Copyright, piracy battle rages: Megaupload.com shut down, execs jailed

Department of Justice, FBI go after Megaupload, Vestor and others in massive copyright, piracy take-down case

The US Department of Justice today said it charged seven people and two corporations with running what it called an international organized criminal enterprise allegedly responsible for massive worldwide online piracy of numerous types of copyrighted works.

The DoJ stated that through the company known as Megaupload.com and other related sites, the group has generated more than $175 million in criminal proceeds and cost copyright holders more than half a billion dollars.

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"This action is among the largest criminal copyright cases ever brought by the United States and directly targets the misuse of a public content storage and distribution site to commit and facilitate intellectual property crime," the DOJ stated. 

Specifically Megaupload Limited and Vestor Limited were indicted by a grand jury in the Eastern District of Virginia and charged with engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two substantive counts of criminal copyright infringement. The individuals each face a maximum penalty of 20 years in prison on the charge of conspiracy to commit racketeering, five years in prison on the charge of conspiracy to commit copyright infringement, 20 years in prison on the charge of conspiracy to commit money laundering and five years in prison on each of the substantive charges of criminal copyright infringement, the DoJ stated. 

The DoJ said that police today executed more than 20 search warrants in the United States and eight countries, seized approximately $50 million in assets and targeted sites where Megaupload has servers in Ashburn, Va., Washington, D.C., the Netherlands and Canada. In addition, the U.S. District Court in Alexandria, Va., ordered the seizure of 18 domain names associated with the alleged Mega conspiracy.

According to the indictment, the conspiracy for over five years  operated websites that unlawfully reproduced and distributed infringing copies of copyrighted works, including movies - often before their theatrical release - music, television programs, electronic books, and business and entertainment software on a massive scale. The conspirators' content hosting site, Megaupload.com, is advertised as having more than one billion visits to the site, more than 150 million registered users, 50 million daily visitors and accounting for four percent of the total traffic on the Internet, the DoJ stated.

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"The indictment states that the conspirators conducted their illegal operation using a business model expressly designed to promote uploading of the most popular copyrighted works for many millions of users to download. The conspirators further allegedly offered a rewards program that would provide users with financial incentives to upload popular content and drive web traffic to the site, often through user-generated websites known as linking sites. The conspirators allegedly paid users whom they specifically knew uploaded infringing content and publicized their links to users throughout the world," the DoJ stated. 

The conspirators failed to terminate accounts of users with known copyright infringement, selectively complied with their obligations to remove copyrighted materials from their servers and deliberately misrepresented to copyright holders that they had removed infringing content, the DoJ stated.   For example, when notified by a rights holder that a file contained infringing content, the indictment alleges that the conspirators would disable only a single link to the file, deliberately and deceptively leaving the infringing content in place to make it seamlessly available to millions of users to access through any one of the many duplicate links available for that file.

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