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Cablegate: Ukraine: Ipr Enforcement Cooperation Group

VZCZCXRO4649
PP RUEHLN RUEHVK RUEHYG
DE RUEHKV #2265/01 3241131
ZNR UUUUU ZZH
P 191131Z NOV 08
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 6743
INFO RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
RUCPDOC/USDOC WASHDC
RUCNCIS/CIS COLLECTIVE
RUEHSF/AMEMBASSY SOFIA 0040

UNCLAS SECTION 01 OF 03 KYIV 002265

SENSITIVE
SIPDIS

STATE FOR EUR/UMB AND EB/TPP/IPE
STATE PLEASE PASS TO USTR FOR BURKHEAD/GROVES
USDOC FOR 4201/DOC/ITA/MAC/BISNIS
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYCK
SOFIA FOR MLAMBERTI

E.O. 12958: DECL: N/A
TAGS: ETRD KIPR ECON UP
SUBJECT: UKRAINE: IPR ENFORCEMENT COOPERATION GROUP
ADDRESSES COUNTERFEIT AGRICULTURAL CHEMICALS

REF: KYIV 821 and previous

1. (SBU) Summary: GOU, Embassy, and industry
representatives discussed efforts to combat counterfeit
agrochemicals at a November 14 IPR Enforcement Cooperation
Group (ECG) meeting. Constructive GOU-industry dialogue on
this topic continued several days later under the auspices
of the European Business Association. GOU interlocutors
recognized the danger presented by counterfeit
agrochemicals and expressed a desire to improve
enforcement. The GOU remained tight-lipped regarding a
major seizure made two years ago, however, and we pressed
the government to be more transparent with industry on such
cases. Ukraine does not yet have an effective procedure
for destroying counterfeit agrochemicals, but GOU officials
at least identified the agency with overall responsibility.
GOU reps also recognized the need to increase transparency
in granting agrochemicals market approval. Post will
consider further steps to encourage improved enforcement in
this area. End Summary.

2. (U) On November 14 Ukraine's State Department of
Intellectual Property (SDIP) hosted the eighth meeting of
the IPR Enforcement Cooperation Group (ECG), with
participation of numerous industry representatives. (Note:
See reftel for previous ECG meetings. End Note.) This ECG
meeting focused on combating counterfeit agricultural
chemicals. The European Business Association followed up
on November 18 with a roundtable of its own on the same
topic.

3. (U) The following is a list of key participants in the
ECG meeting:

GOU
---
Valentin Chebotaryov - Deputy Chairman, SDIP
Iryna Vasylenko - Head of Enforcement Division, SDIP
Olena Shcherbakova - Head of European Integration and
Int'l Cooperation Division, SDIP
Yuriy Shafray - Head of IPR Division, Ministry of
Internal Affairs

Industry
--------
Svetlana Matveyeva - DuPont
Alexey Filatov - Vasil Kisil & Partners Law Firm
(handling DuPont patent cases)
Maurice de Billot - Monsanto
Olena Fomina - Monsanto
Sergey Lobov - Dow AgroSciences
Valentina Nesina - BASF
Natalia MacMaithghon - Pakharenko & Partners Law Firm
(representing CropLife International)

Counterfeit Agrochemicals - A New Priority
------------------------------------------

4. (U) Chebotaryov and Deputy Econ Counselor noted that the
issue of counterfeit agrochemicals was a new one for the
ECG. Deputy Econ Counselor stressed that, while the
problem was a complex and challenging one, the GOU could
make significant progress if it worked closely and
constructively with industry.

5. (U) Shafray gave a short briefing on recent cases
involving counterfeit agrochemicals, noting that such cases
had become more of a priority for law enforcement given the
clear threat to the environment and plant, animal, and
human health. Police had launched 15 criminal cases over
the last two years involving distribution of illegal
agrochemicals and had also detected some illegal
production, albeit in relatively small amounts. Shafray
noted that police could hold suspected counterfeit products
for only 24 hours and said that help from industry in
conducting analysis was therefore critical.

"Uzin Case" - Mum's the Word
----------------------------

6. (SBU) Fomina and de Billot asked for an update on the
status of the large seizure of counterfeit agrochemicals

KYIV 00002265 002 OF 003


made in 2006. (Background Note: In 2006, the GOU stopped
and seized a shipment of approximately 500 metric tons of
counterfeit agrochemicals, with a potential sales value of
$2.5 million, from China. The shipment contained fake
products of several international companies, including
Monsanto, Dow, and DuPont. The seized goods were initially
held at a facility in the city of Uzin, but there were soon
rumors that part or all of the shipment had "disappeared,"
presumably sold off by corrupt government officials. The
GOU was slow to provide details, although law enforcement
officials told us informally that the State Security
Service (SBU) had taken possession of the seized goods and
was conducting an investigation. Recently, industry reps
heard rumors that what was left of the shipment was moved
to a different facility in the city of Shostka. End Note.)

7. (SBU) Chebotaryov and Shafray said that they were unable
to discuss the details of the case, but at least confirmed
that the SBU was in fact responsible. Econoff noted that
an SBU official had attended almost every other ECG
meeting, and lamented his absence. Econoff also emphasized
that the GOU needed to open a more serious dialogue with
industry on this case in order to make progress.
Chebotaryov responded that SDIP would circulate a report on
the ECG meeting to other agencies, including the SBU, and
would encourage the SBU to be more forthright in providing
information on the case.

8. (U) Marek Luczak, head of Syngenta's Kyiv office and
Chairman of the European Business Association's
Agrochemical Committee, delivered a similar message at the
November 18 roundtable, urging the GOU to be more open in
providing details on seizures.

Destruction
-----------

9. (U) Chebotaryov noted that legislation passed as part of
WTO accession gave the GOU the necessary authority to
destroy counterfeit goods and commented that the GOU was
still working out how destruction would work in practice.
(Note: The GOU has a fairly effective procedure in place to
destroy optical discs, but destruction of other goods,
particularly potentially dangerous chemicals, has proved
more challenging. End Note.)

10. (U) Shafray and Chebotaryov clarified that, once a
court issued the appropriate ruling, the State Executive
Service (SES), under the Ministry of Justice, took
responsibility for destruction of all counterfeit goods.
In the case of chemicals, said Shafray, the SES would rely
on experts from the Ministry of Environment, Agriculture,
and other related agencies, but the SES remained the
responsible agency. (Note: Ukraine's capacity to destroy
agrochemicals remains quite limited, with only two capable
facilities in the entire country, and the GOU often has to
send chemicals to a third country for destruction. End
note.) Fomina noted that destruction of agrochemicals can
be quite expensive and expressed concern that such costs
could prevent progress.

11. (U) At the November 18 roundtable, Oleksandr Sokolov
from the Ministry of Environment and Alexey Filatov, a
lawyer for DuPont, said that the Law on Agrochemicals and
corresponding implementing regulations needed amendment to
clarify the procedures for destroying counterfeit
agrochemicals. Other participants agreed but argued that
the GOU already had sufficient legal authority to improve
IPR enforcement in this area right away.

Patent Linkage
--------------

12. (U) Fomina and Matveyeva complained that patent linkage
for agrochemicals remained weak and urged SDIP's patent
authorities to coordinate more closely with agencies at the
Ministries of Environment and Agriculture responsible for
granting market access. Chebotaryov accepted the criticism
but noted that the GOU had to be careful in stopping
registration of suspected patent-infringing products. If
such agrochemicals later proved not to be patent-
infringing, he said, the producer could sue the government,

KYIV 00002265 003 OF 003


or launch an unfair competition case.

13. (U) Industry reps argued that the agencies responsible
for granting market access could at least do a better job
of publicizing registration applications, so that patent
holders would have more time to address the courts.
Vasylenko agreed that the GOU agencies could revise their
procedures to increase transparency and said she would
reach out to them.

Comment: SDIP Struggling to Coordinate
--------------------------------------

14. (SBU) The poor attendance from key GOU agencies at this
ECG meeting was concerning. SDIP is supposed to serve as
the policy coordinating body for IPR issues, and we have
invested heavily, with mostly positive results, in building
SDIP's capacity. Chebotaryov suggested that a follow-up
meeting, if deemed necessary, be hosted by the Embassy in
an effort to raise the meeting's profile and attract better
GOU attendance. Indeed, following the meeting,
Shcherbakova revealed frustration that so many other
agencies had apparently ignored SDIP's request that they
attend. End Comment.

TAYLOR

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