Website liability for copyright violations

Some companies are unsure whether they are violating copyright laws or not. Take the case of Garry Fung, discussed in a CTV story yesterday. His website, IsoHunt.com allows users to link to content such as videos and music. He is being sued in Canada and the U.S. because his website hosts content that can be downloaded (legally or illegally) by users. Fung, of course, wouldn’t have any direct knowledge about whether people are downloading illegally, but the question is, under the Copyright Act, whether that matters. Fung apparently has a policy of removing content if the copyright holder (ie. the artist or association) complains about illegal practices. Does the Act require websites to proactively monitor how their sites are being used? If so, is there any way of doing this cost effectively? These questions may not be answered conclusively anytime soon. But, anyone operating on the internet needs to take whatever measures are realistic in order to protect themselves.