Home » Legal Articles and Free Legal Information » Developments in intellectual property law in January 2012

SOPA, PIPA, Megaupload and ACTA

It's been a frenetic start to 2012 as far as intellectual property law is concerned.

First we had the self inflicted blackouts of a large number of sites in protest over two bills (proposed statutes or legislative acts) before the US House of Representatives. Then we had the arrests of the people behind the filelocker or filevault site, Megaupload and finally a US Supreme Court ruling concerning GPS that could have very wide privacy and law enforcement repercussions in that country at least. The case is United States v Jones No. 10-1259 and Weblegal provides a separate summary and consideration here.

On January 18 websites, such as Wikipedia's English language site, went dark for the day in protest to highlight the perceived evils of the Stop Online Piracy Act Sopa and Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act or Protect IP Act 2011 or as we prefer Pipa which were being debated by the Senate.

The intention underlying the bills is to provide a means of tackling the hosting and distribution and commercial exploitation of copyright infringing works and counterfeit goods.

As a means of achieving their aims the bills target websites which are registered outside of the United States (non-domestic Internet sites) and which are alleged to be encouraging, facilitating or permitting piracy. Or in the terminology of the PIPA Bill itself:

Section 2-Definitions
(7) the term "˜Internet site dedicated to infringing activities" means an Internet site that--
(A) has no significant use other than engaging in, enabling, or facilitating the
(i) reproduction, distribution, or public performance of copyrighted works, in complete or substantially complete form ...; or
(iii) sale, distribution, or promotion of goods, services, or materials bearing a counterfeit mark ...

Those supporting the bills are largely from the content producing and exploiting industries such as the Hollywood studios, the music recording industry, book publishing and US Chamber of Commerce.

Those opposing the bills include a number of modern tech companies. A number of these companies took out a full page advertisement in the New York Times. They included some of the Internet''s largest, most profitable and most innovative companies, namely Google, Facebook, Mozilla, Zynga, eBay, Twitter, Yahoo, LinkedIn, and AOL. Part of the ad read as follows:

We support the bills stated goals providing additional enforcement tools to combat foreign "rogue" websites that are dedicated to copyright infringement or counterfeiting. Unfortunately, the bills as drafted would expose law-abiding U.S. Internet and technology companies to new and uncertain liabilities, private rights of action, and technology mandates that would require monitoring of websites. We are concerned that these measures pose a serious risk to our industry's continued track record of innovation and job creation, as well as to our nation's cybersecurity. We cannot support these bills as written and ask that you consider more targeted ways to combat foreign "rogue" websites dedicated to copyright infringement and trademark counterfeiting, while preserving the innovation and dynamism that has made the Internet such an important driver of economic growth and job creation.

It isn't just the technology companies who are opposing the bills though; there are a number of prominent academics and free speech proponents, the foremost amongst whom is probably Lawrence H. Tribe, who has written an open letter titled The Stop Online Piracy Act (SOPA) Violates the First Amendment.

There are those opposed to the bills because they claim, if enacted there be an increase in security risks and possibly damage to the Internet's technical infrastructure. By way of example, analysis by a group of leading domain name system (DNS) designers, operators, and researchers can be accessed here.

Or as Mr Wikipedia himself (Jimmy Wales) so succinctly said in an interview on the BBC, "It's more about how sloppy this legislation is. Proponents of Sopa have characterised the opposition as being people who want to enable piracy or defend piracy.

But that's not really the point. The point is the bill is so over broad and so badly written that it's going to impact all kinds of things that, you know, don''t have anything to do with stopping piracy." Jimmy Wales said that there is ample enough protection at present for copyrighted works such as the Digital Millennium Copyright Act ("DMCA"). Perhaps. (According to the Mega Conspiracy Indictment the DMCA was not effective in preventing protection to copyright holders in this instance (see below).)

Anyway, as a direct result of the protests Senator Harry Reid, the majority leader, announced on January 18 via Twitter that the bill would be postponed until issues raised about the bill were resolved.


On 5 January 2012,indictments were filed in the US against a number of people behind the Megaupload site. Megaupload described itself as a "cyberlocker site," the FBI and Justice Department took issue with that description for a number of reasons and preferred to describe the site as a "filesharing" site. On 20 January 2012, Kim Dotcom along with two of the other founders and a sales officer were arrested in Auckland, New Zealand by NZ Police who were cooperating with the United States' FBI and Justice Department and police agencies from a number of other countries. Those arrested were charged (according to the indictment) with engaging in conspiracy to commit racketeering, conspiracy to commit copyright infringement, conspiracy to commit money laundering and distributing and aiding and abetting copyright infringement.

The indictment alleges that Megaupload engaged in 'criminal copyright infringement and money laundering on a massive scale with estimated harm to copyright holders well in excess of $500,000,000 and reported income in excess of $175,000,000.' It also states that

Megaupload.com was at one point in its history estimated to be the 13th most frequently visited website on the entire Internet. The site claims to have had more than one billion visitors in its history, more than 180,000,000 registered users to date, an average of 50 million daily visits, and to account for approximately four percent of the total traffic on the Internet.

It is alleged that Mr Dotcom has earned handsomely out of the Mega Conspiracy owning as he does roughly 68% of Megaupload; 'In calendar year 2010 alone, DOTCOM received more than $42 million from the Mega Conspiracy.'

The arrests and the closure of the Mega Conspiracy sites has already had an effect on some other filesharing sites. One of the biggest, Filesonic, turned off the filesharing capabilities for its users and is now only allowing users to download files that they have personally uploaded and the site Uploadedto has blocked users from the US using its services. RapidShare however has proclaimed (to Ars Technica) that its services will remain unaffected. A RapidShare spokesman sought to distant their practises from those of Megaupload pointing out that RapidShare has designated a Digital Millennium Copyright Act agent to deal with takedown requests.

Weblegal predicts that this case if successfully prosecuted will probably have as far reaching an effect as what was envisioned by the authors of Pipa and Sopa. Certainly the penalties that those indicted in the Megaupload case face, namely a maximum penalty of 20 years in prison on the charge of conspiracy to commit racketeering, five years in prison on the charge of conspiracy to commit copyright infringement, 20 years in prison on the charge of conspiracy to commit money laundering and five years in prison on each of the substantive charges of criminal copyright infringement, will have a sobering affect on most people who may be considering starting or buying into a filesharing business.


It will also be interesting to see whether the worldwide agreement the Anti-Counterfeiting Trade Agreement (ACTA) once enacted will have any affect. Australia, along with Canada, the European Union (EU) and the EU Member States, Japan, South Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland and the United States of America were all involved in negotiating ACTA. Interestingly, of the EU states Germany, the Netherlands, Estonia, Slovakia and Cyprus did not sign up. According to the European Commission the professed aims of ACTA are to:

[T]o establish a comprehensive, first-time, international framework that will assist Parties to the agreement in their efforts to effectively combat the infringement of intellectual property rights, in particular the proliferation of counterfeiting and piracy, which undermines legitimate trade and the sustainable development of the world economy. It will include state-of-the-art provisions on the enforcement of intellectual property rights, including provisions on civil, criminal, and border enforcement measures, robust cooperation mechanisms among ACTA Parties to assist in their enforcement efforts, and establishment of best practices for effective IPR enforcement.

ACTA apparently does not require any EU law changes and unlike Sopa, ACTA "does not foresee cutting off internet access to anyone." According to Article 2, ACTA will not create new intellectual property rights, laws, or criminal offences in any of the member countries. It is rather (as stated in Chapter II of the Agreement) the legal framework for the enforcement of intellectual property rights. When ACTA is enacted it may well have the effect of nullifying any renewed attempts of passing Sopa and Pipa as on one reading at least they will offend some of provisions in ACTA.

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