“Megaupload amassed the millions of popular content files that it hosted on its servers and offered to the public for download by openly encouraging and paying users to upload these files,” the MPAA alleges in its complaint, filed on Monday in the U.S. District Court for the Eastern District of Virginia.
The MPAA's lawsuit comes more than two years after federal authorities shut down Megaupload and indicted Dotcom for criminal copyright infringement. Prosecutors allege that Dotcom and other executives engaged in a conspiracy to infringe copyright by encouraging users to upload pirated clips to the online storage service. The government said in the indictment that Megaupload spurred people to infringe copyright by offering cash rewards to users who uploaded popular files, which were frequently downloaded by other users.
The MPAA makes a similar claim in its new lawsuit, which is pending in the same courthouse as the criminal case. “Through Megaupload's 'Uploader Rewards' program, defendants openly paid Megaupload users money to upload popular unauthorized and unlicensed content, including plaintiffs' copyrighted television shows and movies,” the MPAA alleges. “The more often an uploaded file was downloaded by other users, the more money the uploader made.
Although both the federal government and the MPAA take issue with this type of arrangement, it's unclear whether Megaupload's rewards program actually violated copyright law. The MPAA previously made similar allegations against the cyberlocker Hotfile, which also paid users who upload popular content. Hotfile and the MPAA settled that case before trial; the agreement calls for Hotfile to pay $80 million and to either shut down or start using digital fingerprinting technology to prevent people from sharing copyrighted files.