While the agreement left room for the file-hosting service to continue its operations by implementing a filtering mechanism, the company decided to throw in the towel and shut down.

However, that doesn’t mean the trouble is over for the defunct file-sharing site. Encouraged by Hollywood’s multi-million dollar victory, several of the world’s largest book publishers have now filed a lawsuit of their own against the site and its owner.

Pearson Education, Cengage Learning, John Wiley and Sons, Elsevier and McGraw-Hill lodged a complaint with the U.S. District Court for the Southern District of Florida, accusing Hotfile of vicarious copyright infringement.

“Hotfile built a business off of infringement. The book publishers’ rights were massively infringed by the site and its operators. They should not be allowed to simply pocket their profits and walk away from the harm they caused,” a representative of the book publishers tells TorrentFreak.

The publishers have submitted 50 books as evidence, including ‘Office 2007 for Dummies’ and ‘C++ How to Program,’ for which they demand compensation. This means that Hotfile is facing up to $7.5 million in damages, if they are found guilty.

The complaint itself offers little new and repeats several arguments that were previously made in the MPAA vs. Hotfile case. Among other things, the publishers note that Hotfile knew that their service was widely used for copyright infringement.

“Hotfile was aware that the vast majority of the files on its service were copyrighted. It received millions of takedown notices under the Digital Millennium Copyright Act, received correspondence from users and affiliates identifying copyrighted works and recognized that users were migrating to Hotfile for copyrighted works after competitor RapidShare was sued,” the complaint reads.

The publishers further accuse Hotfile of doing nothing to remove pirated files from its service, and claim that the filehoster lacked a repeat infringer policy, which the court previously saw as a requirement by the DMCA to qualify for safe harbor.

“Hotfile failed to ban with any consistency repeat infringers who accounted for a large percentage of the infringing files on the system. Despite receiving millions of DMCA notices, Hotfile did not track whether any of the uploads came from the same user,” the publishers note.

As a result of these lax policies, a relatively small group of persistent infringers was able to upload dozens of millions of files, the publishers say.

“In fact, by early 2011, nearly 25,000 users had accumulated more than three DMCA notices and many had received 100 or more. This group of uploaders was responsible for posting 50 million files, which amounts to 44 percent of the files on Hotfile,” the complaint states.

Taking into account Hotfile’s legal history, the publishers have a pretty strong case. This may in part explain why they chose to pursue this target. The question is, however, whether Hotfile still has funds left to pay any damages.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

Thus far, these lawsuits have almost exclusively focused on BitTorrent users, but new legal action by several major book publishers suggests that Usenet uploaders are also being eyed.

Cengage Learning, John Wiley and Sons, Elsevier and McGraw-Hill recently obtained subpoenas from the U.S. District Court of Columbia, requiring Usenet providers to hand over the personal details of two very active uploaders.

The publishers state that they caught the uploaders “Hockwards” and “Rockhound” sharing hundreds of books. The pair are allegedly connected to Usenet services provided by Usenetserver and XS News, and both companies are now being held responsible for the infringing uploads.

“This information is being provided to you as the Usenet provider responsible for providing Rockhound with the accounts through which the infringement is occurring,” the publishers write in one of their letters.

“Based on the information at our disposal, we have good faith belief that the material uploaded to Usenet by Rockhound is infringing the book publishers’ copyrights. Over the past four months alone, Rockhound has uploaded hundreds of infringing books.”

The book publishers are asking the Usenet providers to hand over all information they have on the two uploaders, including billing records, phone numbers and addresses. In addition, the publishers list hundreds of infringing books that they want the providers to remove from their servers.

TorrentFreak talked to a representative of the book publishers who informed us that they have to protect their rights online, to guarantee that high quality books will continue to be published in the future. Targeting Usenet providers and their users is part of this strategy.

“The publishers are actively monitoring and enforcing their rights on the internet, including on Usenet. Any individual or company that uploads large quantities of digital copies of the publishers’ books for others to download without authorization is a potential target for enforcement,” the representative told us.

“Those individuals and companies are violating the law, no matter where they live and no matter why they are doing it,” the publishers add.

Whether the information obtained through the subpoenas will help the book publishers to identify both users has yet to be seen. It is not uncommon for uploaders to take measures to obfuscate their identities by using prepaid credit cards, VPN services and false contact information.

That said, the action against these Usenet uploaders is significant and in line with developments over the past year. Gradually, we’ve seen anti-piracy efforts begin to include Usenet providers and related services.

Copyright holders, for example, have rapidly increased the number of DMCA takedown notices they send to indexing and hosting services, leading to the shutdown of NZBMatrix. In addition, payment providers such as PayPal are banning Usenet related sites over piracy concerns, causing sites such as Newzbin2 to fold.

Although very rare at the moment, these recent legal actions by book publishers show that Usenet users aren’t immune to legal troubles either.

Update: This article has been updated to make clear that one of the users was a Usenetserver customer. Highwinds is not providing Usenet services.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

All of these companies were named in the lawsuit because of their connections to Pharmatext.org, a site that offered links to pirated e-books. The plaintiffs asked the court to find the operator of Pharmatext guilty of direct copyright infringement and the ad networks guilty of contributory copyright infringement for serving ads to Pharmatext, an arrangement which generated just $510.93 between August 2008 and December 2010.

Since the defendants weren’t initially present to mount a defense, the court issued a preliminary injunction which ordered Whois Privacy Protection Service to reveal the previously hidden identity of the Pharmatext owner (revealed as Kapil Dev Saggi of India), and site’s domain registrar to disable the website. The advertising networks, Clicksor and Chitika, were ordered to stop doing business with Pharmatext.

On June 3rd, 2011, in their defense Chitika argued that the plaintiffs had failed to present a viable claim for direct infringement against Pharmatext. Not only is Saggi in India (offenses need to be carried out in the US), but the location of the cyberlocker services where the allegedly infringing material was hosted was never revealed. Without a valid claim for direct infringement, Chitika argued, a claim for contributory infringement could not go ahead.

Nevertheless, even if direct infringement could be proven, Chitika argued that as a mere provider of a technology that allows a website operator to embed adverts in his site, the company “has no mechanism by which it can determine whether a publisher’s site contains allegedly infringing materials.”

The ad network added that London-based Elsevier and New Jersey-based John Wiley & Sons had not produced any evidence which showed that Chitika had knowledge of any infringing activity, or that it knowingly caused or substantially contributed to any infringing activity. The court has just delivered its verdict and essentially agreed with Chitika.

“Plaintiffs do not allege facts showing that Chitika was familiar with the content of the Pharmatext website, or knew (or had reason to know) that such content was infringing,” wrote United States District Judge Richard G. Stearns in his ruling.

“Thus, plaintiffs fail to support with plausible facts their conclusory allegations that Chitika ‘must have had knowledge’ of the alleged infringement of plaintiffs’ books,” and that “Chitika “plac[ed] ads on the Pharmatext site because [it] believe[d] that Pharmatext users – in other words, people seeking to obtain pirated copies of copyrighted books – are a target audience for particular advertisers.”

But while Chitika came out of this battle on top, law professor Eric Goldman says that if the plaintiffs had approached this particular infringement issue in a different way – by sending an early complaint to Chitika about Pharmatext’s infringing activities before going ahead with a lawsuit – the outcome could have tipped in the plaintiffs’ favor.

“I would expect this opinion to look very different if Elsevier sent a cutoff notice and Chitika didn’t promptly drop Pharmatext,” Goldman writes.

But the points of interest don’t stop there, particularly in respect of the advertising-blocking sanctions of the pending SOPA legislation. As previously noted, Chitika made hardly anything from its business with Pharmatext. In the face of a shutdown request from the book publishers, would it really have carried on doing business with the linking site? Goldman thinks not.

“Assuming Chitika does 50/50 splits with its publishers, Chitika will not expend an ounce of effort to preserve its $17/month revenue stream from Saggi. Thus, Elsevier’s cutoff notice would be dispositive–even if Chitika could win a ruling like this (which would be more uncertain after Chitika gets a cutoff notice), it’s not worth the fight,” Goldman continues.

“So after Elsevier’s cutoff notice to Chitika, Chitika instantly tosses Pharmatext overboard like a piece of garbage, due process be damned. SOPA isn’t required to get that result.”

As previously reported, online piracy of its products has recently become a focus issue for Wiley. In late October the publisher filed a lawsuit to obtain the identities of 27 individuals it accuses of illegally sharing its “For Dummies” books on Demonoid, a request that has now been granted by the court.

On November 23rd it filed another lawsuit, this time against 46 John Does. It is not yet clear if Wiley intends to take cases to court or obtain settlement from its targets.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.