Off the Special 301 Watch List? New Ukrainian Collective Management System in the Making

After being adopted in May 2018, the long-awaited new law “On Efficient Management of Rights Holders’ Economic Rights in the Field of Copyright and (or) Related Rights” entered into force in Ukraine in July 2018. The law aims to build a more efficient and transparent collective rights management system. A powerful stimulus came from the United States, which has partially suspended Ukraine from its General System of Preferences (GSP) and has repeatedly criticized Ukraine in the Special 301 report for copyright-related issues including the nontransparent system governing copyright collectives responsible for collecting and distributing royalties to rights holders.

Lately, there have been 19 collective management organizations (CMOs) operating in Ukraine with largely overlapping responsibilities. The new law intends to reduce the number of CMOs and put each remaining CMO in charge of a certain sector and category of copyright holders. The intention is to keep the CMOs that cover the widest repertoires and enjoy an international reputation and the trust of rights holders.

A key to creating a trustworthy system is having all CMOs established and managed by copyright holders, who will oversee all CMO activities including the royalty rate-setting process and the distribution of royalties. CMOs are now responsible for creating and administering a register of rights holders and a register of copyright and related rights that they manage.

If unable to identify the intended royalty payment recipient, CMOs will no longer be able to keep the money but will have to transfer it to institutions in charge of Ukraine’s cultural development. It remains unclear how exactly this will work, but it is expected that the subsequent bylaws will clarify certain provisions.

The law has also changed the way copyright and related rights damages are calculated. Previously, courts prescribed statutory damages within the range of Ukraine’s 10 to 50,000 minimum monthly wages and plaintiffs did not have to prove the amount of damages suffered but the infringement itself. In order to implement the provisions of Art. 240(1)(b) of the EU-Ukraine Association Agreement, the new law replaced the range with a lump sum, which will be twice the amount the infringer would have paid if he had been authorized to use the infringed right (in cases where no infringement was intended) or thrice the amount (if the intent was there).

By: Viktoriia Smyrnova and Tatiana Panchenko

For more information, please contact Viktoriia Smyrnova at our Ukraine office.