Court Assessed Use of Works of Performing Arts and Phonorecords in Mobile Apps

The court dismissed the claim of the exclusive licensee for compensation for infringement of the exclusive

rights to the work, performance and phonogram, brought against the owner of the mobile application. In

addition to other grounds for the dismissal, the court found that it was not access to the specified intellectual

property directly, but the ability to use the full functionality of the app that was chargeable in the app.

The record label sued the owner of the mobile app for compensation for infringement of the exclusive rights

to the performance, phonogram and musical work.

Under the decision of the court of first instance, the claims were satisfied in part, with a tenfold reduction in

the amount of compensation. However, the appellate court reversed the decision, having denied the claim.

The plaintiff argued that the intellectual property, in respect of which he was the exclusive licensee, were

unlawfully available for free listening on a paid basis in the defendant’s mobile application.

The defendant referred to the fact that only a limited number of people have access to the system which

allows downloading music tracks to the application, namely, only those to whom the defendant has granted

such access on the basis of contracts concluded with it.

However, the appellate court found several grounds for dismissal of the claim, each of which would have

been sufficient to overturn the decision of the court of first instance.

According to the license agreement, on which the plaintiff based his claims as an exclusive licensee, it

applied to the intellectual property created by the licensor, while all the property specified in the claim was

not and could not have been created by the licensor, who himself used them on the basis of the license

agreement.

In addition, the claim was not to be satisfied because the defendant’s status as a bona fide information

intermediary, whose liability, including for violations in the field of business activities, comes only in the

presence of guilt.

The court concluded so due to the fact that the fee allows users of the app to use its full functionality,

including listening to content in the background without advertising. Accordingly, defendant does not

receive payment from users for the use of music content, but rather for the right to use the functionality of

the app, including paid and free, related and unrelated listening content, and does not offer informational

content.

Moreover, after receiving a claim from the plaintiff, the defendant restricted access to the disputed music.

Sergey Zuykov, the Managing Partner of Zuykov & Partners, Russian Patent Attorney and Eurasian Patent

Attorney commented as follows. An independent ground for dismissal of this claim was the plaintiff’s

refusal of the court’s proposal to request an expert examination, which could have revealed the similarity

between the intellectual property recorded on the flash media presented by the plaintiff and those on the

recording made by the notary, because the comparison of phonograms, performances and musical works

requires special knowledge.

The court pointed out that the failure to perform this procedural action entailed the risk of failure to prove

the claim.