VZCZCXRO0067
PP RUEHDBU RUEHLN RUEHSK RUEHVK RUEHYG
DE RUEHKV #0292/01 0431136
ZNR UUUUU ZZH
P 121136Z FEB 09
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 7259
INFO RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUCNCIS/CIS COLLECTIVE
RUEHSF/AMEMBASSY SOFIA 0046

UNCLAS SECTION 01 OF 03 KYIV 000292 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/UMB AND EB/TPP/IPE 
STATE PLEASE PASS TO USTR FOR BURKHEAD/GROVES 
USDOC FOR 4201/DOC/ITA/MAC/BISNIS 
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYCK 
SOFIA FOR MLAMBERTI 
 
E.O. 12958: DECL: N/A 
TAGS: ETRD KIPR EAGR SENV UP
SUBJECT: UKRAINE: IPR ENFORCEMENT COOPERATION GROUP AGAIN 
PUSHES ON COUNTERFEIT AGRICULTURAL CHEMICALS 
 
REFS: A) KYIV 256 
      B) 2008 KYIV 2265 and previous 
 
¶1. (SBU) Summary: GOU, Embassy, and industry 
representatives discussed efforts to combat counterfeit 
agrochemicals at a February 10 IPR Enforcement Cooperation 
Group (ECG) meeting, a follow up to the last ECG meeting 
held in November.  GOU interlocutors recognized the danger 
presented by counterfeit agrochemicals and expressed a 
desire to improve enforcement.  The State Security Service 
finally provided some details regarding a major seizure 
made in 2006, but said it could not grant rights holders 
access to the seized goods until an ongoing criminal case 
was completed.  Industry reps provided concrete proposals 
to improve the registration process for agrochemicals so 
that patent-infringing goods could not make it to the 
Ukrainian market.  Rights holders also urged the GOU to 
develop a workable procedure to ensure destruction of any 
fake agrochemicals.  The meeting offered hope for real 
improvements to the regulatory regime, although the GOU is 
unlikely to fully develop a destruction capability given 
its current budget crisis.  End Summary. 
 
¶2. (U) On February 10, Post and Ukraine's State Department 
of Intellectual Property (SDIP) conducted the ninth meeting 
of the U.S.-Ukraine IPR Enforcement Cooperation Group 
(ECG), with participation of numerous industry 
representatives.  This ECG meeting focused on combating 
counterfeit agricultural chemicals.  Post, rather than 
SDIP, hosted the ECG for the first time ever in an effort 
to encourage improved attendance from the last meeting (ref 
B), which focused on the same issue. 
 
¶3. (U) The following is a list of key participants in the 
ECG meeting: 
 
GOU 
--- 
Valentin Chebotaryov - Deputy Chairman, SDIP 
Iryna Vasylenko      - Head of Enforcement Division, SDIP 
Olena Shcherbakova   - Head of European Integration and 
                       Int'l Cooperation Division, SDIP 
Liudmyla Syvolotska  - IPR Division, State Customs Service 
Oleksandr Tkachuk    - Center for Int'l Cooperation, 
                       State Security Service (SBU) 
Yevgeniy Rudik       - IPR Division, Ministry of 
                       Internal Affairs 
Alla Otverchenko     - Economic Cooperation Department, MFA 
 
Industry 
-------- 
Marek Luczak         - Syngenta 
Svetlana Matveyeva   - DuPont 
Tatiana Zhurkova     - DuPont 
Oleksandr Mamunya    - Vasil Kisil & Partners Law Firm 
Natalia MacMaithghon - Pakharenko & Partners Law Firm 
                      (representing CropLife International) 
Oksana Bedratenko    - European Business Association (EBA) 
                       Agrochemical Committee 
 
Enforcing Patents 
----------------- 
 
¶4. (U) Industry reps reiterated complaints that patent 
linkage for agrochemicals is too weak, allowing patent- 
infringing products to find their way to the Ukrainian 
market.  Zhurkova, DuPont Ukraine's lead for patent issues, 
urged Customs to be more proactive in stopping goods at the 
border that were suspected of infringing on an established 
patent.  Syvolotska from Customs expressed a willingness to 
work with rights holders to block infringing imports 
arriving with falsified documentation, but stressed that a 
court ruling was necessary for Customs to act.  Zhurkova 
also called on Customs to expand its IP registry, which 
currently covers only trademarks, to include patents.  GOU 
officials responded that including patents in the registry 
would require Customs to dramatically expand its level of 
expertise and number of testing laboratories. 
 
¶5. (U) Luczak, the Syngenta rep and chairman of EBA's 
Agrochemical Committee, which unites the leading 
internationals, noted that the process of defending patents 
 
KYIV 00000292  002 OF 003 
 
 
through the courts was difficult, even "hopeless."  Luczak, 
Bedratenko, and Mamunya therefore proposed that the GOU 
instead address the registration process, which they 
described as the "root cause" of the problem.  On behalf of 
EBA, the group presented a draft amendment to the 
appropriate regulation (a Cabinet of Ministers Resolution) 
that would prohibit registration of a product found to be 
infringing on a valid patent.  Such a regulatory amendment 
would solve at least 90 percent of the problems, said 
Luczak, as companies would no longer have to fight 
infringing patents through the courts after the infringing 
product had already appeared on the market.  DuPont's 
Zhurkova appeared to agree, urging that, in considering 
product registration applications, the GOU should require 
additional documentation certifying that the relevant 
product did not violate any IP rights. 
 
¶6. (U) Chebotaryov welcomed the EBA proposal and promised 
to circulate it within the GOU.  (Note: The Ministry of 
Environment, responsible for registration, did not send a 
representative to this meeting, likely due to a reshuffle 
of personnel.  EBA is addressing its proposal to them 
separately.  End note.) 
 
"Uzin Case" - Finally an Official Response 
------------------------------------------ 
 
¶7. (SBU) Deputy Econ Counselor asked for an update on the 
status of a large seizure of counterfeit agrochemicals made 
in 2006.  (Background Note: In 2006, the GOU stopped and 
seized a shipment of approximately 500 metric tons of 
counterfeit agrochemicals, with a potential sales value of 
$2.5 million, from China.  The shipment contained fake 
products of several international companies.  The seized 
goods were initially held at a facility in the city of 
Uzin, but there were soon rumors that part or all of the 
shipment had "disappeared," presumably sold off by corrupt 
government officials.  The GOU was slow to provide details, 
although law enforcement officials told us informally that 
the State Security Service (SBU) had taken possession of 
the seized goods and was conducting an investigation. 
Recently, industry reps heard rumors that what was left of 
the shipment was moved to a different facility in the city 
of Shostka.  End Note.)  Deputy Econ Counselor noted that 
rights holders could likely aid in the identification and 
destruction of the seized goods, but that the GOU would 
need to show good faith and grant rights holders access to 
the seizure. 
 
¶8. (SBU) SBU rep Tkachuk briefed the group on the status of 
the case.  He said that in May-June 2008, the entire 
shipment was moved from Uzin to a specialized storage 
facility.  Tkachuk said that the shipment was being 
preserved for use as evidence in court, and that the SBU 
could not provide additional details, even the precise 
location of the facility, nor grant rights holders access 
to the shipment for fear of prejudicing an ongoing criminal 
investigation.  Tkachuk sought to allay industry concerns 
that the shipment, or part of the shipment, had disappeared 
or was unsecured. 
 
¶9. (U) Luczak expressed understanding that the counterfeit 
chemicals could not be destroyed without a court ruling but 
encouraged the GOU to provide more details as soon as 
possible. 
 
Destruction 
----------- 
 
¶10. (U) Luczak complained that there was no clear procedure 
in place to destroy counterfeit agrochemicals.  Mamunya 
said he was particularly concerned that there was 
insufficient legal ground for destruction.  EBA therefore 
presented proposed amendments to the Law on Pesticides and 
Agrochemicals, and to the relevant sub-legislative 
regulations, to clarify that counterfeit agrochemicals 
qualified as a kind of "banned substance" under the law 
that could be destroyed by the government. 
 
¶11. (U) Vasylenko responded that the Criminal and Civil 
Codes already provided for the destruction of all 
counterfeit goods, although she admitted that the Law on 
 
KYIV 00000292  003 OF 003 
 
 
Pesticides and Agrochemicals could be amended to eliminate 
any confusion (see ref B for additional discussion of this 
issue).  (Note: The necessary amendments to the Criminal 
and Civil Codes were adopted in May 2007 as part of 
Ukraine's accession to the WTO.  End note.)  Deputy Econ 
Counselor encouraged the GOU to seriously consider the EBA 
proposal.  Chebotaryov said that SDIP would be happy to 
follow up with industry reps to review the draft amendments 
in detail. 
 
Comment: Progress, but Destruction to Remain a Problem 
--------------------------------------------- --------- 
 
¶12. (SBU) This ECG proved successfully in attracting wider 
GOU participation and focusing attention on what is a 
serious and challenging problem.  The SBU now seems to 
understand that it needs to keep rights holders informed of 
the "Uzin case," a lesson we hope the GOU will keep in mind 
when there are future seizures.  EBA's concrete proposals 
on how to fix the registration process were well received 
and hopefully will lay the groundwork for serious progress. 
That said, there is still a major gap in the enforcement 
chain, namely that the GOU does not have a workable, 
effective process for destroying counterfeit agrochemicals. 
And given Ukraine's budget crisis (ref A) -- as an example, 
an SDIP official told Econoff that the situation was so bad 
that every other light bulb in SDIP's offices had been 
removed to save money -- it is unlikely that in the near 
future the GOU will be able to build new facilities to 
destroy dangerous chemicals or even to finance destruction 
abroad.  In the meantime, we will continue to push for 
progress on the regulatory side.  End comment. 
 
TAYLOR