VZCZCXRO2971
PP RUEHBI
DE RUEHKV #1450/01 1631331
ZNR UUUUU ZZH
P 121331Z JUN 07
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 2691
INFO RUEAWJA/DEPT OF JUSTICE WASHDC
RUCPDOC/USDOC WASHDC
RUEHMO/AMEMBASSY MOSCOW 0177
RUEHBI/AMCONSUL MUMBAI 0055

UNCLAS SECTION 01 OF 03 KYIV 001450 
 
SIPDIS 
 
SIPDIS 
 
STATE PLEASE PASS TO USTR FOR MOLNAR/GROVES 
USDOC FOR 4201/DOC/ITA/MAC/BISNIS 
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYCK 
MUMBAI FOR WKLEIN 
 
E.O. 12958: DECL: N/A 
TAGS: ETRD KIPR ECON UP
SUBJECT: UKRAINE: IPR ENFORCEMENT COOPERATION GROUP 
DISCUSSES DESTRUCTION OF INFRINGING GOODS 
 
REFS: A) KYIV 1338 
 
      B) KYIV 348 
      C) 2006 KYIV 4359 
      D) 2006 KIEV 2219 
      E) 2006 KIEV 881 
 
¶1. Summary: GOU, Embassy, and industry representatives 
discussed the destruction of IPR-infringing material at a 
June 5 Enforcement Cooperation Group (ECG) meeting.  GOU 
reps reviewed recently-passed legislation that provides the 
authority for destruction and said that implementation will 
be a challenge.  USG and UK experts advised on how best to 
approach the issue, in particular describing how equipment 
seized from illegal producers can be used to bolster law 
enforcement agencies' capabilities.  Industry reps 
expressed concern that lack of government funding could 
inhibit destruction and expressed their willingness to 
cooperate with the GOU.  A GOU-Industry partnership will 
indeed be necessary to properly implement the new 
legislation, and Post will continue to facilitate this kind 
of dialogue.  End Summary. 
 
¶2. On June 5 Ukraine's State Department of Intellectual 
Property (SDIP) and Econoffs conducted the fifth meeting of 
the IPR Enforcement Cooperation Group (ECG), with 
participation of numerous industry representatives. (Note: 
Refs B-E describe previous ECG meetings.  End Note.)  The 
meeting took place on the margins of a seminar devoted to 
IPR enforcement (septel) and included U.S. and United 
Kingdom experts in Kyiv for the seminar. 
 
¶3. The following is a list of key participants: 
 
GOU 
--- 
Valentin Chebotaryov - Deputy Chairman, SDIP 
Iryna Vasylenko      - Head of Enforcement Division, SDIP 
Sergiy Nikulesko     - Head of IP Inspectors, SDIP 
Tamara Davydenko     - Head of Copyright Division, SDIP 
Olena Shcherbakova   - Head of European Integration and 
                       Int'l Cooperation Division, SDIP 
 
Industry 
-------- 
Michael Buchan         - Motion Picture Association (UK 
                         Office) 
Dominic Watson         - DuPont Ukraine 
Natalya Pleshkova      - Danone Ukraine 
Alexander Kotlyarevsky - IFPI 
Ignat Berezhny         - Ukrainian Association of the Music 
                         Industry 
Yulia Andrusiv         - British American Tobacco Ukraine 
Ilya Frolov            - Unwind Technology 
Alexander Pakharenko   - IP Law Firm Pakharenko & Partners 
Mikhail Aristov        - Boehringer Ingelheim Pharma GmbH 
Yuliya Kobuk           - American Chamber of Commerce 
Olga Sydorenko         - European Business Association 
 
USG and UK 
---------- 
J.P. Schutte      - Deputy Economic Counselor, U.S. Embassy 
Todd Reves        - Office of Enforcement, USPTO 
Marina Lamm       - Office of Enforcement, USPTO 
Steve Mellin      - Assistant U.S. Attorney, Eastern 
                    District of Virginia 
Gerald Reichard   - Special Agent, FBI 
Timothy Tymkovich - Judge, U.S. Court of Appeals for the 
                    Tenth Circuit 
Phil Lewis        - Senior Policy Advisor, United Kingdom 
                    Intellectual Property Office (UKIPO) 
Pete Astley       - Principal Trading Standards Officer, 
                    Warrington Borough Council (UK) 
 
GOU: Need to Implement New Destruction Law 
------------------------------------------ 
 
¶4. As described in ref A, the Ukrainian Rada (parliament) 
on May 31 passed a law amending the Civil and Criminal 
Codes to allow for the destruction of counterfeit and 
pirated goods, as well as the equipment used to produce 
those goods. The ECG meeting focused exclusively on this 
issue, and expert-level exchanges on the storage and 
destruction of IPR-infringing goods continued throughout 
the three-day workshop.  SDIP officials at the ECG 
 
KYIV 00001450  002 OF 003 
 
 
described the amendment as a simple fix to provide clear 
authority for the GOU to destroy all kinds of infringing 
goods, not just optical disks.  (Note: President Yushchenko 
signed this measure into law on June 11.  End Note.) 
 
¶5. SDIP officials noted that the challenge would now be to 
develop appropriate procedures to implement the law.  They 
identified the following as especially critical issues, and 
asked for U.S. and UK insights: 
-- Developing the technical capability to destroy 
infringing goods (especially more dangerous items like 
counterfeit pharmaceuticals and pesticides); and 
-- Financing the storage and destruction (i.e. by the 
government, infringing party, or right holder). 
 
USG: Destroy Goods, Seize Equipment 
----------------------------------- 
 
¶6. U.S. prosecutor Steve Mellin encouraged the GOU to 
approach infringing goods and the equipment used by the 
illegal producers separately.  U.S. reps noted that for the 
infringing goods themselves, the preference is always to 
destroy.  Astley and Buchan described efforts in the UK to 
destroy goods through a recycling process that is more 
environmentally friendly. 
 
¶7. According to Mellin and FBI special agent Reichard, the 
USG preference is to seize rather than destroy equipment 
used to produce infringing goods.  The government could 
sell any difficult-to-destroy equipment for which 
destruction is not feasible, such as an actual 
manufacturing plant.  Mellin and Judge Tymkovich noted 
that, in such cases, the government would have to use 
follow-on monitoring and other legal tools to ensure that 
the equipment was never again used to produce infringing 
goods.  Reichard and Lewis described how both U.S. and UK 
law enforcement officials make use of legal provisions 
allowing them to seize equipment -- such as cars, 
computers, and photocopiers -- to use for official law 
enforcement purposes.  The FBI, said Reichard, often uses 
this provision to provide equipment to under-funded local 
agencies active in combating IPR crimes. 
 
¶8. SDIP Chairman Chebotaryov expressed concern that such 
measures could raise suspicions of government corruption in 
Ukraine.  U.S. officials responded that the seizure of 
equipment for official purposes should proceed only on the 
basis of a court order, with due process and full 
transparency.  An independent government body could decide 
where the seized equipment would go. 
 
Industry: Who's Going to Pay? 
----------------------------- 
 
¶9. IFPI rep Kotlyarevsky described destruction of 
infringing goods as particularly important because it 
strikes at the leadership of illegal production, rather 
than just the street-level retailers.  He also noted that, 
without destruction, enforcement efforts in one country 
often result in the equipment used to produce pirated material 
simply moving to a neighboring country.  Kotlyarevsky said 
industry's greatest concern was who would incur the cost of 
destruction.  Lack of government funding would be a major 
impediment to destruction, cautioned Kotlyarevsky, and he 
asked if there was precedent for the infringer to pay. 
(Note: Philip Morris Ukraine has been particularly vocal on 
the need for the infringers to pay, but its representative 
was unable to attend the ECG.  End Note.)  Mellin responded 
that such precedent does exist in the U.S. system, but that 
prosecutors instead usually simply seek forfeiture of 
assets.  Judge Tymkovich noted that the government could 
request the court to assess specific damages against the 
infringer to cover the costs of destruction. 
 
Work with Industry! 
------------------- 
 
¶10. Buchan, from Britain's MPA, urged the GOU to partner 
closely with industry when destroying infringing goods or 
equipment.  In the UK, rights holders had legal title to 
infringing goods, so destruction required their 
cooperation.  Storage of infringing goods was often a major 
challenge, and industry could help in providing storage 
space.  DuPont rep Watson noted that counterfeit pesticides 
 
KYIV 00001450  003 OF 003 
 
 
could be particularly difficult to destroy; DuPont was 
interested in assisting the GOU at the technical level. 
Deputy Econ Counselor noted that the USG had already 
provided some technical assistance in this area and would 
look at further opportunities to do so, perhaps in 
partnership with industry reps and with EU colleagues. 
 
Comment: Gov-Industry Cooperation a Two-Way Street 
--------------------------------------------- ----- 
 
¶11. The dominant theme of the ECG discussion on 
destruction, and indeed of the entire three-day workshop, 
was that industry is an invaluable and indispensable asset 
to government in enforcing IP rights.  The GOU has 
gradually become more comfortable in cooperating with 
industry reps, in part encouraged by these ECG meetings. 
As Deputy Econ Counselor reminded the ECG participants, 
however, GOU-industry cooperation must be a two-way street. 
The GOU will have its hands full in implementing the new 
law allowing for destruction of all IPR-infringing goods 
and equipment.  Industry can help the GOU develop workable 
implementing procedures.  The European Business 
Association's IPR Working Group is drafting a set of 
recommendations for the government. 
 
TAYLOR