Mega-legal Problems with Megaupload

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While Megaupload has been shut down and its founder Kim Dotcom and others charged in one of the biggest Internet piracy cases, the ripples continue to create other problems.

For instance, Carpathia Hosting Inc, which used to host the 1100 servers of Megaupload is in a fix. It approached the court submitting that the monthly cost of $37000 just for storing the servers in a climate controlled secure space is not something the company is ready to bear.

On the other hand the U.S. government has problems with Andrew Schapiro representing Megaupload as his law firm, Quinn Emanuel Urquhart & Sullivan has also represented companies who are victims of Megaupload and may be asked to testify.

  

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According to the government, things become more difficult because the law firm wants access to the seized funds of Megaupload to cover costs. While the government, on one hand, cannot deny legal representation of the accused, on the other hand, it also cannot allow shrinking of a finance pool that may be used for restitution to victims.

Quinn has already file a rebuttal memorandum saying, “if the Government is to have its way in this case, the only lawyers before the Court will be those representing the Government. If the Government is to have its way, the only evidence available to the Court would be that cherry-picked by the Government, for the Government, from the universe of relevant servers slated to be wiped.”

The owners of the hosting company are in tears. They cannot use the 1100 servers, and they cannot wipe off the data as long as the case remains pending. They cannot also bear the storage costs of $37000 per month.

The judge, O’Grady, asked if any of the parties at court were ready to take charge of the servers, but no one came forward. The judge was quite candid and skeptical of ever bringing Dotcom to justice. O’Grady said, “I’m not sure we’re ever going to have a trial,” indicating that the accused may never be extradited to U.S.

A lawyer for Megaupload pleaded that the data be not destroyed as “There’s no way to unring the bell if this data is lost.” The government said forcing the government to bear the costs for the servers would be a “massive burden on the government and the taxpayer.”

Some subscribers who had uploaded their own material to Megaupload have also asked their data to be returned.

Almost in support of the judge’s assertion that there may never be a trial, the law firm representing Megaupload stated, “If the Government is to have its way, in sum, Megaupload will never get its day in Court and the case will effectively be over before it has even begun. Megaupload’s fate will have been sealed by virtue of an indictment and corresponding asset freeze executed without the benefit of any adversarial proceeding or opportunity to be heard.”

Megaupload maintains that it was simply a storage agency and not concerned with what its subscribers uploaded or downloaded.