BULGARIA 301 REVIEW: RECOMMEND WATCH LIST

UNCLAS SECTION 01 OF 03 SOFIA 000251 SIPDIS DEPT FOR EB/IPE CLACROSSE DEPT PLEASE PASS TO USTR JCHOE-GROVES, LERRION, DOC JBOGER DOC PLEASE PASS TO USPTO JURBAN, AND LOC STEPP SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON ETRD KIPR BU REF: A) State 14937; B) Sofia 85; C) Sofia 103; D) 05 Sofia 1546; E) 05 Sofia 1916 SUBJECT: BULGARIA 301 REVIEW: RECOMMEND WATCH LIST ¶1. (SBU) SUMMARY: In response to increased pressure from the EU and our Embassy, the Bulgarian government has made progress this year towards improving the Intellectual Property (IP) regime. Ambassador Beyrle has consistently raised the issue with responsible ministers and MPs, and highlighted the importance of IP protection in his public speeches. The high-level inter-ministerial IP group, new IP legislation, somewhat better enforcement and the government's leadership in putting together an action plan incorporating a public awareness campaign all point to increased GOB interest in adequate IP protection. The lack of sustained, consistent enforcement, insufficient government resources, internet piracy, and the need for improved legislation remain weak spots. Bulgaria still has a long road ahead to reduce piracy to "acceptable Western- levels", but seems on the right path for the first time since being put on the Watch List in 2004. END SUMMARY ¶2. (SBU) RECOMMENDATION: Keep Bulgaria on the Special 301 Watch List in 2006. Talking points should acknowledge progress and urge continued efforts to reduce piracy. We also request the USG and private sector provide training and technical assistance resources to help improve the situation. NEW IP LEGISLATION: RIGHT DIRECTION, NEEDS TWEAKING -------------- -------------- ¶3. (SBU) The Bulgarian Socialist Party (BSP)-led parliament approved in September 2005 the long awaited Optical Disk Media Law. The law mandates SID codes on blank optical discs (OD) produced in Bulgaria and further strengthens the import/export regime for raw materials and equipment involved in the ODM production. The GOB recognizes that the law could be better and plans to review its implementation and enforcement by June 2006. In the meantime, the government is in the process of selecting an external consultant to review the law. We will consult with industry - which is unsure of whether or when to re-enter the legislative debate - on proposed changes. Bulgaria is currently focused on EU accession, so review will not happen until after the EU's spring monitoring report. ¶4. (U) Parliament passed on November 25, 2005, amendments to the 1993 Law on Copyrights and Related Rights, which aligns Bulgaria's copyright legislation with European requirements. Although Bulgaria is not yet in the EU, the amendments implement two EU copyright directives (2001 and 2004) - which we understand puts Bulgaria ahead of some long- standing EU Member States. ¶5. (U) Patent law - There are new amendments to the Patent Law envisaged, related to strengthening the administrative process of patent infringement. INTER-AGENCY COUNCIL: GOOD START - LET'S SEE SOME RESULTS -------------- -------------- ¶6. (SBU) The GOB's formation of a high-level inter-agency intellectual property body - the Council of Intellectual Property Protection (Council) is a welcome move and directly answers EU and USG requests (ref. B and E.) There are several authorities involved in enforcing existing laws (Ministries of Interior, Economy and Energy, Culture, Customs Agency, Border Police, Prosecutor, etc.),which operate at different levels to combat the distribution of pirate optical disc media. The goal of the Council is to improve coordination among responsible agencies. This is no small feat in a government where computer systems - where available - are not able to communicate with each other. ¶7. (SBU) The Council has developed an action plan to strengthen the IP regime. This plan was developed in response to USG and EU concerns, and incorporates a number of items that we have advocated for, including improving interagency IP coordination with senior level support, passage and implementation of the copyright law, stronger enforcement and measures to stop counterfeiting, increasing training, and launching an IP public awareness campaign. ENFORCEMENT: NOT GREAT, BUT IMPROVING -------------- ¶8. (SBU) It is hard to judge whether street-level sales of pirated goods (optical disk media, counterfeit distilled SOFIA 00000251 002 OF 003 spirits and other manufactured goods) have been affected by greater enforcement (Refs C and D.) On the one hand, the number of raids seems to have increased, as have the amounts of seized goods - although this could be improved further through better cooperation with industry. On the other hand, the ODM industry shows higher rates of piracy in 2005 than in 2004. Prosecutions and convictions have been non- existent. However, there are some bright spots: the Council approved on February 3, 2006, amendments to the Penal Code criminalizing the possession of counterfeit products. In addition, a new Prosecutor General will take office February 22 who promises to be much more interested and aggressive in pursuing intellectual property violations. ¶9. (SBU) Deputy Minister of Culture Ina Kileva told us that after comprehensive inspections of 83,000-85,000 illegal ODM seized in Bulgaria last year, none have come from licensed Bulgarian plants. She attributed any pirated ODM to small- scale "garage" burners and foreign imports. While IFPI agrees that there is no evidence of substantial piracy from the plants here since late 2004 or early 2005, it remains unclear whether the government has succeeded in suppressing piracy permanently, or mothballed it until after the EU peer review and Special 301 processes are complete. PLANS FOR INCREASED PUBLIC AWARENESS -------------- ¶10. (U) The Bulgarian government is increasingly responding to our ideas to launch a public awareness campaign on IPR, and for ministers to take a public role. The Minister of Culture, Stefan Danailov, set up in November 2005 a working group tasked with planning and launching an extensive campaign. The GOB's upcoming measures include: -- concerts and an information campaign in Sofia and Ruse to highlight the cost of IP violations, coinciding with the international IP day of April 26; and -- two seminars in June to share best IP practices with Bulgarian experts. USG INVOLVEMENT -------------- ¶11. (U) Along with committing itself to this extensive public awareness campaign, the GOB expressed strong interest in receiving adequate training and technical assistance. Our main challenge will be to ensure that the increased interest in fixing the IP regime does not disappear due to lack of resources. For this, the Embassy team working on IP issues recommends increased USG engagement with GOB on IP issues, and more assistance and funding. The USG should play a role as sponsor of the public awareness campaign or a select portion of it, and we plan on submitting an overall request to fund projects to address IP deficiencies in Bulgaria (septel). --We nominated a well-regarded judge of the Sofia City Court for the USPTO's Academy on the Enforcement of Intellectual Property Rights in March; --Embassy and USAID plan a three-day in-country training for judges and others on enforcing IP rights, for which we are seeking additional funding; --We have requested funding for the Department of Justice (DOJ) to train prosecutors here in spring or summer to enhance their capabilities in dealing with IPR crime; --DOJ is also putting together a training program for police scheduled for June 2006, for which funding seems available; --We formed a multi-agency task force to work with U.S. companies and industry associations to address specific IPR violations and seek public and private solutions to the overall problem. We also recommend holding regional workshops to include Bulgaria, Greece, Turkey, Romania, Serbia and Macedonia to address cross-border sales of pirated goods, and to examine how Bulgaria's and Romania's entry into the EU will help or hinder law enforcement efforts. COMMENT -------------- SOFIA 00000251 003 OF 003 ¶12. (SBU) Bulgaria's senior leadership understands that this year is a crucial one for Bulgaria in the IP field - both for the EU process and our own 301. They also see that a strong regime will lead to increased investment in the IT and other sectors. We are cautiously optimistic that Bulgaria is moving in the right direction. For that reason we do not recommend Priority Watch List as we did last year. The current government seems to have more political will on this issue than the last one, and is at least "talking the talk" and taking small steps forward. We will continue to pressure the GOB to move faster in making Bulgaria an IP- friendly country, and encourage them to stay committed to this issue after the EU Accession process is complete. BEYRLE