File hosting service RapidShare.com has reportedly handed over the IP address information to the recording industry.  Record labels have been taking advantage of the 101st paragraph of German copyright law which forces ISPs to identify content owners on file hosting systems if they are suspected of infringing.

One user claimed that his house was raided by law enforcement officials in Germany thanks to RapidShare.  The user was sharing Metallica’s Death Magnetic album one day before it was released.  In January 2008, RapidShare and the GEMA argued that the website was not responsible for copyright content being hosted.  The courts decided to rule against RapidShare and forced them to remove content proactively.

[via Ars Technica]

RapidShare should have known better that allowing illegal files to be shared on their site would not last long.  Especially seeing as how they host that content and expect users to pay for premium accounts.  A court in Germany has ruled that RapidShare is not doing their part in ensuring piracy controls.  RapidShare will be forced to become active against blocking users from uploading copyrighted content.  This rule is very similar to DMCA takedowns in the U.S.  RapidShare is currently #12 on Alexa.

RapidShare is also being forced to proactively check the content before publishing it and log the IP addresses of those who upload copyrighted material.  RapidShare stated that they are using an MD5 Hash filter and employs 6 people to prevent copyright infringement uploads. 

Update: I just read on Mashable that Apple already pulled the application from the store.  Techdirt doesn’t believe Apple should block the app because:
“If someone wants to part with a grand for a glowing screen, who is Apple to stop them? The application developer is honest and clearly states that there “is no hidden function.” It is not malicious, pornographic, a bandwidth hog, illegal or a threat to privacy.”  Blocking the I Am Rich application makes Apple look “less open.”

In my personal opinion, I could care less whether Apple keeps the App on there.  I think it is just a bad investment for anyone that wants to buy it.
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Armin Heinrich, the maker of the most expensive iPhone application, launched “I Am Rich” yesterday.  Today, an anonymous commenter on Pulse 2.0 posted a link on RapidShare to where the application can be downloaded.  I haven’t tested out the link on RapidShare because I have no desire to have this useless application on my iPod Touch.

I think downloading the application for free from RapidShare is just as bad as buying the application itself.  This is because you obviously want to be “that guy” or “that girl” that gets off on showing expensive applications on the iPhone or iPod Touch. 

RapidShare is a file hosting site that is ranked #12 on Alexa.  Many artists use the site to distribute their music legally, but a lot of files end up on the site illegally.  In this file-sharing case, I’m guessing Apple Inc. (NASDAQ:AAPL) may take action since it directly affects their income generated from the App Store.

Update: Here is a case where someone accidentally bought the I Am Rich application

Found via Digg