Innovations in the Field of Intellectual Property

Khrystyna Demchenko , Junior associate with Legal Alliance Company

A number of draft laws that involve significant innovations in the field of intellectual property are expected to be considered in the upcoming year.

The draft law “On Introducing Amendments to Certain Legislative Acts on Protection of Copyright and Related Rights on the Internet” is however the most controversial among them; let’s look more closely at it.

This draft law has been developed by the State Intellectual Property Service of Ukraine and subject to a number of comments, particularly made by the Ukrainian League of Industrialists and Entrepreneurs and the Ukrainian Internet Association, has been put out for public consultation for the third time already.

The draft law “On Introducing Amendments to Certain Legislative Acts on Protection of Copyright and Related Rights on the Internet” was passed in pursuance of recommendations from 2012 International Intellectual Property Alliance (IIPA) Report. Considering this it is quite reasonable that the given draft law in fact reduces itself to a partial reception of the American Digital Millennium Copyright Act, it is not of an integrated nature and it does not totally correspond to the Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (hereinafter – the Directive No. 2000/31/ЕС).

Provisions of the said Directive No. 2000/31/EC are provided in the Ukraine - European Union Association Agreement which imposes requirement to bring the current Ukrainian legislation about liability of the Internet access providers in line with the EU laws within 18 months after execution of the present Agreement. In addition the corresponding Chapter of the Association Agreement reproduces textually provisions of the Directive No. 2000/31/EC insofar as it refers to the grounds for release from liability of passive type Internet access providers.

Coming back to the draft law firstly it involves definition of a new entity to be liable for violations in regard to copyright and related rights, namely service provider, in the Law of Ukraine “On Copyright and Related Rights”. Unlike previous draft law versions according to service provider definition it is clear that it involves namely hosting providers that execute resource hosting agreements with site owners.

On the one hand it is a positive moment because mere conduit providers (provide access to the Internet network) and providers of caching services (temporary store information transferred trough or placed on the Internet) are automatically released from liability; these providers are passive providers i.e. they do not control activity of their users and simply provide technical capability for the Internet access or search of relevant information by consumers of information services which is consistent with provisions of the Directive No. 2000/31/ЕС.

Herewith we can see non-compliance of innovations with the Law of Ukraine “On Telecommunications” changes and amendments to which are not offered. In particular providers of such services are not the telecommunications providers and operators (as consistent with the draft law) which activity shall be licensed and is limited to telecommunications field namely to the Internet access service (for the purposes of the Directive No. 2000/31/ЕС they can be named as mere conduit providers) but the sole proprietors. Besides it is not considered that hosting services are not limited to web-sites hosting but also involve other resources; hosting services are provided through server or other technical equipment which belong to provider of such services. Also the current Law of Ukraine “On Telecommunications” does not regulate the issue of provision of web-sites hosting services by operators and / or telecommunications providers, there are no corresponding definitions for ‘the Internet network address blocking”, “web-sites hosting”.

Under its main provisions the draft law provides adoption of the procedure which is similar to the American “notice and take-down” i.e. receipt of a message by the Internet hosting-provider with simultaneous liability to provide possibility to block access not to copyright or related rights items which may infringe third party rights but to the whole web-site which raises the question about proportionality of such measures.

In particular it is offered to adopt a new way of rights protection on the Internet – filing of an application by copyright and (or) related rights holders about the breach of copyright and (or) related rights on the Internet. Application content almost totally represents provisions of 17 USC § 512 (c) (3) of the Digital Millennium Copyright Act.

However important mechanism of web-sites owners’ rights protection is not being adopted, this mechanism is provided in 17 USC § 512 (f), namely applicant’s responsibility by compensation of losses caused by false report about infringement. The latter contributes to termination of unfair competition especially if to recollect activity of direct competitors regarding applications filing and lack of close check of applications content by service providers displayed by the American researchers. It can be clearly understood that while choosing between liability for failure to block access to the objects reproduction of which is the breach of copyright or related rights on the one hand and release of liability if the procedure of application processing and decision making about blocking is observed on the other hand, the providers choose the latter.

Herewith the fact that namely the site owner is imposed with responsibility for the information accuracy provided in reply to application correlates with the said in no way.
However the out-of-court dispute resolution should be regarded as the most controversial provision of the draft law “On Introducing Amendments to Certain Legislative Acts on Protection of Copyright and Related Rights on the Internet”. In particular decision to block web-sites access is left not even on the administrative but on the private body, namely service provider, though it would be more lawfully and proportionally to review this issue under legal process. Such discretionary power of service provider actually can be regarded as the previous restriction of the right on freedom of expression which is evidenced by the ECHR practice namely the decision on Yildirim v. Turkey.

Besides the offered disparity in the amounts of penalty for administrative offence (failure to stop breach of copyright and (or) related rights on the Internet) and for crime (breach of copyright and related rights) – aggravation of both consider similar fines, is surprising.

The presumption of absolute liability of web-site owners and their obligations to perform general monitoring prohibited not only by the provisions of the Directive No. 2000/31/ЕС but also the Directive on the enforcement of intellectual property rights No. 2004/48/EC of 29 April 2004, the Declaration on freedom of the expression and the Internet of 1 June 2011 is still an open issue. According to the European Court of Justice jurisdiction general monitoring shall be regarded as supervision of content of objects saved on sites which can be protected by copyright or related rights, it is applied to an unlimited range of customers, established for an unlimited term and it imposes heavy financial burden on hosting providers that also include web-site owners according to the European Union Law. Considering the current judicial practice this approach namely is used.
A positive moment is the possibility to prevent site access blocking through application reply.

Besides, amendments to the Law of Ukraine “On Notaries” are the innovation which is indeed worth noticing and which will simplify the procedure of violations confirmation in the field of intellectual property on the Internet and eliminate the practice of employment of notary offices’ services in the Russian Federation which is quite popular currently. Thus it is supposed to introduce the right of notary officers to evidence credibility of web-sites hard copies which contain claimed items of the intellectual property right.

Thus, totally the draft law attracts more criticism than appreciation but taking into account its stage amendments are still possible to be made.