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. Last Updated: 07/27/2016

Court Cracks Down on Game Rentals

bloombergUnder the ruling, Internet cafes such as this one in Moscow must obtain licenses to rent out computer games.
Internet cafes and computer game clubs will be required to hold special licenses to rent out game software, the Supreme Arbitration Court said in statement posted on its web site.

The court said it would approve an instruction to arbitration courts on considering such intellectual property rights cases on July 16.

The requirement would make it difficult for the country's 15,000 Internet clubs to rent out even legally licensed computer game software unless they conclude special license agreements with the copyright holders.

Some 80 percent of existing Internet cafes will require such licenses to operate, as most of them rely on the income from renting out game software, industry players said. While renting out unlicensed programs or software has always been punishable by a fine, the new measure is the first to target Internet cafes.

If implemented, the measure would require Internet cafes to pay fines of 10,000 rubles ($390) to 5 million rubles ($195,000) as compensation to copyright holders, whether or not any profit is made on the transaction.

"The court never paid attention to software rental before," said Vadim Uskov, head of Uskov and Partners, Kommersant reported Friday. Uskov said that the court's instruction could lead to a wave of inspections in Internet clubs by law enforcement agencies.

The measure could also prompt a series of lawsuits and encourage patent lawyers to pursue litigation against Internet cafe owners.

Courts will be able to fine an Internet cafe's owner up to 5 million rubles for the illegal rental of software, said Viktor Naumov, a partner at law firm Beiten Burkhard, Kommersant reported.

"Although they are unlikely to impose fines that big, in practice compensation could run to hundreds of thousands of rubles," he said.