Judge Liam O'Grady, of the U.S. District Court for the Eastern District of Virginia, also said Friday he will schedule a hearing for Megaupload's motion to dismiss the copyright-infringement charges against the site, although the motion doesn't address the charges against founder Kim Dotcom and other employees. Megaupload's lawyers filed the that the DOJ lacks jurisdiction to prosecute the Hong Kong-based Megaupload.

Friday's hearing focused mostly on the petition of Kyle Goodwin, a video journalist who at Megaupload, to get his files back. If the DOJ seized the data "and rendered it useless, then the government can be held responsible for that, can't it?" O'Grady asked.

O'Grady told lawyers for the DOJ and Goodwin that he is considering a search-and-seizure hearing to determine if the DOJ improperly seized the files of Goodwin and other Megaupload users, as Goodwin's lawyers contend, and to determine how to return the files. O'Grady did not decide at the Friday hearing whether to move forward with a so-called search-and-seizure hearing.

The DOJ didn't seize Goodwin's data, and for a rule 41 complaint to be justified, the DOJ would have to hold the property in question, said Andrew Peterson, an assistant U.S. attorney in the Eastern District of Virginia. The DOJ seized Megaupload's domain name and made copies of some of its servers, but Goodwin's data still resides on servers owned by Web hosting provider Carpathia Hosting, he said.

"The government does not possess the property at issue," he added.