Kim Dotcom and Megaupload sued for copyright infringement by music labels

Megaupload may have shut down in January 2012 after its founder Kim Dotcom was arrested on copyright infringement charges, but the cloud storage service is now facing new civil lawsuits from the music and film industries.

US music industry body the RIAA has filed a lawsuit on behalf of its members, targeting Dotcom, two of his colleagues Mathias Ortmann and Bram van der Kolk, and investor Vestor Limited.

The lawsuit claims they "willfully engaged in, actively encouraged, and handsomely profited from massive copyright infringement of music" on Megaupload. It follows a similar suit filed earlier in April by film industry body the MPAA.

Both lawsuits cite the same figure from the US Department of Justice's indictment of Dotcom and colleagues in January 2012, which claimed that Megaupload had made more than $175m in "criminal proceeds" (MPAA) or "illicit profits" (RIAA) from a business they claim was built on people sharing copyrighted content.

Megaupload Limited played an active role in ensuring that it had the most popular content on its servers, that the URL links to those infringing content files were widely disseminated on the Internet, and that the links were advertised and promoted by pirate linking sites, so that the maximum number of Megaupload users would access the infringing content," claims the RIAA's filing.

"It further exercised active control over the process of providing that content by regulating the volume and speed of transmissions to users who had not yet purchased 'premium' subscriptions.

The RIAA's lawsuit was filed on behalf of labels Warner Music Group, Universal Music Group, Sony Music Entertainment and Capitol Records, while the MPAA's lawsuit includes studios Twentieth Century Fox, Disney, Paramount Pictures, Universal, Colombia Pictures and Warner Bros.

"When Megaupload.com was shut down in 2012 by U.S. law enforcement, it was by all estimates the largest and most active infringing website targeting creative content in the world," said the MPAA's senior executive vice president and global general counsel Steven Fabrizio, in a statement.

Megaupload may be defunct, but Dotcom has since launched a successor cloud storage service called Mega, before moving on to work on other projects including digital music service Baboom, recording and releasing his own albums, and launching a political party in New Zealand, where he is fighting extradition to the US to face the criminal charges.

In a statement published by Ars Technica, Dotcom's attorney Ira Rothken attacked the civil lawsuits. "Our first response is that the RIAA, the MPAA, and the DOJ are like three blind mice following each other in the pursuit of meritless copyright claims," said Rothken, who returned to a previous theme of Dotcom's defence: that Megaupload was just as legal as other prominent cloud services.

"We believe that the claims against Megaupload are really an assault by Hollywood on cloud storage in general as Megaupload used copyright neutral technology and whatever allegations they can make against Megaupload they can make against YouTube, Dropbox, and others," said Rothken.

The MPAA disputes those claims, however. "Megaupload wasn’t a cloud storage service at all, it was an unlawful hub for mass distribution," said Fabrizio, claiming that Megaupload financially rewarded users for sharing popular files, which were often copyrighted.

"To be clear, if a user uploaded his term paper to store it, he got nothing – and, in fact, unless he was a paying subscriber, Megaupload would delete the paper if
it was not downloaded frequently enough. But if that same user uploaded a stolen full-length film that was repeatedly infringed, he was paid for his efforts," he said.

"That’s not a storage facility; that’s a business model designed to encourage theft – and make its owners very rich in the process. There’s nothing new or innovative about that. That’s just a profiteer using existing technology to try to get rich off of someone else’s hard work.”