File hosting service Hotfile has been found liable for copyright infringement by a court in the US. The court also ruled that the founder the site, Anton Titov is personally responsible for the damages claimed by movie studios.
Hotfile was sued by five studios including Warner Bros, Disney and 20th Century Fox because the file hosting service gave incentives to upload copyrighted content. It paid uploaders when their content was downloaded by users with a Premium subscription. The more popular the content, the more subscribers downloaded it and the more the uploaders got paid. Often the most downloaded content included popular movies from Hollywood studios.
The file hosting service claims that it was protected under the safe harbor provision of the Digital Millennium Copyright Act (DMCA). This gives the possibility of owners of sites that allow user generated content to remove copyrighted content after a takedown notice. Hotfile implemented an takedown technology that automatically removed files reported by the studios.
Still that wasn't enough and the court ruled that the site was responsible for copyright infringement. Likely because it implemented an incentive scheme which caused uploaders to be more creative in offering copyright content on the site.
Details on any damages the owner of the site has to pay have not been released yet, there is one certainty, the owner won't go to jail as it's a civil case.
