An Expert's View about Intellectual Property Law in Ukraine

Posted on: 19 Mar 2012

The joint research of the Investment and Trade Foundation (ITF) and Cai & Lenard Law Firm on the protection of intellectual property in the Internet

INTELLECTUAL PROPERTY ON THE INTERNET: PROTECTION METHODS Cai & Lenard Law Firm, Ukraine Investment and Trade Foundation 2012 ABOUT THE RESEARCH A significant number of expert materials on issues of intellectual property protection are as follows: ?if you need a helping hand, the best place to look is at the end of your sleeve?. Anyway, it is still possible to protect yourself successfully, even on the Internet. This research shows the options, the practical results and trends of intellectual property rights protection in situations when violations occur on the Internet. The research is prepared as part of cooperation between the Foundation for Investment and Trade (ITP) and Cai & Lenard Law Firm for educational purposes to a wide audience, including IT industry professionals, management personnel, educational and research institutions of all levels, lawyers, authors, internet users. The Investment and Trade Foundation and Cai & Lenard Law Firm jointly own copyright to this research. Citing and duplication of the research are allowed for educational, non-commercial purposes providing notation of the source and copyright holders. Comments and feedback on this research are welcome. Please send them to the email addresses of the experts: and 2 ABOUT INVESTMENT AND TRADE FOUNDATION The Foundation for Development of International Trade and Investment ? Investment and Trade Foundation, ITF ? is the non-governmental expert organization, which was established with the aim of assisting foreign companies in doing business in Ukraine, while on the other hand supporting Ukrainian entrepreneurs in their efforts to export more. ITF is the research, information, and expert center in the field of international trade and investment in Ukraine. Headquarter of ITF is in Kyiv, Ukraine. Information about other researches of Investment and Trade Foundation can be found at ITF website: ABOUT CAI & LENARD LAW FIRM The Cai & Lenard Law Firm was founded in Kyiv in 2010. The key practices of the firm are commercial law, arbitration and legal support of investment projects. The Cai & Lenard Law Firm seeks to revive the best traditions of legal protection and support of business. The firm proposes a qualitatively new format of the business world cooperation with legal advisers. Publications and information about the Cai & Lenard Law Firm are posted on the website: 3 TABLE OF CONTENTS: The legal protection and public Dispute resolution on the protection of authorities in the field of intellectual intellectual property rights in Ukrainian property..........................................5 courts?????????????10 Plan of actions for the intellectual Consideration of domain disputes in property protection on the international jurisdictions??..??.12 Internet??????????...6 Gaps in the protection of intellectual The main difficulties of the intellectual property rights?????????.15 property protection on the Recommendations?????.??...16 Internet??????????...8 A. Offender identification?????...8 B. Evidentiary basis????????.9 4 THE LEGAL PROTECTION AND PUBLIC AUTHORITIES IN THE FIELD OF INTELLECTUAL PROPERTY In theory, intellectual property rights should stay protected all the time. Legislation of Ukraine in the field of intellectual property takes into account different areas, including new research and creative activities, and is designed to meet European and international experience. However, in practice the protection of rights on the Internet is not always successful, both in Ukraine and worldwide. The proof is a long and resonant fight against pirate sites, in particular, the known cases of file-sharing websites. A number of state bodies in Ukraine are entitled to clarify and/or protect intellectual property (IP). The State Intellectual Property Service occupies an important place among them; in particular, the state inspectors on intellectual property issues have such powers: ? to carry out scheduled and unscheduled inspections on the use of intellectual property rights; ? to issue binding orders in the field of IP; ? to review and seize documents, equipment and other items used with violations in the field of IP; 1 ? to execute protocols on administrative offences etc. If you need advice in the field of copyright and neighbouring rights, the application can be directed to the Division of Copyright and Neighbouring Rights of the State Intellectual Property 2 Service. Useful tips can be found on the website of the State Service . If violation has occurred in the area of a competition law (including violations on the Internet), the Antimonopoly Committee of Ukraine (AMCU) shall protect a possessor of a right. AMCU considers applications concerning protection in the field of economic competition, and adopts binding decisions. For this purpose, the law requires to provide AMCU with all necessary documents, objects, media, as well as give explanations and other information (including data with limited access). The State Service for Economic Crimes at the Ministry of Internal Affairs (MIA) has the right to carry out inspections for uncovering of violations related to intellectual property rights. Among other powers, the Ministry of Internal Affairs of Ukraine has authorities concerning: ? establishment and functioning of daily contact network for immediate assistance in the investigation of crimes related to computer systems and data; ? prosecution of persons accused of such crimes; 3 ? collection of evidence in electronic form . And, of course, along with the right to apply to the above agencies and departments there is an opportunity to negotiate peacefully with the offender or file a suit to a court or international institutions. The procedure and the effectiveness of such appeals, obstacles to the protection of intellectual property rights on the Internet, as well as ways to overcome them are shown below in the research. 1 Article 51-2 of the Code of Administrative Offences of Ukraine provides a fine from 170 to 3,400 hryvnias for violations in the field of IP. 2 3 The Law of Ukraine ?On ratification of the Convention on Cybercrime? PLAN OF ACTIONS FOR THE INTELLECTUAL PROPERTY PROTECTION ON THE INTERNET When it comes to the question ?Where should protection of the violated right begin?? it is comfortable to have at hand a sample plan of actions in such situations. Summary table of methods of intellectual property protection against infringements on the Internet can be summarized as follows: «Place» of violation Websites, social networks, blogs etc. Violation types Misuse of texts, 1. Fixation of violation* 4 graphics, music and 2. Offender identification and appeal to such person other content 3. Possible appeal to provider or hosting company (in some cases they are able to close the offending account) 5 4. Appeal to the State Intellectual Property Service 5. Complaint to the Department for Economic Crimes at local MIA authority 6. Production before the court (compensation of damage) or appeal to AMCU (protection against unfair competition) Improper use of 1. Fixation of violation* databases and computer 2. Offender identification and appeal to such person with demand 6 programs (in particular, to stop violation unlawful offer for sale, 3. Complaint to the Department for Economic Crimes at local free download etc.) MIA authority 4. Possible appeal to interested companies (e.g., Business Software Alliance, Microsoft) 5. Production before the court (compensation of damage) or appeal to AMCU (protection against unfair competition) Illegal use of a domain 1. Fixation of violation* name (including the use 2. Offender identification and appeal to such person with demand of someone else?s brand to stop violation name) 3. Production before the court (compensation of damage) or appeal to AMCU (protection against unfair competition) 4. Proceedings under the Uniform Domain Name Dispute Resolution Policy (UDPR) * Fixation of violations must be in accordance with the requirements of the law and be suitable for use in court and other bodies. 4 If it is a social network or blog, You should duplicate the appeal to the site administration. 5 There is a possibility of appeal in an electronic form: Remember that the electronic address is not official, and that the work of inspectors on intellectual property issues turns around now only. 6 If it is a social network or blog, You should duplicate the appeal to the site administration. 6 The table shows only approximate options and cannot include all peculiarities of such doings, as well as results of the appeals. In practice it is rather difficult to involve state authorities when petty offence was committed and no significant commercial benefit was obtained. It is also essential to take into account the time limit set for the response of state bodies to citizens? appeals. General term for such response is 30 days, but, of course, in some cases it can be less. Selecting among alternatives of appeals one should consider that although the State Intellectual Property Service has much data on protection of intellectual property rights, the work of inspectors on intellectual property issues is not organized at such quality level as MIA officials? practice. At the same time, MIA will be truly concerned with the appeal if the offence inflicts 7 enough damage for criminal prosecution . On the whole, the state bodies of Ukraine only start to gather experience on prevention of intellectual property rights violation on the Internet because of legislation novelty and variety of violations in this sphere. 7 Damage have to exceed 10730 hryvnias in 2012 (refer to Articles176 and 177 of the Criminal Code of Ukraine). 7 THE MAIN DIFFICULTIES OF THE INTELLECTUAL PROPERTY PROTECTION ON THE INTERNET Whatever authority shall be chosen, the difficulties in intellectual property rights protection on the Internet are connected with two main problems: Problem of Problem of due offender evidence identification collection A. Offender identification 8 The High Commercial Court of Ukraine (HCCU) interprets that in case of information layout on the Internet with public access, person whose rights were violated in such way may file a suit against an owner of a website containing these data (even if information was not published 9 by the website owner). Also Plenum of the Supreme Court of Ukraine states in its Ruling that an author of such information publication and the website owner identified by a plaintiff are proper defendants. Now it is more difficult to identify the website owner because of restrictions of the Law of 10 11 Ukraine ?On protection of personal data? . Due to this Law, the WHOIS base, previously convenient for registrant identification, does not contain necessary data (if a registrant is a natural person). In such cases there are several alternate solutions: ? filing an appeal/attorney?s inquiry to an administrator/registrar for relation concerning the 12 registrant (as well there is a paid service for disclosure of such information ?Informer? ); ? sending of appeals concerning violations to MIA and the State Intellectual Property Service, which may detect an offender during investigation; ? impleading the registrar of domain name with following claims to detect the registrant and 13 substitute the defendant ; ? filing an injunction application to the court, receiving of court ruling containing request to 14 the registrar to provide data on the registrant ; 8 In its informational letter ?On some issues of the application of legislation on information by commercial courts? ? 01-8/184 of 28.03.2007. 9 Ruling ?1 of 27.02.2009. 10 Specified Law came into effect on 01.01.2011. 11 12 13 While employing this method one should not only take into account Article 33 of the Civil Procedure Code of Ukraine to substitute the defendant, but also the provisions of Article 31 of the Code, under which the plaintiff has the right to change the subject or cause of action PRIOR to the hearing on the merits by the court. 14 Data about the owner of the website can be claimed from LLC ?Hostmaster?, which currently administers the system of registration and record of domain names and addresses in the Ukrainian segment of Internet, according to the requirements of Articles 30 and 65 of the Commercial Procedure Code of Ukraine (Informational letter of HCCU ? 01-8/184 under date of 28.03.2007). 8 ? there is a possibility of offender identification at the proceedings in the World Intellectual 15 Property Organization (WIPO) Arbitration and Mediation Center . It is necessary to consider that the defendant can transfer the domain to other persons after the identification. B. Evidentiary basis The second difficult task is to collect the proper evidence of the violation. Due to the fact that the violation occurs on the Internet it is important to understand the specific character of the evidence collection. The important thing in fixation process is that the courts do not generally accept a simple printout of webpages from the Internet as adequate evidence. At once, the majority of Ukrainian notaries refuse to certify a copy of such pages. On the other hand, the court may agree to conduct a study of evidence at the specified Internet address. However, the contents of the webpages can be changed or removed at the time of such verification by the court. There are a couple of way outs from this vicious circle: ? video recording of the entire process of the webpage visiting at the specified Internet address and stay on the page of the violation; the video will be provided as evidence; ? use of webpage copies certified, for example, by notaries of the Russian Federation (they have such powers, in addition, such documents do not require additional verification in 16 Ukraine) ; ? application for the expert examination to the Research-and-Development Center of Forensic Examinations for Intellectual Property under the Ministry of Justice (the examination confirms the presence of violation, the fact of use of intellectual property, etc.); ? certification of copies of the webpage by a lawyer (on the basis of Article 6 of the Law of Ukraine ?On Advocacy?); ? administrative offence report protocol on administrative violation made up by the state inspector on intellectual property issues is the appropriate evidence of the violation. In addition to evidence of the violation, it is necessary to prove the existence of intellectual property rights to the object of the dispute. If the right has not been registered in the prescribed manner, the plaintiff can prove such a right in the court. In particular, if the first publication of the work took place on the Internet, one may use the methods mentioned above. For example, certification of the webpage printout with published work or the search results webpage, social network or blog webpages, which usually displays the date of publication of the material. A method of sending the work by mail or e-mail (which also fixes the date of sending) can be used as well. When evidence is collected, the party whose intellectual property rights have been violated should prove the amount of compensation. The success rate in such cases is shown in the next chapter of the research. 15 16 Article 13 of the Convention on legal assistance and legal relations in civil, family and criminal matters (Chisinau, 1993) 9 DISPUTE RESOLUTION ON THE PROTECTION OF INTELLECTUAL PROPERTY RIGHTS IN UKRAINIAN COURTS In December 2011 the Unified State Register of Judgments contained more than 70 civil and commercial cases involving violations of intellectual property rights on the Internet and more than 170, which refer to the Internet. Violations were very diverse ? from parasitism on someone else?s trademark in a domain name to usage of social networks to advertise and profit from the product of another person?s authorship. General statistics for decisions on such matters can be represented as follows: Judgements on civil Judgements on commercial disputes disputes 20% 17% 46% 43% 33% 40% Satisfy claims in full Satisfy claims in full Satisfy claims in part Satisfy claims in part Dismiss a claim Dismiss a claim At first sight, the discrepancy between the decisions in civil and commercial cases is not so great; however, it is more noticeable in the context of qualitative differences. In particular, many decisions on commercial disputes were appealed to higher courts (sometimes ? more than once). Moreover, the main subject of disputes varied significantly: Subject of civil disputes 10% Writings 13% Trade marks 40% Other creations 17% Photographs Fine art 20% 10 Subject of commercial disputes 13% Music 33% Writings 15% Trade marks and domain names Other creations Software and databases 18% 21% 17 Thus, unlike in civil cases music as a predominant subject of commercial disputes . Also, contrary to civil disputes, there are cases concerning the protection of intellectual 18 property rights to software and databases among commercial disputes . There are not many of them: only 13% of the total number of commercial disputes, but the decisions on such disputes are held dominantly in favor of copyright holders. It should be noted that civil as well as commercial disputes in the field of intellectual property have a common feature. Thus, the majority of suit dismisses occurred on procedural grounds due to: ? lack of evidence; ? improperly constructed case (improper plaintiff, the mismatch of evidence with legal requirements, erroneous qualification of the violation); ? incorrect statement of suit claims (including disputes concerning domain names). The total number of cases concerning the protection of intellectual property on the Internet dealt with by the courts of Ukraine remains very small. This may be due to the difficulties of the defendant identification and the evidence collection discussed in the previous chapter and, as well, the peculiarities of the regulation of some intellectual property subjects on the Internet. In 19 particular, when it comes to the usage, delegation or cancelling of domain names , the parties 20 face an alternative regulation set by the Internet Corporation for Assigned Names and Numbers (ICANN), as well as specially designed Uniform Domain-Name Dispute-Resolution Policy. This Policy is the topic of the next chapter of the research. 17 It is necessary to clarify that such disputes were initiated by a few organizations ? copyright holders and not by many persons. 18 According to the information of Business Software Alliance (BSA) Ukraine ranks among countries with high piracy in the field of software and databases: piracy rate in 2010 amounted to 86%. 19 We should notice that the assignment of domain names to the objects of intellectual property is still controversial. 20 The court decision in case ? 14/190 under date of 25.10.06 even contains a point of view that ?the enforcement of the legislation of Ukraine to such relationships is impossible since the organization of the Internet at creation was defined by the U.S. government and it is controlled by the ICANN?. 11 CONSIDERATION OF DOMAIN DISPUTES IN INTERNATIONAL JURISDICTIONS Thus, ICANN developed a set of regulations for the control of domain names delegation, 21 including Internet Domain Name System Structure and Delegation . Also there is the Uniform 22 Domain Name Dispute Resolution Policy (UDRP) , which should be applied by domain names 23 registrars and the Rules for Uniform Domain Name Dispute Resolution Policy that should be followed by organizations entitled by ICANN to settle disputes concerning domain names. Other documents regulating this sphere are developed on the basis of ICANN rules (for example, the .ua domain rules), and cannot contradict the ICANN rules. But absence of contradictions does not mean entire match of these rules in different domains. In case of .ua domain, it means, for example, that a domain administrator cannot delegate the domain on lawful and proved by documents appeal of a person, unless there is reasonable court decision or a registrant?s written consent. Indeed, if the dispute arises not between the parties, which concluded an agreement with reference to the specified domain rules, courts in Ukraine don?t consider these rules. Thus, a person who is not a part to such agreement but whose rights are violated cannot use domain rules in court for the rights protection. Generally, one should understand that ICANN does not control a content, spam or copyright violations on the Internet; it coordinates the system of Internet names. Similarly, empowered by ICANN Ukrainian domain administrator ?Hostmaster? and domain registrars do not control actions of website owners and usually are not ready for copyright protection of third parties (except on court decisions). They are responsible for integrity of such information, its public accessibility and possibility of introduction of changes by entitled persons only. In accordance with the legislation of Ukraine providers are not liable for the informational content transmitted through their networks, published by a customer (Article 40 of the Law of Ukraine ?On telecommunications?). In pursuance of the Rules of Delivery and Obtainment of Telecommunication Services (Order of the Cabinet of Ministers ? 720 under date of 09.08.2005) operators, providers of telecommunications even do not have the right to control informational content, which is sent or received by the customer (subscriber), and the liability and risks for information resources usage on the Internet are held personally by the customer (subscriber). Nevertheless ICANN obliges to control the performance of rules set by this corporation 24 and administer customer?s complaints . Currently the majority of disputes concerning misuse of domain names are heard at the 25 WIPO Arbitration and Mediation Center and National Arbitration Forum on the basis of UDRP . 21 22 23 24 Such complaint may be lodged online: 25 The list of all agencies approved by ICANN: 12 Let us look into the spheres of disputes which are predominantly referred to WIPO Arbitration and Mediation Center: WIPO Arbitration and Mediation 40% 37% 35% 30% Copyright Trade marks 25% 22% 18% Patents 20% IT and telecommunications 13% 15% 10% Others 10% 5% 0% At that, according to WIPO Arbitration and Mediation Center, domain disputes from 1999 to 2011 have concerned 35 thousand domain names and involved participants from 153 countries. The success rate of domain disputes resolution is bound to astonish (the number of decisions has exceeded 20 thousands): WIPO decisions on domain disputes 1,42% 13,76% Domain transfer Rejection of claims Domain cancellation 84,82% 13 The USA National Arbitration Forum heard more than 17 thousand disputes on domain names issues from 1999 to 2011. Decisions were as follows: Decisions of the USA National Arbitration Forum on domain disputes 0,25% 10,60% Domain transfer 12,04% Remission of claims Rejection of claims Domain cancellation 75,32% Additionally, 0.4 % of claims were satisfied by the National Arbitration Forum partially and 1.37% of them stay under consideration. It is advisable to take into account that the Uniform Domain Name Dispute Resolution Policy (UDRP) is enforced for domain zones .com, .net, .org, .info, .biz, .mobi and for 65 top- 26 level domains . There is no .ua domain among them. The high success rate of appeals to such centers on domain disputes settlement is rather 27 balanced by high cost of this procedure as well as the fact that compensation of damage or cost of legal services do not fall within competence of these centers during disputes hearings. 26 27 14 GAPS IN THE PROTECTION OF INTELLECTUAL PROPERTY RIGHTS To resume, currently there are such major gaps in the protection of intellectual property rights in Ukraine: ? poor liability for violations in the field of intellectual property (in particular, the absence of criminal liability for usage of pirate copies); ? lack of human resources and well-established mechanisms at state bodies for supporting persons whose intellectual property rights were violated; ? distrust of the court system; ? ability to shrink away or essentially delay the execution of the judgment. As regards the Internet, difficulties connected with the collection of evidentiary basis and offender identification are added to the mentioned gaps. However, there is one positive moment concerning the development of judicial remedy of intellectual property rights on the Internet. Previously courts (and society) did not consider layout of works on the Internet as its act of use; so it did not require the consent of an author/possessor of right. Nevertheless, such statements are definitively disposed by judicial practice, in particular, by 28 recommendations of High Commercial Court of Ukraine . It means that such obstacle for the protection of intellectual property rights on the Internet was eliminated. 28 Item 29 of Recommendations of HCCU ? 04-5/1 107 under date of 10.06.2004: «layout of works on the Internet with public access is a reproduction within the meaning of Article 1 of the Law of Ukraine ?On copyright and neighbouring rights?, therefore Article 15 of this Law should be enforced in such situation?. 15 RECOMMENDATIONS The State Intellectual Property Service prepared (in the basis of WIPO documents) its technical recommendations concerning the protection of copyright and neighbouring rights on the Internet. Among these are: ? receipt of special program identification codes for copyright subjects: ISBN, ISAN, DOI and others (depending on the subject), which allow to observe the subject and protect its integrity from misuses; ? creation of web-depositories, which formalize the work on the Internet and determine whom it belongs to; ? the use of digital marks (digital water marks); they are invisible while looking at them, but consist data that helps to identify an author; ? the use of digital signature; ? the cryptographic transformation that allows to restrict or eliminate the copying (for example, the SCMS system); ? the access limiting to data (locked or paid websites), digital envelops; ? anti-copy method (prohibition of copying on the ?D-ROM); ? finally, cross subsidization. Some legal advice would be helpful as well. The following actions can significantly reduce the complexity of the protection of intellectual property rights violations on the Internet or, in some measure, to prevent such violations. So, it is important to: ? register the copyright or provide proofs of authorship, obtain the necessary documents proving the existence of intellectual property rights; ? be attentive to determination of the legal regime at the publication of intellectual property subjects; ? quickly and wisely react for violations including right violation recording to provide the evidentiary basis for further protection; ? address to relevant state bodies with appeals concerning violations and file claims to court to stop violations and compensate the damages. 16
Posted: 19 March 2012

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