Megaupload's lawyers: DOJ's charges have no basis in law

The U.S. doesn't have criminal secondary copyright infringement laws, they argue in a white paper

The U.S. Department of Justice's copyright infringement case against file storage service Megaupload is "prosecutorial overreach" based on a misreading of U.S. law, the site's lawyers argue in a white paper released Tuesday.

The DOJ's prosecution of Megaupload and founder Kim Dotcom is based on a "theory" of criminal secondary copyright infringement, when those laws aren't on the books, lawyers Robert Amsterdam and Ira Rothken wrote in the white paper.

"The prosecution seeks to hold Megaupload and its executives criminally responsible for alleged infringement by the company's third-party cloud storage users," they wrote. "The problem with the theory, however, is that secondary copyright infringement is not -- nor has it ever been -- a crime in the United States."

Copyright holders have filed civil lawsuits against Web-based services based on secondary copyright infringement, with the U.S. Supreme Court ruling in 2005 that movie studios could sue peer-to-peer service Grokster for infringement.

Megaupload operated for seven years as a cloud storage business that allowed users to upload family photos, artistic designs, academic course work, videos and music, as well as "some potentially infringing material," a common problem for cloud storage services, Amsterdam and Rothken wrote. "Despite Megaupload's lawful uses, the U.S. government has charged the company and its executives under the Racketeer Influenced and Corrupt Organizations (RICO) Act, and has branded the company, its personnel and its tens of millions of users a 'criminal enterprise' dedicated solely to infringing U.S. copyright laws," they added.

A spokesman for Neil MacBride, U.S. attorney for the Eastern District of Virginia and prosecutor in the Megaupload case, didn't immediately respond to a request for comments on the white paper.

The paper, subtitled "The United States v. You (and Kim Dotcom)," also repeats Megaupload's arguments that the DOJ doesn't have jurisdiction to file charges against the company.

"The U.S. government's case is legally untenable for the additional reason that Megaupload and its executives do not reside in the United States and most of the company's activities occurred outside the United States," the lawyers wrote. "The prosecution is unable to serve Megaupload with criminal service of process --- which, in the case of a corporate entity, calls for service of a summons --- because the company has neither an agent nor an office inside the United States."

Amsterdam and Rothken accuse prosecutors of bowing to the Motion Picture Association of America. Pressure from the trade group led federal law enforcement to investigate Megaupload, they wrote.

The two lawyers also compare the Megaupload prosecution to the Massachusetts prosecution of Internet activist Aaron Swartz, who committed suicide in January while facing criminal hacking charges. Swartz had allegedly hacked into a Massachusetts Institute of Technology network and downloaded research articles, apparently planning to distribute them for free.

"While the factual similarities between the Aaron Swartz's prosecution and the Megaupload matter are purely tangential, both cases evoke a common theme of prosecutorial abuse in matters touching upon copyright," Megaupload's lawyers wrote.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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