suraj.sun writes "A federal judge in Miami has dismissed direct copyright infringement charges against Hotfile, a popular online "locker" service that the major Hollywood studios allege is responsible for massive copyright infringement. But he allowed the case to proceed on charges that Hotfile has induced and profited from the infringing activities of its users. The case, which began in February, represents the latest front in the never-ending arms race between Hollywood studios and users seeking free copies of their movies. Hotfile is a "cyberlocker" site. Users upload files they wish to share with others and are rewarded financially if these files prove popular. The studios allege that the overwhelming majority of the files users upload to Hotfile are copyrighted content being distributed without the consent of copyright holders' like themselves."