Megaupload Ltd. is alleged to have disseminated copyright
protected movies and music and US prosecutors now have the task of
gaining access to the company's servers in a bid to prove their
case. In the fascinating Megaupload saga, a Canadian court has been
asked to decide what to do with 32 servers belonging to Megaupload
which are located in Canada. The servers are packed with
information - "100 laptops" worth of data according
to the judgement - and the court was asked by the US government to
deliver that data to American prosecutors who are pursuing
charges against Megaupload for criminal infringement of copyright,
conspiracy to infringe copyright, money laundering and
In last week's decision, Canada (United
States of America) v. Equinix Inc., 2013 ONSC 193, the
court denied this request, indicating that the massive volume
of data meant that the scope of the investigation should be
narrowed to just that information that is the target of the search,
rather than the entire contents of the data trove. However, the
judge did not deny that the evidence should be delivered. Evidence
to implicate Megaupload likely is contained within those servers,
and it is only a matter of time and negotiation to determine the
scope of the search, rather than an absolute denial of the request.
"Given the undisputed conclusion" the judge
wrote, "...that there were reasonable grounds to believe
that evidence of the offences would be located on the servers in my
view the appropriate balance of the state interest in gathering
evidence and privacy interests in information can be struck by an
order that the servers be brought before the court ...so that the
court can make an order refining what is to be sent."
From a cloud computing law perspective, this case raises several
Canadian courts will order seizure and search of
cloud-computing servers - just like they will with any piece of
evidence in Canada - pursuant to a request from US authorities in
the course of a criminal investigation;
Privacy interests will be balanced by the court, since the law
is developing a sense of when individuals have an expectation of
privacy in the contents of computers or servers;
However, that privacy right is not absolute, but it will be
balanced with the interests of governments to conduct
We can expect another decision to be released before long, where
the contents of the servers are indeed delivered to US prosecutors,
with some conditions or limitations as to the scope of the
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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