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American University of Armenia

Theme: The RA law on "Compulsory labeling of audiovisual magnetic carriers by means of control signs� as a tool for piracy prevention

Student: M. Abrahamyan Instructor: A. Baghdasaryan

Yerevan 2011

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Content Introduction ………………………………………………………………………………………3 Chapter 1: Armenian Practice …………………………...………………………..……………..4 1.1 Inside out: Copyright and related rights protection in the RA…………………………......4 1.2 The RA law on "Compulsory labeling of audiovisual magnetic carriers by means of control signs” as a light in the end of the tunnel …………………………………………….………........6 1.3 Shortcomings of the RA law on H.L. …………………………………………………………9 Chapter 2: International Practice: the lessons to be learnt………………..……………………10 2.1: The Practice of Russian Federation on enforcement of the law on holographic labels: Mistakes are the substantial part of success…………………………….………………………..10 2.2 Moldavian Practice: a guide for law improvement............…...…………………………….12 Conclusion ………………………………………………………….………………………………14 Bibliography ………………………………………………………………………………………..17

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Introduction

Piracy, unauthorized use or appropriation of object of copyright and/ or related right (in general IPR1) is a common problem of developing countries. The main initiatives of piracy development are globalization, cheap digital technologies, low incomes, expensive media products, small markets and weak enforcement of laws. That‟s why very often piracy is also called “an international plague,” or “nirvana for criminals”.2 3 Heavy social conditions, low awareness and legal unconsciousness, make more and more people and economies involve in the stream of privacy. In order to fight this, governments attempt to take all possible measures that can be effective. As an emerging country, Armenia also has high rates of piracy. The global research conducted by the international Business Software Alliance (BSA) revealed that Armenia had over 90 % of piracy level in software products and was among 123 countries with highest piracy level in line with Georgia (95%), Bangladesh (92%), Zimbabwe (92%) and Azerbaijan (90%).4 The most affected sphere is show-business. Attempting to prevent piracy the RA NA adopted the law on "Compulsory labeling of audiovisual magnetic carriers by means of control signs”. De jure the law entered into force on March 1, 2011 but de facto cannot be enforced. As there is no investigation on this issue, the aim of this Paper will be to investigate and find out whether the law includes appropriate enforcing mechanisms? And if any, how they are effective in the improvement of piracy fighting in Armenia? Whether the law is developed to protect copyrighter holders‟ rights? Does it have appropriate mechanisms, or is just a measure to reduce shadow economy and increase tax collection? What is the international practice of such law enforcement? The answers to these questions can be found in two chapters of this Paper. The first chapter of the paper has three parts and is dedicated to the Armenian practice. The first part introduces current situation in Armenia and legal regulation of the field. The second part is dedicated to the RA law on "Compulsory labeling of audiovisual magnetic carriers by means of control signs”, its provisions, similarities and differences with the RA law on “Excise Tax”. The shortcomings of the law are included in the 3rd part of the 1st chapter. 1

IPR- Intellectual Property Rights W. S. Strong “The Copyright Book: A Practical Guideline ”; 3 Media Piracy in Emerging Economies, <http://www.scribd.com/doc/50196972/4/Chapter-4-Russia> 2

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Id 3


The Second Chapter introduces the international practice. It has two parts. The first part represents failed experience of the law in the Russian Federation. The second part introduces the practice of the Republic of Moldova on enforcement of the law on “Broadcasting of samples and phonograms” as exemplary model for Armenian analogue law improvement. In the end, the analyze will show the main conclusions and ways on how international or national practice can be used in this field, what measures shall be taken to improve and increase the efficiency of the law enforcement.

Chapter 1: Armenian Practice

1.1 Inside out: Copyright and related rights protection in the RA

RA legislation on protection of copyright and related rights embodied several International Treaties (The Berne Convention for Protection of Literary and Artistic Works ((Oct. 19 2000), the WIPO Performances and Phonograms Treaty, the WIPO Copyright Treaty (March 6, 2005), Law on Copyright and Related Rights (Copyright law), adopted in 2006 and Articles from RA Civil Code (Chapter 63, 64) and Criminal Code (Article 158). The institutions engaged in the field are RA Intellectual Property agency – separate division acting within the RA Ministry of Economy , “Armauthor” NGO- mere collective administration institution engaged in protection of authors‟ rights. It presents not only legitimate interests of its members (authors) but also collects, delivers and pays royalties to them,5 and the Intellectual Property Division at the National Police‟s Head Department on Organized Crime.? The latter has not sufficient rights, but conducts inspections on the basis of written complaints. The law on Copyright and Civil Code give strict legislative definitions of right holders‟ exclusive moral/non-economic and economic rights which include rights to copy, distribute, broadcast and adapt the work, rights to regulate the copyright and adjacent as well as to stipulate available remedies. 6 Moreover, RA Criminal Code states that illegal use of the object of copyright and adjacent rights or appropriation of authorship, if these actions caused large loss (exceeding 500 minimal salaries ), is a criminally punished offence (starting from a fine in the amount of 500 to 1000 minimal salary to

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6

Statute of “Armauthor” NGO RA Law No. HO-142-N “On Copyright and Related Rights” adopted on 15 .07. 2006, RA Civil Code, Chapter 63, 64

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imprisonment for the term of up to 1 year).7 In spite of the fact that the legal and institutional basis of Armenia is not the last one, in practice, the country has one of the highest piracy level in the world with financial losses of 66%.8 Counterfeit and IP rights violations affect each field of the economy that has any relation with IP sphere. The survey conducted in 2010 showed that 33 % of imported and 67 % of local production is counterfeited.9 Despite these facts there were just 5 criminal proceedings in the period of 2005-2007, 4 of which were dropped.10 As stated by Narine Mkrtchyan who is a BSA Counsel to Armenia and a representative of legal interests of Microsoft Armenia “In general the parties come into agreement without filing motion to the courts”. For example Microsoft Armenia had 12 applications in 2010, from which just 3 are in the process of prosecution”.11 According to A. Varderesyan, head of the Intellectual Property Division at the National Police Head Department on Organized Crime, there are three main directions of copyright and adjacent rights infringements in Armenia: illegal sale of pirated Discs, illegal organization of concerts and illegal dissemination of pirated software.12 This is proved also by the Armauthor annual report. Although the royalty collection increased nearly twice in the period of 2007-2008 (from 39574.0 tsd AMD to 58011 tsd AMD), the theaters still pay the most part of royalties (53.31%) ,while broadcasting companies (TVs and Radios) and phonogram producers pay just 27.37% and 11.84% respectively. 13

This data explains how the phonograms can be sold everywhere starting from 300 AMD (while

mere blank disc price in common market is 100-150 AMD). Although RA has laws, institutions for IPR protection (at least minimal) that are much better in comparison with Zimbabwe ones, in the BSA Annual report these two countries are close neighbors by software piracy level. The investigation revealed that one of the main reasons of such situation is the weak law enforcement.14 So...

7

RA Criminal Code Article 158, amended on 26.10.2010

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“«Պիրատություն» Հայաստանը առաջին շարքերում է” , Aysor.am, 21.10.2009, 14:58

<http://www.aysor.am/am/news/2009/10/21/pirate/> 9

Survey on the Extent of Counterfeiting and Piracy on the Armenian Domestic Market , Aeplac, 2010

10 ԸՍՏ ԿՀԴՊ ԳԼԽԱՎՈՐ ՎԱՐՉՈՒԹՅԱՆ ԱՇԽԱՏԱԿՑԻ, ԱՅԼԵՎՍ ՀԱՄԱՏԱՐԱԾ «ՊԻՐԱՏՈՒԹՅՈՒՆ ՉԿԱ,» , panorama..am, 15.11.2007

http://www.panorama.am/am/law/2007/11/15/pirat/> 11 12

Mkrtchyan Narine, Personal Interview, Feb 10.2011 Samvel Avagyan “Պիրատության խրախճանքը:Հայաստանը` Զիմբաբվեի ու Բանգլադեշի կողքին” Capital daily, 22.10.2009 <

http://www.cdaily.am/home/paper/2010_01_13/news/15212/> 13 “Armauthor” NGO, “Annual report 2008”: pages 8,12 14 Survey on the Extent of Counterfeiting and Piracy on the Armenian Domestic Market , Aeplac, 2010

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1.2 The RA law on "Compulsory labeling of audiovisual magnetic carriers by means of control signs” as a light in the end of the tunnel The RA law on "Compulsory labeling of audiovisual magnetic carriers by means of control signs” (hereinafter the Law on H.L) entered into force on March 1, 2011. 15 It is called to prevent Discs16 counterfeiting and protect the interests of copyright and related rights holders, as well as protect consumers, create additional conditions for tax collection and ensure fair competitive conditions for the economic entities.17 Pursue to Article 3 (1), the existence of holographic labels18 (hereinafter H.L.) is mandatory for any stage of realization of produced and imported Discs in the RA. They shall be affixed on the part of disc cases, packages, the material of which ensures safe affixation of them, on the opening part of the Discs. Respectively, besides the short name, series and sequence number of the product enabling to identify the discs producer or importer, H.L. differ also by color and inscriptions “imported” and “local”. The cost of labels will be defined by the Government decree. It will be composed of the costs related to holographs production, maintenance and withdrawal from circulation. The cost of holographs will be reduced from the taxable income19 (it will be considered as cost and that amount will not be taxed): appropriate amendment to the RA Law on Income Tax is already in force.20 Holographic labels like excise stamps are documents of strict registration and shall be registered, through defined procedure both by an authorized body and economic entities.21 The law on H.L. states that legal persons and individual entrepreneurs22 may obtain H.L within 10 days23 period after submission of full set of below mentioned documents to authorized body: „„(...) 1. request for acquisition of holographic labels; 2. copy of the document certifying the payment made to the state budget for acquisition of a holographic label;

15

Art 10 (1) of RA Law on “Compulsory labeling of Magnetic Carriers of Audio and Video Information by Control Marks” 16 magnetic carrier of audio and video information 17 Id. Art 1(3) 18 Id. Art 2(1)a self adhesive stamp label with grid foil part that has defined sizes and form and high protection level against counterfeit 19 Id. Art 7(1) 20 RA Law No HO-183, “on Income Tax“ adopted 27.10.1997, amended 26.10.2010, Art 9 k(i) 21 Id. Art 2 (3) 22 Controversy with the Id. Art 2(4) of which states that “...organizations and natural persons...importing products subject to labelling into the customs area of RA ...shall bear the obligation of labelling with holographic labels ” 23 Id. Article 6(7)

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3. statement on use of previously acquired holographic labels (except for the case when holographic labels are acquired for the first time); 4. contract, permit (license) of production and/or realization or excerpts thereof signed with copyright and/or adjacent right holders, that clearly states the names, description of content (content), total number of discs to be produced and/or those (the imported ones) subject to sale, and the amounts to be paid to copyright and/or adjacent right holders of the works, as well as the data (address, telephone and fax numbers, internet site, e-mail, etc.) of the copyright and/or adjacent right holder.” 24 If the abovementioned documents are not submitted completely the request for acquisition of a holographic label shall be rejected. But after ensuring the full set of the documents may be reapplied.25 The set of required documents is adapted to the RA law on Excise Tax (Article 7(1')). But Excise Tax law is more advanced and requires certificate of investigation of production capacities of claimants by tax services: when the capacities (inadequate production capacities) do not correspond to the required number of stamps the stamps provision may be either refused or partially satisfied. The law on H. L. and the law on Excise Tax have the same procedure for returning of damaged or unused labels: they must be returned to the authorized body within 10-days after termination of appropriate production or import and every 6-month in case of damaged ones.26 The law also defines the labeling procedure for imported Discs similar to Excise Tax law:“(l)abeling of discs imported into the Republic of Armenia, that are subject to compulsory labeling by holographic labels, is an indispensible condition for releasing the mentioned discs by customs bodies through “import for free circulation” customs regime”.27 As in case of labeling procedure of products defined in Excise Tax law , imported Discs labeling may be conducted in customs control areas (in case when an appropriate authorization is available, in customs territory or customs point area or in customs warehouse) prior to importing those products into the customs territory of the Republic of Armenia. The importer shall be responsible for labeling of the discs imported to the Republic of Armenia. So, as comparison shows, the law on H.L. was drafted on the basis of the RA Law on “Excise Tax” and will enact closely with the RA Law “On Copyright and Adjacent Rights”(hereinafter, the Law

24

Id. Article 6(1) Id. Article 6(5) 26 Id. Art 7(2-6) 27 Id. Article 6(3) holographs 25

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on Copyright): so relations arising between right holders28 and Discs producers or importers shall be regulated in accordance with the Law on Copyright. Moreover with the Law on H.L. RA National Assembly adopts amendments in RA Criminal (Art 158, 208-211) and Administrative Infringement Codes (Art 170.8-170.9, 170.12), Law on Taxes (Art 28.2) and Income Tax (Art 9). All amendments entered into force on March 1, 2011. These amendments mainly define the liability for the law infringements. After adoption of the law on H.L., copyright and related rights infringements become criminally more strictly punished. Amendment to the Art 158 of Criminal Code, decreases the imprisonment from “up to 2 years to up to 1 year”, but increases the monetary fine (instead of 200 to 400 minimal salary now the fine reaches from 500-1000 minimal salary). Moreover, illegal use of the object of copyright and adjacent rights or appropriation of authorship which was committed more than once, disregarding protective technical measures by the group of people with prior consent using the H.L. improperly (labeling not proposed carriers ) in large amounts is punished by the fine 1000-2000 minimal salary , or imprisonment up to 2 years. 29 The amendments to the criminal Code include sentences for production and realization of both illegal Discs and holographic labels. All articles (Articles 208-211) of Criminal Code previously provided for excise stamps, now refer to holographic labels as well. Amendments to Administrative Infringement Code (Art 170.8-170.9, 170.12) establish fees for the realization of the products illegally stamped, unstamped or improperly stamped in average from one to three hundred times of minimal salary, if total price indicated by the seller doesn‟t exceeds 200,000 drams. Additionally, according to the Article 28.1 of the RA “Law on Tax” the unstamped and/or illegally stamped products, subject to mandatory labeling, shall be destructed by tax authorities. This provision does not refer to the discs that are transited through customs territory of the Republic of Armenia, contain software and database and are incorporated in an equipment set, are attached to books, magazines, directories and contain their electronic content; are imported by natural persons for personal use, are produced and/or imported within the framework of humanitarian assistance and charity and are subject to free of charge distribution, because they are not subject to labeling defined by the RA Law On Compulsory Labeling of Magnetic Carriers of Audio and Video Information by Control Marks (Holographic Labels).30 28

Here: copyright and/or adjacent rights holder RA Criminal Code, Article 158 30 Id. Article 9 29

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1.3. Shortcomings of the Law So unauthorized use of object of copyright and/ or related rights, its‟ realization become more strictly punished, but there are some shortcomings in the law. First of all, it is the lack of responsible body. The law on H.L. establishes the labeling procedure, issuance, registration, use and maintenance of holographic labels, as well as the liability for infringement of the Law, but it does not define the responsible body, its liabilities and responsibilities. Although, RA PM 23-A decree on 28 January 2011 required a draft of “Decision on formulation of Authorized Body for implementation of RA Law on H.L” from the Ministry of Finance and State Revenue Committee within the 1st decade of February31, and the Law on H.L. entered into force on March 1, 2011, there is still no defined authority body. Taking into consideration the amendments to laws and PM decree, it can be just suggested that the responsible body will be the State Revenue Committee. Within the scope of the law the Authorized body should provide labels (Article 6(1)), approve the holographic labels sketches (Art2 (3)), define the procedure thorough which the holographic labels should be registered (Art 5(1)) and will not be responsible for accuracy of any information of the documents required for labels provision (Art 6(8)). So here is a big gap in the light of IPR protection, because the contracts may contain false statements: e.g. the number of discs that shall be produced and the number of officially permitted may be far different. And if the law on H.L. is aimed at protection of IPR as well, than Art 6 (8) of the RA Law on H. L. is also a drawback in the Law. The other shortcoming is contradiction between Articles 2(4) and 7 (9) of the RA Law on H.L... Although article 7 (9) states that “(h)olographic labels shall be provided only to organizations and individual entrepreneurs registered (recorded) in the Republic of Armenia”, Article2 (4) contradicts to it “(u)nless otherwise provided for under this Law, organizations and natural persons (hereinafter, Entities) importing products into the customs area of the Republic of Armenia subject to labeling, (...) shall bear the obligation of labeling with holographic labels.”

So here raise a contradiction, on the one hand the labels can be provided only to organizations and individual entrepreneurs, but on the other hand natural persons also bear obligation of labeling.

31

RA PM 23-A decree on 28 January 2011 ”https://www.e-gov.am/u_files/file/decrees/varch/2011/01/11_0023.pdf

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So we can say that the Law on H.L is a simplified tax administrative law aimed at protection of economic interests of copyright and adjacent right holders. It has shortcomings and its implementation is yet under question because of lack of political will.

Chapter 2 International practice: the lessons that must be learnt

2.2. The Practice of Russian Federation on enforcement of the law on holographic labels: Mistakes are the substantial part of success

The laws requiring mandatory labeling of discs may be found in many countries legislation as a piece of tax administration law. But as separate legal act it is commonly adopted in developing countries: especially in some CIS countries (Moldova, Russia, Ukraine, and now Armenia), because commonly countries are trying to enforce their laws on copyright and adjacent rights. In general, the main provisions of the law don‟t change from country to country. Moreover, the process of issuance, registration, use and maintenance of holographic labels and procedures of sale and import defined by the Law on H. L. are approximately the same in all CIS countries analogue laws. Although the laws have similarities, the enforcement and effectiveness of the law, its consequential results are different from country to country. For example, Russian Federation adopted such law in 1990s.: RF Government Decree № 601 of May 17, 1997 "On the labeling of goods in the territory of Russia by conformity marks, protected from falsification” and № 33 of 19 January 1999 Decree of the Government of Moscow " On the introduction of the security identification mark on the video and audio tapes, computer information carriers, laser and compact discs”. But the acts enforcement was ineffective, and they were abolished. Among the reasons can be mentioned huge territory, mass counterfeiting of holographic labels per se, and legal inconsistency.32 E.g. in the case № 1–1187/99 of Savyolovsky District Court of Moscow ,” M” was accused in a crime under Part 1 st.171-1 of the Criminal Code for the realization of unmarked video cassettes. As showed the case facts “M” was registered as an entrepreneur and was engaged in retail realization of video-audio cassettes. He obtained unmarked cassettes before the law on mandatory labelling came into force (September 1, 1999) and could not mark them, although several times asked the Authorized body to provide labels. 32

Olga Sezneva, Joe Karaganis and etc. Media Piracy in Emerging Economies, 140<http://www.scribd.com/doc/50196972/4/Chapter-4-Russia>

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As his employees stated in the Court, starting from September 1, 1999, they sold just marked cassettes: unmarked cassettes were stored in the shelf. The tax services conducted inspection and seized all unmarked video cassettes. The Court justified “M” because on the one hand the wording of RF government decree did not require mandatory labeling of video cassettes, on the other hand violation of Moscow government decree (this decree required mandatory labeling for Video cassettes) could not attract criminal liability established by federal law (because it had power only in the territory of Moscow). 33 This case is a bright example of consequences that may occur because of improper wording of the law, inconsistence of legal acts and authorized body‟s work. Why? Because if the authorized body work properly, “M” would not involved in the suits, if the wording of the RF decree were proper and include all types of information carriers, the law would not be disregarded and ,finally, if the drafters of Moscow decree defined proper punitive mechanisms “M” would be held liable for violation of the law. Republic of Belarus also has law on mandatory labeling of audio-video carriers, which is a sample legal act of Tax Administration. Belarus President 14.09.2004 № 444 edict “on Labeling of Goods by Control Marks” defines procedure for compulsory marking of some goods including compactdiscs as well (tobacco, fuel etc.). Recently, Belarus practice showed that such tax- oriented type laws are not useless but have not great impact on IPR protection. Recently 123, 5 th holographic labels were announced lost. The supervision revealed that some of those labels were used by another related-company for production of counterfeited Discs in Belarus. So the case was prevented because of large scale of forgery.

2.2 Moldavian Practice: a guide for law improvement After adoption of the law on “Broadcasting of Copies and Phonograms” (entered into force in 2003), the Republic of Moldova had remarkable achievements: 10 Contravention Files on the basis of “Exploitation of copies of works and phonograms without control marks and author‟s contracts with right holders” within the period of 2005-2010.34 In general, the law provisions are the same as Armenian one.

33

RF Savyolovsky District Court, No 1–1187/99 Official site of the State Agency on Intellectual property <http://www.agepi.md/en/decizii_judecata/decizii_copyright.php> 34

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So I would like to represent the Moldavian law on the basis of RA law shortcomings mentioned in the 3rd part of 1 Chapter. The Authorized Body In the Republic of Moldova, the responsible body for the regulation of the law is the State Agency on Intellectual property (hereinafter- the Agency). Initially, just Article 17 of the RM law “On Broadcasting of Copies and Phonograms” referred to the body functions, stating that “(t)he Agency (…) exercise control on implementation of the law provisions”. Later, in 2005 the law was amended by Article (4) which substantially improved and changed the law: it stipulates the role and functions of responsible body (Authorized body). Article (4): Functions of the State Agency on Intellectual property in the area of broadcasting of Copies and Phonograms (1) In order to enforce copyright and related rights implementation of the provisions of this Law, the State Agency of Intellectual Property has the following functions: a) Manage and monitor the implementation of this law; b) conduct and manage the State register; of recipients of control marks; c) issue the control marks; d) Implement a specialized examination of copies and phonograms; e) the establishment and management of the National Fund for copyright and related rights; f) Perform other functions and services provided by this law and other regulations.” So this amendment defined a sole body which is responsible and is “implementing party” in every possible stage of labeling.35 So the Agency haws to issue holographs, only in. The cost of the labels are accumulated and used to ensure the normal work of the Agency. For example, the first instance Court of Rican accused Nemtenu Serghei Ion in realization of counterfeited CDs. The investigation revealed that accused had no contract with Authors (Copyright holders) and sold CDs without holographic labels of IP Agency. IP Agency conducted investigation and found counterfeited CDs. The defendant was found guilty in violation of 51(2) of Administrative Code of RM.36 In the framework of the reformations another amendment was made to the Law: for production or realization of copies or phonograms, natural and legal persons have to register in the State Register. For registration, appliers have to present to the Agency the following set of documents: “application, 35 36

Here: labeling of copies and phonograms RM Riscani Sector Court, No 4A -593/06

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passport (natural persons), charter (legal persons), company registration certificate, certificates of residence (n.p.) and the location place (l.p.), contracts with right holders, documents of place locations where the production or realization including the places for samples and phonograms storage(...)”37 The copies of abovementioned documents shall be provided with original ones, sealed and signed, within 30-days either after this law come into force or before the activities begin. In case of any change, documents on appropriate changes shall be submitted to the Agency. 38 H.L.-s are provided on the basis of Agency decision only after acquisition of State Register Certificate. The Riscani Sector Court decision concerns to counterfeited Discs production. The Court charged the defendant with 3000 Moldavian lai and confiscated 11 DVDs, because the production was implemented without Certificate and CDs had no holographic labels.39 The other innovation that is also unique in (at least) CIS countries practice is aimed to increase transparency and awareness. Article 4(2) “(t)he Agency shall publish in its journals the names of natural or legal persons authorized to produce and (or) distribute copies or phonograms, as well as the decisions on registration or refusal of registration of such persons in the State register, and other materials associated with the proliferation of phonograms.”40 To create a database of legal broadcasting of samples and phonograms (copyright and adjacent rights object) and ensure its sustainability, the Moldavian applicants have to submit a sample of each object of copyright and/or adjacent rights with application for holographic labels41: it is additional requirement in application package that have no other country. So this article defines the responsibilities, shows the law orientation to the IPR protection, increases transparency and defines mechanism for awareness which is one of the key tools for piracy prevention.

RM Law No. 1459-XV, “On Broadcasting of Copies and Phonograms”, adopted 14 Nov. 2002, as amended 28.07.05, Art. 6 38 Id. 39 RM Rescan Sector Court, Decision on 04.12.2007 37

40

Id. Art 4(2)

41

Id. Art 11

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Conclusion

According to surveys conducted by BSA and Aeplac, piracy is alarming and extensive problem for Armenia. Annually Armenia has 66% financial losses and every minute loses potential investors because of piracy high level and improper protection of IPR. We cannot afford ourselves such luxurious costs, because Armenia is a tiny blockaded country, without any substantial resources for economy development. The sole resource that has Armenia and can have economic advantages in case of its development is intellect, its human resources. Development of IP sphere will not require natural (industrial) resources, transportation costs, but will ensure decrease of unemployment rate, high salaries, new international investments, and will increase the rating of Armenia in the world. Thus, the protection of IPR and fight against piracy is a national level aim for better future. So let‟s see how the RA law on "Compulsory labeling of audiovisual magnetic carriers by means of control signs (Holographic Signs) can serve our national goals: whether the law is developed to protect copyright holders‟ rights or is just a measure to reduce shadow economy and increase tax collection? On the one hand the law is a simplified law of Tax Administration and the procedure of issuance, registration, use and maintenance of holographic labels is similar to the stamps provision process defined by the RA law “on Excise Tax”. The international practice showed that most commonly the countries just amend their appropriate laws with such provisions rather than adopt new separate laws. As Belarus practice showed, even such tax- oriented type laws that are aimed at reducing shadow economy and increase control over the field are not useless for piracy prevention, because their mechanisms by facilitating the methods of detection of pirated Discs. So the law on H.L by itself is not just a tool for tax collection, but it also serves as a mechanism for piracy prevention and facilitates the protection of copyright and related rights. Besides this, it has also indirect effect on IPR protection in Armenia. The adoption of the law on H.L. leads to definition of more strict criminal liabilities for copyright and related rights infringements. The amendments to the criminal Code include sentences for production and realization of both illegal Discs and holographic labels. All articles (Articles 208-211) of Criminal Code previously provided for excise stamps, now refer to holographic labels as well. Amendments to Administrative Infringement Code (Art 170.8-170.9, 170.12) establish fees for the realization of the products illegally stamped, unstamped or improperly stamped in average from one 14


to three hundred times of minimal salary, if total price indicated by the seller doesn‟t exceeds 200,000 drams. So the law adoption enlarged the scope of the Criminal and Administrative Infringement Codes and provides more punishments for copyright and related rights infringements. Moreover, this law does not increase tax burden, because the holographs shall be considered as costs and will be decreased form taxable income. But the law has drawbacks as well. First of all there is a contradiction between Articles 2(4) and 7(9): on the one hand the labels can be provided only to organizations and individual entrepreneurs, but on the other hand natural persons also bear obligation of labeling. But because the holographs are documents of strict registration and shall be registered by an authorized body and economic entities, I suggest to replace “natural person” phrase with “Individual entrepreneur”. The other gap concerns to the Authorized body As the Moldavian practice showed the role of authorized body is important while Armenian law states that “(t)he authorized body shall not be responsible for accuracy and/or reliability of any information of the documents required under Paragraph 2(4) of this Article or the information contained therein.”42 So the Authorized body will not check the certainty of provided documents: there is still a risk of unauthorized and fake contracts with false contract terms. So there are at least two ways that may correct or improve the situation. One way is to amend the law with provision stipulating the Authorized body's liabilities including the duty to check the contracts and then publish that information in the web-site. As I have already mentioned the RA Prime Minister decree. The other way is to include a person from IP agency who will check the certainty of contracts in the working group and when closely cooperate with the RA IP Agency for publication of that information in the web-site and other publications. The suggestions may be ''legalized'' either by amending the law on holographs or via governmental decree. As the decree of PM suggested the body will be State revenue Committee. And finally, to avoid such chaotic situations when the law is enforced but the mechanisms are not yet defined for its operation, and in some extent, to make a pressure on the Government, I suggest to include in the law provisions concerning to Government future activities. For example as RM Law 42

Article 6(8) of the RA law on "Compulsory labeling of audiovisual magnetic carriers by means of control signs (Holographic Signs)” 15


on “Broadcasting of samples and phonograms” Article 18 (4b) states “within 30 days after publication of the law the government have to announce a tender and ensure participation of appropriate foreign organizations”. This will make Government to act on time implementation of its obligations and remind the Government that “nothing is more destructive of respect for the government and the law of the land than passing laws which cannot be enforced”.43

43

Albert Einstein

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Bibliography 1. The RA law on "Compulsory labeling of audiovisual magnetic carriers by means of control signs” 2. The RA Law on Copyright and Related Rights 3. The RA Law on Excise Tax 4.

Survey on the Extent of Counterfeiting and Piracy on the Armenian Domestic Market

5. W. S. Strong “The Copyright Book: A Practical Guideline ” 6. «Մտավոր Սեփականություն: տեսություն և պրակտիկա» Երևան 2008 7.

“Annual BSA-IDC Global Software” Piracy Study http://portal.bsa.org/globalpiracy2008/studies/globalpiracy2008.pdf

8.

http://aipa.am/en/legislation/

9. www.arils.am/ 10. www.wipo.int 11. www.armauthor.am 12. http://www.crime-research.org/library/Belousov_5eng.htm 13. http://www.iccwbo.org/policy/ip/id3060/index.html 14. http://www.aeplac.eu/images/reports_0/Survey_report_final_eng.pdf 15. http://it.moldova.org/news/campaign-against-software-piracy-launched-in-moldova-19616eng.html 16. http://www.agepi.md/en/decizii_judecata/decizii_copyright.php 17. http://www.agepi.md/pdf/decizii_judecata/2009-2010/d_21_06_2006.pdf

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Effectivness of RA Legal Framework to Fight Piracy on CIS Countries Experience  

As an emerging country, Armenia has high rates of piracy. Attempting to prevent piracy the RA National Assembly adopted the law which De ju...

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