Reform of judicial proceedings in the field of intellectual property in Ukraine

Intellectual property is a part of civil law that combines industrial property, copyright and related
rights, trademark and confidential information.
It is well known that in the countries of the European Union and North America special attention
has always been paid to the observance of intellectual property rights. There is a constant and
continuous struggle against piracy, plagiarism and other actions that violate or threaten to violate
copyright.
Unfortunately, among Ukrainian citizens, the awareness level of the importance of protecting
intellectual property rights is rather low. Moreover, Ukraine is practically the leader in the rating of
the states, violating intellectual property rights, and is included in the list of «pirate» countries. In
Ukraine, intellectual property is a relatively new part of the legislation. Nevertheless, it should not
be forgotten that the protection of intellectual property rights is provided by the legal norms of
various fields of law. For example, the Civil Code contains definitions, content and types of such
rights (fourth volume «Intellectual Property Law», chapters 75 and 76). At the same time, the
peculiarities of property relations regulation regarding the use of intellectual property rights are
specified in the Commercial Code (Chapter 16). It is worth noting that, in addition, there are certain
separate laws of Ukraine which regulate certain aspects of intellectual property rights. For example,
the Law of Ukraine «On State Regulation in the Field of Technology Transfer» or the Law of
Ukraine «On Copyright and Related Rights”.
At the same time, it should be noted that in the legislation, despite such a large number of laws and
codes regulating the protection of intellectual property rights, there is no clear principle of damages
and compensation calculation.
In recent years in Ukraine, considerable attention has been paid to the observance of intellectual
property rights. In 2016, well-known Ukrainian sites were closed as containing content that was
violating copyright: the ex.ua file exchanger and the online resource fs.to; in early 2017, the Law of
Ukraine «On State Support for Cinematography in Ukraine» was adopted, enabling owners of
copyright to block illegally posted on the Internet video quickly. In addition, in 2017, an initiative
was launched to establish the High Court on Intellectual Property Issues (HCIPI).
In general, such courts are a widespread practice. There are about 90 such courts in the world, and
although they have different names, the scope of their competences is approximately the same. The
creation of these courts was caused by the accession of different states to the WTO and their
accession to the TRIPS. And while it does not oblige states to set up courts that regulate intellectual
property issues, many states have made such a decision on their own initiative.
Earlier cases on intellectual property issues were considered by commercial courts. However, in
September 2017, the Decree of the President of Ukraine «On the Establishment of the High Court
on Intellectual Property Issues» was issued, and recently a new edition of the Code of Commercial
Procedure of Ukraine was adopted, in which the rules and its jurisdiction are defined.
Therefore, HCIPI will consider cases concerning the recognition of a well-known trademark, the
rights to an invention or trademark, cases of protection against unfair competition in the field of
intellectual property rights, cases concerning the registration, continuation or cancellation of
patents, disputes over copyright, contracts, regarding the disposal of proprietary intellectual
property rights.
In addition, economic courts will now consider cases not only between business entities, but also
between individual parties, which are not entrepreneurs. (Part 2, Article 4 of the Code of
Commercial Procedure).
Although such a court is a significant and important step for the Ukrainian judicial system, there are
still some shortcomings that should be noted.
 The first such disadvantage is the territorial remoteness. According to the Presidential
Decree, HCIPI will be located in Kyiv, and this will immediately cause problems with
access for many citizens.
 Secondly, this Supreme Court will deal, in particular, with the case of recognizing trademark
as well known. The problem lies in the fact that there is no clear procedural mechanism for
this.
 Thirdly, the main requirement for judges is a three-year record, but it is never indicated that
the experience should be in the field of intellectual property. Finally, no need need for a
specialist who would possess practical knowledge of applying intellectual property rights is
specified.
Thus, we can conclude that the implementation of such reforms is a long and complicated process,
which requires a lot of coordination, corrections, adjustments and innovations. Even if you create
such a new judicial body, provided all possible details and shortcomings are counted up to the
smallest detail, it will still take time to gain sufficient experience in the field of intellectual property
itself. No less time is needed for individuals and legal entities in order to get used to working under
the new system and all the innovations, as well as begin to trust the competence of the new body.
Reputation and trust is something that only comes with time. You can doubt certain innovations,
new workers, new systems. However, there will always be such specialists whom people will ask
for advice. Our team of lawyers is always ready to provide you with highly qualified legal
assistance, regardless of whether the old system or the new one is current.]]>

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A new law on virtual assets: the picture is formed, but without details. On September 8, 2021, the Verkhovna Rada has finally adopted the long-awaited law "On Virtual Assets", which clarified many ambiguous points. This is especially true for the status of cryptocurrency and the rules of its circulation in the country. Let`s take a closer look at novelties. An ambiguous term Let's start with what the legislator actually means by "virtual assets". There are the following features:  they are an intangible good (cannot be represented on tangible media)  fall under the list of objects of civil rights (that is, they can be owned and be disposed of)  represent an electronic form of a set of data (essentially, they are blocks of information put in order);  the existence and circulation of assets are due to software tools (specific electronic environment). From these features we can draw the following conclusion: virtual assets are not limited to cryptocurrency. Digital currency is part of the concept, but other instruments, such as tokens, NFTs, or even in-game items, fall under the definition. Actually, the actual existence of most digital products, having a certain value, is due to the software environment (ecosystem), either it is blockchain technology, a trading platform, or an online game server. It should be noted that the attempt to define virtual assets was already made in the adopted Law of Ukraine in counteracting money laundering. In this act, they understand it as digital means of payment, which goes against the new definition. As a result, there are now two different explanations for virtual assets, which causes significant confusion not only in regulation but also in interpretation. It is definitely necessary to expect clarifications from competent state bodies. Let's return to the new law. Its application covers legal relations in which the "Ukrainian element" is present:  provider or recipient of services represented in Ukraine;  an agreement according to which the turnover of virtual assets is carried out in accordance with Ukrainian legislation;  the acquirer of assets (or both counterparties) is a resident(s) of Ukraine. The law also introduces an interesting division of all virtual assets into two groups: secured and unsecured. Here again, there is a problem of interpretation. The first category includes products exchanged for (state) currency, the second category includes instruments that can be exchanged only for other digital assets. There is an alternative opinion: that the turnover of secured assets is supported by real goods (money or other property), while unsecured ones are not supported by anything. The latter interpretation is the most credible, as the new law stipulates that virtual assets are NOT means of payment. Moreover, they cannot be exchanged for real goods, be they property, services or money. This significantly narrows the potential for the use of virtual assets not only for commercial but also for civilian purposes. About obligatory licensing The new law states that in some cases, the use of virtual assets will require licensing. The 4 types of activity are mentioned:  storage and management of virtual assets (or its` keys)  servicing of exchange operations with virtual assets (both for other analogues and for real goods);  translation of digital assets;  any intermediary services. A list is quite impressive, but there are some important exclusions:  if your service works with cryptocurrency wallet (it means users can dispose of accumulations into cryptocurrency independently);  If your service works on smart contracts or decentralized protocol, based on which internal transfers are performed. As to intermediary services, everything is more compicated. Actually, any mediation is based on the public share offering. That is why it is subject to licensing. How to get a license? A company that wishes on legal grounds to engage in virtual assets must satisfy legislative requirements. The key role is played by the minimum amount of the statutory capital, which equals 1,19 million hryvnyas (for non-residents it is 5,95 million hryvnyas) in case of storage and administration. For other types of activity (trading, translation and mediation services) the minimum size of the statutory capital amounts to 595 thousand hryvnyas (for non-residents is 2,98 million hryvnyas). The order of the registration of license:  to compose an application and prepare documents.  to pay state fee (68-136 thousand hryvnyas for residents and 340-680 thousand hryvnyas is for non-residents).  to pend review of the request (30 days).  to get a license. The duration of the license is 1 year. No norms about the continuation of legal force of permission are set (we are expecting amendments or explanations from the Ministry of Digital transformation of Ukraine). Notably that non-residents must pay a far greater sum, than domestic companies. The Ukrainian legislator obviously encourages an internal market, getting rid of a strong foreign presence (that, in fact, coincide with modern politics of the state on the whole). Together with an application, the following documents must be prepared: The access code to the copy of the Statute of the company (or the foundation agreement) kept in an electronic file in the database of the Unified State Register of Enterprises and Organizations (USREO);  Funding sources of the statutory capital (where the money are taken from);  confirmation of the actual injection of money;  information about beneficiaries (special attention must be paid to business reputation);  the information about the director and founders;  the check about payment of state fee;  the internal regulations, in accordance with which ones, the privacy policy rules are regulated. In the terms of volume of necessary documentation of licensing is very alike with complete registration of legal entity. It is understood that the state wants the severe adjusting of activity of organizations that will engage in virtual assets. Is it already possible to get a license? The adoption of the law by the parliament is a significant step forward in adjusting and legal market of virtual assets creation in Ukraine. However, the new rules haven`t come into effect yet - their term of introduction depends on making amendments in the Internal Revenue Code. It is yet unknown, when a legislator will decide to enter the renewed system of taxation for such assets. Being "IT-hub" and territory, where cryptocurrency enjoys large popularity, the question of taxes must be decided maximally safely. Despite the presence of obvious gaps in interpretation, a new law on virtual assets gives the official narrative of what takes place and that, how the legal relationships related to cryptocurrency will be regulated. It is to be hoped that in the nearest time the Ministry of digital information will give out the detailed explanations concerning debatable norms.
20/01/2022

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