Unless you were confused and thought today was the day all of the websites were protesting SOPA and PIPA then you probably know that Megaupload was taken down today by the FBI. As WSJ notes:

The charges against Megaupload offer a rare window into the business of cyberlockers. Megaupload bills itself on its website as a place where people can store large quantities of data, but prosecutors said internal emails and other evidence gathered during the probe show company officials deliberately designed the system around uploading the most popular types of files, which tended to be copyrighted material, including sharing copies of movies before they are available in theaters.

Seems fair enough but before Google Music went live there was a major case Capitol Records, Inc. v. MP3tunes, LLC and the ultimate finding was that a digital locker was shielded from liability because of the DMCA Safe Harbors that they fit into. To qualify you need to terminate users that are repeat infringers, comply with takedown notices, not have actual notice that there is infringing materials and not benefit by the infringement. It’s worth reading the Wiki link above as it spells out each step but the court bent over backwards to grant leniency to the digital locker in that case. The biggest issues for Megaupload deal with the ‘red flag’ knowledge as the internal emails will be a problem but in MP3Tunes executive had downloaded illegal content themselves and it was obvious from the urls alone that illegal content was being stored and the court still found no duty to investigate further. And as far as the ‘benefitting’ from the infringement, Megaupload similarly charges users the same fee if they use the site for legitimate and illegitimate purposes so they can similarly fit into that loophole.

Without repeating the entire Wiki article, it seems like the MP3Tunes case and Megaupload fits into a very similar fact pattern. So, readers, what say you? Will Megaupload be reinstated? Am I missing something here?

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