Megaupload's mode of operating showed there was an "executive conspiracy" to commit copyright violation, the United States has told the Supreme Court.

It also showed those facing extradition - Kim Dotcom, Mathias Ortmann, Bram van der Kolk and Finn Batato - clearly understood they had pirated material and the website needed it to function.

Crown lawyer Fergus Sinclair, acting for the US, put Megaupload's rewards programme at the centre of proving a criminal conspiracy to violate copyright for financial gain.

The US submissions at the Supreme Court in Wellington go to the US indictment which included charges beyond copyright breaches, including conspiracy to breach copyright and alleged crimes often a feature of organised crime prosecutions.


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Sinclair said there were examples of direct violation involving those facing extradition.

But he said studying how the rewards programme functioned showed the entire business was structured to use internet piracy as a means to make money.

It comes after lawyers for those facing extradition said any copyright infringement was by those who used Megaupload and not those who ran it.

Sinclair said the rewards programme saw Megaupload pay money to those who uploaded content popular to users.

He said evidence showed Dotcom talking about Megaupload growing because of the rewards programme. In response, van der Kolk revealed 90 per cent of rewards were paid on infringing content.

The KimDotcom legal team includes his wife Liz Dotcom and barrister Ron Mansfield. Photo / Mark Mitchell
The KimDotcom legal team includes his wife Liz Dotcom and barrister Ron Mansfield. Photo / Mark Mitchell

"How did Mr van der Kolk know that?" Sinclair asked. One message, he said, showed every file uploaded by a user attracting reward payments had been checked, albeit to save money rather than stop infringement.

It showed there was direct knowledge, he said.


Sinclair said Megaupload was also receiving takedown notices from copyright holders alerting it to infringing content on the website.

He said there was evidence showing those running Megaupload had linked takedown notices to users with infringing content. His statement was in response to questions from Chief Justice Helen Winkelmann as to whether the Megaupload accused had was conscious knowledge of takedown notices in relation to specific users' content.

Sinclair said the rewards programme was a message to users that they would be paid money if they uploaded infringing content.

Evidence from Andrus Nomm, who took a plea deal in the US which included testifying against others from Megaupload, showed him saying to Batato: "Most of our content is stolen." "I know," was the response.

Sinclair also challenged the interpretation of the Copyright Act put forward by lawyers for the Megaupload accused. He said a reading of copyright law which excluded online piracy from criminal liability was wrong.

The case continues and will now run through into next week.