Court acquits allofmp3.com site owner

MOSCOW, Russia (Reuters) -- A Russian court found the former boss of music download Web site www.allofmp3.com not guilty of breaching copyright on Wednesday in a case considered a crucial test of Russia's commitment to fighting piracy.

The allofmp3.com Web site angered Western music companies by undercutting the price of downloads in deals they said breached copyright law.

Denis Kvasov, head of MediaServices which owned the site, was put on trial after entertainment companies EMI Group Plc, NBC Universal and Time Warner Inc. pressed for a prosecution.

"The prosecution did not succeed in presenting persuasive evidence of his involvement in infringing copyright law," said judge Yekaterina Sharapova.

A local official with the International Federation of the Phonographic Industry (IFPI), which is representing copyright holders in the case, said it would appeal the decision.

"We are disappointed with the verdict and will appeal," IFPI regional director Igor Pozhitkov told reporters.

The site has been a thorny issue in negotiations between Russia and the United States over Russia's accession to the World Trade Organisation, a key aim of President Vladimir Putin.

At the beginning of the year global credit card companies stopped allowing customers to pay allofmp3.com for music downloads and by July the Web site had quietly closed down.

Kvasov always said he was within the law because the site paid part of its income to ROMS, a Russian organisation which collects and distributes fees for copyright holders.

The judge agreed with his defence.

"Everybody who uses soundtracks has to pay a certain amount of their income to the rights holders and this company has done that," she said. "MediaServices has paid a certain amount of money to ROMS."

At the height of its popularity allofmp3.com attracted millions of bargain-hunting music lovers across the world. It would typically sell the world's most popular tracks at a huge discount to U.S. competitors.

Russian marketplaces and underground passes are full of cheap copies of music and film on DVDs and Russia's government has been accused of being too lax on protecting intellectual property rights, a basic principle of WTO membership.

But in July Russia's top negotiator on WTO entry said he thought a deal would be ready by the end of the year.

Although allofmp3.com has disappeared, another Russia-based discount music Web site has since emerged -- www.mp3sparks.com, also owned by MediaServices.