Hollywood Movie Studios, Record Labels Sue Megaupload for Copyright Infringement

Major movie studios and record labels are suing Megaupload for copyright infringement, claiming the popular file-sharing website encouraged users to upload hundreds of thousands of unauthorized copies of popular films, television shows, and music each day.

Megaupload and its founder, Kim Dotcom, face two separate lawsuits, both filed this month in the U.S. District Court for the Eastern District of Virginia. The first lawsuit filed on April 7 includes movie studios Twentieth Century Fox, Disney, and Paramount. The studios allege the infringement of popular movies such as “Tangled,” “Transformers,” and “Harry Potter and the Deathly Hallows.” The second lawsuit, filed three days later, includes record labels Sony, Capitol Records, and Warner Music. They allege the infringement of hit songs by Katy Perry, Britney Spears, Bruno Mars and other popular recording artists.

The plaintiffs accuse Megaupload of paying users to upload popular entertainment content onto Megaupload’s servers. Through an “Uploader Rewards” program, the more often a file was downloaded by others, the more money the user made. Megaupload also provided users with links to the infringing content and encouraged them to widely promote and share the URLs on the Internet. The plaintiffs further assert that Megaupload profited by selling users premium subscriptions for rapid, unlimited downloading and by selling online advertisements. At one point, Megaupload boasted more than 150 million registered users and 50 million daily visitors, accounting for four percent of total Internet traffic.

The alleged infringement occurred from 2005 until 2012, when Megaupload was shut down by the Justice Department. Megaupload’s attorney, Ira Rothken, told various news organizations that the lawsuits are “meritless” and that the site’s terms of use prohibited copyright infringement and provided a take-down service for content owners. The plaintiffs allege that although Megaupload included an “abuse tool” allowing copyright owners to request that specific links to infringing content be taken down, most infringing files had numerous links, rendering the abuse tool largely ineffective.