[cbs]

I haven't really been able to get a good shake on what the law will be for this situation, or what I believe the law should be here.

That having been said, its hard to think that they were in compliance with 17 USC §§ 512(c)(1)(a)(ii) - (iii) in particular. Continued safe harbor protection requires that mega-upload:

    (i)
    does not have actual knowledge that the material 
    or an activity using the material on the system 
    or network is infringing;
    (ii)
    in the absence of such actual knowledge, is not 
    aware of facts or circumstances from which 
    infringing activity is apparent; or
    (iii)
    upon obtaining such knowledge or awareness, 
    acts expeditiously to remove, or disable access 
    to, the material; 

I think it falls to a jury to determine if a 'reasonable person' would find that infringement was apparent to the mega-folks, but I don't think the "golly gee sucks, I just didn't know" defense is going to get them very far, especially in light of the emails in the indictment.

[aperture]

Respectfully, I believe you are wrong that the "golly gee shucks, I just didn't know" defense will be applied here. Under that statute, you see subsection a (parts i, ii, and iii). However, it goes on to explain in subsection b:

  (B) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and 
  (C) upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity. 

Under this, the only debate is section B, which is that this individual profited explicitly off of copyright material. He can argue he profited off of the service, and it was not being serviced for the use of explicitly copyrighting material.

As for section C, obviously in the article he not only took measures himself to try to stop copyright material once reported, but he even ALLOWED companys to do it themselves.

The jury can find this more than reasonable. And it can be argued from a legal point of view, moral or immoral. The defense is based on the statues protection, not the kindness of the courts.

[Natsu]

https://ilt.eff.org/index.php/Copyright:_Digital_Millennium_...

Cases interpreting the “knowledge disqualifier” include Perfect 10 v. CCBill, 488 F.3d 1102, 1114 (9th Cir. 2007) (noncompliant notices do not count toward knowledge, use of “illegal” or “stolen” in domain name does not create red flag knowledge for hosting service); Io Group v. Veoh Networks, 586 F.Supp.2d 1132, 1148 (N.D. Cal. 2008) (“[A]pparent knowledge requires evidence that a service provider turned a blind eye to ‘red flags’ of obvious infringement.”); Corbis v. Amazon, 351 F. Supp. 2d 1090, 1108-09 (W.D. Wash. 2004) (neither general knowledge of infringement on the site nor third party notices are not enough to constitute a “red flag”); Hendrickson v. Amazon, 298 F. Supp. 2d 914, 917 (C.D. Cal. 2003) (Amazon lacked prospective knowledge of infringing DVD sales, even after rights holder informed it that the title in question had never been released on DVD); Hendrickson v. eBay, 165 F. Supp. 2d 1082, 1093 (C.D. Cal. 2001).

That said, MU might, in fact, be liable if it can be shown that they were aware of specific acts of infringement and did nothing, which some of the emails may, in fact, establish. After that, there's some question of how broadly the loss of safe harbor applies. I'm not sure that you lose all safe harbor protections for all infringement if you fail any particular red flag test. It seems to me that you ought to lose safe harbor only for those specific acts of infringement. But IANAL, and I'm not sure that point has ever been ruled on, so maybe we'll find out.