Megaupload Points Out That The DOJ Has Contradicted Itself Concerning Legality Of Serving Megaupload

from the oops dept

Earlier this month, we pointed out that the Justice Department had asked the federal courts to amend the federal rules concerning issuing a summons on a corporation. As the filing made clear, they were concerned about being able to serve criminal complaints on foreign companies with no US presence, since the law clearly says that you need to send a summons to “the organization’s last known address within the district or to its principal place of business elsewhere in the United States.” If they can’t do that, they don’t meet the qualifications of the summons.

We thought it was noteworthy that the DOJ was looking to change that rule and wrote about it. It appears that the lawyers for Megaupload have noticed this same point… and quickly realized that this filing pretty clearly contradicted the DOJ’s own statements in the Megaupload case, where they insisted that the existing rules did not get in the way of serving Megaupload. Megaupload is using that to renew its request to have the indictment dismissed.

Back in January, it seems, the DOJ told the court that there was no issue at all with the fact that Megaupload had no US address. As Megaupload summarizes in its filing:

Among other things, the Government argued that, even if the individuals are never extradited to the United States, the Government can simply ignore Rule 4’s requirement that the summons be mailed to Megaupload’s “last known address within the district or to its principal place of business elsewhere in the United States” and instead mail it to an alternate destination. (See Dkt. 159 at 3-4 (suggesting that the Government could mail the summons to the Commonwealth of Virginia’s State Corporation Commission; or to the warehouse of third party vendor Carpathia Hosting; or to other third parties).) Previously, the Government had even suggested that Rule 4’s mailing requirement is merely hortatory, and that “[s]ervice of process in the corporate context . . . is complete upon delivering the summons to an officer or agent” of the corporation. (Dkt. 117 at 9-10.)

But that’s clearly contradicted by the DOJ’s own statement to the courts in the request for the rules change — which were filed before the DOJ’s request to the courts.

The Government’s letter is directly relevant to the Court’s consideration of Megaupload’s pending motion to dismiss without prejudice, as it contradicts the Government’s repeated contention that it can validly serve Megaupload—a wholly foreign entity that has never had an office in the United States—without regard for Rule 4’s mailing requirement. To the contrary, the Government explicitly acknowledges in the letter that it has a “duty” under the current Rule to mail a copy of the summons to a corporate defendant’s last known address within the district or to its principal place of business elsewhere in the United States. (See Exhibit 1 at 2.) Moreover, by seeking to have the mailing requirement eliminated, the Government implicitly admits it cannot validly serve Megaupload consistent with Rule 4 as currently written. Finally, contrary to the Government’s contentions before this Court that Rule 4’s existing provisions are mere accidents of drafting, the Government is acknowledging to the Advisory Committee that they are in fact well considered products of “the environment that influenced the original drafters of the Federal Rules of Criminal Procedure,” albeit an environment that the Government believes “no longer exists,” given what it calls the “new reality” of “federal criminal practice.” (Id. at 2- 3.) To the extent that the Government would urge this Court to work the same substantive modification of Rule 4 that it is urging upon the Advisory Committee, this Court should be forthrightly advised in the premises as to the nature of the Government’s request and the reasoning behind it.

The Government’s letter to the Advisory Committee thus confirms what Megaupload has argued all along—that the Government indicted Megaupload, branded it a criminal, froze every penny of its assets, took its servers offline, and inflicted a corporate death penalty, notwithstanding the fact that the Government had no prospect of serving the company in accordance with current law, yet to be amended. Megaupload should not be made to bear the burdens of criminal limbo while the Government seeks to rewrite the Federal Rules to suit its purposes.

Those darn pesky rules.

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Companies: megaupload

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Comments on “Megaupload Points Out That The DOJ Has Contradicted Itself Concerning Legality Of Serving Megaupload”

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out_of_the_blue says:

SO no US address = immune from all prosecution?

Legalisms. By the way, those ARE rules, NOT laws. They have the effect of law primarily because a Court is inherent in their application.

But to hold that the process of serving can’t be effected because the defendant doesn’t have a US address — while doing business IN the United States — is contrary to every principle of law.

Legalisms are all Dotcom has to hide behind.

Take a loopy tour of! You always end up same place!
Where Mike’s “new business model” (file hosts like Megaupload) is to grift on income streams that should go to content creators — and then call the creators greedy!

Anonymous Coward says:

Re: Re: Re:3 SO no US address = immune from all prosecution?

They can only seize what comes under US jurisdiction and not anything else that is outside of the country of the US. If the US wants to seize anything that is housed in another country whether a company, assets etc. then the US have to go through the proper due legal process of that other country. You do realize that in New Zealand’s extradition treaty they do not extradite for copyright infringement so the US has to convince NZ that Megaupload was a criminal enterprise under RICO.

Rikuo (profile) says:

Re: Re: Re:3 SO no US address = immune from all prosecution?

I have a friend called Kenneth. Kenneth is rich. He went out and rents the usage of a house in Saudi Arabia. He doesn’t own the house outright, just pays to use it from a Saudi company, and in turn other people can rent a room from Kenneth – Kenneth pays a fee to the Saudi business but is still able to make a profit.
One day, some rebellious Saudi youths who had paid for a room went outside and hung a big poster saying such vile slurs that Mohammed, the father of Islam, was evil, raped little girls and that Islam is the religion of the devil, among other things.

According to your logic, Kenneth is guilty, and should expect to be tried in a Saudi court for crimes perpetrated by others using property that they paid for access to. He made a profit on the utterance of slurs.

Androgynous Cowherd says:

Re: Re: Re:3 SO no US address = immune from all prosecution?

Only the servers aren’t Megaupload’s. They belong to a third party, Carpathia. Carpathia is merely a hosting provider hosting Megaupload data, where Megaupload controls what gets uploaded and stored. As such, Carpathia should be protected by the DMCA’s safe harbors. The most they should have been exposed to is a takedown notice for hosting infringing content at the direction of one of their users — same as how when Joe Schmoe has an infringing video hosted by Youtube, Youtube’s servers can’t be seized, but the video can be taken down with a DMCA notice served on Youtube.

If Carpathia servers could be seized for the actions of one of their users, then your ISP’s servers could be seized if you uploaded an infringing document to your webspace or even received an email with an infringing attachment that remained on their mail server. That seems wrong. The most the ISP should be subject to (assuming they comply) is takedown requests for the infringing files. The only difference with Carpathia’s hosting of Megaupload’s stuff is the scale, from what I can tell based on what’s been stated at this blog.

Ninja (profile) says:

Re: SO no US address = immune from all prosecution?

It’s about sovereignty. You don’t apply US laws to foreign players. The best you can do is block them from making business with US based companies and citizens.

But to hold that the process of serving can’t be effected because the defendant doesn’t have a US address — while doing business IN the United States — is contrary to every principle of law.

The best they could have done was to seize MU servers within their borders, not go completely above that and beyond their authority.

Legalisms are all Dotcom has to hide behind.

The same could be said about the cases where the MAFIAA screwed the artists within the law. The difference here is that Megaupload was operating within NZ and even US laws as far as the judicial proceedings have pointed so far (remember the US is refusing to make the evidence available so we cannot know whether there is a cause against MU at all).

But never mind, keep taking your loopy tour inside your own twisted head.

OldMugwump (profile) says:

Re: Re: SO no US address = immune from all prosecution?

Suppose I setup a US company and website, servers in the US.

I’ve no presence in, say, Saudi Arabia, at all.

Some Saudi comes to my website and does some transaction – maybe I get paid by PayPal, credit card or something. I’ve no way to even know this person is in Saudi Arabia.

Are, then, suggesting that I, as US person doing business in the US, with no presence in any other country, should be liable for possible violations of the laws of Saudi Arabia?

This would imply that EVERY online vendor of anything (products or services) is liable for violations of ANY law of ANY country in the world.

So we can just shut down the Internet and go home.

Ninja (profile) says:

Re: Re: Re: SO no US address = immune from all prosecution?

No, no. If what you did is illegal inside the US (or what your client did and you know and participated) then yes. It’d be akin to you doing business with the Saudi guy and said business is illegal in Saudi Arabia but not in the US. The Saudi guy should get in trouble but not you. And if the illegal activities had any physical presence in Saudi Arabia then yes these assets could be seized (again, if it’s an ISP they couldn’t know so the ISP itself would not be liable). What I’m saying is that the US COULD go for any physical presence MU had inside the US but only IF Megaupload was doing anything wrong (not the case).

AzureSky (profile) says:

Re: Re: Re: SO no US address = immune from all prosecution?

no, only the other way around, see because most other countries dont think they rule the world, unlike our lovely US govt.

see, the US govt likes to go after people for things that are legal in their own countries, or go after people because their corporate masters dont like them(kim dotcom and that kid from the UK they want to send to prison for running a streaming link site that was/is legal in the UK)

people just need to accept that US law is world law (or at least thats what idiots like OOTB and our own govt, and their corporate masters think.

anonymouse says:

Re: Re: SO no US address = immune from all prosecution?

WOW i am amazed they would even discuss this, it opens up all Us businesses to international law and not just American law. This could be the start of the end for some of the worst of the worst business entities on the internet, businesses that have purchased laws to protect them in America.

Anonymous Coward says:

Re: SO no US address = immune from all prosecution?

That’s what the US LAW seems to indicate.

That it’s a defense lawyers job to use any good argument to try and get his client off should be obvious.

As for all he’s got to hide behind there’s the spying, the illegal trespass and theft, a jury pool that’s massively in his favor and that’s before we’re onto the merits of the actual case.

Anonymous Coward says:

Re: SO no US address = immune from all prosecution?

so what argument are you going to use to allow US companies that have no addresses in other countries but do business in other countries to get away with wrong doing? i suppose your going to come out with some bullshit that will exonerate them but because Joe Biden wanted to please his US entertainment industry execs friends (who refuse to adapt to the digital age and were far too slow to jump on to the torrent protocol wagon) decided out of court that Mega was infringing, it’s ok to screw them over! you’re some sort of prick, ootb!

Anonymous Coward says:

Re: SO no US address = immune from all prosecution?

By that same logic, because US websites can be seen in Iran, China, and Saudi Arabia, all US citizens should be held accountable to follow the laws of every country in the world while on the internet, or face extradition.

Oh, that’s right, the US is “special” and only it’s laws apply to everyone else in the world. Other countries that try to apply their laws to the US are evil hives of piracy and/or terrorism.

Bergman (profile) says:

Re: SO no US address = immune from all prosecution?

So what you’re saying is, that if a U.S. corporation that exists solely within the U.S., only does business within the U.S. and has no offices, personnel or facilities outside the U.S., that should not shield them from being extradited for prosecution in an EU court for violating French law?

Really now?

Anonymous Coward says:

this is typical of a liar! when things are not going how they are wanted, just change the rules to suit the situation. the path being trodden atm by the DoJ is a dodgy one. they need to be very careful what they are wishing for, just to please the entertainment industries and Joe Biden! bring this change into being and be prepared for US companies to be sued in foreign lands. i bet that wont go down well. i also wonder what excuses will be used to try to prevent other countries from suing US companies? you can bet a dime they would do whatever had to be done to prevent it, whilst still expecting, one way or another, for foreign companies to be accountable to US laws as and when told!

Anonymous Coward says:

Re: Re:

“… just to please the entertainment industries and Joe Biden…”

The only thing I’ve seen Biden and Big Entertainment work together on is battling the National Rifle Association’s claim that the entertainment industry is responsible for encourging gun violence.
You one of them NRA gun-nuts, boy?

Chosen Reject (profile) says:

Re: Re:

First the US government will serve foreign companies for providing services illegal in the US to US citizens. Then foreign companies will just block all US traffic. Then the US government will sue them for not providing access based on some US law (perhaps the ADA?).

Then foreign governments will do the same to US companies. Then there will be a need for some third party organization to mediate all of this. Perhaps we can call it the World Trade Organization?

Disclaimer: I don’t like the WTO. I think each country should be independently sovereign from other countries. If a US citizen breaks a US law, then punish the US citizen, not the foreign company that provided some service to the US citizen.

Violated (profile) says:


Well they do make a good point when sure enough the US Administration and the Copyright Cartels do like to contradict themselves on a case by case bases depending on their immediate aims.

Still MegaUpload won’t have an easy time trying to win this point when the Judge simply won’t crash the whole DoJ and FBI case simply on a technicality.

Anonymous Coward says:


“Amend the federal rules” to retro-actively apply to a case they have already served. I can’t think of a better example of corruption than this.

I was hoping Megaupload would get it’s day in court because there are so many other things that are very wrong, really fundamentally wrong with how this case was put together and acted on that deserves to come out in court so all could see it.

I think the general public saw the initial headlines and assumed that MegaUpload was guilty. The lack of headlines covering the difficulties has just left that impression in place. Having the case dismissed on a technicality would further the interests of those fighting for the need for stronger laws. Not much else would be reported on. Shame.

Kudos to NZ for not being as corrupt as the US by questioning Dotcom’s extradition. The British didn’t even have the balls to do that.

gorehound (profile) says:

And if this Law or Others were changed MU & Dotcom were already Charged (I Believe this is the correct words) so how would they just state that we will Try you now…….When the Date of their Offense/Arrest was when the Law was different.

I think I mean if there was no Law against Murder and you murdered someone……..Then 3 years later they make a Law and they Arrest you.For an offense that you had done when there was no Law against it.

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