MegaUpload, a Hong Kong-based cloud sharing service shut down by U.S. authorities and accused of running the largest copyright infringement conspiracy in history, should not face prosecution in the U.S. because it never had offices or conducted business here, attorneys defending the site said in a court filing this week.

MegaUpload founder Kim Dotcom, an eccentric New Zealand millionaire, is just one of five individuals accused of operating the conspiracy, but his defense attorneys see the allegation as wholly unsupported. U.S. prosecutors want to extradite Dotcom and associates to the U.S. to face trial for encouraging billions in damages to U.S. movie and music studios, but their case against Dotcom has run into a variety of problems.

"We told the court that the United States lacked probable cause to take down the entire site," Ira Rothken, MegaUpload's attorney, told CNet reporter Greg Sandoval. "It would have to hold the company criminally responsible for the acts of copyright infringement committed by its users. And there is no such thing as criminal secondary copyright infringement."

Dotcom's attorneys added that it's not even clear if the U.S. has jurisdiction over MegaUpload. While New Zealand law allows authorities to grant extradition requests to any country (PDF), it is quite particular on what is and is not proper procedure.

Dotcom's extradition has proved easier said than done for U.S. officials, who have had to contend with a New Zealand judge seemingly uninterested in rubber-stamping their request. At the same hearing where MegaUpload's defense alleged that the U.S. lacks jurisdiction, New Zealand District Court Judge David Harvey gave the U.S. 21 days to turn over key evidence to Dotcom's attorneys, which they had resisted due to the proceedings being carried out under an extradition process and not a criminal trial.

"As I understand it, all of his information and records were contained on computers or on servers which were removed from his premises or his control as the result of the actions of the New Zealand Police and the United States [and] authorities in other countries in January 2012," the judge opined. "He simply does not have access to information which may assist him in preparation for trial."

Another problem for U.S. officials: copyright infringement triggers only civil penalties in New Zealand, and the punishment does not meet the country's minimum benchmark to approve an extradition request. Because charges against Dotcom relating to money laundering and fraud all hinge upon the civil infraction of copyright violation, the U.S. may have a difficult time getting the judge to accept the leap from civil to criminal charges.

Wednesday's decision means that not only do U.S. authorities now have to prove they have jurisdiction over a non-U.S. company, it also means that the complex charges stemming from Dotcom's alleged copyright infringement operation must now be proven to a New Zealand judge.

Dotcom's defense team won its last round in court against the U.S. as well, when a judge ordered officials to return over $800,000 in seized assets to Dotcom to fund his legal defense. He was previously only allowed a small monthly allowance in interest from New Zealand government bonds he owns.

The now-shuttered website allowed users to upload any file they choose, then share it with others by directly passing along the file's URL. It also gave copyright holders a set of tools to remove infringing content, and said that U.S. movie studios filed millions of requests for deletion with which the site complied.


(H/T: Tech Dirt)