Kim Dotcom recently launched his new website mega.co.nz after megaupload.com was shut down by United States authorities because of the widespread copyright infringements allegedly occurring on the site.

The new mega.co.nz service is a cloud based service and because the data is encrypted, the idea is that Mega does not have any knowledge of, and therefore legal responsibility, for the data.  Apart from helping Kim Dotcom and his Mega empire from avoiding liability for copyright infringement, the encryption is likely to be attractive to users of the site, who may take comfort in the additional privacy the encryption provides.

Dotcom and mega.co.nz are clearly trying to take advantage of the “safe harbour” provisions in the Copyright Act.  Generally speaking, the safe harbour provisions provide that an internet service provider (ISP), which includes a hosting service such as megaupload.com or mega.co.nz, is not liable for material hosted by it unless it knows or has reason to believe the material infringes copyright.  Once the ISP becomes aware of the material, the ISP should delete it or prevent access to it.

No legal action has yet been taken against the mega.co.nz website.  The megaupload.com case is still making its way through the New Zealand courts.  The Unites States government has applied to have Kim Dotcom extradited from New Zealand to the United States to face copyright, racketeering and money laundering charges.  In considering the extradition request, the question for the New Zealand courts is whether, according to the laws of New Zealand, the conduct would justify a trial here, if it had occurred here.  The extradition trial is scheduled to take place in August 2013.

In a similar vein, Google has got off the hook in Australia with an “ignorance is bliss” defence.  The Australian Competition and Consumers Commission sued Google in relation to its “sponsored links”.  Sponsored links appear at the top of, and on the right hand side of, Google search results.  Advertisers pay Google to have their advertisement (usually a link to the website) appear when certain terms are searched on Google.

The Australian Competition and Consumers Commissioner argued that Google was misleading and deceiving consumers by allowing advertisers to use competitors’ names and trade marks in their search terms for sponsored links, for example, by allowing a Nike advertisement to appear as a sponsored link when a Google search for adidas was performed.

Although the sponsored links appear on Google’s website, and Google is paid for them, the Australian High Court ruled that Google was not the author of them.  Google’s sponsored links customers choose the keywords and the advertising and the Court said Google was not adopting or endorsing them.  The Court ruled that consumers would view any misrepresentation as having been made by the advertiser, and not by Google.

Contrast the Dotcom and Google situations with the first two decisions of the Copyright Tribunal in relation to illegal file sharing in New Zealand.  Account holders are responsible for illegal file sharing that occurs under that account, regardless of who did the file sharing.

In the first decision of the Copyright Tribunal, the account holder accepted responsibility for one of the three instances of file sharing, but said that neither she nor anyone in her household was responsible for the sharing of another song.

In the second decision a father said that it was his sons, ages eight and 12, who were responsible for the illegal file sharing and he knew nothing about it.

In both cases the account holders said they little knowledge of file sharing and the illegality of it.  On the other hand, in the Dotcom and Google cases, both entities are extremely well versed in the law, and deliberately make sure they are at arm’s length in order to avoid liability.

The difference is that account holders are liable for whatever happens on their internet connections, regardless of whether they knew about it or understand the law.  Account holders do not have the same so-called safe harbour.  This presents a problem for parents, employers, hotels, motels, cafés and flatmates who have little or no control over what is done on their internet connections.

A safe harbour for some can be dangerous waters for others.