Newsletter № 8
Attention! Legal Alliance newsletter is a monthly corporate publication that is distributed in order to inform our clients, business partners and other interested
persons about the latest changes in legislation, and recent news about the company. Any information presented in the digest, is not a legal advice and does
not constitute an agreement between the attorney and client. About the Newsletter
Since April 2013, Legal Alliance Company is initiating the regular newsletter in the field of
intellectual property law with a special focus on our priority sectors – pharmaceuticals,
medical devices and FMCG.
Once in two months we will highlight the most important features in the field of intellectual
property – legislative novels, market news, executed projects and other interesting solutions
from the Legal Alliance Company.
There are no difficulties to receive a digest. You can subscribe by yourself on our web-site
or apply to Nataliia Duginova, Head of marketing
department, by e-mail
We believe it could be useful for your business purposes in Ukraine.
Attorney-at-law, Patent & Trademark Attorney of Ukraine,
Partner with Legal Alliance Company, Head of IPR practice
READ IN THIS NEWSLETTER
Report 301 Published. Ukraine took first place in the ranking of countries that violate intellectual
Following a special report 301 the Sales Representative Office (Government Agency of the United States) rated Ukraine the
top one in the ranking of countries with high levels of intellectual property infringement. Among the reasons that caused to
give Ukraine the first place are the following: non-transparent work of the collective management organizations whose duty is
to collect royalties, use by public authorities of unlicensed software, Ukraine's status as a "safe harbor" for online piracy over
the past 15 years, court case of EX. UA; the lack of cases of imposition of criminal liability in the sphere of protection of
intellectual property. In 2013 Ukraine took the top position for the seventh time, again after a gap of seven years. Currently,
the top priority need is to introduce the regulation of the liability of agents and third parties, to limit the liability of Internet
service providers, and to provide adequate response to reports of infringements of intellectual property rights in the online
environment. At the same time, the development of international standards of exterritorial action in combating infringements
of intellectual property rights still continues. After the failure of the Anti-counterfeiting Trade Agreement, April 18, 2013, the
lower house of Congress approved the Cyber Intelligence Sharing and Protection Act aimed, among other things, at the
protection of intellectual property rights and at the fight against counterfeiting in the Internet.
Compulsory licensing of intellectual property
Some time ago we have published a forecast on the possibility of the introduction in Ukraine of intellectual property compulsory licensing ). Today, we again focus our attention on increasing activity of state bodies in this direction. Despite the fact that the mechanism of compulsory licensing of intellectual property rights is provided by the law of Ukraine "On Protection of Rights to Inventions and Utility Models" and "On medicines", now in Ukraine it is not implemented However, in May last year Presidential Decree number 526/2012 was adopted, which put into effect the decision of the National Security and Defense Council of 25 May 2012 "On providing the population with quality and affordable medicines." According to this document, the Ministry of Health and Ministry of Justice are obliged to study the issue of adaptation of Ukrainian legislation to the requirements of European legislation, in particular, on the implementation of the Agreement on Trade-Related Aspects of Intellectual Property Rights to protect public health and promote accessibility of medicines system of compulsory licensing of medicines. At the end of March 2013 at a meeting of National Security and Defense the President Yanukovych expressed his dissatisfaction with the pace and effectiveness of work to provide the population with quality and affordable medicines, and reminded the need of approval requirements for production and quality control of medicines in accordance with EU standards. It is worth noting that in the plan of activities of Ministry of Health in 2013, which was made public in January, it is said that the draft law on compulsory licensing must be published in the second quarter. According to the document, compulsory licensing will allow local manufacturers to produce patented drugs even if they could not agree with the holder of the patent. In such a case, the Government will establish a royalty rate and force the patent holder to an agreement about its use. Taking into account the emerging trends in increased attention to the issue of intellectual property compulsory licensing control, we recommend that holders of patents analyzed objects of intellectual property within their ownership. In turn Legal Alliance Company has consistently expressed its opinion on the inadmissibility of the adoption of this project in this wording, meanwhile realizing that international treaties and current law give all the possibilities for the introduction of this mechanism.
Legal Alliance lawyers are ready to provide legal assistance in case of questions related to intellectual property. You can
contact Illya Kostin
, partner with Legal Alliance - or Natalia Lavrenova
, senior lawyer with Legal
Alliance - . Telephone number: 380 44 220 15 84.
Protection of copyright and related rights in the Internet
Until the 1st of July, 2013, there will continue the discussion of the draft Law of Ukraine "On amendments to some legislative acts on the protection of copyright and related rights in the Internet", published by the State Intellectual Property Service of Ukraine. The draft law intends to amend the existing law "On Copyright and Related Rights" to include a new way to protect rights, namely, the right to apply with the statement about infringement of copyright and (or) related rights to the State Intellectual Property Service of Ukraine. There is a provision for the list of documents to be submitted together with the application, and the payment of fee to the budget. Foreigners and foreign entities must also submit Ukrainian translation of the documents, duly certified (legalization, apostille). In case of improper placement of copyrightable objects and/or objects of related rights on a website and, therefore, three or more decisions of the State Intellectual Property Service in respect of the website, customer service must discontinue service of the website (there were proposed respective changes to the Law of Ukraine "On Telecommunications" ). On June 21, 2013, a similar law was passed by the State Duma of the Russian Federation.
Fees for use of equipment and material carriers used for personal needs
There have been published the Draft Resolution of the Cabinet of Ministers of Ukraine "On Amendments to the Resolution of the Cabinet of Ministers of 27 June 2003 № 992". The draft resolution envisages the amount of fees paid by manufacturers and importers of the equipment and physical media the use of which for personal needs may result in reproduction of works and performances fixed in phonograms and (or) videograms. The amount of fees for importers is calculated based on the value specified in the foreign trade agreement; for domestic producers - as a percentage of the selling price. The fees are not paid in case of professional equipment and (or) physical media or the equipment exported beyond the customs territory of Ukraine. The fees are transferred to the authorized collective management organizations determined by the State Intellectual Property Service of Ukraine.
On June 17, 2013, the draft Law of Ukraine "On electronic commerce" was registered with the Verkhovna Rada of Ukraine. The draft law is already not the first attempt to regulate the relevant areas, however, emphasis should be made on the innovations proposed in the draft law, which may be the impetus for the formation and development of e-commerce in Ukraine: there have been introduced the terms "electronic agreement", "online shop", etc., there have been abolished the requirement for mandatory digital signature on electronic documents, there have been provided for guarantees of judicial protection of rights of subjects of e-commerce. It should be noted that due to the international initiatives in this area (formed at the conference organized by the European Commission on 22 April 2013 in Dublin and aimed against counterfeiting in the Internet, in particular, in trade of counterfeit goods through e-commerce), the draft must be amended to include appropriate safeguards.
End User License
Private companies are currently lobbying changes to the Tax Code of Ukraine to facilitate application of the doctrine of exhaustion of intellectual property rights in the tax practice. According to international practice, "end user license" in a computer program gives the right to use the computer program only according to functional application, rather than the right to copy and distribute the program. Payments for such a program must not be the royalty. According to the leading experts in tax practice: depending on the form in which copies of the program are distributed payment will be either for the goods (if the computer program is transferred on a physical medium) or payment for services (if the computer program is available via the Internet), and be subject to VAT. Thus, it is planned to determine that payments paid by end users for the relevant copies of works shall not be treated as royalties.
The court imposed a fine of 14 million hrn to the owner of the Kiev online forum
Among the recent decisions of national courts there should be mentioned the decision of the Dnieper District Court of Kyiv of April 21, 2013, pursuant to which the holder of a Web resource was fined 14 million for the illegal use of trademarks for goods and services on the site with the statistics of up to 20 visitors a day. In the court opinion the judge Natalia A. Cech noted that the plaintiff’s prayer for compensation for moral damages in the amount of additional 1 mil ion was not proved in
court, and therefore could not be granted. Conclusion on the amount of the property damage was made by the appraiser PE "Activ-Invest". Conclusion of the Research Institute for Intellectual Property stating the non-commercial use of the mark for goods and services was not admitted by the judge. The decision is contrary to the Law of Ukraine "On Protection of Rights in Trademarks for Goods and Services", which provide for legitimacy of noncommercial use of registered trademarks without consent of the owner.
United States District Court
On April 6th, 2013, the Central California court ruled in the case Ingenuity 13 LLC v. John Doe, which, similar to the decision in the case of Riviera Riverside, is not an example of the universally accepted court practice, but, unlike the latter, although the decision of the California court started with a quote of Spock from the Startrack, it is the proof of legal professionalism and common sense. Judge Otis D. Wright II said that the law on copyright initially designed to support starving artists is used, in the times of electronic media, by hungry lawyers for robbing people. On the basis of identical court documents, the judge revealed the scheme created by lawyers who resorted to threats of lawsuits against individuals with IP addresses of which pornographic video was downloaded from BitTorrent for non-commercial use. The lawyers received profits until John Doe, risking privacy, submitted the case to the court of California. a In addition to the fine of around 80,000 the defendants faced reputational risks.
Patent Court started its work in Moscow
From the 1st of July 2013 in Moscow there will be working the court of intellectual property rights, which, according to the Federal Constitutional Law on Arbitration Courts in the Russian Federation, is a specialized court which, within its jurisdiction as a court of first and second instances considers, the cases in disputes related to the protection of intellectual property rights. The jurisdiction of the court covers the cases regarding determining of the patent holder, on cancellation of the patent, on the appeal of normative legal acts of the federal executive bodies, on provision of or termination of legal protection of the results of intellectual activity, on the appeal of the federal antimonopoly body, etc. In May 2013, the first deputy chairman of the State Intellectual Property Service of Ukraine Oleksiy Ianov stated about the possibility of establishment of the Patent Court in Ukraine – the court to deal with intellectual property issues.
Human genes are not patentable
On June 13, 2013, the U.S. Supreme Court in the case of the Association of Molecular Pathology v. Myriad Genetics held that human genes must not be the subject of patents. In its decision the Court did not cover the issue of distribution ban on receiving patents as to scientific modifications of the genetic code, but noted that the gene and the information they bear, are not subject to patenting for the reason that they are separated from the surrounding genetic material. Although the decision puts an end to the question about patenting human genes, the political debate continues, particularly regarding the legality of storage by company Myriad Genetics of the previously received data.
Currently, there considered the case upon the claim of Eli Lilly and Company v. Government of Canada, submitted to an arbitral tribunal of the North American Free Trade Agreement (pursuant to an agreement NAFTA). Canadian domestic courts found invalid the patent to the generic drug Strattera intended to treat attention deficit disorder. The American company plans to challenge the two doctrines of the Canadian patent law that restrict the rights of companies under international agreements. There have been alleged violations of three standards of investment protection: the prohibition on indirect expropriation, the standard of equal treatment and the minimum standard of treatment of investments. There have been filed a claim for compensation of 100 million necessary for the restoration of the patent. At present, the dispute is in the process of settlement through negotiation.
Great Britain will reduce the price of medicines by 20%
On June 20, 2013, the Department of Health launched a public debate aimed at reforming the system of price controls by the NHS, which will affect the prices for drugs that are not included into the national pharmaceutical price regulation scheme (PPRS). According to the forecasts, in the result of the reform prices for drugs that are not covered by PPRS will decreased by 20%. The reform is in line with the European trends in reducing the cost of health care, and, among other things, is due to publication by The Telegraph of the results of investigation revealing the schemes of interaction of UK drug manufacturers, wholesalers and pharmacies in the use of discounts where the excessive 50-100% become a burden for taxpayers.
Innovativeness of drugs against diabetes
In April 2013, an American company Cowen and Company published a report about the drugs used against diabetes. The list of drugs includes 86 positions. However, it was noted that most of them alleviate the symptoms rather than eliminate the causes of the disease. The report also states that only a small percentage of those drugs are innovative. At the same time, to encourage pharmaceutical research by companies in this sector, the public and the private sectors are going to introduce the compliance of the level of reimbursement and restrictions on price regulation and the level of innovation of drug products.
Lawyers of the intellectual rights practice have provided advice to the Client, a global pharmaceutical company, on the issue of data exclusivity of the original drug of pediatric group.
Legal advice was given to the Client on drugs and immunotherapeutic agentsdata exclusivity, as well as orphan drugsdata exclusivity, data exclusivity protection in Ukraine, as well as on approaches to data exclusivity for these drugs in a number of countries in the European Union.
Legal support of the project was held by IllyaKostin Partner with Legal Alliance, NataliiaLavrenova Senior associate and Aleksandr Ganja, lawyer with Legal Alliance.
A new edition of one of the most anticipated researches of the legal services market Ukrainian Law Firms 2012 was issues on 18th of April 2013. A Handbook for Foreign Clients – is a rank of the Ukrainian law firms according to the area of practice, is based on the results of the law firms for previous year.
According to the results of 2012 Legal Al iance once again received the highest “Top Legal Adviser” researches’ evaluation in the practice of “Medicine, Healthcare, Pharmaceuticals” among other companies having practice in this area. With more than 2,000 healthcare projects in 2012, Legal Al iance remains a leader in the “Medicine, Healthcare, Pharmaceuticals”practice for the past four years, and year by year is strengthening its positions.
Legal Alliance Partners Illya Kostin and Oleksii Bezhevets were included in the top five industry experts. Illya Kostin was awarded for excellence in the field of regulatory mechanisms, intellectual property and dispute resolution. Oleksii Bezhevetshas been recognized for a number of projects in the filed of taxation, business law and dispute resolution.Illya Kostin is at the top of personalities list for the fourth year in a row.
The research also noted a significant activity of the Company’s Partner Dmytro Aleshko in the field of pharmaceutical regulatory mechanisms, Associate Partner Viktoria Ptashnyk in the field of competition law, corporate law and M&A, Counsel Andriy Gorbatenko in the field of competition law, advertising and business law, Senior associate Natalia Lavrenova as a leading expert in the practice of intellectual property, and Company’s lawyer Lidia Sangarovskaya-Gurlach as a leading expert in competition law.
In the interest of the Client, a major Russian manufacturer of drugs, lawyers of intellectual property rights practice conducted a study of the possibility of registering the Rx group drug on the territory of Ukraine with regard to the matters of intellectual property.
During the project, the lawyers have analyzed the authorized medicinal products and applications submitted for registration, analyzed the marks for goods and services registered for drugs and counseled clients on the excretion of the drug on the Ukrainian market.
Legal support of the project was provided by Ilya Kostin, partner with Legal Alliance and Natalia Lavrenova, senior lawyer with Legal Alliance.
Legal Alliance draws the attention of their customers and other pharmaceutical manufacturers, owners of the registration certificates to the situation of the forced termination of the drugs registration certificates by the Ministry of Health.
According to the Decree of Cabinet of Ministers from 26 May 2005 number 376 (as amended), the Ministry of Health may decide to fully or temporary ban on the use of the drug by the means of termination of the registration certificate if such a drug was introduced into circulation on the territory of Ukraine for two years from the date of state registration (re-registration).
The exception to this rule are cases where the drug is entered in circulation due to the way of production and / or use.
At the same time regulatory standards also contain additional justification for the termination of the registration certificate, namely - in finding previously unknown its dangerous properties.
Recently, the work of the State Expert Center of the Ministry of Health of Ukraine has intensified, aimed at identifying drugs that are at risk zone. The last two meetings of the Scientific Expert Council of the State Expert Center of the Ministry of Health of Ukraine were marked by widespread recommendations for termination of registration certificates for such medicines.
Lawyers of Legal Alliance are willing to provide legal assistance to protect the interests of medicines registration certificates owners. In case of any questions, please contact Illya Kostin, partner with Legal Alliance by telephone: 380 44 220 15 84 or email.
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