CYPRUS: EMBASSY-SPONSORED IPR WORKSHOP BRINGS GOVERNMENT

UNCLAS NICOSIA 000322

SIPDIS

SENSITIVE

SIPDIS

DEPT FOR EB/IPC AND EUR/SE

DEPT PLS PASS TO USTR, USPTO AND LOC

E.O. 12958: N/A
TAGS: KIPR ECON ETRD EUN CY
SUBJECT: CYPRUS: EMBASSY-SPONSORED IPR WORKSHOP BRINGS GOVERNMENT
AND PRIVATE SECTOR TOGETHER TO FIGHT PIRACY

REFS: A) NICOSIA 153, B) 06 NICOSIA 245, C) 06 NICOSIA 755, D) 06

NICOSIA 1370, E) 05 NICOSIA 1842 F) 04 NICOSIA 643

(U) This cable is sensitive but unclassified. Please protect
accordingly.


1. (U) Summary: On March 29, over 60 GoC officials and Cypriot
business representatives discussed ways to improve enforcement of
intellectual property rights (IPR) at an all-day seminar organized
by the Economic/Commercial section and the Cyprus American Business
Association. International speakers included representatives of the
music, software and textbook industries from Rome, Beirut and
Athens, respectively. Other participants represented the Cypriot
merchandise and entertainment industry, as well as officials from
the Police, Customs, Ministry of Commerce and Parliament. The
seminar resulted in specific recommendations on changes to GoC
legislation and ways to increase cooperation between the Cypriot
Police, Customs and the Consumer Protection Service. Septel will
discus a separate seminar held March 30 in the Turkish Cypriot
community. End summary.

Workshop Brings Public and Private Sectors Together
-------------- --------------

2. (U) On March 29, the Economic/Commercial section and the Cyprus
American Business Association organized a one-day workshop on IPR
issues in the Government-controlled area of Cyprus. The seminar
attracted over 60 participants from the Police, Customs, Ministry of
Commerce, Parliament, and private sector. The workshop offered a
forum for constructive dialog between government authorities and
industry representatives, and helped identify practical ways to
improve IPR enforcement. The workshop also generated some positive
publicity and highlighted the fact that piracy hurts Cypriot
companies and the Cypriot consumer. The Embassy co-organized
similar seminars in November 2005 (ref e) and April 2004 (Ref f).


3. (U) The U.S. Ambassador, the President of the Cyprus Chamber of
Commerce and Industry Manthos Mavrommatis, and Cyprus's Official
Receiver and Registrar Spyros Kokkinos all delivered opening remarks
highlighting the benefits of strong IPR enforcement. This was
followed by presentations from the Federazione Industria Musicala
Italiana (FIMI),the Business Software Alliance (BSA),the
international textbook industry, the Cypriot Police, the Cypriot
Customs and a very lively and constructive general discussion.


4. (SBU) Participants reported that despite significant progress on
IPR enforcement in Cyprus -- including introduction of EU-compatible
legislation, an excellent track record from Customs, and increased
Police raids -- problems remained. The level of piracy of CD, DVDs,
and software, while declining, remained significant. Cyprus was
unprepared to deal with internet piracy which would grow as a
problem as more Cypriots got access to broadband services. FIMI
representative Luca Vespignani noted that, on average, 20 percent of
those who have a broadband connection worldwide are involved in
illegal file sharing.


5. (SBU) Wendy Copage of Pearson Education reported that in the U.S.
and UK for every 100 students, publishers sell on average 70 new
textbooks to students and another five to ten to the library. In
Cyprus, however, publishers were selling only 10 new books to
students and none to the library as copy shops were openly selling
black and white xeroxed versions of these books for only a fraction
of the price. Although the pirates acted openly, and it was easy
to see that the books were counterfeit, prosecution of textbook
pirates was rare. Head of the Police IPR unit Nicos Chrystostomou
promised to look into this problem.


6. (SBU) A common theme of the discussion was frustration with the
lenient penalties imposed by judges. While legislation gave judges
the right to impose significant fines and even imprisonment, judges
generally imposed only symbolic fines, which pirates could easily
write off as the price of doing business. These low fines were
countering whatever deterrent effect the increased police and
customs raids were having. Copage noted that if even one judge
imposed a custodial sentence on one pirate -- even just for a few
days -- the deterrent effect would be enormous.

Police Action
--------------

7. (SBU) The police spearheads the GOC's IPR enforcement efforts. A
recent amendment to Cyprus' main anti-piracy legislation (Law 59 of
1976) on July 28, 2006, helps the police in its anti piracy efforts.
The new law harmonizes Cyprus fully with EU directives 2001/84/EC
and 2004/48/EC and provides deterrent penalties of up to four years
in prison and/or a fine of up to CP 35,000 (USD 77,000).


8. (SBU) Under Cypriot legislation, the burden of proof lies with
the legitimate rights owner to prove their ownership of each art
work fixed on a particular CD or DVD. Similarly, the Cypriot law
does not allow the sampling of evidence. In cases involving the
seizure of hundreds or thousands of pirated items (particularly, CDs
and DVDs),the authorities' task of establishing authenticity
remains very arduous as every single track must be checked and
documented.


9. (SBU) To address this problem, the Cyprus Police relies
increasingly on close cooperation with local IPR experts from the
private sector, including the International Federation of the
Phonographic Industry (IFPI),the Performing Rights Society (PRS),
and the Cyprus Federation Against Copyright Theft (CYFACT). To help
with this, IFPI Greece hired in 2006 a full time local Cypriot
representative. To date, the private sector has also conducted IPR
training for over 256 police officers. In fact, IPR training is now
mandatory for all new police cadets.


10. (SBU) Since the establishment of the Police's Unit for
Countering IPR Theft and Illegal Gambling in October 2004, the
Police have filed 299 reports and seized 320,538 exhibits as
evidence.

Customs Action
--------------

11. (SBU) Iacovos Antoniou of the Department of Customs noted that
adoption of a new Customs law (Law 133(I) of 2006, which came into
effect on October 20, 2006) had strengthened Customs' role in
fighting IPR piracy. This new law harmonizes Cyprus fully with EU
regulations 1383/2003 and 1891/2004 by amending earlier Cypriot
legislation. These amendments provide steeper and recurring fines
for pirates and introduce a "name and shame" policy for pirates in
the Official Gazette. The new law also enables Customs to seize
imported counterfeit products from the domestic market including
shops or warehouses. Previously, Customs could only seize items at
the point of entry into the country. Cyprus is only the second EU
country that has given Customs such increased authority. Customs,
however, has no authority to seize pirated items produced
domestically.


12. (SBU) Customs has put the new law to good use, engaging in more
than 15 raids and significant seizures of pirated material since
October 2006. These cases are currently pending before the court.
During 2006, Customs engaged in 114 piracy raids, seizing thousands
of pirated articles such as clothes, shoes, bags, cosmetics, toys,
DVDs, CDs, cigarettes, pills, watches, electric appliances and
mobile accessories bearing well known trade marks.

Reversal of Burden of Proof
--------------

13. (SBU) In July 2006, the House Legal Affairs Committee failed to
act on Police-initiated amendments that would have allowed sampling
of evidence and reversed the burden of proof in many IPR cases
(i.e., defendants would be required to demonstrate that their goods
were legitimate rather than the Police having to show they were
counterfeit -- ref D). As a result of the Parliament's inaction,
the amendment is still in limbo. Workshop participants agreed to
lobby the House Legal Affairs Committee to support these amendments
so as to greatly strengthen the Police's ability to control DVD, CD,
and other types of piracy.

Consumer Protection Service Woefully Undermanned
-------------- ---

14. (SBU) While most participants recognized the significant
contributions of Customs and the Police, several participants noted
the continued poor performance on IPR of the Commerce Ministry's

Consumer Protection Service (CPU). The Cypriot Trading Standards
Law gives the CPS a significant role in battling locally-produced
pirated items, which by law Cypriot customs cannot touch.
Nevertheless, due to other competing priorities and lack of staff,
the CPS has chosen not to make IPR a priority. CPU Officer
Theodoros Constantinou defended this decision noting that the
Commerce Ministry needed around 300 people to fulfill all its
responsibilities. Of the 188 positions that it in theory is
authorized to have, 84 positions are currently vacant due to the
government-wide hiring freeze.


15. (SBU) Discussion then turned to how the CPS's IPR
responsibilities under the Trading Standards Law could be
transferred to the Police and Customs or even the private sector.
One Paphos Policeman noted his office had tried consulting the CPS
to verify that suspected goods were counterfeit only to have to wait
over a year for any response. Customs noted that it worked directly
with the private sector to determine the authenticity of goods. It
had developed a searchable database of all goods subject to piracy
in Cyprus over the past seven years, with the contact info of the
local representative of the appropriate rights holders. Customs
offered to make this available to both the Police and the CPS. The
Police also offered to help the CPS learn why a judge recently
refused to hear its testimony. The three services also promised to
explore whether the CPS would be able to appoint the Police or
Customs to testify on its behalf or undertake investigations under
the CPS's purview.

Piracy Across Green Line
--------------

16. (SBU) Leading IPR lawyer Achilleas Demetriades and several other
participants noted the growing problem of counterfeit materials

entering the government-controlled area from the Turkish Cypriot
Community. Senior Customs Officer Iacovos Antoniou noted that
beginning in August 2004, the EU Green Line Regulation allowed any
individual to cross the Green Line carrying up to Euro 135 of goods
purchased on the other side. Since then, Customs had identified
hundreds of cases of individuals entering the government-controlled
area with counterfeit goods. Customs Officer Mari
Charalambous-Kliriotou alleged that several people have in effect
made smuggling cigarettes and pirated goods their career. A single
person can carry three pairs of fake Levis jeans and 10 fake Dior
blouses and still fall within the Euro 135 personal allowance.
Furthermore, if the goods are made in the Turkish Cypriot community
and not imported -- as many counterfeit clothing items are --
Customs has no legal right to confiscate these goods, as this falls
to the undermanned Consumer Protection Unit.


17. (SBU) Several of the participants suggested that Cyprus should
lobby the EU to lower the Euro 135 limit in an effort to reduce the
flow of pirated items from the north. We pushed back noting that
this would have the adverse effect of also limiting legitimate
trade. Supporting increased trade between the two communities was a
declared goal of both the GoC and the international community.
Other solutions needed to be found including increased education
within the Turkish Cypriot Community and encouraging the European
Commission to include IPR as a priority within its Euro 259 million
assistance program. Nevertheless, it is clear that unless the
Turkish Cypriot authorities take steps to address the lack of IPR
protection in the north, Greek Cypriot pressure to close the Green
Line to trade is likely to continue to increase.

Achievements
--------------

18. (SBU) The seminar:

-- fostered increased cooperation between the public and private
sectors and among the three government agencies primarily
responsible for IPR enforcement. For example, the Police often
waited months for guidance from the severely undermanned Consumer
Protection Unit on whether a good was counterfeit. To solve this,
Customs will now make available to the Police its database of local
representatives of trademark holders, enabling the Police to
immediately turn to the public sector for help in identifying
suspected pirated goods.

-- identified recommended changes to existing IPR legislation
including allowing sampling of evidence and reversing the burden of
proof and urged all interested parties to lobby for their adoption.
These changes were presented to the Parliament by the Police based
upon a similar recommendation that emerged from the November 2005
seminar. The Parliament, however, has yet to act on the Police's
proposal. A key parliamentarian present pledged to work for the
bill's passage.

-- spurred discussions between the undermanned Consumer Protection
Service and the Police and Customs on how the CPS may be able to
transfer some of its IPR responsibilities to the other institutions.


-- highlighted the problem of relatively weak penalties being
imposed by judges and stressed the need to better educate the
judiciary and the general public on the negative effects of IPR
piracy on society as a whole.

-- raised public consciousness of IPR enforcement issues both among
the seminar participants and the wider society through media
coverage of the event.

-- highlighted the problem of textbook piracy; the police promised
to look into this issue;

-- highlighted the growing threat of internet piracy as more
Cypriots get broadband internet access.

SCHLICHER