If they're taking that material down to stay legal, as far as the DMCA is concerned, when they become aware of information that makes it apparent the material is infringing they will lose safe harbor protections if they do not take it down.

Typically, this is covered by the "we can do whatever we want"-type clause in other file providers TOS, bayfiles is just limiting their purview to more specific situations.

My point with my previous point was that any harshness was not on the part of bayfiles.