Arbitrazh Court of St Petersburg and Leningrad Region, Decision of 15 October 2012, No. A56-16627/2011; 13th Arbitrazh Court of Appeal, Decision of 21 January 2013

A change of the interpretation of the legal provisions by the Russian courts led to a success of copyright infringement proceedings brought against the Russian social network VKontakte.

VKontakte is currently the largest Russian social network with more than 100 million users and one of the most visited websites in Russia. It not only provides the usual functions of a social network, such as messaging, public pages and sharing images, but also serves as a platform for uploading, searching and sharing music and videos. In the past, VKontakte was confronted several times by IP right owners for infringement of their rights by user generated content on the platform. Most of these disputes were barely successful since the courts were not able to establish from the evidence provided a wrongdoing by VKontakte.

A recent claim brought by S.B.A./Gala Record was successful, approached by the Russian court in a different way.

S.B.A./Gala Records is the first independent Russian record and publishing label, founded in 1988. In 1993, it became the official representative of EMI Music in Russia. It holds the exclusive IP rights to various music recordings, including by the Russian singer MakSim. S.B.A./Gala Records claimed that on the website www.vkontakte.com a number of songs by MakSim were available after having been uploaded by users without its consent and thereby infringing its IP rights. It requested compensation in the amount of Russian Rubles 550,000 (approximately U.S.$17,000).

The Russian court’s approach changed in the way it interpreted the respective legal provisions. Under Russian law, in order to apply measures for the protection of IP rights (e.g. statutory compensation or damages recovery) it is necessary to examine the circumstances relating to the presence or absence of the defendant's fault with regard to the infringement of IP rights.

The court held that VKontakte was a commercial body undertaking business activities. Considering its duties, including the observation of legal rights of authors and right holders, the court found that for assessing VKontakte's possible wrongdoing as part of its business activities, it was not necessary to establish if and to which extent it was VKontakte's fault but only if an infringement of IP rights was the result of certain activities (or omission).

The court found that S.G.A./Gala Records provided sufficient evidence to establish an infringement of its rights by the actions of VKontakte: 1) by developing and introducing software programs for offering a service to use recordings owned by right holders and placed on the platform by VKontakte users, as well as 2) by failing to implement sufficient means to exclude unauthorized use of the recordings by the users of www.vkontakte.com. VKontakte, however, failed to present evidence that it took all necessary steps to comply with its obligation to remove IP rights infringing content, taking into account the extent of care and caution which would have been expected.

Under Paragraph 3 of Article 401 of the Russian Civil Code, a person who fails to comply with its obligations during its business activities shall bear responsibility, unless he or she can prove that the compliance was impossible due to a force majeure. As this was not established, the court found VKontakte to be liable for IP right infringement and ordered the social network to pay S.B.A./Gala Records Russian Rubles 550,000.

The success of S.B.A./Gala Records in this case can largely be based on its ability to establish evidence of the infringement of IP rights, in particular by providing a protocol of website content certified by the notary. During the trial the court examined the website so it was vital that unauthorized content was not removed from the website prior to the hearing. Also, the claimant provided sufficient documentary evidence, proving its IP rights on the recordings. This confirms that contracts between an artist and a publishing company should not be generic but refer precisely to the particular works.

Another claim of S.B.A./Gala Records in the same dispute directed against Selektel LLC, a provider of so called co-location services (i.e. in the provider’s facilities with a guaranteed power supply, low temperature, security etc.), was dismissed. The court said that the provider had neither technical nor operational capacity to influence the content or the supporting programs of VKontakte. Therefore there were no actions (or omissions) that infringed the exclusive IP rights of S.B.A./Gala Records.

On 21 January 2013, the Court of Appeal confirmed the decision and dismissed VKontakte's appeal.