The battle between Megaupload (David) and the US Government and the MPAA (Goliath) started out with a flurry of blows against the New Zealand based site staff, but in recent weeks the blows have all been falling stateside.

Today, the New Zealand High Court ruled that the search warrants used to raid Dotcom’s mansion were illegal, casting uncertainty over the entire ‘Mega Conspiracy’ case.

An earlier ruling by High Court Justice Judith Potter concluded that a previous search and seizure order was invalid because of improper paperwork. The documents were later corrected.

In the ruling, Chief Justice Helen Winkelmann declared the warrants illegal, noting that they were not adequately descriptive of the offenses Dotcom was accused of.

“Indeed they fell well short of that. They were general warrants, and as such, are invalid,” she said.

In addition, the data removed from New Zealand by the FBI (which they claim was ‘not stolen’, since it was ‘only data’) was also ruled to be illegally obtained, and should not have been taken out the country.

“…the release of cloned hard drives to the FBI for shipping to the United States was contrary to the February 16 direction under section 49 (2) of the MACMA [Mutual Assistance in Criminal Matters Act] that the items seized were to remain in custody and control of the Commissioner of Police. This dealing with the cloned hard drives was therefore in breach of s49(3) of the MACMA.”

Winkelmann also voiced concerns over police conduct, questioning if their actions in January amounted to unreasonable search and seizure, with a preliminary view that they did. Along with these concerns came a note that the raid could be considered trespass by the police, not something the elite anti-terrorist team used for the raid will want on their record.

Perhaps the biggest setback for any prosecution relates to what evidence was collected. An independent, and appropriately experienced High Court lawyer will now conduct a review of the evidence to determine what is and is not relevant to the charges Dotcom faces.

Anything deemed not relevant will be returned to Dotcom, and not provided to the US. Anything deemed relevant will be copied to both Dotcom and US authorities for use in court.

While the ruling does not amount to the unequivocal quashing of the search warrants and the invalidation of any evidence collected through them, it is a significant win for Dotcom. Meanwhile a request for the cloned hard drives to be returned (presumably without being copied) has been made to US authorities. The amount of respect for the New Zealand legal system held by US authorities may be inferred by the time it takes to comply with the request.

As for the extradition hearing? That’s still going ahead.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

Its outward structure is simple. Internet users who are discovered uploading copyright material are first sent two warnings via their ISP. On receipt of a third, copyright holders can take the Internet account holder to the Copyright Tribunal where they face hefty fines.

If entertainment industry lobbyists were to be believed the legislation couldn’t come soon enough since local artists were being seriously hurt by downloading. But it took a full two months for RIANZ – the Recording Industry Association of New Zealand – to deliver their first batch of just 75 warnings. All of them related to international artists and local artists were completely absent.

Now, more than 6 months after the so-called ‘Skynet’ law was introduced, local ISP TelstraClear has confirmed that one of its customers is the unlucky recipient of a third and final “enforcement” warning, delivered on behalf of RIANZ.

The alleged music pirate now has a week from the date of the notice to lodge a dispute. Failure to do so could lead the individual to be referred by RIANZ to the Copyright Tribunal for a punishment which could include a fine of up to $15,000.

TelstraClear, an outspoken critic of the ’3 strikes’ legislation, confirmed that it had been receiving just 15 notices a week from RIANZ. Nevertheless, that’s a significant amount when compared to those sent to any and all ISPs by the movie industry.

The MPAA-affiliated New Zealand Federation Against Copyright Theft (NZFACT) has sent a grand total of *zero* notices since the new law allowed it do so.

There are a couple of theories as to why this is the case. NBR, who spoke with an industry source who did not wish to be identified, said the size of the market in New Zealand meant it was too small for Hollywood to bother sending notices.

The other theory, which is connected to the first, is related to cost. When an ISP sends out a notice they can charge copyright holders a fee of $25. There is a further cost of $200 to take a case before the tribunal. With thousands of notices sent the costs would soon mount up.

There is speculation that to overcome this cost-related problem, RIANZ have been monitoring file-sharing networks in order to work out who is doing the most infringing and targeting those users first. Proportionately, users will download more individual instances of music than they would movies, making them easier to spot on separate occasions.

The $25 fee is currently being reviewed by the Economic Development Ministry which will have to decide if the level should be increased, reduced, or maintained. NZFACT boss Tony Eaton has asked for them to be thrown out completely, which suggests the movie industry might have more interest in sending notices if they become free.

But according to a report out of the TelCon12 telecommunications conference in Auckland today, ISPs have been bemoaning the costs of preparing the system versus how things have turned out.

“It’s more complex than just, ‘receive information, send notice’,” TelstraClear’s Oonagh McEldowney said, adding, “We’re nowhere near recovering our setup costs.”

An industry source told TorrentFreak that the ISPs budgeted for many more thousands of notices to be pushed through in order to ensure their initial outlays on systems implementation were covered. Being left high, dry and out-of-pocket will not have been well-received.

Update: Scott Bartlett, CEO of ISP Orcon, has confirmed his company has also sent out a ’3rd Strike’ notice.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.