Protection of IP rights as a factor in economic development?

Intellectual property rights consist of personal non-property intellectual property rights and/or proprietary intellectual property rights. No one can be deprived of intellectual property rights or limited in their exercise, except in cases provided for by law.

Our Counsel, Ph.D., Attorney-at-law Kateryna Brodska told on the air of Ukrainian Public Interactive Television what intellectual property is and how to protect your rights to it.

Follow the link to watch Kateryna’s full video commentary.

The text version of the conversation is also available below.

― Ms. Kateryna, we want to talk to you about the protection of intellectual property rights, in particular, as a factor in economic development. First of all, we want to know how and whether in our country intellectual property can really generate income and also strengthen the economy?

Thank you, of course, it can and certainly brings. Perhaps not in the amount that would be desirable both for the enterprise that owns intellectual property and for the state, but it brings. Why? Let’s figure it out.

First, those using the intellectual property pay royalties or licensing fees. Of course, the owner company or individual benefits from this, but taxes must be paid on these payments, which are a direct benefit to the state.

In addition, the more enterprises use intellectual property, the more the added value of products increases, which results in an increase in value added tax. Of course, this is revenue for the budget.

In addition, we must not forget that registration of intellectual property and trademarks also requires the payment of appropriate fees, which is beneficial for the state. Official import of registered goods under well-known brands also requires mandatory payment of royalties or licensing fees in the context of customs duties. That is, of course, there is a benefit for the state and owners.

However, we are faced with certain problems, which are also related to counterfeit goods, when counterfeits are imported, customs duties are not paid, and, as a result, not only the owner, but also the state receives less profit.

However, if we carry out a direct sequence, it can be argued that the greater the investment, protection and number of registered intellectual property and trademarks, the greater the payment of taxes to the budget, and, accordingly, the benefit for both the state and the enterprise/individual who registered your intellectual property.

In this context, we can mention the negative experience that Ukrainian agricultural companies had. The lack of state protection (in particular, assistance to the state in registering plant varieties, etc.) over many years has led to the fact that we are now working for foreign partners. That is, Ukrainian agricultural owners, entrepreneurs, commodity experts, people who invented something registered their inventions abroad. Therefore, now Ukraine, instead of making a profit from its registrations (those breeding assets that exist in Ukraine), pays funds to foreign companies that have registered such plant varieties, for example, abroad.

In this case, we can immediately say that registration is part of the need to generate profit for both the owner and the state. Therefore, registration is part of the protection and development of the economy, both at the enterprise level and at the state level.

― Ms. Kateryna, how easy is it to register intellectual property? What is needed for this and how is it registered and protected by the state?

It is clear that this whole process takes quite a long time and takes about two years. This applies to trademark registration. However, there are, let’s say, interesting things in this process, since you can use these rights immediately, referring to the fact that we have already submitted documents for registration. This rule is used by many inventors who want to register their trademark.

However, we must not forget that there is a fairly large “layer” of intellectual property rights that are easier to use without state registration. We are talking about copyright, which arises with the person who created it from the moment the work is created. Here we can talk not only about the packaging design, but also about the website and its design (visual content). Again, you need experience and knowledge, albeit a small number, but quite specific regulations regarding the possibility and notification of other persons that the work is a protected object of intellectual property.

In addition, one should not forget about the possibility of protecting a trade secret, into which one can “sew up” something that can be protected without long-term registration.

But, in our opinion, as a company that has been providing professional services related to brand protection for many years, regardless of the ability to use such slightly protected intellectual property in terms of non-registration, registration of trademarks is desirable and recommended.

It should also be remembered that registration of the protection of intellectual property rights should take place not only in Ukraine. The point is that if an enterprise is interested in exporting, then registration must be in those countries where the enterprise intends to supply its goods. Why?

On the one hand, the company must protect itself from illegal acts of persons who may copy its packaging, as well as from counterclaims, since similar packaging and design may already be registered in other countries.

In jurisprudence, in applied legal practice, there is the so-called. “presumption of primacy”: the one who first registered an object of intellectual property owns the rights to it. And, as you know, brilliant thoughts do not arise only from one person. Therefore, you must always check what a person intends to register, position as his own creativity (here we are talking not only about a trademark, but, again, about what the design of an intellectual property object is), then you need to check whether a similar intellectual property object exists registered both in Ukraine and abroad in order to protect itself from possible illegal actions by other persons, as well as counterclaims.

― Ms. Kateryna, how do they punish at the legislative level in Ukraine those who use someone else’s intellectual property or appropriate it for themselves?

Thank you for the questions. In fact, in Ukraine there are quite diverse types of application of liability. We can recall administrative liability for illegal use of trademarks. And although the fine there is not too large – from 170 to 3400 UAH, interestingly, one of the types of sanctions is the seizure of all goods, as well as the equipment with which this product was produced (equipment, spare parts).

We can also recall criminal liability, which provides for imprisonment for up to two years, along with confiscation of property that violates intellectual property rights, including equipment, as well as administrative: the so-called. “economic sanctions” applied by the Antimonopoly Committee of Ukraine (AMCU). The size of the fines that this body can apply is extremely interesting: it can be 5% of the revenue that the company received.

And although all these types of liability are beneficial to the state, the question arises: what does the one who violated these rights get?

In this context, we recommend that you definitely go to court with a civil claim, since it is through it that we can obtain compensation for damages, moral damages, and also prohibit the use of our trademark or a similar one with which the consumer may confuse it.

It is necessary, let’s say, to share responsibility and be sure to duplicate the use of government measures with measures of one’s own protection. Here it is possible to apply those sanctions that are provided for by the Civil Code of Ukraine, as well as those provided for by the recently adopted Law of Ukraine “On Copyright and Related Rights” No. 2811-IX of December 1, 2022.

― Ms. Kateryna, how easy/difficult is it to prove this right to intellectual property/copyright in such legal disputes and, if it is not registered, is it possible to win the court in this case?

― We, as practicing lawyers in IP, are waiting for the Higher Specialized Court for Intellectual Property to start working. This will save a lot of time, because he will specialize in this category of cases.

Now we are faced with different jurisdictions, because if the violator is an economic entity, we appeal to the Economic Court. If the latter is an individual, we are forced to appeal to the courts of general jurisdiction. But given their workload today, they take too long to process such cases.

However, we have experience that such cases can be won with a properly formed package of evidence. Again, we appeal to copyright law. It is necessary to prove that, for example, the site has:

  • mark ®™;
  • the year in which this copyright arose (i.e., the first year of publication of such a work is indicated).

In addition to such a “thorough” collection of evidence, sometimes the question arises of involving an expert component if, for example, the name of a TM is consonant with the opposite or has a similar designation (graphic, verbal, etc.).

In our opinion, it is also mandatory to be represented by a lawyer who understands this topic professionally and can prove in court all four components of the offense in clear language:

  • an object;
  • subject;
  • subjective side;
  • objective side.

And also who can prove the three components of the causes and application of responsibility, that is:

  • that a violation actually occurred;
  • that there is a causal relationship between the violation and the damage caused;
  • and, accordingly, prove the amount of such damage.

― But is it possible to defend copyright when, for example, intellectual property is, so to speak, stolen and posted on social media pages, passing it off as their own?

It is, but it all depends on primacy, that is, on proof that this or that expression/catchphrase was used by this particular subject for the first time.

In our activities, we use the measures that the Law of Ukraine “On the Bar and Advocacy” No. 5076-VI of July 5, 2012 allows us, in particular:

  • site review protocol;
  • protocol for reviewing a page on social networks (screenshots).

We collect evidence and thus prove the primacy of use.

Sometimes we also turn to linguistic examinations, which prove that the mentioned formulations are identical (as might be the impression) or, on the contrary, that harm was caused to its author for the use of such an expression/catchphrase. Again, situations are known when other persons, taking some words out of context, caused reputational damage to another person without meaning this at all.

― Ms. Kateryna, if we talk about myths around intellectual property, we know the most common one: “protecting IP in Ukraine is expensive.” Is this really true?

As we told you at the beginning, protecting intellectual property consists not only of filing a lawsuit, but of many factors. If its registration is missing, it must include adequate evidence of priority, that is, such copyright has arisen; on a trade secret – preparation of relevant documents from the company/individual entrepreneur in order to confirm the right to it.

As for the actual proof of wrongfulness in court using linguistic expertise, you need to generally understand the feasibility of its implementation. If, for example, it concerns a global brand, the question here is not even the cost of such expertise, but its reputation, because it is one of the greatest values of the company as such. By the way, even when an audit is carried out, the reputational component of the company in the market is assessed separately. Of course, in this case, the implementation of the examination will cost approximately 1,500 USD. – It seems to me that it is not very expensive. Again, everyone independently chooses for themselves what they protect and what they expect from such a strategy.

However, even if all the evidence is collected and the necessary examinations are carried out, we are faced with the illegal behavior of our opponents. That is, individuals neglect their procedural rights, and sometimes even abuse them: they skip court hearings and do not provide proper evidence. Thus, they deliberately delay the legal process.

We are also faced with a heavy workload in the courts, when cases are scheduled to be heard once a month. Of course, we would very much like to see, as in the legal systems of the UK and the USA, the judge considers exclusively one case for a certain time, paying attention only to it. And only after the verdict/decision on the case is made, the judge moves on to the next one. It would be more interesting and effective in terms of protection periods.

However, we all understand perfectly well that with the beginning of a full-scale invasion of law enforcement agencies, the National Police has other matters, but when, say, in violation of the requirements of the Criminal Procedure Code, a criminal case is not registered under Article 229, which concerns the application of sanctions, liability For the illegal use of someone else’s intellectual property, we are forced to go to court to oblige the government body to fulfill the functions assigned to it. Agree, this is nonsense, but we are saddened to admit that such cases actually exist.

― Ms. Kateryna, in conclusion, you have already mentioned that our state needs an IP court. Could you tell us if his vision is already in place and when he will be able to make money and advocate for those who own the intellectual property?

No, we are waiting. Previously, a Commission had already been formed, which was supposed to elect judges to this court. However, we are not yet sure that the court will start operating this year. One thing I can say for sure: Ukraine, confidently moving towards membership in the EU, has done a lot more in the field of protecting intellectual property rights, in addition to the IP court. It is imperative to remember the creation of UKRNOIVI (Ukrainian National Office of Intellectual Property and Innovation), which now relies on everything that UKRPATENT did not complete or did not complete properly.

It is also worth mentioning the Order of the Ministry of Economy of Ukraine No. 2945 dated 02/01/2024 “On approval of the Procedure for the formation and maintenance of a national list of websites that cause concern regarding the observance of intellectual property rights”, thanks to which we are reaching a new level in the fight against piracy and violations on the Internet Internet. In particular, intellectual property owners will now be able to file a notice that certain websites are illegally using the intellectual property of others. Such a register of websites will be administered by the Ministry of Economy of Ukraine, and the most interesting thing is that it will be made public at the international level. That is, at the WIPO ALERT level.

In our opinion, these are already significant changes, so we can confidently say that we have even more opportunities to protect intellectual property rights.