Hosting Provider Steadfast is Not Liable for ‘Pirate’ Site

Hosting provider Steadfast is not liable for the copyright-infringing activities that took place on the server of a customer. A California District Court has dismissed all copyright and trademark infringing claims filed by ALS Scan, concluding that the hosting provider did enough to curb copyright infringement.

In 2016, adult entertainment publisher ALS Scan dragged several third-party Internet services to court.

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

ALS argued that Steadfast refused to shut down the servers of the image sharing platform Imagebam.com, which was operated by its client Flixya. The hosting provider had been targeted with dozens of DMCA notices, and ALS accused Steadfast of turning a blind eye to the situation.

Steadfast denied these allegations. The hosting provider did indeed lease servers to Flixya for ten years but said that it forwarded all notices to its client. The hosting company could not address individual infringements, other than shutting down the entire site, which would have been disproportionate in their view.

With a trial getting closer, the hosting company submitted a motion for summary judgment, arguing that it can’t be held liable for copyright infringement. A few days ago California District Court Judge George Wu ordered on the matter, bringing good news for Steadfast.

Judge Wu dismissed all claims against Steadfast, including contributory copyright infringement, vicarious copyright infringement, and contributory trademark infringement, which is a clear win.

Dismissed

The order clarifies that hosting providers such as Steadfast can be held liable for pirate sites. This is also the case when these sites are hosted on servers that are leased by a company which itself has a takedown policy, something Steadfast contended.

In this case, it is clear that Steadfast knew of the infringements. It could have shut down imagebam.com but failed to do so, and continued to provide server space to known copyright infringers on the site. All these arguments could, in theory, weigh against the hosting provider.

However, in order to be liable for contributory copyright infringement, ALS Scan needed to show that Steadfast failed to take simple steps to prevent the copyright infringements at issue. This is where the adult entertainment publisher’s arguments failed.

Steadfast forwarded all notices to its customer Flixya which resulted in the removal of the infringing images. In other words, the hosting provider took simple steps that prevented further copyright infringements.

“Given these undisputed facts, the Court would find that Steadfast did not ‘[fail] to take simple measures’ to prevent the specific acts of infringement of which it was aware. Steadfast took simple steps that resulted in all of the at-issue images being removed,” Judge Wu writes.

ALS argued that Steadfast should have shut down the entire server of its customer to prevent future infringements, but this isn’t necessarily the case. Service providers only have to take measures if they know that infringements occurred or will occur in the future. The latter was not obvious here.

“As such, the Court is not convinced that Steadfast had any reason, legal or practical, to terminate Flixya’s account and power down its servers,” the order reads.

Steadfast founder and CEO Karl Zimmerman is happy with the outcome of the case. He agrees that hosting providers have a responsibility to respond to copyright infringement complaints, but stresses that his company already has the right procedures in play.

“We already check and assure the content is removed, and yes, if the content simply stays up, that is concerning and shows that more could be done,” Zimmerman informs TF.

“We took action in forwarding the complaints, tracking those complaints, and validating the content had been removed. We did what was required of us, which is why I thought it was odd we were in this case in the first place.”

Hosting providers should take measures to help curb copyright infringement, according to Steadfast. However, shutting down entire services of customers who take down infringing links when they’re asked too, goes too far. Zimmerman is glad that Judge Wu agreed with this.

“To me, it simply does not seem reasonable to have to shut down a customer just because future infringement of their users is possible, when every indication is that the customer is completely law-abiding and I’m glad the judge agreed with that,” he says.

A copy of United States District Court Judge George Wu’s order is available here (pdf).

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