Megaupload Asks Hong Kong Court To Drop Restraining Order On Megaupload Assets, Claiming Legal Violations

from the frozen dept

Wed, Apr 23rd 2014 7:53pm — Mike Masnick

In the continuing global legal fight over Megaupload, the company apparently is asking the Hong Kong high court to set aside the restraining order on the company's assets that was put in place over two years ago, following a request from the US Justice Department. Megaupload was always legally based in Hong Kong, even if the company itself was based in New Zealand. Megaupload appears to be claiming that the Hong Kong Justice Department did not properly follow the law in going along with the US DOJ's request. The main issue, which has been debated back in the US, is that, technically, the DOJ cannot serve Megaupload (the company) since it has no US employees or presence. The DOJ can go after foreign individuals, but when it comes to foreign companies, the law is pretty explicit that they can't. While the DOJ is actively seeking to change that law, it doesn't change the basic problem with the original request.

Megaupload is pointing out that the US DOJ's request to the HK DOJ depended on Megaupload being served the criminal summons. But since that hasn't been satisfied, it argues the HK DOJ has no basis for restraining Megaupload's assets:

The order was granted on the basis of an ex parte application by the HK DOJ made at the request of the US DOJ. The grounds for discharge of the order is the failure by the HK DOJ—acting on the basis of information provided by the US DOJ—to fully and frankly disclose in that ex parte application serious legal issues relating to the US DOJ’s inability to serve Megaupload with a criminal summons in accordance with United States federal law. Among other things, the US DOJ failed to explain how it intended to comply with the service of process requirements imposed by the Federal Rules of Criminal Procedure, which, as argued in Megaupload’s application, are an essential prerequisite to initiating any criminal proceedings against Megaupload and cannot be satisfied for a corporation that has no physical presence or subsidiaries in the United States. Megaupload has submitted those filings with its application to the High Court.

Megaupload claims it's seeking to free the assets in order to attempt to regain control over the leased servers from Carpathia, which the DOJ has been hoping would be destroyed (leading to the destruction of evidence in a criminal case, at the DOJ's urging). While the issue of serving Megaupload is something of a technical snafu, it's one in a rather long line of sloppy lawyering by the DOJ throughout this case.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: criminal charges, doj, frozen assets, hkdoj, hong kong, service
Companies: megaupload

43 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

That One Guy (profile), 23 Apr 2014 @ 6:15pm

Could be good
Should they succeed here, and get the money back, I imagine it'll be quite interesting to watch the DoJ scramble around to come up with an excuse for why they can't use it to either buy outright, or at least pay the maintenance fees for the servers that the DoJ are hoping to have wiped.
[ link to this | view in thread ]
Anonymous Coward, 23 Apr 2014 @ 8:39pm

It seems odd to me that the US Federal Government itself, is trying so hard to chase down and convict a New Zealand businessman, who resides outside their jurisdictional authority.

Thinking about countries around the world trying to extend their jurisdictions onto American soil, is truly horrifying.

My mind keeps wandering back to that movie titled, 'Team America: World Police'. I never watched this movie, and I found the movie title to be somewhat offensive. I never would have imagined that the DOJ would take this movie title, and raise it to a whole new level.
[ link to this | view in thread ]
Anonymous Coward, 23 Apr 2014 @ 8:50pm

One wonders if there was/is something on those servers that the US Govt seriously wants deleted.
[ link to this | view in thread ]
Anonymous Coward, 23 Apr 2014 @ 8:52pm

And when I say seriously wants deleted, I refer to the possibility that a party has put material on Mega servers that is embarrassing or criminal and is doing all it can to ensure it never sees the light of day.

What I have read about the DOJ's actions in this matter make me think something else is going on...
[ link to this | view in thread ]
Anonymous Coward, 23 Apr 2014 @ 8:55pm

You would think that the US Government would know to cross all their i's and dot all their t's or risk letting their big bad criminal get out on a technicality.
[ link to this | view in thread ]
zip, 23 Apr 2014 @ 9:02pm

military blowback
MegaUpload's case is helped by the recent border dispute flareup between China and Japan. Now that the US has taken Japan's side -- as well as threatening China militarily -- the US DOJ should not expect more favors from Hong Kong being granted as easily as before.

If the military confrontation escalates, MegaUpload could very well get a free pass as a result.
[ link to this | view in thread ]
Anonymous Coward, 23 Apr 2014 @ 9:06pm

If the goal is to remove the data from circulation then their efforts make a bit of sense. I'm beginning to think this has nothing to do with copyright and wondering if this has something to do with data that the US Govt wants to keep out of someone's hands and only has this clumsy method to accomplish it.

It's all conspiracy theory, but I'm at a loss at all of this over stolen movies or songs. And there is no question the DOJ knew there were many legitimate users of Mega that would lose their data based on the DOJ's actions.

Was WikiLeaks or Manning using Mega as a transfer point? Is there another leaker that we don't know about that was using it? Or was there information a planned attack needed that is stored somehow on those servers (or they think it is).

All of what we have seen is way over the top and I wonder if there is an alternative to what we are being fed.
[ link to this | view in thread ]
Anonymous Coward, 23 Apr 2014 @ 9:34pm

Re:
I'll go with Hanlon's razor combined with the sunk costs fallacy for now and assume the DoJ thought this was just going to be an open-and-shut easily-won feel-good case to keep Hollywood happy, leading them to fuck up massively, and now they just can't drop it because it'll make them look bad.
[ link to this | view in thread ]
Anonymous Coward, 23 Apr 2014 @ 9:49pm

Re:
"It seems odd to me that the US Federal Government itself, is trying so hard to chase down and convict a New Zealand businessman, who resides outside their jurisdictional authority."

It's always about money and power. Megaupload was the biggest cyberlocker/cloud-storage provider out there, it was about to go IPO, it accounted for approx 4% to 5% of all internet traffic, and it had plans to provide free content. We're talking about a valuation of billions (with a b), and plans to widely expand into other areas (music streaming, advertising revenues, deals with media companies such as Disney etc). AND it was not in American hands. So it was destroyed by any means, and many other such services were also hounded and/or scared away either entirely or they changed their models. And then .. voila ... it's all replaced by thriving services provided by USA companies - Google Drive, MS OneDrive, Apple iCloud, Amazon S3, DropBox etc - regardless of their existence/plans prior to the Megaupload shutdown. And being US companies, the USA/MAFIAA can "probably" exercise more control. I'm almost entirely convinced that the free content, music service touted by Megaupload was the catalyst. But don;t underestimate the billions of lost revenue to the USA (albeit double dutch irish sandwiched).
[ link to this | view in thread ]
That One Guy (profile), 23 Apr 2014 @ 10:08pm

Coming soon to a file-locker near you: 'Doctor Dotcom vs. The World'
(Apologies in advance for the length, but an epic tale cannot be rushed or shortened, lest the heart be ripped from it)

It's likely not that nefarious actually, though the sleaze and corruption factors more than make up for it.

Basically, the DOJ are, more often than not, good little Hollywood employees, and Hollywood had/has a real hate-on for Dotcom, and a flair for extravagance and the theatrical.

As they've done in the past, the DOJ took the claims made by Hollywood at face value and sprang into action, rushing to apprehend the nefarious 'Doctor Dotcom' before his plans of world domination and/or providing an alternative way for musicians to get their music out and sell it came to fruition, sure that their good buddies/bosses were right and that they'd find a treasure trove of evidence.

(Something to remember, the Dotcom raid went down shortly after SOPA was shot down, and while it likely wasn't the deciding factor, it did quite likely lead to the whole thing being rushed, as Hollywood was less than pleased, and wasn't exactly subtle in expressing this displeasure. And when the groups known for making substantial 'campaign contributions' start cracking the whip, the recipients of those 'donations' start getting jumpy.)

So, the DOJ sprang into action, and coned, bribed or just lied to the NZ government into supporting a SWAT-style raid, choppers in the sky and all, lest Doctor Dotcom flip the magic switch Hollywood assured the DOJ(or the DOJ assured the NZ police, can't remember exactly) he had that would instantly wipe the servers, destroying all that evidence(the same servers they're now trying to indirectly wipe, after cherry-picking evidence from. Funny how that works).

Luckily for us all, Doctor Dotcom had not only forgotten to install the magic switch, he had yet to make the technological breakthrough that would allow him to connect, from NZ to the US, to servers which had been disconnected before the raid.

For want of a horseshoe the world was saved(or something like that).

So, the evil Doctor was crushed, now it was just a simple matter of going 'Pretty please?' to the NZ government and Doctor Dotcom would shortly find himself on a one way plane to the US, there to stand trial(or 'trial' as the case may be) for his heinous crimes.

However, before the champagne could be popped, the unthinkable happened: the NZ government asked for proof of Doctor Dotcom's terrible crimes.

Proof!

As though the duplicity of the evil Doctor's crimes weren't evident enough, the foolish government wanted proof before handing him over! Truly, the NZ government had obviously gone mad, wasn't Hollywood's word and assurances good enough?!

However, all was not lost, for had not the ever-so-virtuous and honest Hollywood assured the DOJ of Doctor Dotcom's guilt? Had they not even pinky swore it?

So, digging through the evidence they had gathered, and doing their best to ignore the trivialities the NZ courts were complaining about(something about 'illegally removing evidence from the country'), the DOJ set about building their case, only to find out, to their horror, that the twisted Doctor had somehow triggered a second switch, one that magically created meg after meg, gig after gig, of non-infringing files.

The sheer shock in the offices of Hollywood's greatest enforcers was indeed great that day.

This would not do. If the Doctor was allowed to access the servers and copy over evidence from them for his defense, all the carefully crafted planning would be for naught! After all, had not US law already found that if a service or technology has significant non-infringing uses, it was legal?

At all costs, the Doctor could not be allowed access to the servers.

Gloom and doom pervaded the office, and the valiant Defenders of Hollywood searched for a way to keep the case afloat, until, one day, a lowly agent came to a shocking realization.

Servers cost a significant amount to maintain...

Thanks to the actions against the vile Doctor Dotcom, his vast wealth was, for the most part, locked away, no longer available to him...

If the server costs were unable to be paid, then they would almost certainly be cleared of all data, and leased to another...

From that realization, a plan was hatched. With their own 'evidence' copied off the servers, the DOJ had no more need of the data on them, so all they had to do was stall. Stall and wait, until the day when the servers were cleared free of all that 'inconvenient data', and the DOJ would be the only ones left with evidence from them.

The plan seemed to be working, any day now the servers would be cleared of data, and the case could be brought to bear, with the evil Doctor vanquished once and for all.

And then, like a bolt of blacked evil out of the sky, the heinous Doctor unveiled yet another of his plots, and pointed out to the Hong Kong courts that, in their haste, the righteous DOJ had perhaps... missed a few steps, forgotten to dot all the 'i's, cross all the 't's, in their haste to put his evil to and end...

[To be continued in 'Doctor Dotcom vs. The World 2: The Doctor's Revenge]
[ link to this | view in thread ]
Anonymous Coward, 23 Apr 2014 @ 10:29pm

How did Hollywood get Hong Kong in its pockets?
[ link to this | view in thread ]
Anonymous Coward, 23 Apr 2014 @ 10:39pm

Re:
How do you think the RIAA got its incestuously bred clones all over the fucking planet?
[ link to this | view in thread ]
That One Guy (profile), 23 Apr 2014 @ 10:43pm

Re:
Oh it's less likely that they corrupted the Honk Kong courts, and more likely they 'forgot' to mention any 'inconvenient' details that might have 'gotten in the way'.
[ link to this | view in thread ]
This comment has been flagged by the community. Click here to show it

Anonymous Coward, 23 Apr 2014 @ 10:50pm

Megaupload must have been one of Pirate Mike's favorite sites.
[ link to this | view in thread ]
Anonymous Coward, 23 Apr 2014 @ 11:01pm

Re: Coming soon to a file-locker near you: 'Doctor Dotcom vs. The World'
This should be a movie!
[ link to this | view in thread ]
That One Guy (profile), 23 Apr 2014 @ 11:04pm

Re:
'Legal violations? What legal violations, Hollywood says they're guilty, that's good enough for me!'

And you wonder why no one takes you seriously...
[ link to this | view in thread ]
Anonymous Coward, 23 Apr 2014 @ 11:27pm

Re:
Yup. It's called, 'Exonerating evidence'.
[ link to this | view in thread ]
Anonymous Coward, 23 Apr 2014 @ 11:28pm

Re: Re: Coming soon to a file-locker near you: 'Doctor Dotcom vs. The World'
Only available on MEGA!
[ link to this | view in thread ]
Anonymous Coward, 23 Apr 2014 @ 11:30pm

Re:
No, but it was one of mine. Where I hosted a ton fo my notes for a personal project. Good job I had some other cloud service to back up...
[ link to this | view in thread ]
Ane of best ways to start morning=), 23 Apr 2014 @ 11:37pm

Re: Coming soon to a file-locker near you: 'Doctor Dotcom vs. The World'
Thanks, mate. You made one internetuser to smile...
[ link to this | view in thread ]
Anonymous Coward, 23 Apr 2014 @ 11:38pm

Re: Coming soon to a file-locker near you: 'Doctor Dotcom vs. The World'
Ohhh, I get it. So that's why this case has dragged on for over 2 years. The DOJ is trying to force service providers to delete all the evidence that would acquit Mr. Dotcom of the false charges filed against him.

I see. Thank you for taking the time to break down the DOJ's criminal behavior for me.
[ link to this | view in thread ]
That Anonymous Coward (profile), 23 Apr 2014 @ 11:47pm

Re:
You mean like the vast amounts uploaded from those claiming the sites only use was stealing from them?
Or that had different divisions of the company trying to get advertising deals?

I mean the DoJ was able to sift through PETAbytes in hours to get the "goods" but were unable to get anyone elses data back to them. One wonders if the links were provided to them by the uploaders.
[ link to this | view in thread ]
That One Guy (profile), 23 Apr 2014 @ 11:49pm

Re: Re: Coming soon to a file-locker near you: 'Doctor Dotcom vs. The World'
It's not the only cause it's been dragging out for so long, for example, the DOJ seems to have the strangest aversion to actually providing any evidence of Dotcom's alleged crimes to the NZ courts*, in order to justify the extradition, and so the trial keeps getting pushed back while they 'gather and prepare evidence', but it's very likely one of the reasons, yes.

*Which would, in turn, provide them to Dotcom's legal team, a fact that very much has an affect on the DOJ's disinclination of providing it, as evidence that has been presented is evidence that can be challenged.
[ link to this | view in thread ]
That Anonymous Coward (profile), 23 Apr 2014 @ 11:55pm

I forget didn't the DoJ lawyer pushing this case recently switch back to a private sector job again?
IIRC he was a BSA (no the other one without kerchiefs) lawyer, went to DoJ pushed some IP cases and then left.

This case moves so slow its hard to remember all the players.
[ link to this | view in thread ]
PaulT (profile), 24 Apr 2014 @ 12:27am

Re:
Well, this site is clearly one of yours, so what does that say about you since you're the one obsessed with the idea that it's run by and targeted toward pirates? By your own logic, *you* must be a pirate! Unless you're actually going to admit that none of that is actually true, of course...
[ link to this | view in thread ]
Anonymous Coward, 24 Apr 2014 @ 1:03am

Re:
It may well be the logs that show where the infringing files were uploaded from, and who 'owned' them. As has been pointed out many times, context of the files is significant to proving that they were infringing, and uploads by copyright holders cannot be infringing by definition.
[ link to this | view in thread ]
Niall (profile), 24 Apr 2014 @ 1:54am

Re:
That title was meant to be offensive - it was a direct comment on American attitudes to the rest of the world. Shame that the 'World Police' bit only involves policing donut shops (oil countries) and not people in genuine trouble.
[ link to this | view in thread ]
David, 24 Apr 2014 @ 2:18am

Re: Re:
What a clever way to cover up the embarrassment of having picked up a turd it is to nonchalantly smear it all over your face. The U.S. government seems to employ that tactic a lot recently.

Drop it, wash your hands. Fire Clapper and prosecute him for lying to congress. Fire Holder, put somebody with a conscience and respect for the Constitution in charge of the Department of Justice, and prosecute Holder for contempt of congress, obstruction of justice and multiple perjury (what a mockery that he stayed in office as the head of the Department of Justice after indulging in illegal weapon trading in the Fast and Furious affair and lying about it to congress under oath). Drop the Megaupload debacle.

The U.S. government is a cesspitt of corruption and bribery, with legislation openly paid for by corporate and military interests and put through with blackmail.
[ link to this | view in thread ]
techflaws (profile), 24 Apr 2014 @ 2:45am

Re:
Just as this must be the one of brainless anonymous cowards.
[ link to this | view in thread ]
Anonymous Coward, 24 Apr 2014 @ 3:51am

Re: Re:
You assume brainless. My personal choice is moneyless.
[ link to this | view in thread ]
Anonymous Coward, 24 Apr 2014 @ 4:14am

Re: Re: Re:
No, he just hates it when due process is enforced.
[ link to this | view in thread ]
Namel3ss (profile), 24 Apr 2014 @ 6:29am

Re:
BSA? You mean "bullshit artist"? Why yes indeed.
[ link to this | view in thread ]
jupiterkansas (profile), 24 Apr 2014 @ 7:35am

Re:
You should watch the movie because it's one of the funniest films of the last decade.
[ link to this | view in thread ]
jupiterkansas (profile), 24 Apr 2014 @ 7:44am

Re:
Except that hasn't mattered when they've seized domains in the past. The damage is done and the worst that can happen to the DOJ is they pay a fine (with tax payer money).
[ link to this | view in thread ]
Anonymous Coward, 24 Apr 2014 @ 7:48am

I wouldn't be surprised to find that the US DOJ have already contacted the HK DOJ and made demands with telling them exactly what to do and if they fail to keep the assets frozen etc. thst there will be severe consequences given to them for failing.
[ link to this | view in thread ]
ltlw0lf (profile), 24 Apr 2014 @ 7:50am

Re: Re:
You should watch the movie because it's one of the funniest films of the last decade.

I agree. I like some of South Park, but really haven't cared much for anything else that Trey and Matt have produced, but this movie is awesome, not only on being funny, but on being political satire on the current attitudes and opinions about the US governments reach in areas of law and politics vs the rest of the world. If anything, it makes fun of American views of the rest of the world.

And I'd say it very much is life imitating art imitating life.
[ link to this | view in thread ]
PaulT (profile), 24 Apr 2014 @ 8:11am

Re: Re: Re:
Ditto. It's a hilarious film, not mocking America per se, but mocking the jingoistic, militaristic mindset of many in the country. It was a pretty fitting satire considering everything that was happening at the time, even in between sex, gay and dick jokes (and, for the thin-skinned, it mocks North Korea, Al Qaeda and left-wing celebrity campaigners just as much as anything inherently American).

If even the title of a silly puppet comedy offends, you probably have a lot of other problems and perspectives you need to address.
[ link to this | view in thread ]
That One Guy (profile), 24 Apr 2014 @ 11:13am

Re:
I'd be surprised if they hadn't done something like that, Dotcom having access to his money would be a huge monkey-wrench in their plans.
[ link to this | view in thread ]
Anonymous Coward, 24 Apr 2014 @ 11:29am

I feel like Hollywood never counted on Kim Dotcom and his associates to last out this long. His servers decided to continue storing everything despite how costly it is, and his lawyer is basically working for free for the time being. They tried to strangle him financially and failed. And it seems so full of holes that Hollywood must have planned this whole scheme in the 48 hours after SOPA was shelved and before the raid. It was all done to make an example of Megaupload, but all it seems is that Kim has been exposing all sorts of corruption, simply because Hollywood was angry is precious bill failed in Congress and rushed to go make an example of Mega.
[ link to this | view in thread ]
6, 24 Apr 2014 @ 11:42am

more than technicalities.
"While the issue of serving Megaupload is something of a technical snafu, it's one in a rather long line of sloppy lawyering by the DOJ throughout this case."

Actually the inability to serve a foreign corporation is much more than a "technical snafu". It is an important protection for foreign corporations, just as we would wish our corporations be protected from other countries doing the same. You can serve individuals, but you cannot serve corporate "entities" as they are nothing but legal constructions of the state itself.
[ link to this | view in thread ]
Coyne Tibbets (profile), 24 Apr 2014 @ 12:48pm

But it's not about the cloud, oh no
Megaupload on the one hand, Aereo on the other. But it's not about the cloud, oh no: Trust us.
[ link to this | view in thread ]
jupiterkansas (profile), 25 Apr 2014 @ 9:50am

Re:
All Hollywood cared about was shutting down his website. Mission accomplished. How it was done was the DOJ's problem.
[ link to this | view in thread ]
jupiterkansas (profile), 25 Apr 2014 @ 9:51am

Re: But it's not about the cloud, oh no
And "the cloud" is just another word for "the internet."
[ link to this | view in thread ]