pm

    Re: Re:

    So you think Congress wants to let foreign corporations that transact business within the U.S. to be immune to U.S. criminal laws? That's just laughable on its face. And the fact that each state permits substituted service on foreign corporations that transact business therein says that common sense wins again.

     

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  39.  
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    Anonymous Coward, Jul 27th, 2012 @ 7:48pm

    Re: Re: Re: Re: Re:

    Carpatia is subject to Virgina law Megaupload is not.

     

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  40.  
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    Anonymous Coward, Jul 27th, 2012 @ 7:50pm

    Re: Re: Re: Re: Re:

    Carpatia is a service provider, that is providing a service for a foreign company, if your BS was true every American enterprise out there would have to submit to all the laws in the world and that is just laughable, can you imagine having to fallow Chinese law inside the US because you have rented servers in China?

     

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  41.  
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    Anonymous Coward, Jul 27th, 2012 @ 7:52pm

    Re: Re: Re: Re: Re:

    Further if that BS you are talking was true, thousands of companies right now would stop doing business with American service providers ASAP since they cannot fallow all American laws.

    That is a multi billion dollar market in services that you are talking about, probably bigger than any IP BS you want to throw at it.

     

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  42.  
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    Anonymous Coward, Jul 27th, 2012 @ 7:59pm

    Re: Re: Re: Re: Re: Re: Re:

    LoL

    Says you, if a foreign country doesn't want to acknowledge those laws what is the US going to do?
    Threaten economic sanctions?
    China, India, Russia and Brazil are waiting with open arms those rejected by the US.

    This is not the 80's dude.

     

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  43.  
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    saulgoode (profile), Jul 27th, 2012 @ 8:04pm

    Re: Re: Re: Re: Re:

    Dubious? The entire purpose and point of those sections from the Virginia Stock Corporation Act that I quoted are to make it so that a foreign corporation transacting business in Virginia can be served with process therein.
    Yes, dubious -- because whatever the "entire purpose and point of" a particular state's statutes may be, state law does not have the authority to contravene Federal law (to my non-lawyerly knowledge).

     

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  44.  
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    Anonymous Coward, Jul 27th, 2012 @ 8:14pm

    Re: Re: Re:

    https://en.wikipedia.org/wiki/Forum_non_conveniens



    On June 27, 2011, the Supreme Court of the United States issued opinions in Goodyear Luxembourg Tires v. Brown, 564 U.S. ___[1], [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law] and J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. [enhanced version / unenhanced version ] ___[2]. Both cases explored limits on the exercise of personal jurisdiction over foreign companies.

    In Goodyear, the Court addressed whether "foreign subsidiaries of a United States parent corporation [are] amenable to suit in state court on claims unrelated to any activity of the subsidiaries in the forum state." The Court concluded that the Goodyear foreign subsidiary petitioners are not amenable to suit in North Carolina.

    In Nicastro, the Court considered the question of whether J. McIntyre Machinery, Ltd. (J. McIntyre), a UK company, is subject to the jurisdiction of New Jersey courts when J. McIntyre did not market goods in New Jersey or ship them there. A divided Supreme Court ruled that J. McIntyre is not subject to the jurisdiction of New Jersey Courts.

    http://www.lexisnexis.com/community/international-foreignlaw/blogs/internationalandforeignl awblog/archive/2011/07/07/supreme-court-rules-on-exercise-of-personal-jurisdiction-over-foreign-comp anies.aspx

    In their analysis of general jurisdiction, the North Carolina courts relied on the petitioners' placement of tires in the "stream of commerce." The Supreme Court, however, explained that the "[f]low of a manufacturer's products into the forum . . . may bolster an affiliation germane to specific jurisdiction . . . But ties serving to bolster the exercise of specific jurisdiction do not warrant a determination that, based on those ties, the forum has general jurisdiction over a defendant."


    And there goes your BS in flames.

     

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  45.  
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    Anonymous Coward, Jul 27th, 2012 @ 8:27pm

    Re: Re: Re:

    The Court seems unlikely to allow jurisdiction to be exercised over small and medium-sized foreign companies whose products merely end up in the U.S. through American distributors. The Court will likely require some additional purposeful conduct showing the intent to sell products in this country such as visits to American trade shows as well as minimum contacts with the desired forum state.
    .
    .
    .
    Similarly, the Court is unlikely to allow jurisdiction over a foreign company just because its parent company is located in the U.S. if the foreign company has not conducted any activities here. The justices appear concerned that allowing jurisdiction over a broad range of cases would lead other countries to reciprocate by aggressively asserting jurisdiction over American companies as well, which Justice Scalia called a little scary.

    http://blog.ceb.com/2011/03/30/hauling-foreign-corporations-into-american-courts-in-the-21s t-century/

    Lets recap this, Megaupload has no representation in the US the only link to the US is a service provider that sold their services to Megaupload, and there is along history of the supreme court rejecting such claims because of reciprocity issues.

    So lets be clear here, you are screwed.

     

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  46.  
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    Anonymous Coward, Jul 27th, 2012 @ 8:32pm

    Re: Re: Re:

    Laughable is the concept that the US can claim jurisdiction over a foreign company just because they used an American service provider, without no subsidiaries in American soil doing business there, this opens the door to reatliation by foreign governments against American companies and that in the words of Mr. Scalia "A bit scary".

     

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  47.  
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    Anonymous Coward, Jul 27th, 2012 @ 8:58pm

    Resources to understand what is happening.

    http://www.ofii.org/policy-issues/legal-a-regulatory-reform/691-personal-jurisdiction- over-foreign-manufacturers.html
    https://en.wikipedia.org/wiki/Personal_jurisdiction_in_Internet_cas es_in_the_United_States

    https://en.wikipedia.org/wiki/Personal_jurisdiction
    https://en.wikipedia .org/wiki/Minimum_contacts

    Commercial activities

    Merely placing products in the "stream of commerce" is insufficient to provide minimum contacts with the states where the products end up. The defendant must make an effort to market in the forum state or otherwise purposefully avail himself of the resources of that state.[8] However, since only four of the nine Supreme Court Justices joined the opinion that required a defendant to do more than place his products in a "stream of commerce," some lower courts still rule that doing so is adequate for a court to exercise personal jurisdiction.

    Claims arising from the tort of defamation are treated by a different standard.[9]

    https://en.wikipedia.org/wiki/Minimum_contacts

    https://en.wikipedia.org/wiki/Subjec t_matter_jurisdiction
    https://en.wikipedia.org/wiki/In_rem_jurisdiction

     

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  48.  
    identicon
    Anonymous Coward, Jul 27th, 2012 @ 9:42pm

    Re: Re: Re:

    Are you seriously making the argument that if you buy something from a foreign country, all their laws apply to you and they can extradite you to stand trial for a violating a would even be considered a 'novel' interpretation of criminal law domestically?

    Because that's what it looks like right now.

     

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  49.  
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    Rikuo (profile), Jul 27th, 2012 @ 11:26pm

    Re: Re: Re:

    I doubt you'll see this, but as a non-US person, even I can see the fail in your argument. What you're arguing for is that Megaupload is subject to Virginia STATE law. What has happened to them is the Department of Justice, a FEDERAL body, has decided to try and prosecute them. Thus, they fall under the rules of FEDERAL law, not STATE.

     

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  50.  
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    Chargone (profile), Jul 27th, 2012 @ 11:26pm

    Re: Re:

    ... my experience with Megaupload has been distinctly orange....

     

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  51.  
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    PaulT (profile), Jul 27th, 2012 @ 11:53pm

    Re: Re: Re: Re: Re: Re:

    It's amazing, isn't it? He's so obsessed with attacking Megaupload and trying to use "the law" to prove Mike wrong, he's incapable of thinking his argument all the way through. As with all of his arguments, he's actually trying to argue for "protection" that would in reality destroy American business, just because he doesn't like that a few people are involved in piracy. The smug "I'm right you're wrong" attitude is topped only by the magnitude of his stupidity.

     

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  52.  
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    The eejit (profile), Jul 28th, 2012 @ 1:28am

    Re: Re: Re: Re: Re: Re: Re:

    So you're arguing that Micrsoft should be held to Chinese law? Or Russian law?

    This sword cuts both ways.

     

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  53.  
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    The eejit (profile), Jul 28th, 2012 @ 1:32am

    Re: Re: Re:

    Unless the acts werre committed on U.S soil directly, YES. Because then the USD sets a precedent that would mean that, say, George W. Bush Jr. and Tony Blair could then copnceivably be brought to justice in IUraq and Afghanistan. After all, they were ultimately responsible for many hundreds of thousands of "unlawful" deaths there.

     

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  54.  
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    The eejit (profile), Jul 28th, 2012 @ 1:34am

    Re:

    Except it's not. Now, the money that's hel din US accounts? Sure thing. The Servers? Sure, provided that the defense team has exactly the same level of access.

    But not everything. Because MU is a non-US company.

     

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  55.  
    identicon
    Anonymous Coward, Jul 28th, 2012 @ 2:10am

    Re:

    have you actually read the motion and MU's rebuttal motion? and have you any idea of private international law and issues of jurisdiction? seems not...that argument has been comprehensively taken apart by the rebuttal, and there are very good reasons why the language of the law is so plain. i has to do wih protection for US companies operating abroad, since these things work on the principle of repciprocity. BTW, using emotive language desn't make your argument more persuasive, you know..

     

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  56.  
    identicon
    6, Jul 28th, 2012 @ 5:49am

    Re: Re: Re:

    Your argument presumes a lot that you aren't bringing up brosensky.

    Your argument presumes that they are "conducting business" in VA so far as the statute is concerned. That is far from being shown.

    Your argument presumes that Mega was in violation of VA law all along by failing to register. Thousands of other internet companies would also supposedly be subject to this if this were the case, there is no indication that either Mega or those other thousands of internet corps are.

    Your argument also presumes that congress did not intentionally not want the US government to have jurisdiction over foreign corporations, thus inviting the rest of the world to grant themselves jurisdiction over our US corps. There is no sign that this took place. Indeed, the legislative history shows the opposite.

    It is not "loophole" it is simply the government noting the limits of its own court system's jurisdiction.

     

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  57.  
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    6, Jul 28th, 2012 @ 5:55am

    Re: Re: Re:

    In other words the argument is that the government can avoid meeting the actual wording of a federal rule of civil procedure by trying to serve someone other than who it calls for.

    Yeah gl with that one bro.

    Mike mentioned it already. Giving it more than a mention is giving that frivolous argument more attention than it deserves.

     

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  58.  
    identicon
    6, Jul 28th, 2012 @ 5:55am

    Re: Re: Re: Re:

    Sorry, federal rules of criminal procedure.

     

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  59.  
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    6, Jul 28th, 2012 @ 5:57am

    Re: Re: Re: Re: Re: Re: Re:

    If they have been properly served.

     

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  60.  
    identicon
    Anonymous Coward, Jul 28th, 2012 @ 7:14am

    Re: Re: Re:

    You are afraid Megaupload will pull a Roman Polanski?

     

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  61.  
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    Anonymous Coward, Jul 28th, 2012 @ 8:06am

    Re: Re: Re: Re: Re: Re: Re: Re:

    6,

    Obviously, Megaupload and the DOJ have presented their arguments in briefs to the District Court, and argued their respective positions before the court yesterday, July 27th.

    Much is made by Megaupload that it does not have a Virginia mailing address. The proper resolution of this matter is anything but clear. While this case arises where the FRCP appear to govern, this does not necessarily mean that resort cannot be had in part to state law. One will have to await the court's decision on the motion to see how this issue is answered.

    Of course, a condition predicate should state law be decided as relevant is the matter of "conducting business in the state". How nice it would be if the contracts between Megaupload and the "server renters" were avaliable for perusal. Their "choice of law" provisions would prove quite interesting since, almost invariably, the service providers' terms and conditions recite provisions in their favor, and not that of the "renters". Granted, contracts are civil matters, but it is not at all unusual for federal courts to look to state law where federal case law is not well developed.

    Long ago I was quoted in an article at Patently-O that "predictions are the musings of fools", a lesson I learned many, many years ago. This quote follows from the very first lesson I learned when I began my practice of law, namely, the one should never get drunk on his own wine. An argument may be outstanding, but that alone does not mean that a court will find it compelling and determinant of the eventual outcome.

    Thus, the most that can be said at this point is the case is now before the court for a decision, and all must now await that decision. My prediction? I hew to my earlier quote and await its promulgation.

     

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  62.  
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    Anonymous Coward, Jul 28th, 2012 @ 8:51am

    Re: Re: Re: Re: Re: Re:

    Carpatia is a service provider, that is providing a service for a foreign company, if your BS was true every American enterprise out there would have to submit to all the laws in the world and that is just laughable, can you imagine having to fallow Chinese law inside the US because you have rented servers in China?

    If you leased hundreds of servers in China as a key component of your online data storage business, you think that you wouldn't be subject to Chinese law? Good luck with that.

     

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  63.  
    identicon
    Anonymous Coward, Jul 28th, 2012 @ 9:06am

    Re: Re: Re: Re: Re: Re:

    Yes, dubious -- because whatever the "entire purpose and point of" a particular state's statutes may be, state law does not have the authority to contravene Federal law (to my non-lawyerly knowledge).

    Corporate law is state law. There is no federal law that preempts the state law. Two issues here. On the one hand, you have a federal court with federal question jurisdiction. This means that the Federal Rules of Criminal Procedure control the procedural issues. For example, Rule 4 requires mailing the summons to the last known address in the district (or principal place of business in the U.S.). That federal rule is controlling. But the issue of who is the agent for service of process of a foreign corporation in a given state turns on that state's substantive corporate law. Corporations and corporate law are creatures of state law. Every state decides for itself whether foreign corporations may transact business within that state, and if so, what conditions of conducting such business will be.

     

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  64.  
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    Anonymous Coward, Jul 28th, 2012 @ 10:03am

    Re: Re: Re: Re: Re: Re: Re:

    Article VI, Clause 2 (Supremacy Clause) says that the Constitution and Federal law always preempts state law.

    The case hangs on the on specific personal jurisdiction, where Megaupload councel correctly pointed out that there are no jurisdiction which even the Judge O'Grady noted that the plain language of the law required sending notice to the company address in the United States and fallowed by "You don't have a location in the United States to mail it to".

    Allowing to create a proxy by using business relationships seems sneaky and unethical.


    Further as Megaupload counsel noted most of the DOJ has not satisfied any of the rules of criminal procedure, and most of the precedents presented where mostly civil cases that have different rules and involving the serving of a corporate parent via its subsidiary, which is not the same thing as vendor-customer relantionship between Megaupload and Carpathia.

    The DOJ also hinted that it is willing to forgo due process and keep Megaupload in legal limbo. It believes that since the law doesn't specify a time limit for service it basically can hold assets and keep the indictment forever, which I am sure violates procedural due process as granted by the American constitution by the 5th and 14th Amendments.

     

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  65.  
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    Anonymous Coward, Jul 28th, 2012 @ 10:09am

    Re: Re: Re: Re: Re: Re: Re:

    What you believe the US would allow anybody to deport US CEO's to be tried in China?
    Seize and freeze all assets of American companies and send it to China?

    Good luck with that.

    You do understand that setting this precedent affects all service providers which include bankers, telecoms, studios, labels and so forth.

    Did the DOJ manage to get a hold of Roman Polanski yet?
    What is the hold up? or the Pirate Bay for that matter.

    The only lesson here appears to be that you do not ever do business inside the US with US companies without using several financial proxies and it is better to use datacenters elsewhere.

     

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  66.  
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    Anonymous Coward, Jul 28th, 2012 @ 10:27am

    Re: Re: Re: Re: Re: Re: Re:

    So the only thing Islamic radicals in Indonesia have to do to get Lady Gaga deported is show that she had a business relationship with any of their companies?

    How about getting American bankers to be deported to Europe and Asia to stand trial for mishandling and poisoning their financial assets?

    I am sure those people broke some law somewhere and they probably have some sort of business relationship with some company or companies.

    This is a can of worms that will explode in the faces of the people who open it.

     

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  67.  
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    Chilly8, Jul 28th, 2012 @ 11:06am

    Asset forfeiture law was meant to be a revenue maker for the US government. I find it absurd that even if a jury finds Dotcom not guilty, they still get to keep his assets.

     

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  68.  
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    Anonymous Coward, Jul 28th, 2012 @ 11:52am

    Re: Re: Re: Re:

    You misunderstand the jurisprudence. The issue here is only service of process. Those cases look at personal jurisdiction, which is a related issue though it's not the exact same issue. Nonetheless, those cases don't apply here for the personal jurisdiction issue.

    The issue in Goodyear was whether the estates of two children who died in a bus crash in France could sue subsidiaries of Goodyear who were located in Luxembourg, Turkey, and France in the courts located in North Carolina. That is not the situation here. The Court held that North Carolina did not have specific jurisdiction to adjudicate the matter because the tire was manufactured and sold abroad and the accident took place abroad. The Court also found that the contacts with North Carolina were not systematic and continuous enough to establish general jurisdiction over the foreign corporate defendants.

    The situation here is a foreign corporation (Megaupload Ltd.) transacting business directly in Virginia. The contacts with Virginia are direct. The jurisdiction sought is specific, not general, since the liabilities arise directly from the contacts. The Goodyear case simply does not apply here.

    The J. McIntyre case is also distinguishable and inapplicable here. In J. McIntyre, a worker who seriously injured his hand brought a product liability suit against the foreign manufacturer of the machine involved in the accident. The Court held that the foreign corporation did not purposefully direct its conduct at New Jersey so as to allow jurisdiction there. There were insufficient contacts between the foreign corporation and New Jersey so as to permit jurisdiction there.

    The situation with Megaupload Ltd. is different since Megaupload Ltd. did purposefully direct its conduct to Virginia when it entered into multi-year, multi-thousand-dollar-a-day contract in Virginia. This isn't the case of some third party using Megaupload's products in Virginia despite Megaupload Ltd. doing nothing to connect itself to Virginia. Megaupload Ltd. decided to lease key components of its business in Virginia. Totally different fact pattern.

     

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  69.  
    identicon
    Anonymous Coward, Jul 28th, 2012 @ 12:02pm

    Re: Re: Re: Re:

    This isn't the situation where a foreign corporation's product merely ended up in Virginia. Megaupload Ltd. lease hundreds of servers for several years in Virginia to be the backbone of its business. Nor is this a situation where a subsidiary is being sued in the U.S. because its parent is located here.

    I see people are marking your posts as "insightful," but clearly nothing could be further from the truth. Obviously, they like the conclusion you're reaching (Megaupload Ltd. wins!) without any regard to the soundness of your arguments. Such is the norm on Techdirt, I'm afraid. "Smart" arguments are arguments that are good for piracy and bad for copyright. That's one way to approach the world, I suppose.

    Megaupload Ltd. is amenable to service or process and personal jurisdiction in Virginia because it chose to enter into contracts there that made up key parts of its business empire. You can't escape that fact, no matter how many things you pull off the internet that sound good (for Megaupload Ltd., or course) but are actually not relevant here.

     

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  70.  
    identicon
    Anonymous Coward, Jul 28th, 2012 @ 12:04pm

    Re: Re: Re: Re:

    Are you seriously making the argument that if you buy something from a foreign country, all their laws apply to you and they can extradite you to stand trial for a violating a would even be considered a 'novel' interpretation of criminal law domestically?

    Because that's what it looks like right now.


    I'm stating the fact that a foreign corporation that transacts business in the state of Virginia, by operation of law, selects the Clerk of the Commission to be its agent for service of process in Virginia. I've quoted the exact state law at issue, as well as the Supreme Court saying that such laws are indeed constitutional. What have you argued persuasively? Nothing.

     

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  71.  
    identicon
    Anonymous Coward, Jul 28th, 2012 @ 12:12pm

    Re: Re:

    have you actually read the motion and MU's rebuttal motion? and have you any idea of private international law and issues of jurisdiction? seems not...that argument has been comprehensively taken apart by the rebuttal, and there are very good reasons why the language of the law is so plain. i has to do wih protection for US companies operating abroad, since these things work on the principle of repciprocity. BTW, using emotive language desn't make your argument more persuasive, you know..

    I have read them, and I do understand the law. What are you even getting at about private international law. That sounds great and all, but you aren't even making a substantive argument. Megaupload Ltd.'s counterarguments on the service of process issue were not very persuasive. You seem to be doing nothing more than the "backwards thinking" that I have come to expect from the Techdirtians: Whatever's best for Megaupload Ltd. must be the law. In the real world, though, it doesn't work that way. And people who want to discuss the law discuss the actual law, not some make believe version of the law.

     

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  72.  
    identicon
    Anonymous Coward, Jul 28th, 2012 @ 12:34pm

    Re: Re: Re: Re:

    Your argument presumes a lot that you aren't bringing up brosensky.

    Your argument presumes that they are "conducting business" in VA so far as the statute is concerned. That is far from being shown.


    I've read the case law interpreting what it means to transact business in Virginia, and it turns out it means different things in different contexts. In the context of establishing an agent for service of process for a foreign corporation, the inquiry is coextensive with the due process analysis--if it violates due process to establish specific, personal jurisdiction, then the company has not transacted business there (and vice versa). It'd be a lot of work to go back and cite all that, but I invite you to do your own research. Regardless, I think the server leases easily give Virginia specific, personal jurisdiction over Megaupload Ltd. since that business contact is crucial to Megaupload Ltd.'s business.

    Your argument also presumes that congress did not intentionally not want the US government to have jurisdiction over foreign corporations, thus inviting the rest of the world to grant themselves jurisdiction over our US corps. There is no sign that this took place. Indeed, the legislative history shows the opposite.

    Megaupload Ltd.'s textual-structural argument on the differences between Rule 4 of the criminal and civil rules was a good argument. Nonetheless, there is a last known address within Virginia for Megaupload Ltd., and it is the address of the Clerk of the Commission. It's silly to argue that the statutory agent of Megaupload Ltd. for service of process is not in fact Megaupload Ltd.'s agent for service of process. Rule 4 is still satisfied. The rule doesn't say the address can't be statutorily created, and as I quoted above, Virginia has such a statute and such statutes are constitutional.

    It is not "loophole" it is simply the government noting the limits of its own court system's jurisdiction.

    Rule 4 was promulgated by people who knew full well that the states have laws creating statutory agents for substituted service of process for foreign corporations. If Congress wanted such state laws to have no effect, it would have said so.

     

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  73.  
    identicon
    Anonymous Coward, Jul 28th, 2012 @ 12:42pm

    Re: Re: Re: Re:

    In other words the argument is that the government can avoid meeting the actual wording of a federal rule of civil procedure by trying to serve someone other than who it calls for.

    Yeah gl with that one bro.

    Mike mentioned it already. Giving it more than a mention is giving that frivolous argument more attention than it deserves.


    Not at all. The Rule says to mail the summons to the last known address in Virginia. Virginia law says that Megaupload Ltd.'s last known address in Virginia is the address of the Clerk of the Commission. The argument is not at all frivolous, and it should come as no surprise that the government didn't open up the states to foreign corporations committing criminal acts in the U.S. without a way to do anything about it. What's frivolous is the argument that foreign corporations can do whatever they want in the U.S. without repercussions.

     

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  74.  
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    Corby (profile), Jul 28th, 2012 @ 3:18pm

    There are other cyberlockers in the world which have infringement on them who are not based on US soil who use servers in the US and charge people etc. to use the service and these cyberlockers have not had the servers terminated and equipment seized etc. and had assets frozen etc. So why are these cyberlockers allowed to continue to operate despite having infringement on the servers and charging people etc. If the US does have jurisdiction to shut down a foreign company that is not based on US soil but simply uses the servers hosted in the US then why haven't they shut down these other cyberlockers and frozen their assets etc?

    It seems that the US is a law to themselves in that they can't play by the rules either considering that the NZ Judge has ruled that the search warrants obtained or given to search Dotcoms home were Illegal because they were too broad and that the seizing and taking away of equipment etc. from the home was also Illegal and that transfering the data from the hard drives and sending the data to the US was also Illegal. If the appeal by the US with regards to the search warrant and search etc. is not overturned and still stands as it is now then any evidence obtained from the hard drives from the search and seizure of Dotcoms home cannot therefore be used as evidence.

     

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  75.  
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    Anonymous Coward, Jul 28th, 2012 @ 3:25pm

    Re: Re: Re: Re: Re:

    Please point to where Megaupload is in any way or shape compelled to register anything in Virginia.

     

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  76.  
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    Anonymous Coward, Jul 28th, 2012 @ 3:28pm

    Re: Re: Re: Re: Re:

    It is not the clerk of the commission because Megaupload is not required to register anything in Virgina and thus doesn't failed to register and thus doesn't get one appointed automatically.

     

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  77.  
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    Anonymous Coward, Jul 28th, 2012 @ 4:15pm

    Re: Re: Re: Re: Re:

    If authorized

    See, e.g., http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+13.1-766 ("Whenever a foreign corporation authorized to transact business in this Commonwealth fails to appoint or maintain a registered agent in this Commonwealth, or whenever its registered agent cannot with reasonable diligence be found at the registered office, then the clerk of the Commission shall be an agent of the corporation upon whom service may be made in accordance with 12.1-19.1.").


    But Megaupload is not an LLC authorized is it?

    13.1-1007. Unlawful to transact or offer to transact business as a limited liability company unless authorized.

    It shall be unlawful for any person to transact business in this Commonwealth as a limited liability company or to offer or advertise to transact business in this Commonwealth as a limited liability company unless the alleged limited liability company is either a domestic liability company or a foreign limited liability company authorized to transact business in this Commonwealth. Any person who violates this section shall be guilty of a Class 1 misdemeanor.

    (1991, c. 168.)


    So it appears that it is illegal to anybody outside the US to contract services with Virginia companies, all entities and persons doing business with Virginia companies should cease immediately their illegal activities.

    Oh that will go well I see.

     

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  78.  
    identicon
    Anonymous Coward, Jul 28th, 2012 @ 4:18pm

    Re: Re: Re: Re: Re:

    Why is Megaupload amenable to service of process?
    It doesn't have a US address, it doesn't conduct its business in the US, it does use a US contractor, but that is it, and it is not even "authorized" to conduct business in Virginia which renders the 13.1-766. Service of process on foreign corporation. part irrelevant since it has no obligation to have a registered agent in Virginia.

     

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  79.  
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    Anonymous Coward, Jul 28th, 2012 @ 4:24pm

    Re: Re: Re: Re: Re:

    The law says nothing of the sort.
    The law says that Megaupload should be served on an US address which Megaupload doesn't have and have no obligations to register an agent on the US since it did not do business in the US depending on how you interpret it and even if it is found to be doing business in the US it makes it an illegal LLC operating in US soil which have no obligations to have an appointed representative because it can't have one since it is an unauthorized entity and thus unable to have a representative.

     

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  80.  
    identicon
    Anonymous Coward, Jul 28th, 2012 @ 4:25pm

    Re: Re: Re: Re: Re:

    Please show when Megaupload became an authorized LLC in the US thus requiring a registered agent.

     

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  81.  
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    Anonymous Coward, Jul 28th, 2012 @ 4:28pm

    Re: Re: Re: Re: Re:

    Can unauthorized LLC's even be able to register an agent or be appointed one?

    Is the clerk of the commission going to be assigned to represent illegal entities now?

    One has to wonder what kind of law is that.

     

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  82.  
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    Anonymous Coward, Jul 28th, 2012 @ 4:38pm

    Re: Re: Re: Re: Re:

    Was Carpathia required to inform Megaupload it had to register anything in Virginia to do business there?

    Oh this will be good.

     

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  83.  
    identicon
    Anonymous Coward, Jul 28th, 2012 @ 5:28pm

    Re: Re: Re: Re: Re: Re:

    Sorry, I see that I quoted the right statute and then the wrong statute. Try this one: "If any foreign corporation transacts business in the Commonwealth without a certificate of authority, it shall by transacting such business be deemed to have thereby appointed the clerk of the Commission its attorney for service of process." http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+13.1-758

     

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  84.  
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    Anonymous Coward, Jul 28th, 2012 @ 6:57pm

    Re: Re: Re: Re: Re: Re: Re:

    Oh I am sorry but the clerk still needs to mail that to an US based address.

    The party seeking service shall recite the statute or other authority pursuant to which process is being served and shall include the mailing address of the defendant in accordance with subsection D or subsection F of this section.

    Is this a joke, there is no address, how will the party seeking service provide the last know address of the defendant?

    2. The principal office address of a foreign corporation authorized to transact business in Virginia, or, if no such address is on record with the Commission, the address of any officer or director of the corporation, or, in case of withdrawal from the Commonwealth, the address shown in the application for withdrawal or any change thereto.

    http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+12.1-19.1

    Maybe the F section?
    F. Whenever the party or bureau or division of the Commission seeking service has knowledge of a defendant's current address which differs from that on record with the Commission he may, and, in the event the Commission does not have a record of the defendant's address he shall, provide the latest known mailing address of the defendant.

    Nope that does not allow it since there is no address in the US on record and there is no known mailing address.

    I see this was a joke right, you got me, I have been trolled.

     

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  85.  
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    Anonymous Coward, Jul 28th, 2012 @ 7:02pm

    Re: Re: Re: Re: Re: Re: Re:

    Are you joking or something, the commission clerk needs an US address to mail the defendant which must be provided by the plaintiff(i.e. the DOJ).

    The party seeking service shall recite the statute or other authority pursuant to which process is being served and shall include the mailing address of the defendant in accordance with subsection D or subsection F of this section.

    http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+12.1-19.1

    What is the US mailing address for Megaupload that the law requires please.

     

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  86.  
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    Anonymous Coward, Jul 28th, 2012 @ 7:10pm

    Re: Re: Re: Re: Re: Re: Re: Re:

    Those laws in Virginia are hilarious.
    :)

    Good luck finding the "last recorded mail address" for Megaupload.

     

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  87.  
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    MrWilson, Jul 28th, 2012 @ 7:20pm

    Re: Re: Re: Re: Re:

    And regardless of all of your unrelated citations of case history, I'll repeat my question: "Can you cite a statement or ruling by the judge that confirms that he thinks this is a valid argument?"

    All the citations in the world don't help if the judge thinks your theory isn't valid.

     

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  88.  
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    saulgoode (profile), Jul 28th, 2012 @ 8:00pm

    Re: Re: Re: Re: Re: Re: Re:

    There is no federal law that preempts the state law.

    There is the Federal Rules of Criminal Procedure to which I already referred -- and whose scope is:

    Rule (1)(a)(1) These rules govern the procedure in all criminal proceedings in the United States district courts, the United States courts of appeals, and the Supreme Court of the United States.

    Would not such scope encompass the District Court for the Eastern District of Virginia? Would not these rules requiring service to "the organization's last known address within the district or to its principal place of business elsewhere in the United States" pre-empt any stipulation otherwise by the state legislature?

    What you seem to be suggesting is that state legislatures are free to ignore Federal law. If such is the case, I will be glad to lobby my state's government to ignore copyright law altogether.

     

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  89.  
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    Anonymous Coward, Jul 28th, 2012 @ 9:43pm

    Re: Re: Re: Re: Re: Re:

    Your question will be answered when and as the judge issues his decision on Megaupload's motion. He will either accept or reject the argument. Of course, the matter now before the court involves a host of other issues as well, so it seems likely a decision will not issue quickly.

     

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  90.  
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    Anonymous Coward, Jul 29th, 2012 @ 10:18am

    Re: Re: Re: Re: Re: Re: Re: Re:

    The federal rules are controlling on the procedural issues. But on the substantive issue of the identity of the foreign corporation's agent for service of process, there is no federal law that supersedes. There is no federal corporate law. If state law says that by conducting business in Virginia foreign corporations have appointed the Clerk the agent for service of process, then that law controls the issue.

    Each state decides for itself to what extent it wants its courts to have personal jurisdiction over foreign corporations doing business therein up to the limit of the Due Process Clause. What foreign corporations are able to be served in Virginia is a state law issue. Virginia gets to decide that, only limited by due process concerns.

    Federal courts look to state law for issues of personal jurisdiction, since the states can decide to allow personal jurisdiction only over certain defendants. A state can decide that it won't allow the courts therein to have personal jurisdiction over certain defendants, even if it would not violate due process to do so. The courts sitting in Virginia, like the court here, look to state laws on personal jurisdiction issues all the time. The personal jurisdiction of a federal court sitting in Virginia is limited by Virginia law.

     

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  91.  
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    Anonymous Coward, Jul 29th, 2012 @ 10:52am

    Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Now that I think about it, that's not quite right. In general, federal courts exercise personal jurisdiction no broader than that authorized by the long-arm statute of the state the federal court sits in. If process would have been sufficient in a court of general jurisdiction within that state, then process is sufficient is a federal court sitting in that state. The constitutionality of the exercise of personal jurisdiction in the federal court collapses into the analysis for whether the same exercise of jurisdiction in the state courts.

    However, for claims arising under federal law--as the claims against Megaupload Ltd. all do--then the federal courts can even exercise personal jurisdiction over defendants that not even a court of general jurisdiction sitting within the state could do. The personal jurisdiction of a federal court sitting in federal question jurisdiction is only limited by the federal Due Process Clause--and the federal rules.

    The federal rules do require a mailing address in the U.S., so it that sens they do not go as far as the Due Process Clause would allow. But nonetheless, nothing disallows state substantive corporate law from conditioning that a foreign corporation doing business that state constructively names a state officer to be its agent. Fed.R.Crim.P. 4(c)(3)(C) does not say that the last known address has to be actual and not constructive. If Congress wanted to limit the jurisdiction of the federal courts to hear federal criminal matters to only foreign corporations with actual and not constructive addresses in the U.S., Congress knew how to do so. It chose not to place that limitation, and for good reason. Why would Congress want to create a loophole like that?

    Lots of foreign corporations operate in the U.S. without properly registering in the states they operate in. Lots of foreign corporations have constructive mailing addresses for the very purpose of mailing process to. It makes no sense to argue that these constructive mailing addresses that exist for the very purpose of delivering process to foreign corporations doing business in the states are not mailing addresses that can be used to mail process.

    You guys seem all too willing to go to great and fantastical lengths to protect Megaupload Ltd.

     

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  92.  
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    Anonymous Coward, Jul 29th, 2012 @ 3:39pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    You think wrong, federal law supersedes state law, there is no contest about that.

    More federal cases can use state laws when they apply and do not conflict with federal regulations which in this case does, federal law requires an US address and even if Virgina state law was used the Clerk must have an address and that address according to federal law must be an US one.

     

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  93.  
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    Anonymous Coward, Jul 29th, 2012 @ 3:42pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    About making sense, it doesn't need to make sense, is the law courts are bound by the letter of the law, not but what should be or could be.

     

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  94.  
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    Anonymous Coward, Jul 29th, 2012 @ 5:21pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    The Clerk of the Commission has a mailing address in Virginia, naturally. Shall I google the address for ya?

     

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  95.  
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    Anonymous Coward, Jul 29th, 2012 @ 5:51pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

     

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  96.  
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    Amazing Sammy, Jul 29th, 2012 @ 7:50pm

    Accountability?

    Is it wrong to ask who the Justice Department is accountable to? I like Obama, in general, but his Justice Department has been a damn joke. There's this, the hip hop blog, the gun running thing, and the fact that the DOJ is now responsible for more terrorist plots than actual terrorists. Are the lights even on in the office of whoever it is that is supposed to be in charge?

     

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  97.  
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    Anonymous Coward, Jul 29th, 2012 @ 8:31pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Not what the law says little fellow.

    The party seeking service shall recite the statute or other authority pursuant to which process is being served and shall include the mailing address of the defendant in accordance with subsection D or subsection F of this section.
    http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+12.1-19.1

    See there to make the Clerk an agent for the defendant the plaintiff must provide an address so the Clerk can mail the defendant and according to federal regulation it must be a US address.

    Please where is that address for Megaupload again?

     

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  98.  
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    Anonymous Coward, Jul 30th, 2012 @ 3:56am

    Re: Re: Re: Re: Re: Re: Re:

    If you are right then an 18 year old buying something from a US website while lawfully drinking a beer in their own country is violating US law and can be extradited to face charges for that?

     

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  99.  
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    Anonymous Coward, Jul 30th, 2012 @ 4:09am

    Re: Re: Re:

    I think congress wants a threshold before a business can be considered to be within US criminal jurisdiction, hence the reason why they made that jurisdiction deliberately less broad than civil jurisdiction.

    Is it your veiw that this was an oversight on Congress' part? That they had it together when formulating civil jurisdiction then lost the plot when it came to formulating criminal jurisdiction?

     

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  100.  
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    Anonymous Coward, Jul 30th, 2012 @ 4:57am

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Not what the law says little fellow.

    The party seeking service shall recite the statute or other authority pursuant to which process is being served and shall include the mailing address of the defendant in accordance with subsection D or subsection F of this section.

    http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+12.1-19.1

    See there to make the Clerk an agent for the defendant the plaintiff must provide an address so the Clerk can mail the defendant and according to federal regulation it must be a US address.

    Please where is that address for Megaupload again?


    13.1-758 establishes that when Megaupload Ltd. transacted business in Virginia, the Clerk was deemed to be its agent for service of process. That is a substantive issue: it identifies who is the agent for service of process for a foreign corporation doing business in Virginia.

    13.1-19.1 does not apply to Megaupload Ltd. since it is a procedural rule on how to effect service on said agent. Here, Rule 4 of the Federal Rules of Criminal Procedure control, not 13.1-19.1 (which is state procedural law).

    Nice try though!

     

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  101.  
    identicon
    Anonymous Coward, Jul 30th, 2012 @ 5:08am

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Not what the law says little fellow.

    The party seeking service shall recite the statute or other authority pursuant to which process is being served and shall include the mailing address of the defendant in accordance with subsection D or subsection F of this section.

    http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+12.1-19.1

    See there to make the Clerk an agent for the defendant the plaintiff must provide an address so the Clerk can mail the defendant and according to federal regulation it must be a US address.

    Please where is that address for Megaupload again?


    13.1-758 establishes that when Megaupload Ltd. transacted business in Virginia, the Clerk was deemed to be its agent for service of process. That is a substantive issue: it identifies who is the agent for service of process for a foreign corporation doing business in Virginia.

    13.1-19.1 does not apply to Megaupload Ltd. since it is a procedural rule on how to effect service on said agent. Here, Rule 4 of the Federal Rules of Criminal Procedure control, not 13.1-19.1 (which is state procedural law on how to effect service).

    Nice try though!

     

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  102.  
    identicon
    Anonymous Coward, Jul 30th, 2012 @ 5:39am

    Re: Re: Re: Re:

    I think congress wants a threshold before a business can be considered to be within US criminal jurisdiction, hence the reason why they made that jurisdiction deliberately less broad than civil jurisdiction.

    Is it your veiw that this was an oversight on Congress' part? That they had it together when formulating civil jurisdiction then lost the plot when it came to formulating criminal jurisdiction?


    So you think Congress's intent was to bring foreign corporations who merely commit torts in the U.S. to justice, but if a foreign corporation commits a crime (which is worse than a tort), then Congress wanted to give them a free ride? As I said above, that very conclusion should tell you that that's not the right way to look at it.

    Corporate law is state law. The identity of who is an officer in a corporation, or who is a member of the board, or who is that corporation's agent for service of process all turns on state law. There has never been substantive, federal corporate law. Congress didn't overlook anything. Congress knew (and this stuff is over a century old) that states have statutory provisions covering who is able to be served for purposes of establish personal jurisdiction over foreign corporations doing business within.

    I do love how everyone seems to think this is some great mystery that's just now being realized. Fact is, this stuff has been worked out for decades and decades. Megaupload Ltd. didn't find some crazy loophole. States have identified and solved this problem long ago.

    And if you think federal courts don't look to state law for the identity of a corporation's agents, well, think again. I can find cases over a century old saying that they do. Sorry.

     

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  103.  
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    Anonymous Coward, Jul 30th, 2012 @ 5:57am

    Umm, all this and nobody noticed that this isn't a lawsuit - it's a criminal trial.

    Mike, your hyperbole knows no ends.

     

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  104.  
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    Anonymous Coward, Jul 30th, 2012 @ 10:44am

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Quote from 13.1-758-F:
    If any foreign corporation transacts business in the Commonwealth without a certificate of authority, it shall by transacting such business be deemed to have thereby appointed the clerk of the Commission its attorney for service of process. Service upon the clerk shall be made in accordance with 12.1-19.1.

    According to 12.1-19.1 the DOJ has to provide the address of Megaupload and federal regulations states that it needs to be a US based one.

    Further Megaupload is a criminal case being heard by a Federal court where Federal rules apply not state ones so why bring that up since they cannot be used to satisfy federal rules?

    Only a dishonest bastard would do that.

    Nice try though.

     

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  105.  
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    Anonymous Coward, Jul 30th, 2012 @ 10:49am

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Are you a moron?

    13.1-19.1 does not apply to Megaupload Ltd. since it is a procedural rule on how to effect service on said agent. Here, Rule 4 of the Federal Rules of Criminal Procedure control, not 13.1-19.1 (which is state procedural law on how to effect service


    So states rules don't apply to megaupload because they are state procedural law on how to effect service on a state procedural law appointing a Clerk?

    So using state law to comply with federal law is ok but the minute that state law presents conflicts with federal law they no longer apply?

    You don't win very often do you?

     

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  106.  
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    Anonymous Coward, Jul 30th, 2012 @ 11:14am

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Show me the federal law that explains how you figure out who the officers, board members, and agents of a corporation are. You can't. Such substantive things have always been done at the state law level. Corporations are created by state statute. When a foreign corporation does business within a state, it does so by impliedly agreeing to whatever reasonable conditions the state has imposed.

    The federal rules control the procedural issues in this case. The federal rules require that the summons be mailed to the last known address in Virginia. Since corporations aren't actual people, you have to look to Virginia's corporate law to see what people can be served. The law says that a foreign corporation that transacts business in Virginia is deemed to have appointed the Clerk as its agent for service of process. That's a substantive issue--the identity of the agent. That's not a procedural issue. The procedural issues are controlled by the federal rules, but the substantive issue of what actual people are agents for service of process turns on state law.

    I understand that you disagree and that you will read everything in a way that favors Megaupload Ltd. if possible. I'm simply pointing out the fact that Megaupload Ltd. has an agent in Virginia, and that agent has a mailing address. If you think that Megaupload Ltd.'s agent for service of process in Virginia is not somebody the DOJ can serve process on in Virginia, then I don't know what to tell you. We'll see soon enough.

     

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  107.  
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    Anonymous Coward, Jul 30th, 2012 @ 11:17am

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Do I come across as a moron? I know you don't like what I'm saying (it's bad for Megaupload Ltd. and you don't like that), but there's no reason to call me names. I'm simply explaining what I believe to be the law. I've been researching these issues for a few days, and I'm happy to back up what I say.

    What I'm saying is that the identity of the agents upon whom service of process can be made for a foreign corporation doing business within a state turns on state law, even if it's in the federal courts. I can cite cases over a century old saying just that.

    The procedural issues, though, turn on federal procedural law. Rule 4 dictates how service upon a qualified agent is to be made. State law, though, is used to identify who the proper agents of the corporation are.

    Sorry you don't like my conclusions, but there they are.

     

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  108.  
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    Anonymous Coward, Jul 30th, 2012 @ 2:51pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    The clerk can be appointed if it doesn't conflict with federal rules which this does to have the clerk appointed you have to give him an address and federal law says it must be a US one, so you in fact can't appoint the clerk as representative.

    I know you don't like that conclusion, and will try to read everything in favor of the DOJ because you have a personal dislike for Megaupload Ltd, but I am simply pointing out the fact that Megaupload is a criminal case in a federal court that is governed by federal rules that overrule or supersedes state laws where necessary to make them compliant with federal laws.

     

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  109.  
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    Anonymous Coward, Jul 30th, 2012 @ 2:53pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Quote:
    The procedural issues, though, turn on federal procedural law. Rule 4 dictates how service upon a qualified agent is to be made. State law, though, is used to identify who the proper agents of the corporation are.


    To name the clerk the procedure is to give him an address since it is a federal case under federal jurisdiction it fallows that it should fallow federal laws which state that the address needs to be a US one, that you don't agree is your problem.

     

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  110.  
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    Anonymous Coward, Jul 30th, 2012 @ 4:48pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Fed.R.Crim.P. 4(c)(3)(C) controls the method of serving process. One thing that's necessary is mailing a copy of the summons to an address in Virginia, here, the clerk. That's the rule that controls. You seem to agree that that rule controls service of process. But then you're arguing that Virginia's Section 12.1-19.1 also controls the procedure for serving process? I don't see it. The method of serving process is clearly only governed by the federal rules. It's a federal court sitting in federal question jurisdiction. It doesn't follow state methods for serving process. The law only requires that: "A copy must also be mailed to the organization's last known address within the district or to its principal place of business elsewhere in the United States." It doesn't say that a copy must be mailed, and if the state law says anything else about serving the Clerk, then you have to do that too. Mail to last known address in the district, and that prong is complete. I just don't see your argument as having much merit. Why would the state's procedure for serving process not be preempted by Rule 4?

     

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  111.  
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    Anonymous Coward, Jul 30th, 2012 @ 4:52pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    To name the clerk the procedure is to give him an address since it is a federal case under federal jurisdiction it fallows that it should fallow federal laws which state that the address needs to be a US one, that you don't agree is your problem.

    No, to serve the Clerk under Virginia law, you must follow the steps in Section 12.1-19.1. But the DOJ isn't serving the clerk under Virginia's procedural laws. The rule that governs service of process here is Fed.R.Crim.P. 4(c)(3)(C).

    The Clerk is deemed to be Megaupload Ltd.'s agent by operation of state corporate law. The process for serving that agent falls under the Federal Rules since it's a federal court sitting in federal question jurisdiction.

    Your argument just doesn't make sense. Seems like we've gone far enough past the point of diminishing returns. We'll see what Judge O'Grady says soon enough.

     

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  112.  
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    Jerimiah, Jul 30th, 2012 @ 8:20pm

    Re: Re: Re: Re: Re:

    Since you appear to have done a fair bit of research, perhaps you can answer something I find myself wondering upon reading this particular thread of comments.

    Who owns the server that was located in Virgina? Who was responsible for leasing it out, as well as the bandwidth it used? IANAL but it would seem whomever that person or business is, they're the ones who should be liable. They weren't being diligent in regards to what their server was being used for. If they knew they're server was being used for an allegedly illegal purpose, shouldn't the onus be on them to do something about it in accordance to local state and federal laws? They are the ones actually running the business there after all, not Megaupload. Megaupload was simply renting it from them (i.e. they're the customer in this instance).

    I'm not on either side by the way. I'm just a curious.

     

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  113.  
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    Jerimiah, Aug 2nd, 2012 @ 6:31am

    Re: Re: Re: Re: Re: Re:

    Carpatia is subject to Virgina law Megaupload is not.


    That was my thinking as well. Carpathia is the one operating their business within Virginia. Some (maybe all) of the servers they lease are physically located there and are their property, no one else's. Therefore the onus should be on Carpathia to make sure their servers aren't being used to break local laws. The power bills, taxes, equipment, maintenance, property, and myriad other details all fall on Carpathia since it's their operation. Megaupload doesn't have anything to do with those servers other than remotely saving users files there. As much as some folks would like 100% of the blame to fall on Megaupload, Carpathia is the one responsible for nearly everything having to do with running those servers and is earning money for all that effort.

    I've never rented a server before, but I'm assuming more than a few here have and so this question is directed at them. Do you know where all the servers you're renting are physically located, or is that simply not at all relevant to you, only the fact that you're getting the service you pay good money for (i.e. storage space, bandwidth, and the occasional tech support when a problem crops up)? What happens when the company you're renting from changes the physical location of the server(s) they own and/or switches you to a different server in a different location (perhaps because they have many servers located in lots of different places)? Would you even know? And would you allow yourself to be extradited by some foreign government if that was the result of being moved to a different server by your hosting company?

    On the user side of things, do the customers (and pretty much anyone who downloads) of a service like Megaupload know what servers their files are on and where they are in the world? Say I type in www.somewebsite.com and my browser connects to a server in the UK. Tomorrow I type in that exact same URL and this time my PC connects to a server in the US. The day after that, China. You see, there is just no way for the average person to know which server they're connecting to on any given day, for every URL they type in, and whether what their doing while connected to that server is legal where it's physically located. What was legal yesterday may be illegal today and legal again tomorrow depending on which server I get connected to. Heck it could even be my own ISP I end up connecting to seeing as they cache all the popular stuff.

    How is one to always know? You would have to use some tool to do a trace prior to typing any URL into your browser and do so for every URL you wish to go to. You would also have to pray the information you get back is accurate and not spoofed prior to figuring out what the laws are in that country. Who the hell even does that? And that's just http for goodness sake. It's completely unreasonable to expect someone to always know where the server they're using is physically located and whether it's legal for them to do what they want to do in that country/state.

    The only clue one might have that the physical location of a server has changed would be that the IP address changed from what it was the day before. Do any of you actually pay any attention to that? IP addresses are usually region specific, right? But what if the service provider uses forwarding and their main IP address and URL, the one you have no choice but to connect to first, never changes? You do a DNS lookup for the URL you want to type into your browser in order to get the IP address, then figure out what country owns that IP range, then figure out what the various laws are there, then type the URL into your browser to initiate contact only to get forwarded to some other IP address than the one you looked up. Now you have to check everything again to know the physical location you've connected to and whether what your about to do is legal there, etc, etc, etc...

    I hope you can see just how big of a mess this can get. It is utterly insane and that's just IPv4 I'm talking about! I can't imagine what it would be like to have to do that using IPv6 which tends to be a PITA for several reasons.

    Ok so one last question. If Megaupload is guilty of operating in Virgina unlawfully, what does that mean for Carpathia? Are they perfectly innocent of any wrong doing if all the blame falls on Megaupload? I think the copyright maximalists petty hatred and strong desire to see Megaupload pay, whether guilty of wrong doing or not, may be resulting in a whole lot of delusionally wishful thinking. As far as I know Megaupload was operating well within US laws, even obeying the DMCA even though they didn't really have to. Copyright complaints were dealt with swiftly, infringing material quickly taken down either my MU or via the automated service they provided copyright holders.

    The fact that those leaked IFPI documents show Megaupload is only responsible for a very tiny percentage of infringements leads me to believe these preventative measures were working as intended, meaning the copyright industry has no real right to be complaining and certainly no right at all to effectively destroy what was a very successful multi-million dollar business, all without any due process whatsoever. So much for the high and mighty ideals of the USA; innocent until PROVEN guilty and all that. I honestly believe certain vested interests were utterly scared of the new music service that was in development (and still is lol) and that said interests also may have chosen Kim Dotcom because they believed he was an easy target (due to being easily dislikeable it's been said). Wow, were they ever wrong on that one lol. A severe conflict of interest on the US Government side of things got out of hand and they're going to pay for it, or so one would hope. My guess is that this case will probably be dropped at some point and swept under the rug, with nobody held responsible (I'm looking at you DoJ).

     

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