If feds can bust Megaupload, why bother with anti-piracy bills?

A growing battle over copyright on the internet came to a head this week as digital protests scuttled two anti-piracy bills, police arrested Megaupload's millionaire filesharing pirate, and hackers brought down the Department of Justice website.

TVNZ via Reuters TV
Megaupload founder Kim Dotcom (R) appears with other employees in Auckland's North Shore District Court after their arrest January 20, 2012. New Zealand police broke through electronic locks and cut their way into a mansion safe room to arrest the alleged kingpin of an international Internet copyright theft case and seize millions of dollars worth of cars, artwork and other goods.

It was almost as if the thrums of digital artillery could be felt across millions of keyboards.

As some of the internet's biggest power players, including Google and Wikipedia, protested two fast-tracked anti-piracy bills going through Congress, the US Justice Department launched an attack on one of the web's biggest alleged scofflaws, Megaupload, and, in a counterattack, the hacker group Anonymous temporarily blacked out DOJ's website.

Techno-pundits and mainstream observers quickly connected the dots between anti-piracy protests and the Megaupload arrests, notching the dustup as potentially the biggest salvo yet in the multi-billion dollar internet copyright wars pitting, in essence, Hollywood and its Washington lobbyists against internet free speech and its hacker protectors.

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“This week has been the week of copyright warfare, but the decision to nuke the king copyright violator so spectacularly only goes to show how little the feds need bigger bombs,” writes Sam Biddle on the tech-scene site Gizmodo.

The Justice Department has not commented on the timing of its arrest of Kim Dotcom (also known as Kim Schmitz), the high-flying millionaire CEO of Megaupload, who is now in custody and being prepared for extradition to the United States from his home base of Auckland, New Zealand. The arrests came after a two year investigation.

Megaupload was perhaps the most brazen of dozens of file-sharing sites, offering cash for particularly lucrative uploads and partnering with some big-name rappers in its barely-concealed bid to dispense and disperse pirated music and film. The site has 150 million members and makes up 4 percent of all daily traffic on the web.

But the decision by the Justice Department to net such a big, obvious fish at this time raised eyebrows among the internet cognoscenti, who posited that it was meant as a retort to populist digital forces that amassed in protest of the fast-tracking of two anti-piracy bills, the Stop Online Piracy Act (SOPA) and Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act (PIPA). Citing the protests, Congressional leaders forestalled the bills on Friday, saying they need more work.

Championed by the Motion Picture Association of America and the Chamber of Commerce, the anti-piracy bills would have broadened the Justice Department's justifications for seeking court orders against alleged copyright violators, prevented advertisers from doing business with such sites, banned search engines from listing them, and forced internet service providers to block the sites.

Hollywood and music moguls say the internet is killing their business, with Megaupload alone allegedly stealing $500 million worth of copyrighted merchandise. The fact that at least some of the digital material was stored in a server in Virginia gave the Justice Department jurisdiction to have Mr. Dotcom and several others arrested.

But opponents of the bills say expanding Justice's power over what's kosher and what's not on the web could chill free speech and innovation on the internet, resulting in both economic and societal costs over the long term.

Proponents of anti-piracy legislation say the new laws will only affect scofflaws, but the FBI's salvo against Megaupload indicated to some experts that current law already favors property rights over individual rights.

Some have already questioned how the government had the right to shut down Megaupload this week without first allowing the company to explain itself in court. The action may force legitimate file-sharing companies, including those who provide “cloud”-based file “lockers” for users to store and share material, to question their business models.

“They will wonder if they have done anything different from Megaupload, and does that mean the Feds will come through their door,” Eric Goldman, a professor of intellectual property law at Santa Clara University, told the Washington Post's Cecilia Kang.

In a Monitor commentary, VentureBeat's Ben Popper agreed that the FBI's takedown of Megaupload simply highlighted the efficacy of current laws to curb copyright violators on the web. "Advocates of the legislation have always said that piracy was costing America billions in jobs and endangering jobs," writes Mr. Popper. "Stronger laws were needed, they argued, even if they might pose risks of censorship, chill investment in tech and damage the fundamental architecture of the internet. But the DOJ was able to rely on ProIP, a law passed back in 2008, in order to shut down Megaupload."

But at the same time, Anonymous' subsequent denial-of-service attacks against the DOJ, the MPAA and several other websites in retaliation for the Megaupload arrests could serve to swing public opinion in favor of stronger legislation against online piracy.

“Anonymous' actions hurt the movement to kill SOPA/PIPA by highlighting online lawlessness,” writes the Houston Chronicle's tech blogger, Dwight Silverman, who called the hacker attack the digital version of a “full-scale riot.” He added, “Anonymous is fond of saying, 'We do not forgive. We do not forget.' The problem is, neither do the people who want to shut down online piracy, even at the cost of a less useful and vibrant internet.”

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