A Mega lawsuit

April 9th, 2014 at 11:00 am by David Farrar

Stuff reports:

Internet Party leader is facing a new lawsuit in the United States from six Hollywood film studios.

They claim in their suit the founder “facilitated, encouraged, and profited” from illegal file-sharing on the site.

The Motion Picture Association of America (MPAA) filed the suit on behalf of the studios this morning (NZ time).

The lawsuit was filed by Twentieth Century Fox Film Corporation, Disney Enterprises, Paramount Pictures Corporation, Universal City Studios Productions, Columbia Pictures Industries, and Warner Bros Entertainment in the US District Court for the Eastern District of Virginia.

The US Government is already seeking to extradite Dotcom to face charges of conspiracy, racketeering and money-laundering allegedly carried out by his file-sharing company, Megaupload.

It’s an interesting move. Does that signify concern over whether the criminal case will succeed, or was this always planned?

Dotcom is specifically named in the suit, under his most famous name as well as Kim Schmitz and Kim Tim Jim Vestor.

Kim Tim Jim Vestor???

According to the Government’s indictment, the site reported more than $175 million (NZ$203.4m) in … proceeds and cost US copyright owners more than half a billion dollars.

The studios allege Megaupload paid users based on how many times the content was downloaded by others. But the studios allege the site didn’t pay at all until that content was downloaded 10,000 times.

This is a key detail in both the criminal and civil lawsuits. Other file-sharing websites do not pay people based on how many downloads they get for content they upload. This is how they allege they incentivised copyright infringement, rather than just provided a file sharing platform (such as the new Mega).

This does not mean the lawsuits will be successful. But it is a key factor in why Megaupload was targeted, and not other file-sharing sites. If someone can earn say $10,000 by uploading the latest movie release, well that is a pretty good incentive to do so.

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36 Responses to “A Mega lawsuit”

  1. Ryan Sproull (7,153 comments) says:

    Was it payment by volume of plays of the content or of views of the ads that popped up when someone opened the video pages?

    Because if it was the latter, you might as well accuse Google Ad Network for incentivising people to host attractive illegal content with Google display ads next to them.

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  2. 35pr17 (10 comments) says:

    “Other file-sharing websites do not pay people based on how many downloads they get for content they upload.”

    You mean something what Youtube does with their partner/monetization network?

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  3. queenstfarmer (782 comments) says:

    Interesting that some media are only just now picking up on how Mega financially incentivised mass illegal filesharing, as if this is a new allegation. This has been a key issue since day 1.

    They should also look at Kim & co’s own emails showing that they knew exactly what was going on, and devised strategies to encourage further sharing of porn, movies, & music.

    It is no surprise that Kim is so desparate to avoid ever having to answer these very specific charges.

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  4. davidp (3,581 comments) says:

    Is the Internet Party a subsidiary of Mega? If so, is it possible that the Internet Party might be seized by the studios as part of any judgement? We might end up with Mana being partly owned by a bunch of Hollywood studios, which would be a giggle.

    Oh, am I the only person surprised that the Internet Party couldn’t be launched until Apple Corporation had approved their software. This must be the only party in NZ history whose operations are subject to the veto of a multi-national corporation, and where the party pays a percentage of membership fees to that multi-national.

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  5. Steve Wrathall (284 comments) says:

    Kim Tim Jim Vestor???
    Any relation to Tarquin Fin-tim-lin-bin-whin-bim-lim-bus-stop-F’tang-F’tang-Olé-Biscuitbarrel?

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  6. Elaycee (4,392 comments) says:

    DPF: Does that signify concern over whether the criminal case will succeed, or was this always planned?

    Don’t think there are concerns…. the move appears to be pragmatic. Because there have been several delays with Dotcom’s extradition hearing, the charges were filed on 1st April in order to keep within the US statute of limitations.

    http://blogs.findlaw.com/celebrity_justice/2014/04/hollywood-studios-sue-megaupload-kim-dotcom-for-infringement.html

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  7. queenstfarmer (782 comments) says:

    @35pr17: YouTube is similar but different. Many websites have a model falling under the broad category of “making money by advertising based on number of views/downloads/clicks/etc”.

    The allegation is that Mega’s was predicated largely on mass illegal sharing, actively encouraged by Dotcom & co (the FBI evidence makes a powerful case based on their own emails).

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  8. Kleva Kiwi (289 comments) says:

    Its been filed now because of statute of limitations will come in soon.
    There is possibility krim.con may have arrest warrant issued if he dosnt show and courts deem it a requirement that he does.

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  9. Manolo (13,783 comments) says:

    We need to hear the wise opinion of the distinguished Mr Graeme Edgeler, legal counsel of the popular Internet Party.

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  10. Weihana (4,537 comments) says:

    DPF,

    It’s an interesting move. Does that signify concern over whether the criminal case will succeed, or was this always planned?

    I think this was always planned. I wonder if there is some advantage in a civil action if the extradition is succesful so that he can be served on US soil.

    Other file-sharing websites do not pay people based on how many downloads they get for content they upload. This is how they allege they incentivised copyright infringement, rather than just provided a file sharing platform (such as the new Mega).

    The inducement rule is summarized as:

    “We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.”

    I’m not sure I see how paying people based on downloads meets that definition. To pay users for downloads incentivises people who contribute things which appeal to consumer demand and therefore increase traffic to the website. The issue would not seem to turn on whether or not people were paid per download or per ad click or per ad view or whatever. All these things are essentially equivalent and it’s the same thing Youtube does, Google does, Facebook does etc.

    The issue turns on whether there is “clear expression or other affirmative steps” that fosters infringement. Mere knowledge of infringing material or infringing uses is not sufficient: “the inducement rule … premises liability on purposeful, culpable expression and conduct.”

    In Grokster that was shown through actively seeking out former Napster users when Napster ceased to exist as a conseuqence of judicial action. This demonstrated the requisite intent in that case. Merely paying for downloads would not seem to show such intent since a video of a cat may likewise generate lots of downloads and therefore lots of payments. It would seem to depend on all the other evidence and to look at that evidence in context to see if it showed purposeful action to foster infringement.

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  11. UglyTruth (4,551 comments) says:

    The phrase “copyright infringement” is ambiguous, it can be applied to an act in which no wrong has been committed.

    The idea that people downloaded content in order to avoid paying for it is just an assumption, and it is an essential point if you want to make a case that Dotcom is guilty of a wrong.

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  12. Keeping Stock (10,342 comments) says:

    Without in any way commenting on the merits of the criminal case, the civil case will have a lesser standard of proof. The MPAA will have to prove its allegations on the balance of probabilities, rather than beyond reasonable doubt. It is the same standard of proof that saw OJ Simpson declared responsible for the death of his wife, even though he was found not guilty of murder by a jury.

    Dotcom’s lawyers will be rubbing their hands with glee; there was a comment on the news last night that a defence would cost “tens of millons” of dollars. Given Dotcom’s rather cavalier treatment of New Zealand creditors, I would suggest that they ask for a significant portion of that up-front, as a retainer.

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  13. Alan (1,087 comments) says:

    “The studios allege Megaupload paid users based on how many times the content was downloaded by others. But the studios allege the site didn’t pay at all until that content was downloaded 10,000 times.”

    This is a fairly common model, that allows software distributors to write small apps that are at no cost to end user and get paid. VLC media player and the like all exist because of this. It’s not a key detail at all, it’s normal for hosting sites to share ad revenue for people that deliver page impressions.

    There is only 1 point that is valid, did Mega knowingly host material and refuse to comply with takedown notices, other wise section 512c of the DCMA applies; hosters are protected by infringements that relate to “Information residing on systems or networks at the direction of users”

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  14. davidp (3,581 comments) says:

    Manolo>We need to hear the wise opinion of the distinguished Mr Graeme Edgeler, legal counsel of the popular Internet Party.

    I’d also be hearing why there is an injunction that specifically prevents Wayne Temporo from discussing the Internet Party. What are they hiding? Is this the first time in NZ history that a person has been prevented by law from discussing a political party?

    It is ironic that a party that claims to be in favour of openness is actually so secretive.

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  15. Elaycee (4,392 comments) says:

    Burning question: If Krim Dotcom (aka Kim Schmitz / aka Kim Jim Tim Vestor) is so sure he is innocent of all charges, why isn’t he (and his fellow accused) on the next plane to the USA to prove his innocence via the Courts?

    I think we all know the answer….. :lol:

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  16. Alan (1,087 comments) says:

    That he doesn’t trust the US courts system and considers it in hock to the entertainment industry ?

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  17. queenstfarmer (782 comments) says:

    @Elaycee: he doesn’t have to “prove his innocence”. He is innocent until proven guilty.

    On the criminal charges, the prosecution needs to prove his guilt, to a jury, beyond all reasonable doubt.

    On the civil charges, it is the balance of probabilities.

    But your question stands. If the claims are as laughable and “stupid” as convicted criminal Dotcom says, then he could beat them in no time and get on with his life.

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  18. Keeping Stock (10,342 comments) says:

    @ Elaycee and queenstfarmer – on one hand Dotcom has been quoted as saying that he wants his “day in court”, and is sure that he will be cleared of the criminal conspiracy charges. On the other hand, he is doing everything possible to avoid his day in court.

    Funny that ;-)

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  19. Elaycee (4,392 comments) says:

    @Keeping Stock – I’ve just deleted a comment saying the same thing.

    Snap! :D

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  20. Nostalgia-NZ (5,214 comments) says:

    Alan:

    ‘There is only 1 point that is valid, did Mega knowingly host material and refuse to comply with takedown notices, other wise section 512c of the DCMA applies; hosters are protected by infringements that relate to “Information residing on systems or networks at the direction of users”’

    The black and white is becoming grey now, more so because of the claims this was always a civil case. With all the talk about the statute of limitations it seems to forget that DC apparently has no money, his assets frozen, almost blood from a stone situation. On the other hand it may be the groundwork for the commencement of settlement proceedings or anticipation of a counter suit.

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  21. Weihana (4,537 comments) says:

    Alan (901 comments) says:
    April 9th, 2014 at 12:20 pm

    That he doesn’t trust the US courts system and considers it in hock to the entertainment industry ?

    There is a better argument I think and that is that if you are subject to legal action you take any and every opportunity to fight that. Whether or not he is guilty it is ridiculous that people criticize merely on the basis that he puts up a challenge.

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  22. Weihana (4,537 comments) says:

    Keeping Stock (9,775 comments) says:
    April 9th, 2014 at 1:05 pm

    On the other hand, he is doing everything possible to avoid his day in court.

    I think you will find extradition hearings are conducted in court rooms. :)

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  23. Dave_1924 (116 comments) says:

    DPF…. “Kim Tim Jim Vestor???”

    “he fled to Hong Kong and changed his name to Kim Tim Jim Vestor, swapping first names on a whim.”

    See: http://www.forbes.com/sites/andygreenberg/2013/04/17/inside-mega-the-second-coming-of-kim-dotcom/

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  24. Manolo (13,783 comments) says:

    The obese German must be counting on comrade Norman to get him off the hook (no extradition to the US).

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  25. johnwellingtonwells (137 comments) says:

    KDC’s problem is that he does not have the money to fly premium economy or business class. So how will he fit into an economy seat 10 abreast 777-300ER? Pity the person sitting next to him

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  26. Elaycee (4,392 comments) says:

    So how will he fit into an economy seat 10 abreast 777-300ER? Pity the person sitting next to him

    Perhaps he can try Air NZ’s cuddle class – with his pal Hone…. :D

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  27. wikiriwhis business (4,016 comments) says:

    The US is after his money. Absolute final analysis

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  28. OneTrack (3,108 comments) says:

    “That he doesn’t trust the US courts system…”

    Why wouldn’t he trust the US? They’ve got Obama.

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  29. Steve (North Shore) (4,563 comments) says:

    This Dot Crim Entertainment is just oarsome – popcorn please

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  30. igm (1,413 comments) says:

    I can’t wait for a farewell party at the airport. Slobcom will be seen off by a few very worried people, namely Hadfield, Cunliffe, and Peters. These are people who have promised to interfere in his extradition order, for monetary donations to their insolvent parties. There is a lot to come on this topic and this obese criminal will blow the whistle . . . wait and see!

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  31. OneTrack (3,108 comments) says:

    igm – you forgot to mention Norman.

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  32. Nookin (3,345 comments) says:

    “The US is after his money. Absolute final analysis”

    People in the US are after money that they say it rightfully theirs and wrongfully obtained and retained by Dot.com as they are lawfully entitled to do. Absolute final analysis.

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  33. igm (1,413 comments) says:

    OneTrack: Norman is, like his party, a two-minute wonder!

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  34. Mark (1,488 comments) says:

    Isnt the whole Mega Upload saga essentially about copywrite infringement? Call me naive but this is how the whole issue should have been dealt with from the start, a civil suit for copywrite infringment and hollywood protecting its commercial interests.

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  35. Mark (1,488 comments) says:

    igm (821 comments) says:
    April 10th, 2014 at 6:56 am
    I can’t wait for a farewell party at the airport. Slobcom will be seen off by a few very worried people, namely Hadfield, Cunliffe, and Peters. These are people who have promised to interfere in his extradition order, for monetary donations to their insolvent parties. There is a lot to come on this topic and this obese criminal will blow the whistle . . . wait and see!
    Vote: 0 0

    WHo is Hadfield??

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  36. Mark (1,488 comments) says:

    WHo is Hadfield??
    Vote: 0 1

    LOL – Dont like the question or dont have an answer?

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