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Cablegate: Ukraine: Industry Wins Landmark Internet Piracy Case

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DE RUEHKV #2385 2581238
ZNR UUUUU ZZH
P 151238Z SEP 07
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 3748
INFO RUEAWJA/DEPT OF JUSTICE WASHDC
RUCPDOC/USDOC WASHDC
RUEHMO/AMEMBASSY MOSCOW 0247

UNCLAS KYIV 002385

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STATE FOR EB/TPP/IPE AND EUR/UMB
STATE PLEASE PASS TO USTR FOR JGROVES/LMOLNAR/PBURKHEAD
USDOC FOR ITA/MAC/OIPR
USDOC FOR 4231/ITA/OEENIS/NISD - CLUCYCK
COMMERCE PLEASE PASS TO USPTO

E.O. 12958: DECL: N/A
TAGS: ETRD KIPR ECON UP
SUBJECT: UKRAINE: INDUSTRY WINS LANDMARK INTERNET PIRACY CASE
AGAINST MP3.UA

REFS: A) KYIV 1888

B) KYIV 1780
C) KYIV 1452
D) KYIV 348

1. Summary: A Ukrainian record company won a court case on September
13 against the infamous Ukrainian music download site mp3.ua. To
our knowledge, it is the first time a music company has successfully
won a civil case against an online music pirate in a Ukrainian
court. The court ruling imposes substantive penalties on mp3.ua.
The ruling came as a surprise, as law enforcement officials and many
industry reps did not believe the courts would take action against
download sites. Police have instead been trying to work through the
Internet Service Providers (ISPs). Although the owners of the site
will likely appeal the decision, the court's decision could set an
important precedent for industry to defend its rights in court, and
it validates recent USG efforts to provide IPR training to the
courts. End Summary.

2. The aptly-named Ukrainian record company Honest Music won a
landmark court case on September 13 against internet site
www.mp3.ua, considered the largest Ukrainian source of pirated music
online. The ruling by Ukraine's High Commercial Court imposes the
following penalties on mp3.ua:

-- To stop offering all the tracks from Honest Music's catalogue for
downloading;

-- To pay almost USD 75,000 in damages to Honest Music; and

-- To pay a fine of USD 7,500 to the State Budget of Ukraine.

(Note: A representative of Honest Music informed us that a copy of
the court decision is not yet publicly available but promised to
provide one when possible. End Note.)

3. Ignat Berezhny, head of the Ukrainian Music Industry Association,
an IFPI-affiliated umbrella organization that includes Honest Music
as well as most large international labels, cautioned Econoff on
September 14 that he expected mp3.ua to appeal the decision. Should
Honest Music win the appeal, however, industry will then seek to use
the case as a precedent to broaden the action against mp3.ua to
include other rights holders, said Berezhny.

4. Econoff had discussed GOU efforts to combat internet piracy with
Serhiy Lebid, head of the Ministry of Interior's IPR Department, on
August 29, before the court ruling. Lebid restated that the GOU's
preferred method to shut down illegal sites was to work through
Internet Service Providers (ISPs), as he felt law enforcement lacked
the necessary authority to go through the courts (refs A and D).
Private sector companies have been equally doubtful of their chances
of success against online pirates in Ukraine's civil courts.
Econoff passed to Lebid ISP information from USG agencies and
industry on mp3.ua and mp3stor.com, another suspected Ukrainian
pirate site. (Note: Post also passed this information to Embassy
Moscow, as experts believe the servers hosting mp3.ua are located in
Russia. End note.) Lebid appreciated the information and promised
a thorough investigation of both sites.

Comment: An Anti-Piracy Turning Point?
--------------------------------------

5. This court decision, if held up on appeal, could mark a major
turning point in the fight against online piracy in Ukraine. Mp3.ua
has built up a huge repertoire of nearly 32,000 artists, developed a
large Ukrainian user base, and seemed able to operate with impunity.
Ministry of Interior efforts to shut down the site appeared to be
going slowly, and the courts appeared unable to act. The High
Commercial Court's ruling may finally set the precedent for rights
holders to successfully use Ukrainian courts to defend their IP
rights from illegal online use. It also validates our recent
efforts to expand USG-sponsored IPR training for Ukrainian courts,
and the High Commercial Court in particular (refs B-C).

TAYLOR

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