Павлова А. С.

Scientific supervisor: Усиков В. А.

INTELLECTUAL PROPERTY

Intellectual property rights are a bundle of exclusive rights over creations of the mind, both artistic and commercial. The former is covered by copyright laws, which protect creative works, such as books, movies, music, paintings, photographs, and software, and gives the copyright holder exclusive right to control reproduction or adaptation of such works for a certain period of time.

The main objective of intellectual property is to stimulate technological progress, for the benefit of society. Intellectual property rights grant exclusive rights to intellectual creations; they grant ownership over creations of the mind. These exclusive rights allow owners of intellectual property to reap monopoly profits. These monopoly profits provide a financial incentive for the creation of intellectual property, and pay associated research and development costs. Intellectual property rights are considered by economists to be a form of temporary monopoly enforced by the state (or enforced using the legal mechanisms for redress supported by the state).

Intellectual property rights are usually limited to non-rival goods, that is, goods which can be used or enjoyed by many people simultaneously—the use by one person does not exclude use by another. This is compared to rival goods, such as clothing, which may only be used by one person at a time. For example, any number of people may make use of a mathematical formula simultaneously. Some objections to the term intellectual property are based on the argument that property can only properly be applied to rival goods (or that one cannot "own" property of this sort).

The solution of the problem of creating an effective system of protection of intellectual property is a prerequisite for building a strong foundation for an innovative model of Ukraine’s development, its modernization, and the raising of its competitiveness in a global social-economic system, and consequently - creating jobs in new industries that could shape a 21st century global economy - an economy based on knowledge. This also concerns the creation of civilized market environments where both the entrepreneurs and the consumers would be safeguarded against unfair competition, particularly unauthorized use of intellectual property and the production of falsified goods

The problem of the protection of intellectual property has come to the fore in the modern world and is not simply a legal or commercial issue. With the global economy’s ongoing comprehensive intellectualization, it assumes a political dimension as it concerns economic security and demands a strategic approach. These intellectualization processes have become extremely intense which was unimaginable a decade ago. There are over 4 million active patents in the world; about 700,000 new applications for patents are submitted annually; the sale of licenses for patented items brought $ 100 billion in 2000, i.e. ten times more than in 1990.

It is important that the global intellectual property protection system has a basic formation. Ukraine must adapt to this system if it intends to evolve as an integral part of the global economy rather than as an economy distanced from global social, economic and technological development trends. In recent years Ukraine has considerably stepped up its activity toward integrating with the international structures that regulate intellectual property. It has joined 15 out of the 26 universal conventions and agreements in this field.

The actual trends in the sphere of registration and use of intellectual property rights in Ukraine remain controversial and do not prove the effective functioning of an available system of their protection.

Only 372 contracts were registered in 2000 (185 - on copyright transfer and 182 - license contracts for use of industrial property items), most of them (233) involving trademarks. Notably, 42.8% of all the contracts licensed for use with trademarks involved alcoholic items and another 7.5% - tobacco items; not a single contract was concluded in such spheres as communications, electronics, agriculture, health care. Alcoholic items also accounted for the greatest number of license contracts for use in inventions (16.6%) while machine-building accounts were for 4.8%, electronics - for 2.4%; not a single contract was finalized in agriculture.

The elements which ensure the commercialization of patented achievements remain underdeveloped with the structure of the intellectual property protection system. In an unfavorable climate for foreign investment, this results in low per capita indices of hi-tech exports - ten times lower than the European average. The royalty and licensing services accounted for a mere 0.04% of Ukrainian exports of services and 1.27% of imports.

The most acute problems in the protection of intellectual property in Ukraine are as follows: protection of software and data bases (according to 65.3% of experts polled by UCEPS), protection from unfair competition (55.6%), protection of trade marks (52.1%), protection of audio and video produce (50.0%).

Experts believe that the creation of an efficient system of the protection of intellectual property is hampered above all by an imperfect national legal system (see Diagram 1). Another obstacle is the prevailing negligence for the protection of intellectual property in society, the absence of adequate information on protectionist activities in the sphere of intellectual property. However, even the experts tend to underestimate the social-economic mechanisms of the protection of intellectual property.

Notably, more than half of 2,000 Ukrainians polled by UCEPS do not consider the protection of intellectual property to be high in the priority of problems in the country’s economic development. The limited solvency of the bulk of Ukrainians is a powerful stimulus for purchasing and using products manufactured piratical. Almost 70% of Ukrainians use falsified products labeled with recognized trade marks (see Diagram 2); only one-fifth of them never buy such products. 42.4% of Ukrainian citizens buy cheap goods, even though they may be forged. For almost 40% of Ukrainian consumers the quality of falsified goods is quite acceptable. This shows that the distorted legal awareness of the bulk of Ukrainians results basically from their limited attitude towards quality - normal in low-income strata of the population.

finally, it should be noted that experts see the main reasons for the low efficiency of the protection of intellectual property of Ukrainian individuals and legal entities abroad in «the lack of state funds for patenting and registring procedures abroad» (54.8% of respondents), «the low level of legal culture in the country» (46.6%), «the absence of knowledge and information about the norms of copyright protection outside Ukraine» (45.2%). «Unclear legislation on the transfer of technologies, including the employment of Ukrainian specialists abroad» is noted by 43.8% of experts polled by UCEPS.

As a UCEPS analysis shows, the following significant problems in the structure of the legislative regulation of intellectual property protection remain unresolved: possession and management of the rights for the intellectual property created within the state budget and centralized funds; collective management of copyrights and related rights; regulation of the national intellectual property market, commercial transfer of rights to any item of intellectual property; legal provisions for the development of franchising - the sale or lease of a trade mark under its owner’s control; the transfer of technologies abroad, with foreign companies selectively acquiring Ukrainian technologies, often dirt cheap; legal mechanisms to prevent applications for invention patents to foreign countries bypassing Ukraine’s patent agencies, which result in an uncontrollable drain of new technologies abroad; the protection of enterprises’ commercial information and know-how; the protection of recognized trademarks which do not need registration: Ukrainian laws give no definition of this term, no such list of trademarks; protection of labels; evaluation of non-material assets; inventory of intellectual property items; the introduction of more efficient protective mechanisms against any violations (i.e. misappropriation of the results of scientific works through fictitious co-authorship; publication by government officials under their own names of results in the materials prepared by their subordinates; reproduction of the results of scientific works without reference to their authors and their unauthorized publication etc.); protection of rationalization proposals; protection of animal breeds; protection of folk lore, national handicrafts and knowledge; loopholes in the anti-monopoly legislation which make it possible to use patenting procedures as an instrument of monopolizing markets.