A New Zealand court of appeals has handed the US government a major victory in its ongoing battle to extradite the owners of the foreign corporation behind the alleged piracy website Megaupload.com. In overturning an earlier ruling that would have allowed Megaupload’s owners, including self-described “Freedom Fighter” and German citizen Kim Dotcom, broad access to the US Department of Justice’s evidence against Megaupload in advance of the owners’ extradition hearing, a New Zealand court ruled that extensive disclosure would unnecessarily bog down the process and that a mere summary of the US case would be sufficient. This ruling represents a major setback for Dotcom, who had claimed that access to a wide range of documents in the US government’s possession would help prove that there is no merit to the US government’s case against him and his company.

As previously discussed by Arent Fox in Alleged Copyright Pirate Megaupload Cites Lack of Jurisdiction in “Incredible” Attempt to Dismiss Federal Charges and UPDATE: US Federal Court Denies Alleged Copyright Pirate Megaupload’s Motion to Dismiss Federal Charges, the US Department of Justice shut down Megaupload’s websites and seized more than $67 million of the company’s assets following the indictment and arrest of Megaupload’s owners in connection with their alleged operation of an organization dedicated to copyright infringement. In October, a federal judge rejected Megaupload’s motion to dismiss the criminal copyright charges on procedural grounds, reasoning that foreign entities cannot avoid US criminal prosecution by simply failing to obtain a US address. See US v. Dotcom et al., No. 1:12-cr-00003 (E.D. Va. Oct. 5, 2012).

Dotcom’s extradition hearing is currently scheduled for August, but his attorneys plan to appeal the ruling to New Zealand’s Supreme Court, which could result in further delays of the hearing. Should the US government ultimately succeed in its efforts to extradite Dotcom to the United States, prosecutors could potentially overcome the procedural hurdles related to service of process by simply serving the papers on Dotcom, on the theory that Megaupload is effectively his “alter ego,” given his role as the head of the company.

Further developments in the Megaupload litigation could have profound implications for both US copyright holders as well as the operators of foreign file-sharing websites. Any US company with substantial intellectual property assets should therefore pay close attention to the US’s case against Megaupload.