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

NinjaVideo Admin Phara Gets 22 Months In Jail, 500 Hours Of Community Service & Has To Pay MPAA $210k

from the well,-well... dept

Today was the sentencing for Hana "Phara" Beshara, the admin for NinjaVideo who has received plenty of attention in the last few months. Just a few hours ago, she was sentenced to 22 months in prison, another two years probation after that, 500 hours of community service and she has to pay back the $209,896.95 that she supposedly made from NinjaVideo to the MPAA. I'm sure they'll be passing that along to moviemakers, right? Either way, what's telling here is that the judge appears to have given Beshara significantly less than what the government asked for.

After receiving what appears to be some pretty bad legal advice, Beshara was indicted, and quickly realized that she was left with little choice but to plead guilty in the case. Just a few weeks ago, we wrote about the fantastic and detailed American Prospect article by Rob Fischer, which detailed Beshara's story in a way where she certainly made it clear that she didn't agree with the reasonableness of the charges against her. Once again, it seems as if Beshara has been on the receiving end of bad legal advice (talking to the press post-guilty plea, but pre-sentencing... not so smart).

The US Attorney, Neil MacBride (who, it's important to note, spent years as the Business Software Alliance's "anti-piracy" boss), asked the judge to throw the book at her, using Fischer's article to repeatedly claim that Beshara's "substantial ego" and "inflated sense of self-importance" justified sending a strong message with the sentencing. Who knew that having a big ego was illegal? MacBride -- as he used to do with the BSA -- totally overplayed the claims of "losses" to the entertainment industry -- insisting that, every week, the MPAA alone was harmed to the tune of $1.5 million, "resulting in a staggering sum if the figure is extrapolated" to cover the 120 weeks that the site was in existence. Here's a tip, Neil, if extrapolating leads you to "a staggering sum," perhaps it's because your assumptions are wrong.

Either way, the judge appears to have decided not to completely buy into these claims of harm. While the government "agreed to limit the loss" to just $1 million, even though "the harm was certainly far more than $1 million," the judge seems to have capped the financial restitution to just her salary from NinjaVideo. The judge appears to have chosen not to also include a fine (which sentencing guidelines would allow between $10,000 and $100,000). On top of that, the judge gave Beshara less time in jail then either what Beshara claimed she expected (3 years) or what the sentencing guidelines and MacBride suggested (46 to 57 months). It seems that the judge didn't buy into all of MacBride's assertions.

Either way, expect the government to play this up as some huge victory against the scourge of online infringement and use it to justify continued censorship of websites.

Filed Under: copyright, hana beshara, ice, infringement, jail, neil macbride, operation in our sites, phara, sentencing
Companies: mpaa, ninjavideo

ICE Admits That It Just Wants To 'Put People In Jail' With Operation In Our Sites

from the nice-of-them dept

Rob Fischer has a fantastic article at The American Prospect, looking at ICE's Operation In Our Sites program, with a specific focus on the seizure and subsequent prosecution of NinjaVideo. It's worth reading in its entirety, as a few things become clear. Here are just a few interesting tidbits, though. First up, the site's admins noted that they had done their best to abide by the DMCA, and they figured that if anything, they might have to fight a civil lawsuit, not a criminal one:

Under the Digital Millennium Copyright Act of 1998 (DMCA), copyright owners are responsible for sending takedown notices to sites hosting infringing content. Anyone on YouTube who has ever read the statement “This video has been removed due to terms of use violation” has seen the result of a DMCA notice. “We believed that if we didn’t host the content but linked to it elsewhere on the Web, our only legal consideration was complying with takedown notices,” Beshara says. “And we always complied.”

But it wasn’t so simple. The DMCA takedown process allows intermediaries like YouTube to avoid liability because it’s their users uploading the infringing content. Ninja Video was both the intermediary and the uploader. Independent storehouses called “cyberlockers” hosted the content Ninja Video streamed, but Ninja’s uploaders put it there.

I'm not sure that this is really an accurate explanation of the DMCA issue, seeing as the users uploaded the content... that's the same thing with YouTube and Veoh, both of which have been declared legal under the DMCA. As long as they followed the safe harbor provisions, the fact that users upload shouldn't have an impact. There very likely may have been issues of secondary liability if the site encouraged people to infringe -- but that's a separate issue, and one that again should have been an issue for civil copyright law, rather than criminal.

The folks at ICE come across as typical meatheads with no clue what they're dealing with here. The real humdinger of a quote comes from ICE Special Agent William Ross, who earlier in the piece notes that he was influenced by Hollywood repeatedly asking him to do their job. But when confronted with the point (made by Corynne McSherry from EFF) that "Arresting people and putting them in jail for having some links online doesn’t really strike me as a good way for us to invest our time and energy." Ross hits back:

“I am a law-enforcement officer,” says Special Agent Ross. “I want to put people in jail.”

That, alone, is a pretty ridiculous and scary quote when you think about it. He's not talking about fairness or justice or upholding the law. He just wants to "put people in jail." People like that shouldn't have jobs in power.

In the end, it seems clear that the folks at Ninja Video received horrific legal advice and made some equally poorly thought out legal decisions themselves. I still don't see where the site's operators could have possibly been liable for criminal copyright infringement, but after throwing away the $10,000 they raised on lawyers, who (from the description in the article) did not appear to do very much (and it's not clear they ever understood fully what was happening), the admins quickly caved to government pressure on plea bargains.

In the wake of the Dajaz1 debacle by the Justice Department, it seems even more ridiculous that the NinjaVideo folks agreed to the plea deals. If they'd just received some decent legal advice early on, they wouldn't now be facing years in jail. Pretty unfortunate.

In the meantime, what you get is a ridiculous portrait of a bunch of "we just want to put people in jail" semi-clueless ICE agents (they repeatedly use Alexa as their judge of what's popular -- can no one buy them a subscription to a decent online monitoring service?) who don't even recognize the First Amendment implications of seizing sites with tons of non-infringing content on it, and who seem to be totally in awe of big entertainment companies and the myths they tell. The whole thing would be amusing if it didn't involve serious Constitutional questions and if people weren't ending up in jail.

Filed Under: dhs, domain seizures, free speech, ice, operation in our sites, william ross
Companies: ninjavideo

Two More Guilty Pleas Over NinjaVideo

from the close-it-out dept

This should come as absolutely no surprise (and, indeed, we predicted it), but following the guilty pleas of two of the admins for Ninjavideo, the two remaining Americans, who were indicted, have now accepted plea bargains as well. Compared to the first two, these two were small fry, and they must have realized that the government using the two others against them would leave them in serious trouble. Now all that's left is to see what kind of punishment the judge doles out. It would be interesting to see what kind of deal the government promised... and compare it to what the judge eventually does, but it seems like the legal fighting here is just about over. There was one more person indicted, but he's apparently in Greece, and the US government hasn't been able to find him yet.

Filed Under: copyright, lawsuits
Companies: ninjavideo

One Ninjavideo Defendant Pleads Guilty; Expect Him To Testify Against The Others

from the they're-going-to-lose dept

When the government indicted five people for being involved with Ninjavideo, we noted that the government's case looked a hell of a lot stronger than many of its other efforts involving seizing websites, and we predicted that the people involved were likely to lose in court. So it came as little surprise that one, Matthew Smith, has already pled guilty. Of course, knowing a little about how these things work, it's pretty clear that the feds did a plea bargain deal with this guy, and he's now likely to testify against the others. That's the basic deal: plead guilty to these lesser charges (two out of the six charges), provide evidence against everyone else, get a promise of less time in jail (which the judge can ignore).

This is why some other countries don't allow plea bargains. It makes it way too easy for people to agree to say whatever the feds want in other cases, just to protect their own hide.

I still think that the feds have a much stronger case against Ninjavideo -- though it still seems like this should be a civil suit, rather than a criminal suit. Separately, from other information I've seen, it appears that the feds do get some things in the indictment incorrect, including the claim that Ninjavideo hosted videos. That was part of the reason why I thought Ninjavideo was going to lose badly, but others have pointed out that while Ninjavideo tries very hard to make users think it hosts the videos, in actuality, it does not. Still, at this point, given the other activities of those involved in the site, I'm not sure that distinction matters. And now that Smith is likely to appear against the others, my original prediction stands: everyone else is going to lose badly, whether or not they get plea bargain deals as well.

Filed Under: copyright, criminal copyright infringement, matthew smith
Companies: ninjavideo

Can The Operators Of A Site Targeted By Homeland Security Crowdsource A Defense?

from the legal-long-shots dept

We've already covered the bizarre story of Homeland Security effectively working for Disney in seizing some domains of sites that were used to file share movies (way, way, way outside of Homeland Security's mandate), and covered the sneaky attempt to defend those moves by conflating copyright infringement online with counterfeit drugs being sold online. It's also still not clear that Homeland Security even has the legal right to seize those domains as it did. Now, one of those sites targeted by Homeland Security, NinjaVideo is trying to fight back, and appears to be trying to crowdsource a legal defense fund to handle the fight. I honestly don't know anything about NinjaVideo or what the site did, so I have no idea if it has a strong or weak case. I also do wonder how many people will really step up and support the site -- though if many do it could make for an interesting case study on its own as well. Either way, it's worth watching to see how successful the site is in raising money for its fight -- and then in the legal fight itself.

Filed Under: copyright, crowdsource, homeland security
Companies: ninjavideo