The federal inquiry that led to the arrest of four people associated with the online file-sharing site megaupload.com yesterday started over two years ago in Virginia, with an investigation led by the FBI. Seven people have been charged with running “an international organized criminal enterprise” which allegedly facilitates piracy of copyrighted works under the pretense that its intended use is legal transferring of large files. It is an interesting development in the anti-piracy debate following Wednesday’s blackout in opposition to SOPA (Stop Online Piracy Act) and PIPA (Protect Intellectual Property Act) legislation in Congress. The arrests may actually buttress arguments that the bills are superfluous and overreaching.
Over 150 million registered users and 50 million hits a day make this one of the largest intellectual property theft cases to date. Each of the seven men worked as executives for the company and were based worldwide in countries including Germany, New Zealand, Turkey, and Slovakia. The site’s founder, Kim Schmitz, aka Kim Dotcom, was among the four arrested in New Zealand. Along with copyright infringement, each man faces up to 20 years of jail time for the five total charges against them, another of which is conspiracy to commit money laundering. According to the Justice Department, the enterprise has caused over $500 million in damages to copyright holders.
Although the site was based in Hong Kong, the U.S. moved forward with the arrests citing its jurisdiction as some of the content was hosted on servers in Virginia. Ironically, this is precisely the argument that supporters of SOPA and PIPA make – that prior anti-piracy legislation is lacking in that it cannot shut down domains based outside of the U.S.
Opponents of the bills argue that allowing IP service providers to block domain names would put too much power in the hands of companies such as Comcast, although author of the bill Rep. Lamar Smith (R-Texas) has stated that he will consider removing this provision. Further, under SOPA, the provision that any site that is committing or even simply facilitating copyright infringement can be shut down is far too broad. This definition could stretch to include any site that offers file sharing, and the amount of extensive work that it would require to filter through all files would be an impossible feat for many companies, especially start-ups.
On the day that the arrests were made, hacker group Anonymous shut down numerous websites in protest, including that of the United States Justice Department, the Motion Picture Association of America, the Recording Industry Association of America, and other large entertainment company sites.
For some people, such as upcoming artists looking to promote their music, their ability to share large files on websites such as SoundCloud is critical. Music executives, however, will argue that once established, these same artists will seek backing by the government to solidify their intellectual property rights.
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