Court Clears Way for Megaupload Founder Kim Dotcom to Be Extradited to U.S. U.S. authorities say Dotcom and three co-accused Megaupload executives encouraged paying users to store and share copyrighted material.

German tech entrepreneur Kim Dotcom on Wednesday lost a bid to block his extradition from New Zealand to the United States to face charges including copyright infringement and money laundering, a major victory for the U.S. Department of Justice in the long-running case.

The decision by a New Zealand court comes almost four years after police raided Dotcom's mansion west of Auckland at the behest of the U.S. Federal Bureau of Investigation and shut down his popular file-sharing website, Megaupload.

"I'm disappointed," Dotcom told reporters as he left the court, promising to fight the ruling and wishing onlookers a Merry Christmas.

U.S. authorities say Dotcom and three co-accused Megaupload executives cost film studios and record companies more than $500 million and generated more than $175 million in profits by encouraging paying users to store and share copyrighted material, such as movies and TV shows.

The New Zealand prosecution, which argued the case for the U.S. government, said Dotcom and his executives had encouraged and paid users to upload pirated films and music to generate profit.

Lawyers for Dotcom argued the evidence for this was thin and that Megaupload was an Internet-service provider similar to services such as Dropbox, and protected by copyright law from liability for users' uploading pirated files.

Judge Nevin Dawson ruled the prosecution had established a case for all four defendants to answer.

"We plan to appeal. We think the judge was wrong on the law," Dotcom's lawyer Ira Rothken told Reuters by telephone from California. "Justice wasn't done today."

New Zealand's justice minister will make a final decision on whether Dotcom will be handed over to the United States.

High profile

Dozens of black-clad police raided Dotcom's mansion in 2012, breaking him out of a safe room and confiscating millions of dollars in cash and property, including a fleet of luxury cars, computers and art work.

Years of legal wrangling ensued and it emerged that New Zealand's Government Communications Security Bureau had illegally spied on Dotcom before the raid.

Dotcom maintained a high profile while fighting his case, setting up a political party and new companies and taunting both the New Zealand and U.S. governments.

The case has been watched closely by the media industry and developers in the file-sharing business for signs of how far Washington is willing to go to protect U.S. copyright holders.

It comes at a time when the United States has expressed growing concern over the increasingly global threat the Internet poses to the multi-billion dollar American entertainment industry.

Being able to extradite possible copyright-breachers to face charges in the United States would avoid the risk of file-sharing websites operating out of foreign safe havens, according to legal experts.

(Reporting by Charlotte Greenfield; Editing by Lincoln Feast and Michael Perry)