1

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

2

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

3

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

2 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>

4 Id

4

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

5 Statute of “Armauthor” NGO

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

5

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

8 “«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

Mkrtchyan Narine, Personal Interview, Feb 10.2011 12

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

6

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)

7

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) 25

Id. Article 6(5) 26

Id. Art 7(2-6) 27

Id. Article 6(3) holographs

8

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 29

RA Criminal Code, Article 158 30

Id. Article 9

9

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

10

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>

11

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 compact-

discs 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 34

Official site of the State Agency on Intellectual property <http://www.agepi.md/en/decizii_judecata/decizii_copyright.php>

12

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

Here: labeling of copies and phonograms 36

RM Riscani Sector Court, No 4A -593/06

13

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.

37

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 40

Id. Art 4(2) 41

Id. Art 11

14

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

15

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)”

16

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

17

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-19616-

eng.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