Aarti Shahani reports: With online relationships, it’s complicated.

The billionaire founder of eBay, Pierre Omidyar, is bankrolling a new media company with reporters who have used WikiLeaks to break giant stories.

But the eBay-owned subsidiary PayPal is working with the Justice Department to prosecute a handful of WikiLeaks supporters. The defendants could serve decades in prison, and their convictions could decide if “hacktivism” is free speech or a felony offense.

On Oct. 31, 14 defendants are scheduled to walk into a federal court in San Jose, Calif. They are known as the PayPal 14, and prosecutors will ask them to plead guilty to attacking PayPal, the online payment service based in that city.

In December 2010, PayPal, Visa, Mastercard and major banks became targets of a spate of cyberattacks, but not by criminals who wanted to steal credit card numbers.

When the companies stopped processing online donations for WikiLeaks founder Julian Assange, supporters — some associated with the hacker group Anonymous — responded with a novel form of protest.

In the case of PayPal, they sent thousands of packets of data to the company’s servers at such a speed, its system nearly crashed.

“It was serious,” said PayPal spokesman Anuj Nayar, who recalled that deflecting the traffic felt like a chess game.

PayPal estimates the attacks cost $3.5 million in technology upgrades. The company gave prosecutors a list of the top 1,000 attackers. From that list, the Department of Justice indicted a handful as part of its ongoing crackdown against Anonymous.

The DOJ cannot comment on pending cases but relies on prosecution guidelines that consider how likely a person is to repeat an alleged offense. Attorney Peter Leeming, who represents one of the defendants, says the selection “seemed arbitrary to me.”

Leeming, based in Santa Cruz, Calif., has represented political protesters for decades and is developing a boutique practice around hacktivism, or online attacks that are politically or socially motivated and not driven by financial gain.

“They’re a relatively new creature,” he said. “Is demonstrating and shutting down a street any different from shutting down a line of commerce on the Internet?” [Continue reading…]