Legit Megaupload Users Could Be Out of Luck

The U.S. Attorney’s Office handling the case against Megaupload and its founder Kim Dotcom and associates has informed the court it’s OK to begin deleting the Megaupload data beginning on Feb. 2, according to press reports. The two storage companies that host Megaupload data — Cogent Communications and Carpathia Hosting — are free to sweep their servers clean.

The U.S. Attorney’s Office for the Eastern District of Virginia has copied sufficient data for its prosecution and no longer needs the hosted data. If Megaupload’s legal team wants to access the data, it can deal directly with Cogent and Carpathia, suggested U.S. Attorney Neil H. MacBride in a letter addressed to attorneys representing Megaupload and other defendants. [*Editor’s Note – Jan. 30, 2012]

As for what happens to the data stored by legitimate users, that’s up in the air. Megaupload has not been paying its storage fees since the feds froze the company assets, company representatives told The Associated Press.

Impending Delete Date or Not?

While the U.S. Attorney’s Office has given the server owners the green light to delete files, that doesn’t necessarily mean that files will be deleted.

“It doesn’t seem like anyone is purposefully deleting the files. It is more like the data might get evicted from the storage servers for nonpayment,” Azita Arvani, principal of the Arvani Group, told the E-Commerce Times.

“Megaupload claims they are not paying because their money has been frozen by the government,” said Arvani. “So, what happens to the user data?”

One solution would be extending the data-deletion time beyond Feb. 2. That might offer an opportunity for legit users to grab their files.

“It would be good if the storage companies and the feds could come to some sort of agreement, where they would provide a grace period for the users to transfer their own legitimate files to some other storage,” said Arvani.

Destroying Evidence?

From a legal standpoint, it may seem unusual that the U.S. Attorney’s Office would OK the destruction of data that is relevant in an ongoing court case.

“It is hard to imagine that destroying evidence in current litigation could positively affect the cases,” Peter S. Vogel, a partner in Gardere Wynne Sewell, told the E-Commerce Times.

The legal question may involve the notion that the copied files are sufficient evidence and the data on the servers is thus irrelevant.

“The federal prosecutors claim they have made copies of certain files, but they have not taken possession of the servers,” said Vogel. “While this may be adequate for the copyright infringement litigation, it is not really possible for the defendants or public to know at this point.”

The government may be concerned that if the files are not destroyed, copyright infringement would continue to the detriment of copyright owners, Vogel speculated.

What About Legit Users?

The Megaupload bust may have a severe adverse affect on some legitimate users if they did not retain backup copies of their data, a suggestion that even Megaupload made in its terms of agreement.

“Millions of Megaupload customers claim they did not participate in the alleged copyright infringement,” said Vogel. “They say their data should not be destroyed, but since the government is not responding to inquiries, it is difficult to determine the impact on these millions of legitimate users.”

User Beware

Just how safe is data stored in the cloud? That depends entirely on the vendor.

“The demise of Megaupload and resultant confusion as to the stored user files demonstrates the evanescence of digital data due to mislaid trust,” Raymond Van Dyke, a Washington, D.C.-based technology and IP attorney, told the E-Commerce Times. “Clearly, companies like Napster and Megaupload, that thumb their noses at copyright interests, are poor paradigms for stability.”

Respect for intellectual property should be a key consideration for anyone wishing to have a third party host their files, Van Dyke suggested.

“There are many legitimate data storage sites out here,” he said. “Just because something is free does not mean that it is the best. Caveat emptor.”