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Part II COPYRIGHT AND NEIGHBOURING RIGHTS A. Legal basis for protection 1. Laws addressing the protection of copyright and neighbouring rights The protection of intellectual property is guaranteed by the Constitution of the
Ukrainian Federation. Pursuant to Article 41 of the Constitution enacted on 28 June
1996, “everyone has the right to own, use and dispose of his or her property, and the
result of his or her intellectual and creative activity”.
So far, the protection of copyright and neighbouring rights has been regulated in
more detail by the Law on Copyright and Neighbouring Rights of 23 December 1993.
The Copyright Law follows the continental-European tradition and consequently
makes a distinction between the protection of works under copyright and the
protection of performers, producers of phonograms and videograms as well as
broadcasting organisations under a so-called neighbouring right. In many respects
this Law is similar to the Russian Law on Copyright and Neighbouring Rights of 1993
on which, reportedly, it is modelled.
In the week before the consultants’ visit to Kiev, on 11 July 2001, the Ukrainian
Parliament (Verkhovna Rada) adopted a long-awaited, modernised and hitherto twice
vetoed Copyright Law which will increase the intellectual property protection
considerably, in particular in the neighbouring rights field. The “Law of Ukraine on
Amendments to the Law of Ukraine on Copyright and Neighbouring Rights” as
adopted by the Parliament was signed by the President on 3 August 2001. The Law
will enter into force on the date of its publication in the Official Gazette.
Where not otherwise stated, the present report is based on an unofficial English
translation of the new Copyright Law dated 26 July 2001 which was kindly made
available by the State Department of Intellectual Property after the consultants’ visit
to Kiev.
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In addition to the Copyright Law, there are a number of other laws governing various
related areas, such as the:
- Law on Cinematography;
- Law on Television and Radio Broadcasting;
- Law on Publishing;
- Law on Distribution of Copies of Audiovisual Works and Phonograms.
Akin with the situation in Russia, there is also an initiative to provide for specific rules
on intellectual property protection in Book IV of the Civil Code. For the time being, it
would appear that the work on this issue was put on hold. Nonetheless, there are
voices which aim at making a case for the codification of intellectual property laws
together with laws on enforcement in an Intellectual Property Code similar to the
French Intellectual Property Code. In this context it is vital to avoid that such a
codification exercise, whether in the Civil Code or elsewhere in the law, leads to two
co-existing laws which would contradict each other. Also, the codification process, if
at all carried out, must not change the substantive provisions in the various
Intellectual Property Laws to be compiled in one Code and the initiative must in
particular not be used to lower the level of protection.
2. International Conventions
a) Current situation
At present, Ukraine is a member of the following international conventions which
govern the protection of copyright and/or neighbouring rights:
• the Universal Copyright Convention;
• the Berne Convention for the Protection of Literary and Artistic Works;
• the Geneva (Phonograms) Convention.
In more detail, the following should be noted with regard to Ukraine’s membership in
international conventions:
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• Universal Copyright Convention
The former Soviet Union deposited its instrument of accession to the 1952 Text of
the Convention on 27 February 1973. Its membership became effective as of 27 May
1973. As Ukraine is considered one of the successors of the Soviet Union, it
continued the membership in the Convention in this quality since 17 January 1994.
• Berne Convention
The government of the Ukraine deposited on 25 July 1995 its instrument of
accession to the Berne Convention. The accession took effect as of 25 October
1995. The instrument of accession contains the following declaration1:
“According to Article 18(3) of the said Convention as so revised, the Ministry of
Foreign Affairs of Ukraine declares that the above-mentioned Convention will not
apply to literary and artistic works which on the date of entering into force by this
Convention for Ukraine are already public domain on its territory“.
Of course, under Article 18 of the Berne Convention, only works which have been in
the public domain for the reason of the expiry of the term of protection, and not for
any other reason, can be excluded from protection. Foreign works which have been
in the public domain for any other reason than the expiry of the term of protection,
cannot be considered in the public domain for the purposes of Article 18 Berne
Convention. With the newly adopted Copyright Law, however, the legal situation
becomes clearer. Indeed, Final Provision N° 8 of the Law stipulates that the words
“notifying that said Convention shall not apply to works that, as of the date of entry
into force of this Convention for Ukraine, have already fallen into the public domain in
its territory” be deleted. As a result, the Ministry of Foreign Affairs of Ukraine shall
notify the Director General of WIPO of the fact that Article 18 Berne Convention shall
be in full effect in Ukraine after the entry into force of the Law (Final Provision No.9
Copyright Law).
1 Industrial Property and Copyright, September 1995, page 297/8.
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• Geneva (Phonograms) Convention
The Ukrainian government became a member of the Convention with effect from 21
February 2000. As the Ukrainian government did not make a declaration with regard
to the treatment of pre-existing phonograms, hitherto only phonograms that came
into being after 21 February 2001 enjoyed protection. Under the 2001 amendments,
once in force, this situation will change considerably. Final Provision N° 10
specifically provides for the following sentence to be introduced in the Law of Ukraine
“On The Accession To The Convention For The Protection Of Producers Of
Phonograms Against Unauthorised Duplication Of Their Phonograms of 29 October
1971”:
“With the aim of meeting the requirements set forth in said Convention, to apply, on a
mutual basis, the national treatment of protection of neighbouring rights as stipulated
in the Law of Ukraine “On Copyright and Neighbouring Rights” to phonogram
producers from states-parties to the Convention and their phonograms, if the term of
protection of these phonograms has note expired in the country of origin.”
Hence, Final Provision No. 10 provides that phonograms shall enjoy protection under
the Copyright Law if the term of protection has not yet expired in the country of origin.
In accordance with Final Provision No.11, the Director General of WIPO is to be
notified of this modification.
b) Future developments
• Rome Convention
Ukraine has not yet acceded to the Rome Convention. However, Ukraine plans to
join the Convention. To this end it appears that, on 8 May 2001, the draft of an
application for membership was sent to the Parliament for consideration.
• TRIPS Agreement
Ukraine is not yet a member of the World Trade Organisation, but an observer. The
prerequisite for becoming a member of the WTO is of course that the country’s
intellectual property laws together with their enforcement mechanisms are brought in
line with the requirements of the TRIPS Agreement.
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• WIPO Treaties
Ukraine has neither ratified nor signed the two WIPO Treaties, the WIPO Copyright
Treaty (WCT) nor the WIPO Performances and Phonograms Treaty (WPPT). The
country is, however, eager to join the Treaties and draft laws on joining both WCT
and WPPT have been sent to the administration of the President of the Ukraine.
3. Regional and bilateral agreements Ukraine also concluded a number of bilateral agreements which, inter alia, address
the protection of intellectual property, including copyright and neighbouring rights. In
particular, the Ukraine is bound by an Agreement on Trade Relations with the United
States and in a variety of co-operation agreements concluded with the European
Union.
B. Substantive legal issues
This section of Part II reviews substantive legal issues of copyright and neighbouring
rights protection. The document summarises the current state of protection with
reference to the recently adopted Law which is expected to enter into force on the
day of its publication in the Official Gazette.
1. Subject matter of protection
As already indicated, Ukrainian Copyright Law protects works under copyright and
other subject matter under neighbouring rights.
a) Copyright
Pursuant to Article 8 Copyright Law, copyright extends to scientific, literary and
artistic works, whether published or unpublished, finished or unfinished and
regardless of their purpose, genre, volume or goal. The protection extends to
expressions and not to ideas, procedures, methods of operation nor mathematical
concepts.
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Article 8(1) of the Copyright Law contains an open-ended catalogue of works
enjoying copyright protection under the law and which corresponds, in essence, to
the enumeration of works in Article 2(1) Berne Convention. Computer programs are
protected as literary works which results both from Article 8(1) N° 3 and Article 18 of
the Copyright Law. Protected are also derivative works such as translations,
adaptations, arrangements and other transformations, as well as collections and
other composite works, including databases. Protection extends to portions of a work
that can be used independently, including the title of a work (Article 9 Copyright Law).
Protection does not extend to official documents and official translations thereof as
well as state emblems and official signs, bank notes, works of folklore, daily news
and current events information. Note that timetables, TV and radio programmes as
well as telephone directories are expressly excluded from protection on the basis of
Article 10 Copyright Law. But, according to Article 10(f) Copyright Law, they may be
protected by a sui generis right which, although expressly referred to, is not regulated
in the Law.
b) Neighbouring Rights
Pursuant to Article 35 of the Copyright Law, subject-matters of neighbouring rights
are:
- performances,
- phonograms,
- videograms, and
- broadcast programs.
c) Relationship between copyright and neighbouring rights
Ukrainian Copyright Law does not make provision for a so-called authors’ rights
safeguard clause as it is contained in Article 1 Rome Convention or Article 1(4)
WPPT. This is a positive development as Article 1 Rome Convention has repeatedly
given rise to misconceptions in national law and often led to the introduction of rules
that institute a supremacy of rights granted to authors over neighbouring rights
instead of confirming the peaceful co-existence of such rights, as Article 1 Rome
Convention and now Article 1(4) WPPT together with the agreed statement indeed
suggest.
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Nonetheless, Article 36(2) Copyright Law makes provision for a number of rules
which touch upon the relationship of rights. These rules require that the broadcaster
must observe the rights of the other categories of neighbouring rights and those of
the author. Furthermore, the phonogram or videogram producer shall exercise their
rights within the limits of the rights that the performer and the author of the work have
granted them by contract. Likewise, the performer shall exercise his rights without
infringing the rights of the author of the work performed. This means basically that a
performer, phonogram producer or broadcasting organisation may not infringe upon
a work or performance by using it, which goes without saying.
2. Conditions for protection
There are different conditions which may need to be fulfilled in order to benefit from
protection under copyright law. These are:
• criteria of eligibility for protection or points of attachment, i.e. the question
whether foreign works and other protected subject matter may benefit
from protection under the Copyright Law;
• the question of applicability in time, i.e. whether works and other protected
subject matter in existence prior to the enactment of the Copyright Law in
1993 and/or prior to the accession to the relevant international
conventions enjoy protection under the Law; and
• the compliance with any formalities.
The situation under the Ukrainian Copyright Law appears to be as follows:
a) Eligibility for protection
Article 3 of the Copyright Law makes provision for the criteria that need to be applied
for a work or a subject matter of neighbouring rights to enjoy protection under the
Law. The rules may be summarised as follows:
Copyright and neighbouring rights protection under the Law applies to works and
subject matters of neighbouring rights that
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- have been created by Ukrainian citizens or persons having their permanent
residence in Ukraine or legal entities having their “locations”, presumably a
business establishment, in Ukraine;
- have been first or simultaneously published in Ukraine;
- are located on the territory of Ukraine or, in the case of transmissions of
broadcast programs, that the broadcast organisation is located in Ukraine and
that the broadcast occurs via transmitters equally located in Ukraine;
- in accordance with international treaties. There may be a drafting error in this
last alternative as the rule of international treaties should come into play only
where the author is not a Ukrainian national and the rule in the Law applies
regardless of nationality.
There is an uncertainty with regard to Article 3(2) let. d Copyright Law: the Law is
also to apply to “other holders of copyright and neighbouring rights” which would
suggest that the Law applies to all works not yet covered by the other categories in
Article 3, an effect which is certainly not intended by the legislature.
b) Applicability in time
The applicability in time of Ukrainian Copyright Law was one of the major problems
under the 1993 Copyright Law, particularly as far as neighbouring rights were
concerned. The newly adopted Law makes an attempt to solve this problem under
the Final Provisions N° 5 – 9.
In essence, the following rules are aimed at instituting a so-called “retroactive”
protection:
- the Law is expressly applied to performances and phonograms in respect of
which the term of 50 years from publication or recording has not yet expired
(Final Provision N° 5 Copyright Law);
- the declaration on the limited application of the protection with regard to pre-
existing works made on occasion of the accession to the Berne Convention
will become obsolete (Final Provision N° 8 Copyright Law) ;
- protection under the Geneva (Phonograms) Convention will be extended to
phonograms which, in their country of origin, have not yet fallen into the public
domain (Final Provision N° 10 Copyright Law);
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- Final Provision N° 6 further provides for a general rule to be applied in
connection with international treaties. The rule which, at least in the English
translation, is not entirely clearly worded stipulates that works and other
protected subject-matter created or first published before the entry into force
of the Law adopted in July 2001 shall be protected if on such day they have
not fallen into the public domain in the country of origin by reason of
expiration of the term of their protection
c) Compliance with formalities
As far as works are concerned, Article 11(2) Copyright Law provides that copyright
protection shall commence upon the creation of the work. The provision further
confirms that neither registration nor deposit or fulfilment of other formalities are
required for the enjoyment and exercise of copyright. The author may, however, use
a copyright notice in form of the letter © followed by the name of the copyright owner
and the year of the first publication of the work (Article 11(3) Copyright Law –
presumption of authorship). This is important for enforcing copyright as the use of
such a notice as well as any other indication of the author’s name on the original and
each copy of a work results in a reversion of the burden of proof: in the absence of
proof to the contrary, the person named as the author on the original or a copy shall
be deemed to be the author thereof (Article 11(1) Copyright Law). The copyright
owner may voluntarily register the work with the official State Register in order to
certify his copyright (Art.11(5) Copyright Law).
Likewise, in the field of neighbouring rights, no registration nor any other formality
require to be fulfilled in order to benefit from protection under the Law (Article 37(2)
Copyright Law). The phonogram and videogram producer, as well as the performer,
may, however, affix a notice on the copy of a phonogram or videogram or on every
sleeve or inlay card of the phonogram or videogram consisting of the symbol P (letter
P in a circle) followed by the owner of the exclusive rights and the year of first
publication. As in the case of works, the use of such a notice results in a reversion of
the burden of proof (Article 37(3) Copyright Law).
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3. Beneficiaries of protection Copyright laws usually determine who may benefit from the protection under the law.
Generally, there are two groups of beneficiaries: the initial beneficiary, i.e. the person
who is the first owner of the rights and the subsequent beneficiary, the person to
whom all or part of the rights have been transferred by contract or operation of law.
In a nutshell, the rules under the Ukrainian Copyright Law are as follows:
a) Works
The author is the first owner of the copyright in a work (Article 11(1). The same
applies to authors of derivative works (Article 20(1) Copyright Law). Pursuant to the
definition in Article 1 Copyright Law, the author is an individual who created a work
through his creative efforts. Thus, it would appear that legal entities cannot be
authors of a work.
There are also specific rules on authorship and initial ownership for different
categories of works which may be summarised as follows:
(aa) Works created in co-authorship
Co-authors are persons whose joint creative activities resulted in a work. In
such a case, the co-authors enjoy the copyright in the work jointly and their
relations, including the sharing in the remuneration, may be the subject of a
contractual arrangement (Article 13(1) Copyright Law). Where there is no rule
about the participation in the remuneration, the authors shall receive equal
shares (Article 13(4) Copyright Law). In case of a violation of rights, each
author may assert his rights in court.
Where the contribution of a joint author may be used as an independent part,
the respective joint author may use this part separately. If the work of the co-
authors constitutes an indivisible whole, none of them shall be entitled to
prohibit the exploitation of the work without valid reason (Article 13(1)
Copyright Law). Conversely, where the parts have independent significance,
each of the authors shall be entitled to use his own part at his discretion,
unless otherwise stipulated in the agreement (Article 13(2) Copyright Law).
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(bb) Collective works
The compiler of a collection, database, or other composite work holds the
copyright in the selection independently from the copyright of the authors in
the individual underlying works (Article 19(1) Copyright Law).
In case of encyclopedia, collections of scientific works, periodicals and the
like, the publisher holds the exclusive right to use such publications. The
publisher also has the right to have his name indicated with the work.
The authors of the works included in such publications shall retain the
exclusive right to exploit their works independently of the publication of the
whole work (Article 19(2) Copyright Law).
(cc) Course-of-duty-works
A course-of-duty-work is a work created by the author in the course of duty in
accordance with his job or under an employment agreement between the
author and the employer (Article 1 Copyright Law). In such a case, the
economic rights in the work shall belong to the employer while the author
retains his moral rights (Article 16(1) and (2) Copyright Law). The amount of
remuneration for the creation and the use of the work shall be stipulated in the
employment or other service agreement.
(dd) Audiovisual works
Article 17(1) of the Copyright Law determines as the authors of an audiovisual
work:
- the director;
- the author of the script and/or texts and dialogues ;
- the author of the musical work (with or without words) which has been
specifically created for the audiovisual work;
- the art director;
- the cameraman.
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There is a rebuttable presumption for the transfer of the film authors’
economic rights in respect of performance, reproduction, distribution, public
display and demonstration, subtitling or dubbing to the film producer subject
to the payment of an equitable remuneration for each use to be collected and
distributed by a collecting society. Note that this presumption does not cover
the public performance right with regard to the music incorporated in the film
(Article 17(2) Copyright Law).
As far as subsequent ownership is concerned, the following is to be noted:
Copyright, with the exception of moral rights, is first of all transferable by way of
inheritance (Article 29 Copyright Law).
Furthermore, it is also possible to assign or license the economic rights of the author
on the basis of an author’s contract according to Articles 15(1) and 31 of the
Copyright Law.
b) Subject matter of neighbouring rights
As a general rule, the performer, producer or broadcasting organisation who qualifies
for protection under the Law own the neighbouring rights dealt with in Section III of
the Copyright Law (Article 36 Copyright Law). In more detail, the holders of
neighbouring rights are:
- Performers
Performers are actors, singers, musicians, dancers or other persons who
perform, recite, declaim, sing, dance, play on a musical instrument or
otherwise perform literary or artistic works or works of folklore, as well as a
variety turn, circus act or puppet show and also the conductor of musical or
dramatic-musical works (Article 1 Copyright Law). This definition reflects, in
essence, the requirements of Articles 3(a) and 9 Rome Convention and
Article 2(b) WPPT.
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- Producers of phonograms
The producer of a phonogram is the natural person or legal entity that has
taken the initiative of and responsibility for the first recording of the sounds of
a performance or other sounds (Article 1 Copyright Law). This provision
corresponds to the updated version of the definition for producer of a
phonogram as introduced by Article 2(d) WPPT, except for the fact that the
definition does not expressly cover “representations of sounds”.
- Broadcasting organisations
The notion of broadcasting organisation covers both organisations who
transmit by wireless means and by cable (Article 1)
The exclusive economic rights granted to the performer, the producer of phonograms
and videograms as well as the broadcasting organisation may be assigned to third
parties (Article 36 with Articles 39(2), 40(2) and 41(2) Copyright Law).
In the field of performers’ rights, there are also two presumptions of transfer in Article
39 (3) and (4) Copyright Law:
- a rebuttable presumption with regard to the entirety of the economic rights
with respect to the performance from the performer to the film producer in
occasion of the production of an audiovisual work.
- An irrebuttable presumption with regard to the performers’ distribution and
rental rights in cases where, during the first recording of a performance, the
performer authorised further reproductions of the performance. The performer
retains, however, a right to fair remuneration for said types of use of his
performance to be administered through collecting societies.
4. Scope of protection International conventions and regional legislation in the copyright and neighbouring
rights field make provision for minimum rights which should be granted to authors
and owners of neighbouring rights. This part of the Study reviews the rights granted
under Ukrainian Copyright Law to authors and holders of neighbouring rights and
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examines whether this system is in compliance with the rules which may be found at
the international and regional level.
a) Works in general
Authors enjoy both moral and economic rights.
(aa) Moral rights
Article 14 of the Copyright Law contains a long list of moral rights which are
enjoyed by authors in respect of their works:
- the right to be recognised as the author of the work (right of authorship);
- the right to be named, i.e. the right to exploit the work or to authorise the
exploitation under his true name or his pseudonym or without any name
given;
- the right to preserve the integrity of the work.
(bb) Economic rights
According to Article 15(1) Copyright Law, the economic right of the author
comprises the exclusive right to use his works and to authorise or prohibit the
use of his works by other persons. Article 15(2) Copyright Law further
confirms that the author has the exclusive right to exploit his works in any
manner or form.
Paragraph 3 of the same Article then determines in more detail the content of
the general broad exploitation right enunciated in the first two paragraphs of
the provision by enumerating the different acts which are covered by the
exploitation right. The list, which is expressly non-exhaustive, includes:
- Reproduction of the work, which, according to the definition in Article 1
means the making of one or more copies of a work in any material form,
including by way of sound and visual recording; the storage of a work in a
computer memory also constitutes reproduction. Temporary reproduction is
also expressly covered. In essence, the provision appears to comply with the
rules in international copyright law, in particular the Berne Convention;
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however, it could still be strengthened by expressly stating that protection
extends to all forms of reproduction, whether direct or indirect and in part or in
whole. This formula has been adopted by a number of national legislatures,
and in particular in the recently adopted, so-called Copyright Directive2 of the
European Union whose Article 2 covers “direct or indirect, temporary or
permanent reproduction by any means and in any form, in whole or in part”
(emphasis added).
- Distribution of originals and/or copies of a work by first sale or other means
of alienation or transfer; with the exception of rental, the distribution right is
exhausted where copies of a lawfully published work have been put into
circulation by means of first sale in Ukraine. An editorial modification is
suggested with regard to the rule of exhaustion: although Article 15(7)
Copyright Law refers to lawfully published copies that are put into circulation
legally, it should be made clear that exhaustion can only occur where the
putting into circulation was made by the right owner or with his consent. Such
wording may also be found in the law of the European Union, in Article 4(2)
Copyright Directive and in Article 9(2) Rental Directive3.
- Importation of copies of a work: There is no indication whether this provision
covers both lawfully and unlawfully made copies of a work; however, in view
of the rule of national exhaustion which applies to the distribution right, the
distribution right will already have the practical effect of giving protection
against parallel imports.
- Transfer for property lease/commercial rental of the original and/or copies
of an audiovisual work, computer software, databases, printed musical works,
works fixed on phonograms, videograms or in computer-readable form. This
provision gives rise to the following two observations: first of all, it is unclear
what the difference between transfer for property lease and commercial rental
is. Unless it is a translation error with the consequence that the provision
should refer to lending, the definition in Article 1 Copyright Law would suggest
that there is no difference between rental and property lease. This would also
mean that there is no lending right. Secondly, unlike in the European Union
2 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L167 of 22 June 2001, page 10 et seq. 3 Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property, OJ L 346 of 27 November 1992, pages 61 et seq.
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where the rental right, with the exception of buildings and works of applied art,
covers all works, the Ukrainian rental right is restricted to certain categories of
works. Although Ukrainian law would not be in compliance with EU Law in this
respect, it would nonetheless appear to be consistent with Articles 11 and
14.4 TRIPS Agreement which require a rental right at least with regard to
computer programs and cinematographic works as well as phonograms.
- Public demonstration which, in accordance with Article 1 Copyright Law,
means the public presentation of an audiovisual work or a performance fixed
on a videogram or any moving image. - Public performance which, according to Article 1 Copyright Law, seems to
refer to any presentation, performance or communication of works and the
like either direct or with technical aids, in a public place or a place in which a
large number of persons not belonging to the usual family circle are or can be
present, irrespective of whether the works or other protected subject matter
are perceived at the place of the communication or in another place at the
same time as the communication.
- Broadcasting: this right is very broadly phrased and includes both
broadcasting by wire and wireless means. According to the definition in Article
1 Copyright Law, broadcasting is the transmission of a work which can be
received by an unlimited number of persons in various places located at a
distance from the place of transmission at which the images or sounds cannot
be received without such transmission.
- Public display: the scope of the right is not entirely clear; from its definition in
Article 1 Copyright Law, it would appear that it covers everything else which is
not broadcasting, public performance or public demonstration.
- Making available: Article 15(3) Copyright Law also refers to the general
notification to the public of the author’s works in such a manner that its
representatives can access the works at any place and at any time at their
own discretion. This right appears to be a making available right in
accordance with Article 8 WCT.
- Translation of the work.
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- Adaptation, arrangement or other transformation of the work. - Any repeated promulgation of works: this is a curious right which would
require elucidating remarks. - Inclusion of a work in a database.
The exclusive right incorporates an entitlement of the author to a remuneration for
the use of his works. The remuneration can be paid as a lump sum, a proportional
payment or as mixed payments as the case may be (Article 15(5) Copyright Law).
Note that the Cabinet of Ministers of Ukraine may establish minimum rates of the
authors’ remuneration and the procedure of their indexation.
b) Works of fine art
Authors of works of fine art enjoy an inalienable right to remuneration (the so-called
droit de suite) for the resale of their work at a public auction, or by an art gallery and
other outlets. In such a case, the remuneration amounts to 5% of the sale price
(Article 27 Copyright Law).
c) Neighbouring Rights
As the scope of protection granted to the different categories of the owners of
neighbouring rights varies considerably, it is necessary to proceed separately:
(aa) Performers
Performers enjoy both moral and economic rights.
The scope of moral rights granted to performers in Article 38(1) of the
Copyright Law corresponds, in essence, to the moral rights in Article 5 WPPT.
It comprises a paternity right, an integrity right and the right to be recognised
as the performer.
As far as economic rights are concerned, Article 39 Copyright Law provides
for the following rights in respect of
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- fixation of a hitherto unrecorded performance;
- direct or indirect reproduction of the recording of a performance where the
fixation was made without the consent of the performer or where the
reproduction is carried out for a purpose other than the one to which consent
was granted. Note that this right would appear to be too narrow to comply
with Article 7 WPPT and Article 14.1 TRIPS. It is suggested to follow the
wording of the reproduction right adopted by the European Union on the basis
of Article 2 (b) Copyright Directive.
- distribution of their performances fixed on a phonogram or videogram, without
an express enunciation of the national exhaustion rule however. The principle
of exhaustion should be confirmed for the sake of clarity.
- broadcasting of unfixed performances;
- distribution of fixed performances by any means of communication whereby
any person can access them from any place and at any time at their own
discretion. This right would appear to implement Article 10 WPPT.
- commercial rental and/or property lease of a performance fixed on a
phonogram published for commercial purposes on which a performance has
been recorded with the participation of the performer. The same comments as
in the case of authors’ rights with regard to the notion of property lease apply.
Note also that the rental right as well as the distribution right and the right to
“property lease” are presumed transferred to the phonogram and/or the
videogram producer upon the conclusion of a contract for the recording of the
performance. In such a case, the performer retains, however, a right to an
equitable remuneration. This presumption is irrebuttable.
Performers also have a right to share, with the producer of a phonogram
and/or videogram, the remuneration for broadcasting, public performance and
cable broadcasting of their performances fixed on a phonogram or a
videogram published for commercial purposes (Article 43 Copyright Law).
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(bb) Producers of phonograms and videograms
Apart from exclusive economic rights and rights to remuneration, producers
enjoy the right to affix their name to every recorded medium or package
together with the indication of the authors, performers and titles of works and
to be mentioned when the phonogram or videogram is used (Article 38(2)
Copyright Law).
In accordance with Article 40(1) Copyright Law, the producer enjoys the
exclusive right to authorise or prohibit
- the direct or indirect reproduction of a phonogram or videogram in any
manner or form whereby it would be preferable that the text be adjusted to
Article 2 of the European Union’s so-called Copyright Directive;
- adaptation (“remaking”) of the phonogram or videogram;
- the distribution of copies of the phonogram or videogram by first sale or
otherwise. As in the case of authors’ rights, the distribution right is subject to
the principle of national exhaustion. For comments on the exhaustion
principle, please refer above to the relevant comments in the part on authors’
economic rights under (aa).
- the importation of copies of a phonogram or videogram for the purposes of
distribution;
- broadcasting and making available of a phonogram or videogram;
- commercial rental of a phonogram or videogram.
The producer of a phonogram is also entitled to a share in the remuneration
for broadcasting, public performance and cable broadcasting of a phonogram
or videogram published for commercial purposes on the basis of Article 43
Copyright Law. The remuneration must be administered collectively and will
be distributed amongst producers and performers in equal shares of 50%.
Note that the remuneration is not freely negotiated, but prescribed by the
Cabinet of Ministers. Regrettably, such a procedure is an impediment to
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contractual freedom. Ideally, the amount of the remuneration should be
determined between the users and the collecting societies of
phonogram/videogram producers and performers. Where no agreement can
be reached, the Law could provide for other mechanisms of determination of
the tariffs through arbitration or mediation.
(cc) Broadcasting organisations
Like phonogram and videogram producers, broadcasters have the right to be
named in connection with their broadcasts whether in fixed or unfixed form
(Article 38(3) Copyright Law.
In addition, pursuant to Article 41 Copyright Law, the exploitation right granted
to broadcasting organisations comprises the following exclusive rights in
respect of :
- public promulgation by broadcasting and rebroadcasting of the broadcaster’s
programs, whereby the notion of “public promulgation” requires clarification;
- the fixation of the program on a material medium and the reproduction
thereof;
- the communication of the program to the public in places where a charge is
made for admission;
- dissemination, in or from the territory of Ukraine, of a satellite signal carrying
their programs by a distributing body not authorized to handle this satellite
signal.
The notion of “public promulgation by broadcasting and rebroadcasting”
should be clarified in order to ascertain that the right covers the TRIPS
requirement in Article 14.3 TRIPS with regard to rebroadcasting by wireless
means of broadcasts.
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5. Duration of protection
In view of the different terms of protection, it is important to distinguish between
copyright and neighbouring rights:
a) Copyright
The new Law raises the general term of protection for works of authors, in
accordance with the terms in place in the European Union, from 50 to 70 years post
mortem auctoris, ie. from the death of the author (Article 28(2) Copyright Law).
There are several categories of works for which the starting point of the 70 years
term differs from the general rule (Article 28(3)-(8) Copyright Law):
Joint works 70 years from the death of the last surviving co-
author.
Pseudonymous/ 70 years after the promulgation of the work,
anonymous works unless the identity of the author is revealed within this
period in which case the general rule will apply.
Posthumous works 70 years from the publication of the work if published
within 30 years from the death of the author.
Posthumous works 70 years from the rehabilitation of the author.
of rehabilitated authors
Unpublished public 25 years from publication for the publisher.
domain works
The terms of protection run from January 1 of the year following that in which the
legal act occurred that marks the starting point (Article 28(9) Copyright Law).
Moral rights are perpetual. Note however that moral rights cannot be inherited (Article
29(1) Copyright Law). However, the heir shall have the right to claim authorship and
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the integrity of the work (presumably in the author’s name – Article 29(2) Copyright
Law).
It should also be noted that the Ukrainian Copyright Law contains a provision in
Article 30(3) Copyright Law which empowers the government to identify certain cases
in which a payment for the use of a public domain work may be instituted. Such a
royalty shall be paid into an artists’ professional fund for the use on the territory of the
Ukraine. The benefits of such a provision are more than doubtful as the use of public
domain works in most cases contributes to the financing of the promotion and
development of younger authors. If a fee is charged for the use of such public
domain material, this can well hamper the future evolution of new works. The
application of this principle should therefore be handled with care.
b) Neighbouring rights
The general term of protection for neighbouring rights is 50 years. In more detail,
pursuant to Article 44(1) to (4) Copyright Law, the terms of protection for the different
categories of neighbouring rights run as follows:
Performers: 50 years from the date of the first recording of a performance;
note that as in the case of authors, moral rights are perpetual.
This provision is not in conformity with Article 3.1 of the
Duration Directive4 which requires that performers’ rights are
protected for a period of 50 years from the date of the
performance or, where a fixation of such a performance is
lawfully published or communicated to the public within this
period, 50 years from the date of publication or communication,
whichever is the earlier.
Producers: 50 years from first publication or fixation if the
phonogram/videogram has not been published within this
period.
Broadcasters: 50 years from the first transmission of the broadcast.
4 Council Directive 93/98/EEC of 29 October 1993 harmonizing the term of protection of copyright and certain related rights, OJ L 290 of 24 November 1993, pages 9 et seq.
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The periods are calculated as from January 1 of the year following that in which the
legal act occurred that marks the starting point of the period (Article 44(4) Copyright
Law).
Article 44(5) Copyright Law contains a rather curious provision in the field of
neighbouring rights: it provides that the heirs, and in the case of a legal entity, the
successors in title, of the performer, the producer or the broadcasting or cable
distribution organisation shall enjoy the neighbouring right for the remainder of the
term of protection.
6. Limitations and Exceptions
The Ukrainian Copyright Law makes provision for limitations and exceptions to
copyright (Articles 21 to 25) and neighbouring rights (Article 42 Copyright Law). In
addition, the exceptions in the copyright field also apply to neighbouring rights, but
surprisingly under seemingly narrower conditions..
The Ukrainian Copyright Law, which follows the continental-European school of
copyright protection, does not contain an open-ended system of limitations and
exceptions (such as the fair use doctrine under US law or the concept of fair dealing
under UK law), but following other examples in the laws of the European continent, a
closed list of limitations and exceptions along the lines of the Berne Convention. The
salient points in the field of limitations and exceptions are as follows:
a) Copyright
The catalogue of limitations and exceptions, which is briefly summarised in the
following, reflects the examples which may be found in international and regional
copyright law, particularly in the Berne Convention. The so-called three step test
applies on the basis of Article 15(6) Copyright Law. Note that the list of limitations is
exhaustive (Article 21 Copyright Law). In a nutshell, the system of limitations and
exceptions in the copyright field is as follows:
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(aa) Reproduction for private purposes
Article 25 Copyright allows for the reproduction of a lawfully disclosed work for
exclusively personal purposes without the author’s consent and generally
without remuneration, except in the case where a private copying scheme
applies (Article 25(2) with 42(2), (4)-(7) Copyright Law). The general private
copying exception does not cover works of architecture, computer programs
nor entire books or musical scores or works of fine art.
As far as the copying of audiovisual works and sound recordings is
concerned, the law provides that such copying is permitted as long as
remuneration in accordance with a private copying royalty scheme is paid
(Article 25 with Article 42 Copyright Law). The royalty is based on blank
recording media and equipment and is payable by manufacturers or importers
of said material. The amount of remuneration shall be determined by the
Cabinet of Ministers. The shares in the distribution of revenues is determined
by the right owners; in case there is no agreement, the shares shall be 50% to
authors and 25% each to performers and producers of phonograms or
videograms. Ideally, as in the case of sharing in the remuneration, the level of
remuneration should be negotiated between the collecting societies
representing right owners on the one hand and the “users”, i.e. manufacturers
and importers, on the other hand. If there is no agreement, the amount should
be fixed by independent arbitrators or mediators.
Media and equipment exported, used for professional recordings or material
not intended to be used for home recording as well as equipment/media
imported by an individual into the customs territory of Ukraine are excluded
from the obligation to pay a remuneration.
The described exception on private copying together with the royalty scheme
may be a reasonable compromise in respect of reproductions made in the
analogue world. In fact, such private copying royalty schemes have existed
since their introduction, for the first time in 1965 in Germany, to accommodate
acts of private copying carried out by private persons for their own use with
the help of recording equipment which had as a result a loss in quality of the
copy made. However, the provision requires a careful review insofar as digital
private copying is concerned. It is at the very least doubtful whether the
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provisions as drafted could serve as a basis for a satisfactory and balanced
solution in this domain where copying with no loss in quality may be easily
effected. The exception should definitely not apply in a context where a work
is made available by electronic means on the basis of a contractual
relationship (see also the regime introduced by Article 6(4)4 of the Copyright
Directive). Finally, the private copying exception should always play together
with the use and protection of technical measures. In this context, it may be
useful to take a look at the system introduced by the EU legislature in Articles
5(2)b and 6 of the Copyright Directive.
(bb) Reproductions of works in other cases
Articles 21-25 Copyright Law make provision for exceptions to the
reproduction right which mainly reflect cases of the Berne Convention.
Exceptions under these provisions exist in particular in respect of
- quotations, along the lines of Article 10(1) Berne Convention and, in addition,
the free use of quotations in the form of brief excerpts from performances and
works incorporated in a phonogram, videogram or broadcast program. Note
that the unlimited use of quotations from phonograms and the like is too
broad. The limitation as drafted could even be construed to cover acts of
digital sampling which should come under the scope of the reproduction right.
Where a quotation is made, the use of the excerpt must always be compatible
with fair practice. This general condition should be inserted in the limitation in
Article 21(1) Copyright Law to apply to both to the use of works as well as of
phonograms and videograms.
- use of a work for illustration in teaching along the lines of Article 10(2) Berne
Convention, is rather broadly worded. The provision should be narrowed
down to apply only in cases where the utilization is compatible with fair
practice.
- reprographic reproduction for teaching and research on the basis of Article
9(2) Berne Convention.
- reprographic reproductions by libraries and archives as replacement copies
for lost or destroyed copies of works and under very narrow conditions for
private study or research.
- reporting of current events similar to Article 10 bis (2) Berne Convention;
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- reproduction of articles from the press for information on current events along
the lines of Article 10 bis (1) Berne Convention.
- reproduction for court and administrative procedures as provided for under
Article 2 bis (1) Berne Convention.
- reproduction of a work for the benefit of the blind.
- reproduction in catalogues of works displayed at exhibitions, auctions, fairs
and collections that are open to the public. There is no reason why a
catalogue should be reproduced freely without payment of remuneration in a
catalogue which may be distributed even after the closure of the exhibition for
many years. This exception should be omitted from the Copyright Law.
(cc) Miscellaneous limitations and exceptions
Ukrainian Copyright Law allows for the free public performance – without the
consent of the author and without remuneration - of musical works in the
course of official or religious ceremonies (Article 21 N° 8 Copyright Law).
There is no reason why a work should be freely used in official circumstances.
In addition, an author may wish not to have his work associated with certain
official events.
In addition, the Copyright Law contains a number of specific limitations and
exceptions for the use of computer programs (Article 24 Copyright). These
provisions appear to follow, to a large extent, the lines of Articles 5 and 6 in
the Computer Programs Directive5 with regard to reproductions and
adaptations, including decompilation, of computer programs.
b) Neighbouring Rights
Article 42 of the Copyright Law contains specific rules on limitations and exceptions
to neighbouring rights. In essence, the Copyright Law provides that the limitations
and exceptions in the field of authors’ rights (Articles 21-25 Copyright Law) apply if
the following conditions are met:
- the fixation, reproduction and presentation is made only for training purposes
or scientific research;
5 Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs, OJ L
122/42 of 17 May 1991.
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- the exception does not apply to copies destined for export;
- neighbouring rights holders obtain an equitable remuneration.
From the wording of the provision, it would look that the above criteria are conditions
for the application of the limitations and exceptions in the field of authors’ rights. If
this is true and not a translation error, when the limitations for neighbouring rights
holders would be narrower than in the case of authors. In any case, the provision
requires clarification.
7. Transfer and assignment of copyright and neighbouring rights
As is often the case in copyright laws which follow the continental-European authors’
rights tradition, the Ukrainian Copyright Law contains a number of rather restrictive
rules regarding contractual stipulations for the use of works protected by copyright. In
the field of neighbouring rights, there are no such ample provisions. There is a simple
statement with regard to the rights of performers, producers and broadcasters that
their rights may be assigned to third persons (Articles 39(2), 40(2) and 41(2)
Copyright Law). As there are no further rules, it is assumed that the rules on
copyright apply by way of analogy.
In the field of copyright, a distinction must be first of all made between moral rights
and economic rights.
a) Moral rights
In most continental-European systems, moral rights are not assignable as they are
considered to be closely related to the personality of the author, or the performer,
where applicable. By contrast, common law systems often provide for a possibility to
waive certain moral rights in order to facilitate the use of the work, particularly in the
field of audiovisual production. The Ukrainian Copyright Law provides in Article 14(2)
Copyright Law that moral rights may not be assigned. Hence, moral rights are neither
assignable nor waivable. Moral rights as such are also not inheritable (Article 29(1)
Copyright Law – see for details above Part II, 5), but the heir may exercise certain of
the moral rights.
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b) Economic Rights
Article 15(1) Copyright Law states that economic rights may be assigned to a third
party. The provisions dealing in more detail with authors’ contracts provide that
economic rights may be either transferred to a third party (Article 31 Copyright Law)
or be the subject of an exclusive or non-exclusive licence to use the work (Article 32
Copyright Law). The transfer or licence must be accorded on the basis of a written
authors’ contract which must comply with the requirements regarding form, duration
and contents as referred to in Article 33 Copyright Law.
In essence, the rules on copyright contracts require a written contract except in the
case of periodicals and that at least the modes of exploitation, the territory and the
period for which the rights are assigned or licensed, the amount of remuneration as
well as the procedure and the period of payment be specified in the contract (Article
33(2) Copyright Law). The remuneration may either be a lump sum, a proportional
participation or a combination of both. With regard to the amount of remuneration, the
minimum rates are set by the Cabinet of Ministers of the Government of the
Ukrainian Federation. This is clearly a problematic interference in the freedom of
contracts (Article 33(2) Copyright Law).
As far as the rights of exploitation are concerned, all rights that are not expressly
specified in the contract shall be deemed not to be assigned (Article 31(1) Copyright
Law). Forms of exploitation that are unknown at the time of conclusion of the contract
cannot be assigned (Article 33(3) Copyright Law). This rule is probably modelled
upon a similar provision in German Copyright Law (§ 31(4) UrhG) which has proved
to be an impediment where the exploitation of works in a new technological
environment is at stake. Furthermore, just as in French law in Article L. 131-1 CPI, it
would appear that exploitation rights with regard to future works may not be assigned
as a result of Article 33(7) Copyright Law.
It thus seems that the rules on copyright contracts in the Ukrainian Copyright Law are
a cocktail of the most restrictive provisions which may be found in other country’s
laws. Such a system is certainly not investment friendly and the Ukrainian legislature
may wish to consider altering certain provisions in order to establish a smoother
procedure for the exploitation of rights which is governed above all by the principle of
contractual freedom.
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8. Administration of Copyright and Neighbouring Rights
Title IV of the Copyright Law contains basic principles for the administration of rights
by collecting societies. So far, it would appear that only the Ukrainian Agency for
Authors’ Rights and Related Rights is dealing with the collective management of
rights. This part is to review first of all the legal provisions governing the
administration of copyright and related rights. Secondly, this part gives information on
the practical side of rights management as it presently takes place in Ukraine.
a) Legal provisions governing the administration of rights
The Copyright Law provides in Article 45 that copyright and neighbouring rights
holders can administer their rights in three ways:
- personally;
- through an agent on the basis of an agency contract (Article 46 Copyright
Law);
- through a collecting society. The rights management through a collecting
society is compulsory in a number of cases, including for remuneration from
private copying (Articles 25 and 42 Copyright Law) and remuneration for the
broadcasting and communication to the public of a phonogram or videogram
(Article 43 Copyright Law).
Where collective administration is at stake, right owners are entitled to establish
separate associations for the administration of their rights (Article 47(1)-(3) Copyright
Law). Alternatively, right owners may entrust state organisations with the
administration of their rights.
Where a collecting society is to be fully functional, it needs to be registered with the
State. The registration will be published in the Official Bulletin (Article 48(1) Copyright
Law).
Right holders give the collecting society a mandate for the administration of their
rights on the basis of a written contract (Article 48(3) Copyright Law). Collecting
societies may not engage in business activities and are exempt from the provisions
under the legislation for Monopolies (Article 48(2) Copyright Law). As a result of the
exemption from the legislation for Monopolies, collecting societies are obliged to
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grant non-exclusive rights (Article 48(5) Copyright Law). Apart from the
administration of revenues including the negotiation with users, collecting societies
may also perform any other activity which is necessary for the protection of rights by
the society (Article 49 Copyright Law).
b) Practical rights management
At present, the only organism which seems to have an official mandate to operate in
the field of collective rights management is the Ukrainian Agency of Copyright and
Related Rights (hereinafter referred to as the “Agency”). It appears that there are
also a number of private sector agencies in the form of non-governmental
organisations which collect income for their members but they are not strictly
considered as collecting societies. In addition, an insurance company entitled
“Garant” also explained to have gathered practical experience in the licensing of
rights.
The Agency of Copyright and Related Rights was founded in June 2000, but its roots
are much older. In fact, the Agency has strong traditions in the past as it is the
successor of the State Agency for Copyright established on the territory of the
Republic of the former Soviet Union. The Agency is now gradually moving into a
more market-oriented activity with the goal of developing into a kind of NGO
structure. On this basis, the Agency was also accommodated in CISAC under the
condition that, within the next two years, the Agency will develop from the former
State Agency into a Society for the administration of economic rights.
The Agency administers the rights of about 2000 Ukrainian authors and of about
50.000 Russian authors. It is also actively involved in concluding reciprocal
agreements: so far, 17 agreements were concluded and 11 more are in the process
of coming into being.
The Agency has 140 staff and is structured according to the various branches of
activities. The Agency is represented in all regions and covers both copyright and
neighbouring rights uses.
An important task of the Agency is the creation of awareness of users that copyright
is an immaterial form of property the use of which needs to be paid for. The
promotional work carried out by the Agency is considered successful as it was
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possible to conclude a great number of agreements with important users such as
Mac Donald, the Union of Cable TV, about 40 cable television companies or the
Association of TV companies.
Apart from the collection and distribution of revenues, the Agency is also involved in
the fight against piracy. Much of the work is carried out by the Legal Department
which assists the author in court. It is one of the biggest departments but still finds it
difficult to recruit attorneys with a good knowledge of Copyright Law. Training is an
important issue, particularly in a legal field which is as new as copyright and related
rights are to Ukraine.
C. Recommendations
The Law which was adopted in July of this year to strengthen the protection of
copyright and neighbouring rights already made a considerable progress and solved
a number of vital issues, including the applicability of protection to pre-existing
repertoire both local and foreign. Although the main focus should be now on an
efficient practical application of the new rules, there are nonetheless some legal
issues which could still be improved. The following recommendations for
improvements therefore cover both legal and practical issues.
1. Legal issues
a) As far as the membership in international conventions is concerned, Ukraine
should consider to ratify both WCT and WPPT, to adhere to the Rome
Convention and to become a member of TRIPS.
b) The scope of the reproduction right should be adjusted for all right owners to
reflect the principles enshrined in Article 2 of the EU’s Copyright Directive, i.e.
it should extend to direct or indirect, temporary or permanent reproduction by
any means and in any form, in whole or in part.
c) The exhaustion rule to the distribution right should be worded in the light of
Article 9(2) Rental Directive and Article 4(2) Copyright Directive.
d) The rental right should cover all works, except for buildings and works of
applied art.
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e) A number of exceptions are too broadly worded and should be more narrowly
confined to reflect the so-called three step test as may be found in Article 9(2)
Berne Convention, Article 13 TRIPS, Article 10 WCT and Article 16 WPPT.
This apples to the exceptions in respect of
- quotation (as far as quotations from sound recordings are concerned - § 21
Nr.1 Copyright Law);
- illustration for teaching (§ 21 Nr.2 Copyright Law);
- free reproduction in catalogues (§ 21 Nr.5 Copyright Law);
- free public performance for official and religious use (§ 21 Nr.8 Copyright
Law)
- private copying as far as digital private copying is concerned.
f) It is advisable that the Law make a greater commitment to contractual
freedom. This means for instance that the rate of remuneration for private
copying be negotiated between users and right owners and that a number of
restrictive rules, such as the prohibition to assign rights with regard to
unknown uses be abandoned.
g) The protection of technical measures should be improved to ascertain the
application of civil, criminal and administrative sanctions to the circumvention
and other infringements against such measures.
h) Clarifications are needed with regard to the following notions:
- “other holder of copyright and neighbouring rights in the sense of Article 3
Copyright Law;
- repeated promulgation of works in Article 15 Copyright Law;
- public promulgation by broadcasting and rebroadcasting (Article 41 Copyright
Law);
- transfer of property lease.
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2. Practical issues
The main practical issues are training and administration of rights.
a) Training
It would appear that in the field of practical measures training in copyright and
neighbouring rights issues is the most important issue. This applies to all categories
of legal practitioners, be it lawyers in private practice, judges, public prosecutors or
other copyright law enforcement officials. Training is needed both in domestic and
international copyright and neighbouring rights law. There is also a high interest in
the Law of the European Union. One particular problem is encountered in the lack of
publications on foreign and EU law in the Ukrainian or Russian language. Similar
representations were made in an earlier project in Russia and it could be worth
investigating whether a common project regarding the translation of foreign copyright
teaching materials could be envisaged for a number of CIS countries. Finally, it
should be noted that there is practically no academic teaching in the field of copyright
and neighbouring rights law which also would require to be developed. The Ukrainian
authorities are eager to establish profound contacts and exchange of know how with
both the Max Planck Institute in Munich and the Institut Henri Desbois in Paris.
b) Administration of rights
Exchange of ideas, know how and expertise with foreign collecting societies should
be supported and promoted. It would also be advisable to envisage the setting up of
collecting societies in the field of neighbouring rights which also would require
practical support. In general, it would appear necessary to establish a healthy private
sector representation modelled on other European countries.
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Part III Enforcement
This part examines the enforcement of infringements of intellectual property rights
from two different angles: it is first of all a stocktaking of the mechanisms which both
the intellectual property legislation and related legal sources grant right holders and
their representatives to defend their legal position. Secondly, it looks at the practical
application of these provisions on a day to day basis in the fight against piracy.
As already indicated in the introduction, the majority of the relevant legal materials
outside the laws governing the various forms of intellectual property were not
available in English translation. This is particularly true for the Civil Code as well as
the provisions governing procedure, i.e. the Civil and the Criminal Procedure Codes,
and the majority of legal materials relating to border measures. Excerpts of the
Criminal Code were, however, available as was an unofficial translation of the
Customs Regulations of 28 April 2001.
This part of the paper is composed of two parts: Part A outlines the legal basics of
enforcement actions, while Part B makes an attempt at describing the reality of
practical enforcement. Part A is structured as follows: after a review of the legal basis
for enforcement actions as may be found in the relevant laws on industrial property,
as well as on copyright and neighbouring rights, the various procedures at hand such
as civil, criminal and administrative proceedings will be reviewed followed by an
overview of border measures. Finally, Part B gives an account of the practical
enforcement with regard to various industries.
A. Legal tools for the enforcement of intellectual property rights
The substantive intellectual property laws generally define the notion of infringements
of the rights provided for under the statute concerned and refer such infringements to
civil, criminal and administrative proceedings. The notion of infringement as well as
the various procedures available to the right owner or his representatives are
described in more detail in the following.
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1. The notion of infringement of intellectual property rights
The various laws regulating substantive issues of the protection of intellectual
property usually define the notion of infringement with regard to the industrial
property right or the copyright or neighbouring right at stake. In the following, these
provisions are reviewed in more detail.
a) Copyright and Neighbouring Rights
The currently applicable Copyright Law of 1993 provides in its Article 41 that the
reproduction, distribution or other use as well as the importation into the Ukraine of
works and subject matters of neighbouring rights without the consent of the right
owner constitutes infringement of copyright and neighbouring rights. The distribution
of infringing copies is equally a copyright or neighbouring rights infringement as is the
importation of copies made in countries where no copyright protection exists or has
expired with regard to the copy involved.
Article 50 of the newly adopted Copyright Law extends the list of copyright and/or
neighbouring rights infringements hitherto contained in Article 43 of the old Copyright
Law of 1993 considerably. The enumeration in the new provision covers:
- any acts that infringe the moral or economic rights of the author or
neighbouring rights holder;
- “piracy” in the sphere of copyright and/or neighbouring rights which means
the publication, reproduction, distribution including importation and
exportation of infringing copies;
- “plagiarism” that is the publication in full or in part of another person’s
work under the name of a person who is not the author of the work;
- unauthorised importation of copies of works and/or objects of
neighbouring rights which appears to refer to the importation of lawfully
made goods and hence seems to sanction parallel imports;
- any act that threatens an infringement of copyright or neighbouring rights;
- the intentional circumvention of technical means of protection of copyright
and/or neighbouring rights, in particular the production, distribution,
importation for distribution and use of means of circumvention;
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- forging, altering or elimination of rights management information, in
particular rights-management information in electronic form, without the
consent of the right owners or their representatives;
- distribution, importation and broadcasts of works and objects of
neighbouring rights without or with altered rights management information.
The last three alternatives appear to address the obligations with regard to protection
of technical measures and rights management information resulting from Articles 11
and 12 WCT and Articles 18 and 19 WPPT. While the preparedness of the Ukrainian
legislature to introduce such protection is a good step in the right direction, the
provisions may gain from a more concrete, but carefully tailored protection. In
particular, it is not clear whether these infringements would also be subject to
criminal sanctions. Moreover, the restriction to intentional infringements also does not
appear appropriate. Examples for the protection of technical measures and rights
management information may be found in Article 6 of the so-called Copyright
Directive in the European Union and in Articles 1201 and 1202 of the US Digital
Millennium Copyright Act.
The infringement of moral and/or economic rights may be pursued in compliance with
the procedures provided for by administrative, criminal and civil legislation (Article 51
Copyright Law).
b) Industrial property rights
The different laws concerning industrial property rights provide that the exploitation,
putting on the market, distribution or other use of the subject matters of industrial
property rights, without the consent of the right owner constitutes infringement of the
industrial rights. The exploitation of similar products is equally an infringement. This
provisions result from § 23 of the Trademark Act, §28 of the Invention and Utility
Model Act, §16 of the Topography of Integrated Circuit Act, §20 of the Industrial
Design Act. Importing is generally considered as an infringement, however it is not
expressively mentioned in the Tademark Act, nor in the Industrial Design Act (but we
may consider that it is included in the term “exploitation”).
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The Variety Plant Act gives no details as to the acts of exploitation constituting
infringements (§9), but gives a definition of exploitation (§1), as production of seed,
selling, importing, stocking, using seeds themselves or as parent form for
reproduction). The Act on indication of sources of goods provides that the use of it
may not occur without the granting of a certificate by the authorities and that the
owner may back up the unlawful use on a product, on packaging or commercial
documents and demand the cease of such infringements (§19).
The Unfair Competition Act provides for the three abovementioned types of
infringements, for fines and civil, administrative or criminal liability.
The Advertisement Act provides that advertisers who fail to comply with the
requirements or restrictions established for advertising are held liable pursuant to the
procedure provided in the Act (§ 27). The State Committee for protection of
consumer’s rights, and the Antimonopoly Committee shall have the right to levy
penalties. Like for copyright and neighbouring rights, the infringement of industrial property
rights may be pursued in compliance with the procedures provided for by
administrative, criminal and civil legislation (though Article 26 Variety Plant Act
includes disciplinary liability, without further details).
As already indicated, the injured owner of intellectual property rights generally has
recourse against the infringer with civil, criminal and administrative sanctions. In the
following, the different procedures for obtaining the various sanctions are outlined.
2. Civil sanctions and procedure
In the intellectual property field, it seems that civil cases are mainly brought before
the ordinary civil courts or arbitration courts when injunctions against copyright
infringements need to be obtained. It would appear that judges are rather hesitant,
sometimes even reluctant, to award damages to the injured party as a compensation
for the damage suffered.
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a) Substantive issues
As in the case of the notion of intellectual property rights infringements, the various
laws dealing with the protection of such rights contain a number of specific provisions
on civil sanctions which are set out in the following:
aa) Copyright and Neighbouring Rights Law
Article 52 Copyright Law provides a great variety of civil sanctions which the right
owner may claim and the court may accord. In more detail, the copyright and/or
neighbouring rights owner has the following remedies at his disposal in case of an
infringement of his rights:
- recognition and renewal of rights;
- restoration of the situation prior to the infringement and the cessation of the
acts that infringe or are liable to infringe them;
- payment of damages, including loss of profits or the surrender of revenue
derived by the infringer from the infringement;
- termination of preparations for an infringement of copyright and/or
neighbouring rights including the suspension of customs procedures;
- participation in the inspection of premises where there are reasonable
grounds to assume that infringing copies are produced, stored or otherwise
used;
- publication in the mass media of information about infringements of copy- and
or neighbouring rights and of court judgments with regard to infringements;
- request for information about third parties involved in the production and
distribution of infringing copies;
- the adoption of other measures provided for in legislative texts for the defence
of rights.
Curiously, the new Article 52 Copyright Law contains a second paragraph setting out
the “rights” a court shall have with regard to the issue of a decision. It is interesting to
note that the sanctions provided for in this second paragraph do not entirely
correspond to the above list of remedies the right owner may claim. Does this mean
that the court shall have the right to accord the remedies mentioned in the second
paragraph without a request by the right owner ? If this is not the case, what is the
fate of the remedies mentioned in paragraph 1 if the court cannot order them as a
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result of paragraph 2 ? Or are the sanctions in paragraph 2 additional to paragraph
1? In any case, the provision would gain much from clarification.
Coming now to the details of paragraph 2, the Court shall have the right to order the
following remedies:
- compensation for immaterial damage;
- payment of damages for copyright and/or neighbouring rights infringements;
- collection from the infringer of income derived from the violation;
- payment of an indemnity of an amount between 10 and 50.000 times the
minimum salary instead of payment of damages or collection of income;
- prohibition of publication of infringing copies, including their performance, as
well as confiscation of such copies and of the equipment and material used
for the violation of rights;
- request for information about third parties involved in manufacture and
distribution of infringing copies;
- a fine at the rate of 10 percent of the amount awarded to the claimant by the
court to be transferred to the state budget of Ukraine;
- Confiscation of all infringing copies, materials and equipments followed by
their delivery up to the right owner or destruction of the infringing copies and
sale of the material and equipment with the proceeds to be submitted to the
state budget of Ukraine.
bb) Industrial property
The different laws concerning industrial property matters contain basic provisions
concerning civil sanctions.
The Industrial Design and Model Act (§26) only sets that the owner of a patent can
claim compensation for his prejudice and that the licensee may also require that the
owner of the patent be reinstated in his rights.
The Invention and Utility Model Act (§34) also provides for cease of the infringement
and reinstating of the prior situation, moral and economic damages, including
benefits and loss, and that the licensee may also require that the owner of the patent
be reinstated in its rights.
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The Trademark Act (§20) only sets that the owner of a certificate can claim for
ceasing the infringement, compensation of his prejudice, removing of the infringing
sign from a product or form its packaging or that the representations of his mark or of
a sign misleadingly similar be destroyed. Also, the licensee may require that the
owner of the certificate be reinstated in its rights.
The Topography of Integrated Circuits Act (§21) provides for more detailed
sanctions: Cease of the infringement (asked by the owner of a certificate or the
licensee) reimbursement of damages, including loss of profit and moral damages,
abolishment or adjudication of all infringing integrated circuits as well as photo
moulds of topography’s layer, technical documents, other information on the material
means and ways necessary to produce the integrated circuits, and a fine that can be
up to 10 % of the amount awarded to the claimant by the court.
The Indication of source of goods Act (§24) provides that on importing to the custom
territory of Ukraine, the infringing goods shall be temporarily detained. It provides
also for more detailed sanctions: the owner of a certificate may ask for cease of
infringement, remove from the market the goods identifying by the infringing
indication, remove this from the goods or its packaging, recover its prejudice,
including benefits and lost, compensate damages to the amount not more than profits
gained by the infringer (which is not so high a standard), undertake any other actions
provided by the legislation.
The Variety Plant Act is quite vague and may be less protective. It only provides that
the person who are guilty of infringements are liable under the disciplinary, civil,
administrative or criminal law (§26). It does not contain any further provision, such
as in the above mentioned acts.
Further provisions are made as to the disputes that a court may settle: in the
Indication of Source Act (§25-2), Industrial design Act (27-2) Trademark Act (§21-
2Topography of Integrated Circuits Acts (§22-2 Invention and Utility Model Acts (§35-
2). They basically include, however not in detail or expressively, the claims listed
above. But maybe the provision would gain from clarification.
The above mentioned laws do not contain such detailed provisions on the acts that
the court is allowed to take, as in the Copyright law, but only the above mentioned list
of claims the party can bring before the court, which seems to be the same.
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b) Procedural aspects
A specific provision with regard to the competence of civil law courts is contained in
the Copyright Law. Pursuant to Article 52, civil remedies against an infringer may be
brought before a law court (a general or an arbitration court) and other enforcement
agencies, such as the Antimonopoly Committee.
The general courts are competent for disputes involving at least one natural person,
whereas the arbitration courts, which are state courts and specialised in economic
cases, are competent for disputes involving legal entities. The procedure before the
general courts usually starts at the first instance or district court with the possibility of
an appeal to the City Court and the Supreme Court. The arbitration courts also have
a three tier system: the case will be initiated at an arbitration court whose decision
may be appealed to the arbitration appeal court with a possibility of review by the
Supreme Court.
As in Russia, arbitration courts are considered to conduct the case in a more
professional way although, this being said, the judges at the Ukrainian courts do not,
as yet, obtain a special intellectual property training as do their colleagues from
Russia. Also, in accordance with the lack of specialisation of the judges, there are no
special chambers of the court dealing primarily with intellectual property rights
infringements.
As, most regrettably, no meetings were scheduled with judges, and in the absence of
any English translation of the Code of Civil Procedure, it is not possible to give a
more detailed overview of the course of civil proceedings.
However, it must be borne in mind that the way Ukrainian courts work at present may
well change in the near future. A court reform is envisaged and even considered by
the Parliament. It is expected that the court reform would lead to the introduction of
specialised courts in the field of intellectual property. Much interest is given to the
German Federal Patent Court and several representatives expressed the wish to
have an exchange of experience with their colleagues from Munich.
In general, the move towards a modernised system of courts was generally
welcomed by the interviewed parties who called for a specialisation of courts in
intellectual property matters. Specialised IP courts would doubtless be a good step
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as this would require a professional training and special involvement of judges in the
intellectual property field. There are of course various ways of creating a system of
specialised courts in intellectual property. Depending on the degree of
decentralisation of the country, there could be either a centralised court dealing with
IP matters or, alternatively, special IP chambers within the framework of existing
courts.
In Germany for instance, the governments of the 16 Federal States are empowered
on the basis of § 105 Copyright Law to assign by statutory order copyright cases to
certain County Courts (“Amtsgerichte”) or High Courts (“Landgerichte”) where it is in
the interests of judicial administration. In the Explanatory Memorandum6 to the
German Copyright Law, the German legislature took the view that a sound
jurisprudence in the field of copyright requires experience and know how of the court
which can only be gained if the court continuously deals with copyright matters.
Similar considerations apply in the industrial property field where the respective rules
are contained in Article 140 Trademark Law (“Markengesetz”) and Article 143(2)
Patent Law (“Patentgesetz”).
In France several courts (Tribunaux de Grande Instance, Cour d’appel) on the first
instance level and on the appeal level, are empowered on the basis of § 615-17 of
the Intellectual Property Code, to settle the disputes related to inventions patent
matters. Also, an exclusive jurisdiction is given to the Tribunaux de Grande Instance,
as to the matters regarding trademarks on the basis of § 716-3 of the Intellectual
Property Code. However, no similar provision exists as to copyrights or neighbouring
rights.
Moreover, the Paris Court and Tribunal have specialised chambers which deal with
intellectual property matters including copyright, such matters being considered by all
the French courts as being very specific and difficult, so that even provincial town
courts try to follow such an organisation, as far as possible. This is an important step
for harmonisation of the jurisprudence.
It is important, however, to consider that the introduction of a special IP court or
chamber should fit in well with the overall court system of the Ukraine.
6 BTDrucks. IV/270 S.106
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c) Provisional measures
Provisional measures appear to be an unknown feature in Ukrainian civil procedure.
This was confirmed orally by a number of interviewed parties. Of course, provisional
measures are required if Ukraine aims at complying with the terms of the TRIPS
Agreement. Indeed, Article 50 TRIPS requires Members of the WTO to provide for
prompt and effective measures to be ordered by the judicial authorities to prevent an
infringement of any intellectual property right from occurring and/or to preserve
relevant evidence with regard to the alleged infringement. The adoption of the
measures must be possible inaudita altera parte. This is necessary in order to apply
the provisional measure without giving advance notice to the infringing party;
otherwise the infringer could take steps to impede the enforcement of the provisional
measure.
It is therefore not surprising that, in general, procedural laws allow for the application
for provisional measures before legal proceedings in substance are initiated. This is
for instance the case under Article 809 of the Code of Civil Procedure (Nouveau
Code de Procédure Civile) in France where a court can render an “ordonnance de
référé” which allows for immediate relief, mainly in the form of injunctions, where a
case is made for a “trouble manifestement illicite”, i.e. an obviously illicit interference
in a legal position, such as the violation of intellectual property rights. The référé has
proven a particularly useful tool in the fight against piracy where the rapid availability
of provisional measures and other emergency relief is of prime importance.
A similar procedure may be found in German law where § 935 of the Civil Procedure
Code (Zivilprozeßordnung) empowers the right owner to request a preliminary court
order (called “einstweilige Verfügung”) if there is a danger that the change of
circumstances would seriously deteriorate or even render impossible the claim of the
plaintiff. Such a request may be brought even before the main proceedings are
initiated. In such a case, the court may order on request that the main proceedings
must be initiated within a certain period of time. If the plaintiff does not follow such
order, the preliminary court order may be terminated by the court.
Most probably to meet the requirements of Article 50 TRIPS, the new Copyright Law,
not yet signed nor in force, contains specific provisions governing provisional
measures in the field of copyright and neighbouring rights.
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Article 53(1) of the new Copyright Law provides for provisional measures which may
be ordered by a judge of an ordinary or an arbitration court. Accordingly, the courts
may decide to prohibit the defendant or the person in respect of whom they have
sufficient reason to suspect a copyright or neighbouring rights infringement from
performing certain acts such as the manufacture, the reproduction, sale, rental,
importation or other use under the Law as well as the shipping, stocking or storage
with a view to the distribution of allegedly counterfeit copies of works or objects of
neighbouring rights. In accordance with Article 53(2) Copyright Law, the court may
also order the preventive search for and seizure of all allegedly counterfeit copies of
works and objects of neighbouring rights and of the materials and equipment
intended for the manufacture thereof as well as of relevant documentation.
Article 53(3) of the Copyright Law also provides for preliminary measures to be
ordered by a judge on the application by the right owner even before a claim is
lodged or before proceedings have begun. In such a case the judge may order:
- the inspection of the suspected premises;
- sealing and removing into custody of suspected infringing copies, materials
and equipment as well as of relevant documentation.
Prior to taking a decision, the judge may request from the applicant evidence that he
is the owner of the rights and that a violation of his rights has taken place. The judge
shall also ask for the payment of a deposit for the prevention of abuse of an interim
measure.
Following the order of the preliminary measures by the judge, the applicant is to
initiate proceedings concerning the violation of rights within a period of 15 days from
the day of application of the preliminary measure. The Article does not describe the
continuation of the procedure, except for the fate of the deposit which is either
returned to the right owner or used as part of the compensation of damages incurred
by the defendant, depending on the outcome of the proceedings. It is however
assumed that, if the proceedings are not instituted within the period of 15 days, the
preliminary measures would be cancelled.
No such procedure is provided in the acts as to industrial property matters.
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3. Criminal sanctions and procedure
The enforcement of intellectual property infringements in criminal proceedings is
characterised by the fact that, during the last years, the legislation in the field of
criminal law was seriously deficient. One of the difficulties was that neither related
rights nor trademark infringements came under the scope of the respective
provisions in the Criminal Code. However, with effect from May 2001, new provisions
entered into force which brought related rights and trademark infringements under
the scope of the Criminal Code, increased fines and imprisonment and introduced
the seizure of counterfeit goods. While the new provisions finally represented a
sound basis for the prosecution of IP infringements in criminal proceedings, it must
be reported that the Criminal Code was amended yet again with the effect of
decreasing the sanctions considerably. The amendments to the Criminal Code are
scheduled to enter into force in September 2001. This move is most regrettable as
the amendments effective May 2001 allowed at last for more effective work of the
Ministry of Internal Affairs’ Intellectual Property Crime Group which is a relatively new
department entirely devoted to the fight against piracy of intellectual property goods.
In the following, the criminal sanctions under both the current legal regime and the
new provisions in force from September 2001 will be reviewed as well as the basics
of the criminal procedure.
a) Criminal sanctions
Criminal sanctions are available against the unlawful use of intellectual property in all
forms, be it objects of copyright and neighbouring rights or industrial property rights.
(aa) Criminal sanctions for infringements of intellectual property rights until
September 2001
Under the currently applicable Article 136 of the Criminal Code, criminal sanctions
are available against the unlawful use and any other intentional infringement of
objects of intellectual property rights, as well as against the misappropriation of
authorship. The notion of intellectual property rights comprise literary and artistic
works, objects of neighbouring rights, computer programs, databases, scientific
inventions, utility models, industrial designs, trade and service marks, topography of
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integral micro circuits, varieties of plants and others. Where the infringement of such
acts cause “material damage in the large scale”, the infringer may be ordered:
- a fine of an amount of 200 – 1000 times the non-taxable minimum income of
a citizen, or
- corrective labour for up to 1 year, or
- imprisonment for a period up to 2 years, and
- confiscation of infringing product as well as of the equipment used for the
manufacture of such illegal copies.
In case of repeated infringements or on prior agreement of a group of people or in
the case of an extremely large-scale material damage, the sanctions are increased to
- a fine of an amount of 1000 – 3000 times the non-taxable minimum-income of
a person; or
- corrective labour for a period up to 2 years; or
- imprisonment from 2 to 5 years; and
- confiscation of infringing product as well as of the equipment used for the
manufacture of such illegal copies.
The currently applicable sanctions are very closely modelled on the corresponding
provision in the Russian Criminal Code (Article 146 dealing with copyright and
neighbouring rights infringements). In essence, Article 136 of the Ukrainian Criminal
Code provides for similar sanctions as the Russian Code with the distinct advantage
of higher fines and the possibility of confiscating illegal copies and equipment used. If
effectively applied in practice, these sanctions doubtless constitute a deterrent
against piracy of intellectual property goods.
(bb) Criminal sanctions for intellectual property rights from September 2001
As already indicated, yet again a new regime will govern the criminal enforcement of
intellectual property rights when the new Criminal Code will come into force in
September 2001. The criminal sanctions will be contained in different Articles of the
Code, Article 176 dealing with infringements of copyright and neighbouring rights,
Article 177 with offences of industrial property in general and Article 229 with
trademarks in particular. The new sanctions will be as follows:
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(i) Copyright and neighbouring rights (Article 176 Criminal Code (new))
The new Article 176 of the Criminal Code will penalise the reproduction and
distribution of scientific, literary and artistic works, computer programmes, databases,
performances, phonograms and broadcasting programs as well as other uses of
similar works, computer programs, databases and objects of related rights without
the consent of the right holder. In such a case, the use is illegal and, provided the
infringing act caused material damages in the large scale, may be punished with the
following sanctions:
- a fine of an amount of 100 – 400 times the non-taxable minimum income of a
citizen, or
- corrective labour up to 2 years
- confiscation of infringing product as well as of the equipment used for the
manufacture of such illegal copies.
In case of repeated infringements or where the infringing acts caused material
damage in the extremely large scale, the sanctions are increased to
- a fine of an amount of 200 – 800 times the non-taxable minimum income of a
citizen, or
- corrective labour up to 2 years or
- imprisonment for a period up to 2 years and
- confiscation of all infringing copies of works and objects of neighbouring rights
as well as of the equipment used for the manufacture of such illegal copies.
Where the aforementioned acts are committed by an official using official channels,
the infringer may be ordered:
- a fine from 500 to 1000 times the non-taxable minimum income of a citizen; or
- arrest for a period up to 6 months; or
- limitation of freedom for a period up to two years together with the deprivation
of the right to be engaged in certain types of activities for the period up to
three years.
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Needless to say, these sanctions are considerably lower than in the currently
applicable Article 136 Criminal Code and, unlike the present provision, will no longer
constitute a deterrent against piracy in the copyright and neighbouring rights field. It
is most regrettable that the Ukrainian legislature who already spent much efforts in
introducing an excellent system of punishing piracy in the field of intellectual property,
is now taking a step backwards. If at all possible, it should be avoided that this
considerable deterioration of the present situation will ever take effect.
(ii) Industrial property in general (Article 177 Criminal Code (new))
No copy of the text has been provided, but we have been mentioned by the person
interviewed that the provisions are similar to the above provisions contained in § 176,
so that the same above remarks are here available.
We were told that the scope of protection includes invention and utility models,
indication of source of goods, variety plant and topography of integrated circuits .
(iii) Trademarks (Article 229 Criminal Code (new))
No copy of the text has been provided, but we have been mentioned by the person
interviewed that the text does not provide for imprisonment and sets a very small
amount of fine, up to 800 USD, subject to the fact that the infringement is already
about 1 000 USD.
It seems doubtful that such a provision is sufficient to dissuade, or punish the
infringers and decrease the number of counterfeits .
(cc) Necessary improvements in the field of criminal sanctions
Apart from the fact that the new provisions lowering sanctions for infringements of
intellectual property rights should be prevented from entering into force, there are a
couple of other points which, if taken into consideration, would strengthen the
criminal enforcement against piracy even further:
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- First of all, at present, the sanctions only come into play if there is a “material
damage in the large scale”. Material damage is considered to be caused in
the large scale if it is 100 times and more the non-taxable minimum income of
a citizen. An extremely large scale damage is admitted when the damage is
at least 1000 times the non-taxable minimum income of a citizen’s income.
The non-taxable minimum income is currently 17 UHR which equals 3,5 USD.
Hence a large scale damage is from 350 USD, whereas an extremely large-
scale damage would run from 3500 USD. The same regime would
continuously apply under the new provisions, but the amount of damage
would be calculated in a different way. Whereas at present, the damage is
calculated on the basis of a legal production, in future only the costs for the
unlawful production would be taken into consideration for establishing the
large or extremely large material damage.
In any case, it should be considered whether the condition of a large damage
for the application of criminal sanctions is at all needed. In a number of other
territories, the availability of criminal sanctions is not dependent on a large
scale damage. Articles 106 – 108 of the German Copyright Law as well as
Articles L.335-2 to 335-4 of the French Intellectual Property Code apply
criminal sanctions with no threshold condition and increase the penalties for
repeated offences or where they are committed for commercial purposes.
- Secondly, both Article 136 of the current Criminal Code as well as the
relevant provisions of the forthcoming Criminal Code are lacking a number of
sanctions which could constitute a further deterrent to piracy. The introduction
of the following sanctions should be considered:
- Confiscation of the infringer's personal property (in case of serious
crimes) and of the proceeds (a useful example is Article L.335-6
French Intellectual Property Code);
- Closure of the business or revocation of a business licence (such a
provision could be based on Article L. 335-5 French Intellectual
Property Code);
- Publication of the judgement (see the example in Article L. 335-6
French Intellectual Property Code).
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- Finally, the provisions in the Criminal Code would gain from a
provision which would clarify the criminal liability of legal entities. Such
a provision could be based on Article L. 335-8 French Intellectual
Property Code.
b) Procedural aspects
An important feature in the field of criminal law enforcement is the recent
establishment of a specialised unit in intellectual property matters within the Ministry
of Internal Affairs (MOI). The Intellectual Property Crime Group is a Subdivision of
the Economic Crime Combating Department and has been operational as such only
since June of this year. The division also has branches in local offices in the region.
Currently, the subdivision in the MOI in Kiev counts the head of the department and
two employees. Their main activities consist in the fight against music, audiovisual
and software piracy as well as in the prosecution of acts of unfair competition and
illegal use of trademarks.
With the establishment of the specialised subdivision, it is not astonishing that the
MOI usually takes the initiative to pursue infringements of intellectual property rights
although it appears that the prosecutor could also initiate criminal proceedings
against an infringer.
The general course of the proceedings was reported to be as follows:
The investigation starts when the Subdivision receives information that an enterprise
is manufacturing illegal product. A controlled purchase of such infringing copies will
then take place in order to gather documentary evidence of and for the investigation
process. Before the interview of the owners and employees of the suspected
enterprise, financial and organisational background information will be collected. This
step will be followed by a visit to the enterprise in order to inspect the venue and to
interview owners and employers. If there is enough evidence that the production is
illegal, infringing product will be temporarily seized on the basis of a court order. The
seized product will then be subject to an examination. The expertise will be carried
out by independent experts. It was reported that the system of examination could be
problematic as it was not particularly well organised. In addition, the right owners
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often are foreigners so that it is not always quick and easy to receive the necessary
documents that are required for the continuation of the investigation.
Once all the necessary steps of the investigation have been made, the officials
decide whether a criminal or an administrative case will be introduced. The decision
depends on the amount of damage caused (see above under criminal sanctions).
Only if a large scale damage was caused, i.e. a damage exceeding 350 USD, will
there be a criminal procedure. In all other cases, administrative procedure will follow
the police investigations.
After the initiation of criminal proceedings either the MOI or the public prosecutor will
continue the investigation. This can take between 1 and 6 months depending on the
particularity of the case.
When the investigations by the MOI or by the prosecutor are terminated, the court
will decide on the sanctions to be applied to the infringer, including the final
confiscation of the infringing goods.
Finally, it should be noted that the Criminal Code gives the MOI also powers to
perform certain preliminary measures. In particular, the officials of the MOI can
- arrest a suspect infringer for a short period of time (3-10 days), but on the
basis of a confirmation by a judge;
- seize illegal products; and/or
- stop the activity of a plant.
As the provisions in the Criminal Code are relatively new in a number of areas such
as trademarks and related rights, there has not been so much experience in
conducting criminal proceedings. Nonetheless, in the first months of 2001 already
139 cases have been initiated of which 45 relate to copyright. In 2000, only 19 cases
relating to copyright were initiated. Also, more than half a million CDs and other
formats had been seized. Reportedly, this increase in cases would, however, not
mean an increase in piracy, but is a sign that with the new Subdivision and the
provisions of the Criminal Code in force since May 2001 (but regrettably only until
September 2001) the work of the MOI has become more effective.
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4. Administrative sanctions and procedure
In cases where an infringement does not qualify as a crime pursuant to Article 136
Criminal Code because it did not cause a large scale material damage,
administrative proceedings may be initiated in accordance with the Code on
Administrative Offences. In addition, administrative proceedings may be initiated at
the Antimonopoly Committee as intellectual property rights infringements may also
constitute an act of unfair competition which would be subject to administrative
sanctions.
a) Procedure according to the Code of Administrative Offences
Article 51-2 of the Code of Administrative Offences provides for administrative
sanctions for the illegal use of goods protected by intellectual property rights,
including literary and artistic works, objects of neighbouring rights, computer
programs, databases, scientific discoveries, inventions, utility models, industrial
designs, trademarks and servicemarks, topography of integrated circuits, varieties of
plants and other subject matters. As in the case of the Criminal Code, the law also
applies to the misappropriation of authorship. In such cases, the following sanctions
may be applied:
- fine from 10 - 200 times the non-taxable minimum income of a citizen;
- confiscation of infringing copies as well as of equipment and materials used
for the manufacturing of such copies.
The procedure in the case of an administrative offence is much easier than in
criminal proceedings. After the closure of the investigations, the MOI will establish an
administrative protocol and possibly seize infringing product. The protocol will be
submitted to a court, whereby any court on the territory of the Ukraine will be
competent. The court will then decide on the amount of the fine and the confiscation
of infringing goods, equipment and other material used for the infringement.
b) Procedure according to the Unfair Competition Act
Pursuant to Article 4 of the Unfair Competition Law, unauthorised use of another’s
Christian and company names, trademarks, logos, advertising material, packaging,
book titles, works of art, periodicals and the like shall be qualified as unlawful in case
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where there can be confusion with respect to activities of other economic entities
(entrepreneurs) who have the priority right to the use of such objects. Note that
objects of neighbouring rights do not appear to be covered by this Article.
Acts of unfair competition may give rise to administrative sanctions in accordance
with Articles 21-23 Unfair Competition Law. In the case of economic entities which
are legal persons, the fine may be up to 3% of the annual turnover achieved in the
year preceding the imposition of the fine. Where the establishment of the annual
turnover is impossible, a fine up to 5000 times the non-taxable minimum income of
citizens will apply (Article 21 Unfair Competition Law). Other legal persons and
entities which do not qualify as legal persons may be subject to a fine up to 2000
times the non-taxable minimum income of citizens (Article 22 Unfair Competition
Law). Administrative liability under the Unfair Competition Law also applies to
physical persons who are either themselves engaged in entrepreneurial activities or
who commit the act of unfair competition in the interest of a third person (Article 23
Unfair Competition Law).
Note that any damage caused by an act of unfair competition can only be claimed by
the injured party in civil proceedings (Article 24 Unfair Competition Law).
The Unfair Competition Law also provides for the confiscation of unlawfully labelled
products and duplicated products originating from a different economic entity (Article
25). It would appear that this provision does not extend to infringements in relation
with works of art.
The administrative proceedings are initiated by a statement of claim which the injured
party will have to address to the Antimonopoly Committee of the Ukraine or to one of
its territorial offices within a period of six months from the date the infringing act was
discovered (Article 29 Unfair Competition Law).
After the claim has been lodged, the Committee may institute provisional measures if
there is a danger that the implementation of its decision will be difficult or impossible.
Article 29 of the Unfair Competition Law empowers the Antimonopoly Committee to
issue orders on:
- forbidding a person to perform certain acts if there are signs of transgression
in that person’s conduct;
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- the seizure of property or sums in the possession of the defendant.
These orders on preliminary measures may be appealed by the defendant within 15
days from the date of the receipt of the copy of the decision to an ordinary regional or
city court or to an arbitration court, as the case may be.
In accordance with Article 30 Unfair Competition Law, when dealing with acts of
unfair competition, the Antimonopoly Committee can take binding decisions on
- recognition of the fact of an act of unfair competition;
- termination of an act of unfair competition;
- the withdrawal of an untrue, inaccurate information to be made by the
convicted party at his own cost;
- imposing of fines;
- confiscation of unlawfully labelled products or duplicated products originally
made by a different economic entity (entrepreneur);
- withdrawal and overriding of unlawful acts and abrogating contracts made by
central or local bodies of state executive power and executive bodies of local
self-government.
The decision on fines exceeding 400 times the non-taxable minimum income of
citizens may only be rendered by the Antimonopoly Committee of Ukraine and not by
regional offices; the confiscation can only occur in accordance with the rules on the
order of confiscations by courts.
Decisions of the Antimonopoly Committee may be appealed within 30 days from the
receipt of the decision to the ordinary regional or city court or an arbitration court, as
the case may be (Article 32 Unfair Competition Law).
5. Border measures
Before entering into a discussion of the legal basis for border measures, it should be
noted that, so far, no practical border enforcement of counterfeit trademark and pirate
copyright goods appears to have taken place. A new Intellectual Property Rights
Protection Department was established recently within the State Customs Service of
Ukraine which is eager to achieve practical results in the field of border enforcement
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on the basis of legislation which was recently put in place and which is expected to
be completed by further normative acts most probably by the end of this year.
a. Legal basis
Three legal instruments are of interest in the field of enforcement by customs
authorities:
- Decision of the Economic Council of the CIS taken on 22 June 2001 in Minsk
on the draft rules of customs control for movements across the borders. The
Decision creates a general procedure for customs in the CIS with the purpose
of enabling those states which do not as yet have domestic legislation in this
field to act in accordance with international norms. - Regulations on the procedure for the registration and transport across the
customs border of Ukraine of goods containing objects of intellectual property
as approved by Decree No. 412 of the Cabinet of Ministers of Ukraine dated
28 April 2001, in force from 16 June 2001. These Regulations are the legal
basis for border enforcement measures which are currently applicable. - Draft Customs Code. The draft Customs Code passed the second reading in
Parliament in the week of 9 July 2001. The third reading is expected to take
place in the autumn with the entry into force of the Code probably towards the
end of the year. Reportedly, the draft Customs Code would enhance the
enforcement as it would provide also for fines against the importation and
exportation of infringing intellectual property goods.
b) Present system of border enforcement
As already indicated, border measures are presently available on the basis of the
Regulations approved by the Cabinet of Ministers with Decree No.412 of 28 April
2001, hereinafter referred to as the “Regulations”.
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aa) Scope of application
The Regulations apply to goods containing objects of intellectual property that are
imported or exported and that must be included in the register of goods containing
objects of intellectual property kept by the State Customs Service (Clause 2
Regulations). “Goods that contain objects of intellectual property” are copies of works
of science, literature and art, including computer software, databases, phonograms,
goods labelled with trademarks for goods and services indicating their origin and
other goods that can be registered as such by the State Customs Service (Clause 5
Regulations). It would thus appear that both trademarks and subject matters of
copyright come under the scope of the law and that in view of the reference to “other
goods” this list is non-exhaustive. However, this assumption is subject to clarification.
The Regulations do not apply to the transit of goods, mail orders and goods in
travellers’ personal luggage that are imported or exported for their own use and not
intended for commercial use (Clause 2 Regulations).
bb) Registration procedure
The border control by customs authorities only takes place where details about the
goods have been entered in the register kept by the State Customs Service (Clause
3 Regulations). The entry into the register requires a request by the right holder
which must be accompanied by a great variety of information as set forth in Clause 6
Regulations, some of which may be extremely cumbersome and even impossible to
obtain:
- an official document certifying the registration in Ukraine of the intellectual
property right;
- a detailed description of an object of intellectual property enabling its
identification by customs authorities and its TN ZED code (Commodity
Classifier for Foreign Economic Activity);
- copies of the intellectual property goods or photographs thereof;
- other information about the intellectual property goods enabling identification
thereof;
- information about the countries, producers and methods of transportation of
counterfeit goods, if any;
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- letter of guarantee concerning reimbursement of the cost of storage, expertise
and other expenses of the customs authorities, as well as reimbursement of
damages to the owner of the goods if violations are not confirmed.
The State Customs Service decides on the request and notifies the applicant within a
period of 30 calendar days from the decision. The State Customs Service may refuse
the registration if:
- the abovementioned documents have not been submitted;
- there is no protection for the intellectual property right according to the
legislation in Ukraine;
- there are no specific features which can be controlled by customs authorities
at the moment of passing over the border.
The denial of registration must be accompanied by an explication of the reasons for
the decision (Clause 7 Regulations). However, it would appear that no appeal is
available against the decision of the State Customs Service.
Where the request for registration is accepted, the State Customs Service proceeds
with the registration within a period of 10 days from the receipt of the registration fees
(Clause 10 Regulations). The registration can be for 6 months or 1 year, depending
on the request of the right owner, and can be extended for a further period of 6
months or 1 year one month prior to the expiry of the period (Clause 12 Regulations).
Once registration is effective, and during the entire period of registration, the
procedure can be initiated in two ways: either the right owner files a substantiated
request with any customs office in the Ukraine for the suspension of customs
clearance for an object of intellectual property if there are sufficient grounds to
believe that the object is transported across the custom border of Ukraine in violation
of the right owners intellectual property rights (Clause 14 Regulations); or the
customs authorities act ex officio (Clause 25 Regulations).
cc) Procedure for the suspension of customs clearance at the right owner’s
request
Where the right owner initiates the procedure, he must submit, yet again,
cumbersome and probably impossible information:
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- a detailed description of the intellectual property goods to enable identification
by the customs authorities;
- information concerning the location of the importer or exporter as well as the
recipient of the goods;
- conclusions of an expert evaluation concerning correspondence of the
contentious object with the registered object;
- any other documents which prove the violation of rights.
Within one day from the receipt of the request, the chief customs officer decides
whether or not there are sufficient grounds for the suspension of customs clearance
(Clause 16 Regulations). If this is not the case, the motivated refusal is sent within a
period of three days to the right owner (Clause 17 Regulations). It would appear that
there is no appeal possible against this decision.
If there are sufficient grounds for the suspension, customs clearance of the goods will
be suspended for a period of 15 days, which may be prolonged, and the State
Customs Council will be notified (Clauses 18 and 19 Regulations). During the period
of suspension, the right owner is to visit the customs office and may inspect the
goods. In addition, samples of the goods may be sent for inspection or expertise to a
customs laboratory or another competent body. Moreover, during the 15 day period,
the right owner must file a statement of claim with the competent general or
arbitration court and must produce a court award certifying the initiation of
proceedings (Clauses 20 – 23 Regulations). The customs clearance will be
suspended for the entire period of the legal proceedings. On the basis of Clause 24
Regulations, customs clearance may take place in the following cases:
- there is no sufficient evidence;
- the request was withdrawn by the right owner because a settlement was
reached; - no court award concerning the initiation of legal proceedings was produced.
dd) Ex officio actions by customs authorities
As already indicated, once the registration by the right owner is effective, the
customs authorities may also proceed ex officio to the suspension of customs
clearance (Clause 25 Regulations). In such a case, the right owner, the declarer and
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the States Customs Service will be informed. The right owner shall visit the customs
office immediately and inspect the goods. Within a period of 3 days from the seizure
of the goods, two samples will be sent to the customs laboratory for the purposes of
expertise and inspection. If it is established that the product is manufactured in the
Ukraine, then the customs office will notify the State Customs Council and the
competent local public prosecutor. If the product was manufactured outside the
Ukraine, the State Customs Service will be notified who shall inform the respective
competent body.
c) Recommendations for improvements
Although the enactment of specific provisions on border measures with regard to
intellectual property goods is a good step in the right direction, there are nonetheless
a number of serious deficiencies in the Regulations which affect adversely the
intended effect of a border enforcement system :
- The scope of application of the Regulations is not entirely clear. What are
exactly “goods that contain objects of intellectual property” ? There seems to
be a wide definition in Clause 5 which refers to “other goods that can be
registered by the State Customs Service”, but this assumption needs to be
confirmed. It should be equally clarified whether the scope of the Regulations
extends to packaging and labels of goods.
- It is most regrettable that personal luggage, mail order and transits are
excluded from the scope of the Regulations. In many territories, the personal
luggage exemption is used to bring pirate product into and out of the country
which is subsequently entered into commercial channels. At the border,
infringers of course indicate that the product is merely for private use,
whereas as soon as the product is imported or exported, it is used for
commercial purposes. The same is true for mail orders. The best way to solve
the problem is to omit any exemption from the scope of protection for
personal luggage and mail orders. Likewise, there is no justification to exempt
transit from the Regulation. The primary goal of the customs Regulation, that
is to take infringing goods out of circulation, also applies if goods are “merely”
in transit. This was also disputed in the framework of the EC Council
Regulation No.241/1999 of 25 January 1999 amending Regulation (EC) No
3295/94 laying down measures to prohibit the release for free-circulation,
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export, re-export or entry for a suspensive procedure of counterfeit and
pirated goods7 whose application to transits was doubtful but was meanwhile
confirmed by the European Court of Justice8.
- Furthermore, border measures are only available if the right owner has gone
through a laborious registration procedure and this even if the customs
authorities are to act ex officio. Even worse, the information which is required
for the purposes of registration and for the request for suspension of customs
clearance is in most cases impossible to obtain. This is particularly true for
information regarding counterfeit and pirate goods. It is most unlikely that the
right owner will have knowledge of the producer and place of manufacture of
the counterfeit product or of a particular shipment. If this information is a
prerequisite for registration and initiation of the procedure, then the provisions
will be practically meaningless. In fact, the State Customs Service complained
that since the enactment of the Regulations in June 2001, there had not been
a single request from a right owner under the new provisions. The reason for
this absence may indeed be the fact that the use of the provisions is
practically impossible as the right owners are not in a position to collect the
information which is required for the filing of their claim. Incidentally, a similar
problem was encountered last year in Latvia where right owners also had to
submit information about a possible shipment of infringing goods prior to the
arrival of such goods at the border. The customs authorities equally
complained that the new provisions were not used and it turned out
afterwards that the right owners were just not in a position to gather the
necessary material and hence could not use the procedure.
- Another problem concerning the documentation which is required for
registration is the fact that the right owner must produce a certificate that
demonstrates the registration of the intellectual property right in Ukraine. This
may be acceptable for industrial property, but it is not for copyright. In
accordance with the Berne Convention and TRIPS, the currently applicable
Copyright Law provides for voluntary registration of copyright, as does the
newly adopted Law. To request a certificate of a registration of a copyright
7 Published in OJ L 27 of 2 February 1999, page 1. 8 European Court of Justice, Case C-383/98 Polo Lauren Co. v. PT Dwidua Langgeng Pratamva, Decision of 6 April 2000, GRUR Int. 2000, page 461/2.
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would render the registration compulsory which is not in accordance with the
Berne Convention nor TRIPS.
- A court award confirming that a statement of claim has been made to the
competent court must be delivered within 15 days, a period which may be
renewed for another 15 days, for the suspension of customs clearance to
continue. This condition has of course as a prerequisite that the court is able
to deliver such an award within this timeframe. Otherwise, this condition
would be another burden for the right owner to bring a procedure under the
Regulations.
- There are a number of uncertainties concerning the expertise to be brought
with regard to alleged infringing goods. What are customs laboratories and
who are other competent bodies in this regard ? Who appoints the experts
and would the right owner have a right to challenge the expertise ? It is also
astonishing in this context that the right owner would have to bring
conclusions of an expert’s evaluation with the request to suspend the
customs clearance even before the goods have arrived. This is another
barrier which may contribute to the reluctance to use the new provisions.
- It should be generally clarified whether the right owner has any rights to
appeal against the decision of the customs authorities to deny registration or
refuse a request for suspension of customs clearance.
- Finally, there are no administrative sanctions, including fines, available
against the infringement of customs rules regarding intellectual property
rights. Reportedly, the new Customs Code will, however, provide for fines in
the case of violation of customs rules in the field of intellectual property.
It is strongly recommended that the abovementioned shortcomings be considered in
the very near future and that these deficiencies are at least addressed in the new
Customs Code. The sooner the new provisions will be amended so that right owners
can effectively use them, the sooner these provisions will be used in practice.
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B. Practical Enforcement
Piracy in Ukraine concerns the whole intellectual property sector, be it counterfeit
trademark goods or pirate computer software, motion pictures, books or music. In
some fields the piracy levels have been reported by relevant private sector
organisations as well as by the Ministry of the Interior (MOI) to be in the region of
90%. Pirate music, videos and computer software are on sale in shops, department
stores and markets, as are counterfeit trademark goods such as bags, clothes or
watches. Motion pictures and music appear to be most adversely affected by the
phenomenon, followed by computer software with the third large group of
infringements being the illegal use of trademarks of both Ukrainian and foreign
companies.
When reviewing practical enforcement of piracy in the intellectual property field, it
must be borne in mind that the public services which have been entrusted with the
task of fighting piracy are relatively new, as are the legal provisions on which
enforcement actions are based. As already indicated, the specific IP units within the
MOI and State Customs Service have only been fully established in June of this year
and criminal sanctions for trademark and related rights infringements have been in
place only since May of this year. The same is true for private sector law
enforcement agencies such as REACT which has been created only recently or the
anti-piracy office of the IFPI which, although created at the end of 1999, could only
benefit from criminal enforcement since the coming into force of the new provision in
the Criminal Code last May. It is therefore a process which is still in the beginning
and which needs to be developed further with the necessary know-how and
expertise.
1. Piracy affecting various industries a) Music industry
Pirate CDs are primarily produced by one of the five CD plants on the territory of the
Ukraine, although an increasing number of recordings seems to also be imported.
The capacity to produce optical media product in various forms (CDs as well as
VCDs, DVDs and videogames) appears to outweigh the needs of the population in
the Ukraine. According to information from the MOI, the five known CD plants on the
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territory of Ukraine have an estimated production capacity of 50 million CD units9,
whereas the need of consumers for CDs in Ukraine is estimated at around 5 million
units. According to official information by the State Committee on Statistics of the
Ukraine, the number of CDs produced in 1999 amounted to 6.730.200 and in 2000 to
9.017.500. No figures were collected for the years 1997 and 1998. Although it was
assured from official side that all CD plants were now under the control of the
government and no pirate material was produced any longer, only an effectively
applied regulatory regime to control optical media production can ultimately prevent
further production of pirate copies. Such legislation, which in essence is a kind of
business regulation, could well find its place in administrative law together with
administrative sanctions for non-respect of the rules which could be further
accompanied by specific rules on sanctions in the Criminal Code.
In order to control the distribution of pirate sound recordings, as well as of videos, the
Law on the Distribution of Copies of Audiovisual Works and Phonograms was
adopted on 23 March 2000. This Law basically requires the affixing of a hologram on
the packaging of a CD which is to affirm that the recording was produced legally. The
distribution of the hologram is administered by the Ukrainian Agency of Copyright
and Related Rights. It is at the very least doubtful whether the Law has fulfilled its
goal of regulating the distribution of illicit material. In any case, it is was possible to
inspect pirate recordings bearing a hologram. Hence, the holograms are equally
open to fraud either through illicit reproductions of the hologram or by using the
hologram for other purposes than officially indicated.
Pirate CDs can be bought on street markets or in shop outlets. The pirate offers
comprise new releases as well as recordings which have not even been released yet.
A vast majority of pirate recordings is exported to other countries in the region, hence
adversely affecting the development of other Eastern European markets. But
Ukrainian made illicit recordings are also found in larger quantities in Western
European countries and elsewhere in the world. An efficient border control is
therefore required in order to avoid that the illegal material leaves the country.
9 Note that the IFPI evaluates the actual production capacity at around 70 million units per year. Source: IFPI’s Quarterly Newsletter Network which may be accessed at their website: http://www.ifpi.org
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Despite this difficult situation, the legitimate Ukrainian recording industry has joined
forces and created the Ukrainian Music Alliance (UMA) in the beginning of this year.
The alliance includes the licensees for two major record companies and a number of
other record companies, distributors and retailers of legitimate recordings. The work
of the Alliance is focussed at obtaining the legal environment which is required to
build up a well functioning local music industry which is not threatened by acts of
piracy. In this context, it is also important to note that the distribution of international
repertoire does not only benefit foreign right owners but has a direct beneficial effect
on the Ukrainian record companies which, once piracy will be eliminated, will be able
to reinvest the revenues from the distribution of foreign repertoire into the costly
production and development of Ukrainian authors and Ukrainian artists.
b) Motion picture industry
Piracy of audiovisual works also ranges in the area of 90% and appears mainly in the
form of video piracy. According to industry reports, there are five main replicators of
pirated videos with capacities of over one million videocassettes per year and around
100 small operators. Like CDs, pirate videos are sold on street markets, in shop
outlets and were seen also in larger department stores. Pirate films of Hollywood
productions appear shortly after their theatrical release in the United States. As an
example, it is already possible to buy videocassettes of the recent Hollywood release
Pearl Harbour in Kiev. Most of these cassettes are back-to-back copies of videos
recorded from screens in the United States. As in the case of CDs, Ukrainian
produced pirate videos are also exported to other countries.
Broadcast piracy has also been an issue, but some improvement in the unlicensed
broadcasting of films is reported.
As far as film production is concerned, it has been reported that only about 5 to 8
Ukrainian films are produced per year through the studio Berjenka which has been
privatised. Hence, the majority of films shown in the local cinemas are foreign and
licensed through three official distributors. As in the case of the recording industry, it
is of course difficult for a local industry to establish if it has to compete with piracy.
There is not yet a Ukrainian film producers’ or distributors’ association. However, it
was reported that in the course of the autumn, the Ukrainian Video Association may
be formed.
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c) Software industry
Software piracy, which comes second after sound and audiovisual piracy, is
assessed around 85-90 %. So far in 2001, 9 criminal cases pursuing computer
software piracy have been initiated by the MOI. Computer software piracy often
involves end-user piracy, i.e., the installation of software, whether legally or illegally
acquired, in excess of the number of authorised copies. The consequences of
software piracy, however, are far broader than losses to foreign software providers.
Piracy problems also threaten and diminish government revenues, foreign
investment, the viability of the local Ukrainian software market, and Ukraine’s gross
domestic product.
The key problems presently facing the software industry in Ukraine are the absence
of adequate and effective enforcement of copyright law and an uncertain legal
environment. It is necessary to create awareness with regard to compliance with and
respect for intellectual property laws.
d) Book publishing industry
Finally, book piracy also remains a continuous problem. The biggest problem
appears to be the illegal production of books in Ukraine for sale in Russia.
Nonetheless, just in time with the beginning of the summer holiday season, pirate
copies of German children’s books were seen during the consultants’ visit to Ukraine
in an open market.
e) Fashion industry
It seems that even in important department stores, as we could visit one in the center
of Kiev, and not only open markets, one may easily find copies of models owned by
CHRISTIAN DIOR, LOUIS VUITTON, concerning as well designs of bags, glasses,
or trademarks or registered logos, or even registered packaging of perfumes or
beauty products.
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f) “Detergent” industry
Also, in the field of detergent, washing powder, shampoos and the like, where
trademarks mean the most important part of the value of the products, counterfeit
goods represent a huge percentage on the market in Ukraine, although it is very
difficult to determine percentages.
Procter & Gamble has managed to reduce from 36 % fakes in shampoo last year and
is mainly concerned with false packagings, though that they say that the situation
improved since 1993.
Detergents or shampoo and the like are mainly sold on street markets and it is
practically impossible to find the producer of such fakes. As a result, it is practically a
nonsense to bring an action before the court on the basis of a registered trademark,
as to very small quantities of goods in open market, when the costs of such actions
will be far more important than the results.
Companies such as Procter & Gamble find it more efficient to try to educate the
consumer, working closely with the State Committee of Standards and Metrologic
Certification. They conduct controls of the standards of the products, already having
6 mobile labs for that purpose. They also deliver to the sellers certificates that can be
withdrawn if it appears that fakes are sold. They try to show to consumers how to
recognise the genuine product. To that extent, such firms find it more useful to
accompany the products by a notice that shows that their trademarks are registered .
2. Obstacles to practical enforcement
Piracy can only be effectively defeated if all those who are involved in enforcement
actions do have the necessary legal and technical tools for leading a successful
combat against the various forms of piracy. It would appear that the major obstacles
to efficient anti-piracy work in Ukraine are insufficient training of law enforcement
officials in general and a lack of awareness of the general public concerning the
detrimental effects of buying pirate product. In more detail, the situation is as follows:
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- Lack of technical experience: It seems that the persons involved in the
enforcement of intellectual property rights do not have the necessary
technical expertise to identify illegal material and to distinguish it from
legitimate repertoire. Assistance and training with involvement of the private
sector is urgently needed.
- Absence of specific legal education of legal practitioners: From both
public and private sector, there have been remarks regarding the professional
competence of judges, prosecutors and other law practitioners in the
intellectual property field. As intellectual property is a relatively new subject,
there is no specific professional legal training. Also, Universities do not
provide for specialised courses.
- Procedure: as the legal basis for bringing criminal procedures is very recent,
there is not yet much experience. In civil cases, it is practically difficult to
obtain damages and preliminary measures against intellectual property
violations are non-existent. In view of the registration procedure, border
control is also almost non-existent. This leaves the right owner with
administrative proceedings which only provide for low fines.
- Control of optical media production: With the large production capacity for
optical media, it is indispensable that there is an effective regulatory control
which prevents the production of further pirate copies.
- Lack of funding and staffing: Particularly in the industrial property field, the
lack of appropriate funding and staffing was indicated by the public sector
representatives.
- Creation of awareness: Both public and private sector take the view that a
programme of creation of awareness for the public is needed. The public is
not conscious of the detrimental effects of buying pirated and counterfeit
goods both for the cultural industries and the public interest at large.
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C. Recommendations The enforcement system as practised at present demonstrates serious weaknesses
and shortcomings. There are a number of reasons: first of all, the enforcement of
intellectual property is considered a novelty as the legal basis for the enforcement of
such rights have been introduced only a short while ago, such as the provisions in
the Criminal Code. It is therefore not surprising that law enforcement officials could,
so far, not gather sufficient experience in this field. Finally, some of the procedural
provisions addressing the enforcement of intellectual property rights, particularly as
far as customs measures are concerned, are deficient and require improvements.
The following recommendations are made with a view to improve the situation in the
field of enforcement of intellectual property rights:
1. Legal issues
There are a number of legal problems regarding enforcement which require to be
addressed. However, before entering into a discussion of these more specific issues,
it should be noted that, in general, the enforcement system as it is currently applied,
appears to put more weight on enforcement actions by public bodies rather than
encouraging the private sector to take initiative to fight against intellectual property
rights infringements.
a) Civil procedure
- In practice, courts seem to be reluctant to award damages. Where the legal
conditions for the application of damages are fulfilled and the rights owner
requests the award of damages, there is no reason why the damages should
not be granted.
- Provisional measures such as preliminary injunctive relief do not seem to be
available; in the copyright field, such measures have been introduced in July,
but as the Law is not yet effective, no practical experience exists. In order to
be in compliance with Article 50 TRIPS, provisional measures should be
introduced and applied with regard to all intellectual property rights.
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b) Criminal procedure
- The amendments to the Criminal Code which are scheduled to enter into
force in September 2001 and which would deteriorate the protection, should
not come into effect.
- “Material damage in the large scale” as a prerequisite for criminal sanctions
should be abandoned.
- The criminal sanctions should be amended to provide also for the publication
of the judgment, the possibility of the confiscation of the infringer’s personal
property and the closure of the business or premises where the infringing act
was committed.
- The criminal liability of legal entities should be clarified.
c) Administrative procedure
Fines are too low to constitute a deterrent for piracy and should be increased.
d) Border measures
- The scope of application of the currently applicable customs Regulations
should be clarified, in particular the notion of “goods that contain objects of
intellectual property”.
- The Regulations should extend to personal luggage, mail orders and transits.
- The registration and application procedures are too cumbersome and the
extent of documentation to be supplied by the rights owners is almost
impossible to comply with so that the procedure loses its practical relevance.
This situation urgently requires to be reviewed.
- A number of clarifications are needed, in particular with regard to expertise
and the possibility of an appeal by the right owner against decisions by the
customs authorities.
- There are no administrative sanctions for the infringement of customs rules
regarding intellectual property rights. Such rules should be introduced in the
near future.
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2. Practical issues
a) Training
As in the case of substantive legal issues, training is an important aspect also in the
field of enforcement. Training is necessary both with regard to technical elements
(i.e. the distinction of counterfeit or pirate material from legitimate product) and
enforcement law. All professionals involved in the enforcement of intellectual property
rights would benefit from training: officials of the law enforcement bodies such as
police and customs officers as well as public prosecutors, judges and legal
practitioners in general.
b) Court reform
As Ukraine is currently undergoing an important reform of their court system, support
with regard to establishment of specialised court services in intellectual property
could be beneficial. In particular, it could be worth to have an exchange with
representatives from other countries, which have specialised courts or chambers
within courts, to learn about the various systems of concentrated jurisprudence in IP
matters and to investigate the feasibility and the introduction of such a system in
Ukraine.
c) Control of optical media production
An effective regulatory business control in the field of optical media production,
probably as part of Ukraine’s administrative law, could help considerably in fighting
piracy. By contrast, the recently implemented hologram system does not appear to
be a response to the piracy problem. The hologram system is vulnerable to fraud and
pirate copies of sound and video recordings bearing holograms are in circulation in
the country.
d) Funding/staffing
Following representations made by a number of officials particularly from the
industrial property field, it may reveal useful to investigate a need for increased
funding and staffing.
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e) Creation of awareness
The creation of awareness of the public is of great importance. As long as the public
is not convinced that the purchase of illegitimate goods is detrimental to the country’s
wealth, growth and culture, piracy will subsist. The experience made by the detergent
industry with regard to the introduction of legitimate material in the market may be a
workable example to follow. In addition, in the cultural field, there have been
suggestions, even from the public sector, that the price of legitimate cultural products
could be made more attractive for the Ukrainian public, if such goods were exempted
from VAT.