Ministers Implicated in Landmark U.S. Ruling

A private company in the West breathes life -- and millions of dollars -- into the intellectual property acquired from a former Soviet enterprise. Years pass before bureaucrats in Moscow look around one day and realize the government no longer owns a lucrative business, so they form a new company with the same name as the old Soviet one and sue.

But this time it's not Stolichnaya vodka they want -- it's cartoons.

Californian-based Films By Jove -- founded by former Soviet actor Oleg Vidov and his wife Joan Borsten -- acquired the international rights in 1992 to more than 1,000 animated motion pictures from the successor to the Soviet Soyuzmultfilm studio.

But a few years after acquiring those rights, a Brighton Beach video distributor named Joseph Berov began pirating the cartoons, prompting Films by Jove to sue for infringement in New York. By 2000, the new Soyuzmultfilm, created by the government the year before, had joined the case as a third party, claiming it, not Film By Jove, owned the cartoons.

"Suddenly the new government studio appeared before the U.S. judge and asked to join an ongoing case about piracy," Borsten, Film By Jove's president, said by phone from Los Angeles.

She said her firm not only paid $500,000 to the old Soyuzmultfilm for the rights to the cartoons, it also agreed to give it 39.5 percent of future profits.

Over the next several years, she said, it invested $3 million sprucing up the cartoons digitally and commissioning stars like Sarah Jessica Parker and Julio Iglesias to do voice-overs.

"We would all be in profit by now if we had not been sandbagged by legal fees," which Borsten said had cost her company $500,000.

In August 2001, the New York District Court upheld Film By Jove's claim against Berov and the government's Soyuzmultfilm, leaving Berov to pay as much as $12 million in penalties. But by December of that year, Berov and Soyuzmultfilm had won a decision from Russia's Higher Arbitration Court supporting their claims and filed a motion for reconsideration in New York. The Russian court had ruled that the privatized Soyuzmultfilm was not the legal successor to the legendary studio and therefore could not sell the copyrights.

Now, however, the case appears to be finally over: Judge David Trager of the U.S. federal district of New York dismissed the case earlier this month, ruling that the Moscow court had inaccurately interpreted Soviet law.

In a voluminous, 140-page decision, the judge, citing documents submitted by Film By Jove's lawyers, accused Culture Minister Mikhail Shvydkoi and former Deputy Prime Minister Valentina Matviyenko of meeting personally with court officials in Moscow "to influence if not coerce" its decision in the name of "state interests."

"It was only after FBJ's substantial investment in restoring Soyuzmultfilm studio's animated films for potentially lucrative international distribution that the Russian government initiated an attempt to reacquire the commercial exploitation rights it had long ago ceded voluntarily," the judge wrote.

An executive at Soyuzmultfilm identified Deputy Culture Minister Yekaterina Chukovskaya as the pointwoman in the government's battle to regain the copyrights. Chukovskaya was not available for comment Monday due to illness. Denis Tumanov, who represented the government in the case, declined to comment, and Soyuzmultfilm general director Ernst Rakhimov could not be reached.

Berov's lawyer, Paul Levenson, said by from New York that his client plans "to request leave to appeal, because an appeal at this point is not automatic."

However, Borsten considers the legal nightmare to be over and said she hoped her experience would help other companies that were fairly privatized from being targeted by the Russian government.

"It has set a precedent, and for others bringing cases related to Russian rulings in America it will make it easier because this is the first one that can demonstrate with documents what everyone says about the [Russian legal system]."