Kim Dotcom's lawyer aligned Megaupload with online services such as Dropbox and YouTube, telling the Supreme Court there was little difference in how they worked.
Ron Mansfield said those businesses all offered a service on the internet which was given specific protection when the New Zealand law of copyright was rewritten to account for the online age.
The argument goes to the heart of the appeal by Kim Dotcom, Mathias Ortmann, Bram van der Kolk and Finn Batato.
The Court of Appeal upheld their extradition to the United States partly on the basis of ruling they were criminally liable under the Copyright Act for movies and music identified on the Megaupload website.
It was important to do so as the trigger for extradition is for the court to be satisfied sufficient evidence has been presented to warrant a trial on the same charge in New Zealand. The US has said they are criminally liable under the Copyright Act, and if not, then their actions justify extradition on other criminal charges.
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Mansfield has told the Supreme Court the Copyright Act and its listed offences were the only consideration because it matched Parliament's intention.
By endorsing shopping around for alternative crimes, he said it would give the court's stamp of approval to the same being done to "mum and dad and the kids".
"It's going to be easier to prosecute under the Crimes Act but the punishment would be much more severe."
Mansfield said a study of the way the Copyright Act was created - from 2001 until it was passed in 2008 - showed parliamentarians deliberately drafted so as to accept the realities of internet use and to create a permissive environment to encourage online growth.
Among that, he said there was a specific exception for internet service providers and because any infringement was done by users of Megaupload.
He said the drafting of the law showed the definition of internet service provider was broadened to include those businesses which hosted files.
"Megaupload, its technology and the service it provides, would probably be similar to Dropbox. It's a service where you can store your electronic files or you can use it to transfer your electronic files from … person to person.
"You, the user, decide if you're simply storing it or making it available to another."
He said Dropbox - like Megaupload - didn't have a search bar or indexing facility to help people find infringing content.
"That, in a nutshell, is Megaupload. Megaupload, like Dropbox, can be used for non-infringing use or for infringement."
Under questioning from Supreme Court justices, Mansfield said services such as YouTube - which he likened to the MegaVideo site - was among sites which rewarded users for popular content.
"It's simply encouraging users through its site which we would expect, as a matter of commonsense, a business would do."
The protection established for service providers was because it was understood there was infringing content by users, he said.
If there had been infringing content on Megaupload, said Mansfield, it was through users of the website. On that basis, he said, there was no criminal liability for the accused because any infringement would have been secondary.
The hearing is its third day and is reaching the end of the case on appeal. Crown Law Office lawyers acting for the United States are expected to be heard this afternoon.
The hearing is the last in the extradition case which began with the arrest of the four men in 2012 and a finding in the district court in 2015 that they were eligible for extradition.
If unsuccessful, the next step would see Minister of Justice Andrew Little asked to endorse the extradition order. That order could then be subject of an appeal through judicial review.