That kind of model, of necessity, leaks information about the files you are uploading, which is a major negative. It is now possible to tell if you've uploaded the same document as somebody else.

I'd love to know how they are doing it, though. I'm not sure I believe there is a way to do it that doesn't allow Bitcasa to read the file (at least not one using well-researched encryption technologies). It seems like they are likely using your key as a key encryption key for the actual key to the file, but for that to work, they have to be able to tell you the real encryption key, which means they have access to the contents.

I'd love to be proven wrong, though, because we could use it. :)

Probably something along the lines of E(data, H(data)), I'm guessing.

I'd be very surprised if this were patentable. The same basic technique was mentioned offhand in literature as early as 2003 (http://static.usenix.org/events/hotos03/tech/full_papers/mis...), and I suspect the idea's even older.