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US record labels follow movie studios in suing Dotcom’s Megaupload

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.


Comments and questions

Seems a bit odd that two years pass and then within two days two law suits at filed. Looks a bit orchestrated to me.

Yep orchestrated, much the same way as the copyright infringement was orchestrated. Evidence gathered in the criminal case has been "released and made public" for no fee, so that others may benefit from the knowledge.

And yes the sooner Kimmy is back on US soil the better. Remember this, there is no such thing as a free lunch, and Kim it's time to pay for all your feasting.

KDC never lived in the U.S.A.

Glad Chris that you admit to it being orchestrated, and I suggest even down to the unbelievable yankee PR that 1ZB on Larry Williams show did last Thursday late afternoon. I'll bet Dotcoms lawyers are all over that episode, for a more blatant suck up to the Hollywood cartel I have ever heard. It came across as nothing more than a paid for advertorial for the go America team. Cant help thinking 1ZB broke some NZ laws with the statements dressed up as prefabricated questions and answers during that farce. Later I heard something called a huddle, and after half an hour of main stream media spitting bias and venom it was nice to hear some guy called Tim Watkins I seem to recall giving a balanced and rational counter to Williams hatred.

Likely this:

The statute of limitations for U.S. civil copyright infringement is three years from when the infringement is discovered, or should have been discovered with reasonable diligence. In continuing infringement case, “[e]ach act of infringement is a distinct harm giving rise to an independent claim for relief.”

Interesting situation that on one hand the US DOJ is having the NZ Government spend millions of Kiwi tax payers dollars fighting all the way to the NZ Supreme Court so they don't have to release evidence to Kim Dotcom. Without this evidence defending himself is mega difficult.

Yet back in the ol' US of A they freely give all the evidence needed to the Movie industry (MPAA) and music industry (RIAA) so they can sue Dotcom and get their hands on the $170 million dollars the DOJ confiscated.

If they win there is a pretty high chance none of the $170 million the MPAA and RIAA are trying to get will ever be given to an actor in a movie or musician in a band. This will probably be dished out to the law firms looking after the interests of the industry and "administration" expenses at the various companies involved. Then in a couple years time the lawyers working for the DOJ will pass though the revolving doors between industry and government and land themselves million dollar a year jobs with the law firms who have made millions out of the confiscated Megaupload $170 million.

While I could be wrong i'd be prepared to eat a dirty old jandel if they win and anybody who is a real artist and not a lawyer or executive every gets a cent from the Megaupload millions.

This should work out really well for singers, songwriters, actors and other starving artists.

Lawyers always make sure of Justice for the little guys.

If the action fails, how will that work for singers, songwriters, actors and other starving artists?

Knowing they can put their heart and soul into a work, get it released and advertised, and then somebody can upload the CD or DVD on to MegaUpload and the rest of the world can listen to / watch it from there.

By the way, does anybody have a download link for Lorde's album......

The reality is musicians have traditionally made sweet F all from album and music sales anyway. Most musicians contracts are structured in such a way that the record company spends huge money on producers and music studio time to their buddies and the "artists" start out with a huge debt to the record company. The few cents per CD the artist is supposed to get paid goes straight back to the record company to pay the debt back.

As soon as the artists is about to get even with the debt they send them through the cycle once more and spend even more money of producers and expensive studio time so they are constantly in debt to the record company.

With digital sales the record companies still pay art artists a few cents on the sales while keeping their commission they traditionally kept for actually producing physical disks in factories, printing covers and shipping them throughout the world. So the record companies are getting paid for something they no longer do in a digital era. This is one of the reasons they are reluctant to have users go to a online streaming model like Spotify, Pandora or iTunes Radio. The royalties for streaming are a fraction of the money they make from a digital sale based on the royalties over the air radios have been paying for decades.

So rather than move with the times and give consumers realtime access to the music they want at a price reflecting the true cost of digital distribution the legacy industries are fighting any way possible to cling to the old model where they pay themselves commissions for production, shipping and distribution that they no longer have to do.

Musicians have historically made by far the most money from touring. Money earned on the road up until recently was typically left out of recording contracts. Of recent there is a trend with record companies including public performance royalties to themselves.

So musicians where not really affected too much by Megaupload because they never really got paid for music sales anyway.

In fact UK heavy metal band Iron Maiden use information about the countries and cities which are pirating their music the most to book additional tour dates. The band plays concerts where the most piracy is occurring and are making millions by continuing to fill large convert venues giving fans the bands live music experience.

You see even pirates got to pay to buy a concert ticket.