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Ukraine increases severity of punishment for violating IP rights

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QArea Team
QArea Team Marketing Manager
February 13, 2006
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February 14, 2006 – On February 09, 2006 the Parliament of Ukraine approved bill No. 8068 "On Introducing Changes to Penal Code (in the Part Dealing with Intellectual Property Rights Protection (TRIPS))".

World Trade Organization logoBecause at present penal and administrative rules fail to provide proper protection of intellectual property (IP) rights (as required by the multilateral agreement on trade related aspects of IP rights), which exerts many foreign and especially American vendor companies that would like to outsource their projects to offshore software development companies in Ukraine, and which may affect Ukraine's aspirations to enter the World Trade Organization (WTO) and the European Union (EU) as well, the Ukrainian Parliament increased the severity of punishment for violating IP rights.

From now on, unauthorized playback, distribution of matters of science, literature and art, computer software and databases, phonograms, videograms, and unauthorized copying thereof by either officials or organized crime groups shall be penalized with a fine of 2 to 3 thsnd tax-free allowances of individuals or imprisonment for 3 to 7 years (recently, there was a fine of 500 to 1,000 tax-free allowances of individuals or imprisonment for 2 years).

The bill also specifies damages of heavy, extra heavy and sizeable amount.

As provided by these changes to the law, a person will be charged in case of: violating a copyright and associated IP rights, violating rights to an invention, utility models, industrial design, IC topography, plant species, innovation, unauthorized use of product or service trade mark, brand name, strict indication of source, due to which damages of sizeable amount have been caused – with a penalty equivalent to 20 tax-free allowances of individuals.

As it was stated by the Office of the United States Trade Representative on January 23, in recognition of the Government of Ukraine's efforts to improve the enforcement and protection of intellectual property rights, U.S. Trade Representative Rob Portman announced that the United States will reinstate Generalized System of Preferences (GSP) benefits for Ukraine and lower Ukraine's designation under Special 301 from Priority Foreign Country to Priority Watch List. Now the Generalized System of Preferences extends its privileges over Ukraine to provide excuses for duties on import of some 3,400 products.

"I commend the Government of Ukraine for its sustained efforts to crack down on copyright piracy and urge the government to continue their efforts," said Ambassador Portman.

In 2001, when significant illegal manufacturing of optical media products, such as CDs and DVDs, was occurring in Ukraine, the Office of the US Trade Representative designated Ukraine as a Priority Foreign Country and repeatedly urged Ukraine to take steps to address this problem.

Reinstating GSP for Ukraine by US government was made possible after, in June-July 2005, the Ukrainian Parliament being induced by the government made punishment options more rigorous against violating IP law, as well as abolished a must of obtaining an identification code by importers. This change had a major role since earlier small parties of discs were impossible to be shipped to Ukraine due to time spent on obtaining such identification code was too long.

"Since the legislation passed, Ukraine has been actively inspecting plants licensed to manufacture optical discs, conducting raids against businesses involved in commercial distribution of IPR-infringing products, and imposing fines against infringers," Portman continued. "We strongly urge Ukraine to keep up these efforts, which reflect positively on the investment environment in Ukraine."

Thus, by having passed this bill, Ukraine fulfilled the requirement of TRIPS which is part of a set of agreements signed within WTO frame, and the Ministry of Economy of Ukraine anticipates Ukraine's joining World Trade Organization by July 2006.

About QArea: QArea is the one of the largest offshore software development companies in Eastern Europe since 2001. Its primary focus is brought upon application development for handheld devices, (j2me development), Symbian, WinCE (Windows Mobile), Palm devices and related. Also, QArea cultivates strong .NET and Java development teams performing standalone and web-application development services.

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