The Supreme Court in Germany has confirmed that RapidShare has an obligation to actively police the Internet to thwart piracy. As a result the Swiss company has become the first cloud hosting provider required by law to monitor external websites for incoming links to infringing files. In addition, users of the file-hosting service now have to face the possibility that sharing files anonymously via the service will be disallowed in future.

In the aftermath of the Megaupload shutdown the legality of many file-hosting services was called into doubt, RapidShare included.

During the past several years RapidShare has made tremendous efforts to cooperate with copyright holders and limit copyright infringements. But this hasn’t prevented the company from getting involved in a handful of lawsuits against rightsholders.

Last year a regional High Court in Germany confirmed two separate verdicts by a lower court, in cases that were initiated by book publishers and a music rights group.

The court clarified that RapidShare has no obligation to proactively monitor files that are uploaded by its users. However, the company is required to monitor external sites that link to copyrighted files on RapidShare, and ensure these files become inaccessible to the public.

In addition, the ruling noted that when these measures prove not to be effective enough, the file-hosting site should restrict the opportunity for people to use the site anonymously. RapidShare already logs IP-addresses but to decrease anonymity customers may also have to show proof of identity.

Arguing that this decision went too far RapidShare took the case to the Supreme Court, but that appeal has now been rejected. The full decision is yet to be published but it is clear that the court affirmed the earlier judgment.

Copyright holders are happy with the Supreme Court confirmation. According to them it proves that service providers have an obligation to actively address piracy, and do more than simply responding to takedown notices.

“The confirmation of the judgment is groundbreaking because it clarifies that it’s a fundamental responsibility of online storage services towards rightsholders, whose works are shared en masse through their platforms,” music rights group GEMA comments.

TorrentFreak asked RapidShare for a comment on the Supreme Court decision but we have yet to receive a response.

Initially, not much is expected to change for the file-hosting service as they have already been “policing” the Internet for quite a while.

“That is exactly what RapidShare has already been doing for many years. If the Anti-Abuse Team identifies a download link on such pages which results in a file that has clearly been published illegally being on the company’s servers, the file in question is immediately blocked,” the company told us previously.

However, RapidShare believed that making this policy mandatory goes too far. “We believe that being obliged to carry out such actions is questionable from a legal perspective,” RapidShare said.

Aside from monitoring forums and linking sites for infringing links, over the past few years RapidShare has made several other adjustments to its service to decrease unlawful use. Most recently the company restricted the ability of all users to share files in public, hoping that would drive away pirates.

These measures resulted in an exodus of users and as a result RapidShare fired 75% of its employees earlier this year.

It is expected that the Supreme Court decision will have massive implications. Not only for RapidShare, but also for many other file-hosting services that operate in Germany. More on what will change exactly for RapidShare and its users will become apparent when the full verdict is released a few weeks from now.