A lawyer representing file sharing site Megaupload says the verdict could have a negative impact on cloud storage providers

Megaupload Lawyer Says Case Could Impact Other Cloud Storage Providers

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An attorney that represents file-sharing site Megaupload says the massive copyright infringement case could be bad news for other cloud storage providers, according to a report on Wednesday by IDG News Service.

Ira P. Rothken, an attorney that will represent Megaupload if the case comes to trial, says other cloud storage providers may be held criminally liable for illegal content stored by customers if a verdict against Megaupload is reached.

Megaupload founders have been accused of copyright infringement, aiding and abetting copyright infringement, wire fraud and money laundering. When Megaupload was pulled offline in January, the FBI seized 18 domains associated with Megaupload.com, and approximately $50 million in assets. The case is being hailed as the largest US copyright infringement case in history.

The case has shed new light on the concern of the liability of cloud providers, and Megaupload’s impact on hosting providers was the basis of lawyer and WHIR contributor David Snead’s World Hosting Days presentation in March.

Not only is policing and monitoring every file uploaded an impossible task for a cloud provider, but also privacy laws in the US prevent providers from looking at the content users have stored, Rothken says. Megaupload will likely defend itself using the safe harbor provisions of the Digital Millennium Copyright Act that protects ISPs against being liable for what users do on their networks, according to the report.

As the Electronic Frontier Foundation looks to recover legitimate files stored on the Megaupload servers, the MPAA says it would agree for this to happen if a mechanism for preventing the download of illegal files was set up, according to a report on Net Security.

The US government has rejected a deal that Megaupload founder Kim Dotcom had reached with its web host Carpathia Hosting, in which it would pay the hosting provider $1 million to obtain the physical servers. The MPAA claims that if this was to happen, it would result in further copyright infringement. It is estimated that Carpathia Hosting is spending $9,000 a day hosting the Megaupload content. This is apparently a temporary arrangement, and Carpathia has asked the US government to cover the costs.

Earlier this week, Megaupload founder Kim Dotcom was granted Internet access by a New Zealand judge, according to a report by Mashable on Monday. Dotcom has not been able to access the Internet since being granted bail in February. He was also granted swimming privileges, and the ability to travel to a recording studio in Auckland twice a week to finish an album.

A hearing is scheduled for August to determine whether Dotcom will be extradited for trial to the US.

Talk back: How do you think the Megaupload verdict would impact cloud storage providers? Do you think the government should take over hosting of the Megaupload files? Let us know in the comments.

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One Comment

  1. Adam

    I firmly believe that users should be held individually responsible for laws that they violate. In the case of MegaUpload, users who made copyrighted/illegal material publicly available are the bad guys. Holding the hosts responsible for crimes they did not commit is only going to push hosting business to countries exclusively outside of the United States.