Feds Say That Data On Megaupload Servers Are Not Needed, But Kim Dotcom Disagrees

Posted Apr 7, 2012

Federal prosecutors have reported to a judge that there is no need to keep millions of files hosted on Megaupload. Megaupload’s founders are being charged with running an online piracy website. There is a hearing scheduled next week at the U.S. District Court in Alexandria on what to do with the 1,100 servers that stores Megaupload’s files.

The server is currently holding 25 million gigabytes of data, which is the equivalent of over 325 years of high-definition video. Megaupload founder Kim Dotcom lives in New Zealand and could face extradition to the U.S. Dotcom and six others were charged this past January with facilitating copyright infringement.

Carpathia Hosting in Dulles, Virginia is spending $9,000 per day to maintain the files on the servers. Megaupload was paying to rent those servers, but the government had seized their assets and they have not been paying the bills. However Megaupload has pointed out that the government’s argument would result in the destruction of key evidence they need in the case.

The United States has seized and frozen all of Megaupload’s assets, which, together with those seized from the other Defendants, include more than $60 million in cash and well over $100 million all told. In taking this extraordinary step, the Government must necessarily be alleging that every dollar of these assets is the proceeds of illegal activity. The basis of this allegation are the Government’s self-selected copies of a tiny fraction of Carpathia’s 1,100+ servers; even as to that fraction, the Court is asked to assume that every scrap of information on those servers amounts to criminal copyright infringement or perhaps some other illegal activity. If there is logic to the Government’s actions, there is nothing lawful to be found across Megaupload’s business as reflected on those 1,100+ servers. Only thus might the Government forbid Carpathia from so much as transferring to Megaupload the Mega Servers housing Megaupload content. Notably, the government is further forbidding Megaupload from using any of its assets to pay Carpathia for continued preservation of the Mega Servers’ content. And, it has, in the face of Carpathia’s earnest submission that it will cease preserving the servers absent the requested relief, urged the Court to deny such relief, because “the government has already completed its acquisition of data from the Carpathia Servers authorized by the warrant.” … In essence, the Government has taken what it wants from the scene of the alleged crime and is content that the remaining evidence, even if it is exculpatory or otherwise relevant to the defense, be destroyed. And by refusing to permit Megaupload to use its assets to mount a defense, the Government is effectively making sure that Megaupload has no practical way to preserve the evidence itself.

Such a course of proceeding by the Government would be troubling in any circumstance. But this is, of course, a criminal case. It is, in fact, what the Government has called the largest such case it has ever brought in the history of alleged copyright infringement. If the Government’s position now wins the day, the integrity of of what ensues will be lost–the Mega Servers will have been wiped and potentially exculpatory or relevant evidence will have been spoliated, en masse, before being properly surveyed by the parties, not to mention the Court. The Government’s case may be advantaged by this course of action, but much else will suffer and due process will not permit it.