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Global Media and Communications Watch The International Legal Blog for the Tech, Media and Telecoms Industry
Posted in Copyright, Entertainment & Content, Internet, Policy & Regulation Natalia GulyaevaMaria Sedykh

Russia: New anti-piracy fee for Internet content is proposed

The First Vice Prime Minister Igor Shuvalov has reportedly[1] ordered the Russian Ministries of Culture, Communications, Economic Development, Finance, and Justice to assess a proposal from the Russian Union of Right Holders (“RUR“), to fight piracy by introducing a fixed royalty fee to be paid to rights holders in exchange for unlimited use of content on Internet. The Ministries would be required to develop relevant legislative amendments by 5 December 2014.

Under Russian law copyright and related rights clearance may be exercised by way of conclusion of agreements with right holders directly or with collecting societies representing such right holders.  Collecting societies are supposed to manage, on a collective basis, the rights of  authors, performers, producers and other right holders, when;

  •  it may be difficult for the right holders to exercise their rights individually
  • or  when Russian law allows use of copyright and related rights without a right holder’s consent provided that such right holder receives a due royalty.

Currently collecting societies in Russia may obtain state accreditation for managing certain rights of right holders, for example, exclusive rights to published musical works with respect to their public performance, broadcast or cable transmission.

The RUR suggests the introduction of a so-called “universal license”, which should serve as a new tool for IP rights management on the Internet. For this purpose RUR proposed a set of amendments to the Russian Civil Code.

According to the RUR’s proposal, communication operators shall be required to obtain a universal license and pay the anti-piracy fee for almost all types of content (books, movies, music, etc.), except for software and compiled works such as e.g. databases.  Though the royalty amount is not established yet, according to information available from public sources[2] such a royalty may be in the range from $1 to $3 per subscriber annually, which may amount to $200M – 600M per year.  The function of collecting payments from the communication operators is expected to be imposed on a collecting society accredited by the state.

The RUR itself already manages the rights of the authors, performers and producers of phonograms (recordings) and audio-visual works in order to receive a fee for the reproduction/playback of phonograms and audio-visual works for private use.  Such fees have been collected by RUR since 2010 for instance from manufacturers and importers of devices and carriers (tangible mediums) which are used to reproduce the phonograms and audio-visual works in the amount of 1% from the resale or customs price.  In 2013 the RUR collected approx. RUB 390M.

The RUR’s proposal has been thoroughly discussed by the market players and practitioners.  With all respect to positive aspects of RUR’s proposal (such as e.g. release of users from liability for piracy, potential reduction of courts` and state authorities’ related workload), negative aspects were also discussed, mostly by communication operators and right holders.  Communications operators appear to be not supportive of such amendments: they consider them as an attempt to shift the piracy problem from right holders to communication operators which may result in increased Internet subscription fees for ordinary users.  Right holders have complained about the absence of an effective system for distribution of royalties collected by the collecting societies among right holders  as well as about potential legalization of piracy.  There is also a concern the niche may be monopolized by just one collecting society.

The current version of the amendments stipulates the potential effective date as 1 January 2015.  We will keep monitoring this legislative initiative and provide further update in due course.