Several content owners filed suit for copyright infringement against Hotfile Corp, a corporation that operates a website where users can upload electronic files to the site, after which Hotfile provides the user with a unique link allowing anyone with the link to download the file. Hotfile pays users who upload the most popular files to it servers, and encourages users to promote their links. Files that infringe copyright constituted the majority of the downloaded files. Hotfile filed a motion to dismiss. The district court for the Southern District of Florida dismissed the claim of direct copyright infringement because, although Hotfile allegedly encourages the massive infringement, the complaint did not allege that the Hotfile took “volitional steps” to infringe the plaintiffs’ rights. However, the court concluded that the plaintiffs’ business model could give rise to contributory and/or vicarious liability for copyright infringement.
TIP: Regardless of whether direct copyright infringement is found, secondary copyright infringement may be found for inducing infringing conduct of another or profiting from direct infringement while declining to exercise a right to stop or limit it.