Court Allows Copyright Infringement Free For All On File Hosting Sites

by Christopher Harbin

Right now, it appears that courts are willing to let file-hosting sites like Rapidshare, Hotfile, and Megaupload live in the void in the law between Grokster, Limewire, and Napster.  Recently, Judge Huff of the Southern District of California denied Perfect 10’s request for a preliminary injunction against Rapidshare holding that P10 could not prove a likelihood of success on the merits.   A couple of notes from the decision:

1.  Judge Huff finds that Rapidshare is not violating the 106(3) distribution right because their activity is distinguishable from Hotaling and Napster. Judge Huff reasons that because Rapidshare does not index its files, it is not making the files available in the same way that Hotaling and Napster were.

2.  Judge Huff affirms the general principle that Plaintiffs bears the burden of identifying the location of the infringing files on Defendant’s server to prove the requisite knowledge  for contributory infringement.   Merely providing filenames or copies of the infringing material and expecting Defendants to ferret out infringement  on their site.

3.  Rapidshare’s affiliate program:  The Court seemed more willing to accept that Rapidshare’s  affiliate program may be materially contributing to infringement.  However, it appears P10 did not offer enough evidence to get a TRO at this stage.

4.  The WTF Moment:  Court notes in the balance of equities analysis that P10 refused to take use Rapidshare’s take down tool to automatically delete infringing material.

5.  DMCA:  Rapidshare hasn’t designated an agent under 512 and therefore cannot take advantage of the service provider liability exception.   The court did not reach whether charging for access or the affiliate program would remove 512 immunity, likely because there was no need to reach this question because of Rapidshare’s failure to designate an agent.

I’m not the most pro-copyright guy on the block, but I think it’s pretty clear that Rapidshare and its ilk are clearly liable for  contributory infringement.

First, although Rapidshare does not index its files, it basically punts indexing to third-party websites.  It’s trivial to find infringing material hosted on Rapidshare and other file-hosting sites and I’m not sure why dicing up storage and indexing into separate entities which obviously have a symbiotic relationship should be able to avoid liability.

Second,  I’m not at all convinced that in all cases plaintiffs should be forced to ferret out all infringement on a defendant’s website.  As the law stands right now, copyright holders have to employ an army of people to constantly monitor defendant’s site for infringement.

Third, these affiliate programs — and the fact that these sites charge for download access rather than storage space — clearly indicates to me that they are actively trying to induce infringement.  Before these sites wised up, one of these sites actually encouraged users in its affiliate program to upload popular movies, songs, and images.  Some of these affiliate programs pay out in cold hard cash or in download credits.   Even though there is some measure of plausible deniability here, I don’t need a weatherman to tell me which way the wind blows.

Fourth, Plaintiffs should not have to avail themselves of self-help measures to take down copyrighted material to get a TRO to stop infringement.  It’s like a pawn shop saying that although they are  pretty sure most of the merchandise  in the shop is stolen that if you can come down and identify your stolen goods  they’ll be glad to give them back to you.  Additionally, these take down regimes usually use MD5 hashtags which are pretty frickin’ useless.  Hashtags are useful in identifying whether the particular file on the server IS the exact same as the original file, but they are not useful as a location device.  In other words,  if the hashtag of a copyrighted file is found on another’s server, it is almost certain that the files are the same.  But a failure to match hash tags does not mean that the file is not located on the server because hashtags are easy to circumvent.  For example, the hash tag of a word document containing the collected works of Shakespeare would be different from the same document with an extra punctuation mark.  So uploaders just add in a couple extra seconds of music or video to circumvent the hash tag.   So in the pawn shop analogy, you’d have to be able to identify your merchandise to the nearest micron in order to get your stolen goods back.

So as it stands currently, it appears that file-hosting sites have found a hole in copyright law and are free to actively exploit it.  Until courts or Congress plug the hole, it seems that file-sharing sites are an infringement free for all.

36 Responses to Court Allows Copyright Infringement Free For All On File Hosting Sites

  1. Alan says:

    Rapidshare is pretty stupid for not complying with the DMCA registration requirements.

  2. T. D. Ruth says:

    I’m one of those guys who has to send DMCA notices to the file hosting services on behalf of clients – mainly songwriters/publishers. While I’ve never been a fan of RapidShare and the like, I also give them credit for being largely legitimate file hosts that are merely exploited by those wanting to share copyrighted materials. While they may not have formally designated a DMCA agent, they provide a mechanism for sending notices and are prompt about removing content.

    So, even though I represent some stakeholders who are harmed by file sharing sites like this, I think they serve a legitimate enough purpose to remain online. That they provide a mechanism for taking down infringing content is enough for me.

    Sites like mp3raid, on the other hand, clearly aim to profit off of infringing materials. They can suck it.

    • Christopher Harbin says:

      Thanks for your comment. Do you worry that take down measures are too easy for uploaders to circumvent or is it enough to get at the low-hanging fruit? I’m sure that MD5 filtration for very popular media probably takes a pretty big chunk of it offline. Is this enough for copyright holders? I also agree that these sites have a legitimate purpose, I’m just not at all convinced that Plaintiffs should always bear the burden of combing through Defendants server. At some point, I’m willing to move that responsibility onto the hosts.

      • evrenseven says:

        Christopher, this is unrelated to the post but I didn’t know how else to get it to you… A copyrights short answer question…

        A clear take off on the iconic “London Calling” album cover. I say it’s good ol’ parody, hence the short answer.

        • Christopher Harbin says:

          I think it’s probably parody because it seems to be commenting on the Clash’s iconic album cover — but some may characterize it as satire. In the Cat in the Hat case, the use of Dr. Seuss imagery in a book on the OJ Simpson murder was held not to be commenting on Dr. Seuss but rather misappropriating Seuss’s protected expression. I personally think the satire / parody line is not as fine as others currently make it out to be. If I were czar of the copyright world, I’d remove the distinction all together.

      • T. D. Ruth says:

        How do you mean? These sites are only useful for distributing media if people can identify the song they want to download. Most of the time, the files are referenced on a blog if not indexed somewhere. Those blogs don’t succeed unless they have lots of visitors and they don’t get visitors unless they promote the files they’re linking to. If they’re promoting to the general public, they’re easy to find.

        The more covert they are about the location of the file, the more limited the distribution will be. There’s a threshold where, for a variety of reasons, it doesn’t make sense to pursue a takedown.

        • Christopher Harbin says:

          Sorry if I wasn’t clear. I was asking where you — as a practitioner — believe there is some unfairness for plaintiffs to have to actively and continuously police a site like Megaupload after you have notified them of infringing content. You can notify them of one location and –doink– the file is up in another location. Alternatively, you can ask file-sharing sites to filter by MD5 hashtag, but these are easily circumvented. I’m trying to fish out where I think the balance is and I’d like to hear practitioners’ viewpoints on that.

          I’m also not convinced that going after the indexing sites is enough. First, I believe that most sites are within the DMCA’s information location exception and targeting these sites doesn’t give much context for a fair use analysis.

          My view is that under certain circumstances courts should require a more robust effort by file-hosting sites to prevent copyright infringement on their site. Because these sites have built their business model on profiting directly from other’s copyrighted content and then turn a blind eye to their user’s infringement, I think it’s pretty unfair for courts to require plaintiffs to resort to self-help methods to get an injunction. Especially because the self-help methods that remove content are so trivial to circumvent.

  3. Jeff says:

    Come on – digital copies of copyrighted material aren’t exactly analogous to just any stolen goods at a pawn show.

    If the pawn shop has your stuff, you can’t also have it. The analogy only works if the stuff at the pawn shop is pirated DVDs or some such.

    • Christopher Harbin says:

      Your point is totally irrelevant. Your beef — which is totally misplaced in this discussion — is with the public goods characterization of why we have copyright law, not the idea that plaintiffs are forced to go to great lengths to stop file-sharing sites from stealing from them. My main point here is that at some point, I believe it is fair to make the “pawn shop” starting checking the goods at the door a little harder. I’ll write soon on the public goods problem and you can jump in with the “ZOMG BUT COPYRIGHT OWNERZ HAZ A COPY TOO!” argument then.

      • Harry Mauron says:

        A TRO requires irreperable harm. The court correctly determined that a plaintiff facing irreperable harm would have tried the available self-help feature before running, panties-a-wad, to the court.

        To continue the pawn shop analogy – why should the court swing into action and make an ex parte ruling when the plaintiff couldn’t be bothered to call the shop on the phone (at the number listed on the door, the yellow pages, etc.) to get their allegedly stolen goods back?

        • Christopher Harbin says:

          Couple points here.

          1) This isn’t ex parte. Both parties got to respond. You should learn what those words mean before you bandy them about. Like Uncle Ben said to Peter Parker “With great power comes great responsibility.” So too with legal language.

          2) A more apt analogy is that I’ve been to the pawn shop four days in a row to get back my Magic cards the neighborhood kids keep stealing, and I don’t feel like describing all the cool artwork on Black Lotus to get it back on the fifth day.

          3) “A TRO requires irreperable harm. The court correctly determined that a plaintiff facing irreperable harm would have tried the available self-help feature before running, panties-a-wad, to the court.”

          I’m not sure why the defendants should get to choose the “self-help” exactly because such self-help is useless in the long run. It’ll just be back six seconds after take down because somebody else uploads it again. Copyright owners — especially ones who have large amounts of content to police — are making a concerted effort to punt some of the responsibility to stop infringement on their sites to the owners. I support this initiative.

          • Harry Mauron says:

            I’m pretty familiar with the meaning of “ex parte”.
            You incorrectly used the term TRO (when you mean preliminary injunction) so I included the additional element in my pawn shop hypo.
            The point stands. Money damages are sufficient and plaintiff bears the burden to enforce. No TRO and no PI is necessary, especially if the plaintiff can’t be bothered to identify the infringing content or use provided self help.

  4. evrenseven says:

    In my opinion, indexing should be the sine qua non of contributory infringement by an ISP.

    But in a broader sense, when is Perfect 10 going to give up? You operate a dead business model. At some point, you have to decide that even though the law may be on your side, the changing times just don’t make your business viable anymore.

    The music industry will always survive in some embodiment because there is no replacement for the live concert experience. However, pornography exists *because* of the lack of a live experience, so to speak. Also, despite being completely legal, porn lives in this gray area of shame where users feel its OK to pirate the content because it’s already something dirty and immoral to begin with. I wonder if people who wouldn’t download music or movies actually *would* download pornography.

    Again, I’m not saying it’s right, but it’s time for Perfect 10 to pack it up and find a new line of business… perhaps move to Nevada and start offering “live experiences?”

  5. Davis says:

    The court seems to give short shrift to the eBay v. Mercexchange standard for issuing injunctions, and continues to presume irreparable injury based on the likelihood of success on the merits. Are we witnessing yet another copyright split between the Second and Ninth Circuits?

    • Christopher Harbin says:

      I think you are correct — it is logical to presume harm from a likelihood of success on the merits but not logical to presume “irreparable harm” that can only be remedied by injunctive relief. I think Doug Laycock has it right when he proclaimed the irreparable injury rule dead-letter law. 103 Harv. L. Rev. 687 (1990). Assessing money damages would be a royal PITA for courts, so better just to sign an injunction. Can’t say I blame them.

  6. […] Harbin alerted us in the comments that he’s posted a copy of the ruling and written up his own analysis. First, here’s the ruling: From the initial statements about the ruling from Rapidshare, […]

  7. […] Christopher Harbin alerted us in the comments that he's posted a copy of the ruling and written up his own analysis. First, here's the ruling: From the initial statements about the ruling from Rapidshare, saying […]

  8. fnord says:

    Keep in mind that Grokster prevailed in the lower courts, too. This ain’t over yet.

  9. Chris,

    Congratulations on your comments regarding the Perfect 10 v. RapidShare ruling. I actually liked the Judge. She tried hard to make the correct ruling, but in my view, did not fully appreciate the substantial way in which RapidShare materially contributes to the infringement. RapidShare stores the infringing material on its servers, sells access to it, and has paid third parties to upload it as well. That’s about as involved as one can get in the infringing activity. So we just don’t agree that RapidShare does not materially contribute to the infringment. I also do not believe that RapidShare qualifies for DMCA safe harbor for a number of reasons, the primary one being that there is no safe harbor for selling access to other people’s intellectual property, which also creates direct liability for RapidShare. I sent 842 Perfect 10 images showing the model names to RapidShare at its offices in Cham. They never even responded to the notice. I wanted them to block the images from reappearing. Their claim, that I should have sent URLs instead of images, doesn’t prevent the same images from reappearing elsewhere. Simply specifying a URL doesn’t identify which images at that URL belong to the copyright holder. RapidShare could have easily found those images by searching on the model names, as you pointed out in your insightful article. If RapidShare truly wanted to remove all infringing content from their website, as they claim, they wouldn’t have much left. Maybe a few movie trailers and a picture of Christian Schmid’s car. We intend to appeal this ruling to the Ninth Circuit while the case goes forward in San Diego as well. This case is far from over.

    • Permanently hard Dique says:

      What about “Plaintiffs bears the burden of identifying the location of the infringing files on Defendant’s server to prove the requisite knowledge for contributory infringement.” Does every host have to be your policing lackey if you tell them to take down all IP ever mailed to the Library of Congress?

      • Christopher Harbin says:

        I think you are seeing owners of a large amount of copyrights really tired of playing whack-a-mole with file sharers. One of Viacom’s beefs with respect to Youtube is that the same files, which are easy to find, keep popping up. At some point, it is simply not fair to make copyright owners ferret out every single infringing piece of material on another’s server, especially when they’re on notice of (or at worst encouraging) large-scale infringement on their site.

        And like I’ve said before, I’m not the most pro-copyright owner guy on the planet. There are many times I think copyright owners jump the gun on obviously fair uses of material and they can be royal jerks about it. But you copyright homers are going to ruin it for the rest of us. The reasonable types want a fair exchange between the public and content creators. Apparently what the rabid anti-copyright crowd wants is, well — frankly I can’t figure out what you all want. My best guess is you want content for free. When people say things like “the model needs to change, man,” that’s just advocating for copyright owners to compete with free. That can’t be right. If the anti-copyright crowd would direct their attention from “fuck the RIAA” to “fuck the DMCA” for a hot-second, we might see some real copyright reform happen. But as it stands now, you’re ruining the credibility of the reasonable folk.

        Norm has it right — I think Rapidshare, Hotfile, etc. have a pretty solid understanding of their model and that a ton of their revenue is derived from inducing and selling access to copyright infringement. I don’t advocate for file hosting sites to be shut down completely, but I don’t think it is unreasonable to judicially force these sites to police their house a little bit better.

  10. […] Harbin alerted us in the comments that he’s posted a copy of the ruling and written up his own analysis. First, here’s the ruling: From the initial statements about the ruling from Rapidshare, saying […]

  11. Sean F. says:

    My friend Josh and I feel that the downloading of copyrighted material is alright in two specific situations.

    1 – When the material in question is no longer in print and only used copies exist (in which case, the copyright holder gets no money anyway).

    2 – When the material in question is extremely difficult to find through legitimate channels (most often when the first condition applies).

  12. Mike K says:

    Has anyone looked at the German rulings against Rapidshare? Both the book industry and the German version of the RIAA won! The courts found infringement, and required immediate action by Rapidshare.

    • Christopher Harbin says:

      I’ve read the German rulings and Rapidshare as both won and lost. My German is okay, but I had to rely on google translate to get at lot of the legal language. With the caveat, it appears the two courts whose decisions I reviewed differed on whether it is feasible to implement an effective filtering mechanism. I’m quite torn as to what I think here. On one hand, I don’t whole-heartedly believe (and I think one would be naive to think) that Rapidshare is doing all that they can within reason to stop infringing activity on their site. Nor do I think Rapdishare should be required to review every single file put on their server. This problem gets slightly easier as identification technologies become more robust, but I’m also wary because fair uses on file-upload sites may be tagged. Also, if I read the opinions correctly, I believe Germany has a different standard for copyright infringement, requiring that ISP-type services implement some form of monitoring, so I’m not sure how useful the decisions are to us.

      My premise is much less expansive — that where service providers are on notice of a pretty substantial track record of infringing content, courts should be willing to impose more robust requirements of these sites to search for and take down infringing content, especially given the large “whack-a-mole” problem. The alternative is that copyright owners will force service providers to cough up IP addresses / payment records and then hammer individual uploaders. I’m not sure why copyright owners should be forced to alienate only these uploaders when service providers are taking in a pretty sweet rake on infringing content.

  13. Christopher Harbin says:

    Mea culpa on the TRO/PI mixup, although to be fair TROs are not necessarily ex parte.

    First, I still disagree that defendants that rake off infringing content should get to define the “self-help” Plaintiffs, whom there is no doubt are being harmed here, and that P’s should have to avail themselves of defendants self help to enjoy injunctive relief. Especially because, as Norm notes, the self-help is freaking useless. It’s not self-help but rather a defendant-imposed hurdle.

    Second, the irrepreable harm rule is dead-letter. There are lots of things money damages can pay for, but courts seriously don’t give a crap. If you punch me in the face every day for a week, I would certainly have an adequate remedy at law for future punchings, but there isn’t any good reason I shouldn’t be able to enjoin you from punching me. Contempt is a useful tool, sometimes.

    If you have beef with the fact that irrepreable injury has all but died out as an actual requirement, that’s independent of copyright law and not really at issue here. Otherwise you are basically instituting a judicially-mandated statutory license. For the most part, IP rights are rights to exclude, (yah, I know copyright is kinda different, but the underlying incentive theory is the same) so I feel injunctive relief is appropriate in most cases.

    • Harry Mauron says:

      Maybe we’re arguing past each other.

      I’m fine with onerous anti-whack-a-mole obligations on hosts AFTER they’ve been found to infringe or contribute to infringement. Since the P10 case is looking for an injunction, the plaintiff should be obliged to try a little harder, especially in this area (or IP/tech generally) where the contours of the law are fuzzy at best.

      So forget irreperable harm as an blackletter issue – it’s just about context, same as the degree of likelihood of success. You have to look like somebody who needs and deserves an injunction (or TRO) to get one. P10 doesn’t.

  14. […] past unsuccessful legal action by Perfect 10 and a recent German legal victory by RapidShare. The Legal Satyricon summarizes and criticizes the decision, arguing that RapidShare and similar sites are obviously […]

  15. Othelos says:

    Internet is the only thing that is left free in this world ( at least for the momment). It is a great success, we don’t need a big brother watching over what files we download.

    Just my point of view, don’t flame me

  16. In the long run, I think all of this criminalization of opportunity cost is creating a backlash that will eventually turn so many people against copyright that people will stop buying content out of sheer emnity toward the producers.

    I’m working on my 7th cd, so I have an interest in copyright. I have to say that the inequities in the old system have left me jaded enough about the gatekeepers that I can’t wait for the day when there are no major labels.

    File sharing is like airplay for the little guy who can’t make the payola. Even if I like a major label artist, I haven’t bought a new major lable cd in years. I buy ’em used, but I’m liking big time stuff less and less.

    Copyright is doing more to harm the useful arts than it is promoting it. I honestly think the more “victories” the RIAA has the less people are going to buy their stuff.

    If your legitimacy as a label is based on being trusted for finding good music, alienating your audience is not the place to start. Punish the people that like what you do and they’ll stop listening to the artists all together or just stop caring about where the files come from at all.

  17. BlaineB says:

    Filesonic allows Filestube to index its files even if the links have never been “published” on a forum or blog. As a producer I have been able to locate multiple sets of identical links that were created with the “copy” function as a backup for when the links that are posted publicly and deleted via DMCA takedown.

    Several other filehosts also appear to now be allowing Filestube to index their servers to get more downloads and more traffic to their sites and more money to their affiliate posters. Filesonic owners Ouissam Youseff & Matt Keez continue their trailblazing ways.

  18. 0dayarchive is Original Scene Download Wallpaper From Filesonic…

    Court Allows Copyright Infringement Free For All On File Hosting Sites « The Legal Satyricon…

  19. you wish says:

    everybody should be a value producer that way everybody gets everything for free.

%d bloggers like this: