MPAA on Hotfile: More Egregious Than Grokster, Indistinguishable From Megaupload

Hotfile logo - H 2012

Hotfile logo - H 2012

In legal papers submitted this week at a Florida federal court, Hollywood studios say that the massively popular cyberlocker Hotfile "enables copyright infringement on a mindboggling scale," responsible for billions of infringing downloads of copyrighted works. The website, which has ranked as one of the top 100 trafficked sites in the world, is said to be "more egregious" than Napster, Grokster and Limewire and "indistinguishable" from Megaupload, which the plaintiffs stress was indicted criminally recently.

The MPAA doesn't believe a trial is needed to sort out Hotfile's liability over alleged copyright infringements.The plaintiffs' motion for summary judgment refers to past major lawsuits from the entertainment industry against websites engaged in massive piracy, and suggests there are factors here that should compel a judge to bring down the hammer on Hotfile.

For one, the studios point out that "no other early pirate services had the temerity actually to pay its users to upload infringing content," but that Hotfile's "Affiliates" program does that trick, even by the acknowledgement of its own economist.

Secondly, the plaintiffs direct the judge's attention to the fact that Hotfile "physically stores all of the infringed content on its own servers," which they say goes beyond what Grokster and Limewire did, and represents a situation whereby Hotfile has the ability to stop infringements if it so chose.

After the lawsuit was filed against Hotfile In February 2011, the defendant responded by saying that the movie studios "do not deny that Hotfile scrupulously complies with the DMCA safe harbor provisions," statutory language that is often interpreted to allow ISPs the ability to escape liability from claims so long as they expeditiously remove flagged content upon notice from copyright holders. Hotfile argued that the movie studios were merely pissed that the "scale" and "speed" of piracy meant they continually had to "play catch-up."

In the latest summary judgment motion, the plaintiffs explain to a judge why Hotfile isn't eligible for DMCA safe harbor protection. Among the reasons given is that Hotfile did not reasonably implement a policy to terminate "repeat infringers," that Hotfile failed until 2010 to obey DMCA  "agent" protocol where takedown notices could be registered, that Hotfile continues to in violation of these procedures, that Hotfile has "red flag" knowledge of copyright infringement on their systems, and that Hotfile induces copyright infringement among its users.

Some of the studios' interpretation of DMCA guidance, particularly the "red flag" issue, continues to be the subject of controversy among copyright holders and the tech community in battles like Viacom's lawsuit against YouTube. This case poses another test of some of these hot topics. Often, judges seem to do a sniff test in interpreting law to figure out a service provider's liability. Does the defendant smell like an unlawful actor? Here, the studio-plaintiffs make the case that Hotfile fails the test. They write:

"It is not a coincidence that Hotfile cannot satisfy any of the DMCA prerequisites. These DMCA tests are designed to limit DMCA safe harbor to only innocent service providers – those who have no meaningful knowledge of infringement on their systems and who act reasonably to prevent infringement. Hotfile is anything but innocent."

U.S. District Judge Kathleen Williams has a couple of choices here. She can find it a triable issue whether Hotfile is liable for copyright infringement and let a jury decide. Or she could rule for the plaintiffs, which, barring any settlement, would likely kick off a slightly different kind of trial to determine damages. Depending on how the judge rules, how she's interpreting the DMCA and which arguments she's accepting, the case could also be ripe for appeal.


Twitter: @eriqgardner