A Megaload of Unintended Consequences

By Bill Wilson
After an outpouring of opposition by millions of Internet users and tens of thousands of websites against the “Stop Online Piracy Act” (SOPA) and the “Protect Intellectual Property Act” (PIPA) in the House and Senate, congressional proponents of the bills have delayed votes on Capitol Hill.

That is not stopping the Obama Administration, however, which has been acting as if the proposals have already been passed. The most recent example is the shutdown of Megaupload.com, a web-based data storage company that boasted over 150 million users, by the Justice Department and New Zealand law enforcement officials.

According to the indictment, the company was accused of facilitating the distribution of pirated movies, television shows, music, and other copyrighted material. Allegedly, the company refused to process Digital Millennium Copyright Act takedown requests, and falsely told copyright owners materials had been removed when members of the company took steps to keep the pirated material on their servers.
Finally, according to the indictment, the company allegedly “made payments to uploaders who were known to have uploaded infringing copies of copyrighted works” and that members of the company itself were uploading infringing works.

If true, the members of the company would certainly be in a lot of trouble. However, this case has broader implications that should be considered.

Over 150 million users worldwide — millions of whom were premium subscribers — have lost access to their data files. By some estimates, there were over 8 billion files stored on Megaupload, just a fraction of which contained infringing material according to the indictment, which only claims that “many millions” of the files were infringing. Like many alleged criminal enterprises, Megaupload carried on several legitimate business dealings.

So, whether the company is guilty or not, Megaupload had millions of users who were using its servers for legitimate purposes — and they’ve just had their data seized without cause.
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