The following post is courtesy of Terry Hart, author of Copyhype
Very few people would argue that a corporation should have complete immunity from US criminal laws simply because it receives its mail in another country. Yet that is essentially what Megaupload's attorneys are arguing in court.
On Friday, a Federal district judge heard arguments on a motion to dismiss criminal charges against Megaupload, LTD. The motion comes as part of one of the largest criminal copyright cases in US history. The motion only addresses dismissal of charges against Megaupload; the case against Kim Dotcom himself, the other six individual defendants, and Vestor, LTD are unaffected by the motion.
Ultimately, what this motion boils down to is not, as Megaupload's attorneys have contended, whether a US court can exert jurisdiction over any web service operating across the globe, but whether a corporation operating inside the US, and committing crimes inside the US, can be held liable for those crimes.
In its brief opposing the motion, the US points to a long line of cases that support the exercise of jurisdiction over foreign people and corporations, citing the Supreme Court as stating “[t]he principle that a man, who outside the country willfully put in motion a force to take effect in it, is answerable at the place where the evil is done, is recognized in the criminal jurisprudence of all countries.” The government notes the many contacts Megaupload had with the US: the company leased a thousand servers from Carpathia Hosting, half of which were located in Virginia; the servers housed Megaupload’s data files -- the “heart of its business” according to the US; its financial infrastructure and business, marketing, and contractual relationships were located within the US; and its customers and victims were found in the US. In sum, according to the US, “in every relevant respect, the company’s day-to-day business and operations took place on these shores and in this District.”
The company does not dispute that it conducted business within the US or that any alleged criminal acts occurred here. Instead, the heart of Megaupload’s argument is that it cannot be served with process -- a prerequisite to a court exerting personal jurisdiction over a person or corporation -- under the Federal Rules of Criminal Procedure because it does not have a mailing address in the United States. The government finds this reading of the rules “incredible” and offers several methods for serving the company that would comply with the rules. Under Virginia state law, for example, when a foreign corporation doing business within the state does not register an agent or office, the clerk of the State Corporation Commission serves as the company’s agent for accepting service of process.
During the hearing, even the court expressed some difficulty in accepting Megaupload’s interpretation of the rules. According to news reports, Judge O’Grady said it's unlikely that Congress, when creating the rules for serving criminal charges, intended that a company could "violate our laws indiscriminately from an island on the Pacific.” A ruling on the motion is expected in the near future.