U.S. Government Wins Key Ruling in Bid to Extradite Kim Dotcom

After a series of setbacks, the U.S. government has reversed a losing streak in the ongoing battle to extradite Megaupload founder Kim Dotcom.

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On Friday, an appeals court in New Zealand overturned a lower court judge and ruled that the U.S. doesn't have to turn over documents connected to its attempt to show that Dotcom participated in a "mega conspiracy."

In addition, the appeals court has offered key guidance that likely will make it easier for the U.S. to bring Dotcom over to a Virginia federal court on charges of racketeering and copyright infringement.

An extradition hearing is scheduled for August. In anticipation, Dotcom's lawyers want to show that the U.S. has misinterpreted his cyberlocker business and that the company that was shuttered in January 2012 can't be held liable for copyright infringement thanks to the absence of intent and protections offered to Internet service providers under the Digital Millennium Copyright Act.

To make that case, Dotcom has demanded more information about the evidence that U.S. authorities have in their position.

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In May, a New Zealand judge came out with an opinion that presented an extradition hearing as akin to a criminal proceeding, ruling "the right to adequate time and facilities to prepare a defense in my view is entirely consistent with the nature of extradition proceedings."

The documents ordered to be handed over were copyright ownership records, records obtained from covert operations by agents to identify infringements on Megaupload's network, communications between copyright holders and Megaupload and more.

The U.S. appealed, and on Friday, it got the ruling it had hoped to attain.

"Although the extradition process is an important element of the system of criminal justice, it is wrong to equate it with the criminal trial process," the appeals judges wrote.

The appeals court also considered disclosure requirements under the Extradition Treaty, which necessitates that a government requesting extradition provide a summary of evidence and other relevant documents.

"It was not suggested to us that there had been any failure to meet those requirements," says the appellate ruling, which adds that "other relevant documents ... are not, in our view, a roundabout way of requiring a requesting state to give disclosure of all relevant documents it holds as would occur prior to a criminal trial."

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Friday's appellate ruling also serves to offer some guidance in Dotcom's coming extradition hearing.

In August, the U.S. will have to convince a judge that there is a prima facie case that justifies extradition in the same manner that would persuade a judge to allow a trial in New Zealand. To that end, a summary of the evidence is to be given, which Dotcom can challenge, but only to the evidence's reliability rather than the inferences drawn. If Dotcom was able to gain documents to challenge the latter, the appeals court writes, the extradition hearing "would lose much if not most of its efficacy."

The appeals court notes that the purpose of an extradition hearing is only a "limited weighing of evidence." The U.S. is presumed to be reliable, though Dotcom can challenge any abuse in the process. (Among other things, his lawyers have been attempting to argue that the country's spy agency made illicit acts.)

But it appears that Dotcom's arguments on why he's innocent would have to wait to be examined in the U.S., and he won't be aided in document discovery until he gets there. The appeals court says that it's the discretion of the U.S. government to determine which disclosures are relevant at the moment. Things might change once a judge considers the evidence at the August hearing.

Here's the full ruling.

In reaction, Dotcom tweeted, "Am I disappointed about the ruling today? YES. Do 'good faith' & 'US govt' go together? NO. Will I sleep like an innocent baby tonight? YES."

E-mail: eriq.gardner@thr.com; Twitter: @eriqgardner