Disney Enterprises, Inc. et al v. Hotfile Corp. et al

Filing 121

Defendant Hotfile Corporation's ANSWER and Affirmative Defenses to Complaint with Jury Demand , Defenses and, COUNTERCLAIM against Columbia Pictures Industries, Inc., Disney Enterprises, Inc., Twentieth Century Fox Film Corporation, Universal City Studios Productions LLLP, Warner Bros. Entertainment Inc. by Hotfile Corp..(Munn, Janet)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 11-20427-JORDAN
DISNEY ENTERPRISES, INC.,
TWENTIETH CENTURY FOX FILM
CORPORATION, UNIVERSAL CITY
STUDIOS PRODUCTIONS LLLP,
COLUMBIA PICTURES INDUSTRIES,
INC., and WARNER BROS.
ENTERTAINMENT INC.,
Plaintiffs,
v.
HOTFILE CORP., ANTON TITOV, and
DOES 1-10,
Defendants.

/

HOTFILE CORP.,
Counterclaimant,
v.
WARNER BROS. ENTERTAINMENT INC.,
Counter-Defendant.

/

ANSWER, DEFENSES, AFFIRMATIVE DEFENSES AND COUNTERCLAIM OF
DEFENDANT HOTFILE CORPORATION TO PLAINTIFFS’ COMPLAINT
Defendant Hotfile Corporation (“Hotfile”), hereby answers, pleads defenses and
affirmative defenses and counterclaims to Plaintiffs’ 1 Complaint, dated and filed on February 8,
2011 (the “Complaint”).

1

Plaintiffs are: Disney Enterprises, Inc., Twentieth Century Fox Film Corp., Universal City
Studios Productions LLLP, Columbia Pictures Industries, Inc., and Warner Brothers
Entertainment Inc., and are hereinafter referred to collectively as “Plaintiffs.”

CASE NO. 11-20427-JORDAN
ANSWER
1.

Hotfile denies each and every allegation contained in paragraph 1.

2.

Hotfile admits that when a user uploads content to hotfile.com, a uniform resource

locator (“URL”) relating to the uploaded file is generated. Hotfile admits that the URL can then
be shared with others who can download the uploaded file from any internet-enabled location by
clicking on the URL. Hotfile admits that Hotfile remunerates users and websites that direct
traffic to hotfile.com through “affiliate” advertising, a commonly used practice among internet
businesses. Except as so expressly admitted, Hotfile denies each and every allegation contained
in paragraph 2.
3.

Hotfile denies each and every allegation contained in paragraph 3.

4.

Hotfile admits that at one time, the FAQ page of the hotfile.com website

contained the phrase “[u]pload files only if you intend [sic] to promote them” and the Affiliate
page of the hotfile.com website contained the phrase “to encourage the good promoters by
increasing their earnings and to reduce the earnings for uploaders that mainly use the free Hotfile
resources for storage.” Except as so expressly admitted, Hotfile denies each and every allegation
contained in paragraph 4.
5.

Hotfile admits that some estimates have ranked hotfile.com as one of the top 100

visited websites on the Internet. Except as so expressly admitted, Hotfile denies each and every
allegation contained in paragraph 5.
6.

Hotfile denies each and every allegation contained in paragraph 6.

7.

Hotfile denies each and every allegation contained in paragraph 7.

8.

Hotfile admits that the Complaint is a civil action purporting to seek damages and

injunctive relief for alleged copyright infringement under the copyright laws of the United States,
17 U.S.C. § 101 et seq., but denies that Plaintiffs are entitled to any relief.

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9.

Paragraph 9 states a legal conclusion to which no response is required. To the

extent a response is required, Hotfile is without knowledge or information sufficient to form a
belief as to the truth of the allegations contained in paragraph 9 and therefore denies each and
every allegation in paragraph 9.
10.

Hotfile admits that it operates the hotfile.com website. Hotfile admits that

hotfile.com can be accessed by users in Florida. The remaining allegations in paragraph 10 state
a legal conclusion to which no response is required. To the extent a response is required, Hotfile
denies each and every allegation contained in paragraph 10.
11.

Hotfile admits that Florida corporation Lemuria Communications, Inc., provides

hosting services for hotfile.com. The remaining allegations in paragraph 11 state a legal
conclusion to which no response is required. To the extent a response is required, Hotfile denies
each and every allegation contained in paragraph 11.
12.

The allegations in paragraph 12 state a legal conclusion to which no response is

required. To the extent a response is required, Hotfile denies each and every allegation
contained in paragraph 12.
13.

Paragraph 13 states a legal conclusion to which no response is required. To the

extent a response is required, Hotfile denies each and every allegation contained in paragraph 13.
14.

Paragraph 14 states a legal conclusion to which no response is required. To the

extent a response is required, Hotfile denies each and every allegation contained in paragraph 14.
15.

Hotfile is without knowledge or information sufficient to form a belief as to the

truth of the allegations contained in paragraph 15 and therefore denies each and every allegation
therein.

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16.

Hotfile is without knowledge or information sufficient to form a belief as to the

truth of the allegations contained in paragraph 16 and therefore denies each and every allegation
therein.
17.

Hotfile admits that Hotfile is a Panamanian corporation that operates hotfile.com.

Except as so expressly admitted, Hotfile denies each and every allegation contained in paragraph
17.
18.

Hotfile denies each and every allegation contained in paragraph 18.

19.

Hotfile is without knowledge or information sufficient to form a belief as to the

truth of the allegations contained in paragraph 19 and therefore denies each and every allegation
therein.
20.

Hotfile admits that registered and non-registered users can upload content to

hotfile.com. Hotfile admits that when a user uploads content to hotfile.com, a URL relating to
the uploaded file is generated. Except as so expressly admitted, Hotfile denies each and every
allegation contained in paragraph 20.
21.

Hotfile admits that users can access and download a file associated with a URL

generated by Hotfile by clicking on the URL link or copying the URL into a web browser.
Hotfile admits that a user can download the linked file for free as a regular user. Hotfile admits
that users can purchase premium memberships, which gives users access to faster download
speeds and other benefits. Except as so expressly admitted, Hotfile is without knowledge or
information sufficient to form a belief as to the truth of the remaining allegations contained in
paragraph 21 and therefore denies each and every allegation therein.
22.

Hotfile denies each and every allegation in paragraph 22.

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23.

Hotfile admits that it stores content files on its servers. Hotfile admits that

Hotfile’s Terms of Service reserve the right to terminate users or users’ access to the Hotfile site.
Except as so expressly admitted, Hotfile denies each and every allegation contained in paragraph
23.
24.

Hotfile admits users can sign up for Premium memberships, which cost up to $9

per month. Hotfile admits that with Premium memberships, users have access to simultaneous
downloads, unlimited high speed downloads, and no initial delays or download time restrictions.
Hotfile admits that non-Premium users are allowed to download one file at a time and that the
downloads are at slower speeds than Premium users’ downloads with a delay before a file begins
to download. Hotfile admits that non-Premium users may download one file in a 30-minute
period. Except as so expressly admitted, Hotfile denies each and every allegation contained in
paragraph 24.
25.

Hotfile denies each and every allegation contained in paragraph 25.

26.

Hotfile admits that “hotlinks” are URL links by which a recipient can directly

access the content file corresponding to the link without visiting hotfile.com. Hotfile admits that
Premium users can purchase hotlinks. Except as so expressly admitted, Hotfile denies each and
every allegation contained in paragraph 26.
27.

Hotfile is without knowledge or information sufficient to form a belief as to the

truth of Plaintiffs’ characterization of the business models of Netflix or iTunes. Hotfile denies
each and every allegation contained in paragraph 27.
28.

Hotfile denies each and every allegation contained in paragraph 28.

29.

Hotfile admits that it has implemented an “Affiliate” program in which uploaders

are remunerated in part based on the number of times a file they uploaded has been downloaded.

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Hotfile admits that the amount affiliates are paid when their files are downloaded takes into
account the rank of the affiliate and the size of the uploaded file. Hotfile admits that an
affiliate’s rank is determined by (1) the ratio of the users who downloaded that affiliates files and
the users who become Premium members based on that affiliate’s uploaded files, and (2) the
ratio of uploaded files to the number of downloaded files. Except as expressly so admitted,
Hotfile denies each and every allegation in paragraph 29.
30.

Hotfile admits that affiliates can earn a higher rank if the users who downloaded

their uploaded content become premium members. Hotfile admits that when a downloading user
signs up for a premium membership, the affiliate (if any) who uploaded that content file gets
credit for the sale of a premium subscription. Hotfile admits that when a downloading user
clicks a Hotfile URL link, that user is taken to a download page. Hotfile admits that the
download page allows a user to sign up for a Premium membership. Except as expressly so
admitted, Hotfile denies each and every allegation contained in paragraph 30.
31.

Hotfile admits that its affiliate compensation formula provides earnings for

downloads of 100MB to 2000MB sized files that are at rates twice as high as earnings for
downloads of 5 to 50MB sized files. Except as so expressly admitted, Hotfile denies each and
every allegation contained in paragraph 31.
32.

Hotfile admits that the affiliate program is intended to encourage traffic to

hotfile.com. Hotfile admits that at one time, the FAQ page of the hotfile.com website contained
the phrase “[u]pload files only if you intend [sic] to promote them.” Except as so expressly
admitted, Hotfile denies each and every allegation contained in paragraph 32.
33.

Hotfile admits that at one time, the Affiliate page of the hotfile.com website

contained the phrase: “We are trying to encourage the good promoters by increasing their

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earnings and to reduce the earnings for uploaders that mainly use the free Hotfile resources for
storage.” Except as so expressly admitted, Hotfile denies each and every allegation contained in
paragraph 33.
34.

Hotfile denies each and every allegation contained in paragraph 34.

35.

Hotfile admits that it has two additional affiliate programs listed on the Affiliate

page of the hotfile.com website under “Referral programs.” Hotfile further admits that at one
point in time, the phrase “earn money spreading links in your site” appeared on the Affiliate page
of the hotfile.com website. Except as so expressly admitted, Hotfile denies each and every
allegation contained in paragraph 35.
36.

Hotfile denies each and every allegation contained in paragraph 36.

37.

Hotfile denies each and every allegation contained in paragraph 37.

38.

Hotfile denies each and every allegation contained in paragraph 38.

39.

Hotfile denies each and every allegation contained in paragraph 39.

40.

Hotfile denies each and every allegation contained in paragraph 40.

41.

Hotfile denies each and every allegation contained in paragraph 41.

42.

Hotfile denies each and every allegation contained in paragraph 42.

43.

Hotfile denies each and every allegation contained in paragraph 43.

44.

Hotfile admits that some estimates have ranked hotfile.com as one of the top 100

visited websites on the Internet. Except as so expressly admitted, Hotfile denies each and every
allegation contained in paragraph 44.
45.

Hotfile admits that Anton Titov is the sole officer and director of Lemuria

Communications. Except as so expressly admitted, Hotfile denies each and every allegation
contained in paragraph 45.

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CASE NO. 11-20427-JORDAN
ANSWERS TO CLAIMS FOR RELIEF
Count I – Direct Infringement of Copyright
(Against All Defendants)
46-57. Count I of Plaintiffs’ Complaint has been dismissed and therefore does not require
a response.
Count II – Secondary Infringement of Copyright
(Against All Defendants)
58.

Hotfile incorporates by reference its responses to paragraphs 1 through 57 as if

fully set forth herein.
59.

Hotfile denies each and every allegation contained in paragraph 59.

60.

Hotfile denies each and every allegation contained in paragraph 60.

61.

Hotfile denies each and every allegation contained in paragraph 61.

62.

Hotfile denies each and every allegation contained in paragraph 62.

63.

Hotfile denies each and every allegation contained in paragraph 63.

64.

Hotfile denies each and every allegation contained in paragraph 64.

65.

Hotfile denies each and every allegation contained in paragraph 65.

66.

Hotfile denies each and every allegation contained in paragraph 66.

67.

Hotfile denies each and every allegation contained in paragraph 67.

68.

Hotfile denies each and every allegation contained in paragraph 68.

69.

Hotfile denies each and every allegation contained in paragraph 69.

70.

Any allegation of the Complaint not specifically admitted is hereby denied.
DEFENSES AND AFFIRMATIVE DEFENSES

Hotfile asserts the following defenses and affirmative defenses in response to Plaintiffs’
Complaint and counts purportedly stated therein, undertaking the burden of proof only as to

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those defenses deemed affirmative defenses by law, regardless of how such defenses are
denominated below.
71.

Plaintiffs’ Complaint, and each count purportedly stated therein, is barred under

the safe harbor provisions of the Digital Millennium Copyright Act as codified at 17 U.S.C.
section 512 et seq., because Hotfile is an Internet Service Provider that meets all the
requirements of the Act.
72.

Plaintiffs’ Complaint, and each count purportedly stated therein, is barred in

whole or in part because Hotfile’s allegedly infringing conduct constitutes fair use. On
information and belief, Hotfile users store and transmit user-generated content files, some of
which may incorporate copyrighted material. However such use can be of a small amount, and
its purposes include parody and commentary. As such use has little or no detrimental effect on
the market for the copyrighted work, it constitutes fair use under the Copyright Act, 17 U.S.C. §
107. Others uses of Hotfile, including “personal cloud storage,” also constitute fair use under 17
U.S.C. § 107.
73.

Plaintiffs’ Complaint, and each count purportedly stated therein, is barred in

whole or in part by an express and/or implied license or due to authorization from Plaintiffs. On
information and belief, some Hotfile users store and transmit content files of which they are the
authors or to which they have the authorization or license of the copyright owner. Plaintiffs or
their content-protection agents have on some occasions misidentified such works and alleged
them to be infringing. Hotfile has a license and authorization to such alleged infringements.
Furthermore, Plaintiffs have been aware of Hotfile’s Special Rightsholder Accounts and
Hotfile’s notice and takedown policy under the DMCA and have used these mechanisms for
content protection on Hotfile as to some allegedly infringing files. These means were available

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for Plaintiffs to takedown and prevent the very uses they now claim are acts of infringement.
Yet, on information and belief, Plaintiffs consciously and deliberately abstained from taking
down or deleting such files, which constitutes conduct reasonably interpreted as the grant of an
implied license or authorization for the continued storage and sharing of these files.
74.

Plaintiffs’ Complaint, and each count purportedly stated therein, fails to state a

claim upon which relief can be granted for any allegedly copyrighted work not listed on Exhibit
A of the Complaint and any file not identified in Schedule A to Plaintiffs’ response to Hotfile
Interrogatory No. 1.
75.

Plaintiffs’ Complaint, and each count purportedly stated therein, is barred by the

doctrine of laches because Plaintiffs, with full notice of Hotfile’s operations and of particular
hosted files that they believed to be infringing, unreasonably delayed in filing suit, which delay
has prejudiced Hotfile. On information and belief, Plaintiffs have been investigating Hotfile for
over a year in which time they were aware of particular URLs of files that they believed to be
infringing and had decided to contend that Hotfile’s content protection policies were inadequate.
Rather than diligently and promptly bringing suit, however, Plaintiffs and their content
protection agents delayed in seeking any remedy. Not only did Plaintiffs inexplicably fail to
bring suit or otherwise give Hotfile notice of their allegations during this period, to the contrary,
they repeatedly complimented Hotfile’s content protection efforts, offered for Hotfile to become
a business affiliate, and refrained from using their Special Rightsholder Accounts to takedown
the files they believed were infringing. The Plaintiffs thereby perpetuated the very infringement
they now allege in this case. The Plaintiffs’ unreasonable delay resulted in prejudice by causing
Hotfile to leave up the files that are now alleged to infringe, inducing Hotfile to maintain the

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very content protection policies Plaintiffs now impugn, and causing potentially helpful evidence
to be lost.
76.

Plaintiffs’ Complaint, and each count purportedly stated therein, is barred by the

doctrine of estoppel. Plaintiffs have been aware of Hotfile for over two years, since the earliest
days of its existence. In that time period Hotfile has consistently expeditiously responded to
takedown notices from Plaintiffs and engineered a Special Rightsholder Account system to
enable Plaintiffs and other content owners to immediately takedown links from Hotfile that they
believed were infringing. In that period the Studios repeatedly complimented Hotfile’s content
protection efforts and cooperation, and one Plaintiff offered to discuss with Hotfile a possible
business affiliate partnership. Hotfile relied on these representations believing that the Studios
found Hotfile’s content protection policies to be more than adequate, enforced those policies and
continued to invest in the growth and expansion of its business. Despite their repeated
compliments and request for a business partnership, on information and belief, Plaintiffs had,
during the period when they were complimenting Hotfile, already decided on a strategy to
contend in this lawsuit that Hotfile’s policies were inadequate, including that they would demand
a strengthened repeat infringer policy, and stronger fingerprinting. Furthermore, on information
and belief, Plaintiffs were aware of URLs for particular files on Hotfile they believed to be
infringing but deliberately left on the site. Before bringing suit, Plaintiffs never requested or
even suggested that Hotfile modify its policies, did not identify the allegedly infringing links of
which they were aware and did not delete the files using their Special Rightsholder Accounts,
which the Studios themselves had requested and which they represented was an “ideal” way to
protect content. In view of Plaintiffs’ compliments and their silence regarding Hotfile’s policies
and particular files which they could have readily sought to have revised or rectified, Plaintiffs

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should be estopped from seeking infringement damages or any other remedy for the preComplaint period.
77.

Plaintiffs’ Complaint, and each count purportedly stated therein, is barred in

whole or in part by the doctrine of waiver. Plaintiffs voluntary relinquished their right to any
remedy for the alleged infringements at issue. On information and belief, Plaintiffs were aware
of the particular infringements they have alleged against Hotfile, but deliberately abstained from
promptly bringing these alleged infringements to Hotfile’s attention by way of a takedown notice
or by utilizing their Special Rightsholder Accounts. Hotfile to its detriment and prejudice relied
on the Studios’ inaction with respect to these works, and believing that the Studios found
Hotfile’s content protection policies to be more than adequate, enforced those policies and
continued to invest in the growth and expansion of its business. Thus, the Studios by their own
actions and inaction have perpetuated the very acts of which they now complain and have
voluntarily relinquished any right to a remedy for the particular copyright infringements that they
have identified in this lawsuit.
78.

Plaintiffs’ Complaint, and each count purportedly stated therein, is barred by the

doctrine of unclean hands. Plaintiffs have engaged in a pattern of deceptive and harmful actions
toward Hotfile, including complimenting Hotfile’s policy to perpetuate alleged infringement,
while secretly harboring a strategy to contend that Hotfile’s policies were inadequate and should
be strengthened, and deliberately and knowingly requesting that Hotfile takedown content that
they did not own in order to curtail and undermine Hotfile’s substantial non-infringing uses.
Because of their unclean hands, the Studios Complaint should be barred.
79.

Plaintiffs’ Complaint, and each count purportedly stated therein, is barred by

Plaintiffs’ failure to mitigate damages. Plaintiffs have identified approximately one thousand

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files or URLs on Hotfile.com that they allege are infringing. On information and belief,
Plaintiffs were aware of these files for a substantial period of time before they filed their
Complaint. Plaintiffs had at their disposal tools, including Special Rightsholder Accounts, which
they themselves requested and which Hotfile engineered specifically for their benefit, to take
down these links. Yet Plaintiffs inexplicably failed to either provide notice to Hotfile under the
DMCA or use their Special Rights Holder Accounts to delete the files they allege were
infringing. Moreover, after this lawsuit was filed, the Studios refused to provide Hotfile with a
list of the suspected links. They waited until they were forced to do so in discovery, finally
providing a list in May 2011 some three months after filing this action. Hotfile promptly
removed or disabled any remaining files that were on the list. The Studios’ unexplained failure
to take the simple measure of using notice-and-takedown or their Special Rights Holder accounts
to stop the alleged infringement constitutes a failure to mitigate damages.
80.

Plaintiffs’ Complaint, and each count purportedly stated therein, is barred in

whole or in part because Plaintiffs do not hold the right, title or exclusive license to the
copyrights they alleged are being infringed. Plaintiffs have sent takedown notices alleging
infringement of works that they do not appear to own or otherwise possess rights with respect to
which they may seek redress under the Copyright Laws. On information and belief, Plaintiffs do
not own all relevant rights for all the works that they seek to have included in this case and as to
which they intend to allege infringement.
81.

Plaintiffs’ Complaint, to the extent it seeks redress for contributory infringement,

is barred based on the doctrine of substantial non-infringing uses. Hotfile is capable of
substantial non-infringing uses, including limited sharing, distribution of authorized and licensed
content, sharing of public domain content and “personal cloud storage.” In light of these and

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other substantial non-infringing uses, the Hotfile system does not contributorily infringe
Plaintiffs’ copyrights.
DEMAND FOR JURY TRIAL
Hotfile demands trial by jury on all claims of Plaintiffs’ Complaint so triable.
PRAYER FOR RELIEF
WHEREFORE, Hotfile prays for the following relief:
a.

That Plaintiffs take nothing by way of their Complaint, that the Complaint be

dismissed with prejudice and that judgment be rendered in favor of Hotfile;
b.

That Hotfile be awarded its costs including reasonable attorneys’ fees incurred

herein pursuant to 17 U.S.C. § 505, and costs pursuant to 28 U.S.C. § 1920; and
c.

For such other and further relief the Court deems just and proper.

COUNTERCLAIM OF COUNTERCLAIMANT HOTFILE CORP. AGAINST
COUNTER-DEFENDANT WARNER BROS. ENTERTAINMENT INC.
Defendant/Counterclaimant Hotfile Corporation (“Hotfile”), hereby counterclaims
against Plaintiff/Counter-Defendant Warner Bros. Entertainment Inc. (“Warner”) as follows:
NATURE OF THE COUNTERCLAIM
1.

Warner is a famous and respected Hollywood Studio. It holds copyrights to

thousands of movies and television shows. In this case, however, Warner has acted
unscrupulously, attempting to employ its superior financial resources in an effort to destroy
Hotfile via a campaign of unfounded and false allegations. Not only has Warner (along with
four other major motion picture studios) filed this unfounded and contrived litigation against
Hotfile employing overly aggressive tactics, Warner and its employee Michael Bentkover
(“Bentkover”) have made repeated, reckless and irresponsible misrepresentations to Hotfile
falsely claiming to own copyrights in (or have the owners’ authorization to delete) material from

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Hotfile.com. Worse, Warner continued to make these misrepresentation even after Hotfile
explicitly brought this rampant abuse to Warner’s attention. Thus, Warner has knowingly made
misrepresentations and it has engaged in DMCA abuse on an unprecedented scale by grossly
misusing the powerful anti-piracy software tool that Hotfile specially created at Warner’s
request.
2.

Hotfile designed that tool, called a Special Rightsholder Account (“SRA”), to

enable Warner immediately to delete or disable an unlimited number of files that Hotfile users
have uploaded to Hotfile.com that Warner believes in good faith infringe its copyrights. In
providing Warner with this special privilege, Hotfile relied on Warner’s sophistication and
experience in DMCA take down procedures as well as its reputation for honesty and integrity in
business dealings. Regrettably, Warner has betrayed that trust. It has knowingly and recklessly
abused the power of the SRA tool. It has falsely stated to Hotfile – literally thousands of times –
under penalty of perjury that Warner is the owner, or authorized legal representative of the
owner, of copyrights to materials that Warner then deleted from Hotfile.com when in fact
Warner had no right to do so. Warner’s conduct has harmed Hotfile, Hotfile’s reputation, and
Hotfile’s relationship with the many Hotfile users whose files have been wrongfully deleted by
use of the SRA tool by Bentkover and other Warner representatives. By this counterclaim,
Hotfile seeks to recover compensation for Warner’s fraudulent and irresponsible actions.
JURISDICTION AND VENUE
3.

This Court has exclusive jurisdiction over this counterclaim under 28 U.S.C. §§

1331 and 1338(a) because it arises under the Copyright Act, 17 U.S.C., §§ 101 et seq.
4.

This Court has personal jurisdiction over the Plaintiff/Counter-defendant Warner

by virtue of its doing business in this District and because Warner filed this action against Hotfile
as one of the Plaintiffs.

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5.

Venue for this counterclaim is appropriate within this judicial district pursuant to

28 U.S.C. § 1391(b) and § 1400(a), as Warner and its agents may be found in this district.
THE PARTIES
6.

Counterclaimant Hotfile Corporation (“Hotfile”) is a corporation organized and

existing under the laws of Panama. Hotfile operates Hotfile.com, an internet file hosting service
that offers premium network storage and access that enable its global userbase to reliably store
and share digital files.
7.

Counter-defendant Warner is a Delaware corporation, with its principal place of

business in Burbank, California. Michael Bentkover is an individual employed by Warner, as
Manager, Anti-Piracy, Internet Operations, on information and belief, operating out of Warner’s
Burbank, California offices. On information and belief, Bentkover is a member of Warner’s
Worldwide Antipiracy Operations and reports to a Warner Senior Vice President and Intellectual
Property Counsel. Warner and Bentkover are intimately familiar with the requirements of the
Digital Millennium Copyright Act, 17 U.S.C. Section 512, including the rights and
responsibilities of content owners such as Warner. Warner asserts that it tracks suspected
copyright infringement on hosting sites such as Hotfile primarily using its internal personnel
(such as Bentkover) and its sophisticated and proprietary technology, which it is continuously
updating and refining. See Dkt. # 106-14, p.3 [Kaplan Declaration]
GENERAL ALLEGATIONS
8.

Hotfile is a successful file hosting or “cloud storage” service. It offers premium

network storage and access that enable its global userbase to reliably store and share digital files.
It works with literally any type of computer file. It has made significant investments in the
expansion of its server facilities and is particularly well-suited to host large files including video,
audio, photos and open source software packages, file types that are the future of the Internet.

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9.

Upon learning that there is a claim that potentially copyright infringing material is

included in files loaded on to its servers, Hotfile acts expeditiously to remove, or disable access
to the material. Hotfile has proactively worked with content owners such as Warner to devise an
effective notice and take down procedure to ensure that genuinely copyrighted material is taken
down and stays down.
10.

In April 2009 Hotfile’s posted policy stated that “Hotfile (www.hotfile.com) is an

Online Service Provider under Title II of the Digital Millennium Copyright Act, 17 U.S.C.
Section 512 …” It informed content owners, including Warner: To exercise your DMCA rights,
your Proper DMCA Notice must be sent to Designated Agent of hotfile.com to email:
[e-mail]. . . When a Proper DMCA notification is received by Designated Agent, or
when hotfile.com becomes otherwise aware that copyright rights are infringed, it will remove or
disable access to infringing materials as soon as possible.”
11.

Bentkover sent DMCA take down notices on behalf of Warner to Hotfile at the

Designated Agent address, [e-mail]. He also requested that Hotfile provide a special
“takedown tool” to allow Warner to more quickly remove infringing content “rather than sending
an official takedown abuse notice every time URL’s are identified.” Warner wanted a specially
engineered tool that it represented to Hotfile would be used responsibly by Warner and in full
compliance with Warner’s obligations under the DMCA.
12.

Hotfile provided Warner with the SRA tool, activated in August 2009. The

account is listed under the email address [e-mail]. This password
protected account permits Bentkover (or someone using his email address) to log in with the
password to directly command Hotfile’s servers to block any file. Warner can enter one or a list
of URLs for files on Hotfile’s systems, and they are immediately blocked. Alternatively, users

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such as Bentkover and Warner can upload a batch file with links in it, and all files corresponding
to those links will be deleted. The process is completely automated; there is no action taken by
anyone at Hotfile.
13.

If misused, the SRA tool provides Warner with the ability to cause significant,

unchecked harm to Hotfile users. Once a file is deleted via the SRA tool, the Hotfile system
automatically blocks uploading of the same file or any other copy of the file with the same hash
value. Thus if the SRA tool is misused to delete a file that is not infringing any Warner
copyright, all copies of the same file are blocked from being uploaded regardless of the fact that
the file was deleted by abusive conduct. With the power inherent in the SRA tool came
significant responsibility for Warner.
14.

Every time Warner used the SRA account it was required to expressly certify

“under penalty of perjury that it is the owner or authorized legal representative of the owner of
copyrights” to each and every URL or file they deleted from Hotfile.com. This representation is
required in substance to be included in DMCA notifications. See 17 U.S.C. § 512(c)(3)(A)(vi).
Hotfile relied on Bentkover and Warner’s sophistication and familiarity with the DMCA
procedures and in the accuracy of their representations in allowing Warner to use and maintain
its SRA account.
15.

On information and belief, Warner also utilized the services of PeerMedia,

DtectNet and Opsec to assist Warner in its so-called “anti-piracy” campaign. On information
and belief, Bentkover, and/or other Warner representatives encouraged PeerMedia, DtectNet and
Opsec to obtain SRA accounts from Hotfile. Similarly, Hotfile relied on the sophistication and
expertise of these Warner agents, their familiarity with the DMCA procedures and in the
accuracy of their representations in allowing them to use and maintain SRA accounts.

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16.

Hotfile also provided Warner with complimentary premium accounts by which

Bentkover and Warner could view and download an unlimited number of Hotfile files at the
highest available speed. By September 2010, Warner had at least five such complimentary
accounts. Hotfile made these accounts available to Warner to allow it to verify that its
copyrighted material was in fact displayed in files before using its SRA account to delete the file.
Bentkover gave Hotfile the impression that he was in fact using the premium accounts in
coordination with use of the SRA tool, once complaining when the premium accounts were
temporarily disabled. On information and belief, however, Warner deleted thousands of files
without ever viewing them. Many of these files were deleted without being downloaded by
anyone, meaning that although Warner had the capability to view and download the content
before deleting the file, it failed to do so. There is no excuse for Warner’s failure to verify its
representation, especially as they were made under penalty of perjury.
WARNER’S ABUSE AND MISREPRESENTATIONS
17.

In September 2009, Michael Bentkover requested several increases in the daily

limits of files that could be deleted via the SRA established in his name. He requested and
Hotfile provided increases to one thousand, then two thousand files, per day. Warner requested
and received additional increases in October 2009, finally requesting and receiving authority
from Hotfile for the ability to delete an unlimited number of files each day. Hotfile placed its
complete trust and confidence in Warner and believed that Warner would exercise its ability to
delete files in good faith and in strict compliance with its DMCA obligations. Hotfile would
never have given Warner the ability to delete an unlimited number of files from Hotfile.com if it
had known Warner would delete files without ever checking their content.
18.

By September 2010, Hotfile began noticing suspicious conduct associated with

the Warner DMCA takedown notices. Hotfile alerted Warner employee Bentkover that two

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CASE NO. 11-20427-JORDAN
individuals purporting to be employees of Warner in Europe were requesting takedowns in
Warner’s name, explaining that Hotfile suspected that false DMCA notices were being sent
under Warner’s name. Bentkover assured Hotfile that the individuals were in fact authorized by
Warner to send DMCA notices on its behalf, but that henceforth they would use the SRA
account in Bentkover’s name.
19.

Throughout 2010, and unbeknownst to Hotfile, Warner and the other Plaintiffs

(other major motion picture studios), their trade association (the MPAA) along with their agent
DtectNet were secretly investigating Hotfile and preparing to file this lawsuit. The MPAA and
the Plaintiffs had decided to make an example of Hotfile.com to send a message to the many
similar (but generally less responsible) so-called cyberlocker sites. On information and belief,
Warner was supportive of the planned litigation and its intended very aggressive message to be
send to Hotfile and its competitors. Warner assumed that it would not have same unlimited
access to use its SRA account after the lawsuit was filed. As a result, Warner became even more
overly aggressive and irresponsible in using—and abusing—the SRA account in the period
before and after this action was filed in February 2011.
20.

Warner’s use of the SRA increased dramatically in late 2010 and early 2011. By

February 2011, the Warner/Bentkover SRA was deleting literally tens of thousands of files from
Hotfile.com, sometimes in a single day. The sheer volume and rapidity of these deletions meant
that Warner could never view the great majority of the content it was deleting. It could only
view the text of the URLs, which in some cases contain titles selected by the user who uploaded
the files on to Hotfile.com, and in other cases only seemingly random sequences of letters,
numbers and symbols. Although these file names are not necessarily indicative of file content,
the URLs corresponding to the some of these files deleted by Warner contained names/titles

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CASE NO. 11-20427-JORDAN
indicating that thousands of software games and videos with pornographic content had been
deleted by use of the Warner SRA.
21.

The frequency of use of the Warner SRA account appears to have reached its

height in the days shortly before and immediately after this lawsuit was filed on February 8,
2011. In particular, Hotfile’s records indicate that a large number of files with titles indicative of
software games were deleted on February 7, the day before the lawsuit was filed. Hotfile's
records show that hundreds of files with titles that suggest adults-only content were deleted by
use of the Warner SRA on February 14, 2011. On information and belief, Warner did not have
authority from the copyright owners of these files to make these deletions.
22.

The downloading data for the list of Warner’s deleted files contains other

indications of serious abuse by Warner. Many hundreds of files that Warner deleted using its
SRA had never been downloaded before their deletion. As noted, if a file has never been
downloaded, Warner could not have viewed its contents before deleting the file. In addition, the
file deleted by Warner that had been most frequently downloaded—five times more frequently
than any other file—was a software title wrongfully deleted by Warner. The software publisher
that uploaded the file used Hotfile.com as a means for distribution of its open source software.
Warner was not authorized by the software publisher to delete the file.
23.

In April 2011 Hotfile provided Warner with a listing of some of these suspicious

deletions. To date, however, Warner has offered no explanation or justification for the rampant
deletions. While it has reduced the frequency of use of the SRA somewhat, Warner has
continued to use and misuse the SRA account just as before.
24.

Warner has provided a spreadsheet in discovery listing the files it admits were

deleted by use of the Bentkover/SRA account. The Warner records confirm that many files that

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CASE NO. 11-20427-JORDAN
it deleted were deleted apparently without authorization by the content owner. For example, the
Warner listing shows dozens of deletions of a file whose name suggests that the content was an
audio book entitled “Cancer: Out Of The Box,” by Ty M. Bollinger—a cancer treatment book.
Warner made a movie several years ago called The Box. According to Warner records, it used its
SRA to delete 3,481 files from Hotfile.com that it claims were copies of The Box. However,
Warner’s own records strongly suggest that many if not a majority of those deleted files were not
actually copies of—indeed had nothing to do with—the movie The Box. Rather, most are just
Hotfile links that had the two common words “The Box” somewhere in the file name.
25.

The most recent deletion of file on the list of “The Box” deletions was made on

April 16, 2011—after Hotfile had notified Warner of the pattern of suspicious deletions—and
appears to be a generic image file with clip art meant to be inserted as the front and back cover
for "the box" of a wedding DVD. This evidence conclusively shows that the Warner/Bentkover
SRA account was used by Warner to delete files indiscriminately and without justification,
perhaps with the assistance of an automated “crawler” computer program, which identified each
file on Hotfile.com containing the words “the box” in its title. Even after Warner knew its
methods for using the SRA account were resulting in a large number of wrongful take-downs,
Warner continued to use the same flawed methods for selecting files to delete. Thus, on
information and belief, Warner knowingly and materially misrepresented to Hotfile that files on
Hotfile.com contained infringing content when they in fact did not.
26.

Despite being given at least five complimentary premium accounts (warnerbros1-

warnerbros5), that enabled Warner and Bentkover ready access to the content of each file to
allow for a cursory check of the content before deleting, Warner and Bentkover recklessly and
repeatedly deleted files which they never downloaded or otherwise even attempted to view the

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CASE NO. 11-20427-JORDAN
contents. Warner appears to have adopted the same willful blindness strategy for file name
searching with respect to other generically titled entertainment products (e.g. "The Closer," "The
Middle," etc.), with similar overly broad and unjustifiable results.
27.

An extreme example involves the television show “Fringe.” Warner’s records

show it tried to delete a file associated with the “URL” “http://hotfile.com/contacts.html and give
them the details of where the link was posted and the link and they will deal to the @sshole who
posted the fake.” Obviously, the “URL” Warner identified was not a Hotfile download URL at
all. Rather, the “URL” that Warner tried to delete was taken from a comment to a blog post
discussing the television show “Fringe,” and there was no file or content of any kind associated
with the identified text. (Since the “URL” was not a Hotfile.com file, the attempted deletion via
the SRA was not successful.) The mere presence of the word “Hotfile” in a blog entry
discussing one of Warner's television shows prompted Warner to try to delete a non-file.
28.

Another example concerns the Warner movie entitled The Rite, which was

uploaded to another file hosting site, called filesonic.com, not Hotfile. Nevertheless, because
Warner apparently went to a third party search site looking for links to The Rite, it returned a
page containing not only the filesonic link to The Rite but also dozens of seemingly unrelated
links to other files at filesonic.com, Hotfile.com and other sites. On information and belief,
Warner used the SRA account to delete each of the twenty or so Hotfile links listed on that page,
even though from their titles (e.g., “Julia-Mavroi”) none appear to have any relationship to The
Rite or to Warner. Warner’s representations under penalty of perjury that it was the owner or
authorized legal representative of the owner of the copyrights for the content of these files were
false.

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CASE NO. 11-20427-JORDAN
29.

Warner asserts that in the past it and other copyright owners have used software to

“crawl” websites looking for infringing content and Warner admits that its has “technologies for
locating infringing content on linking sites.” See Dkt. # 106-14, pp. 3-4 [Kaplan Declaration].
On information and belief, Warner and Bentkover are well aware that its technology and
techniques produce many “false positives” yet Warner used and continues to use these flawed
procedures to identify and delete thousands of files from Hotfile.com in which Warner had no
copyright interest and no permission from the true content owner to delete them.
30.

In sum, thousands of files were improperly deleted by the Warner SRA, even

though contrary to its representations under penalty of perjury in each case Warner had no
legitimate interest in the content and certainly no copyright ownership. Worse, Warner’s
conduct was volitional. Warner has continued to use the SRA in the same improper manner even
after being notified by Hotfile of its massive abuse.
HOTFILE HAS BEEN INJURED BY WARNER’ ACTIONS
31.

Warner and its agents, while using Hotfile’s SRAs not only to expeditiously

takedown content they did not own, complimented Hotfile for its DMCA policy and copyright
compliance. They emailed Hotfile on several occasions making statements such as, “I just
wanted to thank you again for the removal tool…”; “Thanks – we appreciate your fast response
and help”; and “Thank you as always for your fast cooperation and removal of Warner Bros.
property.” Another anti-piracy vendor stated “Thank you very much,” and made the unsolicited
endorsement that “we will inform our clients of hotfile.com’s commitment to copyright
compliance at first opportunity.” While giving this reassurance to Hotfile, Warner was in fact
harming Hotfile and Hotfile users and secretly preparing this lawsuit.
32.

Hotfile’s DMCA notice-and-takedown regime and its SRAs represent a

significant investment by Hotfile. The success of Hotfile’s copyright compliance necessarily

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CASE NO. 11-20427-JORDAN
rests in large part on the good faith of the content owners, such as Warner. Hotfile entrusted
Warner and its employee Bentkover with the SRA tool enabling them at their sole discretion to
takedown links on Hotfile without any oversight or approval by Hotfile. In placing its trust and
confidence in Warner and Bentkover, Hotfile was attempting in good faith to work with Warner
to “cooperate to detect and deal with copyright infringements,” in accordance with the DMCA.
S. Rep. 105-190, at 20 (1998); H.R. Rep. 105-551(11), at 49 (1998). Warner and Bentkover,
however, abused that trust. They repeatedly and glaringly misused the SRA thereby harming
Hotfile and its users.
33.

Hotfile has been injured by Warner’s wrongful conduct in lest the following ways

(1) interference with valuable relationships with customer whose files were wrongfully deleted
by Warner, (2) lost income from customers who terminated premium accounts, (3) damage to its
reputation and good will, and (4) costs incurred in investigations and attorneys fees to uncover
the full magnitude of Warner’s blatant and wanton violation of the DMCA.
FIRST CAUSE OF ACTION
(Violation of the DMCA, 17 U.S.C. § 512(f))
34.

Hotfile re-alleges and incorporates Paragraphs 1-32 of this Counterclaim as

though fully set forth herein.
35.

In utilizing the SRA tool, Warner made knowing and material misrepresentations

that files on Hotfile’s servers infringed Warner’s intellectual property rights, when in fact they
did not, as described more fully above. In particular, Warner and Bentkover falsely represented
under penalty of perjury that Warner was the owner or authorized legal representative of the
owner of copyrights in thousands of files they caused to be deleted from Hotfile.com when
Warner was in fact not the owner and did not have authorization from the owner.

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CASE NO. 11-20427-JORDAN
36.

On information and belief, Warner actually knew of the material falsity of its

misrepresentations. If it did not know before then, Warner learned of falsity of its
misrepresentations at the latest when Hotfile provided notice to Warner in April 2011.
37.

In the alternative, Warner should have known, if it had acted with reasonable care

or diligence, or would have no substantial doubt had it been acting in good faith and not been
reckless, that Warner was not the owner or authorized legal representative of the owner of any
copyrights in thousands of files it deleted from Hotfile.
38.

Hotfile relied upon the misrepresentations made by Warner in having its system

delete or disable access to the files listed by Warner as allegedly infringing its copyrights in
using the Warner SRA, as detailed above.
39.

As a proximate result of Warner’s conduct, Hotfile has suffered injury and has

been damaged in an amount subject to proof at trial to include actual damages, including costs
and attorneys’ fees, incurred by Hotfile as permitted under 17 U.S.C. § 512(f).
DEMAND FOR JURY TRIAL
Hotfile demands trial by jury on its Counterclaim.
PRAYER FOR RELIEF
WHEREFORE, Hotfile prays for the following relief:
a.

As to its Counterclaim against Warner, Award Hotfile actual damages in an

amount to be determined at trial, attorneys fees and costs pursuant to 17 U.S.C. § 512(f);
b.

That Hotfile be awarded its costs pursuant to 28 U.S.C. § 1920; and

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CASE NO. 11-20427-JORDAN
c.

For such other and further relief the Court deems just and proper.

Dated: August 22, 2011
s/ Janet T. Munn
Janet T. Munn, Fla. Bar No. 501281
Rasco Klock
283 Catalonia Avenue, Suite 200
Coral Gables, Fl 33134
Telephone: [phone]
Telecopy: 305.476.7102
Email: [e-mail]
s/ Roderick M. Thompson
Roderick M. Thompson (admitted pro hac vice)
Andrew Leibnitz (admitted pro hac vice)
Anthony P. Schoenberg (admitted pro hac vice)
Deepak Gupta (admitted pro hac vice)
Janel Thamkul (admitted pro hac vice)
FARELLA BRAUN + MARTEL LLP
235 Montgomery St.
San Francisco, CA 94104
Telephone: [phone]
Telecopy: 415.954.4480
And
s/ Valentin Gurvits
Valentin Gurvits (Admitted pro hac vice)
BOSTON LAW GROUP
825 Beacon Street, Suite 20
Newton Center, MA 02459
Phone: [phone]
Fax: [phone]
Counsel for Defendant and Counterclaimant
Hotfile Corp.

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CASE NO. 11-20427-JORDAN

CERTIFICATE OF SERVICE
I hereby certify that on August 22, 2011, I filed the foregoing document with the Clerk of
the Court in the conventional manner. I also certify that the foregoing document is being served
this day on all counsel of record or pro se parties identified below in the manner specified, either
via transmission of Notices of Electronic Filing generated by CM/ECF or in some other
authorized manner for those counsel or parties who are not authorized to receive electronically
Notices of Electronic Filing.
By: s/ Janet T. Munn
Janet T. Munn

GRAY-ROBINSON, P.A.
Karen L. Stetson, Fla. Bar No.: 742937
Email: [e-mail]
1211 Brickell Avenue
Suite 1600
Miami, FL 33131
Phone: [phone]
Fax: [phone]
JENNER AND BLOCK, LLP
Steven B. Fabrizio (Pro Hac Vice)
Email: [e-mail]
Duane C. Pozza (Pro Hac Vice)
Email: [e-mail]
Luke C. Platzer (Pro Hac Vice)
Email: [e-mail]
1099 New York Ave, N.W.
Suite 900
Washington, DC 20001
Phone: [phone]
Fax: [phone]

28