The timing was certainly interesting: almost immediately after Congress announced that the Stop Online Piracy Act (SOPA) and the PROTECT-IP Act (PIPA) had been temporarily tabled, the Department of Justice (DOJ) and FBI seized MegaUpload — one of the world’s most popular “locker-and-links” services. Not only has the site been yanked from the internet, but several of the company’s principals — including a colorful (and many say disreputable) character, Kim Dotcom — have been arrested.

Following the takedown, hacker group Anonymous pulled off an audacious “distributed denial of service” (DDOS) attack on the FBI and the DOJ, along with Warner Music, Universal Music and the Recording Industry Association of America (among others). For the record, we find such activity entirely counterproductive.

Intrigue aside, the MegaUpload incident brings up a number of questions for creators. Nobody would argue that the service hosted scads of unauthorized content. But whether or not the company is guilty of the laundry list of activities laid out in the US government’s indictment, it is also true that MegaUpload was functionally an online locker platform. From a purely technological standpoint, this makes it not all that different from Dropbox or SoundCloud — services that musicians and music entrepreneurs use every day to store files and collaborate with other artists around the world.

Again, this post is in no way condoning what’s alleged in the government’s case against MegaUpload. Kim Dotcom, with his previous convictions for insider trading and embezzlement, definitely seems like a shady fella. We’re mostly concerned with what the seizure might mean for sites “with substantial non-infringing uses,” to quote a footnote in the Supreme Court’s 2005 Grokster (PDF) decision. Because as musicians and label owners, we use locker sites all the time for material to which we own all the underlying rights.

Now, before you go digging into your case law and statute, keep in mind that the action brought against MegaUpload is a criminal case, not a civil one. Besides the higher standard, this is important when trying to figure out what impact — if any — a MegaUpload ruling would have on the broader universe of locker and “cloud” services.

Most copyright cases are civil, which means action is brought by rightsholders like the major studios, record labels and so forth. Criminal prosecutions are brought by the US government, in this case, the DOJ. Unlike civil cases, criminal infringement requires willfulness (and only where willfulness is provable beyond the infringement itself). So, unless there’s a strong demonstration of intent, it’s unlikely that a site like Dropbox would find itself in the DOJ’s crosshairs. The presumption is that other locker services (keeping in mind their “substantial non-infringing uses”) would remain eligible for the “safe harbors” in the Digital Millennium Copyright Act, provided they comply with the requirements laid out in section 512(c) of the Act. (More info here.)

So, the sky is probably not falling with regard to certain platforms that musicians use every day. Still, these developments do raise broader questions about what happens to user data if a site is pulled. Although a huge amount of content on MegaUpload was unauthorized, there was also plenty of stuff on the site that users wholly owned. Now all of that material is gone. Should users expect to get any of it back?

Other sites are already taking proactive measures to “clean up” their services in light of the MegaUpload takedown. Fileshare is moving to suspend accounts associated with unauthorized content. Filesonic.com has disabled its file sharing mechanism, and can only be used as storage for the user. It seems likely that we’ll see more platforms following suit. Will internet companies begin “voluntarily” leaving their safe harbors and actively monitoring their sites for possible infringement? Could we see more criminal cases brought by the government using allegations similar to the Mega indictment? Or will most of the action around copyright involve civil suits and DMCA defenses?

Lots of open questions, for sure.

FMC is committed to growing the legitimate digital music marketplace so that creators can get paid for the use of their work. But we also know that some innovations that *can* be used for unauthorized distribution are also useful for musicians, artists and small businesses. That’s why it’s so important to make sure that our laws and enforcement strategies are targeted to those who profit from unlawful activity, and don’t simply demonize an entire technology. We’d also suggest that there’s likely a lot more discussion to be had around licensing and business models, which we see as the other side of the enforcement coin. These are tempestuous days for the entire internet ecosystem, and we want the coolest heads to prevail.

Good thing musicians have always been cool.