MegaUpload is shut down a day after the Internet protests. Coincidence?

January 20, 2012

MegaUpload jailOn Wednesday, January 18, 2012, an online protest against the Stop Online Piracy Act and the Protect IP Act occurred (and it was a pretty successful one at that).

The next day, the U.S. Department of Justice released an indictment against MegaUpload, its owner, and several of its officials, and shut down the site itself.

MegaUpload was one of the largest file-sharing websites on the Internet, and it was often the bane of the intellectual property holders that are pushing so hard for SOPA and PIPA, who accused it of encouraging – or even profiting outright from – piracy.

As luck would have it, the indictment is charging MegaUpload and its chief officials (which it calls the “Mega Conspiracy”) with piracy – or more specifically, copyright infringement.

Are these close occurrences related or merely coincidental?

Let’s look a little deeper into this.

The specific criminal charges in the indictment are two different counts of copyright infringement and three other related conspiracy charges: conspiracy to commit racketeering, to commit money laundering, and to commit copyright infringement.

For those who aren’t familiar with RICO (the Racketeer Influenced and Corrupt Organizations Act) or other federal white collar crime statutes, racketeering and money laundering require a predicate act to actually be considered crimes.

In other words, there needs to be another crime that gives rise to racketeering and money laundering; if the crime isn’t there, neither is money laundering nor racketeering.

In this case, that means that if the copyright infringement charges dissipate, so do the rest of the criminal charges (more or less).

So how does the indictment allege that the “Mega Conspiracy” committed copyright infringement?

Due to space limitations, I can’t go too deeply into the indictment here, but it makes some interesting characterizations about MegaUpload’s business model.

Specifically, that it’s entirely based on participating in, or otherwise encouraging piracy.

For example, the indictment points out MegaUpload’s practice of rewarding users who upload popular files (so as to get more website visits and increase its ad revenue) as encouraging piracy.

Needless to say, the indictment also claims that members of the “Mega Conspiracy” had actual knowledge of the copyright infringement at the time it was occurring and didn’t do anything to stop it (according to the indictment, they encouraged it).

This point is really what the Justice Department’s entire case hinges on.

The mens rea (necessary mindset) for the charged crimes in the indictment is willfully (otherwise known as “intentionally”) is quite a high standard to prove beyond a reasonable doubt.

Basically, the feds will have to prove not only that members of the “Mega Conspiracy” knew copyright infringement was going on, but also either actively engaged in it themselves or “aided or abetted” in its commission.

The indictment gives enough examples of statements by “Mega Conspiracy” members that should well enough establish they had knowledge of pirated material being uploaded onto and downloaded from their servers.

That alone isn’t enough to reach the “willfully” threshold, though.

The question for the court will be whether that knowledge, coupled with the “Mega Conspiracy’s” continuing to operate their servers and the business with full knowledge that infringement was occurring rises to the requisite “willfully” level.

The court’s specific findings here may not only make MegaUpload civilly liable (by removing the protection of the DMCA’s safe harbor provisions), but it may also establish a new standard for prosecuting similar file-sharing websites.

Either way, full due process rights must be given – as they should be.

In the meantime, MegaUpload has been shut down indefinitely, even before a court has made any findings of guilt.

So to answer my earlier question, if the timing of the indictment’s release was related to the SOPA or PIPA protests, I really can’t see the point if it was.

If it was to prove that sites like MegaUpload do, indeed, contain pirated content, or that piracy exists, no reminder was needed.  I think that was pretty common knowledge up to this point.

On the other hand, the indictment proves that the “worst offenders” of copyright infringement can be stopped under the existing legal framework, without the need for additional laws like SOPA and PIPA.