Megaupload case and other internet piracy issues

The Megaupload website, which allowed users to download pirated films, music and other content, was taken down on 20th January 2012. While Megaupload’s main servers were located in the United States, Megaupload Limited (registrant of the domain megaupload.com) was incorporated in Hong Kong, and bank transactions took place there. Pursuant to the Mutual Legal Assistance in Criminal Matters Ordinance (Cap 525 Laws of Hong Kong), Hong Kong Customs cooperated with the US Department of Justice and mobilised 100 officers to search four locations in Hong Kong, including company offices, domestic premises and five-star hotel suites where high-speed internet servers suspected of being related to the case were uncovered. Criminal proceeds of around HK$330 million were frozen. The case was described as “among the largest criminal copyright cases ever brought by the United States”.

Despite its connection to Hong Kong, the megaupload.com website was not accessible by users with Hong Kong IP addresses before it was shut down. The reason for the block was unknown, but Hong Kong Customs suggested that it was “a bid to hinder law enforcement investigation”.

In recent cases involving online IP infringement activities where the infringers are suspected of being located in or connected to Hong Kong, it is not uncommon for access to the website concerned to be denied to Hong Kong users. This makes it difficult for law enforcement agencies to collect evidence of infringing activities in Hong Kong. In the Megaupload case, legal assistance was provided by Hong Kong Customs to the US Department of Justice. In cases where the copyright or trademark infringement is found to amount to a criminal offence in Hong Kong, the secretary for justice of Hong Kong can seek legal assistance from an authority of a place outside Hong Kong. Section 9 of the Mutual Legal Assistance in Criminal Matter Ordinance provides that:

“The Secretary of Justice may request an appropriate authority of a place outside Hong Kong to arrange for (a) evidence to be taken in the place and the transmission of the evidence to Hong Kong; or (b) a thing (including a thing belonging to a class of things) in the place to be produced and the transmission of the thing to Hong Kong, for the purpose of a criminal matter in Hong Kong.”

A word of caution for rights holders, however: if online infringement activities are discovered, instead of asking the third-party online service provider to remove the infringing materials or demanding the suspected infringer to cease the infringing activities, the rights holder may wish to consider whether it wants to collect more evidence of infringement by carrying out an in-depth investigation or requesting assistance from Customs. Once any request or demand is sent to the online service provider or suspected infringer, the suspected infringer will be alerted, making further investigation much more difficult.