Copyright Unbalanced: From Incentive to Excess (8 page)

Unsurprisingly, this can lead to errors. Take the case of dajaz1.com, the domain of a popular hip-hop blog that was seized by the federal government in December 2010. The operator of the site, a Queens man named Andre Nasib, told the
New York Times
that his blog was popular enough that representatives of hip-hop labels and artists would sometimes leak prerelease copies of upcoming music to him in an effort to generate buzz.
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Some of these leaked tracks were then cited in the government’s seizure application as evidence of infringement.
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Nasib filed for the return of his domain in early 2011. But instead of either returning the domain or beginning formal forfeiture proceedings, the government applied for three consecutive 60-day extensions. The government sought the delays in part because it was waiting for the Recording Industry Association of America to answer “outstanding questions” about the domain. Evidently, the government never received a satisfactory response to these questions, and it finally returned the domain without explanation or apology in December 2011.
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The government’s mistakes—and the lack of an effective mechanism for challenging those mistakes in court—kept Nasib’s website offline for a full year.

Another example involves the domain rojadirecta.com, which was a link site based in Spain. It provided sports fans with a convenient way to find video coverage of soccer games. Many of the videos allegedly infringe the copyright of professional soccer leagues, but courts in Spain have upheld the site’s legality, ruling that linking to infringing videos is not itself an infringement of copyright.
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Nevertheless, the US federal government seized the domain in early 2011. After months of fruitless efforts to get it back, in June 2011 the owners filed a lawsuit seeking the domain’s return.
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Finally, in August 2012, the government returned the domain without explanation or apology. Once again, the government was able to hold a domain for 18 months without having to prove that its owner committed any crime.

Property rights activists have long decried the abuse of civil asset forfeiture in drug cases.
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Civil asset forfeiture allows the government to deprive people of their property without an adversarial hearing. And it shifts the burden of proof to the property owner, effectively asking him to prove his own innocence.

But the seizure of domain names has constitutional defects that go beyond those of traditional asset seizures. Websites are platforms for speech. The Supreme Court has held that prior restraint—censorship prior to publication—violates the First Amendment.
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It’s hard to imagine a more clear-cut example of prior restraint than the government seizing the domain of an online publication—prior to any adversarial hearing—and holding it for months.

Such seizures are also inconsistent with the Supreme Court’s interpretation of the Fifth Amendment. In 1974, the high court upheld the government’s seizure of a yacht because it was the kind of property “that could be removed to another jurisdiction, destroyed, or concealed, if advance warning of confiscation were given.”
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But the court has ruled that the same reasoning does
not
apply to real property. Land and buildings cannot easily be moved, concealed, or destroyed, the Supreme Court ruled in 1993, so “the Due Process Clause requires the Government to afford notice and a meaningful opportunity to be heard before seizing real property subject to civil forfeiture.”
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Exactly the same reasoning applies to domain seizures. A domain name is simply an entry in a database. Operation In Our Sites focused on domain names, such as .org and .com, for which the relevant databases are controlled by third parties subject to US jurisdiction. Therefore, it will always be possible to order that a domain be transferred to the government after its owner has had his day in court. That means the government is obligated to afford domain owners due process
before
seizing their domains.

In 2011, the government began criminally prosecuting the operators of some of the websites whose domains it had previously seized. A site called NinjaVideo was one of the first targets. Its lead administrator, Hana Beshara, and four others were charged with criminal copyright infringement in September. Beshara and her associates pled guilty. Beshara was sentenced to two years in prison.

Beshara understood that users were drawn to her site largely because it offered links to infringing copies of copyrighted movies and TV shows. She expected to eventually face a civil lawsuit, though she says she believed—implausibly—that she was eligible for the “safe harbor” provided by the 1998 Digital Millennium Copyright Act. However, Beshara told the
American Prospect
in 2011 that “we never thought they would come after us like criminals.”
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That wasn’t a crazy supposition. There don’t appear to have been any criminal prosecutions of sites like NinjaVideo in the United States before 2011. It’s well established that online services can face civil liability for facilitating the infringing activities of their users, but the contours of such “secondary” copyright liability have been fleshed out by the courts rather than Congress. And generally speaking, criminal offenses must be explicitly defined by Congress. So it’s unclear whether operating a link site can constitute a criminal offense under American law.

Given the uncertainty of her legal position, Beshara’s decision to accept a two-year plea bargain may have been personally rational. But because her case didn’t go to trial, the boundaries of criminal copyright infringement will remain murky for future defendants.

Also indicted in 2011 was Richard O’Dwyer, a British college student who operated a link site called TV Shack. Rather than prosecuting him in the United Kingdom, American and British authorities have sought O’Dwyer’s extradition to the United States. That decision was made despite the fact that neither O’Dwyer nor his servers have been located in the United States since TV Shack was created. It’s also not clear that O’Dwyer has broken British law. A British judge upheld the legality of a similar site, called TV-Links, in 2010.
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In an interview with
Ars Technica
, O’Dwyer’s mother, Julia, said that facing trial in the United States would be a hardship for Richard and his family. He would be cut off from his friends and family and unable to continue his studies or seek employment. According to Julia O’Dwyer, “It will cost £1500 [US$2,300] at least to have a trip to America. And then you go all that way for an hour’s visiting time in jail.” She called extradition “an extra punishment that you’re given before you even get to any charges.”
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She has a point. If Richard O’Dwyer committed a crime under British law, he ought to be tried in the United Kingdom. If British copyright laws are too lax, major copyright holders can lobby the authorities to beef them up. But the mere fact that some of the people using O’Dwyer’s site were Americans shouldn’t be enough to make him subject to US law. And forcing him to stand trial thousands of miles from home does seem like an unfair punishment imposed before he has been convicted of any crime.

The highest-profile target of the government’s campaign against online intermediaries is the locker site Megaupload and its CEO, Kim Dotcom. In 2011, Megaupload was one of the world’s highest-traffic websites. It allowed users to upload large files and make them available for others to download—a capability that has many applications, both lawful and unlawful. It claimed to be responsible for 4 percent of all Internet traffic.
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In January 2012 a coordinated international raid involving officials from the United States, New Zealand, and other countries seized the megaupload.com domain, shut down Megaupload’s servers, arrested Kim Dotcom and his top executives at his residence in New Zealand, and froze all the defendants’ assets.
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Kim Dotcom and his associates are entitled to a presumption of innocence until they are found guilty by a jury. Unfortunately, the government has adopted a range of tactics seemingly calculated to punish Dotcom and his associates before they’ve had their day in court.

Practically speaking, the indictment and related seizures destroyed Megaupload. Since January, its servers have been switched off, its employees have gone unpaid, and its customers—some of whom paid for premium accounts and used them to store valuable data—have not been able to use the site. Even if Dotcom ultimately prevails in court, it could take years to rebuild the site. It may even prove impossible if competitors consolidate their market positions in the meantime.

When New Zealand officials raided Kim Dotcom’s home, they executed a search warrant calling for the seizure of “all digital devices, including electronic devices capable of storing and/or processing data in digital form.”
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While some of these devices presumably contained information relevant to the indictment, others contained data unrelated to the case—including personal files belonging to Dotcom and his family and surveillance video that could confirm or deny Dotcom’s claims that the police used excessive force in their raid. The hard drives were transferred to the United States over the objections of the New Zealand judge overseeing Dotcom’s extradition case. The same judge has ruled that the search warrant was so broad as to be invalid under New Zealand law.
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As of August 2012, the government has refused Dotcom’s request for copies of his files to help prepare for a forthcoming extradition hearing; litigation on that issue is ongoing.

The government has also impeded efforts by Dotcom and his associates to obtain legal representation. All funds belonging to Dotcom, his codefendants, and the Megaupload corporation were frozen at the time of the raid. Megaupload and Dotcom sought to have enough funds unfrozen to cover their legal bills. The government has argued that Dotcom should pay his lawyers using funds that were released by the New Zealand courts—though Dotcom notes that these funds have been specifically earmarked for living expenses, not legal bills. The government has opposed the release of
any
funds to pay for the defense of Megaupload, which is legally a distinct entity entitled to its own representation.

By freezing Megaupload’s assets, the government also placed the data on Megaupload’s servers—including the data of thousands of Megaupload users, some of whom were using the site in non-infringing ways—in jeopardy. Megaupload leased 1,103 servers from Carpathia Hosting in Virginia. When Megaupload’s bank accounts were frozen, it became unable to pay its bills. In March, Carpathia told the court that keeping the servers idle was costing the company thousands of dollars per day. It warned that if those bills are not paid, Carpathia could be forced to delete the data so that it can reallocate the servers for use by other customers.

Megaupload wants to pay Carpathia for the servers in order to preserve its customers’ data. But the government has objected to this arrangement, arguing that Megaupload’s funds are the proceeds of illegal activities and that the data on the servers are contraband. But of course the government has not yet proven these claims to a jury. And not only could deleting the 25 petabytes of data on the Megaupload servers do irreparable harm to Megaupload’s business, it could also destroy evidence Megaupload needs to mount an effective legal defense.

In short, the government’s power to seize assets prior to conviction is making a mockery of Kim Dotcom’s constitutional rights. He has the right to a presumption of innocence, but his business has been effectively destroyed before he sets foot inside a courtroom. He has a right to counsel, but the government has effectively prevented him from paying his legal bills with his own funds. He has a right to exculpatory evidence, but the government is refusing to give him copies of data it seized from his home and has shown little concern that its actions could result in the destruction of evidence on the Megaupload servers.

It’s useful to step back and ask whether it makes sense to criminalize copyright infringement in the first place. Crimes like murder, rape, and arson do grave injustices to their victims, and we want to create the strongest possible deterrent.

The argument for criminalizing copyright infringement is less clear-cut. The Constitution authorizes copyrights in order to “promote the progress of science and the useful arts.”
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That utilitarian justification suggests that we should take a pragmatic approach to copyright enforcement. It’s important to provide enough copyright protection to stimulate the production of creative works. But copyright infringement is not such a grave injustice that it needs to be stamped out at any cost.

Users determined to flout the law will always be able to find infringing works in the seedy corners of the Internet. But most users prefer the convenience, quality, and clean conscience of obtaining content from legitimate vendors. So the copyright system doesn’t need to eliminate piracy altogether; it merely needs to make infringing sites sufficiently unprofitable and marginal that licensed services can thrive.

The pre-2010 enforcement regime, with its reliance on civil lawsuits rather than criminal penalties, appears to have achieved this goal. To be sure, such lawsuits did not eliminate piracy from the Internet altogether. But legitimate services like iTunes and Netflix prospered during the first decade of the 21st century. And perhaps as a consequence, the market continued to produce an abundance of creative works.
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