Online file locker Rapidshare is legal in Germany, but has to adjust its policy regarding infringing content, the Higher Regional Court in Hamburg has ruled. Rapidshare plans to appeal.

Rapidshare, one of the largest file locker sites in the world, was sued by the German copyright organisation Gema which represents 64.000 copyright holders. The organisation claimed that Rapidshare allows users to unlawfully acquire copyright material on a large scale and that the resulting loss to copyright holders is immense. Gema wanted to determine which obligations an online storage service has to copyright holders.

The court ruled on March 14, but the full verdict arrived at Gema and Rapidshare on Tuesday, a delay typical in the German legal system. After reading the verdict, both parties claim they are victorious.

Rapidshare emphasised that the court explicitly recognised the legality of Rapidshare's business model and gave it legal legitimacy. Gema welcomed the court's ruling that Rapidshare is still prohibited from making public the works of musicians represented by the organisation, but didn't get its way on the measures the court ordered Rapidshare to take to prevent copyright infringement.

The copyright organisation had asked the court to order Rapidshare to scan files during the upload process, but the court took another approach, ruling that Rapidshare must actively monitor incoming links from external sites to the files it hosts and take down any illegal files thus identified.

This is exactly what Rapidshare has been doing for years, the company said. Rapidshare has an anti-abuse team that identifies illegal files that will be immediately blocked when spotted.

Nevertheless, Rapidshare plans to appeal that part of the ruling because the company should not be obliged to carry out such measures, Rapidshare CEO Alexandra Zwingli said.

"It is not without reason that neither the American DMCA nor its European equivalents call for proactive monitoring of foreign sites," she said. "We believe that there is no need to change this rule. Any kind of obligation to police foreign sites would bring about significant exposure of liability for a hoster and could ultimately scotch innovations."

"It is good if hosters voluntarily become active, just as we do, but it would be wrong to turn hosters into policemen through the means of laws and court rulings."