War Against Cyberlockers Begins: MPAA Sues Hotfile

So-called “cyberlocker” sites have been a growing piracy problem for a couple years now, but big entertainment companies haven’t-until now-gone after them in court the way they’ve successfully gone after peer-to-peer file-sharing sites like Grokster and Limewire. But it looks like the battle is going to start. The Motion Picture Association of America, on behalf of its member studios, filed a lawsuit against the popular Hotfile file-sharing service today. The studios could have chosen to sue any one of a number of cyberlocker services for copyright infringement; the fact that they chose Hotfile suggests that they believe that this service is a particularly ripe target, possibly because it’s one of only a few bold enough to offer an “incentive” program that gives cash rewards to big uploaders.

There’s nothing inherently illegal about cyberlocker services, as the MPAA sort-of acknowledges in their release about the lawsuit, which was filed today in a Miami federal court (embedded below). “Download hubs like Hotfile bear no resemblance to legitimate online locker services,” says the organization. “In fact, Hotfile openly discourages use of its system for personal storage.” The lawsuit describes how Hotfile incentivizes uploaders to send popular files by paying them once the file has been downloaded more than 1,000 times. Most of those files are, the MPAA claims, copyrighted works that are being illegally shared. And it’s those illicit files, claims the MPAA, that have made Hotfile one of the 100 most visited sites in the world, less than two years after its launch.

Registry information for Hotfile.com indicates the company is based in Panama, but the MPAA alleges Hotfile is run by Anton Titov, “a foreign national residing in Florida.” Titov is named as a defendant in the lawsuit as well. Hotfile didn’t immediately respond to an e-mail seeking comment about this lawsuit.

Hotfile’s site provides a standard way for copyright holders to ask it to take down material that infringes upon the Digital Millennium Copyright Act. But the studios claim that the service is still clearly inducing its users to break copyright law with its incentive program. In addition, they say Hotfile isn’t taking certain steps necessary to be protected from copyright lawsuits, such as terminating users who are repeat offenders.

This is the second suit against Hotfile in less than a month; in January, Hotfile was sued along with 1,000 John Doe defendants by adult film company *Liberty Media* Holdings (Not to be confused with Liberty Media (NSDQ: LINTA) Corp., which owns Starz, QVC and other media properties.)

Until now, the most notable litigation against a cyberlocker site was the lawsuit brought against Rapidshare by Perfect 10, a defunct porn company that’s now making a business of being a serial copyright plaintiff. The MPAA is, of course, much better equipped to make a serious legal challenge to cyberlocker services than these small adult film companies. If this lawsuit moves forward and Hotfile defends itself in court, the case could lead to some rulings about the legality of cyberlocker services.

It’s worth noting that Rapidshare, the largest cyberlocker site, also had an incentive program that rewarded uploaders for a period of time. But that program was discontinued in March 2010. Since both lawsuits against Hotfile make a particular issue out of its cash incentive program, one possible outcome of this litigation is that those types of programs will start disappearing from the cyberlocker landscape pretty quickly.

Hotfile Complaint 2.8.11