survey on protection of the intellectual property rights

SURVEY

PROTECTION OF

THE INTELLECTUAL PROPERTY RIGHTS:

ANALYTICAL REVIEW OF THE EU LAW IN

THE SPHERE OF INFORMATION SERVICES,

LEGAL APPROXIMATION RECOMMENDATIONS

The Project is implemented by UPMF, PAI, FIIAPP, Louis Berger SAS, KLC and HRTA consortium

The Project is funded by the European Union

Ukrainian-European Policy and Legal Advice Centre – Phase V

102-104, Antonovycha Street 03150, Kyiv, Ukraine

Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19

E-mail: [email protected] http://www.ueplac.kiev.ua

1

The Project is implemented by UPMF, PAI, FIIAPP, Louis Berger SAS, KLC and HRTA consortium

Ukrainian-European Policy and Legal Advice Centre – Phase V EuropeAid/127777/C/SER/UA

The Project is funded by the European Union

Survey on

PROTECTION OF THE INTELLECTUAL PROPERTY RIGHTS:

ANALYTICAL REVIEW OF THE EU LAW IN THE SPHERE OF INFORMATION SERVICES,

LEGAL APPROXIMATION RECOMMENDATIONS

Kyiv, October 2010


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


2

TABLE OF CONTENT Page

CHAPTER I – LEGAL PROTECTION OF COMPUTER PROGRAMS

I.1 EU Law 4

I.2 Ukrainian legislation 6

Summary Table 9

I.3 Recommendations 11

CHAPTER II – LEGAL PROTECTION OF SATELLITE BROADCASTING AND CABLE RETRANSMISSION

II.1 EU Law 12

II.2 Ukrainian legislation 14

Summary Table 18

II.3 Recommendations 20

CHAPTER III – LEGAL PROTECTION OF DATABASES

III.1 EU Law 21

III.2 Ukrainian legislation 25

III.3 Recommendations 28

CHAPTER IV – LEGAL FRAMEWORK ON THE INFORMATION SOCIETY

IV.1 EU Law 29

IV.2 Ukrainian legislation 33

IV.3 Recommendations 36

CHAPTER V – LEGAL FRAMEWORK FOR ELECTRONIC COMMUNICATIONS SERVICES

V.1 EU Law 37

V.2 Ukrainian legislation 39

V.3 Recommendations 44

CHAPTER VI – LEGAL PROTECTION OF AUDIOVISUAL MEDIA SERVICES

VI.1 EU Law 45

VI.2 Ukrainian legislation 51

VI.3 Recommendations 54


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


3

INTRODUCTION

The protection of intellectual property rights is an important component of international trade and has frequently been a matter of friction between individuals, private enterprises, states and even international organizations. The European Union has thus strived to create a harmonised legal environment governing intellectual property rights and this effort, coupled with the essential similarity of the Member States’ jurisdiction in their treatment of intellectual rights, has resulted in a satisfying level of protection. Moreover, significant work in that respect has been accomplished at the international level through a network of international conventions and agencies (notably WIPO).1 Intellectual property protection also remains one of the most crucial areas of legal approximation given the specific, often immaterial, nature of its objects, which can be disseminated swiftly and with violation of their owners` rights. This is particularly the case with information services, with their explosive expansion and evolution. Indeed, legislation (be it on a national or European level) is struggling to keep up with technological development which not only makes the dissemination of information far easier, but also allows easy access over national borders. All these factors complicate tracing violation of the related intellectual property rights (IPR) and their protection, requiring, thereby, a fine-tuned but flexible regulatory framework. It is no surprise that this issue is of utmost importance for the Ukrainian drafter, and that the intellectual property is embedded as a separate paragraph in the EU-Ukraine Association Agenda, binding the parties to strengthen their co-operation on the IPR protection by exchange of experience and organisation of joint actions in order to implement properly the relevant EU Directives. Since 2001 Ukraine has been improving the legal background in the intellectual property sphere. In light of the Law of Ukraine On State Program of Approximation of the Ukrainian legislation to the EU legislation and given that integration into the European Union remains priority of the Ukraine`s foreign policy, the Cabinet of Ministers of Ukraine charged the Ministry of Education and Science of Ukraine and Ministry of Justice of Ukraine to bring legislation of Ukraine on intellectual property into line with the EU legislation in this area.2

The list of specific EU directives to be approximated is reflected in the last Plan of Measures on Legal Approximation (PoMLA), approved by the CMU Regulation of 9 June 2010 (see points 13 and 71-73).

Taking into consideration all aforementioned complex factors, our comparative analysis and recommendations appear to be opportune and relevant in terms of Ukraine`s legislative efforts.

1 WIPO – World Intellectual Property Organisation 2 See the Plan of Measures on Legal Approximation (PoMLA), approved by the CMU Regulation on 9 June 2010


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


4

This report examines and compares the current EU and Ukrainian legislation on the following issues:

a) copyright protection on some specific fields (computer programs, satellite broadcasting and cable retransmission, databases)

b) legal framework on the information society c) legal framework on electronic communication services d) legal framework on audiovisual media services.

A short overview of the relevant EU Directives is followed by a presentation of the corresponding Ukrainian legislation and an analysis of its compliance with the relevant EU legislation. Finally, the recommendations section recapitulates major points which the Ukrainian law-makers will find valuable for approximating the national legislation.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


5

CHAPTER I - LEGAL PROTECTION OF COMPUTER PROGRAMS

SECTION I.1 - EU LAW ON THE PROTECTION OF COMPUTER PROGRAMS

The Directive 91/250/EEC introduces a general legal framework for the protection of computer programs considered as an original intellectual creation and at the same time rejects their protection under the scope of the patents legal system or by the creation of a new sui generis legal category (entity).

Object and field of protection The Directive does not include a specific definition of “computer programs”, in order to facilitate the constant evolution of its content in relation to technological progress. It is nonetheless important to notice that computer programs are considered to be a category of literary works. Their protection by copyright law depends on a “low originality” criterion introduced in the Article (art. 1 par. 3), according to which the computer programs’ originality has the sense that a certain program “is the author's own intellectual creation”. It occurs that IP protection is attributed to any computer program does not constitute an exact copy of a former one. This protection also includes all preparatory design material of the program provided that their nature “is such that a computer program can result from it at a later stage” (art. 1 par. 1 and preamble 7), but covers only the expression form of the computer program and excludes any ideas or principles which underlie its creation.

Authorship – Employee’s creation The author of a computer program is the natural person or persons who created it, though it is possible that a legal person may be considered the author of a computer program if that is allowed by the legislation of a Member State (art. 2 par. 1). Specific provisions are included in the case of collective works and collaboration works in accordance with the provisions of each national copyright law. When a computer program has been created by an employee in the execution of his duties or following the instructions given by the employer, all economic rights in this program are transferred to the employer, unless otherwise stipulated by contract (art. 2 par. 3).

Author’s economic rights

The Directive refers only to the economic rights of the author without any provisions on his moral rights. In this perspective, the author or the right holder of a computer program can authorize or prohibit any act concerning the function and exploitation of a computer program, such as:

a) the permanent or temporary reproduction of the program by any means and in any form, in part or in whole: the Directive breaks new ground by adopting a broad definition of the reproduction right; under that scope, any act of loading, displaying, running, transmitting or storing a computer program, necessary for its permanent or temporary reproduction, is covered by the reproduction right and therefore the permission of the author is needed;

b) the translation, adaptation, arrangement or any other alteration of the program and the reproduction of the results thereof;

c) the distribution to the public (including rental) of the original computer program or its copies; the first sale in the Community of a computer program copy by the right holder or with his consent shall exhaust the distribution right of that copy within the Community (first sale doctrine) – however, this rule doesn’t apply to the rental right.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


6

Exceptions in favor of the lawful user The Directive introduces some binding exceptions to the exclusive rights of the author in order to facilitate the lawful use of a computer program. The lawful user (buyer or licensee) may without any permission proceed to the permanent or temporary reproduction of a computer program, as well as to its translation, adaptation, arrangement or alteration if those acts are necessary for the intended use (art. 5 par. 1). That rule also applies to error corrections and creation of back-up copies. Additionally, the lawful user during the ordinary use of a program is entitled to study or test its functioning in order to determine the ideas and principles upon which is founded (art. 5 par. 3). Finally, the lawful user has a right of decompilation of the program (reproduction of the program code and translation of its form) if that is necessary to achieve its interoperability with other pre-existing computer programs (art. 6 par. 1). In any case, decompilation cannot be prejudicial to the author’s legitimate interests or conflict with the normal exploitation of the computer program (art. 6 par. 3). Conditions of decompilation (art. 6 par. 1)

a) The main purpose of the decompilation is to achieve interoperability. b) The acts of decompilation are performed by the buyer, the licensee or a third

authorized person. c) The acts are confined to the parts of the original program which are necessary to

achieve interoperability. d) The information necessary to achieve interoperability has not previously been

available to the above persons.

Restrictions on decompilation (art. 6 par. 2) The information obtained through decompilation:

a) can be used only to achieve interoperability; b) cannot be announced to others, except if that is necessary for the interoperability; c) cannot be used for the development, production or marketing of a substantially

similar computer program; d) cannot be used for any other act which infringes copyright.

National measures of protection Each Member State has to introduce in national legislation the appropriate measures in order to prevent and prosecute any act infringing author’s or right holders’ copyright on a computer program, such as:

a) put into circulation an infringing copy; b) possess an infringing copy for commercial purpose; c) put into circulation or possess any means the purpose of which is to facilitate

unauthorized removal or circumvention of protective technical devices. Both illegal copies and means of circumvention can be liable to seizure (art. 7 par. 2, 3).

Term of protection Originally, according to the Article 8 par. 2 of the Directive 91/250/EEC the protection of computer programs was granted for the life of the author and fifty (50) years after his death. Actually, under the scope of the Articles 1 par. 1 of the Directive 93/98/EEC and 1 par. 1 of the Directive 2006/116/EC on the term of protection of copyright, the protection is granted for the life of the author and seventy (70) years after his death.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


7

SECTION I.2 - COMPLIANCE OF UKRAINIAN LEGISLATION WITH

DIRECTIVE 91/250/EEC ON THE LEGAL PROTECTION OF SOFTWARE

Computer programs (software) regulation of the author’s and related right is covered by the relevant Book IV (Intellectual Property Rights) of the Civil Code of Ukraine and by specialized Law of Ukraine on Copyright and Related Rights (hereinafter sometimes - the Law). Civil Code gives the most general overview of copyright and related rights regulation while the Law provides with an in-depth perspective and is a core document on this field. Within the scope of the last legislation developments, it is worth mentioning the Draft Law on the Usage of Open Source Software at the Governmental Institutions and Local Authorities (4704 / 24.06.2009).

All the relevant definitions are can be found in the Law of Ukraine on Copyright and Related Rights. It defines software in a rather technical manner as a set of instructions in the form of words, digits, codes, schemes, symbols or any other form which can be read by computer and lead it to achievement of certain purpose or result (this term includes operating system as well as application in source or object code). Authorship is not delineated by the legislator, but the Law gives a notion of author as a natural person who created a piece of work through his/her creative efforts. The term collective works is defined as a piece of work created by the author as a part of performance of his duties in accordance with the job or employment agreement (contract) between him and the employer. With regard to definitions related to software copyright protection, the Draft Law on the Usage of Open Source Software at the Governmental Institutions and Local Authorities should be mentioned. It is interesting in the way it provides with specific definitions of the terms which were previously referred to during judicial proceedings (namely by Constitutional Court) but were not formally expressed in the legislation. Precisely, the draft distinguishes open source software and proprietary software and defines what is ‘open source’ and compilation process.

The Law has no separate chapter devoted to software copyright protection but according to provisions of the Article 18, the computer programs are protected in the same manner as a literary works. Such protection applies to all computer programs, regardless of the way or form of its expression. The same concept is supported by the Civil Code of Ukraine.

In Ukraine the criterion of originality in the legislation is not expressly stated but the concept is widely used in judicial proceedings. Criterion of originality is mentioned twice in the Law. The first time with regard to original name of the work as a separate piece of work to be protected (Article 9 of the Law). Legislation also provides an example of works that do not meet the criterion of originality, e.g. transport or TV-programs schedules, telephone numbers databases or similar databases.

With regard to the work created by the employee, there is a lack of consistency in regulation. The Law of Ukraine on Copyright and Related Rights (Article 16) gives the exclusive economic rights for the collective piece of work to employer, unless otherwise stated in the employment agreement (contract) and / or civil contract between the author and employer. For the creation of the work, the author is expected to receive royalty in the amount and on conditions mentioned in the employment agreement. While the more recently adopted Civil Code of Ukraine (Article 429) stipulates that economic rights, related to creation of a work according to the employment agreement, belong to both the worker who created the piece of work and to employer, unless otherwise provided by agreement.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


8

The Article 19 of the Law fixed a non-exhaustive list of the author’s exclusive economic right including his personal exclusive use of the computer program and exclusive right to allow or prohibit the use of computer program by other persons.

The exclusive right to use the work by the author (or other person who holds a copyright) includes the use of work in any form and by any means. The exclusive right of the author (or another person holding the copyright) to allow or prohibit the use of computer program gives him the power to authorize or prohibit reproduction of works, any re-publication of works, if it is done by organization other than that carried out the first distribution, translations of works, adaptations, arrangements and other similar changes, distribution of works by means of primary sales or by transfer for rental, submission of the works to the public so that it may be accessed anywhere and at any time, commercial rent after primary sale, import copies of works, etc.

A person who possesses a lawfully produced copy of computer program shall be entitled without the consent of the author or another person who has the copyright to this program:

- to make changes to computer program (updating) so that to ensure the functioning of technical equipment using this program and to take actions related to operation of the computer program according to its purposes, including record and store in computer memory and also correction of obvious errors, unless otherwise provided by agreement with author or other person holding the copyright;

- to make one back-up copy of a computer program provided that this copy is for archival purposes or to replace lawfully acquired copy in case the original computer program is lost, destroyed or becomes unusable. This copy of the computer program can not be used for purposes other than those specified previously and shall be destroyed in case software copy possession ceases to be lawful;

- to observe, study and modify the functioning of computer program in order to determine its ideas and principles, provided that this is done in the process of execution of any action, loading, functioning, transferring or storing in the memory of computer program.

The abovementioned list of limitations is exhaustive. This means that under any circumstances the reproduction, translation, adaptation, arrangement cannot be done without prior consent of the author or other person holding the copyright.

According to the Article 24.1.3 of the Law of Ukraine on Copyright and Related Rights, a lawful user can legally decompile a computer program (to transform its object code into source code) in order to obtain information which is necessary for the achievement of its compatibility (interaction) with independently developed computer software. This right is subject to certain restrictions, namely:

a) the information necessary for the achievement of compatibility should not be previously available to that person from other sources;

b) the steps are performed only on those parts of computer program that are necessary for the achievement of compatibility;

c) information obtained by decompilation may be used only for the achievement of its compatibility with other programs, but cannot be transferred to other parties except when this is necessary to achieve interoperability with other applications and cannot be used for development of computer software which is similar to the decompiled computer program or for any other copyright infringement actions.

Finally, the legislator put a general common obligation on a lawful user who exercises his rights for program alteration, creation of a back-up copy, study or test of its functioning as well as decompilation that such actions shall not prejudice the use of computer software and


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


9

shall not restrict the legitimate interests of the author and (or) any other person who has the copyright on computer software.

Protection of economic rights related to copyright can be done through administrative, civil and criminal procedures described in the relevant legislation. The law gives a list of circumstances under which the copyright holder can seek for protection and remedies. These circumstances include any infringements of exclusive economic rights of the copyright holder, provided that they are not falling within the scope of limitations granted to the lawful user. Namely, this includes:

- piracy, i.e. publishing, reproducing, importing into the customs territory of Ukraine, export from the customs territory of Ukraine and distribution of the counterfeit copies of computer programs and similar products;

- plagiarism, i.e. publishing all or part of the work under the name of a person who is not the author;

- import of the computer programs into the customs territory of Ukraine without permission of the persons holding copyright;

- actions that threaten copyright infringement; - any action for the intentional circumvention of technical measures of copyright

protection, including manufacturing, distribution, import for distribution and use of technical means for such circumvention;

- forging, altering or removing the information (especially in electronic form) about the copyright holder, etc.

According to the Article 18 of the Law on Copyright and Related Rights, the copyright is granted for the entire life of the author and 70 years after his death, unless otherwise provided by provisions of the same Article. For works, published anonymously or under a pseudonym, the copyright expires in 70 years after the work has been published. If taken by the author pseudonym leaves no doubt on the author's identity, or if the author of a work published anonymously or under a pseudonym is disclosed no later than 70 years after the publication of a work, the term shall be calculated following the main rule, i.e. for entire life period of the author and 70 years after his death. Copyright for works created by the group of people is granted for the lifetime of co-authors and 70 years after the death of the last co-author. The term of copyright after the death of the author shall be calculated from the 1st of January of the year following the year of death.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


10

Summary table

Software Directive 91/250/EEC Ukrainian Legislation A. Definitions:

Software No express provision.

A set of instructions in the form of words, digits, codes, schemes, symbols or any other form which can be read by computer and lead it to achievement of certain purpose or result (this term includes operating system as well as application in source or object code).

Authorship No express provision. No express provision. Author is a natural person who created a piece of work through his/her creative efforts.

Collective works

No express provision.

A piece of work created by the author as a part of performance of his duties in accordance with the job or employment agreement (contract) between him and the employer.

B. Software protection:

Criteria of originality for a computer program

A computer program shall be protected if it is original in the sense that it is the author's own intellectual creation.

No express provision.

Computer program created by an employee

Where a computer program is created by an employee in the execution of his duties or following the instructions given by his employer, the employer exclusively shall be entitled to exercise all economic rights in the program so created, unless otherwise provided by contract.

Where a computer program is created by an employee in the execution of his duties or following the instructions given by his employer: - according to Civil Code, both the employee and employer have copyright, unless otherwise provided by agreement - according to the Law on Copyright and Related Rights, the employer exclusively shall be entitled to exercise all economic rights

Author’s exclusive rights:

- permanent or temporary reproduction in part or in whole

- translation, adaptation, arrangement or any other alteration

- distribution to the public (including rental) of the software or its copies


- translation, adaptation, arrangement or any other alteration

- distribution to the public (including rental) of the software or its copies

- other rights

Limitations to authors’ rights in favour of the lawful user


- translation, adaptation, arrangement and any other alteration

- creation of a back-up copy - study or test the functioning of the

program

- changes to computer program (updating) to ensure the functioning of technical equipment using this program

- creation of a back-up copy - study or test the functioning of the

program


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


11

- decompilation - decompilation

Restrictions to decompilation right

- these acts are performed by the licensee;

- the information necessary to achieve interoperability has not previously been readily available

- such actions shall not be used for goals other than to achieve the interoperability of the independently created computer program;

- information obtained shall not be given to others

- the information necessary for the achievement of compatibility should not be previously available to that person from other sources;

- the steps are performed only on those parts of computer program that are necessary for the achievement of compatibility;

- information obtained by decompilation may be used only for the achievement of its compatibility with other programs

Remedies

National measures of protection in case of: - putting into circulation an

infringing copy; - possessing an infringing copy for

commercial purposes; - facilitating the unauthorized

removal or circumvention of any technical device which may have been applied to protect a computer program.

Protection of economic rights related to copyright can be done through administrative, civil and criminal procedures in case of any infringements of exclusive economic rights of the copyright holder, provided that they are not falling within the scope of limitations granted to the lawful user + list of infringements.

Term of protection

life of the author + 70 years (art. 1 of the Directive 93/98/EEC)

life of the author + 70 years


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


12

SECTION I.3 – RECOMMENDATIONS FOR LEGAL APPROXIMATION Criterion of low originality As referred to in the Section I.2 of this Chapter, the concept of originality for computer programs is not directly stated in Ukrainian legislation, although is widely used in judicial proceedings. It is thus recommended that this criterion is expressly introduced in the Ukrainian legislation, since “low originality” offers a wide framework of protection for all kinds of computer programs and, therefore, facilitates market evolution.

Open source software With regard to the definitions related to software copyright protection, it is worth distinguishing between the open source software and the proprietary software and defining what is the ‘open source’ and compilation process. Some proposals on the above mentioned issues are stated in the Draft Law on the Usage of Open Source Software at the Governmental Institutions and Local Authorities (4704 / 24.06.2009). Employee’s creation With regard to the work created by the employee, there is a need to reach consistency in Ukrainian legislation. The Law of Ukraine on Copyright and Related Rights (Article 16) gives exclusive economic rights for the collective piece of work to employer, unless otherwise stated in the employment agreement (contract) and/or civil contract between the author and employer. For the creation of the work, author is expected to receive royalty in the amount and on conditions mentioned in the employment agreement. The more recently adopted Civil Code of Ukraine (Article 429) indicates that economic rights related to creation of a work according to the employment agreement belong to both the worker who created the piece of work and to employer, unless otherwise provided by agreement. It seems that the first provision is closer to the one adopted by the Directive since all economic rights on the computer program are transferred to the employer, unless otherwise stipulated by contract.

Exceptions in favour of the lawful user The Directive introduces some binding exceptions to the exclusive rights of the author in order to facilitate the lawful use of a computer program. As referred to the Section I.2 of this Chapter, two of them are not introduced yet into the Ukrainian legislation:

a) the right for the lawful user (buyer or licensee) to proceed, without any permission, to the permanent or temporary reproduction of a computer program and

b) the right for the lawful user (buyer or licensee) to translate, adapt, arrange or alter a computer program if those acts are necessary for its intended use

As these exceptions are of great practical value and use, it is recommended that they are introduced in the Ukrainian law in order to allow any lawful user a full access to the computer program and to cover the needs of normal use.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


13

CHAPTER II - LEGAL PROTECTION OF SATELLITE BROADCASTING AND CABLE RETRANSMISSION

SECTION II.1 - EU LAW IN THE FIELD OF SATELLITE BROADCASTING AND

CABLE RETRANSMISSION

The Directive 93/83/EEC harmonized the legal framework of Member States for the protection of authors and performers whose works or performances are subject to transfrontier broadcasting via satellite or cable television programmes. In order to harmonize the existing legal framework, the Directive introduces and defines a number of concepts such as satellite broadcasting, communication to the public by satellite, cable retransmission, author of an audiovisual work and collecting society. Furthermore, the Directive introduces provisions concerning copyright and related rights on works transmitted via satellite or cable broadcasting, as well as the transfer of such transmission rights. Definition of satellite broadcasting – Applicable law According to the Article 1 par. 1, a satellite means “any satellite operating on frequency bands which, under telecommunications law, are reserved for the broadcast of signals for reception by the public or which are reserved for closed, point-to-point communication”. The nature of the satellite (direct broadcasting or telecommunications) is irrelevant, as is the encryption or not of the transmitted signal, on condition that the means for decrypting are provided to the public by the broadcasting organization or with its consent (art. 1 par. 2c). Communication to the public by satellite means “the act of introducing, under the control and responsibility of the broadcasting organization, the programme-carrying signals intended for reception by the public into an uninterrupted chain of communication leading to the satellite and down towards the earth” (art. 1 par. 2a). In this way, the Directive adopts the country of origin principle; in other words, the applicable intellectual property law is the law of the country where the transmission of the signal to the satellite is effected and not of the country or countries receiving said signal.

Definition of cable retransmission – Field of protection According to the Article 1 par. 3, the cable retransmission means “the simultaneous, unaltered and unabridged retransmission by a cable or microwave system for reception by the public of an initial transmission from another Member State, by wire or over the air, including that by satellite, of television or radio programmes intended for reception by the public”. Therefore, the field of protection of the Directive does not extent to non-simultaneous retransmission. Transfer of satellite broadcasting rights - Author’s broadcasting right The Directive recognizes to the author of a copyrighted work the exclusive right to authorize or prohibit the satellite broadcasting of this work. Consequently, the author’s permission is required in case of such broadcasting. Generally, the author’s capacity (who the author is) is determined by each national law. In the case of an audiovisual work, the author is the principal director, but Member States may provide for others to be considered as its co-authors (art. 1 par. 5). The transfer of satellite broadcasting rights is obtained only by contract. Transfer by compulsory or legal license is not allowed (art. 3 par. 1). The content of this contract may comply with the legislation on copyright and related rights of the Member State in which communication to the public by satellite occurs (preamble 15). The effects of a collective agreement for a given category of works between a collecting society and a broadcasting organization may be extended to the right holders of this category, who are not represented by the collecting society, if:


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


14

a) satellite broadcasting simulcasts a terrestrial broadcast by the same broadcaster, and

b) the unrepresented right holder has at any time the possibility of excluding the extension of the collective agreement to his works.

An exception to that rule is provided for the cinematographic works (art. 3 par. 3).

Transfer of satellite broadcasting rights - Related rights

According to the Article 4 par. 1 of the Directive 93/83/EEC and the Articles 6, 7, 8, 10 of the Directive 92/100/EEC on rental right and lending right, as have been recently amended by Article 7 and 8 of the Directive 2006/115/EC, each Member State must provide a specific right for performers, phonogram producers and broadcasting organizations in case of satellite broadcasting or cable retransmission. Firstly, the Directive recognizes the exclusive right of performers to authorize or prohibit satellite broadcasting or cable retransmission of their (live) performances. Secondly, such an exclusive right is attributed to broadcasting organizations for the satellite broadcasting or cable retransmission of their own broadcasts. Finally, both performers and phonogram producers have right to an equitable remuneration, paid by the user, when a published phonogram is used for satellite broadcasting or cable retransmission. The producers of audiovisual works do not enjoy a similar right to equitable remuneration.

Transfer of cable retransmission rights

The transfer of cable retransmission rights either by the copyright owner or by the holders of related rights is obtained by collective agreements signed only through a collecting society (art. 9 par. 1). The Directive establishes a presumption for the right holders whose rights management has not been transferred to a collecting society. In that case, the collecting society which manages the rights of the same category shall be deemed to be mandated to manage his rights also. An exception to the above obligation is provided for the broadcasting organizations exercising cable retransmission rights in their own transmissions (art. 10). However, in case of cable retransmission and if no agreement is concluded, any party has the right to call upon the assistance of a mediator. The prevention of the abuse of negotiating positions for cable retransmission is necessary and each Member State has to ensure it by means of civil or administrative law. The holders of related rights (performers, phonogram producers and broadcasting organizations) have the exclusive rights mentioned above. The first two categories of right holders also dispose a right to equitable remuneration.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


15

SECTION II.2 - COMPLIANCE OF UKRAINIAN LEGISLATION WITH DIRECTIVE 93/83/EEC

ON THE COORDINATION OF CERTAIN RULES CONCERNING COPYRIGHT AND RIGHTS RELATED TO COPYRIGHT APPLICABLE TO SATELLITE

BROADCASTING AND CABLE RETRANSMISSION

Copyright and related rights applicable to satellite broadcasting and cable retransmission are regulated by the relevant Book IV (Intellectual Property Rights) of the Civil Code of Ukraine, a specialized Law of Ukraine on Copyright and Related Rights (hereinafter - the Law), the Law of Ukraine on the Distribution of Audiovisual Works and Phonograms, as well as the Law of Ukraine on Television and Radio Broadcasting. Ukraine has ratified and joined the European Convention on Transfrontier Television which means it is an integral part of Ukrainian legislation. Law of Ukraine on Television and Radio Broadcasting refers to this Convention in terms of retransmission rights regulation. The Civil Code gives the most general overview of copyright and related rights` regulation while the Law provides with in-depth perspective and is a core document in this field. Both documents cover in details the rights related to copyright, but there is a clear lack of regulation in the field of transfer of satellite rights and transfer of cable retransmission rights. The Draft Law on Changes to the Law of Ukraine on Copyright and Related Rights (4073 / 17.02.2009) aims to eliminate partly this drawback.

Most of the relevant definitions are mentioned in the Law of Ukraine on Copyright and Related Rights and Law of Ukraine on Television and Radio Broadcasting. Some terms seem to be clear from the context or can be obtained by using analogy with other definitions. Solely one term is clearly missing, namely this is a ‘satellite’. The definitions of ‘communication to the public by satellite’ and ‘cable retransmission’ appear not stated expressly. The legislation explains some terms which are closely connected. For instance, regular “broadcasting organisation is defined as a TV and radio broadcasting organisation which transmits programs (both of domestic production and production of other organisations) by broadcasting via radio waves (and laser, gamma rays, etc.) in any frequency range (including via satellite); ‘cable broadcasting organisation’ is a TV and radio broadcasting organisation which transmits programs (both of domestic production and production of other organisations) by broadcasting of remote transmission signal with the help of any type of ground, underground or underwater cable. The Law of Ukraine on Television and Radio Broadcasting defines ‘broadcasting’ as the initial transmission, which is done by terrestrial transmitter, cable TV or satellite of any type in encrypted or open form of television or radio programs that are communicated to the public. ‘Retransmission’ is reception and simultaneous transmission, regardless of technical means employed, of complete and unchanged TV programs or significant parts of such programs which are communicated to the public by broadcasting organizations.

The definition of audiovisual work can be found in both Laws of Ukraine – on Copyright and Related Rights and also on Television and Radio Broadcasting, which represent technical and descriptive legal approaches. In the first case, it means a work that is recorded on a certain tangible medium (film, magnetic tape, magnetic disk, CD, etc.) in a series of consecutive frames (images) or analogue/discrete signals which represent (encode) moving images (with sound or without it), the perception of which is possible solely by means of any type of screen (cinema, TV screen, etc.) on which the moving images are visually displayed by certain technical means. Audiovisual works are: films, TV-movies, videos, filmstrips, slide films, etc., that can be fiction, animation (cartoons), non-fiction or other. In the latter case, audiovisual work is defined as a part of television and radio program, which is subject to copyright, has certain duration, the title given by author and its own concept, consists of


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


16

episodes or as entire author’s work connected together by creative idea, images and sounds and which is a product of the authors’, performers’ and producers’ activity.

The Law does not give a straightforward definition of the ‘author of an audiovisual work’ but it provides with explanations who is the ‘author’, i.e. a natural person who created a piece of work through his/her creative efforts, and who is the producer of an audiovisual work, i.e. a person who manages / manages and finances the creation of audiovisual work. Thus, it can be concluded that the author of audiovisual work is a person who created an audiovisual work through his/her creative efforts. Furthermore, in the body of the Law there is a list of persons who can be considered as the authors (co-authors) of an audiovisual work:

a) the principal director; b) scriptwriter; c) music composer; d) art director; e) cameraman.

Finally, the Law gives definition of a ‘collecting society’ which is a non-profit organization, that on a collective basis manages the economic rights of copyright and (or) related rights.

Article 17 of the Law of Ukraine on Copyright and Related Rights gives the list of persons who can be considered as authors (co-authors) of an audiovisual work, namely, the principal director, scriptwriter, music composer, art director and cameraman. The same person can carry out two or more previously mentioned functions. Unless otherwise agreed by the contract for the creation of an audiovisual work, the authors who contributed to the creation of an audiovisual work and transferred the property rights to producing organization of an audiovisual work, do not have the right to object to the performance of the work, its reproduction, distribution, public communication, public demonstration, public broadcasting, as well as subtitling and duplication of its text, except to the right of a separate public performance of the musical works included in audiovisual work. For every publication and public performance, communication, demonstration or notification of an audiovisual work, its property lease and (or) the commercial rental of its copies all authors of audiovisual work retain the right for equitable remuneration that is paid and distributed by collecting organizations or in some other way. Authors whose works have been incorporated into audiovisual works (both which existed before and created in the process of audiovisual work production), retain copyright for each of their works and can use it regardless of the audiovisual work, unless by the contract with the producing organization other conditions are specified.

The Law of Ukraine on Copyright and Related Rights does not state expressly the author’s exclusive right to authorize the communication to the public by satellite of a copyright work but it provides with a non-exhaustive list of the author’s economic rights, including the right of the author to allow or prohibit the reproduction of works, public performance and broadcasting; public demonstration, any further communication to the public of works, if it is done by an organization other than that carried out the first one. The non-exhaustive character of this list and its content leads to the conclusion that the author also has the exclusive right to authorize the communication to the public by satellite of a copyright work.

Transfer of satellite rights has no specific regulation in the Ukrainian legislation. With regard to this issue, the Law provides with a concept of collecting society, but it slightly differs from the one employed to manage or administer copyright or rights related to copyright in case of satellite broadcasting.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


17

Copyright and (or) related rights holders may (but not obliged) entrust the management of their economic rights to collective societies, founded by the copyright and (or) related rights` holders and which have the status of a legal entity according to the law. It is allowed to set up a separate collecting societies for the certain categories of economic rights and of the certain categories of copyright and (or) related rights holders or collecting societies managing various economic rights for different categories of copyright and (or) related rights holders.

Transfer of cable retransmission rights is not regulated by the current legislation. The Draft Law (4073 / 17.02.2009) proposes changes to the Law of Ukraine on Copyright and Related Rights, following the concept described in the EU Directive. It is proposed to add the right to allow or prohibit cable retransmission of works to the list of exclusive economic rights of authors (Article 15 of the Law). Cable retransmission should be understood as simultaneous, unaltered and unabridged retransmission by a cable or microwave system for reception by the public of an initial transmission, by wire or over the air, including that by satellite, of television or radio programmes intended for reception by the public.

The Law of Ukraine on Copyright and Related Rights provides with the separate three lists of economic rights (related to copyright) for performers, phonogram producers and broadcasting organizations. For instance, performers have an exclusive right to allow or prohibit public transmission of their recorded performances (live broadcast); record as phonograms or videograms of their previously unrecorded performances; communication to the public of their performances recorded in phonograms or videograms by any means of communication so that any person can access them from any place and at any time at their own discretion, provided that during the first record of performance the consent for communication to the public was not given. Phonogram producers enjoy an exclusive right to use their phonograms and exclusive right to allow or prohibit the broadcast of phonograms and their copies by any means of communication so that any person may access them from anywhere and at any time at their discretion. Broadcasting organizations possess an exclusive right to use their programs in any way and exclusive right to allow or prohibit other persons to broadcast their own programs by means of broadcasting or retransmission. Broadcasting organizations may also prohibit the retransmission of a satellite signal, which broadcast their program on/from the territory of Ukraine by the organizations for which the satellite signal was not intended.

It is allowed to use performances, phonograms, videograms, broadcasting programs and to record, reproduce and transfer to the public without consent of the performers, phonogram videogram producers and broadcasting organizations, if it falls within the scope of limitation of copyright holder’s exclusive rights and upon fulfillment of the following conditions:

- the works are reproduced solely for the study or research; - related rights holders retain the right for fair remuneration based on the number of

reproduced copies (procedure for such remuneration is fixed in details by the Law). It is allowed to reproduce performances recorded as phonograms and videograms at home for personal use only without consent of the author(s), performers and phonogram (videograms) producers, but with payment of their remuneration according to the procedure described in the Law. In practice, it means the inclusion of such remuneration into the price of tangible objects on which the performance is recorded. The use of related rights without consent of the their holders must not prejudice the normal exploitation of performances, phonograms, videograms and programs and affect the


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


18

legitimate interests performers, producers of phonograms, videograms and programs or other copyright and (or) related rights holders. The short excerpts of current events within the scope of the Article 10 of the Law are not the objects of intellectual property and, thus, are not protected by the law and can be freely reproduced.

The national legislation does not distinguish protection of performer’s rights or broadcasting organizations’ rights in case of the satellite broadcasting and cable retransmission. It considers the general rules of protection as sufficient to guarantee intellectual property rights. These rules are applicable in the same manner to the copyright and related right holders in case of violation of any of their economic rights, including the ones related to satellite broadcasting and cable retransmission even though these rights are mentioned rather implicitly in the body of the Law. Protection can be exercised through administrative, civil and criminal procedures described in the relevant legislation.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


19

Summary table

Definitions Satellite Directive 93/83/EEC Ukrainian legislation

Satellite

Satellite operating on frequency bands which, under telecommunications law, are reserved for the broadcast of signals for reception by the public or which are reserved for closed, point-to-point communication.

Definition is not mentioned.

communication to the public by

satellite

The act of introducing, under the control and responsibility of the broadcasting organization, the programme-carrying signals intended for reception by the public into an uninterrupted chain of communication leading to the satellite and down towards the earth.

Not mentioned expressly. Legislation provides with definitions of ‘broadcasting organization’ and ‘transmission to the public’.

cable retransmission

The simultaneous, unaltered and unabridged retransmission by a cable or microwave system for reception by the public of an initial transmission from another Member State, by wire or over the air, including that by satellite, of television or radio programmes intended for reception by the public.

Not mentioned expressly. Legislation provides with definitions of ‘cable broadcasting organization’ and ‘retransmission’. Draft Law on Changes to the Law of Ukraine on Copyright and Related Rights follows literally the same wording as in Directive.

audiovisual work

Not mentioned expressly.

Two definitions available. One has a technical approach, another represents a legal descriptive approach.

author of an audiovisual

work

The principal director of a cinematographic or audiovisual work shall be considered as its author or one of its authors

Not mentioned expressly. Legislation provides with definitions of ‘author’ and ‘producer of audiovisual work’ and gives the list of the persons regarded as authors (co-authours): the principal director; scriptwriter; music composer; art director; cameraman.

collecting society

Organization which manages or administers copyright or rights related to copyright as its sole purpose or as one of its main purposes.

A non-profit organization that manages on a collective basis economic rights of copyright and (or) related rights.

Rules existing in the field of satellite broadcasting and cable retransmission

1. Acquisition of author’s

broadcasting rights

- Who is considered to

The principal director is considered to be an author.

Co-authors are the principal director, scriptwriter, music composer, art director, cameraman.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


20

be the author of an audiovisual

work

- Author’s exclusive right to authorize the communication to the public by

satellite of a copyright work

The author has exclusive right to authorize the communication to the public by satellite of a copyright work.

The author’s right is not stipulated expressly but the author can allow or prohibit public performance and broadcasting; public demonstration of copyright work.

Transfer of satellite rights

The transfer of satellite broadcasting rights is obtained only by contract. Transfer by compulsory or legal license is not allowed. Provision on a collective agreement between a collecting society and a broadcasting organization.

Not regulated by the Law. The concept of collecting society is partly followed.

Transfer of cable

retransmission rights

The transfer is obtained by collective agreements signed only through a collecting society.

Not regulated currently by the Law. Draft Law follows the concept of Directive.

Related rights of performers, phonogram producers and broadcasting organizations

Limitations to related rights

- private use; - short excerpts of current events; - ephemeral fixation by a

broadcasting organization for its own broadcasts;

-teaching or scientific research

expressly mentioned: - private use - teaching or scientific research

National legal framework for protection of related rights

N/A

Similar rules for copyright and related rights protection through administrative, civil and criminal procedures


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


21

SECTION II.3 – RECOMMENDATIONS FOR LEGAL APPROXIMATION

Definitions

As referred to above in Section II.2, there is a lack of terminology related to specific acts taking place in the case of satellite broadcasting or cable retransmission. The existing definitions refer to the broadcasting organizations and do not determine what exactly constitutes a communication to the public by satellite or retransmission of a program via cable, as the text of the Directive does. Those definitions should be included in the Ukrainian legislation, since on the basis of them the field of protection, as well as the applicable law, are determined in particular cases.

Recognition of satellite broadcasting and cable retransmission rights

As referred to in the Section II of this Chapter, the Law of Ukraine on Copyright and Related Rights does not state expressly the exclusive right to authorize the communication to the public via satellite or cable retransmission. It is recommended to consider introducing those exclusive rights into the Ukrainian legislation for each category of right holders mentioned by the Directive, that is, authors, performers, phonogram producers and broadcasting organizations. Consequently, each right holder’s permission shall be required in case of satellite broadcasting or cable retransmission. It appears also recommendable, as the Directive provides, that performers and phonogram producers have the right to an equitable remuneration, paid by the user, when a published phonogram is used for satellite broadcasting or cable retransmission. This provision allows users to broadcast a certain work without prior permission of those two categories of right holders in order to facilitate its commercial exploitation, but, at the same time, the right holders can receive payment for their contribution in the form of the equitable remuneration. Transfer of satellite broadcasting rights: author’s right and related rights

As mentioned in Section II.2, the Ukrainian legislation has no specific regulation in this field. It is thus recommended to consider introducing the relevant provisions of the Directive, referred to in Section II.1 (transfer obtained only by contract), in the Ukrainian legislation.

Transfer of cable retransmission rights

As referred to in Section II.2, the transfer of cable retransmission rights is not regulated by the current Ukrainian legislation. It is therefore recommended that the relevant provisions of the Directive (transfer obtained only by collective agreements) are adopted in the Ukrainian legislation. The same holds for the presumption, established by the Directive, concerning the right holders whose rights management has not been transferred to a specific collecting society, the exception provided for the broadcasting organizations exercising cable retransmission rights in their own transmissions and the possibility for the parties to call upon the assistance of a mediator.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


22

CHAPTER III - LEGAL PROTECTION OF DATABASES

SECTION III.1 - EU LAW ON THE PROTECTION OF DATABASES Directive 96/9/EC takes into account the fact that databases are valuable instruments for the development of an information internal market. Therefore, the Directive establishes the protection of original databases and attributes for the first time a sui generis right to the database maker in order to protect his economic and technical investment.

Object and field of protection According to the terms of the Directive, a database is “a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means” (art. 1 par. 2). Databases can be of electronic or non-electronic form. The protection covers all categories of databases, such as collections of literary, artistic or musical works and collections of texts, sound, images, numbers, facts or data (whereas 17). It occurs that the criterion of protection does not depend on the nature of database content since it consists either of copyrighted works, either of simple facts or data. It depends on the originality of the selection or the arrangement of that content. This Directive does not protect any computer program used in the making or operation of databases (art. 1 par. 3), as well as the compilation of musical recordings (preamble 19). Copyright and sui generis right – Protection criteria

Databases having a certain degree of originality on the selection or the arrangement of their content are considered to be the author's intellectual creation and are protected by copyright (art. 3 par. 1). At the same time, the Directive recognizes a sui generis right to the maker of a database, original or not, if “there has been qualitatively or quantitatively a substantial investment” for its creation (art. 7 par. 1).

The two bases of protection are concurrent in the case of original databases, where both the copyright and the sui generis right are present (art. 7 par. 4). On the contrary, non-original databases are covered only by the sui generis right.

(A) Databases and copyright

Criterion of protection for an original database The databases having a certain degree of originality on the selection or the arrangement of their content are considered to be the author's intellectual creation and are protected by copyright (art. 3 par. 1).

Authorship – Employee’s creation

The author of an original database is the natural person or persons who created it. A legal person shall be considered as the author of an original database if that is allowed by the legislation of a Member State (art. 4 par. 1). Specific provisions are included in the case of collective works and collaboration works in accordance with the provisions of each national copyright law (art. 4 par. 2, 3). National copyright law also applies in the case of databases created by an employee in the execution of his duties (preamble 29). In any case, author’s and artist’s rights on their work or performance remain in force. It occurs that their permission is necessary either to incorporate a work or a performance to a certain database, or to extract those elements from it (preamble 26).


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


23

Author’s exclusive economic rights

The Directive refers only to the economic rights of a database author (art. 5). Moral rights are attributed to the natural person who created the database according to national legislation (preamble 28). The author or the right holder of an original database can authorize or prohibit any act which constitutes a form of exploitation, such as:

a) the temporary or permanent reproduction in whole or in part of the database by any means;

b) the translation, adaptation, arrangement or alteration; c) the distribution to the public of the database or its copies; the first sale in the

Community of a copy of the database by the author or the right holder or with their consent shall exhaust the right to control resale of that copy within the Community;

d) the communication, display or performance to the public; e) any reproduction, distribution, communication, display or performance to the public

of the results of the acts referred to in (b) above.

Exceptions in favour of the lawful user

The Directive introduces a binding exception to author’s exclusive economic rights in order to facilitate the lawful use of an original database by its buyer or licensee. In this perspective, the lawful user may without any permission have access to the content of the database, as a whole, and proceed to any act consisting one of the author’s exclusive economic rights. The same provisions are applicable when the lawful user is authorized to use only a part of the database (art. 6 par. 1).

General exceptions to the authors’ economic rights Apart of the lawful user, Member States can provide exceptions to the authors’ economic rights which facilitate any third person to have access on the database content and use it for some specific purposes, such as:

a) reproduction for private use of a non-electronic database; it follows that reproduction of an electronic (digital) database covered by copyright or by the sui generis right is prohibited even for private use purposes;

b) use for teaching or scientific research; c) use for purposes of public security and of an administrative or judicial procedure; d) use for purposes authorized under national law.

In any case, all the above mentioned acts cannot be prejudicial to the author’s or right holder’s legitimate interests or conflict with the normal exploitation of the database (art. 6 par. 3).

Term of protection According to the Articles 1 par. 1 of the Directive 93/98/EEC and 1 par. 1 of the Directive 2006/116/EC on the term of protection of copyright, the protection is granted for the life of the author of a certain database and seventy (70) years after his death.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


24

(B) Databases and sui generis right

Criterion of protection for a non-original database The databases which do not present any originality on the selection or the arrangement of their content are covered only by the sui generis right attributed to their maker in order to protect the investment made against any “unauthorized extraction or re-utilization of all or a substantial part of the contents of that database” (preamble 40, 41).

The maker’s sui generis right - Substantial parts The database maker has the right to prohibit the extraction or re-utilization of the whole or of a substantial part of its content (art. 7 par. 1). In the terms of the Directive, “extraction” means “the permanent or temporary transfer of all or a substantial part of the contents of a database to another medium by any means or in any form” (art. 7 par. 2 a). “Re-utilization” means “any form of making available to the public all or a substantial part of the contents of a database by the distribution of copies, by renting, by on-line or other forms of transmission” (art. 7 par. 2 b). The sui generis right covers only the substantial part of the database contents. The determination of whether a particular part of a database is substantial or not must be made on the basis of criteria evaluated qualitatively or quantitatively. The first sale of a copy of a database within the Community by the maker or the right holder or with their consent shall exhaust the right to control resale of that copy within the Community (art. 7 par. 2 b). Public lending is not considered as an act of extraction or re-utilization. Those provisions apply to database makers which are nationals of a Member State or to companies set up in accordance with the law of a Member State and having a genuine link to the economy of this Member State (art. 11, criterion of territoriality).

Exceptions in favor of the lawful user on the substantial parts The Directive introduces some binding exceptions to the maker’s sui generis right in order to facilitate the lawful use of a database. The lawful user may without any permission proceed to the extraction or re-utilization of the substantial parts of a certain database, if the purpose of those acts is related to:

a) private use of a non-electronic database; c) teaching or scientific research; d) public security reasons, as well as administrative or judicial procedure.

Lawful user’s rights and obligations - Insubstantial parts Since the database maker’s right covers only the substantial part of its contents, the lawful user (buyer or licensee) is allowed to extract or re-use some of the insubstantial parts of the whole or of a part of the database contents (art. 8 par. 1). Nevertheless, he cannot proceed to the repeated and systematic extraction or re-utilization even of insubstantial parts in case that those acts conflict with a normal exploitation of the database or cause unreasonable prejudice to the maker’s legitimate interests (art. 7 par. 5). In any case, the lawful use of the insubstantial parts cannot be unreasonably prejudicial to the maker’s legitimate interests or conflict with the normal exploitation of the database (art. 8 par. 2). Additionally, the copyright or the related rights existing on the database content have to be respected.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


25

Term of protection The sui generis right expires fifteen (15) years from the first of January of the year following the date of completion of a certain database. Additionally, a new period of fifteen (15) years protection is offered when substantial changes to the content of the database are made. These changes evaluated qualitatively or quantitatively must result to a substantial new investment (art. 10 par. 3). The burden of proof regarding the date of completion lies with the maker (preamble 53).


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


26

SECTION III.2 - COMPLIANCE OF UKRAINIAN LEGISLATION WITH DIRECTIVE 96/9/EC

ON THE LEGAL PROTECTION OF DATABASES

Copyright protection of databases is covered by the relevant Book IV (Intellectual Property Rights) of the Civil Code of Ukraine and by the specialized Law of Ukraine on Copyright and Related Rights (hereinafter the Law).

The Law of Ukraine on Copyright and Related Rights contains several definitions related to the copyright protection of the databases, which are considered to be a set of works, data or any other independent information in any form, including – electronic; their selection and placement of components as well as arrangement are the result of creative work; and the components of which are available individually and can be found through special search system based on electronic (computer) or other technologies. The Law explains who can be the ‘author’ of any work, i.e. a natural person who created a piece of work through his/her creative efforts. From this definition, one may conclude that the ‘database authorship’ can belong to the natural person only as a result of his/her creative work. This rule comes out of a concept that only natural person as an author can possess inalienable rights, while legal interties can only hold the economic copyright in case of collective works or transfer of copyright. The term ‘collective works’ is defined as a piece of work created by the author as a part of performance of his duties in accordance with the job or employment agreement (contract) between him and the employer. While Ukrainian legislation refers to ‘sui generis’ with regard to the regulation of non-original databases protection, it does not provide with the detailed rules on it and, thus, the definitions of ‘extraction’ and ‘re-utilization’ are not mentioned in the Law.

Criteria of protection for a database are not mentioned expressly, but in order to be considered as an object of copyright regulation the database must be original, i.e. to be presented in a special creative manner as a result of the author's intellectual creation. This conclusion comes out of an example of works that does not meet the criterion of originality, e.g. transport or TV-programs schedules, telephone numbers databases or similar databases (as provided by the Article 10 of the Law).

The author of a collection or other compiled works holds the copyright with regard to his compilation and arrangement of works and (or) other data that result from his creative activities. Compiler of a database holds the copyright provided to compliance with the author’s rights of each and every work included to the collection. Authors of works included to the database are entitled to use their works independently of the database, unless otherwise provided by the author's contract with the compiler of the database. Copyright of the database compiler does not prevent other persons to select or arrange independently the same works and (or) other data in order to create their works. Legal protection of databases does not apply to the data or information and do not affect any copyright, related to the data or information which contained in the database. The Article 19 of the Law contains a non-exhaustive list of the author’s exclusive economic right including his personal exclusive use of the database and exclusive right to allow or prohibit the use of the database by other persons. The exclusive right to use the work by the author (or other person who holds a copyright) includes usage of work in any form and by any means. The exclusive right of the author (or another person holding the copyright) to allow or prohibit the use of computer program gives him the power to authorize or prohibit reproduction of works, any re-publication of works, if it is done by organization other than that carried out the first distribution, translations of works, adaptations, arrangements and other similar changes, distribution of works by means


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


27

of primary sales or by transfer for rental, submission of the works to the public so that it may be accessed anywhere and at any time, commercial rent after primary sale, import copies of works, etc.

National legislation of Ukraine does not specifically mention the right of the lawful user to access without prior permission of the author the content of the database. Such right of the lawful user can be confirmed by the contract or license agreement when the person buys or rent the database.

National legislation does not impose extra limitations to the author’s right with regard to the databases. Strictly speaking, one of the few limitations refers to the use of works in judicial or administrative procedures to the relevant extent and purpose. Without permission of the author (or other person who holds the copyright) and without payment of royalties, it is also allowed to reproduce solely for personal or family use of the previously lawfully published works, except works of architecture (such as buildings and other structures), computer software, graphic reproduction of books, music and original works of fine art. Works and performances recorded in phonograms, videograms and their copies, as well as audiovisual works and their copies, are allowed to be used personally or with family at home without the permission of the author(s), performers, producers of phonograms, producers of video grams, but with payment of their remuneration following the procedure settled in the Law. The use for purposes of teaching or scientific research does not concern databases. Specifically, without consent of the author or other person who holds copyright the Law allows only:

- to reproduce excerpts from the published written works, audiovisual works, e.g. illustrations for teaching purposes, provided that such reproduction is consistent with the mentioned purpose;

- reprographic reproduction by educational institutions for classroom lessons of published articles, other small works and excerpts from written works, with illustrations or without them, provided that such reproduction is consistent with mentioned purpose, if the reproduction of a work occurs once and has no systematic character.

According to the Article 18 of the Law on Copyright and Related Rights, the copyright is granted for the entire life of the author and 70 years after his death, unless otherwise provided by provisions of the same Article. For works published anonymously or under a pseudonym, the copyright expires in 70 years after the work has been published. If a pseudonym taken by the author leaves no doubt on the author's identity, or if the author of a work published anonymously or under a pseudonym is disclosed no later than 70 years after the publication of a work, the term shall be calculated following the main rule, i.e. for entire life period of the author and 70 years after his death. Copyright for works created by the group of people is granted for the lifetime of co-authors and 70 years after the death of the last co-author. The term of copyright after the death of the author shall be calculated from the 1st of January of the year following the year of death. According to the Article 10 of the Law of Ukraine on Copyright and Related Rights, the legal regime of non-original databases is determined by the category sui-generis (a special kind of law). In 1996 this kind of law was stated at the international level within the framework of harmonization of the databases legal regulation, adopted in the Directive 96/9/EC on the legal


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


28

protection of databases. While referring to this concept, the Ukrainian legislation neither provides a legal framework for ‘sui generis’ within the national legal system, nor gives special rules. Original, i.e. creative databases are protected by the copyright. The legal practice follows the idea that the databases, which do not have copyright protection, shall be regulated by the Berne Convention and the Directive of the European Parliament and European Council of 03.11.1996, № 96 / 9, Law of Ukraine on Copyright and Related Rights and other legislative acts of Ukraine. Such databases are characterized by a complex multistage structure, mutual dependence of certain sections, complex system management, etc. The data, which is the part of fields and sections of the database, is protected by law “sui generis”. Therefore, as defined by the provisions of the Directive, the prohibition of unauthorized use of information and data in the database cannot be considered as the copyright protection.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


29

SECTION III.3 – RECOMMENDATIONS FOR LEGAL APPROXIMATION

Criterion of low originality

As presented in Section III.2, the concept of originality for databases is not directly stated in the Ukrainian legislation. It is recommended to consider stipulating this criterion expressly in the Ukrainian legislation, since the “low originality” offers a wide framework of protection for all kind of databases and, therefore, facilitates market evolution.

Author’s exclusive economic rights

The Directive refers only to the economic rights of a database author. The list of those rights is not exhaustive, but the specific rights mentioned by the Directive (reproduction translation, adaptation, arrangement or alteration, distribution to the public, communication, display or performance to the public) should be a part of the Ukrainian legislation, since they cover the most common acts operated in case of commercial exploitation of a database.

Exceptions in favour of the lawful user

As presented in Section III.2, Ukrainian legislation does not specifically mention the right of the lawful user to access without prior permission of the author the content of the database. The Directive introduces a binding exception to author’s exclusive economic rights in order to facilitate the lawful use of an original database by its buyer or licensee. It appears recommendable that the Ukrainian legislation expressly introduces the lawful user’s right to have access, without any prior permission, to the content of a database, as a whole or as a part, and proceed to any act consisting one of the author’s exclusive economic rights.

General exceptions to the authors’ economic rights

As presented in Section III.2, the Ukrainian legislation does not impose extra limitations to the author’s right with regard to the databases. According to the Directive, national legislation can provide exceptions to the authors’ economic rights in order to facilitate any third person, other than the lawful user, to have access on the database content and use it for some specific purposes. It is desirable that the Ukrainian legislation introduces the exceptions referred under (a), (b) and (c) in the Section III.1.

The database maker’s sui generis right

As presented in Section III.2, the Ukrainian legislation does not expressly and systematically provide a framework for the protection of the database maker’s rights. As far as the definitions are concerned, it is recommended to stipulate the definitions for the acts of “extraction” and “re-utilization” in the Ukrainian legislation, since they describe the content of the database maker’s specific rights. It is also worth introducing into the Ukrainian legislation the whole legal framework for the rights of the database maker as provided by the Directive. This framework covers the issues related to the sui generis right, the first sale doctrine, the exceptions in favour of the lawful user on the substantial parts of a non-original database, its rights and obligations on the insubstantial parts of such a database, as well as the term of protection.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


30

CHAPTER IV - LEGAL FRAMEWORK FOR THE INFORMATION SOCIETY

SECTION IV.1 - EU LAW ON THE INFORMATION SOCIETY The Directive 2001/29/EC introduces new and flexible legal concepts for the protection of creators, performers and producers into the information society, able to respond to the technological challenges mostly in the field of digital exploitation of copyrighted works. The Directive follows the legal framework constituted by the WIPO Conventions, but at the same time manages to establish a high level of protection crucial for the intellectual creation. Some of the concepts are developed further (reproduction right, communication to the public right), while some others are introduced for the first time (effective technological measures, rights management information). (A) Content of the exclusive rights

Reproduction right The Directive extends the concept of the reproduction right to cover any act of reproduction irrespectively of the process (direct or indirect reproduction), the purpose (temporary or permanent copy), the extent (in whole or in part) or the means used (analogue or digital). The exclusive right to authorize or prohibit all those forms of reproduction is recognized to the authors, performers, phonogram and film producers, as well as the broadcasting organizations for their own broadcasts transmitted by any means.

Right of communication to the public This exclusive right, understood in a broad sense, entitles the authors to allow or prohibit any transmission or retransmission of their works to the public, including broadcasting (art. 3 par. 1, preamble 23). Nonetheless, it does not cover any other acts involving distribution to the public of the hard copies of a work. The related rights holders (performers, producers and broadcasting organizations) are protected according to the provisions of each national law.

Making available right The Directive introduces what should be understood as an exclusive right covering all acts of making a work available to members of the public, in such a way that each one of them may have access to that specific work, from a place and at a time individually chosen. This right is attributed to all categories of creators and right holders (authors, performers, phonogram and film producers, broadcasting organizations) and covers any act of on-line transmission of copyrighted works or other subject matters. It occurs that right holders may allow or prohibit any digital reproduction and distribution of texts, images, music records, films, computer programs or databases. Both rights of communication to the public and making available are not subject to exhaustion because of their specific nature as on-line services (art. 3 par. 3).

Distribution right The Directive provides for all authors the exclusive right to allow or prohibit any form of distribution to the public of their works by sale or otherwise (art. 4). The first sale or other transfer of ownership within the Community of the original or copy of a work by the right holder or with his consent shall exhaust the distribution right of that copy within the Community (first sale doctrine).


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


31

(B) Limitations to the exclusive rights

The main purpose of this Directive is to ensure a “fair balance of rights and interests” between the different categories of right holders and users “in the light of the new electronic environment” (preamble 31). In that respect, the Directive provides an exhaustive enumeration of exceptions and limitations to the reproduction right, the right of communication to the public and the making available right provided that their exercise has educational, cultural, scientific or public security purposes. Some of those limitations apply only to the reproduction right. In some cases, the establishment of such restrictions is associated to a fair compensation due to the right holders. Additionally, according to the general rule of the Article 5 par. 5, the application of all exceptions or limitations should not conflict with the normal exploitation of the work or be unreasonably prejudicial to the right holder’s legitimate interests (three steps test).

Limitations to the reproduction right The Directive introduces only one binding exception of the reproduction right related to the temporary acts of reproduction as an integral and essential part of a technological process. Those acts (such as browsing, caching, routing etc.) have no separate economic value on their own and their sole purpose is either to enable efficient transmission in a network between third parties by an intermediary or to facilitate the lawful use of a copyrighted work (art. 5 par. 1).

The Directive also introduces a number of provisional yet exhaustive exceptions of the reproduction right, such as:

a) reproduction on paper or any similar medium provided that the right holders receive fair compensation;

b) reproduction on any medium (analogue or digital) for private use provided that the right holders receive fair compensation;

c) reproduction by public or educational establishments, museums or archives of non-commercial nature;

d) ephemeral recordings made by broadcasting organizations for their own broadcasts; e) reproduction of broadcasts made by social institutions provided that the right holders

receive fair compensation.

Limitations to the reproduction right, the right of communication to the public and the making available right

The Directive introduces a number of provisional yet exhaustive exceptions of all the above exclusive rights which allow the exploitation of a copyrighted work without prior permission of the right holder in case of:

a) use for teaching or scientific research for non-commercial purposes provided that the source is indicated. This is a generally expressed limitation which does not indicate categories of works able to be used for the mentioned purposes, so it follows that it applies to any kind of literary, artistic or scientific copyrighted work, as well as to the e-learning process (see also preamble 42);

b) use for the benefit of people with disability and of non-commercial nature; c) use by the press of published articles on current economic, political or religious topics

or of broadcast works provided that such use is not expressly reserved and the source is indicated;

d) use of quotations for criticism or review of published works provided that the source is indicated and their use is in accordance with fair practice;

e) use for public security or in order to ensure administrative and judicial proceedings;


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


32

f) use of political speeches or extracts of public lectures provided that the source is indicated;

g) use of a work during religious or official celebrations; h) use of works of fine arts located permanently in public places; i) incidental inclusion of a work in other material; j) use for advertising a public exhibition or sale of artistic works; k) use for the purposes of caricature, parody or pastiche; l) use in connection with the demonstration or repair of equipment; m) use of an artistic work (building or drawing) for the purposes of reconstruction; n) research or private study in public libraries by dedicated terminals of works contained

in their collections; o) use in cases of minor importance already existing under national legislation provided

that they do not affect free circulation of goods and services within the Community.

Limitations to the right of distribution

The Directive allows Member States to introduce limitations to the right of distribution of the same nature and under the conditions provided for the application of the limitations referred to all the above mentioned rights.

Application of three steps test The application of all limitations provided by each Member State, including the free operation of temporary acts of reproduction, is subject to the rule of the three steps test (art. 5 par. 5). According to this rule, all limitations apply in specific cases which do not conflict with the normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder. (C) Technological measures According to the terms of the Directive, “technological measures” are considered to be any technology, device or component that it is normally designed to prevent or restrict acts, in respect of copyrighted works which are not authorised by the right holder (art. 6 par. 3). The technological measures are deemed effective “where the use of a copyrighted work is controlled by the right holders through application of an access control or protection process”. In other words, technological measures can prevent the reproduction of a work, a file or a fixation material and for this reason they allow right holders to exercise digital rights management (DRM) in a specific work. The Directive encourages Member States to provide adequate legal protection against any person who circumvent, without permission, the effective technological measures when such act is made in his knowledge or with reasonable grounds to know that he is pursuing that objective (art. 6 par. 1). It also encourages Member States to provide legal protection against any person who provides services or proceed to the manufacture, importation, distribution, sale, rental, advertisement for sale or rental, or possession for commercial purposes of devices, products or components when those services, devices or products:

a) are promoted, advertised or marketed for the purpose of circumvention, or b) have only a limited commercially significant purpose or use other than to

circumvention, or c) are primarily designed, produced, adapted or performed in order to facilitate

circumvention (art.6 par. 2).


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


33

Nevertheless, technological measures should not prevent the users from proceeding to the application of exceptions and limitations provided for the exclusive rights, especially the reproduction right. For that reason, the Directive provides a number of cases in which the right holders have the obligation to give to the beneficiaries the measures to ensure the benefit of such an exception or limitation. These provisions do not apply to works available to the public on agreed contractual terms in such a way that members of the public may have access to them from a place and at a time individually chosen.

(D) Rights-management information The term “rights management information” means that any information provided by right holders which identifies a copyrighted work or other subject-matter protected by a related right or the sui generis right of database maker and which identifies the author or any other right holder, or information about the terms and conditions of use of the work or other subject-matter, as well as any number or code that represent such information (art. 7 par. 2). According to the Article 7, Member States should provide adequate legal protection against any person who proceed to unauthorized acts of (a) removal or alteration of any electronic rights-management information or (b) distribution, importation for distribution, broadcasting, communication or making available to the public of copyrighted works from which electronic rights-management information has been removed, when this person knows or has reasonable grounds to know that his acts constitute an infringement of the rights related to that work (art. 7 par. 1). (E) Sanctions and remedies Member States should provide a number of sanctions against any person whose unauthorized acts infringe the legal framework set by the Directive. In that perspective, the right holders whose interests are affected by an infringement should have the possibility to:

a) bring an action for damages; b) apply for an injunction; c) proceed to the seizure of the infringing material, devices or products used for the

circumvention of technological measures. Additionally, the right holders should have the possibility to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right (art. 8 par. 3).


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


34

SECTION IV.2 - COMPLIANCE OF UKRAINIAN LEGISLATION WITH DIRECTIVE 2001/29/EC ON THE HARMONISATION OF CERTAIN ASPECTS OF

COPYRIGHT AND RELATED RIGHTS IN THE INFORMATION SOCIETY

Regulation of the copyright and related right is covered by the relevant Book IV (Intellectual Property Rights) of the Civil Code of Ukraine and by the specialized Law of Ukraine on Copyright and Related Rights (hereinafter sometimes - the Law). Civil Code gives the most general overview of copyright and related rights regulation while the Law provides with in-depth perspective and is a core document on this field. Within the scope of the last legislation developments, it is worth mentioning the Draft Law on amending some laws of Ukraine to strengthen the protection of copyright and related rights (3503/ 18.12. 2008) and the Draft Law on amending some laws of Ukraine on copyright and related rights (4073/ 17.02.2009).

A separate part of the Directive 2001/29/EC is dedicated to technological protection measures and rights management information. All the relevant definitions can be found in the Law of Ukraine on Copyright and Related Rights.

In particular, it defines the rights management information as information, including electronic (digital) form that identifies the object of copyright and (or) related rights and the author or other person who has copyright and (or) related rights for this object, or information about conditions of use of copyright and (or) related rights, or any numbers or codes in which such information is represented, when any of these items of information is attached to a copy of the object of copyright and (or) related rights or put in it or appears with its communication to the public.

As to the term effective technological measures, it is not defined by the legislator but the Law gives a notion of technical means of protection as technical devices and (or) technological means designed to create a technological obstacle to the infringement of copyright and (or) related rights during perception and (or) copy protected (encoded) recordings in phonograms (videograms) and broadcasts of broadcasting organizations or for controlling the access to the usage of objects of copyright and related rights. Reproduction right is enshrined in the paragraph 1, Part 3 of the Article 15, paragraph "c" of Part 1 of Art. 39, paragraph "a" of Part 1 of Art. 40, paragraph "b" part 1 Art.41 of the Law and paragraph 2 of Part 1 of Art. 441, paragraph 3 of Part 1 of Art. 453, paragraph 1 of Art. 454, paragraph 1 of Art. 455 of Civil Code, and applies to the authors, performers, phonogram producers, videogram producers, broadcasting organizations. If we make a consistency determination editorial scope of the reproduction right and establish an adequate correspondence of such terms as "videogram" and "movie", "producer of videogram" and "producer of the first fixation of film", "program of broadcasting organization" and "broadcast of broadcasting organization", one can conclude that this part of the Ukrainian legislation fully meets the requirements of the Directive 2001/29/EC.

As to the Right of communication to the public by any means for the authors, the Civil Code generally requires the provisions of the said Directive, although, there appears an obvious disagreement between the terminology of the Directive and the relevant articles of the Civil Code.

While in the Law the relevant provisions also occur, but they require a substantial review on their compliance with the Directive. In particular, the wording of paragraph "d" of Part 1 of Art. 40, paragraph "a" of Part 1 of Art. 41 of the Law, did not comply with the Article 3 (2) of the Directive, under which the proprietary right of the performers, phonogram producers,


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


35

producers of the first fixations of films and broadcasting organisations, does not apply to communication to the public by wired or wireless means, it is limited to the exclusive right to authorise or prohibit the making available to the public, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them.

Distribution right for the authors. This is an exclusive right to authorise or prohibit any form of distribution to the public by sale or otherwise. The distribution right shall not be exhausted within the Community in respect of the original or copies of the work, except where the first sale or other transfer of ownership in the Community of that object is made by the right holder or with his consent. The right to distribute in regulations by law may involve only "to permit", while the algorithm Directive establishes "the right to authorize or prohibit" which is an important specification for practical implementation.

As to the first sale doctrine, it means that copyright does not restrain the owner of the copy from selling the copy of the work if the copy was obtained with the permission of rights owner or in another manner prescribed by law. So, the re-sale of a book or a CD-ROM which is protected by copyright, will be considered as legitimate action – in this part the Ukrainian legislation also corresponds to the Directive 2001/29/EC.

The Directive proposes a system of exceptions and restrictions to the property rights to works and objects of related rights. It worth emphasizing that all the range of possible exceptions and limitations are clearly defined and are not subject to broad interpretation, and, in most cases, one can note an attempt to find a balance of interests between different categories of copyright and related rights subjects, and between mentioned subjects, users of their property rights and society. However, it is done not in the form of binding rules, but in the form of recommendations at the discretion of Member States, although there are provisions that strictly require harmonization. Moreover, the mandatory exceptions have occurred in the EU legislation and international regulations prior to the adoption of this Directive.

Thus, temporary acts of reproduction, which have no independent economic significance (they are transient or incidental [and] an integral and essential part of a technological process) – Article 5 (1) of the Directive - for the first time in international law, they are excluded from the reproduction right.

An interesting exception to the reproduction right is set for the objects used by social institutions pursuing non-commercial purposes, such as hospitals or prisons, on condition that the right holders receive fair compensation. In three cases of exceptions and limitations fair compensation is offered to pay, while in other cases of possible constraints such payment is not expected.

Turning back to the Ukrainian legislation, it should be noted that the legislators still need to consider soon the provisions of Art. 5 of Directive, which are not reflected in the Ukrainian legislation and decide on the feasibility of their implementation, taking into account that exceptions and limitations are not binding and should properly reflect the growing economic influence. It is reasonable to pay attention to the European experience, at least for a provision on ephemeral recordings of works, made by broadcasting organisations by means of their own facilities and for their own broadcasts, as well as for such provisions as the use of such works as the works of architecture or sculpture, made to be located permanently in public places. And this is really logical, because if a work of architecture, fine art or photographic work is permanently in places that are open for free visits, its use is permitted without consent of the author or other subject of copyright and without paying compensation, except the use of such work for commercial purposes, or when such work is the main object of reproduction.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


36

Provisions of the Directive (Article 8 (3)) on obligations of Member States to ensure the effective application of injunction are not only against the violators themselves, but also against intermediaries whose services are used by a third party to infringe a copyright or related right, deserve special attention. Generally speaking, the Ukrainian Law is consistent with the provisions of the Articles 6, 7, 8 of the Directive. However, the above mentioned issue that applies to intermediaries needs to be approximated.

The said Directive contains a position that a fair balance between the rights and interests of different categories of subjects of copyright as well as between different categories of subjects of copyright and users of protected objects has to be guaranteed. We believe that this is a topical idea of the Directive and it has been already displayed in the TRIPS agreement. And this idea has to guide the Ukrainian legislator. Moreover, some positive aspects have already been observed. For example, under the civil legislation, limits on the exclusive property rights have been designed so that a certain number of such limits requires giving to subjects of property rights "fair compensation" or "reasonable remuneration". So, one can see a general trend of transition to the "right to pay" mentioned in Art. 445 of the Civil Code, that means a possibility to use the object of intellectual property rights without the consent of the subject of copyright or related rights, but with payment of remuneration to him, unless the Law stipulates otherwise. In particular, the necessity of paying reasonable compensation for all cases of reproduction (copying, photocopying, etc.) is covered by the property right to distribution of objects in the digital environment and so on.

Finally, analysis of the Directive and of the Ukrainian legislation shows that in Ukraine the overall level of protection of copyright and related rights in the information society corresponds to the level specified in the EU.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


37

SECTION IV.3 – RECOMMENDATIONS FOR LEGAL APPROXIMATION

Definitions As referred to above in Section IV.2, Ukraine mainly lacks terminology related to the rights defined by the Directive. It is thus recommended that the Ukrainian legislator follows the wording of the Directive for the definition of the rights mentioned in its text, namely the reproduction right, the right of communication to the public, the making available right and the distribution right. It is also recommended that the Ukrainian legislation attributes those rights to all the categories of right holders mentioned in the Articles 2, 3 and 4 of the Directive. Finally, it is recommended that Ukrainian legislation introduces a definition of “effective technological measures” in order to determine the content of the legal protection offered against circumvention, as mentioned in the Article 6 (1) of the Directive.

Binding exception of the reproduction right As mentioned in Section IV.1, the Directive introduces one binding exception of the reproduction right related to temporary acts of reproduction as an integral and essential part of a technological process. It seems recommendable that Ukrainian legislation expressly stipulates this exception.

Other limitations to the reproduction right It is also worth introducing into the Ukrainian legislation at least some of the provisional exceptions of the reproduction right, especially those related to:

a) reproduction on any medium (analogue or digital) for private use provided that the right holders receive fair compensation;

b) ephemeral recordings made by broadcasting organizations for their own broadcasts; c) reproduction by public or educational establishments, museums or archives of non-

commercial nature.

Other limitations to all exclusive rights As indicated in Section IV.2, some of the provisions of the Article 5 of the Directive are not reflected in the Ukrainian legislation. It is recommended that Ukrainian legislation introduces the provisional exceptions of the exclusive rights, especially those related to use:

a) for teaching (including e-learning process) or scientific research for non-commercial purposes provided that the source is indicated;

b) for the benefit of people with disability and of non-commercial nature; c) by the press of published articles on current economic, political or religious topics or

of broadcast works provided that such use is not expressly reserved and the source is indicated;

d) of quotations for criticism or review of published works provided that the source is indicated and their use is in accordance with fair practice;

e) of works of fine arts (architecture or sculpture) located permanently in public places; f) for advertising a public exhibition or sale of artistic works; g) for the purposes of caricature, parody or pastiche; h) for research or private study in public libraries by dedicated terminals of works

contained in their collections. Sanctions and remedies

It is recommended that Ukrainian legislation ensures the effective application of injunction not only against the violators themselves, but also against the intermediaries whose services are used by a third party to infringe a copyright or related rights.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


38

CHAPTER V - LEGAL FRAMEWORK FOR ELECTRONIC COMMUNICATIONS SERVICES

SECTION V.1 - EU LAW ON THE ELECTRONIC COMMUNICATIONS SERVICES The main purpose of the regulatory framework Directive 2002/21/EC is the convergence of the telecommunications, media and information technology sectors. It should be noted, though, that this framework does not expressly cover the content of services delivered over electronic communications networks using electronic communications services, such as broadcasting content, financial services and certain information society services (preamble 5). Therefore, this Directive operates as a complement to the other Directives reviewed herein, as it establishes a stable legal framework for the consolidation of the internal market for electronic communications and the effective management of radio frequencies. These provisions are amended and completed by the Directive 2009/140/EC in order to maximize the flexibility of radio frequencies management and increase the access to the spectrum by using principles of technology and service neutrality. Introduction of new legal concepts

The framework Directive 2002/21/EC introduces a considerable number of definitions, useful for the understanding of all those new legal concepts connected to the technological progress and the functioning of the various information technology sectors. Some of those definitions are amended by the Directive 2009/140/EC. It occurs that each Member State should introduce in national legislation provisions concerning:

a) electronic communications network (art. 1 par. 2 (a) (a) of the Directive 2009/140/EC);

b) transnational markets (art. 1 par. 2 (a) (b) of the Directive 2009/140/EC); c) public communications network (see art. 1 par. 2 (a) (d) of the Directive

2009/140/EC); d) network termination point; e) associated facilities; f) associated services; g) spectrum allocation; h) harmful interference; i) conditional access system; j) universal service; k) provision of an electronic communications network; l) enhanced digital television equipment; m) application program interface (API).

Formation and tasks of the National Regulatory Authority

The Directive 2002/21/EC establishes a framework for the formation and tasks of the National Regulatory Authorities charged with the application of all measures proposed for the pursuit of its objectives. Member States should guarantee the independence of those Authorities. They also should take all appropriate measures in order to ensure impartiality and transparency in the exercise of their powers (art. 3 par. 3 of the Directive 2002/21/EC). National Regulatory Authorities contribute to the development of the internal market for electronic communications (art. 7, 7a, 7b of the Directive 2009/140/EC). For that purpose, they are entitled to ask networks and services providers for all necessary information, including financial information, concerning their conformity with the Directive provisions (art. 5 of the Directive 2002/21/EC). At the same time, they cannot proceed, as a rule, to the adoption of measures for the implementation of the Directive’s provisions before they have


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


39

activated a consultation and transparency mechanism involving the reaction and comments of the interested parties (art. 6 of the Directive 2002/21/EC). Each National Regulatory Authority’s general tasks are to promote the competition in the provision of electronic communications networks and services, to contribute to the development of the internal market, to pursuit the interests of the European Community citizens (art. 8 of the Directive 2002/21/EC), as well as to ensure the protection of the disabled users and to preserve the fair competition in the electronic communications sector (art. 8b of the Directive 2009/140/EC). One of the most important specific tasks of a National Regulatory Authority is the management of radio frequencies (spectrum). The National Regulatory Authority has to ensure that spectrum allocation used for electronic communications services is based on objective, transparent, non-discriminatory and proportionate criteria. However, in cases of interference, protection of public health, efficient use of the spectrum etc., Member States may provide for proportionate and non-discriminatory restrictions to the types of technology used for electronic communications services. Additionally, the National Regulatory Authority is responsible for the granting of rights of use of national numbering resources, as well as the management of the national numbering plans in a manner that gives equal treatment to all providers of publicly available electronic communications services (art. 10 of the Directive 2009/140/EC). In order to obtain a rational procedure of numbering, the Directive 2002/21/EC enables each National Regulatory Authority to determine whether or not the interested parties have significant market power equivalent to dominance (art. 14) or a position of joint dominance (Annex II, as amended by the Directive 2009/140/EC). Finally, each National Regulatory Authority is responsible for the resolution of disputes between undertakings providing electronic communications networks or services and in some cases for the resolution of cross-border disputes. Security and standardisation of the internal market

The EU Commission supports the National Regulatory Authorities in their work by adopting specific measures of general application aiming at the normal operation and harmonization of the internal market. In that respect, Member States ensure that providers of public communications networks or services take all appropriate technical and organisational measures to manage the risks posed to the security or integrity of those networks (art. 13a) Additionally, the Commission publishes a list of standards and specifications to serve as a harmonisation basis of electronic communications networks and services. Respectively, Member States, in order to promote media pluralism and cultural diversity, encourage, on the one hand, the providers of digital interactive television services to use an open application program interface (API) and, on the other hand, the providers of digital television equipment to comply with an open API (art. 18 of the Directive 2002/21/EC).

Right of appeal

Member States have to ensure setting up of an independent national appeal body which is independent of the parties involved. Any user or undertaking affected by a decision of a National Regulatory Authority shall have the right of appeal against that decision. Penalties

Member States should provide rules on the penalties, applicable to infringements of national provisions adopted in accordance with the legal framework set by those Directives and the


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


40

relevant Specific Directives. The penalties provided must be appropriate, effective, proportionate and dissuasive (art. 21a).

SECTION V.2 - COMPLIANCE OF UKRAINIAN LEGISLATION WITH DIRECTIVE 2002/21/EC ON A COMMON REGULATORY FRAMEWORK FOR

ELECTRONIC COMMUNICATIONS NETWORKS AND SERVICES

Over the recent years, the regulatory framework of the European Union in the field of electronic communications networks has undergone several changes. By the end of 2009, the current regulatory framework as of 2002 was supplemented by two new directives and one decision. Few years earlier, some significant changes were also made to the Recommendation of the European Commission on market definition in the electronic communications sector, which is one of the most important documents of the legal framework.

We analyze the current Law of Ukraine on Telecommunications as amended by the Law № 1819-VI (1819-17) on 20 January 2010, in terms of its compliance with current legal framework of the European Union in the field of electronic communications.

Overall, the goals and scope of the Law of Ukraine on Telecommunications mainly corresponds to the legal framework of the European Union in the field of electronic communications. However, some aspects require special attention.

The Objectives of Regulation

Regulatory framework of the European Union can be characterized by three main purposes of regulation: the development of market competition, consumer protection and development of the EU internal market (Article 8 of the Framework Directive, see above). Two of them are directly mentioned in the Law of Ukraine on Telecommunications (Article 2 'The Purpose of the Law'), but the third one ('Harmonization of National Markets and Developments Towards a Single Internal Market in Electronic Communications of EU), obviously, is not less important for regulatory framework of the European Union. For this reason, a potential problem may arise, as according to the Law of Ukraine, the services can only be provided by natural persons and/or legal entities domiciled in Ukraine (Article 6 (2): "Telecommunications services in Ukraine is an exclusive right of legal entities domiciled in Ukraine and registered under the laws of Ukraine and / or individuals - self-employed persons with permanent residence in Ukraine). In addition, the Article 16 ("The Purpose of Regulation") cannot be considered as being in full compliance with the EU legal framework.

In order to fully comply with EU legal framework, not only the approximation of the Ukrainian and EU markets should be defined as one of the purposes of the Law, but the principle of open markets should become one of the leading principles in the framework of provisions on market entry.

Scope of Regulation

The EU regulatory framework scope covers transmission of all signals through electromagnetic devices, including broadcasting of signals. This means that the rules of market entry (“the general permit” and in some cases individual license) and market regulation (equal conditions for all operators) should also be applied to broadcasting networks and services. However, the Article 28 (1) of the Law of Ukraine on Telecommunications gives ground for doubts about the openness of markets for networks and broadcasting services. As it is stated: 'The usage of public telecommunications networks for television and radio is on a contractual basis according to the law'.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


41

Inadequate Division of the Management and Regulation Tasks and Objectives

In general, the Law of Ukraine on Telecommunications is characterized by an adequate level of separation of the "administrative" (and / or financial) goals and objectives of the Ukrainian state, on the one hand, and the regulatory goals and objectives on the other. These two areas are regulated by separate sections of the Law (under section II 'State Regulation in Telecommunications' and Section III 'Regulation in Telecommunications').

However, an in-depth analysis of particular articles in these sections indicates a risk of insufficient separation of these two different (and possibly contradictory) objectives of the governmental authorities in Ukraine. It includes several correlated provisions.

Firstly, under the Article 15(1), at least a part of the regulatory functions are given to the Central Executive Authority in the field of communications. While the competence of the Central Executive Authority includes delivering of proposals on public policy in the telecommunications sector and their implementation within its powers (paragraph 1), development and adoption of legal acts within its competence (par. 3), definition of requirements on the quality of telecommunications services (4), implementation of technical policy in the field of telecommunications services, standardization and conformity assessment of telecommunications (5 ), organization and responsibility for development of standards (7), development and implementation of technical policy in the formation of numbering resources (9), in cooperation with other bodies elaborating the Concept of Telecommunications Development of Ukraine, which is aimed to achieve strategic interests and international competitiveness of Ukraine (10), cooperation with international organizations and relevant authorities of other states (17) and performance of duties entrusted to the Administration of Communication of Ukraine (18).

Whereas, it is worth considering the distinction between the policy-making, related to electronic communications, and the enforcement by the actors in charge. It seems that at least some part of the Central Executive Body broad powers should belong to the National Commission for Communications Regulation. Specifically, the power to determine requirements for quality of services (paragraph 4), implementation of technical policy (5), settlement of standards (7) and cooperation with international organizations and relevant authorities of other states are closer to the policy implementation rather than to the policy development. Therefore, these functions should be either transferred to the National Commission on Telecommunication Regulation to avoid potential conflicts of interest between the administrative and the regulatory tasks of the Ukrainian state, or re-formulated in a more general manner that would bring them closer to the policy-making than to the practical policy implementation.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


42

Lack of the dividing line in interaction between the central executive authorities and the National Commission on Telecommunication Regulation

The above mentioned concerns seem further complicated by the lack of clearly defined relations between the central executive authorities and the National Commission on Telecommunications Regulation. Especially given that the Article 13 of the Law of Ukraine on Telecommunications clearly states that it is the "central executive body in the field of communications” possesses an administrative power in the field of telecommunications. The fact that under relevant provisions of the Law, a specific regulatory power is granted to the central executive body (e.g. Article 24 on the conditions of telecommunication equipment application), and not to the National Commission on Telecommunications Regulation, makes cooperation between these bodies even harder.

National Commission on Telecommunications Regulation

At first glance, the provisions on legal status and power of the National Commission on Telecommunications Regulation fully comply with EU regulatory framework. The National Commission on Telecommunications Regulation has been entrusted the general function of supervision over the effective application and compliance with the provisions of the Law (Article 18 (3) Law on Telecommunications) and taking decisions that are binding for the telecommunications market players (Articles 18, 12 of the Law on Telecommunications).

However, some concerns remain:

a. Legal status / independence of the National Commission on Telecommunications Regulation

According to current version of the Law, it appears unclear whether the National Commission on Telecommunications Regulation is a separate legal entity. If it is not the case, the provisions on the legal status of the National Commission on Telecommunications Regulation do not meet the EU legal framework, since the division of tasks related to administration and regulation of the Government of Ukraine will not be considered as sufficient (see Art. 3 of the Framework Directive). Application of the Law on Telecommunications with regard to market players shall be solely within the competence of regulation bodies.

b. Competences

The National Commission on Telecommunications Regulation seems to lack some key competences. For instance, it appears that it is not involved in the process of market regulation. According to the EU directives, market regulation (particularly the use of special function of economic regulation mechanisms with respect to powerful market players to ensure equal competitive conditions for other telecommunications providers) is one of the most important competences that should belong to the national regulatory authorities without undue interference on the part of legislative bodies (see the ECJ decision on the case C-424/08 "Commission of the European Communities against the Federal Republic of Germany). Given its importance, this matter is considered in detail below.

In addition, the Article 19 of the Law on Telecommunications allows such an interpretation, which considerably limits the possibility of interference by the National Commission on Telecommunications Regulation, while the Article 18 of the law provides the opposite position. Therefore, it is recommendable to re-word the Article 19 of the Law in a manner to limit the competences of the National Commission on Telecommunications Regulation, but instead to include a list of possible tools at its disposal.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


43

c. Organizational Autonomy: HR and Budget

Finally, it appears unclear whether under the current version of the Law National Commission on Telecommunications Regulation has sufficient capacity (financial, human, technical, etc.) to effectively perform its own functions since the Article 20 of the Law simply states that for exercising powers, the National Commission on Telecommunications Regulation organizes its own unit within the budget defined by the Government. To avoid a possible misunderstanding, it is thus recommended to supplement this provision with clear guarantees that the National Commission on Telecommunications Regulation will have the necessary financial and human resources to implement their own tasks, as required by paragraph 3 of the Framework Directive (as amended by Directive on Regulation of 2009).

The EU legislation lays down a principle, according to which the conditions of market entry should be simplified to the most possible extent to encourage entry of new players and investment in electronic communications.

In principle, the majority of the Law of Ukraine on Telecommunications provisions meets these purposes, since the entry into the telecommunications market of Ukraine requires only a notification (Article 42 (1) of the Law on Telecommunications). An individual license is obligatory only for some specific services. In fact, the cases in which an individual license is required are stated so unclear that a provision on services covered by the requirement of individual license is applied almost all the time (namely, the fixed cable and wireless communications, mobile communications networks and broadcasting services, usage of electronic communications channels (Article 42 (3) of the Law on Telecommunications). In the EU Directives it is clearly indicated that the requirement of obtaining an individual license is justified only in case of distribution of scarce resources, e.g. number or frequency resources. As far as the Ukrainian legislation defines more cases where the individual license is mandatory, it significantly increases the number of requirements for market entry, which goes beyond the established regulatory and legal basis in the EU.

Furthermore, the Law of Ukraine on Telecommunications contains several provisions, under which new players on the market, that are looking to develop and use the public telecommunications networks, have additional obligations (see Articles 27 and 30 of the said Law). Another example of too onerous obligations is the fact that the use of public telecommunications networks to provide services of broadcasting is established on a contractual basis, according to the law. An additional example is the fact that projects on construction, reconstruction and modernization of telecommunication networks (even those that are not in public use?) at least in some cases are subject to examination, while costs associated with its implementation are covered on the operators of these networks (Article 31 of the Law on Telecommunications). Finally, the National Commission on Telecommunications Regulation possesses some competences which are difficult to justify in terms of legal basis of the EU. Examples of such competences can include: a power to include to the licensing procedure to operate in the telecommunications sector (unspecified) some "special conditions" for individual operators or service providers (Article 44 (3) of the Law on Telecommunications) and a power to limit the number of licenses "if it is necessary to ensure effective use of telecommunications networks for consumers and limited resources usage" (Article 47 (1) of the Law on Telecommunications).

The tasks related to the market regulations constitute an integral part of the proper implementation of EU directives into the national legislation of member countries. In the current version of the Law on Telecommunications the relevant provisions seem not corresponding to the basic principles of the EU legislation. In order to ensure this compliance, the Ukrainian legislation requires the following major changes:


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


44

· tasks related to market regulations should be entrusted to the relevant national regulatory authority; · market definition should be avoided in the law (EU Court Decision C-424/07 'The European Commission v. Germany'); · the definition of 'significant market advantage' should be given, the existence of which would serve a basis for imposing additional obligations on operators; · it is desirable to avoid the market regulatory obligations what generally requires the analysis of market activity of all market participants; · obligations established by the law should be avoided (those laying outside the competence of regulatory bodies).

Although the provisions for the protection of consumers' rights seem generally in conformity with the relevant EU directives, the Law of Ukraine on Telecommunications obviously requires amendments with regard to universal service (e.g. selection methods of universal service providers and compensation mechanism). Summing up, one may note that although in general the Law of Ukraine on Telecommunications seem to be consistent with the aims, principles and approaches set out in the EU regulatory and legal framework in the field of electronic communications, an analysis of specific provisions shows that in many cases (e.g. in relation to market entry), the very complicated procedures apply. Moreover, a special attention should be devoted to the provisions on regulation of the market, since they cannot be considered as the ones which comply with the basic principles of the EU legislation (flexible market regulation, imposition by regulatory bodies of proportionate obligations on operators with significant market advantages). Finally, the provisions related to universal service also require significant amendments in order to achieve the compliance with the regulatory EU approach (scope of application, open imposition of "obligations" to provide universal service, fair and proportional reimbursement of net expenditures).


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


45

SECTION V.3 – RECOMMENDATIONS FOR LEGAL APPROXIMATION

In order for the Ukrainian legislation to comply with the general provisions of the Framework Directive, it is recommended that it introduces or clarifies the concepts forming the core of this Directive, especially those of the electronic communications network, transnational markets, public communications network, associated facilities and services, spectrum allocation, harmful interference, conditional access system, universal service, provision of an electronic communications network and application program interface (API). Nevertheless, market definition should be avoided in the law (EU Court Decision C-424/07 'The European Commission v. Germany'). Provisions related to universal service require significant amendments in order to comply with the EU legal framework (scope of application, open imposition of "obligations" to provide universal service, fair and proportional reimbursement of net expenditures). It is also recommendable to pay special attention to the legal provisions on regulation of the market, as currently they cannot be considered as compatible with the basic principles of the EU legislation (flexible market regulation, imposition by regulatory bodies of proportionate obligations on operators with significant market advantages). The definition of "significant market advantage", the existence of which has been a basis for imposing additional obligations on operators, seems an important element to be introduced in the Ukrainian legislation.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


46

CHAPTER VI - LEGAL PROTECTION OF AUDIOVISUAL MEDIA SERVICES

SECTION VI.1 - EU LAW ON AUDIOVISUAL MEDIA SERVICES

The latest Directive (2007/65/EC), adopted by the EU in the field of media services, in fact, takes into account the impact of new technologies in the transmission of audiovisual media services (namely the emergence of on-demand audiovisual services), the spread of information and communication technologies, as well as the technological developments on business models in order to ensure competitiveness and legal certainty for European media industries. So, although the basic principles of the legal structure of media services are retained, former Directive 89/552/EEC and Directive 97/36/EC are largely amended. In that perspective, new rules concerning on-demand audiovisual services are provided, advertisement practices become more flexible, the limitation on the amount of daily television advertising is abolished and product placement is allowed under certain circumstances. The new Directive (AMSD) concerns all audiovisual media services; that includes television broadcasting activities (linear services) and on demand (non-linear) audiovisual services. Therefore, it contains a variety of definitions in order to clarify the content of all notions related to audiovisual media services, such as: media service provider, editorial responsibility, audiovisual commercial communication, on-demand audiovisual media service, product placement, European works etc. (see art. 1 par. 2, a-n). The AMSD begins with the general provisions related to issues such as provider identity, jurisdiction, policy measures and state cooperation (A-General provisions), and then contains some specific provisions related to issues applying to all categories of audiovisual programs (B- Provisions applying to all audiovisual media services). In this second part, the AMSD includes a set of rules applying exclusively to television broadcasting services (Β.1- Provisions applying only to linear media services), as well as a number of rules applying exclusively to on-demand audiovisual services (Β.2- Provisions applying to non-linear media services). (A) General provisions Provider identity

Access to the identity of audiovisual services providers has to be guaranteed by setting a legal framework that contains at least the information included in the Article 1 par. 7, 3a of the Directive. Jurisdiction

The country of origin principle is the core of the AMSD, “as it is essential for the creation of an internal market”. Therefore, Member States can enforce media service providers established in their territory to comply with the rules of their legislation applicable to audiovisual media services. The AMSD contains the detailed rules specifying the conditions under which a media service provider is deemed to be established in a Member State (art. 1 par. 3). The freedom of reception principle also remains in force. Member States shall not restrict retransmissions on their territory of audiovisual media services from other Member States (art. 1 par. 4). Nevertheless, the State of reception can prohibit the retransmission in its


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


47

territory of any television service whose content violates the European legal framework related to the protection of minors and of sensitive population groups. More requirements are set in case of the retransmission of non-linear services. Member States may take measures against a specific on-demand audiovisual media service which is contrary to the objectives of public policy, public health, public security and the protection of consumers. Such measures have to be necessary and proportionate to the above objectives. The imposition of such measures requires the existence of a substantial threat to the function of the public sphere as well as the prior notification of the State of origin, which aims at the possible voluntary compliance of the offending provider. Circumvention measures

Member States are free to adopt more detailed or strict rules in the fields regulated by the Directive, provided that such rules are in compliance with the Community law (art. 1 par. 5). They also enjoy jurisdiction to apply those rules against any broadcaster established in another Member State with the purpose of circumventing the stricter rules of their own legal system. In any case, measures can be taken provided that they are objectively necessary, proportionate to the objectives pursued and applied in a non-discriminatory manner. In any case, both the Member State in which the broadcaster in question is established and the European Commission have to be notified. The measures can be enforced only if the Commission decides that they are compatible with the EU law. (B) Provisions applying to all audiovisual media services Audiovisual commercial communications

The AMSD provides a flexible legal framework applying to all kinds of audiovisual commercial communications (television advertising, sponsorship, teleshopping and product placement). The main principle of this legal framework remains the rule of recognition, according to which all audiovisual commercial communications shall be readily recognisable and distinguishable from editorial content (art. 1 par. 7, 3e). It also retains in force the prohibition of transmitting any surreptitious audiovisual commercial communication. Furthermore, the Directive provides the rules specifying the content of those communications in order to ensure the respect of human dignity, the protection of health and safety, the protection of minors and the protection of environment. In that respect, it prohibits all communications that may include or promote discrimination based on racial or ethnic origin, religion, disability, age or sexual orientation. Commercial communications for cigarettes and other tobacco products, medicinal products and medical treatment are strictly prohibited. Finally, it is worth observing that for the first time this Directive encourages the development of the codes of conduct regarding inappropriate audiovisual commercial communications of foods and beverages of low nutritional value accompanying or included in the children's programmes.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


48

Sponsorship

A flexible framework of sponsorship is adopted since the name, the logo or any other symbol of the sponsor (such as a reference to products or services) can be transmitted during any audiovisual media services or television programme in an appropriate way (art. 1 par. 7, 3f). Nevertheless, Member States may decide not to show the sponsor’s logo during children's programmes, religious programmes and documentaries. Sponsorship is in any case prohibited in news journals and current affairs programmes. Where sponsorship is allowed, the media services provider has to ensure that their content or scheduling shall not be influenced by this fact (principle of editorial independence) and their programmes do not contain any promotional reference to the goods or services provided by the sponsors. Product placement

Rules applying to product placement are for the first time introduced in this Directive (art. 1 par. 7, 3g). The general prohibition may have exceptions only for certain categories of programmes (cinematographic works, films and series made for audiovisual media services, sports programmes and light entertainment programmes). The same principle applies to goods or services provided free of charge in order to be included in a programme. In any case, product placement can be allowed in the children's programmes. According to the aforementioned principle of editorial independence, the media service provider has to ensure that their content or scheduling shall not be influenced by the fact of product placement and their programmes do not contain any promotional reference to those goods or services. Furthermore, programmes that contain product placement shall not give undue prominence to the product in question. The media service provider has to inform the viewers of the existence of product placement at the start and the end of the programme, as well as after any advertising break. The means of such information or marking are determined by the domestic legislation of each Member State. Incitement to hate

Member States shall ensure by appropriate means that audiovisual media services provided by media service providers under their jurisdiction do not contain any incitement to hatred based on race, sex, religion or nationality (art. 1 par. 7, 3b). Accessibility of people with disabilities

Member States shall encourage media service providers under their jurisdiction to ensure that their services are gradually made accessible to people with a visual or hearing disability (art. 1 par. 7, 3c). Protection of Intellectual Property rights

Member States shall ensure that media service providers under their jurisdiction do not transmit cinematographic works outside periods agreed with the rights holders (art. 1 par. 7, 3d).


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


49

(Β) Provisions applying to linear media services Television advertising

The AMSD abolishes the existed time limits to television advertising and allows broadcasters greater latitude in the structuring of their programmes (art. 1 par. 14-15). More specifically, the former rule of maximum daily time limit for television advertising is abolished (see art. 18 par. 1 of the Directive 89/552/EEC as amended by Directive 97/36/EC). Another abolished rule is the one on the transmission interruptions, according to which the transmission of any television programme may be interrupted by advertising once for each scheduled period of at least twenty minutes (see art. 1 par. 4 of the Directive 89/552/EEC as amended by Directive 97/36/EC). It must be noted, however, that the hourly time limit of twelve minutes of the television advertising remains implicitly in force, as does the rule of recognition, according to which television advertising shall be readily recognisable and distinguishable from editorial content by optical, acoustic or spatial means (art. 1 par. 13). Furthermore, according to the provisions of the present Directive (art. 1 par. 14), the transmission of a television programme may be interrupted by advertising spots once for each scheduled period of at least thirty minutes only for specific categories of programmes (films made for television excluding series, serials and documentaries, cinematographic works and news programmes). The same rule applies to the children programmes, provided that their scheduled duration is longer than thirty minutes. Television advertising is strictly prohibited during religious services. It occurs that a television programme, other that the above mentioned programmes, may be interrupted by advertising at any time provided that the hourly time of advertising transmission does not exceed twelve minutes. Teleshopping windows and spots

The rule of recognition applies in teleshopping windows as well (art. 1 par. 13 and 19). The hourly time limit of teleshopping transmission is determined by reference to the duration of advertising messages. The proportion of both television advertising and teleshopping spots within a given clock hour shall not exceed twenty per cent (art. 1 par. 18). Furthermore, the minimum uninterrupted duration of a teleshopping window shall be of fifteen minutes (art. 1 par. 19). However, the previous daily limit of total three hours’ duration of teleshopping windows is abolished (see art. 18a par. 2 of the Directive 97/36/EC). In the case of teleshopping, the abovementioned rule of the Article 1 par. 14 concerning interruption of certain programmes (films made for television excluding series, serials and documentaries, cinematographic works and news programmes) applies: once for each scheduled period of at least thirty minutes. The transmission of children's programmes may be interrupted by teleshopping once for each scheduled period of at least thirty minutes, provided that the scheduled duration of the programme is longer than thirty minutes. Finally, teleshopping is prohibited during religious services. Exclusive rights on major events

Each Member State may take measures to ensure that broadcasters under its jurisdiction having the exclusive rights for transmission of major events do not deprive the public in that Member State of the possibility of following such events by whole or partial, live or deferred coverage on free television (art. 1 par. 9, 3j par. 1). For that purpose, the Member State


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


50

concerned shall draw up a list of designated events, national or non-national, which it considers to be of major importance. The same measures are taken in case where the broadcasters under the jurisdiction of a Member State, having the exclusive rights for transmission of certain events deprive the public in another Member State of the possibility of following such events by whole or partial, live or deferred coverage on free television, provided that those events are designated by that other Member State to be of major importance for their society (art. 1 par. 9, 3j par. 3). Short news reports

Member States shall ensure that, notwithstanding the exclusive rights for transmission of major events by a certain broadcaster, any other broadcaster established in the Community has access to those major events for the purpose of short news reports on a fair, reasonable and non-discriminatory basis (art. 1 par. 9, 3k). Such access is guaranteed by allowing the broadcasters to freely choose the short extracts from the transmitting broadcaster's signal with at least the identification of their source. If free access to the signal isn’t possible, Member State may establish an equivalent system. The duration of said extracts is not determined in the operative part of the Directive; however, reference to its Preamble (par. 39) indicates that it must not exceed ninety (90’’) seconds. Short extracts may be used in on-demand audiovisual media services only if the same programme is offered on a deferred basis by the same media service provider. Right of reply

The Article 23 of the former Directive 89/552/EEC, as amended by the Directive 97/36/EC, remains in force. According to this Article, “any natural or legal person, regardless of nationality, whose legitimate interests, in particular reputation and good name, have been damaged by an assertion of incorrect facts in a television programme must have a right of reply or equivalent remedies. Member States shall ensure that the actual exercise of the right of reply or equivalent remedies is not hindered by the imposition of unreasonable terms or conditions. The reply shall be transmitted within a reasonable time subsequent to the request being substantiated and at a time and in a manner appropriate to the broadcast to which the request refers” (art. 23, par. 1). European works

The Article 5 of the former Directive 89/552/EEC remains in force. According to this Article, “Member States shall ensure, where practicable and by appropriate means, that broadcasters reserve at least 10% of their transmission time, excluding the time appointed to news, sports events, games, advertising and teletext services, or alternately at the discretion of the Member State at least 10% of their programming budget for European works created by producers who are independent of broadcasters”.

(C) Provisions applying to non-linear media services Protection of minors

The protection of the physical, mental or moral development of minors is a main objective of the present Directive. The related obligations are already spelt out for the television broadcasters and are applicable for the whole of their programmes, including advertisements (see art. 16 and 22 of the Directive 89/552/EEC). In view of the expansion of new technologies, Member States are obliged to take measures to ensure the protection of minors from on-demand media services, as well. In other words, it is ensured that minors do not see or hear such on-demand services (art. 1 par. 8, 3h).


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


51

European works

The former Directive 89/552/EEC contained provisions on the minimum percentage of broadcasting or producing the European works by independent producers (see art. 5). The AMSD includes an express definition of the notion of European works (art. 1 par. 2n), while it obliges Member States to take appropriate measures so that the on-demand services promote, to the extent possible, the production of European works and access to them (art. 1 par. 8, 3i).


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


52

SECTION VI.2 - COMPLIANCE OF UKRAINIAN LEGISLATION WITH DIRECTIVE 2007/65/EC ON AUDIOVISUAL AND MEDIA SERVICES

Copyright and related rights applicable to audiovisual and media services are regulated by the relevant Book IV (Intellectual Property Rights) of the Civil Code of Ukraine, the specialized Law of Ukraine on Copyright and Related Rights, the Law of Ukraine on advertising, as well as the Law of Ukraine on Television and Radio Broadcasting. Ukraine has ratified and joined the European Convention on Transfrontier Television which means it is an integral part of Ukrainian legislation. Convention contains provisions on audiovisual and media services in the field of advertising and teleshopping.

Some relevant definitions are mentioned in the Law of Ukraine on Television and Radio Broadcasting. `Media service` is defined therein as the arrangement of program packages and providing the subscribers with an option of their view on contractual basis.

`Media service provider` is defined in the Law on Television and Radio Broadcasting as an entity that provides the subscribers with an access to program packages on the contractual basis under a license issued by the National Council of Ukraine on Television and Radio, using for transmission of these programs multi-resources networks. According to the Directive 2007/65/EC, `programme` means a set of moving images with or without sound, constituting an individual item within a schedule or a catalogue established by a media service provider, and whose form and content is comparable to the form and content of television broadcasting. Under the Ukrainian legislation the equivalent term is defined as a substantially completed part of the schedule, which has a corresponding name, duration, copyrights sign, and can be used independently of other parts of the schedule and is regarded as a complete information product. Along with this, some terms seem to be clear from the context or can be obtained by using analogy with the other definitions, for example, the `new media services` or the `on-demand audiovisual media services`. Nevertheless, some terms appear obviously missing, namely these are the `audiovisual commercial communications` and the `product placement`.

The Law of Ukraine "On Advertising", the Article 1, defines the term "hidden advertising" as the information about a person or a product in the programme, broadcast, publication, if such an information implies advertising purposes and might mislead people about the real purpose of such programmes, broadcasts, publications.

Ukraine faces the task of approximating its national legislation in the audiovisual field to the EU legislation. One of the priorities has to be identified as implementation to the Law of Ukraine "On Advertising" and other legislative acts provisions of the Directive 2007/65/EC on audiovisual media services of 11 December 2007. The above mentioned Directive aims at a significant liberalization of rules on television advertising and in the audiovisual field in general, opening new opportunities and sources of funding for the broadcasters and providers. The Directive completely abolishes the quota of advertising during the day, recognizing it as ineffective. Quota of commercial advertisements per hour is set at the level of 20%. The Directive clearly defines the conditions under which product-placement may be authorized for cinematographic works, films and serials. At the same time, the Directive prohobits product-placement in the children's television programmes. These conditions have to be studied, analyzed and implemented in the Ukrainian legislation.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


53

The Directive offers to TV-Channels and providers to give more flexibility in programming by mitigation of policies on advertising blocks during the broadcast of diverse content. For example, it is allowed to interrupt by the advertising the television films (except serials and documentaries), the cinematographic works and the news once during the scheduled broadcast time of 30 minutes. For serials and documentaries, the issue of advertising seems to be completely given at the mercy of providers and broadcasters. It is thus likely that today much stricter rules on the television advertising are set in Ukraine. The real challenge of the Directive is to spread its norms not only to the field of traditional television, but also to the new on-demand audiovisual media services that are just beginning to develop in Ukraine. However, the introduction of uniform standards of advertising seems fair and justified in terms of the rights of viewer - the consumer of those services. Besides the issue of advertising, the Directive impacts on two major clusters: general conditions for carrying out the information activities and regulations on audiovisual media, and the scope of copyright and related rights.

Comparison of the European Convention on Transfrontier Television and the EU Directive on audiovisual media services in the field of advertising and teleshopping.

European Convention on Transfrontier Television

EU Directive on audiovisual media services

the total quota of advertising - 15% of daily transmission time;

the length of time to broadcast advertising issues within the program shall not exceed 20% of the prescribed hour;

the total quota of advertising - no more than 20% of airtime;

no restrictions on advertising within the astronomical hour;

windows of teleshopping - up to 3 hours a day, duration of one window of teleshopping - at least 15 minutes. the maximum number of windows per day – 8;

video ads of teleshopping are included to quota of advertising; windows of teleshopping - no quota, the minimum duration of one window - 15 minutes;

interruption of transmission of audiovisual works (excluding series, serials, entertainment programs and documentaries) - every 45 minutes if the broadcast duration exceeds 45 minutes; news and current affairs programs, documentaries, and programs for children - every 20 minutes if they have more than 30 minutes duration;

interruption of transmission of television films (except serials and documentaries), movies and news programs - once every 30 minutes; broadcasting of programs for children - every 30 minutes if they have more than 30 minutes duration.

As to the provider identity, according to the Ukrainian legislation, a media service provider can begin its activity after receiving the license and approved by the National Council on Radio and Television package (packages) of the universal program services.

The Directive 2007/65/EC provides a flexible legal framework applying to all kinds of audiovisual commercial communications (television advertising, sponsorship, teleshopping and product placement). One should mention that teleshopping and product placement needs to be specified by the Ukrainian legislation. The main principle of all kinds of audiovisual commercial communications – rule of recognition, according to which all audiovisual


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


54

commercial communications shall be readily recognisable and distinguishable from editorial content, – appears to be fully reflected in the Ukrainian regulations on advertising. Sponsorship-related rules under the Law of Ukraine on advertising comply with the Directive as far as the name, the logo or any other symbol of the sponsor can be transmitted during any audiovisual media services or television programme in an appropriate way. Where sponsorship is allowed, the media services provider has to ensure that their content or scheduling shall not be influenced by this fact (principle of editorial independence) and their programmes do not contain any promotional reference to the goods or services provided by the sponsors. Right of reply is embedded in the EU Directive in the following way: "any natural or legal person, regardless of nationality, whose legitimate interests, in particular reputation and good name, have been damaged by an assertion of incorrect facts in a television programme must have a right of reply or equivalent remedies. Member States shall ensure that the actual exercise of the right of reply or equivalent remedies is not hindered by the imposition of unreasonable terms or conditions. The reply shall be transmitted within a reasonable time subsequent to the request being substantiated and at a time and in a manner appropriate to the broadcast to which the request refers". According to the Article 65 of the Law on Television and Radio, the right of reply is reflected in the following way: “Citizen or legal entity for which in broadcasting or TV program was expanded information which is false or in violation of his (her) rights and legitimate interests, has the right of reply (comment or actually interpretation of facts) in programs and broadcasts of this broadcasting organization, regardless of whether the application was presented with request of denial or not”. The Ukrainian legislation also contains provisions on the right of refutation – in the Civil Code as well as in the Law on Radio and Television. As it is stated in the said Law, a citizen or a legal person may require from broadcasting organization a denial of information, disseminated in its program or broadcast, that is untrue and/or humiliates the honor and dignity. European works

According to the abovementioned EU Directive, "Member States shall ensure, where practicable and by appropriate means, that broadcasters reserve at least 10% of their transmission time, excluding the time appointed to news, sports events, games, advertising and teletext services, or alternately at the discretion of the Member State at least 10% of their programming budget for European works created by producers who are independent of broadcasters". Art. 28 of the Law on Radio and Television also includes rules on the European works, namely – from 07.00 till 23.00 broadcasters follow the next proportions between the Ukrainian and the foreign programs: programs of the European production should constitute not less than 80 percent, including at least 50 percent of programs of the Ukrainian production.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


55

SECTION VI.3 – RECOMMENDATIONS FOR LEGAL APPROXIMATION

Definitions

It is recommended that Ukrainian legislation follows the wording of the Directive and introduces definitions for non-linear (on-demand) audiovisual media services, audiovisual commercial communications and product placement. Provider identity

As referred to in Section VI.1, access to the identity of audiovisual services providers should be guaranteed by setting a legal framework that contains information on the identity elements of each provider (name, geographical address, electronic mail address or website competent regulatory authority or supervisory bodies). It is recommended that Ukrainian legislation introduces rules related to those provisions. Other basic tools for approximation

Inspired by the legal framework set by the Directive, it seems recommendable to introduce the national rules and measures concerning:

a) registration of companies providing audiovisual media services; b) development of specific rules for their functioning; c) promotion of European products on the market; d) attention to complaints from a specially authorized state body.

Jurisdiction

It is also recommended that Ukrainian legislation introduces rules applicable to the linear and non-linear (on-demand) audiovisual media services in order to specify the conditions under which a media service provider is deemed to be established in the Ukrainian territory. Product placement

In the Ukrainian legislation it is worth adopting the legal framework proposed by the EU Directive concerning product placement. Although the Ukrainian law states that the product placement rules apply to goods or services, provided free of charge, in order to be included in a program (such as production props and prizes), the content of this expression should be clarified. Finally, the national law should specify the categories of programs in which the product placement is allowed and lay down the rules ensuring the editorial independence of the provider, as well as the protection of the viewers.

Television advertising and Teleshopping

It seems recommendable that the Ukrainian legislator follows the legal framework proposed by the Directive in both cases. A clear definition of teleshopping acts should be provided. The condition of a “scheduled period”, set by the Directive in order to allow interruptions to the program either by advertising or by teleshopping messages, should also be clarified. Television advertising for cigarettes and other tobacco products, medicinal products and medical treatment should be strictly prohibited. It should, however, be pointed out that the European Convention on Transfrontier Television (ECTT) constitutes an integral part of the Ukrainian legislation and its provisions on audiovisual media services in the field of advertising and teleshopping seem stricter than the ones adopted by the EU Directive.


Tel.: +38044 581 55 83 Tel./Fax: +38044 581 58 19


56

Exclusive rights and short news reports

It is recommended that, in this case, the Ukrainian legislation follows the legal framework proposed in the EU Directive referred to above.

Non-linear media services

It is also worth introducing specific rules related to the on-demand audiovisual media services into the Ukrainian legislation. General provisions concerning incitement to hate, accessibility of people with disabilities, human dignity, protection of health and safety and protection of minors, should be also adopted. Specific provisions on the advertising and teleshopping should be included in compliance with the general rules for audiovisual commercial communications covered by the Directive:

a) rule of recognition; b) prohibition of transmitting surreptitious audiovisual communications; c) respect of human dignity, protection of health and safety, protection of minors and

protection of the environment; d) prohibition of discrimination based on racial or ethnic origin, religion, disability, age

or sexual orientation; e) prohibition of communications for cigarettes and other tobacco products, medicinal

products and medical treatment.

survey on protection of the intellectual property rights

Documents