Judge wants MegaUpload user data preserved for now

ALEXANDRIA, Va.--MegaUpload's lawyers got much of what they asked for today from a federal district court regarding what should be done with the company's servers and user data.

Lawyers representing consumers, MegaUpload, the six major Hollywood studios, the U.S. government, and MegaUpload's hosting service were all in court to voice their opinion about what should be done with billions of digital files belonging to maybe as many as 60 million former users of the cyberlocker service. The government shut down the site in January and filed criminal copyright charges against MegaUpload's managers, including founder Kim DotCom, in a case that has generated massive international interest.

Since then, MegaUpload has been unable to keep up the payments to Carpathia Hosting. Instead of destroying the user data, Carpathia has preserved MegaUpload's servers at its own expense. Carpathia has asked the court for financial relief in the form of a protective order. The parties were in court to determine what should be done with the MegaUpload's data.

Ira Rothken, MegaUpload's lead attorney, asked U.S. District Judge Liam O'Grady to send all the parties interested in the data back to the negotiating table to continue looking for a solution they can agree on.

And that's exactly what O'Grady told them to do. What's most important about the judge's decision was that the user data will continue to be preserved.

O'Grady told the parties that unless they wanted to hire their own "special master" to help mediate the talks, then he would send them to a magistrate judge known for his abilities to "bring people together" and hash out agreements.

If you're rooting for MegaUpload or if you're one of the people who stored content on the service, then there's some more good news. O'Grady said he was "sympathetic" with Carpathia's financial plight and he also seemed dismissive of the government's argument that Carpathia shouldn't be allowed to return the information to MegaUpload.

Rothken had tried to buy the servers from Carpathia but the government nixed the deal. MegaUpload says it needs the servers to help prove its innocence.

It wasn't a big victory but my read of the tea leaves was that the judge is reluctant to make any ruling now that would result in the destruction of the data.

After hearing arguments from so many parties, O'Grady seemed a little desperate to find somewhere to park the servers. When an attorney representing one copyright owner argued that his client wanted the data preserved, the judge sighed and asked him, tongue in cheek: "Your parties aren't interested in taking possession of the data are they?"

Here are a few more highlights:

• While O'Grady was sympathetic to Carpathia's financial burden, the government's lawyers told the judge that the company was no babe in the woods. They said that the company generated $35 million from working with MegaUpload and suggested that Carpathia may bear some of the responsibility for the copyright infringement that allegedly occurred at MegaUpload. They told the judge there's a chance that Carpathia will face a civil suit.

The government's lawyers said Carpathia just wants to "get out" of the servers but that doesn't mean U.S. taxpayers have to ride to the rescue.