Megaboned - What the law profs say about the Megaupload case

On Thursday, the US government unsealed a 72-page indictment against Megaupload. The file locker was one of the largest sites on the Web, and major copyright holders had accused it of facilitating widespread copyright infringement. The government argues that Megaupload founder Kim Dotcom and his lieutenants were less a legitimate business than a scheme to profit from the infringing activities of their users.

Of course, defendants are innocent until proven guilty. Dotcom and his co-defendants may still avoid extradition to the United States, and if they come to the US they'll have an opportunity to dispute the government's evidence or to argue that their actions were not, in fact, against the law. Indeed, Megaupload has long claimed that its purported compliance with the DMCA's notice-and-takedown requirements means that the site is immune from liability under US copyright law.

To help us understand the legal issues in the Megaupload case, Ars Technica spoke with three law professors: James Grimmelmann at New York Law School, Michael Carrier at Rutgers-Camden, and Chris Sprigman at the University of Virginia. All three agreed that Megaupload is not the world's most sympathetic defendant, but they offered divergent assessments of Dotcom's chance of a legal victory—and of the the case's possible implications for the future of copyright law and the file-locker industry.

All three professors emphasized that an indictment may include claims that are misleading, taken out of context, or even flat inaccurate. And they noted that not all the allegations in the indictment may even make it before a jury. But we asked the professors to assume that the indictment is at least accurate (full context is of course impossible to provide) when assessing the legal merits of the case.

The most important issue in the case may well be "inducement." In the Supreme Court's landmark Grokster decision in 2005, the high court ruled that a company offering a product with the intent of promoting copyright infringement by others is liable for their resulting acts of infringement.

The government points to several factors as evidence that Megaupload actually promoted infringement by its users. The site offered financial rewards to users who uploaded files that proved popular to downloaders, and the government alleges that Megaupload "made payments to uploaders who were known to have uploaded infringing copies of copyrighted works."

For example, in 2007, one of the Megaupload employees sent an e-mail to his peers about users who had received payments. He described one of the uploaders, who got a $100 payment, as "Our old famous number one on MU, still some illegal files but I think he deserves a payment." Another user who got a $300 check was described as having "30849 files, mainly Mp3z, some copyrighted but most of them have a very small number of downloads per file." In another 2007 e-mail, a Megaupload employee wrote that some of the uploaders receiving payments "had very obvious copyrighted files in their account portfolio, but I was rather flexible."

In a 2008 incident, a user e-mailed Megaupload and wrote "I've been trying to watch Dexter episodes, but... the sound doesn't match up with the visual." Dotcom forwarded this e-mail to a subordinate, adding "...on many forums people complain that our video / sound are not in sync... We need to solve this asap!" Dexter, of course, is a popular, copyrighted television show.

Source: ARS Technical