Hosting can be a lucrative business. Any business model that produces automated monthly billings is certainly 
something to be looked upon fondly. Having said this, a hosting company does face certain risks. Let’s take a look at how a hosting company can mitigate its risk of being sued for copyright infringement by complying with the DMCA.
DMCA
The “DMCA” is an abbreviation for the Digital Millennium Copyright Act of 1998. The laws was created as one of a group of laws designed to protect fledgling online businesses on what was then just becoming a popular thing – the internet. We are talking about the days of dial up modems to give you a sense of perspective.
The purpose of the DMCA is to create an informal procedure for addressing copyright infringement in the online environment. The part of the law applicable to hosting companies focuses on three parties:
The copyright holder,
The person posting the content of the copyright holder to a website without permission, and
The website.
The “website” is defined very broadly to include what is known as “internet service providers.” A hosting company is considered such a provider and covered by the law.
Copyright infringement is a major issue on the web. It typically works something like this scenario.
I am reading an article on a website and see a funny picture.
I post the image to my Facebook account for all my followers to see.
I do not get permission from the copyright holder who is typically the photographer.
I am infringing on the rights of the copyright holder.
Before the web existed, the copyright holder would send a cease and desist letter to the person who had reprinted the image without permission. In many cases, the dispute would just end up in court.
The DMCA was written by politicians who realized there were going to be a massive number of copyright disputes on the web since it is so easy to republish content. To avoid crippling the courts with millions of lawsuits, the DMCA is designed to create a procedure to facilitate an informal resolution to each infringement problem.
The actual procedure is beyond the scope of this article. What is important for you to understand is so long as the procedure is followed by a hosting company, the company cannot be sued for monetary damages for any alleged infringement related to content uploaded by a user of the hosting service. Let’s look at an example to see how this works.
I start “Blow Me Down Hosting, Inc.” My first customer is “M. Content Scraper.” He starts a blog and begins posting content. I receive a copyright compliant from the publisher of Stephen King asserting Mr. Scraper has infringed on the copyright of Mr. King by copying large sections of one of his books and republishing them on the blog started by Scraper. If I follow the procedure detailed in the DMCA, Mr. King cannot sue me for the infringement. He can only go after Scraper.
Think about that for a second. Copyright infringement lawsuits are the single most common form of lawsuits filed in relation to the internet and you have just been given immunity from those lawsuits. You should be thinking this DMCA law is a pretty good deal at this point in time.
Details, Details
Is there a catch with the DMCA? Of course there is. You didn’t really think immunity of this sort would come without any requirements, did you?
The catch in this case is a hosting company must comply with numerous requirements detailed in the DMCA to maintain the immunity from being sued. Just a few of the requirements include:
Designating and registering a DMCA agent with the Copyright Office,
Creating and publishing a DMCA Policy on the website,
Creating and maintaining a Repeat Infringer Policy, and
Following a specific timeline of steps to be pursued when a complaint comes in as detailed in the DMCA.
Is it worth taking these steps? Absolutely. The truth of the matter is many of your hosting clients are going to violate the copyright of others at one time or another. Most will do it accidently because they simply do not understand how copyright works. The last thing you need as a hosting company, however, is to be dragged into a few hundred copyright infringement lawsuits. By complying with the DMCA, you can avoid this fate.
If you are starting a hosting company, contact me today to learn more about using the DMCA to protect your business from copyright lawsuits.
Richard A. Chapo, Esq.
@richardachapo