Whoever conspires to commit or attempts to commit an offense under subsection (a) of this section shall be punished as provided for the completed offense in subsection (c) of this section.

• Motorola, Cisco and Netgear all have licensed the patents in question, meaning that users of that equipment are covered by those patents under the concept of patent exhaustion (basically, if you buy a licensed product, it's licensed). Innovatio conveniently doesn't mention this to the people it sends threat letters to.
• The patents in question are part of commitments to IEEE that they'll only be licensed on RAND terms, but the threat letters demand way more than would be considered "reasonable."
• Incredibly, Innovatio includes some expired patents in the list of patents it has threatened people over. That's a massive no-no. Once a patent is expired you can't demand a license for it. At all.
• Innovatio apparently tells the people it threatens that it'll be cheaper to just settle, rather than to even investigate the claims that it's making -- and has told people that the manufacturers in question aren't defending their customers, which is proven false by the lawsuit, which, again, was filed soon after Innovatio popped up on the scene.
• In an attempt to appear more legit, Innovatio claims that the patents in question have "generated in excess of $1 billion in settlements and license fees" to scare small businesses into complying. It leaves out that it appears to be basing this number on the famous broad patent fight settlement between Qualcomm and Broadcom, which was a wide-ranging cross licensing program, that has nothing to do with Innovatio or its specific patents.

Defendants prey upon end users that are not involved in the development or supply of the accused technologies, demanding exorbitant licensing amounts that breach numerous obligations on the patents and greatly exceed any notion of reasonableness. In furtherance of their plan, Defendants threaten protracted negotiations with onerous burdens on end users, and offer supposed “discounts” for promptly paying Innovatio without engaging in such negotiations, while making it clear that Innovatio will initiate costly litigation with anyone that does not acquiesce (something it cannot realistically do given the 8000-plus letters sent throughout the U.S.). Under these circumstances, Innovatio circumvents its obligations and illegally obtains and seeks to obtain licensing fees to which it is not entitled, at great detriment to the Plaintiffs in this action, their customers, and the public generally.

To date, at least ten of the Innovatio Patents have expired, yet those patents continue to be highlighted in Defendants’ threat letters in furtherance of their licensing campaign. Yet Innovatio states to its licensing targets that “Innovatio proposes granting [the licensing target] an upfront, paid-up license for its use under all of 31 of the issued Innovatio Patents,” when those targets have no liability on and therefore no need of such a license to expired patents. For example, on May 9, 2012, almost one year after the ‘771 patent expired and almost six months after the ‘311 patent expired, Innovatio sent a demand letter to [redacted] .... Innovatio did not provide notice of these or its other patents to [redacted] before expiration. Notwithstanding the expiration of these patents and other patents, Innovatio’s May 9, 2012 demand letter stated “[t]he operation and use of any [WLANs that use the IEEE 802.11 communication protocols] by [redacted] constitutes infringement of at least the following Innovatio Patents: . . . U.S. Patent No. 5,940,771 . . . [and] U.S. Patent No. 6,374,311.” .... Yet circumstances here including a failure to comply with 35 U.S.C. §287, confirms that Innovatio cannot assert infringement or recover damages on at least these expired patent claims. On information and belief, Innovatio never disclosed that these patents had expired, or that its remedies were limited, and the purpose behind inclusion of these patents is to inflate the size of Innovatio’s portfolio, instill fear, increase fees and costs to investigate, and force its targets to capitulate promptly to Innovatio’s unlawful demands.

Ms. Hansen demanded that Ms. Barker pay money to settle the lawsuit or she would be identified publicly as having downloaded pornography and would be subject to hundreds of thousands of dollars as a judgment if the suit went forward because there were multiple downloads. Numerous individuals on the Internet report receiving a phone call from the same telephone number as that provided by Ms. Hansen to Ms. Barker with a demand that they pay money to settle a lawsuit against them.

Ms. Barker refused to pay any money because she did not know what BitTorrent was and had never downloaded any pornography from the Internet. On information and belief, many other members of the class have paid sums of money in settlement with the pornography purveyors even though they had never downloaded any pornography from the Internet, and certainly had never unlawfully downloaded any pornography from the Internet.

Subsequently, Ms. Hansen and others associated with her called Ms. Barker's place of employment and left messages on the voicemail to which several of Ms. Barker's co-workers also had access and continued to contact Ms. Barker on her personal telephone. Class members have been subjected to the same or similar treatment.

• For example, the indictment points out that Megaupload did not have a site search, by which users could find material. That's interesting, but it seems like an odd piece of information in making the case. Other copyright cases have specifically found that having a search engine is part of an inducement claim -- so there's an argument that the idea not to have a search engine wasn't so much "conspiracy," as it was an attempt to follow the guidance of the court and to stay legal. To use the lack of a feature, that previously was shown to be a problem, as evidence of a conspiracy is crazy. Damned if you do, damned if you don't.



• Separately, the indictment lists various feature choices as part of making its case. There is, for example, the fact that if certain files aren't downloaded in a certain amount of time, then they are deleted. The indictment presents this as evidence that the service is mainly for infringement, because it potentially precludes the idea that the site is used for long-term backup. Of course, that falsely assumes that long-term backup is the only legitimate use of a cyberlocker. But that might not be the case at all. The service could (and is) used to just distribute large files in a directed, short-term effort. If anything, the fact that files are deleted after they're done being shared highlights a key legal function of the site: it was used by people to exchange large files once or twice, since they're too big to share via email attachment.
  
  On top of that, other, legitimate, sites have similar policies. The popular image hosting site Imgur does the same thing: if people don't access an image for an extended period of time, Imgur may delete it. That's not because it's encouraging infringement, but because it knows that the service is being used for short-term distribution.



• There is also the question of paying certain uploaders. However, there does seem to be a bit of a stretch in assuming that because some uploaders get lots of downloads by posting infringing content, all such "paid" users must be putting up infringing works. There are plenty of viral videos that are quite popular not because of infringement. In fact, much of this seems to be based on the simple assumption that encouraging more usage means they must be encouraging infringement. It's entirely possible that Dotcom did encourage infringement, but it feels like there should be more actual evidence of that, rather than pasting together a bunch of claims that could be interpreted in legitimate ways. Paying users for popularity is not, and should not, be evidence of criminality, or even infringement.



• There is also the claim that, while the company did remove some works upon takedown notice, it merely removed one link to the work, but left up other links. The issue here, as noted elsewhere in the indictment, is that Megaupload has a system for de-duplication -- so that if multiple people uploaded the same file, it only kept one version, but made it available at a different link for each person. This is the same sort of thing that lots of legitimate sites do, including Dropbox. The question, then, is if you do something like that with a locker service, and keep a single file, accessible through multiple locker links, what do you do if you get a takedown? This is still somewhat of an open question -- and was one of the points raised (in a civil copyright infringement context, which is very different) in the EMI vs. MP3tunes case. In that case, the company was told that it did, in fact, have to delete the actual file. But that raises other questions. Let's present a hypothetical: what if infringer A and authorized distributor B both upload the same file. The system de-dupes and uses a single file for each to access. Now, the copyright holder discovers A's version, and issues a takedown. It will automatically take down B's authorized work as well -- even though that copy was not infringing. Or... what if someone uploads a copy, but for their own personal use to access remotely, but never shares the link? In that case, no infringement is occurring... but DOJ seems to claim that the site would have to delete the file anyway, or there may be criminal risk. That's crazy.



• The complaint argues that because Megaupload's "top 100" list does not actually list the top 100 downloads on the site, this is more evidence of conspiracy. The issue here is that the list apparently removes files that are likely infringing. But... again, in other cases (like the IsoHunt case) such lists were also seen as proof of inducement. So, again it's a damned if you do, damned if you don't situation. If Megaupload's list showed infringing works, then they'd be charged with inducement... but removing them from the list makes them guilty of conspiracy?



• In addition, the indictment shows that, despite the company not being a US company, it did set up a DMCA agent, a tool to make removing files easier, and did take down works on request. There are some reasonable questions about if it ignored some takedown messages (likely) and the fact that it put limits on how many takedowns could be done per day with its tool. Those certainly work against the company in terms of retaining any DMCA safe harbors. Similarly, there is some evidence that the owners of the site may have uploaded infringing files themselves -- which, again, has no DMCA protections.



• The indictment points out that Megaupload used its hashing system to maintain a list of known child porn and block those files from being re-uploaded. The problem here is that copyright is different than child porn. Child porn is a strict liability issue: it is always illegal. There are no extenuating circumstances. But copyrighted content is different. It could be authorized. It could be fair use. And that depends on the specific use, not the file. So using a hash system there doesn't make sense, whereas it can make sense for child porn.



• The indictment also lists all sorts of emails, some of which are more damaging than others, but some of which may be taken out of context. All of them seem to assume that Megaupload employees can easily tell, often just by file name, what's infringing and what's not. I think this is an assumption that many people who don't understand copyright law make. And while you can guess... it's not always so easy. The recording industry, for example, regularly uses cyberlockers as a legitimate way to distribute promo copies. How would Megaupload know if certain files were legit or not, without further details? Yes, there's obvious infringement happening on the site, but will Megaupload always know which specific files are infringing?



• The indictment discusses demands from Universal Music that Megaupload would need to meet before UMG would even discuss a potential license. This included: "proactive fingerprint filtering to ensure that there is no infringing music content hosted on its service; proactive text filtering for pre-release titles that may not appear in fingerprint databases at an early stage; terminate the accounts of users that repeatedly infringe copyright; limit the number of possible downloads from each file; process right holder take down notices faster and more efficiently." While the DMCA does require action against repeat infringers, there are no legal requirements for the other issues. It's not clear why that should be evidence here. The fact that Megaupload didn't go above and beyond what the law requires shouldn't be seen as evidence of wrongdoing...



• Many of the emails discuss the fact that, in general, there are infringing works on the site. Yeah, but that's the same issue in the YouTube case and other cases. General knowledge that your tool is used for infringement is kind of meaningless, because you can't take works down if you don't know what's actually infringing.



• Money laundering claims are tricky and perhaps there was some "money laundering" going on here, but this indictment seems to include basic payments to Megaupload's hosting companies. Using payments to companies for hosting as evidence of money laundering seems pretty extreme, and suggests the possibility that this is just a "lumping in" situation, just to pile on more things that look bad, but aren't illegal by themselves.

The extortion tactics and fraudulent conduct detailed in this Complaint each constitute a predicate act under RICO of (1) extortion, because such communication were threats intended to obtain money or property premised upon legal action that was a complete sham; and (2) fraud, because each mailing, phone call, and email furthered and executed the scheme to defraud Righthaven’s targets.

Righthaven has a knowing, willful, and specific intent to defraud its targets into entering into settlement agreements under the threat of fraudulent claims.

• The filing highlights that all three of Righthaven's clients have admitted to the press that they decide who to sue, not Righthaven, again indicating that Righthaven is not the actual copyright holder here:

  Officers of each of these client entities have publicly stated that the media entities, not Righthaven, have the right to dictate who can and cannot be sued.
  
  In an article appearing in the Arkansas Democrat-Gazette, Stephens Media LLC’s General Counsel Mark Hinueber is quoted as saying “I can tell Righthaven not to sue somebody.” ...
  
  In the same article, WEHCO Media’s President Paul Smith is quoted as saying that if Righthaven discovers someone has violated WEHCO’s copyright, “it would be [WEHCO’s] decision whether or not to move forward with it[.]” ...
  
  Finally, in The New York Times, MediaNews Group’s Vice President Sara Glines stated that MediaNews Group “reviewed every violation and only approved actions against sites that carried advertising and were not charities.”

• In fact, Eiser takes the above quotes even further. Because this particular lawsuit was over MediaNews (Denver Post) content, and the site that the material was reposted to does not have advertising, she claims that there can be no lawsuit, since Glines (above) noted that they do not approve lawsuits against sites with no advertising. She uses this over and over again to claim a lack of standing to sue, promissory estoppel (i.e., the company promised not to use Righthaven to sue certain sites, but then did so anyway) and that Glines/MediaNews had issued a waiver of sorts. I don't see how this would carry much legal weight, but it is amusing in suggesting that MediaNews was less than truthful.
• There definitely are mistakes in the filing. Whoever wrote it, seems wholly unfamiliar with the nature of the "work for hire" doctrine, and confused about when it would apply.
• It claims that the main lawyer that Righthaven has used in many of its cases, Steve Ganim, is only on the Florida bar, and not allowed to practice law in Nevada, despite doing so. Eiser uses this to claim that Ganim and Righthaven are engaged in the unauthorized practice of law in Nevada. The filing also claims that when another defendant brought this information to light, "Righthaven attorney Shawn Mangano threatened a frivolous defamation action against Leon to shut him up." This would be amazing, if true.
• The filing claims that after a judge indicated support for the claim by the EFF and others that Righthaven is probably not open to winning lawyer's fees in its cases, because its lawyers are in-house, that it suddenly started hiring outside counsel for its lawsuits.
• As others have done, Eiser claims that the Denver Post's "sharing" tools give her an implied license to share the works.
• Eiser claims that "under 20" people saw the article posted to the website, raising questions about how much "damage" was actually done.

  Even if it could show that every single person who read the Rosen Letter on the Lowcountry 9/12 Project blog would have read it at The Denver Post instead, only then would any actual damages be shown, and they would be in the neighborhood of 40 cents.
  
  The South Carolina Supreme Court was offended by a case over five cents in 1918.
  
  Adjusting for inflation, five cents in 1918 was worth 72 cents in 2010, when the alleged damages were sustained.
  
  The approximately 40 cents of damages suffered (not even by Righthaven) is well within the rule of de minimis non curat lex.

• Eiser tries a First Amendment claim, saying that the use was for communicating ideas. This argument is one that I find interesting, but is clearly dead in the water. The courts have been pretty blind on First Amendment implications of copyright law, and they're certainly not going to jump in now on a case like this.
• Eiser tries to bring up the famed BMW v. Gore case to say that statutory infringement rates are illegal. This argument has been made before (in the Jammie Thomas and Joel Tenenbaum cases) without much luck. I can't see them suddenly getting a sympathetic ear here either.
• Eiser claims that Righthaven is technically a debt collector, and that it does not follow proper procedures and laws as a debt collector.
• We've discussed a few times how bizarre it is that Righthaven demands the publisher's domain name in each lawsuit it files, despite that not being a standard remedy (or a reasonable remedy) for copyright lawsuits at all. In this filing, Eiser suggests that this attempt to get others' domain names is effectively a form of illegal cybersquatting on those sites. That one also sounds like a big stretch, but an interesting idea.
• There's another big reach, claiming an antitrust (Sherman Act) violation in seeking to stomp out competitors through a fraudulent claim. Again, a nice try at a novel legal theory, but one unlikely to get very far.