Megaupload and criminal copyright infringement

There are layers and layers of interwoven issues arising from the shut down of Megaupload and the global action against its key staff in January 2012. For me, one of the core questions has always been the role government should have in acting on allegations of copyright infringement. Distractions, personalities and conspiracies aside, where is the line between civil and criminal recourse?

This is not to question the sovereign right of governments to protect national economic interests but the circumstances under which such a right is exercised, including against non-resident entities. In the past, public resources backed by the muscle of the State to back private interests globally was seen as imperialism.


Let me say up front that my views are biased. I have worked with all the four Megaupload defendants in New Zealand in their new venture Mega. After that, I’ve worked with Kim Dotcom in the Internet Party. These connections no longer exist (paywalled), giving some benefit of distance and objectivity.

Any discussion about copyright tends to get emotional quickly. Many are quick to assert that any view favouring Megaupload or Kim are obviously pro-theft and anti-creatives. That is simply false.

My own view is that copyright, which is meant to be a way to promote new creative works and balance private with public good, needs to be reviewed from first principles to be fit for the Internet Age. This is detailed in the Internet Party’s Copyright Policy, to which I was a major contributor.

At the same time, I do not support people breaking the law and infringing copyright. That’s not to say that breaking bad laws are never a good idea- Mahatma Gandhi’s Dandi march to illegally make salt is an example of civil disobedience that was both justified as well as politically astute. But breaking copyright laws aren’t in that class.

Whether it is principles based or people unwilling/unable to pay or just ignorance, I don’t support copyright infringement. Let’s call for updating the law but not break them meanwhile.

Criminal charges against Megaupload staff

With those disclaimers out of the way, my view is that the US Government should have let copyright holders aggrieved by Megaupload take their civil case to the courts. The US Government should not have launched criminal proceedings with all the force of the State that such a move entails.

I said exactly this but more eloquently using a rugby analogy in a keynote at the Surveillance, Copyright, Privacy: the End of the Open Internet conference earlier this year. The relevant part of the keynote recording is from 6 minutes in for about 10 minutes.

As a counter-example, the US Government did not interfere in the civil proceedings between Google (YouTube) and Viacom. Imagine the uproar if the senior management of Google were arrested, jailed and criminally prosecuted.

This case Viacom International Inc. v. YouTube, Inc. has done a lot to clarify the US law related to safe harbour and secondary copyright infringement, exactly the issues in the Megaupload case. Megaupload as a civil case would have similarly advanced understanding of the DMCA, just as the Sony and Grokster cases did.

It is noteworthy that the Viacom vs. YouTube case ended with a settlement in March this year with no money reportedly being paid.

The Megaupload and YouTube cases are very complex and involve emerging law with little precedents. Without knowing why the US Government crossed the line with Megaupload, it is curious that they chose to do so in the first place. Logically, the US Government should have broken new ground with a US company. Right now it looks like one law for US companies and one for everyone else. It also makes the US Government look anxious to assert global jurisdiction in an Internet Age.

Also noteworthy is that the DMCA protection to Internet intermediaries like YouTube and Megaupload (subject to them following the rules around things like takedowns) only applies for civil liabilities. IANAL but it seems that the US Government unfairly takes these protections away by going down the criminal action path.

The criminal path also has a higher bar in that criminal intent and behaviour must be proven. On the other hand, it opens up a basis for extradition and sends a much stronger warning to the wider industry, which was at least one of the goals in the first place. If nothing else, the fact that civil cases against secondary copyright infringement like YouTube have failed should raise questions about going down the more severe and disruptive criminal path.

Those who look at the Megaupload indictment and point to alleged actions by Megaupload staff in relation to promoting copyright infringement as justification, the actions of YouTube executives were shown to be much worse in court and, yet, they still got DMCA immunity.

All of this has firmed up my view that civil rather than criminal action should have been the right path to act against Megaupload.

Legal views from US professors

There are many people who have concluded that criminal action against Megaupload was incorrect. For example, Eric Goldman, a professor of law at Santa Clara University, said:

Instead, the government’s prosecution of Megaupload demonstrates the implications of the government acting as a proxy for private commercial interests. The government is using its enforcement powers to accomplish what most copyright owners haven’t been willing to do in civil court (i.e., sue Megaupload for infringement); and the government is doing so by using its incredibly powerful discovery and enforcement tools that vastly exceed the tools available in civil enforcement; and the government’s bringing the prosecution in part because of the revolving door between government and the content industry (where some of the decision-makers green-lighting the enforcement action probably worked shoulder-to-shoulder with the copyright owners making the request) plus the Obama administration’s desire to curry continued favor and campaign contributions from well-heeled sources.

The resulting prosecution is a depressing display of abuse of government authority.

He points out that criminal copyright infringement requires that wilful infringement has taken place, and that taking Megaupload offline had produced the “deeply unconstitutional effect” of denying legitimate users of the site access to their data.

There are some, beyond the copyright industry, that supports the criminal path adopted by the US Government. For example, Law professor James Grimmelmann of New York Law School said:

If proven at trial, there’s easily enough in the indictment to prove criminal copyright infringement many times over. But much of what the indictment details are legitimate business strategies many websites use to increase their traffic and revenues: offering premium subscriptions, running ads, rewarding active users.

I hope that if this case goes to trial and results in convictions, that the court will be careful in sorting out just what Megaupload did that crossed the line of criminality.

Interestingly, even he points out how the case is hardly black and white.

It’s important to hear and consider all sides in deciding where to draw the line between governments acting to protect economic interests versus letting disputes being examined and decided by civil action. In my opinion, in the case of Megaupload, the US Government got it wrong.


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