Lawyers for Megaupload won a legal victory in court this week against the U.S. Government and pushed ahead with requests to have the case dismissed outright and – barring that – release the seized assets of the company.
First the victory. The U.S. Government has been ordered by the New Zealand court to hand over any evidence it has gathered against Megaupload and its founders. This is a no-brainer in the United States where the process of discovery is a requirement in any trial. The U.S. had hoped to simply have Kim Dotcom extradited to the United States without having to show all of its cards, but the NZ courts have put cold water on that.
New Zealand District Court Judge David Harvey ruled in an 81-page decision that it would grant the request from Megaupload lawyers that the U.S. Government must reveal what evidence they have on the defendants. U.S. Government lawyers protested the order, saying that the defendants don't have the right to discovery during the extradition process. The judge disagreed. He ordered that the U.S. Government disclose all documents related to the alleged criminal acts, including evidence in the possession of the New Zealand police, and files held by the FBI and other U.S. authorities.
Charges in the indictment against Megaupload’s founders include engaging in a racketeering conspiracy, conspiring to commit copyright infringement, conspiring to commit money laundering, and two counts of criminal copyright infringement. The U.S. Government has 21 days to deliver all the requested documents.
Also this week, lawyers for Megaupload asked that the court force the U.S. Government to release the millions of dollars in assets it seized from the company and its operators in January. Lawyers for the file-sharing site claim that some of the $175m that the U.S. Government wants to seize and the $67 million it has already taken had to have been made legally.
"This represents the total revenues generated by Megaupload during its entire corporate existence," the motion begins. "Thus, the premise of the Government’s forfeiture request is that Megaupload never earned a single penny that was not criminal under U.S. law — whether, say, from a non-infringing use of its service, or from use that occurred wholly outside the United States and beyond reach of U.S. law, or even from an infringing use within the United States as to which Defendants nonetheless qualify for a statutory safe harbor or lacked requisite criminal intent.”
A more detailed breakdown of Megaupload's motion can be found here.
Finally, lawyers for Megaupload have asked the District Court for the Eastern District of Virginia to dismiss the case altogether. The defense argues that the U.S. violated Megaupload’s due process rights by effectively destroying its business by shutting down its services without having properly served the company. If the motion is granted the case against Megaupload would effectively be over.
"Both prongs of the procedural due process test are plainly met here," lawyers for Megaupload argued. "The Government has seized Megaupload’s property and domain name, ruined its reputation, and destroyed its business pursuant to an indictment which is fatally flawed as a jurisdictional matter. Megaupload now finds itself in a state of abeyance, with no end in sight. As a result of the Government’s inability to properly serve the summons on Megaupload, this Court lacks jurisdiction over the company. In the absence of effective service of process, criminal proceedings against Megaupload cannot commence, and as the Court has aptly noted, we ‘frankly don’t know that we are ever going to have a trial in this matter’."
We will continue to follow this story as it develops.