Megaupload founder Kim Dotcom appears in court

REUTERS TV/REUTERS - The founder of file-sharing website Megaupload Kim Dotcom, a German national also known as Kim Schmitz, is seen at court in Auckland in this still image taken from video January 23, 2012.

After U.S. authorities shut down popular file-sharing site Megaupload last week, it’s founder Kim Dotcom appeared in a New Zealand court Monday. Sarah Halzack reports:

Kim Dotcom will remain in custody at least temporarily after a New Zealand judge delayed a decision on whether the founder of the file-sharing site Megaupload.com should be permitted to be released on bail, according to published media reports.

Video

Kim Dotcom and his co-defendants in the Megaupload case appeared in an Auckland court Monday, which heard arguments over their bail requests. Dotcom's lawyer said his client was innocent of internet piracy and money laundering charges. (Jan. 23)

Kim Dotcom and his co-defendants in the Megaupload case appeared in an Auckland court Monday, which heard arguments over their bail requests. Dotcom's lawyer said his client was innocent of internet piracy and money laundering charges. (Jan. 23)

Gallery

At a hearing Monday in Auckland, New Zealand, Dotcom denied that he is guilty of the Internet piracy charges he is facing in the United States. The New Zealand Herald reports that Dotcom’s attorney, Paul Davidson, argued that his client should be eligible for bail because “he is not a person who is inherently motivated to disappear or breach conditions. There is no flight risk.”

Ultimately, Reuters reported, the judge wanted more time to make his decision about the request, “given the breadth of issues covered in this bail application and the seriousness of the issues.” The judge said his final decision would come no later than Wednesday.

FBI officials are seeking to have Dotcom and three of his cohorts extradited to the United States, where they would face charges of Internet piracy and money laundering. The charges are related to the file-sharing Web site Megaupload.com, which was shut down Jan. 20 as part of the indictment.

Shortly after news spread of the Justice Department’s action, that federal agency’s Web site went down, as did the site of Universal Music. The outages were a result of a cyberattack from the informal hacking collective known as Anonymous, which went after the sites in retaliation for the crackdown on Megaupload.

Meanwhile, FileSonic and FileServe removed their sharing features in the wake of the Megaupload indictments. Tom Cheredar reports:

After employees of file-sharing services Megaupload were arrested, similar digital locker services FileSonicFileServe, and others have stopped allowing users to share the files they upload with others.

The “cyberlocker” provided by these companies is essentially a cloud service that allows people to upload a number of different files that can be shared/downloaded by others for a limited period of time (or permanently for premium customers).  The move to shutter this functionality by FileSonic, FileServe, and others is undoubtedly a response to legal action taken against competing site Megaupload, which was shut down last week under accusations of piracy by the U.S. Department of Justice in conjunction with government authorities from many foreign countries.

“All sharing functionality on FileSonic is now disabled. Our service can only be used to upload and retrieve files that you have uploaded personally,” FileSonic states on its website — meaning you can no longer download any file you didn’t personally add to the service.

Also gone is the affiliate rewards program many of these sites offer. This reward program pays its users a fee for getting other people to download the files that you upload to the site. If you’re a third-party firm that needs to share large files with clients over the internet, a site like FileSonic is a good alternative to e-mail. If you’re getting paid by the number of files downloaded, you can see why some professionals might find FileSonic alluring. However, the same can be said about these reward programs for people who illegally upload copyrighted content (movie, songs, etc.).

While the average web user may not immediately identify with these services, they among the most popular/trafficked sites in the world. According to Alexa, FileServe has a global ranking of 132 and FileSonic has a global ranking of 166.

It’s likely that many of the most popular cyberlocker sites will suffer a fate similar to Megaupload if they can’t prove that they are legitimately trying to combat piracy. The fact that FileSonic, FileServe, and others have yanked the sharing functionality shows that they probably haven’t done enough in the past. Another competitor,MediaFire, recently told VentureBeat that it isn’t scared of a government takedown because the company doesn’t incentivize piracy the way some others do.

Brad Plumer asks if the crackdown on Megaupload proves that SOPA is unnecessary:

The logic behind Congress’ much-maligned online-piracy bills was that more weapons were needed to go after copyright infringers overseas. But last week, the U.S. government took down Megaupload, one of the biggest file-sharing sites abroad. Doesn’t that suggest new laws aren’t necessary?

Megaupload.com, after all, wasn’t just any file-sharing site. It helped form the backbone for the argument that bills like the Stop Online Piracy Act (SOPA) were utterly essential. Back in November, for instance, the Chamber of Commerce argued that “rogue websites — dedicated to the theft of American intellectual property — get over 53 billion visits every year.” Upon closer inspection, about 40 percent of those visits were due to just two entities: Rapidshare, a file-sharing site that courts have ruled perfectly legal, and Megaupload (along with its sister site, Megavideo). Which means that the Justice Department managed to take down a huge chunk of the rationale for SOPA without even needing SOPA.

Over at Ars Technica, Timothy Lee hosts an excellent debate on whether the Megaupload seizure proves that new laws aren’t needed. It’s very much worth reading. On the one hand, the U.S. government was mainly able to go after Megaupload because it was a .com — which meant that it fell under U.S. jurisdiction. A record industry official tells Lee that laws like SOPA are necessary to go after similar sites with foreign domain names like .ru. (Granted, SOPA wouldn’t allow the government to take down these sites entirely — it would merely provide tools to block U.S. users from accessing such sites and cut them off from U.S.-based ad networks and payment processors.)

On the other hand, Cato’s Julian Sanchez argues that the indictments against Megaupload’s founders did most of the important work here — old-fashioned law-enforcement work, plus cooperation with countries like New Zealand, helped take down the site for good. As my colleague Cecilia Kang reported recently, that’s raised the specter that other overseas file-sharing sites could be vulnerable to fresh crackdowns, even if they’re largely used for legitimate purposes. And, while it’s true that a site hosted in, say, China rather than New Zealand might be better able to evade U.S.-led actions, there are lots of reasons that, say, a file-sharing site wouldn’t want to locate itself in China, with its restrictive Internet rules.

More from The Washington Post:

Q&A with Megaupload lawyer

Megaupload case makes other sites nervous

Megaupload exec had sweet rides

FAQ: What is Megaupload?

 
Read what others are saying