Megaupload May Be Liable for Direct Infringement, Court Rules

SAN DIEGO — Perfect 10 has scored a legal victory in its $5 million copyright suit against file-sharing membership site Megaupload, after a judge advanced the case by ruling that the file-storage site may be liable for direct and contributory infringement.

In Megaupload’s motion to dismiss, the judge upheld Perfect 10’s claims of direct and contributory infringement, but tossed the company’s vicarious and trademark claims.

According to the motion, Megaupload, which also operates sister sites Megarotic.com, Megaporn.com, Megavideo.com and Megaclick.com, argues that Perfect 10 had not alleged it engaged in volitional conduct sufficient  to hold it liable for direct infringement and maintains it is merely a passive conduit.

“Megaupload serves as more than a passive conduit and more than a mere file storage company,” Judge Irma Gonzalez wrote.

“It has created distinct websites, presumably in an effort to streamline users’ access to different types of media. It encourages and in some cases, pays its users to upload vast amounts of popular media through its Rewards Programs. It disseminates URLs for various files throughout the Internet. It provides payouts to affiliate websites that maintain a catalog of all available files and, at last, it is plausibly aware of the ongoing, rampant infringement taking place on its website.”

The suit, filed by Perfect 10 last February, said that Megaupload directs download links offering "tens of thousands of Perfect 10 copyrighted images, as well as Perfect 10 videos, to be juxtaposed on Megaupload affiliated websites, next to photographs and likenesses of Perfect 10 models and other models or celebrities."

The suit names Megaupload operator Kim Schmitz, who is described in the filing as a felon who has served time in prison for computer hacking and insider trading.

It also names 100 John Doe defendants, which are described as Megaupload's business partners or affiliates.

Megaupload and its sister sites have become increasingly popular through the past few years. Megaupload.com, according to the complaint, has become among the hundred most popular websites on the Internet, with a reported 45 million unique visitors per day.

Adult industry attorney Marc Randazza told XBIZ that he believes cyberlocker sites can be held liable for direct infringement.

"I have not seen a case in which one was held liable," Randazza said. "But this is an evolving area of the law and I think that Perfect 10's lawyers did a good job in educating the court."

Randazza said that Megaupload now has to work at defending its case, which includes engaging in discovery.

Related:  

Copyright © 2025 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

Lifelong Merchant Services Adds New Team Members

Point of Sale (POS) provider Lifelong Merchant Services has added industry veterans Megan Abbatelli and Cam Jennings to its team.

FSC Addresses UK Age Verification Guidelines

The Free Speech Coalition (FSC) has published an article offering guidance on the U.K.'s Online Safety Act and the various guidelines put forward by the country's telecommunications regulator Ofcom.The article follows:

European Commission Posts AV Guidelines, Seeks Feedback

The European Commission has made public its draft guidelines on protecting minors online under the Digital Services Act, including age verification requirements covering adult sites and platforms.

'White-Hot' Party Set to Kick Off XBIZ Miami

XBIZ is pleased to announce that the annual White-Hot Party, the official opening bash of XBIZ Miami, is set for Monday, May 19, at Mynt Lounge in South Beach.

AEBN Publishes Popular Searches for March, April

AEBN has announced the top search terms for March and April from its straight and gay theaters in all 50 states and the District of Columbia.

Takedown Piracy Adds 'Search Max' Feature

Takedown Piracy has launched Search Max, a search engine for detecting, verifying, and removing Google infringements.

Sex Workers' Group Fights Proposed Swedish Ban on 'Remote' Sexual Services

The European Sex Workers’ Rights Alliance (ESWA) has launched a campaign against a Swedish government proposal to expand current laws against purchasing sexual services to apply to acts performed remotely by cammers, streamers and custom content creators.

FSC: Arizona Governor Signs Controversial Age Verification Law

Free Speech Coalition has released a statement regarding Arizona Governor Katie Hobbs signing the state's age verification bill into law.

NCOSE Sues 4 Adult Websites Under Kansas Age Verification Law

The National Center on Sexual Exploitation (NCOSE), a conservative anti-pornography organization, has sued four adult websites in Kansas under the state's age verification law.

Sarina Havok, Robin Coffins Launch New Site Through Grooby's Blue.xxx

Sarina Havok and Robin Coffins have launched their new membership site, SarinaAndRobin.com, through Grooby's website management company Blue.xxx.

Show More