In a decision that has ramifications for the future of online locker services, the court held that MP3tunes qualifies for safe harbor protection under the DMCA.

[1] In September 2007, MP3tunes received a takedown notice from EMI Music Group that identified 350 infringing songs and unauthorized websites.

MP3tunes claimed protection under the DMCA safe harbor provisions, which conditionally shield online service providers (OSPs) from liability for copyright infringement.

[2] EMI argued that MP3tunes fails these four requirements; the court mostly disagreed, holding that MP3tunes is generally eligible for safe harbor protection.

Furthermore, the court found MP3tunes' existing repeat infringer policy, under which MP3tunes terminated 153 users who illegally shared music, to be adequate for safe harbor requirements.

In contrast, it would be impossible for EMI to externally identify the infringing songs in users' lockers in order to list them in a takedown notice.

[1] Because the sites in question were general-purpose, non-pirate-themed file-sharing and cyberlocker sites like RapidShare, the court disagreed, holding that there was no direct implication of infringing intent by their name or URL alone; that it would undermine the purpose of the DMCA to equate "free", "MP3", and "file-sharing" with piracy; and that MP3tunes was not obligated to go to these websites or otherwise investigate them further in order to determine their legitimacy.

The court rejected this view, holding that EMI's testimony and documents were sufficient to establish that copying had occurred, since they showed that MP3tunes lockers contained EMI-owned songs sideloaded from unauthorized distributors.

[1] Since MP3tunes failed to qualify for DMCA safe harbor protection for the EMI-identified infringing songs in its users' lockers, MP3tunes became liable for them.

EMI alleged that the rebroadcasting of this master copy constituted an unauthorized public performance, asserting Cartoon Network, LP v. CSC Holdings, Inc. as guiding case law.

The court vehemently disagreed, holding that such user access to content is no different than that provided by YouTube, exactly the kind of safe harbor the DMCA is designed to protect.

First, it established DMCA safe harbor protection for online locker services, potentially granting them "broad immunity from copyright liability".

[4] Second, it endorsed data deduplication, which allows cloud music services to more efficiently allocate storage and reduce the amount of space needed per user.

[5] This interpretation was welcomed by cloud music advocates after a previous ruling in Cartoon Network v. CSC Holdings had indicated that deduplication would make online lockers services liable for copyright infringement.

In an amended opinion, Judge Pauley held that while prior case law construing § 301(c) of the Copyright Act held that federal copyright protections do not preempt or limit common law rights in pre-1972 works, they also did not suggest that § 301(c) limits Congress's ability to grant immunity to qualified Internet service providers for the infringement of works fixed before 1972.