The court noted that Hotfile’s general knowledge of infringement, even if rampant, was
insufficient by itself to support liability. And unlike Grokster, the intent to infringe was not
“unmistakeable” such that it could be said to be central to the business model and ingrained in
the platform’s design. Although some evidence showed that Hotfile might have been on notice
that specific acts of infringement were afoot, the evidence did not demonstrate that Hotfile knew
for certain that the uses were illegal or that Hotfile induced the infringing use. On balance, the
court concluded that a number of questions remained regarding Hotfile’s intent (actual or
imputed) to foster infringement and the capacity for and scope of noninfringing uses of its
system, therefore making summary judgment for inducement or contributory liability
inappropriate.^2248
In Dec. 2013, the MPAA announced a settlement under which the district court had
awarded damages of $80 million to the plaintiffs and ordered Hotfile to either shut down its
operations or use digital fingerprinting technology to prevent copyright infringement by its
users.^2249
(g) UMG Recording v. Escape Media(For a discussion of inducement liability issues in this case, see Section III.C.1(c) above.)- Adequacy of Pleadings of Secondary Liability Against Service
Providers
A number of cases have addressed the adequacy of pleadings of secondary liability on the
part of service providers in view of the principles of liability articulated in the cases in the
preceding three subsections.
(a) Miller v. FacebookIn Miller v. Facebook, Inc.,^2250 the plaintiff, owner of copyright in a video game called
“Boomshine” sought to hold Yeo, the developer of another game called “ChainRxn,” directly
liable for infringing the look and feel of Boomshine, and to hold Facebook indirectly liable for
listing ChainRXn in the Facebook Application Directory and providing the platform through
which ChainRXn was distributed. Facebook sought to deny the plaintiff leave to file a second
amended complaint. The court granted leave, finding that the proposed second amended
complaint adequately pled claims of direct infringement against Yeo and contributory
infringement against Facebook.^2251
(^2248) Id. at 119-23.
(^2249) “Hotfile To Pay $80M to MPAA, Studios In Copyright Suit,” Law360 (Dec. 3, 2013), available as of Dec. 7,
2013 at http://www.law360.com/ip/articles/493076?nl_pk=be5fde4e-8dc1-4d81-b621-
f0352bcdff74&utm_source=newsletter&utm_medium=email&utm_campaign=ip.
(^2250) 2010 U.S. Dist. LEXIS 61715 (N.D. Cal. May 28, 2010).
(^2251) Id. at 1-3.