What happened to MGID and Adwise - point of view of Clear Sky Initiative

What happened to MGID and Adwise - point of view of Clear Sky Initiative

On Thursday, February 27, Cyber Police searched the offices of the advertising agencies MGID and Adwise.

Commenting on the search that took place to ThePage CEO of MGID Sergey Denisenko said: “If we are accused of having our codes posted on the pirated sites, it is not a crime – neither criminal nor administrative. There are certain rules and laws under which advertising platforms cannot be held responsible for claiming to the owners of the copyright sites, which is illogical. If a blogger, BBC or CNN uses any video or photo that they do not own, then we cannot control it. Thus, we are obliged to react and we always do it if someone’s copyright is infringed … Even if we assume that we are operating some pirated sites, we are not responsible for copyright infringement that could theoretically be on the pages of those sites”.

Let’s go back for three years.

In April 2017, the Article 176 of the Criminal Code of Ukraine (Copyright and Related Rights Violations) was amended that added responsibility for the “financing” of violations described in the disposition of this article, including, in the form of unlawful reproduction, distribution of audiovisual works.

In June 2017, All-Ukrainian Advertizing Coalition, EBA, USAID, UAPA and Clear Sky conducted a meeting related to these changes with the advertising market where the lawyer Andrey Osipov, through the principle of “who benefits?” used by the investigators, showed how these changes applied to the advertisers and agencies: it is, in fact, a profitable acquisition of stolen goods. He suggested that “the crime would take the form of guilt with direct or indirect intent”. It is advantageous for the advertiser to advertise on pirates, since this inventory is cheaper than on legal resources, because the pirated site does not spend money on purchasing content.

In July 2017, the Clear Sky anti-piracy Initiative created the “Service for Advertisers” on blacklists.org.ua being a “blacklist” of the sites to which rights holders have claims. Because those who were robbed know better the sites who stole. And informing is the first step towards not financing these resources.

Further. The Ukrainian Anti-Piracy Association (UAPA) started monitoring the advertisements on these sites, apo.kiev.ua, and the brands that appeared on them and their agencies started receiving letters. They said: “We invite you to review the results of the monitoring and to see if your brand/client is one of the companies whose services or products are advertised on the Internet on the web-sited to which rights holders have claims. We consider it necessary to draw your attention to the above issues, and we ask you to make every effort to eliminate the advertising of goods/ services on “pirated” resources on the Internet, and not to cooperate with the companies that offer you advertising on these resources, which are detrimental to the reputation of your company and your customers».

In 2018, the research company Gemius launched a new function of gemiusAdReal research – advertising on “claimed sites” was separated from the general report and submitted to a separate letter called Pirate Blacklist.

Everything was done for the advertisers to have the time and opportunity to understand the reason of the ad appearing on the pirated resource, to adjust the advertising campaign, to clean the medialists. Both MGID and Adwise received direct warnings about the risks of being hosted on stolen content from Clear Sky and UAPA respectively.

Kateryna Fedorova, Director of the Clear Sky Initiative Public Union:
“Clear Sky” constantly monitors the situation, using information from the rights holders, UAPA and Gemius. Last year, we noticed a lot of advertising activity of MGID on blacklisted sites. I personally contacted their representative, explained the situation and consequences, asked them to analyze, provided all the necessary information – even received the answer that our lists were taken up. But in January, an analysis showed that the number of advertisements on the sites listed on blacklists.org.ua placed by MGID increased more than 1.5 times. This company has become # 1 in our anti-rating. We, again, informed it with a request to pay attention to. This has happened this year, and no response has been received, unfortunately. Therefore, in fact, we believe that the searches conducted had a serious basis. We hope to receive more official information at the end of the investigation. But we hope that this situation will not be perceived in the public space as arbitrariness of the copyright holders, but will be a signal to the market. Ukraine is at the forefront of the countries that systematically violate intellectual property rights, both at the US and EU opinion. We want to change that.”

There have been precedents in the world of holding advertisers accountable for advertising on pirated sites. In 2017, the UK Police Department for Intellectual Property Theft “visited” eight advertisers who advertised on pirated sites. The British experience is considered to be one of the most successful in the world: with the help of the police, the country has stopped advertising on sites that violate intellectual property for 6 months. Initially, British brands advertising disappeared, afterwards negotiations with the gambling association, which were also successful, became the second stage.

In 2018, Sostav reported that three employees of the German agency that advertised on the pirated sites were sentenced to probation.

Tim Kuik, Managing Director of the Dutch anti-piracy group BRAIN said:
“There have been no court cases in the Netherlands regarding liability of advertisers. A number of years ago we inventoried brands and (public) organizations with advertisements appearing on infringing or unlawful websites and addressed these (100+) by mail. As a result they instructed their ad agencies not to advertise on controversial websites, including file-sharing platforms known to structurally infringe copyright. We only had some schools resisting our request. After contacting the Ministry of Education they issued an instruction to schools not to advertise on such platforms. This solved that issue.”

Head of the Latvian Association “For Legal Content” (Par Legālu saturu) Dace Kotzeva said:
“This year we plan to sign a memorandum with the Latvian Advertising Association. It stipulates that we will blacklist the sites claimed by the copyright holders, they will not be included in media plans. The Latvian brands and agencies think about brand safety and will surely go for this act of goodwill. I doubt we will have to apply to the police: the police are necessary if the mutual understanding cannot be reached. But in this case, we have the memorandum with the Police as well”.

Baiba Liepinya, CEO of the Latvian Advertising Association:
“Our association is against financing the piracy sites and all our member agencies have already implemented blacklists on local/ regional levels in order to avoid the situation that pirates might be funded with money of advertisers. The problem is that such sites appear faster than we implement blacklists. Currently we are closely working with NGO “ Par Legālu saturu”  in order to find new ways of stopping money flows to sites that use illegal content as the main problem is that these site are included in audience supply list in global networks.”

“Since 2015 Sygnal Association has been implementing the idea of ”Follow the Money”. The strategy is based on the approach of cutting off all sources of financial revenue to websites that distribute content without authorization of its right holders. This steps directly contribute to such websites being cut off from financial gain and, in many cases, lead to their shut down. At present this strategy has been indicated as the most effective tool to fight against illegal distribution of an audio-visual content online”, – comments Karolina Makowska, Chairperson of the “Follow the Money” Programme Council in Sygnal Association, Poland.

Maxim Lazebnik, director of the All-Ukrainian Advertising Coalition said:
“Everyone knows that stealing is bad and piracy is also a theft of content. I cannot comment on this particular investigation, as I only have information from the online media and Facebook scribbles, to which I am extremely critical. One thing I want to point out: I find the images of “innocent victims” to be untrue. In my opinion, advertising agencies – across the communication chain – need to understand who their clients are, what advertising they place, and at what sites. And to comply with all laws, including the law on copyright and the criminal code.”

The first pre-trial investigation on financing of intellectual property infringement is a precedent. And it is important for all of us to know what happened; and see how it ends. Intellectual property protection is necessary to create strong economy. The producers need to know that they will repel the movie. The startups and investors wishing to work in Ukraine need to know that intellectual property is protected here. And to provide this protection, the responsibility and involvement of all content ecosystem members is needed including the advertising budget holders. “One should remember that money leaves traces. And who has money? The advertiser does” Andrey Osipov recalled at that meeting with the advertising market two and a half years ago.