WRITTEN QUESTION E-2383/02

by Charles Tannock (PPE-DE) to the Commission

(2 August 2002)

Subject: CD piracy

Does the Commission have any information on reports that there has been a substantial increase in the production and sale of counterfeit CDs and music cassette tapes in Ukraine and, if so, can the Commission indicate what action is being taken either by the Commission or by the Ukrainian authorities to address the problem?

Does the Commission have any reports of similar activities in any of the applicant Countries, and, if so, which country has the greatest level of illegal activity in this area?

Answer given by Mr Patten on behalf of the Commission

(23 September 2002)

The Commission can confirm that the production of pirated CDs and other intellectual property rights (IPR)-related goods in Ukraine has increased significantly over recent years. Piracy and a lack of adequate protection of intellectual property rights in Ukraine have become a real concern for the Community and its enterprises, notably as regards CDs, DVDs, CD-ROMs and books, as well as infringements of geographical indications. Ukraine has recently considerably improved her copyright legislation. Nevertheless, enforcement of IPR remains a point of serious concern. The recording industry reported a piracy rate in Ukraine of 99 % resulting in estimated losses of USD 210 million per year. This has not only an effect on the Ukrainian market, but also on neighbouring countries to which more than 30 million pirated CDs are exported annually.

The Commission has repeatedly expressed serious concerns about the rampant piracy and counterfeiting in Ukraine and, in general, about the lack of adequate enforcement of IPR legislation which leads to major losses both for European and local right-holders. This issue has been raised at regular meetings of the Community-Ukraine Cooperation Committee and its Sub-Committees, and also by means of letters addressed to the Ukrainian Government and Rada.

Both the Commission and the Ukrainian authorities are well aware of this issue, and under the Community-Ukraine Partnership and Cooperation Agreement (PCA), which entered into force in 1998, Ukraine committed itself to adopt a level of protection similar to that in the Community by 2003, and to accede to a number of international conventions on IPR (Article 50 and Annex III of the PCA).

In the past year, the Ukrainian government has made some substantial legislative efforts in the IPR field, which have been welcomed by the Community as significant steps in complying with PCA obligations and in combating piracy and counterfeiting (i.e. amendments to the law on copyright as well as the adoption of the new Criminal Code,

which strengthens penalties for IPR infringements, and accession to a number of important international conventions in this area such as the Rome Convention, the World Intellectual Property Organisation (WIPO) Copyright Treaty and the WIPO Performances and Phonograms Treaty).

But along with further legislative improvements Ukraine must urgently ensure the implementation and enforcement of the adopted legislation. This includes notably the creation of appropriate infrastructure to ensure effective IP rights management, including registration mechanisms, where applicable, and a strengthening of the administrative capacity and enforcement measures, including border controls, in particular in the area of copyright.

The Commission is assisting the Ukrainian authorities in these efforts by offering technical assistance under the TACIS programme. A further project of support to the relevant institution building is currently being prepared.

The Commission has also been working closely with the customs administrations of the Member States and rightholders, in particular the international Federation of Phonographic Industries to address this serious problem. Close co-operation and technical workshops have increased the seizures made under the Community customs legislation dramatically. In 2001 customs in the Member States stopped more than 40 million pirated CDs and DVDs, a 349 % increase over the figure for 2000 and a 15,300 % increase over the figure for 1999. Criminals handling such goods change transport routes and methods to disguise the origin of these goods and hence precise figures by countries of origin are not available. However, there are indications that production may be shifting from Ukraine to other countries. The previous situation whereby many of these items originated in the Ukraine appears to be changing as production moves to other countries.

As regards similar problems in the applicant countries, the Commission is monitoring efforts to combat piracy and counterfeiting in the framework of the accession negotiations. Whereas the enforcement record in the candidate countries, in particular in the Baltic States, has been a matter of concern in recent years, the effectiveness of the judicial and administrative bodies involved in enforcement is increasing in order to meet the requirements in the field of protection of intellectual property rights. In October 2002, the Commission will again report on the measures adopted throughout the last year in its Progress Reports on each candidate country.

The Commission has also actively involved the enforcement authorities of the candidate countries in the Customs 2002 seminars which bring together rightholders and enforcement authorities to improve risk management and controls in this area.