On April 19, 2012 the President of Ukraine signed the new Customs Code of Ukraine, which shall soon enter into force.

The Code introduces a number of important changes that must take into account by market participants when importing goods with the use of various intellectual property objects.

It is important to note that the major changes were mainly made in the Customs Register of Intellectual Property Rights (hereinafter the Customs Register).

As we know, the Customs Register is kept by the Customs Service to ensure that a person who has the rights to an object of intellectual property, if there is reason to believe that during the movement of goods across the customs cordon of Ukraine its rights to the object may be violated, has an opportunity to apply to the Customs Service for entering the said object into the registry. After that, the customs authorities shall take measures to prevent the movement of counterfeit goods across the customs cordon of Ukraine by using the object entered in the register of intellectual property rights.

Meanwhile, the existing Customs Code as of 11.07.2002 indicates that the objects of intellectual property rights, which are entered into the Customs Register, may be objects of copyright and related rights, industrial designs, trademarks and geographical designations.

One of the main novelties is that the new code does not explicitly refer to objects that can be entered into the Customs Register. The relevant articles contain a quite general notion of "object of intellectual property rights protected in accordance with the law." At the same time, article 4 of the Code, which includes definitions of the terms used, indicates that objects of intellectual property rights shall mean objects of copyright and related rights, inventions, utility models, industrial designs, trademarks, geographical designations (designation of the origin of goods), and plant varieties.

Understanding that the list of "objects of intellectual property rights protected in accordance with the law" is much broader than the one set forth in article 4 of the Code, the legislator is likely to have established that the Customs Code specifically refers the above mentioned objects to the concept of intellectual property objects.

Based on this definition, we conclude that inventions, utility models and plant varieties may be entered into the Customs Register along with the conventional items after the entry into force of the Customs Code.

Of course, to introduce a security system for these objects the customs must have a regulatory framework that has yet to be developed and adopted. While welcoming the extension of the list of objects of intellectual property rights that are protected at the customs, it is still quite hard to imagine how the customs authorities will carry out the examination and identification of the protected inventions in the importation of goods. It is also not clear whether the court will take responsibility and make rulings on securing claims, without being sure that the imported goods actually violate the rights holder of an invention. It remains to be seen whether the formula when importers' losses are borne by rights owners will indeed be effective.

Further, the new Customs Code has changed the term in which the owner may apply to court for a ruling on interim relief in the form of suspension of customs clearance of goods. Namely, this period in the Customs Code of 2002 is 15 calendar days with extension possible for the same period. In the new code it is 10 working days, also with extension. At the same time, we understand that this provision is aimed to protect the rights holder, as 10 days under standard conditions are 14 calendar days, but in case of public holidays the period of time may be much longer.

In addition, the Customs Code establishes the possibility of a simplified procedure for destruction of goods with customs clearance suspended on suspicion of violating intellectual property rights.

Such destruction is possible when the holder in writing informs the customs authorities that the goods violate intellectual property rights belonging to him and provides the consent of the owner of such goods to their destruction. It is important to understand that destruction of goods under a simplified procedure is performed by the rights holder under his responsibility. The owner of the goods, by voluntary destruction of his goods, avoids administrative responsibility and a fine of one thousand untaxed minimum incomes of citizens.

The most important innovation in terms of rights holders is the provision of the Customs Code on releasing customs authorities from liability for the omission of goods infringing intellectual property rights. This provision applies to goods that contain objects included in the Customs Register, as well as goods with objects not included in the register of intellectual property rights, but which are subject to protection under the law.

Thus, the customs authorities decline any liability for their failure to fulfill their duties in respect of proper examination of goods, including the possibility of infringement of intellectual property rights. This provision is essentially at odds with the general law provisions on liability of public authorities for their decisions, actions, or inaction.

We believe that this provision actually negates the positive changes introduced by the new Customs Code. Let us hope that the inclusion of this provision is mainly due to the desire of customs authorities to formally dissociate themselves from legal claims of rights holders. Otherwise, they will properly perform their duties and deal effectively with the problem of flooding the Ukrainian market with counterfeit goods.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.