Tech Law

Court Rules Kiwi Cops Botched Megaupload Raid

New Zealand police used invalid warrants to search and seize property from the mansion of Megaupload founder Kim Dotcom, a high court judge in that country has reportedly ruled.

The papers that authorities used were general warrants and fell well short of describing the offenses alleged, High Court Judge Helen Winkelmann said.

She also ruled it was unlawful for New Zealand police to hand computer hard drives seized in the raid over to the United States Federal Bureau of Investigation for shipping to the U.S., contrary to directions given by the court in February.

New Zealand police reportedly seized millions of dollars worth of cash, cars and other property belonging to Dotcom in the raid on his estate in January.

“This might be the most beneficial thing for Kim Dotcom because it might make it difficult for him to be extradited,” Stewart Kellar , a lawyer who represents musicians and other artists, told TechNewsWorld.

The U.S. Allegations Against Megaupload

U.S. authorities seek to extradite Dotcom and six associates on charges of copyright infringement and money laundering. An extradition hearing is set for August. They claim Dotcom encouraged users to store pirated videos, music, software and other media and then share them with others.

Megaupload was a cyberlocker service that let users store digital files for a fee and share those files with others. Dotcom had acknowledged that users could have stored pirated files in the service but said it was up to them to deal with it.

Some Issues With the U.S. Case

Ira Rothken, who represents Megaupload in the U.S., contends that the case against the company is flawed.

On June 21, he filed a brief asking the court to dismiss the criminal case because, among other things, the U.S. failed to follow rules which require a foreign corporation to have an office in the U.S. as a condition of service of an indictment. Maintenance of the action violates due process, Rothken argued.

Further, by taking down one of the world’s largest cloud storage services without any notice or chance for Megaupload to be heard in a court of law, the U.S. is acting over-aggressively and over-broadly, Rothken stated.

Also, there is no statutory claim under U.S. law to hold a cloud storage provider criminally responsible for the acts of its users, an approach known as “secondary criminal copyright liability,” Rothken said.

Round and Round and Round We Go

In April, the U.S. sought to block Megaupload from hiring copyright lawyer Andrew Schapiro from law firm Quinn Emanuel on the grounds that Schapiro’s past work for YouTube and Google, which are potential witnesses in its case against Megaupload, represent a conflict of interest.

The U.S. also continues to reject Megaupload’s argument that it can’t be served because U.S. law only allows for service on addresses within the U.S., and Megaupload is a foreign company.

Meanwhile the Department of Justice shut down Megaupload’s servers, hosted by Carpathia Hosting in Virginia, leaving thousands of users without access to their files.

Truth and Justice

The New Zealand high court’s ruling that the FBI should turn over data seized from Megaupload doesn’t cut off the agency’s access to that information because “it will still have a copy of the files,” attorney Kellar said.

The files themselves can’t be presented in a U.S. court because they were obtained wrongfully, but “they give the U.S. an unfair procedural advantage because they have the data and they will always have it to support their playbook.”

The case “will be long and complex,” Rebecca Jeschke, spokesperson for the Electronic Frontier Foundation, told TechNewsWorld. This “just increases the urgency for Megaupload’s customers [to recover their data]. We need to come up with a procedure for lawful users to get their data back, and soon.”

The EFF, assisted by retired federal judge Abraham D. Sofaer, will ask a federal court judge on Friday to order the return of data to Kyle Goodwin, a Megaupload user who lost all access to his files when the U.S. government shut down the service.

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