Understanding The DMCA Before Starting A Hosting Company

Hosting can be a lucrative business. Any business model that produces automated monthly billings is certainly The DMCA and Starting A Hosting Companysomething to be looked upon fondly. Still, 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.


The “DMCA” is an abbreviation for the Digital Millennium Copyright Act of 1998. The Act is one of a group of laws designed to protect fledgling online businesses on what was then just a fledgling idea – 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:

  1. The copyright holder,
  2. The person posting the content of the copyright holder to a website without permission, and
  3. The website.

The “website” is defined very broadly to include “internet service providers.” A hosting company is considered an internet service provider.

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 of the picture which is typically the photographer. 
  • I am infringing on the rights of the copyright holder.

Before the web existed, the copyright owner would hire a lawyer to send a cease and desist letter to me. If I did not respond, the copyright holder would then file a copyright infringement lawsuit against me, and the matter would proceed to 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 was written to create a procedure to facilitate an informal resolution to each infringement problem.

The actual process is beyond the scope of this article. What is important to understand is so long as a hosting company follows the procedure, the host cannot be sued for monetary damages for any alleged copyright infringement by one of its clients. 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 complaint from the publisher of Stephen King asserting Mr. Scraper has copied and republished large sections of one of Mr. King’s books on the web. 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 lawsuit filed in relation to the internet. The DMCA provides immunity from those lawsuits. As the owner of a hosting company, you should view the DMCA as a pretty good deal.

Details, Details

Is there a catch with the DMCA? Of course. You didn’t really think immunity of this sort would come without a catch, did you?

The catch is a hosting company must comply with numerous requirements to maintain the protection. 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 when a complaint comes in as detailed in the DMCA.

Is it worth taking these steps? Absolutely. The truth is many of your hosting clients are going to violate the copyright of others at one time or another. Most will do it innocently because they just do not understand how copyright works. A few will be scumbags maliciously trying to make a buck off of the work of others. By complying with the DMCA as a hosting company, you can avoid being dragged into hundreds or thousands of copyright infringement lawsuits.

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.