Internet Book Piracy

by Gini Graham Scott

  More specifically, as provided for in Title 17, Chapter 512, (J) of the US Copyright Law (http://www.copyright.gov/title17/92chap5.html), here are the codes related to how to get an injunction to stop infringement by transmission over an automated system.

  j. INJUNCTIONS. — The following rules shall apply in the case of any application for an injunction under section 502 against a service provider that is not subject to monetary remedies under this section:

  1. SCOPE OF RELIEF. — (A) With respect to conduct other than that which qualifies for the limitation on remedies set forth in subsection (a), the court may grant injunctive relief with respect to a service provider only in one or more of the following forms:

  i. An order restraining the service provider from providing access to infringing material or activity residing at a particular online site on the provider’s system or network.

  ii. An order restraining the service provider from providing access to a subscriber or account holder of the service provider’s system or network who is engaging in infringing activity and is identified in the order, by terminating the accounts of the subscriber or account holder that are specified in the order.

  iii. Such other injunctive relief as the court may consider necessary to prevent or restrain infringement of copyrighted material specified in the order of the court at a particular online location, if such relief is the least burdensome to the service provider among the forms of relief comparably effective for that purpose.

  B. If the service provider qualifies for the limitation on remedies described in subsection (a), the court may only grant injunctive relief in one or both of the following forms:

  i. An order restraining the service provider from providing access to a subscriber or account holder of the service provider’s system or network who is using the provider’s service to engage in infringing activity and is identified in the order, by terminating the accounts of the subscriber or account holder that are specified in the order.

  ii. An order restraining the service provider from providing access, by taking reasonable steps specified in the order to block access, to a specific, identified, online location outside the United States.

  2. CONSIDERATIONS. — The court, in considering the relevant criteria for injunctive relief under applicable law, shall consider —

  A. whether such an injunction, either alone or in combination with other such injunctions issued against the same service provider under this subsection, would significantly burden either the provider or the operation of the provider’s system or network;

  B. the magnitude of the harm likely to be suffered by the copyright owner in the digital network environment if steps are not taken to prevent or restrain the infringement;

  C. whether implementation of such an injunction would be technically feasible and effective, and would not interfere with access to noninfringing material at other online locations; and

  D. whether other less burdensome and comparably effective means of preventing or restraining access to the infringing material are available.

  3. NOTICE AND EX PARTE ORDERS. — Injunctive relief under this subsection shall be available only after notice to the service provider and an opportunity for the service provider to appear are provided, except for orders ensuring the preservation of evidence or other orders having no material adverse effect on the operation of the service provider’s communications network.

  PART IV

  The Criminal Crackdown on Internet Piracy

  CHAPTER 20

  The Beginning Criminal Attack On Internet Piracy

  ALTHOUGH ONLINE BOOK PIRACY HAS been going on for over a decade, made possible by file-sharing programs and websites for uploading and downloading files in PDF and other formats, it is only in the last few years that law enforcement agencies have taken notice. A key reason is that piracy has become a billion-dollar business, involving millions of individuals and companies affected by the theft of their intellectual property. While the initial impetus to go after the pirates started in the music and film industries, writers and publishers are finally waking up to take action, and law enforcement agencies have begun to crack down on book piracy, along with other intellectual property thefts, including software, music, and films.

  Despite bumps in the road, when the pirates fight back—claiming they weren’t doing anything illegal or that law enforcement used inappropriate tactics to bring them to justice—the growing pressure is helping to draw attention to the crime of Internet piracy. People are becoming increasingly aware that it is a crime, and law enforcement agencies are seeking to target and eventually reduce the number of perpetrators. These include website operators, service providers, uploaders, and downloaders of infringed-upon material, though this effort may have slowed since mid-2014, given the complications in gaining convictions in these cases when the defendants have huge economic resources and are located in other countries.

  One of the biggest and longest cases is the Megaupload case, in which Kit Dotcom and three other Megaupload executives face criminal copyright violations and related charges, although they have been fighting the extradition requests to go to the United States to be tried on these charges. Now defunct, the Megaupload site, launched in 2005 in New Zealand, was a web storage service where millions of users around the world uploaded and downloaded unauthorized copies of books, films, songs, and other digital entertainment. Before it was shut down, it was one of the 100 most popular websites, with about fifty million visitors each day. At its peak it had over 150 employees, earned $175 million in revenues—$42 million in 2010 alone—and became the thirteenth most visited site on the Internet, accounting for 4 percent of all Internet traffic (http://en.wikibooks.org/wiki/Professionalism/Kim_Dotcom_and_Megaupload).

  According to the DOJ, it cost the film studios and record companies more than $500 from users who shared their copyrighted materials, though Dotcom claims to be innocent on the grounds that Megaupload sought to make sure that users did not share copyrighted material and that he and the company’s executives had no criminal intent (https://news.vice.com/article/internet-mogul-kim-dotcoms-extradition-trial-begins-over-megaupload-copyright-case).

  One of the big breakthroughs in the case came on January 19, 2012, when the FBI and dozens of armed New Zealand police busted the alleged operators of Megaupload, a locker service that made millions by helping millions of people store and distribute pirated feature films, TV shows, songs, software, porn, and some books (http://news.cnet.com/8301-31001_3-57362152-261/fbi-charges-megaupload-operators-with-piracy-crimes). Besides arresting Dotcom, the authorities confiscated millions of dollars worth of cars, laptops, and weapons (https://news.vice.com/article/internet-mogul-kim-dotcoms-extradition-trial-begins-over-megaupload-copyright-case).

  It named seven people in the indictment and took four suspects into custody, charging them in Virginia, since one of their servers was there, with crimes related to online piracy. Among those arrested by the New Zealand police in Auckland was the colorful founder of Megaupload, Kim Dotcom (a.k.a. Kim Schmitz), a German national, and three others, under arrest warrants requested by the United States. As reported by Greg Sandoval in a CNET News article, “FBI charges Megaupload operators with piracy crimes,” “racketeering conspiracy, conspiring to commit copyright infringement, and conspiring to commit money laundering” (http://news.cnet.com/8301-31001_3-57362152-261/fbi-charges-megaupload-operators-with-piracy-crimes). In the raid, the FBI seized $50 million in assets and charged Dotcom and six others with “running an international enterprise based on Internet piracy that cost copyright holders at least $500 million in lost revenue” (http://robot6.comicbookresources.com/2012/01/comics-a-m-fbi-shuts-down-megaupload-file-sharing-site).

  According to a statement issued by the US Justice Department and FBI, this action was truly a breakthrough in pursuing piracy as a crime. As the statement put it: “This action is among the largest criminal copyright cases ever brought by the United States … [It] directly targets the misuse of
a public content storage and distribution site to commit and facilitate intellectual property crime” (http://news.cnet.com/8301-31001_3-57362152-261/fbi-charges-megaupload-operators-with-piracy-crimes). The United States had jurisdiction to act since Megaupload’s servers were located in Virginia, although Dotcom and the other operators were arrested in New Zealand.

  The raids caused Megaupload to close, although the fight has continued, since Dotcom has been fighting extradition. He recently won access to evidence seized during the raids, since the New Zealand high court decided that the warrants used to grab the material were illegal, according to a May 31, 2013, BBC News/Technology article, “Megaupload wins access to data seized in police raid.” So now the New Zealand police have to look through the evidence grabbed during the raid and return any data files considered “irrelevant” to the case, as well as destroy any clones of this information created by the investigators and return any relevant information to Dotcom’s legal team (http://www.bbc.co.uk/news/technology-22716718).

  Meanwhile, as Dotcom fought back against the FBI with a team of twenty-eight lawyers, he defiantly created a new storage service, called Mega, launched on January 20, 2013, a year after Megaupload crashed (https://mega.co.nz). Within a month it was up to over three million registered users and growing at 30 percent a week, according to Andy Greenberg in a Forbes magazine article, “Inside Mega: The Second Coming of Kim Dotcom” (http://www.forbes.com/sites/andygreenberg/2013/04/17/inside-mega-the-second-coming-of-kim-dotcom). As Greenberg describes, this new site is designed to completely encrypt the stored files, so the only person who can decrypt the files is the user, making it impossible for the FBI or even Mega to unlock the file. The theory behind this approach is that the service can’t be responsible for filtering or making available copyrighted content, because the company can plausibly claim it has no way to identify copyrighted material on its servers. The strategy is one of “willful blindness,” whereby Mega might have to provide law enforcement with non-content data, such as IP addresses, but not the data itself. Will this strategy work? Will it make it even harder for the victims of infringement to know who’s sharing their files with others? Only time will tell. And as of this writing the Mega site still exists.

  Yet, despite Dotcom’s global fight against criminal charges with his battery of lawyers—including plans to sue the US government and the studios that triggered the raid with “misinformation and corruption”—the raid has showed that criminal justice agencies are finally serious about pursuing Internet piracy by initially going after the worst of the worst. And despite Dotcom’s counterattack, the bust has cost him a small fortune from the millions he once earned from Megaupload. As Greenberg notes, Dotcom had to fire forty-four of his fifty-two house staff and hundreds of Megaupload employees. All but two of his cars were seized or sold. He owes millions to defense lawyers, and all of his bank accounts were frozen, permitting him only a $20,000-a-month government allowance (http://www.forbes.com/sites/andygreenberg/2013/04/17/inside-mega-the-second-coming-of-kim-dotcom).

  The takedown also showed the detrimental effect of these piracy sites on the market. There was an increase in movie rental and sales in the months after Megaupload was discontinued—evidence that piracy does reduce the sales of the infringed-upon work. As noted by Dara Kerr in a March 2013 CNN article, a new study by Carnegie Mellon’s Initiative for Digital Entertainment Analytics showed that after Megaupload was shut down, online movie revenue increased by 6 to 10 percent, based on researching the revenues of two major movie studies from users in twelve different countries. The researchers concluded, “Shutting down MegaUpload and Megavideo caused some customers to shift from cyberlocker-based piracy to purchasing or renting through legal digital channels” (http://news.cnet.com/8301-1023_3-57573195-93/megauploads-closure-boosts-movie-rentals-and-sales).

  The Megaupload takedown is also significant in showing the pirates that the government and law enforcement are getting serious about intellectual property crimes. While the raid may have been instigated by the film studios, it might be considered an opening salvo in the war against the pirates by the United States and other governments, which can help the book industry, too. While there may be hundreds of active pirates with websites, servers, storage lockers, or accounts for uploaded files, along with millions of individuals downloading the pirated files, the actions against Megaupload and Dotcom serve as a warning to all that law enforcement is now actively pursuing the pirates. So an enforcement action could potentially come after anyone next.

  However, complications could undermine the case. For example, Megaupload filed a request to dismiss the indictment against it on the grounds that it is a foreign company and the government was required to serve the company in the United States, so it was not properly served. In response, in May 2014, the US government submitted its objections to Megaupload’s motion to dismiss the case,168 and in June, a US District Court granted Kim Dotcom’s request to put the MPAA and RIAA civil actions against him for millions on hold to avoid him incriminating himself in the US government criminal case.169 Yet, while the authorities froze his worldwide assets of over $40 million US dollars at the time of his arrest and he was jailed for a month, he earned another 40 million in New Zealand dollars (£20 million) from new ventures, including two more file-sharing sites—Mega and a music venture, Baboom. At the same time, he managed to delay extradition hearings several times, which have finally gone to trial in September 2015, though his bail conditions were retightened so he can no longer travel by private helicopter or boat and has to report to the police twice a week.170 And so the biggest case of Internet piracy downloading drags on, with an appeal from the defense or prosecution almost certain whatever the court’s decision.

  Given Kim Dotcom’s assets, it would seem this case could be prolonged, though he now claims the case has drained him of legal resources and he is broke, but is now returning to court to seek to have some of his frozen assets released to pay his legal fees and expenses.171

  But since this big case, it appears that US law enforcement agencies have not been as aggressively pursuing Internet piracy cases involving the theft of books, films, and music, though there have been a sprinkling of smaller cases, perhaps due to a shift in priorities, given the growing concern with hacking and cybersecurity crimes.

  However, on the international front, the big story was the December 2014 takedown of The Pirate Bay website—by far the biggest source of international pirating—by the Swedish police, with some pressure from the US government. The story actually dates back to the first police arrest in 2006, when Hollywood sought the government’s help in cracking down on the site, after claiming that piracy cost it $6.1 billion in 2006 alone. In response, the United States threatened to impose trade sanctions against Sweden through the World Trade Organization if the site wasn’t shut down. And so the Swedish police raided the site in 2006, which included “confiscating enough servers and computer equipment to fill three trucks and making two arrests.” But three days later, the site was back up again, and was more popular than ever due to coverage by the mainstream media.172 Instead of being based in Sweden, it moved its operation to cloud-hosting in two different countries with several virtual machines handling operations, and the original cofounders, Fredrik Neij, Peter Sunde, and Gottfrid Svartholm, sold the site to a possible shell company.

  By 2008, the site was the ninety-seventh most-visited website on the entire Internet, and at the time of their 2009 trial, when the site reportedly had twenty-two million users, the cofounders received $3.6 million in fines along with time behind bars for copyright infringement. The way the site worked is that it didn’t actually host any of the copyrighted material. Instead it maintained a database of tracker files so users could download the torrents, rather than the actual copyrighted content, and users needed a separate piece of software to actually use the torrent file, which consists of a set of instructions on how a computer should reassemble a large file from the relatively small pieces shared by
many hosts, and illegally download the content. Essentially, this is distributed file sharing, so in effect, multiple pirates are to blame for a single completed file that is opened by the user.173

  And then on December 9, the Swedish police raided a server room in the Stockholm area and left with several servers and computers, which took down not only The Pirate Bay, but also some related sites—bayimg.com, pastebay.net, and a few other torrent sites—in response to a complaint by the Rights Alliance, a Swedish anti-piracy site. But it would seem that the raid had little impact on piracy. According to Variety, on December 8, almost 102 million IP addresses were downloading movies and TV shows using the torrent sites, and that dropped to 95 million on December 9. But a few days later, the downloads were up to 100.2 million, perhaps because The Pirate Bay site was quickly replaced by the uTorrent site.174 Plus, it was relatively easy to re-create the same service, since The Pirate Bay’s database of torrent links was freely available for download, so another organization just had to upload this base and be ready to respond to the high level of traffic. And that’s what happened. The operators of Isohunt, one of the torrent search websites blocked in many countries, including the UK, re-created a new version of The Pirate Bay on the oldpiratebay.org site.175 As of this writing, while the original site is gone, there are a number of proxy sites (https://thepiratebay-proxylist.org) and it is still considered the top site for torrent downloads.176

  While the Megaupload saga drags on and The Pirate Bay seems to have found new life to outwit the law, the decline in law enforcement actions against piracy sites could mean that there is a kind of exhaustion setting in, since for all the effort to take down the worst of the worst pirates, the practice of piracy still goes on, making these few takedowns seem like a hopeless effort—like tilting at windmills, only to find they are still popping up everywhere. Or perhaps law enforcement efforts have targeted other, more dangerous Internet criminals, such as those hacking into corporate servers and stealing masses of data and intellectual property, such as in the Sony case. Or then again, the anti-piracy measures could be working through the growing number of private efforts to combat piracy. Seppala concludes his article, “The Pirate Bay Shutdown: The Whole Story (So Far):