Liberty Media, the company involved in achieving the largest headline settlement against a BitTorrent user last month, has widened its net to include cyberlocker-based infringement. The movie studio has now filed suit against file-hosting site Hotfile and 1000 of its users. PayPal is also named in the suit alongside calls for it to freeze Hotfile's account. The court is asked to seize Hotfile's domain name.

A lawsuit filed by Liberty Media Holdings 6th January 2011 sets out the basis for a potentially large and important case against file-hosting site, Hotfile.

Liberty describes Hotfile Corp as a Panamanian company with no physical presence there and one that takes steps to “obfuscate the facts of its location, address, and principals.” The studio states that Hotfile’s owner is a Russian named Anton Titov, who may or may not be a resident of Bulgaria and/or The Netherlands, and who also may have a residence in Florida.

A company called Lemuria Communications is also listed as a defendant. The company is claimed to be Hotfile’s webhost and an alter ego of Anton Titov. Hotfile is said to operate servers in Dallas, Texas and Florida.

The studio goes on to list 1000 ‘John Doe’ defendants who it’s claimed “jointly and severally, with actual or constructive knowledge of or with willful blindness, reproduced and distributed certain LIBERTY-owned works through www.Hotfile.com.”

PayPal is also named as a defendant on the basis that it offers financial services to Hotfile, Titov and Lemuria. Liberty demands that the court freezes defendants’ assets held by PayPal pending the outcome of the case.

Liberty Media says that while Hotfile may have legitimate uses, its aim is “to profit from the illegal sharing of copyrighted materials, many of which are the intellectual property of LIBERTY,” material which the studio says is placed there by “an army of assistants.”

These assistants, Liberty claims, are otherwise known as affiliates which together form a business model described as a “massive pyramid” of cascading payments from which Hotfile, but not copyright holders, profit.

Liberty says it discovered more than 2,400 links to 800 of its titles stored on Hotfile and that the file-hoster used Lemuria Communications’ servers to achieve its “unlawful goals”.

“Hotfile.com cleverly avoids cataloging or indexing the files in order to be willfully blind to their users’ uploads and downloads, while profiting from the site’s web traffic,” the lawsuit states, adding:

“Demonstrating that Defendant Hotfile.com is aware of the illegality of its conduct, it offers two methods for download services. For its first option, Defendant Hotfile.com permits its partners to download a stolen movie at a very slow transfer speed for no charge. The other option allows users to pay a premium to download the movie ten times faster.”

In respect of safe harbor, Liberty Media claims that while Lemuria had a registered agent as required under the Digital Millennium Copyright Act (DMCA) at the time of the infringements, Hotfile did not. As such it is “not entitled to the DMCA’s safe harbor provisions for the complained of infringements.”

Liberty describes Hotfile as a massive copyright infringer which encourages affiliates to upload copyright material in order to attract further visitors to its website from which both the company and affiliates profit.

With demands for a jury trial, Liberty Media claims Hotfile is guilty of inducing, contributory and vicarious infringement and wants statutory damages of $150,000 per infringed work.

Furthermore, Liberty requests that the court seizes Hotfile’s domain name pending the outcome of the case.