File-sharing means of choice causing piracy police to worry

Hollywood has tried to seize the narrative in the battle against piracy by framing the issue as akin to stealing jobs or robbing a store. But as the latest iteration of content trafficking technology emerges, some say perhaps the better analogy is a pawn shop.

Cyberlockers are fast becoming the file-sharing means of choice, providing piracy police with a greater reason to worry. These hosting services — by which users upload content into a digital storage locker — are relatively easier to access compared to BitTorrent sites because they don’t require as much special software to do so.

The bigger concern to the entertainment industry is their belief that the growth of cyberlockers has hinged not on a culture raised on getting content for free, but one that is out to make a buck. Some of the most popular services rely on subscription fees, but they also depend on web traffic, and to do that they pay users who upload and promote links to the most popular content. Such sites as Hotfile, Fileserve, MegaShares and RapidShare have had such incentive programs, although the latter dropped its rewards offer last year in the face of industry pressure.

That comes as Hollywood and the major tech giants and retailers have paired up to support their own cloud-based locker service, UltraViolet, that launches this fall, and Disney’s own Studio All Access service that stores digital copies of movies to play using any device with an Internet connection. Apple has its iCloud.

What studios see in many non-Hollywood cyberlocker services are ventures that leech on their content — as the most popular titles in cyberlockers tend to be movies that are still playing at multiplexes. In other words, if users can get their hands on a prized blockbuster illegally and upload it to a cyberlocker, they can get cash.

In February, the major studios filed suit against one of the most popular cyberlockers, Hotfile, claiming that the hub committed copyright theft on a “massive scale” and that it profited “handsomely from encouraging and providing the means of massive copyright infringement.”

Later that month, acccording to TorrentFreak, Hotfile users started complaining on a wide scale that the company was deleting their accounts, while Hotfile said that it was undertaking a “more aggressive policy” toward users that are the subject of repeated complaints of copyright infringement.

Hotfile argues that it is protected by the Digital Millennium Copyright Act’s safe-harbor provisions, which shield sites from liability if they promptly remove infringing material in response to takedown notices. In legal filings it also says that the upload of copyrighted material has “little or no detrimental effect on the market for copyrighted work,” and, moreover, it’s a “fair use” of material.

But the situation took a turn this summer. A federal judge in July dismissed studios’ claims that Hotfile engaged in direct infringement, but is still allowing claims of “secondary” infringement to proceed.

Even more interesting than those legal developments is the way that Hotfile is pushing back.

The company is seeking records of the studios’ own anti-piracy tactics, the means by which they monitor and identify infringing material with the help of security vendors.

Hotfile says that rather than falling short in taking steps to get rid of infringing content, it took action that drew compliments from the studios. Hotfile notes that it implemented a “special rightsholder account” system so copyright holders could immediately take down files themselves, but that the studios “deliberately” kept their material up as they prepared to file suit.

In the case of Warner Bros., however, Hotfile contends that the studio was overly aggressive in that it used its rightsholder accounts to remove material it did not own, like software games and adults-only content. For example, Warner Bros. made a movie several years ago called “The Box,” but it also deleted an audiobook titled “Cancer: Out of the Box,” according to Hotfile’s claim.

Warner Bros. had no comment, but in previous filings the studios have called their anti-piracy records “irrelevant” to the case and have pointed out that the “fair-use” argument applies to clips, not entire movies. Although the studios haven’t filed an official response to the Hotfile counterclaim, they’ve indicated that it would be baseless.

As the legal case drags on, attention also is focusing on legislation.

The Protect IP Act, a bill aimed at rooting out so-called “rogue” websites, passed the Senate Judiciary Committee unanimously, and will get a big push by the Hollywood lobby to secure passage this fall. The legislation, however, does not specifically address cyberlockers, and sources say there are now discussions about including a provision covering such cloud-based storage services.

If such provisions are included, Hollywood may have a new tool to fight piracy, perhaps freed from the unpredictability of the courts. But surely that won’t be the end of it.

After all, pawn shops may not be the most reputable businesses in the world, but they’re still open.

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