According to Boyd, Movietvonline.com and other sites linking to pirated movies and TV programs that require Zango to be installed steer users to secondary sites such as Megavideo, or to offshore BitTorrent and YouTube-esque sites hosted in China.
Stratz also acknowledged that Movietvonline.com currently receives revenue from Zango, which pays sites for each installation they obtain.
But noted antispyware researcher Ben Edelman, a lawyer and assistant professor at the Harvard Business School, said Zango is also making money from the practice. "Zango is profiting directly from copyright infringement," said Edelman, who has tracked the company's moves for years, most recently in research he published in May that took Zango to task for, among other things, offering up copyrighted content on its own site.
Zango's revenues come from serving up the pop-up ads its software displays on users' computers.
That means Zango is not eligible for the "safe harbor" provisions of the Digital Millennium Copyright Act (DMCA), said Edelman. "To claim safe harbor, a site cannot 'receive a financial benefit directly attributable to the infringing activity'," Edelman said, reading from the statute.
"Google, for example, knows it would become ineligible for the DMCA Safe Harbor if it ran ads alongside copyrighted content on YouTube, because then Google would be profiting directly from the copyright infringement," Edelman continued. "That's why most have no ads."
Nor does Zango's explanation that Movietvonline.com acts as a search site hold water. "It doesn't look like a search site to users," Edelman argued. "The site puts itself out as offering the videos directly, not by linking."
Movie and television copyright holders would have a strong case against Zango if they wanted to pursue the matter, Edelman added. "It's just a question of how many they want to file," he said. "I think this would be a pretty good one to pursue, because Zango is profiting directly from the infringement."
This is the second time in the last three months that Zango's made the news. In June, the Bellevue, Wash.-based company, formerly known as 180solutions, laid off nearly 70 employees, a third of its workforce.
Zango also remains locked in a legal battle with security company Kaspersky Lab, whose software blocks the adware company's programs from installing. Although Kaspersky won the first round of a Zango-filed lawsuit, Zango appealed the verdict to federal court last year. A decision on the appeal has not yet been handed down by the Ninth Circuit court.