An interesting legal decision Monday takes some weight off the hard drives of the still-infantile music cloud industry. A federal judge has ruled that the MP3tunes cloud music service doesn’t violate copyright infringement statues when they serve only one MP3 file to multiple customers who happen to own the exact same track—rather than having to store fifty identical files for 50 different customers. Ryan Singel of Wired.com’s Epicenter blog develops an excellent case as to why this is good for the cloud:

[I]nstead of uploading all of a user’s songs, MP3tunes’ software would check the library for previously uploaded songs and if a match existed, the song would just be added to the locker without requiring an upload. No matter how many customers “uploaded” that song, MP3tunes kept only a single copy.

EMI… sued MP3tunes over that practice and others. In a complicated federal court decision Monday (see Threat Level’s write-up), aNew Yorkfederal court judge ruled that the practice was legal—but only insofar as the single storage method is done for exactly unique copies. So for instance, all people who bought “Stairway to Heaven” as an MP3 from Amazon would have the exact same file (as determined by an MD5 Hash) and MP3tunes could just store a single copy.

As more customers store files online and music services arise from the mist of the cloud, interesting legal quandaries also arise from social conventions. One of those legal quagmires happens to be a consequence of the drum that the music industry has been beating that equates copyright infringement with theft—an attempt to metaphorically match digital files to physical objects. However, in the computer world, files aren’t physical objects but persist with a virtual nature that means that what appears to be multiple files may actually be only one.

The case was brought by music label EMI—a record label whose artists include Lady Antebellum, Katy Perry, and Coldplay—against MP3tunes, and U.S. District Judge William Pauley IIIhas ruled that their operation is actually protected by the 1998 Digital Millennium Copyright Act. “If enabling a party to download infringing material was sufficient to create liability, then even search engines like Google or Yahoo! would be without DMCA protection. In that case, the DMCA’s purpose—innovation and growth of internet services—would be undermined,” the judge wrote.

Even DropBox could be affected by this ruling as they use the exact same de-duping process as MP3tunes—although not for mp3s, but files in general. When two users upload the exact same file, the cloud-storage service checks and combines the two by providing a virtual link to the single file. As a result, if one-hundred users upload the exact same file, DropBox only needs to store a single instance. To the end users, each one has their own file; but it saves a great deal of space.

Even better for leveling the playing field for Google, Amazon, and Apple

Recently, Google with their PushLife and Grooveshark acquisitions and Amazon with Cloud Drive have started their own forays into music-locker services, allowing their customers to upload music so that it can be played anywhere. Both Internet media giants have done so without seeking permission from music labels. In both instances they call upon their customers to upload their own version and store it online. As a result, they’re weighted down by a huge number of duplicated files. Apple, on the other side of the tech coin, has developed a service with the blessing of the music labels and they use a master-file system (a de-duping technique.)

With this ruling, Google and Amazon will be able to forgo the need of keeping a great deal of inefficiently used space to store multiple copies of the exact same music file and not worry about facing a lawsuit from labels such as EMI.