Are Federal Agencies Forfeiting Ownership of Data Stored in the Clouds?
Federal actions against a data storage company raise novel legal questions regarding ownership of data stored in a cloud environment. Moreover, there is the possibility that the legal decisions reached in the Megaupload case regarding ownership and property rights issues could be applied unexpectedly and adversely to federal data stored in a privately-owned cloud.

By way of background, the Megaupload case concerns a data storage company that was heavily used for illegal activity, the storing of stolen intellectual property. The moral and economic imperative of combatting intellectual property piracy, however, does not necessarily limit the scope of the legal decisions that will be reached in the case.

The Electronic Frontier Foundation, a leading cyber-watchdog, stated that "the government's approach should terrify any user of cloud computer services-not to mention the providers. The government maintains that Mr. Goodwin lost his property rights in his data by storing it on a cloud computing service."

EFF goes on to explain, "the government argues that both the contract between Megaupload and Mr. Goodwin (a standard cloud computing contract) and the contract between Megaupload and the server host, Carpathia (also a standard agreement), 'likely limit any property interest he may have' in his data.

EFF opines that "Apparently your property rights 'become severely limited' if you allow someone else to host your data under standard cloud computing arrangements. This argument isn't limited in any way to Megaupload -- it would apply if the third party host was Amazon's S3 or Google Apps or or Apple iCloud."

The question becomes then, do federal agency rights to their own data become compromised when they use cloud-based services? Could litigation or other legal process impede agency access (or exclusive access) to their data? Are there fundamentally different legal principles that apply to federal agencies than to private parties when signing a contract with a company for cloud services?

Given the government's decision to adopt a "cloud first" policy, it is essential that the legal issues associated with cloud ownership be resolved as quickly and unambiguously as possible.

See EFF -- Megaupload and the Government's Attack on Cloud Computing