NZ Supreme Court Gives A Mixed Bag Extradition Ruling To Kim Dotcom; Extradition Still Alive, But He Can Raise Procedural Issues

from the this-case-will-never-end dept

It's been almost a decade since US and New Zealand forces did a silly made-for-Hollywood (and possibly by Hollywood) raid of Kim Dotcom's home in New Zealand for the crime of running a cloud storage service that some people used for infringing works. Since that time, Dotcom has been fighting extradition charges to the US. The case has taken many crazy twists and turns, including the US government seizing his assets by claiming he's a fugitive, even as he's been going through the standard legal process to determine if extradition is proper (and there's a very strong legal argument it is not even remotely proper).

That said, while Dotcom has won rulings showing illegal activity in how he was surveilled and arrested, he's also lost his attempts to block the extradition.

The latest ruling, from New Zealand's Supreme Court is unfortunately more of the same. The court has found that he can be extradited on 12 of the 13 charges against him, but also noted the procedural problems that have plagued the case mean that he still cannot be extradited. Specifically, the Supreme Court found that Dotcom (and his colleagues who were also arrested) were denied judicial review of the original ruling in the district court in 2015.

Dotcom and his lawyers have (accurately) stated that the ruling "is a mixed bag." But it's mostly mixed with bad news for Dotcom. The good part is just that he doesn't have to get shipped off to the US right away.

But on the whole this is a bad ruling for Dotcom. The key issue at play gets deep into the copyright weeds, about theories regarding criminal inducement of infringement, and whether or not New Zealand and the US have matching crimes. Unfortunately, so far it looks like the New Zealand courts (like too many of the US courts) don't really care to look at the actual specifics of what's in the law and just lump together a bunch of different concepts around "copyright infringement bad," without being willing to understand that building a platform that is used for infringement is not the same thing as infringing yourself. The court didn't seem to understand the difference here -- which is unfortunately not that surprising, but it is disappointing. These kinds of rulings damage the open internet, limit the kinds of services that can be built, and bring us closer to a locked down broadcast-only internet, the kind which Hollywood wants.

Filed Under: cloud storage, copyright, extradition, intermediary liability, kim dotcom, new zealand, procedural issues, us
Companies: megaupload

Kim Dotcom Loses Latest Round In Extradition Fight, Will Try To Appeal Again

from the this-case-will-never-end dept

Kim Dotcom's ongoing legal saga continues. The latest is that the New Zealand Court of Appeal has rejected his appeal of earlier rulings concerning whether or not he can be extradited to the US. Dotcom and his lawyers insist that they will appeal to the Supreme Court, though there seems to be some disagreement about whether or not that will even be possible. The full ruling is worth a read, though much of it is dry and procedural.

And, I know that many people's opinion of this case is focused almost exclusively on whether they think Kim Dotcom and Megaupload were "good" or "bad," but if you can get past all of that, there are some really important legal issues at play here, especially concerning the nature of intermediary liability protections in New Zealand, as well as the long-arm reach of US law enforcement around the globe. Unfortunately, for the most part it's appeared that the courts have been much more focused on the whole "but Dotcom is obviously a bad dude..." and then used that to rationalize a ruling against him, even if it doesn't seem to fit what the law says.

As Dotcom and his lawyers have noted, this has meant that, while there are now three rulings against him on whether or not he can be extradited, they all come to different conclusions as to why. A key issue, as we've discussed before, is the one of "double criminality." For there to be an extraditable offense, the person (or people) in question need to have done something that is a crime in both the US and New Zealand. As Dotcom has argued over and over again, the "crime" that he is charged with is effectively criminal secondary copyright infringement. And that's a big problem, since there is no such thing as secondary criminal copyright infringement under US law. Since Megaupload was a platform, it should not be held liable for the actions of its users. But the US tries to wipe all of that away by playing up that Dotcom is a bad dude, and boy, a lot of people sure infringed copyright using Megaupload. And all of that may be true, but it doesn't change the fact that they should have to show that he actually broke a law in both countries.

Indeed, the lower court basically tossed out the copyright issue in evaluating extradition, but said he could still be extradited over "fraud" claims. Dotcom argued back that without the copyright infringement, there is no fraud, and thus the ruling didn't make any sense.

The Court of Appeal comes to the same conclusion, but for somewhat different reasons. It appears that Dotcom's lawyers focused heavily on what some might consider technical nitpicking in reading of the law. Pulling on a tactic that has been tried (not successfully...) in the US, they argued that reading through the text of the copyright shows that it only applies to "tangible" copies -- i.e., content on a physical media -- rather than on digital only files. In the US, at least, the Copyright Act is written in such a way that a plain reading of the law says that copyright also only applies to physical goods, rather than digital files. But, as has happened here, US courts have not been willing to accept that fairly plain language in the statute because it would mess up the way the world views copyright. It's no surprise that the New Zealand court came to the same end result. While it would be better if the law itself were fixed, the courts seem pretty united in saying that they won't accept this plain reading of the statute, because that would really muck things up. Unfortunately, in focusing on that nitpicking, it may have obscured the larger issues for the court.

Over and over again in the ruling, the court seems to bend over backwards to effectively say, "look, Dotcom's site was used for lots of infringement, so there's enough evidence that he had ill intent, and therefore we can hand him over to the US." That seems like a painfully weak argument -- but, again, par for the course around Dotcom. So, basically, even though it has other reasons than the lower court, this court says there's enough here to extradite:

We have departed from the Judge in our analysis of s 131.260 But the Judge’s conclusions on ss 249 and 228 (the latter of which we will turn to shortly) were not affected by his conclusion on s 131. Each of the ss 249 and 228 pathways depended on dishonesty, as defined, and the other elements of the actus rei of those offences. Inherent in the Judge’s finding was that dishonesty for the purpose of s 249 (and s 228) did not require proof of criminal conduct under s 131. With that conclusion we agree. It is plainly sufficient that for the purposes of s 217 that the relevant acts are done without belief in the existence of consent or authority from the copyright owner. It does not need to amount to criminal conduct independently of s 249. Put another way, “dishonestly” as defined in s 217 is not contingent on having committed another offence, but is instead simply an element of the offence.

That may be a bit confusing, but basically they're saying it doesn't much matter whether or not there was actual criminal copyright infringement or not, because there was enough "dishonesty" to allow Dotcom to be extradited on other issues.

Again, none of this is that surprising, but it does again feel like the courts reacting to how they perceive Dotcom himself, rather than following what the law actually says. That should worry people. At this point, it seems highly likely that Dotcom's attempts to appeal to the Supreme Court will fail and that he will be extradited. Of course, then there would still need to be legal proceedings in the US -- though the judge assigned to his case has already shown little interest in understanding the nuances of copyright and intermediary liability law, so it's likely to be quite a mess here as well.

Whatever you think of Kim Dotcom, many of the legal arguments against him seem almost entirely based on the fact that people want to associate him with the actions of his users, and the fact that he didn't seem to much care about what the legacy entertainment industry thought of him. Maybe he deserves to be locked up -- but it's hard to argue that the process has been fair and based on what the law actually says.

Filed Under: appeals, due process, extradition, intermediary liability, kim dotcom, new zealand
Companies: megaupload

Supreme Court Won't Review US Government Getting To Steal All Of Kim Dotcom's Stuff

from the that's-unfortunate dept

While the "main event" in the never-ending case of the US Justice Department against Kim Dotcom continues to grind its way ever so slowly through the wheels of justice, one element has basically concluded. And this was the part that should concern you even if you think that Kim Dotcom was completely guilty of criminal copyright infringement. The issue here is that as part of the arrest of Dotcom and his colleagues, the US "seized" many of his assets. Now, when the government seizes assets, it's a temporary thing. They have a certain period of time to hold onto it. Afterwards, they either need to give those assets back or file a separate case to attempt to "forfeit" those items (i.e., keep them forever). Here's where things get a little bizarre. Because Dotcom was fighting extradition in New Zealand, the "deadline" for the US to continue holding the seized assets was approaching -- so they filed the separate case against his stuff. Because it's a civil asset forfeiture case, the case is literally against his stuff, and not against Kim Dotcom (and, yes, this is as weird and nonsensical as it sounds). But there was a twist: because Dotcom was still in New Zealand, the Justice Department said that he was a "fugitive" and thus couldn't even protest the forfeiture of his stuff. Unfortunately, both the district court and the appeals court agreed.

Again, let's be totally clear here -- because sometimes people get so focused on their belief that because Megaupload enabled copyright infringement that this is somehow okay. But here we have a situation where before anyone has been found guilty of anything, the US government was given permission to take and keep all of Kim Dotcom's stuff. This should concern you even if you think Dotcom deserves to rot in prison, because there's a clear absence of due process here. If Dotcom is eventually found to be not guilty -- that won't have any impact on this. The US government still gets to keep his stuff (or, well, whatever it can get its hands on).

So the issue here is not whether or not Kim Dotcom is guilty of copyright infringement. It's whether or not the US government can just take his stuff before that other process has played out. That's a problem.

And, unfortunately, it's a problem that the Supreme Court will not be reviewing at this time. Even as some of the Justices have expressed concerns about civil asset forfeiture, apparently they didn't want to take on this particular case. And, maybe that's okay, because maybe, as with many people, they wouldn't have been able to separate out the copyright question from the civil asset forfeiture question from the fugitive disentitlement question -- all of which are separate but important.

Filed Under: civil asset forfeiture, copyright, fugitive disentitlement, kim dotcom, scotus, supreme court
Companies: megaupload

Once Again, New Zealand's Spying On Megaupload Execs Found To Be Illegal

from the because-of-course dept

Earlier this week, the new documentary by Annie Goldson about Kim Dotcom, Kim Dotcom: Caught In The Web was released. It's available on basically any authorized platform (and, not surprisingly, quickly showed up on a number of unauthorized platforms as well). I should note that I sat for two interviews with the filmmakers, and am very briefly in the film. It's really worth watching. While it doesn't go as deep into the weeds of the specific legal issues at play as I, as a legal geek, might enjoy, that's understandable as a more mass market documentary. And I think it does a really great job of at least getting across the basic issues, of how people in Hollywood, the DOJ and New Zealand law enforcement, intelligence and government were so won over by the image of Kim Dotcom, that they didn't bother much with the legal details.

One aspect of the legal case that is definitely discussed in the documentary is the fact that the New Zealand intelligence service, GCSB, illegally spied on Kim Dotcom on behalf of the US government. That's supposed to be forbidden, as the GCSB is only supposed to spy on foreigners, and not citizens or permanent residents. This came out fairly early on in the case against Dotcom, but there's been an ongoing legal battle (one of many...) into what it means concerning the case against him. GCSB had said that they didn't mean to break the law, so it shouldn't matter. And New Zealand moved to change the law to expand GCSB's surveillance powers over New Zealanders in the future.

But on Friday, New Zealand's High Court officially unveiled a ruling from back in December, saying that the surveillance of two of Dotcom's colleagues was illegal. This goes beyond what was previously revealed a few years back. Of course, it appears that part of the ruling is based on GCSB refusing to provide any details, claiming they are "top secret" and that to respond to the charges would "jeopardise the national security of New Zealand." Yes, or perhaps just jeopardize GCSB.

It's not entirely clear that this will have much of an impact on the case for Dotcom directly, though it once again highlights how the investigation and case against him involved an awful lot of cut corners by officials who totally bought into Hollywood's repeated story about how Dotcom was "Dr. Evil." Dotcom's lawyer, Ira Rothken, is arguing that this is yet another reason why the case should be dropped -- but so far the courts haven't really seemed to care much about all of the errors, law breaking and over reaction in building the case against Dotcom. However, as Rothken notes:

"This case and extradition should now be dismissed in the interests of justice.

"The government's illegal conduct has reached such an extreme level that we believe that no court should entertain an extradition proceeding so tainted with state sponsored abuse and violations of basic human rights."

For years now, I've explained why the case against Dotcom has serious problems -- mainly in that it makes up elements of criminal activity that simply don't exist in the law. The fact that there was also illegal spying on Dotcom and his partners only raises more questions. Yet, so far, the courts don't seem very interested in dealing with any of that, preferring to smooth things over with a simple "but bad stuff happened, therefore he should be punished." It's one of the most extreme examples we've seen of what law professor Eric Goldman has called out concerning lawsuit about infringement online: the courts frequently ignore the actual law if they sense there was "too much infringement." The fact that the government also got some of its information through illegal spying may not be enough to counteract the massive gravitational pull of "but... but... infringement."

Filed Under: gcsb, kim dotcom, new zealand, surveillance
Companies: megaupload

Kim Dotcom Asks US Supreme Court Not To Allow US Government To Steal All His Stuff Without Due Process

from the due-process-matters dept

Over the past few years we've covered what may seem like a side issue in the many legal issues facing Kim Dotcom, but it's an important one: is the US able to legally take all of his money and stuff, despite (1) him not being found guilty of anything and (2) that stuff not being anywhere near the US? As we've said, even if you think Dotcom is guilty of horrible crimes and should rot in jail, how the US is going about taking his assets should concern you massively. The fact that courts have blessed the DOJ's actions doesn't make it any less concerning.

On Friday, Dotcom (along with some powerhouse legal help) asked the Supreme Court to review this issue. The real issue here is one that we've covered a lot in other contexts: civil asset forfeiture, in which the US seizes and sues stuff rather than people. That's why this lawsuit is not actually against Kim Dotcom (there are other such lawsuits), but rather the United States v. All Assets Listed in Attachment A (no, really, that's the case). Of course, "Attachment A" is all of Dotcom's assets, mostly in Hong Kong. But the situation with Dotcom takes the normal questions about asset forfeiture and adds layer upon layer of complexity.

There are three specific issues that Dotcom is asking the Supreme Court to review, and all are important here. The first is whether or not a US court can allow for asset forfeiture for assets that are outside the US and outside of US government control. As the dissent pointed out in the appeals court ruling in this case, a federal court issuing a ruling is supposed to be a binding ruling, not an advisory ruling. And if the assets are held outside the US and not under the jurisdiction of the US courts, the ruling can't be binding.

The second two issues are connected: and it's basically the question of whether the courts were right in saying that the federal government could take Dotcom's stuff and that Dotcom could not protest, because he was "a fugitive." Of course, he's not a "fugitive." He's just fighting extradition to a place he's never been. He isn't running away and is going through the full legal process he's entitled to in New Zealand. That's not someone hiding from the US, it's someone who is following the basic rules of due process, which the US wishes to deny him. The specific questions are at what stage of the process he can be declared a fugitive and the other is whether or not intent needs to be shown.

As we have noted repeatedly, the Supreme Court rejects most requests to hear cases, but the lawyers here (Dotcom's long-term lawyer Ira Rothken along with legal giant Quinn Emanuel) have done a good job demonstrating real circuit splits in appeals courts on each of the three questions, which is often important in convincing the Supreme Court to actually take a case. As the filing notes:

This Court has previously admonished that the “harsh sanction” of fugitive disentitlement in a civil forfeiture action is “most severe and so could disserve the dignitary purposes for which it is invoked,” because it “foreclos[es] consideration of claims on the merits.” ... The Court noted that it “ha[d] held it unconstitutional to use disentitlement similar to this as punishment for rebellion against the United States,” but left open the question of “whether enforcement of a disentitlement rule under proper authority would violate due process.” ... Nonetheless, a divided panel of the Fourth Circuit affirmed civil forfeiture based on fugitive disentitlement.

I imagine that the federal government will insist there's no reason for the Supreme Court to weigh in here, but hopefully the court decides to review the case. Again, even if you dislike Dotcom or think he's guilty of a "megaconspiracy" to infringe on copyrights, the due process questions around civil asset forfeiture should concern you -- and hopefully they concern the Supreme Court.

Filed Under: doj, kim dotcom, scotus
Companies: megaupload

New Zealand Court Says Kim Dotcom Still Eligible For Extradition... But Not Over Copyright

from the wait,-what? dept

After quite some time, a New Zealand court has said that Kim Dotcom is eligible for extradition to the US -- something he's been fighting for over five years. But there's a weird twist to the story. A key part of the argument that Dotcom's lawyers have been making is that for extradition to the US, there needs to be "dual criminality" (you can hear Dotcom's lawyer, Ira Rothken, discuss this on our podcast a few months back). And, the key "crime" that Dotcom is charged with involves secondary copyright infringement (i.e., creating a platform that others use to infringe). But, that's a problem, as there's no criminal secondary copyright infringement under New Zealand law (nor US law, but that's a separate issue). So, here's the twist. The court actually agreed that there's no such thing under New Zealand law -- and said that Dotcom can't be extradited for copyright infringement. However, the court said that he can be extradited for "fraud" because there's dual criminality there.

As Dotcom's lawyers point out, that means this is no longer, as was claimed by the US, the "largest criminal copyright case" because copyright is officially no longer a part of it. But, if the copyright part is taken out... where's the "fraud"? The whole claim of "fraud" is based entirely on the fact that Megaupload users infringed on copyrights. So if that's not a crime, then, um... where's the fraud?

I know that some will argue that it doesn't really matter, and they'll insist that what Dotcom and Megaupload did was "bad" -- end of story. But we're still supposed to live under the rule of law, and you don't just get to throw people in jail because they're "bad." You have to prove they actually broke the law. But that's a big problem here, because Megaupload didn't violate copyright law. And if it didn't do that... where's the "fraud"? Dotcom's lawyers will now try to appeal this part of the ruling, extending this legal fight even further. But it's a bigger issue than that. If courts can wipe away safe harbor protections by service providers by hiding behind a "fraud" claim, there are no longer safe harbor protections:

The High Court has accepted that Parliament made a clear and deliberate decision not to criminalise this type of alleged conduct by internet service providers, 5 making them not responsible for the acts of their users. For the Court to then permit the same conduct to be categorised as a type of fraud in our view disrupts Parliament’s clear intent. The High Court decision means that Parliament’s intended protection for internet service providers is now illusory. That will be a concern for internet service providers and impact on everyone’s access to the internet.

That's dangerous for free speech, it's dangerous for innovation, and it's dangerous for basic respect for the law.

Filed Under: copyright, criminal copyright, doj, extradition, fraud, intermediary liability, kim dotcom, new zealand
Companies: megaupload

The FBI's Megaupload Domains Are Now Hosting Porn Ads

from the well,-they-have-some-experience dept

Well, we know the FBI is particularly adept at hosting porn on the internet. After all, just a few days ago it was revealed that in the short time it was running a child porn site as a honeypot, it actually made the site run much faster. But now Torrentfreak points us to the news that some other FBI sites are serving up porn as well, though mostly out of FBI incompetence, rather than competence. Apparently the domain the FBI was using for its nameservers for the domains it seized from Megaupload expired, and someone else snapped it up and redirected all the sites using those nameservers to advertisements basically for porn. So, the FBI is now essentially pointing people to porn via Megaupload. Here's the really amazing thing, though: this is not the first time this has happened. The same exact thing happened last year for Megaupload.com. And after Torrentfreak reported on that, the FBI removed the namerservers completely. But just for the .com. The rest of the Megaupload domains continued pointing to the same nameserver... and the domain for that nameserver expired again and has been snapped up by another company pushing porn sites. Now, the FBI apologists will argue that this is no big deal. Obviously, the FBI didn't do this on purpose. But it certainly does continue to raise questions about the FBI's competence on tech matters. Why the hell were they using nameservers that they either didn't control in the first place, or that were held by someone so incompetent that they were allowed to expire and be snapped up by someone else? Having nameserver domains expire is not a particularly common occurrence. Maybe it's time for the FBI to admit that seizing websites isn't exactly a core competence. Unless it's operating child porn websites. Then, apparently, it has super skills.

Filed Under: domains, fbi, hosting, porn, seizure
Companies: megaupload

Appeals Court Says It's Perfectly Fine For The DOJ To Steal Kim Dotcom's Money Before Any Trial

from the this-is-pretty-fucked-up dept

Last year, there was a series of very troubling rulings by a district court in a case related to the criminal prosecution of Kim Dotcom. This wasn't, technically, part of the actual criminal case against him, but rather a separate effort by the government to steal his money. We've been covering the ridiculous process of civil asset forfeiture for a while, and it's really problematic in general. In Dotcom's case, it's something of a farce. Remember, civil asset forfeiture is the situation where the US government effectively files a civil (not criminal) lawsuit against inanimate objects, rather than people. In this case, it basically filed a lawsuit against all of Kim Dotcom's money, arguing that it was the proceeds of a crime and therefore, the government should just get it all. Again, this is entirely separate from the actual criminal trial of Kim Dotcom, which has been put on hold while the extradition battle plays out in New Zealand (determining if Dotcom can be forcibly sent to the US to stand trial).

Just the whole process of civil asset forfeiture is troublesome enough. As we've detailed over and over again, it's basically a system whereby law enforcement gets to steal money and other stuff (cars are popular) from people, simply by claiming that they were used in a criminal endeavor. Since the lawsuit is against the stuff, if people want it back, they have to go and make a claim on it, and it's a fairly convoluted process. In this case, things were even more ridiculous, because the government argued that because Dotcom was resisting extradition from New Zealand, he could be declared "a fugitive" and the judge overseeing the case (the same one overseeing his criminal case, Judge Liam O'Grady) agreed. That effectively meant that Dotcom had no legal right to protest the government simply taking and keeping all of his assets -- and they moved forward and did exactly that.

It is difficult to see how this can be legitimately described as anything but theft by the US government. It got someone locked up in New Zealand, based on questionable legal theories, and while he was (quite reasonably) fighting extradition to the US (a place he's never visited and where he has no business ties), it initiated a separate legal process to keep all his money, no matter what happens in his extradition fight and criminal trial. On top of that, it effectively barred him from making an official claim on that money by having him declared a fugitive for exercising his legal due process rights to fight extradition. So while he exercises his legal due process rights in New Zealand, he's blocked from doing so in the US. And all of his money goes to the US government.

As we said after O'Grady's ruling came out, even if you think that Dotcom is guilty of a criminal copyright conspiracy, and even if you think he should be extradited, tried and locked up this should concern you. Let him go through the full legal process, with all that due process entails, and then determine what should happen to his assets. To take them before that's happened, through this questionable side process is immensely problematic.

And that's why Dotcom appealed, and many others -- including a bunch of criminal defense lawyers -- stepped in to argue this was crazy. Unfortunately, earlier today, the 4th Circuit Appeals Court upheld O'Grady's ruling and rubber stamped the DOJ's legalized theft of Dotcom's assets. You should read the 61 page opinion (which was a 2 to 1 decision, with an interesting dissent), but we'll hit on some of the low points here.

There were a number of different arguments raised -- with a big one not just being the basic due process question, but a jurisdiction question. Dotcom's assets are not in the US. His work was not in the US. So why does the US get to seize the money. The majority opinion basically says "because that's what Congress wanted -- it created this law to let the US government seize overseas assets." The opinion admits that there's a bit of a circuit split on this, but goes for it anyway.

When the amendments were introduced in the Money Laundering Improvements Act, Senator D’Amato included an explanatory statement indicating that subsection (b) was intended to provide the federal district courts with jurisdiction over foreign property:

Subsection (b)(2) addresses a problem that arises whenever property subject to forfeiture under the laws of the United States is located in a foreign country. As mentioned, under current law, it is probably no longer necessary to base in rem jurisdiction on the location of the property if there have been sufficient contacts with the district in which the suit is filed. See United States v. $10,000 in U.S. Currency[, 860 F.2d 1511 (9th Cir. 1988)]. No statute, however, says this, and the issue has to be repeatedly litigated whenever a foreign government is willing to give effect to a forfeiture order issued by a United States court and turn over seized property to the United States if only the United States is able to obtain such an order.

Subsection (b)(2) resolves this problem by providing for jurisdiction over such property in the United States District Court for the District of Columbia, in the district court for the district in which any of the acts giving rise to the forfeiture occurred, or in any other district where venue would be appropriate under a venue-for-forfeiture statute.

This is the point that the dissent disagrees on, and argues that the forfeiture should be blocked on jurisdictional questions alone. The key, according to Judge Henry Floyd, is that court decisions must be binding on parties, and not advisory. But that doesn't work when you're talking about an opinion concerning assets overseas, which will still then depend on the local government where those assets live to abide by the ruling.

The majority side-steps this concern by cabining it to the separation of powers context. One of the basic tenets of what constitutes a “case or controversy” cannot be elided so. The defendant in this action--the res--is outside of the United States and beyond the control of the district court. Absent control, no order of the district court can be binding on the res because the fate of the res is ultimately not in the hands of the district court. Instead, the res in this case is subject to the control of the courts of New Zealand and Hong Kong. The district court’s forfeiture order therefore merely advises the courts of a foreign sovereign that (in the district court’s view under the laws of the United States) the United States should have title to the res. Those courts, of course, with control of the res and with the authority vested in them by their own sovereigns, remain free to revise, overturn, or refuse recognition to the judgment of the district court.

As Judge Floyd notes, this makes the opinion nothing more than an advisory opinion, which is prohibited by Article III of the Constitution (concerning the powers of the judiciary).

Back to the majority opinion, the court rejects the argument that this process to steal Dotcom's money without letting him defend himself violates the Due Process Clause of the Fifth Amendment. First, the court says that because some of Megaupload's servers were based in Virginia, the jurisdiction is fine. Then, the court accepts the lower court's decision that Dotcom can be called a "fugitive" even as he's both in contact with the court and going through a perfectly legal process around extradition in New Zealand. Somewhat incredibly, the court decides that because he's resisting extradition, that's the same thing as being a fugitive hiding out. That... should be troubling for a whole variety of reasons. Basically, the court says that due process means that Dotcom has the right to be heard protesting the forfeiture, but that the only way to do that is to stop fighting extradition. It gets down in the weeds parsing the law in determining what the right standard is for determining if fighting extradition counts as being a fugitive, and decides that this was Congress' intent with the law -- that so long as the person is avoiding court, even if for reasons relating to the legality of extradition, they can still be declared a fugitive.

The claimants’ argument that they have legitimate reasons to remain where they are, such as jobs, businesses, and families does not disprove that avoiding prosecution is the reason they refuse to come to the United States.

I imagine that Dotcom's lawyers will now try to fight this as well -- seeking either an en banc rehearing or petition the Supreme Court to hear the case. Both are pretty risky, with a fairly high probability of being rejected. And, of course, as the dissent pointed out, there's still one other hurdle for the DOJ: the assets are held in Hong Kong and New Zealand, and they now need to convince authorities in those two places to hand over the money. And, as of right now, it's not clear if they'll actually let it happen.

Again, no matter what you think of Dotcom's actual criminal case, this result should be concerning to you. The use and abuse of civil asset forfeiture is the real issue here -- not the copyright questions. The ability of the US government to simply take millions of dollars based on accusations and without a guilty verdict in a trial should be tremendously worrying. If a full trial happened and he was found guilty, then there's a reasonable argument that, as a result of that, the money can be forfeited. But it's extremely problematic that the money can be forfeited in these circumstances, before the rest of the legal process has occurred. Under this ruling, even if Dotcom came to the US and was found not guilty, the US government would still keep all his stuff. Can anyone explain how that would be a fair and just result?

Filed Under: 4th circuit, article iii, asset forfeiture, civil asset forfeiture, copyright, doj, due process, hong kong, jurisdiction, kim dotcom, new zealand
Companies: megaupload

Judge's Opinion On Kim Dotcom Shows An Unfortunate Willingness To Ignore Context

from the this-is-disappointing dept

Last night, we posted the news that a judge in New Zealand had ruled that Kim Dotcom and his colleagues were extraditable. Dotcom is appealing the decision, so it's not over yet. Soon after the decision was announced, the full ruling by Judge Nevin Dawson was released. It's a staggering 271 pages, and I've spent a good chunk of today reading it over. Some parts of it are more compelling than others, and there may even be enough to support the ruling. However, what troubles me is how frequently Judge Dawson appears to totally, without question, accept the US government's arguments (as relayed by New Zealand prosecutors), despite the fact that many of them are clearly misleading at best, or downright incorrect.

It would take too long to go point by point through the whole thing, but I did want to highlight a few points that I found concerning. The key issue in the extradition fight is whether or not copyright infringement is an extraditable offense. Under the treaty between the US and New Zealand, it is not considered an extraditable offense, which is why a variety of other "conspiracy" charges are piled on in the complaint against Dotcom. Yet, Judge Dawson basically tosses much of that out, arguing that "conspiracy to defraud" is an extraditable offense, and copyright infringement can be a conspiracy to defraud. As Dotcom's lawyers noted yesterday, this would basically write out the fact that copyright is not an extraditable offense.

However, almost all of this "conspiracy to defraud," as well as the other issues that the court finds extraditable (such as "money laundering") are all based on the claims of the DOJ, many of which were presented ridiculously out of context by the DOJ in the original indictment, but which Judge Dawson takes as perfectly accurate, without considering alternative explanations. For example, there's the question of whether or not Megaupload had its own search engine. As we noted in the original indictment, this is particularly ridiculous. A key reason why the original Napster got shut down was because it had a search engine, which the court used to argue that it was more involved in the infringement. Thus, there's a strong argument for why a site should not have a search engine, in order to make it harder to find infringing materials. Yet, the DOJ argued that this was part of the "conspiracy" and that it showed that Megaupload was trying to hide the infringing activities from law enforcement. Damned if you do, damned if you don't. But Judge Dawson flat out accepted the DOJ's argument. Judge Dawson quotes a Skype discussion between two of Dotcom's colleagues, Mathias Ortmann and Bram Van Der Kolk, in which Ortmann notes that "searchability is dangerous and will kill us." And the judge concludes:

There was so much infringing content on the sites that its presence had to be disguised and made non-searchable. Traffic flowed to this content through third party sites.

That's one interpretation. A more plausible explanation could be that these guys didn't want to make their site easy to use for infringement and thus didn't make the material searchable. Instead, that's used against them.

Elsewhere, the judge uses a discussion between Kim Dotcom and Ortmann about how to make sure the service is "invulnerable" to legal challenges as proof that they "appreciated that Mega operated unlawfully and was at risk of being shut down by a court." Of course, a perfectly reasonable alternative explanation is that their discussion was on how to make sure they were not unlawful and not at risk of being shut down by a court. There are plenty of business discussions that tons of businesses could have like this that, devoid of context, could be presented in this misleading way. Any time any two executives from a business were to discuss specifics of making sure their business is legal could then be misrepresented as evidence that they "knew it operated unlawfully and was at risk of being shut down by a court."

There are lots of other examples of this, including conversations between basically all of the defendants discussing (and sometimes joking about) the possibility of lawsuits (most of which they assume would be civil lawsuits). But just because you think you might get sued is hardly evidence of a conspiracy or belief that what you're doing is illegal. I've had many discussions with our lawyers about doing things to protect ourselves from getting sued. That doesn't mean I believe I'm operating illegally. It means I understand the legal environment we operate in, where lawsuits happen frequently, and I'd like to minimize the risk. But in this case, every hint of Megaupload doing the same is treated as an admission of knowingly breaking the law. It's true that there are some conversations that do seem to go beyond this point, such as when Ortmann and Van Der Kolk complain that the business can't be sold because it's not "legit" -- so it's reasonable to argue that those are enough. But, so many of the conversations seem to be spun so far beyond reality that it makes the evidence appear a lot stronger than it really is.

Some of the evidence is just outright ridiculous. At one point, Ortmann sends Dotcom a link to an agenda for an "IP Crime Conference" that was hosted in the same building that was officially Megaupload's headquarters (a Hong Kong hotel) with the tagline "in the lion's den." The judge concludes that from this you can infer "Mega's business was copyright piracy." Huh? How is that a reasonable inference?

Now, I know that some folks are already banging angrily below in the comments about this, pointing out that of course Megaupload was used for infringement, and all of this is just hand-waving to ignore that fact. But that's not what I'm doing here at all. Yes, it's quite clear that Megaupload was widely used for infringement. But that alone is not a criminal offense. When the VCR was first introduced, it was widely used for infringement. When the mp3 player was first introduced, it was widely used for infringement. When the DVR was first introduced. Tape players. Photocopiers. Radio. But that alone does not constitute a criminal offense. Yet, here the judge seems to think that any weak inference that the execs at Megaupload knew that their service was used for infringement implicates them in a criminal conspiracy.

That seems incredibly problematic.

Similarly, as the DOJ did in its indictment, the Judge focuses a lot on the "incentive" program that Megaupload put in place, whereby users who post files that get a lot of downloads could profit from those downloads. The claim by the DOJ, and totally accepted by Judge Dawson, is that this is proof that they were encouraging infringement. But, again, such a program could just as easily be useful for non-infringing purposes as well. If you were a singer and wanted to give away your music for free, but still profit from it, you could see how this could be a compelling business model. In fact, some major recording artists, such as Busta Rhymes, were excited about using Megaupload in just this manner. Yes, obviously some would use this to post infringing files, but again the fact that some users could misuse the service does not mean the company's execs are criminals.

For example, the court uses the fact that Ortmann and Van Der Kolk messaged each other about how uploaded files in the program are "not yet" being "audited for copyright violation" as evidence that the program was designed to drive infringement. But there is no requirement under the law to proactively monitor the content for infringement. Later the judge uses the fact that the incentive program was purposely designed to "attract new users" and to reward "huge uploaders" as evidence that "this was not cyberlocker activity but mass distribution of illicit content." Again, this presumes that the only possible use for a cyberlocker is to store personal data, and not to use it to distribute and share files (many of which may be perfectly legitimate).

Again, some of the other statements may cross the line -- including discussions about specific users where the defendants appear to recognize that certain files are infringing. There are also discussions about whether to cut off incentive payments in cases where they know a user is uploading infringing material (where they don't cut off those payments). Those may be the most damning. But, again, straight up copyright infringement isn't supposed to be an indictable offense. And it's all this other stuff that the judge uses to argue some wider "conspiracy to defraud."

Also, as has been pointed out time and time again, there is no such thing as "secondary" criminal copyright infringement. That is, it's not a criminal offense if your tool is used by someone else to infringe. But all that basically gets ignored.

There's a lot more in there, and it's worth reading through and looking at all of the arguments and evidence. I can see why the judge ruled the way he did. And much of it is similar to the arguments in the original indictment. And, again, there may actually be enough in there for the extradition to go forward, but so much of it seems bound up in taking statements out of context that it seems pretty sketchy. If those kinds of arguments were dropped, and the ruling focused just on the clear evidence of some sort of plan to "defraud" it would seem like a much stronger argument. The fact that piece of evidence after piece of evidence just seems so... weak, raises serious questions about the whole decision.

Filed Under: bram van der kolk, conspiracy, conspiracy to defraud, copyright, doj, extradition, kim dotcom, mathias ortmann, nevin dawson, new zealand
Companies: megaupload

New Zealand Says Kim Dotcom Eligible For Extradition; Dotcom To Appeal

from the and-on-it-goes dept

This doesn't come as a huge surprise, but minutes ago in New Zealand Judge Nevin Dawson gave the US Justice Department a bit of an early Christmas present in declaring that Kim Dotcom and his co-defendants in the Megaupload case are eligible for extradition, following the long extradition trial earlier this year. The judge apparently said that the evidence was "overwhelming" against the defendants. This does not mean that Dotcom and crew are boarding a plane across the Pacific just yet. They have 15 days to file an appeal and Dotcom's lawyers have already indicated that such an appeal is on the way (what did you expect?). Dotcom's lawyer Ira Rothken points out that under New Zealand's extradition agreement with the US, there is no extradition over copyright issues -- and argues this ruling renders such a safe harbor "illusory." Of course, even if that fails, there's still a separate process for approving the actual extradition, which would take place with New Zealand's Justice Minister, but that part of the process is more of a formality than anything else. It's not over yet, but at this point things are leaning strongly towards Dotcom and his colleagues being shipped to Virginia to face a US criminal trial.

Filed Under: copyright, doj, extradition, kim dotcom, new zealand
Companies: megaupload