Combating copyright infringement in Russia: a comprehensive approach for western plaintiffs.

• Author: Miller, David E.

ABSTRACT

This Article addresses several measures that U.S. and European firms can undertake to combat copyright infringing activities in Russia. First, the Article attempts to dispel the notion that Russian law and the Russian government are inadequate to deal with copyright and piracy problems. In fact, recent surveys suggest that foreign plaintiffs have achieved some success in arbitrazh courts. Furthermore, Russian authorities have begun to take steps to ensure that these decisions wilt be enforced.

Second, the Author suggests that the United States and European nations can apply pressure on the Russian Federation to ensure compliance with copyright laws in the context of bilateral treaties to which Russia is a party. Both the United States and the European Union have current treaties with Russia that provide avenues for communication of these concerns.

Finally, the Author argues that if Russia were admitted into the World Trade Organization, procedures within that organization could be employed to influence Russian intellectual property policies and their enforcement. If Russia were a party to the WTO, other member states could attempt to enforce Trade-Related Aspects of Intellectual Property Rights (TRIPS) standards, thereby improving foreign copyright interests.

1. INTRODUCTION

   United States and European firms lose millions of dollars each year as a result of the illegal reproduction and sale of copyrighted goods in Russia.(1) This piracy significantly limits the sale of legal reproductions of motion pictures, sound recordings and musical compositions, business and entertainment computer software, and books.(2) This Article describes a comprehensive, three-pronged approach that United States and European plaintiffs can and should employ to combat piracy in Russia: (1) litigation in Russia itself; (2) lobbying for intergovernmental pressure within the framework of bilateral agreements between Russia and both the United States and the European Union; and (3) lobbying for Russia's admission to the World Trade Organization. These three steps will help to reduce, if not to eliminate, piracy in Russia over time.

2. LITIGATION IN RUSSIA

   Foreign firms often assume that Russia "has no law"--that is, its written laws are poorly drawn and that its courts are inefficient, incompetent, or simply corrupt.(3) In fact, however, the Russian government took impressive steps toward the development of a new, comprehensive, and enforceable system of copyright laws in 1992 and 1993, when it adopted both the "Law on the Legal Protection of Computer Programs and Databases"(4) and the "Law on Copyright and Neighboring Rights."(5) These measures replaced all prior Soviet and Russian copyright laws.(6) Russia subsequently joined both the Berne Convention(7) and the Geneva Phonograms Convention(8) in 1995. These international agreements trump domestic law in Russia.(9) Finally, Russia made copyright infringers criminally liable for their illegal actions in 1997.(10)

   While foreign plaintiffs may pursue both civil and criminal cases against copyright pirates within the Russian court system, the available data suggest that foreign plaintiffs with copyright claims should file only civil litigation. Criminal copyright cases must be brought before a court of general jurisdiction, while an arbitrazh court can hear civil copyright claims.(11) The power to investigate criminal copyright complaints was transferred from the prosecutor's office to the police in 1995 and then moved back to the prosecutor's office in 1996.(12) It appears that prosecutors currently lack the resources to energetically pursue copyright cases.(13) In 1999, 276 criminal cases were brought against alleged infringers of motion pictures, sound recordings, and business software.(14) Only eighty-two defendants, however, were convicted, and all but one paid minimal fines and served no time in jail or prison,(15) In other words, only 29.7% of all criminal cases led to convictions, and sanctions were generally de minimis.(16)

   As Table 1 indicates, plaintiffs are much more likely to achieve favorable outcomes in the arbitrazh courts than in the courts of general jurisdiction. In the Moscow City Arbitrazh court, for example, 51.6% of all intellectual property cases decided in 1998 resulted in a finding that the respondent was guilty of violating Russia's intellectual property laws:

   TABLE 1: INTELLECTUAL PROPERTY CASES FILED IN NINE REGIONAL ARBITRAZH COURTS(17)

   IP Cases IP Cases Won Court Filed in 1998 in 1998 Moscow City 124 64 Moscow Oblast 8 3 Leningrad Oblast 28 13 Novosibirsk 3 1 Ekatarinburg 8 7 Saratov 0 0 Voronezh 0 0 Yaroslavl 1 0 Altai Krai 0 0 Furthermore, the available data suggest that foreign plaintiffs also receive favorable rulings in at least half of the cases that they file before arbitrazh courts.(18) It thus appears that foreign plaintiffs have a good chance of receiving favorable judgments from arbitrazh courts in copyright litigation.

   The arbitrazh courts are devoted exclusively to commercial disputes and are charged with the "protection of violated or disputed rights and of the lawful interests" of legal entities and registered entrepreneurs "in the sphere of business and of the other kinds of ... economic activity."(19) In particular, the arbitrazh courts have jurisdiction over all economic disputes involving foreign companies.(20) Legal entities--including foreign companies--need not be registered or incorporated in Russia in order to bring suit in an arbitrazh court for copyright infringement.(21) Furthermore, the Berne Convention prevents these courts from requiring copyright registration as a precursor to filing such a suit.(22) In short, a foreign plaintiff who seeks to sue an alleged infringer for making illegal copies in Russia faces no particular jurisdictional or other procedural hurdle, other than the usual need to identify the respondent with some specificity.(23)

   Strictly speaking, foreign plaintiffs may appear pro se before arbitrazh courts, just like their domestic counterparts.(24) Most, if not all, will want to employ appropriate counsel; there are at least twenty-five attorneys in Russia who specialize in intellectual property matters.(25) To initiate a case before an arbitrazh court, the plaintiff must submit a comprehensive statement of claim, including all relevant law and facts.(26) The plaintiff chooses the venue; however, the case must be filed in the jurisdiction in which one or more defendants are located.(27) Cases must be resolved within two months after a complaint has been filed,(28) and delays are rare.(29) Filing fees are set according to a sliding scale that currently ranges from 5 percent to .05 percent of damages claimed, depending upon the amount sought.(30) Interim relief may be sought "at any stage of the arbitration process" if the absence of such relief might "interfere with or render impossible the execution of the judicial act."(31) Arbitrazh courts are required to consider and act upon any request for interim relief, such as seizure of equipment used to make illicit copies, within one day.(32) Furthermore, a respondent's failure to comply with an interim order can lead to the recovery of additional damages for losses incurred as a result thereof.(33)

   Prior to trial, an arbitrazh judge reviews the documents submitted by both parties and informs them if any other evidence should be provided.(34) Discovery takes place between the parties; a party may ask the court to secure any necessary documentation.(35) A decision by the court to refuse such a request is subject to appeal.(36) Arbitrazh courts may also compel production. Persons (including non-parties) who refuse to comply with an order to produce documentation are subject to fines by these courts.(37) Generally speaking, the judge, rather than the parties or their counsel, controls the trial, and documentary evidence is taken much more seriously than oral testimony.(38) Arbitrazh courts, however, do ensure an adversarial process. Parties (or their counsel) have a guaranteed right to present evidence, cross-examine witnesses, object to the other party's evidence, make statements, and present arguments on all relevant issues.(39) The court announces its decision at the conclusion of the trial, and may also produce a written opinion at that time.(40) A written decision must be issued within three days in complex cases.(41) Parties have the right to appeal within thirty days, and failure to appeal means that a judgment enters into force.(42) As a general rule, court costs are split between the parties in proportions that directly reflect the extent to which the plaintiff has prevailed on its claim.(43) Each side pays its own attorney's fees.(44)

   An arbitrazh court's decision is subject to three stages of appellate review. First, the case is reviewed de novo by a panel of three judges from the same court that originally heard the case.(45) The original judge may not serve on this panel.(46) Any ruling on appeal takes effect immediately.(47) The second stage of review takes place before a separate panel of three judges,(48) who are generally academics, practicing attorneys, or government officials.(49) While the law limits these judges to reviewing cases for errors of law,(50) many of them admit that they also overturn cases based on factual errors.(51) Recent research indicates that foreign plaintiffs win more frequently than domestic plaintiffs at this stage of appellate review.(52) The Presidium of the Supreme Arbitrazh Court has the right to review decisions by either the arbitrazh appellate court or the circuit court upon petition by the Chairman of the Supreme Arbitrazh Court, the Prosecutor General of the Russian Federation, or their respective deputies.(53) Parties may formally ask these officials to file a petition for reconsideration; however, the Supreme Arbitrazh Court will review decisions only when they concern "extraordinary" matters of...