Expert Opinion (#04 April 2014)

Intellectual Property Rights: Emerging Issues

by Anton A. Zhdanov

From the time of Ukraine’s independence in 1991 the state authorities of Ukraine began the process of developing a new system of legislation that has to regulate relations in different spheres of public life, and would establish an effective mechanism to protect the rights and interests of the different subjects of law. While a lot of legal areas had to be developed ab initio, some legislative purposes for state bodies were simplified with the necessity of implementation of a number of existing standards and rules into domestic Ukrainian legislation.

The second approach is relevant for the institute of Intellectual Property because at the moment of declaration of Ukrainian independence the main ideas for the existence of intellectual property rights, the requirements for their legal protection, and many other aspects were regulated and standardized by a set of international agreements. Among these agreements in the sphere of intellectual property we can identify the Paris Convention for the Protection of Industrial Property of 20 March 1883, the Madrid Agreement Concerning the International Registration of Marks of 14 April 1891, the Berne Convention for the Protection of Literary and Artistic Works of 9 September 1886 and others.

Ukraine’s accession to the above-mentioned international agreements takes them into the force as a part of its national legislation. However, it also imposes certain obligations with regard to the necessity to make domestic legal acts comply with the principles of ratified agreements.

Although the requirements of international agreements were formally fulfilled by Ukraine, as of today, we can’t see a truly effective mechanisms that would help the subjects of IP rights to guarantee appropriate legal protection in the case of violations.

In this case we are definitely talking about a real mechanism of remedies because from the outside situation with protection of IP rights in Ukraine looks optimistic considering existence of a set of legislative acts that are regulating the essential relationships in the IP sphere. However, the key issues of intellectual property rights protection are set out in a lot of special laws, such as the On Protection of Rights to Trademarks and Service Marks Act of Ukraine, On Copyright and Related Rights Act of Ukraine, On Protection of Rights on Inventions and Utility Models Act of Ukraine, etc.

At the same time, we need to consider that significant legal acts in the area of IP rights were developed and adopted in 1990s. It was a time when the understanding of the essence of intellectual property, as well as the general importance for the State to protect those rights, weren’t properly evaluated. Despite changes, as for today the problem of inconsistencies between the contents of current regulations and the contemporary development of intellectual property does not appear to have been resolved. The structure of legislation concerned to IP rights primary focused on the settlement of the technical aspects of IP rights registration, and to a lesser degree, to solve the global issues with respect to formation of effective system of IP rights protection, encouraging and developing the industry in general.

The imbalance of existing legislations with real-time requirements in the sphere of IP rights affects the subjects of intellectual property to implement their rights; and does not allow them to be flexible with the results of technical progress and appearance of fundamentally new IP objects for legal protection.

It is no secret that a lot of problems in Ukraine for IP rights protection are connected with the examination of eligibility proceedings in the course of IP rights registration. The basis of such problems is not only the lack of legislative regulation or absence of the necessary specialists or financial resources. A lot of issues are concerned with the general policy of the State with regard to the system of patent and licensing authorities. Nowadays this system is considered as the source of budget revenues only, but not as an important mechanism to stimulate the development of innovation processes, producing certain economic and social effects.

However, the proper organization of patent and licensing system has a high value for initial building of IP rights protection framework. In practice the violation of the rules of legal protection provisions is the first reason for contesting registered rights, which may lead to the impossibility of their further effective and proper protection.

The next problem that we should pay attention to is the imperfection of legislation in the part of identification and proving of facts of IP rights infringement. This is especially so where it concerns the Internet network, where the possibility of promptly tracking, fixing and suppression of IP rights infringement is really essential for possessors of rights. Although such mechanisms of recording (for example, authentication of the web-page contents by the notary) are well known in many countries, the implementation of equal rules in Ukraine is still in process. As a result, the holders of the right are forced to spend a lot of time and to use other resources to prove the fact of violation only. At the same time, there is a risk of the court refusing such evidence in the subsequent trial due to inadmissibility of evidence (for example, the court may not accept as evidence the provided results of examination and assign a new forensic examination).

The general situation with the judicial system of Ukraine is that it, unfortunately, is not able to ensure fast and efficient resolution of IP disputes and does not contribute to increasing IP rights protection efficiency. Both the disregard of the necessity of application of certain procedural rules for IP disputes resolution, and the absence of a clear specialization of Ukrainian courts in IP rights infringement disputes, are the reasons for this problem. Despite the specificity of IP rights disputes, that are preferentially related to the resolution of technical issues and require the involvement of experts, the courts usually apply the general strategy of the trial in the part of evidence collection and evaluation, and on another procedural issues. In sum total, in the absence of a clear specialization of judges and developed court practice on different issues of IP litigation, this leads to a delay in court proceedings, or awarding unpredictable judgments in contradiction to the legal nature of particular IP rights violation or existing remedies for IP rights infringement. As a result, we can see a situation when the dispute on trademarks infringement, that is absolutely clear for the IP rights possessor, is considered by the court for 3 or 4 years. Besides this, contradictory decisions can be awarded by different courts on equal disputes, and even positive decisions could not be enforced due to imperfections in the execution process (in particular, there is no clear mechanism of execution of court decisions on the IP rights disputes). Obviously, a long and unpredictable trial, which requires serious additional expenses, cannot stimulate the IP rights owners to protect themselves in each case of violation. Accordingly, awareness of the likely impunity contributes to increasing the violation level of IP rights. Nevertheless, the Ukrainian judicial authorities are trying to correct the situation by providing the different Courts Interpretation and Courts Brief on particular issues of IP rights disputes. But in any way we need more system-based work in this area to establish a unified court practice that is understandable and clear for IP rights subjects.

We should also note the lack of alternative protection mechanisms, that is different from court protection, promotes the impunity of IP rights infringement. For example, despite the existence of criminal responsibility for IP rights violation under several articles of the Criminal Code of Ukraine, cases where parties are really brought to responsibility are extremely rare in practice. The reasons for this are the difficulties in proving signs of a crime, especially in the part of damages, as well as the lack of experience of IP rights infringement investigation.

These and many other negative factors are not new for the subjects of relations in the sphere of Intellectual Property, and the risks on carrying out the functions related to the creation of IP rights objects are well-known too. Certainly these problems are known to relevant state authorities and special subjects related to IP rights protection. But paradoxically, the situation has not seen any change for a long time and today it is impossible to define when problem issues will be resolved. This process requires efforts to be combined both in the sphere of legislative improvement, and development and unification of court practice in the area of IP with the implementation of practical mechanisms of IP rights protection by the owners. This process does not require the implementation of extremely new institutions of law or increasing the number of regulatory acts. We just need an executable system, which could give an opportunity for authors to understand how they will protect their rights before the moment of creation of the IP object.

Although Ukraine today really faces many new challenges and many vital areas of life need to be reformed, we want to believe that the problems of IP rights protection will not be at the end of this list. Moreover, the declaration of the Ukrainian course for EU Association obliges us to speed up the work in this direction, because the existence of an effective system of IP rights protection is an essential condition for the completion of the Association process.

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