Ukraine looks to break impasse over collection of copyright fees

In late December 2020, Ukraine's ruling party attempted to bring to an end the long-running saga surrounding the collection of copyright fees from manufacturers/importers of electronic devices able to reproduce copyright-protected content. The issue has been paralysed due to a stand-off between the Collective Management Organizations responsible for collecting these fees and the impacted business community, which has looked to block the initiative at every turn. A draft law was tabled in Parliament which aims to revitalize the fee collection system.

In 2003 the copyright fee was introduced in Ukraine as a compensation mechanism for right-holders' losses caused by piracy. This innovation was driven by Ukraine`s international obligations towards intellectual property protection.

The system operated with disruptions until 2014, when the copyright fee collection was effectively blocked by the business community, which exploited legal loopholes in the legislation and was unwilling to negotiate with Collective Management Organizations, the nominated representatives of the right holders. The conflict largely focused on the fee rates and list of devices charged. The stakes are relatively high – the annual fee collection for laptops and PCs alone could amount to USD 3 million nationwide.

At the end of 2020, the ruling party attempted to relaunch the copyright fee collection system, prompted by concern among its international partners over the weak IP protection within the country. Despite the fresh approach, however, critics say the root causes of the conflict have not been addressed.

The new draft proposes the following:

• to empower the Government to define the fee rates within the limits established by the Law (no higher than 0.12%);
• to define an exhaustive list of devices from which the fee for private copying shall be collected – only from data storage devices: SSDs, HDDs, flash drives and memory cards.

The proposed changes mainly benefit importers and producers of electronic devices, since the list of devices impacted and the rates themselves will be reduced significantly. On the other hand, there are no guarantees that the new system will secure efficient protection of the rights holders – in which case criticism from the EU and other international partners can be expected, as well as potentially a negative impact on trade relations.

To learn more about these developments and possible future scenarios and what they could mean for businesses click here for the full memo in English.