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

Filing 396

NOTICE by Hotfile Corp., Anton Titov Defendants' Notice of Filing the Publicly Filed Redacted Version of the Declaration of Anton Titov Filed In Support of Defendants' Opposition to Plaintiffs' Motion for Summary Judgment and Exhibits Thereto (Attachments: # 1 Exhibit 1, # 2 Exhibit A, # 3 Exhibit B, # 4 Exhibit C, # 5 Exhibit D)(Munn, Janet)

EXHIBIT 1

PUBLIC VERSION
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO.: 11-CIV-20427-WILLIAMS/TURNOFF
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.
____________________________________/
[REDACTED] DECLARATION OF ANTON TITOV IN
SUPPORT OF DEFENDANTS’ OPPOSITION TO
PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT
AND EXHIBITS THERETO
I, Anton Titov, declare as follows:
1.

I am a founder, minority shareholder, and technologist for defendant Hotfile

Corporation and a defendant in this action. This declaration is based on personal knowledge
unless indicated otherwise and all statements contained in this declaration are true and correct to

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the best afmy knowledge. If called as a witness, I could and would testify to the facts set forth

in this declaration.
2.

Hotfile hosts files on the internet. Users may employ Hotfile's web technology to

store electronic data of any kind, including documents, spreadsheets, presentations, photographs,
home movies, sound recordings, software, or any other kind of electronic fIle. Information
stored on Hotfile remains private unless shared by the uploading user. Hotfile personnel do not
access users' uploaded flIes out of respect for user privacy.
3.

Hotfile's business is not "selling access to more than one hundred million files."

Mot. at 3. While Hotfile has hosted over 123,344,533 files during its three~year history, only a
small fraction ofthose files were ever downloadable at one time - and even fewer Were
accessible· by anyone user, given that files hosted 011 Hotfile· are private.
4.

Users primarily employ Hotfilc for storage. 55.96% offiles uploaded to Hotfile

have never been downloaded. This calculation does not count: as a "zero download" me any fIle
with duplicate URLs on Hotfile's system where some or all of the duplicate U:RLs did not have
any

a~sociated

downloads. This calculation also does not count as a "zero download" file any

file that was never downloaded by virtue of being blocked by Vobile or hash-blockingot SRA or
any other takedownprocedure.
5.

Users may share the web link or 'fURL" to a fIle uploaded to Hotfile with friends,

family, or online communities.
6.

Hot:file earns revenue solely by selling premium memberships. While any user

may store files at Hbtfik for ninety days at no charge, premium users store theidiles
indefinitely. Premium users also enjoy faster download speeds and shOrter waiting periods
before d0'W11loads.
7,

T() attract traffic in its first years of operation, Hotfile paid its registered users

between $0.002al1d $0.015 {i.e.,

1/5 - 3/2

¢) for each download refen"ed; depending on the size of

the downloaded fIle, the server resources consumed, and the number of downloaders who
subsequently purchase premium memberships. Since smaller files can be aggregated into bigger
ones as easily as bigger files can be divided into smaller parcels, Hotfile had no reason to believe
that larger files more Ijkely infringe. Today, Hotfile only pays a referral fee when a new user
purchases a premium membership.

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8.

Hotfile forbids the uploading or dO\\llloading of copyrighted works without

authorization. Each user must explicitly agree not to upload, store, or share content to which the
user does not have permission.
9.

To protect copyrighted works, Hotfile provides content owners such as each of

the Plaintiff" here with the free and unlimited ability to directly "take down" or disable access to
any file on Hotfile without any oversight whatsoever. Content owners possessing this access known as holders of "Special Rightsholder Accounts" or "SRA.s" - need merely assert that they
possess rights to the files taken down to etfectuate their requests. For every file removed,
whether by SRA or as a result oftake down requests to Hotfile, Hotfile· takes the additional step
of ensuring that no other copy may ever again be uploaded or downloaded through Hotfile using
a technology known as "hash-blocking." In addition, Hotfile terminates the account of any
.

.

registered user accused on more than two occasions of uploading copyrighted \vorks without
permission (i. e., Hotnle's '1hteestrikes" policy). On top of aU ohhis, Hotfile employs digital
fmgcrprinting tecbnology from Vobile, Inc. to block tmauthorized uploads. Since
implementation ofVobile's technology by Hotfile last July, only 3.4% of attempted uploads
have beenblocked as unauthorized by the copyright holder.
10.

From the fustday, Hotfile terminated the accounts of repeat copyright infringers.

It also processed takedoWlllloticesfrom copyright holders within 48 hours. Indeed, it began

receiving and proce~slJ1g takedown notices from Plaintiffs themselves in May 2009.
11.

The num'bet. of Hotiile users that have signed up for Premium accounts has varied .

over time though it hasgeneni.1lYnot reached levels significantly higher than 10% ofHotfile's
total registered users,

HoWle Does Not Subcontract Out Its "Search" Functionality

12.

Hotfiledoes not pennit searching offiles stored on Hotfile because such

iunctionalityis antithetical to HotfIle's pm-pose of providing private storage. Nonetheless,
Plaintiffs aSsert that Hotfile"suhcontracted" this search [unction to so-called "link sites," citing
186 pages of "screenshots of various ['link sites'] printed ... on February 13,2012." Mot. at34; Yeh Ded ~ 44 & Ex. 43. However, only eight pages of the exhibit even mention Hotfile, and
none of those provide operative liliks to Hotfile. Moreover, when I query the online database
used by Hotfile to track sources ofits traffic, none of Plaintiffs' enumerated sites appear among
the top 500 sites providing traftlc to Rotfile in the past year.

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13.

In asselting that Hotfile "disaggregated" search fi.mctionality from its website,

Plaintiffs cite an article or web posting by the Electronic Frontier Foundation from 2006. Prior
lo Plaintiffs' motion, I had never seen that document, which apparently predated Hotfile by three
years. That document appears nowhere in HotfIle's records or documents produced in this case.

Hotme's Business Model
14.

Plaintiffs assert that "Hot:file's entire business model hinges on being able to offer

... content that users waht to download." Mot. at 5. However, when I query the online database
used by Hatille to track sources of its traffic, the largest single source oftraffic to Hotfile (by a
factor of more than six to one over traffic from any single referring \vebsite) is users manually
enlering Hotfile's web address on therrbrowser.

15.

Files identified by Plaintiffs' expert as non-infringing drove sales Lo Hotfile five

tinles more than Plaintiffs' works-in-suit; it would be counterproductive for Hotfile to support
infringement, even setting aside the risk ofruinous litigation costs imposed by Plaintiffs.

HoWie's User Affiliate Program
16.

Hotfile previously paid its users for referring additional traffic to the site to

increase name recoglntion, IlJ,atketplace adoption,and sales. 1 I UIlderstood this to be the nature
of advertising.

17.

AlthoughPlaintiffs .c1aim that "popular" works presumptively infringe, Mot. [it 5,.

Vobile's patented digital fingerprinting technology identifies no infringement at all among
Hotfile's top 100 downloads; These files were run through Vobile' s techno logy on February 27,
2012, returning zero "umtches" of unauthorized content.

18.

Plaintiffs contend tbatHotfile's affiliate program discouraged users :from

uploading ilIes that were not downloaded frequently. Mot. at 6. While true that Hotfile gave
less encouragement to these uploads (payment Many kind can hardly qualify as
"discouragement"), infrequently-downloaded files use greater server resources, upload resources,
bandwidth, and diskspace -, and by definition generate fewer referrals. Yeli Ex. 61 at ·13.
Hotme's Website Affiliate Program

19.

l

Prior to 2012, Hotfile paid website ovvners a 5% commission on sales ofpremiUll1

Hotfile's current AffIliate program does nolcompensate uploaders for downloads.
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memberships to users referred by those websites. The sites referring the most users to Hotfilc
include Google, Facebook, and Y
One top participant in Hotfile's program received. per week for referring
users to Hotfile seeking to download open source software ("freeware"). Ifwebsites which
merely aggregate links foster illegality, as Plaintiffs suggest (Mot. at 7), they might investigate
the 24th and 79th most popular websites in the United States: the Huffington Post and Drudge
Report. See www.Alexa.com. one of Plaintiffs , past sources of information in this case).
20.

Havirlg had two years to investigate the matter (see Complaint ,-r 37 (filed 2/8111

and identifying an investigation ofHotfile for "well over a year"), Plaintiffs argue that twelve
"Hotfile-affiliated" websites identified in their brief and fifty such websites identified in an
exhibit flout copyright law based on screenshots and "their names alone." Mot. at 7. This
amounts to 62 ofHotiile's 24,753 referring svebsites. Plaintiffs also assert that eleven: other
websites were shut down by federal authorities or found liable in civil actions, yet they do not
indicate which (if any) ofthose websites had. any affiliation with Hotfile. In any event, none of
thewebsites identified in this paragraphprovidedenough traffic to even appear amongHotfile's
top 500 sources oftraffic in the past year.
21.

Plaintiffs contend that Hotfile once restored the affiliation of a website operator

whose affiliate status had beet1 disrupted, even though the operator's homepage "blatantly
promote[d] movie and ~elevisionpll;acy," Mot. at 7. However, in checking ownershipofa
webpage, no reason exists to navigate to the operator's homepage. Indeed, the e-mails cited by
Plaintiffs (Yeh Exs. 99-101) simply reference the page htin;i!wvvY'l,allvoulike,comi
b8age04195a2t:zQJltrnl- which could not possibly be said to suggest infringement under

anyone's definition. Absent complaint from content owners, Hotfilewould not have no reason to
investigate further.

-

23.

Hotfile eliminated the website operator payment program in early 2012.

The Primacy Of Storage At Hotfile

24.

In contending that "users buy [premium subscriptions] for a better do"Wllioading

experience," Mot. at S, Plcdntiffs highlight Hotfile's prior statement on its website: "[u]pload
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files only if you jnten[d] to promote them." Id; see also id (encouraging "good promoters").
Plaintiffs ignore the topic being addressed: tips for afiiliates to increase their earnings. Yeh Ex.
59. Hotfile' s advertising partners comprise approximately one-half of one percent (0.53 %) of
Hotfile's user base. Statements to these affiliates in no way changes the fact that the remainder
of users prinlarily employ Hotfile f'Or storage. See supra '14 (56% of uploads to Hotfile are
never dow111oaded).
As purported evidence of Hotfile's "file distribution" business, Plaintiffs point out
that Hotfile rewarded affiliates for downloads but declined to pay for uploads. Mot. at 8. Hotfile
paid advertisers for traffic. It could hardly pay users to consume the storage that Hotfi.1e was
offering fin sale.

Takcdowns At Hotfile
26.

Since inception, :Hotfile has received notices of allegedly infringing links either

through DMCA notices or SRA accounts for 8,330,465 of its 123,344,533 files - or 6.8% of its
files. Hotfile has taken down 5.4 million files - 4% of total files - in response to DMCA notices,
and slightly less than3 Itrillion files - 2% of total files - have been taken down by SEAs.
27.

Out ofth.e2,884,928,361 downloads on Hbtfile's website, only 13.6% were

downloads of files tMt received any type o:f takedown notice.
28.

Prior to the filing of the complaint, 46,562 users - only 1.1 % of registered Hotfile

users at that time - received at least one takedowll notice.
29.

I performed a cornpUterized review of the takedownnotices that HoWle has

recei vcd and found that millions· ofURLSare f'Ound in take down notices that were missing either
a statement under penalty of perjury bra statement of good faith belief (or both) - which I
understand to be required by theDMCA.
30.

Plaintiffs argue that HotfIlevoltlntarily terminated 444 (or 89%) of its 500 most

highly-paid affiliates in the months following adoption of its "three strikes" repeat infringer
policy on Febmary 18,2011. Mot. at 9. Th.eseusers amounted to only 1.2% ofHotfile's
affiliates and 0.008% of Hotfile's users. Thousands of affiliates v.rere not terminated.
31.

Plaintiffs assert that "Hotfile uploaders overwhelmingly have been identified as

copyright infringers." Mot. at 9.

In fact, 93% ofHotfik's uploadershave never received even a

single takedo\Vn notice, as set forth in the chart below.

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Users with Uploads by Strikes

50

32.

Plaintiffs then argue that Hotfile users dCl'W11l0aded 10,390 of Plaintiffs' works

over 30 million times using 945,611 links. Mot. at 10. That amounts to 1.1% of Hotfile's
downloads.

Hotme's Termination Of Repeat Infringers
33.

According to Plaintiffs, Hotfile hasterrninated22,447 of its users for receiving

repeated allegations of infringement, where Hotfile supposedly should have terminated 34,741
users. Foster Ex. Gat 26 (last page); Foster Decl.·~ 61 & Ex.H. These humbers amount to
0.42% and 0.66% of Hotfile's users, respectively.
34.

Plaintiffs argue that defendants falsely '"claimed" to have a strikes-based repeat

infringer policy prior to the Complaint. Mot. at 10-11; Yeh Exs. 10,12

event, Hotfile did review accounts of users with l1umerous complaints at the request of content
owners, did perfClrmmanual reviews of those accOlmts, did terminatetliose accounts, and did
stop payments.

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While Hotfile indeed received millions of notices, it also had
many millions of registered users and lmtold numbers of anonymous users. Accordingly, we
understood lllaintiffs to be truthful when repeating their praise for Hotfile's efforts to combat

36.

:rlaiiltiffs then argue that Hotfilfi should have terrriinated 24,790 of its users before

this litigation under a "three strikes" repeat infringer policy. MoL at 11. Hotfi1e has managed
2,884,928,361 downloads, 123,344,533 uploads, and 5,287,163 registered users while utilizing

_

However, had Hotfile followed Plaintiffs' asserted policy. Hotfile would have

tenninated its top uploaders years ago - whom I understand have committed no infringement,
even according to Plaintiffs. See Foster Ex. D (asserting that open source software developer
received its trurd strike on January 5, 2010); 2 Foster nep., Ex. 23 (asserting that
open source developer ' _ " received third strike on May 28, 2011). Additionally, more
than two-thirds of the "repeat infringers" identified by Plaintiffs did not upload a single work-insuit after their supposed third strike- meaning that the terminations would not have helped
Plaintiffs in any way. Foster Ex. D; Mot. at 11.
37.

Plaintiffs then contend that Hotfile was forced to terminate almost aU of its top

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Afilliates and tens of thousands of its uploaders. Mot. at 12. In fact, Hottile only terminated
22,447 (or 0.42%) of its users, equivalent to 4% ofits known uploadcrs. Hotfile did so within
months of Plaintiffs' Complaint - a document which reversed praise Hotfile had received for
years.
38.

Plaintiffs then assCli that "repeat infringers" accounted for over half of aU files

ever uploaded to Hotfile and more than 75% of all downloads. Mot. at 12. However, when
Hotfile suspended these users, it took down not just the thousands of files subject to takedovvn
notices, but the millions of other files these individuals had posted that no party anywhere had
ever identified as infringing. Despite Plaintiffs' statement that "repeat infringers" uploaded more
than half ofHotfue's files, fully 87% (8,330,465/61,066,769) of these uploads were neVer
accused of infringing any copyright, even assuming that all of Hotfile's takedown notices related
to files uploaded byaUeged"repeat infringers." Foster Decl. ~ 52, Ex. Gat 26.
39.

Among files uploaded to Hotfile by affiliates, 89% were never subject to any

notice ofalleged infringement, as set forth in the chart below and ExhibitB.

Up:loads By Affi.liates

40.

Asserting that subscribers then complained "in email after email" that copyrighted

works were no longer available on Hotfile, Plaintiffs cite e-mails from nine of Hotfile's
5,287,163 users. Mot. at 12 (citing Yeh Exs. 66-68). One ofthe users soughtio download a
novel by Charles Dickens. Yeh Ex. 66 (Titov Ex. 134). A.l1other sought to download a

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goverml1ent document in Argentina that - to this day - has not been su~ject to a takedovm
request. ld (Titov Ex. 135). The remaining seven emails, even if believed to reference
copyrighted work, hardly demonstrate reliance by Hotfile on copyrighted material- particularly
given that any user dissatisfied with Hotfile (either before or after the strengthened repeat
infi:inger policy) could obtain their money back.

Hottile Sought Customers. Not Infringers
42.

When Hotfile started, according to Yeh Ex. 60, outside contractor Andrew

Ianakovtook it upon himse1ftogenerate traffic to Hotfile by seeking uploads of "mp3 [audio
files], videos, applications [and] games." However, he nowhere sought infringing content, Yeh
Ex. 60, and indeed the explicit "terms and conditions" of tl1e Hotfile· website forbade infringing
content.Plainnffseven.assert that:t\1r. Ianakov "specifically solicited users to upload 11l0vies;' even though the cited exhibit states no such thing. Mot. at 12.
43.

Plaintiffs. then suggest that, on March 29, 2009, Mr. Ianakov "encouraged the user

[''':Titing under the moniker

to upload infringing [television] files to Hot:file."

Mot. at 12 (citing VehUecI. E::,.;:. 64). This is not true. In fact, Exhibit 64 shows at mo.st Mr.
Ianakov responding to apostingby a promoter ofthe competing cyberlocker RapidShare
(Miting under the m o n i k e r _ by touting Hotme's reliability and freedom from
advertisements. :t\:1r. Ianakov makes no mention oftelevision shows, infringement, _ ,

or any ofForumDesire's other three postings in the preceding day, and responds instead to a
previous posting by an entirely different user. Yeh Ex. 64. At the deposition where I
represented IIotfIle, Plaintiff..'>neveri:lSked any questions about the content of this proffered
exhibit.
Defendants Did Not Help Users Infringe
44.

In response to Plaintiffs' discovery del1k1.nds in this case, HotfHe gathered for

production approximately 701,116 e-mails with users.

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Asserting as a fact that "Defendants helped users
engage in specific acts ofinfringement," Plaintiffs attach eighty-one of these e-mails to their
motion,

01'

0.01 % of the e-mails received by Hotfile. Yell Exs. 28,30.

HoWle's Implementation Of Hash Blocking

Without providing the e-mails, Plaintiffs purport to silll1marize_" other user e-mails in
which supposedly identify wotks-in-suit as a user's last download. YehEx. 27. Nothing
submitted
that Jvfr. Ianakov responded to any of these e-mails, much less
studied the'
listed.

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_

Accordingly, when Hotfile originally received a takedoVv11 notice, it disabled that

URL. This pennitted one user to undertake non-infringing uses of her copyrighted tiles stored
on Hotfile while preventing others from infi"inging the same master file.
48.

In August 2009, Hot±ile unilaterally took the additional step of disabling any

master file subject to a takedown notice (so-called "hash blocking"). Prior to hash blocking,
I-Iotfile had received takedown notices for 117,931 URLs, meaning that Hotme implemented
hash blocking before over 98.6% of its takedovynnotices issued.

Multiple lJRLs For A Single File Permit Download Tracking Bv Segment - Not
Circumvention Of Copyright Protection
49.

Hotfile permits uploaders to obtain several URLs [or every upload so that the

uploader can track dov,rnloads by different population segments (e.g., how many times
dovvn10aders accessed one's photo album from Facebook as opposed to Twitter). Plaintiffs
suggest that, before hash-blocking, users exploited these duplicate URLs to propagate
infringement, so that the takedown of one infringing URL would not impact the operation of
another URL relating to the same content. Mot. at 14. However, betore August 2009, only
48,094 (or 1.7%) ofthe 2,852,406 files stored at Hotfile had duplicate URLs, and only 117,931.
(4.1 %) of Hot file's fIles were subject to takedown notices.

Defendants Did Not Use Copyrighted Content To illustrate How To Use HotfiIe
50.

Plaintiffs assert that :trottiIe once gave the following example ofa URL which

could be submitted to Hotme to check the link's operability: http://hotiiie.COLn//d1!182987J_
c2d67b8!PCDJJonpomination.20Q9.rar.rrtmL YehEx.44. Despite Plaintiffs' assertion, this

URI, is not - and never has been - a "download link for the Pussycat Dolls' popular album 'Doll
Domiriation, '" as it possesses incorrect syntax for a Hotfile link. Mot. at 15.
51.

Plaintiff" next assert that "Defendants tweeted instructions for using its remote

upload tool illustrated with an infringing adult content title." Mot. at 15. However, Defendants
did not know the contents ofthe tweeted link.

Hotfile Personnel Did Not Improperly Download Infringing Content

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. Hotfile Did Not Receive Notice Oflnfringement From RapidSharc
54.

Mot. at 16; Yeh. Ex. 52. Given that the odds of
even two files sharing the same hash value are ljn 34x 1038 , RapidShare'sfinding of mUltiple
files with the same hash indicates that all bfthe files were empty. As far as I know, empty files
infringe no copyrights.
Defendants Implemented Vobile's Digitall?mgerprinting Technology
55.

Within months of the fIling of this litigation - at which point Plaintiffs reversed

years of praise for H otfile' s counter-illfringement efforts frOn1 the Plaintiffs without any warning
-Hotfile implemented digital fingerprinting technology from Vobilc, Inc. ("Vobile").
56.

In more than six 1110nths ofVobile's operation on Hotfi1e~s website, Vobile has

determined that only 3.4% of uploaded video files match copyrighted works (i.e, 63,744 matches
outof 1,838,287 files).

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I declare under penalty

ofpel~iury

under the laws of the United States of America that the

foregoing is true and COh'ect.

Executed on this

7f

j, day of March 2012, at Sofia, Bulgaria.

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