VZCZCXRO2344
RR RUEHBI
DE RUEHKV #1205 1420621
ZNR UUUUU ZZH
R 220621Z MAY 07
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC 2380
INFO RUEAWJA/DEPT OF JUSTICE WASHDC
RUCPDOC/USDOC WASHDC
RUEHMO/AMEMBASSY MOSCOW 0160
RUEHBI/AMCONSUL MUMBAI 0039

UNCLAS KYIV 001205 
 
SIPDIS 
 
DEPT PLEASE PASS TO USTR FOR LMOLNAR/JGROVES 
USDOC FOR 4201/DOC/ITA/MAC/BISNIS 
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYCK 
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MUMBAI FOR KLEIN 
 
SIPDIS 
 
E.O.: 12958: N/A 
TAGS: ETRD KIPR EINT UP
SUBJECT: UKRAINE: MICROSOFT AND GOU GO AFTER SOFTWARE PIRATES 
 
REF: A) KYIV 449 
 
      B) 2006 KIEV 2723 
 
¶1. Summary: A local Kyiv court sentenced a convicted distributor of 
pirated software on May 7 to one year and one month imprisonment. 
Although the judge then suspended the prison term, the severity of 
the sentence attracted significant media attention.  The case is 
part of an invigorated campaign by Microsoft, with the cooperation 
of Ukrainian law enforcement, to crack down on software piracy. 
Software piracy rates in Ukraine remain among the worst in the 
world, although the GOU appears to be taking steps in the right 
direction.  End Summary. 
 
Software Piracy Conviction 
-------------------------- 
 
¶2. On May 7 a local Kyiv court found a distributor of pirated 
software guilty of copyright infringement and sentenced him to one 
year and one month imprisonment.  The case resulted from a raid by 
law enforcement officials in January at Kyiv's "Radiorynok" outdoor 
market.  Media reports noted that the court's sentence was stiffer 
than those in previous software piracy cases, which usually resulted 
only in administrative fines.  The judge subsequently suspended the 
prison term (conditional on the defendant not committing another 
crime), however.  Serhiy Lebid, head of the Ministry of Internal 
Affairs' IPR Department, told Econ Assistant on May 15 that the 
convicted pirate is unlikely to see the inside of a cell. 
 
Larger Microsoft/GOU Campaign 
----------------------------- 
 
¶3. Ukrainian daily Kommersant reported on May 11 that this case was 
only the first of many to follow in the wake of 14 raids by law 
enforcement in early 2007.  Vladislav Shapoval, a lawyer 
representing Microsoft, told Kommersant that there were now 17 cases 
involving pirated Microsoft software working their way through the 
courts.  In April, Microsoft stepped up pressure on suspected 
violators, sending warning letters to 82 companies and organizations 
suspected of using pirated software. 
 
¶4. Valery Lanovenko, General Manager of Microsoft Ukraine, told 
Econoff on May 12 that this case represented an important victory 
for Microsoft's anti-piracy efforts.  He cautioned, however, that 
Microsoft was anticipating an appeal of the conviction.  Lanovenko 
has in the past told Econoff that a key element of Microsoft's 
strategy in Ukraine is to push for a few high-profile criminal 
convictions in order to encourage Ukrainians to eschew pirated 
products. 
 
Software Piracy Remains Rampant 
------------------------------- 
 
¶5. According to a recent study by the Business Software Alliance 
(BSA), Ukraine places among the 10 countries with the highest rates 
of software piracy in the world.  The piracy rate stood at 84% in 
2006, virtually unchanged from 85% in 2005.  Ukraine also falls 
among the top 20 countries in the world in terms of losses to 
industry, estimated by BSA at USD 337 million for 2006. 
 
¶6. As noted in ref A (Post's Special 301 submission), government 
procurement/use of pirated software also remains a problem. 
Microsoft canceled a software legalization agreement with the GOU in 
June 2006 due to government noncompliance. 
 
Comment: Small Step in Right Direction 
-------------------------------------- 
 
¶7. Microsoft, long active in Ukraine through public outreach and 
cooperation with the GOU (ref B), is stepping up its fight against 
local pirates.  Ukrainian law enforcement, especially the Ministry 
of Internal Affairs' IPR Department, appears willing to help by 
targeting raids at suspected distributors of pirated software.  This 
recent, high-profile conviction should help discourage use of 
pirated software.  Until someone actually goes to jail, however, the 
deterrent effect could be limited. 
 
TAYLOR