Megaupload’s Demise: A Warning to Cloud-Computing Services

As most are aware, Megaupload recently came under fire from the government for violating copyright laws due to its practice of encouraging the public to upload and view enormous amounts of pirated movies.  As Jeremy Pelofsky reports, is accused of “engaging in a scheme that took more than $500 million away from copyright holders and generated over $175 million in proceeds from subscriptions and advertising.”

Megaupload provided a forum that encouraged third parties to upload infringing material and, thereafter, profited from both advertisements and from offering subscriptions for faster viewing and downloading speeds. The encouragement by Megaupload to upload infringing material onto its servers and inadequately removing the infringing material from its website after being warned by copyright holders eventually led to the government’s crackdown. The key to the infringement claims against Megaupload arise from its repeated failure to comply with the notice and takedown provisions of the Digital Millennium Copyright Act (DMCA), thereby resulting in charges of willful copyright infringement.

So…knowing that the basic elements of Megaupload’s infringement include 1) providing an accessible forum; 2) giving users the ability to upload legitimate or illegitimate material to the forum; and 3) allowing other users to view and/or download the legitimate or illegitimate material for free, the following question emerges: what other services might be liable in the same manner as Megaupload?

As Chloe Albanesius reports, there are a few widely used services that immediately come to mind including well-known cloud-computing services: Dropbox, Box, and YouSendit. These services essentially provide personal or group forums capable of meeting the aforementioned elements carried out by Megaupload.

Unlike Megaupload, however, Box and YouSendIt claim to take measures to avoid violating the Digital Millennium Copyright Act and act accordingly when the discovery of infringing material appears on their servers. In order to comply with the Digital Millennium Copyright Act, it is essential for these services to both understand and comply with the notice and takedown provisions of the DMCA requiring the removal of infringing material from servers once the webhosts are made aware. It is certainly feasible for these types of services to be run in a legitimate and legal manner as long as they take the necessary precautions and comply with the associated laws.

Thus, the takeaway from today’s blog post: As technology increasingly makes it easier for the public to electronically share information, it is important for companies to make themselves aware of the laws concerning both the internet and intellectual property in order to avoid following in the steps of Megaupload.

More information on the DMCA can be found at:

Image by cayobo on Flickr Creative Commons- some rights reserved.


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