Why Kazakhstan is no longer included in List 301
In the West, the sphere of copyright or, in other words, intellectual property (IP) is an area that draws particular attention from the state, and this in many ways enabled developed countries to become world leaders in producing various types of industrial products. The general director of the World Intellectual Property Organisation (WIPO), Kamil Idris, says that IP is becoming increasingly more significant as an important instrument of economic growth and accumulation of national wealth. For example, according to a study by this organisation, the intellectual copyright industry accounts for 12% of GDP in the USA. In monetary terms, it stands at about $500bn, which is more than US exports of clothes, cars, PCs and aircraft put together.
In Kazakhstan IP is gradually acquiring genuine significance as a valuable and renewable resource which will define the level of well-being of our country’s people in the future.
Kazakh President Nursultan Nazarbayev has repeatedly said that creating favourable conditions to produce goods with protected trade marks and copyright is a priority in helping to achieve rapid economic development.
State Policy in the IP Sphere
In Kazakhstan, like everywhere else in the CIS, the national IP system was formed after the country gained independence. In 1992, the State Copyrights and Related Rights Agency (SCRRA) was set up from the Kazakh division of the All-Union Copyrights Agency by a Kazakh Cabinet of Ministers decision. The SCRRA drafted the Law On copyrights and related rights in 1996, which was recognised by CIS experts as a model in regulating relations for the use of copyrighted objects.
The main functions of copyright protection are now delegated to the Kazakh Justice Ministry’s Intellectual Property Rights Committee, which was set up in 2001. This body aims to regulate matters relating to copyright protection, making proposals to improve the law, improving consumers’ legal awareness and monitoring entities that use IP objects.
The system of issuing patents has also been reformed. The National Intellectual Property Institute (NIPI) plays the role of the Kazakh patent body’s expert organisation. It carries out expert examination of industrial intellectual property objects, including inventions, prototypes, trade marks, the place names of goods’ origins, industrial samples and innovations in the sphere of breeding new species. After the NIPI’s expert examination, the Intellectual Property Rights Committee issues protective documents – patents and certificates. The NIPI is currently administering international conventions too.
The country has, therefore, created a state system which ensures the protection of IP rights. However, experts believe government bodies and all organisations concerned should improve cooperation to enable the system to function effectively.
The Current State of the IP Sphere
Until recently, many still did not have a clear understanding of IP in Kazakhstan and it remained a vague legal notion without any particular significance for everyday activities. However, many companies and organisations are now coming to understand that the exclusive right to an IP object offers a particular type of competitive advantage.
Nevertheless, improving the legal conscience of people who commercially use the inventions of science, literature and the arts remains the main problem. No less an important task is to detect the obstacles to resolving topical issues in terms of copyright and related rights protection.
The main advocators of IP rights are the USA, the EU and Japan, which account for two-thirds of all the invention patents issued globally. For example, the USA issues about 500 patents per 1 million people each year, and this figure is twice as high in Japan. In terms of the number of patents (about 100 per 1 million people), Kazakhstan is among the top three patent issuers in the CIS, along with Russia and Ukraine.
Since independence Kazakhstan has issued over 36,000 preliminary patents, patents and trade mark certificates. The NIPI director, Sayat Nyusupov, says the most active regions in terms of the number of applications to register inventions and prototypes are: Almaty (almost 50% of all applications in 2005); Astana; Karaganda; East Kazakhstan and South Kazakhstan Oblasts. The bulk of patentable scientific research is being funded by the budget (up to 40%). The most active sectors producing and adopting inventions are the oil and gas sector, medicine and agriculture. They account for almost 50% of all the patents issued.
Other Central Asian countries issue far fewer invention patents. As a result, experts suggest that Kazakhstan could become a regional leader in scientific innovations and in the creation of new technology. They link our country’s prospects of joining the WTO with additional opportunities to successfully adopt advanced technology and promote scientific and hi-tech products on foreign markets.
Kazakhstan has already become a fully-fledged signatory of a number of international agreements, treaties and conventions which work under the aegis of the WIPO (including the Paris convention on industrial property protection, the agreement on patent cooperation, the Madrid agreement on international registration of trade marks, the Eurasian patent convention and others), but the protection of copyright in Kazakhstan does not yet meet international standards.
For example, after polling its own representatives as well as private companies and copyright protection societies working in Kazakhstan, the Directorate General Trade of the European Commission concluded that the violation of IP rights is quite widespread. Foreign copyright holders are the worst off because it is hard for them to prove that they are right, especially if their copyright is registered in a foreign country. The Kazakh government has not managed to cope with piracy due to a lack of resources, necessary experience, and corruption.
Given the constant flow of investment from the EU and the USA to the country’s economy, it is obvious that improving Kazakh national IP legislation and bringing it in line with international law is of the highest priority.
International experience shows that any state should develop and adopt effective law-enforcement systems to fight copyright violations. This enables copyright holders to prevent the violation of their rights and compensate for the damage inflicted. In addition, administrative and judicial bodies should be ready to support lawful demands made by copyright holders at any time.
The protection of IP rights is regulated by the following laws in Kazakhstan: the Civil Code, On copyrights and related rights and On trade marks, service marks and the place names of goods’ origins, On protecting breeding innovations, On the legal protection of integrated microcircuits and On patents. In addition, the country has passed several legislative acts relating to the protection of industrial intellectual property objects.
The adoption of the Criminal Code and the Administrative Offences Code, which stipulate responsibility for crimes and offences relating to IP rights, has been an important stage in ensuring IP rights protection.
In order to bring national legislation fully in line with WTO standards, amendments were made in 2005 to the Kazakh Law On copyrights and related rights in terms of introducing retroactive protection for inventions – for example, the period of authorship protection has been increased from 50 to 70 years (as it is in developed countries).
The country also adopted the Programme to Build and Develop the National Innovation System for 2005-2015, which should create proper conditions for inventors.
Internationally-known companies producing software, music and film products suffer the most from the unlawful use of IP. Often, luxury goods and fashionable clothes, tracksuits, perfume, toys, spare parts for cars and medicines are faked. In order to ensure the copyright of the inventors, performers and producers of soundtracks on the Internet, Kazakhstan has joined WIPO treaties on copyrights, performances and soundtracks. The country is also actively cooperating with international copyright organisations: the IFPI, the BSA and others.
According to the Kazakh Prosecutor-General’s Office, about 90% of multimedia products sold in Kazakhstan are fakes. The Kazakh Copyrights and Related Rights Protection Association has also said that the total number of multimedia products sold in Kazakhstan in 2005 stood at over 50 million, of which only 5 million were licensed. Revenue from selling licensed products exceeded $15m in 2003 and revenue from fake products exceeded $70m. As a result, the budget fell about $3m short in taxes and other payments. As for the dynamics of offences in the IP sphere, only eight people were sentenced in 2003, whereas over 90 criminal cases were launched in 2005.
The country adopted a number of amendments to the law last year to tighten responsibility for the violation of IP rights. The standards of the Criminal and Administrative Codes that were in force in the past did not make it possible to effectively fight these violations. For example, violators paid fines worth three monthly calculation indicators – or 3,000 tenge – for selling pirate video cassettes. It is clear that this measure of punishment could not serve as a deterrent in fighting piracy. The new law increased this fine to 500 monthly calculation indicators. In addition, the law allows copyright holders to go to court to demand compensation for moral damage. It is also important that criminal cases will now be launched not for fraud or for the deception of consumers, but for the violation of copyright. The annual Intellectual theft preventive operation held by the country’s law-enforcement agencies also reduces the level of piracy in Kazakhstan, and more effectively ensures IP protection for both local and foreign copyright holders.
The exclusion of Kazakhstan from the blacklist called List 301, which it had been listed in since 1999, served as recognition that the steps taken were adequate. This list, annually published by the US trade body, includes those countries which do not pay due attention to protecting IP rights. As a result, another obstacle to Kazakhstan’s membership of the WTO was removed, and this, of course, improves our country’s investment attractiveness and rating.
In 2006, List 301 was topped by China, a country with a high level of violations in IP rights. The document also says that serious violations of IP rights take place in Russia, where piracy and the production of fake goods are widespread. The least that needs to be done in order for a country to be excluded from List 301 is to tighten responsibility for illegal use of IP objects, and fake products as well as equipment to produce these products should be confiscated.
The chairman of the Intellectual Property Rights Committee, Marat Aykenov, has said that our country "does not intend to stop here and will aim to be recognised by the international community as a strict guarantor of IP rights protection". As a result of this aim, it is expected that Kazakh customs bodies will be given ex-officio functions, additional powers, to prevent copyright products from being forged and conduct independent criminal investigations without them having to be requested by copyright holders. Adopting legislative standards to fix these powers makes it possible to erect a barrier to fake products which will significantly cut their export and import.
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