BULGARIAN REACTION TO IP ACTION PLAN; NEXT STEPS

UNCLAS SECTION 01 OF 03 SOFIA 001916

SIPDIS

SENSITIVE

DEPT FOR EB/IPE JURBAN; SWILSON
DEPT PLEASE PASS USTR LERRION
DOC FOR SSAVICH

E.O. 12958: N/A
TAGS: ECON ETRD KIPR ASEC BU
SUBJECT: BULGARIAN REACTION TO IP ACTION PLAN; NEXT STEPS

REF: A) SECSTATE 183379

B) SOFIA 1546


1. (SBU) SUMMARY: The Bulgarian government's reaction to
our proposed intellectual property (IP) action plan (REF A)
has been generally favorable. More than ever, the GOB
appears eager to demonstrate progress on IP issues largely
because the EU has identified it as a key area of concern.
Despite a string of successful enforcement activities
lately, there still is not adequate high-level political
support for IPR, which is sorely needed to energize
attention to this issue at the working-level. The Embassy's
priority in the coming months will be reinforcing GOB
political will as well as encouraging further enforcement
efforts and formulating training programs for judges,
prosecutors and police. We hope to use the current momentum
in the bilateral relationship, boosted by the recent meeting
between President Bush and President Purvanov, to press for
advances in IPR. We will also stress that improving IPR
will open the door to more US investment. END SUMMARY.

BULGARIAN GOVERNMENT RECEPTIVE TO IP ACTION PLAN
-------------- --------------


2. (U) The Embassy has delivered the proposed IP Action Plan
to a number of ministries both at the senior and working
levels. Ambassador Beyrle shared the Action Plan and
talking points with Minister of Economy and Energy Rumen
Ovcharov. Ovcharov appeared receptive to the plan and
underscored the importance of working together to
successfully fight the piracy of optical disc media (ODM).
The two agreed that experts would meet in the coming months
to discuss specific details and timetables relating to this
cooperation.

3.(U) We also shared the action plan with the Deputy
Ministers of Interior and Culture, and other officials who
work on IPR at the expert level, including the Director for
Registering, Licensing and Control at the Economic Ministry;
and the Director for Copyright and Related Rights at the
Culture Ministry. Overall, our interlocutors expressed
their thanks for the action plan and stated it would be a
useful tool in assisting the Bulgarian government to improve
its IPR regime and enforcement. Most officials, at least in
their rhetoric, pledged support for the overall goals of the
plan.


4. (U) The timing is ripe for advancing IP issues here given
the importance Brussels has placed on it for Bulgaria's EU
accession. In its latest monitoring report on Bulgaria, the
European Commission identified IPR issues as one of five
areas of "serious concern" requiring decisive action before
EU accession. As a result, the GOB appears particularly
focused and possibly more willing to take steps to
strengthen their IP regime. Gergana Tsareva, the Director
for Registering, Licensing and Control at the Economic
Ministry, shared with us a draft of the government's own IP
action plan, which attempts to address many of the EU's
concerns. The Bulgarian plan incorporates a number of U.S.
measures, including improving interagency IP coordination
with senior level support, increasing training and launching
an IP awareness campaign. According to Tsareva, the Council
of Ministers is expected to approve the IPR action plan this
year.

ENFORCEMENT: A BRIGHT SPOT ON THE IPR FRONT
--------------


5. (U) The most encouraging development on the IPR front has
been in enforcement. The Bulgarian police--in conjunction
with local industry representatives--have continued to
conduct a series of raids following the August raid that
dismantled a major IPR bootlegging ring (Ref B). In
September, the police (with the assistance of industry
representatives) initiated a sweep against a number of
retail outlets and warehouses engaged in the distribution of
counterfeit sporting goods on the Black Sea coast and in
Plovdiv. As a result, the police seized about 5,000
counterfeited items bearing various trademarks such as
Adidas, Nike, Puma and Reebok. Thanks to the follow-up
investigation of these cases, the police in October were
able to break up a significant counterfeit operation based
in Plovdiv. The owner of the factory was arrested--the
first arrest for trademark infringement. The police
reportedly are pursuing criminal prosecutions in the case.


6. (U) Also in October the National Service for Combating
Organized Crime (NSCOC) raided a major counterfeit clothing
and sports-shoes warehouse. The police found vast
quantities of fake goods bearing well-known names like
Adidas, Puma, Reebok, Nike, Miss Sixty, Energie and Diesel.
The seized goods were estimated to be worth as much as 1.5
million Bulgarian leva (915,000 USD). The investigation
revealed that the counterfeit products originated in Dubai,
China and Turkey and had been exported to Greece, Macedonia
and Bulgaria, where they were sold in some of the best
retail shops in Sofia. According to police, the bust
represents their biggest clothing counterfeit operation to
date. With an eye towards eventual prosecution, the police
now are trying to collect evidence related to customs and
tax violations.


7. (U) In addition to these operations, which received
extensive media coverage, the head of the Motion Picture
Association, Rozalina Apostolova, also informed us of
another 15 raids and inspections carried out by the police
during September. Through these efforts, the police seized
over 30,000 illegal audio cassettes, CDs, and DVDs as well
as 57 DVD-R burners and CD-R burners. Svetlozar Sokolov,
whose law firm ARSIS represents a number of major
international companies in Bulgaria with IP concerns, also
confirmed that street-level enforcement in Bulgaria has
improved and is not a major area of concern for the industry
at the moment.

COODINATION AND POLITICAL WILL REMAIN A CHALLENGE
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8. (U) Currently, Bulgaria's main vehicle for coordinating
IP actions is an expert-level council chaired by the
Ministry of Culture's Director for Copyright Protection,
Georgi Damyanov. The council is made up of representatives
from NSCOC, the Economic Police, the Customs Agency, the
Ministry of Culture, and the Ministry of Economy. Despite
its interagency membership, the primary function of the
council (which was established by the Minister of Culture in
November 2002) is to help the Ministry of Culture better
perform its tasks related to IP protection, rather than
coordinate the entire government's effort against IPR. As
Damyanov told us the council in its current form is
ineffective and lacks real political support. He, as
director for example, has no real authority to order other
ministries to take action. The council therefore has no
enforcement ability and is little more than a consultative
body of experts.


9. (SBU) Based on pressure from the EU as well as the U.S.,
the GOB is in the process of creating a new interagency IP
body with higher level participation which is meant to
improve cooperation. However, our contacts tell us that the
new body is the primary sticking point preventing approval
of the government's IP action plan. According to Gergana
Tsareva, none of the ministries are willing to take on the

SIPDIS
responsibility of establishing and physically hosting this
new agency. Tsareva confided that she refused to host the
new body, arguing she did not have enough time and staff.
She added that there is little support or interest in such a
body from her immediate supervisor, the Deputy Minister of
Economy, or even Minister of Economy Ovcharov himself.
Other ministries reportedly are saying the same thing.
However, Damyanov told us that the Ministry of Culture will
agree to host the new body if no other ministry is willing
to. The GOB hopes to resolve the issue by the end of
November.

NEXT STEPS FOR ADVANCING THE IP ACTION PLAN
--------------


10. (SBU) The Embassy team working on IPR issues has
identified three general areas we intend to focus on in the
coming months: building greater political will for IP
issues, encouraging the government's enforcement efforts and
designing training programs. Specific steps will include:

--Identifying a minister or two who can give greater
political support to the GOB's interagency group for IPR
issues. We also will try to identify appropriate candidates
for a possible IVP program to see how the USG inter-agency
process works;
--Continuing to pressure the relevant ministries to continue
improved enforcement;
--Drafting proposals for the training of judges, police and
prosecutors. The Pol/Econ section is working with USAID on
a proposal for the training of judges under the World
Learning Group project. Additionally, DOJ is working on
arranging funding for two broad types of training for police
and prosecutors. The plan is for each group to have their
own separate, specifically-tailored workshop followed by a
joint training session;
--Assisting local industry in their plans to launch a public
awareness campaign on IPR. Industry representatives are
planning a free concert and public awareness campaign with
Bulgarian artists to highlight through various media
outlets--television, radio, newspapers and billboards--the
costs of IP violations. The industry has funding for this
effort but inquired about getting additional support from
us, particularly on enlisting the government's backing for
and possible participation in the campaign.


11. (SBU) Comment: The EU's emphasis on improved IPR
compliance has created new opportunities for us to press
this issue. We believe EU pressure along with our campaign
to highlight the positive connection between IPR protection
and increased U.S. investment will keep the Bulgarians
motivated. End Comment.

BEYRLE