• Alexander Pakharenko

    Partner, Pakharenko and Partners IP and Law Firm, Attorney-at-law, Ukrainian Patent Attorney,
    Director of the Ukraine Alliance Against Counterfeiting and Piracy

PAKHARENKO & PARTNERS

Address: Business Centre Olimpiysky, 72 Velyka Vasylkivska Street, Kyiv, 03150, Ukraine

Tel: +380 44 593 9693

Fax: +380 44 451 4048

E-mail: pakharenko@pakharenko.com.ua

Web-site: pakharenko.ua

IP and Law Firm Pakharenko & Partners was established in 1994 and has offices in Kyiv and London. As a firm providing full IP service coverage we are keen on developing successful protection and enforcement strategies for our clients, covering the development of IP portfolio, acquisition of IPRs, commercialisation of IPRs, enforcement and management of IPRs, including patents (inventions and utility models), designs, trademarks and geographical indications, domain names, copyright and related rights, plant breeders’ rights both at national and international level.

The firm provides assistance to national and foreign clients in securing and enforcing their intellectual property rights in Ukraine and CIS countries.

The company’s lawyers have been involved in anti-counterfeiting and anti-piracy activities since the implementation of the relevant provisions on IPR enforcement in Ukrainian legislation.

Our staff members also have expertise in pharmaceutical law, competition law, media law, corporate and commercial law, commercial litigation.

We’re able to service our clients’ needs around the world through our established network of associates. The special relationships developed by our company with many attorney firms in key foreign markets provide ongoing, substantial benefits to our internationally focused clients.

 

Main practice areas:

Intellectual Property Law, Anti-Counterfeiting and Anti-Piracy Operations and Legal Support, Media Law, Advertising Law, Competition Law, Pharmaceutical Law, Corporate Law, Customs Law, Commercial and IP Litigation

 

Membership of organizations:

The company and its members are actively involved in the operation of a number of national and international intellectual property associations, such as: AIPPI, INTA, FICPI, LES, MARQUES, PTMG, ECTA, ACG, IACC, ACACAP, ICC Ukraine, IBA, European Business Association (EBA), American Chamber of Commerce (ACC) in Ukraine, Ukrainian Patent Attorneys Association (UPAA), Seed Association of Ukraine, Ukrainian Bar Association, Ukrainian Attorney Association (UAA), Ukrainian Alliance Against Counterfeiting and Piracy (UAACP) which is a member of the GACG Network, CIOPORA.

Reforming Customs and IPR Enforcement

Achieving an adequate and effective level of protection and enforcement of intellectual property rights (IPRs) is one of the focuses of the EU — Ukraine Association Agreement. IPR enforcement has been identified as one of the priorities of the Ukrainian government, as it is the basis for the country’s innovative development and fair competition. However, due to various reasons, the changes in the sphere of IPR protection expected by potential investors and Ukrainian foreign partners, have not occurred yet.

One of the main problems of the fight against counterfeiting and piracy at the customs border is ineffective operation of the Customs Register of IP objects.  Scrupulous right holders include their IPR objects in the register to fight counterfeit goods and prevent their putting into free circulation. Under the law, a customs officer checks the conformity of the data of declared goods with the data entered in the Customs Register of IPR objects, namely the code of goods under the Ukrainian Classification of Goods for the Purposes of Foreign Economic Activity, description of goods and availability of information about the IPR object, information about the subjects of foreign economic activity performing a foreign economic transaction (authorized importers), transportation vehicle and peculiarities of crossing of customs border. As a result, the Customs Service of Ukraine suspends the customs processing of goods if the importation of goods is carried out by unauthorized importers (not included in the Customs Register) while the activities of the customs authorities should be aimed at preventing counterfeit and pirated goods from entering the territory of Ukraine.

That is why setting up an effective work of the customs authorities aimed at assisting in protection of IP rights at the customs border is an urgent matter, due to the threats posed by counterfeiting to the security of Ukraine (profits obtained from sale of counterfeits are widely used by organized crime, including terrorists) and it should be achieved within the shortest possible time.

Currently, the State Fiscal Service is undergoing reforms and is to be divided into the customs authority and tax authority. The SFS officials assure that priority issues include digitalization of customs services and further automatization of the customs processing, particularly in the course of assisting in protection of IP rights at the customs border.

Priority Steps

In the course of reforms and in order to improve the protection of IP right hol­ders, the objectives of the central customs authority should be as follows:

— ensuring unhampered customs processing of original goods that would fully comply with the requirements of Regulation (EU) No 608/2013;

— initiating the enhancement of the operation of the Customs Register of IP objects with regard to the development of an electronic system for the online data interchange (using the latest digital technologies, online resource) between companies-right holders (or their representatives) and customs authorities;

— improving the procedures of simplified destruction of counterfeit goods and small consignments starting with legislating for the possibility of placement of such goods in the customs regime of “destruction” particularly by customs officers after obtaining the consent for such procedure from an owner of goods and IP right holder, and ending with the adoption of the regulation on the mechanisms of placement of counterfeit goods at the customs warehouse, the clear terms of their storage and the procedure for calculation of the costs of such storage.

Digitalization of the Customs Register of IP Objects

The latest practice of border measures shows that the central authority responsible for customs issues is lacking a uniform consolidated database with information about all actions taken by the Customs Service of Ukraine regarding suspension of customs clearance of goods with features of infringement of IP rights, starting with suspension of goods and ending with destruction of counterfeit goods.

To solve these issues it is advisable to introduce the system of electronic data interchange between companies-right hol­ders (or their representatives) and customs authorities which will allow filling-in and submission of applications for inclusion of IPR objects in the customs register, carrying out online interchange of information between customs officers and right hol­ders, recording all actions, in particular, the requests of customs authorities addressing right holders (time of sending of request, time of receipt of the response, information about persons responsible for information interchange) and will contain consolidated information about car­rying out of all actions by customs with regard to suspension of clearance of particular goods with signs of IPR infringement, starting from the suspension of goods and ending with destruction of counterfeit products.

By analogy with the Regulation (EU) No. 608/2013 of 12 June 2013, when considering a right holder’s application for inclusion of the IPR object to the Customs Register, it is necessary to ensure that the applicant provides the comprehensive information necessary for the identification of the original goods, since the absence of such information in the Customs Register of IPR objects results in the suspension of customs clearance of original goods that are the subject of parallel import.

Also, the publication of data of the customs register on the official website of the Customs Service of Ukraine should also be improved, namely, disclosure of information available in the Customs Register of IP objects for third parties (importers, exporters) according to the legislative requirements to public information concerning open data. For the time being the information available on the website of the SFS is represented in the form of tables (in Microsoft Office Excel files) that can hardly be considered as a friendly interface providing for simple data processing by a potential user. Furthermore, since summer of 2018 no information about right holders’ authorized representatives in Ukraine is available, while in cases where the consent for publication of its data has been provided by the right holder’s representative, such information must be provided in open access.

Improvement of the Simplified Procedure for Destruction of Counterfeit Goods

According to the recent practice of border measures, the simplified procedure for destruction of goods is imperfect and results in the failure to observe the terms of storage of such goods (up to 5 years instead of 90 days) and unjustified overvaluation of the cost of storing counterfeit goods in customs warehouses. Even in case of written consent of the owner of counterfeit goods for their destruction, according to paragraph 5 of Article 401 of the Customs Code of Ukraine No. 4495-VI of 13 March 2012, the owner of such goods shall conduct an additional procedure of customs processing of such goods under the customs regime of “destruction”. In addition, when sending such goods in postal items, including so-called “small consignments”, consignees in some cases ignore procedural obligations to place goods under the “destruction” regime, in the absence of administrative countermeasures.

By analogy to Regulation No. 608/2013 of 12 June 2013, a simplified procedure for the destruction of goods suspected of counterfeiting, including destruction of small consignments, should be developed that will minimize the procedural burden on the owner of the goods, as well as the administrative burden on the customs authorities. The destruction procedure must be carried out under the control of the customs authorities; it should be simple to complete, the participation of the owner of counterfeit goods in the destruction procedure should end after providing the consent for destruction or “tacit consent” by the latter, the right holder must be able to control the fulfillment by the owner of the goods of its obligations and have the right to be directly involved in the process of destruction of such goods, given that it is the right holder who bears all the costs associated with the suspension and destruction of counterfeits.

In order to prevent the failure to observe the terms of storage and ungroun­ded overvaluation of the cost of storing counterfeit goods in customs warehouses, it is necessary to develop and legislate for the mechanisms of placing these goods in the customs warehouse, the clear terms of their storage and the procedure for calculation of the storage costs.

Furthermore, when choosing a company specializing in destruction of counterfeit products, the right holders encounter a problem of establishing a possibility of destroying certain categories of goods at enterprises included in the License Register (of handling hazardous waste) available on the website of the Ministry of Ecology and Natural Resources of Ukraine. As a result, the Customs Service of Ukraine refuses to destroy the goods at the chosen enterprise because of the lack of direct references in their licenses regar­ding the destruction of certain categories of goods or the absence of such an enterprise in a particular region. To resolve this issue, it is necessary to publish an updated list of enterprises specializing in destruction of counterfeit goods on the official website of central customs authority, indicating certain categories of goods that they can destroy and the customs they can provide their services for.

Right holders believe that digitization and transition to electronic document management in the work of the Customs Register of IP objects and the improvement of the simplified procedure for the destruction of counterfeit goods is not only in line with the trends of further improvement of the “one window” mechanism within the framework of systemic reform of the Customs Service of Ukraine and the implementation of best world experience, but will also be an important anti-corruption step in customs activities related to promoting the protection of intellectual property rights, since it will allow minimized the human factor and organize proper monitoring in order to quickly resolve existing issues.