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Old 03-05-12, 00:41   #1
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Default Megaupload: A Lot Less Guilty Than You Think

Megaupload: A Lot Less Guilty Than You Think
By Jennifer Granick

The recent Department of Justice decision to indict Megaupload for copyright infringement and related offenses raises some very thorny questions from a criminal law perspective. A few preliminaries: I’m responsible for the musings below, but I thank Robert Weisberg of Stanford Law School for taking the time to talk through the issues and giving me pointers to some relevant cases. Also, an indictment contains unproven allegations, and the facts may well turn out to be different, or to imply different things in full context.

DMCA SAFE HARBOR: BELIEVE IT AND IT WILL BECOME REAL: As a matter of criminal law, the discussion of whether Megaupload did what it needed to do to qualify for the DMCA Safe Harbor misses the point. Did they register an agent? Did they have a repeat infringer policy? These are all interesting CIVIL questions. But from a criminal law perspective, the important question is did Defendants BELIEVE they were covered by the Safe Harbor? This is because criminal infringement requires a showing of willfulness. The view of the majority of Federal Courts is that “willfulness” means a desire to violate a known legal duty, not merely the will to make copies.

In other words, for criminal liability, it doesn’t really matter whether the service qualifies, so long as Defendants believed it qualified. If so, they were not intentionally violating a known legal duty, and so their conduct would not satisfy the willfulness element of the offense. For criminal liability after the DMCA safe harbor, as in horseshoes, close may be good enough.

SECONDARY COPYRIGHT LIABILITY AND CRIMINAL LAW:

The heart of this case is whether and when an enterprise can be held criminally liable for the conduct of its users. (For example, both copyright infringement claims (Counts 4 and 5) identify aiding and abetting as a basis for the charge.)

Aiding and abetting is something like the civil liability inducement theory the U.S. Supreme Court created in the 2005 Grokster case. Experts opine that the indictment makes out a pretty good inducement case against Megaupload. But the first question from a defense perspective has to be “Can the Grokster theory of CIVIL liability even be the basis for CRIMINAL copyright claims?” This has never been decided by any Court.

However, the pending Second Circuit case of Puerto 80 Projects v. USA (“Rojadirecta“), raises the issue squarely. There, the plaintiff is challenging the ICE seizure of its Rojadirecta domain names based on an allegation of criminal copyright infringement. For background on the case, and on the ICE domain seizures, check out Techdirt’s coverage.

Rojadirecta’s lawyers at Durie Tangri have challenged the U.S. Government’s assertion that criminal liability arises from linking to infringing content. The lawyers argue that judge-made secondary infringement liability theories, including Grokster style inducement, cannot be the basis for a criminal copyright violation because the criminal copyright statute doesn’t mention secondary liability. Congress considered and rejected statutes that would have created such liability, in COICA and PROTECT IP. In sum, due process doesn’t allow incarceration under a civil legal theory that the Supreme Court dreamed up in 2005. The issues yet to be decided in Rojadirecta apply to the Megaupload case as well.

AGREEMENT + CIVIL VIOLATION = PRISON?: Count 2 is a conspiracy to commit copyright infringement claim, and references unknown parties as members of the conspiracy. Conspiracy entails an agreement to commit an offense and an overt act in furtherance of that agreement. The act in furtherance need not itself be illegal, but there must be an agreement to do an illegal act. The list of overt acts show that the object of the conspiracy was infringement by Mega users. If Defendants agreed with each other to induce others to infringe, and Rojadirecta’s lawyers are correct that inducement is not a crime, there’s a conspiracy only to violate a CIVIL law. If the idea is that Mega conspired with its users to infringe, those users may or may not have been criminally infringing copyright. They were located all over the world, and may or may not have acted willfully, i.e. intended to violate U.S. law. Again, the government would basically have alleged an agreement to violate a U.S. CIVIL law, including by many people who are not subject to U.S. rules.

Is it a federal crime to conspire to induce others to violate a U.S. civil law?

The answer to that is an obvious “no”. The conspiracy statute itself makes clear that the object of the conspiracy must be an offense or fraud against the United States, in other words, a federal crime. 18 U.S.C. 371. It is true that Oliver North and John Poindexter were prosecuted for conspiracy to violate Boland Amendment, which prohibited Defense Department spending on the Nicaraguan Contras, but was not itself a crime. And there is a 1979 case (U.S. v. Ruffin, 613 F.2d 408 (2nd cir. 1979), where the defendant was convicted of conspiracy when he convinced an unwitting person to divert federal funds to the defendant’s personal benefit. But both cases constituted fraud involving U.S.taxpayer dollars, which is also a basis for conspiracy liability. Civil violations simply are not.

For these reasons, prosecuting this case against Mega, especially if Defendants get good criminal lawyers who also understand copyright law, is going to be an uphill battle for the government.

A few other points. Some direct infringement convictions look easy, but COUNT 4 IS WEIRDLY INCOMPLETE: I agree with the copyright law experts interviewed by Ars Technica that the most damning allegations in the indictment are the claims of direct infringement, particularly for the prerelease movies. Interestingly, the indictment identifies four films that the defendants supposedly distributed before release: The Green Hornet, Thor, Bad Teacher, Twilight–Breaking Dawn Part 1. But Count 4 only charges one such act of prerelease infringement, the movie Taken. What about the other films? Why were those not also charged?

Finally, this case is extremely interesting from a JURISDICTIONAL standpoint. One of the very first issue to be litigated will be extradition to the United States. Does the United States have jurisdiction over anyone who uses a hosting provider in the Eastern District of Virginia? What about over any company that uses PayPal? That’s a very broad claim of power, and I expect it will be vigorously contested.


This is an older article now but probably one that hasn't shown up here. It comes from Jan. 26ᵀᴴ, this year.

In it, it demonstrations some of the major differences between civil law in the US and criminal law. I had made mention there were differences in them and this one lays it out well.

Megaupload was shut down under criminal law, supposedly. A charge of criminal copyright infringement. This article lays out why it will be hard to prove in court.

I suspect that this whole operation to appease the copyright gang will come to nought. Mainly because if it does go to court and it is proven that Kim Dotcom is innocent, they are then liable for the destruction of his business. None of this gang is overly known for wanting to pay up. I suspect instead that realizing this late in the process the major screwups, that they will instead not charge Kim Dotcom and stonewall over the whole business. Kim will have to sue the US government over the destruction of his business and that will take years, if it ever does get settled.
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Old 03-05-12, 01:11   #2
 
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Default Re: Megaupload: A Lot Less Guilty Than You Think

Doesnt matter that its a couple of months old photostill, there are some interesting points in there, but then that blog comes from Stanford Law University....LOL

Thanks for sharing it with us.
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