What is the Megaupload Controversy

Megaupload is a web site that is dedicated to hosting file storage for viewing services. Last month, the U.S. Department of Justice caused the shut-down of the once-popular file-storage website resulting in a variety of charges, arrests as well as the seizure of hundreds of millions of dollars in assets.

Megaupload was created in 2005 and had gotten over 21 billion visits each year. However, it was shut down by the US Department of Service on January 19, 2012 for copyright violations and allegations of digital piracy have been made but the trial has not begun yet. Just today, the company was charged with new a new superseding indictment that aims to show how Kim Dotcom, the founder and others allegedly aided and abetted massive copyright infringement.

Megaupload claimed that violations by users uploading files were not tolerated. In addition, the site owners claimed that the individuals who visited their site were not necessarily trying to upload pirated files. The site is currently unavailable due to criticism against them.

The controversy with Megaupload is still brewing however.

There has been criticism of the action against Megaupload focused on two key areas.

“First off the media reports that there have been quite a few legal observers who point out 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 push-back from groups threatening to sue on behalf of the interests of “innocent customers.”

In the latest indictment against Megaupload, prosecutors focus on details of “personal involvement” of the defendants to aid and abet a conspiracy that included both copyright infringement and fraud. In other words, a new claim has been made that they actually participated with or help their site users deliberately violate copyright laws and commit fraud. These are very serious allegations again Megaupload.

One example of this is that prosecutors say that Megaupload alleged to have 180 million registered website users but in fact it only had 66 million as of January 19. In addition, they are claiming that less than 1/10 of those Megaupload users ever uploaded a file.

Rather, Megaupload engaged copyright-infringing uploads by only a few site users.

The new indictment states, however, “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 against Megaupload goes on list the ways that the founder of Megaupload 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, the founder of Megaupload 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.

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