Legalities of file hosting sites?

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Hey!
I have just come up with an awesome idea for a file sharing website. The trouble is, Im worried about legalities.
Why did Megaupload get shut down? They gave full permission to the big companies to take away the files.
Do you think I can make a file sharing site without getting sued to death?

Charges against MU at time of seizure: copyright infringement, racketeering, and money laundering.

Copyright infringement being the main reason.

Blimy... didn't know about the last 2!
But he did comply with copyright infringement laws. He let the companies in on his servers to delete the files.

the legality is as grey as it gets,

there are definately cases where american copyright law has encroached on national alws around the world and several cases where that in itself isnt internally consistent.

in reality if you piss off the various rights holders they will do anything including trade embargoes to get their will, best bet is not starting or finding a country to host it where it will be a non issue.

Do you think Im asking to be thrown into prison?
Copyright laws suck

Have you checked to see if your idea has been implemented by anyone else, or could be implemented on top of existing services? Hard to imagine anything new that FTP, rsync, bittorrent, file lockers and JDownloader, DropBox, and the various cloud APIs (Amazon, MS, etc) haven't already done in this space.

If your idea is revolutionary, just do it. The big-content media companies will try to acquire your technology before they sue you into oblivion. Take the money and run before your technology is obsolete.

The Megaupload case has been covered in excruciating detail by TorrentFreak and Ars Technica.

One thing you may want to consider is setting up a website to bring in people but have the network itself on an encrypted Virtual Private Network (VPN). The virtual private network is like a separate Internet that uses the current Internet infrastructure to allow computers on the network to connect.

OpenVPN is a free, open source solution. OpenVPN can be configured so that participating computers only transmit information related to the activity for which the VPN is built while allowing other traffic to continue over the regular Internet.

Membership can be set up on an invite only basis in order to keep undesireables from wrecking it. Encourage acquaintances to sign up and tell them that they can invite their friends. Also have plenty of content already available so that they will be encouraged to use and share. The content does not have to be cartel owned in order to be educational and entertaining.

In addition, it is possible to incorporate other forms of private networking into the mix. A simple wireless router connected to a computer can be used to share files over a local area. This works good for apartment buildings, mobile home communities, and any place where there are lots of people with computers in a small area.

Take a look at http://www.openvpn.net for the free OpenVPN software and http://www.plaza1.net/FreeWan/ to get a picture of the local network concept.
Both are based upon tried and true technologies and are used by businesses for their private networks.