>>APMG 8119: DIGITAL ENTERPRISE

REPORT PREPARED FOR: ASSOCIATE PROFESSOR DR. ROBERT

DAVIS Pro Megaupload

BY: Susan Rosewarne, Manilay Vanphavong & Cam Hung Luu

POSTGRADUATE DIPLOMA IN BUSINESS APMG 8119: DIGITAL ENTERPRISE

2012

PRO MEGAUPLOAD

>>APMG 8119: DIGITAL ENTERPRISE

Part 1: Introduction

Megaupload.com founder: Kim Dotcom, born Kim Schmitz, in 2005

Megaupload shut down: 19th January 2012 by the U. S Government request. Kim Dotcom and colleagues arrested in his Coatesville house by FBI & NZL police.

The Megaupload indictment: Megaupload accused of Copyright infringement - costing corporate companies more than $US500million lost revenue.

>>APMG 8119: DIGITAL ENTERPRISE

Four perspectives of different parties

The copyright holders (U. S government)

Represented by the U. S justice department and corporation such as Universal Music that want to convicted of illegally sharing copyrighted material

The owners of Megaupload

It claim projection from such a conviction under the DMCA

The legitimate users of Megaupload

They claim a loss of private material

All potential users of Megaupload

They have the opinion that arts should be shared freely

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Contemporary issues

• United States and New Zealand court systems have no definitive legislation against Kim Dotcom –”Grey Zone”.

• Government Communications Security Bureau (GCSB): illegally spied on Kim Dotcom

• Government & Police raids: treated Kim Dotcom’s and family like terrorists.

• John Banks (ACT New Zealand leader): denied all knowledge of 2010 mayoral campaign donations, gifted by Kim Dotcom

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Controversial Issues

• Web organisations questioned government on their rights to shut Megaupload website down for hosting pirated contents.

• Pressure on governments by Corporate organisations like apple/sony to shut the likes of Megaupload down due to affecting their revenues.

• Government denies consumers rights: due to denying consumers access to their legal personal stored data.

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Overview: Online Law Terminology

• PIPA: Protect IP Act

Allows U. S Government to shut-down websites dedicated to infringing or counterfeit goods

• SOPA: Stop Online Piracy Act

Rewrite of PIPA : Allows the U. S Government to shut down websites believed to infringe copyright material and arrest those deemed responsible.

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ACTA: Anti-Counterfeiting Trade Agreement

Similar to PIPA and SOPA : Establishes International standards for intellectual property rights.

CISPA: Cyber Intelligence Sharing and Protection Act

Cyber security giving authority to U. S Government access to private browsing data.

This bill passed 26th Apr 2012

(*NB: 3 months after Megaupload shut down)

Online Laws continued

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• By shuttling Megaupload down: Customer Data Access Suspended and is now at risk of being deleted by Government.

• Government denies consumers rights: Megaupload users currently

unable to retrieve their legal digital intellectual property.

Customers rights

>>APMG 8119: DIGITAL ENTERPRISE

• This Megaupload closure will affect:

Cloud storage providers eg: Apple-iCloud, Dropbox and YouSendIt; as they allow consumers to potentially store illegal documents within their network.

• File Sharing Users Opinions :

• MYOB General Manager Julian Smith says : “the data sovereignty issues in this case fall into a “grey area” within US law.”

• Acclipse Marketing Manager Rhys Taylor says : “the Megaupload case has contributed to a growing awareness that people should take an interest in where their personal data is held”

• Xero Chief Executive Rod Drury says: “there is no way the US authorities are going to pull down business accounting sites”

Implications to other cloud providers

>>APMG 8119: DIGITAL ENTERPRISE

Why was Megaupload shut down but not other websites?

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• United Nations Declaration of Human rights states:

“Everyone shall be given the right to hold opinions without interference & be given the right to freedom of expression”(Brenkert, 2010) –Megaupload enabled users this!

• Megaupload like Dropbox enabled legitimate file-sharing:

“Shareware developers used Megaupload to distribute software” (Rallo, 2012) by utilising "cloud storage technology which was "nearly identical" to that used by such legitimate businesses as Dropbox” (Parloff, 2012).

Part 2: Copyright

>>APMG 8119: DIGITAL ENTERPRISE

• “Governments now impose internet laws, blockades and censorship under various guises” (Subramanian, 2012) - restricting availability of information and controlling content to their citizens, sometimes suppressing information flow.

Megaupload was “backup storage” : Therefore Patent Law gives immunity from a law suit.

Immunity to sellers of products: "merely capable of substantial non-infringing uses." - Megaupload’s lawyer Rothken argues Megaupload being capable of substantial non-infringing uses (Parloff, 2012).

Megaupload Patent Law Cover:

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Sharing files within Megaupload for legitimate purposes:

Sharing files within the Megaupload space on the grounds of: Research, education, study and reporting are regarded as “permitted acts” under New Zealand copyright law (Council of New Zealand)

DMCA (Digital Millennium Copyright Act): “Lies at the heart of Megauploads defence” (Parloff, 2012)-Megaupload cannot be punished for users uploading copyright material! (Kristoffer Hesdorf Famus Sidenius, 2012).

Legitimacy:

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At the time of Megaupload being shut down:

• Megaupload was “neither “ the sole active file-sharing website nor the most popular. NB: (*server registered in Hong Kong)

Megaupload Provides a link only: Enables users of their site to share files and does not supply them with copyright material.

Megaupload Customers : Self-responsible & accountable for their own accounts & actions – Customers freedom of choice in regards to what they share (Kristoffer Hesdorf Famus Sidenius, 2012).

Megaupload Customers:

>>APMG 8119: DIGITAL ENTERPRISE

The Treaty on Extradition (US treaty), ensures “extradition shall be granted only if the evidence to be found is sufficient” (NZL extradition) – What evidence is Sufficient in Megauploads case?

Megaupload is covered by DMCA meaning: “hearsay” evidence in court will be inadmissible in New Zealand courts (NZL extradition).

Extradition from New Zealand must relate to an “extraditable offence” which involves conduct that would be regarded as criminal, had it occurred in New Zealand (NZL extradition)

1. Taking into Consideration: March, 2012 : Judge Judith Potter declares Kim.com arrest as “null and void” (Kristoffer Hesdorf Famus Sidenius, 2012)

Extradition:

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End Result of Shuttling Megaupload:

Individuals demographic freedom of speech has been violated!

Customers now unable to retrieve their personal material

Prior to shuttling Megaupload down, what proof did the New Zealand Government have of Kim Dotcom directly sharing copyright material (Kristoffer Hesdorf Famus Sidenius, 2012)

Many of Megaupload Customers are merely "innocent third party users who did not breach the law” (Garrett-Walker, 2012)

US Government as a outcome of Megaupload users now banding together to sue them, reputes that no “irreparable harm” has been done to them by shutting down their Megaupload accounts.

Cause and Effect

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The failure of spying from US parties also has due to the weaken point from John Key as Prime Minister.

There is a news “PM insight he knew nothing about Dotcom” and it would be bad thought of head of civil central in New Zealand.

"The GCSB knows about this law, they work under this law all the time, it is impossible to believe the GCSB did not know they were not allowed to spy on New Zealand residents," co-leader Russel Norman said.

Labor leader David Shearer has against the NZ government by keeping the private recording in Dotcom case.

Labor leader David Shearer told media today: "We know that a video was made, that's what our sources are telling us, the GCSB is saying after seizing hard drives the video does not exist, I can leave the rest to your imagination."

Part 3: The Edge of Government the margin of errors

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The concessions from John Key PM of New Zealand: less vigilant in protecting the civil

"Going forward we want to look at who was involved," he said. "Was the U.S. involved? Who called for domestic spying? What was the basis for it and what type of information was obtained? Did they obtain information that would have been attorney-client privileged or communications between lawyers?"

the Government Communications Security Bureau (GCSB), our equivalent to the American CIA, is not allowed, by law, to spy on New Zealand citizens or permanent residents.

The Edge of Government

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NZ authorities absolutely have an obligation to assist the US with legal extradition efforts

A paperwork error saw his property seized without giving proper notice

Invalid search warrants for the raid

The probable unlawful interception of communications by the GCSB

The Edge of Government

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Brenkert, G. G. (2010). Corporate Control of Information: Business and the Freedom of Expression. [Article]. Business & Society Review (00453609), 115(1), 121-145. doi: 10.1111/j.1467-8594.2009.00354.x

CRAYMER, L. (2012, 09 24). THE WALL STREET JOURNAL. Retrieved 10 15, 2012, from Megaupload Case Faces New Zealand Probe: http://online.wsj.com/article/SB10000872396390444180004578015990685998874.html?mod=googlenews_wsj

Garrett-Walker, H. (2012). Megaupload user takes fight to court. [Newspaper ]. New Zealand Herald.

Healey, J. (2012, January 20). Copyrights: Feds push a few novel theories in MegaUpload case. Los Angeles Times. Retrieved from http://opinion.latimes.com/opinionla/2012/01/copyrights-feds-push-novel-theories-in-megaupload-case.html

Kang, C. (2012, January 21). Megaupload shutdown raises new Internet-sharing fears. The Washington Post. Retrieved from http://www.washingtonpost.com/business/technology/megaupload-shutdown-raises-new-internet-sharing-fears/2012/01/20/gIQATHRtEQ_story.html

Kirk, J. (2012). Megaupload lawyer says case could affect other storage services. Retrieved from http://www.cio.com.au/article/420568/megaupload_lawyer_says_case_could_affect_other_storage_services/

Kristoffer Hesdorf Famus Sidenius, M. S. J., Brian Hojberg Jensen, Magdalena Katarzyna Fiktus. (2012). Copyright VS. Megaupload.

New Zealand Institute of Chartered Accountants. (2012). Megaupload case cloudy. Retrieved from http://www.nzica.com/News/Archive/2012/April/Megaupload-case-cloudy.aspx

Parloff, R. (2012). MEGAUPLOAD AND THE TWILIGHT OF COPYRIGHT. (cover story). [Article]. Fortune, 166(2), 130-140.

Rallo, R. (2012). Kim Dotcom. NetGuide, September, 2012.

Bibliography:

>>APMG 8119: DIGITAL ENTERPRISE

Subramanian, R. (2012). The Growth of Global Internet Censorship and Circumvention: A survey. Computer information systems department

TVNZ. (2012, 09 27). Retrieved 10 15, 2012, from John Key apologises to Kim Dotcom : http://tvnz.co.nz/politics-news/john-key-apologises-kim-dotcom-5105817

TVNZ. (2012, 10 12). Retrieved 10 15, 2012, from New probe in Kim Dotcom spying saga: http://tvnz.co.nz/politics-news/new-probe-in-kim-dotcom-spying-saga-5127880

Warren, C. (2012). What Megaupload Teaches Us About the Cloud, SOPA and Backups. Retrieved from http://mashable.com/2012/01/20/megaupload-sopa-dropbox/

Bibliography: