Profits for Some, Speech for the Rest

On January 19, 2012, New Zealand’s counter-terrorism unit invaded an Auckland compound, rappelling down from helicopters, breaking down doors, wielding M4 carbines and dressed in civilian clothes under their flak jackets. Their target, Kim Dotcom, had been an international fugitive for two weeks, and in that time had not moved once. They took his children and employees into custody at gunpoint, demanding to know if they had bombs. They could not actually get to Kim Dotcom himself, because rather than enacting the ultimate climatic scene from Scarface, he had instead decided to embody Panic Room. The police spent some thirty minutes with sledgehammers and a circular saw trying to get into what they believed to be his hiding place, making a rather large mess and a very small hole. It then became apparent to them that this was not his hiding place, but in fact an unused dumbwaiter. With some prodding, Mr. Wayne Tempero, Dotcom’s head of security, revealed that the far more elaborate emergency “red room,” (which had always been a part of the rented mansion) was adjacent; he asked Mr. Dotcom to come out, which he did. The police then punched Mr. Dotcom in the stomach – levelling him – after which another officer stood on his left hand. They took him into custody to await extradition for crimes relating to commercial copyright infringement. Kim Dotcom was not a member of Al-Qaeda; he ran a website that Hollywood didn’t like.

(Illustration by Malcolm Jamison)

The international press release fabricated a story that the police “broke into” the panic room, finding Dotcom carrying a “sawed-off shotgun.” This version of events is impossible; the police did not even attempt to breach the highly secure red room. Mr. Tempero did have a few registered firearms on the premises, but they were in gun safes. No one on the premises was known to have proclivity for violence. In retrospect, there is little to suggest that the police command had any expectation that he would offer a violent response. Said Mr. Tempero, when asked what would have happened if the arrest warrant had been served by uniformed police officers, “he would have sat them down and maybe offered them breakfast.”

Megaupload was a company registered in Hong Kong (though not available to local users), run by Kim Dotcom (formerly Schmitz), a German citizen. Mr. Dotcom had been convicted of computer fraud and trading in stolen credit cards in 1998. Then in 2002, he was arrested in Bangkok and deported to Germany for insider trading. Even though Dotcom did not serve prison time, he was evidently soured on the whole German experience. So, he launched Megaupload in 2005 from Hong Kong and moved to New Zealand. He lived an impossibly grand lifestyle from the site’s proceeds, believing that his remote physical location was far enough removed from the American sphere of legal influence. Dotcom is not a person whose life history elicits a great amount of sympathy.

The January 5, 2012 indictment, although it greatly overestimates pecuniary damages by orders of magnitude, does actually contain quite damning evidence. Megaupload implemented a system to save on bandwidth and storage space. They would hash every file before accepting it for upload: if the file already existed on their servers they would simply offer the uploader a unique link that he could keep or share. If a Content Owner issued a claim of ownership, Megaupload would remove the link. (A similar action on Youtube removed the content and saved a hash of the file so that the user cannot simply upload once again). The file would stay on Megaupload’s servers, and the user could get a new link almost instantaneously when he attempted to re-upload the file. From internal emails obtained by the Justice Department, it appears that employees were well aware that infringing material was on their servers – going so far as to suggest videos to one another in intercompany email. Everyone could get limited access for free, but unlimited, faster access required a monthly subscription. Megaupload also sold advertisements, which made its CEO, who owned 68% of the company, enormously wealthy. He has requested bail (which has been denied) and now awaits extradition to theUnited States. His trial will take many years, and when he is eventually found guilty, he will likely see serial child rapists with 3 strikes get parole before him. Go Justice!

[Update: Kim Dotcom was granted bail February 21 2012, provided he does not fly in a helicopter or access the internet. All of his accounts have been frozen, so he is no longer considered a flight risk.]

(Pic via Alpine Stained Glass)

In summary, large media companies did not like Megaupload. They leaned on existing American law enforcement apparatuses, which may have discovered evidence of intentional piracy for commercial gain. The New Zealand police then arrested a German national for operating a company based in Hong Kong. No conscious person should think that this domestic law needs more teeth. But, if you are an employee of any number of film or music trade groups, you probably think that this entire song and dance was just too much damn work.

This line of rent-seeking insanity begins with the American Digital Millennium Copyright Act (‘DMCA’) in 1998. For contemporary observers, it was an ambitious compromise meant to protect (some) of the rights of consumers and protect (in some respects) the assets of the Content cartel. The most important part of this legislation, (what made websites like Youtube technologically and economically viable) is that it indemnified any page that speedily removed content uploaded by users upon request of the anyone who implied that they owned said content. If the website did not, it would be liable for damages, sometimes many thousands of dollars per infringing work. The law required such speedy response that the offending content ought to be removed without consideration of the poster of this content. Some websites (like Youtube) allow you to appeal the takedown ex post facto, but the law does not require websites to implement a system for restoring content removed by error or even malice.

It is not difficult to see the dangerous implications this has for speech, especially in this era where much of our collective expression has moved online where the only barrier to an audience is obscurity. At the very least, we are allowed to post content that does not have to be manually vetted by the receiving website. The way society structures these “safe harbor” laws says a lot of what we want to protect – possible profits for very few, or online cultural microcontributions by everyone.

This was never really enough for the content cartel. They thought that owners of websites ought to be responsible or the posts of their users. And their fears about the strength of the DMCA became justified after Viacom’s lawsuit against Youtube was summarily dismissed. Viacom had complained that Youtube had wrought financial gain at their loss since users were uploading episodes of the Daily Show without permission. The judge asked for proof that Google was not complying with the DMCA. Viacom could not locate any, even though Google had surrendered an archive of the site and a record of its administration – many terabytes worth – during the suit.

To make sure they were not humiliated again, media trade groups poured hundreds of millions of dollars into lobbying for new legislation in the United States. The media content cartel wined and dined the legislators of both parties, indiscriminately providing them with trips and lavishing them with parties with famous actors and actresses. They did not appeal to voters or public interest groups, anticipating that it may create opposition. At the same time, the stakeholders in this legislation, Google, Facebook, Twitter – not to mention the users of these sites – did not provide a meaningful lobbying response. Industry wide, the Media Content Owners outspent technology corporations and groups by 10-to-1.

As such, it was not surprising that the Stop Online Piracy Act (‘SOPA’) was a shopping list of Media Content Owner’s desires. Among them, it eliminated safe harbour provisions. Completely and utterly. To be more exact, the ‘safe harbour’ provisions were amended so that indemnity would only be granted if companies removed offending content before it became public. The legislation as written, more or less requires human verification. Very specifically, this would have required the administrators of every website with user-generated content – Youtube, Facebook, even Wikipedia – to vet each post by a user to make sure that it did not contain material that could be owned by someone else. Manually. Before it could be viewed by anyone else.

If this had become law, Youtube would have shut down on the first day. They do not have manpower to watch the millions of videos that are uploaded everyday. Twitter and Facebook would no longer function as organs of instant, uninterrupted, public speech – all public declarations would be calculated messages of large companies and public institutions. Implicitly the legislation insinuated that our collective contributions to the general cultural experience were so minuscule in comparison to those bearing corporate sanction that they could be cast aside without forethought. This is outrageously insulting. Anyone with an interest in making internet not break and semi-sentient reacted with anger and vitriol to the bill, especially after Wikipedia imposed a minor self-blackout. To the relief of everyone who was not being paid to like the bill, Congress will not revisit it as written.

In Canada, where most of Provocative Penguin lives, we do not have safe harbor provisions. To be more accurate, our websites and ISPs do not have to comply with takedown requests. They gain no advantage for doing so. It is unclear from the laws as written if this means that ISPs and websites are wholly responsible for the damages wrought by content they happen to make available or, rather, they are not culpable at all. Currently, ISPs and media companies both argue the latter, but for different reasons. The ISPs advertise to frustrated American webmasters that their hosting services do not have to comply with DMCA takedown requests. That’s why is located in Canada. The content cartel rather uses the law’s ambiguity as proof that Canada needs much stronger legal protections for their content and sanctions against those companies that are purposefully profiting off of piracy. They want a Canadian SOPA and would rather wait until they have it than try to use the existing one.

C-11, the law that was originally introduced in a previous minority parliament (as C-36) (and died there) has often been referred to as our version of SOPA. It is not, at least as it is written now. Michael Geist and suggest that the content cartel would very much like to include SOPA language into the bill so that they could, for example, shutter a site like without a due process. Geist is most likely correct, but this language is not in the bill now. C-11 is our version of the DMCA, enshrining the ‘safe harbor’ principle in the law has become the unfortunate norm, among other things. It is by no means a perfect, or even a particularly desirable bill, but unlike SOPA, it will not break the internet as we currently know it. It is important to make the distinction between “poor” and catostrophic – I only get so much time to phone my MP after all.


PWL Nelson lives in Toronto. He writes about technology and legal issues.