VZCZCXYZ0000
RR RUEHWEB

DE RUEHKV #0528/01 0731301
ZNR UUUUU ZZH
R 131301Z MAR 08
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC 5196
INFO RUEAWJA/DEPT OF JUSTICE WASHDC
RUCPDOC/USDOC WASHDC
RUEHMO/AMEMBASSY MOSCOW 0321
RUEHSF/AMEMBASSY SOFIA 0029

UNCLAS KYIV 000528 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB/TPP/IPE - JBOGER/JURBAN 
STATE PLEASE PASS TO USTR FOR PBURKHEAD/JGROVES 
USDOC FOR 4231/ITA/OEENIS/NISD - CLUCYCK 
USDOC PLEASE PASS TO USPTO 
SOFIA FOR MLAMBERTI 
 
E.O. 12958: DECL: N/A 
TAGS: ETRD KIPR ECON UP
SUBJECT: UKRAINE: IP RIGHTS HOLDERS STILL DISSATISFIED WITH 
COLLECTIVE MANAGEMENT -- PUBLIC PERFORMANCE PIRACY 
 
REFS: A) KYIV 503 
 
      B) KYIV 404 
      C) 2007 KYIV 2260 
 
SENSITIVE BUT UNCLASSIFIED; NOT FOR INTERNET PUBLICATION. 
 
¶1. (SBU) Summary: The recording industry remains concerned 
about public performance piracy -- the failure of 
intellectual property users to make royalty payments -- in 
Ukraine.  The industry regards Ukrainian TV stations as 
particularly problematic.  Industry reps would like to see 
increased criminal penalties and broader use of the 
government's regulatory authorities.  The GOU has agreed to 
work with industry's proposals but is concerned about over- 
criminalizing the issue.  Indeed, the heart of the problem 
appears to be rights holders' lack of civil remedies, which 
can only come with long-term improvements in Ukrainian 
courts' familiarity with intellectual property rights.  End 
Summary. 
 
¶2. (U) Econoff attended a February 19-21 Intellectual 
Property Rights (IPR) Conference organized by the GOU in 
Svalyava, Ukraine and a March 5 IPR roundtable hosted by 
the European Commission (ref A).  Both events devoted 
sessions to problems of collective management and public 
performance piracy.  Rights holders have long complained 
that some royalty collecting societies do not properly 
return royalty payments to rights holders and that only a 
small fraction (about 5-7%) of the market properly pays 
performance royalties (ref B,C, and previous). 
 
GOU Conference: Royalty Collecting Societies Frustrated 
--------------------------------------------- ---------- 
 
¶3. (SBU) Pavlo Kalenychenko, Director of the royalty 
collecting society Ukrainian Music Alliance (UMA), detailed 
the difficulties to get IP users, such as restaurants and 
bars, to make royalty payments.  Tamara Davydenko, Head of 
the Copyright Division at the State Department of 
Intellectual Property (SDIP), said she hoped an information 
campaign could help to get IP users to willingly pay 
royalties.  (Note: Davydenko also publicly recognized UMA 
and the Ukrainian Music Rights League (UMRL) -- the two 
royalty collecting societies supported by IFPI -- as the 
primary societies operating in Ukraine, a positive 
development in this long-running saga.  Industry had 
previously expressed concerned over GOU support for rogue 
collecting society Oberih (ref C and previous).  End note.) 
 
TV Stations Particularly Problematic 
------------------------------------ 
 
¶4. (SBU) Vadim Koktysh, Director of Ukrainian recording 
company Honest Music, criticized representatives of local 
TV stations present at the GOU conference for failing to 
make royalty payments on music they played as part of TV 
programs.  The TV station reps in turn complained that they 
had not budgeted for royalty payments and that making such 
payments would cause their stations severe financial 
damage.  (Comment: Although not intending to do so, the TV 
station reps appeared to admit that they were in fact 
avoiding royalty payments owed to rights holders, and that 
they were doing so for purely financial reasons.  End 
Comment.)  Valentin Chebotaryov, SDIP Deputy Chairman, on 
March 5 lambasted as "ridiculous" a letter recently sent to 
SDIP from TV stations repeating the argument that they 
could not make royalty payments due to budget constraints. 
 
Way Forward - Amend Criminal Code? 
---------------------------------- 
 
¶5. (U) Ignat Berezhny, Director of the Ukrainian 
Association of the Music Industry, argued that Article 176 
of Ukraine's Criminal Code should be applied more broadly 
to IP users who play music without authorization from 
rights holders.  Berezhny said that industry reps would 
soon provide the GOU with suggested amendments to the 
Criminal Code to provide for stricter penalties in such 
cases.  Oleg Levchenko, from a smaller royalty collecting 
society, argued that the primary enforcement problem was 
the courts, as judges frequently ruled in favor of 
defendants even when presented with overwhelming evidence. 
 
 
Chebotaryov said SDIP agreed that the Criminal Code needed 
amendment and expressed his willingness to work with 
industry's draft. 
 
Or Use Regulatory Authorities? 
------------------------------ 
 
¶6. (SBU) Chebotaryov cautioned, however, that he did not 
want to over-criminalize public performance piracy.  Oleg 
Dolinsky, Managing Director of Comp Music (an EMI 
Licensee), noted that the biggest IP users -- restaurants, 
bars, and TV and radio stations -- all had to obtain 
government-issued licenses to run their businesses, and he 
asked if the GOU could withhold licenses from IP users who 
failed to make royalty payments.  Chebotaryov responded 
that he had personally argued before Ukraine's TV and radio 
regulatory body that copyright protection requirements 
should be included in the licensing process.  Yet these 
efforts failed, said Chebotaryov, as other GOU agencies 
argued that SDIP was trying to interfere excessively in 
business activities. 
 
Comment: Lack of Civil Remedies 
------------------------------- 
 
¶7. (SBU) Public performance piracy -- the failure of IP 
users to make royalty payments -- continues to be a problem 
in Ukraine.  The GOU has demonstrated goodwill in 
addressing this problem, however, both by recognizing the 
legitimacy of industry-supported royalty collecting 
societies, and by agreeing to try to step up criminal 
enforcement in this area.  Yet, as several of the 
roundtable participants noted, the real solution to the 
problem likely lies in better civil remedies for rights 
holders.  Such improvements will require a judiciary better 
informed on IPR.  Law enforcement cannot shut down every 
restaurant and bar playing unlicensed music, and, indeed, 
should not be spending its limited resources on these types 
of cases.  Post hopes that its continued efforts to focus 
IPR training activities on judges will help lead to long- 
term progress and a system that corresponds more to those 
prevalent in western Europe, where IP users pay royalties 
without the continual involvement of law enforcement.  End 
comment. 
 
TAYLOR