Megaupload case gathers steam as warrants deemed invalid

The US case against Megaupload founder Kim Dotcom is looking shakier by the day, following news that warrants used to raid his New Zealand home were invalid.

On Thursday New Zealand High Court Judge Justice Helen Winkelmann ruled that the warrants used in January “did not adequately describe the offences to which they related”. Many of Dotcom’s substantial assets were frozen, and property seized including a 20 luxury vehicles, works of art and computers.

Moves by the FBI to copy data from Dotcom's computer and take it offshore were also unlawful, she said.

In January Dotcom was cut out of a safe room in his $30m Aukland mansion by SWAT officers and arrested along with four others. Now under house arrest, he was initially judged a flight risk and denied bail.

Megaupload was unceremoniously executed, provoking outrage from millions of users who had legitimately used the service to store their own, now inaccessible, data.

The US government claim the site made upwards of $175m through encouraging people to share pirated content, costing content owners an estimated $500m. All in all, seven people are still facing charges ranging from copyright violation and wire fraud, to money laundering and conspiracy.

Sitting in a New Zealand jail cell in January, with his assets frozen and the weight of the US government bearing down on him, the future must have seemed pretty bleak to Kim Dotcom.

However, five months is a long time. Now, the man who was looking down the barrel of a lengthy prison stretch over a number of alleged copyright and conspiracy violations has performed an astonishing legal and PR turnaround.

The New Zealand courts have returned a series of decisions that will have made the big man smile, starting with his release on bail, the return of some assets and, last month, an order for the US government to present its evidence against the company.

Lawyers representing the US government said the ruling had not come as a surprise, adding that they were discussing whether on not to appeal the decision.

As Megaupload’s lawyers prepare for an appearance in a Virginia court this week to argue against the indictments, a US lobby group the Electronic Frontier Foundation (EFF) has announced its own legal challenge to the seizure of Megaupload users’ data.

Despite months of legal wrangling, the EFF accuses the US government of doing nothing to help legitimate users of the site access their data.

This week, Apple co-founder Steve Wozniak has also joined a growing list of international celebrities to lend their support to Dotcom and the EFF challenge. Questioning the US government’s approach to the case, Wozniak said the piracy case was “hokey”.

“You don't just shut down the whole street because somebody is speeding,” he told the Associated Press. “It's just kind of ridiculous what they did to his life, an awful lot of Kiwis support him. The U.S. government is on thin ground.”

Cloud providers will be watching this case closely, as the outcome could have repercussions for the entire industry and the way content piracy is policed. In an AP email interview, Dotcom said the charges against him were bogus.

"The more people learn about this case the more they realize that this type of copyright disagreement between Hollywood and new cloud storage technology is a political debate, not something that belongs in the criminal court and certainly not something to justify breaking down the door to my house," he said.

Do you think the US government acted legitimately in protecting content owners from piracy? Can they afford to let Dotcom get away? Should other cloud storage providers be sweating? Leave a comment below...

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