Megaupload, the file hosting and transfer service incorporated in Hong Kong, was taken down today by U.S. Justice Department and FBI today on charges of copyright infringement and conspiracy. The timing of the federal raid on Megaupload is particularly intriguing in light of yesterday’s widespread online protests against two anti-piracy bills currently being debated by Congress – the Stop Online Piracy Act (SOPA) and the Protect IP Act (PIPA).
Four of Megaupload’s top employees, including the site’s founder Kim Dotcom, were arrested today. Three other employees are currently wanted on charges of copyright infringement by authorities and awaiting arrest.
Megaupload has generated significant revenue from advertising and subscription fees. The company provides hosting and file transfer services similar to services provided by competing companies such as RapidShare and MediaFire. Megaupload was even recently touted by the Black Eyed Peas as a legitimate method to transfer files across the Internet. However, authorities and large media companies are claiming the company allows an easy method for users to illegally trade copyrighted material.
Even though Megaupload was taken offline today, the indictments to seize the site and its assets were actually handed down two weeks ago, the end result of a two year investigation.
It will be interesting to see how this case plays out, especially with digital piracy currently being debated in the public so prominently. The conspiracy charges are quite troublesome, but it’s possible this case could end up like the Supreme Court case from the 1980s in regard to home VCRs. In that case, the Supreme Court ruled that using VCRs to record television shows for viewing at a later time constituted “fair use” under copyright law, even though the devices could be used to mass distribute recorded copies of shows. If Megaupload can prove that its hosting and file transfer services fall under the “fair use” provision, these charges could have no merit. However, if Megaupload is proven to be primarily a distribution network for copyrighted material, it’s very likely that we have seen the last of this company.