infringers, rather than on specific instances of infringement. Accordingly, if the Section
512(c)(1)(B) requirements are met, the entire relationship between the defendant and the
infringers should fall outside the safe harbor. The court therefore held that because the
defendants did not meet the requirements of Section 512(c)(1)(B), they were outside the Section
512(c) safe harbor with respect to all infringement activities on their sites that were the subject of
this suit.^2811
After the Ninth Circuit’s decision, Fung agreed to a $110 million judgment and to shut
down his web site by Oct. 23, 2013.^2812
x. Disney Enterprises v. HotfileIn Disney Enterprises, Inc. v. Hotfile Corp.,^2813 Hotfile operated an online storage locker
service that enabled user to upload files for storage through a simple user interface. Once a file
was uploaded, the user automatically received one or more unique URL links containing the file
name and an extension. The link generally gave some indication of the file name and thus its
possible content. Although Hotfile provided no index or search feature, it encouraged users to
share file links through an affiliate program, which paid individuals to navigate prospective
downloaders to file locations. The incentives increased with the size of the file and the
frequency of its download but without regard to the content of the file. Hotfile’s affiliates
created their own web sites that catalogued files found on Hotfile, promoted their files, or
allowed the public to search for files. Uploading users could themselves broadcast the download
links, such as by emailing them or by advertising them through other channels. Thus, in addition
to a storage site, Hotfile had been turned into a file distribution network. Hotfile did not review
what its users were uploading, downloading or promoting. Although Hotfile was accessible to
the public and anyone could upload or download for free, paying nine dollars per month for
“premium” status permitted uploaders to store their files for a longer period; otherwise, files
were automatically deleted every three months.^2814
The plaintiffs brought claims for inducement, contributory and vicarious liability against
Hotfile and filed a motion for summary judgment seeking an adjudication that Hotfile’s activities
were not entitled to the DMCA safe harbors.^2815 In support of their motion, the plaintiffs argued
that Hotfile did not reasonably implement a repeat infringer policy and the court agreed based on
a number of considerations. While noting that the statute does not require a perfect policy or
(^2811) Id. at 1046.
(^2812) “Website at Center of Copyright Infringement Action Agrees to Shut Down World Wide,” BNA’s Patent,
Trademark & Copyright Journal (Oct. 17, 2013), available as of Oct. 17, 2013 at
http://iplaw.bna.com/iprc/display/simple_doc_display.adp?fedfid=37305808&vname=ptdbulallissuesdib&jd=a0
e2n9r2f6&split=0#a0e2n9r2f6.
(^2813) 2013 U.S. Dist. LEXIS 172339 (S.D. Fla. Sept. 20, 2013). In an earlier opinion, discussed in Section II.A.4(r)
above, the court granted Hotfile’s motion to dismiss the plaintiffs’ claims of direct infringement, but denied its
motion to dismiss with respect to the plaintiffs’ claims of inducement, contributory and vicarious liability.
(^2814) Id. at 6-11.
(^2815) Id. at 5-6.