Bloomberg News

Dotcom Urges U.S. Judge to Dismiss Copyright Charges

January 30, 2013

Megaupload.com, the file-sharing website that was shut down last year on copyright infringement charges, urged a U.S. judge to throw out the indictment to make up for what it called a lack of “due process” in the case.

The U.S. Justice Department failed to give the company legal notice that it was charged, froze its assets and left servers containing content owned by customers “gathering dust and in danger of deteriorating,” Megaupload’s lawyer Ira Rothken wrote in a filing in federal court in Alexandria, Virginia, yesterday.

“More than a year has now passed since Megaupload was branded a criminal, with no opportunity to date to clear its name or challenge the charges against it,” Rothken wrote. The government’s conduct in the case raises “grave questions about whether the government is intent on being judge, jury, executioner and asset collector,” he wrote.

Kim Dotcom, the founder of Megaupload, was indicted in what was dubbed a “mega conspiracy” by U.S. prosecutors, who accused his website of generating more than $175 million in criminal proceeds from the exchange of pirated film, music, book and software files. On Jan. 20, Dotcom began running a successor website called Mega from his home in New Zealand.

The U.S. is seeking Dotcom’s extradition, with a hearing scheduled for August in Auckland.

Peter Carr, a spokesman for U.S. Attorney Neil H. MacBride, referred questions about the seizures of the websites and Dotcom’s assets to the government’s court filings.

Preventing Redirection

In a Jan. 13 affidavit, referred to by Carr, an investigator whose name is blacked out in the document cited a U.S. law that allows seizure of property when an injuction wouldn’t guarantee the property would be available for seizure upon conviction.

The domain names had to be seized to prevent Megaupload’s supporters, or others, from redirecting content to servers elsewhere in the world, the investigator said. Injunctions wouldn’t prevent that, according to the investigator.

The U.S. won the court order and shut down Megaupload.com without notice after the charges against seven individuals, including Dotcom, were unsealed in federal court in Alexandria on Jan. 19, 2012.

The U.S. Justice Department seized Dotcom’s bank accounts. At the same time, New Zealand police, following a helicopter-led raid on Dotcom’s mansion, seized 18 cars, computers and files. Dotcom spent a month in jail before winning his release on bail.

New Website

Mega, like its predecessor, lets users upload, download and share files, competing with sites such as Dropbox.com and Google Inc.’s Youtube.com, Dotcom said when introducing the new website this month. Unlike the rival sites, Mega allows file encryption through an Internet browser with the user having the only key to unlock the file, preventing governments and storage providers from viewing the contents, he said at the time.

Rothken, in the latest filing, urged the judge to dismiss the indictment until Megaupload is properly served with legal papers outlining the charges, “thereby freeing the corporate defendant from the criminal limbo that is presently subjecting it to daily, irreparable harm.”

The New Zealand case is Between Kim Dotcom and Attorney General. CIV2012-404-001928. High Court of New Zealand (Auckland). The U.S. case is: USA v. Dotcom. 12-cr-00003. U.S. District Court for the Eastern District of Virginia (Alexandria).

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net


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