Whether the DOJ can prosecute Hong-Kong based Megaupload is also up in the air.
by Megan Geuss - June 29 2012

Today US District Judge Liam O'Grady deferred a decision on whether Megaupload users would get their data back, saying he would consider scheduling a hearing at a later date.

A date for this later hearing was not specified, but it will likely determine whether the Department of Justice committed a search-and-seizure that would require the DOJ to make users' files accessible to them again, or whether "the court should treat Goodwin and other Megaupload users as unsecured creditors who can ask for their data back when the DOJ's case against Megaupload is finished," as PCWorld reported Assistant US Attorney Andrew Peterson as saying earlier today.

Still, Judge O'Grady appeared skeptical of the government's position that Megaupload was merely a service provider rather than a holder of property.

"Goodwin isn’t 'asking that service be restored,'" O’Grady said, according to Bloomberg. "He’s asking for his data back, and that’s property, right?"

Judge O'Grady also said he would hold a hearing at a later date to consider Megaupload's motion to dismiss copyright infringement charges by the DOJ on the grounds that Megaupload is based in Hong Kong, not the US.

Still, Megaupload's users wait. Kyle Goodwin, an Ohio man represented by the EFF, is acting as a stand-in for the nearly 66 million Megaupload users whose 25 petabytes of data are hanging in limbo on servers operated by hosting company Carpathia. While Megaupload's assets are seized, the company can't pay the tens of thousands of dollars a month that Carpathia is losing in depreciation and operating costs. The hosting company has asked that the US government either permit Carpathia to return the data to Megaupload or to let the company reformat the servers and use the storage space for other customers.

The MPAA has cried that transferring the servers with infringing materials back to Megaupload so users could get their files back would be a violation of copyright law. But earlier this month, the MPAA filed a brief saying it would accept users getting their data back, as long as no infringing material slipped back out into the wild.

In April, Judge O'Grady granted several weeks for Megaupload, Carpathia, the MPAA, and other parties to mediate an agreement regarding the user data on Megaupload servers. The parties have not been able to reach an agreement, but the deferred hearing might settle once-and-for-all who's responsible for the data on the servers and how soon users will get it back.