Counterfeit Law Blog

The RIAA filed suit against Mediaservices, Inc., owner of the Russian music website AllofMP3.com last week.  The RIAA complaint is not yet available on PACER.  However, Good Morning Silicon Valley reported that the Complaint, filed in federal court in New York, alleges that more than 11 million songs were illegally downloaded from AllofMP3.com between June and October 2006 and seeks statutory damages of $150,000 for each unlawful download.  If the RIAA prevails, this would result in trillions of dollars in damages, an award that, by all accounts, would be unenforceable in Russia.

The RIAA lawsuit is the latest in a series of efforts to stop AllofMP3.com.  The site was described in the U.S. Trade Representative's 2006 Special 301 Report as  a "pirate website"  and by U.S. Trade Representative (USTR) Susan Schwab as "at the top of the 'notorious markets' list ... the Web's number one pay-per-download music site whose catalog consists of illegal copies of music from U.S. recording artists and other right holders."  The site typically charges users less than a dollar to download an entire album .  While AllofMP3.com claims to pay a 15% royalty to Russian music licensing societies, these societies are not authorized by U.S. rights owners to license their music. 

In the fall of 2006, Mastercard and Visa stopped accepting charges made at AllofMP3.com.  The site switched to xrost prepaid icards.  Then, in late November, the USTR announced that Russia had agreed "on the objective of shutting" down the site.  The agreement, reached in connection with negotiations regarding Russia's accession to the World Trade Organization (WTO), also requires Russia "to work to enact" legislation by June 1, 2007 that would prohibit licensing societies from acting without right holder consent. 

However, as of today, AllofMP3.com is still up and running.  AllofMP3.com's owner, Mediaservices, asserts that its web site complies fully with Russian law and that U.S. purchasers may lawfully download songs from the site, citing Section 602(a) of the U.S. Copyright Act, which exempts from the general prohibition against importation of infringing works the importation of a single copy of an infringing work acquired outside the U.S. for personal use, Section 1008 of the Act, which prohibits infringement actions based on the noncommercial use by a consumer of a recording device for making digital or analog musical recordings, and the first sale, fair use and back-up exceptions.  While we can anticipate that AllofMP3.com will raise these arguments in defense to the RIAA lawsuit, it is very unlikely that it will prevail on any of them.  Instead, the court is likely to find in favor of the rights holders.  While such a ruling would be difficult, if not impossible, to enforce in Russia, it might put further pressure on the Russian government to take action against the web site in order to appease the U.S. and other countries that have objected to its failure to shut down AllofMP3.com.  If nothing else, a court ruling in favor of the music industry would make clear to U.S. purchasers that downloading music from AllofMP3.com is illegal.