On August 23, 2016, the Cabinet of Ministers of Ukraine executed the first step of a reform in the sphere of intellectual property, announced earlier this year, and adopted a decision to liquidate the State Intellectual Property Service (SIPS) and transfer all of its functions to the Ministry of Economic Development and Trade of Ukraine (MEDT). SIPS is the main government body responsible for the state’s IP policy, trademark, patent and copyright protection, the functioning of respective IP registries, etc. SIPS delegates most of its functions to the State Enterprise "Ukrainian Intellectual Property Institute"(Ukrpatent) and oversees their execution.
It is important to note that this liquidation does not take immediate effect. In fact, SIPS continues to perform its functions until an additional decree on this point is adopted by the Cabinet of Ministers of Ukraine. Thus, in the short term, it is business as usual for IP applicants in Ukraine and, looking ahead, the reform may cause some disruption to usual business processes, even though the MEDT promises a trouble-free reform.
Concept of the reform
The overall framework of the reform is outlined in the Concept for Reforming of State Intellectual Property System in Ukraine (“Concept”), adopted on June 1, 2016, by the Cabinet of Ministers of Ukraine. The main goal of this reform is to create a high quality, transparent and effective system for intellectual property protection in Ukraine. The Concept mentions specific tasks of the reform:
- establishment of a transparent two-level subordination state system for protection of intellectual property, which would include a National Agency for Intellectual Property (preliminary name, further "NAIP") acting under the direct supervision of the MEDT;
- reorganization of a system for the collective management of copyright and related rights through the establishment of a single collective management organization responsible for the collection of remuneration from consumers; and
- adoption of new IP legislation and its harmonization with the respective EU laws and regulations.
Timeline of the reform
According to the documents and information shared by representatives of the MEDT, the timeline for the reform would be the following:
- August 2016 - liquidation of SIPS (done);
- September 2016 - publication of the first draft law on NAIP for stakeholders’ review;
- October 2016 - transfer of the draft law on NAIP for approval to the Cabinet of Ministers of Ukraine;
- Somewhere in 2016-2017 - adoption of the law on NAIP by the Parliament of Ukraine;
- Fist quarter of 2017 - transfer of all SIPS functions to the MEDT;
- Third quarter of 2017 - transfer of all SIPS functions from the MEDT to NAIP; and
- Somewhere in 2017 - reform of collective management organizations.
However, the actual timeline of the ongoing reform and its action plan is still unclear. This is mostly because several government branches are involved in the process, and the performance of some of these branches, particularly the Parliament of Ukraine, is quite difficult to predict.
Risks and opportunities
This reform in the sphere of intellectual property is unprecedented in Ukraine, and it will not leave a single stone unturned. Critics of the reform point out that there are numerous opportunities for this reform to fail based on its design and execution strategy. The biggest issue of the reform is that it requires the adoption of numerous IP laws and the Parliament of Ukraine has not succeeded in adopting any for around 12-14 years.
The reform may also cause some disruption in the work of the Ukrainian state IP system, which could result in the following:
- delays and unusual issues during registration and transfer of IP rights;
- need to reissue POAs in the name of NAIP;
- change of the civil court responsible for IP cases for the time of transition of functions from SIPS to NAIP;
- procedural need to change SIPS, as a party to the ongoing court proceedings, twice, to the MEDT and then to NAIP;
- delays and unusual issues during copyright clearance for users of copyrighted materials in Ukraine; and/or
- delays and unusual issues with receipt of remuneration from Ukraine for copyright owners;
The Ukrainian government promises to make this reform as transparent and as open to stakeholders as possible. Therefore, during this reform, businesses will have a chance to be heard and to lobby for better IP regulations and better management of the state IP system in Ukraine.
Along with news on the creation of the Ukrainian IP court, which we reported earlier (more on that you can find by following the link, this reform may open a new chapter in Ukrainian IP history. The reform is currently at its initial stage, and how it will be executed remains to be seen. The reform certainly creates an opportunity for businesses to be heard and engaged in consultations on the future of the Ukrainian IP system, but it may also challenge businesses with the need to promptly react to structural and legislative changes. We will be engaged in the discussions around this reform and also encourage you to participate.