Under the Criminal Code, an IP rights infringement constitutes a crime if it has caused considerable damage. Criminal proceedings can be initiated where a specific threshold of damages is met. The amount of damage (considerable, extensive or particularly extensive) determines the penalties imposed on infringers.

Under the Criminal Procedure Code, IP rights infringement cases qualify as private prosecutions and can be initiated only based on an application from a rights holder or its legal representative in Ukraine that has information on the criminal offence, or by the victim of a crime committed through the infringing activities.

The police cannot act ex officio in cases involving trademark infringement. However, the police can carry out raids based on the rights holder’s complaint and documents collected during the pre-trial investigation. In order to conduct a raid or specific investigative action, an order must be issued by the court. 

Thus, evidence can be secured only through the police. A criminal prosecution involves the following steps:

• The rights holder files an application for trademark infringement with the police to register the case in the Unified Register of Pre-trial Investigations (the Criminal Procedure Code provides that such a registration must take place within 24 hours of submission of an application) in order to initiate criminal proceedings and a pre-trial investigation.
• The police interview the rights holder’s representative to ensure that it provides relevant information on the infringement.
• Police officers make repeat (controlled) purchases in order to establish the facts of the sales. Further (or simultaneous) action is taken to locate manufacturing facilities, warehouses and offices, which may then be searched by the police.
• The police secure a court order in order to search the relevant premises and seize counterfeit goods, materials, equipment and relevant financial and other documents.
• Once the relevant evidence (including information about the quantity of counterfeits) has been secured, the rights holder files an application with an investigator for trademark infringement, including a damages calculation.
• The court orders an expert to establish the amount of damages and unauthorised trademark use.
• The rights holder submits a civil claim for damages (based on the expert’s report).
• The police interview witnesses and other parties related to the criminal proceedings.
• The police issue a notice of suspicion and an indictment.
• The criminal records are disclosed by an investigator to the parties, which then familiarise themselves with the materials of the finalised pre-trial investigation and sign the respective procedural document.
• The case is transferred to the court and the trial takes place.
• The verdict is issued and executed (eg, payment of a fine to the state revenue, destruction of counterfeit goods, compensation for damages).

There are no specialized courts. Cases are heard by courts of general jurisdiction.

Infringers may be liable under civil laws regardless of whether criminal or administrative penalties have been applied against them. The general limitation period for a civil action is three years from the date on which the rights holder became aware or should have become aware of the infringement of its IP rights.

Preliminary injunctions may be sought in cases where there is a risk that the execution of court orders and judgments may become complicated or impossible. Such a request may be filed either upon filing a claim or at any stage of the legal proceedings in a court of first instance or a court of appeal.

Preliminary injunctions may be sought to:

• seize property and funds which are in the infringer’s possession;
• limit the infringer’s activities (including disposal of funds); and
• prohibit other persons from carrying out activities pertaining to the claim.

Interlocutory injunctions are also available by means of provisional measures applied before filing a claim with a court. 

The procedural laws provide for court expertise in cases which require special knowledge. Most IP cases fall under this category. Thus, a court expert is an integral part of every type of legal proceeding, whether administrative, civil or criminal.

If the infringer requests the appointment of an expert, it bears all expenses arising therefrom. Expenses arising from court proceedings are borne by the losing party.

Remedies

In civil proceedings, the rights holder is first entitled to claim payment of indemnity for property, including lost profits and moral damages (available through courts of general jurisdiction and commercial courts). These are the so-called ‘general remedies’.

Under Ukrainian civil laws, the rights holder can also seek the following special remedies set of the Civil Code:

• immediate action to prevent an IP rights infringement and secure relevant evidence;
• suspension of customs clearance of infringing goods being imported into Ukraine;
• seizure and destruction of infringing goods;
• seizure, confiscation or destruction of materials and equipment used for the manufacture of infringing goods;
• compensation instead of damages for infringements; and
• publication in national newspapers and other media of details relating to the infringement and the decision of the court.

Customs measures aimed at promoting the protection of intellectual property rights do not apply to genuine goods and in such cases do not depend on the identity of the importer.

Based on our experience, to achieve greater positive changes in the fight against counterfeiting the following measures should be taken:

• focusing on the full range of counterfeit goods, since absolutely all industries are at risk (healthcare, fashion, electronics, sports, home appliances, toys and games, beauty and personal care, agrochemicals);
• keep maintaining close cooperation with right holders by organizing training seminars;
• introducing the specialization of investigators in the structure of investigative units, taking into account the specifics of the investigation of this category of cases;
• generalizing the investigative practice in this category of cases, in particular with regard to initiation of pre-trial investigation, conducting investigative actions, application of measures of criminal proceedings; and
• taking into account the latest legal positions of the Court of Cassation on the alternative ways of initiating proceedings/entering of a victim (without filing a complaint on committing a crime), the use of lost profits to calculate the damages caused to right holders, etc.

On 14 November 2019 amendments were made to the Customs Code of Ukraine. First of all, the definitions of counterfeit goods and IPR objects were amended. “Counterfeit goods” means: 

• goods, which are the subject of infringement of IPR to a trademark in Ukraine and which bear without authorization a sign, which is identical to the TM validly registered in Ukraine in respect of the same type of goods or which is misleadingly similar to such a TM;
• goods, which are the subject of infringement of IPR to a GI in Ukraine and bear, or are described by, a name or term protected by that GI; or
• any packaging, label, sticker, brochure, operating instructions, warranty document or other similar item, even if presented separately, which is the subject of infringement of IPR to a TM or a GI, which includes a sign, name or term which is identical to a validly registered TM or protected GI, or which is misleadingly similar to such a TM or GI, and which can be used for the same type of goods.

IPR objects now include the objects of copyright and related right, inventions, industrial designs, geographical indications, plant varieties, semiconductor products. 

The following new terms have been introduced: pirated goods; measures for facilitation of enforcement of IPR; goods suspected of infringement of IPR; genuine goods; perishable goods; and small consignment of goods.

The following measures are applied to goods suspected of infringement of IPRs:

• suspension of customs clearance of goods on the basis of the data of the Customs Register of IPR objects;
• suspension of customs clearance of goods at the initiative of the state body of revenues and fees;
• destruction of goods, the customs clearance of which is suspended on suspicion of infringement of IPR;
• suspension of customs clearance and destruction of small consignments of goods, which are transported (dispatched) across the customs border of Ukraine as regular international and express courier mail items; and/or 
• change of labelling on goods and their packaging.

Measures aimed at facilitation of enforcement of IPR shall not be applied to genuine goods.

In order to benefit from the border provisions, a rights holder can file a formal application for customs surveillance in electronic form. Registration with Customs is valid for six months or one year and can be further renewed at the rights holder’s request. Customs also has the right to act ex officio, provided that it has sufficient information on the rights holder and the relevant merchandise.

To apply for customs surveillance, the rights holder files a formal application providing Customs with relevant information on:

• the merchandise to which the trademark applies;
• any manufacturers of authentic products;
• details of importers and exporters;
• delivery routes and means of transportation; 
• useful tips on identifying counterfeit goods; and 
• any available information on potential sources of counterfeits. 

The requirements for a formal application appear extensive, but the rights holder need only provide available information. An update may be submitted to Customs at any time within the duration of the registration, at no extra cost.

If Customs suspends clearance, the rights holder can initiate one of three proceedings:

• Destruction of counterfeit goods. In case of suspension of customs clearance of goods suspected of infringement of IPR during their transportation across the customs border of Ukraine, such goods can be destroyed under customs control without the necessity to establish any infringement of IPRs. Such destruction is possible under the following conditions: the right holder informs Customs in writing that there are features of infringement of his IPR and that he intends to apply the procedure of destruction of such goods; and the declarant submits to Customs the consent of the owner of such goods to their destruction or he does not submit any objection by the owner of such goods to their destruction (tacit consent). In case of actual destruction of goods, where customs clearance has been suspended based on suspicion of infringement of IPR, the owner of such goods shall be released from administrative responsibility.
• Civil proceedings. A civil lawsuit is filed against the owner of the infringing goods. Here, the burden of proof is borne by the rights holder.
• Administrative proceedings. These are initiated by Customs. The burden of proof is borne by Customs and the rights holder. The action is initiated by Customs based on an opinion from a competent expert body confirming that the detained goods infringe IPRs. In this case the detained goods are subject to confiscation. 

All costs associated with the preservation and destruction of counterfeit goods are paid by the right holder.

During the implementation of anti-COVID-19 measures in Ukraine, the State Security Service of Ukraine, in cooperation with the law-enforcement authorities, revealed dozens of violations involving the illegal manufacture and distribution of substandard counterfeit disinfectants on an industrial scale. 

In all cases, counterfeits were produced artisanally, in non-residential premises using raw materials of dubious origin, according to unknown recipes without any permits and quality control. The finished products were marketed by infringers in Ukraine under famous domestic and European brands as well as under fictitious brands through pharmacies, online stores, social media, as well as sold to hospitals and the Ukrainian military! All seized antiseptics, according to experts of the State Consumer Service, were of poor quality, and their use could be harmful to consumers’ lives and health and, notably, accelerate the spread of viral diseases.

In case of trademark infringement through a domain name, it is, in most cases, impossible to rely on WHOis records to determine the actual holder of a domain in Ukraine, in view of the Law on the Protection of Personal Data. 

In practice, if the actual domain name holder is unknown, the rights holder will contact the registrar with a request to send the infringer a warning letter.

Fraudulent domain name registrations can be revoked by the courts. In cases of fraudulently registered ‘.ua’ top-level domain names (which are registered only on the basis of a trademark valid in Ukraine), along with the revocation of such registration, cancellation of the respective trademark registration should also be considered. 

Warning letters may be used as a form of pre-court dispute resolution.

In the course of internet monitoring, once the rights holder has established who is operating relevant websites and has analysed the relevant information (for example, metadata, internet history and domain information) to detect the location of the counterfeiter’s operations, it is possible to make a trap purchase to:

• determine the return address; and 
• obtain payment receipts, which may then be used as evidence in court. 

Once evidence has been collected, rights holders can choose between administrative, civil or criminal actions (with the involvement of the law enforcement agencies in the latter case). 

Under existing law, an Internet Service Provider cannot be held liable for contributory infringement.

Most counterfeiting issues are settled at the pre-court stage. Having received complaints from rights holders, most infringers try to resolve the matter amicably or meet the claimed demands. However, in some cases infringers remain unresponsive or oppose the rights holder’s actions and continue their trade in counterfeits. In particular, infringers may re-launch the closed website at a new address. To secure unhampered operation of the website, infringers may also transfer the hosting of the website or transfer the website to a jurisdiction where enforcement is more difficult. 

In 2019, UA domain operator Hostmaster adopted the .UA Domain-Name Dispute-Resolution Policy (UA-DRP), a domain dispute resolution mechanism similar to the Uniform Domain-Name Dispute-Resolution Policy (UDRP), but with certain differences. The UA-DRP came into force on 19 March 2019.

On 19 March 2019, it came into force for private second-level domain names in the .UA domain.

On 19 December 2019, it came into force for private third-level domain names in the COM.UA domain.

On 6 May 2021, it came into force for private third-level domain names in the domains kyiv.ua, kiev.ua, ivano-frankivsk.ua, if.ua, poltava.ua, pl.ua, uzhgorod.ua, uz.ua.

For a complaint to be successful, the following must be proven:

• the complainant’s trademark is identical or confusingly similar to the domain name;
• the domain name registrant has no rights or legitimate interests in respect of the domain name in question; and
• the domain name is registered or used in bad faith.

The remedies available to the complainant are the domain name cancellation or its transfer to the complainant.

In our current practice, we are mostly working with Instagram and Facebook social networks to stop trademark infringements involving the offering of counterfeit goods via user profiles. Upon revealing an infringement and collecting the evidence base, we are submitting a complaint to the support service of these social networks. After the complaint is reviewed, either the entire profile is blocked, or the relevant links are deleted, if their number does not exceed three.   

Effectiveness of combating the sale of counterfeit products/copyright infringements depends entirely on the activity of the right holders (their representatives).

Priority steps to improve the situation with the protection of intellectual property rights include:

• Introducing modern tools at customs to ensure counterfeit goods are easily revealed as well as automatization of the interaction between right holders, customs officers and declarants during suspensions, which will effectively align the work of customs and law enforcement agencies in this area in close cooperation with right holders.
• Tracing the entire logistics chain bringing goods into commerce which are suspected of infringement of IP rights. For this purpose, it will be necessary to introduce the obligation of economic entities, during the sale of any imported goods at physical markets and online in Ukraine, to have a number of the declarations under which such goods were imported. This will allow controlling bodies to monitor the legitimacy of imports of any goods into Ukraine.

1. What are the first steps for any anti-counterfeiting plan in Ukraine?

We recommend taking the following steps to detect the sale of counterfeit products:

• monitor the Internet;
• search for possible production facilities manufacturing counterfeits (factories, manufacturing facilities and warehouses);
• reveal and record any advertising.

After analysing the results of such activity, the initial action would be to warn the infringers (sending C&D letters; without involvement of the law-enforcement authorities), and request that they cease such unlawful activity. Work in this direction significantly reduces the terms of participation in the project. 

2. How does the right holder initiate and progress criminal proceedings? 

As trademark infringements are subject to a private prosecution, a right holder collects information about the offense and may further initiate criminal proceedings by sending a statement of infringement of the trademark rights to the police. After the police have entered the information with the Unified Register of Pre-trial Investigations, the criminal proceedings are initiated, in the framework of which all necessary investigative actions are taken. Also, after counterfeit products are detected, the police conduct a raid (a representative of the right holder may participate in the raid with the prior consent of the investigator) and such products are seized. As a result of the raid, the range/quantity of counterfeit products is established and the amount of the damages incurred by the right holder is determined. The case files are sent to the court after the investigator has presented suspicion to the infringer and the indictment has been drawn up. Our team has been actively involved in training seminars for Customs and police on behalf of rights holders.

3. At what stage of the criminal proceedings can the right holder drop the charges?

At any stage of the criminal proceedings the right holder can withdraw his private charges by sending a corresponding statement to the law-enforcement authority or the court. Forwarding such a statement is the ground for the closure of the criminal proceedings.