Friday, May 4, 2012

Megaupload Mediation

Controversial file-sharing services called cyber-lockers allow users to upload files to a server, which provides remote and secure storage of user content. Megaupload's users share their files with others and are encouraged to contribute content, which is often copyrighted. Services like this offer free limited access and further unrestricted use for a fee. U.S. District Judge Liam O'Grady recently directed lawyers from both sides of an Eastern District of Virginia case involving data which has been managed by service provider Carpathia Hosting since Megaupload was dismantled by authorities earlier this year to engage in mediation sessions in order to resolve the matter of archiving or deleting the information which had been stored by Megaupload users. The ruling temporarily preserves the infringing data which Carpathia claims it has had to spend as much as near $10K per day to maintain. Because the site went dark and Megaupload is no longer paying for server upkeep, but files are potential evidence of pirating, the hosting company wants relief while millions of legitimate users worldwide still want access to their data. In ancillary proceedings in New Zealand, Kim "Dotcom" Schmitz, the founder of controversial website, has been awarded back some of his previously confiscated fortune after it was revealed that a search warrant obtained by authorities was illegal. He and a number of the company's executives face extradition to America for trial. The issue of mediating litigation holds and preservation of evidence and related costs is a hot one in terms of ESI. This case brings to mind some recent entries of mine on E-Discovery mediation, as well as cost shifting and judge-directed ADR. It will be interesting to see if the rights of third-parties are respected in the process. See recent news items here: and and