Movie Studios Sue Defunct Piracy Site Megaupload, Seeking Millions in Damages

Six major U.S. movie studios have sued Megaupload — which U.S. law enforcement officials shut down in January 2012 — seeking to collect the $175 million the site and its principals allegedly earned from copyrighted works illegally shared on the cyberlocker site, and even more.

The lawsuit does not specify the amount the studios are seeking to collect from Megaupload, but they said they are entitled to the maximum statutory damages of $150,000 per infringement plus the profits the defendants generated.

The complaint was filed Monday in the U.S. District Court for the Eastern District of Virginia by Twentieth Century Fox Film, Disney Enterprises, Paramount Pictures, Universal City Studios Prods., Columbia Pictures Industries and Warner Bros. Entertainment.

SEE ALSO: DOJ Releases Evidence It Says Shows Megaupload Used Piracy to Make Millions

“When Megaupload.com was shut down in 2012 by U.S. law enforcement, it was by all estimates the largest and most active infringing website targeting creative content in the world,” Steven Fabrizio, senior exec VP and global general counsel of the Motion Picture Assn. of America, said in a statement.

According to the U.S. government’s indictment, Megaupload reported more than $175 million in proceeds and cost copyright owners more than $500 million by enabling copyright infringement on a massive scale.

The Hollywood studios’ lawsuit names as defendants Megaupload Ltd. and its founder, Kim Dotcom; Vester, the majority shareholder of Megaupload; Mathias Ortmann, the site’s chief technical officer; and Bram van der Kolk, who oversaw programming.

Ira Rothken, the California-based lawyer who reps Megaupload and Kim Dotcom, said, “We believe the motion picture studios’ claims lack merit” and said that the defendants plan to vigorously defend themselves against the lawsuit.

Dotcom, aka Kim Schmitz and Kim Tim Jim Vesto, responded to the studios’ lawsuit with a tweet:

Dotcom personally received more than $42 million from the site in calendar year 2010 alone. The U.S. government is seeking to extradite Dotcom, with a hearing in New Zealand scheduled for July 7. In January 2013, Dotcom launched Mega, an encrypted cloud-based storage service that is purportedly designed to shield users from being snooped on by governments or corporations.

Last December, the U.S. Department of Justice unsealed evidence in its criminal case against Megaupload, including email excerpts the government claimed shows Megaupload and its operators knowingly engaged in large-scale copyright infringement to make money.

“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,” Fabrizio said. The website paid users based on how many times the content was downloaded (with Megaupload doling out coin only after a file was downloaded at least 10,000 times).

A copy of the studios’ 24-page complaint is available on the MPAA website here.

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