Your friend should be pretty pissed at Kim Schmitz for deceiving him into thinking that MegaUpload was a general-purpose file hosting site and not the criminal piracy conspiracy that it clearly, deliberately, lucratively was. You know, in addition to being pissed at the FBI.

I'm not denying that MegaUpload engaged in piracy, but that doesn't stop it from ALSO being a general-purpose file host. This is very tangential to copyright law, but there was no good reason morally (and, as far as I'm aware, legally) not to return customers data.

This is the human shield theory of defending a criminal enterprise, isn't it? Profit from piracy, but cover it up with innocent people's documents.

No, it's the Betamax defense, isn't it? Substantial non-infringing uses make the technology allowable.

Correct, and this is why Amazon S3 probably the biggest filesharing system in existence is not being sued and being taken offline. Megaupload, not so much.

(in reply to the much more nested comment) but this is the age of electronic data - it is easy to delete the content that was the subject of the DCMA and leave the rest of the site up read-only for a month while people archive (or something).

While I think the government could have been more forgiving of innocent third parties, remember that MegaUpload was a virtual company where all the computers were leased on the cloud. Those vendors were not being paid and meanwhile had capital costs on their equipment for as long as the prosecutors were copying off data. They deserved to have their equipment returned to them as soon as possible.

Sure, but he should still expect his seized "property" to be returned, just as if he had stored his archives at a storage facility whose owners were willfully ignorant of other customers running bootlegged DVDs on site.