RapidShare must remove copyright infringing content, court says.

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RapidShare may face itself without a viable business model if a German court ruling stands. The file sharing service was sued by a German copyright holder, and after telling the court that it was doing all that it could to screen out copyrighted material; the court found that its efforts were insufficient, raising questions about whether the company could do anything sufficient without incurring enough costs to sink the company.

RapidShare is one of the companies that hosts large files for users who need to exchange them with friends and family; and like many other services, it offers a free service with limited features, hoping that users would buy a premium service that gives them significant perks, like hosting larger files and unlimited download speeds. All of this is done by a web interface, making it more popular since it doesn’t involve P2P transfers.

However, Germany does not have a “safe harbour” law, like Australia. The U.S., however, does have this provision, meaning that companies are exempted from liability for infringing material that is placed on their servers, like YouTube. However, it does need to take down the content once the copyright holder says that it needs to be taken down.

While RapidShare has told the courts that it has been using an MD5 Hash filter to prevent the uploads of previously removed material and hiring six full-time employees to remove the infringing content, the court said that it was not sufficient enough by saying (in German) that infringers would only have to change a few bytes of the file to circumvent the filter.