Megaupload site wants assets back, to fight charges

WASHINGTON Fri Jan 20, 2012 4:52pm EST

1 of 2. German internet millionaire Kim Schmitz is seen in Hong Kong in 1999.

Credit: Reuters/Handout

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WASHINGTON (Reuters) - The Internet website, shut down by authorities over allegations that it illegally peddled copyrighted material, is trying to recover its servers and get back online, a lawyer for the company said on Friday.

The company and seven of its executives were charged in a 5-count, 72-page indictment unsealed on Thursday accusing them of engaging in a wide-ranging and lucrative scheme to offer material online without compensating the copyright holders.

Authorities in New Zealand arrested four of those charged, including one of its founders, who legally changed his name to Kim Dotcom. Assets were also seized money, servers, domain names and other assets in the United States and several countries.

"The company is looking at its legal options for getting back its servers and its domain and getting its servers back up online," Megaupload's lawyer Ira Rothken told Reuters. "Megaupload will vigorously defend itself."

He said the company simply offered online storage. "It is really offensive to say that just because people can upload bad things, therefore Megaupload is automatically responsible," he said.

No decision has been made yet about whether they will fight extradition from New Zealand to the United States, Rothken said.

U.S. authorities have painted a much darker picture of the company's operations, saying that Megaupload readily made available copyrighted material including music, television shows, movies, pornography and even terrorism propaganda videos.

Users could upload material to the company's sites, which then would create a link that could be distributed so others could download it, according to the indictment. Some paid subscription fees for faster upload and download speeds.

Despite complaints from copyright holders, the Megaupload did not remove all of the material when requested to do so, prosecutors said. The company's executives earned more than $175 million from subscription fees and advertising, they said.


Less than a day after U.S. authorities shut down the site and several of its sister sites, there appeared to be an attempt to resurrect the site.

Twitter was flooded with messages circulating a new Internet Protocol address, but the site offered no substantive content immediately and it did not appear that it was sanctioned by Megaupload.

The new website, which is being hosted in the Netherlands, looked similar to the original website. The company's lawyer said that he was not directly familiar with the new site.

"We're not familiar with any official effort at this point to get the site back up in light of the fact that its major servers are in the possession of the United States government and other governments," Rothken said.

One of those arrested on Thursday was Bram van der Kolk, who has citizenship in the Netherlands and New Zealand. He oversaw programming and the network structure for Megaupload's websites, according to court papers.

U.S. officials were asked on Thursday about the risk of the site reappearing elsewhere in the future, a key issue that has confronted authorities in the past when they've tried to shut down Internet sites selling counterfeit goods.

"Right now we're in the process of executing search and seizure warrants and certainly it's not going to pop up again today. But I couldn't speculate as to what may or may not happen in the future," one Justice Department official said on Thursday.

Another official said "maintaining and running and assembling a site like this is very expensive. And obviously the seizure of financial assets is critical in this type of investigation and prosecution in preventing it from going forward."

The case, which started as an investigation in March 2010, emerged just as lawmakers in Congress have been battling over new legislation sought by the television, movie and music industries that was aimed at making it harder for such material to be so easily peddled over the Internet.

Some major technology companies, including Google and Facebook, have sought to derail the current versions of the legislation because they were concerned they would lead to censorship and lengthy litigation.

Earlier on Friday, Democratic Senate Majority Leader Harry Reid postponed a vote on one bill that was set for Tuesday until several issues are resolved.

(Additional reporting by Jim Finkle in Boston; Editing by Howard Goller, Gary Hill)

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Comments (73)
Stratagem wrote:
“Users could upload material to the company’s sites which then would create a link that could be distributed. The sites, which included video, music and pornography, did not provide search capabilities but rather relied on others to publish the links, the indictment said.”

“If copyright holders complained about a specific link to the website, prosecutors said that would remove that link but scores of others existed to the same material, according to prosecutors.”

So, the prosecutors contend that the case has no merit? The DMCA specifically describes this model and these actions as absolute blockades to primae facie.

Jan 19, 2012 8:49pm EST  --  Report as abuse
Pyro wrote:
Wait, what about all of the legitimate users of Megaupload. Like it or not, they have taken down a lot of copyrighted material, and many people use it to share completly original documents. I personally didn’t use Megaupload, but I do use mediafire to share large attachments when I can’t fit it in one email. These buffoons in Hollywood just need to adapt, and I can’t stand for these tools to trample over our god given rights.

Jan 19, 2012 9:47pm EST  --  Report as abuse
jscott418 wrote:
The problem with these sites is it not only goes against copyright laws, it goes against the fact that people should pay for copyrighted material. Just because you cannot afford it, or think its too expensive or you just hate big business. Does not mean that you stealing and distributing content is any less criminal. This is the way to deal with copyright infringement. Not to pass legislation like SOPA. Shut down the ones you can and work with other Countries to do the same.

Jan 19, 2012 9:50pm EST  --  Report as abuse
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