Lawsuit Against Web Host Swiftel Shows Massive Liability Risk for Hosting Industry

July 18, 2005
July 18, 2005 - (HOSTSEARCH.COM) - According to P2Pnet, Australian web hosting provider Swiftel is being sued by Warner Music Australia after 2 systems administrators, Melissa Ong and Ryan Briggs, allegedly set up a file sharing hub for the BitTorrent P2P file sharing with thousands of copyrighted audio and video files. Justice Catherine Branson overturned a prior ruling allowing the court case to go through.

While Swiftel’s liability in the case may be limited, the recent trend towards holding makers of P2P software and now web hosts liable for copyrighted file sharing highlights a disturbing fact for web hosting providers. Most hosting providers don’t know what content is being featured on the sites they host and should Swiftel be found guilty in the October trial this would open up the door for other web hosts to be sued for the content their customers are posting on their sites.

The recent trend towards liability follows a US Supreme Court ruling against P2P file sharing firm Grokster. Previously, companies such as MCI, for example, were able to get away with hundreds of millions of dollars in profits hosting sites through resellers that downloaded Trojan malware that caused infected computers to send out advertising spam. Only after growing pressure did MCI reluctantly cut ties with their cash cow.

One other disturbing fact that the Swiftel case illuminates is that many countries will happily host sites that foster what would be illegal activity in another country. For example, Party Gaming’s recent IPO at $9 billion in London on the back of an online gambling site that makes most of its money through players in the United States where online gambling is illegal shows the discrepancies between national and international law and the ubiquitous nature of the Internet.

In other words, Swiftel, had it been based in Gibraltar like Party Gaming or somewhere in China would probably still be sending those same copyrighted files over the wire to anyone who wanted them.

In the short term, this bodes ill for Western economies and well for any country that is willing to bend or break the rules.

In the long term this will lead to economic decline for the West until such time as countries like the US and Australia are willing to liberalize their IP (intellectual property rights) laws or the world comes together in a consensus about how the Internet is to be used no matter how much profit there is at stake. You can see the UN’s 4 different plans for the future of Internet governance and the Bush administration’s 180 degree plan for the likelihood of such a consensus.

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