OVERVIEW OF THE NEW COPYRIGHT
AND NEIGHBORING RIGHTS PROTECTION REGIME IN UKRAINE
Dr. Irina Paliashvili,
President of the
Russian-Ukrainian Legal Group, P.A. (Washington, Kiev, Moscow)
I.
Introduction
II.
Revolutionary Changes in the National Legislation
III.
Ukraine Joins Major IPR Treaties
IV.
Optical Media Anti-Piracy Measures
2001 was an extremely busy year
for Ukraine in the area of IPR. The
biggest news, unfortunately, was negative, since Ukraine was recognized as one
of the world’s leading violators of intellectual property rights in the area of
optical media piracy and was subjected to significant sanctions by the United
States Government. Moreover, despite
numerous promises by the Ukrainian Government to fix this problem, Ukraine
repeatedly failed to satisfy the criteria of the US-Ukraine Joint Action Plan,
the US Government, and the international industry for combating piracy.
These negative and highly
publicized developments, unfortunately, overshadowed the tremendous progress
made by Ukraine in 2001 in the area of the IPR legal regime, both in terms of
national legislation and in terms of participation in international IPR
treaties. To this end, one may say that
the devastating problem of piracy has produced some positive effects: Ukraine has come a long way in its efforts
to establish a sound, long-term legal
basis for IPR protection, and has achieved unprecedented progress compared to other
CIS countries.
It can be said that 2001 was a
year of revolutionary changes in Ukraine’s national IPR legislation, which will have long-term effects, not only in
Ukraine, but also in other countries of the region. The following were the most significant developments in this
field:
(a) Adoption
of the new Law “On Copyright and Neighboring Rights”;
(b) Adoption
of a new Criminal Code containing two articles on IPR protection;
(c) Amendment
of the IPR-related articles of the Administrative Code;
(d) Amendment
of the IPR-related articles of the Customs Code;
(e) Adoption
by the Parliament of a new Civil Code containing a separate Book IV on
IPR.
Of these five documents, the new Law
“On Copyright and Neighboring Rights” (“Copyright Law”) could probably be
considered the most significant and progressive development in the area of IPR
protection in Ukraine. The Copyright
Law had a very difficult route to success and was vetoed twice by the President
until the Rada got it right. Its final
version was prepared in close cooperation with the international IPR community
and reflects the most modern and progressive international standards in this
area, including compliance with TRIPS.
Among its highlights are:
n The
expansion of retroactivity for copyright;
n The
introduction, for the first time, of retroactivity for neighboring rights;
n Cancellation
of the notorious reservation on public domain made by Ukraine when it joined
the Bern Convention;
n The
granting of national-regime protection to foreign phonogram producers through
amendments to Ukraine’s accession to the Geneva Convention;
n A
significant enhancement of the protection of rights-holders through the
introduction of a number of preventive measures, including the participation of
rights-holders in inspections and an explicit basis for courts to order interim
protection measures on their own initiative or on the initiative of a
rights-holder, even before any substantive lawsuit has been filed;
n The
introduction of a greater degree of transparency that requires the publication of information on copyright violations
and of the respective judicial rulings;
n The
significant strengthening of implementation and enforcement mechanisms for IPR
protection.
The new Criminal Code contains several IPR-related
provisions (Articles 176, 177, 229 and 231) that not only broaden and strengthen
the criminal liability for copyright violations, but that also, for the first
time, introduce criminal liability for neighboring rights and industrial
property rights violations. One of the
shortcomings of the Criminal Code’s IPR provisions, however, is that the
application of criminal measures, as a rule, is permitted only in cases when
the violation of rights leads to material damage or the gaining of an
especially large amount of income.
Another problem is the relatively minor criminal sanctions for IPR
violations.
Amendments to the Administrative
Code (Articles 512 and 1633) have extended
administrative liability to all cases of the illegal use of any IPR objects and
have increased administrative sanctions, including applicability of confiscation.
Customs Code Article 116-1 has drastically
increased the sanctions for IPR-related customs violations (up to the
equivalent of $27,000 in selected cases).
Finally, the Parliament adopted the new Civil Code, which contains a separate book (Book IV) devoted to
IPR, on 29 November 2001. The Civil Code, however, was later vetoed by
the President in its entirety. The
preparation of Book IV of the Civil Code was surrounded by a dramatic
conceptual battle similar to the one that has been going on in Russia for
several years. As in Russia, the
original drafters of Book IV based it on the concept of the direct exhaustive
regulation of IPR, leaving no room whatsoever for special laws such as the
Copyright Law and other IPR legislation.
As is well known, and as was pointed out in the many appeals addressed
to the Government of Ukraine by the WIPO, the EU, the US Government, WTO
negotiators, and the international IP industry, this concept is contrary to the
internationally accepted concept of putting the main emphasis in IPR regulation
on special legislation, leaving only the general framework to civil codes. After a long and complicated preparation
process, the final version of Book IV, as adopted, represented a compromise between these two concepts,
providing very detailed and excessive regulation, but, at the same time,
leaving room for special regulation.
Since the Civil Code was vetoed by the President with general
instructions to the Parliament to substantially revise it (there were no
special instructions made by the President in relation to Book IV), it is not
clear at this time how the work on the Civil Code in general, and on Book IV in
particular, will evolve, or whether the conceptual conflict over Book IV will
be renewed.
In 2001, Ukraine made
impressive progress in joining major international IPR treaties and
conventions, including:
n
The Geneva Convention on the Protection of Phonogram
Producers (the Copyright Law later granted foreign phonogram producers
originating from the Geneva Convention member-states national regime and
retroactivity);
n
The Rome Convention for the Protection of Performers,
Producers of Phonograms and Broadcasting Organizations;
n The WIPO
Copyright Treaty;
n The WIPO
Performances and Phonograms Treaty.
These positive
developments, complementary to the progressive changes in the national
legislation, brought Ukraine very close to TRIPS compliance in the legislative
field.
There is much less progress to report for Ukraine in the
anti-piracy area, which consists of three basic components:
(a)
Legal basis for IPR protection;
(b)
Regulatory regime;
(c)
Enforcement and liability.
As was mentioned above, Ukraine was successful in addressing the first component, i.e., in establishing a sound and sustainable legal basis for IPR protection based on both national legislation and international treaties. However, Ukraine’s failure to stop massive optical medial piracy can be attributed to the lack of success in dealing with the other two components: establishing a strict and effective regulatory regime of government control over the manufacture and distribution of optical media, and the lack of enforcement of whatever control exists at present paired with a weak liability mechanism.
On June 5, 2000, Ukraine and the United States signed the Joint Action Plan to Combat Optical Media Piracy in Ukraine, but the Government of Ukraine has consistently failed to implement its commitments under the Plan.
For two years, the
Government and the Parliament were working on a comprehensive regulatory law
that would establish strict government control over the manufacture and
distribution (including export) of optical media. Ukraine had full access to the similar legislation and experience
of other jurisdictions that have successfully resolved the piracy problem, such
as Bulgaria and Hong Kong, and to the
pool of international expertise in this field provided by various international
organizations and technical experts sponsored by the US Government and the
EU. However, the Law “On the Specifics of the Government Regulation
of the Activity of Subjects of Economic Activity Associated with the
Manufacture, Export, and Import of Laser-Readable Discs” (“CD Licensing Law”),
adopted after two years of extensive and highly-publicized debate in
mid-January 2002, failed to meet several important criteria of the Joint Action
Plan and internationally accepted anti-piracy requirements.
In
general, it can be said that the CD Licensing Law considerably
restricts the government’s control over the manufacture and distribution of
optical discs, even after this activity becomes subject to licensing, and
contains weak and insufficient enforcement and liability mechanisms. In particular, the following key
shortcomings of the CD Licensing Law may be mentioned:
n
Legislation applicable to optical media regulation
includes, in addition to the CD Licensing Law, a much more liberal Law “On
Licensing Certain Types of Economic Activity” (“General Licensing Law”),
thus creating either confusion or a direct conflict between the two. Because the CD Licensing Law is not clear
regarding which law should prevail in the event of a conflict, and because
these two Laws have contradictory objectives, the process of licensing and
controlling optical media seems destined to be confusing and complicated.
n
The scope of the CD Licensing Law does not cover
all aspects of optical media manufacturing and distribution, thus leaving
substantial components of this process unregulated. Just one example: the transportation of discs, raw materials,
and equipment is absent from the definition of “illegal circulation of
laser-readable discs”, which means that control bodies will not be entitled to
take pirated discs into protective custody if the latter are discovered with a
carrier (i.e., in a vehicle) during transportation.
n
Licensing requirements and conditions are much more
relaxed than necessary for the Government to exercise effective control over
the industry.
n
There are serious gaps in the licensing of export
and import of optical media, relevant raw materials and equipment.
n
The inspections by the Government with the
participation of rights-holders, especially surprise inspections, which are an
essential component of the enforcement mechanism, are severely restricted, even
compared to the liberal General Licensing Law.
Moreover, the CD Licensing law imposes liability on an applicant
(presumably the rights-holder) that
initiates an inspection should such an inspection fail to uncover the
violations claimed by the applicant.
n
Liability for violations of the CD Licensing Law is
weak and insufficient (for example, no confiscation of infringing discs, raw
materials, or equipment is possible), and there is no effective mechanism
provided for the imposition of such liability.
The Government at present
is drafting a number of implementation regulations (“CD Regulations”) based on
the CD Licensing Law, and, provided a good-faith effort is put into preparing
such CD Regulations, some of the above-mentioned shortcomings may be fixed in
the CD Regulations. However, there are
a number of shortcomings that can only be fixed by amending the CD Licensing
Law itself. Therefore, if Ukraine makes
a major good-faith effort to establish a strict and effective regulatory regime
for optical media, even one based on the weak and insufficient CD Licensing
Law, it has every chance of succeeding, by making the necessary amendments to
this Law, by adopting strong and effective CD Regulations, and by the
subsequent strict enforcement of this regime.