EU PATENT BREAKTHROUGH DURING SWEDISH PRESIDENCY AND

UNCLAS SECTION 01 OF 03 STOCKHOLM 000776

STATE FOR JOELLEN URBAN

STATE PASS TO USTR FOR DAVID WEINER AND KIRA ALVAREZ

SIPDIS

SENSITIVE PLEASE PROTECT

TAGS: KIPR EINT ETRD ECON PGOV SW
SUBJECT: EU PATENT BREAKTHROUGH DURING SWEDISH PRESIDENCY AND
GENERAL IPR/INTERNET PIRACY UPDATE

Ref: A) STOCKHOLM 736, B) STOCKHOLM 733, B) STOCKHOLM 676

STOCKHOLM 00000776 001.2 OF 003



1. (U) Summary: The EU Competitiveness Council, chaired by Swedish
Trade Minister Ewa Bjorling, managed to broker a deal after over 40
years of efforts to agree on a unified EU patent system. Swedish
Minister for Communications, Esa Torstensson discussed Swedish
concerns about the ongoing ACTA negations at a meeting at USTR.
Sweden is in the process of recruiting a National Coordinator within
the Swedish Police, who will coordinate IPR related investigations.
This will greatly facilitate the work for Sweden's two specialist
prosecutors. Furthermore, the Police authorities plan to have
completed the recruitment of the 15 investigative officials during
the first half of 2010. Our industry contacts tell us that this is
the key issue going forward -- far more important than IPRED.
Notwithstanding, the IRPED-legislation (implementation of the EU
Enforcement Directive) has spurred a 40 percent increase in DVD
sales of newly released movies since the law entered into effect on
April 1, 2009. End summary.

EU Patent breakthrough
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2. (U) On December 4 the EU Competitiveness Council battled toward
a so-called 'general approach' on a future patent system, together
with an agreement on the basis of a draft regulation for European
Union patents. The issue has bogged down the European Commission
and the Council for over 40 years. Today, the cost of getting an
EU-wide patent is eleven times that of getting the same protection
in the U.S. The Council conclusions also contain the main elements
of a single European Patent Court that will try cases on both the EU
patent and existing European patents. In today's system, patent
processes for one and the same invention must be conducted
separately in each Member State. The establishment of a single
court could mean annual savings of up to USD 42 billion for European
companies.


3. (U) Leading the objections to the Swedish EU Presidency's
proposal for a general approach was Denmark. The Danes, though,
finally withdrew their legalistic objections after it became clear
that changes to the Swedish proposal would not be acceptable. The
Swedish 'general approach' on the EU patent regulation means a real
breakthrough. The all important issue of translation will now be
left for agreement at a "later" date.


4. (U) The agreement paves the way for further discussion, under
Spanish and other Presidencies, towards a future patent system.
This would be based on two main pillars. Firstly, a unified patent
litigation system with exclusive jurisdiction for civil litigation
related to patent infringements and validity of EU and European
patents. There would be a court of first instance comprised of a
central division as well as local and regional divisions (in member
states). There would also be a court of appeal.


5. (U) Comment. This is a major accomplishment of the Swedish
Presidency. It was the top EU Presidency priority of Trade Minister
Bjorling. The issue has been blocked for over 40 years. Sweden
made a serious effort to break the deadlock during its EU Presidency
in 2001. Although the tricky language question remains, it is
likely that it will be possible to solve that piece separately.
This breakthrough on a European patent is a welcome addition to the
Swedish list of accomplishments during the Presidency, which
includes the Lisbon treaty, the future leadership, climate
financing, and the Stockholm Program. End comment.

ACTA
--------------

6. (U) Even though Asa Torstensson's Ministry, the Ministry of
Enterprise, Energy, and Communication has no ACTA negotiations
mandate; she raised the issue of openness and the ACTA during her
visit to the United States. She publicly summarized her trip as
follows: "I was invited by Peter Cowhey (USTR) to describe the
experience of the telecom-package, and the debate and discussion
that followed. I also described how a similar debate is now gaining
force, as we discuss the ACTA texts -- without even having seen
them. That is why openness for the duration of the discussions is
so important." Torstensson further said she had explained to
Cowhey that it will not be possible to reach ACTA conclusions which
go beyond the scope of the telecom package. "I explained the
complexity of the issue of streamlining efforts on the telecom
market, and the balance between regulations that ensure internet
users' interests. I also said that the telecom package has meant
reinforcements of the rights of the internet users," Torstensson
told reporters. She also told Swedish reporters that she understood
the U.S. position that negotiations must be kept secret and that she
felt that Cowhey understood and respected her position as well. The
Swedish Justice Ministry has the lead on the ACTA negotiations, and
ACTA was not the reason for Torstensson's visit but she still
believes that "it is important to have as open negotiations as

STOCKHOLM 00000776 002.2 OF 003


possible. We then avoid speculations on what the texts include or
involve. It is beneficial to all parties if negotiations can take
place openly, as we then can remove our focus from issues which are
not part of the ACTA."

Sweden continues to strengthen IPR Enforcement structures
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7. (SBU) Justice Ministry contacts informally told us about an
upcoming change of the organization for the two specialist
prosecutors with national IPR competence. The two will work under
the International Prosecutors' Chamber at the Prosecutor General's
office, together with the Specialist Unit for Corruption issues and
the Internal Controls Unit. This organizational change is much
welcomed by the rights-holders organizations. Furthermore, Swedish
police are in the final stages of recruiting a National Coordinator,
who will be responsible for channeling and prioritizing IPR related
investigations. This will have a great impact on the effectiveness
of the prosecutors. Another key part of the puzzle is the
recruitment of additional investigative officials. The Swedes have
told as that they intend to have 15 dedicated investigative
officials in place by the end of the first half of 2010. A close
contact at the Anti-Piracy Bureau told us that "this is all that
matters now, IPRED and its effects are nothing compared to this."

IPRED legislation works
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8. (U) The Sodertorns District Court decided on December 4 that
ISP Telia is obliged to hand over the identity of the customer that
has been operating the website Swetorrent where thousands of IPR
protected works have been made available (illegally) to
approximately 20,000 users. A number of Swedish movie corporations
have, with the help of The Swedish Anti- Piracy bureau, requested
that Telia hand over information about the identity of the persons
behind the IP number which operates the Swetorrent site. Swedish
Anti-Piracy Bureau has previously warned the website operator but
the operator continued its operation. "It is no longer possible to
protect illegal activity behind an IP number. Today's decision
shows that it is the owner of the copyright protected material who
will be protected rather than the perpetrator," says Sara Lindback,
Legal Counsel at the Swedish Anti Piracy Bureau, following the
decision.


91. (U) This is the second District Court ruling where ISPs have
been forced to handover information on IP users. The previous
decision was turned over on appeal and is currently appealed to the
Swedish Supreme Court, which has ordered that the ISP is not allowed
to destroy information related to the suspected IP number.

IPRED legislation effects felt
--------------

10. (U) As previously reported, the IPRED legislation may have
caused ISPs to remove IP numbers sooner rather than later, but there
have also been benefits. In Sweden sales of newly released DVDs
have increased by 40 percent since the IPRED legislation went into
effect on April 1, 2009. According to the owner of the legal
downloading site for movies, Film2home, downloads of movies have
increased six-fold.


11. (U) Although 40 percent is a huge number, the increase in
sales might not be entirely a result of IPRED regulations. The new
movie "Men that Hate Women" have sold in 300 000, which is unusually
high for any newly released movie in Sweden.


12. (U) The Music Business is also experiencing an increase in
sales; 18 percent during the first nine months of 2009. The sale of
hard copies increased by 9 percent whereas digital sales increased
by 80 percent. During 2008 music sales fell by 7 percent.


13. (U) Other IPR news in brief

--Portlane tracker still up

Stockholm District Court decided not to order Internet Service
Provider (ISP) Portlane to remove its tracker pending a legal
hearing. "To already prior to the legal hearing order the removal
of a tracker would create a too great burden on ISPs," Jonas
Forzelius (legal counsel for Portlane) explained following the
decision.

-- Voddler gets competition as another free streaming movie site is
launched

As previously reported, Voddler has been well received in Sweden and
internet users are lining up to get access. However, their instant
success as a result of being the only service provider that provides
movies without a cost may be threatened. Another Entertainment
Service Provider, HDMT.net, also providing streamed movies without a

STOCKHOLM 00000776 003.2 OF 003


cost was recently launched. The site collects and compiles movies
and series which are already available online, and stream them over
their services. The legality of the service has been questioned.

BARZUN