Russobit-soft faces a loss of $1.5 million

intellectual property

Yesterday, a long-standing dispute between the largest Western record companies and the Russian CD manufacturer Russobit-Soft developed. Foreign companies are demanding $1.5 million from the plant for illegally duplicating their products (Kommersant wrote about the start of the process on December 18, 2003). At a meeting in the Arbitration Court of the Moscow Region yesterday, the results of an examination were presented proving that the majority of counterfeit disks that the plaintiffs' representatives purchased at retail in several European countries were produced on Russobit-Soft equipment.

Eight of the largest Western record labels (including BMG, Warner Music, Sony Music) have been suing Russobit-Soft since December last year. Then representatives of the labels, tired of the Ministry of Internal Affairs' promises to deal with piracy, decided to act on their own. The International Federation of Phonogram Producers (IFPI), which fights audio piracy on behalf of 1,500 companies, filed claims in the Arbitration Court of the Moscow Region by eight record labels in the amount of about $1.5 million against the optical disc manufacturer Russobit-Soft, accusing it of in the release of counterfeit discs by Michael Jackson, Whitney Houston, the Bee Gees and other foreign artists.

The Russobit-Soft plant has been producing multimedia and music CDs since 1998 and is the core of the Russobit concern. Until 2002, the plant was located on the closed territory of the enterprise for the supply of products to the Administration of the President of the Russian Federation. The capacity of Russobit-Soft production lines is more than 3 million CDs per month. The annual turnover of the plant is more than $10 million.

While record labels were suing Russobit, the plant was constantly getting into pirate scandals. In February 2004, employees of the capital's GUBEP seized a clandestine factory in Pushkin, near Moscow, with equipment worth $12 million, which supplied more than half of the retail pirate outlets in Moscow with counterfeit DVD movies and pornography. One of the production lines of the underground factory, according to the police, belonged to Russobit. The former head and founder of Russobit, Oleg Gordiyko, who is now fighting pirates himself, heading the intellectual property committee of the Chamber of Commerce and Industry of the Russian Federation, was also involved in the scandals. Let us recall that in August 2004, the Simonovsky Court of Moscow acquitted journalist Dmitry Korovin, whom Mr. Gordiyko and his business partner Alexander Ligai had accused of libel (Kommersant reported this on August 17). The court not only recognized that the journalist did not want to slander the official and businessman, but also actually confirmed Mr. Korovin’s assumptions that the leaders of Russobit produce pirated CDs.

Yesterday, the record labels' litigation with Russobit came to an end. At a meeting of the Arbitration Court of the Moscow Region, specialists from the expert forensic center of the Ministry of Internal Affairs of the Russian Federation presented the results of the so-called forensic examination of the CD. Its essence is that samples of discs printed by Russobit were compared under a microscope with 30 counterfeit CDs of Michael Jackson, Whitney Houston and other artists, purchased by IFPI representatives in retail chains in Russia, Ukraine, Poland and other European countries. The examination established that two-thirds of the pirated discs were indeed printed at the facilities of Russobit. IFPI representatives are confident that “this is 90% success.” “From our point of view, the evidence has been presented,” said Igor Pozhitkov, head of the regional branch of IFPI. “The copyright holders did not give consent for Russobit to produce our phonograms on their equipment, and accused him of unauthorized duplication. Although the process is slow, this statement has so far no one disputed."

Representatives of Russobit were not present at the court hearing. At the company’s office, in response to a Kommersant correspondent’s request to contact lawyers or Russobit-Soft CEO Vyacheslav Barybin, they promised to “transfer questions to management,” but did not comment on anything. A decision on the record labels' lawsuit is expected to be rendered as early as next week.

ALEXANDER Kommersant-Voronov

Pirates were convicted by examination