Bloomberg News

Megaupload Evidence Posted in Hunt for Infringement Victims (2)

December 20, 2013

Megaupload.com gave copyright holders a fake “abuse tool” to remove infringing material and had a business model that encouraged pirated content, according to a summary of evidence in the conspiracy case against the file-sharing service.

The summary was released today by the U.S. Justice Department at the order of District Judge Liam O’Grady in Alexandria, Virginia. The judge ordered the document made public to help identify copyright owners who may have been harmed by Megaupload’s operation.

Conspirators, including Megaupload founder Kim Dotcom used a network of websites “to upload, as well as reproduce and distribute, infringing copies of copyrighted content; and are aware that they have financially benefited directly from the infringement of copyrighted works that they are in a position to control,” according to the summary.

Dotcom, who lives New Zealand and is fighting extradition, six other individuals and two companies were accused of belonging to a global criminal organization prosecutors called Mega Conspiracy that was involved in criminal copyright infringement and money laundering, prosecutors said in an indictment unsealed in January 2012.

Mega Conspiracy reported more than $175 million in income and cost copyright holders more than $500 million, according to the indictment.

Trade Associations

O’Grady’s order required that the evidence compilation be distributed to seven trade associations, including the Motion Picture Association of America, the Business Software Alliance, the National Music Publishers Association.

The contents of the summary already had been disclosed to the defendants, the Justice Department said in a statement.

The evidence includes a description of the “abuse tool”, a web form which purported to give copyright holders the ability to remove copyright-infringing material from Mega Conspiracy-controlled servers. The tool only allowed removal of content from a single web address and “failed to disable access to the underlying copyright infringing material,” according to the summary.

Megaupload also relied on third party linking websites that allowed millions of uploaders and users “to advertise, throughout the Internet, URL links to infringing content available on Mega sites,” government lawyers wrote in the summary.

Uploader Reward

Postings on third-party linking sites were financially encouraged by an “uploader reward program,” according to the summary.

The evidence released today is “191 pages of meritless criminal allegations,” Ira Rothken, an attorney for Dotcom, said in a phone interview. Challenges to the conduct Dotcom is engaging in should be handled in civil and not criminal court, Rothken said.

The Megaupload case is being driven by “pressure by Hollywood on the Obama administration,” Rothken said. “The Justice Department is acting as a proxy for the MPAA.”

T.J. Ducklo, a spokesman for the MPAA, declined to comment.

In addition to Dotcom, three others charged in the case, Finn Batato, Bram Van Der Kolk and Mathias Ortmann, are fighting extradition from New Zealand. Another alleged conspirator, Andrus Nomm, is fighting extradition from the Netherlands and two others, Julius Bencko and Sven Echternach, are fugitives, Peter Carr, a Justice Department spokesman said in an e-mail.

The case is U.S. v. Dotcom, 12-cr-00003, U.S. District Court, Eastern District of Virginia (Alexandria).

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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