Identifier
Created
Classification
Origin
06WARSAW280
2006-02-22 12:51:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Warsaw
Cable title:  

POLAND: Embassy Warsaw Special 301 Input

Tags:  ETRD KIPR PL 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 03 WARSAW 000280 

SIPDIS

SENSITIVE

STATE FOR EUR/NCE/MSESSUMS
STATE PASS USTR FOR DONNELLY/ERRION
COMMERCE FOR 4232/ITA/MAC/EUR/OECA/MROGERS

REF: (A) 2005 Warsaw 01869 (B) 2005 Warsaw 02210 (C) 2005
Warsaw 02385 (D) 2005 Warsaw 03022 (E) 2005 Warsaw 03267 (F)
2005 Warsaw 03361 (G) 2005 Warsaw 03411 (H) 2005 Warsaw
03451 (I) 2005 Warsaw 03780 (J) Warsaw 0068 (K) 27JAN06
Birdsey-Burgess/Rogers Email (L) 2005 Warsaw 3593

E.O. 12958: N/A
TAGS: ETRD KIPR PL
SUBJECT: POLAND: Embassy Warsaw Special 301 Input

-----------------------------
Slow Progress, New Government
-----------------------------

UNCLAS SECTION 01 OF 03 WARSAW 000280

SIPDIS

SENSITIVE

STATE FOR EUR/NCE/MSESSUMS
STATE PASS USTR FOR DONNELLY/ERRION
COMMERCE FOR 4232/ITA/MAC/EUR/OECA/MROGERS

REF: (A) 2005 Warsaw 01869 (B) 2005 Warsaw 02210 (C) 2005
Warsaw 02385 (D) 2005 Warsaw 03022 (E) 2005 Warsaw 03267 (F)
2005 Warsaw 03361 (G) 2005 Warsaw 03411 (H) 2005 Warsaw
03451 (I) 2005 Warsaw 03780 (J) Warsaw 0068 (K) 27JAN06
Birdsey-Burgess/Rogers Email (L) 2005 Warsaw 3593

E.O. 12958: N/A
TAGS: ETRD KIPR PL
SUBJECT: POLAND: Embassy Warsaw Special 301 Input

--------------
Slow Progress, New Government
--------------


1. (SBU) Despite lingering problems in enforcement and,
particularly, in judicial adjudication of optical disc (OD)
piracy cases, there has been slow, but nonetheless steady,
progress in Poland's handling of IPR violations, warranting
maintenance of Poland's position on the Watch List. And
while problems related to market access for pharmaceutical
firms continue unabated, at this time we have no new
evidence of specific IPR violations related to data
exclusivity. That said, the legacy of problems dating back
to poorly-enforced data exclusivity regulations continues to
pinch the revenues of innovative firms, especially when
combined with non-IPR related problems such as lack of
access to the public health system drug reimbursement list.
U.S. firms also point out post-accession additions to the so-
called "ghost list" of market approved drugs, though not
actually available, as they can be used to establish
reimbursement prices well below that of the existing
innovative drug.

--------------
Optical Disc Progress
--------------


2. (SBU) Secretary Gutierrez praised Poland's anti-piracy
efforts and progress despite lingering problems in some
areas (Ref K). Persistent efforts to encourage Poland's law
enforcement to be more active, particularly at bazaars along
the German border (Refs D, G, I) paid off last year not only
with an increase in raids on pirates. Significantly, these
efforts also provided the foundation for an industry
initiative that brought legal experts from other EU
countries to Poland, sensitizing the judiciary in south
western Poland to the criminal nature of OD piracy.


3. (SBU) The December conference in Wroclaw, coordinated by
the local Polish affiliate of the International Federation
of the Phonographic Industry (IFPI) was noteworthy for
several reasons, but mostly because it was a shining example
of industry-government cooperation. It was this type of
cooperative effort that the Polish government highlighted in

its anti-piracy strategy (Ref D) released last spring. The
increase in cooperation is evident from statistics of
seizures of pirated goods.

--------------
Statistics
--------------


4. (U) Poland has made great strides in optical disk
seizures over the past year starting in calendar year 2005.
Compared to the previous year, the number of total cases
increased from 1208 to 1221. Regions showing significant
improvement indicated by an increase in the number of cases
from 2004 to 2005 include: Lubuskie, Malopolskie,
Swietokrzyskie, Zacholdniopomorskie and Warszawa. The most
impressive growth took place in the Warszawa and Malopolskie
regions with an increase of 84 and 43 cases respectively
when compared to 2004 data. In descending order, Polish
authorities seized the largest number of foreign CDs,
totaling 233,873 followed by CDR (95,853),MP3 (76,803),CD
polish (60,179),DVDs (22,036),foreign cassettes (2,453),
Polish cassettes (832) and CDRW (766).


5. (U) When analyzing the data, general trends emerge. For
example, more CDs than cassettes were seized and more
optical disks with foreign materials were seized when
compared to purely Polish material. With regard to specific
regions, Warszawa seized the largest number of foreign CDs
(68,725) and Polish CDs (20,098) with the Malopolskie region
coming in second with 17,411 Polish CD seizures. The most
pirated DVDs were found in the Malopolskie region (8433)
with Warszawa coming in a distant second with 5550 DVDs
seized in 2005. Seizures of cassettes are much lower than
CDs, DVDs and MP3 materials due to improvements in
technology. The largest number of seizures of Polish
cassettes, foreign cassettes and MP3 pirated material took
place in the Mazowieckie region: 215, 929, and 22,611
respectively. Lastly, the largest number of CDR seizures
took place in the Zachodniopomorskie region with 23,332. Of
note, aside from CDRW seizures in the Pomorskie and
Dolnoslaskie region with 753 and 13 respectively, no other
region seized any pirated CDRW materials. In discussions
last year with Wroclaw police officials, they noted that
college students burning CDRWs for profit is a particular
problem in their area. The CDRW seizures in Dolnoslaskie
appear to support their claims.

--------------
But Not All Is Rosy . . .
--------------


6. (SBU) Despite the evident progress, there are still
several reasons why Poland should be maintained on the Watch
List.

- Since the departure from the Ministry of Culture of a key
contact active in anti-piracy efforts, and the relatively
quick dismissal of his successor, it has been increasingly
difficult to find someone who will take "ownership" of the
piracy issue in this key government office.

- Related to this point, key elements pertaining to awarding
damages of the EU Enforcement Directive are apparently being
weakened in legislation currently under consideration.

- Although retail sales in the Warsaw Stadium have
decreased, evidence indicates that the Stadium continues to
serve as a "wholesale" distribution site.

- The judicial process, already slow and cumbersome, is
backlogged with cases, and there appears to be limited
interest in addressing some of the more egregious causes of
prosecutorial sloth (such as procedural issues related to
expert testimony, see Ref I). It should be noted that
Poland's judicial system is equally inefficient in dealing
with non-IPR commercial disputes.

- IFPI notes that Poland's production capacity has grown to
775 million units. The Embassy has visited the largest
producer of CDs and DVDs in Poland (the Thomson plant
outside Warsaw, which produces - for export -- OD media
almost exclusively for major western firms) and is less
concerned, given the current lack of evidence, with gross
production capacity figures. We believe the real concern is
the "missing" production line from Wroclaw, which somehow
vanished from police storage as reported last spring.

--------------
Next Steps for OD
--------------


7. (SBU) In discussions with visiting MPA representatives,
we outlined what we believe to be the most efficacious
course of action in dealing with outstanding piracy issues.
A stronger focus on legislative fixes to evidentiary
requirements, an emphasis on stronger criminal penalties,
and a strengthening, rather than dilution, of legislation
when implementing EU directives are the most salient points.
Further cooperation with industry (see Ref D) and the
judiciary will, we believe, support these efforts most
effectively.

--------------
Pharmaceuticals
--------------


8. (SBU) More thorny are the issues facing the
pharmaceutical industry. The Polish government has been
less than aggressive in protecting intellectual property
(read data exclusivity) in the past; however, now we are
dealing with the legacy of the ghost of the data exclusivity
past, with no strong evidence of new violations of TRIPs
obligations being brought forth. It is understandable that
the innovative drug industry is frustrated with its lack of
market access, but we believe the best way to assist the
industry is to focus on tangible issues we can attack now,
rather than go through the repetitive and less effective
process of reminding the Poles of their international
obligations (Ref J).


9. (SBU) As Secretary Gutierrez noted in his discussions
with both industry representatives and Health Minister
Religa, the biggest obstacle for innovative firms is lack of
access to the public health system drug reimbursement list.
Attacking the Poles on older cases related to data
exclusivity deficiencies will not address this problem.

--------------
The Issues
--------------


10. (SBU) As noted, the lack of access to the reimbursement
list means that innovative drugs are paid for by the Polish
health care consumer 100 percent out of pocket. Although,
by our count, four new molecules were added to the
reimbursement list last year, these were the first additions
to the list in seven years. With the lack of innovation
represented in the reimbursed Polish pharmaceutical market,
it is at the same time astounding to realize that Poles pay
more for prescription medicines than any other EU country.


11. (SBU) In addition, the still unresolved Customs and
Margins case (see Refs A,L) creates tremendous uncertainty
for innovative firms, most of which import their products.
Additional troubling calls from the Health Ministry for cost
of production data (a complete non-starter for most of
innovative firms) raises the spectre of a new rash of
problems with data exclusivity, given Poland's problematic
track record of protecting data in the 1990s.

--------------
And Where We Go From Here . . .
--------------


12. (SBU) Nonetheless, these problems have less to do with
strict IPR-related issues than they do with tremendous
market access obstacles. As noted in Ref L, we believe the
best way to address these issues is with increased dialogue
with Ministry of Health officials, which now seems to be a
real possibility.


13. (SBU) In discussions with Secretary Gutierrez, Minister
Religa offered to have the Health Ministry engage in
dialogue with the innovative drug industry. To that end,
the Embassy is working with the Pharmaceutical Committee of
the AmCham to invite Religa to the March 2-3 meeting in
Warsaw of the chief executives of major innovative firms.
The Ambassador is conveying directly the importance of the
meeting to the Minister.


14. (SBU) In any event, we hope to establish an
"institutionalized dialogue," perhaps on a monthly basis,
between industry and the Ministry. The receptivity of the
Minister to transparency and dialogue during the Gutierrez
visit is something we believe should be pounced on. At the
same time, we believe maintaining Poland on the Watch List
will provide us with leverage, should problems related to
cost of production data move forward. Keeping our powder
dry and testing the Ministry's willingness to engage in
fruitful discussions is, we believe, the proper course of
action.