piatkow - 8:17 am on Sep 3, 2009 (gmt 0)

In my view, the process should be:
1. Hosting service notified of breach
2. Hosting service notifies customer and gives them a reasonable time limit to remove the breach or challenge the claim
3. A challenge should trigger a further review period
4. If customer fails to act then suspend site at end of time limit

Failure to follow an appropriate process such as that suggested should then make the hosting service liable.
NB I am not explicitly referring to US law, the basic process should apply under any jurisdiction. I am also talking specifically about hosting not about services such as YouTube.

Certainly a hosting provider should not act arbitrarily nor should it be expected to pro-actively identify copyright or trademark breaches.