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protection offered by the DMCA. The case of Viacom vs Youtube (a $1 billion law suit) found a company must be wilfully flouting redflagged infringements to lose its protection. Granick and Falzone also pointed to UMG vs Shelter Capitals, which pitted copyright owners against the Veoh website. That service offered access to unlicensed music videos which showed adverts based on the name of the artists. Copyright owners argued, said Granick and Falzone, that “it must have known that the works on its site were infringing, therefore disqualifying it from the safe harbour”. The 9th US Circuit Court of Appeals found “merely hosting a category of copyrightable content, such as music videos, with the general knowledge that one’s services could be used to share infringing material, is insufficient to meet the actual knowledge requirement”.

In both cases, the copyright owners displayed a range of communications showing the companies knew there was infringing material — just like the Megaupload case. And in both cases, it was not enough to eliminate “safe harbour” protection offered by the DMCA.

The Viacom vs YouTube case would have more relevance for the arguments against Megaupload. FBI prosecutors had argued the company was liable because it could and didn’t identify infringing material. US District judge Louis Stanton ruled in YouTube’s favour, saying: “Plaintiffs often suggest that YouTube can readily locate the infringements by using its own identification tools. It had no duty to do so.”

Granick and Falzone’s final contribution to the case against Megaupload raised the question of wilfulness. There were efforts taken by Megaupload and spelled out in the indictment which appeared to attempt to reduce piracy, rather than encourage it. The steps included Megaupload’s Direct Delete access, trumpeted by Dotcom after his arrest. The lawyers said “if Megaupload and its principals believed they met the requirements of the Safe Harbor, then they were not wilfully disregarding the law, and cannot be held criminally liable”.

“In sum, the Megaupload indictment raises the stakes while pushing the boundaries of secondary copyright liability beyond current civil law, which is already muddy and unsettled. Every innovator and future customer has to guess whether they might be targeted next.”

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