Six major Hollywood movie studios are suing Megaupload founder Kim Dotcom and his associates, alleging they made more than US$175 million by running an online hub for stolen copyrighted movies and TV shows.
Megaupload and associated company Vestor are named in the charges alongside Auckland-based Dotcom, co-founder and chief technical officer Mathias Ortmann and Bram van der Kolk, who oversaw programming, according to charges filed yesterday in the US District Court in Alexandria, Virginia. The men operated the website until indicted on US Federal charges in 2012 when it was shut down.
The suit by Twentieth Century Fox Film Corp., Disney Enterprises Inc., Paramount Pictures Corp., Universal City Studios Productions LLLP, Columbia Pictures Industries Inc. and Warner Bros. Entertainment Inc claims the defendants earned about US$150 million from the sale of Megaupload premium subscriptions. It also says they earned more than US$25 million through online advertising on Megaupload and its associated websites.
The charges allege Megaupload's business model depended on attracting users to download high-value copyrighted content.
"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," the case alleges. "Defendants were responsible for the infringement of thousands of plaintiffs' copyrighted works, causing substantial harm to plaintiffs, who invested billions of dollars and enormous creative energies to produce their copyrighted works."
An "abuse tool" which purported to enable copyright holders to remove or disable access to copyright-infringing files on Megaupload's servers didn't function in the way the defendants represented it, ensuring the most popular infringing files would continue to be broadly available on Megaupload for download despite copyright owners' efforts to protect their content, the charges allege.
"Defendants did not take any of the simple, meaningful steps they could have taken to curtail infringement because they wanted and needed that infringement to make their illegal business profitable," the studios claim.
The claim was filed in Virginia because Carpathia Hosting Inc which provided internet hosting services for Megaupload, is based in Dulles, Virginia.
The studios are seeking profits, damages and costs.
Dotcom and his associates Finn Batato, Ortmann and van der Kolk last month lost a bid in the Supreme Court to access US government evidence against them ahead of an extradition hearing to the US to face charges of mass copyright infringement and money laundering of more than US$500 million.