Hotfile Piracy

Cyberlocker Hotfile has been found liable for copyright infringement for housing pirated movies and TV shows on its site, the MPAA said on Wednesday.

The summary judgment decision from U.S. District Court Judge Kathleen Williams in Florida was the first such ruling on whether cyberlockers can be held liable for the content stored on their site, the MPAA said. It also said that the company’s principal, Anton Titov, also was held liable for infringement.

The decision is sealed for about two weeks, after confidential and proprietary information has been redacted.

“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,” said MPAA chairman Chris Dodd.

The studios claimed that Hotfile “protected” those who uploaded movies and TV shows to its storage lockers and even gave them an incentive. It paid users to upload files and post links to them on third party sites.

“Today’s decision was a critically important step toward protecting an internet that works for everyone — both the people who create the content and the audiences who enjoy watching it,” Dodd said.

Janet Munn, attorney for Hotfile, did not immediately respond to a request for comment.

But the company has maintained that it was protected under the safe harbor provision of the Digital Millennium Copyright Act, which shields user-generated sites from liability if owners promptly remove infringing material in response to takedown notices.

After the studios sued Hotfile in February, 2011, claiming copyright theft on a “massive scale,” the company fought back. It sought records of the studios’ own anti-piracy tactics, claiming that Warner Bros. in particular was overly aggressive in implementing Hotfile’s automatic takedown technology that removed material it did not even own.

The MPAA said that the court found that “Hotfile was successful in large part because it did not control infringement activity on its system.” In 2005, the Supreme Court ruled that peer-to-peer file sharing service Grokster could be held liable for inducing copyright infringement via the technology it offered. But Hotfile said that it actually earned praise from the studios for implementing a “special rightsholder account” system to copyright holders could immediately take down files by themselves.

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