ESTONIA: IPR WORKSHOP REVEALS SHORTCOMINGS AND

UNCLAS SECTION 01 OF 03 TALLINN 000066 SIPDIS STATE FOR EB/CBA, EB/TPP/IPE AND EUR/NB COMMERCE PLEASE PASS USPTO/OFFICE OF ENFORCEMENT HELSINKI FOR ECON SIPDIS E.O. 12958: N/A TAGS: ECON EFIN KIPR EN SUBJECT: ESTONIA: IPR WORKSHOP REVEALS SHORTCOMINGS AND FORGES TIES REF 06 TALLINN 424 ¶1. (U) Summary: On January 17-18, Embassy Tallinn and the U.S. Patent and Trademark Office (USPTO) held a workshop focusing on copyright infringement in the digital environment. The event was a rare coming together of 60 Estonian police, prosecutors, judges, government officials, law professors and industry representatives. The group discussed enforcement problems resulting from limits on investigative tools, the prosecutorial practice of dropping cases for lack of 'public interest', and the small size of the market. Panelists shared valuable best practices and collaborated on techniques for pursuing internet-based IPR criminals. The event received local TV and press coverage, and participants gave high marks to the interactive case study and mock trial. End Summary. ¶2. (U) At a two-day workshop titled "Criminal Enforcement of Intellectual Property Rights", sixty Estonian police officers, prosecutors, and judges met for the first time together to discuss and learn about IPR-related crimes and procedures. The Enforcement Division of the U.S. Patent & Trademark Office (USPTO) sponsored the event. The workshop focused on the digital environment, since internet piracy is a new and constantly evolving challenge to IPR enforcement in countries with well-developed IT sectors, such as Estonia. This event was a follow-up to Embassy Tallinn's international IPR conference in April 2006, titled "Copyright Infringement in the Digital Environment" (Ref A). USPTO, the FBI, DOJ, and the U.S. District Court for Southern New York sent panelists, as did the International Federation of the Phonographic Industry (IFPI),the Business Software Alliance (BSA),the Estonian Organization for Copyright Protection (EOCP),and the Patent Office of the United Kingdom. The key judge, prosecutor, and investigator from a recent high-profile Finnish case discussed "Finreactor", Finland's largest peer-to-peer (P2P) piracy case, in which twenty-two people were convicted and ordered to pay damages of EUR 420,000 to music, film, and computer game companies. ¶3. (U) During introductory remarks, the Estonian Police Commissioner and the Deputy Under-Secretary on Criminal Policy for the Ministry of Justice both stressed the economic, cultural, and security reasons for engaging in the fight against piracy. In their characterization, piracy not only costs industry billions each year, but also represents lost jobs and lost tax revenues. Increasingly, they saw piracy as a source of income for organized crime syndicates, since the illegal copying and sale of IPR material is far safer and more lucrative than drugs or other crimes. Robert Stoll of the USPTO noted that emerging artists -- and local cultures -- are hurt disproportionately by internet piracy because they, unlike industry mega-stars, cannot afford to continue performing, if pirates steal what should have been legitimate sales. Police find common ground; different techniques -------------- -- ¶4. (U) The discussion panel on "Investigating IPR Crimes" generated the most interest from conference participants. All parties agreed that the hardest aspect of investigating illegal P2P networks is pinpointing the identity and location of a given internet provider (IP) address. Differences arose, however, when comparing the measures that law enforcement agencies can take. Robert Herzog of the FBI said that giving false information, using an alias, pretending to be a file sharer or a hacker, using informants, even making illegal purchases in the pursuit of an investigation are all permitted in the U.S. - under prosecutorial oversight. However, Estonian investigators said they cannot do such things without a court order from a pre-trial judge. According to Finnish prosecutor Antti Pihlajamaki, the police did not use undercover identities in the Finreactor case; one of the detectives used his own nickname in chat rooms to collect evidence, and did not provide false information. While investigators in the Finnish case managed to gather sufficient evidence without going undercover, Estonian police and industry groups say the requirement to obtain such pre-trial court orders does pose an obstacle to law enforcement here - especially given the relative inexperience of judges in handling digital IPR cases. A Question of Priorities -------------- TALLINN 00000066 002 OF 003 ¶5. (U) A bigger obstacle to the criminal enforcement of IPR is Article 202 of the Estonian Code of Criminal Procedure. This 'discretionary clause' allows prosecutors to drop cases they deem lacking sufficient public interest. According to local industry groups, this article is applied extensively in IPR cases, which are often dropped even when the industry brings evidence of a violation to law enforcement. When the IFPI panelist asked for an explanation of why prosecutors choose to drop IPR cases under this article, one responded that this is at their discretion and not for public discussion. Prosecutors in the audience referred to criminal cases as an "extraordinary measure" and recommended that industry use civil courts instead. U.S. panelists noted that although 95% of IPR infringement cases in the U.S. are handled in civil court, it is important to utilize criminal prosecution occasionally - especially in cases of high- profile or repeat offenders - to send a message to would-be IP pirates. ¶6. (U) During a panel on "The view from private industry", the problems of small markets came up. The panel noted, the major record and movie industry groups worldwide (IFPI, MPAA and trademark representatives) are less motivated to put resources into Estonia to combat piracy more aggressively. Eva Tibar-Suvalav, representing Nike, said that many companies are reluctant to invest in combating counterfeit goods, because the cost of doing so is often greater than the losses due to such trademark infringements. Nike, she said, is one of the few exceptions, and as a result it is virtually impossible to find fake Nike products in Estonia, yet counterfeits of other sportswear brands are still available. Peter Scott of IFPI offered their highly sophisticated forensic DVD analyses lab in London as a service to law enforcement. Privately, however, he told us that IFPI has had to cut funding to the EOCP - the only anti-piracy organization in Estonia. Mr. Scott also described a novel enforcement approach being used by IFPI to go after one of the largest online digital piracy groups in Russia - follow the money. IFPI has obtained the cooperation of Visa, MasterCard and American Express to block transfers of funds into the bank accounts of the Russian website. Panelists observed, however, that those infringing IPR law in Estonia, are more often individual end-users, less likely to attract the resources of larger industry groups. ¶7. (U) The Judges' panel with U.S. District Judge Lewis Kaplan's presentation on the U.S. system was one of the highlights of the workshop, and revealed another key difference between the two legal systems: sentencing guidelines. In Estonian courts, sentencing occurs simultaneous with the announcement of the verdict and is based on the Estonian penal code. Participants were surprised to learn that U.S. judges are constrained by federal guidelines, which stipulate sentencing based on the specific circumstances of the crime brought into evidence. The result is that the U.S. system gives more leeway to prosecutors, while in the Estonian and Finnish system, judges have more discretion in the final outcome of the case. Conference participants considered the subsequent interactive case study and mock trial to be very practical, as very few digital IPR cases in Estonia actually reach the trial and verdict stage. The mock prosecution and defense gave near Oscar-winning performances during the trial, which the panel of Estonian, Finnish, and U.S. judges ended with a unanimous guilty verdict. ¶8. (U) Media coverage of the event raised awareness of the pervasiveness of internet piracy in this otherwise tech- savvy country. USPTO's Robert Stoll gave a 30-minute live interview on the popular Estonian morning program "Terevisioon", which was rebroadcast several times over the next few days. The Russian-language newspaper "Molodjozh Estonii" and Russian-language TV evening news also covered the workshop, and the Estonian-language paper "Postimees" ran an op-ed by the Charge d'affaires on IPR protection the following week. ¶9. (U) Comment: The two-day USPTO workshop spurred greater understanding both by law enforcement and by industry of the challenges they each face, and the stakes involved, in digital IPR cases. Further attention to IPR enforcement by local authorities is all the more important, because major international industry groups do not see enough incentive to step into such small markets to combat piracy. Further, TALLINN 00000066 003 OF 003 the structure of the Estonian legal system makes it even more important for judges to have a clear understanding of IPR enforcement. Based on the turnout and high level of interest in the USPTO workshop, together with recent AmCham seminars on IPR (for both teachers and small businesses), we see progress on increasing awareness and compliance in Estonia with international IPR standards. There is still a long way to go to bring down the high rates of digital piracy, but the new working-level relationships and experience coming out of this workshop will further the cause of IPR enforcement. End comment. ¶10. (U) This cable was cleared by USPTO. GOLDSTEIN