Megaupload Targeted In Multi Million Dollar Lawsuit

Adult media company Perfect 10 has come out all guns blazing in yet another lawsuit adventure. This time it has targeted cyberlocker Megaupload, with claims that the file-hosting giant infringed its copyrights, infringed and damaged its trademarks, and engaged in unfair competition. Perfect 10 demands a jury trial and damages and costs running to millions of dollars.

Another month, another copyright lawsuit from adult media outfit Perfect 10. This time the company is chasing file-hosting service Megaupload and its owner Kim Schmitz, associated companies such as megarotic.com, megaporn.com, megavideo.com, and megaclick.com, and other businesses and affiliates.

Does 1 to 100 in the lawsuit, which was filed 31st January in the California Southern District Court, are described as businesses owned, controlled by, or affiliated with Megaupload “which either directly or indirectly profit from and/or directly or indirectly infringe or facilitate the infringement of Perfect 10 intellectual property.”

The complaint states that Schmitz created MegaUpload for the specific purpose of storing, displaying and distributing intellectual property owned by others including “billions of dollars of pirated full-length movies, songs, software, and images.” It adds that Megaupload is not registered to do business in the United States and pays no US taxes.

Through its rewards program, which Perfect 10 claims offers $10,000 USD for 5,000,000 reward points, Megaupload “induces its customers to post content that is likely to be massively downloaded, such as high quality infringing nude images and popular full length movies and songs.”

Furthermore, Perfect 10 believe that Megaupload does not deserve ‘safe-harbor’ under the DMCA.

“Pirate websites such as megaupload.com, which obviously infringe massive quantities of movies, songs, images, and other extremely valuable copyrighted works, and directly profit from the infringing activity over which they have complete control, were never meant to be eligible to receive a DMCA safe harbor,” states the lawsuit.

“Furthermore, none of the five Megaupload websites listed above, including megaupload.com, identify the name, address, or phone number of their respective DMCA agents as required by 17 U.S.C. § 512(c)(2).”

Nevertheless, Perfect 10 says it sent Megaupload 22 notices in July and August 2010 informing the file-hoster “that it was infringing a vast collection of third party copyright works, Perfect 10 rights of publicity, and Perfect 10 copyrighted works.” Perfect 10 states that “as far as it can determine” most of the works have not been removed.

This has led the company to sue Megaupload for direct, contributory and vicarious infringement of “tens of thousands” of its images. Among other claims, Perfect 10 states that Megaupload also infringed and damaged its trademarks and became a source of unfair competition.

Perfect 10 is demanding that all defendants cease the unlawful copying, distribution and displaying of its copyright works and the same be deleted along with any links to such material between the defendants’ websites and their affiliates.

Damages of at least $5 million are claimed, plus punitive damages, attorney’s fees and full costs.

In 2009, Perfect 10 filed a lawsuit against the leading file-hosting service, RapidShare. Among other claims, Perfect 10’s complaint stated that RapidShare was guilty of infringing the copyrights of many of its images. In May 2010, the District Court of California ruled that RapidShare was not guilty of copyright infringement. RapidShare went on to countersue Perfect 10 “for being a copyright troll.”

Update: Here is a statement from Megaupload sent to TorrentFreak a few minutes ago.

We will file a motion shortly to dismiss the case. Our legal team is confident that we have nothing to worry about and they are working on a counter suit.

All infringing files Perfect 10 has ever reported to Mega have been removed within hours. We keep track of all DMCA notices and could identify all notifications from Perfect 10 and we have verified that all reported links were disabled within hours.

We also removed a link to content by the artist “Christina Aquilera” which was reported by the owner of Perfect 10 Mr. Norman Zada. But we doubt that Perfect 10 or Mr. Zada own the rights to works of that artist.

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