MegaUpload – four NZ residents arrested in US copyright infringement case

Late last week four people were arrested in Auckland for extradition to the United States as part of international copyright infringement proceedings brought by the United States Government in what they describe as “among the largest criminal copyright cases ever brought by the Unites States”. The case according to the US Justice Department “directly targets the misuse of a public content storage and distribution site to commit and facilitate intellectual property crime”.

MegaUpload operated a site where content could be uploaded. MegaUpload allowed advertisers to display ads on their site and received a pay per click revenue stream as viewers accessed (non searchable) pages on their site. MegaUpload offered no directory or search facility for its content. Third parties could, however, upload their own content and make available links to that content on their own websites. These third parties were paid a percentage of advertising revenue arising from page views on the MegaUpload site. The allegation is that MegaUpload knew full well that the most popular content, generating the most revenue from advertisers, was content which infringed copyright. In this way allegations are made of authorisation of copyright infringement which are analogous to those recently considered by the Australian High Court in the AFACT v iiNet case (judgment still awaited). The service has parallels to YouTube and Drop Box amongst others.

The idea that there are businesses which profit in direct proportion to the numbers of page views is not new. The idea that Internet service providers (ISPs) may profit from increased levels of traffic is not new. However, this case gives rise to the question as to how much of the infrastructure must be provided before infringement is deemed to be authorised? Do you infringe by providing a basic data connection? Do you need to provide the tools for storage? Do you need to be advised that there is an infringement taking place? Do you need to do more, and actually participate in ripping, uploading or downloading? These issues have not been widely tested and there are no universal answers. This case will attempt to draw some more boundaries from the US perspective.

Another central question for the internet and “cloud” enabled world is how much connection to the USA is sufficient in order to subject yourself to their laws. A United Kingdom student Richard O’Dwyer had a website which pointed users to infringing content. There was no clear precedent in the UK to suggest that he infringed copyright. His only connection to the US was a .com domain name and yet extradition to the US to face criminal copyright charges is likely to be granted in the UK. The concern of commentators is that use of technology which sees data and transactions flow seamlessly across borders may well open people up to infringement of the laws of multiple countries. This case will also test the principles of jurisdiction, as extradition is sought of New Zealand residents to the US.