ULASP: Is the Education Ministry destroying the music market of Ukraine?

On August 30, 2013, the Education and Science Ministry of Ukraine issued order No. 1349 on a procedure for defining the empowered collective management organization that is to collect and distribute royalties for the use of phonograms and videograms published for commercial purposes.

According to specialists of the Ukrainian League of Intellectual Property and Allied Rights (ULASP), the document will negatively influence the development of the Ukrainian music market.

The procedure for determining the organization empowered to collect and distribute the royalties for the use of music is cause for concern. The order says that state agencies will select the collective management organization that has the largest number of agreements with foreign collective management organizations.

"There are fears that in this case no Ukrainian collective management organization, or singer, or producer, will have any influence on this organization. I don't want to speak about anti-Ukrainian moods in state structures, but it's strange for the Education Ministry to publish a document that obviously hinders the development of the national music market and deprives their representatives of the right to vote," said the head of the legal department at ULASP, Oleksandr Nikin.

He said that the role of this future organization in the development of the Ukrainian music market will be important, as it will define how to collect royalties, from whom and how much, and to whom the royalties are to be paid, which is very important. Ukrainian law on intellectual property and allied rights has many gaps. One can assume without fear that the following rules of payments will be established: all or most of the money collected will go abroad. This is money that could be used in Ukraine for the creation of new music content - music, songs and videos.

"In this situation it would be more beneficial for Ukrainian singers to be members of Russian collective management organizations, not Ukrainian ones, as Russian organizations, as foreign ones, have importance for defining powers, while Ukrainian ones do not. We understand that the distribution systems could be built in several ways - including in ways that prevent Ukrainian content from getting a part of this money," Nikin said.

Shortly before the signing of the document, market players-representatives of the collective management organizations, companies that own intellectual property rights and music producers discussed the document and unanimously declared it unacceptable.

In addition, the order violates the law on the permit system in the economic operations area. The law says that all permits are established only by Ukrainian law, but not by orders of ministries. This was done so as not to repeat the experience of the 1990s, when each ministry published many orders, including ones on licensing types of operations.

The Education Ministry decided to return to the past and issued a permit document - the order on the empowered collective management organization, which is obliviously a permit document, as it is impossible to carry out operations in line with Article 43 of the law on intellectual property and allied rights.

"This order is evidence of the fact that the empowered agencies of Ukraine will act for the sake of foreign organization rather than for the development of the Ukrainian market. The order was signed by the Justice Ministry on August 5, 2013, before a visit of Vice Premier Kostiantyn Hryschenko to the United States, where he spoke about: the protection of intellectual property rights. Who will protect the rights of Ukrainian collective management organizations, producers and singers? The question is open," Nikin said.

About the ULASP:

The Ukrainian League of Intellectual Property and Allied Rights is a non-profit organization for the collective management of property rights. It was created in 2011 to improve the situation in the sphere of the use of intellectual property and allied rights to the public performance of music of Ukrainian and foreign authors in retail and catering outlets.