U.S. Flip-flopping Proves Us Right, Megaupload Tells Court

In a filing just submitted to a U.S. federal court Megaupload is using the Government’s own words against it, hoping to get the case against it dismissed. Megaupload points out that the Department of Justice is trying to change the law to legitimize the destruction of Megaupload. The DoJ wants to amend the law so that it’s possible to serve foreign defendants, while it previously argued in court that the authorities didn’t require such power.

While Dotcom’s legal battle in New Zealand focuses on spying efforts and unwarranted seizures, the U.S. federal court still has to decide on Megaupload’s request to dismiss the entire case against the company.

Several months ago Megaupload filed a request to dismiss the indictment against it, until the U.S. Government finds a way to properly serve the company.

According to “Rule 4” of criminal procedure the authorities have to serve a company at an address in the United States. However, since Megaupload is a Hong Kong company, this was and is impossible.

Only by dismissing the case can the court protect Megaupload’s due process rights, the defense argued. However, the Government disagreed and asked the court to deny Megaupload’s motion. Among other things the Government claimed that the federal rules shouldn’t be interpreted so narrowly.

A company should only be served on a U.S. address if they have one, they argued.

Last week a new chapter was added to this standoff and it turned out that, behind the scenes, the Department of Justice is trying to change the law in its favor. In a letter to the Advisory Committee on the Criminal Rules the DoJ made suggestions that would directly influence the Megaupload case.

Among other things the Government asked to “remove the requirement that a copy of the summons be sent to the organization’s last known mailing address within the district or principal place of business within the United States,” and to amend the Rule to “provide the means to serve a summons upon an organization located outside the United States.”

These were the exact issues Megaupload used in its request to dismiss the charges against it, and Megaupload was even cited in the letter as an example of why the law should be improved.

The question is, however, whether the proposed amendments will help or hurt the Government’s case. Megaupload’s defense argues the latter and has now submitted the letter to court, using it as evidence that the authorities knew all along that they were not playing by the rules.

“The Government’s letter is directly relevant to the Court’s consideration of Megaupload’s pending motion to dismiss without prejudice, as it contradicts the Government’s repeated contention that it can validly serve Megaupload—a wholly foreign entity that has never had an office in the United States—without regard for Rule 4’s mailing requirement,” Megaupload’s lawyers write.

Megaupload’s legal team goes on to explain that the letter shows that the Government knew it couldn’t possibly serve the Hong Kong company.

“To the contrary, the Government explicitly acknowledges in the letter that it has a ‘duty’ under the current Rule to mail a copy of the summons to a corporate defendant’s last known address within the district or to its principal place of business elsewhere in the United States.”

“Moreover, by seeking to have the mailing requirement eliminated, the Government implicitly admits it cannot validly serve Megaupload consistent with Rule 4 as currently written,” Megaupload writes.

Adding up the bits and pieces Megaupload’s lawyers argue that the letter proves that there was no legal basis to destroy Megaupload. It therefore asks the court to take the letter into account when it decides on the motion for dismissal.

“The Government’s letter to the Advisory Committee thus confirms what Megaupload has argued all along—that the Government indicted Megaupload, branded it a criminal, froze every penny of its assets, took its servers offline, and inflicted a corporate death penalty, notwithstanding the fact that the Government had no prospect of serving the company in accordance with current law, yet to be amended.”

“Megaupload should not be made to bear the burdens of criminal limbo while the Government seeks to rewrite the Federal Rules to suit its purposes,” the lawyers conclude.

The court now has to decide whether or not Megaupload should be dismissed from the indictment. If that’s the case, Megaupload plans to give users access to the files that were seized, and it will also free up funds for a proper defense.