The Verkhovna Rada of Ukraine has adopted bill on protection of copyright and related rights

On 15 May 2018, the Verkhovna Rada of Ukraine has adopted at its second reading Bill No. № 7466 "On effective management of intellectual property rights of copyright holders in the field of copyright and related rights", based on the provisions developed under the Twinning programme in 2015. Amongst other things, it will allow for renewal of the Ukraine and the U.S. Generalized System of Preferences.

Namely, it will mean returning to the preferential duty-free regime for 155 Ukrainian goods in the United States. Adoption of the new law, together with establishment of the specialised Intellectual Property High Court in Ukraine, is unquestionably an indicator of the initiation of fundamental changes.

The adoption of this law is justified by: 1) partial GSP suspension (preferential duty-free import regime to the United States of 155 types of goods originating in Ukraine) due to poor IPR protection for the period of 120 days starting from 26 December 2018; 2) lack of effective regulation of the collective management organisation's (CMO) activities in Ukraine; it should be remembered that due to the lack of regulation the Ministry of Economic Development and Trade was unable to register new organisations, withdraw certificates in existing ones (even with evidence of significant abuse) or supervise their activities.

An additional impetus to the adoption of the law was one practice in particular: in 2017, Ukrainian CMOs collected royalties in the amount of EUR3.4 million (310 times less than in the UK, and almost 652 times less than in the US, compared with 2016).

The new law proposes to solve this problem by obliging these organisations to publicise on their websites (and keep up to date): their charter, membership conditions, the procedure for the seizing of rights (copyright holders could choose to leave the CMO at any time), standard licence agreements and tariffs, principles of reward distribution and annual activity report. From now on, CMOs are non-profit organisations (NPOs), and uncollected royalty payments will not appear to constitute a reward for the managers of CMOs.

These organisations must now take all appropriate measures to find the correct holder who is due the royalties collected. The income for an unidentified rights holder, or one who refuses to receive it, would be separately accounted on the balance sheet of the CMO for three years, following which period it will then be directed to the development of Ukrainian culture, as determined by the state.

Also, in accordance with the Ukraine-EU Association Agreement, the law will implement the main provisions of Directive 2014/26/EU of 26 February 2014 on the collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market.

This Law enters into force from the day following the day of its publication and applies to legal relations that arise after its entry into force, and, as regards the functioning of the electronic system of registration and accounting in the field of copyright and related rights, from 1 July 2019.

A further set of draft laws in the field of intellectual property have been developed to implement the provisions of the Association Agreement with the EU and which will create a favourable investment climate. They are currently at different stages of consideration in the Verkhovna Rada of Ukraine and, hopefully, will soon be adopted. An adequate level of legal protection of intellectual property rights in any country is a significant factor in increasing the consciousness of the societal development and the rule of law in the state.

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