Third, the Government attempts to distance itself from what Megaupload was told about the 2010 warrant by emphasizing that it did not directly instruct Megaupload to preserve the allegedly infringing files. (Dkt. 155 at 3.) But it is well settled that a private party's actions are imputed to the Government when that party is enlisted by the Government and acts in accordance with the Government's instructions. Thus, courts confronting criminal searches and seizures have consistently found Fourth Amendment interests implicated where a private party acts as the Government's "instrument or agent." See Skinner v. Railway Labor Executives’ Ass’n, 489 U.S. 602, 614 (1989); United States v. Richardson, 607 F.3d 357, 364 (4th Cir. 2010). As the Fourth Circuit has indicated, "the key factors bearing upon the question of whether a search by a private person constitutes a Government search are: '(1) whether the Government knew of and acquiesced in the private search; and (2) whether the private individual intended to assist law enforcement or had some other independent motivation.'" ....

Here, Carpathia's communications with Megaupload satisfy both prongs. The Government not only knew of Carpathia's actions but orchestrated them. Indeed, the Government's affidavit in support of the June 24, 2010 search warrant expressly requested that "Carpathia and its customer MegaUpload be permitted to view the warrant and Attachments A and B to the warrant to assist them in executing the warrant." ... Correspondingly, the Order sealing that warrant, which "found that revealing the material sought to be sealed would jeopardize an ongoing criminal investigation," authorized the Government to provide the warrant only to Carpathia, and authorized Carpathia to "provide a copy of the warrant with attachments and this sealing order to MegaUpload.".... In conveying the instructions to Megaupload, Carpathia noted that it had "attempted to convince the Government to work directly with Mega on this matter, but given the complex jurisdictional issues, they have been unwilling." .... It is equally clear that Carpathia's sole purpose in communicating with Megaupload on that date was to assist the Government in executing the June 24, 2010 warrant.

Even if the Government could somehow avoid responsibility for Carpathia's instructions and the Magistrate Court's sealing order, there would remain the undeniable fact that the Government failed to inform this Court of critical, exculpatory information about the circumstances under which Megaupload learned of the allegedly infringing files and subsequently cooperated with the Government's investigation. See United States v. Leon, 468 U.S. 897, 926 (1984) (material omissions that render search warrants misleading can be grounds for invalidating warrants);...

...the MPAA Members’ position continues to be that if the Court is willing to consider allowing access for users such as Mr. Goodwin to allow retrieval of files, it is essential that the mechanism include a procedure that ensures that any materials the users access and copy or download are not files that have been illegally uploaded to their accounts, given that MPAA Members and other rights holders are certain to own the copyrights in many of the files stored on the servers. In addition, in no event should any Megaupload defendants or their representatives—who have not generally appeared in this proceeding, and who are not subject to the control and supervision of the Court—be allowed to access the Mega Servers under such a mechanism designed for the benefit of third party Megaupload users. Whether and under what conditions the Mega defendants should have access to the servers (again, assuming they are subject to the control of the Court) is a separate issue.

The United States has seized and frozen all of Megaupload's assets, which, together with those seized from the other Defendants, include more than $60 million in cash and well over $100 million all told. In taking this extraordinary step, the Government must necessarily be alleging that every dollar of these assets is the proceeds of illegal activity. The basis of this allegation are the Government's self-selected copies of a tiny fraction of Carpathia's 1,100+ servers; even as to that fraction, the Court is asked to assume that every scrap of information on those servers amounts to criminal copyright infringement or perhaps some other illegal activity. If there is logic to the Government's actions, there is nothing lawful to be found across Megaupload's business as reflected on those 1,100+ servers. Only thus might the Government forbid Carpathia from so much as transferring to Megaupload the Mega Servers housing Megaupload content. Notably, the government is further forbidding Megaupload from using any of its assets to pay Carpathia for continued preservation of the Mega Servers' content. And, it has, in the face of Carpathia's earnest submission that it will cease preserving the servers absent the requested relief, urged the Court to deny such relief, because "the government has already completed its acquisition of data from the Carpathia Servers authorized by the warrant." ... In essence, the Government has taken what it wants from the scene of the alleged crime and is content that the remaining evidence, even if it is exculpatory or otherwise relevant to the defense, be destroyed. And by refusing to permit Megaupload to use its assets to mount a defense, the Government is effectively making sure that Megaupload has no practical way to preserve the evidence itself.

Such a course of proceeding by the Government would be troubling in any circumstance. But this is, of course, a criminal case. It is, in fact, what the Government has called the largest such case it has ever brought in the history of alleged copyright infringement. If the Government's position now wins the day, the integrity of of what ensues will be lost--the Mega Servers will have been wiped and potentially exculpatory or relevant evidence will have been spoliated, en masse, before being properly surveyed by the parties, not to mention the Court. The Government's case may be advantaged by this course of action, but much else will suffer and due process will not permit it.

Its reasoning then becomes altogether mystifying when it asserts (without any substantiation) "that the Carpathia Servers may contain child pornography, rendering the Carpathia Servers contraband." ... To take the Government at its word, therefore, it at best is greeting with equanimity and at worst is advocating, the imminent destruction of evidence of child pornography. It is passing strange for the Government to express preference for the destruction of evidence of criminal misconduct over the preservation of it for criminal investigation.

The government's intransigence on the preservation of evidence is the latest example of the government's scorched-earth approach to the Megaupload prosecution. Theoretically, criminal defendants are innocent until proven guilty. Yet the seizure of Megaupload's servers, freezing of its assets, and arrest of its top executives did immense damage to the company long before they had a chance to tell their side of the story to the jury. Now, the government seems to be trying to deny Megaupload the opportunity to fully defend itself in court. Megaupload may be found guilty, but like everyone else it has the right to a fair trial.

The sale or transfer of those copies from Carpathia to Megaupload or any other third party would constitute an unauthorized "distribut[ion] ... to the public" under the Copyright Act

"A sale or transfer of the servers to Megaupload (or any of the defendants) would raise a significant risk that Megaupload will simply ship the servers, hard drives or other equipment -- and all of the infringing content they contain -- to a foreign jurisdiction and relaunch the infringing Megaupload service, which would result in untold further infringements of the MPAA members’ copyrighted works. If so, the renewed criminal enterprise might be beyond any effective legal remedy."