Ukrainian treasury looses some $100 million annually because of piracy
The Ukrainian market is packed with infringing merchandise, holding back domestic output and damaging the national interests. All efforts to combat this unlawful practice prove of little avail, noted a round table discussing problems of software legalization.
According to Serhiy Lebid, deputy head of the Internal Affairs Ministry’s department to investigate crimes in the sphere of intellectual property, 35 software copyright cases were started in Ukraine last year; there were 77 such cases in nine months of this year. Mr. Lebid believes that the legally prescribed sanctions should be more severe, because the existing ones are “inadequate” compared to the damage done to society by the perpetrators (more often than not, it is a fine or a suspended term of up to two years).
Surprisingly, some of software owners show little interest in having their intellectual property protected in Ukraine. Microsoft does it regularly (69 of 77 criminal cases involve its products), but other foreign companies are hesitant to deal with corrupt Ukrainian officials in the opinion of the Ukrainian computer clubs association.
Until recently other Eastern European countries registered a similar situation with unlicensed software, but active legalizing measures were taken and everything changed. The Polish experience is rather interesting. In 1994, its software piracy showed 97%, but the government’s certifying campaign had reduced it to 54% by 2000, while the domestic software marked had increased 80.8%, reaching a turnover of $378 million.
COMMENTARY
Volodymyr DMYTRYSHYN, deputy head of the intellectual property state department:
Experts set the level of piratical software in Ukraine at 90%. In 2000, it cost the GDP almost $265 million, along with $100 million worth of tax revenues never reaching the budget. If the process continues, GDP losses will increase almost 1.7 times in 2004 and those to the budget 1.8 times.
Domestic software share in the GDP amounted to some $34 million in 2000 and tax payments totaled approximately $12 million. If piratical products continue being used at the current rate, 2004 will show $57 million and $21 million respectively. If the piracy rate is lowered by at least 10%, the GDP share will increase to $107 million — or $332 million if Ukraine reaches the average Western European index (34%). Unpaid customs duties, being an important budget income item, are another consequence of software piracy. The law On the Customs Tariff of Ukraine reads that the lawful importation of a single software copy is levied 0.8 euros worth of customs duty. In other words, piracy has relieved the state budget of some 960,000 euros in terms of customs payments.
Further losses are incurred by highly qualified personnel leaving Ukraine in search of higher paid jobs. Most of these people are real experts in their fields who could have contributed a great deal to their country’s well-being. Annually, 2.5-6 thousand computer specialists depart from Ukraine, considering that the institutions of higher learning produce 1,400 of them every year. Per capita tuition costs the state some three thousand hryvnias a year. Allowing for this criterion, the state budget annually looses 37.5 to 90 million hryvnias.
The current legislation entitles the software owner (publisher) to make copies. Buying such products, we simultaneously buy the license (right) to use every such copy. In other words, every software user should have such a license. A license should be purchased for every computer using software installed or network-downloaded. However, many people still believe that intellectual property remains public property. As a result, the products of mental labor are cheapened. Among the Ten Commandments, Thou shalt not steal is not supplemented with Thou shalt not copy software, but this is no excuse. It is high time we put an end to this legal nihilism, disrespect for someone else’s work, and adopted civilized software usage standards.
