Since February 24, 2022, Russia’s troops have poured death and destruction on Ukraine. There are no obvious signs to suggest that the conflict will end anytime soon.
Part of the early response from Ukraine’s allies was to impose sanctions on Russia, to weaken the country’s ability and will to wage war. Companies in many sectors suspended or terminated business in Russia, including prominent entertainment industry players.
As a result, new US-owned movies dried up, leaving the entire Russian cinema industry in crisis. Some venues began screening pirated movies downloaded from torrent sites but the move was criticized by local cinema groups who were saddened by a return to the unlicensed entertainment “dark days” of 30 years ago.
Russia’s Intellectual Property Crisis
While Russia is still trading with select countries, those that have imposed sanctions (‘enemy’ or ‘hostile’ countries, says Russia) are key suppliers of entertainment media, software, and other types of intellectual property. Sony, Universal, and Warner, for example, aren’t releasing new movies or music but existing contracts are being honored, meaning that older content is still licensed and legally available.
So what happens when licensing deals run out and, for any number of reasons, overseas companies are unwilling or unable to continue doing business in Russia?
Legal proposals during the early weeks of the invasion envisioned that software owned by copyright holders from sanctions-supporting countries could be legally used without a license, providing there was no local alternative. That was widely misinterpreted in media reports as permission from the Russian government to pirate everything but that was not the case.
Piracy is illegal in Russia and no laws have been passed to change that. However, with cinemas and entertainment distribution companies in other sectors under immense pressure, the government clearly feels it needs to do something. Asking what companies need would’ve been a good start but it doesn’t sound like they were consulted at all.
Russia’s ‘Special Licensing Operation’
The Kremlin’s solution to the country’s content crisis is already underway. The plan is to expand laws that currently allow the use of inventions and industrial designs, in times of emergency relating to the defense and security of the state, without obtaining any permission from rightsholders – so-called ‘compulsory licensing’.
In early March, Russia published a list of hostile countries including the US, UK, EU members, Norway, Switzerland, Canada, Japan, South Korea, Australia and more, stating that their patent and industrial design owners will not be entitled to compensation in the event their rights are infringed.
According to local media sources, the Kremlin is now working to expand compulsory licensing to encompass ‘enemy’ entertainment products, including copyrighted movies, music, and similar media. Such licenses would come into play if existing licenses are terminated, with Russian licensees of rightsholders and Russian rights management groups able to apply for them in court.
Music & Video Companies Not Impressed
The National Federation of the Music Industry (NFMI), which represents Sony Music, Universal Music and Warner Music in Russia, is urging the authorities to reconsider their plans for compulsory licensing. The NFMI says that initiatives to weaken intellectual property protections “cause concern”, noting that courts will favor compulsory license applicants if the copyright holder doesn’t have “good reasons” to deny a regular license.
Such “good reasons” might feasibly include a reference to sanctions or fear of breaching sanctions, but that might not end especially well for rightsholders either. The Kremlin believes that complying with sanctions should be punishable as a crime, with up to ten years in prison for offenders. Given this impossible situation, it’s no surprise rightsholders are alarmed.
In a letter to several government ministries seen by Kommersant, the NFMI describes compulsory licenses as a “disproportionate measure” that could lead to “mirror measures” against Russian music abroad, the exclusion of streaming services from app stores, and an increase in piracy.
Local service Yandex.Music told the publication that it wants to build long-term relationships with foreign partners and the government’s plan runs counter to that.
“The compulsory licenses initiative carries risks for such partnerships and, accordingly, for the interests of Russian users. The project needs to be discussed with the industry,” a spokesperson said.
The suggestion that the music industry isn’t being consulted is baffling, not least since most changes to copyright law in the US and EU are driven by corporate needs, not in spite of them. The only comfort here is that movie and TV show companies are completely aligned with their musical counterparts.
Compulsory Licenses “Legalize Piracy”
The Internet Video Association, which represents major Russian video services, has also sent strong objections to several government ministries.
Describing the compulsory licensing plans as a threat to legal online video services and their users, the video industry group says that foreign devices and platforms, such as iOS, Android and smart TV companies, could even retaliate by suspending Russian video services. That doesn’t seem outrageous, given the association’s overall assessment.
In their opinion, implementation of the plan would effectively lead to the legalization of piracy in Russia. For rightsholders, it doesn’t get more serious than that.