The ruling itself is not yet available, but MPAA chairman and CEO Chris Dodd reportedly cheered U.S. District Court Judge Kathleen Williams “for recognizing that Hotfile was not simply a storage locker but an entire business model built on mass distribution of stolen content.
The studios sued Hotfile two years ago, arguing that the site's design encouraged copyright infringement. "As with other adjudicated pirate services that came before it, from Napster and Grokster to Isohunt and Limewire, Hotfile exists to profit from copyright infringement," the MPAA argued in court papers.
Hotfile 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.
But Hotfile said that it was protected by the Digital Millennium Copyright Act's safe harbors, which provide that Web services providers aren't liable for infringement by users -- provided the sites take down material upon request. Those safe harbors have some exceptions, including one for companies that know they are hosting pirated material.
It's not yet known why Williams rejected Hotfile's argument on that point. One possibility is that she accepted the MPAA's argument that Hotfile induced infringement by compensating users who uploaded files that other people wanted to access -- presumably, professional movies and TV shows. Williams also reportedly found Hotfile's principal, Anton Titov, personally liable.
The judge is expected to release an opinion to the public within two weeks.