You're missing the point. There is a DMCA process, by which someone sends a takedown notice and the website owner needs to take down infringing material. In addition to this process, Megaupload offered certain third parties the ability to directly take down files without having to go through the takedown process. It is this ability which was limited, not the ability to send takedown notices.
All I'm saying is that in this regard Megaupload's actions were perfectly reasonable. The debate about whether taking down links instead of files because not all copies of the file are infringement is a completely separate issue.
No, I think the problem here is that you haven't read the indictment. That automated process was the primary (and, according to emails subpoenaed in the investigation, apparently the only) means of issuing notices and takedowns. Schmitz at one point instructed an employee specifically not to honor takedown requests made outside that process.
"We have a funny business... modern days pirates", said one Mega- employee to another. "We're not pirates", he responded. "We're just providing shipping services to pirates."
The text of the law: "the service provider
responds expeditiously to remove, or disable access to, the
material that is claimed to be infringing upon notification
of claimed infringement as described in subsection (c)(3),"
They are also required to restore it if they receive a counter-notification and the issuer of the original takedown notice has not filed a lawsuit in 10-14 days. This implies they can not delete the file from their system and still meet their legal requirements.
Correct me if I'm wrong, but if I understand the text of DMCA correctly, they are not required to restore the content which was taken down, only that they may.
