You're reading: Ukraine's copyright piracy business burgeoning

Loud music booming off Kontraktova square in Kyiv's Podil district draws passersby in droves to a streetside vendor selling Hr 10 compact discs. It also draws attention to the glaring problem of copyright infringement in Ukraine, which has exploded in the face of the Ukrainian government's continued negligence of the problem.

The problem of videocassette, CD and software piracy in Ukraine is no longer limited to retail sales. Successful crackdowns on bootlegging operations in Bulgaria and Russia in the last year have turned Ukraine into a haven for producers of pirated products as well, according to a recent report by one of Ukraine's major television stations.

While Ukraine's less-than-wealthy consumers may be happy to be able to get their hands on cheap tunes and video games, few of them realize that their inexpensive pleasure annually costs the government millions of dollars in lost tax dollars, while contributing to the country's reputation as a lawless, Third World place unworthy of inclusion in Western alliances such as the European Union and the World Trade Organization.

The government has for years said it planned to fight the problem. But the recent surge in domestic production of pirated products and the continued ubiquity of pirated software on the street prove those words a fallacy.

On April 8, the weekly television program Dosier, broadcast on state channel UT-1, aired a report on a Kyiv-based factory involved in mass producing pirated audio and video products. The report also cited at least two other plants in Kyiv involved in similar activities.

Ukraine has clearly yet to mimic the success of Russia and Bulgaria in curbing piracy.

'Russia has been fighting piracy quite successfully,' said Yury Martynyuk, a lawyer at Salkom. His company acts as local counsel for the Business Software Alliance, a non-profit software-industry association that fights software piracy all over the globe.

The problem was largely curbed in Russia and Bulgaria through the intense lobbying efforts of the alliance and software producers themselves, Martynyuk said. But the crackdown had one unfortunate effect – displaced bootleggers moved into Ukraine, which used to import most of its pirated goods.

'Many producers of pirated products are now bringing their expensive equipment to Ukraine,' Martynyuk said. 'We have an ideal market for that.'

Analysts estimate that illegal videos, CDs and computer software account for 90-95 percent of overall production in Ukraine. The country monthly cranks out about 5 million non-licensed CDs, 3.5 million videos and 5 million audio tapes, Dosier reported.

The country's lax anti-piracy legislation no doubt encourages pirates to come to Ukraine. While retailers of pirated products in the United States or Great Britain face criminal charges, Ukrainian peddlers of pirated wares receive barely a slap on the wrist.

'In Ukraine the punishment is at best confiscation of your equipment and a fine,' said Lyudmila Bilakivskaya, head of the Culture Ministry's film-industry department.

The government's first acknowledgment that a piracy problem existed came in January 1998, when it officially banned sales of video and audio cassettes and CDs in kiosks, markets and outdoor stalls. Sales of such products were limited to licensed specialty stores.

However, enforcement of that law, limited to the city center in the first place, only lasted for about a week.

The government struck again in September 1998, applying a common but useless technique – new licensing and certification requirements on all video and audio sales – to get dealers out of the shadow. The move had the predictable effect of driving the few businesses operating legally onto the black market.

'The situation has gotten even worse since [September],' Bilakivskaya said. 'Red tape makes it crazy to do this kind of business legally.'

Bilakivskaya said her department was issuing duplication and distribution rights for about 550 movies a month before the regulation was introduced. Now, that figure is down to about 25.

It's a wonder there are that many. Why purchase Hollywood movies legally for Hr 50 when you can get them unlicensed for about Hr 12? Pirated computer software is even more of a bargain. One can pick up five or six software programs on a single CD-ROM for about Hr 12. The average legal retail price of just one of those programs is $200.

While both software companies and the Ukrainian government surely lose money as a result of the problem, they may not lose as much as one might think because few people in Ukraine can afford $200 software.

'Maybe, some big firms would be able to afford licensed computer programs,' said one local computer expert who asked his last name be withheld. 'But most of the users wouldn't.'