VKontakte or the Supreme Court: who's in trouble?


Mark Zuckerberg, then a 19 year old, founded Facebook in his college dorm in Harvard in February 2004. Five hundred million people have joined since and today more visitors clog its servers than those who google. Facebook, worth over $15 billion, has become not just one of the world’s fastest growing businesses but a political force. With Facebook and the like the relationship between rulers and subjects has been reversed, making it easier for the powerless to collaborate, coordinate and communicate their concerns.

This commercial and cultural phenomenon is the product of insight, creativity, perfidy and greed - a common blend needed to start a successful business. Zuckerberg’s ex-friends, Cameron and Tyler Winklevoss, claim that he stole their idea when they asked his assistance with a site called HarvardConnection that they had been working on. The argument has been in court for six years and although a settlement, reportedly worth $65 million, was eventually reached, the Winklevoss brothers are still suing.

In 2006 Pavel Durov, then a 21 year old student at Saint-Petersburg university, founded VKontakte, now one of the most popular websites in Russia. It looks, operates and makes money very much like Facebook. The resemblance is so striking that if VKontakte was launched in the US it would have been buried under a barrage of legal actions.

In an ironic twist of events, the outcome of the battle for the Russian market between Facebook and its clone depends to large extent on the result of a legal wrangle in which VKontakte seeks to invoke a legal instrument that exists in America but not in Russia.

VKontakte makes it easy to watch and upload movies. In a way, the site is a mash-up of Facebook and YouTube. Ninety million users upload videos, many are pirated. VKontakte is packed with stolen content.

In 2008 VGTRK, a state broadcasting company, discovered its movies on the VKontakte site. At this stage the social network should have sought a settlement but refused to do so.

The media leviathan sued and, after several setbacks, won an important skirmish in the Appellate Court. ‘According to the court’s logic,’ said Pavel Durov, ‘the copyright owners can shut down any project by uploading their content and then raising legal action without giving prior notice to the site.’

On October 18th, the Court of Cassation ruled in favour of the internet company. The Russian legal community is divided over this decision. Some say it is wrong; others, that the court was right in following the ‘notice and takedown’ approach common in the USA and Europe.

The ‘notice and takedown’ rule means that internet companies do not have to monitor the activity of every user. They are not required to prevent the misuse of their services pro-actively, but when notified of pirated material they must remove it 'expeditiously'. If it were not for this rule there would probably be no Facebook, no YouTube, no Blogger, no Wikipedia, no Flickr, no MySpace - and maybe not even Google. No investor would want to touch them.

The ‘notice and takedown’ rule is not a product of case law. In the USA it was introduced by the Online Copyright Liability Limitation Act, in Europe – by the Electronic Commerce Directive. In either case it is not a new interpretation of an old law; it comes from a statute adopted by the legislator. There is no law like this in Russia. The web here is no different from a bookshop: the owners of sites that host pirated content can be called to account regardless whether they knew about it or not.

The dispute is likely to end up in the Supreme Court, pushing the judges to a choice they may be unwilling to make. If they decide for VKontakte, they would overstep their authority and create law rather than interpret it. Russia would be the first country where the ‘notice and takedown’ legislation was established by the courts and not by parliament.

Ruling in favour of VGTRK is no better. The decision would cast the Russian internet into the legal netherworld and destroy the fragile advantage domestic companies have over their American rivals.

An obvious way out would be a law adopted by the State Duma. It appears, though, that this is not what VKontakte wanted. Perhaps to demonstrate its power?


October 26, 2010

text: S. Matyunin
photo: hellotim - Fotolia.com

This article first appeared in The Moscow Times



The outcome of the battle for the Russian market between Facebook and its clone depends on the result of a legal wrangle in which VKontakte seeks to invoke a legal instrument that exists in America but not in Russia.