Ruling aids Dotcom's piracy defence

Alleged internet pirate Kim Dotcom may be able to breathe a little easier after a landmark Australian High Court ruling that found internet provider iiNet was not responsible for illegal file-sharing by its users.

However, a law professor has warned millions of dollars of assets seized by police may never be returned to Dotcom, even if a bid to extradite him to the United States fails.

The chief executive of iiNet, Michael Malone, said the unanimous ruling by five judges, who dismissed an appeal by Hollywood studios that iiNet was a party to internet piracy by its customers, had ended three years of legal argument costing A$9 million (NZ$11.4m).

The Australian Financial Review said it was a test case of "global significance".

Auckland lawyer Rick Shera said the ruling would be influential in New Zealand and was a positive development for Megaupload founder Dotcom and his co-accused.

"At its heart, Megaupload is about the responsibility of an online service provider for its users' activity and that was exactly the core issue in the iiNet trial," he said. While evidence in the two cases as to whether the companies encouraged piracy was not the same, Dotcom's was a criminal prosecution, so the burden of proof needed to be stronger, he said.

However, Otago University law professor Andrew Geddis was cautious of drawing parallels between the cases, noting that while internet providers such as iiNet were essentially only conduits for file sharing, Megaupload hosted files on its servers.

Shera said that even if the US failed in its bid to extradite Dotcom in a hearing in Auckland in August, the US indictment against him would stand and authorities there would not necessarily return the assets of the company, seized in January.

The Crown Law Office would not comment on what would happen to millions of dollars worth of personal assets seized by New Zealand police in that scenario, but Geddis said it could not be assumed they would then be returned, either.

"You can have assets taken off you permanently on a lower threshold than proof of criminal wrongdoing.

"You don't need to be charged and convicted of anything to have your stuff taken away from you."

US website TorrentFreak reported that Megaupload was preparing a "multibillion-dollar" sharemarket listing before it was shut down in January – a fresh revelation that suggests Dotcom believed he was operating legitimately, and not partaking in a massive "criminal conspiracy" as alleged by the FBI and New Zealand police.

Dotcom told TorrentFreak he had talked with some of the "Big Four" accounting firms and with large international banks interested in underwriting the public offer.

The Dominion Post