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Tech & Sourcing @ Morgan Lewis

TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

On August 19, Russian State Duma member Andrey Kuznetsov introduced a bill on compulsory licensing of copyrights that allows the courts to approve compulsory licenses for content and other copyrightable objects not available in Russia.

Who is affected?

Rightholders from so-called “unfriendly states” (including the United States, the United Kingdom, and the European Union) and entities under their control, presumably, including Russian ones, that (1) unilaterally terminate license agreement other than in connection with the breach by licensee, or (2) otherwise prevent the use of licensed rights, provided such actions result in unavailability of the relevant content or rights in Russia. The bill applies to rightholders of all copyrightable objects, such as theatrical and TV content, music, books, software, databases, videos, pictures, etc.

Who can apply for a compulsory license?

Russian licensees whose contracts were terminated and Russian collective management societies who attempted to license relevant content but were denied.

What is the procedure?

To get a license, applicants must bring a court claim against the relevant rightholder (presumably in Russian state court, but it is not clear from the bill). The claim must set out the proposed terms of the compulsory license, including the scope of the license, fees, and payment terms. The claim must be accompanied with the certificate from the relevant authority that the relevant content is not available in Russia. The government will approve the procedure for the issuance of such certificates.

Does the rightholder have a say?

Yes, the rightholder can appear in court and defend the claim, but the court will grant a license unless the rightholder can prove that it had valid reasons to terminate the license agreement or reject a proposal to execute one.

The rightholder also has the right to apply to court to terminate compulsory license if (1) the circumstances that allowed the grant of the compulsory license no longer exist, and (2) the rightholder agrees to execute the license agreement directly with a Russian licensee.

Does the license contemplate any consideration?

Yes, if the applicant is a former licensee then the court will use the fees agreed in the terminated agreement. If the applicant is a collective management society, then the court will apply the fees that would be customary under the circumstances.

Are there any exemptions?

Yes, the bill specifically exempts contracts terminated due to the reasons set out in Article 450 of the Russian Civil Code. Based on the language of the explanatory note accompanying the bill, it seems that the intention was to carve-out mutual terminations. It should be noted, however, that Article 450 of the Russian Civil Code sets out general termination rules and mentions not only mutual termination, but also termination in court and unilateral terminations.

What is the status of the bill?

The bill has just been introduced into the State Duma. If adopted, it will apply to all relations starting from February 24, 2022.