Kim Dotcom and two lawyers, Robert Amsterdam and Ira P. Rothken, have published a white paper defending the Internet entrepreneur against a criminal prosecution issued by the United States government. The report says the copyright case against Megaupload, the previous file sharing service run by Kim Dotcom, is based on "highly dubious legal prinicples" and that it has been manipulated by the government's desire to appease the movie industry in exchange for political support. – NextWeb

Dominant Social Theme: Copyright is settled law.

Free-Market Analysis: Kim Dotcom has turned from a potential felon into a symbol of intellectual freedom. This will likely complicate US extradition efforts … as the case is gradually turning into a controversy over intellectual ownership, which is not ground on which the US government wants to tread.

US attorneys want to focus on Dotcom-the-criminal, not Dotcom-the-intellectual-rights-martyr. For a while, the US seemed to be having its way, even in far off New Zealand. Not long ago, Megaupload's Kim Dotcom was put in jail for illegally downloading copyrighted material.

Later on, it turned on that New Zealand law enforcement had contravened laws placing Dotcom under electronic surveillance and then raiding his mansion, confiscating business servers and finally imprisoning him.

Dotcom was eventually released and was able to gain access to funds to pursue his defense. And now he has released a white paper claiming that the US government lawyers who had him arrested in far-off New Zealand were corrupted by Hollywood and its corporate taskmasters.

Here's more:

The legal team supporting Kim Dotcom argue that Megaupload was used to share a "spectrum of content" including family photographs, academic coursework and files, including videos and music, that was purchased through legal means.

It admits that some of these files including potentially infringing material, but maintains that the case against Megaupload is "grounded in a theory of criminal secondary copyright infringement."

"In other words, the prosecution seeks to hold Megaupload and its executives criminally responsible for alleged infringement by the company's third-party cloud storage users," the team claims.

"The problem with the theory, however, is that secondary copyright infringement is not – nor has it ever been – a crime in the United States. The federal courts lack any power to criminalize secondary copyright infringement; the United States Congress alone has such authority, and it has not done so."

As we've reported before, this is a story that actually goes back 600 years or more. And the story's conclusion involves the gradual creation of copyright as European nobility sought to slow the spread of information that was undermining the social system of the time.

The spreading was being done by a marvelous invention called the Gutenberg press. As people read the Bible for themselves, they discovered the Roman Catholic Church had been interpreting the Latinate Bible in unusual ways.

This resurgence of intellectual activity included scientific theory, the Renaissance, the Reformation and, eventually, the creation of copyright.

The last evolution – of copyright – was apparently intended to slow down the impact of the Gutenberg press.

It worked partially. In England publishers became rich and fewer books and pamphlets were published. In Germany prices remained low and copyright was not enforced so severely.

As a result, Germany had a golden age of philosophy, music, art and science.

Some say Britain lagged behind because of stricter copyright and one of the results was an escalation of military confrontations between Britain and Germany.

The current day has seen a new kind of Gutenberg press that we know as the Internet. But the reaction of the powers-that-be is an ancient one.

Copyright enforcement has increased dramatically. In fact, there is plenty of reason to believe that current copyright enforcement has as much to do with controlling the flow of unwanted information as it is about preserving the rights of creators.

There is evidence that when music and entertainment is broadcast for free, people actually purchase more of the specific material than they do when they are not exposed to it.

This has been Kim Dotcom's point all along. It is a big story with huge business ramifications.

History is being made with the Kim Dotcom case – history that will determine the legal boundaries between information that can flow freely and information that cannot.

Stay tuned.