Cablegate: Ukraine Ipr Conference Hosts Latest Round in Fight


DE RUEHKV #2260/01 2540855
P 110855Z SEP 07





E.O. 12958: DECL: N/A

REFS: A) KYIV 1205

B) KYIV 348
C) 2006 KYIV 4359
D) 2006 KIEV 3810
E) 2006 KIEV 3414
F) 2006 KIEV 3293
G) 2006 KIEV 3145

1. Summary: Ukraine's annual IPR Conference, held September
3-7, brought together GOU officials, industry reps, and
international experts to promote better IPR protection in
the country. Discussion of possible Copyright Law
amendments and the operation of royalty collecting
societies proved most contentious. Although the courts
have now confirmed the revocation of the license of a rogue
and long-irksome collecting society, Ukraine's collective
management system remains in need of reform. Post has
insisted that Washington be able to review any legislative
amendments before they are sent to parliament, now not
expected to occur until 2008. The conference also allowed
participants to explore alternative IPR enforcement methods
and how to align Ukraine's IPR practices more fully with
Europe. Post thanks USPTO and the Copyright Office for
providing top-notch guest speakers for the event. End

"Ukraine Will Never Return to the Dark Days"

2. Ukraine's State Department of Intellectual Property
(SDIP) held its annual IPR Conference in Yalta, September
3-7. The approximately 200 conference participants
included a range of GOU officials, industry
representatives, and international experts from
institutions such as the World Intellectual Property
Organization (WIPO). SDIP Chairman Mykola Paladiy opened
the event by reviewing progress on the IPR front, stating
that Ukraine would "never return to the dark days" when it
was listed as a Priority Foreign Country on the USG's
Special 301 Report.

Rogue Collecting Society Loses License

3. SDIP Deputy Chairman Valentin Chebotarov chaired a
special session on copyrights. SDIP officials briefed on a
recent court decision upholding the GOU's revocation
several months back of the license of Oberih, a rogue
royalty collecting society that had long drawn the ire of
both the domestic and foreign copyright industry (refs E-
F). (Note: Several contacts had told Econoff prior to the
decision that they feared Oberih had a good chance of
winning its appeal in court. End note.) SDIP's move, now
confirmed by the courts, closed a long-standing irritant
for the copyright industry.

Continued Disagreement over Copyright Law Amendment
--------------------------------------------- ------

4. Chebotarov admitted that Ukraine's copyright system
needed further changes, and said the GOU was still working
on revisions to the draft Copyright Law amendment to
clarify the functioning of royalty collecting societies.
He noted, however, that SDIP would finalize the draft law
only after further input from interested parties, and not
before the end of the year. SDIP officials outlined their
current thinking regarding possible legal changes,
describing a kind of two-tier collective management
system. One "authorized" collecting society (or at the
most two) would deal directly with all IP users. This
"authorized" society would collect royalty payments on
behalf of rights holders, but distribute them to various
other collecting societies operating in Ukraine, as
designated by rights holders. These second-tier collecting
societies would then be responsible for returning the
royalty payments to individual rights holders.

5. Matt Skelton, from the U.S. Copyright Office, and Mihaly
Ficsor, a highly regarded authority from the Central and
Eastern European Copyright Alliance, cautioned the GOU
against forms of mandatory or extended collective
management. If enshrined in Ukrainian law, such provisions

could unfairly and inadvisably reduce the rights of
copyright owners, they said. Skelton also outlined other
areas where Ukrainian royalty collecting societies could
play a positive role, such as enforcement -- helping to
bring pirates to court -- and lobbying -- advising the GOU
on possible legislative changes.

6. Boisterous disagreement quickly ensued. The quasi
state-run collecting society UASP recognized rights
holders' complaints about its operations, but defended
itself on the grounds that it was forming a new and
improved collective management structure. (Comment: We
suspect that this UASP body is SDIP's preferred candidate
to become the "authorized" collecting society sitting atop
their envisioned two-tier system. End Comment.)
Representatives of the two IFPI-backed royalty collecting
societies (the Ukrainian Music Rights League and the
Ukrainian Music Alliance) criticized the current version of
the draft Copyright Law amendment, and attacked UASP for
collecting royalty payments without authorization of the
true rights holders. Ignat Berezhny, head of the Ukrainian
Music Industry Association, emphasized the importance of
international cooperation and urged the GOU to provide an
English translation of any proposed Copyright Law
amendments for IFPI's analysis and comment. (Note: Post
has similarly requested an English translation of the draft
amendment so that the USG can review. SDIP has promised to
provide a translation after completing additional
revisions, and before moving the draft forward through the
government. End note.)

Alternative Enforcement Tactics

7. Erik Wilbers, Acting Director of the WIPO Arbitration
and Mediation Center, encouraged Ukraine to look to
mediation as an alternative to costly and lengthy (Comment:
and often corrupt) court proceedings. Deputy Chairman of
the High Commercial Court Viktor Moskalenko agreed that
court-ordered alternative dispute resolution could be
helpful, although several journalists present at the event
expressed doubt that Ukrainian society was "ready" for such
measures. Wilbers responded that mediation and arbitration
are in fact most useful in highly litigious societies.

8. Todd Reves, from the U.S. Patent and Trademark Office,
focused on border enforcement measures as a way to ease
pressure on law enforcement and courts and, in effect, to
get "the most bang for the buck" in combating piracy and
counterfeiting. Reves encouraged the GOU to use risk
analysis in order to most efficiently screen imported

9. Microsoft rep Daniil Klyuchnikov noted that the
corporation was shifting to educational and media
activities throughout Ukraine's regions (rather than just
Kyiv) as part of its reinvigorated anti-piracy campaign
(ref A).

Moving Towards Europe

10. Several speakers encouraged Ukraine to harmonize its
IPR procedures more fully with Europe. Jorg Weberndorfer,
from the Office for Harmonization in the Internal Market
(OHIM) urged Ukraine to consider adopting OHIM's standards
for issuing trademarks. Wilbers suggested that Ukrainian
companies include provisions allowing for WIPO mediation
when drawing up IP-related contracts. Laura Pazeraite, a
Lithuanian trademark lawyer, briefed on Lithuania's efforts
to harmonize its trademark system with Europe and OHIM,
providing a model for Ukraine.

Capitalizing on Ukraine's Intellectual Potential
--------------------------------------------- ---

11. Paladiy and Viktor Ivchenko, Chairman of the State
Agency on Investment and Innovation (more on this
organization to be reported septel), highlighted promoting
innovation as a GOU priority. Econoff emphasized that
increased IPR protection should be a cornerstone of any
pro-innovation policy. The conference also gave a range of

industry reps, from mineral water producers to coal mining
companies to software developers, the opportunity to
explore how to better protect their intellectual property
rights. For example, Sergey Malenkov, from the mining
equipment producer Dongiprouglemash, warned the audience of
how his company had erred by failing to file for a patent
on one particular invention quickly enough.

Comment: Copyright Victory a Hollow One?

12. Post had hoped that the revocation of the Oberih
royalty collecting society's license, if it could only be
held up in the courts, would lead to a significant
resolution of collective management problems. Indeed, we
encouraged SDIP's move through a demarche on our concerns
about Oberih (refs D and G), and during meetings of the IPR
Enforcement Cooperation Group by urging the GOU to do more
to address rights holders concerns (refs B-C). It is clear
that problems remain even after Oberih's demise, however.
Oberih continues to operate, albeit now without the SDIP
stamp of approval, as do other unscrupulous collecting
societies. Post also remains concerned by SDIP's penchant
for government control over the collective management
system and the prospect of a state-anointed "authorized"
collecting society playing an exclusive role. That said,
SDIP's desire to reform the system to make it easier for
the user to direct royalty payments to the proper rights
holder is understandable. We have made our desire to
review any proposed copyright legislation very clear, and
will follow up to ensure that Washington can review draft
laws before they move through the legislative process.

Thanks to USPTO and Copyright Office

13. Post sincerely thanks the U.S. Patent and Trademark
Office (USPTO) and the U.S. Copyright Office for the
participation of Todd Reves and Matt Skelton in the
conference. They added a much-appreciated level of
expertise, as well as an American point of view, to the


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