DOJ Continues To Obstruct Efforts For Megaupload Users To Get Their Files Back

from the because-hollywood-once-told-us-someone-was-dr.-evil dept

For a while we had followed the bizarre situation with Megaupload's servers. As you may recall, the Justice Department seized them all, following its criminal indictment against Megaupload and many of its executives. However, soon after seizing all of the company's servers, the DOJ announced that it no longer needed them and told the hosting company that had them that the data on them could be destroyed. We pointed out that this seemed like a clear case of destruction of evidence by the DOJ. First, it seized pretty much all of the assets of a company, prior to any conviction, and then before any actual judicial proceedings, asked for most of those assets -- many of which could include exculpatory evidence -- to be destroyed. It seemed... quite questionable. That resulted in a bit of a legal battle, as the hosting company storing them, Carpathia, asked what it should be doing (since it's suffering from the cost of keeping the servers). Megaupload sought to buy the servers, but the DOJ has blocked that effort. Last we'd heard, the judge had told everyone to work it all out by themselves.

Torrentfreak has an update, noting that everyone's in a stalemate and nothing seems to be happening:

This effort was stopped because the U.S. didn’t want Kim Dotcom to have access to the files. Hoping to get out of this stalemate the Court then suggested that all affected parties should get together and come up with a solution, thus far without success.

“In separate written requests in the past year both Carpathia and Megaupload have asked Magistrate Judge Anderson – who was appointed by Judge O’Grady to mediate the cloud storage server data issue – to preside over follow-up negotiations on data preservation and consumer access,” Rothken tells TF.

“The US DOJ has shown little interest in such negotiations and the Judge has not been inclined to set any additional meetings,” he adds.

The whole situation is bizarre. Individuals who had legitimate content stored on Megaupload are still asking for access to get back their content, but the DOJ doesn't seem to care at all. In fact, it's coming up with increasingly bizarre excuses to justify shutting down an entire business based on the entertainment industry's say so, and seems to have no qualms about how many people this has created massive problems for.

As the Aereo case is about to be heard, and various concerns about its impact on cloud computing are being raised, people should look over at what's happening with Megaupload's servers and be even more concerned. If the broadcasters succeed in redefining what is a "public performance," it's entirely conceivable that the DOJ could choose to do the same to other cloud services you rely on -- and there seems to be no recourse whatsoever.

Filed Under: doj, evidence, servers
Companies: carpathia, megaupload

Megaupload to DOJ: Misleading Semantics Aside, You Told Us You Were Investigating Infringing Files, So We Preserved Them

from the these-things-are-important dept

The back and forth between the DOJ and Megaupload continues. As you may recall, a key piece of evidence against Megaupload was the fact that it "knew" about certain infringing content on the site after being informed about it - and that Megaupload left that content in place. However, when the warrant was finally unsealed (over objections from the DOJ), it revealed that the "reason" that Megaupload "knew" about this content was because the DOJ had reached out to Megaupload's hosting partner, Carpathia, and told them about this content, seeking information about it for the purposes of a criminal investigation (likely Ninjavideo). Carpathia made all of this clear to Megaupload, and Megaupload cooperated entirely, and did not delete the content for fear of deleting evidence in a criminal investigation after it had been made aware of it.

Megaupload then pointed all of this out to the court, arguing that the DOJ misled the court in getting the warrant in the first place, since it didn't mention the specific circumstances for why Megaupload was aware of the content, but had kept it up. The DOJ's response, from earlier this week, was to argue that since the DOJ never contacted Megaupload directly, none of this matters.

Megaupload has wasted little time in hitting back hard, pointing out that (a) the DOJ was well aware that Carpathia had informed Megaupload of the investigation, (b) that, at the very least, Megaupload's actions in context show non-nefarious reasons for having left the content up (basically arguing the intent) and (c) that, no matter what, the DOJ needed to at least inform the court of these basic circumstances.

Third, the Government attempts to distance itself from what Megaupload was told about the 2010 warrant by emphasizing that it did not directly instruct Megaupload to preserve the allegedly infringing files. (Dkt. 155 at 3.) But it is well settled that a private party's actions are imputed to the Government when that party is enlisted by the Government and acts in accordance with the Government's instructions. Thus, courts confronting criminal searches and seizures have consistently found Fourth Amendment interests implicated where a private party acts as the Government's "instrument or agent." See Skinner v. Railway Labor Executives’ Ass’n, 489 U.S. 602, 614 (1989); United States v. Richardson, 607 F.3d 357, 364 (4th Cir. 2010). As the Fourth Circuit has indicated, "the key factors bearing upon the question of whether a search by a private person constitutes a Government search are: '(1) whether the Government knew of and acquiesced in the private search; and (2) whether the private individual intended to assist law enforcement or had some other independent motivation.'" ....

Here, Carpathia's communications with Megaupload satisfy both prongs. The Government not only knew of Carpathia's actions but orchestrated them. Indeed, the Government's affidavit in support of the June 24, 2010 search warrant expressly requested that "Carpathia and its customer MegaUpload be permitted to view the warrant and Attachments A and B to the warrant to assist them in executing the warrant." ... Correspondingly, the Order sealing that warrant, which "found that revealing the material sought to be sealed would jeopardize an ongoing criminal investigation," authorized the Government to provide the warrant only to Carpathia, and authorized Carpathia to "provide a copy of the warrant with attachments and this sealing order to MegaUpload.".... In conveying the instructions to Megaupload, Carpathia noted that it had "attempted to convince the Government to work directly with Mega on this matter, but given the complex jurisdictional issues, they have been unwilling." .... It is equally clear that Carpathia's sole purpose in communicating with Megaupload on that date was to assist the Government in executing the June 24, 2010 warrant.

The key point is that even if the government believed Megaupload still could have deleted the evidence that it had explicitly sought from Megaupload (which would be quite surprising), it at least had the duty to make it clear why Megaupload was aware of this content, as that has a pretty direct implication on Megaupload's reasons for keeping the content around.

Even if the Government could somehow avoid responsibility for Carpathia's instructions and the Magistrate Court's sealing order, there would remain the undeniable fact that the Government failed to inform this Court of critical, exculpatory information about the circumstances under which Megaupload learned of the allegedly infringing files and subsequently cooperated with the Government's investigation. See United States v. Leon, 468 U.S. 897, 926 (1984) (material omissions that render search warrants misleading can be grounds for invalidating warrants);...

Once again, it seems like the government simply rushed through the Megaupload case, ignoring many, many important details, and basing its case on the theory that if the entertainment industry hates Kim Dotcom so much, he must be all bad. And, if you're dealing with someone "all bad" apparently the DOJ seems to think it can take a bunch of shortcuts.

Filed Under: doj, evidence
Companies: carpathia, megaupload, ninjavideo

The DOJ's Truly Disgusting Argument For Denying A Megaupload User Access To His Legal Content

from the hey,-not-our-machines... dept

In the ongoing saga of what happens to all the data stored on the Megaupload servers, the Department of Justice has now filed a truly revolting argument in seeking to end the efforts by a Megaupload user, Kyle Goodwin (who uploaded and stored sports videos that he shot), to regain access to the content he uploaded.

As we've noted, there's been a lot of finger pointing going on here, with a bunch of highly questionable actions on the part of the government, including its repeated suggestion that all of this data -- which, remember, they seemed to think was evidence of a crime -- should simply be deleted. But what's so sneaky and duplicitous about the DOJ's argument here? They're saying that because they never actually seized the servers in question, this has absolutely nothing to do with them -- and that Goodwin would be better off suing Megaupload or Carpathia (the hosting company) or simply paying Carpathia to access the servers. Basically, it says that no one's stopping him... other than the fact that all the servers are offline thanks to the feds' own actions (but, please, they'd prefer you not remember that part). They actually seem to feign surprise that their own actions of seizing Megaupload's domains and all of the company's (and its exec team's) money, and arresting the entire senior management team... might lead to the site being shut down entirely.

Basically, it's as if the government walked into a china shop, smashed up every last piece, and then walked out. When the owner then sought restitution from the government, the government suddenly insists that since it didn't take any of the broken pieces out of the shop, there's no cause for action against the government. And all the smashed up little pieces are still there, so why would anyone complain?

Oh, and just to add totally obnoxious insult to injury, the DOJ also says that even if the court decides that there's some merit in the arguments laid out by Goodwin, even that doesn't matter, because it'll just cop out and declare "sovereign immunity" and avoid having to pay out. The whole thing is a fairly disgusting display by the DOJ showing just how far it will go to lock someone up once it's determined to. They will cause all sorts of collateral damage, and when someone calls them on it, they'll just point the finger elsewhere... all while demanding even more power to censor with impunity.

Filed Under: doj, kyle goodwin, seizure
Companies: carpathia, megaupload

MPAA Ok With Allowing Users To Get Back Their Megaupload Files If 0% Infringement Can Be Guaranteed

from the and-no-access-for-megaupload dept

We've been covering the ongoing series of fights concerning what happens to to all the data that was stored on the Megaupload servers. The government has wanted it destroyed. Some users have wanted access to their legitimate content. Megaupload wants access for its own defense. The MPAA has wanted it preserved in case it can be used to sue others. Megaupload wants access for the sake of its defense. Carpathia -- the hosting company -- just wants to stop paying $9,000 per day to maintain the servers and data.

However, as TorrentFreak notes, the MPAA's latest filing in this debate offers a very, very, very slight backtrack, in which it says that it kinda sorta would be okay with letting users have access to download their own content... but if and only if there can be a guarantee that not a single bit of infringement occurs as a part of that process. Oh yeah, and also so long as the Megaupload defendants don't get access either (though, it says that's a separate discussion for a separate legal filing).

...the MPAA Members’ position continues to be that if the Court is willing to consider allowing access for users such as Mr. Goodwin to allow retrieval of files, it is essential that the mechanism include a procedure that ensures that any materials the users access and copy or download are not files that have been illegally uploaded to their accounts, given that MPAA Members and other rights holders are certain to own the copyrights in many of the files stored on the servers. In addition, in no event should any Megaupload defendants or their representatives—who have not generally appeared in this proceeding, and who are not subject to the control and supervision of the Court—be allowed to access the Mega Servers under such a mechanism designed for the benefit of third party Megaupload users. Whether and under what conditions the Mega defendants should have access to the servers (again, assuming they are subject to the control of the Court) is a separate issue.

Of course, this assumes it's even possible to prevent 100% of infringement. Which it's not. And that's probably the point. The MPAA gets to pretend that it's being "reasonable" by saying some access is okay... but immediately including an impossible caveat on top of that. It's a neat way to pretend to be open to compromise, while really sticking to an extreme position.

Filed Under: content, doj, hosting
Companies: carpathia, megaupload, mpaa

Judge Preserves Megaupload Evidence For Now, While Gov't Tries To Pin Blame On Hosting Company

from the work-something-out dept

It appears that the judge handling the issue of what to do with Megaupload data -- a situation we've been covering for a while -- finds the entire situation just as annoying as many observers do. He's decided that the evidence should not be destroyed yet... but has also ordered all the various parties who are fighting over this to get together and see if they can broker some sort of deal. Given the various positions by all the parties, I'm not sure this is possible.

The government doesn't care about the data (and possibly wants it destroyed such that evidence against their case goes away). However, at the same time, the government has no interest in giving Megaupload back any of the millions of dollars it seized to pay for the maintenance of the data. In fact, the government seems so against this data ever seeing the light of day that it's actually making the argument that even Carpathia may be liable for copyright infringement, because it made money from Megaupload. This is a rather unique (and totally wrong) interpretation of secondary liability rules, but the DOJ seems so insistent on destroy this evidence that it's apparently not above tarring and feathering independent third parties. Of course, if it really believed that Carpathia may be guilty too, you'd think it would want to preserve the evidence, rather than destroy it.

Megaupload would gladly take on the data and pay for it if it could actually use the seized money for that purpose. The MPAA, however, is completely against this, insisting that all of society would collapse should the data go back to Megaupload (only a slight paraphrase). That said, Greg Sandoval at CNET, who handled the original report (linked above) notes that it appears the judge is not particularly convinced that there's a huge problem if Megaupload is given the data back.

Filed Under: doj, evidence, hosting
Companies: carpathia, megaupload, mpaa

Megaupload Points Out That The Feds Want To Destroy Relevant Evidence In Its Case

from the fair-trials? dept

There are all sorts of problems with the federal government's arguments against Megaupload. Even if the site and its founders are guilty of breaking the law, it's amazingly troubling to look at the details of how the government has gone about proving this. The most immediate situation, as we've been discussing, involves the handling of the data on Megaupload's servers.

Very soon after the raids, the feds told the hosting company that Megaupload used, Carpathia, that it no longer needed the data and that it could be destroyed. As we pointed out at the time, this made no sense at all. After all, the government is alleging that this content is at the center of a criminal conspiracy ring. So why would it want the evidence destroyed? Furthermore, it seems likely that there could be plenty of evidence on those servers that support Megaupload's case (ah, perhaps that's why the government wants it destoryed!).

Of course, since then, a bunch of parties, including Megaupload, EFF, Megaupload users and (oddly) the MPAA have gotten involved in trying to preserve the data, while the hosting firm, Carpathia has asked the court for permission to delete it, get paid for it, or have someone take it off their hands. Megaupload has specifically offered to pay Carpathia to get the servers, but since the government seized all its assets, it can't do that. Plus, the government has objected to this plan. Furthermore, the MPAA -- which still wants the data preserved -- has claimed that if the content goes to any third party it's infringement -- and could lead to the revival of Megaupload.

The whole thing is a bit of a mess, and now Megaupload has pointed out that the government's argument would result in the destruction of key evidence it needs for its case. The filing is very compelling.

The United States has seized and frozen all of Megaupload's assets, which, together with those seized from the other Defendants, include more than $60 million in cash and well over $100 million all told. In taking this extraordinary step, the Government must necessarily be alleging that every dollar of these assets is the proceeds of illegal activity. The basis of this allegation are the Government's self-selected copies of a tiny fraction of Carpathia's 1,100+ servers; even as to that fraction, the Court is asked to assume that every scrap of information on those servers amounts to criminal copyright infringement or perhaps some other illegal activity. If there is logic to the Government's actions, there is nothing lawful to be found across Megaupload's business as reflected on those 1,100+ servers. Only thus might the Government forbid Carpathia from so much as transferring to Megaupload the Mega Servers housing Megaupload content. Notably, the government is further forbidding Megaupload from using any of its assets to pay Carpathia for continued preservation of the Mega Servers' content. And, it has, in the face of Carpathia's earnest submission that it will cease preserving the servers absent the requested relief, urged the Court to deny such relief, because "the government has already completed its acquisition of data from the Carpathia Servers authorized by the warrant." ... In essence, the Government has taken what it wants from the scene of the alleged crime and is content that the remaining evidence, even if it is exculpatory or otherwise relevant to the defense, be destroyed. And by refusing to permit Megaupload to use its assets to mount a defense, the Government is effectively making sure that Megaupload has no practical way to preserve the evidence itself.

Such a course of proceeding by the Government would be troubling in any circumstance. But this is, of course, a criminal case. It is, in fact, what the Government has called the largest such case it has ever brought in the history of alleged copyright infringement. If the Government's position now wins the day, the integrity of of what ensues will be lost--the Mega Servers will have been wiped and potentially exculpatory or relevant evidence will have been spoliated, en masse, before being properly surveyed by the parties, not to mention the Court. The Government's case may be advantaged by this course of action, but much else will suffer and due process will not permit it.

The filing also rips to shreds the Justice Department's claim that the content should be destroyed because some of it may contain child pornography, by noting that it appears the US government is advocating the destruction of evidence of child porn, rather than using it to capture those responsible:

Its reasoning then becomes altogether mystifying when it asserts (without any substantiation) "that the Carpathia Servers may contain child pornography, rendering the Carpathia Servers contraband." ... To take the Government at its word, therefore, it at best is greeting with equanimity and at worst is advocating, the imminent destruction of evidence of child pornography. It is passing strange for the Government to express preference for the destruction of evidence of criminal misconduct over the preservation of it for criminal investigation.

The filing is worth reading, as it goes on in great detail, about the ridiculousness of the government's position, and how it is clearly destroying important evidence in this case, hoping to set it up so that Megaupload can only use the sliver of evidence that the government chooses to make available to it. And it's doing this before the actual case begins, where Megaupload doesn't even know the full details of what evidence is being presented and how it can defend itself. Without that, it's highly questionable, and almost certainly a violation of due process to support the destruction of evidence when Megaupload doesn't even know what evidence it needs to defend itself.

As Tim Lee writes (at the link above) about this filing, this whole situation looks really bad for the government, and seems completely contrary to our basic concepts of due process and innocent until proven guilty:

The government's intransigence on the preservation of evidence is the latest example of the government's scorched-earth approach to the Megaupload prosecution. Theoretically, criminal defendants are innocent until proven guilty. Yet the seizure of Megaupload's servers, freezing of its assets, and arrest of its top executives did immense damage to the company long before they had a chance to tell their side of the story to the jury. Now, the government seems to be trying to deny Megaupload the opportunity to fully defend itself in court. Megaupload may be found guilty, but like everyone else it has the right to a fair trial.

Indeed. Megaupload may not be a sympathetic defendant at all, and may very well have violated the law. But if the government truly believes it has a strong case, why is it trying so hard to destroy so much evidence? If the case is as strong as the Justice Department makes it out to be, then surely it can withstand Megaupload having access to all of the evidence? That the Justice Department is fighting so hard to destroy evidence in the case seems like a clear admission that it knows its case is incredibly weak.

Filed Under: doj, evidence, tim lee
Companies: carpathia, megaupload

MPAA Says Letting Anyone Access Data On Megaupload Servers Would Represent Infringement

from the entitlement? dept

As you may recall, the MPAA is among those who have said that Carpathia, the hosting company Megaupload used, must retain the data on its servers -- even though the Justice Department has said it's done with it and Carpathia was free to delete the evidence. Others, of course have also asked for access to their data. And, most importantly, Megaupload itself has asked if it can keep the data. Carpathia wants nothing to do with it, because it's costing the company $9,000 per day to hang onto the servers without doing anything else with them.

However, in response to all of this, the MPAA has again gone to the court to suggest that if Carpathia gave the content to anyone else, that alone would represent copyright infringement:

The sale or transfer of those copies from Carpathia to Megaupload or any other third party would constitute an unauthorized "distribut[ion] ... to the public" under the Copyright Act

That seems like a pretty big legal stretch by the MPAA's typically overreaching lawyers. Depending on who the content was transferred to, it doesn't automatically mean distribution "to the public."

Of course, the continued insane paranoia of the MPAA continues to shine through in this filing as well. It insists that if Megaupload is given back the servers, it will ship them to some other jurisdiction and immediately relaunch the site:

"A sale or transfer of the servers to Megaupload (or any of the defendants) would raise a significant risk that Megaupload will simply ship the servers, hard drives or other equipment -- and all of the infringing content they contain -- to a foreign jurisdiction and relaunch the infringing Megaupload service, which would result in untold further infringements of the MPAA members’ copyrighted works. If so, the renewed criminal enterprise might be beyond any effective legal remedy."

This also seems like a reach. All of the principles are under arrest and facing extradition to the US where they'll face criminal charges. One would imagine they all recognize that it doesn't do their case any good to set the site up again in another jurisdiction.

Filed Under: data, hosting, infringement
Companies: carpathia, megaupload, mpaa