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Megaupload: U.S. deceived court about pirated files

The file-sharing site is the target of a government investigation into alleged “massive” copyright infringement is continuing its battle with U.S. authorities, this time accusing the American government of lying in order to get search warrants for computer servers belonging to the file-sharing website.

The Department of Justice indicted Megaupload nearly a year ago, claiming that the website’s illegal reproduction of books, movies, television shows and music has resulted in more than $500 million of losses for copyright holders. At the same time, the U.S. government arrested seven individuals—including Megaupload founder Kim Dotcom—for allegedly leading the “international organized criminal enterprise” responsible for the infringement.

But, according to Megaupload, authorities used some rather unsavory tactics to obtain evidence against the site. According to documents filed Wednesday, the U.S. government sent a warrant for 39 infringing files to Carpathia Hosting, Megupload’s Virginia-based server hosting company, which subsequently forwarded the warrant to Megaupload.

Megaupload claims that it left most of the files on the server because the government “warned that alerting users to the existence of the warrant and the government’s interest in the files could compromise the investigation,” but that U.S. authorities later used the files’ continued presence to paint the site as “a brazen scofflaw” to the court. The government also neglected to tell Megaupload that it was the target of the investigation, the filing says.

U.S. officials have been fighting for months to extradite Dotcom from his adopted home of New Zealand, but that country’s High Court dealt those efforts a blow last June when it ruled that New Zealand authorities used unlawful warrants to search Dotcom’s home. A hearing on the extradition proceedings will be held in March.

Read more at Bloomberg Businessweek.

For more InsideCounsel coverage of Megaupload’s legal battles, see:

Megaupload user data may be deleted this week

Hogan Lovells lawyer withdraws from case accused of massive copyright infringement

Porn site points finger at Megaupload

Alanna Byrne

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