Biglaw, Copyright, Cyberlaw, Department of Justice, Entertainment Law, Federal Government, Federal Judges, Intellectual Property, Technology

The Justice Department Appears to Be Losing the Battle Against Megaupload

We have been covering the Justice Department’s case against Megaupload, the formerly massive file hosting site, ever since the government shut it down in January.

We have seen the government’s piracy case devolve from a slamdunk into a slopfest with what appears to be less and less of a chance of successful prosecution. Although charismatic CEO Kim Dotcom is still under house arrest in New Zealand, judicial officials there are getting frustrated with the United States. And the company’s attorneys at Quinn Emanuel are still continuing their assault against the Feds. The firm filed two important briefs yesterday, which could significantly impact the future of the case…

Let’s start with news from the Kiwis. Mr. Dotcom has been under house arrest there for some time, and the U.S. is currently trying to extradite him. Local authorities are skeptical of the United States’s tactics. From the Media Decoder blog of the New York Times:

Now a judge in New Zealand has ruled that the United States must share evidence with Mr. Dotcom — including the Federal Bureau of Investigation’s report — while also indicating his own concerns about the case. The United States government had argued that it had to include only a summary of its evidence in the case, but in a ruling issued Tuesday, Judge David J. Harvey of District Court in Auckland said that it had to produce specific evidence to justify the extradition request and to allow Mr. Dotcom to prepare his defense.

“A denial of the provision of information that could enable a proper adversarial hearing in my view would amount to a denial of the opportunity to contest,” Judge Harvey wrote. “That would effectively mean that the process is one-sided.”

Seriously, guys? You’re trying to extradite an extraordinarily high profile individual (think: hacker Roman Polanski) without giving him the details of this case? Of course the folks down under are going to be like, “WTF, mate?”

Judge Harvey also brought up the question that a lot of people have been asking, namely: why is the United States trying to prosecute an intellectual property case criminally instead of civilly?

The judge’s order also raises a question about the nature of the suit. As the judge wrote, the case is criminal, but the basis for the charges against Megaupload are more commonly cited in the civil context of copyright law:

This is a case that is more complex than many. There is a complex factual matrix and the justiciable issues are complicated by the fact that the United States is attempting to utilize concepts from the civil copyright context as a basis for application of criminal copyright liability, which necessitates a consideration of principles such as the dual use of technology or what they be described as significant non infringing uses.

The existence of criminal copyright charges is a keystone to providing the unlawful conduct element of the racketeering, money laundering and wire fraud charges.

When asked on Wednesday whether the United States would appeal the decision, a Justice Department spokesman declined to comment. Mr. Dotcom’s extradition hearing is scheduled for August.

That, in and of itself, would be enough ego damage to the DOJ for one week. But let’s keep reading to see the heavier ammunition Quinn brought out yesterday. Can you say “motion to dismiss”?

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