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X accused of massive copyright infringement

DOJ says the website’s founders and execs schemed to bilk $500 million from copyright holders

With the flavor of the week being SOPA, PIPA and IP issues, it should come as little surprise that the Department of Justice (DOJ) is cracking down on a major content hosting website.

The DOJ indicted and related sites and arrested seven individuals with running an “international organized criminal enterprise” allegedly responsible for massive copyright infringement. The website is responsible for generating more than $175 million in criminal proceeds and for copyright holders’ loss of more than $500 million, the DOJ and Federal Bureau of Investigation (FBI) announced yesterday.

The individuals, dubbed the “Mega Conspiracy,” are led by Kim Dotcom, Megaupload’s founder and director and sole shareholder of Vestor Ltd., which also was indicted and has been used to hold his ownership interest in the Mega-affiliated websites. The six other individuals hold a range of positions within the Mega network of websites.

Members of the “Mega Conspiracy” were charged in the Eastern District of Virginia on Jan. 5 with engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering and two substantive counts of criminal copyright infringement.

The DOJ states that for more than five years, the “Mega Conspiracy” operated websites that “unlawfully reproduce and distribute infringing copies of copyrighted works, including movies – often before their theatrical release – music, television programs, electronic books, and business and entertainment software on a massive scale.”

The joint takedown is said to be among the largest criminal copyright cases ever brought in the U.S., and it directly targets the misuse of a public content, storage and distribution website to commit and facilitate IP crime.

For more on the case, read the DOJ’s release.

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