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Movie studios to try to stop assets from being returned to Kim Dotcom

By | Published on Monday 2 June 2014


The US movie industry last week confirmed that it was considering new legal action in a bid to ensure that Kim Dotcom and his fellow MegaUpload founders do not get reconnected with their former company’s assets in either New Zealand or Hong Kong. Content industry lawyers argue that if said assets were returned it would allow Dotcom et al to put them beyond the reach of the American courts, where the film studios are suing Team Mega for copyright infringement.

As previously reported, as the criminal case against Dotcom continues to go through its incredibly slow motions, in April both the movie and music industries launched civil proceedings against the former MegaUpload team, who are accused of enabling, encouraging and profiting from rampant copyright infringement. But lawyers for the Mega men quickly requested that the civil lawsuits be postponed until after any criminal proceedings are complete, citing the defendants’ fifth amendment rights.

Even though that could mean a very long delay indeed – given how slowly criminal proceedings are currently proceeding – word has it the movie studios might voluntarily agree to that postponement, except that at the same time Dotcom’s lawyers have made progress to get back assets taken from the Mega team when the US authorities shut down the file-transfer operation back in 2012.

A New Zealand court ruled in April that the order that allowed Dotcom’s personal assets to be taken in 2012 should not be extended, though prosecutors in the country are currently appealing that judgement. Meanwhile Team Mega filed new papers the same month in Hong Kong, where MegaUpload was incorporated, arguing that assets seized there should also be returned.

But the movie studios will try to fight moves to return Mega assets in both countries, arguing that the return of monies amassed by MegaUpload would enable Dotcom et al to move that wealth into hard-to-reach places, preventing them from collecting any damages they may or may not win when their civil litigation gets to court.

According to Torrentfreak, lawyers for the film studios have written: “If the New Zealand government loses [its] appeal, the assets will be unfrozen, and there is a significant risk that they will then be immediately dissipated. [The defendants] have or have had sophisticated global business interests and have the ability to move assets offshore quickly and immediately”.

The lawyers go on: “To ensure that defendants’ New Zealand assets remain frozen even if the New Zealand government loses the pending appeal, several of the plaintiffs have initiated civil proceedings in New Zealand to freeze defendants’ assets pending a judgment in [their civil case]”.

The legal filing adds: “In addition to opposing extension of the asset freeze in New Zealand, defendants are also seeking to unfreeze their assets in Hong Kong. If defendants are successful in their efforts to unfreeze their assets in Hong Kong, there is a significant risk that those assets will be dissipated in very short order. Plaintiffs are monitoring developments in Hong Kong and assessing whether they may need to take legal action there to further preserve defendants’ assets”.