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This paper was researched and written to fulfill the M.A. project requirement for the Monterey Institute of International Studies’ Master of Arts in Commercial Diplomacy. For more information about the Commercial Diplomacy program and the M.A. project requirement, please visit www.commercialdiplomacy.org.
This project was completed to fulfill the requirements of the
Monterey Institute of International Studies’ Master of Arts in
Commercial Diplomacy degree.
the purpose of this project, I have assumed the role of an independent
trade consultant to Kazakhstan’s Ministry of Energy, Industry and
Trade. In this fictitious capacity, I propose a strategy for bringing
Kazakhstan's Intellectual Property Rights Regime into compliance with
the minimum international standards incorporated in the Trade Related
Intellectual Property Rights (TRIPS) Agreement of the World Trade
the TRIPS Agreement is a key requirement for Kazakhstan's accession to
the WTO. Acceding to the TRIPS Agreement will also contribute
significantly to the establishment of a stable business and investment
environment in Kazakhstan.
following strategies support the Kazakhstani President's vision to
develop Kazakhstan as the first "Asian Snow Leopard," and to
bring economic, political and social advances to the country.
Inadequate intellectual property rights
protection in Kazakhstan is a key obstacle to attracting foreign direct
investment to the country; it is also a major impediment to
Kazakhstan’s accession to the WTO. The country’s lack of IPR
protection results in enormous business losses. Losses to domestic
industries from counterfeiting and piracy alone are estimated at $295
million per year, or 1.3 percent of Kazakhstan’s GDP. Kazakhstan’s
weak IPR protection has undermined foreign direct investment from the
United States, which currently invests $1.5 billion in Kazakhstan per
year, accounting for 28 percent of total investment in Kazakhstan.
IPR regime must be brought into compliance with international standards,
the most important of which is the WTO TRIPS Agreement. Strengthening
IPR protection will speed Kazakhstan’s accession to the WTO and
considerably increase foreign investment inflows.
Creation of a new set of laws, including
appropriate enforcement mechanisms, to protect intellectual property
rights has been a major challenge for Kazakhstan. Prior to 1991 when the
country gained independence, private property did not exist. The
country’s centrally planned, soviet system protected state property
laws, however even these laws were geared more toward controlling the
economy than protecting property.
a result, the population of present-day Kazakhstan does not understand
the concept of intellectual property rights. Within the government and
general population, there is a general perception that developed
countries gain immediate benefits from IPR protection while Kazakhstan,
as a country in transition with an unstable economy, gains very little.
The following are some common perceptions:
developed nations have comparative advantages in supplying technology,
capital and services, IPR protection will initially help them more than
brings commercial benefits to Kazakhstan because consumers can buy goods
at lower prices. This stimulates domestic production and enhances
values cannot be placed on intangible items. People should not pay for
expressions of ideas.
Kazakhstan has already made great strides toward
establishing an IPR regime that meets international standards. In
anticipation of the 1992 U.S. –
Kazakhstan Bilateral Trade Agreement, Kazakhstan joined a number of
international treaties and conventions, including the Paris Convention
for the Protection of Industrial Property, the Patent Cooperation
Treaty, and the Berne Convention. In 1996, the country also passed the Law
on Copyright and Neighboring Rights, which covers a wide number of
intellectual property areas such as computer programs, sound recordings,
exclusive rights of reproduction for copyright owners, and penalties for
infringement. Additionally, the Criminal
Code was revised in 1997 to strengthen the Kazakhstani
government’s means of enforcing these laws. The new Code includes
substantial fines and imprisonment for infringers.
Nonetheless, Kazakhstan’s IPR laws still lack
certain provisions crucial to compliance with the TRIPS Agreement. As
committed to in the Bilateral Trade Agreement with the United States,
Kazakhstan must begin adhering to the Geneva Convention for the
Protection of Producers of Phonograms against Unauthorized Duplication
of their Phonograms in order to provide protection to sound recordings.
Kazakhstan has signed but not ratified the 1997 WIPO Copyright Treaty (WCT)
and the WIPO Performances and Phonograms Treaty (WPPT). Laws on the
protection of undisclosed information and integrated circuits need to be
enacted. Moreover, many of Kazakhstan’s IPR laws still do not include
adequate enforcement provisions.
enforcement provisions are included in Kazakhstan’s IPR laws, they are
often rendered useless by unnecessarily complicated and costly
procedures required for invoking these provisions. The enforcement
process is extremely slow with many unwarranted delays.
National Patent Office and the Agency for Copyright at the Ministry of
Energy, Industry and Trade are the administrative agencies that oversee
IPR protection. Their staffs are small and poorly equipped. Staff
incompetence on IPR issues creates difficulties in registering
trademarks, obtaining patents and addressing copyright infringements.
Kazakhstan’s courts do not have a sufficient number of judges familiar
with IPR cases, and court decisions are often biased and lack written
reasoning to back them up. All of these factors contribute to the
problem of corruption, as well as the inadequate functioning of the
judiciary institutions. The Customs Administration does not participate
in preventing IPR violations because there are currently no legislative
acts that regulate Customs’ involvement in IPR enforcement.
conditions make the coordination of enforcement activities difficult to
manage. To make matters worse, IPR enforcement requires that financial
resources be effectively distributed, but corruption often impedes such
distribution. The lack of transparency of governmental actions in
Kazakhstan, as well as the general non-existence of the rule of law, is
also a problem.
strengthen Kazakhstan’s IPR regime and bring it into compliance with
the international standards incorporated in the WTO TRIPS Agreement, I
recommend the Ministry of Energy, Industry and Trade take the following
the Law on the Protection of Independently Created Industrial Designs
the Law on the Protection of Layout-designs (topographies) of Integrated
the Geneva Convention for the Protection of Producers of Phonograms
against Unauthorized Duplication of their Phonograms
a Decree Establishing the National Agency for the Protection of
Intellectual Property Rights
IPR related administration procedures, including patent and trademark
judiciary processes and structures for enforcing IPR laws, including
increasing the number of judges knowledgeable about IPR
the Customs Service’s authority for stopping pirated goods at the
border, and institute procedures to facilitate the exercise of this
To build broad support for IPR, the Ministry of Energy,
Industry and Trade needs the assistance of the private sector. A Coalition
for Intellectual Property Rights Protection (CIPRP) should be formed to implement a domestic strategy for
passing necessary legislation and strengthening enforcement mechanisms.
A Coalition could also help with the development of an international
negotiating strategy to help speed Kazakhstan’s accession to the WTO.
The Coalition should be comprised of businessmen and scientists who have
access to the political elite and can influence the country’s top
policymakers. Representatives of domestic and international trade
associations should also be included.
consensus among government officials and gaining support of the
President is crucial to successful IPR reform in Kazakhstan. All
ministries need to understand the long-term economic benefits of a sound
IPR regime. The Ministry of Energy, Industry and Trade needs to pursue
an executive strategy to target the Prime Minister and the ministers who
are close to the President in order to obtain his full support for IPR
legislative strategy should be developed to convince the Parliament to
adopt the proposed legislation. This strategy should be designed to
overcome Parliament’s lack of specific knowledge of IPR, its
unwillingness to give priority to this issue until after “more
important” issues are solved, and pressures from domestic
protectionist groups. The Ministry, with the support of the Coalition,
should inform legislators about the benefits of IPR protection.
Political parties should be targeted to assure their commitments to the
The Coalition for Intellectual Property Rights protection
will play an important role in implementing the domestic media strategy.
To build public support, the coalition will need to overcome the
public’s general lack of awareness of IPR issues. Members of the Coalition who are well-known public figures
can change public opinion through educational campaigns. National
writers and singers can inform the general population about the negative
impact of IPR violations on their professional activities and job
stability. TV advertising campaigns and press conferences in the most
popular national newspapers such as “Panorama,” “Caravan,” and
“Delovaya Nedelya” will be effective tools for obtaining public
Government of Kazakhstan, with the assistance of the Coalition, should
pursue an international strategy that includes media and negotiation
strategies. The objective of the media strategy is to communicate the
image of Kazakhstan as a country that is both moving progressively
towards a market-oriented economy and implementing the reforms necessary
for building a stable business environment. The international media
strategy should attract the attention of international organizations and
help the country gain technical assistance in conducting IPR reforms.
Ø The Government of Kazakhstan will need a strategy for its WTO accession negotiations. Kazakhstan should convince WTO members that the IPR reforms Kazakhstan has already implemented are as good as they can be at this stage of the country’s development. Because the domestic political institutions that regulate protection of intellectual property rights and other new areas of trade policy are still relatively weak, Kazakhstan cannot fully comply with the IPR requirements of the WTO Agreement at the present time. Implementing legislation needed for comprehensive IPR protection and enforcement will require considerable time, especially because Kazakhstan is only now beginning the process of organizing its governmental institutions.
IPR Protection in Kazakhstan
Prior to gaining independence, Kazahkstan’s economy was centrally planned for 70 years. During that time, laws and enforcement mechanisms for the protection of state intellectual property were developed, but protection of private property, intellectual or otherwise, was almost non-existent. Wealth and property, whether private or industrial, belonged to the state. Creative ideas and expressions were state property and could be used for the good of the country without authorization from the inventor. Indeed, implementation of private copyright and other private intellectual property rights would have contravened the fundamental communist belief in communal property.
Thus, while the soviet regime did include a
system for registering patents, trademarks and copyrights, these rights
were held by the state and served the purpose of helping the state
regulate the economy rather than that of protecting individuals’
The system provided no protection for infringements involving producers
of sound recordings, performers, or broadcasters. Moreover, criminal
code sanctions for copyright infringements were deficient. They lacked
jail terms and imposed only small fines or obligatory labor.
The breakdown of the socialist economic system
left Kazakhstan with no IPR protection whatsoever. However, since
gaining independence in 1991, Kazakhstan has made considerable changes
in its IPR regime, putting into place the statutory framework for
bringing the country's IPR protection up to modern standards.
Specifically, the government of Kazakhstan has adopted the following
In May 1992, Kazakhstan signed a Bilateral Trade Agreement with the United States, which entered into
force on February 18, 1993. The Agreement required Kazakhstan to provide
high standards of protection for intellectual property and included
wide-ranging commitments for Kazakhstan to enact and enforce modern laws
protecting intellectual property rights before December 31, 1993. In
return, Kazakhstan became eligible for “most favored nation” status
and became a beneficiary country under the Generalized System of
Preferences (GSP), a program through which the United States grants
preferential duty-free status on specified imports.
The GSP program requires that countries provide “adequate and
effective” copyright protection and enforcement to U.S. copyright
owners. The United States also acknowledged in the Agreement
Kazakhstan’s adherence to the Universal Copyright Convention (U.C.C.),
which the Soviet Union joined on May 27, 1973. In anticipation of the
Bilateral Trade Agreement, Kazakhstan acceded to the Paris convention
for the Protection of Industrial Property, the Patent Cooperation
Treaty, the Madrid Agreement Concerning the International Registration
of Marks, and WIPO. Kazakhstan recently became a member of the Berne
Convention for the Protection of Literary and Artistic Works.
In February 1996, Kazakhstan passed a new Law on Copyright and Neighboring Rights, which came into force on
June 10, 1996. That law was closely modeled on the Russian
Federation’s 1993 copyright law and WIPO’s model law. Among its many
features, the law for the first time protects computer programs and
sound recordings; it provides copyright owners with exclusive rights of
reproduction and distribution (including importation, rental and public
lending); and it protects public display and public performance,
broadcasting, and the right of translation and adaptation. It provides a
Berne-compatible term of life plus fifty years and includes sanctions
for infringement. The penalties for copyright or neighboring rights
violations include statutory penalties of up to 50,000 times
Kazakhstan's minimum wage.
In July 1997, the President of Kazakhstan issued a resolution on
the adoption of a new Criminal
Code of the Republic of Kazakhstan, which entered into force on
January 1, 1998. This code covers copyright and other intellectual
property rights violations not previously covered in the 1959 Criminal
Code. It includes substantial fines of up to 500 times the monthly wage
and imprisonment of up to five years for repeat offenders.
Copyrights are registered at the Agency for
Copyright at the Ministry of Energy, Industry and Trade. To begin a
civil action against a copyright violator, the copyright holder must
file a complaint with the appropriate civil court. The copyright holder
must provide a detailed description of the nature of the injury and
determine the amount of damages caused by the infringement. In practice,
no civil suits are brought because the proceedings are slow and document
intensive, and no injunctions or seizures are available. Therefore, most
people prefer to pursue criminal actions against copyright violators.
Evidence of the crime and the name of the person who allegedly infringes
the copyright must be provided. Further, copyright holders must provide
a complete statement of the law to the attorney general since copyright
violations and copyright law are not well understood. The action can
take one year or more. Establishing good personal relations with
prosecutors usually helps the right holders win the case.
Since 1992, the National Patent Office, located
in Almaty, the former capital of Kazakhstan, has administered the system
of industrial property rights including patents and trademarks. In
Kazakhstan, existing Soviet patents were converted to Kazakhstani
patents. National legislation on the protection of patents will be
enacted in 1999. As noted above Kazakhstan already has joined various
international agreements that apply to industrial property rights.
Further regulations on integrated circuits and a law on commercial
secrets are expected to be enacted in 1999.
Novelty, inventive activity, and industrial
application are considered in determining whether or not an invention is
eligible for protection. An invention is considered novel when it is not
state-of-the-art. Inventive activity is the creative process providing
results that cannot be obtained from state-of-the-art methods by a
person skilled in the art. The patent legislation excludes certain
products such as layout designs and plant variety.
Kazakhstan’s patent registration system works
not on the first-to-invent but rather the first-to-file principle. Thus,
unlike in the United States, the person or company who first files a
patent application is considered the inventor and will be the owner of
the future patent. Complete registration can take about two years.
As for trade and service marks, they may be
registered with the National Patent Office for a period of 10 years and
may be renewed every 10 years. Only visible signs may be registered. If
a trademark is similar enough to another that it could cause confusion,
the trademark may not be registered. It usually takes one and a half
years to complete a trademark registration. Licensing agreements
regarding trademarks must also be registered.
The Criminal Code enacted in 1998 covers
violations of industrial property rights. Damages can be recovered
through a civil trial. However both criminal and civil cases are almost
non-existent because they are time-consuming, expensive and almost
always unproductive. The Civil Code includes substantial fines for
violation of industrial property rights. However, these remedies too are
more theoretical than practical.
In addition to the Criminal and Civil Codes,
administrative procedures are in place for declaring a patent null or
canceling a patent or trademark under certain circumstances. To make a
complaint, the complainant must file an application at the National
Patent Office in Almaty. The application must be in writing and signed
by the interested party, and it must contain the applicant’s and the
opposing party’s name and address, as well as the purpose of the
application and facts and provisions of the law.
Piracy in Kazakhstan
has undertaken significant steps toward improving its IPR regime.
However, the process of establishing respect for intellectual property
rights is very slow. It is still common to watch Western movies on
Kazakhstani television long before they are released for the U.S.
audiences. Many television stations broadcast U.S. and Western programs
via satellite. Illegal distribution of pirated videocassettes comes
mostly from Russian intermediaries, who are also the main source of
May 1, 1998 the USTR included Kazakhstan on its Special 301 Watch List
because Kazakhstan had not met its bilateral intellectual property
rights obligations. In announcing this determination, the USTR declared
“Kazakhstan has several remaining steps to take to fulfill the IPR commitments under our bilateral trade agreement. It needs to adhere to the Berne Convention for the protection of Literary and Artistic Works and the Geneva Phonograms Convention, provide full-term retroactive protection for US copyrights, specify protection for sound recordings under the copyright law, license television, broadcasting stations, and increase copyright enforcement. Piracy of all copyrighted products is reportedly widespread and there have been no known enforcement measures to date. We look to Kazakhstan to begin significant enforcement measures to reduce piracy rates, to complete its bilateral IPR obligations, and to move toward making its IPR regime consistent with the TRIPS Agreement before it accedes to the WTO”.
 Keneth Ho, Problem
of Piracy in Hong-Kong and China, http://www.houston.com.hk/