"We're just like YouTube," Megaupload lawyer tells Ars

Megaupload's US attorney, Ira Rothken, has a succinct description of the US government case against his client: "wrong on the facts and wrong on the law."
The week has been a busy one for Rothken, a San Francisco Internet law attorney who has previously represented sites like isoHunt and video game studios like Pandemic. When I call, he's eating crab cakes and waiting for yet another meeting to start, but he has plenty of time to attack the government's handling of the Megaupload case.
In Rothken's words, the government is acting like a "copyright extremist" by taking down one of the world's largest cloud storage services "without any notice or chance for Megaupload to be heard in a court of law." The result is both "offensive to the rights of Megaupload but also to the rights of millions of consumers worldwide" who stored personal data with the service.
The best way to look at Megaupload, he says, is through the lens of Viacom's $1 billion lawsuit against YouTube—an ongoing civil case which Viacom lost at trial. (It is being appealed.)
For instance, Viacom dug up an early e-mail from a YouTube co-founder to another co-founder saying: "Please stop putting stolen videos on the site. We’re going to have a tough time defending the fact that we’re not liable for the copyrighted material on the site because we didn’t put it up when one of the co-founders is blatantly stealing content from other sites and trying to get everyone to see it."
"Whatever allegations that they can make against Megaupload they could have made against YouTube," he says of the government. "And YouTube prevailed!" (Rothken made a similar case when he represented search engine isoHunt in 2010, saying it was just like Google.)

Under this view, Megaupload should have been served with DMCA takedown notices (the site did have a registered DMCA agent, as required by law, though not until 2009). If rightsholders believed that was insufficient, they should have conferred with Megaupload's US counsel (the company has retained US attorneys for some time before the current action). And if that wasn't satisfactory, a civil copyright infringement lawsuit should have been filed, one that would not have taken the site down first and asked questions later.
Instead, the government's willingness to pursue the case as an international racketeering charge meant "essentially only sticking up for one side of the copyright vs. technology debate." The result, Rothken says, is "terrible chilling effect it's having on Internet innovators" who feature cloud storage components to their business.
The US Department of Justice released a lengthy statement to the press detailing the charges against Megaupload, while New Zealand police publicly offered crazy details of their bid to arrest Megaupload founder Kim Dotcom (born Kim Schmitz). "Police arrived in two marked Police helicopters," said New Zealand Detective Inspector Grant Wormald at a press conference. "Despite our staff clearly identifying themselves, Mr. Dotcom retreated into the house and activated a number of electronic locking mechanisms. While Police neutralised these locks he then further barricaded himself into a safe room within the house which officers had to cut their way into. Once they gained entry into this room they found Mr Dotcom near a firearm which had the appearance of a shortened shotgun. It was definitely not as simple as knocking at the front door."

This sort of thing makes Rothken furious. Using "James Bond tactics with helicopters and weaponry, and breaking into homes over what is apparently a philosophical debate over the balance between copyright protection and the freedom to innovate, are heavy-handed tactics, are over-aggressive, and have a detrimental effect on society as a whole," he said. In addition, the raid was a reminder that bills like the Stop Online Piracy Act "ought not to ever be passed, because these tactics [the helicopters, etc.] are so offensive that if you take the shackles off of government, it may lead to more abuse, more aggression."
Rothken also suggested that the timing of the raid was suspicious; "over a two-year period, they happened to pick the one week where SOPA started going south."
I asked about specific allegations in the indictment, including the government's quotation of internal e-mails showing employees asking for and uploading copyrighted material. Rothken wouldn't address any specifics, but he did claim the government had engaged in some highly selective editing, choosing a few "bad communications" out of terabytes of seized data. It's as if one were to "judge the character of a person by the three worst things they ever did as a college student and ignored all the things they did as an adult."
For now, the case remains in New Zealand, where questions of bail and then extradition are being handled by local courts. Though the entire case could take a long while to wind its way to completion, Rothken concludes, "Megaupload believes strongly it's going to prevail."

Spin room

This is not a view that convinces either the US government or major copyright holders. Michael Fricklas, general counsel of Viacom and the man overseeing the company's litigation against YouTube, finds the Megaupload/YouTube comparison to be "quite a spin."

"The indictment shows that Kim Dotcom was deeply involved in every aspect of the site, designed the site to encourage infringement, helped specific users find pirated content and improve the piracy experience, paid uploaders who were also in it for money, and knew about lots of very specific infringement," he told me this afternoon. "Thus, even under YouTube's extreme view of the DMCA protections, the DMCA would provide no defense. Criminal and civil proceedings each have a different set of processes and outcomes, and are certainly not mutually exclusive. There are many times—such as in the case of Megaupload—where it is entirely appropriate for both types of action to take place."
A Department of Justice spokesperson told me that the government only goes after groups that show enough evidence of "willful" criminal conduct to take them beyond the realm of merely civil litigation, and that Megaupload certainly qualifies thanks to the same factors mentioned by Fricklas.
As for the timing of the arrests, the DOJ says it had nothing to do with the SOPA debate. After nearly two years of investigation involving many different countries, the indictment against Megaupload was returned by the grand jury investigating the group on January 5 of this year—almost two weeks before the big anti-SOPA protests captured the Web's attention. The arrests themselves—complete with their police helicopters and safe room in-breaking—took place shortly after New Zealand police obtained arrest warrants.
What the case may show more than anything else is the sheer disparity between the dueling worldviews involved. Was the Megaupload takedown an offensive assault on innovators who may have, on a few occasions, done something a tiny bit naughty—or was it a massive Mega-conspiracy worthy of an international police takedown?