Initially a law firm called Sidley Austin LLP had been negotiating on Megaupload’s behalf for the return of such assets and funds held in Hong Kong, New Zealand and Canada. Funds were indeed released from Hong Kong in February (to pay Mega employees) and from New Zealand in March (to pay for Kim Dotcom’s living expenses).

At the end of last month, Sidley Austin LLP and Rothken law firm filed a motion in the US to have more funds released to cover Mega’s legal fees. Later Sidley Austin withdrew and a new law firm called Quinn Emanuel Urguhart & Sullivan took their place.

The addition of the Los Angeles-based company to Megaupload’s legal team was widely considered a great asset for Kim Dotcom and his co-defendants to exploit. Andrew Schapiro, a partner at Quinn Emanuel, had previously represented several technology and media companies including Google and YouTube, leading the latter to a summary judgment in its $1 billion lawsuit against Viacom.

In a new court filing the US government complains that Schapiro’s past record in copyright cases, and that of Quinn Emanuel as a whole, present a series of conflicts of interest.

The government says the first conflict concerns YouTube. Last week the U.S. Court of Appeals in Manhattan reversed a lower court’s decision to issue summary judgment in the Viacom v YouTube case, so now that battle is back on. YouTube is also listed as a victim and potential witness in the criminal indictment against Megaupload. Quinn Emanuel can’t have interest in both cases, the government says.

The second claimed conflict concerns Google, a company represented by Quinn Emanuel on a number of occasions including some involving the company’s AdSense advertising service. According to the Megaupload indictment, Google withdrew its Adsense service from the now-defunct file-hosting service in part due to copyright infringement concerns. The government intends to call Google as a witness in the Megaupload case.

But it doesn’t stop there. The government goes on to list several companies that have been represented by Quinn Emanuel in copyright matters who are also alleged victims in the Megaupload case and who could be called as witnesses.

The list includes a who’s-who of Hollywood and TV companies including Disney, Fox, Time Warner, Warner Bros. and HBO, in cases dating between 2006 and 2009. Another, a trademark dispute involving the company Danjaq LLC (holder of copyrights and trademarks relating to James Bond) and Sony dates back to 1998.

Software companies make an appearance too. Quinn Emanuel represented Brøderbund Software back in 1986, Intuit (the company behind Quicken) in 1997, and at some point Bulletproof Software. It is claimed that all of these companies had their products distributed unlawfully via Megaupload and could be called to give testimony.

“It is unclear how Quinn Emanuel intends to zealously represent defendants Megaupload Limited and Kim Dotcom while also protecting confidential attorney-client information gained in the course of representing other clients [...] particularly where those clients’ interests are directly opposed to those of the defendants,” the government writes.

But according to the government the conflicts go even deeper, particularly since Quinn Emanuel are now applying for funds seized from Megaupload to be released in order to pay legal fees.

“The possibility of a conflict of interest raised by Quinn Emanuel’s proposed representation of Megaupload Limited and Kim Dotcom is not limited to mere subject matter. The assets seized by the government from defendants may eventually be restored to victims – including possibly the current and former Quinn Emanuel clients listed above – as restitution,” the government adds.

In any event, the US government believes that the amount of money already released by New Zealand to Kim Dotcom ($240,000 to be released in monthly installments of $32,000 until the funds are depleted then indefinite monthly payments of $16,000) will not prove restrictive when it comes to hiring a “competent” legal team, “..even if such funds prove insufficient to pay Quinn Emanuel’s billing rates.”

The government’s complaints pose a real problem for Megaupload. Will it ever be possible for Kim Dotcom and his co-defendants to recruit a high-quality copyright specialist law firm that hasn’t ever represented any of the potential witnesses in the case? It seems unlikely.

Meanwhile, the fight for legitimate users of Megaupload to get their data back continues.

“The Electronic Frontier Foundation (EFF) will ask a federal judge on Friday to establish a process that would allow lawful users of Megaupload’s cloud storage service to get their files back,” the EFF reports.

Update: Quinn Emanuel just responded to the objections in quite an entertaining rebuttal.

Here’s a quote:

“[I]f the Government is to have its way in this case, the only lawyers before the Court will be those representing the Government. If the Government is to have its way, the only evidence available to the Court would be that cherry-picked by the Government, for the Government, from the universe of relevant servers slated to be wiped. If the Government is to have its way, in sum, Megaupload will never get its day in Court and the case will effectively be over before it has even begun.”

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

Across the pond in the United States, there is an Internet provider that has single-handedly implemented a similar scheme. Suddenlink, one of the top 10 cable companies in the country, disconnects subscribers for six months after they have received three DMCA notices. According to a company representative, Suddenlink is required to take this action under the DMCA.

TorrentFreak has been in contact with one of the customers who had his Internet connection disconnected for three alleged copyright violations. The affected subscriber provided detailed chatlogs with Suddenlink where the following explanation for the drastic measure is given.

Customer: I want to reconnect my internet service. They said I got 3 DMCA letters and they said that by law I had to be disconnected. Is that true?

Suddenlink rep: Yes, your internet was disconnected due to DMCA. When the internet is disconnected due to DMCA, it can not be reconnected for a minimum of 6 months.

Customer: The DMCA makes that requirement?

Suddenlink rep: Yes.

Customer: So you’re stating, for the record, that by law, the DMCA law, that you have to disconnect users for receiving 3 DMCA letters?

Suddenlink rep: You have no choice in the matter.

Suddenlink rep: It is the DMCA policy that it can not be reconnected for 6 months.

Suddenlink rep: It may be the DMCA policy or it may be the way we go about following the DMCA guidelines.

Customer: The law states that?

Suddenlink rep: Once the 3rd offense occurs, it can not be reconnected for 6 months.

Suddenlink Rep: The information I have on the DMCA states: This law was enacted in 1998 to protect against illegal downloading of copyrighted material like movies, music, etc. As an Internet Service Provider (ISP), Suddenlink , and other ISPs, must implement a policy of terminating internet service of customers who repeatedly share copyrighted files.

The explanation given above is pure nonsense of course. The DMCA does not and never has required ISPs to disconnect users. For some reason Suddenlink customer support was told to communicate this lie to its users. What is true, however, is that Suddenlink will disconnect subscribers after three alleged warnings.

TorrentFreak contacted the company and we were told that this measure is hidden in their Terms of Service. Although there is no word about a three-strikes policy, we did find the following sentence that could be used to justify the disconnections.

“If you continue to transfer Copyrighted Material illegally, you are violating Suddenlink’s policies and Suddenlink may take further action, including limiting your Internet download capacity, suspending or terminating your account, or a range of other measures.”

In reality, this means that subscribers will be disconnected from the Internet for 6 months without a refund. The subscriber we talked to was informed about the penalty over the phone and never received any documents to back it up.

Although Suddenlink’s three-strikes policy is the most extreme, the company is not the only US Internet provider that has implemented it. Cox is using a similar scheme, but with the major difference that the disconnection is limited to a few hours, not six months.

Disconnecting users based on claims of copyright holders and without any form of trial seems to be an extreme measure for a company that provides such an essential service as Internet access. Suddenlink told TorrentFreak that they are within their rights, just like Comcast said two years ago when they started blocking BitTorrent traffic.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

If you have received a letter from lawyers Davenport Lyons (or indeed any other law-firm operating the same business model) accusing you of illegally sharing games, videos or music, this article will provide serious food for thought and give you the tools and knowledge to make your voice heard at a government level. It is unacceptable that people are being wrongfully accused. We believe that your names and addresses should not have been handed over to these lawyers in the first place, and that you should not have received a threatening letter.

This is a guest post from Michael Coyle of Lawdit Solicitors who is currently defending many of those accused in the Dream Pinball, Colin McRae Dirt, Call of Juarez and more recently, the various porn titles cases brought by DigiProtect in the UK. (Intros, links, editing and letter template added by TorrentFreak/Penumbra)

Alleged File-Sharers: Why the Information Commissioner Has Let You Down

The Information Commissioner’s Office (ICO) is a non-departmental public body reporting directly to Parliament. It is the office dealing with the Data Protection Act 1998 and the Freedom of Information Act 2000, the Privacy and Electronic Communications (EC Directive) Regulations 2003 and the Environmental Information Regulations 2004 in England and Wales.

UK ISPs were ordered earlier this year [and in 2007] by the High Court to disclose information relating to its customer’s data, based on information provided to them by amongst others, video games companies. The information sought was based on the customer’s IP address. Pursuant to CPR 31.18, lawyers applied for an order that the ISPs disclose the full name, postal address and telephone number of the subscriber of each of the IP addresses supplied.

The game plan was to match each IP address with an individual and write to them with a hefty threatening letter and a request for £500-600. If this sum was not paid, court action was threatened, costing tens of thousands of pounds. It all seemed fairly conclusive. The ISPs complied and the Lawyers [Davenport Lyons] commenced the enormous task of writing to over (so we understand) 25,000 potential infringers.

However it was only when responses started to flood in – many in their hundreds to Lawdit Solicitors – did it become clear that while IP addresses could reveal a name and real-life address, it did not reveal the culprit. It proved very little. It certainly did not prove that any copyright infringement had taken place, far from it. Only by inspecting the hard drive of the customer’s computer could you do this. If there were any other evidence to sit alongside the IP address, for example a user name or password of the file sharing software you could sympathize with the rights holder.

But to rely on the IP address alone is wholly disproportionate and has resulted in untold misery to many thousands of individuals. This whole affair sums up in my view how little the Information Commissioner (IC) is really concerned with an individual’s data. I am not aware of any publicly quoted concerns from the IC about this issue and he has remained silent as the forums and bulletin boards crackle with the indignation and invasion of individual’s data. You cannot blame the ISPs. As a Court Order was in place, why would an ISP go out on a limb for a few thousand customers?

But the IC ought to have been keeping a watchful eye out and at the very least issue a press release to offer individuals some comfort. The silence is even more deafening in that on 29 January 2008, the ECJ held that Community law does not require member states to oblige ISPs to disclose details of suspected file-sharers to enable a copyright owner to bring civil proceedings.

Personal data is protected generally in the EU by virtue of the EC Directive on the protection of individuals with regard to the processing of personal data (95/46/EC) (Data Protection Directive). Member states may provide exemptions to protection in order to conduct criminal investigations or safeguard national or public security or to protect the rights and freedom of others (Article 13(1), Data Protection Directive).

In the UK such an exception can be found under section 35 (1) of the Data Protection Act 1998 which provides that ‘Personal data are exempt from the non-disclosure provisions where the disclosure is required by or under any enactment, by any rule of law or by the order of a court.’ This exemption does not contain any further considerations for a Data Controller before making a disclosure in these circumstances.

The EC Directive on the processing of personal data and the protection of privacy in the electronic communications sector (2002/58/EC) (E-Privacy Directive) provides that national authorities may only lift the protection of data privacy in order to safeguard national or public security or to conduct investigations into criminal offences or the unauthorised use of an electronic communications system, where this is a “necessary, appropriate and proportionate measure” (Article 15(1), E-Privacy Directive).

The ECJ reached its conclusion(.pdf) following a Spanish case concerning Telefonica. The Juzgado de lo Mercantil No 5 de Madrid decided to stay the proceedings and referred the following question to the Court for a preliminary ruling:

Does Community law, specifically Articles 15(2) and 18 of Directive [2000/31], Article 8(1) and (2) of Directive [2001/29], Article 8 of Directive [2004/48] and Articles 17(2) and 47 of the Charter permit Member States to limit to the context of a criminal investigation or to safeguard public security and national defence, thus excluding civil proceedings, the duty of operators of electronic communications networks and services, providers of access to telecommunications networks and providers of data storage services to retain and make available connection and traffic data generated by the communications established during the supply of an information society service?

The ECJ, responded that the answer must be that Directives 2000/31, 2001/29, 2004/48 and 2002/58 do not oblige Member States to ensure effective protection of copyright in the context of civil proceedings to communicate personal data. A fair balance needs to be struck between the various fundamental rights and in particular the principle of proportionality. In Advocate General Kokott’s opinion she considered that it was compatible with Community law for member states to exclude operators of electronic communications networks and services from having to make available personal data relating to connection and traffic information in the context of a civil, as distinct from criminal, action.

While the decision is not binding on the ECJ it will generally follow the Advocate General’s opinion. For the vast majority if not all of the 25,000 recipients, this decision ought to have been interpreted as a request for information relating to a non criminal offence (i.e. any copying/file-sharing was non-commercial) and the request for the personal data ought to have been refused.

If you have received a letter accusing you of illicit file-sharing and you are innocent then please write to the Information Commissioner with your story and complain that the release of your personal data was a breach of the Data Protection Act 1998, while urging them to carry out a review of all subsequent releases.

The Information Commissioner’s Office, Wycliffe House, Water Lane, Wilmslow, Cheshire, SK9 5AF.

For your convenience, a TorrentFreak reader Penumbra has created this template in order to streamline the complaints procedure: (Link)

Update: You may petition the government online by following this link.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

Nevertheless, following an investigation by UK Trading Standards, the Federation Against Copyright Theft (FACT) and the police, the admin was arrested. At the time, FACT claimed that he was detained due to “offenses relating to the facilitation of copyright infringement on the Internet.” Except there was a problem.

There is no criminal offense of ‘facilitation of copyright infringement’ under English law. There would have been at least a civil offense if TV-Links had hosted the videos themselves, but they did not. Sites like YouTube and Dailymotion did, but the police or anti-piracy groups didn’t go after these giants. Indeed, the police themselves seemed to disagree with FACT’s reasoning for the raid, saying that the admin had been arrested for “supplying property with a registered trade mark without permission.”

…which raised another problem. The Trade Marks Act 1994 (specifically section 92) was designed to deal with physical, real-world counterfeit goods. Supplying links, if anything, could only be considered a service – definitely not a sale of physical goods. Getting a conviction on these grounds would be tricky, if not impossible. Considering the problems highlighted above, it’s no surprise that the TV-Links case has disappeared from the news radar.

TorrentFreak tracked down the now ex-admin of the site, 26 year-old Dave Rock, for the lowdown on this important case which seems to ask two questions: Can someone be held responsible when 3rd parties merely link to copyright works that are hosted by someone else, and furthermore, does this constitute a criminal offense under an act designed to protect physical goods?

It all starts on the morning of 18th October, just five days before the police raided OiNK. Dave had some unwanted visitors. At 06:20, two police officers, three FACT members, and around five Trading Standards officials descended on Dave’s home. Fortunately for him, in his case the media wasn’t tipped off, so there were no photographers and reporters outside his house. Alan Ellis of OiNK was not so lucky.

“The police and Trading Standards officers were always polite and professional, I wasn’t man handled like you see with the over acting police on the TV,” Dave told us. “I was arrested as soon as I opened the door, not cuffed and was allowed to grab a few bits, like my wallet and phone. They seized my laptop, my old PC and annoyingly, my girlfriends PC too, along with random CDs and four or five old hard drives, ranging between 8GB to 15gb.”

When we asked Dave what was on the search warrant, he said: “They ticked Video Recording Act 1984 – Section 16A and Trade Marks Act 1994 – Section 93. But, thinking about some of the questions during the interview I got the impression they were looking for DVD copying kit or they hoped to find this type of thing. FACT’s website always boasts about DVD pirate busts.”

The police officers then took Dave to the station where he was questioned. Not by the police, but by people from Trading Standards and FACT, a well known private anti-piracy company-come-lobby group. Quite why a private company is allowed to directly question someone in a criminal case that they may wish to prosecute privately is another question, and one that many people will find unpalatable.

It seemed that both outfits were disappointed, they must have expected more than just hyperlinks. In common with thousands of forums around the world, Dave didn’t know any of the TV-Links staff personally, and obviously didn’t know anything about the users. Almost 75% of the site’s visitors came from China, 10% from the US and next popular was the UK, at just 3.8%. Hardly a threat to Great Britain Ltd, but of course the implication was that Dave was making money. The reality was that he was receiving around $2 to $5 per day in donations from random site users, which he used to cover the server costs.

After six hours, Dave was released – without being charged and with no restrictions. Now, well over a year later, not much has changed. For the last 6 months or so, Dave has had no contact with the police and no contact through his lawyer with FACT or (Gloucester) Trading Standards. In fact, GTS has no further involvement in the case and has deferred to FACT, just in case they want to make a private prosecution. But, everything has gone very quiet.

TorrentFreak asked Dave if it had ever been raised that he was arrested under laws ill-placed to deal with the situation. He told us, “When it comes to law there isn’t really any point arguing after the point, you need to concentrate on identifying [in this case] how FACT will interpret the current law and, if/when this ends up in court, how they will use it to their advantage.”

Until then, it just seems like a waiting game. “I guess you could call it being in limbo, but recently I haven’t given it much thought, I’m just getting on with my life,” Dave told us. “The only thing that’s a little annoying is that FACT still have all the gear seized by GTS, apparently they’ve been given it for “forensic analysis”. Do I hear you cry ‘breach of Data Protection Act‘, for passing private data to a private company? Again this is something we are still looking into.”

So how on earth did TV-Links end up on the radar in the first place? Why was such significance put on the site and why did the response include a raid with so many people in attendance from the police, government trading standards and Hollywood-funded private company FACT?

“One thing I’d like to mention, Gloucester Trading Standards were always polite and professional,” said Dave. “In my eyes they were led up the garden path by FACT. My personal opinion is that Gloucester Trading Standards were lead to believe I was copying and selling DVDs. But, when they entered my home they only found crappy old PC gear, Laptop and no DVDs, and lost all interest – if they were ever interested in the first place.”

Despite the lack of interest and indeed grounds for a conviction, it doesn’t change the fact that TV-Links is gone as a result of the above actions. Why did it even find a place in people’s lives in the first instance? Dave believes it’s down to sheer lack of choice. “TV-Links and other linking sites are only around because the big media companies haven’t supplied the viewing public with any viable alternatives, at least until recently in the UK. The BBC iPlayer is very good, but it’s a shame it’s only 7 days of TV.”

So, with the authorities backing away, what are the chances of TV-Links making a comeback? “Running the site did take up all of my free time, it was good fun running it but I’m happy I now have my evenings and weekends free,” Dave told us. He has no intention of bringing the site back, particularly since a TV-Links.co.uk replacement site popped up many months ago at TV-Links.ws.

Finally, when sites are busted, many people are interested in exactly how the owners were tracked down by the authorities. With TV-Links, the techniques weren’t mysterious at all. They didn’t need to be. The reason why it was so easy is the very reason Dave felt free to run the site in the first place:

“To be honest I didn’t really attempt to hide my ID, as under UK Law linking to another site isn’t illegal, so I didn’t see the need.”

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.