Megaupload, Perfect 10 Reach Settlement

Nov 3, 2011 2:00 PM PST

SAN DIEGO — Perfect 10, file-sharing site Megaupload and operator Kim Schmitz have reached a settlement agreement in their copyright infringement suit.

Details of the settlement weren’t disclosed, but the settlement involved a joint request from the two companies to have U.S. District Judge Irma Gonzalez vacate a decision she made in the summer that sided with Perfect 10, CNET.com reported.

In that ruling, the judge advanced Perfect 10’s 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, argued 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,” 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.”

Gonzalez agreed to the companies’ request.

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