Why is the Law After Kim Dotcom & Megaupload?

In All by Tola Brennan

MegaUpload was born in 2005 when Kim Dotcom was frustrated by the file size limit on email attachments. The file-sharing grew enormously, but soon was accused of enabling the sharing of copyrighted content. Section 512 of the DMCA provides protection under the “safe-harbor” guidelines which give services a protocol to handle DMCA takedown notices. As long as the service is compliant there are no grounds for violation. However, it was argued that MegaUpload’s business model encouraged illegal sharing. Dotcom makes a full defense here.

On Jan. 4, 2012, the site had 180 million registered users, 50 million daily visits and 4% of all Internet traffic. On Jan. 19 the DOJ took action. On January 20, Dotcom’s New Zealand mansion was the target of a SWAT-style raid with dozens of heavily armed officers, who approached the mansion like a terrorist compound. MegaUpload was shut down and $150 million in assets were seized. Dotcom was arrested and repeatedly denied bail.

The sites’ takedown left lots of legitimate users hurt. In March 2012, extradition papers were filed. In June 2012 the warrant was ruled invalid. These beginning salvos led into three years of legal wrangling. The case, which should revolve around compliance with Section 512 of the DMCA  is on shaky legal ground. The DOJ allegations of a “Mega Conspiracy” come with a lead prosecutor who has an industry past. There are concerns about how criminality is defined and a prominent law professor calls it an abuse of authority and the government has attempted to disrupt due process.

Youtube faced practically the same situation in Viacom v. Youtube and won. The legal defense has made comparisons to Dropbox and iCloud. Sean Parker of Napster fame was able to evade serious repercussions. “The music industry didn’t try to throw Mark Gorton, the founder of Limewire, into jail — even though Gorton cost the labels trillions of dollars in damages, according to the RIAA. Instead, they sued him and forced him to pay $105 million. The Hollywood film studios didn’t lock up Anton Titov, founder of Hotfile, a Web storage service that the studios said adopted an “identical business model” as Megaupload’s” says The Verge.

“The company is being faulted for not monitoring what each of its users did on its service, not inspecting content as it was being uploaded for copyright violations, and not combing through its servers for infringing material. But that’s inconsistent with the rulings from several federal courts, which have held that online companies have no duty to police their services to prevent infringements or detect them after they occur,” says the LA Times.

“It’s the new war on drugs. The plan is to have taxpayers foot the bill and then attack websites rather than regulating or encouraging innovation. The MPAA and RIAA have spent billions fighting piracy when they should have been instead spending billions to reinvent their constituents’ services,” says TechCrunch. “MegaUpload is no more guilty of pirated content than Youtube and it seems the US Government is singling out MegaUpload,” said Business Reporter. He also garnered the support of Steve Wozniak who called the case “ridiculous.”

However, a Jan. 2014, episode of 60 Minutes seemed more interested in hyperbolic claims (“Kim Dotcom was once master of the internet”) and character assassination (“Kim Dotcom is playing a supervillian. He’s playing Dr. No and he’s having a ball playing it.”) than coverage, failing to perform basic fact-checking (“were these extravagant things here when you bought it?”). Bob Simon alleges Dotcom owns his mansion. He does not. But this lie helps a double standard describing the property: “a modern day Xanadu, a mansion only he or Orson Welles could have imagined” and “I wouldn’t call it very tasteful. I would call it gargantuan.”

A Vice documentary was justifiably called a fluff piece, but closes with a positive quote from Dotcom who says of the internet: “If you limit it all and put control into a handful of content conglomerates, large monopolies then you do not have this exposure. You have to play by their rules and you have to live in a world that is censored.”

Eventually legal delays were resolved and this past week the extradition case has got going. The prosecution wrapped up its arguments today and the defense begins early next week. A full timeline can be found here.