• by Wendy Davis , Staff Writer @wendyndavis, May 11, 2012

The digital locker service MP3tunes won a major victory in court last August, when a federal judge in New York ruled that the company can rely on the Digital Millennium Copyright Act's safe harbor provisions if users upload pirated music. Those safe harbors protect companies from liability for users' uploads, provided the companies remove pirated material upon request.

While the ruling didn't end music label EMI's case against MP3tunes, it was nonetheless cheered by digital rights advocates, who said it would help pave the way for new cloud services.  After the ruling came out, other companies, including Google, launched their own cyberlockers. Of course, some of those other services might have launched regardless of the court ruling; Google, for instance, is in a position to fight its own battles in court.

Still, the ruling in favor of MP3tunes certainly didn't hurt the growing cloud storage industry.

But the decision wasn't enough to save MP3tunes. Late last month, the company filed for bankruptcy. "While MP3tunes blazed a trail for the personal cloud music storage, it has had to deal with four and a half years of legal torment," CEO Michael Robertson said in a statement on Friday. "Continued legal bills and the entrance of substantial competitors make bankruptcy the only practical option." News of the bankruptcy filing was first reported on Thursday by Cnet.

MP3tunes isn't the first Web company to find itself in bankruptcy after a fight with a record label. Veoh also went broke after Universal Music Group sued the video-sharing site for copyright infringement. Veoh ultimately won its case, but the company nonetheless was put out of business; after declaring bankruptcy, it was absorbed by Qlipso Media Networks, which currently operates Veoh.com.