Intellectual Property

Legislation - what has been passed

Notwithstanding a significant reduction in the size of the intellectual property service market, an active law-making process is being observed for the first time in 20 years. A certain competition exists between agents involved in draft legislation; however, they show solidarity on one thing - intellectual property cases should be considered in economic courts.



Turbulent processes began after a long lull in intellectual property rights. Both the State Intellectual Property Service of Ukraine (SIPS) and the relevant Ministry of Economic Development and Trade (MEDT) showed their reformatory ambitions. The legal community and European experts actively joined in in the reform. Long-expected legislative practices appeared relating not only to specialized but also procedural laws.

This is just the beginning. But a promising beginning. What is most important is that reformers don’t get carried away.


Legislative boom

It all started with the signing of the Association Agreement with the EU, when Ukraine undertook heavy commitments in the part on adapting Ukrainian "intellectual" legislation to European legislation. This was under the responsibility of the relevant branch, which got a new leader in November 2014. The branch was headed by Alla Zharinova. Among the priorities of working in this position has been  making  improvements in the intellectual property field with the intention of attracting investments to Ukraine.

Now, a year after her appointment, Ms. Zharinova says that the implementation of European legislative acts on the protection of intellectual property rights can be considered a success. Moreover, the State Intellectual Property Service of Ukraine completed the task it was assigned  in their entirety as far back as July 2015, when the adaptation of Ukrainian law to EU law was completed, and by doing so has successfully fulfilled the government task on the respective Implementation Plan.

According to Ms. Zharinova, the sectoral ministry has received for approval four draft bills of national and social importance: on intellectual (industrial) property changes; on promoting the protection of intellectual property rights; on collective management of the property rights of copyright holders and related rights holders; on the settlement of copyright and related rights problems. SIPS experts have, together with the international experts of the Twinning Project intensified their efforts to prepare the so-called Anti-Counterfeiting Bill – on copyright and related rights protection on the Internet.

In the summer of 2015, the relevant ministry intervened in the reform process. Back then, an announcement was made not only about the draft legislation, but also about the reform of the Service itself. If the Ministry of Economic Development and Trade of Ukraine made some progress with legislation, then it progressed none with changes in the Service, though it may be for the better. In autumn, the ministry began the preparation of five basic bills which, according to the intent of the authors, shall be the basis for the reform of the intellectual property protection system in Ukraine. The ministry claims to have submitted for review all the bills of the SIPS of Ukraine. It is the Service proposals that form the backbone of legislative initiatives, the preparation of which is the responsibility of the MEDT working groups.

While some experts call on law-making parties to rush, as Europe stands on the cusp of fundamental changes in “intellectual” law; others say that maybe this is the reason not to hurry.

Aleksander Mamunia, partner and head of dispute resolution and intellectual property at the law firm Aequo, considers the overall intellectual property reform process as trends of the year. In his words the significant involvement of practitioners, lawyers and patent attorneys into the reform process can be seen, which includes the state agency’s work in this regard.

“The intellectual property law- making seems to be active enough, but rather less than organized and effective,” Mr. Mamunia emphasizes. “There is an evident competition between the sectoral ministry and the SIPS of Ukraine in the process of reforming branches and changing the law. In  the meantime, the Ukrainian Parliament has registered only one initiative of the executive branch of power. At the same time, a significant number of diverse bills that vary in their quality have been registered, submitted by various MPs, exhibiting all the chaos of this process in Parliament. The bottom line is that actual changes have not been made,” the lawyer says.

Despite the fact that the registration process of “intellectual” novelties in the Verkhovna Rada of Ukraine has already begun, it is too early to talk about the results, as the parliamentary legislative machine is ruthless towards draft bills on intellectual property, and in some cases – simply blind (though this may be for the better).

Alla Zharinova believes that the adoption of intellectual propriety legislative initiatives will have a positive impact on the public image of Ukraine and enable the position of our country in international ratings on the protection of intellectual property rights to be improved. This will, first and foremost, encourage the growth of its investment attractiveness for foreign investors and its recognition by the world community as a developed, civilized European country. “The SIPS has the finger on the pulse of events, and its matter of priority is the adoption of bills,” Ms. Zharinova says, summing up.


All roads lead to economic courts

The length of time that it take to examine cases on the protection of intellectual property rights is about the time that the discussion lasts about which jurisdiction, either general, administrative, or economic, should consider them. Perhaps it is necessary to introduce a specialized court in the field of intellectual property rights protection?

One of the government’s drafts on improving the legal protection of intellectual (industrial) property provides that all disputes are adjudicated in economic courts. Among other things, the authors of the document want to refer disputes over proprietary rights of intellectual property of a physical person for trial to economic courts too. It is obvious that such a formulation will not be a panacea for problematic issues of jurisdictions between general and economic courts (it is difficult to separate the proprietary and non-proprietary copyright rights of physical persons), but the norm (if adopted) will the basis for the centralization of practice in courts. Discussion about establishing a specialized court of cases in intellectual property protection will now be more and more frequent.

The Superior Economic Court of Ukraine (SECU) also supports a legislative proposal to preset disputes over proprietary rights of intellectual property of physical persons to economic courts. According to Valentin Palii, a judge of the fourth judicial division of the SECU, it will help to ensure the unity of judicial practice (with due account to the specialization of the judges of economic courts) and the hearing of cases of the specified category within a reasonable period of time.

In the context of court trends, disputes over trade marks prevail here. Thus, in 2015 economic courts examined and continue to examine the following cases: over the invalidation of law-enforcement documents (certificates of product and service marks, invention patents, utility models, industrial design rights); over the early termination of the certificate of product and service marks on grounds of its non-use for three years; over recognition of the right of prior use of a trade mark; over the discontinuation of the abuse of rights of a patent holder, certificate of product and service marks as well as cases in connection with the protection of exclusive proprietary copyright and related rights.

Valentin Palii says that in 2015 the number of cases in connection with the protection of exclusive proprietary copyright and related rights has grown. In particular, the number of cases regarding the recovery of compensation for the abuse of exclusive proprietary copyright and related rights.


Not by legislation alone

As to general market trends, Aleksandr Mamunia states there is a significant fall in the intellectual property services market in terms of registration services as well as court, transactional and consulting work. There is a tendency towards a reduction in the number of experts who have market work experience in this field; to dislocation of customer regional centers, under the control of which Ukrainian portfolios of intellectual property rights in particular are, from Russia to the countries of Central and Western Europe; to the commitment of Ukrainian experts to work within different jurisdictions, particularly in  member states of the Commonwealth of Independent States.

This year the executive branch embarked on software. Thus, the SIPS of Ukraine succeeded in changing an approach to software authorization. According to its chairman, the Service put forward an initiative to perform a public audit of the use of software applications in the bodies of executive power to determine the exact number and list of such software applications. A reminder: unlicensed software in government bodies is one of the stumbling blocks between Ukraine and the United States Trade Representative in “special 301”. As of the end of October of 2015, the Service had completed audits of 17 bodies of executive power.

“As practice shows, in contrast to bodies of executive power, which are bound to act in the capacity, expressly specified by the law,” says Alla Zharinova, “rights holders are ready for collaboration, relevant transfers, authorization of development of individual programs, discounting, as they are interested in the effective implementation of their own proprietary rights.”

In early October of this year, amendments to the Agreement between the WIPO and the SIPS were unanimously accepted as part of the 55th series of meetings of the General Assembly of member states of the World Intellectual Property Organization. These amendments allow the Service and expert institution Ukrpatent to exercise the functions of the International Search Authority and the International Preliminary Examining Authority.

This year was marked by specifically close attention on the part of the government to issues of intellectual property development and, according to Mr. Mamunia, the introduction of electronic publishing of applications for trade marks by the SIPS of Ukraine was the biggest event of the year.

And lawyer, IT and media law partner of the attorney association Juscutum, Dmitrii Gadomskii, is of the opinion that the key event, fortunately, never happened. “Attempts to ’force’ bills for copyright regulation on the Internet failed. If at least one of the texts was adopted (I saw three of them this year), Ukraine would not have avoided the Federal Service for Supervision in the Sphere of Telecom, Information Technologies and Mass Communications with all its usual close of Wikipedia, Lurk, jokes, wit and other antidotes to helplessness. I would like not to talk about it, but the law-enforcement authorities leave me no choice. Article 176 of the Criminal Code of Ukraine is still the most popular with our police. It is this article, on the basis of which judges issue sanctions for searches to be carried out of Ukrainian companies, followed by the seizure of laptops, servers, monitors and mouses. Even the rough years of police imperative in 2013 and 2014 did not see more discrediting of this article.”

According to Mr. Gadomskii, next year will bring the start of another war between foreign rights holders and Ukrainian business for changes in the copyright law relating to violations on the Internet. Just as before, rights holders will appeal to the next version of the United States Trade Representative Report on intellectual property law violation (“special 301”). Business will try to explain that it is the courts that should deal with civil-law relations, and not the police.

Apparently, a war will not begin with the Anti-Counterfeiting Bill only. We should remember the difficult market on the collection and distribution of royalties. As soon as European standards are fixed in national law, new problems regarding law-enforcement will arise. However, all this will be in the new year of 2016.



Intellectual Property

Michael DOUBINSKY (Doubinsky & Osharova)
Antonina PAKHARENKO-ANDERSON (Pakharenko & Partners)
Leading FIRMS
1 Pakharenko & Partners
2 Doubinsky & Osharova
3 Baker & McKenzie
1 Yaroslav OGNEVYUK (Doubinsky & Osharova)
2 Oleksandr MAMUNYA (AEQUO)
4 Alexander PAKHARENKO (Pakharenko & Partners)
5 Julia SEMENIY (Asters)
Oleg ZHUKHEVYCH (Gorodissky & Partners)
Irina KIRICHENKO (Ilyashev & Partners)
Anton KOVAL (Doubinsky & Osharova)
Anna KRAVCHUK (Patent Law Agency Synergy)
Taras KYSLYY (Egorov Puginsky Afanasiev & Partners Ukraine)
Vadim MIKHAILYUK (Mikhailyuk, Sorokolat & Partners)
Victoria Sopilnyak (Doubinsky & Osharova)
Oleksiy STOLYARENKO (Baker & McKenzie)