Wednesday, 28 March 2012

Megaupload case

Kim Dotcom ridicules charges against him

28 March, 2012

On Monday MegaUpload founder Kim Dotcom said he is preparing an “entertaining” motion in response to the US government’s charges against him.

The German born, New Zealand millionaire who spent approximately five weeks behind bars for allegedly running the largest media piracy operation, said in an interview with Torrent Freak that not all of the charges against him are accurate.

Dotcom was accused of illegally uploading millions of songs. But according to the millionaire himself many of charges against him are absolutely inaccurate. For example, Dotcom cites an audio file of a song by the rapper 50 Cent he was accused of illegally downloading and distributing. In reality, the New Zealander claims the file was legally purchased.

The file’s link was emailed to several of his friends for the purpose of testing the website’s new email feature. Furthermore, Dotcom claimed the song had a total of zero downloads.

The indictment filed by the US government for his alleged involvement in an online conspiracy that authorities claim stole hundreds of millions of dollars from the entertainment industry, states the 50 Cent email he sent was part of the prosecution’s evidence.

According to Kim Schmitz, aka Dotcom, the file was legally purchased and posted back in 2006 and isn’t relevant due to the statute of limitation having been expired.
In addition to the 50 Cent file, Schmitz also contended that a Louis Armstrong song mentioned in the indictment was also legally bought.

The indictment contained an email in which I suggested to provide Warner Brothers with a limited number of deletes per day,” Dotcom said in his interview.
In fact, days later Warner Brothers got the maximum quota of 100,000 deletes per day,” Dotcom said in response to allegations of his refusal to cooperate with the media giant.

Dotcom believes the fact the he was willing to remove the material for his site verifies that he was more than willing to cooperate with copyright holders. Warner Brothers also was able to impede part of the problem by using MegaUpload’s built in tool that allowed for reporting of copy written material on the site.

According to Dotcom, the tool aided Warner Brothers in removing more than one million files from the notorious site.

Dotcom also added that not all users were transferring “pirated” material and claims the recent happenings have hurt those users who held accounts strictly from the purpose of transferring files over long distances without the need of a hard drive, memory stick or DVD. Among those members he added that 15,000 were US military servicemen that probably used their account to share photos with loved ones back home.

Since he set bail in early March, Dotcom has been under house arrests and has been critical on how the US government has handled the situation.

The seven year operator of the MegaUpload has slammed the entertainment industry and the politicians behind the legal proceeding claiming his site's policies are no different than that of YouTube.

If you read the indictment and if you hear what the prosecution has said in court, at least $500 million of damage were just music files and just within a two-week time period. So they are actually talking about $13 billion damage within a year just for music downloads. The entire US music industry is less than $20 billion,”explained Dotcom in an interview with New Zealand's 3news earlier this month.

In my opinion, the government of the United States protecting an outdated monopolistic business model that doesn't work anymore in the age of the Internet and that's what it all boils down to,”he added.

Dotcom promised the motion would soon come.

Amidst a pending extradition request by the US, Dotcom may have the case shift further in his favor, especially after a New Zealand judge ruled that law enforcement apprehended his possessions with a fake warrant. The authorities behind this have filed for another warrant, but if the judge denies the request Dotcom could have access to all his assets once again.

Kim Dotcom: The US Government is Wrong, Here’s Why
For the first time since his arrest in January, Megaupload founder Kim Dotcom is responding to allegations in what he calls the “MPAA-sponsored” indictment. Eager to fight back, Dotcom refutes several “nonsense” claims made by the Government. In addition, he shows that Mega wasn’t a big bad pirate haven, but a legitimate service that may have been shutdown for political reasons.

26 March, 2012

For a man who’s the main defendant in one of the biggest criminal cases ever brought in the US, Kim Dotcom is surprisingly composed.

The Megaupload founder is convinced of his innocence, and instead of letting fear or anger get to him, he is excited. Deep into the night, Dotcom digs through heaps of paperwork, collecting evidence that shows how he was framed by the US Government.

Talking to TorrentFreak by phone, he gives example after example of why he thinks the indictment twists the truth. While Megaupload’s lawyers are still working on the first motion in response to the indictment, he agreed to exclusively share the first details with us.

Stealing from 50 Cent?

One of the claims of the US Government is that Kim Dotcom personally shared copyrighted files on Megaupload, so-called ‘direct infringement’. He supposedly shared a link to a 50 Cent song, but the indictment fails to include the necessary context.

A link distributed on December 3, 2006 by defendant DOTCOM links to a musical recording by U.S. recording artist ’50 Cent’. A single click on the link accesses a download page that allows any Internet user to download a copy of the file from a computer server that is controlled by the Mega Conspiracy,” the indictment reads.

Dotcom told TorrentFreak that the file in question wasn’t infringing at all. He explained that he actually bought that song legally, and that he uploaded the file in private to test a new upload feature. He quickly picked a random file from his computer, which turned out to be this song.

The link to the song was sent using the private link-email-feature of Megaupload to our CTO with the file description ‘test’. I was merely testing the new upload feature,” Dotcom said.

The URL to this song had zero downloads. This was a ‘private link’ and it has never been published,” he added.

Aside from the above, Dotcom told us that the US may not even have jurisdiction over the issue. The song was uploaded from a Philippine IP-address to a European server. Also, since the upload occurred in 2006, the statute of limitations renders the evidence unusable.

Dotcom further said that the Louis Armstrong song mentioned in the indictment wasn’t an infringement either.

I also bought the Louis Armstrong song that was sent to me by a co-defendant via the private link-email-feature of Megaupload. According to the Department of Justice I am an infringer, and this is all they got? One song?”

Warner’s Mass Deletions

In addition to direct infringements, the indictment also suggests that Mega was actively preventing copyright holders from taking down content. An example given in the indictment is that Warner Bros. at one point was unable to delete content through the abuse tool, because they had hit the limit.

Warner Bros. contacted Megaupload about the issue, and an email quoted in the indictment shows that Dotcom refused to raise the limit above 5,000 deleted per day. However, according to Dotcom this version of the truth leaves out some crucial facts.

First of all, Mega’s direct delete feature was provided to content owners voluntary and was not a legal requirement,” Dotcom says. But there is more.

The indictment contained an email in which I suggested to provide Warner Bros. with a limited number of deletes per day. In fact, days later Warner Bros. got the maximum quota of 100,000 deletes per day.”

With the limit of 100,000 links per day Warner Bros was certainly not limited anymore. This is also apparent from takedown statistics provided to TorrentFreak. In total they show that Warner removed 1,933,882 links from Mega sites, making it by far the largest deleter of all copyright holders.

To provide some context, Disney removed 127,934 links in total, the RIAA removed 17,108 links, Sony removed just 3,003 links in total and the BBC was least bothered with just 132 removals.

Google to the Rescue

Another controversial part in the indictment is that Mega should not be eligible for DMCA safe harbor protection because it only removed links, and not the actual files. The indictment describes this issue as follows.

During the course of the Conspiracy, the Mega Conspiracy has received many millions of requests to remove infringing copies of copyrighted works and yet the Conspiracy has, at best, only deleted the particular URL of which the copyright holder complained, and purposefully left the actual infringing copy of the copyrighted work on the Mega Conspiracy-controlled server and any other access links completely intact.”

The indictment suggests that not removing the actual file is wrong, but as Google pointed out in the Hotfile lawsuit recently, this is exactly what a content provider is supposed to do under the DMCA. Removing the actual file is not standard procedure at all, and could lead to all sorts of problems.

The above examples are just the tip of the iceberg. According to Dotcom he can refute pretty much each and every claim in the indictment. Also, Dotcom can do much more than that, and he was willing to share more details with us that shows how Megaupload and Megavideo were not the big bad pirate sites the indictment claims they are.

Big Content & US Soldiers Loved Mega

Megaupload’s founder shared five emails with TorrentFreak that were sent by representatives from big media companies including Disney, Warner Bros. and Fox. Instead of requesting Mega to take down content, they suggested various partnerships.

Warner Bros., for example, asked Megavideo if they could provide a tool to automatically upload content from the movie studio. “We would like to upload our content all at once instead of one video at a time,” Warner’s Joshua Carver wrote.

More details on these partnership emails are published in a separate article here.

And then there’s the issue of the millions of site users that didn’t use it as a pirate haven. US Government workers had many accounts at Megaupload, as did those at MPAA member companies and those employed by the US Military.

Many of these users paid for a premium account and uploaded a variety of content. Talking to TorrentFreak, Kim Dotcom suggested that of the 15,634 soldiers that used Megaupload, many were probably using it to share pictures and videos with their loved ones at home.

More details on the government, MPAA and military users are published in a separate article here.

A Political Scandal?

Having digested the above, it does indeed seem that the US indictment doesn’t tell the whole story, or that it’s one-sided to say the least. This raises the question of why Mega was so aggressively targeted.

What we do know is that the copyright lobby, headed by the MPAA, has been one of the main facilitators of the criminal investigation. It’s also not a secret that the MPAA and other lobby groups hire former high ranked Government officials and vice versa.

The current head of the MPAA for example is former Senator Chris Dodd, and in recent months alone the MPAA also hired former employees from the Justice Department, the White House staff and the Senate Judiciary Committee. Needless to say, the movie industry group is well-connected in Washington.

On the other hand we see that Neil MacBride, the U.S attorney who filed the Mega indictment, has connections to the copyright lobby as well. In fact, he served as the Vice President for Anti-Piracy and General Counsel of the Business Software Alliance (BSA), MPAA’s software counterpart.

It wouldn’t be a huge surprise if the Mega investigation was somewhat of a ‘gift’ to Hollywood, a theory which Megaupload’s founder subscribes to.

Mega has become a re-election pawn in the White House / MPAA affair. If I was a Republican presidential candidate I would investigate this,” Dotcom says.

However, this gift isn’t as free as it may seem. Dotcom says that the witch hunt against his company is putting the US technology sector at a disadvantage.

The MPAA / White House corruption has weakened US technology leadership. Internet businesses, hosting, cloud, payment processors, ad networks, etc. are going to avoid the US,” Dotcom told TorrentFreak.

There is an opportunity for liberal countries to welcome those businesses with better laws,” he predicts. “The loss of IT business & jobs in the US will substantially outweigh the inflated losses claimed by the MPAA & their billionaire club.”

For now, however, Dotcom is mainly concerned with taking the criminal indictment apart. He is confident that he and his legal team will succeed in this and promises fireworks when the complete motion is published.

We did nothing wrong. Watch out for our first motion in response to the MPAA-sponsored Department of Justice indictment. It will be enlightening and maybe entertaining,” Dotcom concludes.

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