Cyberlocker Responds To MPAA Lawsuit Which Tries To Give Hollywood A Veto On Tech It Doesn't Like

from the it-shouldn't-be dept

Ever since the Supreme Court’s Grokster decision, in which it made up a non-legislative “inducement” standard for copyright infringement (a standard, it should be noted, that Congress had a chance to put into law, but declined), the entertainment industry has tried to expand what “inducement” actually means. In the entertainment industry’s general definition, it appears to mean “anything we don’t like” or “anything that challenges our existing legacy business models.” Case in point: cyberlockers. The MPAA has been screaming about “cyberlockers” as this new horrible piracy scheme for a couple years now, ignoring (of course) that cyberlockers serve important and useful legitimate functions in allowing people to share large legal digital files. Like many people, I’ve used cyberlockers to share PowerPoint presentations, photos and videos I’ve taken. They’re incredibly useful and have significant non-infringing purposes.

However, obviously, those tools can (and perhaps frequently are) used for infringement as well. But, we already have laws to deal with that. The DMCA’s notice-and-takedown provision allows copyright holders to alert service providers, who then need to takedown the content. A couple months ago, however, the MPAA went after Hotfile, one of the larger cyberlockers out there, with what struck me as a surprisingly weak case. It was as if whoever wrote the filing didn’t quite understand how cyberlockers work, made a bunch of (mostly really bad) assumptions, and then twisted the facts in the most ridiculous possible way to make a case that Hotfile “induces” infringement.

For example, the MPAA claimed that because Hotfile charges fees for premium service, that’s a sign of inducement. But that makes no sense. Plenty of online services charge for premium accounts, and since there are real marginal costs here, it makes basic economic sense for cyberlockers to charge premium users for additional services. That has nothing to do with infringement. Separately, the MPAA tries to spin the fact that Hotfile encourages people to use it to share widely, claiming that no legitimate “backup” service would do that. But, the MPAA is (incorrectly) assuming that Hotfile is a backup service. It’s not. It’s a tool for sharing digital files. None of that adds up to inducement.

The Supreme Court tried to dance around the earlier Betamax ruling, in which it allowed the VCR to exist because it had “substantial non-infringing uses,” by creating a specific “standard” for inducement, which (as standards go) is pretty vague:

“[O]ne who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties . . . [but] mere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor to liability. Nor would ordinary acts incident to product distribution, such as offering customers technical support or product updates, support liability in themselves. The inducement rule, instead, premises liability on purposeful, culpable expression and conduct . . . .”

Basically, the Supreme Court says that you have to do something to specifically purposely encourage infringement. Just because your service is used for infringement, that doesn’t cut it. Grokster and others lost because there were signs that they advertised or marketed their services specifically for infringement. In the Hotfile case, the MPAA didn’t seem to be able to show that at all.

So it’s not surprising that Hotfile is fighting back pretty hard on the lawsuit, pointing out that (1) it meets the Betamax standard of significant non-infringing uses, but (2) doesn’t come anywhere near the inducement standard of purposefully inducing infringement. The company notes that it promptly responds to DMCA notices and is quick to take down content, once made aware that it’s infringing. It notes that providing a legitimate data storage business is not against the law, and it doesn’t appreciate the MPAA’s insinuations. It goes through the specifics of the Grokster ruling, which clearly don’t apply to Hotfile. In fact, they note that one of the reasons Grokster ran into trouble was because it didn’t receive revenue directly from users — and now the MPAA is trying to use the exact opposite argument (that Hotfile does get money from users) to argue it’s the same as Grokster?

Similarly, it points out how the fact that Grokster, Isohunt, Limewire and others have had a search function has been one of the key points used against those services to “prove” inducement. The courts have reasoned that since they allow searches for any file, they’re “inducing” infringement. Yet, with Hotfile, there’s no search. That should settle the issue… but this is the MPAA we’re talking about, and so they twist the lack of a search engine into a charge that Hotfile “concealed” the content its users uploaded.

Sued if you do. Sued if you don’t.

This seems like a pretty strong filing in response to a clear attempt by the MPAA to twist and extend “inducement” theory way beyond what was intended by the Supreme Court. Hopefully the courts recognize this, but you never know when it comes to these kinds of cases. As Professor Eric Goldman is fond of pointing out, there’s regular copyright law, and then there’s file sharing copyright law, in which the judges creatively reintepret the law to make activities they don’t like illegal, rather than following the actual law.

Either way, this case could become important in determining the boundaries of what really is “inducement.” If the MPAA gets its way, it will effectively erase the Supreme Court’s Betamax ruling, because it will mean that even if you have substantial non-infringing uses, if there are a lot of people using it for infringement, even if you did not push them to use your service for that particular reason, you automatically become liable. This is a complete fabrication by the MPAA who appears to effectively want to overturn the Betamax ruling here by suggesting that if enough people are infringing, you’re automatically guilty of inducement, because any action you do (have a search engine? yes! don’t have a search engine? yes!) is interpreted as inducement.

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Companies: hotfile, mpaa

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Comments on “Cyberlocker Responds To MPAA Lawsuit Which Tries To Give Hollywood A Veto On Tech It Doesn't Like”

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104 Comments
Matthew (profile) says:

i think they're on to something here...

I think they’re on to something here.

I could stick a bunch of bootleg discs in the trunk of my car and then sell them to people. My car is clearly inducing piracy. Ford should install anti-piracy measures in their cars and pay a licensing fee to the *AAs to offest the inevitable harm those groups will suffer as a direct result of cars.

Gwiz (profile) says:

Re: i think they're on to something here...

I could stick a bunch of bootleg discs in the trunk of my car and then sell them to people. My car is clearly inducing piracy.

I have wondered about something close to this scenario, new cars now come equipped with stereos that have hard drives and USB ports. I have seen advertisements (the one with Chris Allen of Idol fame comes to mind) advocating copying your CD’s to the hard drive.

How is it that the auto companies are not “inducing” infringement by these actions?

Michial Thompson (user link) says:

Re: Re: i think they're on to something here...

Because the Auto Manufactures can’t manage to make their shit work as advertised…

Hell I have a 2011 Jeep Wrangler that Chrysler can’t get the Keyless Entry to work consistantly nor can they get the Bluetooth or iPod Interface to work right either.

I’ve been asked twice now by the dealer if I have anything other that Chrysler Provided electronics attached to the Jeep when the Keyless Entry isn’t working.

FUDbuster (profile) says:

Re: Re: Re:

Why would they need to prove that?

That’s from the DMCA: 17 U.S.C. 512(i)(1)(A): “(i) Conditions for Eligibility.? (1) Accommodation of technology.? The limitations on liability established by this section shall apply to a service provider only if the service provider? (A) has adopted and reasonably implemented, and informs subscribers and account holders of the service provider?s system or network of, a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider?s system or network who are repeat infringers”

http://www.law.cornell.edu/uscode/html/uscode17/usc_sec_17_00000512—-000-.html

Not an Electronic Rodent says:

Re: Re: Re:2 Re:

You are aware that the DMCA has been abused extensively against non-infringing cases, right?

How shocking to find that when your standard is “We (who have a specific vested interesting in saying you are ingringing) say you are infringing so you are.”, then you get a lot more “accidental” false positives than if “guilt” is determined by someone at least nominally independant like, say, a court. Wierd huh?

Anonymous Coward says:

Re: Re: Re:3 Re:

Hotfile (and all other cyberlockers) also lose their 512 protection because:

“no copy of the material made by the service provider in the course of such intermediate or transient storage is maintained on the system or network in a manner ordinarily accessible to anyone other than anticipated recipients, and no such copy is maintained on the system or network in a manner ordinarily accessible to such anticipated recipients for a longer period than is reasonably necessary for the transmission, routing, or provision of connections”.

Anonymous Coward says:

Re: Re: Re:4 Re:

What are you stupid?

The right section is C abnormal creature:

Quote:

(c) Information Residing on Systems or Networks At Direction of Users.?
(1) In general.? A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider?

Hotfile is covered.

Anonymous Coward says:

Re: Re: Re:5 Re:

Seems you stopped quoting-

…(A)
(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;
(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or
(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;
(B) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and
(C) upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

Hotfile failed on all of the above.

And a service must be in compliance with all aspects of 512 in order to enjoy its protection.

G Thompson (profile) says:

Re: Re: Re:6 Re:

Wow, you say so much without reading anything.

Must be amazing to live within your reality system, sadly the rest of us live in the real world (whatever that is) where facts, actualities, context, and natural justice exist, not in your one where spectral evidence, hearsay, star chambers, and ‘power is right’ thrive.

Chosen Reject (profile) says:

Re: Re: Re:8 Re:

My guess would be that the US government is getting more and more ridiculous when it comes to copyright infringement enforcement that it’s just easier to bypass them altogether. Just yesterday the House Hearing started to get dangerously close to saying Google should be liable for copyright infringement simply because they haven’t stopped it yet. One of them (Debbie Wasserman-Schultz) even said

“You helped overthrow the head of an entire country in a weekend. To suggest that this is too difficult for you to accomplish demonstrates I think more an expression of a lack of will.”

In an environment like that, I wouldn’t want to start a company in the US either.

G Thompson (profile) says:

Re: Re: Re:8 Re:

Stop me when I get it wrong..

1. US Economy is currently , for want of a better phrase, “in a barbed wire canoe without any paddles”, and the rest of the planet has better tax incentives ANYWHERE else in the world

2. The difference between civil and criminal laws are very distinct and maintained elsewhere than in the USA

3. Due Process of law is not only guaranteed but actually implemented nearly everywhere better than the USA does.

4. Any cyberlocker site, or any major technology company for that matter, that is involved with multi-jurisdictional issues, and especially where the USA in its infinite stupidity considers might at one stage or another be a concern for national security because of encryption, business protection, etc, ad.nauseum is suicidal if they do not go elsewhere in the world.

5. Due to the EU Privacy laws and protection for consumers, and the lack thereof in the USA, specifically when any organisation that deals with EU/UK/CAN/NZ/AUS/ASIA regions and governments is better suited to be elsewhere than the USA who does not give any consumer protection whatsoever. Remember cyberlockers work on the same methodology as the Swiss with security for their customers.

Chosen Reject (profile) says:

Re: Re: Re:6 Re:

It’s not possible to fail on all of the above. Either they have actual knowledge or they don’t. If they have actual knowledge and failed to act expeditiously (thus failing (A)(iii)) then they didn’t fail (A)(i). If they did act expeditiously then they didn’t fail (A)(iii). If they didn’t act expeditiously because they didn’t have actual knowledge, then they didn’t fail.

In their filing, the MPAA acknowledges that hotfile removes files when asked. Therefore, they don’t fail on any accounts.

G Thompson (profile) says:

Re: Re: Re:9 Re:

That is because they are only given one instance of the link.

If they are given multiple virtual links they will remove multiples.

This might be semantics and pedantic behaviour, but that’s what the law allows, as seen by the huge amount of correspondence and C&Ds you can be amazed at on chillingeffects.org

Nowhere in the statute does it say all links have to be removed unless foreknowledge is given.

It is up to the alleged copyright holder (and I say alleged because there is only a proforma affidavit statement that they actually do or not) to show all instances of the alleged infringing work.

They do Not have to physically remove the content, they just have to make sure it is world non-viewable until at such time they receive notice of a challenge or not. And being a cyberlocker they have to meet specific data laws for the deletion of any data. Otherwise they could be liable for gross negligence, vicariously or not, if it is proven that a challenge is correct in a court.

If you, like the alleged content holders, think this is wrong.. take it to the courts and let them decide, though just remember de minimis non curat lex when you get told to get more evidence etc.

Anonymous Coward says:

Re: Re: Re:10 Re:

Hotfile encourages uploading of multiple links to the same content. A judge will ask why that service is offered and what purpose it serves.

That’s where the trouble will likely begin for the defendant in regard to that particular part of their service.

But that is one of only many issues they face.

G Thompson (profile) says:

Re: Re: Re:11 Re:

And then they will explain what porpuse virtual linkages serve..

Then maybe the judge will understand that there is no maliciousness in virtual links, that have been around forever even before the WWW (… gopher/fidonet for basic examples.. *nix also uses virtual links for most files.. even windows has SHORTCUTS)

You might take the time to research on why a cyberlocker would offer that BASIC functionality. which even google docs allows

SD says:

Re: Re: Re:13 Re:

Couldn’t the movie studios be confusing separate uploads and/or split part archives as being a file alias feature??? I don’t see any feature like it described on their FAQ or Premium signup page.

If they allow people to make duplicate files that take up the same amount of storage(aka the “cp” command on any dedicated server) there’s nothing wrong with that as no web host is required to hold a duplication log file or database of duplicate file hashes, and pretty much none of them do.

However if there is truly a file alias system being used, either by Hotfile to save storage internally or as a feature offered to their users, Hotfile should be able to remove access to an allegedly infringing file at it’s source and all of it’s aliases when they receive a takedown letter. There’s no excuse not to!

Considering if my first sentence is true, the MPAA might then turn to arguing that Hotfile does have a database showing all filenames and file sizes on their server. But in my opinon, if there’s no file hash system in place as well, Hotfile couldn’t be sure if those files matched or that the name and size was mere coincidence, and removing access or deleting those files could be a setup for a breach of contract suit.

Karl (profile) says:

Re: Re: Re:14 Re:

Considering if my first sentence is true, the MPAA might then turn to arguing that Hotfile does have a database showing all filenames and file sizes on their server. But in my opinon, if there’s no file hash system in place as well, Hotfile couldn’t be sure if those files matched or that the name and size was mere coincidence, and removing access or deleting those files could be a setup for a breach of contract suit.

A couple comments about this.

First of all, if Hotfile does have some sort of virtual mirroring system on their computers, then they would in fact be liable for taking these down as well. This, I’m sure, would be included in (iii) as being “actual knowledge.”

However, such “virtual mirroring” would almost certainly be in the web server software (or even OS) itself, so disabling access to one should disable access to all the “mirrored” files as well.

So I’m not sure what the other AC means. If users are uploading the same file twice, then of of course Hotfile would need to be notified, via a DMCA notice, that the files were the same. If he means something different, then I’m not sure what is going on.

I’m not familiar with how Hotfile works, so maybe I’m missing something.

Second of all, if Hotfile does not have some sort of database of equivalent files, they are under absolutely no obligation to put one in place. Just making that clear.

Third of all, if Hotfile did delete or remove access to files, they wouldn’t be liable to their users, either. They are exempt from liability under 17(g)(2). Of course, there are rules there as well – they have to notify the allegedly infringing user, allow that user to file a counter-notice, and if the user does, they have to put the material back up within 10 days. If Hotfile does this, the worst that can happen to them is that users cancel their Hotfile accounts.

If the person who accuses copyright infringement does so fraudulently, that person is on the hook for damages and attorney’s fees to Hotfile.

In theory, such a person could also be engaging in criminal behavior under 506(c), and faces a $2,500 fine. But good luck getting anyone to prosecute.

SD says:

Re: Re: Re:15 Re:

Second of all, if Hotfile does not have some sort of database of equivalent files, they are under absolutely no obligation to put one in place. Just making that clear.

I’ve just realized that possibly even having a database in place might not be enough justification to take any links down that weren’t in a notice. Every Hotfile link is accessible publicly but someone needs to know the link first. All of them have 16 digits that Hotfile generates and the filename at the end, making it nearly impossible to find without actual link distribution. It would be stretching the “making available = distribution” argument pretty far but I can see Hotfile losing a case if they had a database of exact files and didn’t act on them though.

However, even a database wouldn’t tell you if equivalent files are infringing, or uploaded by the rightsholder. The MPAA might have to specify in the DMCA notices that they want “all copies removed” from the cyberlocker services and assert that they never gave rights to have their content stored anywhere on there. (Something tells me they’d find IP addresses on some uploads originating from movie studios themselves anyway :P)

Finally, this scenario shows how a simple filename+size match wouldn’t be enough verification of exactness.

Person A:
Uploads 7 100MB split archives of a bootleg movie… Each file is named along the lines of “Archive.r00” “Archive.r01”

Person B:
Uploads 7 100MB split archives of his hard drive… Important documents, personal pictures and home movies. Each file is named along the lines of “Archive.r00” “Archive.r01”. His computer is fried in a lightening storm and Hotfile retains the only copy while he looks for a new computer.

If the host received a DMCA notice for all or some of Person A’s files they’d have to take them down. But do they go the extra mile and remove access, or at the very worst, remove Person B’s files from their servers too? Only matching file hashes like MD5 or SHA1 can find duplicate files, not simply the filename & size. Person B could file a lawsuit if his files were deleted absent of any takedown notice. Hotfile probably has something in their terms to prevent someone for suing them for anything related to data loss but it wouldn’t make it right to delete files before truly determining the contents are exact.

One way to test this(without trying to sue them of course if they act on it), would be to duplicate a filename of a public link that’s imminently going to be removed like “H4ngover2.r00”, with exactly the amount of data, but all random chars. Any service that uses a filename or filename+size as “matching” should be called out on it…

SD says:

Re: Re: Re:16 Re:

I’m not recommending that someone should actually should try that test though. It’s really a reference to what the MPAA would say Hotfile had the ability to check by default (all filesystems store filename and size) which is clearly not enough to determine that they match.

If someone wanted to try that test they should make sure all documentation is kept that the data uploaded was random , make a published report about it, and maybe upload from Starbucks. Personally I don’t think it would be worth the effort. I doubt Hotfile is that stupid to use filename+size matching and a simple email to them should suffice if you really wanted to know, without the possibility of getting mixed up and accused of pirating or something.

Karl (profile) says:

Re: Re: Re:9 Re:

Hotfile allows multiple links to be made of the same content, but only removes one link when a DMCA notice is filed.

You know, I’ve just looked over the Hotfile FAQ, and there’s no mention of this functionality.

Hotfile does have a “file manager” that allows the standard copy/paste/move/rename functions. There is no indication that doing so results in “multiple links” to that file. On the other hand, there is every indication that a file, once removed, is not available in the file manager any more.

Or do you mean posting one large file as a number of smaller files? That’s pretty common – but those aren’t “the same file,” they’re incomplete pieces of a single file. (And, in fact, if only one is taken down, it’s impossible to re-construct the entire file.)

FUDbuster (profile) says:

Re: Re: Re:10 Re:

I think he’s referring to this from the complaint: http://www.mpaa.org/Resources/8ee74526-3a91-4b6a-805f-b18eb673d8fb.pdf

“Moreover, defendants have intentionally attempted to stymie plaintiffs? copyright enforcement efforts. Even if Hotfile does block access to specifically identified copyrighted works, Hotfile has implemented technical features to ensure continued infringing access to plaintiffs? content. For example, Hotfile permits registered users to upload a single copy of a work once, but then make five additional separate copies of the work on Hotfile?s servers, each with a different URL link. The purpose of this feature is to frustrate copyright owner takedown notices: it permits an uploading user to post one URL link at a time, then, when the link is discovered and deactivated in response to copyright owner notices, to immediately post a link to the same content without even having to upload the work again to Hotfile?s servers. There is simply no legitimate consumer or commercial reason to replicate a single uploaded content file five times on the Hotfile servers.”

Karl (profile) says:

Re: Re: Re:11 Re:

Hotfile permits registered users to upload a single copy of a work once, but then make five additional separate copies of the work on Hotfile?s servers, each with a different URL link.

Hotfile does have a “file manager” with basic copy/paste/move/rename functionality. But from what I can tell, once a file is taken down due to a DMCA notice, that file “disappears” from the file manager.

Perhaps the copies don’t? I don’t know. But since Hotfile has no way of knowing if users copied a file or not (especially if they renamed it), they certainly wouldn’t be liable. And that’s assuming the copies automatically get their own URL’s, which, again, I don’t know to be true.

Considering that nearly every line of the complaint is a complete lie, I’ll need to see it to believe it.

Karl (profile) says:

Re: Re: Re:13 Re:

I’m sure the truth lies somewhere between the complaint and the answer.

I’m sure the truth lies in a galaxy far, far away from the MPAA’s complaint. I just read it. To anyone with even a passing knowledge of “file locker” sites, or copyright law, it is utterly ridiculous.

I’d say it’s got more holes than Swiss cheese, but that is an insult to cheese, and Swiss people.

Karl (profile) says:

Re: Re: Re:6 Re:

Hotfile failed on all of the above.

No, they succeed on all of the above. When they get DMCA notices – as is required for both (i) and (ii) – they took the material down, satisfying (iii).

They do not receive a financial benefit that is directly attributable to infringing activity, so they pass (B).

(C) is a restatement of (iii), so they pass that standard as well.

They are fully compliant with Section 512, and do not face any liability whatsoever.

Of course, if you believe some of the AC’s here, the MPAA could just get ICE to take them down for them, because compliance with Section 512 does not shield you from “criminal” activity. Even if your site is 100% compliant with the DMCA, you could still be shut down without notice.

If you believe some of the AC’s, which I don’t.

Anonymous Coward says:

Re: Re: Re:7 Re:

Hotfile fails all of the above; they most certainly are aware that their site is used for infringement, and they made money from their business. I explain elsewhere how they fail 3.

Hotfile also has the other terminal 512 problems that were listed.

So not really sure where your confusion is coming from.

Mike Masnick (profile) says:

Re: Re: Re:8 Re:

Hotfile fails all of the above; they most certainly are aware that their site is used for infringement

It has to be specific knowledge, not general knowledge. So, no, this prong supports Hotfile.

they made money from their business.

It’s not whether or not they make money from their business, it’s whether they make money specifically from the infringement. They do not. They make the same amount whether the file is infringing or not. If the DMCA used your standard, it would mean no commercial business gets any DMCA safe harbors, a concept that is obviously not what Congress intended.

We used to hear that argument against basic webhosts, that they don’t get DMCA protections because they make money from their customers. That got shot down, so I’m not sure why you’re arguing that.

So not really sure where your confusion is coming from.

I think you might be the one who is confused in your reading of the DMCA.

Anonymous Coward says:

Re: Re: Re:9 Re:

Hmm, you must be confused.

Hotfile is absolutely aware of infringing activity. The majority of the files on its site are illegal copies of copyrighted material. Willful blindness is knowledge in copyright law. The business model is based around the fact that material is uploaded, so they do indeed make money from it.

They are also in clear violation of the DMCA as,

“”no copy of the material made by the service provider in the course of such intermediate or transient storage is maintained on the system or network in a manner ordinarily accessible to anyone other than anticipated recipients, and no such copy is maintained on the system or network in a manner ordinarily accessible to such anticipated recipients for a longer period than is reasonably necessary for the transmission, routing, or provision of connections”.

Hotfile fails to gain 512 protection, as do most cyberlocker sites. These sites should be shuttered, and/or blocked by the US government.

The eejit (profile) says:

Re: Re: Re:10 Re:

So you want to absolutely obliterate one section of tech in order to support people who:

a) refuse to adapt;
b) are obsessed with changing laws in their favour by bribing people: and
c) repreatedly fail to ensure that the laws they wrote are followed whenever they are inconvenienced by them?

Nice way to chill people from your nation, fuckwad.

Anonymous Coward says:

Re: Re: Re:11 Re:

Don’t want to eliminate cyberlockers at all; they provide a useful service and I use them myself.

However if they’re going to allow copyrighted material to be uploaded to their servers, they must operate in a way so that those files are not accessible to the mass public.

Otherwise they will not be allowed to function here in the US.

Karl (profile) says:

Re: Re: Re:12 Re:

However if they’re going to allow copyrighted material to be uploaded to their servers, they must operate in a way so that those files are not accessible to the mass public.

Since every file is potentially copyrighted, you’re saying that every “file locker” or “cloud-based” storage provider could not make any file publicly available.

You’re not only saying Hotfile should go out of business, but also Dropbox, SkyDrive, Google Docs, etc. In fact, every online storage company that I know of allows its users to make their files public.

Mike Masnick (profile) says:

Re: Re: Re:10 Re:

Hotfile is absolutely aware of infringing activity. The majority of the files on its site are illegal copies of copyrighted material. Willful blindness is knowledge in copyright law.

Multiple rulings have said it has to be *specific* knowledge, not general knowledge. When Hotfile has specific knowledge, it does, in fact, remove the content, as the DMCA requires.

Not sure why you’re arguing this point. Do you want to just ignore what all the case law says?

The business model is based around the fact that material is uploaded, so they do indeed make money from it.

That makes no sense. By that reasoning, there are NO safe harbors. A webhost makes money from the fact that content is uploaded too, but case law is again clear here that that doesn’t mean they’re making money from infringement. They make money providing a *service* of storage. They make no difference amounts if the content is authorized or infringing. So, no, you are wrong. Again.

They are also in clear violation of the DMCA as,

Um. No. 512(a)(4), which you are quoting, only applies to transitory communications. That’s not what this is. This is a 512(c) issue. You’re reading the wrong part of the law.

Anonymous Coward says:

Re: Re: Re:11 Re:

Multiple rulings have said it has to be *specific* knowledge, not general knowledge. When Hotfile has specific knowledge, it does, in fact, remove the content, as the DMCA requires.

Do you have a cite that it has to be “specific, not general knowledge”? It seems with regard to “red flags”, DMCA caselaw sides with the copyright holders.

A study found that 73.2 percent of cyberlocker traffic was infringing. To suggest that Hotfile is unaware of the extent of infringing traffic on their site implies willful blindness.

But if you’re suggesting they have no way of knowing, then they would not be classified in the section you refer, they would be classified as transitory communication as

“Data transmission occurs through an automated technical process without selection of the material by the service provider.

The service provider does not determine the recipients of the material.”

The cyberlockers can’t have it both ways. To suggest such would essentially be saying there is no effective recourse for copyright holders, and that would completely defeat the purpose and intent of the DMCA.

But they are definitely at least one of the two examples given above, and thus have violated any 512 protection.

Karl (profile) says:

Re: Re: Re:10 Re:

Hotfile is absolutely aware of infringing activity.

And when they become aware of it, they block access to it. That’s what following the DMCA notice-and-takedown system is all about. Nobody disputes that they do so.

The majority of the files on its site are illegal copies of copyrighted material.

Neither you, nor I, nor the MPAA, nor Hotfile itself know what percentage of files on its servers are infringing. Furthermore, “the majority” doesn’t meet the Sony standard for liability.

The business model is based around the fact that material is uploaded, so they do indeed make money from it.

Notice that you didn’t say infringing material. If you had, you’d be completely wrong. The amount of money they make is completely content-neutral.

They are also in clear violation of the DMCA as, […]

Since Hotfile is not a service for “Transitory Digital Network Communications,” that section does not apply to them. (It would apply to ISP’s like Comcast or Verizon.)

They are, however, a service for “Information Residing on Systems or Networks At Direction of Users.” 512(c) is the relevant statute here.

Anonymous Coward says:

Re: Re: Re:11 Re:

Neither you, nor I, nor the MPAA, nor Hotfile itself know what percentage of files on its servers are infringing. Furthermore, “the majority” doesn’t meet the Sony standard for liability.

As stated above, 73.2 percent of cyberlocker traffic has been found infringing.

Sony does not come into play, as Hotfile can be shown to be actively inducing infringement.

And the money they make on their site is directly correlated to the amount of users it has. If the majority of the traffic is infringing, then the majority of the money they make is from infringing activity.

Anonymous Coward says:

Re: Re: Re:12 Re:

As stated above, 73.2 percent of cyberlocker traffic has been found infringing.

That study you keep referring to is complete crap and was commissioned by NBC Universal.

It added up the number of results from search engines with file names that look like infringing content, and likened it the traffic. That’s not an indicator of bandwidth being transferred at all. It also disregards what’s shared privately or not shared at all. Finally, that number is not applicable to Hotfile alone since the study was on Megaupload, Rapidshare, and Hotfile as a group.

The Sony standard is to be “capable” of “substantial non-infringing uses”. Your argument is just like the argument to repeal the 2nd amendment. Ban x because the media says it’s killing z%. When criminals switch back to using knives and swords do we ban those too? Do we go back to using stones? Technological advancement cannot be stopped by people who abuse the technology.

Anonymous Coward says:

Re: Re: Re:2 Re:

No need for a court to have a trial in the above example. The DMCA allows content holders to file a notice of infringement.

Does Hotfile have a DMCA notice policy that is reasonably implemented?

Has Hotfile adopted and reasonably implemented a policy of terminating the accounts of subscribers who are repeat infringers?

If they haven’t, then they do not receive 512 protection.

Nicedoggy says:

Re: Re: Re:3 Re:

Filing a notice is not the same as ascertaining conclusively that any infringement occurred, and if the user files a counter-notice and the content is posted back the copyright holder must go after the user not the service.

What in that you don’t understand?
It was proved many many times in court already, there is no doubts about that, are you a real lawyer?

Chosen Reject (profile) says:

Re: Re: Re:5 Re:

Right, the DMCA allows for a notice to be filed. That notice ought to be followed, and if it doesn’t it opens the service up for liability. However, a user not filing a counter-notice does not mean the user is pleading guilty to copyright infringement. Getting sent multiple DMCA notices, even for the same file, does NOT legally mean you are a repeat infringer. Therefore, the service does not have to close their account.

Anonymous Coward says:

Re: Re: Re:6 Re:

This is incorrect. In the context we are discussing, it is not necessary for a court to determine a work is infringing. It is within the content owner’s right to declare a work to be infringing. The DMCA has very specific language that dictates how a notice of infringement can be filed. The defendant can challenge that accusation (via a claim of fair use or perhaps some other form of incorrect accusation), but a service provider must still implement a termination policy for those that have engaged in repeated infringing activity; i.e. repeated DMCA notices directed at the content they have uploaded.

If the cyberlockers do not practice such a policy, or do not have a policy in place to implement a determination of such, they are not in compliance.

G Thompson (profile) says:

Re: Re: Re:7 Re:

But Hotfile DOES have such an implementation in place.

Also you keep stating only half of the statute.

“The DMCA has very specific language that […], but a service provider must still implement a termination policy for those that have engaged in repeated infringing activity …”

I will end it as it should of been.

… Unless those infringement notices have been provided with a reasonable defence/challenge in which case no termination can or should be given no matter how many DMCA’s have been sent for the SAME content since that content is now contested and only a court can determine its veracity. This also pertains to allegation foir the same account on different content, as long as a challenge has been made initially on first instance of DMCA”

This means that if any more DMCA’s are filed for same content after a challenge has been submitted, those DMCA’s are not only irrelevant, but could be construed as malicious or worse.

The law its an interesting animal. It is designed to be unbiased, equitable and non-discrimitary. Its only people (like yourself it seems) who have the unethical notion that the law is ONLY what you say it is.

G Thompson (profile) says:

Re: Re: Re:9 Re:

So you wont get offended when you get terminated from your ISP account after I hypothetically send multiple DMCA notices to them because I will allege you have infringed on some copyright of mine then?

You of course will challenge each of them as frivolous and with no weight of evidence, but seeing as I will send multiples of these time after time your ISP will, under your reading of the law, have no other recourse than to terminate your account until it is settled in a court, or maybe not even then looking over your previous comments..

Hmmm, seems we have just discovered how a quasi “three strike” policy could be forced onto ISP’s etc with no problem.

Thankfully the courts, in the USA and elsewhere in the world, do not interpret the US DMCA to have that meaning though I understand how you would.

Anonymous Coward says:

Re: Re: Re:10 Re:

You could do such a thing, that is not in question. However because of the strict guidelines that govern DMCA notifications, your identity would be revealed, and you would likely be sued by the target of your anger. If found guilty of specious accusations, you would be liable for court costs plus whatever damages plaintiff was awarded.

G Thompson (profile) says:

Re: Re: Re:11 Re:

And hypothetically if I was a huge multinational organisations (oh lets say with a name like CIAA) the cost of being fined, damages paid (if any), and the specific point of note that 80% of people would not have the resources, knowledge or mindset to actually take it to court. Would make it a worthwhile endeavour. Especially if I was say in the USA and the alleged infringer was not.. or even in my case where you would be in the USA receiving DMCA’s from myself who resides in another country, when jurisdiction of the court in a non DMCA civil tort trying to prove malicious intent and then award damages would be quite egregious for the plaintiff.

Hypothetically of course

Chosen Reject (profile) says:

Re: Re: Re:7 Re:

You’re wrong in this. The MPAA can accuse with DMCA notices all they want. Until a court decides I’m guilty, then I’m not an infringer. They can send a dozen DMCA notices every day, and I can decide not to file a counter-notice ever, but that doesn’t mean I’m pleading guilty to copyright infringement. If that were so, then anybody who doesn’t file a counter-notice would be automatically fined for that copyright infringement. Section 512 states they have to be repeat infringers. To be an infringer you have to have been convicted, not just accused. A DMCA notice (with or without counter-notice) is merely an accusation.

Not that any of that matters. Hotfile does have a policy in line with section 512. So all of the above is just a thought exercise and not applicable to the case at hand.

Karl (profile) says:

Re: Re: Re:8 Re:

Section 512 states they have to be repeat infringers. To be an infringer you have to have been convicted, not just accused.

That does bring up an interesting point.

The requirement that the OSP terminate accounts is not actually part of 512(c). It is, however, part of 512(j), “injunctions.”

That section covers what forms of injunction may be granted by the court. In other words, the court may rule that the OSP disable or delete accounts, but there is no obligation for the OSP to do so without a court order.

Furthermore, the court cannot issue such an order ex parte. They can, however, issue such an order without a conviction, as part of a preliminary injunction (which then becomes permanent after a conviction).

Chosen Reject (profile) says:

Re: Re: Re:3 Re:

Maybe you’re new to this whole web thing, but over many years, websites change locations of things. What was once found at one URL, is now found in another.

http://replay.waybackmachine.org/20100102003849/http://hotfile.com/terms-of-service.html

One of the many relevant sections:

Hotfile reserves the right to immediately suspend or delete the account of a client, which, in the opinion of Hotfile, offends the present agreement or laws or decisions.

So they did before. They ought to win this case.

Anonymous Coward says:

Re: Re: Re:5 Re:

I just followed one of links above and it appears Hotfile had a DMCA notification system starting in 2009.

However there seems to be no evidence they had one from their inception in 2006 until 2009.

There is still no evidence they implemented a policy of terminating repeat infringers.

But all of that is pretty much moot anyway, as:

“no copy of the material made by the service provider in the course of such intermediate or transient storage is maintained on the system or network in a manner ordinarily accessible to anyone other than anticipated recipients, and no such copy is maintained on the system or network in a manner ordinarily accessible to such anticipated recipients for a longer period than is reasonably necessary for the transmission, routing, or provision of connections”.

G Thompson (profile) says:

Re: Re: Re: Re:

Thats the most factual statement you have made today.

Even though it was self evident to anyone that not only do you not understand what anyone is talking about that might disagree with you, but you really do not understand the specific elements of the torts Hotfile has been accused of and all the defences to those elements that Hotfile has raised after being maligned by the MIAA.

DandonTRJ (profile) says:

I think the MPAA made a handful of decent points in its complaint regarding features of Hotfile that probably have no legitimate use except for facilitating piracy. IIRC, they noted that Hotfile lets you duplicate a file you store on it up to six times, which seems tailored to work around DMCA takedowns [Copy #1 removed? Copy #2 is already waiting in the wings!] — but other than that, yeah, it seems like they’re trying really hard to twist a platform that’s merely useful for (and circumstantially rewards) infringement into one that actively induces infringement. Grokster was a hell of a lot closer to that than Hotfile [search function and applicability of DMCA takedowns as prime examples]. But there are those few questionable features of Hotfile that dip the service’s toe ever so slightly into eyebrow-raising territory. The MPAA has their job cut out for them to spin those straws into Grokster gold, though.

(Apologies if any of these points have been addressed in Hotfile’s response; haven’t gotten a chance to read it just yet.)

Anonymous Coward says:

Or maybe we accept that the end goal in all of this is –
they get to force other companies to invest in protecting their valuable IP.

They want Google to pay to create a system that magically removes links they think might be illegal.

They want cyberlockers to hire staff to check each and every upload, to make sure no unpaid music escapes.

They want to make these companies save them money and then pay them more for not looking out for the industries interests.

These are the wonders of introducing the concept of inducement.
You make guns, you induced someone to go on a shooting spree.
You make cars, you induced them to drive recklessly.
You make booze, you induced them to sleep with the person who had a disease.

Those sound silly don’t they? (note if these do not sound silly to you – go make sure your law degree is dusted off)

The concept of personal responsibility died shortly after corporate responsibility.
Its not my fault my 7yr old weighs 300 lbs, its the damn fast food corps fault.
Its not the corps fault we ignored changing market trends and then declared war on them for daring to want something better.

They want the law to fix their industry at the expense of progress, the question is how much longer until we finally demand they give us progress at the expense of the industry business model.

Anonymous Coward says:

Re: Re: Re:

And having pondered this a bit more, I think I have figured out why the politicians are all for this insanity…

If big media becomes less big, they get less money in “contributions”.

You’d hope it is not that simple, but I think that is what it boils down to. Our system has reached a point where it is that corrupt to the core. They have no problem doing this all in the light of day, as long as the lobbyists give them their script of all of the made up horrors to sell the public on. They problem is despite them trying to dumb everyone down, some of us still manage to raise questions they can not hope to answer without a script.

SD says:

The only difference between a paid web host of the 90s and a “cyberlocker” today is a fake credit card #. I’m surprised they haven’t sued any web hosts for allowing “x gigabytes” of storage already, or have they? Surely allowing people to store large files is always going to be for sharing pirated movies and not personal hard drive backups! And why stop there? They should start suing ISPs for letting people transfer that much information in the first place. They’re all guilty!

Anonymous Coward says:

Sued if you do. Sued if you don't.

“Oh what a tangled web we weave, when first we practice to deceive.”
~Sir Walter Scott

(I can’t wait to hear the MPAA try to justify this. They will, you know. They are seriously going to walk into court, have their logical fallacy thrown in their faces, and try to pass it off as somehow making perfect sense.)

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