If you're a fan of storing your important documents on Dropbox, there's a small chance that you might have some copyrighted files up there in the cloud as well. If those files are copyrighted, there's a chance they might not belong to you. If you have those copyrighted files in the cloud, you might want to share them with a friend. That's when Dropbox steps in and puts a stop to things.
— darrell whitelaw (@darrellwhitelaw) March 30, 2014
If you share a copyrighted media file on Dropbox — and you're not the copyright holder — an automated process kicks into action and blocks you from distributing any ill-gotten gains with others. That process is simple; the file's MD5 hash (a tiny piece of unique code that identifies every file you create or share) is checked against a blacklist, and if that hash matches a file already detected as infringing copyright — maybe it's a movie, or a music file or e-book — Dropbox prevents any sharing from taking place.
Interestingly, the files themselves aren't deleted, and the original owner, whose Dropbox storage the files are in, is still able to access them. Only the person or persons with whom the files are shared are out of luck. Of course, there are methods to get around this — putting a video file inside a ZIP will change its MD5 hash, for example — but for the vast majority of illict filesharing, Dropbox's solution works, and in the process indemnifies the service from any legal trouble. [TechCrunch]