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Megaupload.com indicted by Department of Justice
By Daniella Adler – Edited by Abby Lauer

U.S. v. Kim Dotcom et al., 1:12-cr-3 (E.D. Va.)
Indictment

The Department of Justice recently brought a criminal indictment against Megaupload.com and related websites in the Eastern District of Virginia on three different counts of copyright infringement as well as money laundering and racketeering.

The indictment calls the operators of Megaupload.com and its environs the “Mega-Conspiracy” and describes it as a “worldwide criminal organization.” The government estimates that $175 million in profits from subscriptions and advertising comes directly from the large volume of copyrighted material illegally posted on the website. Among the individuals indicted were Megaupload.com founder Kim Dotcom and several of the sites’ main employees and officers.

Currently, when users attempt to access any of the “Mega” sites, they are confronted with an FBI Piracy Warning, which explains that the domain has been seized, states that the “individuals and entities” associated with the crimes have been indicted, and lists the charges. 

The Digital Millennium Copyright Act (“DMCA”), provides a “safe harbor” for companies that comply with the Act, immunizing them from liability for copyright infringement. Digital Millennium Copyright Act, 17 USC § 512 (1998). In its indictment, the government argues that the Mega sites are not protected by the safe harbor because the employees and operators of the website knew their site hosted copyrighted material, benefitted from this material, and uploaded some of the infringing material themselves.

The government accuses the Mega sites of failing to delete copyrighted material using the same technology and methods it uses to ensure that terrorism propaganda videos and child pornography do not remain on the site. It also accuses the individuals indicted of uploading “at least one infringing copy of a copyrighted work to a Mega Site.”

Prior cases holding host websites or technology companies liable for large-scale copyright infringement by its users include a case in which the court found the most incriminating evidence to be that company owners and employees shared copyrighted material themselves and advertised to a user base that was trying to access the copyrighted material. MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005). The government alleges that similar facts apply here. They argue that owners and operators of the Mega sites uploaded copyrighted material themselves, that the Mega sites didn’t fully comply with the DMCA, and that they paid frequent downloaders for their use of the site when they knew that some of the material was infringing valid copyrights.

Jennifer Granick, General Counsel for Worldstar LLC and blogger on the website of the Center for Internet and Society at Stanford Law School, points out an essential difference between the Grokster case and the case at hand: Grokster was a civil case, but the individuals in charge of the Mega sites are facing a criminal indictment. Granick questioned whether the indicted individuals can be criminally convicted for what has been, until now, a subject for civil litigation. For the owners and operators of the Mega sites to be criminally culpable, they must have willfully violated a legal duty. If they honestly believed that they were complying with the DMCA, then the willfulness requirement may not have been met. Granick also points out that the conspiracy statute does not hold third parties liable for their users’ copyright infringement. These issues, she argues, makes the government’s case hard to prove beyond a reasonable doubt.

Ars Technica also reports that Chris Sprigman, law professor at the University of Virginia, is worried that this case will curtail further technological development. Courts have wrestled with this aspect of copyright law since Sony Corp. v. Universal City Studios, 464 U.S. 417 (1984), one of the first cases involving third-party liability for copyright infringement, but the evolution of case law and the passage of the DMCA suggests that curtailing technological innovation will be only a secondary consideration in the Mega site case.

Daniella Adler is a 1L at the Harvard Law School.

 

Posted On Feb - 5 - 2012 1 Comment

One Response so far.

  1. Eric says:

    Daniella,

    Nice writeup. Since the case will likely turn on culpability, Kim Dotcom probably shouldn’t have gotten the vanity plate “guilty” http://cache.gawkerassets.com/assets/images/12/2012/01/1aa9afdd708ef5b95f4f83065fb90fc9.jpg

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