• by Wendy Davis  @wendyndavis, April 7, 2011

Enabling Web users to store music and movies in digital lockers doesn't violate copyright law, even if users upload pirated material to the lockers, Hotfile argues in new court papers.

The company is asking U.S. district court Judge Adalberto Jordan in Miami to dismiss a lawsuit by the Motion Picture Association of America alleging that Hotfile is liable when people use the service to store pirated material.

Hotfile argues that even if some users infringe copyright, the site itself is immune from liability under the safe harbor provisions of the Digital Millennium Copyright Act. Those sections generally protect sites from infringement liability based on user uploads, as long as the site takes down pirated material upon request of the owner.

"Conspicuously absent from the complaint is any allegation that Hotfile has failed to take down promptly offending files when Hotfile has received notices identifying them," the company argues in its motion to dismiss the lawsuit.

Other copyright lawsuits dealing with user-uploaded content, including Viacom's $1 billion case against Google's YouTube, have been dismissed because of the safe harbor provisions.

But the safe harbors have some exceptions, including ones that apply when companies are aware of infringement, induce it, or profit from it.

The MPAA alleged in its lawsuit that Hotfile profits by infringement on the theory that it pays for popular content in order to draw in new users who will purchase subscriptions. Hotfile allows people to upload and distribute files for free, but at restricted speeds. The company also offers premium memberships without the speed limits at prices ranging from $9 a month to $55 a year.

"Even if Hotfile did encourage the uploading of 'popular' content, as alleged, that does not equate to encouraging copyright infringement. There is plenty of 'popular' content being distributed on the Internet that is not infringing at all," Hotfile argues.

Hotfile additionally contends that unlike peer-to-peer companies Grokster and Napster, it doesn't offer search functionality that allow peoples to easily find copyrighted material. Instead, only the person who has uploaded material receives the link for its download.

"Hotfile provides the same basic service as the hundreds, if not thousands, of other bona fide Web-hosting services that are critical and necessary to enable the full potential of the Internet," the company argues.