11:34am PT by Eriq Gardner
Prosecutors Add New Charges to Megaupload Indictment
Federal prosecutors have sharpened their charges against Megaupload's leaders with a new superseding indictment that aims to show how Kim Dotcom and others allegedly aided and abetted massive copyright infringement.
Last month, the U.S. Department of Justice caused the shut-down of the once-popular file-storage website. Many of Megaupload's key executives were arrested and hundreds of millions of dollars in assets were seized.
In the aftermath, criticism of the action against Megaupload focused on two key areas.
First, some legal observers noted that criminal prosecutions are different than civil lawsuits, and that prosecutors would need to prove defendants' "willfullness" to aid copyright infringement. Even if the website couldn't avail itself of safe harbors under the Digital Millennium Copyright Act, did the defendants reasonably believe they'd be protected from the conduct of its users?
Second, other legal observers expressed concern about legitimate data on the website. The company said that millions of its users stored family photos, personal documents and more on the website, and DOJ's efforts to erase the site from existence lead to some pushback from groups threatening to sue on behalf of the interests of "innocent customers."
In the latest indictment, prosecutors include more details about the personal involvement of the defendants to aid and abet a conspiracy that included both copyright infringement and fraud.
For instance, prosecutors say that Megaupload claimed to have 180 milllion registered users but really had only 66 million as of January 19. Less than a tenth of those users ever uploaded a file, they say.
Instead, Megaupload was populated with copyright-infringing works from just a handful of users, and in an effort to mask what was happening, the company's leaders allegedly attempted trickery.
For example, the new indictment states "it was further part of the Conspiracy that members of the Conspiracy reproduced copyrighted works directly from third-party websites, including from YouTube.com. to make them available for reproduction and distribution on Megavideo.com and to create the false impression that Megavideo.com hosted primarily user generated content instead of copyright infringing content."
The indictment goes on to tick off the many ways that Dotcom and others allegedly participated willfully in what was going on, from telling copyright holders that it would cooperate only to fail to suspend flagrant users, not delete copyrighted works, and in some instances, allegedly participate in the creation of redundant links to copyrighted work.
Meanwhile, Dotcom has been in a New Zealand jail since January 20, awaiting possible extradition to the U.S. after his attempts to get a local judge to free him on bail were unsuccessful.