On January 19th, the United States Department of Justice seized and shut down Megaupload and its sister sites. After protests successfully ended SOPA, PIPA, and the threat of squelching information online, the federal government exercised a power that the would-be bills were supposed to grant to the government. As a result of the site’s shutdown and what was considered to be a total breach of power, the hacking entity Anonymous retaliated against not only the DOJ, but also Universal Music Group, the Recording Industry of America, and the Motion Picture Association of America. How was the government able to do this? What might happen to Megaupload and its executives when they are taken to court?

While it isn’t as explicitly written as in SOPA and PIPA, it turns out the government already had the power to shutdown websites, as explained in a Salon article from Glenn Greenwald [link]. Thanks to the boringly-named 2008 Prioritizing Resources and Organization for Intellectual Property (PRO-IP) Act and forfeiture laws typically applied to accused drug dealers, the U.S. DOJ was able to file warrants for arrests and searches in New Zealand and for the seizure of assets both there and in Hong Kong, the location of the Megaupload company. All it took was allegations that the company was hosting pirated material on leased servers in Virginia. Greenwald makes a connection to the recent stink over the National Defense Authorization Act (NDAA), which was criticized for allowing the military to imprison anyone considered a “Terrorist.” Greenwald says that in this case as well, it’s a power the government already had and asserted. Therefore, the only real difference between having bills such as NDAA and SOPA pass is that they codify that power, or state it more explicitly in federal law.

So, while it seems extreme, the seizure of Megaupload was a legitimate undertaking. The site will be shut down for the foreseeable future and its execs will have their day in court. According to the 72-page indictment [link], the comically dubbed “Mega Conspiracy” is accused of hosting pirated material that cost content industries over $500 million in lost revenue. We already know that Bob Bennett will defend Megaupload and its executives in court [link]. He’s most famously known for defending Bill Clinton during the Monica Lewinsky scandal.

It could be a very long time before we see any proceedings on this case, though. The Associated Press points out that before they can face a judge in the United States, the execs must be extradited, which could take up to a year [link]. But could we already look ahead at what this case might contain? When taken to court by the RIAA at the turn of the millennium, Napster was met with similar issues, as detailed in Steve Knopper’s Appetite for Self-Destruction. As Knopper writes, there was one major piece of legislation the company had in its favor:

…there was the Digital Millennium Copyright Act of 1998, which gave “safe harbor” to internet service providers as long as they didn’t actively encourage illegal behavior.

What the case essentially boiled down to was a matter of intent. If the RIAA could prove that Shawn Fanning or his employees were conscious of the activities going on, they could effectively end the case. A single e-mail is all it took, and it was enough to help find Napster guilty. Even back to the 1984 case of Sony Corp. of America v. Universal City Studios, often referred to as the “Betamax Case,” intent has played a large part. Here, the court found that Sony could make VCRs for people to record TV shows for personal use. They didn’t intentionally make VCRs to encourage the spread of pirated, copyrighted material. That was merely a side effect. It’s likely that the matter of intent will play an enormous part in the Megaupload case.

Despite those similarities to the Napster case, there are some glaring differences here, most importantly the seizure of an overseas company. Going to the website currently leads to nothing more than a viewing of the above image and a “Big Brother is watching” kind of chill that crawls down the spine. Greenwald comes to the conclusion that, since the government already has the power to seize websites purely on accusations, the seizure of Megaupload, coincidence or not, is a slap in the face to dissenters of SOPA and PIPA.

All the proof needed to back this assertion is in the retaliation from Anonymous. Not only does it start another point of contention between people and corporations, but Megaupload has stronger support than any other presumptuously dubious file-sharing service. They even have the “Mega Song,” which show high profile celebrities like Kanye West and Alicia Keys showing support for the site.

Then there are the types of things being seized through the warrants in New Zealand. Kim Dotcom, formerly known as Kim Schmitz, is the company’s former CEO and current chief innovation officer. The Wall Street Journal [link] is quick to point out that he was found by police in a safe room with a loaded shotgun. The Telegraph [link] says that among the more than 20 luxury carts seized from his Auckland-area properties, many of them had vanity plates bearing such titles as “HACKER” and “MAFIA.” It also notes some of his malicious past activities. He’s a convicted hacker and has also been convicted of insider trading and embezzlement. Given his past, Dotcom is a likely candidate for allowing pirated material to slide.

Before the site was shut down, Megaupload did post a statement. That statement is hard to come by, unfortunately. I was able to find a few pieces of it, and they show a rather benign response to the allegations. The latter portion harkens back yet again to Napster and the music industry’s missed opportunity to capitalize on digital sales early:

Of course, abuse does happen and is an inevitable fact of life in a free society, but it is curbed heavily and efficiently by our close cooperation with trusted takedown partners. It is just unfortunate that the activities of a small group of “black sheep” overshadow the millions of users that use our sites legitimately every day… The fact is that the vast majority of Mega’s Internet traffic is legitimate, and we are here to stay. If the content industry would like to take advantage of our popularity, we are happy to enter into a dialogue. We have some good ideas. Please get in touch.

Good ideas or not, we may never know now. Hearings are underway in New Zealand, but the actual case may take a long time to finally come about. In the meantime, the world’s largest file-sharing website will remain under heavy scrutiny.

- Kevin Tappin