Costs Could Kill Bid to Restore Megaupload Data

(CN) - The government says it would be "inordinately expensive" and take about 22,000 hours to give a small-business owner back the files he stored on Megaupload.

Kyle Goodwin runs a small business called OhioSportsNet that reports on high school sports in Ohio. According to his brief, Goodwin paid for Megaupload's premium services so he could store videos, interviews and news stories on the website's cloud storage service.

After his own computer crashed, Goodwin claimed he tried to recover his files from Megaupload, only to find that the FBI had shut down the website for copyright infringement. Though Goodwin's files are presumably his own, prosecutors say Megaupload was a haven for digital piracy.

In March 2012, Goodwin filed an emergency motion asking the court to allow him to retrieve his files, without which he claims his business will suffer significant losses, through no fault of his own.

In a separate brief, the Electronic Frontier Foundation, a digital rights nonprofit representing Goodwin, urged the court to set a precedent to "mitigate the collateral damage," of federal seizures.

Although the government agreed that Goodwin has a right to his data, the United States opposed Goodwin's motion because it is unwilling to pay to retrieve his files.

Prosecutors say Megaupload leased 1,103 servers from Carpathia Hosting, and it would take them 22,000 hours to image all the servers.

"The government does not oppose access by Kyle Goodwin to the 1103 servers previously leased by Megaupload," the brief states. "But access is not the issue - if it was, Mr. Goodwin could simply hire a forensic expert to retrieve what he claims is his property and reimburse Carpathia for its associated costs. The issue is that the process of identifying, copying, and returning Mr. Goodwin's data will be inordinately expensive, and Mr. Goodwin wants the government, or Megaupload, or Carpathia, or anyone other than himself, to bear the cost."

"The government did not seize any of the Megaupload-leased servers," the government added. "Instead, pursuant to the warrants, the government copied certain data from the servers. ... After the execution of the search warrants was completed (a process which took approximately one week), the government left the premises leased by Carpathia, and did not retain any of the servers. The government has reviewed the data it imaged from the Megaupload servers, and the government did not image any of Kyle Goodwin's content files." (Parentheses in original.)

Goodwin argued that the government has an obligation to return his data because it rendered his property inaccessible by shutting down Megaupload. But prosecutors said that "the government never seized the property at issue," and therefore Goodwin has no standing to ask for relief. (Italics in original.)

Goodwin himself recognized that "his property 'does not fit the definition of property,'" according to the government's brief. "Mr. Goodwin has asserted an interest in property that is neither restrained, nor seized, nor subject to forfeiture. Instead, an apparent consequence of the government's restraint of Megaupload's assets was a termination of the Megaupload service."

Prosecutors also compared Goodwin's request to that of a criminal defendant who asks for the right to use someone else's money to finance his defense.

"If a defendant does not have a right to use forfeitable assets to hire counsel, then surely a third party, who cannot even assert an interest in the restrained funds he seeks to expend, has no right to use forfeitable assets to try to ameliorate alleged financial injury associated with a commercial transaction," the government concluded.

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