In a part of the ruling that was favorable for the Web company, U.S. District Court Judge William Pauley III in New York ruled that MP3tunes was entitled to rely on the Digital Millennium Copyright Act's safe harbor provisions when users upload pirated music. The DMCA safe harbors protect companies from liability for users' uploads, provided the companies remove pirated material upon request.
Those safe harbors have some exceptions, including one for Web companies that know they host infringing material. But, as a different judge ruled in the Viacom-YouTube lawsuit, Pauley held that generalized knowledge of infringement wasn't enough to lose the safe harbor protection. "Undoubtedly, MP3tunes is aware that some level of infringement occurs," Pauely wrote. "But, there is no genuine dispute that MP3tunes did not have specific 'red flag' knowledge with respect to any particular link on Sideload.com, other than the URLs noticed by [the record companies]."
But Pauley also ruled that MP3tunes didn't adequately respond to specific takedown notices because the company only removed links in Sideload without also deleting the files from users' lockers. The judge rejected MP3tunes' argument that it could have been liable to lawsuits from users if it erased their music. "MP3tunes exaggerates the potential liablity of removing content from users' lockers," he wrote.
Whether that's true is subject to question. But consider, Amazon was sued last year after it deleted George Orwell books from users' Kindles after a licensing dispute erupted. The company ended up paying $150,000 to charity and promising that it won't erase content remotely ever again.