KIEV, Ukraine -- The United States has initiated an investigation against Ukraine regarding protection of intellectual property rights.
In its annual “Special 301” Report on protection of intellectual property rights (IPR) the U.S. Trade Representative designates Ukraine a Priority Foreign Country (PFC) due to severe deterioration of enforcement in the areas of government use of pirated software and piracy over the Internet, as well as denial of fair and equitable market access through the authorization and operation of copyright collecting societies.
Discussions and public hearings on the issue will be held on July 18.
In turn, vice PM Konstantyn Hryshchenko declared that designating Ukraine as one of the main violators of IPR is not quite true to the actual state of affairs in this sphere and does not take into account effort of the government to improve the situation.
According to the official, protection of IPR is a priority task under the program of development of innovation economy and IT industry, and the country has reached significant results since the year beginning.
In particular, the government has started legalizing software, being used by the executive branch of power and allocated 100 million hryvnias ($12.3 million) for these purposes.
Separate decree of the Prosecutor General sets public prosecutor's supervision over observance of IPR in all ministries and departments.
Moreover, the parliament has passed in first reading two draft bills on strengthening responsibility for violation of copyright, including in Internet.
At the same time, Hryshchenko admits that Ukraine still has a lot to do to provide proper protection of intellectual property rights in the country.
"We count on support of our American and other foreign partners, and the decision of the U.S. Trade Representative does not help much. However, the Cabinet will continue taking measures on strengthening respect to IPR and will seek the revision of Ukraine's status in the "Special 301" Report in six months," the official said.
ForUm has asked experts, market operators and special-purpose state agencies on possible consequences of the decision for Ukraine.
Andriy Kulikov, managing partner of A Ventures Capital company:
Designating Ukraine as the world biggest pirate, the U.S. probably wants to set an example for other countries, like this is what you can expect if you do not meet world standards on fighting piracy and protection of intellectual property.
However, such demonstration punishment will harm Ukraine's image and economy.
The fact is that the investment climate in Ukraine is still developing and improving, mostly thanks to Internet and IT sector, but the "pirate" status can kill all the efforts at the grassroots level.
Vitaly Leshan, political expert:
The State Service on Intellectual Property started developing a draft bill on copyright and related rights in 2010.
The bill stipulated to oblige all data centers to ban pirate websites at first request of right holders and in case of refusal to prosecute for violation.
The draft bill had passed its first reading in 2010, but was not included into agenda of the next parliament.
However, international organization kept insisting on reformation of the legislation on copyright and related rights, and in February the parliament started developing a new draft bill.
At the same time we should not forget that piracy in Ukraine has become a part of social culture.
It appeared in 90s when the economy withdrew into the shadows.
Thus, the question of licenses is related to basic social problems, and until we solve these problems, at least partially, the situation will not improve.
Vitaly Kulik, director of the Research Center for civil society problems:
It is obvious that for the formation of civilized legal field in Ukraine we should observe international standards on intellectual property and copyright.
It is also obvious that the problem cannot be solved in one minute, but we should keep trying.
As the saying goes, walk and ye shall reach.
Pirated software is so popular in our country not because we are bad, but because in chaotic 90s there were hard factors for such situation.
Reasoning was obvious: why to buy an expensive license if there is a possibility to get it free of charge.
Moreover, many common citizens still cannot afford buying licensed Windows, Microsoft, etc.
Put it crudely, if everyone had used licensed software, the development level of IT technologies in our country would have been way lower.
However, if we want to reach the world standards and be considered a developed country we have to learn to stop freeloading and establish modern rule of law.
For any man of sense the choice is obvious.
Oleksandr Mamunya, patent counsel, partner of the legal firm "Vasyl Kysyl and partners":
The legislation of Ukraine on intellectual property is outdated and needs changes.
No amendments have been adopted since 90s.
And if 15-20 years ago the country had up-to-date legislation and big problems with its realization, today the problem remains but the legislation is no longer up-to-date.
Russia, for example, is working hard on improvement of the situation on intellectual property - forms special courts, changes law, etc.
We seem to be very close neighbors, but Russia is way ahead in understanding of importance of the role intellectual property plays in the economy.
Oleksandr Sydorov, deputy head of the Interior Ministry department on economic crimes:
Under the "Intellect" operation held by the department, we shut down 41illegal manufactories and withdrew counterfeit audio and video products at the sum of 2.4 million hryvnias, as well as fake brand products at the sum of 5.8 million hryvnias ($0.29 million).
Some days ago the Interior Ministry launched a new campaign on protection of intellectual property.
The most widespread violations of IPP include software piracy, falsification of consumer goods and illegal use of brands and logos of famous Ukrainian and foreign companies.
Thus, piracy includes not only computers and Internet.
Mykola Kovynia, chairman of the State Service on Intellectual Property:
To improve the situation we have worked out a draft bill "On protection of copyright and related rights" aimed at fighting piracy in the net.
In case of detected violation of their rights, right holders should appeal directly to our Service providing all necessary documents (originals and legalized translations for foreign companies).
At the same time, right holders should address a hosting-provider, which host pirated content, and the latter should inform its administration within two days.
Our Service has ten days to consider the appeal, run investigation and publish the list of addresses, which host pirated materials.
Administrations of resources-violators have two weeks to provide documents proving legitimacy of content distribution.
Once received the documents the Service has ten days to investigate and decide whether there is a crime, as well as to inform administrations about the decision.
If the content is recognized pirated, a hosting-provider must block the access to the files or cut off the violator from Internet.
Data centers are also obliged to break contracts with sites, caught publishing pirated content for three times in one year.
I believe the adoption of this law will enable us to fight piracy more effectively.
Dmytro Shymkiv, director general of "Microsoft Ukraine":
70% of software being used in Ukraine is counterfeit, and this is a big problem, as we face billions of losses.
Moreover, we can be excluded again from the generalized system of preferences, as it happened in 2012.
Sanctions were removed later thanks to the agreement reached between the Cabinet and Microsoft, but Kiev has failed to observe the agreement.
Losses may make up to $90 million, but it is not the only risk we face.
Ukraine and U.S. signed a number of agreements on protection of investors, and under these agreements sanctions may be severer.
We speak about billions.