TRANSPARENT RULES OF COPYRIGHT LEVIES PAYMENT FOR IMPORT OF BLANK MEDIA CARRIERS AND EQUIPMENT ARE A PREREQUISITE FOR IPR PROTECTION
The system of protection of intellectual property rights in Ukraine at first glance seems to be ensured by multiple legislative acts, but the effectiveness of this system is questionable. One of the concerns flagged by business community is the procedure of copyright levies payments for the import of equipment and blank media carriers that may be used for the private reproduction of copyrighted works. The EBA Consumer Electronics Committee, which involves internationally known manufacturers of consumer electronics, believes that the protection of IPR - particularly in the private reproduction of copyrighted works - is a vital aspect of preserving the rule of law in Ukraine. Currently the Committee expresses its concern over the novelties that are to be introduced into copyright legislation by the Draft Law №6523 “On Amending Some Legislative Acts on Copyrights and Related Rights” (hereinafter referred to as “the Draft Law”) adopted by the Parliament at first hearing on 1 February 2011. Among other provisions the Draft Law is to introduce a requirement stipulating that the customs clearance of relevant equipment and blank media carriers should be possible on the basis of a Certificate of payment of copyright levies by the importer. In other words, in the case of the adoption of the Draft Law in its current wording, customs clearance of relevant products would depend on the receipt of a Certificate from a Collective Management Organisation (CMO) that is authorised to collect and distribute copyright levies. It is worth saying that the CMO is a non-profit organisation, but not a government agency, thus the level of accountability of such organisation may be vague. The Committee has already expressed a number of arguments against the abovementioned novelty, and moreover suggested an alternative procedure for copyright levies payment. The Committee would like to draw attention to the fact that the requirement to provide the Certificate of copyright levies payment for customs clearance of products could bring about delays in customs clearance and additional expenditures for storing products at customs warehouses. The business community opposes the introduction of such novelty, as the increased list of documents necessary for the customs clearance of equipment and blank media carriers would present an additional hurdle in customs clearance procedures. The Draft Law sets more favourable conditions of copyright levies payment for Ukrainian producers of equipment and blank media carriers than it does for importers. According to the Draft Law, Ukrainian producers have to pay the levies after the actual sale of products, while importers have to pay levies even before the goods enter the Ukrainian market. Such a discriminatory norm could be considered as a violation of Part 4 of the Article III of the General Agreement on Tariffs and Trade and could harm fair trading on the country's market. Also, the abovementioned novelty of the Draft Law does not comply with Ukrainian legislation. On August 6, 2010, the Higher Court of Ukraine concluded that the Draft Law should to be amended, as it contradicts Article 445 of the Civil Code of Ukraine. According to the Civil Code of Ukraine, authors have the right to receive compensation for the actual use of their works. Therefore levies paid for equipment and blank media carriers before they are even imported onto the territory of Ukraine not only contradicts the Civil Code of Ukraine but also seems to be rather unreasonable. Finally, when establishing the system of IPR protection in Ukraine, it would be beneficial to consider the experience of states where IPR protection for private reproduction works effectively. In multiple EU member-countries copyright levies are paid after the import of relevant products, and in some cases even after the sale of products to final consumers. For example, in Portugal copyright levies are collected in the form of tax included in the price of a product. In Italy, copyright levies are determined as a percentage of prices paid by a retailer. A system of copyright levies payment that implies the importers being billed for the import of relevant products and the levies being paid within a reasonable timeframe after customs clearance was established in the Russian Federation after a lengthy debate between business and state authorities. In general, international experience suggests that paying copyright levies after the import of products into the customs territory of the state is a widespread and standard practice. Considering the abovementioned, the EBA Consumer Electronics Committee strongly believes that it is essential to amend the Draft Law and introduce the mechanism of delayed payment of copyright levies within a defined period of time after the actual import of relevant products. Finally, the Committee believes that straightforward and transparent procedure of copyright levies payment by all players on the market of consumer electronics in Ukraine would create conditions for equal competitive market environment. For additional comments please contact Maria Savchenko EBA PR and Communications Manager by telephone: +38 (044) 496-06-01, +38 (067) 215-81-95, or by e-mail: maria.savchenko@eba.com.ua INFORMATION: European Business Association (EBA) - the premier organisation for foreign business in Ukraine - brings together over 850 European, Ukrainian and international companies. The EBA was established in 1999 as a forum for discussion and resolution of problems facing the private sector in Ukraine. This initiative of business people was supported by the European Commission. Being a non-profit Association of legal entities, the EBA sees its core mission as representing the interests of European and domestic investors in Ukraine, and improving the investment climate has been the EBA’s major concern since the moment it was founded. Please visit our web-site for additional information www.eba.com.ua. The priority tasks of the EBA in 2011 are: reducing obstacles for investment, support for different instruments promoting economic integration with the EU and facilitating positioning of Ukraine as a country attractive for investment and business partnership.