Interviews with Kim Dotcom, his lawyer Ira Rothken and Eric Goldman

by Gordon Campbell

Accidentally or otherwise, the laws on intellectual property allow corporations to do unto others what can’t be done to them. If for instance, you violate the rights of a record company or a movie studio by forwarding copyrighted material that they own, without payment, they can have you arrested, and you can end up with a criminal conviction on your CV. Yet if a corporation steals your patent? As they do. Under US law, the corporate can be fined and the CEO might get a lot of dirty looks, but business carries on regardless, and with no criminal blemish on the corporate image. Copyright infringement and patent infringement are treated differently by the courts – even though arguably, the “stealing” of intellectual property is involved in both cases.

That difference is one reason (among several) why those ads that liken copyright infringement to stealing a car or a wallet or a CD have never quite rung true. As this 2011 article in the Harvard Journal of Law and Technology mentions, there is an argument for regarding copyright infringement as being more like a vandalism that reduces the value of the property, than a theft where the goods get taken and the owner can’t use them anymore.

In the US government’s case against Kim Dotcom and Megaupload, this basic legal distinction between actions with criminal liability and those that incur only civil liability poses a significant problem for the prosecution. Extradition depends on making a credible case of criminality. And never before in any US courts (or elsewhere) has an ISP or a cloud storage provider said to be contributing to copyright infringement ever faced a criminal prosecution for engaging in those kind of activities. Megaupload is a unique criminal case.

That’s one good reason why Dotcom and his defence team have asked the NZ Supreme Court to grant them access to the evidence (if any) that the US has for its allegations of criminal behaviour and criminal conspiracy before the New Zealand court accedes to the US extradition request. A mere summary of the allegations would not be good enough, not when the alleged offences are so novel. Arguably, the Megaupload prosecution is just civil proceedings dressed up in criminal drag. There is a real risk that our legal system has become embroiled in what is – in essence – a turf war between rival corporations (ie Hollywood vs Megaupload) in which only civil liability is genuinely at stake. For that reason, the US government and its entertainment industry backers need to put all of their evidential cards on the table ASAP – before New Zealand taxpayers, enforcement agencies and the courts waste any more time and money financing this piece of legal adventurism, on their behalf.

Our Supreme Court will need to be alive to the civil/criminal distinctions, over copyright. The Supremes have just granted leave to the Dotcom legal team to appeal against the Court of Appeal decision of March 1st, 2013. In that ruling, the Court of Appeal ruled that the US government needed to supply only a limited summary of its allegations (a so-called “record of the case”) to back up its circumstantial case against Dotcom and Co in the extradition hearing scheduled to take place in August. Ultimately, the Supreme Court will get to decide whether the relatively sparse “record of the case” summary is sufficient – given our international commitments on extradition on one hand, and given Dotcom’s right to natural justice on the other, as set out in our Bill of Rights.

A few months ago, Werewolf reported on the extradition situation that Dotcom faces. Globally, extradition law is tilted in favour of the country asking for extradition. In this instance though, one hurdle for the US case for extradition is that the alleged offence at the core of the US government’s case – that of criminal secondary liability for copyright infringement – is a charge that has never been laid before. Moreover, to add the criminal dimension necessary to qualify Dotcom for extradition, the US will be invoking the UN Convention On Transnational Organised Crime. Doing so will require the US to make a credible comparison between Megaupload’s activities, and the likes of a Colombian drug lord peddling cocaine. That looks like quite a stretch.

No doubt, the US government will be presenting a stack of evidence against Dotcom and his Megaupload colleagues to make a prima facie case for the kind of liability hitherto restricted to civil proceedings. However diverting these kind of allegations may be – and however strongly Dotcom’s legal team contests them – such claims remain entirely irrelevant to an extradition hearing that is supposed to be focussed on criminal liability. Even when it comes down to civil liability, Dotcom and Co are arguably still protected by the so-called “safe harbour” provisions of the US Digital Millennium Copyright Act, which conditionally exempts service providers (such as Youtube) from being liable for the copyright infringing actions of their users.

Within the domain of criminality the nature of the offence, the evidential standard required, and the available defences are all totally different. Professor Jennifer Granick, head of the Centre for Internet and Society at Stanford Law School, hit this nail on the head last year in an article published less than a week after the raid on the Dotcom mansion took place:

As a matter of criminal law, the discussion of whether Megaupload did what it needed to do to qualify for the DMCA Safe Harbor misses the point. Did they register an agent? Did they have a repeat infringer policy? These are all interesting CIVIL questions. But from a criminal law perspective, the important question is – did Defendants BELIEVE they were covered by the Safe Harbor? This is because criminal infringement requires a showing of wilfulness. The view of the majority of Federal Courts is that “wilfulness” means a desire to violate a known legal duty, not merely the will to make copies.

In other words, for criminal liability, it doesn’t really matter whether the service qualifies, so long as Defendants believed it qualified. If so, they were not intentionally violating a known legal duty, and so their conduct would not satisfy the willfulness element of the offence.

Point being, the belief of criminality is crucial in criminal cases. If Dotcom believed that he was in compliance with the DMCA – if he thought that Megaupload’s structure and operational policies (such as its takedown system etc) were sufficient to earn him ‘safe harbour’ DMCA protection, then that’s effectively it, end of story. As a consequence, the US government would – or should – have a very uphill battle to prove criminal intent on his part. In which case, the extradition request should fail.

In many respects, the saga of Megaupload seems like the parable of the six blind men and the elephant. The moral of that story being: we see only what our point of view allows us to see, and nothing more. Viewed narrowly from the perspective of the US film studio and record company giants transfixed by the imminent demise of their old models of distribution, Megaupload probably looked solely like an evil machine for violating copyright, and for raking in money that the US entertainment industry felt would have otherwise come their way. It definitely wouldn’t have looked like a cloud storage provider whose operations served multiple functions and audiences. That tunnel vision has shaped the indictment at every point, and coloured the interpretation of every aspect of Megaupload’s structure and operations.

For his part, Dotcom appears to see himself as a victim of Hollywood studio machinations. Maybe he has been. But given Megaupload’s potential, he probably has had just as many corporate enemies outside Hollywood. Many US firms offering cloud storage facilities for instance, will have been more than delighted to see the US government home in one of their main foreign rivals in the global market for cloud storage, and wipe it off the map. Strangely enough, if you’re an American firm operating on the margins of legality, things get treated somewhat differently. The likes of Amazon and Google for instance, may pay only a shockingly nominal amounts of tax to the US government, but has that stopped the CIA from inviting Amazon to develop cloud storage capabilities on its behalf? Not at all.

Incidentally, the mega-profits that Dotcom and his associates were supposedly raking probably need to be kept in perspective, too. According to the US indictment, Megaupload grossed $175 million over the five years of its existence, with $25 million coming from online advertising, and $150 million from user fees. Those numbers are not to be sneezed at, but they should also be kept in proportion. Dotcom hasn’t condemned Hollywood to poverty row, exactly. In the course of Megaupload’s global operations, Dotcom’s business may have grossed $175 million over five years – but that’s still considerably less than the $202.7 million that Hollywood managed to rack up worldwide in just thirteen days, from Hangover III.

As things stand, the US government’s prosecution case against Dotcom and his associates is set out here.

No doubt, the Hollywood studios and US record companies could use this 72 page indictment to take civil proceedings against Dotcom (if they ever got their hands on him) but the evidence is thin to virtually non-existent when it comes to Megaupload’s alleged criminal behaviours. True, the indictment claims that Dotcom once personally forwarded a track called “ Nah” by the rapper 50 Cents to a colleague in December, 2005. (To most people however, that would constitute more of a crime against aesthetics, rather than a crime against intellectual property meriting extradition.)

From here on, this article will try and establish under US law, whether any valid residue of criminality exists that Dotcom might be expected to face. To that end, Werewolf carried out three separate interviews : with Kim Dotcom, with copyright expert Professor Eric Goldman of the Santa Clara University Law School and head of its High Tech Law Institute, and finally with Dotcom’s US lawyer Ira Rothken.

Oh, but you could well be thinking, c’mon man – all this is just nitpicking. Surely, Dotcom and Co knew that widespread copyright infringement was taking place via Megaupload, whatever its other roles as a cloud storage service for baby photos and business data etc might have been. Doesn’t the US government hold email evidence in which Dotcom’s staff either call themselves pirates, or ‘fess up to providing shipping facilities for pirates? These guys knew the score.

Well….but here’s the thing. Counter-intuitively, US law holds that the providers of Net facilities which even by dint of their web design or actions enable their customers to infringe copyright are still only civilly liable, at worst – and in many contested cases, are found to be not liable at all for whatever some of their customers get up to. In fact, the latest major US copyright ruling (from April 2013) on the long running Viacom vs Youtube case has pushed out the boat even further on civil liability. A link to that recent Viacom ruling and an insightful commentary on the decision can be found here, on Eric Goldman’s blog.

The relevance of Viacom to the Dotcom case being …Youtube employees had emailed each other to the effect that they knew that in general terms that a whole lot of copyright infringements were taking place on the site….but what the heck if its stealing, lets do more of it. Boy, did they ever. The comments gleaned from the Youtube internal emails and presented in court included the likes of :

“[We should grow] as aggressively as we can through whatever tactics, however evil.… [the site is] out of control with copyrighted material … [if we remove] the obviously copyright infringing stuff … site traffic [would] drop to maybe 20% … steal it!”

All such quotations were argued in court to have been taken out of context. More to the point, and under US law, such comments – on their face, far more damaging than the emails cited by the US government with respect to the Megaupload defendants – have been held not to disqualify the likes of Youtube from safe harbour protection. That protection remains available unless (a) the copyright owner asks the site to take down the infringing material, and the site refuses or is tardy in doing so, and (b) unless the service provider actively “participates” in the infringing activity with respect to the specific clips identified, and not merely in some general “who cares about copyright” displays of bad attitude. The legal obligation rests squarely on the copyright owner to seek and to ask for, takedown. There is no onus on the service provider to pre-emptively screen its content, or to go looking for potential infringements on their site. In his April 2013 ruling on the Viacom case, Judge Louis Stanton concluded :

There is no evidence that YouTube induced its users to submit infringing videos, provided its users with detailed instructions about what content to upload or edited their content, prescreened submissions for quality, steered users to infringing videos, or otherwise interacted with infringing users to a point where it might be said to have participated in their infringing activity.

With that in mind and over the course of these three interviews, Werewolf’s aim has been to :

(a) clarify the obligations on ISPs and cloud storage service providers in those civil cases of secondary copyright infringement that have borne the closest available similarity to the criminal charges that the US government is test driving against Dotcom

(b) establish from Dotcom’s lawyer Ira Rothken whether any of his clients personally engaged in copyright infringement

(c) get Rothken’s response to claims that the design and operations of Megaupload signal an intention to infringe copyright, to an extent that could qualify as “participation” in criminal activity. (For example I quizzed Rothken below about the so-called “MD5 hash” site feature – which the US indictment cites in detail (paras 22-24) to exemplify the allegedly sham nature of the site’s response to takedown requests.)

My apologies for the length of this q&a format. You may like to skip straight to the interview with Rothken. For starters though, here’s Werewolf’s interview with Professor Eric Goldman :

Campbell : Does the DMCA regard the pre-screening of content on a clip by clip basis for copyright infringement to be a practical impossibility, or simply as something that service providers are under no legal obligation to carry out ?

Goldman : The statute is very explicit about this. It says that safe harbours do not depend on a service provider monitoring a service or affirmatively seeking facts as to infringing activity. The statute is very clear on what Congress expected. Congress did not expect that to preserve a safe harbour you would be either manually or algorithmically looking for infringing activity. In fact, we have had some uncomfortable cases in the US which have suggested that if you go looking for problems, we are going to hold that against you. Some of the Viacom vs Youtube litigation suggests that. Some of it suggested that they [Youtube] had seen some stuff that looked like copyright infringing activity…and so obviously [they] should have dealt with that.

Dotcom claims that Megaupload’s takedown procedures were speedy and robust, and he also claims the site’s structure of inducements was created merely to attract and encourage customers, not to induce them to breach copyright. That seems relevant because Judge Stanton [in the Viacom case] said that to forego safe harbour protection, the defendant must either be tardy in the takedowns, or be seeking to influence and to participate in the infringements…

In reply, Goldman pointed out that Viacom was not the only case on the subject, nor perhaps the most important one . “The court held in the Columbia vs Fung case,” Goldman said by way of example, “ that the service provider knew of the problems well enough that the notice and takedown scheme was irrelevant. Therefore, the defendant couldn’t rely on the notice and takedown scheme…”

Campbell : ” OK. So, do cases like Fung [and Capitol Records vs MP3Tunes is another recent example] create a more pro-active role for the service provider?

Goldman : “We have cases that have done that. We also have cases that say the various structures the site creates can be imputed back to the website if they’re used for infringing purposes. Its not just pro-activity in terms of an obligation to monitor or to look for problems, but its also the way that the sites are designed. Some cases have been less generous to the defendant than the Viacom vs Youtube case. “

However, Goldman then made the same point previously made by Jennifer Granick – that these nuances of civil liability are basically irrelevant. “There are two reasons why it is irrelevant….There’s a structural problem in trying to hold a site liable for users activity criminally, given the nature of criminal copyright infringement. The other way to work around it is to say there’s this conspiracy, and that’s what the government allege – the ‘Mega-Conspiracy’– but the only way that works is that there is someone who committed a criminal copyright infringement act, which presumably would have to be someone like the users. If you’re going to go down that route, it takes the government to a dark place that says the users were criminally infringing and were in a conspiracy in order to infringe – and I’m not sure that is going to work.”

Right. Because for that to stand up, what would the evidential standards need to be?

Goldman : The [US] government has to prove every element of the crime beyond a reasonable doubt. It has to break down the elements of the crime – and then has to show each element with enough evidence that’s there’s a finding beyond a reasonable doubt that the activities occurred. The evidentiary standard is extremely high. Now, we almost never see the government tested on this – because most defendants don’t fight back against the government. They settle up, and do a plea bargain. We rarely see the kind of challenges that we’re seeing here because Kim Dotcom has the wherewithal and the moxie to fight back, when most defendants simply don’t. So, we have seen the government succeed [before] with those theories because the defendants simply haven’t been willing to fight it..

Supposedly, in the New Zealand court, an extradition hearing will need to establish whether a prima facie case exists sufficient to justify extradition. The first problem for the US government is whether an offence of criminal contributory secondary copyright infringement actually exists. The second hurdle, in establishing a prima facie case, is that even within the ambit of merely civil proceedings, there is currently a wide range of rulings on the extent of the obligations placed on the service provider. Given all of that, what do you think the main elements of a valid prima facie criminal case against Dotcom could possibly be?

Goldman : There is a problem of overlaying criminal copyright infringement on top of a secondary infringement claim, and arguing that the website is liable because of what its users did. The other layer that is difficult is that criminal copyright infringement requires wilful activity. And in my opinion the wilfulness applies to every element of the crime…Wilfulness is normally supposed to be recklessness or knowledge or intent. Not negligence or strict liability. So wilfulness in this context means the criminals had to wilfully infringe the copyright. They had to know there was a copyright and had to be either reckless about infringing it, or knowing they were infringing it or intending to infringe it. As a practical matter with wilfulness and getting into a criminal copyright context, this is a very high expectation. The government can’t win simply by saying well, they kind of knew..”

Especially when that extensive email evidence among Youtube employees of their knowledge that copyright infringement was occurring on their site – and to some extent, was even to be encouraged – still didn’t deny safe harbour protection to Youtube.

Goldman : Right. And that was a civil case. So in a criminal case, the government’s obligation is much higher than even what Judge Stanton was addressing in the civil context. So the knowledge and understanding of criminal behaviour on Kim Dotcom’s part is very high. And if the government can’t show that, the case will fail. Now take this back to the question you’ve been driving at. If Kim Dotcom subjectively believed that Megaupload complied with the obligations of the safe harbour he lacks the willfulness to be considered a criminal copyright infringer. “

And presumably, Dotcom can adduce evidence that his subjective conclusion was a reasonable one?

Goldman : “Reasonable” and “subjective” shouldn’t go together. ‘Subjective’ is what you believe. “Objective” is what a reasonable person would believe. Even if its a subjective standard we can still say but within that person’s world view, was it reasonable? And I think we have plenty of evidence [that it was] in the Kim Dotcom case. Whether or not a third party would agree with him, within his worldview and within what he knew about the law, he thought he was complying with the law. And that should be the end of the case, actually. That eliminates one of the elements that the government must prove beyond a reasonable doubt: that he wilfully infringed. They can’t do that if he thought he was complying with the safe harbour, and that he thought he was taking all these steps to comply with the safe harbour. The wilfulness standard is a huge structural hurdle for the government’s case. With the Viacom case, the wilfulness issue was in a civil context, where the legal standards and evidential proof were lighter.

Ultimately, the New Zealand extradition hearing will have to establish prima facie evidence on two counts – one, that there was criminal intent and actions involved in the copyright infringement, and secondly, that these activities were akin to drug trafficking or terrorism, sufficient to meet the evidential standard required under the UN Convention on Organised Transnational Crime, right?

Goodman : “You’re not missing anything. For all the hype and hoopla, this case is a very difficult case for the US to win. The government normally doesn’t have to worry about that. Most of the defendants just roll over because they don’t have the money or the fortitude to stand up to the might of the Department of Justice. We’re going to get answers to things we don’t normally get answered in court. Because we actually have someone willing to fight back against the government’s innuendo.”

However, Goldman had one last important point to make. Dotcom, he says, may well be able to assert the lack of wilfulness as a defence to the criminal copyright infringement prosecution. Yet if he personally uploaded copyrighted files, he could still be sunk. The safe harbour provisions would be irrelevant. “My initial assessment of the case – my concern was that he’s going to win on the main claims against him, but even if he has carried out stray uploads here or there, then he might end up losing on those stray issues. That could be a potentially serious matter for him. The White Paper manifesto that he put out doesn’t mention any of that. Frankly, at least in the materials I’ve been reading recently, I haven’t seen the government pressing that point, or making it as prominently as I might have expected.”

The factual question, Goldman says, is did Dotcom do any illegal uploads? In the Capitol vs MP3Tunes civil case, Goldman adds, which involved [pictured left] Internet impresario Michael Robertson’s most recent attempt to relaunch a website, the plaintiffs hammered Robertson on his own personal uploading and downloading activity. [Allegedly, there were 49 instances.] “The number of defences, and the strength of those defences is weaker. Individual uploading activity is a back door way to get somebody on the hook who normally would be ignored…”

Kim Dotcom was interviewed by Werewolf at his Coatesville mansion on May 14.

Campbell : In your view, were the payments made through Megaupload an inducement for users to copyright infringe ? I’m talking about the payments, the premium service….

Dotcom : You are talking about the rewards programme. Premium is what our customers paid to have more services available – more storage, more bandwidth. Rewards were similar to the one Youtube has, where we reward people to upload popular content. Now popular content doesn’t mean copyright infringing content. It means content that is popular.

Let me say what we have done to ensure the rewards programme is the opposite of inducing. Number one, we have only made the rewards programme available to premium customers of our site. Meaning : we had their payment details, we knew who they were and they knew that we knew who they were – so if they did anything wrong, it would be an easy trace back to them. All other sites provide rewards programmes even to anonymous users. We didn’t do that.

The other limitation that we had was no file larger than 100 megabytes world would earn any rewards. OK? So, no movies. So, for Hollywood to come out and say we induce movie piracy and people uploading movies to our site to earn these rewards is wrong.

So you’re saying these were ways of growing the business, rather than inducements to criminal behaviour?

Dotcom : Of course. Its like a frequent flyer programme. You earn air miles. Or at your fuel station, if you fuel with BP you get more points, you get a kickback. But there’s another important thing. When you signed up for the reward programme, the rule at the very top – the first reward rule, was that you cannot upload anything that you do not own the rights to. You cannot upload copyright infringing material. So it was part of the terms of service, it was part of the reward rules.

The US government’s contention was that your take down provisions were a sham – that they were merely a token concession to qualify you for the safe harbour DMCA provisions.

Nonsense. We have taken down 15 million things that were reported to us… We have every takedown notice, and we have the database and we can show that the takedown notices that we have received. The links were taken down. So they don’t have anything to show that we have not acted on takedown notices. Like I said before, we went further than just reacting to takedown notices. We gave [assistance to] content owners a very large number of significant content companies directly accessed to our system – so that they could take down links to infringing material. So if they found something on Google – say Microsoft found the latest copy of Windows…– they could take that link, paste it to our site and without interacting with us, without us getting involved, the link would disappear. Immediately. And the file would not be available via that link.

In the Viacom ruling in April – and leaving aside the legal arguments for a moment – the very scale of the Youtube traffic [where 24 hours of material was being uploaded every minute] was regarded as being a practical barrier to pre-emptively monitoring and deleting copyrighted material. Can you give me some indication of the normal scale of traffic on Megaupload ?

We had 48, 000 files transactions completed every minute. 800 a second. OK? You would need an army of over 1,000 people to sift through and police that. And there’s no requirement in law that a service provider should do any policing at all.

The safe harbour protections that Youtube enjoys have just been re-affirmed by the US courts. From your perspective, what’s the main relevance of the latest Viacom vs Youtube ruling ?

It is important because Youtube was basically facing the same allegations that are being brought against us in our criminal case – with them, in a civil case. And they have won it in the civil case and the safe harbour was up-held for Youtube as a service provider. And the judge made some very significant rulings. [Such as] even if you have general knowledge of infringement, and even if you welcome it, you are still protected by the safe harbour provisions of the DMCA. In our case, those same rules apply.

In that Viacom case, the email evidence [of knowledge that copyright infringing was occurring] was far more damning. In your case, we know about the “ pirates” email. To your knowledge, do the prosecutors have anything more substantial to indicate criminal intent?

The simple answer is : there is none, because there never has been a criminal conspiracy. That email saying “Aren’t we modern day pirates” and the reply from Mathias [Ortmann – pictured left] that “No, we’re just providing shipping services to pirates was a joke, OK? Not to be taken seriously.

Especially since in the Youtube case, the judge underlined that context had to be considered with this kind of email evidence.

And here, the context for the joke was – Bram [van der Kolk] the same day had watched a documentary called Pirates of the Silicon Valley which is a documentary about Steve Jobs and Bill Gates, and how they stole their ideas from everybody else. And Bram was so excited about that, he sent that email to Mathias making a joke about it. Once you understand that connection, it is totally harmless. All those other emails they put in there – taken out of context – when you read the whole email and read the other bits they left out that are not in the indictment, they are actually exonerating.

The Court of Appeal made quite an issue out of you not providing it with an affidavit detailing the damage you would suffer if you didn’t get access to the evidence you’ve been seeking. Why didn’t you do so?

I think it was in our submissions to the court. In] how this is affecting our BORA [Bill of Rights Act] rights in New Zealand. And it is BORA….that is our primary argument to get discovery. That’s what we taking to the [New Zealand] Supreme Court now.

Ultimately, and I’m using some of the wording of the Viacom ruling – are you saying you didn’t interact with infringing users such that it could be said that you encouraged or participated in their [infringing] activity?

No. And let me be clear. I’m never been in touch with any person who has uploaded infringing material to Megaupload and asked anybody to please upload anything [that is] infringing. I’ve never done that, or dealt with any linking sites that were providing links to infringing material. At one point I received an email from a very popular linking site called Pirates Tube where I was aware they had, every now and then, infringing content on their site. And when they contacted us to ask for some kind of payment, I threatened them with legal action and said please remove all Megaupload links from your site. There’s an email that the US prosecutors have, that says : ‘Hey guys we don’t want to work with you because you are posting infringing links to your site, And we don’t like that.’

For extradition purposes, you seem to be being pursued through the UN Convention on Organised Transnational Crime

That’s exactly what they are having to use for the extradition. Because copyright itself would be problematic. This whole thing is about the treaty against transnational crime. That’s what this whole case is, in New Zealand, so that they can extradite us for the conspiracy – if they can prove the conspiracy. But under the current [NZ Extradition]Act, my understanding is that if they just make an allegation, its good enough.

And that’s exactly the problem. That’s exactly why [District Court] Judge Harvey ruled, and [High Court] Judge Helen Winkelman ruled, that we need to have discovery. Because we need to see that this is accurate. Because the case itself is of such a novel nature. Everyone here in the judiciary who has had a look at it has just been shaking their heads – how can you do this? It is an adventure in which they’re abusing the UN treaty.

Right. And since it is such a circumstantial case, you would presumably be arguing that it is necessary for the reasoning behind the analytical stepping stones that the US is using, to be revealed well beforehand?

Here’s the thing, you know. We have two governments here which are the real conspiracy – the US government and the NZ government – that want us gone. They want us on a plane to the US, and they will do everything in their power to make that happen. When you are dealing with a Prime Minister and Justice Minister and everyone in his Cabinet who are all working together – including the Attorney-General – to try and get us out of here, and get us over to the US – there is a good chance they might get away with it. Simply because of the power that is involved. This is not a normal legal case. This is a very political case. And in a political case, anything can happen.

Ultimately, the thornier legal questions were for Dotcom’s lawyer Ira Rothken to answer. He was interviewed by Werewolf on June 4th, on a fairly dodgy phone line to California.

Campbell : Your clients are charged with criminal conspiracy. So far, what evidence has the US government produced of criminality – and I ask that because obviously, wouldn’t most of what has been produced so far create, at worst, only civil liability?

Rothken : They have produced no evidence on anything. Because all they’ve done so far is [make] allegations…Having said that, the indictment fails to state a criminal claim in a competent fashion against the defendants. We’ve articulated that in our [unintelligible] filings last year in the United States which requested the unfreezing of monies for attorneys fees, which the court has deferred on. And as part of our argument there, we indicated that money shouldn’t be frozen because the indictment has not essentially laid out the criminal claim that would justify freezing assets.

So to assert criminality in any meaningful way and to justify the subsequent freezing of assets…wouldn’t that require prima facie evidence sufficient to indicate that these claims could credibly be taken to trial?

Well, we don’t believe there is a prima facie case. And we also don’t believe they will ever be able to show proof beyond a reasonable doubt.

From your side of the fence, is there any aspect of the design of Megaupload that supports a claim of criminal intent?

No, both legally and factually. Factually no, because Megaupload was designed on a copyright-agnostic manner. It has copyright-agnostic algorithms, it basically has a feature set that is consistent with standards in the industry [such] that if you were to say to somebody in the industry – how would you go about designing a current cloud storage site, they would include the features of Megaupload. Just like Dropbox and Google have done. For example : a user signs up and gets an account. They can upload files. Files that can generate what we call a ‘deep url’ or ‘deep link.’ If they choose to share that deep link with someone, now they’re involved in file sharing – and if they don’t, that deep link serves as a de facto password because the url is so long and so cryptic that it acts as a very potent password.

OK. But lets take a specific example. The indictment cites [at para 22-24] the “MD5 hash” tool as one allegedly heinous aspect of the design of Megaupload. Put simply, this meant that duplicated links to infringing material were not disclosed to the copyright holder, and were not automatically deleted – thus rendering the takedown procedures deliberately ineffective. Do you accept that analysis of this aspect of the site’s structure?

No. And again, both factually and legally, no. In terms of MD5 hash, that’s the standard in the cloud storage industry for optimalisation of storage by de-duplication. And de-duplication is a very common technology where if each file has a hash associated with it, and if multiple people end up wanting to upload the same file, you only keep one instance of it and use pointers to let people access that one instance. From their point of view, its stored in their own private silo.

Maybe so, but the claim from the indictment is that this multiplicity of paths to that one file puts an unreasonable and impossible burden on the copyright holder to gain effective takedown –

That theory is illogical on its face. Because in order to determine copyright infringement you have to know more than just the file – you have to know context. So for example, one person backing up their hard drive to the cloud and say, storing Microsoft Word.exe might be different from somebody else getting a pirated version. In each context it’s the same file – but in one context it may be infringing, and in another, it isn’t. You also have geographic ambiguity. Something may be authorised in one particular geographic location and not in another. You have authorisational ambiguity because one person may have bought an MP3 file through Amazon and another person may not have. So an ISP is not [to be put] in the position to dis-ambiguate that, at least under US law. They don’t have an obligation to do that kind of ad hoc investigation, especially over millions of users and files.

Right. And most of the litigation seems pretty clear that there is no pro-active, pre-emptive onus on the service provider. As you say, there would be a dis-ambiguation process in this [MD5 hash] instance that would have to entail a high degree of pro-activity by the provider [with respect to all the other urls leading to the disputed file ]

Dis-ambiguation would be impossible. Because you would have to know [the context] in many instances. And everything is copyrightable, once it is reduced to a tangible form….

So there’s no one size fits all urls solution, for takedown purposes?

It is not a valid argument.

OK, but here’s the major leg of the case when it comes to criminality. In copyright cases, criminality has to do with the behaviour of users, and not of the hosts. In the indictment Kim Dotcom is alleged to have personally shared that 50 Cent track [called “Nah”] and the indictment also alleges criminal behaviour with respect to the site’s treatment of the film Taken. Are both those allegations factually wrong?

We believe they’re factually wrong. And more importantly..in the right time and place, we’ll make our argument in court on those issues.

So at this point you’re saying – that in this case, none of your clients engaged in any personal copyright infringement?

We don’t believe that any of the defendants in this case engaged in any copyright infringement. And at the appropriate time and place in court, we will make those arguments.

Right. But I’d be grateful for a steer on your thinking about a relevant related point. If allegations of personal copyright abuse do appear within the US government’s record-of-the-case summary, could this alone trigger an extradition order? Do you think that would be a proportionate response for a New Zealand court to take?

Ask me that question again.

Leaving aside the factual status of this particular allegation, I’m trying to gauge its potential weight in an extradition context. Could the presiding judge choose to set all this other stuff to one side, and focus only on the personal abuse of copyright?

I’ll answer that. Under the [unintelligible] status of the US/NZ Extradition Treaty, the answer is no, for a number of reasons. Here are some of them : copyright infringement is not an extraditable offence under that Treaty. So if they want to allege copyright [offending by Dotcom and Co. personally] then there’s not going to be an extradition under that Treaty, Secondly, if they want to concoct a view, a conspiracy theory …like a transational organised crime, as a way to bypass the US/NZ Extradition Treaty, then one-off alleged copyright infringement allegations are not enough to show a conspiracy, or transational organised crime. If that were the case, most folks who access the Internet would be involved in committing such alleged crimes. Thirdly, just because you allege that Kim was involved in personal copying, you’ve got to ask whether it rises to the standard of wilfulness. And proof beyond reasonable doubt that would be needed [unintelligible] to count as a crime…

But my concern is that if they want to burrow on down and ask – well, where do criminal actions clearly reside in the matters before the court? Answer : in the actions of a user. Oh, he transferred one track? OK, that’s regarded as criminal, there’s an arguable prima facie case here, so lets extradite him purely on that basis. And that would be consistent with the situation in Europe where Poland is asking for people to be extradited from the UK for stealing a pudding or rustling a piglet. The point being, proportionality seems to have gone right out the window when it comes to extradition.

I would have to say Gordon, that first I’d be looking at the notion that copyright infringement is not an extraditable offence, and then I’d be looking to the notion that one would never allege a transnational organised crime, and then Balkanise one–off alleged infringements. And then I would be looking at proportionality. I think an extradition would be wholly inappropriate – when a country takes down an entire cloud storage site, raises an allegation of criminal copyright infringement, raids a family with children including a pregnant woman and kicks her out of her house…and THEN they come to court with three Balkanised copyright infringements and want to use that to put one over on the court? My guess would be the court would not ever entertain such [unintelligible] claims, given the histrionics that went on by the government here.

According to Dotcom, Megaupload had a size-of-file restriction that effectively prevented films from being hosted there, and yet the indictment refers, amidst its allegations, to the hosting of the film Taken. Can you square those two things?

The answer for now will be that there was a 100 megabyte limit on file size and in terms of the specific [unintelligible] of the evidence, we’ll make that argument in court at the appropriate time. Certainly if you’re looking at it from Kim Dotcom’s perspective, Kim Dotcom has no relationship to the movie Taken whatsoever. And there’s no allegation that he knew about or had anything to do with that. Certainly, there’s [insufficient?] in the allegations to make out a case for wilful copyright infringement…We believe that the evidence is very weak, and at the appropriate time we’ll show that to the court.

As things stand, the criminal conspiracy allegations rely on the US being able to invoke the UN Convention in Transational Organised Crime – which would seem to put Mr Dotcom on the same footing as a Colombian drug lord. Given the potential for abuse of the UN Convention in this instance, do we know what standard of evidence is required before that Convention can be validly invoked?

I’m not going to go into the specific nuances here of our defence strategy on that point. I will acknowledge to you that this is a case of first impression [ie an untried type of proceeding] particularly when a cloud storage or Internet Service Provider is involved. And its also a case of first impression in New Zealand on an attempt by a government to use such a UN-type of Treaty. Having said that, [under] the Transnational Organised Crime Treaty…we have reason to believe that ISPs and cloud storage sites like Megaupload have been singled out as having a greater amount of protection against government over-reach trying to concoct a crime, and using the Transnational Organised Crime charter….There is a bias against finding ISPs [criminally] liable under such a Treaty.

Overall, this looks like an attempt by the US to impose its laws on Internet users worldwide. Should New Zealand be regarding the Dotcom case as a violation of its sovereignty?

For a variety of reasons, yes. I think the United States coming to New Zealand and submitting themselves to the machinery of the New Zealand courts to try and extradite Kim Dotcom and others – and then violating New Zealand law by secreting data offshore without authorisation, and then not returning it when they’d been advised of that violation…That, I think, is an encroachment of New Zealand’s sovereignty, and a lack of respect for New Zealand’s sovereignty. I think the misguided nature of the United States leaning on New Zealand to do a raid with helicopters against a family with children in a non-violent case – on a first impression case to do with copyright – is an infringement by the United States on New Zealand’s sovereignty.

Finally on this point, most of the actions alleged to involve copyright infringement via Megaupload occurred outside the United States, by people who are not US citizens. At best, only some of the equipment used has a tenuous link to the US, and some of the aggrieved corporates are US firms. In cases of copyright infringement, has the US Congress ever given any indication that it thinks US copyright law should have this kind of extra-territorial reach?

Copyright law on a number of decisions….one of which we cite and which you can find on Google, is called Suba Films. It was a civil case, but it still would apply in this criminal context because it’s a procedural, jurisdictional case. In that case, the court said that US copyright law does not apply outside the United States. About 85-90% of all the traffic to Megaupload was outside the United States. Megaupload had a huge server farm in the Netherlands, in Amsterdam, and that was taken offline as well.

It was all taken down, even though 90 % of the traffic was completely foreign. Therefore, it is easy to deduce that a huge amount of traffic was being carried extra-territorially, and not on US servers. Therefore, it couldn’t be involved in copying to and from US servers – because Megaupload, like any other cloud storage provider, would direct folks from the European Union to the EU servers. And yet all those servers were taken down. Even though they could never, ever, ever be said to be infringing under US law.

To summarise then… Your argument on jurisdiction seems to be that (a) due process under US law wasn’t followed, and at best will only be carried out retro-actively, once and if Dotcom is ever gotten onto US soil and (b) that the US Congress has indicated that if extra-territorial jurisdiction isn’t expressly indicated, which it isn’t under the relevant legislation, then it doesn’t apply. For those reasons, are you saying the US lacks proper jurisdiction in this case?

It goes beyond Congress saying that US law shouldn’t apply extra-territorially. The courts have interpreted the statute to say that. The Suba Films case is very clear on that.

ENDS

Finally, like DFW, we have footnotes :

1.The timetable from here? The extradition hearings were originally set for August. However, the NZ Supreme Court has just granted leave for Dotcom to appeal the March 1st Court of Appeal ruling on what the US needs to supply as evidence for that hearing. That Supreme Court appeal will begin in July. A tentative date has been re-set for an extradition hearing in November of this year. This seems optimistic, given it took the Court of Appeal six months to write its own decision, and a far more complex task now faces the Supreme Court. The other tentative date for the extradition hearing (April 2014) looks more realistic, but will still be tight. Thankfully, the re-scheduling means that Judge Helen Winkelman’s latest High Court ruling (requiring the US to return to Dotcom copies of the evidence seized) will at least enable the Dotcom legal team to mount a defence.

2. To fund his defence, Dotcom is going to need to have his US assets unfrozen. While there is a public perception that he has unlimited funds, this is probably inaccurate.

3. Does knowing that some copyright is going on in your operation amount to liability? As the main article says, not even civil liability, much less criminal liability flows from such knowledge. Parts of Judge Stanton’s April judgement in Viacom vs Youtube seem relevant to Dotrcom’s situation. eg :

YouTube’s decisions to restrict its monitoring efforts to certain groups of infringing clips, like its decisions “to restrict access to its proprietary search mechanisms,” do not exclude it from the safe harbor, regardless of their motivation. Plaintiffs’ remaining evidence of control goes no further than the normal functioning of any service provider, and shows neither participation in, nor coercion of, user infringement activity.

And moreover :

The governing principle must remain clear: knowledge of the prevalence of infringing activity, and welcoming it, does not itself forfeit the safe harbour. To forfeit that, the provider must influence or participate in the infringement.

5. A cluster of cases have introduced concepts such as ‘wilful blindness’ that impinge on safe harbour protections. These include the 2011 Global Tech patent case in the US Supreme Court, and the Fung and MP3Tunes copyright cases. (In Fung, the defendant seems to have been actively engaged in urging and participating in copyright infringement.)

4.Almost everything the US government has cited as evidence that Megaupload’s structure and operations were criminally intended to facilitate copyright infringement get a mention in the Viacom ruling, but were found to fall below the threshold of civil liability, much less criminal liability. Judge Stanton cites these allegedly heinous mechanisms at pages 11 –18 of his ruling, before reaching conclusions at pages 18-20 that seem to fit the circumstances of Megaupload pretty closely as well :

During the period relevant to this litigation, the record establishes that YouTube influenced its users by exercising its right not to monitor its service for infringements, by enforcing basic rules regarding content (such as limitations on violent, sexual or hate material) , by facilitating access to all user stored material regardless (and without actual or constructive knowledge) of whether it was infringing, and by monitoring its site for some infringing material, and assisting some content owners in their efforts to

do the same.

There is no evidence that YouTube induced its users to submit infringing videos, provided users with detailed instructions about what content to upload or edited their content, prescreened submissions for quality, steered users to infringing videos, or otherwise interacted with infringing users to a point where it might be said to have participated in their infringing activity.’

As Goldman indicated at the time on his blog, other US courts may differ in future on the extent of responsibility and control that can be laid at the door of service providers. Even so, our Supreme Court needs to take on board that this most recent major US court ruling on copyright infringement puts daylight between service providers and civil liability, and leaves sites such as Megaupload a whole country mile away from criminal liability.