“Legislative Gridlock under the Dome: Collective Management Organizations and DCFTA implementation”

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The Ukrainian IPR laws are now the most flexible part of the Ukrainian legislation which is currently harmonized with the European standards of IPR protection under the umbrella of DCFTA implementation. EU-Ukraine Association Agreement sets up the standards for the IPR protection and also touches upon the issues related to collective management of rights. Under Art. 168 of the said Agreement, Ukraine accepted that there is the need for the respective collecting societies to achieve a high level of rationalization and transparency with respect to the execution of their tasks for the purpose of mutually ensuring easier access to and delivery of content between the territories of the Parties and mutual transfer of royalties.

However, the issues related to reformation of the system of collection and distribution of royalties in Ukraine remains one of the most debatable topic for years in Ukraine, mostly due to that fact that Ukraine remains on the Priority Watch list in the “Special 301” Report prepared by USTR for 2017, mostly due to the unfair, nontransparent administration of the system for collective management organizations.

At the same time, for the time being the Ministry of Economic Development and Trade of Ukraine which is now responsible for the IPR policy during the transition period to the Intellectual Property Office is now deprived to effect the accurate monitoring onto the activities of CMOs operating in Ukraine as a number of regulations governing the procedures for supervision and monitoring of CMOs activities have been cancelled either by the court order or respective Cabinet’s decree.

Within last year file draft laws have been filed to Verkhovna Rada (The Ukrainian Parliament) which suggested different interpretations of reformation of CMOs in Ukraine. The history of these submissions clearly illustrates that, although all the lawmakers  claims that all the changes in the law governing operation of CMOs in Ukraine shall secure CMOs’ transparency and accountability and shall foster good governance in all their activities as the fundamental safeguards for the effective bottom-up stakeholder operating model of the collective management system, there is no consensus view on the operational model of CMOs which would achieves transparency and accountability so that to promote creativity and the fair and accurate distribution of royalties to the authors.

Thus, all the discussions of the draft laws under the Dome of Verkhovna Rada in the relevant standing committees typically ended with recriminations between the parties deepening and no sign of progress towards ending the impasse.

However, on February 8, 2018 the relevant standing committee considered draft law 7466 as of December 28, 2017 “On the Effective Management of the Economic Rights of Rightholders in the field of Copyright and/or Related Rights” and made the decision to adopt it as a basis at first reading. However, the draft law was passed with the reservation that the draft law will be subject to significant modifications to eliminate a number of inaccuracies and inadequacies so as to secure the interest of community of Ukrainian authors and the adequate transformation of one of the major SMOs – Ukrainian Agency of Copyright and Related Rights – and harmonization of the Ukrainian legislation with EU Directive 2014/26/EU on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market.

The Ukrainian community does hope that the consensus will be reached that will result in the sustainable transition to the new transparent and accountable model of administration of the system for collective management organizations in Ukraine.

Kateryna Oliinyk
Co-Chair of the Chamber IPR Committee
Arzinger Law Office