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Article posted Oct 10 2012, 4:45 AM Category: Politics/Corruption Source: Techdirt Print

Court Says Case Against Megaupload Can Continue, Despite Not Being Able To Serve The Company

by Mike Masnick

Nonexistance of the law is no excuse! - ChrisWe've covered one of the sideshow issues in the larger Megaupload case: whether or not the US DOJ could get away with charging Megaupload (the company) without it being located in the US. This wouldn't have impacted the individuals who were indicted separately, but the case against the company entity itself ran into a problem. Since Megaupload has no corporate presence in the US, and the letter of the law is pretty clear that you have to serve companies accused of criminal law violations in the US, there were concerns if Megaupload could even be charged. The DOJ argued that none of this mattered, because in spirit, it should be able to treat foreign companies as if they're in the US. Megaupload hit back, noting that the DOJ shouldn't get to just make up what it thinks the law should be when the law says otherwise.

Unfortunately -- but perhaps not too surprisingly -- the court has sided with the DOJ, saying that the case against Megaupload, the company, can move forward, even though the company was not served in the US.
Judge O'Grady echoes the government's belief that the rules weren't intended to be interpreted for the evasion of foreign defendants. He writes, "It is doubtful that Congress would stamp with approval a procedural rule permitting a corporate defendant to intentionally violate the laws of this country, yet evade the jurisdiction of United States' courts by purposefully failing to establish an address here."

The judge goes onto to make his own interpretation of Rule 4, saying that mailing a summons to the address of corporation's alter ego is the same as mailing the summons to the corporation itself. Often, that means mailing it to the domestic subsidiary of the foreign company; here, it could mean Kim Dotcom if he's ordered to be extradited at a later point.

"So long as the government could prove that an individual defendant is an alter ego of the corporate defendant, the government could satisfy Rule 4's mailing requirement by mailing a copy of the summons to one of the individual defendants once that defendant is extradited to this district," writes the judge.
I can see the judge's reasoning here, but it seems like a pretty slippery slope argument, basically allowing some pretty broad powers to the US to go after countries all around the world. Imagine how the US government would act if other governments around the globe claimed the same thing? It seems that if Congress really intended the DOJ to be able to go after foreign companies, then it should have made that clear in the law.

It sounds as though Megaupload is planning to appeal this ruling, to get a higher court to look into this issue.

In the end, though, this still remains a tangential issue, and one that doesn't impact the case against the individuals. But, for now, the government's argument has won the first round.

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