However, it is difficult to take such a position in view of the fact that such cases have not yet been tested in court, Shera says. It is possible that skilled lawyers could yet knock holes in the current law. The objectors to such laws may have prevailed in some battles but the war has not yet been won, he says.
InternetNZ CEO Vikram Kumar says the Megaupload case shows that "Hollywood and the music industry are now sending signals that wherever you are around the world 'we're going to after you'".
He says it will be up to the courts to decide if the New Zealand police followed due process in arresting Kim Dotcom and his colleagues on Friday. "It seems from reading the indictment that the US court handed down that the financial charges that have been put on alleging money laundering and racketeering are secondary to copyright violations. And it's quite possible that the New Zealand authorities reacted much more to the financial charges." he says.
"The question becomes if Hollywood and the music industry are going after him for copyright violation, is it right to put on additional financial charges just to make it appear more serious and to get other governments to take it more seriously?"
He questions what would happen if a similar case occurs in New Zealand involving a teenager who is alleged to have downloaded illegal files, but made no profit from it. "Would we be happy to have him extradited and stand charge under those laws? I believe there is a larger issue that we have to start tackling at some point."
The Megaupload case is likely to bring the issue around the security of offshoring data under renewed scrutiny. "There is a larger issue when you have things like cloud computing then jurisdiction and where your files are located becomes really important. I guess our persistent recommendation when using online services and cloud computing, is you have to do a bit of risk assessment," Kumar says.
"If you want to put stuff in the cloud which is highly sensitive, highly commercially valuable or you lose a single copy and you have no backups then you're heading for trouble."
Kumar says those with legitimate files stored on the Megaupload site may lose their data. "Until it goes through the judicial process in the US it has all been seized by their own servers in the US, there is potentially material outside US jurisdiction, but whether Megaupload gets around to untangling that soon is doubtful."