Counterfeit Products

QUESTION:

I sold a counterfeit CD to a stranger for 200 tenges…

I sold a counterfeit CD to a stranger for 200 tenges featuring some 100 works, and got a claim for 31,998,000 tenges in damages from the copyright society and 80,000 tenges in damages from the performer association. Are their actions justified? What is the procedure for assessing damages in relation to counterfeit products?

ANSWER:

Pursuant to the Kazakh Copyright and Neighboring Rights Law, Art. 2, clause 4, a counterfeit copy of an item that is copyrighted or subject to related rights, a copy of a work, recorded rendition, phonogram, broadcasts by broadcasting companies or cable operators, whose making, dissemination or other use results in a breach of the copyright or neighboring rights by virtue of the provisions hereof or international treaties ratified by the Republic of Kazakhstan. Any copyrighted or neighboring rights protected item shall be deemed counterfeit if it has copyright information on it deleted or modified without the copyright owner’s consent, or if such item was made with illegal equipment enabling one to bypass the technical aids of enforcing copyright or neighboring rights;

According to article 48 of the Law, anyone who breached the copyright or neighboring rights protected by this Law will be subject to administrative or criminal liability according to the Kazakh law.

The following is not permitted with respect to works or items subject to neighboring rights:
1. Undertake any actions without the author’s or other rightholder’s consent seeking to lift the restrictions on the use of works or items subject to neighboring rights established by operation of the technical aids for protection of copyright or neighboring rights;
2. Manufacture, distribute, hire out, provide for temporary use, import, or advertise any device or its components, use them to generate revenues or provide services in the events where doing so renders impractical the use of technical aids for protection of copyright or neighboring rights, or results in the technical aids becoming unable to protect the said rights;
3. Delete or modify any rights management information without the author’s or other rightholder’s consent;
4. Reproduce, distribute, import for distribution purposes, perform in public, publicly communicate by cable or broadcast, give publicity to works or other items subject to neighboring rights, with respect whereto any information on the management of property-related rights has been deleted or modified.
Pursuant to art. 16, clause 2; art. 37, clause 2, subclause 2; and art. 38, clause 2, subclause 1 of the Law, the Exclusive Copyright (of a performer or phonogram producer) for a composition (phonogram) is defined as a right to undertake, or to permit or prohibit to undertake the following actions: reproduce the composition (right to reproduction) or other actions provided for in the said clauses of the article
Pursuant to clause 2, subclause 19 of the Law, reproduction is defined as the production of one or more permanent or temporary copies of a work or items subject to neighboring rights, in full or in part, whether directly or indirectly, using any method or in any form. Reproduction types include production of an audio or video record, making one or more copies of a two-dimensional or three-dimensional work, as well as any permanent or temporary storage of works and items subject to neighboring rights in any tangible form.
Pursuant to the Kazakh Law, art. 49, clause 1, subclause 6, copyright and neighboring rights are protected by court by way of: payment of a compensation whose amount must be between 20 (twenty) and 50,000 (fifty thousand) minimal wages as established by the Kazakh law. The compensation amount is determined by court instead of damages or income recovery;
According to the Kazakh Law “On Republican Budget for 2011-2013”, art.9, clause 1 of January 01, 2011, the approved minimal wage represents 15,999 tenges.
Therefore, the compensation amount determined by court must be between 319,980 and 799,950,000 tenges.
Thus, the damage is evaluated for each work on a case-by-case basis, with the minimum evaluated amount of 20 minimal wages, which is 319,980 tenges. In our case, 100 works will amount to 31,990,000 tenges
The performers association uses other criteria to evaluate the damage:
It means that each phonogram recorded to a physical medium is evaluated separately, taking into account the performer’s and the phonogram producer’s rights. To be more precise, each phonogram is evaluated relying on the retail price of this kind of physical carrier. For example: phonograms on CDs with CDA or MP3 extension are evaluated to be worth of 800 tenges, for the retail price of an official disk in such formats is 800 tenges depending on the composition and the market price fluctuations involving this kind of products. Therefore, compositions in DVD or audio-video formats cost 1,200 tenges, which may also depend on the composition and the market price fluctuations involving this kind of products.
In exceptional cases, damage may be evaluated relying on other grounds, for example, on the basis of contractual relations between the producers of audio-video products and phonogram producers, on the one hand, and the rightholders who provided the issue of such products for reproduction, on the other hand.
Note that the compositions recorded on physical carriers, rather than the disks being the physical carriers, are deemed counterfeit. Therefore, the damage is evaluated separately with respect to each composition recorded on such carriers.

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