7.5.13

U.S. Government -VS- MegaUpload Case Escalates ¦ 39 Page Document Attacking White House and MPAA Corruption Released


While American copyright wars continue to wage out of control, the battle between the U.S. Government VS Kim Dotcom / MegaUpload, the largest lawsuit ever attempted, has expanded it's battle arena. The two defense lawyers of MegaUpload, Robert Amsterdam and Ira P. Rothken, have released a 39 page White Paper highlighting all of America's unconstitutional acts in their attempt at shutting down and sentencing MegaUpload and it's CEO Kim Dotcom. Claiming 'The White House is for sale.' and pointing to Hollywood and the Motion Picture Association of America (MPAA) for threatening to withdraw political funding if the Obama administration doesn't carry out their orders.

I've tried to summarise the 39 page document bellow.


The criminal prosecution of Megaupload and Kim Dotcom is purportedly the “largest copyright case in history,” involving tens of millions of users around the world, and yet it is founded on highly dubious legal principles and apparently propelled by the White House’s desire to mollify the motion picture industry in exchange for campaign contributions and political support.

The Megaupload prosecution is not only baseless, it is unprecedented. Although the U.S. government has previously shut down foreign websites engaged in direct infringement, such as the sale or distribution of infringing material, never before has it brought criminal charges against a cloud file storage service because of the conduct of its users. Thus, the Megaupload case is the first time the government has taken down a foreign website – destroying the company and seizing all of the assets of its owners (and the data of its users), without so much as a hearing – based on a crime that does not exist. To make matters worse, in order to persuade other countries to cooperate with the take-down, the U.S. government misled them into believing that Megaupload was involved in direct infringement. One of many such examples involved applications for warrants to search and seize Megaupload computer servers in Canada. In those applications, the U.S. government misled the Canadian authorities by stating that the U.S. was prosecuting Megaupload for operating and administering websites that “reproduce and distribute” infringing material. Even if the U.S. government had believed Megaupload was reproducing and distributing infringing material (which it was not), the government was certainly aware that the criminal charges it was prosecuting were not based on any such allegations. Further, the U.S. government made those misrepresentations to Canadian authorities without any advance notice to Megaupload, meaning that nobody was present to refute them.

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The MPAA’s overt use of campaign contributions to sway the U.S. government into engaging in what amounts to unlawful action against Megaupload reflects a form of State Capture, a term coined by the World Bank to describe a brand of corruption characterized by the ability of a relatively small number of private interests to shape the official rules of the game through direct payments or other forms of financial influence. By threatening to revoke vital political and monetary support from the Administration at a crucial moment, the MPAA has exercised de facto control over key levers of executive power in Washington – law enforcement, prosecutors, trade negotiators – and is using those instruments of state power to further the financial interests of its members in Hollywood.

The U.S. government’s attack against Megaupload bears all the hallmarks of a contract prosecution: a case resting on erroneous theories of criminal law, littered with due process violations and prosecutorial abuses, carried out for the benefit of a select few in exchange for their political and financial support. In the name of
eliminating copyright infringement, Hollywood has exerted a corrupting influence in Washington, leading us all down a slippery slope that not only threatens innovation and Internet freedom, but also has profound implications for constitutional principles of free speech, privacy and due process. Megaupload and Kim Dotcom are today’s targets, but the crosshairs can just as easily be trained on anybody who dares challenge or inconvenience a special interest that holds sway in Washington, and the current Administration – with its notoriously insatiable appetite for campaign contributions – seems all too willing to cooperate.
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A 72-page grand jury indictment was soon released, filed in secret in a Virginia federal court two weeks before the raid [of Dotcom's estate]. It stated that Megaupload, Kim Dotcom and six other Megaupload executives were criminally responsible for any and all copyright infringement by the company’s customers. Megaupload and the six executives were labeled criminal racketeers – charged, like the Gambino crime family, under the Racketeering Influenced and Corrupt Organizations (RICO) Act enacted to combat organized crime – accused of having formed Megaupload for the sole purpose of operating a “worldwide criminal organization,” an ongoing conspiracy to commit secondary copyright infringement.

Yet branding Megaupload and its executives as criminals was not enough. U.S. prosecutors applied to a federal court in Virginia, behind closed doors, for an order allowing the government to seize all worldwide assets belonging to Megaupload, Kim Dotcom and the other defendants – including those of unindicted third parties, such as the defendants’ wives and Kim Dotcom’s personal assistants – depriving the defendants of any financial resources with which to fund a defense or counter the charges. The U.S. government promptly initiated extradition proceedings to bring Kim Dotcom to the United States to stand trial. Eventually, after 31 days behind bars, he was released on bail in New Zealand, against the wishes of the U.S. government. Meanwhile, luxury vehicles owned by Kim Dotcom were paraded in front of television cameras, while the media published detailed lists of seized properties comprising some $67 million in assets.

Megaupload indictment tips the scales toward copyright extremism by trying to criminalize innocent businessmen for the unlawful conduct of third parties.

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Unfortunately, when the U.S. government seized Megaupload’s domains and servers, it placed the financial interests of relatively few copyright holders above the interests of millions of legitimate users who were instantly, indefinitely and without warning denied further access to their personal files. According to one report, at least 15,634 U.S. military personnel lost access to their Megaupload accounts, along with many photos and personal files of soldiers deployed overseas.

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To prevent misuse of the service, Megaupload instituted several measures to comply with global safe-harbor provisions such as the Digital Millennium Copyright Act (DMCA).

To begin with, Megaupload cooperated with copyright owners by following the “notice and takedown” procedures described in the DMCA, and it designated an agent to receive notices from copyright owners.
The recent federal court decision in Viacom v. YouTube – which upholds the safe harbor provisions of the DMCA by declaring unequivocally that generalized knowledge of infringement does not deprive a service provider of those protections – further highlights the challenges the U.S. government faces in its case against  Megaupload.

Megaupload went even beyond compliance with the DMCA’s safe-harbor provisions. For example, Megaupload negotiated with numerous major copyright holders or their agents – including the Recording Industry Association of America, Disney, Warner Brothers, NBC, and Microsoft – to allow them access to remove directly, without the oversight or involvement of Megaupload, an active link to material they believed infringed their copyrights. This enhanced access enabled such parties to protect their copyrights without need for formal take-down notices under the DMCA, and resulted in more than 15 million takedowns.

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The U.S. government’s attack on Megaupload and Kim Dotcom is driven largely by the influence the MPAA has wielded historically in Washington on behalf of its member copyright holders, and more particularly by the vigor with which it has exercised its financial resources to instrumentalize the current White House and other branches of government. While the U.S. government falsely (albeit dramatically) accuses Megaupload of engaging in a “Mega Conspiracy,” the real conspiracy – the actual, concerted agreement between two people to carry out a wrongful plan – may lie between old colleagues, both longstanding members of the world’s most exclusive club, former Senator Chris Dodd (D-Connecticut) and former Senator Joe Biden (D-Delaware). Together they conceived and executed the attack on Megaupload, and it can be argued that both men benefitted from it. On the one hand, Joe Biden delivered to Chris Dodd the takedown of a major perceived threat to the MPAA’s copyright holders; on the other hand, Chris Dodd delivered to Joe Biden the continuing political and financial support of Hollywood during the White House’s critical 2012 reelection campaign.

Chris Dodd’s willingness to lobby on behalf of the MPAA was never more evident than during the lead-up to Congressional action on SOPA: Candidly, those who count on “ Hollywood... for support need to understand that this industry is watching very carefully who’s going to stand up for them when their job is at stake . . .. Don’t ask me to write a check for you when you think your job is at risk and then don’t pay any attention to me when my job is at stake.

Ultimately, the legislation failed to pass because there was overwhelming public outcry against it, not because the Administration did not support the measure.

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Copyright’s political problem is a classic case of concentrated benefits and diffused costs. Hollywood, the music industry and book publishers reap the rewards of increased protection, while the public bears the costs. The copyright industries can easily organize themselves into lobbies that have every incentive to invest heavily in acquiring greater protections, while individual members of the public, the nominal beneficiaries of copyright, face a collective action problem that keeps them from organizing against stronger copyright laws.

When the U.S. Congress passed the Copyright Act of 1976, it expanded copyright protections dramatically, covering the entire life of the author plus an additional 50 years, and all works were automatically covered and renewed without any registration requirements. In 1999, Congress enacted the Sonny Bono Copyright Term Extension Act – which coincided with the upcoming expiration of a Disney Corporation copyright – and extended the term of coverage retroactively by an additional 20 years.

Criminal and civil copyright statutes were strengthened repeatedly in the years that followed. All told, the Copyright Lobby has successfully expanded copyright protections and stiffened penalties for infringement no fewer than 15 times between 1978 and 2008.

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The U.S. government’s take-down of Megaupload and Kim Dotcom has ramifications far beyond a single company and its executives. It sets an alarming precedent for regulation of the Internet, freedom of expression, privacy rights, and the very Rule of Law. The U.S. government should not be able to act outside the bounds of due process, at the behest of special interest lobbies, to destroy foreign-owned business enterprises and expropriate the private property of millions of individuals.

In response to the unlawful conduct of the U.S. government, the U.S. House Committee on Oversight and Government Reform and the Office of Professional Responsibility of the U.S. Department of Justice should conduct an investigation and hearings into the conduct of the Megaupload prosecution by the U.S. Department of Justice. In particular, the issue of special-interest influence over the executive branch and the failure of the Department of Justice to protect Megaupload consumer data access should be scrutinized. 

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