Yesterday, the online storage locker RapidShare announced that it triumphed in its appeal over copyright holders who demanded that the service take more steps to control online infringement. Because RapidShare does not make uploaded files publicly available (those who upload them can control access), the court found that it could not be held liable for distribution and that running filename filters on all uploads would produce too many false positives.

It's a huge win for the site, which suffered a major setback in the case before a Düsseldorf court back in 2008. In that decision, the court found for rightsholders, and it looked as though RapidShare would have to start prescreening all uploads by file name, IP address, and other measures to preempt infringement.

RapidShare appealed from the Landesgericht (Regional court) Düsseldorf to the Oberlandesgericht (Appeals court) Düsseldorf, which overturned the lower court's decision. According to the new ruling, RapidShare cannot be held responsible for actions of third parties, since it forces people to choose how their content should be distributed rather than making it automatically available to the public.

In addition, the appeals court took aim at several filtering schemes. Blocking all files of a certain type (such as RAR files) was deemed inappropriate, since a file type has no bearing on the legality of an upload. Scanning by IP address was also tossed, because numerous people can use a single IP address. File name filtering tells you nothing about the contents of a file, so that was tossed. Even content scanning was problematic, as the court noted that this would just lead to encrypted files. Besides, even if you could know that a file was copyrighted, it could still be a legal "private backup" not distributed to anyone else.

Given all these problems, the appeals court reversed the earlier judgment. Christian Schmid, who started RapidShare, said, "We are very happy about the judgment. The court has confirmed that RapidShare is not responsible for the contents of files uploaded by its users. The judgment shows that attempts to denounce our business model as illegal will not be successful in the long run. With its 1-click file-hosting model, RapidShare responds to legitimate interests of its users and will continue to do so in the future."