On Nov. 5, 2004, a New York Federal Court upheld its August 2001 summary judgment granted in favor of Films by Jove, ruling it was improper for the Russian government to try to influence the outcome of the litigation by retroactively changing its laws. The Hon. David G. Trager found in favor of Films by Jove filed suit in 1998 to prevent illegal duplication of Soyuzmultfilm Studio's animated film library by Joseph Berov, a Russian émigré video distributor from Brighton Beach, NY. Films by Jove vs. Joseph Berov, Case No. 988-CV-7674 (DGT).
Los Angeles-based Films by Jove had labored long and hard to obtain the rights animation film library of the Soyuzmultfilm Studios (considered the Disney of Russia). FBJ invested more than $3 million to digitally restore the 1,500 animated films in the library to their original splendor. Working with its partner, Mikhail Baryshnikov, the films to be revoiced by Julio Iglesias, Sarah Jessica Parker, Martin Sheen, Catherine Deneuve and Kirsten Dunst, among others.
Films by Jove demonstrated that the Russian government has twice tried to invalidate Judge Trager's August 2001 summary judgment decision and transfer the copyrights to a library of 1,500 animated films, which Films by Jove licensed from Soyuzmultfilm Studios in 1992 to a new state-owned company. The judge found evidence of "continued actions being taken by the Russian government and judiciary to influence the outcome of this United States litigation with the purpose of depriving plaintiff Films by Jove of its right to distribute the animated films in the United States and elsewhere outside the former Soviet Union." The decision further notes that, "In the case at bar, expropriation of the property of an American company by an act of a foreign sovereign is unquestionably against the public policy of the United States."
A year after the lawsuit was filed, the court issued a preliminary injunction to halt Joseph Berov's alleged continued piracy and violation of Films by Jove's licensing rights. In 2000, the court held hearings about Berov's alleged violation of the injunction. At that hearing, a newly created Russian state-owned studio entered the case as a third party, claiming that it owned the copyrights that Films by Jove had licensed in 1992.
In August 2001, the Court upheld Films by Jove's 1992 license, noting that the defendants' claims that the Russian government owned the copyrights was not supported by any evidence. Several months later, the Russian High Arbitrazh Court issued a ruling that appeared to re-interpret the Russian law that Judge Trager had relied on when making his earlier decision. Berov and the Russian state-owned studio filed their first motion for reconsideration of the August 2001 decision.
The court denied motion for reconsideration, finding that the Russian High Court's interpretation of the applicable law erroneous and inconsistent with the High Court's own prior treatment of similar transactions. The court also noted that the Russian High Court decision followed efforts by senior Russian government officials who held a meeting with a representative of the High Court "to influence if not coerce" the High Court in the name of "state interests." This decision is believed to be the first in which a United States Federal Court rejected a ruling from Russia's highest court and, in the process, found that it may have been improperly influenced.
After Judge Trager issued his damages award to Films by Jove, the Russian government responded with Directive 1882-r, making retroactive changes to a 1999 Directive which, taken together, purported to establish that the Russian government transferred the copyrights to films to the State-owned company in 1999.
In his most recent ruling, Judge Trager noted that under Russian law, the Russian government "did not own" the copyrights it was attempting to transfer. Moreover, Directive 1882-r indicated that the Russian government had become directly involved in trying to influence a United States court's efforts to protect private property. Judge Trager noted in his decision, "It would contradict the very principles at the foundation of the separation of powers doctrine to allow a foreign state
to engage in activities that the United States courts would not tolerate in the US legislature."
"Films by Jove refused to fall victim to attempts by Russia's government and judiciary to reach across the Atlantic in an effort to influence the US Federal Courts," said Joan Borsten, president of Films by Jove, "and stood up to protect its private property investment. Judge Trager's decision sends a clear message to the Russian government that it cannot interfere with the independence of our judiciary. It is also a wake-up call to the global business community that it needs to be cautious and wary of how Russia treats outside investors until it addresses the rampant corruption inside its own borders."
Borsten is co-chair of the Washington DC based US Russia Business Council's legal subcommittee on Small and Medium Enterprise Investment Dispute Resolution; and has testified about Russian intellectual property violations before the House Judiciary Committee.
"This is a great result that validates Films by Jove's position that it holds the license to the Soyuzmultfilm Studio's animated film library," said Matthew Murray, one of the attorneys representing Films by Jove. "My client is pleased that the Court has exposed the Russian government's sophisticated plan to expropriate this property and taken it to task for trying to manipulate the U.S. legal system."
Copies of the Court's rulings can be found at www.russiananimation.com/legal