Russian court clears allofmp3.com of infringement

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WASHINGTON -- In a ruling that's sure to increase trade tensions between Moscow and Washington, a Russian court Wednesday threw out a case against the former head of music downloading site allofmp3.com and rejected the damage claims made by record labels.

Allofmp3.com, which was closed in late June but later reopened under a similar rubric, has been cast as the epitome of Russia's shoddy copyright enforcement and repeatedly held up by U.S. trade negotiators as imperiling Russia's bid to join the World Trade Organization.

The record labels argued that Mediaservices, which runs the sites, never had permission to sell its artists' works.

EMI Group, Universal Music Group and Warner Music Group sought $587,000 in damages from Mediaservices' former head, Denis Kvasov, according to Igor Pozhitkov, the Russian representative for the International Federation of the Phonographic Industry.

Pozhitkov said a Cheryomushky District Court judge threw out the case against Kvasov, saying Kvasov slipped through a legal loophole that allowed the online distribution of music until September 2006. Kvasov ended his involvement with the site in December 2005.

Pozhitkov criticized the ruling, saying the judge ignored the prosecutors' argument that Kvasov reproduced the music in question, which was illegal even at that time. Two more cases against allofmp3.com are pending, including one against Mediaservices' current head, Vadim Mamotin, Pozhitkov said.

Mamotin has insisted that by paying royalties to a Russian licensing group, allofmp3.com was in compliance with Russian laws. Recording companies contend, however, that the licensing group never had permission to download their copyrighted material -- and then undercut their prices.

RIAA international executive vp Neil Turkewitz called the verdict a disappointment.

"It is unfortunate that the court could have misconstrued the law so as to fail to understand the criminality of the defendant's conduct," he said. "Mr. Kvasov and the company that he operated deceived consumers and music fans, profited on the backs of American artists and copyright owners and appears to have gotten away with it -- at least for the time being."

The ruling points out the need for Russia to reform its system. The Bush administration has called on Moscow to make changes in its copyright-protection regime as a necessary step before the country is admitted to the WTO.

"There is no better evidence of the need for immediate and fundamental reform of Russia's legal system in the area of the protection of intellectual property," Turkewitz said. "We hope that today's setback reinvigorates the determination of the Russian government to take the necessary actions to reform its practices, to secure compliance with last year's agreement and to demonstrate to the world its commitment to the rule of law and compliance with international norms."

The Associated Press contributed to this report.
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