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Moscow Arbitration Court Orders “Russian Reporter” Magazine to pay RUB 44.4 Million (about USD 1 Million) in Compensation to HSCI for Financial Losses and Reputational Harm Caused by Magazine Publication

Moscow, 10 November 2014 – OJSC HSCI – The Human Stem Cells Institute (“HSCI”, MOEX: ISKJ), one of Russia’s leading biotech companies, announced Moscow Arbitration Court decision on the Company’s law suit against “Russian Reporter” magazine and its founder - CJSC Expert Media Holding.

“Russian Reporter” made a publication in its magazine and on its website on January 24, 2013, entitled “Money Made on Children’s Blood”. The article contained false information about the Gemabank (largest family cord blood stem cell bank in Russia and CIS) belonging to the Human Stem Cell Institute (HSCI) and about cord blood banking in Russia in whole, discrediting HSCI’s business reputation. “Russian Reporter” magazine was established by CJSC Expert Media Holding.

HSCI demanded in its legal claim made to the Moscow Arbitration Court on June 25, 2013 that Expert Media Holding publish HSCI's response in “Russian Reporter” magazine (as complied with the Russian legislation). The Moscow Arbitration Court fully upheld HSCI’s claim and ordered Expert Media Holding to publish HSCI’s full response in the next issue of “Russian Reporter” magazine following the date when the court’s decision comes into force.

Expert Media Holding has continually deviated from fulfilling the court order to the present day. The false and defamatory information caused harm to HSCI’s business reputation and led to a significant reduction in the number of contracts signed for Gemabank’s services for cord blood banking from February, 2013. As compensation for the reputational harm and losses incurred, HSCI sued CJSC Expert Media Holding and CJSC Expert Group for 75,930,000 rubles, and also asked the court to oblige CJSC Expert Group to delete Internet pages with the published article on “Russian Reporter’s” website.

On October 28, 2014, the Moscow Arbitration Courtordered CJSC Expert Group and CJSC Expert Media Holding to pay a total of 44.4 million rubles (or about 1 million US dollars) as compensation for the losses incurred by HSCI, and for damage to the company’s reputation. The court also ordered Expert Group to remove its web pages with the published article.

According to Artur Isaev, General Director of the Human Stem Cells Institute: “We’re satisfied with the court’s decision. A lot of time and effort was spent on this case. We feel that the court’s decision is very important not only for Gemabank and for the development of the use of cord blood cells in medical practice, but also for journalism and business in general. Journalists will become more aware of their responsibility, and the power and the price of their words, while business will be more confident that one’s reputation has real value in Russia. Journalists are the ones who shape public opinion, to which one’s reputation is inextricably linked. We know the great masters of the pen who work in Expert Media Holding and in “Russian Reporter” magazine. They have brought and continue to bring many benefits to society by writing professionally about new technologies, science and medicine. But it’s obvious that this article was a journalistic mistake in which the author did not understand the details, groundlessly accusing an entire industry of non-existent crimes, and thereby causing considerable damage to the company and the cell technologies sector in general. Development of this sector is for the benefit of society and the people. And it is precisely people’s interests that should be protected by journalism.

I know the difficult economic situation in which many print media find themselves now, and particularly some of the best publications in the country – the “Expert” magazines and “Russian Reporter”, and their employees. We sought to be heard – we asked the respected journalists to publish our opinion, because we wanted justice. The court carefully reviewed the case and made an honest and fair decision. Despite winning in all courts during the case, we are ready to settle with “Russian Reporter” and the defendants and reach an amicable agreement, even at this stage. If this isn’t possible, then we will donate all 44.4 million rubles given to us for compensation of damages and reputational harm to charities for the treatment of children with leukemia and inherited diseases. It is precisely for these patients and for creating treatments for similar diseases that Gemabank and the entire team of the Human Stem Cell Institute work.”

HSCI would like to thank the Polyakov Law Office for their sincere participation, high professionalism, and cooperation in this court case.

Full Version of the Press Release (231 kb)

10 November 2014