Striving for Sustainable IP Protection

Despite the ongoing war the institutional reforms in Ukraine move forward. Intellectual property protection stands out as an exemplary area of progress, demonstrating a steadfast commitment to aligning with EU laws. We interviewed Olena Orliuk, Director of the Ukrainian IP Office, to shed light on the implementation of key laws and the establishment of innovative mechanisms such as the Appeals Chamber and Mediation Center. Additionally, we delved into post-war reconstruction plans. Having been present at the recent meeting of European IP office heads in Kyiv, we also explored the support from the EU Intellectual Property Office through the SME Fund. Unsurprisingly, our discussion extends to the pivotal role of intellectual property in economic dynamics.

Olga Usenko: The Ukrainian National Office for Intellectual Property and Innovations has worked diligently to align Ukraine’s intellectual property framework with EU standards. What are the key achievements, especially in the past year?

Olena Orliuk: Our leading guide in this process was the Association Agreement between the European Union and Ukraine, signed in 2014. The Agreement contained a whole chapter (which is almost 100 articles) devoted to intellectual property – what Ukraine needs to change in the IP sphere to get closer to EU standards. Ukraine has consistently implemented these changes in the legal realm. Hence, today, it can be claimed that Ukraine has almost wholly (98%) fulfilled its IP obligations under the Agreement. The final chord was adopting a law in March 2023, which significantly strengthened the protection of IP rights.

This Law implemented Directive No. 2004/48/EC – one of the key acts on protecting intellectual property rights in the EU – into the national legislation. Amendments to the Civil Code of Ukraine and IP-related laws clarify and supplement the concept of civil liability for IP rights infringements. Amendments to the procedural codes allow demanding evidence from certain interested persons about the origin and distribution network of goods or services (distribution channels) that infringe IP rights.

Also, the conceptually updated Law of Ukraine “On Copyright and Related Rights”. entered into force at the beginning of 2023. This Law implemented not only the obligations undertaken by Ukraine under the Agreement but also the EU acquis, implemented after the Agreement entered into force, and even the practice of the Court of Justice of the EU.

This Law solves many problems of legal regulation in the copyright sphere. In particular, the automatic acquisition by employers and customers of the rights to works created as works for hire or created by order is ensured. These novels are especially relevant for IT companies, which own economic rights to computer programs and databases “by default”. The law also regulates the issue of public licenses used on the Internet (in particular, Creative Commons licenses for Wikipedia posts). The special sui generis right was introduced for non-original objects generated by a computer program. Legal protection of non-original databases has been provided. Cases of authorized use of “orphan” works and objects of related rights (those impossible to identify the right holder). Many other essential amendments have also been introduced.

It is crucial to understand that with Ukraine’s fulfilment of the Agreement’s obligations, the process of adapting national IP legislation to EU standards has not ended. We can state that only the first stage has been completed. To speed up the process of full integration into the EU, it is necessary to continue to work on bringing the legal framework in the field of intellectual property closer to the EU acquis.

O.U.: Can you explain the specific goals and activities of the Appeals Board and its Regulation project?

O.O.: The primary aim of the Appeals Chamber is to ensure quick protection of infringed rights. This is an out-of-court method of dispute resolution, which has undeniable advantages over court proceedings. IP disputes are complex and can be considered by national courts for years. Even if the case is brought before the Supreme Court, there are no guarantees that the cassation instance would not refer the matter to a first instance court for a retrial.

Today, the launch of the Appeals Chamber is one of the most anticipated events for the professional community and also one of the key tasks of the IP Office. Together with the IP community, we developed a draft of the new Rules of Procedure regulating its activities and submitted it to the Ministry of Economy of Ukraine for consideration and approval. This document is currently at the final registration stage at the Ministry of Justice of Ukraine. The draft Rules of Procedure provide a simplified procedure for processing issues within the Appeals Chamber’s competence, which would take up to two months. The general procedure will take from 2 to 6 months. It is also possible to hold a hearing via video conference and submit documents digitally.

What will the Appeals Chamber do? It will consider objections against the IP Office’s decision on the acquisition of IP rights, statements of invalidation of IP rights in whole or in part, and statements of recognizing trademarks well known in Ukraine. Statements and objections may relate to industrial property objects – namely, trademarks, industrial designs, inventions, utility models, geographical indications, and layouts of semiconductor products.

Although the Appeals Chamber is technically not yet operational, we are doing everything possible to ensure that the community receives an effective administrative appeal mechanism immediately after approving the Rules of Procedure and the Appeals Chamber’s composition. We are also working on exchanging with the EU countries’ leading IP offices the practice of considering cases by appeals bodies. We strive to achieve such a level of legal culture and quality of the Appeals Chamber’s decisions that the parties to proceedings would not be interested in challenging them in national courts, but on the contrary, they would trust these decisions and implement them.

O.U.: What is the role and purpose of the Mediation Center established within the IP Office?

O.O.: IP mediation is the third element of the “protective triad”, including courts, administrative mechanisms, and alternative dispute resolution. We have an excellent reference point – the WIPO Arbitration and Mediation Center, which has operated successfully since 1994. International cooperation on mediation with WIPO, other organizations, and national offices of foreign countries is one of our priorities.

Unlike the court process, in mediation, there are no winners, but there are parties who have reached an agreement (and this is not even about compromise). Such an understanding can be reached quickly enough and confidentially. At the same time, the parties to the conflict will be able to save money on lengthy court procedures and preserve further business relations. This is extremely important for intellectual property, which is developing dynamically and needs quick solutions.

We were guided by this when creating the Mediation Center of the IP Office. We have approved several documents that will regulate the activities of the Center: Rules for Mediation, Regulations on the Register of Mediators, and Code of Professional Ethics. An active process is underway to involve mediators who will specialize primarily in IP and will become pioneers of IP mediation in Ukraine.

O.U.: The development and protection of intellectual property play a crucial role in Ukraine’s integration into the EU. How prepared are we for the upcoming launch of EU membership negotiations?

O.O.: Your question is exceptionally relevant. Recently, the European Commission recommended the EU Council to start negotiations on Ukraine’s accession to the European Union and published the Report as part of the Enlargement Package. This is a historic decision for our country.

A separate chapter of this Report is devoted to intellectual property. The Report states that the domain of intellectual property has demonstrated good progress, which was achieved thanks to, in particular, the launch of the national intellectual property authority (the functions of which are performed by the IP Office), the adoption of the Law of Ukraine “On Copyright and Related Rights” and the strengthening of the protection of IP rights.

The European Commission has carefully analyzed the national legislation for the extent to which it is harmonized with the EU acquis. The European Commission recommended Ukraine continue work on the legislation on trademarks, inventions, and utility models, adopt legislation on compulsory licensing, and improve the institute of trade secrets. Separate emphasis is placed on improving the functioning of the copyright collective management system and the mechanism for paying royalties to rights holders. Ukraine also needs to work on the protection of intellectual property rights, particularly by combating piracy and counterfeit products. Launching the IP court’s work and developing cooperation with the EUIPO and the EU countries’ IP offices is also necessary.

We are pleased that the Europeans have highly appreciated our progress in intellectual property. This is the joint merit of the entire IP community and the IP Office’s painstaking daily work. We clearly understand what steps are expected from us on the way to full EU membership.

O.U.: How do you plan to enhance the institutional capacity of the national IP office? Please be more specific about collaboration with businesses to develop intellectual and innovation infrastructure.

O.O.: We regularly work to ensure new standards of communication with applicants. During the year, we held regular meetings with the professional community and business representatives to discuss numerous draft bylaws and ways of overcoming problematic issues to find common positions and work out effective mechanisms.

One of our priorities is the maximum reduction of the terms of considering applications for obtaining legal protection of industrial property objects and improving the quality of expertise. Trademarks are the most popular object among businesses. We are working on reducing the period for examination of a TM application to 12 months and implementing the European post-grant opposition procedure. At the same time, the transition to such a procedure for the examination of trademark applications currently poses particular challenges for business. For this procedure to work effectively in Ukraine, it is necessary to significantly increase the effectiveness of protecting IP rights in general and improve search databases substantially. From Ukrpatent, we received a very complex technical legacy and piles of unexamined applications. Practically all problems, including those related to the long terms of examination, are related precisely to the technical capabilities of the received databases, as well as to the unscrupulous practices of Ukrpatent, which the Anti-Monopoly Committee of Ukraine reflected in its act, and which our IP Office immediately and categorically refused from the beginning of its work. Currently, we are trying to correct the situation that has arisen with terms because we understand the need of businesses for proper legal protection of their IP.

A separate urgent task is to improve the quality of examinations. Today, the quality of examinations is checked by the unit of internal quality control of examination and methodology; our experts have begun to improve their qualifications in international IP offices.

As for business and inventor support, the Government has increased the fee reduction for filing trademark applications electronically from 20% to 25% on the initiative of the IP Office, itself supported by the community. Non-profit inventors pay 12% of the established fee (instead of 20%). The IP Office also provided the possibility of making free changes to the registers regarding the refusal of representation of persons from the russian federation.

Many of the processes we launched during the year are aimed at the long-term results. But all this in the complex will positively affect the development of Ukraine’s intellectual and innovative potential. There is no doubt about it.

O.U.: How does the IP Office respond to the challenges associated with the war? What types of sanctions are being applied by the IP Office regarding applicants, holders of protective documents, their successors, or individuals who may influence them, particularly in the context of restrictions against the aggressor country?

O.O.: The IP Office started its operational activities just amid massive russian missile attacks on the civil energy infrastructure of peaceful Ukrainian cities. We, like everyone else, worked in the absence of electricity, communication, and heat. This was precisely the period when tangible and intangible assets were transferred to us from Ukrpatent: search databases, IT systems, databases, and software. It was difficult but hardly more complex than the struggle of our defenders on the front lines. Thanks to them, we can work to make the future they choose for all of us better.

Today, the IP Office participates in implementing Ukraine’s sanctions policy. It is about blocking assets, the return of assets belonging to an individual or legal entity, and the prohibition of technology and intellectual property rights transfer.

The IP Office may apply a sanction in the form of asset blocking to applicants, IP rights holders, their successors, and persons who can directly or indirectly influence the applicants or owners if they receive official information about the ties with persons already subject to sanctions.

Currently, we have summarized information on the application of personal special economic and other restrictive measures (sanctions) to 24,207 individuals and legal entities, determined by the decrees of the President of Ukraine. Of these, 134 persons are subject to sanctions measures directly in the IP sphere, against whom the IP Office has applied sanctions in the form of blocking assets. These people include applicants, inventors, and IP rights holders.

We are also actively working to stimulate developments in the field of military tech because this is a priority direction of the national technological industry. But this is the topic we can’t discuss much, at least while the war rages.

O.U.: What steps will you take for Ukraine’s reconstruction after its conclusion?

O.O.: As for the post-war recovery, we are working on improving the IP sphere as a whole because I am convinced that this will be one of the arguments for improving the country’s investment attractiveness. We strive to stimulate the development of inventive and creative activity, provide effective protection of the results of this activity and help inventors, creators, and authors to commercialize them effectively. The IP office created the National IP & Innovations Hub, based on which we plan to activate innovations, support research, development, commercialization of IP rights and technology transfer, encourage investments in the economy of Ukraine, and promote the job creation.

O.U.: What strategies or initiatives are being considered to expand the opportunities for effective protection and commercialization of intellectual property rights for representatives of creative industries?

O.O.: To develop creative potential, the IP Office has launched and is successfully implementing the project “34 Poles of Creativity: Copyright in Creative Industries”. Within the framework of this project, we meet with representatives of creative industries, find out the problematic issues that interest them, and organize events where we answer these questions. Careful work has already been carried out with representatives of archival, museum, theatre affairs, representatives of libraries, sports, jewelry, and fashion industries. The work continues.

Based on the results of these meetings and discussions, we prepare checklists and manuals in which we explain to creators in simple language how to protect the results of their intellectual work to create comfortable conditions and earn from it.

O.U.: In October, the delegation of the EU IP Office visited Kyiv. Its Executive Director, João Negrão, outlined attempts to support Ukraine in the intellectual property area throughout the SME Fund. Could you elaborate on the specific support Ukraine can expect from this initiative?

O.O.: 2023 Ideas Powered for Business by SME Fund – the Small and Medium Business Support Fund – a European Commission initiative implemented by the European Union Intellectual Property Office (EUIPO). From June 2023, Ukrainian small and medium-sized enterprises (SMEs) can apply for financing through this SME Fund. Such financial support includes the protection of trademarks and industrial designs within the EU in the amount of 75% of all fees up to a maximum amount of 1000 euros; protection of patents or related activities within the EU in the amount of 75% of the total amount of fees – up to 1,500 euros; protection of plant varieties at the European level in the amount of 50% of fees up to 225 euros.

This is an unprecedented opportunity for Ukrainian businesses to access financial resources to protect their intellectual property. In fact, this is also another step for integrating Ukrainian entrepreneurs into the EU single market.

As the Executive Director of EUIPO, João Negrão announced during his visit to Kyiv, 50 Ukrainian entrepreneurs have already taken advantage of the opportunity to receive a grant from the SME Fund. Ukraine is the only non-EU country that can use these benefits.

We greatly appreciate the help of our European colleagues and particularly the EUIPO. Although this assistance is often reduced to concrete numbers of financial support, it is, in fact, invaluable. We also agreed with the EUIPO to exchange methodological materials and guidelines; they will contribute to improving the qualifications of our experts – this is detailed in the two-year Work Plan, which was signed during the visit of the EUIPO delegation to Kyiv in October for the implementation of the Memorandum of Understanding. This will definitely have a positive impact on the development of IP in Ukraine.

O.U.: You also discussed the challenge of valuing intangible assets within Ukraine’s GDP at this meeting. Can you provide insights into how this issue is being addressed and its implications for the country?

O.O.: Last year, in October, the EUIPO and the European Patent Office (EPO) conducted a study and found the impact of intellectual property on the EU economy. According to this report, industries that intensively use intellectual property rights created 29.7% of all jobs in the EU in 2017-2019. This means that the sectors that use patents, trademarks, industrial designs, and other IP rights directly employ more than 61 million people in the EU. In addition, another 20 million jobs were created in industries that supplied goods and services to businesses using IP rights. Generally, we are talking about almost 82 million jobs (or 39.4%). These industries generated 6.4 trillion euros, nearly half of the EU’s GDP (more than 47%). Not bad, right?

Unfortunately, there are no studies in Ukraine that would help distinguish the share of IP assets in the GDP of Ukraine. That is why the audit of intellectual property objects in the state sector of the economy to identify the share of intellectual property in the GDP of Ukraine should become one of the tasks of the updated composition of the Council on Intellectual Property, which was created at the Cabinet of Ministers of Ukraine. We will advocate for this process.

We need to find out this point of reference to monitor the further dynamics of economic development through the prism of intellectual property and innovation. In addition, identifying the IP share in the country’s GDP will significantly increase Ukraine’s place in the world’s intellectual and innovation rankings. All this will affect the investment attractiveness of Ukraine and the creation of a sustainable, innovative economy, which we all strive for.