The controversy began in January when Dotcom was arrested in a dramatic raid in New Zealand and the U.S. announced it would prosecute Dotcom and Megaupload in Virginia. Since then, however, Dotcom (a German national who legally changed his name to “Kim Dotcom”) appeared to have gained the upper hand after he was released on bail and extradition proceedings slowed to a crawl. A New Zealand court has also ruled the warrants used to conduct the raid were illegal.

On Tuesday, the chief judge of the New Zealand district court that must decide if Dotcom can be extradited announced that Judge David Harvey had surrendered the case and would be replaced. The move comes after reports that Harvey said ”We have met the enemy and he is [the] U.S.” at a recent conference in relation to the current state of copyright law.

According to a law professor quoted by the New Zealand Herald, the Dotcom affair was the “case of a lifetime” for Harvey who is one of his country’s leading copyright and internet authorities. Harvey’s sudden recusal is not surprising, however, given that a judge would be hard-pressed to appear neutral after describing one of the parties in a case before him as “the enemy.” His departure means that a new judge will oversee the extradition proceedings, which were slated for next year and may now take even longer if they go forward at all.

Overall, the case is exposing a growing global tension between the U.S. and the rest of the world over the boundaries of copyright law. Even though New Zealand, England and Canada share the same common law legal traditions as the U.S., judges and academics in those countries have grown uncomfortable with America’s increasingly expansive copyright laws and aggressive enforcement tactics. These tactics have included other extradition attempts, including one aimed at a 23-year-old UK student that is extremely unpopular with the British public.

The entertainment industry and U.S. authorities, on the other hand, are exasperated with services like Megaupload that allow users to store and swap copyrighted music and movies. “Its equipment, machinery,  and servers are here … Many of its victims are in the United States… countless American works illegally reproduced and distributed include, for example, works originally available on YouTube.com, The Sopranos, Seinfeld, Dexter, Chuck, Meet Dave, and The Simpsons,” wrote prosecutors in a filing last week to argue that Megaupload can be tried in the US.

The tension has led online activists to embrace the flamboyant Kim Dotcom as a hero while law enforcement has sought to portray him as the lead gangster of a multi-million dollar criminal enterprise. As for Dotcom, he has proved adept at cultivating support, in part through a defiant Twitter feed:

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MegaUpload founder Kim Dotcom may fit the larger-than-life image most people have of an internet pirate — after all, he is huge and wears black, and drives cars with license plates that say “Guilty” on them. Richard O’Dwyer is the polar opposite: he is a soft-spoken 24-year-old who started a website based in Britain called TV Shack that consisted only of links. Despite their differences, however, the U.S. government is trying to extradite O’Dwyer to the United States to face charges of criminal copyright infringement. While Dotcom hosted terabytes worth of infringing files, O’Dwyer simply linked to them — but in the eyes of the U.S. Justice Department, these two things are virtually equivalent. If the case proceeds, it could force us to change the way we think about some of the fundamental underpinnings of the web.

There are several elements that make the O’Dwyer case particularly important, factors that have led some prominent technology players to mount a protest over his potential extradition, including a petition started by Wikipedia founder Jimmy Wales (which my colleague Bobbie Johnson wrote about) that now has more than 200,000 signatures. In an opinion piece he wrote recently for The Guardian‘s comment section, Wales — who is now also an advisor to the British government — said that while he is in favor of strong copyright protection for content creators of all kinds, that commitment only goes so far. As he put it:

It does not mean that we should abandon time-honoured moral and legal principles to allow endless encroachments on our civil liberties in the interests of the moguls of Hollywood.

The U.S. wants O’Dwyer extradited for linking

By way of background, O’Dwyer started the TVShack.net website in 2007 as a resource for those who were looking for either live-streaming video versions of television shows or for downloads. A disclaimer on the site at the time it launched said: “TV Shack is a simple resource site. All content visible on this site is located at 3rd party websites. TV Shack is not responsible for any content linked to or referred from these pages.” The U.S. government disagreed, however: in 2010, officials with the U.S. Immigration and Customs Enforcement Department (ICE) seized O’Dwyer’s domain and shut the site down. O’Dwyer then moved to a different domain and that was seized as well.

The British government considered mounting a case against O’Dwyer for linking to copyright-infringing material, but decided not to — in part because an earlier case against a similar website that also linked to streams and downloads of TV shows was thrown out, after the judge decided that linking to copyright infringing videos is not a crime. There have been similar cases in other jurisdictions, including a recent ruling by the Federal Court of Canada that said linking to a photo was not considered copyright infringement for the purposes of that country’s criminal code.

The U.S. wasn’t willing to give up so easily, however: the government started an extradition case against O’Dwyer, arguing that he should be sent to the United States to face a trial that could put him in prison for up to 10 years. In March, the Home Secretary ruled that the extradition could proceed — despite the fact that extradition to the U.S. is only supposed to occur when the acts involved are considered to be a crime in both Britain and the United States. O’Dwyer is now appealing that ruling (a news story on Tuesday said the Home Office had decided to back the extradition despite the protests and petitions in his favor, but Wales said on Twitter that this isn’t true).

@MadBennett HO has not responded. I expect them to respond positively soon to meeting with me. Low-level spokesman wrong.

—
Jimmy Wales (@jimmy_wales) July 03, 2012

The O’Dwyer case has no connection to the U.S.

As Wales notes in his Guardian op-ed, the O’Dwyer case is just another example of the impulses that drove U.S. legislators to push forward both SOPA and PIPA — the anti-piracy laws that sparked a massive outcry online last year and led to both of the proposed bills ultimately being shelved. In both of those pieces of legislation, websites could be removed from the internet and subjected to prosecution if their “primary purpose” was judged to be piracy or copyright infringement. In a similar way, the U.S. is likely to argue that since O’Dwyer linked primarily to illegal copies of TV shows, he should be guilty of secondary infringement for “inducing” others to post copyrighted content.

The concept of “inducing” infringement by others is also a centerpiece of the MegaUpload case, but at least that involves files being uploaded to servers owned by Dotcom’s company — O’Dwyer simply linked to things, just as Google or any other search engine does, and he also took down links whenever a rights-holder asked him to, which is one of the tests for when a company should be entitled to “safe harbor” under U.S. copyright laws. Not only that, but the only connection to the United States is that U.S. citizens presumably accessed the website, just as anyone can access a website anywhere, regardless of where they live.

Those two factors — the nature of the website as a collecter of links, and the lack of any connection to the United States that would justify an extradition — are what make the O’Dwyer case particularly troubling. With the case, the U.S. government appears to be asserting that linking to copyright infringing files under any circumstances should not only be an offence but an extraditable offence, and that the U.S. government is fully prepared to reach into other countries and extradite their citizens when there is virtually no connection whatsoever between that person’s acts and U.S. law or jurisdiction.

As media and entertainment conglomerates continue to put pressure on the U.S. government to enact or agree to legislation like SOPA and PIPA, or their international equivalents such as ACTA, cases like O’Dwyer’s should raise some troubling questions about how far the authorities are prepared to go, and what the ultimate impact will be on the web as we know it. If you’re interested in more of my thoughts on the case, I recently spoke about these issues on a CBC Radio program in which Jimmy Wales also appeared.

Post and thumbnail images courtesy of Flickr users Mark Strozier and Keith Allison

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The fuss over Megaupload, a site that allowed users to swap movies and music, began last Thursday when US law enforcement unsealed an indictment charging the man named Dotcom and six other company executives of conspiracy to commit racketeering, money laundering and a host of other charges. Four of the men, including Dotcom, were arrested.

News of the indictment, which came a day after the collapse of proposed anti-piracy legislation, triggered a wave of retaliatory attacks by hacking group Anonymous that knocked a number of websites off-line including those of the Justice Department and the FBI.

Dotcom has since proclaimed his innocence and demanded authorities return tens of millions in seized assets.

The next phase in the proceedings will involve extradition proceedings for Dotcom. New Zealand has an extradition treaty with the United States and prosecutors there have said they are willing to hand over the man who reportedly has passports from Germany and Finland and is a resident of Hong Kong and New Zealand.

Over the weekend, a gush of colorful details emerged about the man whose public persona is a blend between Dr. Evil and an obese James Bond. Here are some recent reports about 38-year-old Dotcom who legally changed his name from Kim Schmitz:

– Authorities had to saw off the locks of a panic room where Dotcom was hiding clutching a sawed-off shotgun

– Dotcom has a penchant for guns, Playboy bunnies and illegal car races. In one race, he reportedly bet two female competitors a half million pounds if they won in exchange for a threesome if he won (via Fast Company)

– Police reportedly seized 18 luxury vehicles, including a Rolls Royce Phantom Drophead Coupe and a 1959 pink Cadillac (via Bloomberg)

While the criminal case against Dotcom unfolds, Megaupload continues to be enmeshed in a series of other strange legal proceedings. Recent developments in these include:

– On Friday, Megaupload withdrew a suit against Universal music for taking down a YouTube (NSDQ: GOOG) clip in which popular entertainers such as Kanye West and Alicia Keyes appeared to endorse the website. But the case is continuing against other anonymous defendants, and may be a tactic to use the discovery process to obtain documents from Googe which cut off Megaupload from its ad network two years ago. (via Hollywood Reporter)

– The media is speculating about the role of Swizz Beatz, an Atlanta rapper sometimes known as “Mr. Alicia Keyes” who was listed as the CEO of Megaupload but who has yet to be indicted. (via Time)

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