The digital locker service Hotfile, currently defending itself in a copyright infringement lawsuit by Hollywood studios, has countersued Warner Bros. Entertainment for allegedly claiming to own content that it did not.
Hotfile says in new court papers that it created an automated takedown tool for Warner Bros. to use, only to have the company remove thousands of files that were owned by other companies.
"In providing Warner with this special privilege, Hotfile relied on Warner's sophistication and experience ... as well as its representations of its honesty and integrity in business dealings," Hotfile says in papers filed this week in the U.S. District Court in the Southern District of Florida. "Regrettably, Warner has betrayed that trust."
For instance, Warner allegedly deleted a free software title owned by a publisher that had attempted to distribute it as freeware. In another example, Warner allegedly deleted links with the words "the box" in the title, even where the content was unrelated to the Warner movie "The Box."
Hotfile alleges that its records indicate that Warner took down the audio book "Cancer: Out Of The Box," By Ty M. Bollinger, as well as the BBC show "The Box that Saved Britain."
Furthermore, Hotfile alleges that the takedowns harmed its relationship with consumers, some of whom terminated their paid accounts. The countersuit is only against Warner, and not the other media companies in the Motion Picture Association of America.
The digital locker company says Warner violated the Digital Millennium Copyright Act, which imposes liability on companies that knowingly send incorrect takedown notices.
But Internet law expert Eric Goldman says that Hotfile will likely have an uphill battle. That's because a federal appellate court ruled in 2004, in another case involving the MPAA, that content owners who subjectively believe they are sending takedown notices in good faith are not liable for incorrect notices.
"Hotfile's claim probably isn't strong," says Goldman, director of the High Tech Law Institute at Santa Clara University. "It's going to be a very hard claim to win."
At the same time, Hotfile's allegations could help it strategically because they allow the company to argue that it attempted to work with Warner Bros. to stamp out copyright infringement.
"The advantage is that Hotfile's going to claim it is the copyright-law friendly cyberlocker," Goldman says. "The counterclaim allows them to tell this whole story of all the things they did for Warner Bros. that other cyberlockers don't do. That's helpful for them in front of a judge."
The litigation dates to February, when the MPAA sued Hotfile for hosting copyrighted material. Earlier this year, U.S. District Court Judge Adalberto Jordan denied a motion by Hotfile to dismiss the lawsuit against it at a preliminary stage. Jordan ruled that the MPAA made sufficient allegations to warrant further proceedings on charges that Hotfile induced its users to infringe copyright.
The company allows people to upload and distribute files for free, but at restricted speeds. Hotfile also offers premium memberships without the speed limits at prices ranging from $9 a month to $55 a year.
In addition, it operates an affiliate program that compensates users who upload popular files, according to the court papers. The MPAA argues that this structure encourages people to upload copyrighted videos and promote the links on other sites in order to collect referral fees.
Warner declined to comment on the countersuit.