Alltunes.com owner lodged a complaint against cut off from the payment system

Rosbank will pay the fiddler for Visa. Alltunes.com owner lodged a complaint against cut off from the payment system

The owners of the Russian music Internet-shop Alltunes.com sued Rosbank that refused to maintain service for payments for songs, acquired at this site by Visa and Mastercard clients. The payment systems like Visa can disable only those customers who fail to comply with the laws of their countries. Allofmp3 cast in lot with Alltunes.com, but they do not violate any Russian laws.

Site Alltunes.com sells music to the customers in the mp3 format. One track costs from $ 0.15. According to the site, its owner, "Internet-Audit" Ltd has a license issued by society for the collective management of rights ROMS. The payment for the services, provided by the site, is made by credit card. According to the evaluation of the International Federation of Producers of Phonograms (IFPI), in 2005 the music sales volume in Russia amounted to $ 388 million, and the sales volume of piratical music is about $ 400 million. "United Card Services" company (UCS) is a subsidiary of Rosbank that serves trade and service organizations for bank cards of such international payment systems as Europay International, MasterCard International, Visa International, Diners Club International, JCB International, American Express.

"Internet-Audit" Ltd., at which name Alltunes.com site is registered, filed a lawsuit to Moscow Arbitration Court against Rosbank and UCS. In accordance with the statement of claim, the suitor considers the site cut off from Visa and Mastercard payment systems to be illegal and demands that the court orders the defendants to perform the contract with LLC. Alltunes.com became the second Russian site cut off from Visa and MasterCard (MC). Allofmp3.com was the first disconnected site - from the 20th of October Visa and MC stopped processing payments for this site. During several days music from Аllofmp3.com could be paid at Alltunes.com, but then this site was also disconnected. According to the source close to the suitors, 95 - 99 % of all payments for music from Alltunes.com were processed with the help of Visa and MC cards.

In order to explain their actions, the payment systems representatives claimed that the work of the Russian Internet shops contradicts to the Russian and international law. At the end of October the spokesman for Visa, Simon Barker, stated that decision of Visa totally corresponds to the Russian law and also to the international copyright and intellectual property law. MC disconnected Аllofmp3.com already at the beginning of August. Rosbank and UCS were involved in the process of these sites disconnection.

Visa has a right to rescind the contract with the customer only if he violates the conditions of the contract or of Visa payment system. But in the case with Alltunes.com non of the obligations mentioned in the Article 9.3 of the contract was violated.

In September big American law company, representing the interests of Allofmp3.com, sent a letter to Vice President of Visa, Zheraldin Stone. That letter acknowledged and proved the fact the disconnection of this site by the payment system was illegal and in addition violated its own rules. Visa rules state that only those sites can be disconnected from the system that contradict "to the applicable laws", ie the laws of the country in which it is incorporated and works. The authors of the letter believe that Allofmp3.com does not violate the Russian laws. The lawyer of "Internet-Audit" Ltd., Christofer Ivanyan, is sure that the site Alltunes.com acts on the territory of Russia legally. "Copyright and Allied Rights" law allows to perform "collective management of rights" without right holders' consent - authors, performers and music publishers.

Head of the Russian representation of the International Association of Producers of Phonograms (IFPI), Igor Pozhitkov, believes that the facts of copyright infringement are defined, and supports the decision of Visa and MC. Vladimir Komlev, CEO of UCS, says that they want the court to draw a line under the issue, regarding the legality of sites', selling the music via Internet, activity. For UCS it's a matter of principle, as the company provides several sites, similar to Alltunes.com, with services. Visa and MC comments were not received.

From June 1, 2007 Internet merchants may lose their basic argument in favour of their rightness - a licence from the collective rights management societies. In the office of the United States Trade Representative officially declared that Russia promised the United States at that time to adopt amendments to the law that would make illegal the current work of these societies. Some Internet shops have already made steps towards reconciliation with the record companies : Allofmp3.com, Mp3search.ru and Mp3sugar.ru proposed increasing fees of Internet shops to the authors from 18% to 50% of revenue.

According to the article