Megaupload questions keep coming

April 23, 2012

Megaupload questions keep comingThe question of what to do with 25 petabytes of data uploaded to Megaupload may be settled this week. But there are legal questions about whether the site’s owner could stand trial.

As we reported in January, federal officials took control of Megaupload’s bank accounts as part of the legal crackdown on the site. That left two hosting companies unpaid and preparing to take their usual action when there’s no sign of a customer paying up, namely wiping the files. To put things into context, one of the hosts says the Megaupload bill is $9,000 a day.

After a lengthy legal process, three issues remain unresolved heading into negotiations on Thursday. Firstly, does Megaupload have the right to access enough cash from its frozen accounts to keep the data on the servers? Secondly, can the hosting firms be forced to keep the data intact even if they don’t get paid?

And finally, if the data is preserved, does Megaupload have the right to allow uploaders to access their files? (Under the current legal situation, there doesn’t seem to be any serious prospect of the files in question being available for third-party download again.)

But it was the legal discussions that set up this week’s formal negotiations that produced a real curveball. Judge Liam O’Grady noted that it’s not certain there’ll ever be a copyright infringement trial over the case.

The problem is that while Megaupload founder Kim Dotcom has been charged over the affair (and arrested in New Zealand), there haven’t yet been any proceedings against Megaupload itself, and it may be possible that simply can’t happen. Whereas the US legal system works on the basis that individuals can be charged anywhere in the world, a company must usually be physically based in the US to come under its legal system.

If that theory holds, prosecutors will have the potentially difficult task of proving that Dotcom as an individual is legally responsible for the actions of Megaupload the corporation, of which he is reported to be a 68% owner.

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