Expert Opinion (#4 April 2020)

The Protection of Intellectual Property Rights in Ukraine

by Eduard Tregubov

Ukraine has been going through major reforms recently covering various branches of law, ranging from the administration of justice and its system of law-enforcement authorities to tax legislation and customs regulations. The protection of intellectual property rights stands out vividly against this background, but rather than providing an example of successful reforms, it remains one of those areas that undeservedly receive little attention from legislators.

Intellectual property matters have traditionally been treated by state authorities as a narrow issue that affects only a minor part of business while the presence of large volumes of counterfeit or grey products on the local market is seen almost as a benefit for consumers who get access to cheaper goods. Intellectual property is perceived as something that ultimately does not constitute property. Downloading audio and video content, using pirated software is accepted as the norm in Ukraine. What is more, the absolute majority of computers used by state authorities and bodies of local self-government, including the very authorities whose task is to counteract the infringement of intellectual property rights, operate counterfeit software.

Instead, reform in this area and putting things right in connection with the illegal use of intellectual property poses a threat that consumers will be forced to pay for things they used to get either for free or buy much cheaper.

Surely this situation impedes the development of honest law-abiding business, hampers investment in Ukraine and annually brings Ukraine to the top in the global rankings of pirate states.  For instance, the situation on the brand licensing market is dire. It is common practice for developed markets to purchase licences to specific brands (names of athletes, celebrities, film and animation characters, works of art, etc.) in order to manufacture branded products.  In Ukraine, this market is still in an embryonic state. Would it be economically feasible to purchase an expensive licence to some or other brand from a licensor when identical goods made by unknown manufacturers in the absence of any official permits can be bought much cheaper at every corner, in any store or supermarket?

It follows that both Ukrainian law and the national law-enforcement system fail completely when it comes to countering counterfeit and pirated products. On the other hand, the Ukrainian legal system does not provide right holders with efficient instruments that would allow them to protect their own intellectual property rights. It is a common situation when the identity of an offender cannot be established, a trial can last unreasonably long, and the levels of fines that can be imposed at the demand of the right holder are extremely low and not commensurate with the market value of a brand or a licence.

The other pressing issue exists in the area of copyright and underlies the formation of a fair and transparent administration framework for collective management organisations that would ensure the transparent collection and distribution of royalties and payments to authors and other right owners. The Law of Ukraine On Efficient Management of Property Rights of Right Holders in the Area of Copyrights and/or Related Rights was adopted as far back as 2018. However, no negotiations have been conducted to determine final tariffs that would ensure a balance between the interests of right holders and users based on the criteria of reasonableness and objectivity. 

At present, there are several draft laws under consideration at the Ukrainian Parliament that are aimed at improving the situation with protection of intellectual property rights. On 20 December 2019, Draft Law No. 2659 On Amendments to Some Laws and Regulations of Ukraine Regarding the Acquisition, Exercise, and Protection of Intellectual Property Rights was registered by Parliament. The objectives of this draft are as follows: to ensure consistency of Ukrainian statutory provisions governing intellectual property; to harmonise Ukrainian intellectual property law with the laws of the European Union; and to facilitate the comprehensive modernisation of Ukrainian intellectual property law and ensure its compliance with the needs of modern society.

Moreover, on 4 February 2020 the Verkhovna Rada of Ukraine adopted in the first reading two draft laws that introduce reform of the system of legal protection of intellectual property:

1) Draft Law No. 2255 On Amendments in Some Laws and Regulations of Ukraine Regarding the Formation of a National Intellectual Property Agency that establishes a legal framework for the operation of the National Intellectual Property Agency (NIPA) that will be established within the structure of the Ministry for Development of Economy, Trade and Agriculture; and 

2) Draft Law No. 2258 On Amendments in Some Laws and Regulations of Ukraine Regarding the Strengthening of Security and Protection of Rights to Trademarks and Industrial Designs and Counteracting Patent Trolling, the objective of which is ensure that Ukraine meets its commitments regarding harmonisation of Ukrainian laws governing the protection of rights to trademarks and industrial designs with the legislation of the European Union.

On 5 February 2020, Parliament adopted in the first reading Draft Law No. 2259 On Amendments to Some Laws and Regulations of Ukraine (regarding reform of patent law). This draft is aimed at ensuring that Ukraine fulfils its commitments regarding the harmonisation of Ukrainian laws governing the protection of rights to inventions and utility models with the laws of the European Union. In particular, the draft law provides for: an increased list of technologies that are not granted legal protection; filing applications in an electronic form; the right of any person to file their justified objections in connection with an application within six months following the date when a patent application is published; a detailed procedure for granting extended protection to the rights to inventions; an increased list of rights and obligations of holders of rights to inventions (utility models), etc.

Taking these legislative initiatives into consideration, it is safe to say that recently some headway has been made towards upgrading the legal framework for the protection of intellectual property rights in Ukraine. At the same time, thorough changes in the efficiency of the work of courts, law-enforcement and customs authorities are also required to really change the situation. 

Eduard Tregubov is a managing partner at Salkom


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