BULGARIA 2006 INVESTMENT CLIMATE STATEMENT.

UNCLAS SOFIA 000090 SIPDIS SIPDIS STATE FOR EB/IFD/OIA AND USTR TREASURY FOR OASIA USDOC FOR 4232/ITA/MAC/EUR/OEERIS/SSAVICH E.O. 12958: N/A TAGS: EINV EFIN ELAB ETRD KTDB OPIC USTR BU SUBJECT: BULGARIA 2006 INVESTMENT CLIMATE STATEMENT. PART 1 OF 2 Ref: 05 STATE 202943 ¶1. Bulgaria - 2006 Investment Climate Statement. ¶A. OPENNESS TO FOREIGN INVESTMENT Bulgaria has a liberal foreign investment regime and attracting foreign investment, especially American, is one of the new administration's top priorities. The government is focused on developing promising sectors of the economy for foreign investment, including energy, tourism, information technology, transportation, telecommunications, agriculture and consumer goods (food & beverage and healthcare). Bulgaria provides considerable incentives for job creation. Many municipalities are prepared to grant concessions or other favorable treatment for significant investments. Bulgaria has a well-educated workforce, low labor costs, and its geographic position places it at the crossroads of Europe, the Middle East, and the CIS. Bulgaria joined NATO in April 2004 and completed EU accession negotiations in June 2004. The EU Accession Treaty was signed on April 25, 2005, allowing Bulgaria to join in 2007, but a "safeguard clause" could allow the EU to delay Bulgaria's entry by a year. Investment Trends and Policies -------------- Despite the many problems that remain in Bulgaria, the country is heading in the right direction -- in large part due to the EU Accession process, which is the government's number one priority. The pace of EU reforms suffered during the summer due to protracted negotiations over forming a new government, but the coalition has been working overtime to pass EU-related legislation. The new Socialist-led government recognizes that foreign investment is essential to the future of Bulgaria and has sought ways to reassure investors of its prudent economic policies. Prime Minister Stanishev, who could not deliver on many of his party's generous election promises, has placed a special emphasis on maintaining the key elements of the previous government's economic policy, which hinge on adhering to the Currency Board Arrangement and conservative fiscal policy. Bulgaria's relations with the International Monetary Fund (IMF) are good, and are often described as a success story. The precautionary Stand-by Arrangement, which was negotiated in July 2004, expires in September 2006 and is designed to be phased out shortly before Bulgaria joins the EU. Continuing economic progress and political stability have enhanced Bulgaria's ability to attract respected international investors. The Bulgaria Investment Agency (BIA) estimates FDI of USD 2.6 billion for 2005 thanks to the expansion of existing foreign investment as well as the higher number of green-field investment projects. New foreign direct investment (FDI) in the period of January through October 2005 increased by five percent--to USD 1.730 billion--despite the election related halt in the privatization process. With more than 10 first class investment certificates under the investment promotion framework, BIA recognizes 2005 as "the year of green-field investment projects." It is a positive sign that the new Socialist government finalized on December 7, 2005, the agreement with the U.S. company AES to construct the Maritsa East 1 (ME1) project, a new 670 MW lignite based power plant. With a total value of USD 1.4 billion, the project represents the biggest ever green- field investment in Bulgaria and largest green-field investment in Southeast Europe for 2005. The Investment Promotion Act stipulates equal treatment of foreign and domestic investors. Bulgaria's investment promotion framework creates conditions for improved administrative services and includes an investment incentive package. The law encourages implementation of investment projects over a period of up to three years. The law explicitly recognizes intellectual property and securities as a foreign investment. Two leading international rating agencies assigned first ever investment grade to Bulgaria in 2004, reflecting the country's positive economic prospects and prudent fiscal policies. In 2005, the two rating agencies upgraded Bulgaria's rating due to falling public debt, continued fiscal prudence and the upcoming EU accession. Common Forms of Investment -------------- The most common type of organization for foreign investors is a limited liability company. Other typical forms are joint stock companies, joint enterprises, business associations, general and limited partnerships, and sole proprietorships. The main controlling bodies of law are: the 1991 Commercial Code, which regulates commercial and company law, including the creation and rights of legal entities, and the 1951 Law on Obligations and Contracts, which regulates civil transactions. These laws are deemed generally adequate and neither limits foreign participation in legal entities. The 2003 Law on Special Purpose Investment Companies allows for public investment companies (SPIC) in real estate and receivables. Since a SPIC is considered a pass-through structure, at least 90 percent of its net income must be distributed to shareholders, who are taxed on the dividends received. Prospective U.S. investors should consult appropriate legal counsel for up-to-date legal information and conduct due diligence before making any obligations. Investment Barriers -------------- Among the problems encountered by foreign investors in Bulgaria are: government bureaucracy; poor infrastructure; frequent changes in the legal framework; low domestic purchasing power; a protracted privatization process; poor health care and corruption. In addition, a weak judicial system limits investor confidence in the courts' ability to enforce ownership and shareholders rights, contracts, and intellectual property rights. The constitutional prohibition against direct ownership of land by foreign persons remains in force, however, there are no restrictions against acquisition of land by locally registered companies with majority foreign participation, and creation of such a company is a relatively simple process. Once Bulgaria joins the EU, all EU citizens and entities will be allowed to acquire property; all other foreigners must continue to form a local corporation. Privatization -------------- The Privatization Agency (PA) administers the privatization of all state-owned companies. Foreign companies, including state-owned ones, may purchase Bulgarian state-owned firms. The government's stated privatization goals are to have transparent, quick, and effective privatization procedures, providing for equal treatment of all investors. The program is intended to make the economy more efficient by divesting state- owned enterprises and to cover the current account deficit with privatization revenues. The failure to complete a single major privatization transaction in 2005, however, underscores the government's inability to attract respected foreign investors though privatization and to finalize already negotiated deals. The ambitious 2005 privatization program envisioned the sale of the remaining 46 state- owned enterprises (SOEs) for the equivalent of USD 300 million, including the Navigation Maritime Bulgare, the national carrier (Bulgaria Air),Boyana Film Studio, the three thermal power-plants, the tobacco monopoly and some arm dealers. The Post-privatization Control Agency, which oversees the implementation of privatization contracts, attempts to ensure that non-price privatization commitments (employee retention, technology transfer, environmental liability and investment). Concessions -------------- Under the 1995 Law on Concessions, the state is authorized, on the basis of a concession agreement, to grant private investors a partial monopoly in activities in thirteen sectors normally reserved for the central and/or local governments. These include the construction of roads, ports and airports, power generation and transmission, mining, petroleum exploration/drilling, telecommunications, forests and parks, beaches, and nuclear installations. In order to streamline the concession procedure, the government launched a National Concessions Register at the end of ¶2005. The register is in line with the EU requirements, and provides detailed information about the projects, including concessionaire's duties and responsibilities in implementing the contract. Concessions are awarded on the basis of a tender and are issued for up to 35 years. They can be extended, but shall not exceed 50 years in total. In a new tender, however, the original concession holder can again be granted the concession under certain circumstances. The Concessions Law permits "build- operate-transfer" deals, giving priority for mineral exploitation to the holders of exploration licenses, and reconciles conflicting procedures for privatization and concession. Since 1998, Parliament has passed legislation granting concessions in telecommunications, energy, mining, waters, ports, airports, roads, and railways. ¶B. CONVERSION AND TRANSFER POLICIES Bulgaria replaced much of its outdated and fragmented foreign currency legislation in 1999 and liberalized current international transactions in accordance with IMF Article VIII obligations. Under 2003 amendments to the 1999 Foreign Currency Act anyone may take up to BGN 25,000 or its foreign exchange equivalent out of the country without documentation. However, the export of between BGN 8,000 and BGN 25,000 or its foreign exchange equivalent must be declared at customs. Export of amounts larger than BGN 25,000 must be accompanied by a declaration about the source of these funds and supported by documents certifying that the person does not owe taxes. No tax certificate is required for foreigners exporting the cash equivalent of BGN 25,000 or greater provided the amount is equal to the amount declared (or less) when imported. The import of more than BGN 8,000 or its foreign exchange equivalent must be declared at customs. The law also stipulates that payments abroad may be executed only through bank transfers. Transfers over BGN 25,000 for current international payments (imports of goods and services, transportation, interest and principal payments, insurance, training, medical treatment, and other purposes defined in Bulgarian regulations) must be supported by documentation showing the need and purpose of such payments. ¶C. EXPROPRIATION AND COMPENSATION According to Article 17 of the Bulgarian Constitution, private real property is protected by law. Depending upon the purpose, expropriation actions may be undertaken by the Council of Ministers or the regional Governor, provided that the owner is adequately compensated. Owners must be compensated in kind with nearby property of equal value at current prices. Monetary compensation is also permitted with the consent of the property's owner. Expropriation actions can be appealed directly to the Supreme Court on the basis of the expropriation action, the property appraisal, or the method of compensation. In its Bilateral Investment Treaty (BIT) with the U.S., Bulgaria committed itself to international arbitration in the event of expropriation and other investment disputes. ¶D. DISPUTE SETTLEMENT The Judicial System -------------- Bulgaria's 1991 Constitution serves as the foundation of the legal system and creates an independent judicial branch. In 2002, the Bulgarian Parliament passed a series of amendments to the Judicial Systems Act aimed at improving the quality of the judiciary, increasing the efficacy of the court system, and preventing corruption in the justice system. The Constitutional Court declared most of the amendments unconstitutional in December 2002. As a result, judicial reform in Bulgaria has been delayed and many key issues remain unaddressed. Further constitutional changes, passed in 2003, limited the immunity of the magistrates, extended the period for getting tenure, and introduced a 5-year term in office for judicial heads. The March 2004 amendments to the Judicial Systems Act were intended to increase further the efficiency of the court system and help prevent judicial corruption. Nonetheless, corruption remains a serious problem. Other problems include lack of transparent and neutral standards for assigning cases, poor coordination between magistrates, corruption, and cumbersome procedures. There are three levels of courts. 117 regional courts exercise jurisdiction over administrative, civil, and criminal cases. Above them, 29 district courts (including the Sofia City Court) have original jurisdiction in civil cases where claims exceed 10,000 leva, in serious criminal cases, and in other cases as provided by law. The district courts are also courts of appellate review for regional court decisions. The five appellate courts may review the decisions of the district courts. On the highest level are the Supreme Court of Cassation and the Supreme Administrative Court. On issues of law, the Supreme Court of Cassation has appellate jurisdiction over all civil cases involving claims over 5,000 leva and criminal cases. The Supreme Administrative Court rules on the legality of acts by the state administration including Council of Ministers and the ministries. The Supreme Courts hear cases in three-judge panels, whose decisions may be appealed to a five-judge panel of the same court. Decisions by the five-judge panels are final and binding. The Constitutional Court is not integrated into the rest of the judiciary. It issues final interpretations of the constitution, rules on constitutional challenges to laws and acts, rules on international agreements prior to Parliamentary ratification, and reviews domestic laws to determine their consistency with international legal norms. While the Constitutional court does not rule ex officio, 1/5 of the MPs (48), the President, the Government, the Chief Prosecutor and the two Supreme courts can refer matters to it for review. Bulgarian law provides for jurors only in criminal cases. Under Bulgarian procedural law, first-instance civil cases are brought before one judge in the regional or the district court, depending on the case. Administrative sanctions may be appealed to the regional courts and one judge reviews such appeals. Administrative acts are subject to administrative and court appeal. Execution of Judgments -------------- To execute judgments, a final ruling must be obtained so that the court can order money damages (which then requires further complicated procedures by the payee) or an equitable remedy. The court of first instance must be petitioned for a writ of execution (based on the judgment),which enables seizure of assets. If the party is seeking a remedy in equity, the final judgment must be brought before an executive judge. In 2002, a number of amendments were made to the Code of Civil Procedure to close loopholes, shorten deadlines, and clarify certain provisions. In practice, Bulgarian and foreign observers caution that the execution of judgments remained slow and unpredictable and was prone to corruption and inefficiency in the judicial system. In a continuing effort to address the execution problems, the Bulgarian Parliament passed the Private Enforcement Agents Act in 2005. The new law introduces the profession of private enforcement agents to whom the state delegates the collection of enforceable claims. The law also provides a series of guarantees that the private enforcement agents' performance will be closely supervised. This important development was also recognized by the European Commission's 2005 Comprehensive Monitoring Report, which noted that the new law "should help improving the functioning of the judicial system and in particular the conditions for contract enforcement." Foreign judgments can be executed in Bulgaria. Execution depends on reciprocity, as well as bilateral or multilateral agreements, as determined by an official list maintained by the Ministry of Justice. The U.S. does not currently have reciprocity with Bulgaria, so Bulgarian courts are not obliged to honor decisions of U.S. courts. All foreign judgments are handled by the Sofia City Court, which must determine that the judgment does not violate public decrees, standards, or morals before it can be executed. There are also cases defined by the Civil Procedure Code (certain real estate issues and Bulgarian precedents), in which judgments cannot be executed even if they conform to Bulgarian laws and morals. Bankruptcy -------------- The 1994 Law on Bankruptcy provides for reorganization or rehabilitation of a legal entity, attempts to maximize asset recovery, and provides for fair and equal distribution among all creditors. The law applies to all commercial entities, except public monopolies or state-owned companies established by a special law. Bank bankruptcies are regulated under the Bank Bankruptcy Act, while insurance company failures are regulated by the 1996 Insurance Act. Under Part IV of the Commercial Code, the debtor or creditors can initiate bankruptcy proceedings. The debtor must declare bankruptcy within 15 days of becoming insolvent. Once insolvency is determined, the court appoints an interim trustee to represent and manage the company, take inventory of property and assets, identify and convene the creditors, and develop a recovery plan. At the first meeting of the creditors a trustee is nominated; usually this is just a reaffirmation of the court appointed trustee. Non-performance of a money obligation must be adjudicated (res judicata) before the bankruptcy court can determine whether the debtor is insolvent. Additionally, amendments passed in 2003 add a presumption of insolvency when the debtor has not performed an obligation within 60 days of maturity or when the debtor can only pay the claims of certain creditors. Creditors must declare all debts owed to them within one month of the start of bankruptcy proceedings. The trustee then has seven days to compile a list of debts. A rehabilitation plan or a scheme of distribution (in cases of liquidation) must be proposed no later than the date on which the court approves the list of debts. The court must rule on approval of the plan within seven days. The lack of trained trustees has been a problem in the past. The 2003 amendments provided for examinations for individuals applying to become trustees, but implementation of this requirement is contingent on the adoption by several ministries of a special regulation. The amendments also provide for annual training courses for trustees. The methods of liquidating assets were also revised by the June 2003 amendments. The main objective was to establish a legal framework for selling assets that accounts for the character of bankruptcy proceedings, thus avoiding the need to apply the Civil Procedure Code. The new regime includes rules requiring a greater degree of publicity for asset sales. The amendments limited the rights to appeal judicial decisions made during bankruptcy proceedings. International Arbitration -------------- Pursuant to its Bilateral Investment Treaty (BIT) with the United States, Bulgaria has committed to a range of dispute settlement procedures starting with notification and consultations. Bulgaria accepts binding international arbitration in disputes with foreign investors. There are opportunities for international arbitration in Bulgaria. The Code of Civil Procedure mandates that a foreign court of arbitration is possible only if at least one of the parties has its seat or residence abroad. As a result, foreign-owned, Bulgarian- registered companies having a dispute with a Bulgarian entity can only have arbitration in Bulgaria. However, under the Law on International Commercial Arbitration, the arbitrator himself could be a foreign person. Under the same act, the parties can agree on the language to be used in the arbitration proceedings. The major and most experienced arbitration institution is the Arbitration Court of the Bulgarian Chamber of Commerce and Industry (BCCI). Not all disputes, however, may be resolved through arbitration. Disputes regarding rights over real estate properties in the country or labor disputes can only be heard by the courts. Additionally, Bulgarian courts have exclusive competence over industrial property disputes regarding patents issued in Bulgaria. Bulgaria is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention),which facilitates enforcement of foreign arbitral awards, and is a member of the 1961 European Convention on International Commercial Arbitration. However, having gone through the enforcement proceedings before the Bulgarian courts, the creditor needs then to execute the award using the general framework for execution of judgments in the country, which is inefficient. Bulgaria is also a signatory of the International Center for Settlement of Investment Disputes (ICSID) convention and the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States. Mediation -------------- Businesses wishing to use mediation to solve their disputes in Bulgaria may find it hard to select experienced mediators. This service has just started to develop in the country following the adoption at the end of 2004 of the Mediation Act. BCCI and the American Chamber of Commerce (AmCham) responded promptly by opening commercial mediation centers. The mediators at these centers have been trained with US assistance but at this point lack sufficient experience to be able to provide high quality mediation services. ¶E. PERFORMANCE REQUIREMENTS/INCENTIVES Bulgaria does not impose export performance or local content requirements as a condition for establishing, maintaining, or increasing an investment. The law does not specifically restrict hiring of expatriate personnel, but residence permits are often difficult to obtain. A June 1999 law regulating gambling imposes license requirements on foreigners organizing games of chance. The Bulgaria Investment Agency (BIA) (www.investbg.government.bg),the government's coordinating body for investment, provides information services, individual administrative services and assessment of qualification to receive investment incentives. First-class investments (investments over 70 million BGN, about USD 44 million) are deemed to be priority investment projects. At the request of investors receiving first-class investment certificates, BIA can recommend that the competent authorities grant them free real estate (either state or municipal property). For first-class investments, the Council of Ministers may provide state financing for critical infrastructure deemed necessary for the investment plan's implementation. Additionally, BIA represents first and second-class investors (investments of USD 25-44 million) before all central and territorial executive authorities and the local self-government authorities, and processes all administrative documents. Third-class investors (investments of USD 6-25 million) receive customized information services. The government policy for promotion of investment is not applicable to banks and other financial institutions, insurance companies, investment companies, companies with special investment purpose, pension and health insurance companies, gambling companies, or investments made pursuant to the Privatization Law. The GOB introduced in 2003 tax incentives for investments in regions with high unemployment. VAT exemption on imports for investment projects over 10 million BGN (about USD 6.25 million),to be implemented over a two-year period, was introduced in 2004. ¶F. RIGHT TO PRIVATE OWNERSHIP/ESTABLISHMENT The Constitution states that the Bulgarian economy "shall be based on free economic initiative." Private entities can establish and own business enterprises engaging in any profit-making activities, unless expressly prohibited by law. Bulgaria's Commercial Code guarantees and regulates the free establishment, acquisition, and disposition of private business enterprises. Competitive equality is the standard applied to private enterprises in competition with public enterprises with respect to access to markets, credit, and other business operations, such as licenses and supplies. ¶G. PROTECTION OF PROPERTY RIGHTS Bulgarian law protects the acquisition and disposition of property rights. In practice, the protection of property rights is subject to difficulties of varying degrees. Although Bulgarian IPR legislation is generally adequate, with modern patent and copyright laws and criminal penalties for copyright infringement, industry representatives believe effective IPR protection requires improvements to the legislation, including to the Optical Disc Media (ODM) Legislation, the Penal Code and the Penal Procedure Code. Additionally, the government still lacks sufficient institutional capacity, coordination, and the political will to address effectively major enforcement problems, especially in combating and prosecuting organized crime groups. Many industrial groups currently have intellectual property disputes before the government. In May 2004, Bulgaria was placed on the Special 301 Watch List for the first time in five years. The 2005 US government inter-agency review retained Bulgaria on the Watch List. There has been a steady resurgence of piracy, mainly in the sale of pirated ODM and illegal downloading of copyrighted material over the past few years. The US government has formulated an action plan, which will assist in focusing attention on immediate and effective implementation of the new Optical Disk Media (ODM) Law and the amended Copyrights and Related Rights legislation, enforcement actions and ministerial-level coordination, designing training programs, and improving efforts to address counterfeiting of U.S. spirits and apparel. Bulgaria is a member of the World Intellectual Property Organization (WIPO) and a signatory to key international agreements. Copyrights -------------- Parliament passed on November 25, 2005, amendments to the 1993 Law on Copyrights and Related Rights, which aligns Bulgaria's copyright legislation with the European requirements. In particular, the amendments implement two directives of the EU in the area of copyrights: Directive 2001/84/EC of the European Parliament and of the Council on the resale right for the benefit of the author of an original work of art; and Directive 2004/48/EC of the European Parliament and of the Council on the enforcement of intellectual property right ("the Enforcement Directive"). Also, the amendments will establish the mechanism regulating the administration of the newly-established database and copyright information sharing system sponsored by the EU. The copyright term of protection was extended from 50 to 70 years after the author's death in 2000. The new term of protection is retroactive, i.e., a term of protection that expired at the moment of approval of the amendments is revived within the framework of the 70-year term of protection. For films and other audio- visual works, copyrights are protected during the lives of director, screenplay-writer, cameraman, or the author of dialogue or music, plus 70 years. Other amendments to the law enable copyright owners to file civil claims to suspend the activities of pirates; provide for confiscation of equipment and pirated materials; enhance border control over pirated material; introduce a new neighboring right for film producers. Parliament approved in September 2005 the long awaited Law on Administrative Control over the Manufacture and Distribution of ODM, which now requires SID codes on blank optical discs (OD) produced in Bulgaria and strengthens the import/export regime for raw materials and equipment involved in ODM production. However, the new law does not allow industry representatives or rights holders to participate in inspections and excludes goods in transit from the registration regime. The Copyright Office of the Ministry of Culture is responsible for copyright matters in Bulgaria. While civil law provides remedies for violations, under the Penal Code, copyright infringement is only a misdemeanor, subject to nominal fines. Patents -------------- The Bulgarian patent law has been harmonized with EU law in the areas of application for European patents and utility models. Bulgaria joined the Convention on the Grant of European Patents (European Patent Convention) on July 1, 2002 and has obtained observer status in the Administrative Council of the European Patent Organization. Bulgaria grants the right to exclusive use of inventions and utility models for 20 years and 10 years, respectively, from the dates of patent application filings. Inventions eligible for patent protection must be both new as a result of innovation and have industrial applications. Article 6 lists items not considered inventions and utility models are specifically defined. The independent Patent Office is the competent authority with respect to patent matters. The patent law describes the application procedures and the examination process. Applications are submitted directly to the Patent Office. Compulsory licensing may be ordered under certain conditions: the patent has not been used within four years of filing the patent application or three years from the date of issue; the patent holder is unable to offer justification for not adequately supplying the national market; or, declaration of a national emergency. Patent infringement is punishable by fines of up to 1,000 BGN. Disputes are reviewed by specialized panels convened by the President of the Patent Office and may be appealed to the Sofia City Court within three months of the panel's decision. The 1996 Protection of New Types of Plants and Animal Breeds Act allows for a term of protection of 25 years for annual plants and 30 years for perennial plants and animal breeds, which starts from its date of issuance by the Patent Office. Parliament ratified in 1998 the International Convention for the Protection of New Varieties of Plants (UPOV). Data Exclusivity -------------- Responding to long-standing industry concerns, the GOB included a provision to provide data exclusivity (protection of confidential data submitted to the government to obtain approval to market pharmaceutical products) in its new Drug Law, which took effect in ¶2003. The law, however, links data protection to a valid patent. Trademarks -------------- The 1999 Trademarks and Geographical Indications Act regulates the establishment, use, cession, suspension, renewal and protection of rights of trademarks, collective and certificate marks, and geographic indications in accordance with TRIPs requirements and the government's EU Accession Agreement. The August 2005 amendments to the Law on Trademarks and Geographical indications and the Law on Industrial Design further incorporated TRIPs requirements. Registration is refused, or an existing registered trademark is cancelled, if a trademark constitutes a reproduction or an imitation or if it creates confusion with a well-known trademark, as stipulated by the Paris Convention and the Trademarks and Geographical Indications Act. Applications for registration must be submitted to the Patent Office under specified procedures. Right of priority, with respect to trademarks that do not differ substantially, is given to the application that was filed in compliance with Article 32 first. Right of priority is also established on the basis of a request made in one of the member countries of the Paris Convention or of the World Trade Organization. To exercise the right of priority, the applicant must file a request within six months of the date of original filing. A trademark is normally granted within 12 months of filing a complete application. Refusals can be appealed in the Sofia City Court within three months of notification of the decision. The right of exclusive use of a trademark is granted for ten years from the date of submitting the application. Requests for extension of protection must be filed during the final year of validity, but not less than six months prior to expiration. Protection is terminated if a mark is not used for a five-year period. Trademark infringement is a problem in Bulgaria for many U.S. manufacturers. Its categorization as a misdemeanor, subject to a nominal fine, is not a sufficient deterrent to illegal activities. While more draconian measures are available, such as confiscation or fines of up to 500,000 BGN, they are rarely levied or enforced. U.S. businesses have noted significant difficulties in obtaining relief against trademark infringement. Even if courts understand the law and issue orders, the entities charged with enforcement often cannot be relied upon to carry out the court judgment. Under Bulgarian law, legal entities cannot be held criminally liable. Therefore, the criminal penalties for copyright infringement and willful trademark infringement are limited. In Bulgaria, trademark and service-mark rights and rights to geographic indications are only protected pursuant to registration with the Bulgarian Patent Office or an international registration mentioning Bulgaria; they do not arise simply with "use in commerce" of the mark or indication. Under Bulgarian law, legal entities cannot be held criminally liable. Similarly, criminal penalties for copyright infringement and willful trademark infringement are limited, compared to enforcement mechanisms available under U.S. law. BEYRLE