Updated: Jan. 19, 4:15PM
In one of the most massive copyright infringement cases in history, law enforcement authorities have shut down and arrested employees of one of the world’s biggest file-sharing websites, MegaUpload.com.
Megaupload founder Kim Dotcom and three other employees were arrested by authorities in New Zealand on Thursday while three others remain at large. A federal judge in Virginia ordered the seizure of 18 domain names affiliated with what the feds called the “Mega conspiracy,” knocking the website offline. About $50 million in assets were seized and 20 search warrants were executed by law enforcement officials in the U.S. and eight other countries.
A 72-page indictment in the Eastern District of Virginia lays out a consipiracy in which the Megaupload employees were part of a “worldwide criminal organization whose members engaged in criminal copyright infringement and money laundering on a massive scale.”
Dotcom allegedly made over $42 million from the conspiracy in calendar year 2010 alone, according to court documents. Authorities seized dozens of luxury cars as well as large LCD televisions and various pieces of artwork from the defendants.
The Justice Department estimated that the conspiracy caused half a billion dollars in harm to copyright owners, a figure a federal official briefing journalists on the arrests described as a very conservative estimate.
While the indictment mentions that premium users of Megaupload had paid for access to copyright materials, a law enforcement official said that the investigation targeted the leaders of the conspiracy rather than users.
Thursday’s bust came a day after a variety of websites went dark in protest of the Stop Online Privacy Act (SOPA) and PROTECT IP Act (PIPA), which they say would give far too much power to the government to essentially shut down websites. The sponsor of PIPA said the Megaupload development actually demonstrated the need for such legislation.
“Today’s action by the Department of Justice against the leaders of MegaUpload.com shows what law enforcement can do to protect American intellectual property that is stolen through domestic websites,” Sen. Patrick Leahy (D-VT) said in a statement. He continued:
Unfortunately, there are no tools in the arsenal to protect that same American intellectual property from theft by websites hosted and operated overseas. Why should we give greater protections to criminals engaging in the same conduct overseas? Meaningful legislation to stop online infringement and piracy by foreign rogue websites will protect American workers, American consumers and America’s economy. The PROTECT IP Act would close this gap and offer a meaningful solution to this costly and corrosive problem.”
Additional reporting by Carl Franzen
Ryan J. Reilly
Ryan J. Reilly is a D.C.-based reporter for TPM. Prior to joining TPM, he worked for a news website covering the Justice Department and was a researcher for Bloomberg News. His email address is ryan(at)talkingpointsmemo.com.
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