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Hollywood Studios Launch Lawsuit Against Megaupload

The copyright infringement filing in Virginia federal court targets Kim Dotcom as well.

Kim Dotcom
Kim Dotcom

Two years ago, Kim Dotcom had just finished partying with some big musicians when New Zealand law enforcement raided his mansion. The Megaupload founder didn't know what was happening at the time, but the U.S. government had just indicted him for criminal copyright infringement and racketeering.

On Monday, as Dotcom continues to await word on whether he will be extradited to the U.S., he got more big news. His adversaries in Hollywood are now suing Megaupload, which at its height claimed more than 180 million registered users and an average of 50 million visitors and 4 percent of total Internet traffic on a given day. The announcement of a copyright lawsuit in Virginia federal court isn't quite as surprising as the January 2012 raid that shut down Megaupload, but due to the statute of limitations, 20th Century Fox, Disney, Paramount, Universal, Columbia Pictures and Warner Bros. needed to act.

Dotcom is personally named as a defendant along with others such as Mathias Ortmann and Bram van der Kolk, who ran Megaupload.

"On a daily basis, defendants intentionally infringed plaintiffs' copyrighted motion picture and television programs on a massive scale and for a substantial profit," says the lawsuit.

The complaint (read here) itself is pretty much an echo of the charges filed by the U.S. government in the early months of 2012.

The plaintiffs take issue with many facets of Megaupload's business, including its "Uploader Rewards" program, where the defendants allegedly paid its users money to upload popular movies and TV shows.

In the past, Dotcom and others associated with Megaupload have argued that their liability should be limited because they were merely in the cloud storage business. A white paper for the company argues that Megaupload "enabled tens of millions of users around the world to upload and download content of the users’ own choosing and initiative. The spectrum of content ran from (to name just a few) family photos, artistic designs, business archives, academic coursework, legitimately purchased files, videos and music, and – as with any other cloud storage service – some potentially infringing material."

The studios respond.

"Contrary to some of defendants' public assertions, Megaupload was not designed to be a private data storage provider," says the complaint. "By design, Megaupload functioned not as a private online storage locker, but rather as a hub for uploading and downloading infringing copies of popular movies and television shows, including plaintiffs' copyrighted works."

The lawsuit could be stayed pending the resolution of the criminal prosecution first, but once it proceeds, it is likely to take a slightly different flavor. To make its own case, government prosecutors will need to show the defendants willfully committed copyright infringement. The intent factor is less important in a civil lawsuit except to the degree that it could inform any damages awarded.

The plaintiffs, represented by attorneys at Jenner & Block, seek profits and maximum statutory damages on claims of both direct and secondary copyright infringement.

Email: Eriq.Gardner@THR.com
Twitter: @eriqgardner