With its Recent Megaupload Indictment, the Government Gets Aggressive in its Efforts to Curtail Copyright Infringement

By Lena Mualla *

Megaupload.com now redirects to this FBI anti-piracy warning

Megaupload.com now redirects to this FBI anti-piracy warning

The recent indictment of the owners of Megaupload.com, a Hong Kong based-file-sharing site that is incredibly popular in the U.S. and throughout the world, is noteworthy because of its timing.  The indictment, coupled with a site seizure, occurred on the very next day after citizens vocalized their outrage over the SOPA/PIPA legislation in a nationwide day of concerted activism, causing Congress to back away from the bill.  SOPA/PIPA would have allowed the government to take down sites with infringing content without demonstrating any wrongdoing on the part of the host site.  Currently, the government must first issue warnings called takedown notices to establish knowledge on the part of the site before any site seizure takes place.  So, why is the timing questionable?  The very provision that citizens fought against, and ostensibly prevailed in defeating, still remained: the government was able to seize the site, Megaupload.com, based on a mere charge.  The 2008 PRO-IP Act and civil asset forfeiture laws serve as the legal basis for such site seizures.

Kim Dotcom formerly Kim SchmitzUncanny timing aside, the indictment itself is rather remarkable.  First, the seven site owners named are all non-U.S. citizens, several from Germany and Finland.  In fact, on March 4, the U.S. filed with New Zealand for extradition of Megaupload founder Kim Dotcom and three of his cohorts.  Dotcom, originally Kim Schmitz, is a citizen of Germany and Finland, and has residency status in New Zealand.  He has past convictions stemming from computer hacking and insider trading during the dot-com bubble of 1995-2000.  The indictment charged the seven with the following crimes: engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering, and two counts of criminal copyright infringement.  The indictment asserts that Megaupload cost songwriters and filmmakers at least $500,000,000.  The site operated in a way that incentivized users to upload videos, paying uploaders for their content in some cases, without regard to whether the material was infringing.  As an evasive measure, the main Megaupload site redirected to third party sites such as ninjavideo.net, megaupload.net, megarelease.net, kino.to, alluc.org, peliculasyonkis.com, seriesyonkis.com, surfthechannel.com, taringa.net, thepiratecity.org, and mulinks.com.  According to a Justice Department statement, “The conspirators allegedly paid users whom they specifically knew uploaded infringing content, and publicised their links to users throughout the world.”  The DOJ termed it a “Mega Conspiracy;” one of the accused in an e-mail jokingly rejected the label “pirate,” instead characterizing the site as “providing shipping services to pirates.”

MegauploadThe question remains, are these copyright infringement indictments likely to become a trend, or did the “large target” nature of Megaupload make it tempting for the government to use the site to serve as an example to others?  The effectiveness of such indictments is uncertain.  Some are already suggesting that instead of using one centralized site, uploaders should just use a decentralized model in order to better evade law enforcement.  One such site, RetroShare, is cleverly designed to circumvent the trappings associated with other file-sharing sites.  As TorrentFreak explains, “The RetroShare network allows people to create a private and encrypted file-sharing network.  Users add friends by exchanging PGP certificates with people they trust.  All the communication is encrypted using OpenSSL and files that are downloaded from strangers always go through a trusted friend.”  In this way, it seems that the government may be on the losing end of a game of whack-a-mole, especially given the anti-censorship climate that has been inhospitable to website crackdowns by the government.

Meanwhile, Kim Dotcom and the other six accused in the alleged crimes are defiant in fighting back the charges.  Casting the charges as “political” and “misleading and malicious,” Dotcom remained positive, speaking from his prison in Auckland, New Zealand: “We’re going for this and we’re confident we’re going to win.”  Aside from the question of what will happen to Dotcom and the six other accused in connection with Megaupload, it is an open question as to what will happen to similar file-sharing sites in the future.

Lena Mualla is a second-year law student at Wake Forest University School of Law. She holds a Bachelor of Arts in Government and International Politics from George Mason University. Ms. Mualla, a Fulbright award recipient, taught English in Indonesia prior to entering law school. Upon graduation, she intends to practice international law or environmental law.