[x-pubpol] Hollywood Studios Win Massive Hotfile Lawsuit

[Joly MacFie]

http://www.hollywoodreporter.com/thr-esq/hollywood-studios-win-massive-hotfile-616764

A Florida federal judge has handed down a huge ruling, determining that
Hotfile is liable for copyright infringement.

The lawsuit led by the Motion Picture Association of America on behalf of
its member studios was a path-breaking and controversial one when it was
filed in February, 2011. It represented an attempted strike against the
burgeoning popularity of cyberlockers. The particular one in question was
alleged to be storing thousands of copyrighted movies and television shows.
During the lawsuit, Hotfile was charged with enabling copyright
infringement "on a mindboggling scale," and deemed "more egregious" than
Napster, Grokster and Limewire and "indistinguishable" from Megaupload.

What made the case one to watch from a legal standpoint was the argument by
Hotfile, one of the top 100 trafficked sites in the world, that it had safe
harbor from copyright liability and had no vicarious liability for what
users were doing. The dispute gave U.S. District Judge Kathleen Williams an
opportunity to address the kinds of questions that have come up in the
Supreme Court's Grokster decision, as well as Viacom's dispute with YouTube
and Universal Music's dispute with Veoh. Namely, what kind of knowledge and
control is necessary before an Internet Service Provider has a legal duty
to clean up copyright infringements on a network.

Unfortunately, the ruling hasn't been made public. It is pending redaction,
and we hear that Judge Williams will be releasing it in 14 days.

In the meantime, the MPAA is cheering the outcome.

 “This decision sends a clear signal that businesses like Hotfile that are
built on a foundation of stolen works will be held accountable for the
damage they do both to the hardworking people in the creative industries
and to a secure, legitimate internet,” said Senator Chris Dodd, chairman
and CEO of the MPAA. “We applaud the court for recognizing that Hotfile was
not simply a storage locker, but an entire business model built on mass
distribution of stolen content. Today’s decision is a victory for all of
the men and women who work hard to create our favorite movies and TV shows,
and it’s a victory for audiences who deserve to feel confident that the
content they’re watching online is high quality, legitimate and secure.”

What led the MPAA to target Hotfile of all cyberlockers is up for debate,
but our guess is that it had something to do with Anton Titov, a foreign
national residing in Florida who is a co-defendant in the case for running
Hotfile. Unlike many other cloud-storage cyberlockers, here was one being
controlled on American soil.

In asking for summary judgment, the MPAA also said that "no other early
pirate services had the temerity actually to pay its users to upload
infringing content," a reference to Hotfile's "Affiliates" program.

During the case, Titov put up a fight.

He not only vigorously contested the massive copyright lawsuit by pointing
to the safe harbor provisions of the Digital Millennium Copyright Act, but
he filed counterclaims against Warner Bros. for allegedly abusing his
site's anti-piracy tool. The basis of the allegation was that the studio
was given a "Special Rightsholder Account" that enabled it to delete or
disable files that were believed to be infringing, and that Warners had
"betrayed that trust" by causing the deletion of thousands of files "when
in fact Warner had no right to do so."

But evidently, Judge Williams saw enough in the MPAA's allegations to award
them a victory on summary judgment. The judge also found Titov personally
liable, according to the MPAA, and rejected the defendant's defense under
the DMCA.

According to a brief excerpt made available, the judge found that "Hotfile
was successful in large part because it did not control infringement
activity on its system."

That certainly raises some provocative issues. We'll have more when the
ruling is released.

E-mail: Eriq.Gardner at THR.com
Twitter: @eriqgardner

* The original complaint
http://www.scribd.com/doc/48443886/Hotfile-Complaint-Complaint-2-8-11
* Counterclaim http://www.scribd.com/doc/64803845/Hotfile-Counterclaim


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