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Megaupload files motion to delay civil suit

The defunct file-sharing site, under financial pressure, wants to deal with the pending criminal case first

Megaupload filed a motion in federal court on Thursday asking to delay a civil suit filed against the file-sharing site while it prepares a defense for its criminal case.

Two companies, Microhits and Valcom, filed a civil suit against Megaupload on March 21, alleging the site induced and contributed to infringing copyright.

Microhits holds the copyrights for recordings by artists such as Billie Holiday, Marvin Gaye and Rod Stewart, while Valcom owns audio and video rights to films featuring entertainers such as Bill Murray, Jackie Chan and Ryan Seacrest.

The civil suit names Megaupload founder Kim Dotcom, the company itself; Vestor, a company owned by Dotcom; and Mathias Ortmann, Megaupload's CTO. The suit came about two months after Megaupload was shut down on Jan. 19 and charged with criminal copyright infringement, the first time a cloud storage service provider has faced such charges in the U.S.

In its motion, Megaupload said the civil suit allegations "appear to be copied verbatim" from the indictment filed in January. If the civil suit progressed in parallel with the criminal case, Megaupload's defendants may be forced to assert their Fifth Amendment right against self incrimination but then waive it as part of the civil case, the motion said.

"This would be an unfair burden on their constitutional rights," the document contends.

Further, Megaupload argued it is broke, as its assets were frozen in January. The company has been asking the U.S. government to unfreeze some funds in order to pay for the preservation of upwards of 28 petabytes of data stored on the service and needed for the legal cases.

Megaupload attorney Ira P. Rothken said on Thursday that negotiations are still ongoing with the U.S. government, but he expected talks would continue for "days" not "weeks." If negotiations fail, Judge Liam O'Grady of the U.S. District Court for the Eastern District of Virginia will make a decision.

The data is still being stored by Carpathia Hosting in Dulles, Virginia, which says it costs US$9,000 a day to maintain. The Electronic Frontier Foundation filed a brief with the court asserting that users who were not breaking copyright law should be able to recover their data.

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