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U.S. says MegaUpload's hosting service is no innocent bystander


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Carpathia Hosting says it shouldn't have to heft costs of preserving MegaUpload's data, but U.S. attorney suggests managers should have predicted that partnering with a pirate site would be expensive.

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MegaUpload's U.S. legal team leaves courts following a hearing about preserving the company's data servers.

(Credit: Greg Sandoval/CNET)

ALEXANDRIA, Va.--Carpathia Hosting had plenty of reason to know that their MegaUpload gravy train would roar off the tracks one day, according to a lawyer representing the U.S. government.

Ever since January, when the U.S. Department of Justice filed criminal copyright charges against MegaUpload, one of the world's most popular cyberlocker services, the private firm that hosted MegaUpload's servers has preserved user data on its own dime. During a hearing in U.S. District Court for the Eastern District of Virginia, the company told the judge yesterday that the U.S. government should pick up the tab.

Jay Prabhu, the lawyer representing the U.S. Attorney's office, doesn't think that's fair. He told the court that if the cost of doing business with MegaUpload has gone up, Carpathia's added expenses shouldn't be thrust onto taxpayers. Later, Prabhu made several comments about Carpathia that for the first time in the case suggested someone other than MegaUpload's managers may bear some responsibility.

The hearing was held to try to determine what should be done with MegaUpload's user data. The service has been taken down and the company is unable to pay the hosting costs. Numerous parties including the Motion Picture Association of America, the Electronic Frontier Foundation, and MegaUpload's lawyers all have an interest in what becomes of the billions of digital files belonging to MegaUpload's former users.

Like Carpathia, most of the parties told U.S. District Judge Liam O'Grady they believe the government should pay for the preservation of the servers. U.S. officials disagree. O'Grady decided to send them all back to the negotiating table to try to work out a compromise.

Before he did that, O'Grady told Carpathia lawyers he had "sympathy" for their situation. That's when Prabhu cut loose on Carpathia.

MegaUpload was boon for Carpathia

Prabhu disputed the notion that the hosting service is just an innocent third party left holding the bag. He attacked the company's claims that managers were caught unaware by the charges leveled against MegaUpload.

Prabhu outlined how Carpathia had received subpoenas regarding MegaUpload's alleged copyright violations from the government as well those from civil complaints against MegaUpload. He told the judge that MegaUpload helped Carpathia generate $35 million. The attorney also said he had reason to believe that Carpathia may be a target for civil litigation.

He did not accuse Carpathia of violating any criminal laws and did not identify where a civil complaint might have originated.

It's not hard to figure out what that origin might be. In previous court filings in this case, the major Hollywood film studios said they are considering civil charges against MegaUpload and other unnamed companies. A spokesman for the Motion Picture Association of America, the studios' trade group, declined to comment.

A spokeswoman for Carpathia issued a statement saying the company is looking forward to working with the other parties to resolve the issue but did not respond to Prabhu's statements. A spokesman for the U.S. Attorney's office also declined to comment.

Anyone who may try to accuse Carpathia of having some kind of culpability in any copyright-infringing behavior at MegaUpload is likely taking on a tough case. The Digital Millennium Copyright Act (DMCA) was tailor-made for third-party service providers like Carpathia. The act's Safe Harbor provision is designed to shield bandwidth providers and other service providers from liability for the copyright violations committed by users.

Nonetheless, the relationship between MegaUpload and Carpathia was certainly unique.

Sailing the digital 'Somali coastline'

MegaUpload put Carpathia on the map. The company was largely unheard of 2009. That was when researchers from the University of Michigan and Arbor Networks reported they had discovered something unusual. In July that year, that 0.6 percent of all Internet traffic for the month was delivered by a little known Web hosting service: Carpathia.

That was equivalent to double the amount of bandwidth consumed by Facebook and nearly half of all of Microsoft's Web properties, including Bing, Forbes noted in a story from November that year.

The researchers traced the massive traffic wave to a deal Carpathia had struck a year earlier to service MegaUpload and the other sites operated by founder Kim DotCom: Megarotica, Megavideo, Megaclick.

Forbes' reporter Andy Greenberg wrote then that the sites had "become the digital equivalent of the Somalian coastline in the fight against online piracy."

:view:Original Article: CNET

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US: Megaupload’s Hosting Company Might be Sued Next

At a federal court hearing where several parties hoped to get a clear answer on the fate of Megaupload’s user data, the US Government’s attorney slammed hosting company Carpathia. The US says the hosting provider may be partly responsible for the copyright infringements that occurred through Megaupload and said Carpathia may even become the target of a civil lawsuit.

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Nearly three months after the Megaupload raids and arrests, 1,103 servers hosted at Carpathia are gathering dust.

While the US Government won’t mind if the servers are destroyed, Megaupload, the EFF and even the MPAA all argued that would be a bad idea because they contain critical evidence and irreplaceable user data.

Hosting company Carpathia, on the other hand, said it can’t bear the costs of $9,000 a day indefinitely. So the company called for a meeting where they asked Judge O’Grady to come up with a solution. That hearing was held on Friday and proved to be quite interesting.

While Carpathia hoped the hearing would bring relief, in the event the company was warned that it too might become a target for litigation.

As reported by CNET, Judge O’Grady was sympathetic to the hosting company’s call for help, but the attorney representing the US Government wasn’t. The attorney stated that Carpathia made $35 million from Megaupload and insinuated that the company might not be as neutral as it claims to be.

The lawyer further said that Megaupload’s host may be partly responsible for the copyright infringements that occurred through the cyberlocker, and added that the host itself could become the target of a civil lawsuit.

The attorney didn’t substantiate the alleged wrongdoings of Carpathia and neither did he identify the potential source of a civil suit.

One possible party that could go after the hosting company is the MPAA. The movie industry group previously said they want the data to be preserved for potential civil cases against Megaupload-affiliated entities. However, during the hearing on Friday they were no longer interested in keeping the data intact, so this seems unlikely.

Neither of the parties involved was willing to comment on the claims made by the US attorney, but it’s clear that the US Government thinks Carpathia is not totally innocent.

After hearing the various arguments, Judge O’Grady decided that the parties involved should get back together to find a suitable solution. This was one of the suggestions made by the Megaupload legal team, but with so many different interests at stake it will prove to be a challenging endeavor.

:view:Original Article: TorrentFreak

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