What the megauploader indictment would set as a precedent

By | January 20, 2012
Disclaimer: I'm not a lawyer, nor do I have any particular legal training. None of my opinions here are verified as such.

If I read the text correctly, there are a few things going on. If all counts are valid, some of the most interesting implications are that:
1. Targeted employees of Megauploader have uploaded ripped content to the Megauploader site. Because they (as employees) are paid by megauploader, this constitutes willful violation for financial gain. Implication: If an investigation finds that any employee of a company has used the company's services to share DCMA-protected material (no distinction between private and business use), the company is liable for DCMA infringement
2. Paying large bonuses to employees, especially executive employees, could be considered criminal activity. Note that the reason for payments were not stated in the evidence, but just the amounts.
3. MD5 hashes are unique identifiers. The accusation states that megauploader algorithm does not save one copy of the file per upload, but instead one copy of the file per MD5 hash, and thus a takedown notification only removes the reported link but not other links pointing to the same file. Technically, it is possible that MD5 hash collisions take place – such that the MD5 hash alone is insufficient to determine that a file is identical to another – but the way the text currently states, only the MD5 value is sufficient to identify content that the company should remove.
4. Internal electronic communication stating that employees are aware of their site used for piracy, but not explicitly mentioning any examples, combined with allegations that as employees they have access to company databases, is sufficient to argue that that employees had knowledge of infringement and shuld have taken action.

It will be interesting to see how 1, 2, and 3 play out. In particular, 1 probably would apply to any internet platform – one example is all you need to get a company in trouble. 2 would apply to any large corporation or hedge fund just as easily. 3 would be an outrage because it would allow future evil prosecutors to place colliding hashes as digital fingerprint evidence and have that used against future defendants.

Full text of the indictment: http://www.scribd.com/doc/78786408/Mega-Indictment

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