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Court Allows Copyright Infringement Free For All On File Hosting Sites

by Christopher Harbin

Right now, it appears that courts are willing to let file-hosting sites like Rapidshare, Hotfile, and Megaupload live in the void in the law between Grokster, Limewire, and Napster.  Recently, Judge Huff of the Southern District of California denied Perfect 10’s request for a preliminary injunction against Rapidshare holding that P10 could not prove a likelihood of success on the merits.   A couple of notes from the decision:

1.  Judge Huff finds that Rapidshare is not violating the 106(3) distribution right because their activity is distinguishable from Hotaling and Napster. Judge Huff reasons that because Rapidshare does not index its files, it is not making the files available in the same way that Hotaling and Napster were.

2.  Judge Huff affirms the general principle that Plaintiffs bears the burden of identifying the location of the infringing files on Defendant’s server to prove the requisite knowledge  for contributory infringement.   Merely providing filenames or copies of the infringing material and expecting Defendants to ferret out infringement  on their site.

3.  Rapidshare’s affiliate program:  The Court seemed more willing to accept that Rapidshare’s  affiliate program may be materially contributing to infringement.  However, it appears P10 did not offer enough evidence to get a TRO at this stage.

4.  The WTF Moment:  Court notes in the balance of equities analysis that P10 refused to take use Rapidshare’s take down tool to automatically delete infringing material.

5.  DMCA:  Rapidshare hasn’t designated an agent under 512 and therefore cannot take advantage of the service provider liability exception.   The court did not reach whether charging for access or the affiliate program would remove 512 immunity, likely because there was no need to reach this question because of Rapidshare’s failure to designate an agent.

I’m not the most pro-copyright guy on the block, but I think it’s pretty clear that Rapidshare and its ilk are clearly liable for  contributory infringement.

First, although Rapidshare does not index its files, it basically punts indexing to third-party websites.  It’s trivial to find infringing material hosted on Rapidshare and other file-hosting sites and I’m not sure why dicing up storage and indexing into separate entities which obviously have a symbiotic relationship should be able to avoid liability.

Second,  I’m not at all convinced that in all cases plaintiffs should be forced to ferret out all infringement on a defendant’s website.  As the law stands right now, copyright holders have to employ an army of people to constantly monitor defendant’s site for infringement.

Third, these affiliate programs — and the fact that these sites charge for download access rather than storage space — clearly indicates to me that they are actively trying to induce infringement.  Before these sites wised up, one of these sites actually encouraged users in its affiliate program to upload popular movies, songs, and images.  Some of these affiliate programs pay out in cold hard cash or in download credits.   Even though there is some measure of plausible deniability here, I don’t need a weatherman to tell me which way the wind blows.

Fourth, Plaintiffs should not have to avail themselves of self-help measures to take down copyrighted material to get a TRO to stop infringement.  It’s like a pawn shop saying that although they are  pretty sure most of the merchandise  in the shop is stolen that if you can come down and identify your stolen goods  they’ll be glad to give them back to you.  Additionally, these take down regimes usually use MD5 hashtags which are pretty frickin’ useless.  Hashtags are useful in identifying whether the particular file on the server IS the exact same as the original file, but they are not useful as a location device.  In other words,  if the hashtag of a copyrighted file is found on another’s server, it is almost certain that the files are the same.  But a failure to match hash tags does not mean that the file is not located on the server because hashtags are easy to circumvent.  For example, the hash tag of a word document containing the collected works of Shakespeare would be different from the same document with an extra punctuation mark.  So uploaders just add in a couple extra seconds of music or video to circumvent the hash tag.   So in the pawn shop analogy, you’d have to be able to identify your merchandise to the nearest micron in order to get your stolen goods back.

So as it stands currently, it appears that file-hosting sites have found a hole in copyright law and are free to actively exploit it.  Until courts or Congress plug the hole, it seems that file-sharing sites are an infringement free for all.

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