File host that uploads illegal files to other file hosts

Question

Imagine two file hosting websites. Perhaps Dropbox and Google Drive.

Now imagine a third file hosting service. However, what it does is grab your file, split it in two chunks, encrypt both of them, and upload one to Dropbox and another to Google Drive (then it gives both download links to the user).

Even if the service detects that the files are illegal, it is not storing them itself, but rather uploading them to other hosts.

Assuming that people use such service to upload illegal content, would such service be technically illegal?

What if the service keeps a list of all download links for anyone to download from?

Mostly curious about Canadian and US jurisdiction.

Answer 1

If it was illegal to make the entire copy, it is illegal to copy half the file. See also, e.g., Basic Books v. Kinko's Graphics Corp., 758 F. Supp. 1522 (S.D.N.Y. 1991)

In response to the question of whether moving it to someone else's servers makes a difference: it is the act of copying, not the possession of the copy, that is the violation of copyright law. As for the copy a service assists someone to make, contributory liability would be the issue.

You don't need to be the person making the copies to be contributing to the infringement--material contribution to the copying process and knowledge of infringement run a serious risk of creating contributory liability.

If seriously considering such a service as a business model someone would need to consult a copyright expert with technical knowledge or pay counsel with technical knowledge for a good bit of time to do some research. There are major civil and criminal consequences if the industry or the government decides to go after a service doing this, so legal expenses would be a significant and important cost of doing business that would significantly increase barriers to entry.

In addition, the service would likely be in violation of its agreement with storage vendors, who would want to minimize their legal exposure and might well discontinue the service when they learned what it was doing.

Answer 2

For the US: If you're old enough, you might recall A&M Records v. Napster, see 239 F.3d 1004 (2001). Napster didn't store any of the infringing data itself, and in most cases, the data never even passed through their servers. Nonetheless, the District Court held, and the Ninth Circuit affirmed, that Napster could be held liable for "contributory and vicarious" copyright infringement, because Napster knew about the infringement, could have stopped it but did not, provided material support for it, and benefited financially from it.

Napster was enjoined from "engaging in, or facilitating others in" copyright infringement, eventually requiring them to shut down. They later settled copyright infringement claims for $26 million and declared bankruptcy.

It's hard to see why your proposed service wouldn't face all the same problems and then some.