"David vs Goliath & Godzilla" - Hollywood files lawsuit against Megaupload

Filed Under: Featured, Law & order

Cinema. Image courtesy of Shutterstock.The Kim Dotcom/Megaupload mega-saga continues, with six mammoth movie studios filing suit against what they say is the former file-sharing site's mega-monster-mind-numbingly-massive copyright infringement.

When last we left him, Megaupload founder Kim Dotcom had won back the right to see all the evidence against him before, rather than after, his possible extradition to the US to answer charges of racketeering, money laundering, online piracy and copyright infringement.

Fuzzy on how those charges came about? No worries, we've got you covered.

Here's a timeline that will fill you in on the early parts of the saga, replete with the January 2012 New Zealand police/FBI SWAT-style raid on Dotcom's mansion - Glocks, semi-automatics and all.

Dotcom is still in New Zealand, fighting the long-running legal battle over the case and fighting extradition to the US.

Now, he's got to face the movie makers whose copyrighted works he allegedly infringed.

Or, as Dotcom puts it:

In a statement, Steven Fabrizio, global general counsel of the Motion Picture Association of America (MPAA), pointed out that when Megaupload was shut down, "it was, by all estimates, the largest and most active infringing website targeting creative content in the world."

That sounds about right. Megaupload had about 150 million registered users before it was shut down and was at one point estimated to be the 13th most frequently visited website.

Dotcom has defended the site, claiming that it was a storage service, not "an unlawful hub for mass distribution, as the MPAA puts it.

In its criminal complaint, the MPAA alleges that Megaupload used to pay users for uploading popular content and as a result was not a storage service.

Fabizio said this in the MPAA's statement:

Megaupload was built on an incentive system that rewarded users for uploading the most popular content to the site, which was almost always stolen movies, TV shows and other commercial entertainment content.

It paid users based on how many times the content was downloaded by others - and didn't pay at all until that infringing content was downloaded 10,000 times.

Megaupload wasn't a cloud storage service at all, it was an unlawful hub for mass distribution.

In fact, Megaupload didn't keep just any old content around, as would a storage service, Fabrizio said. If any posted content - say, a student's term paper - wasn't popular, down it would come:

If a user uploaded his term paper to store it, he got nothing – and, in fact, unless he was a paying subscriber, Megaupload would delete the paper if it was not downloaded frequently enough. But if that same user uploaded a stolen full-length film that was repeatedly infringed, he was paid for his efforts. That’s not a storage facility; that’s a business model designed to encourage theft - and make its owners very rich in the process. There’s nothing new or innovative about that. That’s just a profiteer using existing technology to try to get rich off of someone else’s hard work.

According to the complaint, uploaded content would be deleted if it was not also downloaded within a certain period of time - after 21 days in the case of unregistered, anonymous users and after 90 days in the case of registered users who were not premium subscribers.

It was only premium subscribers, estimated to be 1% of users, who could use Megaupload for long-term file storage, the MPAA charges.

From the complaint:

Thus, 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.

Dotcom has rejected the MPAA's claims about the incentive system, tweeting that files bigger than 100MB in size "did not earn rewards":

In fact, given Megaupload's reward system's limitations to files of 100MB or smaller, the MPAA's focus on it is a red herring, Dotcom's lawyer, Ira Rothken, told Ars Technica.

The MPAA's suggestion that the system was used to promote widespread pirating of movies, with their much larger file sizes, "doesn't pass the giggle test," he said.

[Megaupload] paid out a very, very tiny amount of money over a multi-year period. It was a rounding error on total revenue. It had little to do with the growth of Megaupload as a cloud storage company. This is a misleading attempt to try to take a legitimate cloud storage site and brand it as something negative, just for the MPAA to concoct a lawsuit.

In fact, Rothken told Ars, the MPAA and the US Department of Justice should already know that criminal charges are inappropriate when it comes to secondary copyright infringement. A civil action would be more appropriate, he said.

Dotcom, for his part, hasn't been idle since Megaupload was shuttered.

Besides battling extradition, legal battles and now the Hollywood legal Godzillas, on the one-year anniversary of the shutdown, he launched the Son of Megaupload, also known as Mega.

The most salient difference between Megaupload and its successor: all files are encrypted locally via JavaScript before they're uploaded to Mega.

To promote the launch, Dotcom hired an ice cream chef to create a new flavor to dish out to his fans: white chocolate and cherry.

The man is one heck of a colorful fugitive but he does have mighty good mega-taste, you have to give him that.

Image of theatre courtesy of Shutterstock.

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6 Responses to "David vs Goliath & Godzilla" - Hollywood files lawsuit against Megaupload

  1. Notal · 512 days ago

    i actually remember testing even after 60 days my file was still not removed (zero downloads)

  2. Andrew · 511 days ago

    I can remember a time when encryption was used with sky TV and someone somewhere managed to crack the encryption code without paying for the programme, the judge at the time stated that once the files are transmitted the files belong to whoever downloads and deciphers the film or whatever and that they were free to do so as the programme had been transmitted insufficiently encrypted and that it was Sky's responsibility to make their system more secure. so I have a question and that is this If these studios don't want their films stolen or copied then maybe they should not supply them to the public to view.
    On the other hand they should make sure the films or whatever are encrypted in a way that they cannot be recorded. so whatever the studios do should have no baring on whether it is uploaded or not, once it is out there it belongs to everyone

    • Jim · 510 days ago

      That's easier said than done. Encryption can be pretty good, but there's no encryption in history that can't be decrypted. It's a matter of patience and computing power. And sometimes cleverness.

      However, your statement also belies a major problem the studios have: Their prices are too high. The reason they have a problem at all is because they've priced their products to the point where criminals find it profitable to break their "locks".

      Think about music: They don't have nearly the problem videos do. Why? Because you can buy songs for pennies to maybe a dollar. Who hacks code that's only worth a buck? And, even if they do, they can't sell it because few people bother to even look on the criminal sites any more.

      When movies cost $2-$5, this problem will evaporate.

      • Paul Ducklin · 510 days ago

        Actually, there is an encryption system that is "perfect' and cannot be cracked, known as the one time pad. Used properly, no amount of computing power or time can decrypt a message.

        • Jim · 502 days ago

          True. But, that won't work with mass-produced items. Still, I was remiss in not mentioning that.

  3. Butch · 510 days ago

    It's been a while but I seem to remember that most individuals uploading large file content would routinely break the files into smaller RAR chunks ... often between 66 and 100MB. I never understood why. I think I do now given Kim Dotcom's own tweet. Uploaders wouldn't get paid for a single file containing the entire movie. But if broken into small chunks, they get paid for EACH of the smaller chunks!

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About the author

I've been writing about technology, careers, science and health since 1995. I rose to the lofty heights of Executive Editor for eWEEK, popped out with the 2008 crash, joined the freelancer economy, and am still writing for my beloved peeps at places like Sophos's Naked Security, CIO Mag, ComputerWorld, PC Mag, IT Expert Voice, Software Quality Connection, Time, and the US and British editions of HP's Input/Output. I respond to cash and spicy sites, so don't be shy.