The Federal Bureau of Investigation on Thursday shut down Megaupload, the file-hosting website that claims 4% of all internet traffic. In a press release,* the Department of Justice describes its action as one of the largest criminal copyright cases ever brought by the United States. According to the grand jury indictment, the website was part of a global criminal organization (cleverly referred to as the “Mega Conspiracy”) engaging in over $500,000,000 worth of criminal copyright infringement and money laundering. The indictment charges two corporations and seven individuals with (1) conspiracy to commit racketeering, (2) conspiracy to commit copyright infringement, (3) conspiracy to commit money laundering, and (4) criminal copyright infringement. The Wall Street Journal reports that four of those seven individuals have been arrested in New Zealand by local police, among them Megaupload’s founder, the awesomely-named Kim Dotcom (also known as Kim Schmitz or Kim Tim Jim Vestor — an even better name). Megaupload’s CEO, hip-hop producer Swizz Beatz (also a great name), was not included in the indictment.
Megaupload’s shutdown comes at an interesting moment in time: just one day after many of the internet’s most popular websites censored themselves to protest the Stop Online Piracy Act and the Protect IP Act. This timing has left many observers wondering why SOPA and PIPA are even necessary if the DOJ can already shutter websites suspected of copyright infringement. Megaupload, however, has been charged not just with mere copyright infringement, but criminal copyright infringement (massive criminal copyright infringement, at that), in addition to other criminal acts stemming from that infringement. SOPA and PIPA, as far as I can tell, would only make it easier for the DOJ to take similar action against websites suspected of less serious (probably much less serious) copyright infringement; SOPA, for instance, amends 17 USC §506, the criminal copyright infringement statute, to include infringement by “public performance by means of digital transmission” and by “public performance of a work being prepared for commercial dissemination.” Many similar file-hosting websites continue to operate in the wake of Megaupload’s shutdown, but even if those sites refrain from racketeering, money laundering, and criminal copyright infringement, their fates — and the fates of many other websites — remain uncertain under SOPA and PIPA.
Megaupload attracted controversy last month with a promotional music video featuring celebrity endorsements of the website by will.i.am (another great name), Diddy (absolutely not a great name), Kanye West, and Kim Kardashian (why Kim Kardashian would ever need to use a file-hosting website, I have no idea), among others. The video was removed from YouTube subject to a takedown request from Universal Music Group, but the video — showcasing an apparently original song — did not appear to violate any of the usual DMCA copyright infringement provisions. UMG claimed the video contained an unauthorized performance by one of its artists; Megaupload responded with a lawsuit, arguing that all of the featured celebrities had signed releases permitting use of their likenesses. YouTube has since reinstated the video, available here for your viewing and listening displeasure: http://www.youtube.com/watch?v=K9caPFPQUNs
*The press release was unavailable for most of Thursday due to outages of the DOJ website, my guess was from increased traffic due to media attention of the Megaupload shutdown. As it turns out, the DOJ website (as well as the websites of UMG, the RIAA, and the MPAA) was actually suffering from a retaliatory distributed denial of service attack by infamous “hacktivist” group Anonymous.