"There's no crime against making money from a brilliant idea," Kim Dotcom's lawyer has told the court.

Ron Mansfield has opened his case in defence of the internet entrepreneur at the extradition hearing before Auckland District Court this morning.

He said it was ironic that the US, the driving global force in capitalism, was criticising a company that embodied those principles.

The FBI laid charges in January 2012 when Dotcom and three others - Mathias Ortmann, Bram van der Kolk and Finn Batato - were indicted on 13 charges including copyright infringement, racketeering, money laundering and fraud.

Advertisement

Mr Mansfield said his 300 pages of submissions boiled down to core legal principles which meant the men should be protected from prosecution under copyright law both in New Zealand and the US.

"There's a real competition in relation to the content holders and their right as they see it and the ability of a modern generation to use the internet," the defence lawyer said.

"What the US is effectively saying to internet service providers is: 'You need to actively investigate copyright infringement and stop it, because if you don't you'll not only be civilly liable but criminally liable'."

Mr Mansfield told Judge Nevin Dawson the Copyright Act did not provide a defence to the alleged offending but a complete bar from prosecution.

While he acknowledged it was the first time a New Zealand court had explored the act, he said in essence the US allegations were "nothing new".

"It's just a new form of technology," Mr Mansfield said.

When video cameras were invented, Hollywood heavyweights tried to prosecute those behind it and failed because the technology was "copyright neutral", the lawyer told the court.

The legal action failed because though they could be abused, the cameras were made for a legitimate purpose and Mr Mansfield said it was the same with Dotcom's Megaupload website.

The website allowed paying users to upload and share a variety of video and music files and the Crown - representing the US government - said Dotcom and his co-defendants knew a slew of copyright-infringing material was being widely distributed.

Mr Mansfield labelled the project "Mr Dotcom's dream idea" and after humble beginnings was "seized upon and used because it was convenient and new technology that made our lives easier and better".

"But somehow there's this suggestions coming up with a brilliant idea, bringing it to life through a website and marketing it ... is dishonest or corrupt."

The vast sums of money made by Megaupload came from subscribers and advertisers and were not made on false pretence, Mr Mansfield submitted.

In opening its case Crown prosecutor Christine Gordon, QC, called it a "simple scheme of fraud" but the defendants believe it is far more nuanced.

Mr Mansfield is expected to spend the next four days detailing the case for Mr Dotcom.