Kim Dotcom at home in New Zealand, celebrating the launch of his newest venture.
One day after the January 18, 2012 SOPA/PIPA blackouts, Demand Progress and its allied organizations were busy celebrating a successful day of protests against Internet censorship and plotting our next moves. But in spite of our victory in Congress, we would soon discover that our content industry foes and their political allies already had contingencies in place. On January 19th—merely hours after the end of the SOPA/PIPA blackouts—the United States Department of Justice announced it was going after the popular cloud storage website Megaupload using novel legal theories to allege a criminal conspiracy for copyright infringement because the site allows file sharing.
Our government had decided to take matters into its own hands. The DOJ seized Megaupload’s domain—using the powers it claims from the PRO-IP Act, described at the beginning of this book—and servers, along with the assets of the company and its leaders. The website was one of the world’s most popular online services at the time, and never mind that it wasn’t even a U.S. company, or that Megaupload’s founder Kim Dotcom was living in New Zealand. Demand Progress couldn’t help but wonder if the timing of the U.S. Government’s actions was deliberate.
We had seen plenty of signs that the content industry apparatchiks who pushed SOPA/PIPA were employing an “any means necessary” approach to preserving their business models, but the Megaupload takedown was above and beyond. The case is currently tied up in courts of law on either ends of the world, as Megaupload founder Kim Dotcom fights his extradition from New Zealand to the United States.
As it turned out, in the course of shutting down Megaupload, the U. S. Government created massive collateral damage by cutting innocent users of Megaupload off from their non-infringing content. In short, untold businesses and ordinary Megaupload users who stored their family photos, business documents and other data on Megaupload were out of luck and without any way of recovering their files. This would never happen, for instance, if the government filed charges against a bank: depositors would get to access their money.
Our allies at EFF are in on the fray, opposite our legislative nemeses at the MPAA. Demand Progress even filed a brief in the case to decry the content industry’s attempts to deprive innocent Megaupload users of their files—and we “crowd-backed” it, with nearly one hundred thousand Internet users signing on to make sure the judge understands that his decision could affect millions of people who use cloud storage.
On the day of the U.S. Government raids on Megaupload, Techdirt blogger Mike Masnick wrote about the alarming developments:
If you’ve been paying attention to the MPAA/U.S. Chamber of Commerce/ RIAA claims about why they need PIPA/SOPA, a key argument is that they need it to go after these “foreign rogue sites” that cannot be reached under existing U.S. law. Among the most prominent sites often talked about is Megaupload—which accounts for a huge percentage of the “rogue site traffic” that the U.S. Chamber of Commerce and other bill supporters love to cite. However, it certainly appears that the U. S. Justice Department and ICE don’t think they need any new law to go after people in foreign countries over claims of criminal copyright infringement. As lots of folks are currently digesting, the Justice Department, along with ICE, have shut down the site and arrested many of the principals (with the help of New Zealand law enforcement) and charged them with massive amounts of criminal copyright infringement.
Of course, just last week, we had noted that Megaupload was immune from SOPA/PIPA because it doesn’t apply to dot coms—but this is still interesting and crazy for a whole variety of reasons:
ICE and DOJ have a pretty freaking dreadful record so far in bringing these kinds of cases for online copyright infringement. It’s kind of amazing that they did this so soon after they totally screwed up and had to give back Dajaz1 (without an apology, by the way). Megaupload may be a different type of site … but, still …
Similar cyberlockers, like RapidShare, have already been declared legal in both Europe and the U.S. I don’t know the details of Megaupload’s situation—and certainly its founder has a … um … colorful history … but it seems pretty extreme to totally shut down the site prior to any adversarial hearing.
In the last few days and months, Megaupload had announced plans to help artists make more money … and had announced that very successful and famous music producer Swizz Beatz had become CEO of Megaupload. Beatz is also married to recording superstar Alicia Keys and was responsible for getting all those RIAA artists to endorse Megaupload. All indications were that the company was clearly building a legitimate system for artists to make money and fans to get content. And it seemed that many artists clearly supported the site.
So why do we need SOPA/PIPA again? It seems like the DOJ/ICE just undermined the key argument of the MPAA/RIAA/U.S. CoC for why they need these laws. After all, Megaupload was one of the key examples used for why the law was needed.
At the same time there are huge questions about why the government is involved here. Megaupload is currently engaged in a lawsuit in the U.S.—and contrary to claims of SOPA/PIPA supporters, the company seemed more than willing to appear in court to deal with civil copyright claims. Why leap to criminal claims?
Is this really the message the U.S. DOJ and White House want to be giving the day after mass, widespread protests happened concerning a fear that this new law would be used to take down websites? Honestly, this is a big “fuck you” to the protestors, showing that the government already has this power thanks to the last law they passed: ProIP (which they promised they’d never abuse).
The indictment itself is so full of hyperbole (“Mega Conspiracy”) it sounds like it was written by the entertainment industry itself …
Anyway, I’m sure we’ll have much more to say about all of this … but wow is the timing dumb on the government’s part. Not only does it undermine the argument for PIPA/SOPA, but it raises significant questions about whether or not the feds already have too much censorship power.
Many media outlets have spent a disproportionate amount of time focusing on the Hollywood-style raid on Dotcom’s mansion and his flashy lifestyle. But Demand Progress believes that beneath the tabloid-ready story elements lie critical questions about due process and the exercise of government power. We tracked down Megaupload founder Kim Dotcom to discuss the intersection of the SOPA/PIPA battle and his own case.
DEMAND PROGRESS: One day after the January 18, 2012 SOPA/PIPA blackouts in the United States, you were apprehended in New Zealand for alleged criminal copyright charges related to Megaupload. Do you think the timing was a coincidence?
KIM DOTCOM: I am doing the best I can to defend against what I believe is unjustified government aggression arising out of what appears to be a politically motivated prosecution. The timing and manner of the raid and the method of prosecution strongly suggest that the takedown of Megaupload is a highly political prosecution to win favor with Hollywood.
The raid occurred on January 19th, 2012 around the same time SOPA was going down to defeat in Congress. The raid was like a Hollywood performance complete with helicopters, real time cameras, and a SWAT team against a family with children in a nonviolent case.
The DOJ apparently leaked the raid to their favorite reporters before the raid was completed in a Hollywood-like publicity stunt. The prosecutors used a concocted ex parte procedure to take down the entire Megaupload family of sites. The prosecutors used methods that provided us and site users without notice or an opportunity to be heard by the court before the Megaupload sites were taken offline and all of our assets frozen.
Time has shown us that the end game for the Government was the takedown of the Megaupload sites without fair procedures to appease Hollywood in light of the SOPA defeat as they have delayed the substantive hearings in this case, violated the law and my rights in multiple ways, and refused to provide the evidence or discovery that formed the basis for their claims even though two courts have ordered them to do so.
DEMAND PROGRESS: To what extent do you think the U.S. Government’s sudden interest in website seizures represents an end-run around the legislative process?
KIM DOTCOM: My main disagreement with the current state of the copyright debate is that the political balance is tilted too much in favor of content owners to the detriment of Internet innovation. Hollywood and the United States seem to be picking and choosing who they like and don’t like and that does not provide for the fairness, due process, and predictability that dual use technology companies like Megaupload need to grow and thrive. I believe it would be better for society to allow breathing room for Internet innovation. This case is at its core not about a criminal issue but rather an economics and political debate that is better suited to be dealt with in Congress.
I believe in a system that promotes creativity and protects creative works and at the same time doesn’t unduly burden the growth of Internet service providers like cloud storage companies. The Government took down the entire Megaupload cloud storage site and apparently did not care about consumer data or free speech; they cared about making friends with the MPAA.
DEMAND PROGRESS: Have any clues been revealed during the course of your trial about how the decision to shut down Megaupload was made and who shaped the policy?
KIM DOTCOM: I am pragmatic—Megaupload was a relatively large cloud storage service with high profile celebrities praising it and an attractive test case for a Government interested in winning favor with Hollywood to the detriment of Internet innovation and growth. If you are politically in favor of Hollywood copyright extremism you will likely side with the Government; if you are politically in favor of Internet growth, free speech, and fair use you will likely side with us. This case should never have been brought as a criminal action it is rather a political-economic debate for Congress or other law making bodies.
DEMAND PROGRESS: The media has paid a great deal of attention to your personal lifestyle and possessions in the course of covering your trial. But do you think this case is having an impact on the public discussion of the Internet policy and copyright?
KIM DOTCOM: I describe myself as a father and husband first and as a technology entrepreneur second. I am somewhat of an accidental defender of civil liberties—I would have preferred for my home not to be invaded and assets not taken away and I would have preferred for the police to have not used an illegal search warrant, the Government to have not spied on me illegally, and for the U.S. to have not taken my data offshore illegally. But I am mindful that the court rulings in my case finding government misconduct not only benefit me but also act as case law to benefit all New Zealand residents from such future government abuse.
Same thing on the copyright issues. If we prevail it helps protect other Internet companies from government aggression and provides more of a safe harbor for Internet innovation. The takedown of Megaupload has catalyzed the legal and public policy discussion around cloud storage and we are hopeful it will lead to changes in criminal copyright policies and the law to prevent a chilling effect on Internet growth and innovation.
DEMAND PROGRESS: What kind of impact do you think your prosecution is having on potential online businesses and innovation on the Internet?
Simply put the Megaupload prosecution is having a chilling effect on Internet innovation especially on Internet sites and services that host user generated content. Before this case any copyright issues with cloud storage intermediaries was dealt with using DMCA takedown notices and in some rare circumstances secondary copyright infringement civil lawsuits but never a criminal indictment. Megaupload was started as a solution to reduce the need for email attachments. Users would upload files to their storage area, get unique links or URLs, and include the URL in the body of the email. The recipient can then decide to download the file by clicking on the unique link. Emails can then be sent and received more quickly and presumably with fewer bounces. People started using Megaupload for more general cloud storage and to provide links beyond emails such as in blogs and web pages.
The debate is whether the provision of dual use cloud storage to society, where consumers use it in both good and bad ways, renders the cloud storage provider criminally liable resulting in the entire site being shut down. We think the government is wrong and we believe we will prevail. We hope that a court finds that an ISP like Megaupload providing freemium cloud storage to users across the world, some of whom may misuse the system, is not a criminal violation by the online services provider—if we prevail it will help all tech companies worldwide by providing greater predictability against future criminal indictments.
I am an Internet entrepreneur who is the target of an experimental copyright matter and case of first impression. I am an accidental liberty defender. When I win society wins. My legal team has already helped protect the rights of other New Zealand residents by creating case law precedent against illegal search warrants and illegal U.S. conduct in removing private data from New Zealand. I hope that a court finds that an ISP providing freemium cloud storage to users across the world (some of whom may misuse the system) is not a criminal violation by the ISP. If that occurs it will help all tech companies worldwide and reduce the chilling effect Hollywood has on the growth of cloud storage.
DEMAND PROGRESS: What are some things you think Internet users can do about these issues?
KIM DOTCOM: In terms of what Internet users can do about government aggression is to change government and insist on leaders and policy makers that reflect your values. Helping organizations like Demand Progress is a good place to start. I am part of a mosaic of faces that are evolving the Internet—my face may be highlighted now but it takes a village for society to evolve the Internet the way it wants.
I hope that the future will be more balanced and will not lead to aggressive government takedown of an entire cloud storage site, where consumers lose access to their data such as family photos. I have no choice but to be committed to the fight—my liberty depends on it.
DEMAND PROGRESS: We filed a brief in your case to fight the MPAA’s attempts to block Megaupload users from retrieving their files. There appears to be tons of collateral damage from the U.S. shutdown of Megaupload, including lots of users who had their personal files stored on your site. Can you comment on what sort of precautions the U.S. government has made to preserve this data and whether you think users will ever see their files again?
KIM DOTCOM: We are litigating the consumer data preservation and access issue now in the United States. The DOJ seems to have little interest in preserving the Megaupload user data or allowing for access. Currently much of the user data is stored on servers that are turned off and stacked in a warehouse in Virginia. The Department of Justice took down the entire Megaupload cloud storage site to appease Hollywood and in doing so destroyed free speech and consumer rights to access their own data. The DOJ is supposed to be seeking justice for all people, not just the MPAA.