Techdirt. Stories filed under "indictment" Easily digestible tech news... http://www.techdirt.com/ en-us Techdirt. Stories filed under "indictment"http://www.techdirt.com/images/td-88x31.gifhttp://www.techdirt.com/ Wed, 8 May 2013 03:32:31 PDT Kim Dotcom Files Brief In His Trial In The Court Of Public Opinion Mike Masnick http://www.techdirt.com/articles/20130507/16142522983/kim-dotcom-files-brief-his-trial-court-public-opinion.shtml http://www.techdirt.com/articles/20130507/16142522983/kim-dotcom-files-brief-his-trial-court-public-opinion.shtml new "whitepaper" released by Kim Dotcom, which lays out two key things: why the lawsuit against him is a complete legal sham and also why it was driven by a corrupt connection between the US government and the MPAA. The paper is written by his lawyers, including Ira Rothken and Richard Amsterdam (whose addition to his legal team was discussed a few months ago). Frankly, most of this reads like the lawyers refining the eventual motion-to-dismiss filing that they expect to submit to the federal court (should it ever get there). The majority of it is taken up with the clear legal statements as to why the lawsuit is based on very questionable theories. The main point, as we've discussed before in the context of other cases, is that the DOJ seems to have completely made up a legal theory of contributory copyright inducement. While there is such a thing in civil contexts, it's not there in criminal contexts. Supporters of the DOJ will argue that there is aiding and abetting, but the rules there are quite different and, again, it doesn't look like Dotcom and crew would be guilty of such a charge.

The overall point is clearly stated in the whitepaper. Here's a snippet:
The fact of the matter is that the notion of criminal liability for secondary copyright infringement does not exist in U.S. law. The attempt by prosecutors to expand criminal liability for secondary infringement by couching it as “aiding and abetting” or “conspiracy” goes against established precedent in case law and repeated positions taken by the U.S. Congress.

The Copyright Act creates civil and criminal liability for various acts of copyright infringement, but it does not expressly give rise to liability for infringement committed by third parties. Furthermore, the U.S. Supreme Court has defined specific circumstances under which service providers may be held civilly liable (i.e., not criminally responsible) for direct copyright infringement by third parties, such as distributing “a device with the object of promoting its use to infringe copyright.”

The fundamental legal problem with this aspect of the government’s case is that only Congress can create new criminal liability; judges cannot. Previous instances in which courts have imposed civil liability for secondary copyright infringement – based on application of common law principles – do not apply in criminal proceedings, as federal crimes are “solely creatures of statute.” Whatever authority the courts may have had to recognize a contributory theory of copyright liability in the civil context, the courts simply have no power to impose a basis for criminal liability beyond what is expressly authorized by statute.
One surprising inclusion is that the whitepaper supports this well known point -- that courts can't create new criminal liability -- by extensively quoting legal analysis from Jay Prabhu from years ago. This is a bit of dagger twisting by Dotcom's legal team. Prabhu, well after writing those analysis, took a job in the Justice Department, and eventually was put in charge of the DOJ's "cybercrime" unit -- and has been a key prosecutor against a number of copyright cases, including various domain seizures. In fact, he's the one who signed the indictment against Dotcom. To use his own words against the case is amusing.

The filing also lays out a number of arguments that we've seen before, including a further explanation of how the DOJ was being totally disingenuous in arguing that Megaupload refused to remove works it knew were infringing, by pointing out the files they mentioned were ones that Megaupload has clearly been asked to preserve as part of an investigation into copyright infringement.

There's also an interesting and more detailed than previous discussed defense on the point about Megaupload's rewards program. We had pointed out how silly it was to use this element against Megaupload, since it was a general rewards program to get people to make use of its cloud storage, and there was nothing in the program that induced more infringement (in fact, it seemed like a great tool for a content creator to make money by releasing his or her own works via the rewards program). On this, Dotcom's whitepaper points out not just those points, but also (1) the fact that lots of other sites have similar rewards programs (2) specific features Megaupload included in its rewards program that made it bad for infringement (including file size limits and required identification) and (3) the fact that they had dropped the program long before the indictment.

While I do wonder how wise it is to basically give the DOJ their opening brief way before they would actually see it in court -- and giving them a lot more time to respond to it -- there are a few reasons why this move could make sense. First, they're so damn confident in their argument that it doesn't really matter. That may be risky. Another point may be that it signals to the DOJ that they may want to look for ways to extricate itself from the case quickly, because it's not going to go as easy as the DOJ has assumed from the beginning. The other issue may be that Dotcom and his legal team realized long ago that the court of public opinion probably matters more in the long run than the federal court system in the US.

To that end, of course, the paper has a second section, which has received most of the attention: all about the supposed corrupt process that brought about the indictment. When Megaupload hired Richard Amsterdam, he specifically noted that the details of the case suggested a typical "contract prosecution," and the paper seeks to lay out that argument clearly, highlighting the close relationship between the Obama Administration (mainly via VP Joe Biden) and MPAA boss Chris Dodd.
Chris Dodd’s jump from the U.S. Senate into the cockpit of the MPAA was an equivalent move. As the new Chairman and CEO of the MPAA, Chris Dodd improperly leveraged his friendship with Joe Biden to achieve the MPAA’s objectives. Former Senator Dodd’s relationship with the Vice President– who comes off manipulated, a cheerfully credulous facilitator – together with the Obama Administration’s ravenous hunger for campaign contributions, has given the MPAA absolute control over how the U.S. Department of Justice plays the game in enforcing copyright law. This capture is nowhere more clearly demonstrated than in the Megaupload/Kim Dotcom prosecution.
Frankly, while this section is getting the most attention, I actually find it to be the weakest and most poorly supported part of the paper, which would probably be more compelling without it. I don't doubt that the close connections between the MPAA and various folks in the DOJ and in the VP's office contributed to Megaupload being a target, but trying to make it out as anything more than that seems like a stretch. Yes, the MPAA complained regularly about Megaupload, and that clearly helped put a target on its back. But, it's quite likely that the over-eager folks at the DOJ ran with this one on their own. The MPAA (with the help of the press) had worked over time to paint Kim Dotcom as "Dr. Evil" of the copyright world. Everything about the process of taking down Megaupload screams of a bunch of feds who totally bought into the theatrical version of the MPAA's vision, without much effort to understand what was really happening. The myriad mistakes and sloppiness in the case really suggest that the DOJ assumed that the stories the MPAA told were so accurate that everything about this case would be a layup. The investigation, the indictment, the raid, the handling of evidence -- all of it was done in a sloppy way -- as if they expected no one would challenge any of it.

I'm sure there was influence and pressure that went into this, but painting it as a case where Chris Dodd called up Joe Biden and said, "Destroy Megaupload" is probably a massive exaggeration. Instead, it seems quite likely that MPAA folks just kept playing up the theatrical version of Kim Dotcom as evil (and, Dotcom himself actually helped promote this sort of view of himself at times as well...), and then the DOJ's imagination combined with its general over-aggressive nature towards any copyright issues just sort of took over from there.

Either way, the paper is definitely a worthwhile read. I'm sure a group of folks at the DOJ are taking their time reading through it quite carefully. I imagine that we'll eventually see their response in court.

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]]> laying-out-the-arguments http://www.techdirt.com/comment_rss.php?sid=20130507/16142522983 Fri, 13 Apr 2012 16:09:00 PDT US Gov't Says Megaupload Shouldn't Be Allowed To Use Top Law Firm It Hired For Its Defense Mike Masnick http://www.techdirt.com/articles/20120413/02405818481/us-govt-says-megaupload-shouldnt-be-allowed-to-use-top-law-firm-it-hired-its-defense.shtml http://www.techdirt.com/articles/20120413/02405818481/us-govt-says-megaupload-shouldnt-be-allowed-to-use-top-law-firm-it-hired-its-defense.shtml serious problems and figure the best way to get past that is to make it that much harder for Megaupload to defend itself. We've already covered the desire of the feds to have significant evidence destroyed in the case, but now they're trying to block Megaupload from hiring a top law firm. It had recently been noted that top litigator Andrew Schapiro from Quinn Emanuel, was joining the defense team.

But the US is objecting to Quinn Emanuel taking part in the case, claiming that Schapiro's previous work with YouTube and Google represent a conflict of interest -- since the government intends to try to show that YouTube was a "victim" of Megaupload, and use Google as a witness since it pulled AdSense over infringement concerns. Furthermore, the government uses the fact that Quinn Emanuel -- a pretty large law firm -- has also represented some Hollywood interests to say that it shouldn't be able to take part. The thing is, law firms like Quinn Emanuel have a pretty detailed conflict of interest process, in which they check a bunch of things before they take on a case. If they satisfied that process, then why should the government be involved at all, other than just as an attempt to deny Megaupload the skills of the lawyer it wants to hire?

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]]> fair-trials? http://www.techdirt.com/comment_rss.php?sid=20120413/02405818481 Thu, 19 Jan 2012 13:34:06 PST DOJ Gives Its Opinion On SOPA By Unilaterally Shutting Down 'Foreign Rogue Site' Megaupload... Without SOPA/PIPA Mike Masnick http://www.techdirt.com/articles/20120119/13052817473/doj-gives-its-opinion-sopa-unilaterally-shutting-down-foreign-rogue-site-megaupload-without-sopapipa.shtml http://www.techdirt.com/articles/20120119/13052817473/doj-gives-its-opinion-sopa-unilaterally-shutting-down-foreign-rogue-site-megaupload-without-sopapipa.shtml love to cite. However, it certainly appears that the US Justice Department and ICE don't think they need any new law to go after people in foreign countries over claims of criminal copyright infringement. As lots of folks are currently digesting, the Justice Department, along with ICE, have shut down the site and arrested many of the principles (with the help of New Zealand law enforcement) and charged them with massive amounts of criminal copyright infringement.

Of course, just last week, we had noted that Megaupload was immune from SOPA/PIPA because it doesn't apply to dot coms -- but this is still interesting and crazy for a whole variety of reasons:
  • ICE and DOJ have a pretty freaking dreadful record so far in bringing these kinds of cases for online copyright infringement. It's kind of amazing that they did this so soon after they totally screwed up and had to give back Dajaz1 (without an apology, by the way). Megaupload may be a different type of site... but, still...
  • Similar cyberlockers, like RapidShare, have already been declared legal in both Europe and the US. I don't know the details of Megaupload's situation -- and certainly its founder has a... um... colorful history... but it seems pretty extreme to totally shut down the site prior to any adversarial hearing.
  • In the last few days and months, Megaupload had announced plans to help artists make more money... and had announced that very successful and famous music producer Swizz Beatz had become CEO of Megaupload. Beatz is also married to recording superstar Alicia Keys and was responsible for getting all those RIAA artists to endorse Megaupload. All indications were that the company was clearly building a legitimate system for artists to make money and fans to get content. And it seemed that many artists clearly supported the site.
  • So why do we need SOPA/PIPA again? It seems like the DOJ/ICE just undermined the key argument of the MPAA/RIAA/US CoC for why they need these laws. After all, Megaupload was one of the key examples used for why the law was needed.
  • At the same time there are huge questions about why the government is involved here. Megaupload is currently engaged in a lawsuit in the US -- and contrary to claims of SOPA/PIPA supporters, the company seemed more than willing to appear in court to deal with civil copyright claims. Why leap to criminal claims?
  • Is this really the message the US DOJ and White House want to be giving the day after mass, widespread protests happened concerning a fear that this new law would be used to take down websites? Honestly, this is a big "fuck you" to the protestors, showing that the government already has this power thanks to the last law they passed: ProIP (which they promised they'd never abuse).
  • The indictment itself -- embedded below -- is so full of hyperbole ("Mega Conspiracy") it sounds like it was written by the entertainment industry itself...
Anyway, I'm sure we'll have much more to say about all of this... but wow is the timing dumb on the government's part. Not only does it undermine the argument for PIPA/SOPA, but it raises significant questions about whether or not the feds already have too much censorship power.

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]]> screw-you-all----we're-the-doj http://www.techdirt.com/comment_rss.php?sid=20120119/13052817473 Fri, 30 Sep 2011 07:25:47 PDT Another NinjaVideo Admin Pleads Guilty, Expect The Rest To Do So Too Mike Masnick http://www.techdirt.com/articles/20110929/21453616141/another-ninjavideo-admin-pleads-guilty-expect-rest-to-do-so-too.shtml http://www.techdirt.com/articles/20110929/21453616141/another-ninjavideo-admin-pleads-guilty-expect-rest-to-do-so-too.shtml indicted five people for their roles in the Ninjavideo community, they appeared to have a pretty strong case against them. So it really wasn't a surprise that one of the defendants, Matthew Smith, agreed to a plea bargain, which we noted almost certainly involved him agreeing to testify against the rest. For the Justice Department, that's pure gold. They can then use that to pressure everyone else into plea bargains as well (and each one down gets worse terms). So, it looks like Hana Beshara -- who was "the face" of NinjaVideo -- was the second to fall, taking a plea bargain deal in which she also pleads guilty. Those two were the big fish. I'd be surprised if the other three don't fold quickly as well at this point. Of course, as with the Smith plea, you should take what they admitted to with a pretty big grain of salt. If you want an obvious sign of how the agreement and reality may differ, just look at the details of the Beshara plea, in which she claims that she personally got $200,000 out of the alleged $500,000 the site made. We're skeptical that the site ever made anywhere close to $500,000 or that Beshara made $200,000. So notice that the $200k number is mentioned in how much she made, but no amount is stated in how much the government took from her:
Beshara admitted that she and her co-conspirators collected more than $500,000 in overall proceeds during the website’s two-and-a-half years of operation, with Beshara personally receiving more than $200,000. As part of her plea agreement, Beshara agreed to forfeit assets seized by ICE’s Homeland Security Investigations (HSI) in June 2010, including cash, an investment brokerage account, two bank accounts, a Paypal account and one Internet advertising account.
If ICE got anywhere near $200,000 out of those accounts, they would have said so. They didn't, probably because that money never existed.

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]]> dead-to-rights http://www.techdirt.com/comment_rss.php?sid=20110929/21453616141 Mon, 12 Sep 2011 07:15:16 PDT US Gov't Continues Indicting People For File Sharing; 5 Indicted For NinjaVideo Mike Masnick http://www.techdirt.com/articles/20110912/00101415896/us-govt-continues-indicting-people-file-sharing-5-indicted-ninjavideo.shtml http://www.techdirt.com/articles/20110912/00101415896/us-govt-continues-indicting-people-file-sharing-5-indicted-ninjavideo.shtml indicted five people associated with the site NinjaVideo.net, claiming that together they represented a "conspiracy" to commit criminal copyright infringement. I will say this: compared to the laughable Rojadirecta case, in which the government fails to even show any actual criminal copyright infringement, the indictment here seems a lot stronger -- and unless they got something in the indictment totally wrong, I would predict that these five people are going to lose and lose badly in court.

Unlike the Rojadirecta case, the indictment suggests that NinjaVideo hosted content itself. It also suggests that these admins were very much directly involved in seeking out and distributing infringing content, and profiting from it. The fact that the feds are charging admins and uploaders together as "a conspiracy," is an interesting move, and one that is probably intended to get around the huge problem in the Rojadirecta case: which is that they show users sharing content, but not making money from it, and they show the site admins making money, but not uploading content. You have to show both by a single party for criminal copyright infringement to have happened. So, in this case, they're trying to link the five people together as a conspiracy. From the indictment, which is obviously one-sided, they make it appear that the two major uploaders were closely aligned with the admins. Whether or not that's actually true may be a big part of determining whether or not this case works. Also, it's not clear from the indictment how the hosting setup worked, and if NinjaVideo itself really hosted the material, but that also will be a key point in the case. Assuming that what's in the indictment is accurate, and not taken out of context, however, I just don't see NinjaVideo standing much of a chance in court.

One really interesting factoid in the indictment for all the Google-haters, who insist that Google is the major supporter of these kinds of sites: Google pretty quickly killed the AdSense account that the NinjaVideo folks had opened, telling them that it was because the site appeared to be distributing infringing works. Google-haters keep insisting that Google never shuts down such accounts, but this appears to be a case where they spotted the site pretty quickly and shut down the account.

TorrentFreak also points to a video made by Hana Amal Beshara, an admin for NinjaVideo who went by the name Phara. The video suggests that she and the others had some serious problems communicating with their lawyers, but that's really not going to matter much.
She also notes that they wanted to go public with what was happening ever since ICE seized their website in the very first round of Operation In Our Sites, but that all the lawyers kept saying to stay quiet. She says she now regrets that -- especially since she was indicted anyway -- and doesn't plan to stay quiet any more. While I understand the sentiment, the video itself isn't going to do much to help her case, in that she expresses "no regrets" for her involvement in NinjaVideo. The video makes it clear that she means this because the community "saved her life," but you can bet that the Justice Department will use that against her in court -- claiming she has no remorse.

I still think it's a bit silly for the Justice Department and Homeland Security to be doing this -- as it really should be a civil issue. It seems like Neil MacBride -- the former "anti-piracy" VP for the BSA, and now a US Attorney who was heavily involved in the indictment -- is paying back some favors to the copyright industry he came from. But, this way Hollywood gets taxpayers to pay for these kinds of lawsuits, instead of having to cut back on their own excesses. I also still question the legality of the original seizure of the domain name prior to any adversarial hearing. But, on the whole, these actual charges appear to have a lot more meat to them than what we've seen before in some of the other cases. It won't stop people from infringing, of course. And it won't stop similar communities -- though they'll probably drive those groups a bit further underground, making it more difficult for MacBride and his friends to track them down. But I guess as long as they feel they're "making a difference...."

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