Download fighting software and ip piracy in russia: update

FIGHTING SOFTWARE
AND IP PIRACY IN
RUSSIA: UPDATE
Brian Zimbler, Ksenia Andreeva and Anastasia Dergacheva
May 26, 2015
© 2015 Morgan, Lewis & Bockius LLP
Summary
Section 1:
Russian Intellectual Property Protection – Brief Review
Section 2:
Russian Internet – The Key Battleground
Section 3:
Claims against Online Infringers – Action Plan
Section 4:
Recent Case Studies
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SECTION 1
RUSSIAN INTELLECTUAL
PROPERTY PROTECTION:
A BRIEF REVIEW
Russian IP Protection
• Well-established regime for IP protection based on
international treaties and domestic laws
• Copyright: no registration required; however, voluntary
registration possible for software
• Trademarks: registration required; 10-year term initially, with
unlimited renewals
• Patents: registration required; may cover IT solutions
• Trade Secrets: no registration required; covers technical
data (manufacturing processes, chemical compounds) and
commercial data (customer lists, marketing studies, product
launch data)
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Russian IP Protection (2)
• Specialized Intellectual Property Court for disputes over
creation and validity of IP rights (except for copyrights) and IP
infringement cases
• Infringement of IP rights may trigger civil, criminal and
“administrative” liability
• Remedies for deceptive practices (any conduct
that creates the likelihood of confusion or
misunderstanding) under competition and
consumer protection laws
• Interim measures available; but in practice, not
always easy to obtain unless fake products are involved
• Customs: “Register of Intellectual Property Objects”
useful to block imports of pirated goods
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Russian IP Protection (3)
• But … IP infringement remains a major issue, despite
substantial efforts by Russian authorities
• Pirated software and peer-to-peer file sharing platforms
(torrents) still widely available
• Amount of software installation without proper licensing
in Russia: 67%; commercial value of unlicensed
installations about US$2.6 billion (BSA Global Software
Survey 2013)
• Russia still prominent in USTR Special 301 Report, Priority
Watch List
• Piracy claims in Russia by major music companies against
Vkontakte, the largest social network in Russia; total
lost music revenues about US$69 million (IFPI, 2013)
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SECTION 2
RUSSIAN INTERNET: THE
KEY BATTLEGROUND
Key Laws for Internet/IP
• Part IV of the Russian Civil Code
• Federal Law No. 149-FZ “On Information, Information Technologies and
Information Protection” (2006) (“Information Law”) as amended by
Federal Law of November 24, 2014 № 364-FZ
• Decrees of the Russian Government
• Regulations of Roskomnadzor
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Key Regulators for Internet
•
Ministry of Communications and Mass Media (Minkomsvyaz)
•
Federal Service for Communications, Information Technology and Mass
Communications Supervision (Roskomnadzor)
•
Federal Antimonopoly Service (FAS)
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Market Overview
Projections until 2018:
• Russian Internet market to grow 15%-20% annually
• Internet retail to grow 7% on CAGR basis
(Russian Association for Electronic Communications and Higher School of Economics, J’son and
Partners)
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Legal Regulation of Russian Internet
• Substantial new steps to regulate Internet in 2014
 Focus on privacy and data protection for Russian users, including required
data storage in Russia
 Focus on protection of children from information harmful to health and
development
 Restricting anonymous online payments
 Control over social networks and blogger activity, including obligation to
register with the Russian authorities
 Risks of further control of content
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Legal Regulation of Russian Internet (2)
• Still some gaps in legal protection for IP:




No clear definitions (e.g., Internet, website, domain, website owner,
organizer of dissemination of information on Internet)
Domain name is not IP (however, new Intellectual Property Court has
commented on related cases and interim measures)
Uncertain regulation of technical aspects of software (updates v.
modifications)
Unclear status of virtual products and services (virtual money)
• Russian authorities have proposed an online
piracy-monitoring system using digital
fingerprinting (registry of IP owners)
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SECTION 3
CLAIMS AGAINST ONLINE
INFRINGERS – ACTION
PLAN
Key Principles under Anti-Piracy Law
• First anti-piracy law came into effect in August 2013; covered only
films and TV shows
• Updated law effective from May 1, 2015 to protect all copyrighted
content (except for photographs), and introduced simplified steps for
“take down” of websites with pirated content:
 Action available for the IP owners and, in certain cases, to exclusive
licensees
 Non-judicial measures available – IP owner may send take-down notice
directly to website owner
 Special, fast procedure to seek interim measures – Roskomnadzor
interacts with hosting and communication service providers to block or
suspend infringing content
 Perpetual bans for “repeated” IP infringement
 Limited liability of online “intermediary” – ISP may avoid liability if not
aware of illegal nature of the content uploaded, and it reacts promptly to
claims of IP rights holders regarding alleged infringement
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What IP is Protected against Online Infringement?
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Non-Judicial Measures - How Do They Work?
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Non-Judicial Measures - How Do They Work? (2)
• As of May 1, all website owners must list contact information on their
websites (names, postal addresses and email addresses)
• Notice of claimed infringement must contain: information on the IP
owner (or its representative), description of allegedly pirated IP, information
on the relevant domain name/website address; statement that no license
has been granted for the infringing use (Article 15.7 of the Information Law)
• Within 24 hours of receiving notice, the website owner must either:
 remove infringing content or
 request additional information or
 provide proof that the website owner is authorized to use the allegedly
pirated content
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Interim Measures – How Do They Work?
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Interim Measures – How Do They Work? (2)
• Faster, clearer procedure available starting on May 1, 2015:
 Step 1:
 Step 2:
 Step 3:
right holder files for interim measures against the website
owner with the Moscow City Court (all issued injunctions are
available on the Moscow City Court website)
once interim measures are awarded, the right holder files an
application with Roskomnadzor “to restrict access to
informational resources that distribute infringing content”
(Roskomnadzor is then responsible for all further actions to
block or suspend infringing content)
right holder files a claim for protection of intellectual
property rights with Moscow City Court (not later than 15
days after interim measures awarded)
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Interim Measures – How Do They Work? (3)
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Interim Measures – How Do They Work? (4)
In theory, content is blocked or suspended within seven days:
 Roskomnadzor has 3 business days to identify hosting provider and
notify
 Hosting provider then has 24 hours to advise the website owner to
remove the allegedly infringing content or restrict access
 Website owner then has 24 hours to comply
 If website owner fails to comply, hosting
provider must restrict access to the website
within 3 business days after notice from
Roskomnadzor
 In case of non-compliance by hosting
provider and website owner, Roskomnadzor
notifies the telecom services provider, which
must restrict access to the website within
24 hours
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Interim Measures – Practical Guidelines
In May 2015 Roskomnadzor issued practical guidelines for the application of
interim measures. Roskomnadzor advises IP right holders:
 to apply to Moscow City Court only after non-judicial measures are
exhausted
 do not use non-judicial measures to apply to communication services
providers directly
 when filing for interim measures to list as many allegedly pirated IP
objects as possible
 to provide sufficient details to identify allegedly pirated IP objects (name,
author, etc) and its location (IP address, URL, screenshots and vidshots)
 to mind users interests and exclude blocking of legal content
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Perpetual Ban – How Does It Work?
• Special remedy for repeated violations: website may be blocked
permanently, if there has been a prior decision of the Moscow City
Court against the same website at the request of the same IP owner
• Upon receipt of the court decision, Roskomnadzor notifies the telecom
services provider; it must restrict access to the website within 24
hours
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Remedies for Online IP Infringement
• Civil liability:
 interim measures
 monetary damages
 statutory compensation (no need to prove actual damages):
 fixed amount ranging up to 5m Rubles (about US$100K);
 double the price of pirated goods; or
 double the normal fees for licensed use
• Administrative liability: for unauthorized use of copyrighted
works, monetary fines and seizure of pirated goods
• Criminal liability: for large scale infringements only,
monetary fines, “correctional labor” or imprisonment
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SECTION 4
CASE STUDIES
Recent Cases Involving Online IP Infringement
• Vkontakte cases
 Alenikov vs. Vkontakte (2014)
 Nikitin Media vs. Vkontakte; Studia Souz vs. Vkontakte
(ongoing)
 Sony Music Entertainment vs. Vkontakte; Warner Music UK
Limited vs. Vkontakte and Universal Music vs. Vkontakte
(ongoing)
• Torrent trackers cases (2013-2014)
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Vkontakte (VK) cases: defendant
• VK.com is one of Russia’s largest social networking sites
• VK.com allows users to download audio and video content to
their personal pages and makes it possible for other users to
find it using search engines
• USTR Out-of-Cycle Review of Notorious Markets 2014 report
stated that “vK’s operators responded to the Federal Register
Request with information about their anti-piracy efforts, but the
reported continuing scope and volume of infringing content
demonstrates that more needs to be done to yield positive
change”
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Vkontakte (VK) cases: Alenikov vs. Vkontakte
• August 2013: Alenikov claimed compensation of RUR
1,500,000 (about USD 40,000) for unauthorized use of the
motion picture “Triumf” (Triumph)
• Alenikov sent a written notice to VK requesting that copies of
the motion picture posted on VK be deleted; VK failed to
respond
• VK claimed that the notice did not contain the URL
• The court decided that VK should have responded to the
notice nevertheless
• The court awarded compensation in the amount of RUR
300,000 (about USD 8,000)
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Vkontakte (VK) cases: Nikitin Media vs.
Vkontakte; Studia Souz vs. Vkontakte
• June-July 2013: Nikitin Media and Studia Souz claimed
compensation for unauthorized use of phonograms in the
amount of RUR 75,000 (about USD 2,300) per phonogram
• Nikitin Media and Studia Souz sent notices to VK requesting
that the phonograms be deleted; VK requested proof of IP
rights
• The court of first instance decided that VK is not liable
because it was not aware of the illegal nature of the content
uploaded, and it reacted promptly to claims of IP rights holders
• The decision was upheld in appeals court but reversed in
cassation (in closed session). Next hearing – June 2015
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Vkontakte (VK) cases: Major Record Labels vs.
Vkontakte
• April 2014: Sony, Warner and Universal:
 Claim compensation for unauthorized use of phonograms
in the amount of RUR 1,200,000 (about USD 34,000) per
phonogram;
 Request an order requiring VK to stop making it
technologically possible to upload infringing content and
implement fingerprinting technology to delete copyrighted
works and prevent them from being re-uploaded
• Three cases were initially merged into one but Sony, Warner
and Universal are struggling to separate them
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Torrent trackers cases
• 2013-2014: Russian rights holders vs. foreign hosting
providers
• Claims for an order to stop creating technological means to
store, distribute and otherwise use copyrighted works
• No monetary claims
• Claims granted. Potential impact on VK cases?
• Legal issue – torrent trackers store torrent files and not
copyrighted works. This argument was never raised in court
because the defendants did not participate
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Q&A
Brian Zimbler
Moscow
+7.495.212.2500
[email protected]
Ksenia Andreeva
Moscow
+7.495.212.2527
[email protected]
Anastasia Dergacheva
Moscow
+7.495.212.2516
[email protected]
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