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Running a Totally Legit Operation Says Megaupload Owner in PR Counter Offensive

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from www.cnet.com – Kim DotCom is out on bail and the MegaUpload founder didn’t waste time before going on a public relations offensive.

For the past month, DotCom has been locked up in a New Zealand jail after being accused by the United States government of criminal copyright violations, racketeering, and money laundering. U.S. officials say that MegaUpload cost copyright owners $500 million in damages and is part of the biggest online piracy case ever. They want DotCom to stand trial in this country.

Now, in an attempt to clear his name, DotCom is doing media interviews and telling his side of the story. In a TV interview with New Zealand’s 3 News, the 38-year-old denied committing criminal acts or being a so-called piracy king.

Arresting someone for the kinds of acts that DotCom is accused of is rare. By filing criminal charges, the United States has raised the stakes in the debate over file sharing. Some MegaUpload rivals have either closed down or taken steps to clean out infringing materials.

The U.S. attorney for the Eastern District of Virginia alleges that MegaUpload was part of a massive conspiracy designed to enable the masses to store and share pirated movies, music, and other media.

They allege that not only did MegaUpload’s managers turn a blind eye on the copyright violations by users, but they themselves uploaded pirated material–including an attempt in 2006 to copy all of YouTube’s videos. The government cited e-mail after e-mail between MegaUpload’s managers as they allegedly tried to foil attempts by copyright owners to remove pirated work from the company’s lockers.

DotCom didn’t comment much on the evidence against him largely because the 3 News interviewer didn’t bring it up. He did say that he was told by lawyers that as long as he obeyed the requirements for the Digital Millennium Copyright Act, his service was legal.

Internet service providers are protected from liability for copyright violations committed by users if they obey the DMCA’s requirements. They include removing intellectual property once notified by owners and booting users who repeatedly infringe. DotCom said MegaUpload adhered closely to the DMCA’s requirements.

DotCom also brought up another interesting point during the interview. He said that while individual copyright owners had been critical of the service, not one major film studio or record company had ever filed suit against MegaUpload or even sent him a cease and desist letter. He was, however, sued by a porn studio [Perfect 10] for copyright infringement last year. The case was settled out of court.

MegaUpload was founded in 2005. Wouldn’t at least one of the big studios or record companies have taken him to court during that time? The government has said the criminal investigation lasted two years. That leaves the prior five years that the copyright owners, according to DotCom, did nothing to get in his way.

In most cases, entertainment companies will try to negotiate or at least issue a cease-and-desist letter when they think a service is infringing. If all else fails, they almost always file a civil suit against the alleged violator. According to DotCom, they did not do that in this case.

He told 3 News that the police raid at his home on Jan. 19 was “totally unexpected.” He said he was under the impression that his service was completely legal. That may be, but in the U.S. indictment against him are e-mails allegedly from DotCom that show he worried about authorities targeting his service.

In 2010, DotCom sent another MegaUpload manager a link to a news story about the U.S. government seizing domain names and shutting down sites accused of trafficking in counterfeit and pirated materials.

“This is a serious threat to our business,” DotCom allegedly wrote. “Please look into this and see how we can protect (ourselves)…should we move our domain to another country?”

I’ve got calls in at the Motion Picture Association of America and the Recording Industry Association of America, the respective trade groups for the major film studios and record companies, to hear what they have to say.

Update: The MPAA provided this statement to CNET: “As previously reported by CNET and others, MPAA referred Megaupload to law enforcement authorities in 2010. We believed then and now that a criminal prosecution is the most appropriate means of dealing with Megaupload’s massive infringement of our members’ movies and television programs, and we appreciate and fully support the U.S. government’s actions in this case. Of course, we are watching the proceedings and evaluating whether further action by the MPAA and its members would be fruitful.”

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