The hosting industry is rapidly evolving, providing critical infrastructure services for companies worldwide. From cloud solutions to dedicated servers, hosting providers help businesses build and maintain their online presence. However, despite the fact that hosting providers only offer infrastructure to host content, they often find themselves in the middle of legal disputes related to copyright infringements committed by their clients.
The issue of copyright infringement on digital content has existed for a long time. As technology has made it easier to create and distribute content, it has also increased the scale of its misuse. As early as 1998, the Digital Millennium Copyright Act (DMCA) was enacted in the United States, which tasked hosting providers with cooperating with rights holders and removing liability for client content if copyright claims were properly handled. However, despite the implementation of DMCA, hosting providers continue to face numerous challenges and legal traps.
It’s important to understand that the DMCA is a U.S. federal law that applies only within U.S. jurisdiction. Other countries have their own specific regulations. There is no global legal framework that regulates intellectual property usage uniformly across the world. The rules vary from jurisdiction to jurisdiction.
This long read will explore the problems faced by hosting companies in matters of copyright, backed by examples, and suggest ways to minimize risks.
The History of the Problem: Copyright Infringement and Digital Infrastructure
Copyright in the digital realm has become one of the key legal issues. While users actively create, distribute, and consume digital content, hosting providers act as intermediaries, providing infrastructure for this exchange. Hosting providers offer a platform for hosting websites, applications, and services, but they do not control the content uploaded by clients.
For example, VSYS.Host provider does not control the content that clients host but always emphasizes in terms of service and other policies the requirement to use services legally, including compliance with IP-related matters.
This division of responsibilities is critical to understand, as providers are essentially “facilitators” providing infrastructure, not creators or owners of the content. However, the law sometimes fails to distinguish between those who create the content and those who provide the space to host it. This has put providers at risk of lawsuits for copyright infringement by clients.
In 2019, over 500 million DMCA requests were filed, 45% more than in previous years. In 2023, the number of requests increased by another 30%, indicating a growing volume of violations and an increased burden on hosting platforms.
Laws like the DMCA regulate the interaction between hosting providers and rights holders among other issues addressed in the act. The DMCA grants hosting providers “safe harbor”—protection from liability— provided that the hosting provider has no actual knowledge of the illegal activity and follows specific procedures to remove infringing content.. Additionally, there are strict requirements for how a DMCA complaint must be properly filed. Despite adhering to legal requirements, many hosting companies face accusations of facilitating copyright infringement, which can lead to serious consequences.
Key Problems Hosting Providers Face Regarding Copyright
Problem 1: Handling Mass DMCA Requests and Automation Risks
One of the biggest challenges for hosting providers is the sheer volume of DMCA requests they receive. Hundreds, if not thousands, of notices can be sent daily. The number of DMCA requests faced by large hosting providers increases yearly. Each request requires thorough verification, including investigating the claim, ensuring the complaint is properly formatted and submitted, and more. In other words, numerous steps must be taken to properly process just a single request.
In 2022, YouTube processed over 7 million DMCA requests in just one month, highlighting the massive volume of notices digital platforms face.
Key Challenge: Automation
Many providers are forced to implement automated systems to handle DMCA requests. However, even these systems cannot guarantee that all requests are legitimate, which creates a risk of false removals or abuses of the system.
For medium and small hosting companies that lack the resources to implement automation, this can lead to delays in responding to requests and, consequently, potential legal disputes.
Problem 2: Risks of Fake and Fraudulent Requests
Not all copyright claims are legitimate. Hosting providers often face fake DMCA requests, filled by bad actors aiming to block competitors or legitimate content. This creates serious problems for platforms, which must identify and filter out these fraudulent requests.
According to Electronic Frontier Foundation (EFF), 30% of DMCA requests are erroneous or abuse the system, causing harm to legal content and creating reputational risks for hosts.
Key Challenge: Resource Allocation and Filtering
Providers must dedicate substantial resources to verify the authenticity of such requests, which complicates and slows down processes.
In 2020, Amazon Web Services was hit by a wave of fake DMCA requests targeting legitimate content from competitors. This led to incorrect blocks and customer dissatisfaction, damaging AWS’s reputation.
Filtering fake requests requires sophisticated systems and legal expertise, making automation more challenging. Incorrect filtering can result in lawsuits from rights holders if legitimate and properly filled requests are missed, or to loss of clients if false requests are accepted.
Google estimates that around 4% of all DMCA requests are aimed at sabotaging competitors or abusing the system to remove legitimate content.
Problem 3: Jurisdictional Complexities and Legal Differences
Hosting providers operating internationally face challenges due to the varying copyright laws across different jurisdictions. This creates complications in handling requests.
For example, the EU Directive on Copyright in the Digital Single Market (DSM Directive) enforces stricter rules on content than the US DMCA, which provides more flexibility and protection for providers. Hosting companies operating across multiple jurisdictions must be prepared to comply with these different legal frameworks.
Key Challenge: Fines and Compliance in Different Jurisdictions
Falling to comply with properly filled and formatted international requests can lead to negative consequences for business or even result in fines.
In 2022, the French company OVH faced blockages of its servers in the US for failing to comply with the DMCA, resulting in the loss of its American market segment.
Hosting providers must navigate legal complexities and ensure compliance with regulations in each jurisdiction where they operate. Content owners must also be aware of the laws governing the provider’s jurisdiction and interact with the provider in accordance with the legal framework of the country where the company is registered, ensuring prompt and complaint handling of content-related issues.
Problem 4: Reputational Risks for Hosting Providers
Even when hosting providers operate fully within the law, they still face significant reputational risks from accusations of supporting piracy. Media and rights holders often accuse providers, even when they are following all required procedures.
In 2021, the Cloudflare service came under fire for allegedly supporting pirate sites, despite complying with DMCA procedures. This led to negative media coverage, putting their reputation at risk.
Key Challenge: Loss of Clients and Partners
Such accusations often become public through the media, leading to a further decline in trust from clients. Many legitimate businesses may begin to leave the provider to avoid legal risks. Partners may also terminate contracts to avoid association with copyright violations.
CISCO’s 2021 Data Security Report indicated that 65% of customers would consider leaving a hosting provider if they were associated with copyright infringement or piracy, even if the provider was not directly responsible.
Problem 5: Balancing Confidentiality and Legal Compliance
Many hosting providers, especially those offering anonymous or private services, face the challenge of complying with laws while protecting client confidentiality. Maintaining a balance between safeguarding clients’ privacy and fulfilling legal obligations is crucial.
In 2020, NordVPN faced piracy accusations due to its anonymity policy. Although the company followed the law by providing information on DMCA requests, its clients perceived these actions as a threat to their privacy.
Key Challenge: Legal Compliance, Transparency, and Trust
Hosting providers must operate within legal frameworks while ensuring copyright protection. Developing clear procedures for handling requests can help maintain this balance, ensuring both client protection and legal compliance.
A transparent policy on copyright management is essential for maintaining trust with both clients and rights holders. Companies that openly communicate their stance and demonstrate a willingness to cooperate can reduce the risk of being accused of facilitating piracy.
Conclusion: How Hosting Providers Can Minimize Risks
Hosting providers play a key role in combating copyright violations, balancing the provision of infrastructure with a wide range of legal obligations. To operate effectively, it is crucial to find the right balance between legal compliance, client protection, and preventing reputational risks.
Recommendations for Hosting Providers:
- Automation and Filtering: Implement robust systems to handle DMCA and similar requests with mechanisms to filter out false or fraudulent notifications efficiently.
- Transparent Policies: Foster open communication with both clients and rights holders to reduce the risk of reputational damage.
- Legal Support: Establishing a professional legal team capable of handling requests and potential lawsuits. Additionally, ensure your website’s terms of service and other legal documents are well-crafted, providing transparency and clarity for both clients and content owners.
Sources:
- DMCA Requests Statistics, 2023
- CISCO Data Security Report, 2021
- EFF DMCA Analysis, 2022