Hosting Provider Steadfast Fights to Keep DMCA Safe Harbor

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Chicago-based hosting company Steadfast has asked a California District Court to dismiss the broad copyright complaint filed by adult publisher ALS Scan. The hosting provider denies responsibility for the actions of a client's users, arguing that it is protected by the DMCA's safe harbor provisions.

Last year, adult entertainment publisher ALS Scan dragged several third-party Internet services to court.

The company targeted several companies including CDN provider CloudFlare and the Chicago-based hosting company Steadfast, accusing them of copyright infringement because they offered services to pirate sites.

More than a year has passed and both sides have yet to resolve their differences.

ALS Scan recently asked the court for a partial summary judgment, determining that Steadfast contributed to copyright infringement and that it has no safe harbor protection. If this was granted, the hosting provider would be in serious trouble.

The copyright holder argued that Steadfast refused to shut down the servers of the image sharing platform imagebam.com, which was operated by its client Flixya. ALS Scan sees the site as a repeat offender as it was targeted with dozens of DMCA notices, and accuses Steadfast of turning a blind eye to the situation.

In a new filing submitted this month, Steadfast fiercely denies the allegations. The hosting provider indeed leased servers to Flixya for ten years but says it forwarded all notices to its client.

The hosting company could not address individual infringements, other than shutting down the entire site, which would be disproportionate in their view.

“Steadfast had no ability to terminate services to individual users of Imagebam.com other than unilaterally shutting down the entire server which would have violated the law. Imagebam.com was not a pirate site when it was operated by Flixya,” Steadfast informs the court.

“Steadfast was not a direct infringer; Steadfast’s client Flixya was not a direct infringer. The direct infringers of the ALS content were the users of Flixya’s Imagebam.com website. Discovery has shown that many, if not all the infringers of the ALS content, were actually ALS’s own members who posted ALS content with impunity.”

Interestingly, the users who posted pirated images on the site were ALS Scan’s own customers. According to Steadfast, ALS took absolutely no steps to curb these infringements themselves.

Instead, ALS hired an agent, Steve Easton, to track down infringements on external sites and issue takedown requests. Steadfast received several of these as well, but believes it responded appropriately, even though the notices were not DMCA compliant.

“Once Easton sent his legally insufficient notices to Steadfast, Steadfast immediately forwarded the notices to Flixya. In turn, Flixya disabled access to the allegedly infringing works that were hosted on imagebam.com,” the company writes.

While ALS Claims that imagebam.com was a repeat offender, Steadfast sees things differently. They point out that Flixya is a service provider as well, and that they were the ones who had to address the alleged infringements.

It would certainly not be an “appropriate circumstance” to disconnect the servers of an entire website, not in the way Congress intended the DMCA to work, the hosting provider notes.

“An ‘appropriate circumstance’ to terminate a user does not include terminating a user who follows the law. Here, the facts in the record demonstrate that Flixya did not blatantly infringe copyright,” Steadfast writes.

“Rather, the facts show that Flixya complied with the DMCA. Flixya posted the required DMCA information on its imagebam.com website, had users agree to the terms of service, and informed users that his or her account will be terminated.”

The hosting provider wants the case to be thrown out, but ALS Scan clearly disagrees. According to the copyright holder, Steadfast should have terminated the imagebam.com servers.

“Steadfast maintained its own theory that if its own client was an Internet service provider, Steadfast had no burden to terminate services to its client, or indeed take any action, in response to notifications of infringement,” ALS writes.

“The law is that a service provider must stop providing services to whomever it is providing such services as long as such services materially contribute to infringement.”

It is now up to the court to decide whether Steadfast is indeed liable. If the company loses its safe harbor, this will have implications for the broader hosting industry.

It would essentially mean that large hosting companies are responsible for the infringing content that their clients’ users upload or link to, which could get quite messy.

Steadfast’s response is available here (pdf) and ALS Scan’s reply can be found here (pdf).

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