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Will the MPAA Target RapidShare, Megaupload or Dropbox?

Hollywood opened up a new front in its war against piracy Tuesday by taking the Florida-based file host to court. Hotfile facilitates copyright infringement “on a staggering scale,” the Motion Picture Association of America alleged, and “profits handsomely” from distributing unlicensed copies of major motion pictures and TV shows.

This is the first time the movie studios have taken a so-called one-click file host to court, and the legal arguments used in the lawsuit could spell trouble for sites like Megaupload and RapidShare, or even backup services like Dropbox.

Let’s examine the main arguments made against Hotfile, and how they could affect other services:

Direct download links. Hotfile offers its paying users the ability to directly link (“hotlink”) files hosted on the company’s servers, a feature which the service owes its name to. The complaint argues that through this feature Hotfile “directly sells access to, and copies of, hosted content, profiting directly from its reproduction and distribution,” and in fact does what Netflix (s NFLX) and Hulu do, just without a license.

Of course, many cloud storage providers also offer the ability to share direct download links, and companies like Mediafire have been using this feature as an upsell for their premium plans for years. One could even argue that traditional web hosting plans with metered bandwidth offer the exact same feature. Does that mean that every web host profits from the distribution of copyrighted works?

Public sharing. “Hotfile could immediately, with no effort, substantially mitigate the massive public distribution of copyrighted content by password-protecting the ability to download files,” the complaint argues. The fact that Hotfile allows public sharing is seen as proof that the company’s business model is based on infringement. Once again, bad news for any cloud backup or storage service that offers convenient ways to share files. No password for that Dropbox share? Then you must be infringing.

No search engine. “To conceal the scope of its infringement, Hotfile does not provide a searchable index of the files available for download from its website,” the complaint reads. This is a remarkable argument. File sharing services like Napster got in trouble because they offered a central, searchable index of files to download, and Hollywood went on to sue dozens of torrent sites offering search functionality. Now it’s apparently wrong to not offer search. Of course, one could easily argue that companies like Dropbox and Sugarsync also simply want to “conceal infringement” by not making their data available for public search.

Hotfile’s rewards system. Hotfile offers free file storage, but it restricts the amount of data a non-paying user can download. The company offers cash rewards to users whose files are downloaded frequently to get more people to sign up for its premium services. It’s a business model common with one-click file hosts. Megaupload, for example, offers users $1500 in cash if their files generate one million downloads. However, RapidShare eliminated its own rewards system last summer due to piracy concerns.

The rewards system put in place by Hotfile will likely play a big role in this lawsuit, should it go to court. However, some of the other claims made by the MPAA are more than troubling, and cloud storage companies should pay close attention to this case going forward. A legal precedent in this area could spell trouble not only for the RapidShares and Megauploads of this world, but also for a much wider array of cloud service providers.

Image courtesy (CC-BY-SA) of Flickr user tuchodi.

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7 Responses to “Will the MPAA Target RapidShare, Megaupload or Dropbox?”

  1. The “no search” argument is ridiculous, and I’m confident any court will see that. The point in not providing a publich index of files is exactly to prevent outsiders from finding any possible copyrighted content, unless an uploader explicitly makes links public and therefore commits infringement.

    The argument is so non-sensical that it is impossible for the plaintiff and their lawyers not to know. This can mean one of two things. Either they have hired an incredibly bad lawfirm with completely inept lawyers, because they can’t afford better ones. Or, much more likely, they take the risk with the bad argument because they have a very weak case against Hotfile, and they know it. They have to know that Hotfile is in full compliance with the law since they are very quick in responding to DMCA takedown requests.

  2. Andrew "the jester"

    …why oh why no one has sued the MPAA itself for not having a return policy in movie theatres…? If i go to the movie theatre and watch some pice of junk for 15-20 minutes and I hate it(but loved the trailer though), and I walk… will I get my 10 bucks back? hm. And if you noticed… 60%-70% of all movies on blockbuster site got 3 out of 5 or below… The studios STEAL FROM PEOPLE EVERY DAY… nobody sues them… why? because uncle sam doesn’t give a dman – he’s got his money from the studios… If “Avatar” is soooo cool, I’ll spend 10-15 bucks and watch it in theatres, or rent it, or even buy a bluray, but if it’s another lemon and I missed it in theatres, even if I’ll get that legal bluray copy for free, it will end up in the garbadge…. after 15-20 minutes watching. tnx for readin.

    • Admin Paul

      Hey when I was referring people to dropbox they gave me more and more space which is worth money, so it’s like a payment or reward!!! But I’ve never uploaded or downloaded anything illegal in my life. As my ip is now on their records could I get into trouble? I don’t know what other freaks might do with their dropbox accounts!!!
      Makes me scared to use dropbox, I might cancel :(

  3. Because i have been in this scenario some time in the past i can tell you that the cases that are brought to court are due to denial of the file hosting companies to delete any legal content ONCE REPORTED. So, if someone reports that his content is uploaded illegally on your file hosting firm, just delete it. Hotfile and some others do not delete this content because this is how they make money ( bring more downloads etc… )

    File storage/cloud storage services are not in any kind of danger as long as there is full cooperation with the producer of the content.

  4. robertovalerio

    Well, I guess the MPAA could be targeting DropBox quite soon! Why? Because DropBox uses de-duplication: If a file already exists on the DropBox servers it will not be uploaded again.

    So the MPAA as the representative of the movie industry could just try to upload all pirated and bootlegged movie material. If DropBox does not upload the file as a new file then proof is made that the file is already on their servers. It does not matter anymore how many users have access to the file. It is there.