Legal Issues

by Mike Masnick

Filed Under:
copyright, cyberlockers, infringement

hotfile, mpaa

MPAA's Argument Against Hotfile Assumes Any Popular Content Online Must Be Infringing

from the and-for-this-they-want-summary-judgment? dept

When the MPAA filed its initial lawsuit against Hotfile, we noted that we were surprised at just how weak the argument was. Honestly, we thought that for all the talk of how evil Hotfile was, they would have a stronger argument. As expected, the MPAA has now filed for summary judgment in the case (standard behavior at this stage in a case like this). What's interesting is how much the motion for summary judgement appears to match the US government's indictment against Megaupload, including the questionable interpretation of perfectly reasonable behavior. Basically, the MPAA seems to think that the only possible interpretation of certain facts is that Hotfile was heavily encouraging copyright infringement. While there are some points that may cause trouble for Hotfile (its failure to set up a DMCA agent is a big one), many of the claims are ridiculous and seem to exist in bizarro world.

The more you read, the more you shake your head. The MPAA's circular arguments can basically be summarized as "We shall prove that this tool is illegal. Exhibit A: People use this illegal tool." Very large segments of the motion are basically this tautology over and over again. "Oh my goodness, this is illegal, and our proof is that it's designed so people use it!"

For example, the motion focuses on Hotfile's affiliate program for uploaders, which is quite similar to Megaupload's. However, the MPAA interprets this in a bizarre way suggesting that it was designed to encourage infringement. Why? Because it was designed to encourage usage. Really. The affiliate program pays people more if more of their content is downloaded. According to the MPAA that alone is evidence of encouraging infringement. That seems crazy. As we pointed out, plenty of artists used such services themselves to distribute their own works free to consumers, while still getting paid for it at the same time. This is a business model that cuts out the legacy gatekeepers... but does that make it against the law? In the eyes of the MPAA, absolutely.
Hotfile’s Affiliate program affirmatively discourages users from uploading files that are not downloaded frequently, because those files consume Hotfile resources without generating premium subscriptions. SUF 16(a)(iv)-(vi); e.g., Yeh Ex. 61 at 13 (“some webmaster just . . . upload LOTS of gigabytes, but don’t promote their files. So these kind of webmasters use our server resources, upload resources, bandwidth, diskspace and at final they make our service to work slow”). Hotfile discourages unpopular files through a “ranking” system (Platinum, Gold, Silver, Bronze, and Copper), which governs how much Affiliates are paid. SUF 16(a)(iv). Hotfile assigns “rank” based in part on an Affiliate’s ratio of uploaded files to downloaded files....

Hotfile also uses its Affiliate program to encourage Affiliates to upload large files – because “free” users frustrated with downloading large files at slow download speeds are more likely to upgrade to premium accounts to get faster download speeds
Notice the implicit assumption here: encouraging people to post content that people want and is large must mean it's infringing. But that's a logical leap that the MPAA makes without anything to back it up. There is nothing that says a large popular file must automatically be infringing. Why would the MPAA even make such an argument?

Also, just like the Megaupload indictment, they use the lack of a search engine to suggest something damning.
Because Hotfile avoids having a search function, Hotfile depends on link sites to host, organize and promote download links to content stored on Hotfile. Hotfile’s Affiliate program encourages the development of pirate link sites that do nothing other than promote download links.
This is especially ridiculous because in earlier cases the entertainment industry has argued exactly the opposite: that having a search feature means that these file sharing services were inducing and encouraging infringement by not just being neutral content hosts. The obvious thing to do to remain in compliance with the law, then, is not to have a search engine. Yet, now, they're claiming that not having a search engine is evidence of trying to encourage infringement. So which is it? Is having a search engine illegal or is not having a search engine illegal?

Basically, the MPAA doesn't care. To them, either is illegal because they just can't handle that they're losing their position as a gatekeeper.

Similar to the Megaupload indictment, this motion assumes that encouraging the uploading of popular files and the deletion of unpopular files is proof positive of infringement -- but there are perfectly legitimate reasons for those features. It's fairly amazing to watch the MPAA interpret perfectly reasonable things like deleting files no longer being downloaded -- which plenty of legitimate file transfer services do -- as evidence of lawbreaking.

The MPAA then keeps pretending that if Hotfile isn't used for "personal storage", it must be used for infringement. But that's ridiculous. It's a service for distributing files -- nothing says those files are automatically infringing. That's the logical leap that the MPAA makes multiple times throughout the document.
Hotfile’s chiding of users on public forums puts to rest any suggestion that Hotfile based its business on personal storage: “To pay you just to upload? Why should we pay you then? … Why should we upload files that nobody wants to download? You may think your files are interest[ing] and most probably they are, but we must convince downloaders and convert them to premium users.”
I read this and I don't see the nefariousness. Nowhere do they encourage infringement. They encourage popular files. I know the MPAA would rather not believe it, but there are lots of content creators who no longer go through the gatekeepers, and they produce all sorts of popular content -- some of whom use services like Hotfile and Megaupload to profit from doing so. Why does the MPAA assume that encouraging legitimate activity is proof of contributory infringement?

Similarly, the MPAA jumps a over a clear logic gap by insisting that Hotfile support staff simply "knew" of infringement, because some people asked them how to download files that, according to the MPAA, were infringing. But from the examples given, it certainly sounds like the questions had little to do with the content, but merely the functionality of how you download. There's no indication there that Hotfile's support staff could have or should have known the content is infringing. Amazingly, the MPAA's "we're the center of the universe" attitude seems to assume that naturally anyone would recognize the name of some of its bad movies and immediately, magically know that it's infringing. But, based on what? That's not explained.

The MPAA's "smoking gun" of sorts is the fact that a study suggested a large percentage of downloads on the site were infringing, but I don't see how that, alone, is illegal. When the MPAA sued to kill the VCR, a large percentage of VCR usage was considered "infringing." But the market evolved. A large percentage alone isn't proof of anything, but the MPAA has to throw it out there.

Later, the MPAA goes so far as to pretend a part of the law that doesn't exist. They point out that Hotfile "failed to consider" filtering technology. I can see how that's frustrating to the MPAA, but the law here is pretty clear that there is no proactive duty to filter. So why would the MPAA even bring this up as a point?

There are redactions in the motion and perhaps the MPAA has some magic evidence -- but it's troubling that so many of these claims seem to have little connection to reality.

Also troubling, the motion tries to pin liability on the site's main developer because he programmed the software. That seems pretty crazy. Just because you make a tool, it shouldn't make you liable for how others misuse it.

The entire point of the motion (and the lawsuit) seems to be to prove that (1) Hotfile encourages users to use the site and (2) many users use it to infringe. For them to have a case they need to prove that Hotfile actively encourages infringement, but they can't actually do that, so they just keep trying to prove that Hotfile encourages usage (what site doesn't?!?) and then, entirely separately, that many users infringe... and completely and totally leave out the part where part (1) is connected to part (2). They just keep repeating part (1) and part (2) and saying See?!?!? See?!?!? as if there's a connection there... but which they fail to actually make. It's amazingly lacking in any direct connection.

In the end, one other thing strikes me about all of this. If the MPAA believes that it has such a slam dunk case here... why did it never sue Megaupload in federal court? Yes, Megaupload is based outside the US... but it has been sued in the US before and took part in the case. So why did the MPAA never actually sue Megaupload? If it believes this filing against Hotfile is such a slam dunk, surely we'd have heard about a similar case against Megaupload... and some details of how that effort was stifled. But that's not what's happened at all.

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  1. icon
    TtfnJohn (profile), 9 Mar 2012 @ 1:36pm

    Re: Re:

    Hard to make a point when you don't have one to make. :)

    And if discovery was such a good way to establish a case them why bother with such time consuming nonsense as trials?

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