Megaupload case raises question of provider knowledge

Hollywood signals it will chase alleged copyright infringers around the globe, says InternetNZ

How much knowledge does a platform provider need to have of the files being traded on their system before they can be considered culpable?

Intellectual property and ICT lawyer Rick Shera declines to discuss the Megaupload case specifically, as it is before the courts; but he says the existence of any number of similar “file-locker” sites, to which customers upload and from which others download files, raises an important general question about provider knowledge.

Sites such as Newzbin have been held culpable for merely providing links to material traded, in its case, via Usenet newsgroups. A British High Court judge last year ordered British Telecom to block access to the Newzbin site. This broad application of the law is cause for concern, says Shera; “I’m sure Facebook pages have plenty of links to infringing content.”

In cases brought in the US against allegedly copyright-infringing sites, the “docket” giving details of the case has typically been sealed, meaning not even the defendant organisation can get access to it. Hence such cases have not hitherto been challenged in court to Shera’s knowledge, he says, and the Megaupload case may be the first.

“To my mind, the most interesting and concerning aspect of such cases is the fact that a website can be taken down based solely on one side’s evidence,” he says. New Zealand legislation would require that the rights and interests of third-parties such as non-infringing users of the service be taken into account before any takedown is authorised. “I’m not sure that’s the case under US law,” he says.

The increasing possibility of any remote site being unexpectedly brought down by a copyright challenge is a factor to be taken into account when weighing up the viability of cloud-computing solutions, Shera agrees. “I wouldn’t say it’s a new factor; if you’ve got data in the cloud, you’d be pretty silly not to have some kind of independent backup.”

The kind of “locker” storage of complete files Megaupload has been doing is not “file-sharing” within the definition of New Zealand’s Copyright (Infringing File-Sharing) Act, Shera agrees; that act is directed at peer-to-peer services, where a file is typically assembled from pieces held by many users on the network. However, that is a point of technical interest only, since the action against Megaupload is under US law.

Some commentators have cited the Megaupload action as a demonstration that the present US law is working, so the Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA) being contemplated by the US legislature are unnecessary. These acts were withdrawn for some redrafting last week in the face of international protest.

However, it is difficult to take such a position in view of the fact that such cases have not yet been tested in court, Shera says. It is possible that skilled lawyers could yet knock holes in the current law. The objectors to such laws may have prevailed in some battles but the war has not yet been won, he says.

InternetNZ CEO Vikram Kumar says the Megaupload case shows that “Hollywood and the music industry are now sending signals that wherever you are around the world ‘we’re going to after you’”.

He says it will be up to the courts to decide if the New Zealand police followed due process in arresting Kim Dotcom and his colleagues on Friday. “It seems from reading the indictment that the US court handed down that the financial charges that have been put on alleging money laundering and racketeering are secondary to copyright violations. And it’s quite possible that the New Zealand authorities reacted much more to the financial charges.” he says.

“The question becomes if Hollywood and the music industry are going after him for copyright violation, is it right to put on additional financial charges just to make it appear more serious and to get other governments to take it more seriously?”

He questions what would happen if a similar case occurs in New Zealand involving a teenager who is alleged to have downloaded illegal files, but made no profit from it. “Would we be happy to have him extradited and stand charge under those laws? I believe there is a larger issue that we have to start tackling at some point.”

The Megaupload case is likely to bring the issue around the security of offshoring data under renewed scrutiny. “There is a larger issue when you have things like cloud computing then jurisdiction and where your files are located becomes really important. I guess our persistent recommendation when using online services and cloud computing, is you have to do a bit of risk assessment,” Kumar says.

“If you want to put stuff in the cloud which is highly sensitive, highly commercially valuable or you lose a single copy and you have no backups then you’re heading for trouble.”

Kumar says those with legitimate files stored on the Megaupload site may lose their data. “Until it goes through the judicial process in the US it has all been seized by their own servers in the US, there is potentially material outside US jurisdiction, but whether Megaupload gets around to untangling that soon is doubtful.”

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If builders, doctors, lawyers, drain layers or any other trade found it a bit hard to survive these days, you might think it a bit over zealous to have people rounded up and prosecuted by nations other than out own, arriving on your front door step in a couple of helicopters, lame but effective public defamation of your character due to your choice of vehicle numberplates. having all of your possesions stolen by the americans because you hurt hollywood by $500 million dollars.
That 500 million i seriously suspect was achieved by adding up the money it would take for your whole family to go and see that movie.

I find it highly ironic that somewhere in russia is a group of hackers who have probably had more harm on the individual by the mass sending of viruses, yet they still sit there. T shirt manufacturers who use Nike, Adidas logo's , still sit there , making money by impersonating the big brands.\

My point is, and I'm NOT saying what did is OK , but when does it become OK for the yanks, who are not at least officially the world police, to come and drag people off for such crimes , when it isn't even in their jurisdiction. Last time I checked the internet was not owned of regulated.

Why ? just because of hollywood. I think the answer is yes.
Weve seen, and we will see more attempts to control and regulate the internet.
I agree the outright copying and distribution of material needs to be controlled to some extent but frankly if I told you I was going to make a movie that was to be distributed to every man and his dog world wide, It wouldn't be hard to inject value into the movie, before it is distributed.
Its time for movie companies to think differently,
It's time for governments to but out
oh, crap, helicopters ahead, better go hide :)



This gets worse, if as Mr Shera puts it, someone who uses a cloud service loses all their data and access to it.

Thank goodness in the USA you can sue the Government as you cannot sue the Government in NZ.

Unfortunately whilst technology is lorded as good, it does have its darker sides, manipulated for purposes other than legal activities.

Indeed as the world deals in more and more intangibles society has to decide how to respond. Copy right holders have been the victims of the shift in technology and rightfully claim that they have lost millions. The reality though is that the people stealing the material would have never paid for it in the first place. Studios and recording companies have to challenge themselves to reinvent their business models, otherwise it will be hard to find a jury whose members are not guilty of the offence to which they are charged with judging!



I'm waiting for the outcry from non-infringing users of Megaupload. In theory there are a lot of people whose data has been locked away through no fault of their own. Imagine if, when seizing the assets of a drug ring, the police not only locked down the dealers' bank accounts, but the entire bank.



Another rubbish piece of legislation. Sharing of legally purchased content will still be seen as a valid activity as far as the general public are concerned. Companies or individuals who profit from illegal sharing of content should be liable, but not sites or indivduals who may link to such sites or ISP's or telcos who host such sites. Media companies and legislators way out of touch on this issue. .



Are the police now going to pursue makers of USB sticks and removable hard drives? After all, isn't that what people store their pirated software on?

I do take issue with MegaUpload being a site for storing porn (adult and child), terrorist media, etc. That kind of stuff has got to be squashed.

As to Kim DotCom's personal wealth,.. who cares? He seems to be generous enough to the public. What about all the other millionaire stooges out there who don't give a bean?

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