Source: http://www.copyhype.com/2013/05/do-kim-dotcoms-lawyers-think-hes-guilty-the-answer-may-shock-you/
Timestamp: 2019-04-26 00:38:49+00:00

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Do Kim Dotcom’s lawyers think he’s guilty? The answer may shock you.
posted May 08, 2013 by Terry Hart.
In a new “white paper” released today, Kim Dotcom’s lawyers come to the surprising conclusion that Kim Dotcom is not guilty.
Taking your case to the court of public opinion could be a sign that your case in a court of law is not going well. But ever since the US government charged Kim Dotcom, 6 other defendants, and 2 companies, including Megaupload, for charges relating to massive copyright infringement in January 2012, Dotcom has been on a full court press to convince the public that multi-millionaries (like him) should be allowed to rip off working class creators (like Ellen Seidler). 1A study released in March demonstrated that the Megaupload shutdown caused a 6-10% increase in digital film revenues, revenues that not only help fund the continued creation of films but also that directly go to union members in the form of residuals. The latest move is the “white paper”, titled Megaupload, the Copyright Lobby, and the Future of Digital Rights (with the self-aggrandizing subtitle, “The United States vs. You (and Kim Dotcom)”). Part of this public relations campaign has involved an attempt to characterize Dotcom as some kind of hacker hero — the white paper places Dotcom in the same pantheon as Steve Jobs and Steve Wozniak. Really? Kim Dotcom is to hacking what the 1995 movie Hackers is to hacking.
But what about the legal arguments presented in the paper?
The citations to case law may lead the casual reader to the conclusion that there are valid legal arguments within the paper. But for the most part, the arguments are legal sleight of hand, a series of court quotes that, while true, are inapplicable and immaterial to the point being argued. There is little here that Dotcom hasn’t argued in public or in court (unsuccessfully, so far) before.
The basic premise of this argument is that in the civil context, liability for indirect infringement derives from the common law, not the Copyright Act. Since criminal law as a rule derives entirely from statute, there can be no criminal liability for indirect infringement.
This argument is a red herring.
First, Dotcom and the Megaupload defendants simply are not being charged under any of the tort-based indirect liability standards — which include contributory infringement, vicarious liability, and inducement. They are being charged with direct infringement, aiding and abetting infringement, and conspiracy to commit infringement. 3See Superseding Indictment. The latter two could be considered forms of secondary liability, but they are criminal, not tort forms, and they are provided for by statute.
Next, the white paper wholly skips over the fact that Dotcom has been charged with two counts of direct criminal copyright infringement. Among the allegations supporting these charges is at least one instance where one of the defendants himself uploaded an infringing copy of a film that had not been commercially released yet to Megaupload. 4Superseding Indictment, pg. 44.
But the indictment also alleges multiple instances where copyrighted works were made available to the public through the Megaupload sites. Many courts, and the leading copyright treatise, view making a work available to the public as an infringement of the distribution right. 5See Nimmer Changes his Tune: “Making Available” is Distribution.
Drawing all reasonable inferences in Perfect 10’s favor, Megaupload serves as more than a passive conduit, and more than a mere “file storage” company: it has created distinct websites, presumably in an effort to streamline users’ access to different types of media (e.g., megaporn.com, megavideo.com); it encourages and, in some cases pays, its users to upload vast amounts of popular media through its Rewards Programs; it disseminates URLs for various files throughout the internet; it provides payouts to affiliate websites who maintain a catalogue of all available files; and last, at a minimum, it is plausibly aware of the ongoing, rampant infringement taking place on its websites. Taken together, Perfect 10 has adequately alleged Megaupload has engaged in volitional conduct sufficient to hold it liable for direct infringement. [Emphasis added].
The White Paper next argues that “the U.S. government cannot even argue that the conduct of Megaupload and its executives gives rise to civil liability for secondary infringement, much less criminal liability” under the Supreme Court’s 1984 holding in Sony Corp v. Universal City Studios. The problem with this argument is that it has thoroughly and repeatedly been rejected by courts in cases involving similar services.
Other courts have pointed out that Sony only applies if you’re focusing on liability for the design of a product rather than conduct 8Perfect 10 v. Amazon, 508 F. 3d 1146, 1171 (9th Cir. 2007). or if there is no continuing relationship between the maker of a product and the user. 9CoStar Group v. Loopnet, 164 F. Supp. 2d 688, 697 (D. Md. 2001). But whatever the case, the fact remains that courts have consistently found Sony inapplicable to online service providers like Megaupload for over a decade. It’s telling that this was the strongest argument the white paper could muster.
Next, the white paper says that the argument that its rewards program encouraged or contributed to infringement is a “glaring falsehood.” Megaupload claims that its program that paid uploaders depending on the popularity of the files they uploaded didn’t encourage infringement because someone’s family photos could just as likely be as popular as a copy of the latest blockbuster film. That’s silly.
Tellingly, in its motion to dismiss, Megaupload does not dispute Perfect 10’s allegation that it induces, causes, or materially contributes to infringing conduct. Nor could it, given the allegations that Megaupload encourages, and in some cases, pays its users to upload vast amounts of popular media through its Rewards Programs, disseminates URLs that provide access to such media, and has provided payouts to affiliates who catalogue the URLs for all available media.
The white paper finally argues that Megaupload should not be liable for the massive infringement it caused and contributed to because it is eligible for safe harbor under the DMCA. That begs the question that DMCA safe harbors are even available for criminal defendants — I’ve written previously that the language of the statute doesn’t support such a conclusion. What’s more, even in the unlikely case a court finds that safe harbors are available in the criminal context, it is difficult to see the service being able to show it complied with the statute’s requirements that protect good-faith, passive service providers. 10See, for example, Megaupload, the DMCA and Lockers in General; Megaupload’s DMCA Shell Games; Why Megaupload Doesn’t Have a DMCA Shelter.
The white paper next turns from making substantive arguments to procedural arguments. It argues that “U.S. federal court lacks jurisdiction over Megaupload” because it “is a wholly foreign corporation; it is not incorporated in the United States, and it has no agents or offices in the United States.” Chief among the support for this argument is that the U.S. cannot serve Megaupload under Rule 4 of the Federal Rules of Criminal Procedure.
Note how this argument begins with such a broad statement about a lack of jurisdiction but ends up being really about a minor procedural point. Note too that this argument has no impact on the case against Kim Dotcom himself, his holding company, or any of the other personal defendants. This argument only involves the corporate entity of Megaupload Limited. So the suggestion that we should be concerned about some breach of the rule of law is a bit disingenuous. The dismissal of charges against Megaupload would have little effect on the case against the other defendants except that it might free up assets to pay for the defendants’ attorneys (and even that is not a foregone conclusion).
Last July, I briefly looked at this argument; its substance has evolved very little since then. Megaupload essentially takes the position that corporations who operate within the United States and violate U.S. laws should get a free pass so long as they don’t have a mailbox in the U.S. Note that this argument isn’t limited to criminal copyright laws — corporations would be able to commit financial crimes, environmental crimes, fraud, and more with impunity. This result defies common sense and the rule of law — I’d imagine quite a few people would disagree with Megaupload’s argument that corporations deserve a free pass from obeying the law.
This hasn’t prevented Megaupload from continuing to make the argument in court, despite the fact that less than two months ago, a court in the very same district rejected the idea that the mailing requirement in Rule 4 is a jurisdictional requirement. 12United States v. Kolon Industries, 2013 WL 682896, *5–6 (ED Va. Feb. 22, 2013). So now Megaupload persists in making the argument in its white paper here.
The remaining claims made in the white paper follow the same pattern as those discussed above, full of red herrings, already rejected arguments, and faulty logic. No doubt that matters little to those who worship Dotcom as a hero, buying completely into his celebrity-esque posturing.
1. ↑ A study released in March demonstrated that the Megaupload shutdown caused a 6-10% increase in digital film revenues, revenues that not only help fund the continued creation of films but also that directly go to union members in the form of residuals.
3. ↑ See Superseding Indictment.
4. ↑ Superseding Indictment, pg. 44.
5. ↑ See Nimmer Changes his Tune: “Making Available” is Distribution.
8. ↑ Perfect 10 v. Amazon, 508 F. 3d 1146, 1171 (9th Cir. 2007).
9. ↑ CoStar Group v. Loopnet, 164 F. Supp. 2d 688, 697 (D. Md. 2001).
10. ↑ See, for example, Megaupload, the DMCA and Lockers in General; Megaupload’s DMCA Shell Games; Why Megaupload Doesn’t Have a DMCA Shelter.
12. ↑ United States v. Kolon Industries, 2013 WL 682896, *5–6 (ED Va. Feb. 22, 2013).
Here’s my issue with Kim Dotcom. Even if you agree with what he’s saying, with the arguments he’s making and his views on how copyright does/should work, he’s the worst person in the world to put forward those arguments.
Putting aside his criminal background, his flamboyant lifestyle and the fact that he did get very rich off a service that made much of its money off of piracy, his theatrics, melodrama and, at times, outright hysterics, are off putting to all but the most faithful to him.
Much like Jammie Thomas, the file sharing movement keeps finding the worst people to represent it in the public eye. While the pro-copyright crowd has their kooks too (Prenda Law anyone?) they’re hardly leaders.
My favorite line: “It’s possible that some readers of this publication may not like the larger-than-life excesses of Kim Dotcom, or alternatively, they may not understand him.” I’d say that the vast majority of that particular audience revere his “larger-than-life excesses” and “understand him” quite well. He’s preaching to the choir.
As is its modus operandi, the site Techdirt has once more penned a screed concerning the brief being filed in the court of public opinion. Of course, comments are all too predictable, almost lemming-like if you will.
When “briefs” are filed in the court of public opinion, almost always it means that a positive reception before a court of law is not a likely outcome.
I find it personally reassuring that on occasion some dare to challenge the group think prevalent there.
entirely right. This actually made my day.

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