Memorandum of Law: Digital Pirates

The casino industry in Russia is regulated by Federal Law No. 244-FZ dated December 29, 2006, “On State Regulation Of Activities In The Organization And Conduct Of Gambling And On Amendments To Certain Legislative Acts Of The Russian Federation.”

Article 6 of the Law sets out requirements for gambling organizers. Thus, only legal entities duly registered on the territory of the Russian Federation may act as organizers of gambling games. At the same time, only legal entities that are members of a self-regulatory organization of gambling organizers in betting offices or a self-regulatory organization of gambling organizers in totalizators may act as organizers of gambling in betting offices or totalizators.

Article 5 of this Law establishes restrictions on the organization and performance of gambling activities, including the prohibition of such activities by using information and telecommunications networks, including the Internet, and means of communication, as well as mobile communications (except when interactive bets are accepted, and winnings are paid on them by gambling organizers in betting offices and/or totalizators).

Various types of liability are imposed for non-compliance with gambling regulations.

Article 171.2 of the Criminal Code of the Russian Federation imposes criminal liability on individuals for the illegal organization and conduct of gambling, including through the use of information and telecommunications networks, including the Internet, or means of communication. There is an administrative liability for legal persons for similar offenses under article 14.1.1, part 1, of the Code of Administrative Offences of the Russian Federation, which establishes a fine of from 800,000 to 1,500,000 rubles and confiscation of the gambling equipment.

Besides, concerning gambling websites, measures may be applied to restrict access within the territory of the Russian Federation. Based on Clause 1 of the Provision on the Federal Service for Supervision of Communications, Information Technology, and Mass Media, approved by Resolution of the Government of the Russian Federation No.228, dated March 16, 2009, Roskomnadzor is a federal executive agency responsible for control and oversight in the sphere of mass media, mass communications, information technology, and communications.

In this regard, Roskomnadzor takes measures to restrict access to websites on the Internet containing information, the dissemination of which is prohibited in the Russian Federation, under the procedure laid down in article 15.1 of Federal Law No. 149-FZ dated July 27, 2006 “On information, information technology and the protection of information.”

Thus, Clause 5 of the above article provides an extrajudicial procedure for restricting access to information that violates the requirements of Federal Law No. 244-FZ dated December 29, 2006 ” On State Regulation Of Activities In The Organization And Conduct Of Gambling And On Amendments To Certain Legislative Acts Of The Russian Federation” and Federal Law No. 138-FZ dated November 11, 2003 “On Lotteries” prohibiting organization and holding of gambling activities and lotteries using the Internet and other means of communication.

According to sub-clause “a” of Clause 5 of the Rules for decision-making by federal executive bodies authorized by the Government of the Russian Federation in respect of certain types of information and materials disseminated by means of the information and telecommunications network Internet, the dissemination of which is prohibited in the Russian Federation (approved by Resolution of the Government of the Russian Federation No.1101 dated 26 October 2012 “On the unified automated information system “Unified registry of domain names, indexes of website pages in the information and telecommunication network Internet), the grounds for including domain names and indices of gambling-related website pages in the Unified Register of Prohibited Information shall be a decision taken by the Federal Tax Service.

The criteria for assessing materials and information necessary for taking such a decision were approved by Resolution of Roskomnadzor, the Ministry of Internal Affairs, Rospotrebnadzor and the Federal Tax Service dated May 18, 2017, No. 84/292/351/MMV-7-2/461S.

These criteria include:

1. Presence of photo, video, audio and (or) text, graphic information about the offer to participate in a gambling or lottery, contributing to attract the attention of a potential participant on the website page on the Internet, where there is an opportunity to take part in a gambling or lottery, to bet, to win a prize.
2. Presence of photo, video, audio and (or) text, graphic information, that provides an idea of gambling, lottery, the terms of participation in a gambling game or lottery, including the rules of gambling and conditions of participation in lotteries, the possible results of winning, description of the ways to transfer money for participation in a gambling game or lottery, ways to get the winnings on the Internet page in question, where it is possible to take part in a gambling game or lottery, to bet and receive the winnings, description of the process and of the sequence of actions in a gambling game or lottery, using photo, video and audio images on the website page where it is possible to take part in a gambling game or lottery, to place a bet and to win.
3. Demonstration of participation in a gambling game or lottery, which describes the process and sequence of actions in a gambling or lottery, using photo, video or audio images on the website page where it is possible to take part in a gambling game or lottery, to place a bet and to win.
4. Availability on the website page on the Internet to take part in a gambling game or lottery.
5. Availability on the website page on the Internet to transfer funds, including electronic funds using electronic means of payment, to participate in a gambling game or lottery and to receive (provide) winnings.
6. Presence on a website page on the Internet of an advertisement indicating the opportunity to take part in a gambling game or lottery, using other domain names and (or) indexes of website pages on the Internet.
7. Presence of information and (or) software on a website page on the Internet that allows access to an Internet website, a website page on the Internet that contains prohibited information, meeting the criteria specified in the above Clauses.
8. Availability on a website or website page on the Internet of the possibility to download software for computers that allow participation in a gambling game or lottery.

Digital Pirates

According to the legislation in the Russian Federation, providers that provide servers for video CDNs are information intermediaries.

In accordance with Clause 3, Article 1253.1 of the Civil Code of the Russian Federation, an information intermediary who makes available material on the Internet (e.g., a hosting provider) shall not be liable for an infringement of intellectual rights resulting from the posting of material by a third party or on its behalf. However, liability is absolved only if the information intermediary complies simultaneously with the following conditions:

1. It did not know and should not have known that the use of the relevant intellectual property or means of individualisation contained in such material was unlawful.
2. In the event that it receives a written request from the owner of intellectual property rights indicating the website and/or the Internet address where such material has been posted, it takes the necessary and sufficient measures to cease the infringement of intellectual property rights in a timely manner. A list of necessary and sufficient measures, and the procedure for implementing them, may be prescribed by law.

Thus, if a provider providing its server capacity to pirated video CDNs refuses to cooperate with rightsholders or if the measures taken to suppress piracy are insufficient, the following actions are possible:

• bringing the civil to civil liability;
• bringing perpetrators to administrative and criminal responsibility;
• claims for protection of intellectual property rights that do not involve the application of civil liability measures, including the removal of information that infringes exclusive rights or restricting access to it.

In civil law relations, a party who has unlawfully used the result of intellectual activity may be sued for damages (clause 3 part 1 article 1252 of the Civil Code of the Russian Federation) as well as for compensation (article 1301 of the Civil Code of the Russian Federation).

In addition, depending on the damage caused, such a party may be held administratively liable under article 7.12 of the Code of Administrative Offences or criminally liable under article 146 of the Criminal Code of the Russian Federation.

Such types of liability may be imposed, inter alia, on the CEO of a company whose activities caused damage as a result of the unlawful use of intellectual property. For example, in April 2018, Yury Moskachev, CEO of the cable provider Hom-AP.TV, was sentenced to three years’ suspended imprisonment for an offence under paragraphs “c” and “d” of Part 3 of Article 146 of the Russian Criminal Code. According to the materials of the case, the defendant transmitted the signal of the Nostalgia channel, the rights to which were owned by NTV-Plus, via TCP/IP, without a relevant agreement with the right holder. Subsequently, the court also obliged Yuri Moskachev to pay NTV-Plus 12,707,000 rubles.