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

Kickass Torrents Creator Can't Get Criminal Case Tossed Out

from the moving-onward dept

A year ago, we noted that Kickass Torrents had received the Megaupload treatment, getting hit with criminal charges and having its owner, Artem Vaulin, arrested in a foreign country (in this case, Poland). As we noted in looking over the original complaint, there were some significant concerns (similar to the ones we had with the Megaupload case) concerning whether or not running a service that other people used to infringe could possibly make you guilty of criminal copyright infringement.

The key issue: there is no "secondary liability" concept in criminal copyright law. There is such a thing in civil copyright law, whereby if you're found to be "inducing" copyright infringement (via clear and deliberate statements and steps) you can be found to have to have infringed -- but that's not the case for criminal law. The case against Vaulin (as with Kim Dotcom) tried to get around this by arguing a few different things, which we'll discuss below. Vaulin is fighting extradition in Poland, but in the meantime, had asked the federal court in Illinois to drop the case already, due to the failure to show actual criminal infringement by Vaulin.

Such an effort was always going to be at least something of a long shot, as courts will tend to give a lot of deference to the DOJ, and now Judge John Lee has rejected the request (as was first reported by the Hollywood Reporter).

The first issue the judge had to review was whether Vaulin could even bring his motion in the first place. The DOJ, playing hardball, argued that because Vaulin was fighting extradition to a country that he was not from and had no connection to, he shouldn't be allowed to make any motions in court under the "fugitive disentitlement doctrine" (again, there are similarities here to the DOJ declaring Kim Dotcom a fugitive for fighting extradition -- but that was in a separate effort to get to keep all of Dotcom's assets). As the name suggests, "fugitive disentitlement doctrine" says that those who are running from the law can't show up in court to make their arguments. And... that makes some amount of sense for actual "fugitives" who are hiding and no one knows how to find them. But that's an entirely different situation when you're fighting against extradition to a country you have no connection to.

Unfortunately, the court agrees with the DOJ that the fugitive disentitlement doctrine can apply here, and thus Vaulin's motion is rejected on that basis alone. It cites a few cases on this -- though most do appear to involve people who are more like actual fugitives in that they left the US to escape US law enforcement. However, the court does find one case, In re: Kashamu that involved a Nigerian national who was resisting extradition in a drug smuggling case. That case is precedent, and while I think it's decided incorrectly, the district court can't just ignore that precedent. And thus:

Based on these authorities, and in light of the principles undergirding the doctrine, the Court is persuaded that the elements of the fugitive disentitlement doctrine are met in this case. All three principles that the Supreme Court discussed in Degen—enforcement and mutuality, redressing the indignity of absence, and encouraging voluntary surrender—are implicated here. As long as Vaulin is in Poland, he is not within the Court’s reach. And, as far as the Court is aware, he is actively resisting extradition efforts. His attorneys represented at the most recent status hearing that there is a “real possibility” that he will agree to appear here, but also indicated that he is actively appealing the Polish courts’ decision to extradite him, a process which could take years. Thus, insofar as Vaulin is interested in participating here, he appears willing to do so only from a safe distance.

That said, the court recognizes that the Supreme Court has urged courts to apply fugitive disentitlement "with caution" so it actually digs into the merits of the motion to dismiss. And that's where things get troublesome. There are a few different arguments the court has to respond to, so we'll take them in turn. The first is whether or not criminal conduct occurred in the United States at all. Vaulin and Kickass Torrents are not in the US and thus they argue that if there was any criminal activity it can't be tied to the US. The DOJ argues in response that Vaulin is still guilty of "aiding and abetting" criminal copyright infringement in the US. And the court agrees:

But the core theory underlying the indictment is that Vaulin aided, abetted, and conspired with users of his network to commit criminal copyright infringement in the United States. The first paragraph of the indictment, which is incorporated throughout, alleges that “[m]illions” of Vaulin’s users resided in the United States.... The indictment goes on to allege that these users “uploaded” and “download[ed]” content,... and “obtain[ed] [ ] desired infringed copyrighted content,”.... When viewed in a light most favorable to the Government, as the Court must do at this preliminary stage, the indictment alleges acts of domestic infringement.

But... that totally misses the argument that Vaulin is actually making. No one denies that there were people in the US who used the platform for infringement. But just because people are using the platform for infringement, doesn't make it criminal infringement. For something to be criminal copyright infringement it has to reach a much higher bar than just "people downloaded stuff." That may suffice (with certain caveats) for civil infringement, but criminal requires a lot more which the court ignores in that paragraph. The court also says that because Kickass Torrents had some servers in Chicago, "overt acts in furtherance of the conspiracy occurred in the United States." I'm troubled by the fact that the court completely brushes past the differences in civil and criminal copyright infringement here, because it's a big difference.

The second argument proffered by Vaulin, is that torrent tracker files are not the copyright-covered work, and thus downloading or distributing torrent files cannot lead to criminal liability. The court claims that this argument "misunderstands the indictment." But... that's wrong. I'd argue the judge's reply "misunderstands the argument." Here's what the judge says:

The indictment is not concerned with the mere downloading or distribution of torrent files. Granted, the indictment describes these files and charges Vaulin with operating a website dedicated to hosting and distributing them... But the protected content alleged to have been infringed in the indictment is a number of movies and other copyright-protected media that users of Vaulin’s network purportedly downloaded and distributed without authorization from the copyright holders.... The indictment describes the torrent files merely as a means of obtaining the copyrighted movies and other media.

But... uh... that totally misses the point of the argument. The torrent files are not copyright-covered content. Nowhere does Vaulin or his site distribute or reproduce copyright-covered content. Many, I'm sure, will argue that this is semantics and nitpicking, but it's actually quite important. Yes, a torrent file can then be used to infringe, but it's the end user potentially doing the infringement -- in the same way that a VCR can be used to infringe, but it's not Sony who is held liable for that infringement (even in the civil sense, let alone the criminal). This is the very basis of intermediary liability. But the court skips over all that and says "yeah, but there's infringement." Well, no shit there's infringement. But the question is who's actually doing the infringement. Because if it's not Vaulin, then, this case has a problem. And the court misses that entire argument and just says "there's lots of infringement." That's... bad.

This part though, does make one claim that, if true, would be a lot of trouble for Vaulin: that there's evidence that Vaulin may have also run some direct download websites. If the evidence shows that Vaulin/Kickass Torrents itself was hosting infringing content, then that could be a much bigger deal and make the case a lot more legit. But even here, the court kind of breezily brushes by this fairly important point, and lumps Vaulin in with "his co-defendants' distribution of copyrighted content through direct download websites." So, it's at least unclear to me if the claim is that Vaulin himself ran direct download websites (which would be very bad for Vaulin) or that some unnamed "others" did so, in which case, the specifics matter a great deal.

Next up is the key argument, which we noted up top, about there being no "secondary liability" in criminal copyright infringement. The DOJ responds -- and the court accepts -- that they're not actually charging him with secondary liability for criminal copyright infringement, but rather "conspiracy" and "aiding and abetting" for criminal copyright infringement. Here, unfortunately, I disagree with the argument that Vaulin's lawyers made that the statute on "aiding and abetting" simply doesn't apply at all to copyright law (even though there is some debate among scholars on this). As I've noted in the past, I do think it does apply, but that the standards for aiding and abetting are much different than the standard for basic secondary liability. Aiding and abetting requires "a tight nexus between the mental state of the defendant and the ultimate criminal act committed by another." Merely providing a platform that many people use -- and very rarely used for criminal copyright infringement (again, a much higher standard) -- makes it difficult to see how Vaulin could qualify as aiding and abetting.

But the court ignores all of that, focusing on the question of whether or not there even is aiding and abetting for criminal copyright law -- and saying that there is. And, because of that, there's no discussion of whether or not what Vaulin did qualifies as actual aiding and abetting. It's just... assumed. Now, it's possible that this is (1) because the argument wasn't raised by Vaulin or (2) this is not the stage to raise that issue, and perhaps that's true. But it does feel like the court wandered down a side path here, and ignored the larger question.

Vaulin makes one final argument on this issue -- that if conspiracy and aiding and abetting do apply to criminal copyright law, they should be "void for vagueness." This is kind of a "shoot the moon" argument, saying that it's so vague that people couldn't understand if they were "aiding and abetting" criminal copyright infringement. Here, the court mainly relies on the fact that criminal copyright law is clear. But... again, that ignores whether or not it's clear what "aiding and abetting" criminal copyright law is. Instead, the court pivots and says that Vaulin's "behavior" -- such as moving Kickass Torrents to new domains -- showed that he knew what he was doing was illegal. There's a little bit of a logical leap there -- as one could just as easily say that he was moving domains and kept the site running because he believed it was perfectly legal, and he felt the foreign court orders were wrong... but... that's probably a weak overall argument.

There's one last argument, which is that the government never shows anyone who actually criminally infringed on copyright. It claims that Vaulin aided and abetted such infringement... but not the actual infringement. The court basically says "this doesn't matter" or, at the very least, it doesn't matter at this stage of the process. At trial, it notes, the DOJ will have to show infringement.

All in all, this isn't a hugely surprising ruling -- but it is disappointing. It appears to get distracted and sidetracked and confused on a few different issues, without clearly addressing the actual underlying arguments. As happens all to often in copyright cases, the issues get blurry when judges start focusing on "but... all this infringement is happening." That may be true, but the question is who is actually liable for it, and whether or not it's actually criminal. And that requires a much higher bar, and the court fails to actually show that those bars are cleared. That doesn't bode well for Vaulin.

Filed Under: aiding and abetting, artem vaulin, copyright, criminal copyright, doj, fugitive disentitlement, secondary liability
Companies: kickass torrents

Even If You Think Kim Dotcom Is Guilty As Sin, The US Government Stealing His Assets Should Concern You

from the it's-called-due-process dept

Earlier this year, we covered a very troubling situation involving Kim Dotcom and the US government. As you almost certainly already know, Dotcom is fighting extradition from New Zealand to the US to face a bunch of charges concerning criminal copyright infringement. We've written about those charges as well as the extradition fight many times. However, while all of this was going on, the Justice Department filed a separate lawsuit, not against Dotcom himself, but against all of his stuff. We've talked for years about the problems of the "asset forfeiture" program in the US, and Dotcom's case drives all of those points home. And, even if you think that Kim Dotcom is absolutely guilty, a horrible person, responsible for billions of dollars in losses to the film and music industries, you should still be concerned about the asset forfeiture aspects here.

Again, this lawsuit is technically entirely separate from the ongoing case against Dotcom himself. Instead, it's USA v. All Assets Listed In Attachment A, And All Interest, Benefits, And Assets Traceable Thereto -- which is a catchy name if you're trying to hide what you're really doing, which is stealing all the assets of someone in a foreign country. The Attachment A in the title of that lawsuit is basically a listing of all of Kim Dotcom's assets. In asset forfeiture cases, since the government is technically filing the lawsuit against the stuff, arguing that the stuff itself is guilty, it leaves only limited ability of the original owner of that stuff to try to block the government from taking it all. And, that was made much more difficult by Dotcom (who has never even been to the US) fighting extradition in the (entirely separate) lawsuit against him. The DOJ, somewhat perversely, used the extradition fight to argue that Dotcom is a "fugitive," to basically say that he can't try to block the forfeiture, and the judge agreed.

The end result? The court gave the DOJ a huge green light to legally steal millions of dollars worth of assets from Kim Dotcom despite the lack of any court ruling or admission of guilt. That seems like a rather big due process concern. While a New Zealand court has put a temporary stop to the US government taking the New Zealand portion of the assets, back in the US, there is an appeal going on over the initial ruling.

As part of that, three organizations that you wouldn't normally think of as associating themselves with the likes of Dotcom, have stepped up to argue that the whole civil asset forfeiture effort against Dotcom's stuff is a complete farce. The Cato Institute, the Institute for Justice and the National Association of Criminal Defense Lawyers have filed an amicus brief in the appeal arguing forcefully about how ridiculous this whole case is (not the case against Dotcom, but the case against all his stuff). As the Cato Institute notes in its blog post about this:

The Fifth Amendment’s Due Process Clause requires an opportunity to be heard and an opportunity to defend against government-initiated actions against your property. Unlike an escaped criminal appellant who is scorning the court’s jurisdiction, in civil forfeiture, it’s the government that has dragged Dotcom and the others into court. Moreover, given the amount of abuse in civil-asset forfeiture, the government shouldn’t be allowed both to profit from the forfeiture and suppress defenses by calling residents of other countries “fugitives.” Finally, the reasons for fugitive disentitlement in criminal appeals simply can’t be transferred to civil-asset forfeiture. When an individual is “on the run” from criminal prosecution, courts can’t enforce judgements against them, but a valid forfeiture order would be fully enforceable against Dotcom if the court has jurisdiction over the property. Fugitive disentitlement is also used to deter felons from escaping justice, but there’s no similar concern here, where the property can’t run away and the claimants are merely residing in their home countries. The Fourth Circuit should not only allow the Megaupload defendants to challenge the seizure, it should also consider striking down as unconstitutional all uses of fugitive disentitlement in civil-forfeiture cases.

Frankly, if Dotcom is eventually found guilty of that which he is charged with (which is a separate issue altogether), then it could be perfectly reasonable to argue for asset forfeiture of the proceeds from such illegal acts. But to argue for civil asset forfeiture entirely separately from that process and to abuse the process by arguing he's a "fugitive" in order to get those assets is particularly ridiculous:

Under civil forfeiture laws, the government can take property without an underlying criminal conviction based only on the allegation of a crime. Those whose property has been seized can get it back by proving that their property is “innocent.” The government, however, is preventing the defendants from even making that argument. Using the “fugitive disentitlement” doctrine, the government is blocking the defendants from challenging the forfeiture.

Fugitive disentitlement has historically been applied only to criminals who escaped custody while appealing a conviction, the idea being that a court could decide to dismiss the appeal because any judgment would be unenforceable against an absent defendant. Here, the government has decided that, because the Megaupload defendants aren’t coming to the United States to defend their property, they are “fugitives” who have lost the ability to defend against that seizure — and the district court agreed.

As the filing itself notes:

Stripping the claimants of their due process rights isn’t just unconstitutional, it’s dangerous. There’s a growing literature on the abuse of civil forfeiture—and those abuses are directly tied to the protections given to the claimants here, as well as the ability of government officials to directly benefit from forfeitures. This court should not ratify a doctrine that would make abuses even easier.

Moreover, the reasons for invoking the fugitive disentitlement doctrine in criminal appeals are inapplicable to civil forfeiture actions. First, unlike an order against an absent criminal defendant, a valid forfeiture order where the court has rightful jurisdiction will be fully enforceable. Second, the claimants here haven’t scorned the district court’s authority as a fleeing criminal defendant would. Third, by appearing before the court via counsel, the claimants haven’t disrupted the court’s processes or offended its dignity. Finally, unlike with criminal appellants—who may need to be deterred from flight by the threat of disentitlement—the claimants are merely continuing to lawfully reside in their home countries.

Once again, even if you think Dotcom is the root of all evil in the world, even then you should be concerned about this particular aspect of the case(s) against him. It seems telling to me that, in the comment sections on our previous posts, those who have argued that Dotcom is clearly guilty, seem to have no problem with the asset forfeiture. They don't see it as any sort of due process violation because they've already decided he's guilty in their minds, just as the US government has. But that's not how due process works. You're supposed to be found guilty first. If these people are so sure that Dotcom is guilty, why not wait until that's shown in a court of law, rather than having to go through this separate process to take all of his stuff?

Filed Under: asset forfeiture, doj, due process, fugitive, fugitive disentitlement, kim dotcom
Companies: cato, institute for justice