The shuttered file-sharing site Megaupload has accused the United States government of trying to change criminal court procedures to make it easier to prosecute the firm for copyright infringement. In addition to naming CEO Kim Dotcom as a defendant in the criminal case, the US government also named Megaupload, a corporation based in Hong Kong, as a separate defendant.

Megaupload has argued that US law doesn't allow criminal prosecution of corporations based entirely overseas. Federal rules require notice of an indictment to be sent to a corporation's last known US address. But Megaupload has never had a US address, the firm argues, so it can't be prosecuted.

Judge Liam O'Grady rejected that argument in October, reasoning that the government may be able to satisfy the notice requirement by serving papers on Kim Dotcom after he has been extradited to the United States.

On Thursday, Megaupload pressed its case again by pointing to a letter that Assistant Attorney General Lanny Breuer wrote to the chair of the Advisory Committee on the Criminal Rules, which is part of the judicial branch. The government's attempts to change the criminal rules are an implicit admission that Megaupload is actually correct on the law, the company argues.

"When the Federal Rules of Criminal Procedure entered into force in March 1946, organizations, including corporations, were rarely charged as defendants in and of themselves," Breuer wrote. "Organizations, such as domestic corporations, were established, conducted activities, and expectedly maintained a presence in the United States."

Today, in contrast, "the economy is global. Electronic communications continue to displace ordinary mail. Organizations can maintain no office or agent in the United States, yet conduct both real and virtual activities here. This new reality has affected federal criminal practice fundamentally."

Breuer argues that the rules should be updated to allow for an alternative process for serving notice on corporations that do not maintain a US address. A footnote mentions the Megaupload case as an example.

Megaupload argues that Breuer's letter basically concedes the Hong Kong company's argument. According to Megaupload, the letter "contradicts the Government’s repeated contention that it can validly serve Megaupload—a wholly foreign entity that has never had an office in the United States—without regard for Rule 4’s mailing requirement. To the contrary, the Government explicitly acknowledges in the letter that it has a “duty” under the current Rule to mail a copy of the summons to a corporate defendant’s last known address within the district or to its principal place of business elsewhere in the United States."

"By seeking to have the mailing requirement eliminated, the Government implicitly admits it cannot validly serve Megaupload consistent with Rule 4 as currently written," Megaupload claims.

The issue matters because the United States has frozen millions of dollars in assets belonging to Megaupload. The asset freeze is what completely shut Megaupload down, making it impossible for the company to pay its legal bills, hire employees, or run servers. (Although, it hasn't stopped founder Dotcom from raising money for a new company, launched at an over-the-top party at his New Zealand mansion.) Getting the case against Megaupload dropped wouldn't save Dotcom from extradition, but recovering company assets might cover some legal costs while Megaupload's founder and other officials fight their own court battles.