MPAA's Lawsuit Against Megaupload Is Yet Another Broadside Attack On The Internet

from the collateral-damage dept

Earlier this week, we wrote about the MPAA’s announced plans to sue Megaupload in a civil lawsuit to pile on to the criminal charges the company is already facing. As we noted, there’s no legitimate reason for such a lawsuit, given the criminal lawsuit already underway, other than as a way to try to get a favorable court ruling it can use against others. Having now read the full complaint against Megaupload, it’s quite clear that this is exactly what the MPAA is doing. The lawsuit is incredibly dangerous for the internet, even if you think that Megaupload itself was a bad actor. Even the LA Times — Hollywood’s hometown paper — has called out the lawsuit for how it may have negative consequences felt broadly across the internet.

That’s because the lawsuit makes a whole bunch of claims about Megaupload that are perfectly reasonable activities for tons of user-generated content and/or cloud computing companies. But, because Hollywood has spent years demonizing Kim Dotcom as a movie-style villain a la “Dr. Evil”, it seems to be hoping that the courts won’t notice that it’s basically making up what they want copyright law to be, rather than what it is.

First, it describes the fact that when you upload a file to Megaupload, the service would then give you a link that you could share. The MPAA paints this as if it’s some nefarious scheme to encourage infringement. But it’s actually how pretty much any cloud or user-generated content site works.

When the upload was completed, Megaupload reproduced the file on at least one computer server it controlled and provided the user with a Uniform Resource Locator (“URL”) “link” beginning with “megaupload.com.” The uploader could then propagate the link broadly over the Internet, so that anyone interested in downloading or otherwise accessing a copy of the file could easily find it on Megaupload’s servers.

But, of course, Dropbox or YouTube do the same exact thing. Then, they call out the fact that Megaupload did not provide its own search engine, as if that’s something nefarious:

To conceal the scope of infringennent occurring on the Megaupload website, defendants did not provide users with a searchable index of files available for download from the Megaupload website (although defendants themselves had access to such an index). Instead, defendants relied on numerous third party “linking” sites to host, organize, and promote URL links to Megaupload-hosted infringing content, including plaintiffs’ copyrighted works.

Except, cloud storage companies from Dropbox to Box to Google Drive don’t supply a searchable index of files available on their services either. And that’s for a very good reason. Because they’re not promoting their services as a place to go to search for infringing works. In fact, you just have to go back to the RIAA’s lawsuit against Napster, to see where the exact opposite claim was made. In that case, the court found that Napster was, in part, liable because it had a search feature:

Napster is not an Internet service provider that acts as a mere conduit for the transfer of files…. Rather, it offers search and directory functions specifically designed to allow users to locate music, the majority of which is copyrighted.

Yet, now, the MPAA seems to be arguing that not having a search engine means you’re trying to hide copyright infringement. Damned if you do, damned if you don’t — just how the RIAA and MPAA like it. If you have a search engine, you’re enabling infringement, if you don’t have a search engine, you’re “concealing” infringement.

The MPAA also tries to paint other perfectly reasonable business model choices as nefarious. Offering premium paid-for services for faster downloads, or access to larger files, is painted as some evil plan to profit off of infringement. But it also makes perfect business sense for a company like Megaupload seeking to cover its bandwidth bills. Similarly, the famed “financial incentives for premium users” is treated as if this is actually paying people to post infringing works. But that makes little sense. It’s actually an incentive to get people to post good content. It’s the same reason that YouTube today pays top YouTubers who bring in lots of visitors. Is the MPAA really arguing that such an incentive program is illegal?

To ensure a vast and ever-growing supply of popular copyrighted content to which they could sell premium access, defendants paid users to upload popular content to Megaupload’s servers. Defendants’ Uploader Rewards program promised premium subscribers cash and other financial incentives if they uploaded popular works, primarily copyrighted works, to Megaupload’s servers. The rewards program also encouraged users to publicly promote links to that content, so that the content would be widely downloaded.

Except, nothing in this program appeared to be about encouraging people to post infringing works. In fact, it would seem like a pretty stupid program for encouraging infringement, as Megaupload would likely be able to bring in a lot more attention and revenue for authorized legitimate content. Such a program, in actuality, appears to be the perfect way for artists to go direct to their fans, offering them ways to get the content for free, while still earning money. In fact, that’s why artists like Busta Rhymes spoke out in favor of Megaupload after it was shut down. He pointed out that he could make a lot more money releasing his own music directly via Megaupload, than in going the old record label system.

Furthermore, since this lawsuit is from the movie studios, they list out a number of specific movies that they claim were on the site. However, Megaupload says that the uploader rewards program only applied to files smaller than 100MB, meaning it likely didn’t apply to any films that were uploaded. Assuming that’s accurate, the studios are going to have quite a difficult time proving that the rewards program induced infringement of movies.

On top of that, even if the program was used by some to make money from sharing infringing works, the program itself is clearly content neutral, and not about encouraging sharing of infringing works. For the MPAA to allege otherwise threatens all kinds of incentive programs on pretty much any user-generated content site.

Next, the MPAA complains that when they sent takedowns to Megaupload, it only removed the specific URL they sent, and not all copies of the content. But, uh, that’s all that the law requires. As the court in the YouTube/Viacom case ruled, under the DMCA, the service provider needs to be made aware of specific locations where infringing content is. They can’t just be given a single URL and told to “block all copies of that.” Nor would such a request be reasonable either, as infringement depends on context, not content. In the YouTube/Viacom case, Viacom initially sued over files that its own employees had uploaded, meaning they were licensed — yet it argued those were infringing. You run into the same problem here in that the MPAA is arguing that if you know that a particular file is infringing, all similar content must be removed. But the law does not say that. Though, clearly, the MPAA is seeking to change the interpretation of the law.

Next, the MPAA argues that because Megaupload could have used filtering tools to prevent new uploads of works previously claimed as infringing, and did not do so, that proves it’s liable. However, that’s completely bogus. Many, many, many copyright cases have all said over and over again that nothing in the DMCA creates a duty for service to proactively filter new uploads. In fact, the industry itself admits that this is true, because they’re currently asking Congress to change the law to make this a new legal requirement. Yet, in the Megaupload complaint, they pretend it is already the law:

Megaupload could also have implemented various readily available and effective

technological solutions (including, without limitation, automated filtering using digital fingerprinting-based content-identification technology) to identify and prevent infringement of copyrighted content.

Megaupload chose not to do so.

But there is no legal reason why it had to do so. In fact, considering that others have spent tens to hundreds of millions of dollars on such systems, there are perfectly good business reasons not to have spent such money. Here, the MPAA is using this lawsuit to try to get a court to suggest there’s a legal duty to filter. This would have a huge negative impact on startups who couldn’t afford the tens of millions of dollars entry fee.

You can argue that Megaupload was widely used for infringement. You can even argue that Megaupload management were awful people who didn’t care that much about copyright. But if you read this lawsuit objectively, you have to admit that it is a straight up attack on the basic principles of cloud computing and user-generated content, while seeking to change settled law and reinterpret the DMCA in a way the MPAA fantasizes it should be, rather than the way the law is today. That’s incredible dangerous.

It’s no surprise that they’re doing this against Megaupload, a company based halfway around the globe, with all its assets seized, and which is fighting a massive criminal complaint at the same time. That will, obviously, lead to limited resources to fight this civil suit, making it easier for the MPAA to sneak through dangerous changes to the law, via potential court rulings. These are changes that it’s been unable to get written into the law for the past few years, so now it’s using the courts to try to do its dirty work.

No matter what you think of Megaupload, this is a very dangerous lawsuit.

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Companies: megaupload, mpaa

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Comments on “MPAA's Lawsuit Against Megaupload Is Yet Another Broadside Attack On The Internet”

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89 Comments
Just Another Anonymous Troll says:

I’m confused now. How did the MPAA/RIAA/JFAA (Jerk Face Association of America) even get this guy arrested? It seems to me as though nothing regarding infringement is his fault, the stupid users did it. Hopefully Kim Dotcom will be able to point out the infinite logical disconnects in the MPAA/RIAA’s claim.

Anonymous Coward says:

Re: Re: Re:

Rapidshare had a reward scheme just like Megaupload but they were never shutdown and had their assests seized and frozen and the company still remains in operation today. Rapidshare were exactly the same as Megaupload and yet one company gets shutdown with assets seized and frozen whilst the other company remains in operation to this day. Either both should have been shutdown or both should be allowed to remain operation because the law was obviouly bent in favour to allow Rapidshare to remain in operation even though they were exactly the same as Megaupload with having a reward scheme.

Mike Masnick (profile) says:

Re: Re: Re: Re:

Rapidshare had a reward scheme just like Megaupload but they were never shutdown and had their assests seized and frozen and the company still remains in operation today. Rapidshare were exactly the same as Megaupload and yet one company gets shutdown with assets seized and frozen whilst the other company remains in operation to this day.

Note an important difference: Rapidshare hired some lobbyists in DC. No joke.

https://www.opensecrets.org/lobby/clientsum.php?id=D000065023&year=2013

They recently stopped however, so… watch out Rapidshare.

Anonymous Coward says:

i wonder why there’s no mention that Megaupload gave the MPAA and RIAA open access to view and close links to infringing material, theirs or others, but they chose not to use it! on top of which, regardless of whether the industries manage to get ‘rheir judge’ on the bench for this trial, they will just appeal, appeal, appeal until mega runs out of money or a judge gives the verdict they want.
as for the dangerous side of the law suit, it is definitely being don intentionally now and like it is because of the way various Trade Negotiations are being rebuffed by different countries. the main aim of those negotiations is to give certain USA industries rights over just about every country in the world. with those now falling by the wayside, the industries are coming in with these accusations hoping to get the win here which they will most definitely try to push everywhere else! people, industries countries need to be very aware of what these fuckers are up to. they will not stop until they have complete control of the Internet, that is what they have been striving for and wont quit until they get it. that’s also why the various US law enforcement agencies keep grabbing ankles to help as much and as often as they can, hence the initial fucked up seizure of Dotcom and bits in NZ!!

Anonymous Coward says:

“Next, the MPAA complains that when they sent takedowns to Megaupload, it only removed the specific URL they sent, and not all copies of the content. But, uh, that’s all that the law requires.”

The prosecution also stated in the recent trial of the director of mp3.com that the infringing files were never removed from the server when a DMCA notice was sent to them but only the infringing url links were removed and that wasn’t good enough as the infringing files should also be removed when a DMCA notice was issued. Although the director was found guilty on other things it was ruled by the court that although the infringing url links were only removed and not the infringing files on the server when the DMCA was received by the company then it was sufficient to remove the infringing url links only and that it would be going to far to remove the infringing files from the infringing file as well.

So according to this ruling Megaupload is in the right to only delete the url links in the DMCA notice and not the actual file that is on the server as the file in question could also be a file that someone else could have as a personal backup (which is legal). There is no way that Megaupload or any other company can tell if a file is infringing or not until a DMCA is issued but then other people could have the same file which is not infringing or illegal or anyway so removing the actual infringing link is sufficient.

Anonymous Coward says:

The face of file sharing changed a lot with the Napster lawsuit. Napster was a centralized system where the case claimed that because it was centralized and the files were located on their servers they had control to remove those infringing files.

After that case, suddenly everyone was doing decentralized because the court ruled in favor of control by a centralized setup.

Because a search engine was provided, it was enabling infringement. So all the file sharing systems went to no search engine to remain legal.

This is how the law works. The court rules something as making you liable, then companies figure a way that respects that while still doing what they are doing.

These copyright cartels have been doing the trying in public long before the case starts, which should be highly illegal until after the case is over. Just like talking about a case before court is not a good idea. But the whole purpose is nefarious in that they hope to change the public’s opinion and poison it to the case before it is heard.

While various courts have ruled on various things being illegal, for the most part they are not yet uniform in their judgements. I still have a hard time recognizing that a hyperlink by itself is infringing. It contains no information beyond locator service.

Here we have the MPAA complaining that a previous court ruling which changed the way hosting services operated is somehow aiding. You can’t have your cake and eat it too. Either Napster is not guilty on this one charge or Megaupload is not guilty.

Anonymous Coward says:

Re: Re: Re: Hoping for default judgement

?Don’t throw away good money chasing after bad money.? IOW, cut your losses.

Neither Kim DotCom nor Megaupload are going to get a fair trial in the U.S.

OK, so that’s not 100% certain ?yeah, they might possibly get a fair trial? it’s pretty good odds.

Otoh, the precedential value of a default judgment is close to nil.

That One Guy (profile) says:

Re: Re: Re:4 Hoping for default judgement

Avoiding precedent being set that the *AA’s will use against them as soon as they can sounds like a pretty good goal to me.

Now, you may be right that precedent in a default judgement may not be worth much in other courts, but it will be on paper should that happen, and making sure the *AA’s don’t have yet another weapon they can use seems like a pretty good idea.

That One Guy (profile) says:

Re: Re: Re:6 Hoping for default judgement

Well that was about as fun as wading through legalese usually is. I’m guessing the idea from that page is that a default judgement doesn’t really rely on the judge making any specific calls, but just handing off the victory to the prosecution, making it less useful to use elsewhere because of such?

Thing is though, it may be my cynicism, it may be tin-foil hat territory, but quite obviously the *AA’s believe that this case will help them if they’re willing to throw money at it, so whether or not they’re banking on somehow using the default judgement elsewhere, or some other facet, the fact that they are willing to throw money at it means that it’s worth putting up a fight against them, even if the ‘goal’ isn’t obvious at the time.

Anonymous Coward says:

Re: Re: Re:7 Hoping for default judgement

? doesn’t really rely on the judge making any specific calls, but just handing off the victory?

That isn’t quite exactly accurate. There is one particular, specific call that the judge does finally make when one of the parties doesn’t show: The judge declares ?Winner? and ?Loser?.

(See res judicata and collateral estoppel for more on that. Note especially that those doctrines only bind the parties.)

Bu, the general rule that the defaulting party loses is so well-settled that there’s not much of a point citing any particular case for that holding.

G Thompson (profile) says:

Re: Re: Re:7 Hoping for default judgement

Your not the only cynic here..

I believe that if for some strange reason no amicus briefs are submitted from Dropbin, Google, OneDrive etc, and no one shows up to the case and they get a default judgement of damages that realistically will never be paid (default judgements from US courts normally will not sway another court to allow comity to occur esp in NZ) they instead will use the judgement as a tactical victory (they will call it a Pyrrhic one) that will allow them to bully others into doing there bidding. Also with the current push to change the DMCA if they lose a default judgement they can show how hard done by they are by the bad courts to congress to. To the MPAA this is a win-win.

John Fenderson (profile) says:

Re: Re: Re: Hoping for default judgement

Not going to happen. This sort of thing is actually very good for the major tech companies like Google. They can survive in such a climate and it simultaneously raises the barrier of entry for newer, innovative companies. So it limits competition and makes it easier for them to stay a major tech company.

Anonymous Coward says:

Megaupload

Megaupload had legal uses, but few used it for that and we all know it. Megavideo was massively popular because it was the top host on tv show/movie directory listing websites like tv links. In part because Mega paid uploaders for their videos. Megavideo then went as far as to charge users for streaming long videos. How quickly we all forget the 72 minute restriction. As if legally uploaded videos are 72+ minutes long.

Anonymous Coward says:

Re: Megaupload

The majority of the files that were uploaded by people were never shared or downloaded in comparison to the number of files of that were shared or downloaded. So if anyone says that Megauploaded was used mostly for piracy would be wrong being as the majority of files that were uploaded were never shared or downloaded and thus shows that Megaupload was used mostly as storage/backup by people than compared to people using it for piracy.

Anonymous Coward says:

Re: Re: Megaupload

Measuring files that were shared vs. not shared is not an accurate picture of what was happening. A single user using it for backup could have stored tens of thousands, potentially hundreds of thousands of files (if there wasn’t a limit). A few thousand legal users could have potentially stored more files than all illegally accessed files combined.

Megaupload was ranked the 75th most popular website in the world, higher than Dropbox ranks today. To suggest Megaupload was primarily used for legal traffic is ludicrous.

Ruben says:

Re: Re: Re:2 Megaupload

…even if they are infringing files, that’s not Megaupload’s problem, it’s the uploader’s problem. It’s the user that’s infringing, not Megaupload.

Seriously. Both internally and externally, content industries and their representatives refuse to acknowledge individual accountability.

Anonymous Coward says:

Re: Re: Re: Megaupload

“To suggest Megaupload was primarily used for legal traffic is ludicrous.”

Youtube is used for piracy but the majority of files on their is perfectly legal and yet Youtube hasn’t been shutdown for people using it for piracy even though that the majority of people using it and the majority of files on their is perfectly legal just like the majority of people and the files on Megaupload were perfectly legal compared to the number of files that were being illegal shared.

So by your own words it would be ludicrous to suggest that youtube was primarily used for legal traffic.

Anonymous Coward says:

Re: Re: Re: Megaupload

Actually the majority of people were using it as a backup/storage facility as compared to the number of people that were using it for piracy. So for you to say “To suggest that Megaupload was primarily used for legal traffic is ludicrous” is in itself ludricous being as the majority of users were using Megaupload for the intended use of a backup/storage facility as compared to the number of people who were using it for piracy.

Anonymous Coward says:

Re: Re: Re:2 Megaupload

Even Google must be illegal by the same logic because they too must be a piracy haven with all the internet traffic they cause with people using the site to search for content even though the minority of people are searching google for illegal content as compared to the majority of people who are using Google for lawful purposes.

JMT says:

Re: Re: Re: Megaupload

“To suggest Megaupload was primarily used for legal traffic is ludicrous.”

Suggesting the VCR was primarily used for legal purposes was also considered ludicrous by the MPAA, and yet looked how that worked out.

It’s clear to anyone with half a brain that MU and other cloud storage sites have “substantial non-infringing uses”, so I don’t understand why you think the end result should be different this time around.

Anonymous Coward says:

Re: Re: Re: Megaupload

According to the RIAA/MPAA’s own data Megaupload wasn’t even the biggest of such sites. It was Filesonic. Megaupload was ranked 7th.

So why didn’t they go after the first six? Because Dotcom appeared to be enough of an easy target. And not only do you guys still NOT have him behind bars like you want, you managed to make a perceived douche into a victim, if not a hero.

How do you fuck that shit up? If you’re the MPAA, I suppose.

Karl (profile) says:

Re: Megaupload

As if legally uploaded videos are 72+ minutes long.

If I understand the way Megavideo worked, that 72 minutes was per day, not per video.

So, watching five 15-minute videos would put you over the limit as well.

In any case, the length of a video tells us nothing about whether or not the video is pirated. A 20-minute video of (say) Archer is probably infringing; a 72-minute video of a video game playthrough is probably not.

James Jensen (profile) says:

Re: Megaupload

As if legally uploaded videos are 72+ minutes long.

That’s a poor argument and you know it. However, let’s look at some >72 minute videos that one might legally upload:

The Little Shop of Horrors (1960): 72 minutes and 30 seconds
Sita Sings the Blues: 81 minutes
Night of the Living Dead: 95 minutes

All of them public domain and completely legal to upload and make money from. All completely legal to remix to create a new work.

PaulT (profile) says:

Re: Re: Megaupload

Don’t even fall into his trap of assuming that long video = commercially produced feature film. Just look here: http://twit.tv/ – numerous weekly shows available in video as well as audio, many of them over 90 mins or even 2 hours per episode. By this moron’s assumption, if they used MegaUpload to monetise their show and save some of their bandwidth costs, they must be pirates and deserve to have their own content removed because their legal content doesn’t exist.

This is one of the reasons why these arguments never go anywhere – their assumptions take place in a fantasy world that depends on the idea that their beloved corporations are the only content creators.

Anonymous Coward says:

Re: Megaupload

As if legally uploaded videos are 72+ minutes long.

I suggest you drop by twitch.tv sometime in the near future, and start looking around the video files for some of the most popular users. It’s not all that uncommon for various marathons and tournaments to have 72+ hours of video, conveniently broken into chunks 120 minutes long.

The only difference between then and now is that things have had a chance to scale up.

Anonymous Coward says:

Re: Megaupload

“Megaupload had legal uses, but few used it for that and we all know it.”

Unless you’ve somehow gained access to Megaupload’s logs, you have no reason whatsoever to claim anything of the sort. What you think is not the same as what you know, and you don’t really know as much as you think.

It’s also irrelevant. A legal service doesn’t suddenly become illegal because the number of users obeying the law suddenly drops from 51% to 49%.

Anonymous Coward says:

#onepercentproblems

In fact, the industry itself admits that this is true, because they’re currently asking Congress to change the law to make this a new legal requirement. Yet, in the Megaupload complaint, they pretend it is already the law

Whoops! Another scheduling mishap. Don’t you just hate it when that happens? You pay Congress millions in bribes to pass the law you wrote, and then it doesn’t get rammed through quite fast enough to be used in your court case.

Zonker says:

It’s obvious what MPAA’s goal is here: to eliminate their competition. See, every claim of theirs against Megaupload is against any means independent artists, authors, musicians, or other creators have to distribute and profit from their own works (and keep their rights to their own work) without going through a middleman studio, label, or publisher who will make them sign away their rights for profit.

The MPAA here wants to make it so that the only legal way to create and distribute creative works is through them, the RIAA, publishers, or other middleman assigned to your particular form of media. This is *not* about the rights of artists, this is about the “rights” of the middlemen who get to decide who and what gets published, where and how they get distributed, how much to charge for it, and how little to pay the artist (if anything).

NEW MegaUpload Search services says:

HOW to kill this argument

after you make your megauload you create a search engine that lists text files about copyright law and lists of lazy do nothing companies and shills and how they do nothing for the world….

nohting else , thus your a search engine and one that as they can see isnt infringing…

haha

call this engine lazypeoplesearch

Silver Fang (profile) says:

Imbalance of Power

The problem is the entertainment industry has millions of dollars and an army of lawyers at its disposal. Meanwhile, the tech industry has grown, but still lacks the clout the entertainment industry has. This is why governments and courts fall all over themselves to appease the entertainment industry, generally at the expense of the tech industry.

What’s needed is for the Internet to have a lobbying group of its own to represent its interests in government. I despise lobbyists and special interests, but let’s face it: that’s how our government works. If you want to be listened to, you have to either be rich or be part of a large lobbying group.

It’s time to form a lobbying group for the Internet that’s big enough to take on the RIAA/MPAA head-on and have a decent chance at beating them at their own game.

That One Guy (profile) says:

Re: Re:

Only because their target had the money to fight back, and would you look at that, the majority of Dotcom’s finances are frozen, that just might make it difficult for him to defend himself, especially if they go the time honored route of ‘Well, you won this round, so we’ll just appeal and make you do it all over again.’

G Thompson (profile) says:

Re: Re: Re:

and that right there is one of the major reasons of what is wrong with the US civil legal system and why your companies hate with a passion other common law countries where that cannot happen. Oh that and in other countries 99% of the time the loser pays.

Time for tort reform perhaps? yes I know its a dirty phrase for some attorneys in the USA.. since reform might make them work for a living

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