A U.S. federal court has found file-hosting website Hotfile liable for copyright infringement, according to movie industry body Motion Picture Association of America.
The US District Court for the Southern District of Florida also held that Hotfile's principal, Anton Titov, was personally liable for Hotfile's infringement, MPAA said in an emailed statement Wednesday.
"This case marked the first time that a US court has ruled on whether so-called cyberlockers like Hotfile can be held liable for their infringing business practices," it added.
The order was marked on online court records as "restricted/sealed until further notice." The opinion will be made public by the court in about two weeks, after confidential and proprietary information has been redacted, MPAA said.
Five U.S. movie studios filed a copyright infringement suit against Hotfile in 2011, alleging that the company paid incentives to those who uploaded popular files to the system, that were widely shared. Its affiliate program still offers payment "calculated based on a percentage of the total value of premium accounts purchased by users who download the affiliate's uploaded files."
The scheme gave incentives to users to upload popular copyright infringing content to lure users who would pay for premium accounts to access and download the files, according to the complaint by the studios. Hotfile offers downloads on a high-speed connection to holders of paid premium accounts, in contrast to slower download speeds and fewer downloads offered to free users.
"The more frequently the content is downloaded illegally, the more defendants pay the uploading user," the complaint said. Hotfile was also charged with paying websites that hosted and promoted links to infringing content on its servers.
The file-sharing site did not provide a searchable index of the files available for download from its website, and instead relied on "third-party pirate link sites" to host, organize and promote URL links to Hotfile-hosted infringing content, according to the complaint.
In a filing to the court in the civil suit, Hotfile said it is in full compliance with the safe harbor provisions of the Digital Millennium Copyright Act. "Hotfile and Mr. Titov run a legitimate business that fully complies with (and, indeed, embraces) the United States' copyright laws and the DMCA," it said. The terms of service and an intellectual property and rights policy published on its website explicitly prohibited copyright infringement, it added.
The website said it removes access when notified about files that allegedly infringe copyright, and has provided copyright holders, including the five studios, the "unfettered ability to remove access to files by directly commanding Hotfile's servers through special rightsholder accounts."
Hotfile in Panama could not be immediately reached for comment.