Megaupload applies to the High Court of Hong Kong to set aside US DOJ driven restraint Order

MEGAUPLOAD LTD. RESPONSE TO MEDIA INQUIRIES

ENGLISH

• Megaupload applied today to the High Court of Hong Kong to set aside US DOJ-driven restraint order 

• Megaupload’s Hong Kong court application is part of a global effort to free up assets needed to negotiate via US Court procedure the return of data to cloud storage users

Hong Kong—Megaupload Limited (“Megaupload”) has applied to the Court of First Instance of the High Court of Hong Kong, by way of summons dated 9 April 2014, to set aside a restraint order obtained by the Hong Kong Department of Justice (“HK DOJ”) in January 2012. That order, which was requested by the United States Department of Justice (“US DOJ”) under the Mutual Legal Assistance in Criminal Matters Ordinance in connection with a criminal proceeding in the United States District Court for the Eastern District of Virginia, restrains Megaupload from dealing with its assets in Hong Kong.

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’s global litigation counsel Ira Rothken said that “Over two years later, the US DOJ has yet to serve Megaupload or initiate substantive criminal proceedings against it, trapping Megaupload in a state of criminal limbo. During that time, the restraint order has prevented Megaupload from conducting business or paying bandwidth expenses needed to return cloud storage data to users. Needless to say, Megaupload and its cloud storage users have been severely prejudiced by the US DOJ’s conduct. Indeed, as further argued in Megaupload’s application, the US DOJ’s inability to prosecute Megaupload over this long period of time is grounds to discharge the injunction independent from the US DOJ’s nondisclosure”.

In support of its application, Megaupload has submitted through its Hong Kong legal team expert affidavits by Richard Davis and Robert Weisberg concerning the US DOJ’s ability to serve Megaupload. Mr Davis is a U.S. lawyer in private practice. He is a former Assistant U.S. Attorney and member of the Watergate Prosecution Force, and was previously partner at a prominent international law firm. Mr Weisberg is currently the Edwin E. Huddleson, Jr. Professor of Law at Stanford Law School. He works in the field of criminal law and criminal procedure, and founded and now serves as faculty co-director of the Stanford Criminal Justice Center.