Megaupload claims US asked it to keep infringing files

IDG News Service - The U.S. government misrepresented facts when it approached a court for search warrants against Megaupload, according to a filing Wednesday by counsels of the file-sharing site.

The basis for the warrants was the charge that Megaupload had not removed from its servers infringing copies of copyrighted motion pictures, despite a criminal search warrant of June 24, 2010 from the U.S. District Court for the Eastern District of Virginia to hosting company, Carpathia Hosting, the filing said.

Megaupload had every reason to retain the files in good faith because the government had sought its cooperation in retrieving the files, and warned that alerting users to the existence of the warrants, and the government's interest in the files, could compromise an investigation, the filing said. The government neither directly or through Carpathia asked Megaupload to remove the files identified in the warrant, it said.

Kim Dotcom, founder of Megaupload, and colleagues, and two companies including Megaupload, were indicted by a grand jury in January last year, and charged with engaging in a racketeering conspiracy, conspiring to commit copyright infringement and money laundering, and two substantive counts of criminal copyright infringement, according to the U.S. Department of Justice.

The warrant of June 24, 2010, and attachments were forwarded by email to Megaupload by Carpathia at the government's request, according to the filing. The government did not communicate with Megaupload directly, instead deputizing Carpathia.

The U.S. paints Megaupload "as a brazen scofflaw," that refused to remove the infringing content, according to the filing. "The truth, as the government well knows, is quite different."

A U.S. bid to extradite Dotcom and colleagues from New Zealand is expected to come up for hearing later this year.

Kyle Goodwin, an Ohio-based sports reporter who lost access to data he stored on Megaupload after the site was shut down, moved to unseal certain search warrant materials related to the case in October last year. The court agreed to a government motion that the documents should be unsealed with minimal redactions.

Megaupload was informed of the June 24, 2010, warrant by Carpathia, with the consent of the government and for the express purpose of obtaining its voluntary assistance with executing the warrant, according to the filing. Although it is now apparent that Megaupload itself was the target of investigation when it received the June 24, 2010, warrant, it was steered to cooperate after Carpathia's assurance that the government had given it no reason to believe that it was the target of investigation, it added.

The government approached the court in January last year to state that as of Nov. 18, 2011, 36 of the 39 infringing copies were still stored on Megaupload's servers, despite the warrant of June 24, 2010.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com