The Demise of Megaupload: Necessary Sacrifice for Internet Innovation and Freedom

By: Sean McClelland

The recent destruction of Megaupload, the set of websites that host to four percent of Internet traffic, proved one thing to the Internet community. The Department of Justice, stripped of potential SOPA and PIPA powers, was perfectly content to exercise its duties. The closure of Megaupload came under what is the only enforceable law under whose authority content producers can enforce copyright claims on the web. This federal law, the Digital Millenium Copyright Act of 1998 (DMCA) sets up the environment for all ‘net companies – big and small—exist and innovate. While the current legal framework has come under fire in the wake of the seizure of Megaupload, it is the most robust protection of Internet free speech to come out of our modern copyright regime. The DMCA establishes, among other things, legitimate takedown procedures for copyrighted material that grant protections to hosting companies.

The DMCA contains all sorts of copyright protection provisions that are largely attempts to duplicate traditional media copyright protections in cyberspace. Most central to the topic of Internet censorship, however, is a key provision, 512(c). This clause grants Internet “intermediaries”—usually Internet Service Providers (ISPs) and websites—immunity from prosecution for copyright infringement. There’s one catch though. To get this immunity, websites must follow what is known as the “notice-and-takedown” provision (also in Section 512(c)), removing copyrighted material if they receive a complaint from a rights-holder.

Until recently, Megaupload gathered Megavideo and its associated sites its digital umbrella. Here’s where Megaupload erred: Megaupload and its founder, Kim “Dotcom”, did not follow the “notice-and-takedown” provision of the DMCA. Indeed, the lack of compliance with the “notice- and-takedown” provision was precisely how the group received such high traffic. The sites provided a convenient run-around for those looking for copyrighted material, particularly irritating movie rights-holders by offering free streaming of popular titles. The very nature of Megaupload—the creation of this “digital locker” site where files are held and stored in a format that is unsearchable from within the site itself—relied on the exploitation of private media collections. Its exploitation of copyrighted material was veiled from searches by authorities, and more importantly, it guaranteed patrons that upload would not be taken down. Megaupload repeatedly dodged FBI requests that copyrighted material be removed. Therefore, Megaupload voided any immunity it would have received under the DMCA.

With this news, many Internet rights activists are up in arms by the dismantling of Megaupload, prophesying that other sites will follow suit. The activists foretell the government unnecessarily limiting free speech and communication on cyberspace. Implicit in these claims is the idea that the current framework—anchored by the DMCA—is somehow faulty. While based in reality, these fears mostly are overblown.

Ultimately, the DMCA is the best protector of innovation on the web. It allows dynamic social media operations – Facebook, Youtube, Twitter, Google and Wikipedia – to survive and thrive amidst an otherwise hostile copyright environment. Without the powerful “safe-harbor” provisions of the DMCA, rights-holders for everything from indie music singles to blockbuster Hollywood flicks would be litigating major Internet companies for one form or another of copyright infringement as set out in other sections of the DMCA. While the large, established Internet giants like Google would be able to handle the litigation, smaller companies would likely be driven under before they could afford to pay either their legal expenses or the hefty fines for copyright infringement.

Regarding these provisions, the Electronic Frontier Foundation, one of the foremost legal activist groups with regards to Internet privacy, free speech and innovation issues, claims that the safe harbor provisions “…have been essential to the growth of the Internet as an engine for innovation and free expression”. In other words, without the “safe-harbor” provision of the DMCA, we would have a copyright system that has many of the same qualities as we would have had under SOPA/PIPA.

At the same time, rights-holders also have quite a bit to cheer about the DMCA. With the “notice-and-takedown” provision, they get a strong guarantee that copyright infringement will be stamped out once found. Without such a provision, there would be virtually no protection for rights-holders, as Internet companies would have almost free-reign to keep copyrighted material up on their websites.

For everyone to be happy, websites like Megaupload have to be taken down by the U.S. government. The DMCA is uniquely situated between rights-holders, ISPs and websites, providing a passable compromise that ultimately allows for an innovative Internet. Like any compromise law, both sides dislike certain provisions. The Internet does not appreciate restricting access to copyrighted material and rights-holders would like stronger disincentives for hosting such material. Ultimately, however, the DMCA provides an excellent legal framework for copyright claims on the Internet, guaranteeing the rights of rights-holders, establishing a predictable system of copyright enforcement and ensuring a vibrant and flourishing Internet of free communication.

Sean McClelland is a second-year Law, Letters, and Society major in the College.