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. Last Updated: 07/27/2016

2 Piracy Cases Test Readiness for WTO

As Russia seeks to overcome the last hurdles to joining the World Trade Organization, authorities are prosecuting two intellectual property cases involving Microsoft products that could set important precedents in the country's fight against piracy.

The first focuses on the director of a disc-making plant near Moscow, while the other one deals with the head of a village school in the Perm region that has been caught using counterfeit software.

And while Viktor Zudenkov, the plant director, is unlikely to garner much sympathy, Alexander Ponosov, the school director in the village of Sepych, has already secured support from the Federal Press and Mass Media Agency.

By law, both men face the same penalty: up to five years in prison.

Violation of intellectual property rights has long been a sore point in Russia's relations with the United States, which has pressed hard for a crackdown on piracy.

In November, the United States finally signed a bilateral deal on Russia's WTO accession.

Zudenkov, experts say, is the first director to actually be prosecuted after his disc plant was discovered to be churning out counterfeit software, while Ponosov's case highlights the need to take a closer look at the software used in schools and other public facilities across the country.

"Nobody knows what's going on inside computer labs," Ponosov said Tuesday by telephone from Sepych, referring to school premises in general.

The pirated software was already installed on 12 new computers when the school opened in summer 2005, Ponosov said. He said he first learned the school had been using the counterfeit Microsoft Windows and Office software during an inspection of the school by local prosecutors on May 22, 2006.

Ponosov said that he asked prosecutors for a delay before handing over the hard drives, citing the school's need for the computers during the final exams. He promised to keep the software intact as evidence. On May 30, prosecutors opened a criminal case against him.

Ponosov insisted that he was not guilty of any crime, and that his only fault was that he should have checked the software when the school opened.

Alexander Troyanov, the lead prosecutor in the case, said that after the inspection Ponosov issued a memo to staff banning the use of the pirated software, but the computers continued to be used even though other, older computers were available. The Sepych school was not an isolated case, Troyanov said, as last year seven cases linked to intellectual property rights violation were started in the Vereshchagino district, where Sepych is situated.

"I now have to explain myself before reporters," he said. "All are equal before the law here."

Troyanov said he received a telegram Tuesday from the Federal Press and Mass Media Agency offering to support the school director and pay an estimated 266,000 rubles ($10,000) in damages for the use of the pirated programs.

"They should have spent that money on buying licensed school software, so that children wouldn't be taught to violate the law and obtain knowledge at the expense of Microsoft," Troyanov said.

On Monday, the agency said the Ponosov prosecution was inappropriate. "The village school teacher can hardly be considered the country's chief intellectual pirate," agency chief Mikhail Seslavinsky said in a statement. "If we start punishing [software] users with the full force of the law, half the country's population, including law enforcement employees, could end up in prison."

Ilya Kleiman, an official at the Perm region branch of the Education and Science Ministry, agreed with Seslavinsky, saying 90 percent of the country's enterprises used unlicensed software. "They've found a scapegoat in that village school," he said. He added, however, that after the Sepych school case, his office started advising schools in the region to check their software.

Although in theory Ponosov faces the same punishment as Zudenkov, Troyanov said Ponosov would most likely get away with a fine of about 3,000 rubles ($110).

Vera Barakina, a judge overseeing Ponosov's case, said two hearings had already taken place and that a third was scheduled for Jan. 29. It was the first intellectual property case in her six years in the job, she said.

Microsoft appears reluctant to press charges against Ponosov. Alexei Potapov, the company's representative in the Volga Federal District, said by telephone from Yekaterinburg that it would welcome an out-of-court settlement and was working with Potapov's lawyer.

In the case of Zudenkov, however, Microsoft is taking a hard line. The company is pressing charges against him and the plant, Yunitekhnoplast, located in the Moscow region town of Lobnya, and will seek damages of about 1.8 billion rubles ($70 million), said Alexander Strakh, a lawyer for the company. "There's a big difference between a director of a plant making counterfeit discs and a school director," Strakh said.

When reached by telephone Tuesday, Zudenkov refused to comment.

Disc-copying equipment, three mother discs and about 375 copies were found at the plant during a raid in November 2005, Strakh said. A first court hearing took place Monday and the next is scheduled for Feb. 26.

Anna Lavrinova, deputy director at the Non-Commercial Partnership of Software Suppliers, welcomed the prosecution of the Yunitekhnoplast director, saying it was the first case against a plant boss to go to court.

Lavrinova said the school director might also be guilty of a crime. "He probably neglected something," she said.

Overall, the situation was improving, she said, adding that between 2004 and 2006 her organization had trained more than 2,000 police officers to detect and fight computer piracy.

In Sepych, Ponosov said he hoped to avoid being punished for what he described as other people's actions. But if there was anything he had learned from the case, he said, it was that from now on he would be checking all the software.

"I'm smarter now," he said.