The MPAA believes that people who embed videos to their websites can generate ad revenues without any repercussions so they are pushing to make that illegal.

“Although there is nothing inherently insidious about embedded links, this technique is very commonly used to operate infringing internet video sites,” stated the MPAA. “Pirate sites can offer extensive libraries of popular copyrighted content without any hosting costs to store content, bandwidth costs to deliver the content, and of course licensing costs to legitimately acquire the content.”

“The reason we did that filing [was] that there is a possibility that litigation might be pursued against Megaupload or various intermediaries involved in Megaupload’s operation. We’re not talking about individual users,” said Gantman.

The problem is that Carpathia is spending $9,000 per day to retain the data hosted on Megaupload. Carpathia demanded a federal judge to relieve them of that burden. On the other hand, Megaupload wants the government to free up some of their cash so that they can pay Carpathia to retain the data for its defense and possibly return data to their customers.

The government said that Megaupload generated millions in user fees and ads while facilitating copyright infringement such as Hollywood movies and TV shows. The government estimated that Megaupload caused an “estimated harm” to copyright holders “well in excess of $500 million.” Megaupload also failed to comply to removal notices from right holders under the DMCA.

The MPAA and tech community were on opposing sides of SOPA and PIPA. Many high tech companies like Google opposed SOPA and PIPA. During the Atlanta Press Club on Wednesday, Dodd said that “nearly one-quarter of all global Internet traffic is copyright theft. And at the heart of the problem is the proliferation of parasitic foreign rogue sites whose sole purpose is to facilitate, and profit from, the theft of international property.”

“We are not talking about overzealous film buffs or political activists making a statement about freedom of information. We are talking about criminals,” added Dodd. Dodd then drew comparisons between the movie industry and Silicon Valley.

“We cannot draw up a business model that accounts for the wholesale theft of our product,” Dodd said. “It’s true for pharmacies. It’s true for the automobile industry. It’s true for software developers. And it’s true for us.”

“I firmly believe that our industry cannot survive without the innovations that come out of Silicon Valley every day — and I know that we must have a free and open Internet to keep those innovations coming. But it works both ways,” stated Dodd. He said “copyright legislation helped to create the Internet of today — not to mention providing companies like Apple with the incentive to — as they say — think different, and to think big.”

Dodd told the audience at the event that we must act to stop intellectual property online. He asked the audience members for their support too. “If you believe that freedom of speech does not imply, and the ability to innovate does not require, a license to steal, if you believe that the men and women who work hard to make films and TV shows deserve to be fairly compensated … I invite you to join this coalition and help us move towards a solution to this problem.”

Wales said that this makes the MPAA sound like a corrupt and Congress-buying organization. Dodd also had harsh words for Wikipedia by saying that it was an abuse of power when they blacked out on January 18th to protest SOPA. Wales said that it was successful because 10 million people contacted Congress. Wales said “That’s not an abuse of power, that’s democracy.”

He added “[Dodd] had best get used to it.”

Wales strongly opposes digital piracy, but he believes that Hollywood should talk to Silicon Valley with a little more humility rather than approaching with a Draconian regime.

Between six of the website’s employees, they owned 14 Mercedes-Benz automobiles with license plates that included “MAFIA,” “POLICE,” “STONED,” “V,” “STONED,” “GOOD,” “EVIL,” and “CEO.” They also had a 2010 Maserati, a 2008 Rolls-Royce, and a 1989 Lamborghini. They also had motor bikes, jet skis, expensive artwork, and one of them had a Predator statue.

This case is a big deal because it involved international cooperation between the U.S., Hong Kong, the Netherlands, the U.K., Germany, Canada, and the Philippines. Megaupload had 525 servers in Virginia and 630 in the Netherlands.

The prosecutors said that Megaupload.com’s executives knew full well that the website was used for infringing copyright. They had numerous internal e-mails and chat logs from employees that showed they were fully aware about copyrighted material on the website and they have shared it with each other.

Employees sent each other e-mails such as “can u pls get me some links to the series called ‘Seinfeld’ from MU [Megaupload].” One employee allegedly uploaded copyright infringed content on Megaupload.com such as a BBC Earth episode in 2008.

“By all estimates, Megaupload.com is the largest and most active criminally operated website targeting creative content in the world,” said the MPAA in a statement. “This criminal case, more than two years in development, shows that law enforcement can take strong action to protect American intellectual property stolen through sites housed in the United States.”

[Ars Technica]

I agree with TechDirt’s Mike Masnick when he says:

But that completely misunderstands and misrepresents the situation. Google isn’t the driver. Google is the car manufacturer. Do we sue Ford as an accessory?

[TechDirt]

Zediva did not have to pay license fees so they offered rentals at lower prices. Movies through Zediva can be watched for as little as a dollar or two.

[Xinhuanet]

We target the bastard group that has thus far led this charge against our websites, like The Pirate Bay. We target MPAA.ORG! The IP is designated at “216.20.162.10?, and our firing time remains THE SAME. All details are just as before, but we have reaimed our crosshairs on this much larger target. We have the manpower, we have the botnets, it’s time we do to them what they keep doing to us.
REPEAT: AIPLEX IS ALREADY DOWN THANKS TO A SINGLE ANON. WE ARE MIGRATING TARGETS.

4chan was able to take down MPAA using the Low-Orbit Ion Cannon (LOIC) tactic. After installing LOIC, anyone can repeatedly ping a website. But the hard part is being able to bring a group of people together to do it at once. 4chan is one of the few websites out there that can coordinate such an attack.

[Gawker]

This grants an injunction made against RealNetworks that prevents them from selling RealDVD.  The judge made this ruling based on a violation of the Digital Millenium Copyright Act.

“We are very pleased with the court’s decision. This is a victory for the creators and producers of motion pictures and television shows and for the rule of law in our digital economy. Judge Patel’s ruling affirms what we have known all along: RealNetworks took a license to build a DVD-player and instead made an illegal DVD-copier. Throughout the development of RealDVD, RealNetworks demonstrated that it was willing to break the law at theexpense of those who create entertainment content,” stated Dan Glickman, CEO of the MPAA.

[via NYT]

Yesterday RealNetworks made the surprise claim because under the rules of evidence, a company must retain records if they have knowledge of a potential upcoming lawsuit.  The MPAA has reason to believe that RealNetworks destroyed documents that relate to the production of the RealDVD software.  The MPAA believes that RealNetworks did this well before they sued the software company in September.

“We didn’t think litigation was probable,” stated Leo Cunningham, one of RealNetworks’ attorney.  Cunningham reported this to U.S. District Judge Marilyn Hall Patel during a hearing.  The MPAA generally sues all companies that they believe is a threat to DVD sales.

The MPAA alleges that RealNetworks trashed a senior project manager’s “engineering notebooks” and “actual code files.”  Cunningham stated that the disapperance of the notebooks are a mystery.

Bart Williams, an attorney for the MPAA stated that it was obvious that the MPAA wuld sue RealNetworks.  RealNetworks should have expected it from the time of the product’s initial development two years ago.

Within a few days of the RealDVD software hitting the market, about 3,000 copies were sold.  Judge Patel blocked further distribution in October until an outcome was decided.  MPAA believes that RealNetworks is directly violating the Digital Millenium Copyright Act.

RealNetworks said that they are not violating the DMCA because they allow users to store copies of their own movies on their hard drives which is fair use.  One of the biggest disputes in the case is whether a DVD should be playable without the need for the actual disc with built-in encryption code.

[via Wired]