Megaupload, Kim Dotcom Sued By Two Entertainment Companies

Kim Dotcom Released on Bail - H 2012
Sandra Mu/Getty Images

Kim Dotcom Released on Bail - H 2012

The first civil lawsuit has been filed against Megaupload in the aftermath of U.S. prosecutors indicting the company's founders on massive copyright infringement charges in January.

The new lawsuit comes from Microhits, which says it owns copyrights on sound recordings featuring Billie Holliday, Frank Sinatra, Nina Simone and others, along with Valcom, which says it owns copyrights on films and TV shows featuring Denzel Washington, Bill Murray, Jackie Chan and others. The two companies are suing Megaupload, founder Kim Dotcom, chief technology officer Mathias Ortmann, and Vestor, Ltd. for unspecified millions of dollars. The plaintiffs are being represented by Thomas Dunlap at Dunlap, Grubb & Weaver, the same attorney who previously filed pathbreaking litigation against tens of thousands of BitTorrent pirates on behalf of Voltage Pictures and Nu Image.

The complaint, filed in Virginia federal court last week, cites a White Paper on piracy put out by the Obama Administration and also echoes many of the same allegations made by prosecutors in their indictment against Megaupload's founders.

The lawsuit rehashes Megaupload's popularity, its operations (including its pay service for premium users) and some of the alleged conversations among Megaupload employees that have now become infamous. For example, it quotes an alleged e-mail by Megaupload Programmer-in-Charge Bram Van der Kolk as saying, "we have a funny businesss...modern day pirates :)"

The bulk of the allegations include a list of Megaupload URLs that purportedly contained protected material. The plaintiffs appear to have identified these by searching Google. Here's a paragraph that's representative of the allegations:

"During time periods pertinent to this case and through January 19, 2012, inclusive, the Defendants maintained the urls and Upon information and belief, such webpages were used to disseminate unauthorized copies of copyrighted works by Christina Aguilera, including those to which Plaintiff Microhits holds copyright ownership."

In a statement, Valcom CEO Vince Vellardita said the two companies have "implemented an aggressive initiative to acquire back-due royalties and compensation to assure that we receive all revenues that are due to the Company."

The chief of Valcom, which appears to have acquired a film and TV library for a new Family Television Network, adds that this lawsuit is "one of many situations" identified to recover "due compensation."

The plaintiffs are demanding statutory damages between $30,000 to $150,000 per infringement, and without specifically targeting the number of infringements, Microhits says its catalog exceeds 25,000 musical works and sound recordings and Valcom says its library contains in excess of 6,000 works.

It's unclear how the plaintiffs intend to collect damages, if they are successful. Many of Megaupload's assets have been seized and its bank accounts frozen, although there's recently been word that a procedural error might pave the path towards letting Megaupload's executives recover access to some of their funds. Also, the MPAA has also been looking to collect data in anticipation of a possible lawsuit.

Meanwhile, in other Megaupload news, the company could be on its last legs as a plaintiff in a lawsuit that targeted the allegedly unauthorized takedown of its own music video on YouTube. Last week, after Megaupload dismissed UMG from the case in January, the judge gave Megaupload until this Friday to name a new defendant or the case would be dismissed without prejudice.

Finally, Kim Dotcom continues to be on the counter-offensive against his American enemies, including Hollywood. In an in-depth interview with TorrentFreak, Dotcom responded to charges in the indictment, including allegations he personally uploaded copyrighted files.

The flamboyant Dotcom also said that multiple Hollywood studios suggested partnering with Megaupload, showing off five e-mails from representatives of Disney, Warner Bros. and Fox. He also includes some numbers on takedowns, saying that Warners removed 1,933,882 links from Mega sites (after allegedly having a 5,000 per day quota), that Disney removed 127,934 links, that the RIAA removed 17,108 links, that Sony removed 3,003 links, and that the BBC caused 132 removals.

Dotcom also believes this could set off a political scandal in the U.S. "Mega has become a re-election pawn in the White House/MPAA affair," he says. "If I was a Republican presidential candidate I would investigate this."


Twitter: @eriqgardner