KOSOVO'S IPR REGIME STILL WEAK BUT FUTURE PROGRESS

C O N F I D E N T I A L SECTION 01 OF 03 PRISTINA 000258

SIPDIS

SIPDIS

DEPT FOR EUR/SCE, EB/IFD/OIA, EB/CBA AND EB/TPP/IPE
DEPT PLEASE PASS TO OPIC
AID FOR EE/ECA, EE/DGSR
NSC FOR BRAUN
USDOC FOR CEEBIC, 4232/ITA/MAC/EUR/OEERIS/CEED/SSAVICH
TREASURY FOR EUROPE AND EURASIA

E.O. 12958: DECL: 04/03/2017
TAGS: KIPR ECON PREL YI
SUBJECT: KOSOVO'S IPR REGIME STILL WEAK BUT FUTURE PROGRESS
POSSIBLE

REF: 06 PRISTINA 186

Classified By: Chief of Mission Tina Kaidanow for reasons 1.4 (B) and (
D).

SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY


1. (SBU) Summary. Kosovo's intellectual property rights
(IPR) regime remains a bad mix of little institutional IPR
experience, a struggling economy and high unemployment,
limited interest from UNMIK and the Provisional Institutions
of Self-Government (PISG) in implementing laws, and weak
enforcement and judiciary infrastructures that lack capacity
and expertise to effectively combat the problem. USOP has
taken the lead to improve IPR by providing technical
assistance, pushing UNMIK and the PISG to pass and promulgate
needed legislation, offering U.S. Patent and Trademark Office
(USPTO) training to experts and Kosovo Police Service (KPS)
officers who specialize in financial crimes, and persuading
the private sector also to provide training and technical
assistance. Our efforts are having some success, but
political will from UNMIK, PISG and private industry to take
important steps to improve Kosovo's IPR regime is crucial for
success in the short and long run. End Summary.

DEVELOPING KOSOVO'S IPR INFRASTRUCTURE IMPROVING BUT STILL A
WORK IN PROGRESS


2. (SBU) In our last cable on Kosovo's intellectual property
rights regime (reftel),we reported a situation that needed
significant improvement. While there has been some progress
in improving Kosovo's IPR regime in a year, much more work
needs to be done. The Ministry of Trade and Industry, as
well as private sector organizations such as the American
Chamber of Commerce in Kosovo and the Kosovo Chamber of
Commerce, believe that there are more stores, outlets and
street vendors selling illegally produced or pirated
clothing, digital and analog goods, books, video games,
movies, digital video diskettes (DVDs) and many other
products in comparison to last year. In addition, more
Kosovar companies are illegally using trademarks of
internationally-known companies for their advertisements,
products and stores now compared to last year.


3. (SBU) USAID has provided technical assistance to help
Kosovo draft legislation on trademarks, copyright and
industrial design. USOP was successful in lobbying the PISG
to amend the patent law in order to establish the Patent and
Trademark Office under the Ministry of Trade and Industry
(MTI). Kosovo has undertaken a comprehensive effort to
develop new IPR laws, but certain statutes, such as the
industrial property law, are old Yugoslav laws that are still
on the books. Isa Dukaj, Head of the MTI's Department of
Industry, said the PISG lacks the capacity and experience to
implement the laws and deal with IPR issues. He noted that
having the appropriate IPR legislation is a very important
first step, but implementing the laws is the challenge for
the PISG.

ECONOMIC AND UNEMPLOYMENT WOES EXACERBATE IPR VIOLATIONS


4. (SBU) Kosovo's struggling economy and high unemployment
rate contribute to gross IPR violations. The lack of
productivity of the Kosovo economy and unemployment,
estimated at 44 percent, compel many Kosovars to do whatever
is necessary to make money. MTI officials believe that many
Kosovars are involved in the trading aspects of selling
illegally produced goods, noting that the number of street
vendors and stores selling these pirated products openly and
unabashedly throughout Kosovo has increased. Some American,
foreign and local companies said that when the street vendors
and stores are confronted with information that many of the
products they sell are illegal and violate another firm's
IPR, the Kosovars profess innocence of any wrongdoing and
argue that they are only trying to make money to feed their
families.

UNMIK AND PISG SHOW LIMITED INTEREST IN PROTECTING IPR...


PRISTINA 00000258 002 OF 003



5. (C) UNMIK officials agree with IPR protection, but they
deny responsibility for dealing with this issue, asserting
that it is a responsibility of the Kosovo government. The
PISG appears to understand the importance of IPR protection
as it aspires to attract greater foreign and local investment
in Kosovo. However, this comprehension often does not
produce tangible results. While one aspect of this problem
is that the MTI and Kosovo Police Service lack the technical
expertise to combat these crimes, several foreign and local
companies believe that the biggest obstacle to IPR protection
is that some Assembly members do not want to draft or enact
legislation that would hurt the business interests of their
associates or supporters involved in these activities.

...WHICH WEAKENS KOSOVO'S ENFORCEMENT INFRASTRUCTURE


6. (SBU) Private industry representatives say that stringent,
sustainable IPR enforcement along with the threat of stiff
fines and penalties such as jail time are two sorely needed
mechanisms for protecting IPR and combating
illegally-produced products and pirated goods in Kosovo.
They emphasize that IPR enforcement measures, fines and
penalties must be contained in the law to be effective.
American, foreign and local companies have complained that
Kosovo's IPR enforcement regime is especially weak given the
limited interest from UNMIK and the PISG to take serious
action to protect intellectual property, as well as the lack
of laws which would provide the legal mechanisms to do so.
In addition, most judges and public prosecutors who
specialize in commercial law do not have the technical
expertise to adjudicate or prosecute IPR cases. Dukaj noted
that in 2006 there were no prosecutions for IPR violations.

AMERICAN COMPANIES NEGATIVELY AFFECTED BY WEAK IPR
INFRASTRUCTURE


7. (SBU) Trademark and copyright infringement are the biggest
concerns for U.S. companies and local firms which distribute
American products. Coca-Cola, Microsoft, ConocoPhillps and
Red Bull are some of the American companies that have
complained about trademark and copyright infringement. Post
is actively working with UNMIK Office of Legal Affairs, UNMIK
Civilian Police, the Criminal Investigation Division, the
Public Prosecutor's Office and special economic and
investigative units in the KPS to address their concerns.
Foreign firms have also complained to their liaison offices
about trademark infringement, copyright issues and industrial
design protection.

USOP TAKING LEAD TO IMPROVE KOSOVO'S IPR REGIME


8. (SBU) In addition to providing training, technical
assistance and applying pressure to improve IPR legislation,
USOP has actively taken the lead to improve enforcement by
sending two patent and trademark experts, and three Kosovo
Police Service (KPS) officers who specialize in financial
crimes, to USPTO training on three different occasions in

2006. We have also encouraged the private sector to give
training and technical assistance to the PISG and KPS to
resolve crimes and commercial disputes. USOP has persuaded
the American Chamber of Commerce in Kosovo, Kosovo Chamber of
Commerce, and individual companies like Coca-Cola and
Microsoft of the importance of providing training and
technical assistance to improve Kosovo's IPR infrastructure
to protect their interests. In 2006, the American Chamber of
Commerce in Kosovo held two seminars with UNMIK and PISG
officials on ways to improve IPR protection. The Kosovo
Chamber of Commerce plans to hold a seminar later this year
to raise IPR awareness among its members and PISG officials.
Coca-Cola has met with UNMIK Civilian Police and KPS
officials to explore areas of cooperation to improve
investigative techniques and enforcement mechanisms.
Microsoft is working with the PISG to sign licensing
agreements with all of the ministries and agencies to prevent
copyright infringement.

COMMENT: POLITICAL WILL CRUCIAL TO IMPROVE IPR PROTECTION


9. (C) The political will from UNMIK and PISG to take serious

PRISTINA 00000258 003 OF 003


steps in drafting and passing legislation, as well as
establishing the appropriate judicial and law enforcement
frameworks to implement measures with stiff fines and
penalties, are crucial to improving Kosovo's IPR regime over
the short and long run. Private industry also needs to
continue to provide the necessary resources, technical
assistance and training to help improve IPR protection.
Business organizations like the American Chamber of Commerce
in Kosovo and the Kosovo Chamber of Commerce are beginning to
understand that IPR protection is a systemic problem
throughout Kosovo that will take time to resolve. Private
industry has been actively engaging UNMIK and PISG to
recognize that IPR protection is an essential ingredient to
stimulating economic growth and foreign investment.
KAIDANOW