2005 SPECIAL 301 REVIEW - BULGARIA

UNCLAS SOFIA 000345

SIPDIS


DEPT FOR EB/IPE SWILSON, JURBAN, EUR/NCE SBRANDON
DEPT PLEASE PASS TO USTR JCHOE-GROVES, LERRION, LOC STEPP
DOC JBOGER, SSAVICH

SENSITIVE

E.O. 12958: N/A
TAGS: ECON ETRD KIPR BU
SUBJECT: 2005 SPECIAL 301 REVIEW - BULGARIA



1. (SBU) SUMMARY: Based on the amount of pirated goods
flowing through Bulgaria and the lack of necessary
government action despite repeated prodding by all levels of
the embassy and industry, we feel that this government lacks
seriousness in addressing intellectual property rights (IPR)
violations.


2. (SBU) RECOMMENDATION: Move Bulgaria up to Priority Watch
List, with a sharply worded warning to improve conditions,
and provide USG and private sector resources to help improve
the situation. END SUMMARY.


3. (SBU) In our opinion the situation of pirated Optical
Disk Media (ODM) and counterfeit spirits has gotten worse in
recent months, and government efforts to improve the
environment are limited. On-the-ground enforcement by
Customs and Tax police seems to be slowly improving, but is
severely limited by lack of resources and training. Because
of loopholes in the law, street vendors do not appear to
fear regular police. Downloading pirated goods off internet
sites continues unimpeded. Prosecutors and judges continue
to fail to punish the most egregious violators of the
existing law, while legislation to improve the regime is
stalled and the government and parliament are pointing
fingers at each other. Overall cooperation between agencies
is virtually non-existent, and the government's overall tone
is more defensive and less responsive than ever. Beyond the
obligatory rhetoric in support of IPR, there is no strong
leadership commitment to address the issue here.


4. (U) Following is our analysis of the key areas of
consideration and suggestions for tackling the problem.

PIRATED GOODS INCREASING IN THE STREETS, HOMES AND CAFES


5. (SBU) It is impossible to quantify the amount of pirated
OPM on the streets, but a walking tour gives the impression
there are more vendors selling greater numbers of pirated
goods without fear of arrest than there have been in
previous years. The increase is most dramatic when compared
to 1999-2000, when the USG dropped Bulgaria from the list
due to its successful measures to shut down IPR crime. Even
the current government privately agrees that organized crime
stands behind the vendors and producers, and is a major area
of concern. Most popular CDs, DVDs, games, and software can
be easily purchased at several spots in the central business
area for low prices. Perhaps more disturbing is the
proliferation of internet cafes where illegal material is
downloaded directly off the internet. This practice is
increasingly happening in homes. Disinterested parties and
industry's forensic evidence also indicate that pirate
facilities are operating once again in Bulgaria. As far as
American spirits are concerned, we can assume that only the
largest international stores are carrying legitimate
bourbon.

GOVERNMENT'S EFFORTS ARE MIXED


6. (SBU) Ironically, the meager efforts to rein in IPR
violations are coming from the working -- rather than the
political -- level of government. The Ministry of Finance's
Customs and Tax Police appear to be slightly more aggressive
in their efforts to identify and seize pirated and smuggled
ODM and counterfeit bottles and molds, but have not
succeeded in stemming their proliferation. Municipal police
and Ministry of Culture inspectors, however, do not seem to
be working sufficiently to enforce the laws -- although the
police have stepped up efforts somewhat against counterfeit
spirits. Neither the Ministries of Economy and Culture, nor
the Parliament is taking the responsibility for pushing the
stalled legislation through.


7. (SBU) The GOB abolished its inter-ministerial cabinet-
level council for IPR issues in 2002, and the replacement,
an expert council headed by the Ministry of Culture, has
proved ineffectual. The lack of overall coordination
between agencies is perhaps the biggest reason piracy has re-
surged in the past 5-6 years. In addition, the Ministries'
failure to engage substantively in response to -- and in
some cases even to respond to -- the Ambassador's letters on
IPR issues indicates to us a lack of seriousness in
addressing the issue.

POLITICAL/STRATEGIC ISSUES


8. (SBU) Bulgaria is a close ally with troops in Iraq and
Afghanistan. The government already feels we do not do
enough to appreciate them, and bumping them up to Priority
Watch list would likely be perceived as a poke in the eye.

SUGGESTIONS FOR USG AND INDUSTRY


9. (U) IIPA and DISCUS make accurate criticisms and very
good recommendations in their reports. We feel that in
order to seriously address the problem here it is important
for industry and the USG to provide more assistance and
funding to help the GOB. Putting Bulgaria on the Watch List
last year for first time in five years did not light a fire
under the GOB, but perhaps a concerted effort by industry
and the USG will improve the situation.

In addition to placing Bulgaria on the Priority Watch List,
we recommend:

--ASSISTANCE IN SETTING UP AN INTER-AGENCY COUNCIL:
Participate at a high-level -- Ambassador and/or Washington
official -- in an EU sponsored seminar in Sofia in April to
improve coordination between the various institutions
(Ministry of Justice, Ministry of Interior, Ministry of
Culture, Customs Agency, Patent Office and industry.) We
could propose and offer to fund the resumption of the inter-
governmental council led by either the Ministry of Interior
or Finance, and provide training in how the U.S. inter-
agency process functions, and how industry plays a role in
the enforcement process;

--TRAINING: for judges, prosecutors, inspectors, police;

--FINANCE/GRANTS: to establish mobile teams, which will
combine officials from the Customs Agency, Ministry of
Culture, Tax Administration and Police;

--TECHNICAL ASSISTANCE: Software and hardware to build a
database for rights registration;

--INTERPOL COOPERATION: Assistance from the USG and
Interpol's newly established counterfeit task force; and

--PUBLIC AWARENESS CAMPAIGN: Public advertising, posters, TV
and radio ads showing how harmful counterfeited products
such as alcohol could be to consumers; how organized crime
benefits from illegal purchases; and how people who purchase
illegal CDs are in effect stealing from up-and-coming
entertainers. Industry could do this easily through public
service messages in coordination with the GOB.


10. (SBU) COMMENT: Bulgarian officials do not give
sufficient priority to resolving IPR violations. In the
context of other economic issues in Bulgaria and the level
of violations in other countries, the government is not
taking important measures to resolve IPR issues. Hopefully,
moving Bulgaria to the Priority Watch List will generate a
change in attitude. END COMMENT