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Peppa Big Debt

The provider was involved in the traffic of counterfeit Peppa Pig

The British company Entertainment One UK, the company that owns the cartoon character Peppa Pig, rewarded with the hosting provider MacHost a compensation for sales of counterfeit toys on its sites.

The opportunity to collect compensation from hosters emerged back in 2013, but so far the owners of well-known animation brands have not used it, although they often file for copyright infringement for counterfeit toys. Providers consider such penalties unfair as they are not obliged to have control over the website content.

On 24 November the Arbitration Court of Moscow held subject to satisfying the demands of Entertainment One UK Ltd to the hosting provider McHost, which follows from the court base. The company filed complaints to MacHost, the provider that serves internet shop potapino.ru and optomus.ru which sold unlicensed Peppa pig toys.

The calculated amount of claims was 550 thousand rubles. The court sentenced the plaintiff to the fine of 300 thousand rubles, said Roman Lukyanov, CEO of Semenov & Pevzner (representing Entertainment One in court). He explained that MacHost was held liable as an intermediary service provider: “Despite repeated requests, we had received no answer. Then we informed them a few times about the counterfeit hosting, but the websites ignored these demands.

McHost is still waiting for the motivational part of the decision, however, it “conceptually disagrees” with it, said the general director of McHost Roman Veretelnikov. “The sum of the fine seems as if the provider profited from sales of the toys. However, the provider did not receive any income from the toys, and the income from hosting of each site is about 500 rubles per month,” he said. He added that he did not agree with giving forensic evidence with screenshots. “If someone works with the graphics editors, he can draw any evidence,” he explained.

To date, rights holders of animation brands did not file claims for compensation to the hosts, said Roman Lukyanov. Normally, they would just ask the Moscow City Court to block the site. “Owners of animation brands have not claimed compensation before because everyone understands that hosting does not violate anything, if the client’s website sells a cake with Peppa or Smeshariki,” says a legal advisor of the hosting provider Majordomo Yulia Grigorieva.

The law on liabilities of hosting providers appeared in 2013 which resulted in the outflow of users from Russia to international web hosting companies, she believes.

Standards of proving the fault of a hosting provider were set already in 2008 in the court case of rights holders filed against Masterhost. In line with them, the provider can be held liable only if the right holder demands to limit access to the content due to the violation of intellectual property rights, and the provider wouldn’t do so, says Anatoly Semyonov, deputy chairman of the RSPP Committee on Intellectual Property. “No one asks a provider to check the content of the sites, only respond to the claims,” Semyonov recalls.

Due to the widespread use of unlicensed toys, brand owners file hundreds of claims a year, because the sale of licenses occupies a high share of their revenues.

For example, Vladimir Gobulya, director of the Animaccord studio, says that licensing provides more than one-third of revenue to Animaccord studio that produces “Masha and Medved.”

Yuliana Slashcheva said in her interview to Kommersant that licensing has become the major income for the cartoon market seeing prices falling for media rights. “Soyuzmultfilm” made claims to hosters due to the violation of intellectual rights, but it did not ask to compensate monetary damages, but only asked to block access to a website.