AllofMP3 founder cleared of copyright violation

A Russian court has thrown out a case brought by major record labels against the founder of AllofMP3.com, the controversial music download site at the centre of a diplomatic spat between Russia and the US.

Denis Kvasov, the former owner of the website, has been cleared of charges of copyright violation after the judge presiding over the case ruled AllofMP3.com had operated within the bounds of Russian law. The ruling comes as a blow for major music labels, including EMI, Universal Music and Warner Music, which had argued the site infringed on their copyrights.

The controversial website attracted around 5.5 million users by offering music downloads at a fraction of the price of other download sites like Apple's iTunes, but attracted the opprobrium of major music labels which argued the "parasitic" site was enabling illegal downloads and not paying royalties to copyright holders or artists. The website was closed in June, to the delight of the global music industry, but the company behind the site has established a new download service although it has not stipulated how it differs from AllofMP3.com.

MediaServices, the holding company behind AllofMP3.com, has argued it paid royalties to a Russian copyright collection agency, but music companies do not recognise that organisation as legitimate and claim the agency does not pass on the royalties to rights holders. The site has come under increasing pressure from Russian authorities after trade officials claimed the site's activities could act as a barrier to Russia's entry to the World Trade Organisation.

However, attempts to prosecute the people behind AllofMP3.com were dealt a blow after Yekaterina Sharapova, a district judge, ruled in favour of Mr Kvasov, arguing that the prosecutors had not presented a persuasive case. "I want to draw particular attention to the sloppy job done by prosecutors in collecting and analysing the facts," the judge said. Mr Kvasov faced the prospect of three years in jail and a potential €420,000 (£284,000) fine if he had been found guilty.

The IFPI, the global music trade body, said it was "very disappointed" by the decision.