[tptacek]

MegaUpload operated with foreknowledge of extensive infringing activity on their site, and further willfuly acted to further that activity, for instance by creating an affiliate program that rewarded site members for pushing more copyrighted material to the site.

These assertions were corroborated by MegaUpload's own email.

Again: there are two sides to complying with copyright law to obtain protection under "safe harbor" rules. The side everyone is familiar with is "complying with takedown notices". But the other side, just as important, spelled out in the law, is not operating your service with foreknowledge of infringement. It isn't enough just to wait for copyright holders to send takedowns.

By actively courting piracy, MegaUpload forfeited safe harbor protections.

This question comes up in almost every thread about MegaUpload. The answer is very simple. Even if (in the back of their minds) the operators of Youtube must have known they were a haven for video piracy, so long as they themselves didn't engage with that piracy (and complied with takedowns) they were safe. MegaUpload's staff engaged.

[drcube]

So Google doesn't know there is infringing material on the web? YouTube doesn't have the foresight to realize users will upload TV shows, movies and music? If I recall correctly, MegaUpload gave copyright owners free reign to delete anything they wanted off the site with no takedown notice at all. Does Google allow just anyone to delete pages from their search results?

Tell me about these affiliate programs. Did they really say "Please help us infringe other people's copyright. The more you infringe, the more money you make!"? My understanding was that they encouraged user interaction, no differently than Facebook or any other commercial web site out there.

[tptacek]

Thanks for asking this question. To help understand what's being alleged by the DOJ, you'd probably want to know what they found in Mega's email; for instance:

On or about April 23, 2009, DOTCOM sent an e-mail message to VANDER KOLK, ORTMANN, and BENCKO in which he complained about the deletion of URL links in response to infringement notices from the copyright holders. In the message, DOTCOMstated that “I told you many times not to delete links that are reported in batches of thousands from insignificant sources. I would say that those infringement reports from MEXICO of “14,000” links would fall into that category. And the fact that we lost significant revenue because of it justifies my reaction.”

* "We have a funny business... modern days pirates", said one Mega- employee to another. "We're not pirates", he responded. "We're just providing shipping services to pirates."

* When an outsider complained that MegaVideo's hosting of the Showtime pay-tv series "Dexter" had desynchronized audio/video, instead of taking down "Dexter", Kim Schmitz fired off mail saying that fixing the AV problem was a priority.

* Mega employees themselves uploaded copies of major motion pictures to the service, such as Luc Besson's _Taken_.

* There are Mega emails, on which Kim is apparently CC'd, in which employees enumerate the specific files uploaded to certain high-performing affiliate members, noting (approvingly) that they include copyrighted movies and TV shows. For instance, one line item in an accounting mail: 100 USD [USERNAME DELETED] 10+ Full popular DVD rips (split files), a few small porn movies, some software with keygenerators (warez)

Remember: there are two sides to claiming "safe harbor": complying with takedowns, and not operating your service with actual knowledge of infringing activity on the service. Mega obviously operated with extensive actual knowledge of infringement. The operators of Youtube obviously knew that piracy was rampant on the Internet, and even on their service, but no prosecutor or litigator was ever able to show that Youtube's operators knew of specific, actual infringing activity on the site.

I found it easier to cite my comments from the last big Mega thread here than to go back to the indictment, which you can find easily on Google. The indictment is hilarious. The craziness at Mega just goes on and on. If you can think of something a lawyer would tell you not to do if you were going to run a file sharing service, Mega probably found a creatively terrible way to do it.

[drcube]

Thanks for your answers. I don't think it warrants the attack on their company, but this is the first really damning evidence I've seen against MU since they were raided. I just thought they were considered an easy target because of their CEO's unsavory past.

[tptacek]

Come on. You've had access to the Mega indictment almost since the week they were raided. You don't get to pretend that I just made some dazzling new case about Mega.

Face it: you're a strident defender of Mega, but never took a moment to look past the coverage of this case on sites like "Torrentfreak" to see the actual evidence the DOJ collected.

I'm not picking on you. I can't be: you're exactly like 98% of every defender of Mega on this site.

Happy to help! :)

[pacmon]

For me, it's not about what they may/may not have done. What enrages me is how the government has behaved. The level of force was ridiculous (i mean - helicopters... for a video pirate!?). Not to mention they stole lots of legitimate data and have barely provided a means to some people to retrieve their data. Which wouldn't have happened at all if the MAFIAA had it their way.

[res0nat0r]

>Not to mention they stole lots of legitimate data and have barely provided a means to some people to retrieve their data. Which wouldn't have happened at all if the MAFIAA had it their way.

Sigh....Assets get seized all the time during large raids and there is collateral damage, it is 100% legal. This isn't something new just because the MAFIAA was involved.

[nkurz]

MegaUpload operated with foreknowledge of extensive infringing activity on their site, and further willfuly acted to further that activity, for instance by creating an affiliate program that rewarded site members for pushing more copyrighted material to the site.

I think in some of your responses you are mistaking a condemnation of the US law enforcement approach with a defense of MegaUpload's practices.

Let's say that investor G, a citizen of country U, owns part of a website S that profits by republishing PDF files without explicit permission of the rights' holders. Let's posit that somewhere there exists email showing that G knows that some of these files not always legal.

G also operates another website Y that allows members to submit links to content. G encourages frequent submitters by establishing a point system to reward submissions with increased status within the community. Graham then adds code to his website that automatically resubmits some of these links to S, causing it to be (on occasion) illegally hosted.

The government of a small Southern Hemisphere Z is then lobbied by it's constituent corporations to take action to prevent this crime, which is without doubt clearly probably illegal under Z's laws, and almost as certainly illegal in U. Would country U be justified in seizing G's assets, shutting down his companies, and imprisoning him while while Z is preparing it's case against him?

--

Personally, I don't really fault the US government for acting as it did. It took action that benefited its benefactors. You've got power, you use it. It's also hard to fault New Zealand, as it was probably offered as a "bargain you can't refuse". I don't dispute that Megaupload was only a viable company to the extent that it engaged in currently illegal activity, although I don't think this is different than the way many other now legitimate companies got started.[x]

But I certainly hold to task anyone who argues that the behaviour of the US goverment was legal, moral, or tolerable. I find it no more defensible than assassinating him with an unmanned drone operating within a sovereign country. At least if they'd done that they might have fewer defenders.

[x] Such as Google. In addition to my example here, and well before Youtube came into the picture, I'd suggest that from the beginning Google was based on what at the time was "clearly" illegal behaviour to many.

Scanning the web to index all the content one can reach, ignoring the clearly stated Terms of Service printed on these pages? Storing the full text on their own servers? Serving excerpts to users? Serving complete copies of these pages? All of this was in doubt, and I'm glad that no foreign superpower with an entrenched interest stepped in to quash it before it could develop further.

My belief is that there is no clear legal difference between Megaupload and many other sites on the internet, just differences in selective enforcement. Text search is fully legal, image search is largely tolerated but still formally debated (see recent German supreme court decision), and music and video remain the Wild West. It's not that there is no law, but the law as enforced not necessarily consistent with the law on the books. There is a moral and ethical landgrab going on, and I'd bet that some online activities that are "clearly illegal" today will be fully accepted as legal in only a few years.

[Symmetry]

I'd agree that he seems to be guilty of civil copyright violation and that, if that's true, he deserves to have all his ill-gotten wealth sued away by the big media company's. But those weren't the charges the FBI brought against, him. He's being charged with criminal copyright infringement, and its likely that even MegaUpload's token compliance with the DMCA will be enough to avoid conviction on that charge. The criminal version requires mens rea, and if the owners of Mega Upload seriously intended to comply with the DMCA that's enough for a defense, unlike in a civil case where they would have actually have had to follow all the rules.

[Natsu]

> But the other side, just as important, spelled out in the law, is not operating your service with foreknowledge of infringement. It isn't enough just to wait for copyright holders to send takedowns.

> By actively courting piracy, MegaUpload forfeited safe harbor protections.

You are segueing between talking about DMCA "red flag" knowledge and the inducement standard from Grokster in a rather confusing way.

If we're talking about DMCA "red flags", one needs knowledge (not foreknowledge) of specific acts of infringement, not merely knowledge of infringement in general[1]. There may have been an email proving that, as it's been quite some time since I read the indictment, but I don't remember one offhand involving Kim Dotcom himself. Then you talk about something that sounds like inducement. That's something the Supreme Court invented in Grokster and it's a different standard altogether. It's a theory of vicarious liability that relies on "purposeful, culpable expression and conduct" while "mere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor to liability." [2]

I should also point out that Viacom had some incriminating emails from YouTube staff, which I believe you can find in some of the old Ars coverage of that case, but which I don't know the proper link to. But YouTube largely won the perception battle because of the obvious non-infringing uses of the site and because they went well above and beyond their DMCA obligations (though Viacom still sued them).

Mega is losing the same battle of perception because almost all of the non-infringing uses of their site were private (people sharing files among friends, rather than with the general public), while all infringing uses of the site were necessarily public. So even if they had a million innocent users and a thousand pirates, you'd only see all the files put up by the pirates and the million users would be largely invisible, because they had no interest in sharing their home movies (or whatever) with the world.

[1] "UMG v. Veoh held that generalized knowledge of infringement, without more, is not enough for red-flag knowledge" -- http://www.ipinbrief.com/dmca-contributory-infringement-vica...

[2] http://www.law.duke.edu/publiclaw/supremecourtonline/comment...

[tptacek]

Sure there was. For instance: Kim Dotcom was personally involved in a customer support case wherein a complaint was heard about the video quality of uploads of Showtime's hit series "Dexter"; Dotcom is later observed in Mega emails to be reacting to the complaint by working on improving the video quality. In another similar case, a customer complained to Dotcom about a message from the site they received while watching uploads of "Mythbusters"; Dotcom verified the site was functioning correctly (the site was enforcing bandwidth limits; it was of no concern to Dotcom that the site was also obviously trafficking in infringing content). This is part of a repeating pattern of support and maintenance and logistics email threads Dotcom participated in that make it clear what the site is actually being used for.

That's obviously just Dotcom. When you broaden the inquiry to Mega's key employees, you find instances of them directly handling and uploading infringing content to the site.

Most damning from what I can read is the details of the affiliate program. In emails discovered by the DOJ, we have line-by-line accounting of Mega issuing payouts to people in which the actual line items specify that the activity being rewarded is infringing.

All of these, obviously, are cases in which Mega is shown to have actual, specific, actionable knowledge of infringing activity on their site. Rather than acting to retard infringement on the site, they are shown to abet it, groom it, and in many cases incentivize it financially.

All this should be obvious to anyone involved trying to run a content company on the Internet, of which there are many on HN. Does money fall out of the sky the moment you open a content site? No it does not. Most content companies fail, and portfolios are littered with the bones of companies that tried to make a go of file hosting.

What made Mega so profitable? Come on. We know what made Mega profitable. I don't understand why spend so much time vigorously kidding ourselves about this.

We've talked about this before; we both know that we've both read the indictment. To my mind: Mega is losing whatever "public perception" battle that they're losing because they're obviously a bunch of crooks. I'll happily soak up some downvotes in exchange for the ability to speak plainly. :)

Incidentally: my reading of the law doesn't come from Grokster; it comes from a plain reading of the DMCA, where the steps required to obtain safe harbor status are literally laid out in bullet points.

[Natsu]

I'm more interested in making sure that inducement is not confused with DMCA red flag knowledge than defending Mega. You might want to read the holding in Veoh as well as the DMCA text itself, for example, because some of your statements appear at odds with it. You can find an analysis under footnote 1, above.

Of course, we're both focusing on US law and ignoring NZ law, which is more relevant, but less familiar to us all, and that's probably what this case will turn on in the end. Then again, knowing how these things get enforced in practice, the US authorities may find some way of making NZ law irrelevant.

I don't doubt that Kim could end up shipped off to America for trial, no matter what NZ law says about the subject.

[tptacek]

You keep coming back to "generalized knowledge doesn't comprise red-flag knowledge", and I keep coming back with specific examples of red-flag knowledge. For instance, I can name the actual title of a copyrighted movie the Mega staff pushed onto the site. It was _Taken_, produced by Luc Besson. How did they know it was there, you might ask? Because they put it there.

Admittedly these issues are for the courts to decide, not message boards, but come on: by all the evidence available to us message board peons, these guys were a bunch of crooks.

[ewillbefull]

> On or about October 25, 2008, VAN DER KOLK uploaded an infringingcopy of a copyrighted motion picture entitled “Taken 2008 DVDRip Repack [A Release LoungeH264 By Micky22].mp4” to Megaupload.com and e-mailed the URL link for the file to another individual.

This is not a fair example. A single staff member's personal use of the service has no bearing over the legitimacy of the service or whether the service has copyright liability. That's not the red-flag knowledge we're looking for.

Businesses that violate copyright -- even on massive scales -- usually resolve it through civil claims. I have little doubt Megaupload was a giant infringement scam, but if we let any vague or inconclusive evidence set a precedent for secondary copyright liability on a _criminal_ level, things could get out of hand.

[Natsu]

> You keep coming back to "generalized knowledge doesn't comprise red-flag knowledge", and I keep coming back with specific examples of red-flag knowledge.

My post was not intended as a defense of them per se. I care more about the generalities of the law, rather than about MegaUpload specifically. You made it sound like knowledge of infringement in general was enough when it's not, per Veoh, prompting my post. If they had knowledge of specific acts of infringement, they may well be in trouble, but that wasn't my point.

And I should probably disclaim that, as always, anyone with more than an academic interest in this should consult a lawyer.

[Selfcommit]

The affiliate program was for people pushing content, not specifically copyrighted content. Mega made money on site visits and account premiums

This is no different then Apple making a fortune off the ipod. The original iPod did not have a great store attached to it, it was simply a device for playing MP3s.

Wonder where all those MP3s came from?

Holding Mega accountable for the users actions is like saying Apple should pay the record companies for songs that were pirated on the ipods they sold, and continue to sell.

http://www.youtube.com/watch?v=GZadCj8O1-0

[tptacek]

Huh? Apple never paid anyone a dime to put an infringing music file on their own or anyone else's service. Mega can't say the same thing.

[bathat]

Hmm... some of your other comments read like they were written by a PR firm, (take that as you will) and in this one it seems that you are being deliberately obtuse. At best it seems like you are arguing a technicality.

I'm not in any way defending the actions of MU, its founders or staff, but it had only be established that such devices were legal a year or so before the iPod was released. At the time there was no way to legally purchase MP3- or AAC-encoded music from any of the major recording labels, so the idea that selling those devices (and distributing an MP3 encoder with iTunes for free) was inducement to infringe copyright on a massive scale wasn't so obviously without merit.

[tptacek]

A PR firm. It's like you can't even get your mind around the idea that there are people who don't see this issue your way.