Enforcement of IP Rights in Ukraine in the Fourth Year of War

Taking into consideration the realities of war, Ukrainian law firms are constantly adapting to the ongoing situation and offering high-quality integrated services to overcome contemporary challenges and maintain sustainable performance, so as to retain existing clients and attract new ones. Practice in the field of intellectual property law is affected by three main problems that are relevant for the entire business community and hinder further development: the unpredictability of the situation in the country, unpredictability of the state authorities and the lack of a skilled workforce. In addition, in the fourth year of the war, the intellectual property law legal services market in Ukraine, although stabilized, is not growing, because clients are reducing spending on legal services that are not critically necessary in times of crisis, and investments are being postponed until more stable times.

For our company, the key role in maintaining the business is played by a retained team of professionals who share the same values and enjoy the trust of our regular clients. Our firm’s competitiveness will in the near future be determined by such factors as the ability to provide comprehensive services, adapt to regulatory changes and effectively manage the accumulated professional knowledge with continuous improvement of specialists’ skills and successful use of digital solutions, which allowed not only to streamline the current operations, but also to develop a new standard of service provision, focused on speed, transparency and convenience.

We believe that the war will end, and when that happens investors will return to Ukraine to rebuild the country and its economy together with the Ukrainian nation. At the same time, investors must be confident that their rights, including intellectual property rights, will be well protected and, therefore, favorable investment conditions must be created in the state.

Despite the fact that intellectual property rights are private rights, which means that the procedure for their enforcement requires a rights holder’s active involvement, the enforcement of these rights is carried out in the public interest and to ensure public safety, since crimes that infringe on intellectual property rights not only pose a threat to consumers’ health and safety, cause economic losses for states and rights holders, but are also a source of revenue for organized criminal networks.

In wartime realities, it is the rights holders who have up-to-date information about possible infringement of their intellectual property rights, and customs and law-enforcement agencies have the authority to enforce these rights, which is why the joint efforts of rights holders, customs and law-enforcement agencies is important in combating the felonious threat posed by the production and distribution of counterfeit products.

The common goal of all stakeholders of intellectual property enforcement efforts is to block the paths of counterfeit distribution from production to the consumer with the lowest administrative costs.

The main goal of rights holders is to have counterfeit products removed from the market and destroyed.

A comprehensive approach to enforcing intellectual property rights is based on information exchange, cooperation, partnership and trust between rights holders and customs and law- enforcement agencies.

Part 1. Practice of Interaction between the State Customs Service of Ukraine and Rights Holders

The procedure for the suspension of counterfeit goods at the customs border with their subsequent destruction, prescribed in legislation, is functioning and is actively used by regional customs offices. At the same time, successful cases of suspension of counterfeit products, which concluded with their destruction, have become a reality not only due to the work of customs authorities, but also thanks to the professional and systematic everyday work of the team at Pakharenko and Partners.

During 2024, the Kyiv, Lviv, Odesa, Volyn, Chernivtsi and Kharkiv customs offices continued to apply the procedure for detaining counterfeit goods at the customs border provided for by law. In total, in 2024, customs authorities, acting in the interests of only 10 of 63 companies-owners of global brands – rights holders who are clients of Pakharenko and Partners, carried out 158 effective suspensions of customs clearance of goods, of which 120 suspensions were carried out under Article 399 of the Customs Code, 27 suspensions – under Article 400 of the Customs Code, and 11 suspensions – under Article 401-1 of the Customs Code, with a total of 37,595 items of counterfeit goods detained in effective suspensions. A number of goods in one suspension under Article 399 of the Customs Code ranged from 1 item to 5465 items, under Article 400 of the Customs Code — from 1 item to 9032 items, under Article 400-1 of the Customs Code — from 1 item to 40 items. These were mainly small batches of counterfeit goods, including appliances, clothing, footwear, accessories for watches, car accessories, children’s toys.

Out of 158 suspensions of customs clearance of goods, 92 suspensions ended with the destruction of counterfeit products, 6 suspensions — with a change in the labeling on the goods/their packaging, and 60 suspensions — with the drawing up of an administrative protocol on violation of customs rules (customs offense) under Articles 476 or 473 of the Customs Code. As a rule, for suspensions under Article 401-1 of the Customs Code, protocols on violation of customs rules were drawn up under Article 473 of the Customs Code “Sending across the customs border of Ukraine in international postal and express shipments of goods prohibited for such shipment”. At the same time, as a rule, in cases of customs declarations in which the recipient is the same person, the customs service combines and draws up a single protocol on violation of customs rules under Article 473 of the Customs Code.

During the first three months of 2025, customs authorities, acting in the interests of 4 rights holders of 63 who are clients of Pakharenko and Partners, carried out 38 effective suspensions of customs clearance of goods, of which 25 suspensions were under Article 399 of the Customs Code, 9 suspensions were under Article 400 of the Customs Code, and 4 suspensions were under Article 401-1 of the Customs Code. The total number of counterfeit goods in effective suspensions was 2,442 items. The suspensions were carried out by the Lviv, Kyiv, and Odesa customs offices, of which 24 suspensions resulted in the destruction of counterfeit products (or are awaiting destruction), and 8 suspensions resulted in drawing up administrative protocols.

IPR cases are adjudicated within common courts (civil jurisdiction) and commercial courts (commercial jurisdiction).

As a result of the consideration of customs offence cases by courts of general jurisdiction, in 2024, acting in the interests of clients, Pakharenko and Partners received 31 court resolutions on confiscation and, in most cases, the destruction of counterfeit products. In 2025, 11 court resolutions were received. The vast majority of customs offense cases are considered on the day the case is assigned for consideration. Some cases in Ukraine, due to certain factors (complexity, motions from the defence, additional examination, etc.), can be considered for up to 1 year or more, including the appellate instance. In most cases the State Executive Service (Bailiffs) involves a rights holder’s representative to the destruction process. Problematic issues of legal proceedings — some judges refuse to order the destruction of counterfeit products, referring to the absence of such a sanction in Articles 476 and 473 of the Customs Code.

With regard to the consideration by commercial courts of proceedings related to ordering injunctions in the event of suspensions of customs clearance of counterfeit products, in 2024 and during the first three months of 2025 we, as representatives of rights holders, did not initiate any court cases in commercial proceedings. This is explained by the significant term of consideration of these cases – the average term of consideration of cases by commercial courts is 1-1.5 years. This term includes the first, appellate and cassation instances. The longest term (from 6 months to 1 year) is consideration of a case in a court of first instance. In particular, in 2024, 5 cases were considered that were initiated by us in the interests of clients in 2023, and 2 more cases continue to be considered to this day. Problem issues: duration of trials for up to 1.5 years, which is due to the appointment of forensic examinations by the courts if there are two conflicting expert reports in case materials, instead of providing legal assessment of existing reports, and the lengthy period of conducting the actual examinations themselves.

Regarding the destruction of counterfeit products – as a result of all the above measures, a total of 27,567 items of counterfeit products were destroyed in 2024; in 4 cases the de-labeling procedure was applied to 896 items of goods. During the first three months of 2025, 2,442 items of counterfeit products were destroyed. Problem issues that occur during the destruction of counterfeit goods: the unregulated procedure for issuance of counterfeit goods from a warehouse, which delays the destruction of these goods (for example, Odesa Customs has not issued goods for destruction since the summer of 2023) and unreliable information about official destruction companies that are on the list of customs offices and have received official authorization, but in fact do not have any technical capabilities to carry out destruction of goods (for example, Chernivtsi Customs – Private Company “YurEko” – lacks the appropriate waste heats, the method of destruction of goods is “artisanal burning in open air”).

Legislation

In late April 2025 legislative changes came into effect regarding:

determining the sufficiency of a right holder’s report to confirm an infringement of IP rights and to draw up a protocol on the violation of customs rules related to the movement of goods across the customs border of Ukraine with infringement of IP rights; inclusion of a rights holder in the list of persons who can participate in proceedings in cases regarding violation of customs rules under Art. 476 of the Customs Code of Ukraine.

Conclusions and Recommendations on the Results of the Application of Customs Measures against Counterfeit Products

In our opinion, customs authorities should significantly increase the effectiveness of the application of measures to detect and prevent counterfeit goods from entering the domestic market of Ukraine.

Among rights holders’ general recommendations on improving the enforcement of IP rights by customs and law-enforcement agencies, the following are particularly worth mentioning:

• Tracing the entire logistics chain of bringing into commerce those goods that are suspected of infringing IP rights. For this purpose, it will be necessary to introduce the obligation of economic entities, during the sale of any imported goods on physical markets and online in Ukraine, to indicate in the tax invoice the number of the declaration under which such goods were imported. This will enable controlling bodies to monitor the legitimacy of the import of any goods into Ukraine.
• Counterfeit goods enter Ukraine mainly as a result of smuggling. It is necessary to extend the application of measures to assist in enforcement of intellectual property rights to cases of detection of smuggled goods suspected of infringing intellectual property rights and transported beyond customs control, with concealment from customs control, through non-declaration, etc. (this measure was provided for in the measures for the implementation of the State Anti-Corruption Program for 2023-2025, but was never implemented in Draft Bill No. 10411).
• Mandatory destruction of counterfeit goods confiscated by a court decision under Article 476 of the Customs Code, since the absence of such a sanction enables judges not to order the destruction of counterfeit goods.
• The procedure for issuing counterfeit goods from a warehouse for destruction should be regulated by by-laws.
• Regional customs offices should verify the accuracy of information on official destruction companies that are on their list and that have officially received authorization to destroy a certain type of product.
• Amend Article 397 of the Customs Code to provide for the rights holder’s right to demand compensation for the costs associated with the destruction of these goods (that are the subject of infringement of his intellectual property rights) from the owner of the goods or other persons (currently, the rights holder does have the right to demand only compensation for the storage of these goods).

Part 2. Practice of IPR Enforcement within the Country in Interaction between Law-Enforcement Authorities and Rights Holders

As shown by the practice of Pakharenko and Partners, in 2024 and 2025 the Economic Security Bureau of Ukraine (ESB) significantly increased the number of cases under Article 229 of the Criminal Code related to combating counterfeiting. In some cases, investigators of the National Police of Ukraine (NPU) also investigate cases under Article 229 of the Criminal Code, as well as other cases related to IPR infringements.

In 2024, acting in the interests of their clients, Pakharenko and Partners provided legal support in 40 cases (of which 30 criminal investigations were initiated by ESB, 10 cases — by NPU), the courts issued verdicts in 9 cases (in 8 cases based on a settlement agreement and in 1 case under the general procedure), the total number of seized counterfeit products, non-finished products, packaging, labels and materials used to produce counterfeit products in criminal proceedings amounted to 59,818 items (of which 58,136 items were seized by the ESB, 1,682 by the NPU).

In 2024, a total of 991 items (of which 928 items are mobile phones, headphones, power supplies, cables, boxes, stickers and 63 items are watches) were destroyed in cases handled by the NPU. We should emphasize that the central objective of rights holders is to remove counterfeit products from the market and further destroy them, and for the economic security of Ukraine it is important to prevent any increase in the circulation of counterfeit goods, which are potentially dangerous for consumers, are the items of circulation on the grey goods market, and which are produced and sold with taxes being evaded.

During the first three months of 2025, acting in the interests of their clients, Pakharenko and Partners provided legal support in 19 cases (of which 13 criminal investigations were initiated by the ESB, and 6 cases by the NPU), the courts issued 2 verdicts based on a settlement agreement, the total number of seized counterfeit products, non-finished products, packaging, labels and materials used for the production of counterfeit products in criminal proceedings came to 59,818 items (of which 53,033 items were seized by the ESB, 680 were seized by the NPU).

In 2025, 596 perfume product items were destroyed in a case handled by the ESB.

It should be noted that investigators and detectives who already have experience in completing cases under Article 229 of the Criminal Code of Ukraine usually understand how to investigate them, and cooperating with them does not cause difficulties for representatives of rights holders. Moreover, in 2024-2025, the number of cases where courts return seized counterfeit products to infringers during pre-trial investigations in ESB cases fell significantly.

In handling cases under Article 229 of the Criminal Code of Ukraine, law-enforcement officers should continue to involve representatives of rights holders in pre-trial investigation, including to product authentication (this is a rights holder’s exclusive competence) and not deviate from the established practice of calculating damages caused by the illegal use of trademarks, namely, to proceed from the amount obtained by multiplying the price of a genuine product by the number of counterfeit goods seized.

Conclusions and Recommendations Based on Results of Law-Enforcement Measures against Counterfeit Products

• The active involvement of representatives of rights holders in pre-trial investigations, in particular, in participation in court hearings regarding arrest of seized products and complaints on cancellation of arrest or return of property. Such participation can be the source of weightier arguments than the participation of an investigator/detective/prosecutor in cases of this category, which is often a mere formality.
• Summarizing law-enforcement practice regarding imposition/removal of arrest from seized counterfeit products/equipment in cases under Article 229 of the Criminal Code, identification of mistakes in the work of investigative bodies, procedural supervisors and provision of appropriate recommendations by the Prosecutor-General’s Office to regional prosecutor’s offices;
• Collection and publication every six months of information on the amount of counterfeit goods seized and equipment in cases under Article 229 of the Criminal Code. Determination of information on the number of destroyed counterfeit goods, as a criterion for the performance of law-enforcement agencies;
• Using scientific methods to develop standards (typical algorithms of actions, recommendations) of carrying out a pre-trial investigation of criminal offences under Article 229 of the Criminal Code of Ukraine with the involvement of representatives of rights holders.
• Increasing specialization and training of investigators/detectives investigating criminal cases involving IPR infringements,
• Summing up law-enforcement practice in cases on IPR infringements and provision by the Prosecutor General’s Office of recommendations to regional prosecutors’ offices on measures to speed up pre-trial investigations.
• The use of the method established and proved out by the judicial practice of the Supreme Court, namely the method for calculating damages caused to rights holders as a result of the illegal use of trademarks on counterfeit goods based on the price of an original product multiplied by the amount of seized counterfeit goods.

Furthermore, on 9 April 2025, the ESB initiated an open discussion on the issues of criminal enforcement of intellectual property rights established by Article 229 of the Criminal Code of Ukraine. Pakharenko and Partners and UAACP support the relevance and necessity of introducing legislative amendments to Article 229 of the Criminal Code of Ukraine, voiced at the event, which are aimed at:

– reducing the threshold for criminal liability,

– harsher punishments by increasing the amount of fines and restoring the sanction in the form of imprisonment, which was abandoned as a result of decriminalization of the Criminal Code of Ukraine in previous years,

– restoring in Article 229 of the Criminal Code the sanctions of confiscation and destruction of seized (counterfeit, falsified) products, raw materials, materials and equipment that were used for their production, since the special confiscation introduced in 2016 is almost not used with respect to Article 229 of the Criminal Code of Ukraine,

– introducing liability for legal entities under Article 229 of the Criminal Code of Ukraine.

Conclusions

As we can see, in 2024 and the first quarter of 2025 the system of intellectual property rights protection against counterfeit and pirated goods by customs and law-enforcement agencies in cooperation with rights holders is functioning but requires further improvement, including via the implementation of those measures proposed above.