The bid to have Kim Dotcom extradited to the United States suffered a significant setback today. US authorities had insisted there was no need for them to reveal the evidence they hold against the Megaupload founder. But today a New Zealand judge upheld an earlier decision and ordered the US to reveal the evidence they are relying on to have Dotcom and his associates shipped to the United States, including details of covert operations and confidential discussions with rights holders.

Responding to a request from Megaupload’s legal team, Judge Harvey at the North Shore District Court ruled in May on whether the United States government should be forced to reveal the evidence it holds on Kim Dotcom and other defendants in the case.

Megaupload said they have a right to see the case being built against them but the United States insisted that no right to disclosure exists. Judge Harvey disagreed with the prosecution and ordered disclosure of all documents relating to the alleged crimes of the so-called Megaupload Conspiracy.

“In my view there must be fairness and the hearing and balance must be struck, otherwise the record of case becomes dominant virtually to the exclusion of everything else and places the extradition process in danger of becoming an administrative one rather than judicial,” the Judge wrote. He later stepped down after allegedly describing the United States as “the enemy”.

Refusing to concede defeat, US authorities pushed back and sought a judicial review of Judge Harvey’s ruling. In a judgment today, the High Court upheld the earlier decision handed down in the North Shore District Court.

Justice Helen Winkelmann dismissed the application for a judicial review, noting that without disclosure of the evidence, Kim Dotcom and his co-accused – Mathias Ortmann, Finn Batato and Bram van der Kolk – would not be able to mount a full and proper defense in their extradition hearing.

“Without disclosure [Kim Dotcom and associates] will be significantly constrained in [their] ability to participate in the hearing, and the requesting state will have a significant advantage in terms of access to information,” the ruling reads.

The documents to be disclosed are significant in their scope, encompassing all elements of the case from the allegations of infringement, through to information being held on the nature of the Megaupload rewards program. Interestingly, as part of a section marked Criminal Breach of Copyright, the ruling says that US authorities must disclose:

– All records obtained or created in connection with the covert operations undertaken by agents involved in the investigations related to these proceedings in transacting and uploading/downloading data and files on the Megaupload site.

– All records or information and/or material provided to or obtained by the investigation and/or prosecuting agencies by the investigating and/or prosecuting agencies in this case from holders and/or owners of copyright interests evidencing alleged infringement of their copyright and/or complaining of such infringement.

– All records and materials related to communications between relevant copyright holders and Megaupload and/or its employees regarding their copyright interest, the direct delete access provided by Megaupload to any such copyright holders, and any communications between the copyright holders and Megaupload and/or its staff regarding take-down notices.

Today’s ruling marks a significant victory for Kim Dotcom, his associates, and their legal team. Access to the evidence against them has been ruled crucial to the defendants being able to mount a proper defense, something that the US authorities have tried to deny. Last week Dotcom promised more revelations – they are now almost certainly on their way.

The extradition hearing is currently expected sometime early 2013.