Cyberlockers: the new frontier for pirates?

Ever since Shawn Fanning created Napster in the late nineties, peer-to-peer has been the preferred way of illegally sharing files online. But in recent years a new type of file sharing service has emerged: cyberlockers.

Cyberlockers are online services where users can store their files. Popular services like Rapidshare, MegaUpload and Hotfile offer users disk space to store their files. Storing files online has many advantages: it is possible to access the files from any location with an Internet connection, it is easier to synchronize files across different devices and it is oftentimes cheaper and more secure than using local storage.

Because cyberlockers are easy to use and offer fast and reliable access to files, they have grown immensely popular over the past years. Unfortunately, they are not only popular with legitimate users. On the contrary, most of the files shared by people using cyberlockers infringes upon copyright. According to a 2011 study by Envisional, as much as 73% of all traffic from cyberlockers consists of infringing content. This amounts to 5% of global internet traffic.

For the operators of cyberlockers hosting infringing content is very lucrative. The reason for this is very simple: copyrighted files are far more popular than other files. Popular content means more traffic and more traffic means more revenue, either from ads, subscriptions or both. Many cyberlockers even go as far as to operate upload incentives. If a user uploads a popular file and that file is downloaded an X amount of times, the user is rewarded in cash. Of course, the most popular files are not home made songs or videos, but rather professionally produced, copyrighted materials.

Given the fact that cyberlockers are becoming more and more important in the illegal exchange of copyrighted files, and some of them seem to promote copyright infringement, the legal question is whether cyberlockers are liable for the files on their servers and whether they are liable for the role they wittingly or unwittingly play in the massive copyright infringement that is taking place.

Under the European e-commerce Directive as well as under the American Digital Millennium Copyright Act (DMCA) an information society service provider is not liable for the content it hosts for users, as long as they are not aware of the fact that the content is infringing or illegal. Once the provider is (made) aware of the infringing or illegal nature of the hosted content, it must act promptly to remove the content, lest it become liable itself. To facilitate the notification and removal process, a notice & takedown (NTD) procedure is used.

Furthermore, case law has established that when a service is aimed primarily at facilitating the infringement of copyright, this behaviour is considered tortious. Whether or not this is the case for a particular cyberlocker is dependent on its actual behaviour. The use of upload incentives, a non-effective NTD procedure, or advertising the fact users can download popular (copyrighted) movies for free, are factors that need to be taken into account in judging whether a cyberlocker facilitating copyright infringement.

While offering online storage is a perfectly legitimate service in itself, I feel there are strong indications that at least some cyberlockers deliberately facilitate copyright infringement via their services.

Cyberlockers indeed seem to be the new frontier for pirates.