Conclusions of the 14th EU-Ukraine IPR Dialogue – Kyiv, 6 July 2016
On 6 July 2016, nine months after the previous meeting, the 14th meeting of the EU-Ukraine IPR Dialogue took place in Kyiv. The meeting was one of the highest profile Dialogues to date – with the presence of Stepan KUBIV First Deputy Prime Minister, Minister of Economic Development and Trade of Ukraine, two Deputy Ministers (Natalia MYKOLSKA Deputy Minister of Economic Development and Trade of Ukraine - Trade Representative of Ukraine and Vladislava RUTYTSKA Deputy Minister of Agrarian Policy and Food of Ukraine for European Integration) and one member of the Rada (Victoria PTASHNYK). The Ukrainian government expressed a lively interest in attracting investment in Ukraine and both sides recognised that better protection and enforcement of intellectual property rights is needed in Ukraine in order to stimulate job creation and economic growth through supporting and encouraging innovation and technological development. The Dialogue chair on UA side was again Ms Lena Minich, Head of EU Integration Department in Ministry of Economic Development and Trade (MEDT) and the Ukraine IP Office (SIPSU) counterparts mostly remained the same as last year.
During his speech, the 1stDeputy Prime Minister stressed the importance to improve the IP environment and foster innovation in Ukraine and the Government already approved the reform concept. Intellectual property and innovation are priority for the new government; therefore, Ukraine is taking action to implement the reform in line with the international and EU standards. To this end the government is willing to tackle the corruption in the area, put on end to online piracy, protect databases and computer programs better, strengthen the fight against counterfeiting on the borders and reform the collective right managent system in Ukraine. He also underlined the establishment of the National Office of Intellectual Property, which will replace SIPSU and get extra functions, more power and will be supervised by MEDT. The new national office will be independent, transparent, with a separate budget and highly qualified, well paid personnel, regularly consulting the business and the EU. Ukraine is promoting the IP reform also in Canada, the 1st Deputy Prime Minister and the Deputy Minister of Development and Trade paid a visit there recently. In relation to the IP reform the Deputy Prime Minister also underlined that a coalition agreement was signed with the RADA and an action plan, a roadmap and a strategy to implement the action plan were adopted by the government.
Natalia MYKOLSKA Deputy Minister of Economic Development and Trade of Ukraine - Trade Representative of Ukraine added that they have an ambitious reform concept approved by the government on intellectual property to gradually adjust their IP laws to the European standards. On 5 July there were two IP related items on the agenda of the RADA, but none of them passed. Nevertheless she emphasized that they have supporters in the RADA. These drafts on copyright and trademark would be imortant steps in the implementation of the DCFTA. She thanked the work of the Twinning Project. The MEDT already stopped the registration of new collective management organizations and cancelled one from the register. UA emphasized that they had established a specialized patent court. The EU side reiterated its commitment to Ukraine expressed through the continuing Dialogue process, the DCFTA, the Twinning Project and technical assistance. The EU welcomed the dedication expressed by the Ukrainian government as well as the new reform concept and the IPR National Agency. On the other hand the EU underlined that improvement of the whole IPR sector is necessary to foster investment and to create high quality jobs. Counterfeiting exploites creativity and innovation and generates corruption, leads to organized crime, encourages tax evasion and undermines the economy. It also noted that the EU and UA have an established channel of work – the Twinning project, which has the full backing of the European Commission and asked that the MEDT support this. It reminded UA that the Association Agreement between the European Union and Ukraine entered into force on 1 January 2016 and urged UA to make progress with the implementation. The EU also expressed its disappointment regarding the recurrence of specific issues that remain unresolved year after year (counterfeit agrochemicals, national TV and radio not paying royalties, internet piracy, customs, problematic collective right management system) and underlined that IP enforcement is key to improve the current situation.
Vladislava RUTYTSKA Deputy Minister of Agrarian Policy and Food of Ukraine for European Integration stressed that the fight against counterfeiting and the protection of geographical indicasions are priorities for the new minister. The Deputy Minister gave an update on the situation of counterfeit agrochemicals. She explained that for Ukraine this is a serious problem as the substances contained in these products are dangerous and poison the land. Ukraine is working with international organisations (e.g. Europol and Interpol) to remedy the problem e.g. by trying to check substances at the border – since these chemicals are often imported and sometimes just pass through Ukraine. With the help of Europol and Interpol the ministry trains the customs officials how to identify counterfeit pesticides. The ministry intends to set up a database for the counterfeit pesticides with their description in order to protect trademark owners and consumers. The ministry will use mass media to warn farmers to the counterfeit agrochemicals. The EU side expressed its grave concerns that Ukraine seems to lack market control mechanisms and adequate policies on storage and destruction of counterfeit plant protection products, undermining public safety, and urged the UA side to launch a special operation against the producers and importers of these illegal goods. The new law on special confiscation is also worrying since it prevents the proper destruction of these goods. The EU also recommended to the ministry to cooperate more closely with the rightholders who have the motivation and knowledge to tackle the problem. The UA side promised to change the Criminal Code in order to enable again the destruction of the counterfeit goods, to prepare a report on customs results in 2015 and 2016 concerning counterfeit agrochemicals and to involve the brand owners in the fight against counterfeit pesticides.
The UA side underlined that they worked on adjusting their GI legislation to the EU standards, refused the registration of trademarks infringing EU GIs and facilitated and supervised the phasing out of the UA trademarks identical or similar to the EU GIs. The EU side stressed the relevance of GI protection in rural development and encouraged UA to register its own GIs and profit from GI protection. It also ephasized that a 3 million euro technical assistance on GIs is on its way. In September a scoping study will be prepared and the main project will start in the beginning of 2017 with the setting up of the legal and control system of GIs and the administrative capacity for the protection and enforcement.
Victoria PTASHNYK, member of the RADA supported the IPR reform and the work of the Twinning Project. The draft law on trademarks is very important, it was already registered a year ago in the competent committee and it was presented to the RADA several times, but has not passed yet. The draft is supported by international and European trademark associations, the EU and the US. She underlined the importance of the changes in the judiciary and the establishment of a specialized patent court. The selection criteria for this court will be set out in the near future and they would appreciate getting advice from the EU on this. The EU side welcomed that SIPSU makes their pending trademark applications database searchable/accessible free of charge. The EU recommended to set out this obligation by law. The EU stressed also that it is also indispensable to allow refusal or invalidation on the grounds of bad faith and to enable rightholders to oppose trademarks filed in bad faith. The EU raised concerns about the quality of examinations and the opposition procedure, because the current system gives too much discretion to the authority to accept or reject an opposition. The EU side critized that in order to prove trademark use, courts require that both the purchasing and the selling take place inside Ukrainian territory. This poses a problem to trademark owners which conduct business in Ukraine (e.g. via the Internet) without having a physical presence in the territory. There is no specific law regulating the status of domain names, the procedure of their registration, licensing and transfer. The EU side would like to see a faster progress to bring the trademark law in compliance with the Association Agreement. The representative of SIPSU assured the EU about their willingness to comply with the EU standards and the Association Agreement. The Agreement obliges them to publish the trademarks, so the database is not just a pure favour by the SIPSU. On domain violation they would appreciate to see best practices. The assessment of evidence by the courts cannot be influenced, because that would violate the independence of the judiciary.
The representative of the Ministry of Health didn’t come to the meeting, so UA didn’t present its official position on pharmacheuticals. The EU side raised concerns about the law on compulsory licensing, there are no clear criteria defining circumstances under which the government can consider and grant compulsory licenses. The conditions for grant should be aligned with the conditions provided in WTO TRIPs Agreement. The EU underlined that there is no hierarchy between fundamental rights and intellectual property; compulsory licenses cannot be used to favour generic local drug producers. Ukraine had already adopted and put in place a system establishing a patent linkage which was welcomed by the innovative pharmaceutical industry and the EU supports it, because it provides protection – at least at the stage of the court proceedings. The EU side raised concerns about the regulatory data protection in Ukraine, because the status of the reference drug is not checked during registration of a generic drug. Due to this problem, generic drugs got marketing authorization weeks after that the original drug had been put on the market in Ukraine. The Parties agreed that UA will send in writing the official position of the government on pharmacheuticals and the Doha Declaration.
The UA side presented the IPR reform progress and the draft laws which are in different stages of the legislative process. The following draft laws were prepated by Ukraine: draft laws on trademarks, industrial designs, geographical indications, topographies of semiconductor products, harsher punishment and stronger protection of IPR (amendments to the Criminal and Customs Code), inventions and utility models, copyright and related rights and the enhancement of IP protection. The EU side expressed grave concerns for the slowness of the implementation of the DCFTA. Five draft laws were prepared by the Twinning Project and none of them passed. The EU endorsed in general the draft law on online piracy which introduces a notice and take down procedure, but warned that it has be ensured that clearly pirate services or structurally infringing websites are not able to benefit from the safe harbour provision in the law. It is crucial to modify the definition of intermediary service providers to ensure full compliance with EU-UA Association Agreement. The EU stressed also that there is a need for dissuasive sanctions and website blocking injunctions. UA side agreed to give an update on the legislative process in every three month.
The Ministry of Economic Development and Trade got the budget for the legalization of the softwares of the ministry and they cooperate with Microsoft. Other public bodies also will legalize their softwares.
The UA side presented the new cybercrime unit of the police. 51 people will work for the unit and 12 of them will deal with IP related crimes. The unit will be operational from the beginning of August and conducted by experts of the OSCE, ISITAP and MIA. The staff participated in a training on the protection of intellectual property rights in the International Police Acedemy in Budapest. The Cybercrime Unit plans a session on the methods of detention and documentation of online piracy. In June the police discovered a criminal group which was active in counterfeiting and they ran a successful operation, seized thousands of tons of goods. The EU side supported the establishment of the new cybercrime unit and enlisted the most problematic pirate sites in Ukraine and asked whether the police took action against these. The police had successful operations against torrent sites, but they have not taken action against the websites enlisted by the EU.
The State Fiscal Service held a presentation on the recent developments in Ukraine concerning customs. The customs authority prepared five protocols for IPR customs rules violation and a draft law for the implementation of the new EU IPR customs regulation. The elements of the new draft are the following: new IPRs fall under border measures, new definition for counterfeit goods and new customs producres, new measures to handle small parcels and simplified destruction procedures. UA thanked the training provided by the Twinning Project for the customs officials, but they would appreciate getting technical assistance too. The EU side underlined that even though the new Customs Code last year broguht some positive developments, there are still major problems when it comes to customs activities. There is a lack of effective procedures and legal norms governing the destruction of seized counterfeit products and equipment used for their manufacture. The State Execution Service may dispose of the goods without asking consent from the IPR holder and rightholders are not allowed to participate in the destruction process. There are no adequate facilities to destroy certain types of counterfeit products (e.g. pesticides) and there is a need to simplify the process to destroy small consignments of counterfeit goods without the rightsholders needing to give separate consent in relation to each destruction. The UA side showed willingness to find solutions to the problems raised by the EU, the draft law is in the pipeline and soon it will be submitted to the RADA.
The representative of the judiciary presented the recent and forthcoming changes in the judicial system of Ukraine. A new specialized patent court was established. UA has already prepared the statute of judges and new rules for court procedure are in the pipeline. The UA side provided statistical data on the number of criminal and civil court cases and the fines collected from infringers. The EU side raised concerns that it is difficult to obtain preliminary injunction in Ukraine. Expert opinions in trademark proceedings are unnecessary and costly, the rightholders should be involved. There should be provisions for both imprisonment and fines as available criminal sanctions for wilful infringement. The maximum fine should be also increased. The UA side agreed to work on the issues raised by the EU.
The UA side held a detailed presentation on the current collective right management system in Ukraine providing statistical data and figures on the royalties collected and distributed for rightholders. They acknowledged the pressing need for structural change and the Ministry of Justice ordered to stop the registration of new CMOs. MEDT held a detailed presentation on the new reform concept of collective right management, which would follow the Brasilian model with one single state owned collector entity built on the current UACRR and numerous CMOs. UA doubts that the Twinning proposal would prevent the corrupt people from continueing their illegal collective right management activities in Ukraine. They emphasized that the draft law was supported by the rightholders and it would provide the possibility for performers, producers and authors to join the entity and the state would ensure the transparency. The EU underlined the pressing need to adopt without further delay the draft law on CMOs prepared under the Twinning Project. The current situation with 18 CMOs causes irreparable damage to the legitimate interests of thousands of local and international music rightholders. The EU stressed that the new draft would create an anachronistic monopoly system of collective management for copyright and related rights jointly, which is fundamentally contrary to the global norms of collective management systems and also the international standards. The global norm is to separate in legislation the CMOs managing the 2 sides of the music sector (authors’ and related rights), while leaving it to the rightholders themselves to decide if, when and how to cooperate jointly. Draft 4461 is fundamentally contrary to the majority of provisions of the CRM Directive too. The international organizations wrote a letter to the Prime Minister to express their concerns about this new draft law. As a reaction to the concerns of the EU they replied that the proposal of the Twinning Project would not guarantee the transparency and effectiveness of the system. The EU side promised to send its comments on the draft law.
The representative of the public television and radio channels explained that they didn’t have enough budgets to pay for the foreign content but from the end of 2016 they will be ready to pay. The EU side called on Ukraine to comply with its international obligations and the DCFTA to pay royalties to the foreign rightholders for the music and films used.
The representative of the Twinning Project gave an overview of the project, the draft laws prepared, the Digital Patent Library established and the trainings provided for the customs officials, judges and patent examiners. The UA side expressed its gratitude for the experts who had participated in the Twinning Project and assured the EU side that it was worth for everybody. The EU side considers that the Twinning Project was a lost opportunity since - even though the EU supported them - none of the laws prepared by the project was adopted by the RADA.
The Parties agreed to publish a joint report of the IP Dialogue by mid-September and UA side promised to send an update of the legislative process in every three months.