Megaupload Details Raise Significant Concerns About What DOJ Considers Evidence Of Criminal Behavior

from the bad-cases-and-bad-law dept

Fri, Jan 20th 2012 1:49pm — Mike Masnick

Yesterday I wrote up a first reaction to the Megaupload case. Having spent some more time going through the indictment in much greater detail, I have some more thoughts and concerns.

First, it's important to acknowledge that the founder of Megaupload, who goes by Kim Dotcom, has a long history of ~~flaunting~~ flouting the law in a variety of ways. That makes him quite unsympathetic in a court. On top of that, there are certain claims in the indictment that, if true, mean it's quite likely that he broke the law. Whether or not the violations amount to racketeering & conspiracy is beyond any analysis that we're going to be able to do here. I would say that I would not be at all surprised if he's found guilty.

Where my concerns come in is in some of the "evidence" that's used to add to the overall indictment. To be clear, in a case like this, the issue is the evidence as a whole, combined to show intent and a general pattern to actions. So the allegations in the indictment don't necessarily mean that any individual action is, by itself, illegal. But, I still worry that some of the specific actions used to paint this picture are (1) potentially taken out of context, (2) are presented in a way that likely misrepresents the actual situation and (3) could come back to haunt other online services who are providing perfectly legitimate services.

For example, the indictment points out that Megaupload did not have a site search, by which users could find material. That's interesting, but it seems like an odd piece of information in making the case. Other copyright cases have specifically found that having a search engine is part of an inducement claim -- so there's an argument that the idea not to have a search engine wasn't so much "conspiracy," as it was an attempt to follow the guidance of the court and to stay legal. To use the lack of a feature, that previously was shown to be a problem, as evidence of a conspiracy is crazy. Damned if you do, damned if you don't.

Separately, the indictment lists various feature choices as part of making its case. There is, for example, the fact that if certain files aren't downloaded in a certain amount of time, then they are deleted. The indictment presents this as evidence that the service is mainly for infringement, because it potentially precludes the idea that the site is used for long-term backup. Of course, that falsely assumes that long-term backup is the only legitimate use of a cyberlocker. But that might not be the case at all. The service could (and is) used to just distribute large files in a directed, short-term effort. If anything, the fact that files are deleted after they're done being shared highlights a key legal function of the site: it was used by people to exchange large files once or twice, since they're too big to share via email attachment.

On top of that, other, legitimate, sites have similar policies. The popular image hosting site Imgur does the same thing: if people don't access an image for an extended period of time, Imgur may delete it. That's not because it's encouraging infringement, but because it knows that the service is being used for short-term distribution.

There is also the question of paying certain uploaders. However, there does seem to be a bit of a stretch in assuming that because some uploaders get lots of downloads by posting infringing content, all such "paid" users must be putting up infringing works. There are plenty of viral videos that are quite popular not because of infringement. In fact, much of this seems to be based on the simple assumption that encouraging more usage means they must be encouraging infringement. It's entirely possible that Dotcom did encourage infringement, but it feels like there should be more actual evidence of that, rather than pasting together a bunch of claims that could be interpreted in legitimate ways. Paying users for popularity is not, and should not, be evidence of criminality, or even infringement.

There is also the claim that, while the company did remove some works upon takedown notice, it merely removed one link to the work, but left up other links. The issue here, as noted elsewhere in the indictment, is that Megaupload has a system for de-duplication -- so that if multiple people uploaded the same file, it only kept one version, but made it available at a different link for each person. This is the same sort of thing that lots of legitimate sites do, including Dropbox. The question, then, is if you do something like that with a locker service, and keep a single file, accessible through multiple locker links, what do you do if you get a takedown? This is still somewhat of an open question -- and was one of the points raised (in a civil copyright infringement context, which is very different) in the EMI vs. MP3tunes case. In that case, the company was told that it did, in fact, have to delete the actual file. But that raises other questions. Let's present a hypothetical: what if infringer A and authorized distributor B both upload the same file. The system de-dupes and uses a single file for each to access. Now, the copyright holder discovers A's version, and issues a takedown. It will automatically take down B's authorized work as well -- even though that copy was not infringing. Or... what if someone uploads a copy, but for their own personal use to access remotely, but never shares the link? In that case, no infringement is occurring... but DOJ seems to claim that the site would have to delete the file anyway, or there may be criminal risk. That's crazy.

The complaint argues that because Megaupload's "top 100" list does not actually list the top 100 downloads on the site, this is more evidence of conspiracy. The issue here is that the list apparently removes files that are likely infringing. But... again, in other cases (like the IsoHunt case) such lists were also seen as proof of inducement. So, again it's a damned if you do, damned if you don't situation. If Megaupload's list showed infringing works, then they'd be charged with inducement... but removing them from the list makes them guilty of conspiracy?

In addition, the indictment shows that, despite the company not being a US company, it did set up a DMCA agent, a tool to make removing files easier, and did take down works on request. There are some reasonable questions about if it ignored some takedown messages (likely) and the fact that it put limits on how many takedowns could be done per day with its tool. Those certainly work against the company in terms of retaining any DMCA safe harbors. Similarly, there is some evidence that the owners of the site may have uploaded infringing files themselves -- which, again, has no DMCA protections.

The indictment points out that Megaupload used its hashing system to maintain a list of known child porn and block those files from being re-uploaded. The problem here is that copyright is different than child porn. Child porn is a strict liability issue: it is always illegal. There are no extenuating circumstances. But copyrighted content is different. It could be authorized. It could be fair use. And that depends on the specific use, not the file. So using a hash system there doesn't make sense, whereas it can make sense for child porn.

The indictment also lists all sorts of emails, some of which are more damaging than others, but some of which may be taken out of context. All of them seem to assume that Megaupload employees can easily tell, often just by file name, what's infringing and what's not. I think this is an assumption that many people who don't understand copyright law make. And while you can guess... it's not always so easy. The recording industry, for example, regularly uses cyberlockers as a legitimate way to distribute promo copies. How would Megaupload know if certain files were legit or not, without further details? Yes, there's obvious infringement happening on the site, but will Megaupload always know which specific files are infringing?

The indictment discusses demands from Universal Music that Megaupload would need to meet before UMG would even discuss a potential license. This included: "proactive fingerprint filtering to ensure that there is no infringing music content hosted on its service; proactive text filtering for pre-release titles that may not appear in fingerprint databases at an early stage; terminate the accounts of users that repeatedly infringe copyright; limit the number of possible downloads from each file; process right holder take down notices faster and more efficiently." While the DMCA does require action against repeat infringers, there are no legal requirements for the other issues. It's not clear why that should be evidence here. The fact that Megaupload didn't go above and beyond what the law requires shouldn't be seen as evidence of wrongdoing...

Many of the emails discuss the fact that, in general, there are infringing works on the site. Yeah, but that's the same issue in the YouTube case and other cases. General knowledge that your tool is used for infringement is kind of meaningless, because you can't take works down if you don't know what's actually infringing.

Money laundering claims are tricky and perhaps there was some "money laundering" going on here, but this indictment seems to include basic payments to Megaupload's hosting companies. Using payments to companies for hosting as evidence of money laundering seems pretty extreme, and suggests the possibility that this is just a "lumping in" situation, just to pile on more things that look bad, but aren't illegal by themselves.

Do these kinds of things work together to paint a picture of the company encouraging infringement? It's certainly possible that a court will add up a bunch of things like this and insist that's true. My fear is that, at least with some of these points, there are perfectly reasonable, non-infringing contexts for them. Then, what I worry about, is that in later cases, these types of things are used as "evidence" against companies and services that are legit. Even worse, there's a real worry that it creates chilling effects for lots of legitimate services who do things like de-duplification, or have legitimate backup services. If you're running Amazon S3 or Dropbox, do you now suddenly change how you do business, just to avoid the possibility of being accused of racketeering and criminal copyright infringement? That's worrisome.

But the bigger overall issue is why this action and why now? Companies in the US have filed civil cases against Megaupload in the US and the company was willing to come to the US and deal in US courts. Taking it up to a criminal "conspiracy" and racketeering charge seems like overkill, with tremendous collateral damage and chilling effects.

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Filed Under: censorship, chilling effects, copyright, criminal copyright infringement, kim dotcom, racketeering, takedowns
Companies: megaupload

202 Comments

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DandonTRJ (profile), 20 Jan 2012 @ 1:13pm

After reading the DoJ's evidence [as summarized by Ars Technica] yesterday, I came to the same conclusion.

There is plenty of evidence to suggest that MegaUpload operated in a way that pierces the DMCA shield, whether by specific knowledge of certain infringing works, searching for and downloading infringing works themselves, and uploading specific infringing works themselves. That and the general bluster about their shady corporate culture and internal communications [which reminded me of the complaint filed in the Hotfile case, but on steroids] definitely paints an unsympathetic picture of the defendants. Honestly, if there were any company out there that truly abused the defendant-side DMCA provisions, it was MU, and they probably deserve whatever they have coming if a legitimate case can be made.

Still, I'm worried [as you are] about some of the specific allegations used to try and show intent/conspiracy. Some of those arguments really are Catch 22s [like the presence or absence of a search function], and other features of the site have perfectly legitimate uses [like deleting files after a period of inactivity]. My hope is that the court eventually makes its case against MU while parsing out the red herrings, but hoping for nuance in what began as an ex parte seizure may be a bit naive.
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Jeff (profile), 20 Jan 2012 @ 1:41pm

The DOJ considers it criminal
...if hollywood doesn't like it...
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Aoeu, 20 Jan 2012 @ 2:01pm

*flouting the law, not flaunting
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:Lobo Santo (profile), 20 Jan 2012 @ 2:05pm

Re: Entendre
flout: Openly disregard (a rule, law or convention)
flaunt: Display (something) ostentatiously, esp. in order to provoke envy or admiration or to show defiance. Dress or behave in a sexually provocative way.
Why can't it be both?
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A Dan (profile), 20 Jan 2012 @ 2:11pm

Re: Re: Entendre
Connotations. http://public.wsu.edu/~brians/errors/flaunt.html
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noob, 20 Jan 2012 @ 2:11pm

UK has it right so far, proposing that if you buy it, it is your right to do what you want with it, why is the US thinking so limiting, restricting what you can do with what you buy.
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Anonymous Coward, 20 Jan 2012 @ 2:19pm

But the bigger overall issue is why this action and why now? Companies in the US have filed civil cases against Megaupload in the US and the company was willing to come to the US and deal in US courts. Taking it up to a criminal "conspiracy" and racketeering charge seems like overkill, with tremendous collateral damage and chilling effects.

So if Bernie Madoff had been sued by investors for fraud you think the government should have waited to charge him criminally? Why?

The bottom line Masnick is that you are the world's largest piracy apologist and for some unknown reason are unable to admit it. You conjure up every excuse, spin every improbable scenario in order to cast doubt. You draw conclusions and raise suspicions without access to a single piece of evidence. Again why?

I do not blindly trust the government, but nor do I blindly mistrust them. Everything is a fucking conspiracy with you with Chris Dodd and the ghost of Jack Valenti somewhere in the background pulling the strings. Seriously dude, your tinfoil hat is on way too tight and is cutting off the blood supply to your brain.
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Anonymous Coward, 20 Jan 2012 @ 2:19pm

The remove the link or the file question is a tricky issue, however I cannot see delete the link not the file will ever hold up, even if there are tricky issues. I would think that in practice such websites would need to delete the file, and kill all links, even if it happens one of those links is legitimate. Most of the other issues, such as not allowing search, not preventing reuploads, etc really shouldn't be there.

Also, while I do agree that there are some chilling effects, the evidence suggests that Megaupload did make their large profits were made at least partially illegally, and they intended to flaunt the law. At the very least, they don't exactly come across innocent victims to any degree like youtube or veoh did. My hope is that the judge throws out the bullshit issues that would lead to chilling effects, however I would expect a plea bargain to come before any such ruling.

As to the timing, if Megaupload did make the money alleged in the indictment, and they broke the law to do so, I have no problems with prosecutors going after them. It is also good that they held out until after the protest to avoid distracting from that, even though they surely have had this for months. I'm sure that there was also the throw the bone to hollywood motive intended in this, but while I have problems with some of the bullshit in the indictment, I can't really fault the justice department for going after a multi million dollar illegal operation as long as they were truly an illegal operation.
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Anonymous Coward, 20 Jan 2012 @ 2:23pm

"The problem here is that copyright is different than child porn. Child porn is a strict liability issue: it is always illegal"

Also child porn is much easier to identify than infringement. In some circumstances, identifying infringement may require psychic powers.
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gorehound (profile), 20 Jan 2012 @ 2:26pm

Re:
Mega is no Saint that is for sure but I worry that this is only the beginning.I have no trust and pretty much zero approval of this Government and this Government has shown itself to be liars,hypocrites,and money takers.If you ask me I will state that Washington is full of worse crooks than Megaupload.
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MrWilson, 20 Jan 2012 @ 2:30pm

Re:
Because that theoretically won't maximize profits for the people who influence the laws in this country.
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Anonymous Coward, 20 Jan 2012 @ 2:33pm

Re:
"So if Bernie Madoff had been sued by investors for fraud you think the government should have waited to charge him criminally? "

Woosh!!!

His point is that why wasn't this dealt with earlier on in civil courts.

"The bottom line" is that you wanted to make this non-point as a basis for the rest of your Substanceless rant.
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:Lobo Santo (profile), 20 Jan 2012 @ 2:36pm

Re: WB
Hi!
Welcome back!
So, how's the lobbying going?
Ya know, we kinda missed you guys around here--don't stay away for so long next time.
Anyhow, have a nice day.
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Anonymous Coward, 20 Jan 2012 @ 2:37pm

This case is another reason to abolish IP. If infringement is allowed to be the basis for attacking so many socially beneficial services then I say we legalize infringement.
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ervserver (profile), 20 Jan 2012 @ 2:41pm

re
Megaupload legal counsel will tear the US attorneys to shreds
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kirillian (profile), 20 Jan 2012 @ 2:46pm

Re:
Please do Not feed the Trolls. Thank You.

Zoo Management.
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Anonymous Coward, 20 Jan 2012 @ 2:47pm

Re: Re:
Orly?

http://techcrunch.com/2012/01/20/downfall-photos-of-megaupload-founders-valuable-cars-getti ng-seized/
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Anonymous Coward, 20 Jan 2012 @ 2:47pm

I have no doubt that "money laundering" was added to make a better soundbite and headline. They have done that before with copyright cases = advertising and publicity for certain issues.

It may be extradicting someone requires a certan means test and adding some of those things in allowed the DOJ to act.

I think the timing was odd too. Happening during the wake of the SOPA blackout diminished the news, i.e. news only has so many headline spaces for tech articles and this wasn't big enough.

It was also odd because to anyone watching this stuff, they would have realized SOPA/PIPA wasn't needed. The U.S. already claimed the rights the bill said it would do...

I have a hunch this was planned to happen immediatley AFTER the bill was signed to make the action legal and someone decided to go ahead anyway - challenge the court system.

The question raised for me was - does the U.S. really have the right to set copyright laws AND enforce them for the entire world?

That is not my idea of what government should do and I don't think most people would approve.
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KingFisher, 20 Jan 2012 @ 2:48pm

I don't have sympathy for MU, but I'm pretty put out with the DoJ as well. Best scenario is MU site itself doesn't take any damage but the execs of MU have to pay penalties for running afoul with the law. Besides megaupload was buggy with large files anyways. They're known for having files go corrupt on users in the middle of a download. I'm on the fence on this issue.
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Anonymous Coward, 20 Jan 2012 @ 2:50pm

the entertainment industries, with the blessing and assistance of the various law enforcement agencies in the US plan to shut down any site they dont like, by any means possible. that includes bogus claims and outright lies if needs be. they will not be happy until the best distribution platform on the planet is controlled by and can only be used by them!
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Anonymous Coward, 20 Jan 2012 @ 2:51pm

Re:
Sure, just as soon as we make it legal for me to repeatedly kick you in the balls till you're squirming on the ground like a defeated 3rd grade bully.

tit-for-tat.
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sumquy (profile), 20 Jan 2012 @ 2:51pm

Re:
"You draw conclusions and raise suspicions without access to a single piece of evidence. Again why?"

because of dajaz1 and rojadirecta and richard o'dwyer and sopa and coica and all the other times my government lied to me under hollywood's direction.
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Anonymous Coward, 20 Jan 2012 @ 2:52pm

for me calling "family entertainment" to ultra violence, destruction, and rapes and massacres, its also criminal and also a conspiracy.
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Justin Olbrantz (Quantam), 20 Jan 2012 @ 2:56pm

Re:
"The remove the link or the file question is a tricky issue, however I cannot see delete the link not the file will ever hold up, even if there are tricky issues. I would think that in practice such websites would need to delete the file, and kill all links, even if it happens one of those links is legitimate."

That really depends on whose practice we're talking about. When you view things as black and white as Hollywood et al, any content of theirs anywhere on the web is always infringing, no exceptions (even when its their own site, as we've seen previously...). Of course such a view would require what you say: that once a file has been identified (or alleged) as infringing, it should be banned everywhere.

In reality, however, this is not the case. As explained in the above article, whether making copies of a copyrighted work is copyright infringement depends heavily on the context - who is making the copy (on the internet this can further be broken down to who is uploading and who is downloading) and for what purpose that copy is made. Copies of the exact same work (and even the bit-for-bit identical file) can be both legal and illegal for different combinations of those parameters. This is the law that congress and the supreme court have established. It's ridiculous, in my opinion, but it's the law, and anyone who is arguing that the law is right must acknowledge that it is the law.

Consequently no, it is not possible to remove all links to a single file, because every single link potentially represents a different combination of the aforementioned parameters.
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Ilfar, 20 Jan 2012 @ 2:57pm

Re:
Or you can use the RIAA method and just call it ALL infringing...
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Anonymous Coward, 20 Jan 2012 @ 2:57pm

Re: Re:
Your argument equates legalizing infringement with legalizing unjust violence which reflects poorly on the position of IP extremists.
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Justin Olbrantz (Quantam), 20 Jan 2012 @ 2:59pm

Re: Re:
I should add that my last sentence connects back with the distinction between copyright infringement and child porn: unlike copyright - as just described - distribution of child porn is illegal in all contexts.
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sumquy (profile), 20 Jan 2012 @ 2:59pm

so if i rip my movie off of a dvd and upload it for myself and then someone else uploads their rip but spreads the link for it far and wide, my copy should get deleted too?
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jupiterkansas (profile), 20 Jan 2012 @ 3:01pm

What I can't figure out is if they can make so much money from piracy, why can't Hollywood?
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Anonymous Coward, 20 Jan 2012 @ 3:03pm

Re: Re: Re:
I consider your economic butt-rape of creators unjust violence.
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Anonymous Coward, 20 Jan 2012 @ 3:04pm

Re:
Except reread the Money Laundering part......
Collecting fees and setting up a rewards program for the users can't in any way be Laundering....

"Money laundering refers to the process of concealing the source of illegally obtained money.

Money laundering often occurs in three steps: first, cash is introduced into the financial system by some means (�placement�), the second involves carrying out complex financial transactions in order to camouflage the illegal source (�layering�), and the final step entails acquiring wealth generated from the transactions of the illicit funds (�integration�). "

http://en.wikipedia.org/wiki/Money_laundering

The rewards program was straight up....there was no tricky financial hocus pocus (unlike our wonderful banking system that was bailed out....but I digress...). You upload videos, you get cash back.

The rewards program (from what I read) didn't specify that rewards would only be paid to people that uploaded pirated content.

The fact that the Government had the balls to try to tack that on, to me, as an American-loving, content paying citizen just scares the shit outta me.
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Richard (profile), 20 Jan 2012 @ 3:05pm

Re:
I would think that in practice such websites would need to delete the file, and kill all links, even if it happens one of those links is legitimate.

Why?
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Pirate Apologist, 20 Jan 2012 @ 3:05pm

Re:
woo hoo... the shills/trolls are back... I was starting to think they all got fired or something...
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Richard (profile), 20 Jan 2012 @ 3:06pm

Re: Re: Re: Re:
consider your economic butt-rape of creators unjust violence.

You need help.
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Anonymous Coward, 20 Jan 2012 @ 3:09pm

Regarding the lack of a search function: I think the issue here is that rights holders allegedly could not identify what of their content was actually on the site. Under Perfect 10, Inc. v. CCBill, LLC, 488 F.3d 1102 (9th Cir. 2007), a service provider must "not actively prevent copyright owners from collecting information needed to issue" a DMCA takedown notice (which requires the identification of the allegedly infringing content). Otherwise, the service provider fails at the repeat-infringer requirement for DMCA safe-harbor protection. In other words (as I interpret it), if you purposely hide the identity of the content on your site, you're not eligible for DMCA safe-harbor protection. This sort of makes sense if you think about it, but it also raises practical problems where there is a legitimate need for confidentiality....
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Anonymous Coward, 20 Jan 2012 @ 3:10pm

Re:
This a million times over.

It's because they don't wanna do the initial work it takes to get everything digital. We had that same problem here when we were discussing taking all of our old records and making them into pdf's.

They totally could have set up the same type program themselves...the studios....in which people that had purchased DVD's could upload them into a locker....BAM...no only do they profit from people paying for the storage, but people are paying them to convert the content for them. It's a total win-win.

Sadly, no, they don't want that. I'm still not sure why. Can one of the shills here please explain this?
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Anonymous Coward, 20 Jan 2012 @ 3:12pm

Re: Re:
Off your meds?
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Kaden (profile), 20 Jan 2012 @ 3:13pm

Re: Re:
Again with the ball kicking fetish. Gearing up for a hot Friday night at kink club?
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Anonymous Coward, 20 Jan 2012 @ 3:15pm

Re: Re: Re: Re:
Arbitrarily labeling IP abolition a "butt-rape of creators" violence doesn't make it so and this only makes you look foolish. You are doing a disfavor to the IP extremist position.

If anything, the corporations most avidly supporting these laws are the ones that abuse our legal system to burden creators through laws that effectively limit their means of content distribution without going through an artificially necessary gatekeeper. Attempts to "limit the number of possible downloads from each file" are intended to harm creators that want their content widely and freely distributed. Govt established cableco and broadcasting monopolies result in laws that effectively make it artificially difficult for independent content creators to distribute their content without going through a gatekeeper that requires content creators to sign one sided contracts granting a third party copy protections for 95+ years. Our legal system hurts content creators by making it too legally risky and expensive for restaurants and other venues to host independent performers. The people pushing for these laws the most are the ones who hurt creators the most. Hollywood, with its Hollywood accounting, hurts content creators. Why should I trust their laws to be beneficial to creators.

You have also perverted the founding fathers purpose of IP. The purpose of IP should not be to prevent content creators from being 'ripped off'. It should be to promote the progress of the sciences and the useful arts. It should be to expand the public domain. It should be to serve a social benefit, just like any other law. I do not want it to be the governments job to subsidize IP extremists with laws that negatively affect me (effectively subsidizing IP extremists with laws at my expense). The fact that IP extremists have perverted its purpose into something else is more reason to abolish these laws.
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Anonymous Coward, 20 Jan 2012 @ 3:17pm

Re: Re:
Pirate sites don't create anything, Einstein.

They don't provide the venture capital for movies or music.

They set up servers and start pulling in the bux.

If you think that's a fair way for society to function, you're a sociopath.
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Justin Olbrantz (Quantam), 20 Jan 2012 @ 3:17pm

Re:
The key word being "actively". Declining to actively build in a new feature is most certainly not actively preventing anything. Rather, the government appears to demand that they actively facilitate collection of this information.

This of course assumes that the feature does not already exist, which is a factual matter for which the evidence has yet to be presented.
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bongo houzi (profile), 20 Jan 2012 @ 3:19pm

These guys are thugs but ya it should have come to a head earlier in civil court. It's almost like they're using it to bring the borderline stuff or the stuff that can be misconstrued into the purview of wrongful deeds.
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Anonymous Coward, 20 Jan 2012 @ 3:19pm

Re:
Of course.

That's why none of these sites can survive in the US. They're illegal.

It's why they have to go offshore, to get away from the DMCA.

It's why SOPA and PIPA were necessary.

duh.
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Anonymous Coward, 20 Jan 2012 @ 3:20pm

Re: Re:
Lets say there is a file that has 1 link to it, and a legit DMCA notice is sent to that file. Upon removing the link, the server has no right to keep the illegal upload on their server, they don't get the rights to hold the file just because it was uploaded there.

Lets say that there is a movie, which bit by bit is an illegal encode that was only distributed by an improper encoder, such as a hard coded subtitled video file which is a feature length movie which was fan translated. Obviously, this file could never be considered fair use unless the actual distributor distributes it. Lets also say that the included DMCA notice mentioned that, and said there was no legal distribution of this file. There is no reason Megaupload should only remove a link, as the file itself could not possibly be fair use, so the file should be deleted.

Obviously these are cases where there is little fair use argument, however while there may be tricky cases like what you described, the company shouldn't be able to keep a file they aren't authorize to distribute on their server as long as they use a duplication detection method. That is a problem they made themselves, so they are in a position to either kill the file (and thus disable all links on site to it) or have a system where they do upload duplicates and don't look for matches. Otherwise, as soon as any file is uploaded, they get the rights to do what they want with it (they could continue to provide a new link every time it is taken down if they have a search engine for example)and it would be perfectly legal, as they are allowed to keep the file no matter what any legal action says.
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Franklin G Ryzzo (profile), 20 Jan 2012 @ 3:22pm

Re:
Awwww... you're so cute when you get your panties all bunched up like that. Do me a quick favor and go back and actually read the article... I'll wait...

Ok, great. Now that you've actually read it you must see that there is no apology for piracy, that Mike states he will not be surprised if the defendants are found guilty, and that he actually only raises legitimate concerns about some of the things that are being presented as evidence.

Did you want to want to discuss the merits of Mike's position on the questionable nature of some of the evidence presented? If so, I'd be happy to engage you in the debate. If not, you're in the wrong room... We all paid for arguments in this clinic. Abuse is down the hall.
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Anonymous Coward, 20 Jan 2012 @ 3:23pm

"Copyright is different than child porn". In the U.S., the so-called "land of the free", Traci Lords' early-80s movies are considered "child porn" by the government. Yet those movies are under copyright. So is the copyright on those movies invalid in the U.S.?
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Anonymous Coward, 20 Jan 2012 @ 3:27pm

Re: Re:
Without such a thing, by hosting a server you get the rights to all files, even unauthorized files, with no legal method to get it off the server, even if it is impossible such a file could ever qualify for fair use (a full fan translated hardsubbed movie file for example), or even if it was only uploaded once and that one link was taken down with a legit DMCA you would have no obligation to remove if from your server.
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Violated (profile), 20 Jan 2012 @ 3:31pm

Dotcom
First of all I should thank Mike for making a nice summery of the main issues.

One thing I can say is that Kim Dotcom and the Mega company are certainly not lacking good lawyers who will certainly cover these many points in much greater detail. We can also see in time what else they can do in what I call the "O.J Simpson" trail of the Copyright world.

Mega currently has an on-going Civil case and should they win that case this would certainly harm the Criminal case.

We may recall that while Kim Dotcom was convicted of serious crimes in his youth then as Kim directly states then under German law these convictions have now expired meaning he has no convictions against him. So unless anyone has any new data then it would be safe to say he is long reformed. One would then think that owning the 68th most popular website would be good reason to stay lawful and the profit rolling in.

You certainly have to wonder about overkill when MegaUpload have not yet even been proved unlawful in Civil court. Due process should be about proving a business is unlawful BEFORE you destroy that business. Destroy is the right word when even if Mega win this case the file sharing scene would be long changed and Mega would be renamed Minor.

I also ponder how the Federal Government got their hands on this inside information? Hacking? Spy? If this was someone working for the Feds then much of these email would be about trying to frame them.

The big problem in all this is that it is very hard to trust this Administration and who can say the Judge won't be the Government's best friend aiming for guilty no matter the evidence? What is "justice" next to their campaign of stamping out piracy? It is so easy to go with guilty just because and at minimum the Feds are sure to schedule a copyright butcher.

Well there are so many concerns here and we can only wait and see what happens.
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Violated (profile), 20 Jan 2012 @ 3:31pm

Dotcom
First of all I should thank Mike for making a nice summery of the main issues.

One thing I can say is that Kim Dotcom and the Mega company are certainly not lacking good lawyers who will certainly cover these many points in much greater detail. We can also see in time what else they can do in what I call the "O.J Simpson" trail of the Copyright world.

Mega currently has an on-going Civil case and should they win that case this would certainly harm the Criminal case.

We may recall that while Kim Dotcom was convicted of serious crimes in his youth then as Kim directly states then under German law these convictions have now expired meaning he has no convictions against him. So unless anyone has any new data then it would be safe to say he is long reformed. One would then think that owning the 68th most popular website would be good reason to stay lawful and the profit rolling in.

You certainly have to wonder about overkill when MegaUpload have not yet even been proved unlawful in Civil court. Due process should be about proving a business is unlawful BEFORE you destroy that business. Destroy is the right word when even if Mega win this case the file sharing scene would be long changed and Mega would be renamed Minor.

I also ponder how the Federal Government got their hands on this inside information? Hacking? Spy? If this was someone working for the Feds then much of these email would be about trying to frame them.

The big problem in all this is that it is very hard to trust this Administration and who can say the Judge won't be the Government's best friend aiming for guilty no matter the evidence? What is "justice" next to their campaign of stamping out piracy? It is so easy to go with guilty just because and at minimum the Feds are sure to schedule a copyright butcher.

Well there are so many concerns here and we can only wait and see what happens.
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Anonymous Coward, 20 Jan 2012 @ 3:33pm

"But, I still worry that some of the specific actions used to pain this picture are"

pain should paint
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Anonymous Coward, 20 Jan 2012 @ 3:34pm

Re: Re: Re:
So anyone who disagrees with you is a sociopath.
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Anonymous Coward, 20 Jan 2012 @ 3:34pm

Re:Best comment
That's a really good question for Dodd Leahy, Lamar and the rest of them.

It's not about the money and it never has been. It is about CONTROL.
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Anonymous Coward, 20 Jan 2012 @ 3:36pm

Re:
The scariest thing about the Megaupload case from the vantage point of a legitimate internet business with zero interest in servicing pirates, seems to be the deduplication issue. While one link may be used for infringing on copyrights, the same file (with the same hash obviously) could easily be a personal backup or being used to collaborate on a project involving commentary or criticism.
Would a company that gets a takedown regarding one bad usage of a file then have to ban all possible usages? Such law would seem to have serious first amendment concerns, and this aspect should be fought and overturned, even if MegaUpload itself is found guilty on other counts.
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Anonymous Coward, 20 Jan 2012 @ 3:39pm

Re: Re:DOH
If anything this PROVES they DON'T need SOPA/PIPA and they already have enough power to quake people in their boots who may have legitimate business' but don't know U.S. law.

Not every country agrees with the U.S. and that doesn't make them "roque" or terrorists either.

Canada
U.K.
Switzerland

Those are 3 I know of that have more liberal laws than the U.S.
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Anonymous Coward, 20 Jan 2012 @ 3:40pm

Re: Re:
His point is that why wasn't this dealt with earlier on in civil courts.

Perhaps because the government views money laundering, racketeering and criminal infringement in excess of $100 million as something worthy of a criminal proceeding. Just a guess.
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Mike Masnick (profile), 20 Jan 2012 @ 3:41pm

Re:
Regarding the lack of a search function: I think the issue here is that rights holders allegedly could not identify what of their content was actually on the site. Under Perfect 10, Inc. v. CCBill, LLC, 488 F.3d 1102 (9th Cir. 2007), a service provider must "not actively prevent copyright owners from collecting information needed to issue" a DMCA takedown notice (which requires the identification of the allegedly infringing content). Otherwise, the service provider fails at the repeat-infringer requirement for DMCA safe-harbor protection. In other words (as I interpret it), if you purposely hide the identity of the content on your site, you're not eligible for DMCA safe-harbor protection. This sort of makes sense if you think about it, but it also raises practical problems where there is a legitimate need for confidentiality....

I see where that argument is made, but I don't get it. There's a difference between actively blocking someone from finding stuff... and not proactively giving them a feature to find stuff when it's not a part of what you're offering.

Does Dropbox offer a public search? Does S3?
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Anonymous Coward, 20 Jan 2012 @ 3:42pm

Re: Re: Re:
Seems to me most "pirated" content on the internet is free. So from whom are they "pulling in the bux"?
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Anonymous Coward, 20 Jan 2012 @ 3:42pm

Re: Re: Re:
If it's so easy for infringing sites to collect huge sums of money for distributing content then why don't IP holders simply do the same thing? Why don't they make their own sites and distribute content in the same way that would make infringing sites so much money. The public will likely be much more supportive of giving their internet traffic and money over to creators than over to infringing sites.
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Anonymous Coward, 20 Jan 2012 @ 3:42pm

Re: Re: Re:
Plus I doubt that extradition treaties cover civil litigants. And they'd hide their ill-gotten money.
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Anonymous Coward, 20 Jan 2012 @ 3:45pm

Explainer
from ARS Explainer;
"Which brings us to Megaupload. Several readers asked under what basis the site could be taken down and its employees hauled from New Zealand to a federal court in Virginia. The indictment provides answers. We'll let a judge rule on the merits, but it's worth understanding the government's position here, which is: Megaupload purposely did business in the US and with US residents, and it targeted its sites (in part) toward the US."

I can see now that a lot of countries will be blocking the U.S. whenever they can - sorta like I can't go in and watch BBC's iplayer for shows since I'm in the U.S.

Lovely. That's sort of a reverse censorship.

Let the downloading continue until I can buy the crap I want!!!

(it's a good read; http://arstechnica.com/tech-policy/news/2012/01/explainer-how-can-the-us-seize-a-hong-kong-site-like -megaupload.ars?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+arstechnica%2Find ex+%28Ars+Technica+-+Featured+Content%29&utm_content=Google+Feedfetcher)
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Anonymous Coward, 20 Jan 2012 @ 3:46pm

Re: Re:
I've digitally replicated my balls so you can kick them anytime you wish! I think it might be fun . . .
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Anonymous Coward, 20 Jan 2012 @ 3:47pm

Re: Re: Re: Re: Re:
Progress of the arts doesn't include creators being expected to work on creations that people want to consume but don't want to pay for.

That's slavery.
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Anonymous Coward, 20 Jan 2012 @ 3:49pm

Re: Re:
I think they mean upload anonymously - not providing a search that identifies each user and what files they have.

I'm not familiar with MegaUpload so I can't comment if they allowed users to upload without identifying who they are (registering). Most sites do require giving a valid email address - which is probably why.
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Anonymous Coward, 20 Jan 2012 @ 3:51pm

Re: Re:
The is nothing socially beneficial about repeatedly kick someone in the balls till you're squirming on the ground, therefore it legalization would be a tit-for-tat in regards to legal unauthorized copying.
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Anonymous Coward, 20 Jan 2012 @ 3:51pm

Re: Re:
Unfortunately, the US Attorney relies on statutes instead of Wikipedia:

18 USC 1956 is concerned with financial transactions involving proceeds of illegal activity. It prohibits anyone from conducting or attempting to conduct a financial transaction that involves the proceeds of specified unlawful activity either:

with the intent to promote the carrying on of specified unlawful activity; or
with intent to engage in conduct constituting avoidance of taxes (eg, violation of 26 USC 7201 or 26 USC 7206)�
�when that person knows that the transaction is designed in whole or in part to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; or to avoid a transaction reporting requirement under State or Federal law.

See 18 USC 1956.

The penalty for federal money laundering can up either a fine up to $500,000, or double the amount of money that was laundered, whichever is greater. The court is also authorized to sentence the defendant to a term of 20 years in federal prison.

Pretty much if they funded other legitimate enterprises with money obtained from criminal copyright infringement, they're guilty of money laundering. Oops.
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Anonymous Coward, 20 Jan 2012 @ 3:53pm

Re: Re: *Correction*
The is nothing socially beneficial about repeatedly kick someone in the balls till you're squirming on the ground, therefore it legalization wouldn't be a tit-for-tat in regards to legal unauthorized copying.
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Anonymous Coward, 20 Jan 2012 @ 3:54pm

Re: Re: *Correction*
The is nothing socially beneficial about repeatedly kick someone in the balls till you're squirming on the ground, therefore it legalization wouldn't be a tit-for-tat in regards to unauthorized copying.
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Justin Olbrantz (Quantam), 20 Jan 2012 @ 3:55pm

Re: Re: Re:
Right. So you're arguing that in some specific cases it's possible to know whether something is unauthorized, therefore we must always assume that all cases are unauthorized.

[insert my counter-argument here]
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Anonymous Coward, 20 Jan 2012 @ 3:58pm

Re: Re: Re: Re:
Netflix, Hulu, etc?
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Anonymous Coward, 20 Jan 2012 @ 3:59pm

Re: Re: Re:
This isn't money laundering. See the reply to you by a saner Anonymous Coward, a little below.
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Anonymous Coward, 20 Jan 2012 @ 4:04pm

Re: Re: Re: Re: Re: Re:
First of all your argument raises a false dilemma. It assumes that IP is the only way for artists to make money. In fact, traditionally (and even currently) artists hardly make any money from royalties. Most of that money goes to the middlemen. Artists make most of their money from other activities, like concerts

Secondly, requiring artists to work for free would be slavery. But they're not required to do so, they can find other jobs instead.

Thirdly, progress of the sciences and useful arts doesn't include compensation for artists. Compensation for artists is the means to an alleged end. The desired end isn't compensation for artists, it's social benefit. The constitutions omission of the benefit to artists doesn't imply that the constitution intends the artists benefit to be an end. In fact, it explicitly states that something else, social benefit, should be the end. So for you to somehow extrapolate that artist benefit should be the end is indicative of poor reading comprehension skills on your part.
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Anonymous Coward, 20 Jan 2012 @ 4:06pm

Re: Dotcom
The big problem in all this is that it is very hard to trust this Administration and who can say the Judge won't be the Government's best friend aiming for guilty no matter the evidence?

Ummm, I think it will be a jury who renders the decision on guilt or innocence, unless the defendant waives a jury trial.
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Justin Olbrantz (Quantam), 20 Jan 2012 @ 4:07pm

Re: Re: Re:
"Pretty much if they funded other legitimate enterprises with money obtained from criminal copyright infringement, they're guilty of money laundering. Oops."

Ah, so any organization that has both legal and illegal businesses engages in money laundering by definition. That's something I didn't know yesterday.
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Anonymous Coward, 20 Jan 2012 @ 4:11pm

Re: Dotcom
Don't forget an earlier article which mentioned Dotcom was no longer the head of MegaUpload as of a month ago (was he tipped off?).

And that MegaUpload, under new direction, had both the means and talent to go ligit - including some of UMG's signed artists - which planned on marketing to independent musicians making them a COMPETITOR to the RIAA and labels they represent.

90% of action from Washington DC has been to protect CORPORATE interest. They don't give a squat about our butts.

If pirates can make that much money hosting files - think what someone could do working with musicians to give the public what they want!!!

I remember the old mp3 site based in Russia. It was awesome - all file types. They paid royalties but it was the Russian system which didn't pay U.S. rates. That wasn't good enough - so they severed ties with the Russian agency and then could claim "they didn't pay royalties". All payment processing to the site ended - 5 years ago? The site died. Just like Wikkileaks.

There was a lot of debate about even buying (legite) foreign CD's and industry wanted the USPS to take action.

I guess it was their bad they didn't insist on region coding music discs too...

They probably wanted to go back to the old days where import discs could set someone back $50-$60.

There's been several times that I wanted music from someone not in the U.S. It is not available for download OR disc. I can find it on Amazon.UK - but can't buy it. I can find it on iTune.IS - but I CAN"T BUY IT!!!

They don't want anyone in the US to have content that isn't licensed (approved) through them.

This isn't about money. Independent's are a big threat. They've taken over 50% of Grammy's. It would make them nervous especially after MegaUpload was about to challenge them.

The US State Department only looks at industry figures. They will believe anything they are told.

The end of progress.
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Justin Olbrantz (Quantam), 20 Jan 2012 @ 4:20pm

Re: Re: Re: Re: Re:
Exactly.

Random fact: in countries that have Netflix, Netflix now consumes as much bandwidth as piracy (counting both P2P and HTTP-based piracy); in countries that lack Netflix piracy corresponds to the sum of the two. Rephrased: Netflix has single-handedly reduced internet piracy by 50% (for movies and television, at least).
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Troglodytarum_venator (profile), 20 Jan 2012 @ 4:20pm

"If you're running Amazon S3 or Dropbox, do you now suddenly change how you do business, just to avoid the possibility of being accused of racketeering and criminal copyright infringement? That's worrisome. "

Even bigger issue is, Would you trust a cloud storage to be safe for your buissness, your family photos or whatever you use it for.
Lack of trust means lack of sales, lack of sales means end of service.

So yes, if all their claims pan out, there's still going to be a hit to the economy as cloud storage will be deemed more and more untrustworthy.
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mischab1, 20 Jan 2012 @ 4:25pm

Re: Re: Re:
That subtitled video that the fan translated is legal for the fan who created it. It is just illegal for him to distribute it to other people.
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Franklin G Ryzzo (profile), 20 Jan 2012 @ 4:26pm

Re:
This is an interesting interpretation, but I don't think it applies to MegaUpload. The first thing we need to look at is the purpose of a cyberlocker. This is a service where anyone can upload a file and then download it after. The only person that gets a link to the location of the content is the uploader. Now the uploader can keep this link to himself (as for the purpose of personal backup), he can share the link with specific individuals (as for the purpose of sharing a file with friends or coworkers), or he can post the link for all to see (as for the purpose of making the file public). It's important to understand this basic setup of the service before trying to apply the court's interpretation in the Perfect 10 case. No one has the ability to search the site for specific content... not the public, not the rightsholders, and not even the uploader himself. This would not constitute "actively preventing copyright holders from locating information required to file a DMCA notice". The purpose of the site is agnostic to the content uploaded, and the uploader has the full discretion over who can access their uploaded content. Rightsholders are not prevented from locating their content, they just have to do it the same way everyone else that was downloading found it, which means finding it's location somewhere else.
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doubledeej (profile), 20 Jan 2012 @ 4:33pm

Re:
This would destroy the economy. No music or movie producer, director, author, or software development company would ever release anything again if their works can be legally copied, and they'd all be forced to close their doors. We'd be left with poorly produced music, movies, TV, books, and software, because the professionals that produce these things now wouldn't be able to afford to do so, or have the time because they'd have to have another job to pay the bills. Why would anybody buy when they can have, legally, for free?

Look at the difference between open source and commercial software. Open source doesn't have the polish or selection of commercial titles.

As the architect and author of niche market software, I'd find something else to do if I couldn't guarantee a living by selling my works. No way I'm going to dedicate years of my life to try to sell something that everybody would just end up getting for free.
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Richard (profile), 20 Jan 2012 @ 4:34pm

Re:
if you purposely hide the identity of the content on your site, you're not eligible for DMCA safe-harbor protection.

If that were true then Dropbox would be in trouble - since most files on that site are hidden from everyone apart from the users.

Of course it isn't true.
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Anonymous Coward, 20 Jan 2012 @ 4:47pm

Re: Re: Re: Re:
Sure. Neighborhood crack dealer buys rental property, liquor store, pawn shop etc. Used proceeds from crack to purchase and/or fund daily operations. That's a form of money laundering.
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Anonymous Coward, 20 Jan 2012 @ 4:53pm

Re:
I don't think that cloud storage will be impugned. I don't think it is too difficult for cloud storage operation to run a pretty clean operation. Problem with Megaupload is that they did not set about to run a scrupulously clean operation. At the very best they turned a blind eye. More likely they promoted infringement.
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JarHead, 20 Jan 2012 @ 4:54pm

Re: Re: Re:
Replying to your specific example here, where 1 file have 1 link and that link is deleted, but the file remains.

From a tech stand point it's absurd. I may not know how Mega implement their de-duplication, or how de-duplication is actually implemented in general, but the idea is similar to one widely used in the programming world to implement what is known as "Garbage Collection".

I think it is safe to assume that anyone uses de-duplication wants to minimize the storage costs. If 2 uploaders upload an exact same file, the cost of having to actually store 2 copies of it is more than just having to store one copy and provide 2 links. Notice here the strong emphasis of minimizing storage costs.

So, if 1 file with only 1 link and that link is deleted, storing that file regardless will cost more than not storing it at all. This is the heart of "Reference Counting" algorithm, which states that the actual resource will be deleted after there's no one left referring to it. Change "resource" with file, and "referring" to link/linking.

I think any de-duplication scheme (Flyweights pattern anyone?) without any "Reference Counting" scheme of some sort is simply foolish cos it won't minimize the storage cost, or have some other "use". For the latter case, it must be proven that "Reference Counting" is simply not there or just not working, AND whether the "other use" is anything nefarious.
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Anonymous Anonymous Coward, 20 Jan 2012 @ 4:54pm

Re: Re: Re:
Just curious. Did you use a photo copier, a digital camera, or a 3D printer? Or maybe you are so advanced that you used quantum computing to excite a second copy in a different plane?
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JMT (profile), 20 Jan 2012 @ 4:56pm

Re: Re: Re:
"They don't provide the venture capital for movies or music."

That's not an answer to the question. They're still completely ignoring a proven stream of INCOME, one that comes with the bonus of building goodwill with your customers. Why are they ignoring that?
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Anonymous Coward, 20 Jan 2012 @ 5:00pm

Re: Re:
Why are you trying to make valid economic points?

/sarc
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Violated (profile), 20 Jan 2012 @ 5:04pm

Re: Re: Dotcom
OK you have a point. Best they stick to Jury members who actually have an Internet connection and know what P2P is.

The Judge controls the case and decides what the Jury can see.
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Anonymous Coward, 20 Jan 2012 @ 5:10pm

Re: Re: Re: Re:
What economic butt-rape? CEOs have been given yearly bonuses regularly. Why this money isn't been given to creators is anyone's guess, but the bulk of the missing money isn't a result of "our economic butt-rape".
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JarHead, 20 Jan 2012 @ 5:13pm

Re: Re: Re:
As I noted elsewhere in this comment section, actually storing the file after all links to it are killed is simply doesn't make sense. No need for it to be legit under DMCA or even SOPA/PIPA, cos the site owner's/maintaner's own wallet will punish him/her.

Apart from economic costs, if there's an occasion where the file remains after all links to it are killed, that occasion can be brought against the owner/maintainer, not only under DMCA, but probably privacy laws as well, regardless that only the owner/maintainer have access to that file. And we as the user of such services must be especially wary of that, not cos of the fear from IP maximalists, but what are the owner/maintainer doing with our files.
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Josh in CharlotteNC (profile), 20 Jan 2012 @ 5:19pm

Re: Re: Re: Entendre
You can flout the law.

You can flaunt the fact that you are flouting the law.
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JarHead, 20 Jan 2012 @ 5:23pm

Re:
Hmm, corrupting big files? How big of a file are we talking?

I never have that problem using MU, then again the largest file I ever dl from it is 300mb.
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Travis, 20 Jan 2012 @ 5:26pm

Re: re
Depends on if the judge that tries them (a while from now) has been bought. I won't hold my breath.
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Troglodytarum_venator (profile), 20 Jan 2012 @ 5:31pm

Re: Re:
You're arguing that cloud storage should spy on their users to check if what they store is in violation of something ?
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Josh in CharlotteNC (profile), 20 Jan 2012 @ 5:32pm

Re: Re:
I'd find something else to do if I couldn't guarantee a living by selling my works

So there's a law that guarantees your right to make a profit from your work? That must be nice.

Congress apparently can just solve this entire economic issue we're in by writing a law than guarantees everyone in the country a high-paying job, a nice house, and two or more weeks of paid vacation a year. Hey, they could solve the terrorism problem by writing a law that guarantees that no one will ever be hurt by a terrorist! In a week they could solve all problems we've ever thought of by just passing laws! Perfect world here we come!
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Travis, 20 Jan 2012 @ 5:40pm

Re: Re: Re:
Email addresses are not a distinctive identifier. Especially since there are anonymous email services and you can access via anonymous proxies. All MU was doing (in my mind) was avoiding useless steps to ensure their service was more efficient and useful.
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Anonymous Coward, 20 Jan 2012 @ 5:48pm

Re:
As is Scorpions "Virgin Killer" or Led Zeppelin III LP covers
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Anonymous Coward, 20 Jan 2012 @ 6:04pm

Re: Re: Re: Re:
It doesn't matter how it is from a tech standpoint when you have a single link, if they are allowed to not delete the file when there are 2 links pointing to the same file (not separate duplicate files), they are also not allowed to delete the sole link to a file. Either they are required to remove the file from the server, or they are not upon receiving a DMCA take down.

And there are cases where you could benefit from this. If a similar site simply sent out a new link to the uploader upon receiving a DMCA notice, if they aren't required to remove the file, this would technically be perfectly legal and the website would effectively be impossible to ever remove a file from their server.
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RonKaminsky (profile), 20 Jan 2012 @ 6:05pm

Re: Re: Re: Re:
Even more troubling is that some of the newest filesystems come with deduplication on a smaller-than-whole-file level, for example, a block level. One wonders what a locker service is supposed to do when notified that a file infringes, and an analysis (assuming the tools exist to do this analysis) shows that other files contain a range from 25% to 90% usage of blocks from the infringing file?
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RonKaminsky (profile), 20 Jan 2012 @ 6:07pm

Re: Re:
Even more troubling is that some of the newest filesystems come with deduplication on a smaller-than-whole-file level, for example, a block level. One wonders what a locker service is supposed to do when notified that a file infringes, and an analysis (assuming the tools exist to do this analysis) shows that other files contain a range from 25% to 90% usage of blocks from the infringing file?
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Anonymous Coward, 20 Jan 2012 @ 6:12pm

Re: Re: Re:
"Pirate sites don't create anything, Einstein."

Bankers don't either. They live off of other people's money and make a better living doing than most of the people contributing too. How long do you think that is sustainable?

If they had a sustainable business model then the business should be looked at much closer than labeling it "rogue" because it doesn't fit in with what is already in existance.
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Anonymous Coward, 20 Jan 2012 @ 6:17pm

Re: Re: Re: Re:
I know it's not valid. Most people do but that doesn't mean the LAW required some personal indentification method to track who was doing the uploading and all the files they had.

The reason i said that because at one time most file hosting sites allowed anonymous use. Then it changed and very few do anymore.
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William, 20 Jan 2012 @ 6:21pm

Re: Re:
You're such an idiot. SOPA and PIPA, as claimed by idiots like you, only work for sites outside of the US. Megaupload was outside of the US. Now kindly explain why the fuck you need it again?

Liar.
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Anonymous Coward, 20 Jan 2012 @ 6:23pm

*puts on thinfoil hat* The point is, if they want you, they'll get you, even if it's with fabricated charges that won't hold up in a (real, decent, not the current US-system) court. *doesn't remove thinfoil hat*
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Anonymous Coward, 20 Jan 2012 @ 6:24pm

Re: Re: Re:
A lot of file hosts do some sort of filtering. I know rapidshare does. I've heard it's not possible for any user to upload the same file if they recieved a complaint about it. It's an automatic system of some sort.

I thought it might be what ISP's were planning to use in the U.S. (they already do it in Australia).
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nasch (profile), 20 Jan 2012 @ 6:46pm

Re: Re: Re: Re: Re:
If a similar site simply sent out a new link to the uploader upon receiving a DMCA notice, if they aren't required to remove the file, this would technically be perfectly legal and the website would effectively be impossible to ever remove a file from their server.

I would think it would be hard to maintain the "dumb pipe" status or whatever it's called if a service provider is acting in such ways. And if there is a file sitting on a disk with no links to it, so no way to download it, how is the copyright owner harmed by that?
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nasch (profile), 20 Jan 2012 @ 6:52pm

Re: Re:
This would destroy the economy. No music or movie producer, director, author, or software development company would ever release anything again if their works can be legally copied, and they'd all be forced to close their doors.

I was hoping you were joking... I guess you're not aware that lots of music or movie producers, directors, authors, and software development companies release their work for free and allow it to be legally copied? And they make money doing this? So no, this would not be the end of Western civilization as we know it, just the end of a certain business model - selling copies of data.

No way I'm going to dedicate years of my life to try to sell something that everybody would just end up getting for free.

You're better off selling something that cannot be copied.
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Bergman (profile), 20 Jan 2012 @ 7:13pm

Re:
It occurs to me that if having a search function is illegal, and not having one is also illegal, that the only way ANY site could be legal is if they have a search function that returns "no hits" on any search criteria, no matter what those criteria are.
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Bergman (profile), 20 Jan 2012 @ 7:19pm

Re: Re:
And what if one of the deduplicated files belongs to the actual copyright owner? Wouldn't it be copyright infringement to deny the actual owner of the copyright the ability to copy, license copies and distribute their own property?

I know people who rely solely on the cloud for their files. I regard it as a bad idea (witness what has happened to people who rely on MegaUpload), but such people do exist. What happens to a copyrighted file that is treated the same way, if it gets pirated and uploaded to the cloud? That's a situation where infringing rights might actually BE theft.
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Anonymous Coward, 20 Jan 2012 @ 7:26pm

Re: Re: Re: Re: Re: Re:
If they somehow automated it, it wouldn't affect their dumb pipe status but that is just a quick example I'm sure there are other ways to abuse it. Also, even if the public can't access it, it is clear with the conversation these people in the company continued to get files off their server, and it is legal from them to do this if the law says they don't need to delete it. It also means that anyone who wants a legal collection of illegal files, they just need to host a server, get some people to upload to it, and remove public links on DMCA, and they can do what they want with the files legally, DMCA be damned.
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Bergman (profile), 20 Jan 2012 @ 7:37pm

Re: RIAA method
The logical conclusion of that is that if all distribution is infringement, the RIAA goes out of business, since all recording studios go bankrupt.

It'd arguably be worth it, even with the massive collateral damage...
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Bergman (profile), 20 Jan 2012 @ 7:43pm

Re: Re: Re: Re: Re:
Depends on how you look at it. Coining a word: RIAApist.
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Bergman (profile), 20 Jan 2012 @ 7:46pm

Re: Re: Re: *Correction*
I don't know. Just imagine if someone had done it to Adolf Hitler's father before Adolf was conceived?
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Bergman (profile), 20 Jan 2012 @ 7:49pm

Re: Re:
"This would destroy the economy. No music or movie producer, director, author, or software development company would ever release anything again if their works can be legally copied, and they'd all be forced to close their doors."

Just one problem: There are musicians, artists, authors and software developers who are already making tons of money on exactly that business model.

Some of them used Mega Upload to do it, at least until their livelihoods were threatened by the government pawns of the big businesses that try to financially enslave them.
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Bergman (profile), 20 Jan 2012 @ 8:05pm

Re: Re: Re: Re:
One problem with disallowing reuploading is what if the owner of the copyright is one of the people who uploaded? Or tries to upload at a later date?
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Rekrul, 20 Jan 2012 @ 8:25pm

Re: Re: Re:
I should add that my last sentence connects back with the distinction between copyright infringement and child porn: unlike copyright - as just described - distribution of child porn is illegal in all contexts.

Unless it's the government doing the distribution to entrap... I mean "catch" pedophiles.
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beingkatie, 20 Jan 2012 @ 8:39pm

An indictment is not a conviction
I think it is important to remember that an indictment is not a conviction. Rather, it is a statement handed down by a grand jury before a crime can be tried. Although I agree that some of these issues have been previously litigated, there are not always bright line tests for whether one is a violation or not. Also, this is a criminal case and the burdens of proof are much higher (guilt beyond a reasonable doubt versus a preponderance of the evidence). Therefore, though there may be enough evidence to have a criminal trial, it may not be strong enough for convictions.
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TtfnJohn (profile), 20 Jan 2012 @ 8:51pm

Re: Re:
open source isn't a rejection of copyright. It's a rejection of certain forms of licensing. Every piece of open source software I know of has a copyright notice attached to it.

I'll assume you're talking desktops for laptops and desktop machines as one of the most polished and widely used OS's for smart phones is open source. Namely Andriod,

Or this platform which is run on open source code known as Wordpress.

Saying that ending copyright would somehow end all of the things you list off also belies the point that humans, by our very nature are a creative species and creation existed long before copyright did.

There never was a guarantee of selling niche software and never is. There's risk inherent in anything, even writing endless utilities to cover the weaknesses of Windows. But to say that copyright ALONE gives you a guarantee of selling niche software is ludicrous. Even if you do sell it with a closed source license.
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elliotlessing (profile), 20 Jan 2012 @ 9:07pm

Why Now??
The reason they are doing it now is because the U.S. is trying to save face after exerting so much pressure abroad (i.e., Spain) to compel other countries to adopt SOPA like laws. Now that the efforts in the U.S. are being challenged/delayed, etc., the U.S. is showing these other countries that they still have to do what Hollywood wants, and that Hollywood won't be deterred by people disagreeing with their approach. That's why!!.
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Justin Olbrantz (Quantam), 20 Jan 2012 @ 9:10pm

Re: Why Now??
I dunno. As reasonable as that explanation sounds, I'm not sure they could pull it off on such short notice. It's only been 2 days since the blackout, and 1 day since SOPA and PIPA died (for the time being). Would have made much more sense if it had been weeks later.
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Dr 'Do No' Evil, 20 Jan 2012 @ 9:17pm

way to go Mike
great...
you just eloquently laid out Mega's complete strategy for them... now they will win, the gov't will get pissed and redouble their efforts. Can't we all just get along?

/sarc

truthfully, great arguments - keep up the good work.
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Rekrul, 20 Jan 2012 @ 10:03pm

Re:
"But, I still worry that some of the specific actions used to pain this picture are"

pain should paint

Yes, my pain paints all the time. ;)
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elliotlessing (profile), 20 Jan 2012 @ 10:04pm

Re: Re: Why Now??
Unless the passage of SOPA and PIPA was never a sure thing, and this was a "back-up" if you will . .
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Anonymous Coward, 20 Jan 2012 @ 10:23pm

Re: Re:
Beethoven, Mozart, etc ...
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nasch (profile), 20 Jan 2012 @ 10:43pm

Re: Re: Re: Re: Re: Re: Re:
. Also, even if the public can't access it, it is clear with the conversation these people in the company continued to get files off their server, and it is legal from them to do this if the law says they don't need to delete it.

No it isn't; if they make another copy of that file, that copy would be infringing. And they couldn't really do anything with the file without making a copy of it.
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Anonymous Coward, 21 Jan 2012 @ 12:01am

Re: Re:
>No music or movie producer, director, author, or software development company would ever release anything again if their works can be legally copied, and they'd all be forced to close their doors.

Yeah, I guess after "Weird Al" Yankovic released "Don't Download This Song" in 2006 as a legal free copy from his "Straight Outta Lynwood" album, he was fucked from then on. Alpocalypse (released in 2011) is a complete slimy lie (as our favourite shill here likes to say to anything MPAAly contrary).
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Anonymous Coward, 21 Jan 2012 @ 3:33am

Re: Re: Re: Re:
Those filters don't work, you just need to encrypt the file and presto the signature for the file changes.
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Anonymous Coward, 21 Jan 2012 @ 3:38am

Re: Re: Re: Re: Re:
Is time to start using anonymous P2P cyberlockers.

Omemo FTW!
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Anonymous Coward, 21 Jan 2012 @ 3:44am

Re: Re: Re: Re:
Did you forget to take your meds?
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Anonymous Coward, 21 Jan 2012 @ 3:44am

Re:
That probably makes Blackberries unlawful in the US.
Since not even the company can see what is in the messages being transmitted.

Amazon storage probably is unlawful, Google cloud storage, IBM cloud solutions, Microsoft, everybody.
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Anonymous Coward, 21 Jan 2012 @ 3:46am

Re: Re:
Advocating violence now - what a sociopath.
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Jon Abston, 21 Jan 2012 @ 3:49am

Umm... Thought Megaupload was a Brittish company.
I could be wrong here but I thought Mega was a British
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Anonymous Coward, 21 Jan 2012 @ 3:50am

Re: Re: Re: Re: Re: Re:
No. Slavery would be me using force to make you work for free. There's no gun to your head, no whip to your back. Just you're not going to have the threat of state violence to extract rents from us anymore.

If you aren't getting paid for what you do, don't work.

See if we care.
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Jon Abston, 21 Jan 2012 @ 3:53am

Umm... Thought Megaupload was a British company.
I could be wrong here but I thought Mega was a British company. Based outside of the United States. So how does the DOJ have the right to shut this website down???? Censorship must stop! I don't believe in everything you say but I believe in your right to say it. Freedom. What a concept!
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techflaws.org (profile), 21 Jan 2012 @ 4:52am

Re: Re: Re:
such as a hard coded subtitled video file which is a feature length movie which was fan translated.

Which Hollywood - again - is the only one to be blamed for by not releasing subs themselves in time (if ever) while fansubbers' *good* translations pop up a day later at the most. And of course for putting the screws to hardware manufacturers for daring to support formats due to what technology allows rather than Hollywood.
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United Citizen, 21 Jan 2012 @ 4:53am

Online Piracy
What the DOJ has done in this case is the true online piracy. Ceasing millions of assets that came from advertisers with full knowledge of what site they were advertising on. No money was stolen, it was paid for legitimate service. While intellectual property was stolen, it was not by MegaUpload, it was by users who will just as easily use another service to commit their piracy. Even so, that does not entitle the DOJ to cars, mansions, cash, lifesize predator models, or anything else gained from advertising revenue. If DOJ is claiming all this money is criminal, why isn't every single advertiser that ever used Megaupload being arrested as part of the conspiracy, as they were paying millions to have their ads shown to known infringers.
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techflaws.org (profile), 21 Jan 2012 @ 4:56am

Re: Re: Re: Re: Re: Re:
That's slavery.

That's bullshit.
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techflaws.org (profile), 21 Jan 2012 @ 4:59am

Re: Re: Re:
You forgot to mention balls kicking.
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Loki, 21 Jan 2012 @ 5:34am

Re:
You conjure up every excuse, spin every improbable scenario in order to cast doubt. You draw conclusions and raise suspicions without access to a single piece of evidence. Again why?

Perhaps because the entertainment industry has spent large amounts of money trying to pass legislation extending the duration, expanding the scope, and limiting the exceptions for copyright. They have then used every little rule, even conflating and abusing laws, or simply sued in hopes of bankrupting, (and failing that buying into or buying out) any businesses, services, or institutions that offers/dares to try to compete with them.

They then conflate any new precedents they have been able to achieve to further stifle, cripple, or shut down even more competition.

Repeat, lather, rinse.

Unfortunately, we are dealing with an industry that was, in fact, founded on the infringement (I'm sorry "theft") of IP, who essentially commits (and even essentially admits to in some cases) to extortion, blackmail, and bribery (even if not exactly by the letter of the law - but then if infringement is "theft" then who are we to quibble with the fine points of law, and give me a few hundred million dollars I can "donate" to Congress, and I'll make them official in the letter of the law as well).

When dealing with such an organization, it becomes necessary to go over every fine point, every fine detail.
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Anonymous Coward, 21 Jan 2012 @ 5:35am

If Megaupload can show in court that at least one link of the same material was used as fair use anywhere the feds case is going to the toilet.

Remember this, not everything is copyright infringiment, even if the material stored is copyrighted who is to say that one person didn't won the rights to that?
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Anonymous Coward, 21 Jan 2012 @ 5:43am

Re: Re: Re: Re:
...or an MRI or a CT Scan with an contrast agent transformed into a 3D model.
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Anonymous Coward, 21 Jan 2012 @ 5:48am

Re: Re:
Open source software like Firefox and WordPress?

Are you actually arguing that music and movies can get worse than are today? I would argue we're better off without Hollywood.
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Anonymous Coward, 21 Jan 2012 @ 6:07am

Re: Re:
Look at the difference between open source and commercial software. Open source doesn't have the polish or selection of commercial titles.

Really?

For CAD
http://sourceforge.net/apps/mediawiki/free-cad/index.php?title=Main_Page
http://www.opencascad e.org/

For medical use:
http://www.slicer.org/
http://www.osirix-viewer.com/

For electrical engineering/electronics:
https://spins.fedoraproject.org/fel/
http://www.opencircuits.com/Open_sou rce_electronics

For architects:
http://www.blender3darchitect.com/

As the architect and author of niche market software, I'd find something else to do if I couldn't guarantee a living by selling my works. No way I'm going to dedicate years of my life to try to sell something that everybody would just end up getting for free.

I'm sorry but you already can't guarantee that, at least not through copyrights or patents, you don't have the money necessary to play in that playground unless you are a millionaire, and even if you did your competitors are legal are you going to end your business now?

Of course not, what you will do is to try and do better than the competition or else you want make any money.

You don't deserve to be granted a monopoly on anything period.
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Anonymous Coward, 21 Jan 2012 @ 6:08am

Re: Re: Re:
Studios and labels also don't create anything.
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Anonymous Coward, 21 Jan 2012 @ 6:11am

Re: Re: Re: Re:
The thing is and this is very important the same file can be legal and illegal at the same time.

Or fair use has been void?
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Big Timber, 21 Jan 2012 @ 6:15am

"pain this picture"
Interesting if not ironic lapsus calami.
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Anonymous Coward, 21 Jan 2012 @ 6:39am

Re:
You do not need to put on a "Tin Foil Hat" to state the truth.
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Anonymous Coward, 21 Jan 2012 @ 6:49am

Maybe what is need is a law that would prevent ALL posting of ALL content (legal or illegal) by any site that that is not the CERTIFIED content owner and that each such certified site would have to obtain a federal license on which full and complete federal taxes are paid for ownership and distribution of each and every copyrighted work.

Of course, is no such tax was or license was obtained by alleged copyright owners then the work would be declared public domain.

Tax rates could be set high enough that it would guarantee that non revenue returning works would go public domain after a short period of time.

This would solve two problems our lack of funds supporting the government and the copyright squabbles.
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jailbait, 21 Jan 2012 @ 7:54am

Re:
This is an ad hominem attack whereby the person making the argument is attacked, and the argument itself is not attacked.

While I can't say I disagree with your assessment of Mike, I would have to say you would be MUCH more persuasive if you stuck with the actual merits of the issue at hand.
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jailbait, 21 Jan 2012 @ 8:04am

Re: Re: Re:
In the US, the criminal proceedings are usually always brought first. Civil litigants wait until all criminal proceedings are completed before moving forward with any civil charges (I think this is so that neither is influenced by the other).

For the government, it was ALWAYS in their best interests to move forward with a criminal suit (vs a civil suit). If you lose a criminal suit, your assets can be permanently seized by the government (something the government just LOVES to do). Civil suits would take too long to do this, and then there are appeals processes in place.
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jailbait, 21 Jan 2012 @ 8:09am

Re: Re: Re:
I'm not exactly sure that you need to fit the dictionary definition of the term "money laundering" for it to count as something you can be criminally charged with.

The US government considers ANYTHING gained by conducting illegal business forfeit... Any money (or items) gained from illegal transactions or used to commit illegal transactions can be seized (and kept) by the government. For example, I've seen a prostitution case where the madam was charged with "money laundering" (amongst other things), and all of her assets were seized.

It may just be that "money laundering" may not refer to monies that the US government considers "up for grabs".
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jailbait, 21 Jan 2012 @ 8:26am

Re: Re: Re:DOH
What about the UK law criminalizing encryption of hard drives? If you don't give your password to authorities, you get an automatic two-year jail sentence. The US has a tremendous number of issues, however we are at least somewhat protected by a fifth amendment (the right to silence in case of self-incrimination).
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jailbait, 21 Jan 2012 @ 8:35am

Re: Dotcom
In the US, I think that all of Dotcom's prior convictions would still stand (unless he received them as a minor). His prior convictions (while not being valid to the case) would affect the Juries' or the Judges' view of him negatively. Dotcom's attorneys could however, ask that information not be brought up because it is prejudicial. Nevertheless, Dotcom's conduct during his time at MegaUpload would still be up for discussion, and may still be prejudicial.

Also in the US, the "due process" portion of this investigation was satisfied when judges signed the criminal warrants. "Due process" would also include allowing the admins the right to a trial and the opportunity to face their accusers.
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jailbait, 21 Jan 2012 @ 8:46am

One of my neighbors owned a gift shop on a busy street... one day, seven police cars came by to arrest her. Apparently, one of their "undercovers" found counterfeit material being sold in her shop (i.e., TWO coach sunglasses). The store owner said that she had no idea that they weren't real, she merely bought stuff in bulk from her wholesaler. After jail and extensive fines, she closed down her shop. This was two years ago, and to date, this store is still empty.

In light of all that is going on, not only would I not blame any company for not wanting to do business with a US citizen, but I would have to advise them not to - for their best interests. Businesses should relocate to other countries, should have domains that do not end in "com", "net", or "org", and should filter out any traffic coming from the US.

The MPAA and RIAA are often moaning and groaning about the loss of American jobs and profits.

It seems to me as if it's the ANTI-PIRACY movement doing the most damage to American jobs, creativity, freedoms, and profits.
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Anonymous Coward, 21 Jan 2012 @ 9:12am

NO They got it wrong.. again.
ITS Just as if the industry labels are sitting where the judges are supposed to be, getting everything they want. ITS SICK. We are the people, without us there is NO MONEY for them to pilfer. WE CAN JUST SAY NO to music, JUST SAY NO to movies. JUST SAY "NO" to their greed and hippocracy and their ENTIRE INDUSTRY.

WE RULE, THEY DON'T.
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nasch (profile), 21 Jan 2012 @ 9:15am

Re:
Maybe what is need is a law that would prevent ALL posting of ALL content (legal or illegal) by any site that that is not the CERTIFIED content owner... This would solve two problems our lack of funds supporting the government and the copyright squabbles.

It would "solve" freedom of expression as well.
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The eejit (profile), 21 Jan 2012 @ 9:52am

Re: Re: Re:
Hollywood racketeers on a daily basis. Your point?
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Anonymous Coward, 21 Jan 2012 @ 10:20am

Re: Re: Re:
"Congress Shall Make No Law", taken out of context sounds pretty good. >:-D
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anon, 21 Jan 2012 @ 10:40am

fair use
If a news story was written and that fan sub video was used as a part of the story, the video would of the news story would be legal. It would be legal for the news agency to retain a link to the file. In fact, most news agencies would make a copy and store it on their own server to assure they had the source on record. Right? Like if a certain website had reported on one of the more popular ways that Mega Upload may have been used.
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Muffler, 21 Jan 2012 @ 10:44am

IP
I wonder... does CNN, MSNBC, ABC and the others pay people when they use their you tube videos... i bet they don't in many cases...
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Anonymous Coward, 21 Jan 2012 @ 11:04am

Re: Re:
Also, part of the reason why things like Android and Samsung software and operating systems may not be as good as proprietary ones is because companies like Microsoft and Apple have all these ridiculous patents that they will sue anyone for and so others must create silly, less efficient, and less socially beneficial work arounds to avoid getting sued.

http://apple.slashdot.org/story/12/01/17/1823224/apple-sues-samsung-in-germany-again

htt p://apple.slashdot.org/story/11/12/20/2343258/apple-patents-using-apps-during-calls

http://apple. slashdot.org/story/11/12/19/2329243/apple-wins-injunction-banning-import-of-htc-devices

http://yr o.slashdot.org/story/11/10/24/1228232/microsoft-now-collects-royalties-from-over-half-of-all-android -devices

Firefox and the open source community has come up with all sorts of features that Microsoft simply copied (ie: the find feature at the bottom, much of Windows 7 copies a lot of things from Linux) yet they never get sued, but everyone is afraid of writing anything that might resemble a patent that Microsoft has. Microsoft isn't innovative, Google is more innovative than Microsoft, Microsoft's competitive advantage stems from the government granting them monopoly privileges.
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nasch (profile), 21 Jan 2012 @ 11:05am

Re: Re: Re: Re:DOH
What about the UK law criminalizing encryption of hard drives? If you don't give your password to authorities, you get an automatic two-year jail sentence.

It doesn't criminalize the encryption of hard drives, it compels you to give up your password when requested to as part of a criminal investigation (I don't know if there's enough oversight to prevent abuse):

"British law enforcement gained new powers on Monday to compel individuals and businesses to decrypt data wanted by authorities for investigations.

But as of [October 1, 2007], those served with a "Section 49" notice have to either make decryption keys available or put the data in an intelligible form for authorities. Failure to comply could mean a prison sentence of up to two years for cases not involving national security or five years for those that do.

A Section 49 request must first be approved by a judicial authority, chief of police, the customs and excise commissioner, or a person ranking higher than a brigadier or equivalent. Authorities can also mandate that the recipient of a Section 49 request not tell anyone except their lawyer that they have received it."

The US has a tremendous number of issues, however we are at least somewhat protected by a fifth amendment (the right to silence in case of self-incrimination).

Has it actually been determined in court that the 5th Amendment allows you to keep your encryption password to yourself?
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Anonymous Coward, 21 Jan 2012 @ 11:12am

Re: Re: Re: Re: Re:
and to add to my prior comment, if IP is the basis of placing so much burden on service providers so as to either shut many of them down or make them less efficient, that harms artists. It harms artists a WHOLE LOT MORE than IP abolition could ever do because it makes it more difficult for them to get their works distributed.

Which is the purpose behind these monopolistic laws. It's to make it difficult for artists to get their works distributed without going through a govt established monopolist gatekeeper, which is exactly what our legal system has wrongfully accomplished outside the Internet. This harms artists. Don't be fooled, the intent of our laws isn't to help the artists, its to help the middlemen at the expense of both the artists and the public.
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Anonymous Coward, 21 Jan 2012 @ 12:10pm

Re: Re:
My only point was that this is where the lack of a search function might be legally relevant. A search function is not a requirement for DMCA safe-harbor protection (but it would surely satisfy the "not activity prevent" prong). I'm just trying to guess at why the government would include that allegation. At a minimum it's a relevant allegation, but not a dispostiive fact and maybe not even a probative fact. The thing about indictments is that the government has a tendency to be over-inclusive with the allegations--there's really no incentive to be under-inclusive.

For storage sites like DropBox, where the public doesn't have access, the issue is complex. After all, its contents are encrypted and password protected. In those cases, DropBox is clearly not relying on DMCA safe-harbor protection, which might be OK because DropBox has a pretty good (but not air-tight) fair-use/space-shifting argument. (If there's no underlying infringement, you don't need a DMCA defense.) Also, as a practical matter, DropBox doesn't annoy rights holders (precisely because its contents aren't publicly accessible), so rights holders have no reason to inquire in the first place. (I feel like I'm missing something--it seems crazy that a service like DropBox would need to rely on something like fair use to be legal, you know? But that's the best I can think of right now.)

MegaUpload's problem appears to be that it was awkwardly in between a non-private storage site like DropBox and a fully public site like YouTube, so that it can't take advantage of either the fair-use or DMCA defenses. (I guess the government would argue that's precisely how MegaUpload made its money--letting the public access storage lockers).
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Andre, 21 Jan 2012 @ 1:24pm

money laundering
I think the inclusion of "money laundering" is not to make the accused look worse, but for more 'practical' judicial purposes: might it not have been included because it will probably carry a much heftier sentencing guideline than 'conspiracy to break copyright' in some countries, so that certain actions that are not possible when someone is under suspicion of the latter, are possible when the former is included in the indictment - things such as denying bail, or even extradition as such.
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Anonymous Coward, 21 Jan 2012 @ 3:43pm

Re: Re:
"Mega is no Saint...". Then let's make it one, and sue the DOJ for violating our religious freedom.
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saulgoode (profile), 21 Jan 2012 @ 3:44pm

Alanis would be proud
"Look at the difference between open source and commercial software. Open source doesn't have the polish or selection of commercial titles."

he said, sending his message over an open TCP/IP protocol network to an open GNU/Linux system running Apache, MySQL, and PHP.
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inode-it-all, 21 Jan 2012 @ 6:32pm

Totally clueless
The **AA would have the DOJ shut down the internet if it were actually possible to do so. It may become possible soon, with "kill switch" legislation.
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Anonymous Coward, 21 Jan 2012 @ 8:23pm

Re: Re: Re: Re:
Criminal suits by and large are given priority by the courts, and with good reason...the constitutional requirement for a speedy trial under the 6th Amendment.
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nik cubrilovic (profile), 22 Jan 2012 @ 12:25am

Re:
removing links is fine because a single DMCA takedown notice comprises of two parts: the first asserts that the person making the claim is the copyright owner, and the second is an affirmation that the person who is hosting the file does not have a license for the content.

so for eg. if there are 100 uploads of the same file but only a single takedown notice, the notice only confirms that that one user does not have a right to license that material. there would need to be 100 takedown notices (real and confirmed) to actually delete the file.
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Mike Masnick (profile), 22 Jan 2012 @ 12:39am

Re: Re:
It occurs to me that if having a search function is illegal, and not having one is also illegal, that the only way ANY site could be legal is if they have a search function that returns "no hits" on any search criteria, no matter what those criteria are.

That wouldn't work: would be "evidence that defendant is trying to hide the infringement from law enforcement"

See, that's the thing. If you make it available so law enforcement can find it, then you're making it available to the public -- and inducing infringement

If you don't make it available to the public, then you're also hiding it from law enforcement, and obviously in a conspiracy to avoid law enforcement.

I think the only way to be legal is to have a search that only appears and works when law enforcement is on your site.
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Oliver, 22 Jan 2012 @ 5:09am

great work
Thanks for taking the time an reading through the in indictment. And thanks even more for picking some of the cherries.

I just hope all these points are discussed seperately with the kind of insight you've added and a new "cleaned" indictment is created. Even a judge with above average understanding of the web will easily misinterpret many of the point above.

Thumbs up! You're in my feed reader now. Pls keep it coming!
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Harry Pairoftestees, 22 Jan 2012 @ 6:46am

Legal files
So what about us folks who had stored personal, legal stuff there?

I guess we just loose our shit.

The US Gov stole my videos of my daughters school events when she was young. I had them at MU so I could send out the links to relatives.

I guess my stuff is just collateral damage and I'm screwed.
Bastages!

Look at it like this. Some crook rents a safety deposit box, then puts something stolen in it... then the DOJ takes EVERYBODY'S shyte... the Bank included.

So DOJ,
Where are my LEGAL files?
Thiefs.
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John Fenderson (profile), 22 Jan 2012 @ 10:38am

Re: Re: Re: Re: Re:
"Either they are required to remove the file from the server, or they are not upon receiving a DMCA take down."

It's not so black-and-white. It is entirely possible (and I'd think likely) that there are two links, from two different users, pointing to the same physical file. User #1 infringed and got a take-down notice. User #2 is not infringing. Removing user #1's link, but not the file with user #2's link pointing to is, seems like the proper, and legal, thing to do. It adheres to the intent & spirit of the law.
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John Fenderson (profile), 22 Jan 2012 @ 10:43am

Re: Re:
"o music or movie producer, director, author, or software development company would ever release anything again if their works can be legally copied, and they'd all be forced to close their doors."

Demonstrably untrue.

"Look at the difference between open source and commercial software. Open source doesn't have the polish or selection of commercial titles."

Also demonstrably untrue. Compare the best "open source" (ignoring for the moment that open source != monetarily free) to the best "commercial" software. The open source version is superior in almost every case.
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John Fenderson (profile), 22 Jan 2012 @ 10:59am

Re: Re: Re: Re: Re:DOH
There has been at least one case that I know of in the US where the court compelled a defendant to give up encryption keys under penalty of imprisonment. The fifth amendment is not absolute.
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PaulT (profile), 22 Jan 2012 @ 11:07am

Re: Re:
"Why would anybody buy when they can have, legally, for free?"

Ask Valve, Red Hat, Wordpress, Zynga, EA's mobile team, people who sell DVDs of TV shows or songs that play on the radio. They all seem to be doing fine, some for decades despite people being able to access their work for free.

"Open source doesn't have the polish or selection of commercial titles."

Polish? Yeah, open source authors tend to be more concerned with functionality, choice, compatibility, standards and innovation than merely looking pretty, but I'm not sure how that's a bad thing.

Selection, though? I don't know what you're blathering on about there. Virtually every commercial title has several competing open source products, some of them the leaders in their sector.

"As the architect and author of niche market software, I'd find something else to do if I couldn't guarantee a living by selling my works."

Judging from your statements here, nothing of value would have been lost.

"No way I'm going to dedicate years of my life to try to sell something that everybody would just end up getting for free."

That's OK, millions of more talented people would, including the authors of the software I'm using to post this message, and the authors of the software used to enable you to read, post and enjoy the very site you're commenting on. I'm fine with that.
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Anonymous Coward, 22 Jan 2012 @ 3:29pm

Re: Re: Re: Re: Re:
Tell that to those the government has locked up in Guantanamo Bay.
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anonymous, 22 Jan 2012 @ 4:33pm

Re: Re: Re:
you don't understand de-dup.
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Anonymous Coward, 22 Jan 2012 @ 6:04pm

What kind of bullshit indictments are these really ?
And since when some simple complaints of a 3rd party about a site functionality turn into direct seizure of that site and owners property bypassing any judge and democratic law ?
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beancrisp (profile), 22 Jan 2012 @ 8:12pm

People who side with the Justice Department = EVIL.
People who side with Megaupload = RIGHTEOUS.
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Anonymous Coward, 23 Jan 2012 @ 1:03am

Re: Re: Re: Re: Re: Re:DOH
actually the case where a defendant was compelled to give up his encryption keys involved the authorities seeing child porn on his laptop but then not being able to access it after it was powered down.
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Ninja (profile), 23 Jan 2012 @ 2:51am

Re: Re:
The shock was great and largely felt from the anti-sopa/pipa protests. They were briefly dazed by the power of the minority. But they don't learn and they are back with full power. I think it's good, adds a lot of insightful comments and hell funny ones. I think the shills are an important part of the online ecosystem, they encourage discussions and make ppl pay more attention to the issues so they can debunk their trolling.

I tell you, we don't like the vermin that eats the rotting stuff but they are very necessary for the ecosystem.
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Anonymous Coward, 23 Jan 2012 @ 4:26am

The indictment points out that Megaupload used its hashing system to maintain a list of known child porn and block those files from being re-uploaded. The problem here is that copyright is different than child porn. Child porn is a strict liability issue: it is always illegal. There are no extenuating circumstances. But copyrighted content is different. It could be authorized. It could be fair use. And that depends on the specific use, not the file. So using a hash system there doesn't make sense, whereas it can make sense for child porn.

I'd guess that if Megaupload didn't also use its hashing system to maintain and block a list of infringing files it removed pursuant to DMCA takedown notices, that it is toast. If they had a system for marking and preventing certain files from being uploaded and failed to utilize it for infringing content, then they don't have much to argue about. I predict Dotcom can look forward to 20 years of getting his rear port hacked.
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drew, 23 Jan 2012 @ 4:34am

Re:
Yea it's sad that it doesn't work like that. People bitch about the so called "pirates" if so why did avatar make 2 billion dollars..
I had to see that shit like 5 times in 3d download it and buy the brd two copies one to watch one to save.
There are many movies that are worth it but who wants to pay 12$ to watch fucking trash lol. If more people thought like you this world would be a better place.
If the USA keeps going like it is I'm going to move to Mexico least the drugs are cheap there. First SOPA/PIPA and now fucking ACTA that's 100 times worse and it's not in the public spotlight.
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krit, 23 Jan 2012 @ 4:50am

Great article, very interesting read
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Xenobyte (profile), 23 Jan 2012 @ 5:45am

De-duplication
There a simple reason why a cyberlocker wouldn't take down the referenced file following a complaint but only the reference. One users use may be infringing while another might not.

Here an example: In a number of countries it is perfectly legal to make personal copies of music CDs. User A makes a copy of a CD and stores it at the cyberlocker. Then along comes pirate B and uploads the very same CD. The cyberlocker de-duplicates and there will now be two references to the same data. Then along comes RIAA and files a complaint against pirate B's upload and the cyberlocker takes down pirate B's link, rendering the reference on pirate boards useless. Everybody's happy. But if the cyberlocker removed the data as well, user A would have lost his perfectly legal backup for no reason, which would be a breach of contract, among other things.
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nasch (profile), 23 Jan 2012 @ 6:23am

Re: Re: Re: Re: Re: Re: Re:DOH
actually the case where a defendant was compelled to give up his encryption keys involved the authorities seeing child porn on his laptop but then not being able to access it after it was powered down.

So, if anyone knows... does that precedent mean you could be compelled to give up your password with probable cause, or is there some higher standard involved?
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nasch (profile), 23 Jan 2012 @ 6:26am

Re:
I'd guess that if Megaupload didn't also use its hashing system to maintain and block a list of infringing files it removed pursuant to DMCA takedown notices, that it is toast.

You didn't understand what Mike wrote. If you can recognize a file as child porn, it is illegal, full stop. If you can recognize a file as a copyrighted work, that does not immediately mean it is illegal. The work itself is not infringing, it's the use of it that's infringing. And how it's being used is not something a hashing algorithm can determine.
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Anonymous Coward, 23 Jan 2012 @ 7:38am

Re: Re: Re: Re: Re: Re: Re:
you forgot that if there is a copyright abolition the artist CAN make a contract aying the amount that they want for 1 job given, what im trying to say is if the artist makes lets say a song for someone that person should pay the artist the money he/she wants for that specific job, that song would be the persons belonging and that person could do whatever he likes with it because the job of teh artist was fullfilled after he/she finished teh recording of said song
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toyotabedzrock (profile), 23 Jan 2012 @ 1:23pm

Re: Child Porn Hash
The Government keeps a database of hashes that they give to companies with a legitimate use for them so that child porn can be detected and deleted.

http://torrentfreak.com/isohunt-partners-us-attorney-general-to-ban-child-porn-100630/

So they are making so that filtering child porn is now a liability?
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Anonymous Coward, 23 Jan 2012 @ 8:43pm

Re: Re: Entendre
I flaunt the law, and the law won. I flaunt the law, and the law won!
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Aussie bob, 24 Jan 2012 @ 5:08am

Re:
they are not actively hiding the content, they are passively hiding content and that is permissible by your quoted statement. To be actively hiding the content they would have to rename the files or something to that effect not simply generate a link which does not reflect the name.
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spookiewon (profile), 24 Jan 2012 @ 5:50am

Re: We'll have to agree to disagree
Because I don't see that "remove the link or the file question" as tricky at all. You apparently don't have an issue with a law abiding citizen's legal content being deleted because someone else infringed with the same content. I do. I don't think you can justify depriving one person of their legal property to prevent someone else from stealing another's. If you do, how do you decide whose rights trump whose? Why is the MPAA's and RIAA's rights more important than yours and mine? They shouldn't be, and the reason our rights should trump theirs is because they have consistently used the justice system to deprive us of ours, while we have not abused the system to deprive them of theirs.
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Anonymous Coward, 24 Jan 2012 @ 11:28am

Wait a second...
To put this in real terms... Say you pay $500 and spend a year to make something easily copied. There are 60 people willing to pay $10 for it. You make $100, or 20% of your investment in that year. Not bad. But say some @$$hat copies it and gives it away for free... But gets $1 for each person who accepts that free thing because of advertising. You're out your $500 and that year of work because only an idiot would pay $10 for something they can get for free. The @$$hat makes $60 for doing nothing but stealing your work. Say he does that to 10,000 people too. Now he's made $600,000, but has effectively robbed those people of $5,000,000.

Why doesn't the RIAA (or film studios or whoever else) do that? You can't cover your $500 costs with $60. The guy with no costs (or tiny costs, in this case) can only support that (and make TONS of money) because he steals your work.
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Anonymous Coward, 24 Jan 2012 @ 11:30am

Legal point here...
I've read through these posts *whew* and discovered a couple missing pieces of the puzzle.. It seems people all treating these pieces of information by themselves rather than connecting some puzzling dots. The existence of piece of evidence "A" by itself does not, by itself, suggest illegal activity. Nor does the existence of "B". However, put "A" and "B" together, that provides the suggestion of a crime.

The second piece that's missing is this: an indictment is only confirming probable cause. The indictment, taken as a whole, is meant to give the litmus test of whether or not to continue with criminal proceedings. If you read the indictment, rather than just commenting on the parts the author pulled out without context (see above), there may be pieces that do not, by themselves, seem like criminal activity. In fact, some actions may not seem bad overall unless you know the law (see money laundering in above posts). However, if you can read the indictment and agree that it sounds like they probably committed criminal acts, then you agree with the indictment.

Whether or not it amounts to "beyond a reasonable doubt" in this criminal case or "a preponderance of evidence" in the unrelated civil case has yet to be determined.
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Anonymous Coward, 24 Jan 2012 @ 11:49am

Re: Re: Re: etc...
"you forgot that if there is a copyright abolition the artist CAN make a contract aying the amount that they want for 1 job given, what im trying to say is if the artist makes lets say a song for someone that person should pay the artist the money he/she wants for that specific job, that song would be the persons belonging and that person could do whatever he likes with it because the job of teh artist was fullfilled after he/she finished teh recording of said song"

Sure. And then each artist would come to each individual person's house and record that song for them for a buck, or however much iTunes is charging these days. You know a popular artist would want a LOT more money than any individual would give them, even a rich individual, for one song.

"But wait," you say, "you don't understand. Someone with lot of money would buy that song and "do with it what they like. Then they can distribute it and make their money back." Hmm. You're starting to make more sense. Oh wait, they already exist. The RIAA. Whoops.
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HSG, 24 Jan 2012 @ 1:20pm

Not True
the fact that if certain files aren't downloaded in a certain amount of time, then they are deleted.

The DoJ is wrong. I had a free account at Megaupload for about four years. Stuff I uploaded four years ago was still there four years later. Megaupload said in their TOS they deleted files but they never did. I know this is true for other friends, too.
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none ya, 24 Jan 2012 @ 1:32pm

chilling effect? heck ya
filehosting as we know it worldwide could be entirely dead/gone by the end of the month at this rate :-p
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nasch (profile), 24 Jan 2012 @ 6:07pm

Re: Wait a second...
Why doesn't the RIAA (or film studios or whoever else) do that? You can't cover your $500 costs with $60. The guy with no costs (or tiny costs, in this case) can only support that (and make TONS of money) because he steals your work.

The reality is bits can be copied, and they will be copied. Trying to erase that fact, as the MPAA and RIAA keep doing, will continue to be utterly fruitless. They could instead try to just give the consumers what they want for a reasonable price and take back a whole bunch of that piracy, just like Netflix is doing. Or they could keep pushing the boulder up the hill over and over.

Which do you think they should do? Or are you saying that this time... THIS TIME it's finally going to work and piracy will go away? Please tell me you're not saying that because if you are I just wasted my time. :-p
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nasch (profile), 25 Jan 2012 @ 5:54am

Re: Legal point here...
I've read through these posts *whew* and discovered a couple missing pieces of the puzzle.. It seems people all treating these pieces of information by themselves rather than connecting some puzzling dots. The existence of piece of evidence "A" by itself does not, by itself, suggest illegal activity. Nor does the existence of "B". However, put "A" and "B" together, that provides the suggestion of a crime.

The person missing something is you. From the article: "To be clear, in a case like this, the issue is the evidence as a whole, combined to show intent and a general pattern to actions."
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guy, 28 Jan 2012 @ 8:38pm

biased
Selectively omit much, techdirt?

"the indictment points out that Megaupload did not have a site search"

It also points out that MU would direct users to indexing sites to find copyrighted content, and that they ran an affiliate program to reward people for linking to copyrighted content in addition to uploading it. These allegations are taken together, not in isolation.

"Paying users for popularity is not, and should not, be evidence of criminality, or even infringement."

What about paying users for popularity while writing each other emails remarking that the files' popularity came from them being copyrighted? Because that's in there too.

"The question, then, is if you do something like that with a locker service, and keep a single file, accessible through multiple locker links, what do you do if you get a takedown? "

Well, if you're MU then you allegedly respond by telling the DMCA issuer the actual file had been removed, and then simply removing one/some of the links. Nothing suspicious there right?

" If Megaupload's list showed infringing works, then they'd be charged with inducement... but removing them from the list makes them guilty of conspiracy?"

Removing them from the list while continuing to pay people to upload and link to them, providing customers advice via email on how to find them, logging onto mega-indexing site forums to direct users in person, and in a few cases uploading infringing content directly.

"There are some reasonable questions about if it ignored some takedown messages (likely) and the fact that it put limits on how many takedowns could be done per day with its tool. "

Let's not let the minor detail of how they were openly discussing where to set those limits, and to what degree they should comply with DMCA requests in general, as a function of profit slip in.
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guy, 28 Jan 2012 @ 8:42pm

Re: biased
Er, and yes- they do their cursory little nod at "evidence as a whole" and such. They then proceed to completely ignore that, feigning puzzle about the search engine/top100 stuff without a word of acknowledgement of all the other stuff in the indictment about referral sites and the reward programs they were offering the people running & using them.

And then you get straight-up headdesk stuff like that it should "feel" more like tying together a coherent narrative about inducement when the Feds quote emails where a guy is making a laundry list of infringing uploaders, listing out their pirated content and deciding how much to pay them. Absurd.
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