IN ORDER to pressure Ukraine to act in accordance with Microsoft's wishes, American diplomats rely on intimidation and cite the BSA. But more importantly, for those who need background about Microsoft in Ukraine, see the following:
VZCZCXRO2344 RR RUEHBI DE RUEHKV #1205 1420621 ZNR UUUUU ZZH R 220621Z MAY 07 FM AMEMBASSY KYIV TO RUEHC/SECSTATE WASHDC 2380 INFO RUEAWJA/DEPT OF JUSTICE WASHDC RUCPDOC/USDOC WASHDC RUEHMO/AMEMBASSY MOSCOW 0160 RUEHBI/AMCONSUL MUMBAI 0039 UNCLAS KYIV 001205
SIPDIS
DEPT PLEASE PASS TO USTR FOR LMOLNAR/JGROVES USDOC FOR 4201/DOC/ITA/MAC/BISNIS USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYCK STATE FOR EUR/UMB AND EB/TPP/IPE MUMBAI FOR KLEIN
SIPDIS
E.O.: 12958: N/A TAGS: ETRD, KIPR, EINT, UP SUBJECT: UKRAINE: MICROSOFT AND GOU GO AFTER SOFTWARE PIRATES
REF: A) KYIV 449
B) 2006 KIEV 2723
1. Summary: A local Kyiv court sentenced a convicted distributor of pirated software on May 7 to one year and one month imprisonment. Although the judge then suspended the prison term, the severity of the sentence attracted significant media attention. The case is part of an invigorated campaign by Microsoft, with the cooperation of Ukrainian law enforcement, to crack down on software piracy. Software piracy rates in Ukraine remain among the worst in the world, although the GOU appears to be taking steps in the right direction. End Summary.
Software Piracy Conviction --------------------------
2. On May 7 a local Kyiv court found a distributor of pirated software guilty of copyright infringement and sentenced him to one year and one month imprisonment. The case resulted from a raid by law enforcement officials in January at Kyiv's "Radiorynok" outdoor market. Media reports noted that the court's sentence was stiffer than those in previous software piracy cases, which usually resulted only in administrative fines. The judge subsequently suspended the prison term (conditional on the defendant not committing another crime), however. Serhiy Lebid, head of the Ministry of Internal Affairs' IPR Department, told Econ Assistant on May 15 that the convicted pirate is unlikely to see the inside of a cell.
Larger Microsoft/GOU Campaign -----------------------------
3. Ukrainian daily Kommersant reported on May 11 that this case was only the first of many to follow in the wake of 14 raids by law enforcement in early 2007. Vladislav Shapoval, a lawyer representing Microsoft, told Kommersant that there were now 17 cases involving pirated Microsoft software working their way through the courts. In April, Microsoft stepped up pressure on suspected violators, sending warning letters to 82 companies and organizations suspected of using pirated software.
4. Valery Lanovenko, General Manager of Microsoft Ukraine, told Econoff on May 12 that this case represented an important victory for Microsoft's anti-piracy efforts. He cautioned, however, that Microsoft was anticipating an appeal of the conviction. Lanovenko has in the past told Econoff that a key element of Microsoft's strategy in Ukraine is to push for a few high-profile criminal convictions in order to encourage Ukrainians to eschew pirated products.
Software Piracy Remains Rampant -------------------------------
5. According to a recent study by the Business Software Alliance (BSA), Ukraine places among the 10 countries with the highest rates of software piracy in the world. The piracy rate stood at 84% in 2006, virtually unchanged from 85% in 2005. Ukraine also falls among the top 20 countries in the world in terms of losses to industry, estimated by BSA at USD 337 million for 2006.
6. As noted in ref A (Post's Special 301 submission), government procurement/use of pirated software also remains a problem. Microsoft canceled a software legalization agreement with the GOU in June 2006 due to government noncompliance.
Comment: Small Step in Right Direction --------------------------------------
7. Microsoft, long active in Ukraine through public outreach and cooperation with the GOU (ref B), is stepping up its fight against local pirates. Ukrainian law enforcement, especially the Ministry of Internal Affairs' IPR Department, appears willing to help by targeting raids at suspected distributors of pirated software. This recent, high-profile conviction should help discourage use of pirated software. Until someone actually goes to jail, however, the deterrent effect could be limited.
TAYLOR