Honestly never heard of Megaupload before this news broke. Their services remind me of those lockers you see at airports and bus stations. You rent a box and the box owner probably warns you up front not to put anything in there that you wouldn’t want seen on the evening news.
Megaupload could probably claim that it did not know that copyright material was being uploaded and downloaded, but that would be a bit naïve on their part, especially since their technology was replacing an older, less efficient file sharing technology. The “I didn’t know” argument may not hold up against the prosecution’s argument of willful blindness, however. Time for their attorneys to take a look at the Pentalpha and Grokster cases for further guidance on litigation strategy or better yet, guidance on a settlement. Not only won’t willful blindness hold, but their file sharing business model may have induced more consumers to infringe on copyrights.
Fortunately these guys aren’t a public company or else investors would be seeing shares tank.