What (a) means is that any evidence that establishes MegaUpload ever knew about and failed to act on infringing material is going to damn them in court. For instance, if they can establish a finding of fact that MegaUpload paid site members it knew to be infringers, or even that it targeted its promotional marketing towards other hubs of infringement on the Internet.
The DMCA isn't a computer program. That section (a) does not mean "here are the steps you must take when analyzing your logs". Think instead of a graph and a path through that graph that starts at "Kim Schmitz driving around NZ in a Veyron" and enda t "Kim Schmitz in a minimum security prison", where one path involves edges between vertices involving how much MegaUpload knew about, catered, promoted, or knowingly benefited from piracy.
I supposed that depends on what you mean by "knew to be infringers." I don't think having received a (or several, or...what is the number?) DMCA takedown concerning one's account earns someone the label, but in this context it appears to be what you're saying.
How about this: you operate a file locker service, and in an effort to encourage people to upload files that will be popular and serve as a magnet for ad revenue, you offer to pay people $1/1000 downloads if they join an affiliate program. Later, when reviewing affiliate payouts, you send an email to a coworker breaking down some of your top payouts, noting that you've paid (say) $100 to someone who uploaded "several popular DVD rips".
How do you think that one's going to play out in court?
Or, how about, you want to watch The Sopranos, or Seinfeld, so you send your team a blast email asking for links to those series on your locker site, since it surely must be there. Maybe you complain when the first links you find are in the wrong language. French, say.
How do you think that's going to go?
It is a mystery to me why copyfighters think that MegaUpload is a good case to make a stand on.
