Update: Hotfile has settled the case out of court and has accepted an $80 million judgment, according to Ars Technica. Hotfile has agreed to pay $80 million and to stop operating "unless it employs copyright filtering technologies that prevent infringement," according to a press release issued by the Motion Picture Association of America (MPAA).
Original Story: The Motion Picture Association of America wants $500 million from file hosting site Hotfile for its part in numerous DMCA violations, according to the lobby for the movie industry. The MPAA has been fighting a long court battle with the site for two years; with the official start of an actual trial beginning next week. Both parties have now reached an agreement on the number of copyrighted works that will be part of the trial. Initially the movie studios wanted to include 3,808 movies and TV-shows, but that number has been reduced to 3,448.
“Defendants acknowledge and concede that Plaintiffs’ copyrights in all 3,448 of the Remaining Works in Suit were directly infringed by users of the Hotfile system, for which Defendants are vicariously liable, and for which Plaintiffs are entitled to recover statutory damages,” the joint stipulation reads.
The full list of pirated files includes work from all MPAA members (except Sony Pictures) including episodes of TV-shows Glee, Heroes, Lost, Prison Break, Friends and Fringe; and movies such as The Karate Kid, The Bourne Identity, Bambi and The Matrix. For each of these titles the jury or court can award a fine between $750 and $150,000. This means that Hotfile could face damages as high as $517,200,000.
The agreed-upon stipulation clarifies that Hotfile has waived all "affirmative defenses against its liability for direct copyright infringement" but reserves the right to argue that its users were “space shifting” files that are not included in the suit, which could be seen as fair use.
"Defendants reserve their right to argue that files on the Hotfile system [other than the 3,448 files in suit] may have been ‘space shifted’ by Hotfile users. Plaintiffs reserve their right to argue the contrary, including that ‘space shifting’ is neither a relevant nor legally viable theory of fair use with respect to any copyrighted files on the Hotfile system," the stipulation reads.
The jury will also have to decide on Warner Bros’ potential DMCA abuse.
Hotfile counter-sued Warner and alleged that after granting access to its systems the studio wrongfully took down hundreds of files including games demos and Open Source software without holding the copyrights to them. Hotfile seeks compensation for these false takedowns and the damage they have done to the company. Oddly enough movie studios cannot use words such as "piracy," "theft," and "stealing" during the trial.
We will have more on this story as it develops.