As you may recall, the MPAA is among those who have said that Carpathia, the hosting company Megaupload used, must retain the data on its servers — even though the Justice Department has said it’s done with it and Carpathia was free to delete the evidence. Others, of course have also asked for access to their data. And, most importantly, Megaupload itself has asked if it can keep the data. Carpathia wants nothing to do with it, because it’s costing the company $9,000 per day to hang onto the servers without doing anything else with them.
The sale or transfer of those copies from Carpathia to Megaupload or any other third party would constitute an unauthorized “distribut[ion] … to the public” under the Copyright Act
That seems like a pretty big legal stretch by the MPAA’s typically overreaching lawyers. Depending on who the content was transferred to, it doesn’t automatically mean distribution “to the public.”
Of course, the continued insane paranoia of the MPAA continues to shine through in this filing as well. It insists that if Megaupload is given back the servers, it will ship them to some other jurisdiction and immediately relaunch the site:
“A sale or transfer of the servers to Megaupload (or any of the defendants) would raise a significant risk that Megaupload will simply ship the servers, hard drives or other equipment — and all of the infringing content they contain — to a foreign jurisdiction and relaunch the infringing Megaupload service, which would result in untold further infringements of the MPAA members’ copyrighted works. If so, the renewed criminal enterprise might be beyond any effective legal remedy.”
This also seems like a reach. All of the principles are under arrest and facing extradition to the US where they’ll face criminal charges. One would imagine they all recognize that it doesn’t do their case any good to set the site up again in another jurisdiction.
When Kim Dotcom was granted bail, we noted that it was rather silly that the conditions of bail included a ban on internet access. It appears that pretty much everyone involved in the case has actually agreed, and the terms of bail have been adjusted to allow all of the Megaupload defendants to have internet access. The US didn’t even object to this request (which surprises me, actually).
What the US did object to, however, was Dotcom’s request to be able to go to a nearby recording studio to complete an album he is supposedly working on. The US seems to question whether this album really exists as well as its likelihood of commercial success. However, the judge notes:
This Court cannot speculate on the success or otherwise of Mr Dotcom’s venture. The numerous varieties of modern musical genres suggest that there are probably unimagined audiences available, and modern legitimate digital distribution systems are changing the face of the music market. I could venture to suggest that notoriety alone could well be a marketing angle for Mr Dotcom’s venture.
In the end, he does allow Dotcom to go to the studio, but with specific requirements, including having to notify officials when he’s going there, and only staying for four hours at a time. He has to alert officials when he arrives, at the 2 hour mark, and 5 minutes before he leaves — and he’s supposed to do so with a photo of himself on a smartphone (if he has a smartphone).
The US also objected to allowing the four defendants to meet in person, saying that by allowing them internet access, they could just Skype each other. However, the court agreed with the defendants that Skyping is not the same as actually meeting in person and is allowing that as well (again, in a limited fashion). The court notes that the “flight risk” that the US keeps worrying about appears to be exaggerated, though it’s still keeping pretty strict limits on Dotcom and the others, and may revisit the rules in the future.
Of course, I’m still wondering why internet access was banned in the first place. It seems like such an overaggressive ban on something that’s so central to the ways in which everyone communicates these days.
We’ve already discussed the ongoing fight about what happens to all of the content that was stored on Megaupload’s servers. It’s actually a case of strange bedfellows: the US government says they’re done with the servers (which seems odd, since the content would appear to be evidence in a criminal case, but the feds seem to want it to disappear). Carpathia — the hosing company spending $9,000 per day to hang onto the servers — would like to stop having to pay that money. Megaupload wants to preserve it, saying that it will help it win its case. The MPAA wants to preserve it so that it might use the data to sue more people. And the EFF wants to save it because it notes that there’s a lot of legitimate content there that people can’t access any more.
To that end, the EFF has helped a guy in Ohio file a request with the court to preserve the data, noting that it’s important to his business. The guy in question was filming school sports around Ohio and used Megaupload as a way to backup those files. Because of a hard drive crash just before the feds took down Megaupload, the guy has lost a bunch of his videos. As the EFF notes in its filing (pdf and embedded below):
It is one thing to take legal action against an alleged copyright infringer. It is quite
another to do so at the expense of entirely innocent third parties, with no attempt to prevent or
even mitigate the collateral damage.
That is what has happened here. When the government shut down Megaupload, it was
one of the 100 most popular websites in the world, with reportedly 150 million registered users.
One of those users, Kyle Goodwin, had recently started a business reporting on local high school
sporting events across Ohio. In addition to backing up his files on a hard drive, Mr. Goodwin
joined many others like him in placing his files on Megaupload’s servers, paying for a premium
account, and taking advantage of the remote backup cloud-based system for storage and remote
access to an unlimited number of files.
I’m still amazed that the feds went through with this takedown, rather than telling the MPAA to file a civil lawsuit for copyright infringement against Megaupload.
We’ve noted in the past the similarities between mass IP infringement trolling lawsuits and shakedown scams — and have even seen some out-and-out scammers mimic the techniques of copyright trolls. Torrentfreak now reports that some scammers are specifically targeting Megaupload users, pretending to be lawyers demanding payment for infringements on Megaupload. While these are pure scams, given the MPAA’s own statements about possibly suing Megaupload users, combined with the success rate that copyright trolls often have in getting some people to just pay up, it seems likely that a fair number of recipients of such a scam letter are actually falling for it.
We’ve noted that the MPAA’s case against Hotfile is surprisingly weak, and seems to be arguing that usage alone is proof of Hotfile’s complicity in any infringement done by users. This is a strange argument, which is more smoke and mirrors than anything legit. It’s as if the MPAA believes that if it just screams “but… but… piracy!” loud enough, the judge will forget to look at the actual law. However, in a bit of a surprising move, Google is trying to step in and inform the judge on one key piece of the case, with an amicus brief.
At issue is the standard used to judge whether or not the DMCA’s safe harbors apply. Obviously, Google has a vested interest in having previous court rulings on the DMCA’s safe harbor followed in this case, not just because those rulings protect Google, but because they’re the only way the DMCA actually makes any sense. Google’s argument is pretty clear and well-argued: as the DMCA safe harbors themselves, the massive DMCA caselaw and the Congressional history of the DMCA all show in pretty great detail, to lose the DMCA’s safe harbors, a company has to have specific knowledge of infringement, not just general knowledge that its tool is used for infringement. The MPAA’s argument is effectively the opposite — and is completely nonsensical: that if it can show that enough people infringed, then it should be assumed that Hotfile could have stopped the infringement. As the Google argument explains simply, that’s a clear distortion of the law. In fact, they point out that the MPAA is so far off the reservation on this one that it can’t even find DMCA cases to support its position, instead choosing two cases that have nothing to do with the DMCA.
Amusingly (and ridiculously), the MPAA is so freaked out about Google explaining the law on this one key point that it’s asking the judge not to allow the brief, suggesting that rather than providing a separate third party view, Google’s brief is really just re-arguing Hotfile’s position. That’s an argument that makes little sense, though. Google’s brief is pretty narrowly focused on just one key issue in the much larger case surrounding Hotfile: it’s merely asking the court to make sure it follows the same standard used in most other courts in the country. It makes no specific statements concerning Hotfile’s actions at all. The issue Google raises is important because this court and this Circuit have not specifically ruled on the DMCA safe harbors — a fact you can bet the MPAA knows well. No doubt, the MPAA is hoping that a different ruling in this case can lead to split that would (it hopes) lead to all of those many other DMCA rulings protecting safe harbors being overturned.
I’m sure that some simplistic commenters may try to summarize this case as Google defending Hotfile, but the specifics of the filing make it pretty clear that’s not what’s going on at all. It merely points out the well accepted standards and practices for removing DMCA safe harbor protections — which are quite different than the interpretation of the safe harbors that the MPAA gave the court in its motion for summary judgment.
There are days that the actions of the MPAA just make you shake your head and wonder just what goes through the minds of the lawyers running that insane asylum. The latest is the news that they’re considering suing Megaupload users directly, as if their reputation wasn’t already mud. The details actually have to do with the fight over whether or not the data on Megaupload’s servers is going to be deleted. There was a point, soon after the shutdown, when it was suggested that, due to a lack of anyone able to still pay the bills, the hosting provider that Megaupload used, Carpathia Hosting, would soon wipe the servers clean. That struck me as odd, because I would have thought that the data on those servers represented evidence in a criminal case — but for reasons still not clear, the government insists it has no need for the data and that Carpathia is free to delete it. I won’t even begin to speculate over the fact that the person who sent the letter to Carpathia suggesting this also happens to be the BSA’s former head anti-piracy VP. An ex-anti-piracy exec for an industry lobbyist, now running a criminal anti-piracy case, basically telling the data center to delete evidence? Hmm…
Others, of course, were concerned about both the evidence that could exonerate Megaupload as well as the legitimate files that were going to be lost — so there was an effort made to try to have the files retained, and the hosting firm has said (for now) that they won’t delete the data, despite the fact it is costing the company $9,000 per day to maintain these servers and the 25 petabytes of data they contain. But it wants to.
So here’s the surprise. Those fighting to keep the data have an unexpected ally: the MPAA. Yes, you see the MPAA wants to keep its options open and is considering directly suing users who may have used Megaupload for infringement — and for that to work, they’d need that data to remain available. This came out in a filing by Carpathia to the court, in which it notes that there is significant interest in keeping the data around, but it wants out of the burden of paying for all of this and having to retain the data itself. The filing notes that Megaupload itself wants the data for its defense, the EFF wants to help users get legit files back… and the MPAA wants the data to sue people. Apparently, unbeknownst to the public until now, the MPAA sent Carpathia a letter arguing in agreement with Megaupload and the EFF that the data shouldn’t be destroyed, but only because the MPAA wants to have access to the data in case it decides to go hogwild and completely and permanently destroy its reputation by suing users directly. From the letter the MPAA sent Carpathia:
Independent of the ongoing criminal proceeding, the Studios have civil claims against the operators of Megaupload, and potentially also against those who have knowingly or materially contributed to the infringement occurring through Megaupload…
… In light of the potential civil claims by the Studios, we demand that Carpathia preserve all material in its possession, custody, or control, including electronic data and databases, related to Megaupload or its operations. This would include, but is not limited to, all information identifying or otherwise related to the content files uploaded to, stored on and/or downloaded from Megaupload; all data associated with those content files, the uploading or downloading of those files, and the Megaupload users who uploaded or downloaded those files; all data reflecting or related to payments to third parties (including Carpathia) by the Megaupload operators; all data reflecting or related to payments to the Megaupload operators, including by users and other third parties, all electronic records regarding communications by the individuals involved in Megaupload’s operations; and all internal documents and communications regarding Megaupload.
Of course, recognizing just how bad its own lawyers’ statements are on the matter, the MPAA has sent in its PR folks to try to clean up the mess. Almost immediately after David Kravets at Wired published the original article highlighting this, MPAA PR people started calling him insisting that it wasn’t true at all. MPAA PR VP Howard Gantman told Kravets that the MPAA has no intention to sue users, despite the clear language of the letter it sent Carpathia.
“The reason we did that filing so that there is a possibility that litigation might be pursued against Megaupload or various intermediaries involved in Megaupload’s operation. We’re not talking about individual users…”
That’s not what the plain language of the letter itself clearly states — but never let facts get in the way of a good yarn spun by MPAA PR people desperately trying to make the organization seem not 100% evil. But, this is how the MPAA thinks: lawyers shoot their mouths off with threats first, and the PR folks are left to do cleanup. That’s what happens when you put the lawyers in charge, without any real knowledge of technology, business or just how ridiculously bad they make themselves look with their extreme positions. And then they wonder why no one sides with them in debates like the one over SOPA. Perhaps it’s because their position is so crazy that anyone with the slightest bit of common sense would have known to stay miles away. But that’s not how the MPAA rolls. It goes to crazytown and beyond, and then just denies it was thinking about suing users, despite claiming exactly that.
We’ve already seen that the claims made by law enforcement in the indictment against Megaupload has raised significant legal questions, as they seemed to assume all sorts of things not necessarily factually-based. Part of that overreach resulted in a New Zealand judge granting Kim Dotcom bail despite US authorities insisting that the court keep him locked up. Now things are getting even worse, as a court has declared the restraining order issued in the case as “null and void” and having “no legal effect” after law enforcement admitted to making a significant series of procedural errors. The end result may mean that everything seized from Dotcom — including his money, cars and other goods… may need to be returned.
The police apparently realized this and tried to apply for the proper restraining order after the fact, explaining to the judge that they had made five specific errors in the initial application. The judge is now figuring out what to do and whether or not this means that the government needs to return Dotcom’s property. Of course, there’s a good chance that the judge will allow the government to continue to hold the property and admit merely that “mistakes were made” and that they’ve now been corrected. However, given how many mistakes we’ve already seen in this case — and the apparent carelessness with which so much of it happened — it leads you to wonder how many other “errors” or shortcuts law enforcement in both New Zealand and the US took in bringing this case forward.
It’s no secret that Dotcom’s larger-than-life persona has been an easy target in the attacks on Megaupload, but it’s beginning to appear that law enforcement assumed that just because the guy is an obnoxious show-off with a criminal past that it didn’t need to actually follow all the rules in bringing a case against him this time. That’s not how the judicial system is supposed to work.
We’ve noted before that with the complete takedown of Megaupload by the US government, tons of people who had perfectly legitimate files hosted at the site lost those files and all the inbound links to them. While the government won’t do a permanent restore, I’m sure, apparently negotiations are ongoing to let people go in and “rescue” their data. It sounds like, as part of that process, the Megaupload crew has been reviewing details of their users, and they note that many of their users appear to be in the federal government itself. That’s really not a surprise, since there were plenty of legal uses for Megaupload (as well as infringing uses). But it does suggest just how widespread usage of the site was. It will certainly be interesting, however, to see if data on government users comes out as evidence in any possible trial.
While Kim Dotcom is out on bail in New Zealand, he gave an interview to a New Zealand TV station. You can watch it below or read the transcript at the previous link:
Generally speaking, if you’re facing criminal charges, it’s probably not a wise idea to give public interviews to the press, and I don’t see how doing this helps him in any way. He more or less lays out his expected argument concerning the copyright infringement claims, which are pretty much what you’d expect: that they followed the DMCA, took stuff down on request, and even gave copyright holders special access by which they could take links down themselves. Dotcom is clearly very well versed in the legal issues here, and he’s choosing his words extremely carefully, but it still seems a bit silly to reveal such arguments outside of court, and it could come back to haunt him later (you can bet US prosecutors are pouring over every word to figure out what they can hang him on.
Also, while the interview focuses on the copyright issues, it avoids the key part of the charges, which is the criminal conspiracy issue. Obviously, those are built off of the copyright claims, but just fighting the copyright claims and ignoring the conspiracy charges is unlikely to be a winning strategy.
One key point he raises in the interview is the fact that, despite being in business for seven years, no MPAA studio ever took any legal action against them other than sending DMCA takedown notices which he claims they obeyed (the indictment suggests that Megaupload didn’t necessarily have the greatest record on following takedowns):
JC: CNET, in an article that looked pretty well researched to me and well sourced said, and I quote, “among the copyright owners who’ve accused Megaupload of piracy, including software and video game companies none of them presented the FBI with more, quote, significant evidence, end quote, about Megaupload than the MPAA. Did any members of the MPAA come to you and say “we have concerns, Kim, about what’s going on in Megaupload”.
KD: Never. And I gotta tell you this – if you are a company that is hurt so much by what we are doing, billions of dollars of damage, you don’t wait and sit and do nothing. You call your lawyers and you try and sue us and try to stop us from what we are doing.
JC: So a cease and desist of some form or other. Did you ever receive any letters from members of the MPAA saying “the latest James Bond film is being exchanged, ad infinitum, through Megaupload, you must stop it”? Did you ever receive…
KD: Absolutely not. No legal document has ever reached us from any of these studios. The only thing that we get is Takedown Notices and them using the direct delete access on our website. So, isn’t it surprising to you that when I’m the pirate king and I’m causing all this damage that none of them has ever even attempted to sue us, to sue us for damages, you know? If you would run a business that loses billions of dollars because of me, you wouldn’t just sit there and do nothing. I mean, this investigation was ongoing for over two years, you know, the company was live for over seven years, the MPAA has always thrown names at us and called us all kinds of things but they’ve never actually done anything to you know, take us to court and for the very simple reason that there is a law in the US that protects us which is the Digital Millennium Copyright Act that protects online service providers from actions of their users and this is the same law that allowed Google to still exist, that allowed YouTube to still exist. You know that Viacom sued YouTube and YouTube claimed that they were protected by the DMCA and they won. And if you look at the YouTube case files, the emails that were exchanged internally we are a lamb compared to what was going on at YouTube at the time but these guys got away. They won their lawsuit and I’m sitting in jail, my house is being raided, all my assets are frozen without a trial, without a hearing. This is completely insane, is what it is.
Elsewhere he notes that he’s an easy target because of his “flamboyant” past, but that, alone isn’t illegal. But he also responds to the basic questions pretty clearly, noting that they can’t proactively monitor the service, because (1) that’s not required by law (2) it’s technically impossible and (3) it could raise privacy questions under US law (that part might be a stretch, since the uploads weren’t private, but public).
I still think there are serious problems with the lawsuit, but the case against him is a bit bigger than what he portrays in the interview, and he’s going to need a much stronger defense if he’s going to actually win the case.
One of our most vocal (yet anonymous) critics posted an off-topic comment on a totally unrelated story mocking us for not having covered the story of how Hollywood has been saved (saved!) thanks to the shutdown of Megaupload. Of course, the reason we hadn’t covered the story was because we didn’t know about it. He referenced a couple of French news reports, which I hadn’t seen until I had some time just now to catch up on some old comments. He could have submitted the stories, but he insisted that it would be a total waste of time because we ignore any story that we disagree with. That’s pretty funny, considering many, many of the stories here are ones that challenge our views. And, I’m especially interested in reports of actual data, even if it conflicts with other data we’ve seen in the past. In fact, I’m especially interested in such stories, because my focus is figuring out what’s really happening and understanding what’s actually best for culture and society. So data that actually challenges my assumptions is some of the most useful data around.
Unfortunately, the stories don’t actually have any data. The first one is totally anecdotal, concerning a guy who now goes to the movie rental store to rent (physical) movies since the shutdown of Megaupload, and the second one is about claims from TV stations that their websites are getting more traffic since the shutdown of Megaupload. Both are anecdotal, not data based, and really just seem to scream out the obvious: man, does the entertainment industry do a horrible job giving consumers what they want. If Megaupload’s website was offering a better experience than the TV networks’ own offerings… they should be firing their web designers and starting again. As for the guy renting videos… we’ll see how long that lasts.
The same commenter then left a comment with some bullet point claims. He doesn’t source them, so I have no idea how accurate they are, but they seem to indicate the same point in that second article. In the few weeks after Megaupload got shut down, TV station websites got more traffic. Again, this seems to simply show how bad a job they must have been doing in the past to attract viewers to their own websites. It also means that as soon as something better comes along (and it will), people will split. Ignoring that the market is telling you something is no way to build a long-term business.
Of course, we’ve also seen significant other data from firms that have access to a much wider view of internet traffic, which suggested that Megaupload traffic pretty quickly shifted to other, similar sites. Of course, some of those sites have since shut down or changed models, but anyone who thinks that more such sites aren’t springing up (with some keeping a lower profile) simply hasn’t been paying much attention to how the internet works.
