US record labels follow Hollywood in suing Dotcom's Megaupload

Kim Dotcom

Four major US record labels are suing Megaupload founder Kim Dotcom and his associates in an almost identical suit filed by six Hollywood movie studios earlier this week.

Music labels Warner Music Group, UMG Recordings, Sony Music Entertainment and Capitol Records are suing for copyright breach of sound recordings, from which they say the defendants generated more than US$175 million in illicit profits, while causing more than US$500 million in harm to copyright owners, according to a statement by Recording Industry Association of America.

Like the studio case, the record labels have named Megaupload and associated company Vestor Ltd, Dotcom, Mathias Ortman and Bram van der Kolk. The record labels are seeking a jury trial.

"According to the results of a worldwide investigation by the Department of Justice and the Federal Bureau of Investigation, defendants' copyright infringement scheme has been wildly successful for defendants, while causing widespread and extensive harm to copyright owners," according to papers filed in the US District Court for the Eastern District of Virginia.

"The massive copyright infringement caused by defendants' lawless conduct has harmed plaintiffs in ways that cannot be fully measured and cannot be fully remedied by monetary damages."

The civil case is the latest since Auckland-based Dotcom and his associates were arrested in January 2012 at his Coatesville mansion, and Megaupload was shut down.
Dotcom, Finn Batato, Ortmann and van der Kolk last month lost a bid in the Supreme Court to access US government evidence against them ahead of an extradition hearing to the US to face charges of mass copyright infringement and money laundering of more than US$500 million.

Like the movie studios, the record labels filed their case in Virginia because Carpathia Hosting, which provided internet hosting services for Megaupload, is based in Dulles, Virginia.
The record labels similarly cited Megaupload's 'abuse tool' as not functioning in the way the defendants represented to "frustrate copyright owners' use of it and ensure that the most popular infringing files would continue to be broadly available on Megaupload for download."

They did so because "Megaupload's business model depended on widespread copyright infringement," the record labels claim.

The record labels are seeking actual damages and the defendants' profits, or statutory damages for the infringement, and an order permanently restraining Dotcom and his associates from acting in a way that may infringe their copyright.