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