A judge has called for an urgent review to determine whether Megaupload founder Kim Dotcom should be allowed to see the information the United States government is planning to use in its case against him.
The US asked for a judicial review of the decision made in North Shore District Court in May to grant Dotcom the right to information gathered by the FBI.
The Megaupload founder was arrested after police swooped on his home in January and stands accused of breaching copyright laws costing owners more than US$500 million. US authorities are attempting to extradite him to face the charges.
Authorities say he and his three co-accused - Mathias Ortmann, Fin Batato and Bram Van der Kolk - used Megaupload and its affiliated sites to knowingly make money from pirated movies and games.
The Megaupload lawyers have argued that a lack of disclosure of the evidence would unreasonably deny Dotcom and his co-accused natural justice and would leave him unable to prepare a case to fight his extradition.
But the United States is opposed to providing defendants with disclosure while they are awaiting extradition because they have not surrendered to the jurisdiction of the United States court.
The US said the North Shore District Court had acted beyond its jurisdiction in allowing the disclosure of evidence, and in a decision published today High Court judge Helen Winkelmann found there were grounds for the case to be reviewed.
US authorities said the disclosure of evidence would take at least two months to arrange as the case against Dotcom includes more than 10 million intercepted emails and the contents of various web servers and computers.
However, Dotcom and his associates did not want any delays to the extradition process and were keen that the hearing date of August 6 was kept.
Winkelmann ordered a compromise arrangement where the US authorities would prepare the documents for disclosure, but would not release them until a judicial review of the original decision was carried out.
Dotcom is currently on bail in Auckland.
Plea to drop charges rejected
The US attorney's office has dismissed claims by Megaupload founder Kim Dotcom that criminal copyright charges against him should be thrown out.
According to an article on CNET News the attorney's office said, in a paper filed to a court, that Dotcom's claims the US government had no jurisdiction over the Hong Kong-based Megaupload service were incorrect.
The US government also argued that Dotcom's request that the charges be dismissed was premature as none of the defendants have actually appeared before a court on the substantive charges.
And a request that more of Megaupload's money was returned would be like returning money to a bank robber, Neil MacBride, US Attorney for Eastern District of Virginia, told CNET News.
"The seized assets are simply not the defendants' to spend - and they never were," he said.
This comes after news yesterday that a former New York federal judge has waded into the Dotcom saga saying it was ''outrageous'' the US government is refusing to give Megaupload users back their data.
In an article on wired.com Judge Abraham David Sofaer said he was ''troubled'' that the files of 66.6 million Megaupload customers were being kept as part of the US government case against Dotcom.
"It's really quite outrageous, frankly.
''I was thinking the government hadn't learned to be discreet in its conduct in the digital world. This is a perfect example on how they are failing to apply traditional standards in the new context."
Sofaer has teamed up with the Electronic Frontier Foundation and
is urging a US federal court to set up a system to allow Megaupload
users to get back their legal content, the site said.