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Russian internet group, which lists in London on Friday, is facing claims that its websites rely on pirated content to attract much of their audiences, allegations that have already created legal problems and could generate further lawsuits, the company has admitted.

The portal, a subsidiary of Group, and, which is 25 per cent owned by, have been targeted by multiple lawsuits, most recently one by Gala Records, an arm of EMI Music Publishing, the global music company, last month. Gala alleges that its copyrighted content is given away for free on both sites without licensing agreements, and therefore constitutes piracy.

Both sites are well known among Russian internet users as sources of free copyrighted content, from Hollywood blockbusters to musical hits.

“We are currently defending several lawsuits brought against one of our subsidiaries that seek to recover damages allegedly caused by the unauthorised posting of audio and video content on our websites,” states in its initial public offering prospectus.

“Although the damages claimed in the actions against us are not material ... publicity resulting from the actions could lead to similar claims by other copyright owners alleging higher damages, and if we were held liable, the risk of similar claims would further increase.”

The issue of copyrights has pitted Russian internet companies against content providers in a familiar battle which was solved in many western markets in the past few years.

A person close to acknowledged that piracy lawsuits were a risk but said that the same kind of legal challenge was faced by YouTube, Google’s video sharing site, which successfully defended itself against a $1bn infringement lawsuit brought by US film company Viacom earlier this year. The Gala lawsuit would likely be resolved within a year through a licensing agreement, he added.

According to internet companies, the root of the piracy problem is the incompleteness of Russia’s legislation, which does not adequately assign responsibility for policing piracy.

“There is no unified law or procedure in Russia, like (the US’s Digital Millenium Copyright Act), which leads to different interpretations in courts,” said a Google spokeswoman in Moscow.

But according to copyright holders like Gala, the problem is a lack of will by the internet companies, which see free copyrighted entertainment as a way to generate page views.

Olga Kim, lawyer for Gala Records, says that the websites’ argument that there is a legal grey area is without merit. “They are trying to put all the responsibility on the users, we think this is unfair,” she said. “The legislation is not as specific as it might be, but there are no reasons to interpret the laws any differently.”

She said and Vkontakte have not responded to requests to take down copyrighted materials. “They know perfectly well these materials are on their sites and they do nothing about it.”.’s vice-president for legal issues Maksim Bobin says specific requests for specific items were not received from Gala.

Lev Leviev, chief executive of, said that the existence of free copyrighted entertainment helps to make the site the most popular social network in Russia, but denies that this is part of the company’s business plan.

“It is, objectively, an advantage, but it’s not necessarily made on purpose. We didn’t plan on using pirated content to get some sort of an advantage over our competitors. Its just the nature of web 2.0 and user-generated content.”

Vkontakte and other web sites such as Google and Yandex have issued a joint statement of policy, which lays out a common approach to policing copyrighted content in the absence of good legislation.

Mr Leviev sad that the industry is in talks with content providers about new legislation, reportedly being written by Russia’s ministry of communications. “We are right now working on the model that would benefit both Vkontakte and content providers, which would make everyone happy. I don’t know how it is going to work, but we’ll figure something out.”

Copyright The Financial Times Limited 2017. All rights reserved.

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