Dr. Irina Paliashvili,

President of the Russian-Ukrainian Legal Group, P.A. (Washington, Kiev, Moscow)




Table of Contents


I.                    Introduction

II.                  Revolutionary Changes in the National Legislation

III.                Ukraine Joins Major IPR Treaties

IV.                Optical Media Anti-Piracy Measures




I.                    Introduction


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. 


II.                  Revolutionary Changes in the National Legislation


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.


III.                Ukraine Joins Major IPR Treaties


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.


IV.                Optical Media Anti-Piracy Measures


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.