US Government Cracks Down On Megaupload

The US government seized Megaupload’s domain names, grabbing $50 million in assets, and getting New Zealand police to arrest four of the site's key employees, including e founder Kim Dotcom.

The 72-page indictment states that the site earned more than $175 million since its founding in 2005, most of it based on copyright infringement. The indictment goes after six individuals.

The case is a major one, involving international cooperation between the US, Hong Kong, the Netherlands, the UK, Germany, Canada, and the Philippines. In addition to the arrests, 20 search warrants were executed today in multiple countries.

Megaupload controlled 525 servers in Virginia alone and had another 630 in the Netherlands—and many more around the world.) For years, the site has claimed to take down unauthorized content when notified by IP owners. It has registered a DMCA agent with the US government. It has created an “abuse tool” and given rIP owners access. It has negotiated with companies like Universal Music Group about licensing content.

The US government points to numerous internal e-mails and chat logs from employees showing that they were aware of copyrighted material on the site and even shared it with each other. The government says that the site therefore does not qualify for a “safe harbor” of the kind that protected YouTube from Viacom's $1 billion lawsuit.

Megaupload employees apparently knew how the site was being used. They also knew how important copyrighted content was to their business. Employees also had access to analytics. The government therefore concluded that Megaupload knew what was happening and did little to stop it.

The MPAA stated: "By all estimates, Megaupload.com is the largest and most active criminally operated website targeting creative content in the world. This criminal case, more than two years in development, shows that law enforcement can take strong action to protect American intellectual property stolen through sites housed in the United States."

This is for sure a case to watch!