Ukraine starts serious efforts to fight piracy of CDs, recordings (11/11/01)

Ukraine starts serious efforts to fight piracy of CDs, recordings

by Roman Woronowycz
Kyiv Press Bureau

KYIV - While intellectual property rights violations remain a problem in Ukraine, there is reason to believe that law enforcement officials finally are making a determined effort, and perhaps even having some success, in the fight against the illegal production of audio and video products, computer software and compact discs.

In 2000 Ukraine achieved the dubious distinction of becoming the third leading source of pirated products in the world, tied with Indonesia and following China and Vietnam, according to the Business Software Alliance's Report on Piracy. Meanwhile, the International Federation of the Phonographic Industry listed Ukraine as the country that had made the least effort to protect intellectual property rights

The Ukrainian government began to make a serious effort to combat piracy only last year, after the United States, whose commercial interests are most affected by the illegal copying and sale of audio and video recordings, CDs and computer software, said it would impose economic sanctions on Ukraine if the country did not begin to fight the problem.

Ukrainian officials today are finally taking concrete steps to not only arrest violators but to find long-term solutions.

"We are planning to put an end to the sale of pirated products," said Mykola Paladii, director of the State Department of Intellectual Property, which is part of the Ministry of Education and Science, during a conference on problems in Ukraine with intellectual property rights held on October 31 and sponsored by the Razumkov Center for Economic and Political Research.

In the first seven months of this year investigators from the department recommended instituting 221 criminal cases against alleged violators of intellectual property laws, including 63 for copyright violations. Law enforcement officials have shut down 16 illegal manufacturing outlets and confiscated 235,000 audiotapes, 257,000 videotapes and 217,000 compact discs worth 7.8 million hrv.

Violations of all sorts are widespread, explained Volodymyr Sydenko, an economic expert for the Razumkov Center who presented the statistics, mostly because many manufacturers are not fully cognizant of their responsibilities and because Ukraine's laws on the matter remain vague and underdeveloped. Mr. Sydenko noted that fully half of the 12,000 manufacturers who were inspected by officials were found to have violated current intellectual property laws in some manner.

Fed up with Ukraine's foot-dragging in cleaning up its piracy problem after the country's Parliament again failed to approve a bill that would greatly strengthen the law on intellectual property rights, in August the United States suspended a special duty-free status for some Ukrainian products and threatened to begin economic sanctions.

The sanctions were to have taken effect on November 1, but Ukraine's Prime Minister Anatolii Kinakh won a reprieve for his country after his October 30 visit to Washington when he reached an understanding with U.S. Trade Representative Robert Zoellick that any penalties would be put off if the country's legislative branch moved on the draft law. U.S. Ambassador Carlos Pascual also has asked that the Verkhovna Rada review the fourth book of Ukraine's Civil Code, which is pending approval, to resolve conflicts between intellectual property law addressed there and other Ukrainian legislation.

In Washington Mr. Kinakh pointed out that had the United States imposed sanctions Ukraine faced the prospect of losing $400 million in trade.

Mr. Sydenko explained that another problem also must be tackled: which is a general acceptance among the population of pirated consumer products, along with the lower quality generally associated with such items.

He cited statistics produced by the Razumkov Center, one of the more respected think-tanks in Ukraine, in which 70 percent of respondents said they utilized counterfeited consumer goods. According to the survey, just over 42 percent of Ukrainians will purchase a cheaper product, even if it is obviously a copy, while another 40 percent said they found such goods completely acceptable. Only 20 percent of the respondents of the Razumkov Center study said they would never purchase illegally copied consumer audio, video or software products.

The reason is obvious, according to the report by Mr. Sydenko. "Low expectations are normal for the poorer elements of society," he explained.

Mr. Paladii of the State Department of Intellectual Rights said that a key to defeating piracy is to offer competitively priced tapes and software. He said the International Federation of the Phonographic Industry had assured him that licensed products on the Ukrainian market would cost no more than 15 to 20 hrv, about 5 hrv more than the 10 to 15 hrv price pirated products are getting today.

He pointed out that individuals and departments within the Ukrainian government also are guilty of utilizing pirated products because they are less costly, a major consideration for officials in Ukraine's cash-strapped government corridors.

He said the government needed to purchase an additional $100 million in computer software in the near future and expressed hope that leading software companies, such as Microsoft, would be ready to offer Ukraine an affordable price.

Mr. Paladii also explained that Ukraine must develop a Patent Court, which would be responsible for examining lawsuits brought against unlicensed producers.

In underscoring the progress Ukraine has made toward complying with international norms and requirements, Mr. Paladii explained that today in Ukraine there are only two factories manufacturing CDs, whereas earlier there were five, which allows the government to better control their production. He admitted that dozens of underground manufacturers remain, but noted that the government now requires any audio-video product or CD for sale in Ukraine to have a government stamp from his department, which allows consumers and inspectors to more quickly identify bootleg products.

The Ukrainian government announced another measure to control the manufacture of pirated CDs on November 2 when it stated that it would introduce a licensing regime for both imported and exported CDs, as well as the equipment for their production.

As Mr. Paladii explained during His October 31 presentation, no single action or legislation will rid Ukraine of its piracy problem, but a concerted and integrated effort should help to lessen the extent of it.

"If we can't get rid of piracy, we can at least cut it to a minimum," he said.

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