VZCZCXRO6405
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHBM #0136/01 0610911
ZNR UUUUU ZZH
P 020911Z MAR 09
FM AMEMBASSY BUCHAREST
TO RUEHC/SECSTATE WASHDC PRIORITY 9268
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/USDOC WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 04 BUCHAREST 000136 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR/CE ASCHEIBE, EEB/TPP/IPE TMCGOWAN 
DEPT PASS TO USTR JCHOE GROVES 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KIPR RO
SUBJECT: ROMANIA: 2009 SPECIAL 301 REVIEW 
 
REF:  STATE 8410 
 
¶1. (SBU) SUMMARY: In response to reftel, post recommends that 
Romania remain on the Special 301 Watch List for 2009.  Despite a 
decreasing trend in physical optical disc piracy, the growth of 
Internet piracy -- both peer-to-peer file sharing and 
business-to-consumer piracy -- remains a problem.  Romania has an 
adequate legal framework for IPR protection, but enforcement efforts 
must be consolidated.  While there has been increased cooperation 
between enforcement authorities and industry representatives, post 
has yet to witness consistent judicial results.  END SUMMARY. 
 
IPR PROGRESS 
 
¶2. (SBU) Following is a list of positive developments in the field 
of IPR enforcement since last year's Special 301 review: 
 
-- Utilizing EU "Phare" funds, Romania is completing an IT-based 
project to strengthen the institutional capacity of IPR protection. 
The on-line, inter-institutional database was completed in 2008 and 
is scheduled to become operational in early 2009.  Prosecutors, 
police, customs officials and other IPR-related regulatory agencies 
will have access to a shared system to improve coordination and 
efficiency on IPR-related cases.  The EU grant provided the Romanian 
police with extensive equipment (computers, printers, scanners, and 
digital cameras) in order to implement the project.  Additionally, 
in 2008 the EC approved a follow-on grant to continue strengthening 
institutional capacity through the development of this common 
database. 
 
-- In October 2008, Romania signed the Cannes Declaration on 
Anti-Counterfeiting.  Signatories commit to take steps against IPR 
infringement, especially with regard to counterfeited goods, and to 
strengthen cooperation through information exchanges. 
 
-- The Government of Romania (GOR) approved technical norms to 
implement laws protecting industrial designs, utility models and 
patents.  The State Office for Inventions and Trademarks (OSIM) 
began accepting e-filings for patent applications. 
 
-- There has been a steady decrease in the number of pirated optical 
discs sold by street vendors.  This is due both to the fact that 
street vendors are easy targets for the police, and because market 
changes have made it easier and cheaper for end-users to acquire 
products via the Internet.  The number of Internet piracy cases for 
which technical assessments were completed by the Romanian Copyright 
Office (ORDA) and referred to prosecutors increased from one in 2007 
to 36 in 2008. 
 
-- The Association of Producers and Distributors of IT and 
Communication Equipment (APDETIC) reported that in 2008 the Romanian 
enforcement bodies' anti-counterfeiting efforts in hardware 
successfully met APDETIC's demands. 
 
-- In 2008, post sponsored a senior expert on patents, an IPR judge 
from the Supreme Court and a chief IPR county prosecutor to attend 
training at the U.S. Patent and Trademark Office's IPR Enforcement 
Academy in Alexandria, Virginia.  Post also nominated an IPR police 
officer to participate in the Department's International Visitor 
Program.  Private industry sources have also provided training 
opportunities for Romanian judges, prosecutors, police, border 
officials, and industrial property rights experts.  Additionally, 
WIPO and the European Patent Office conducted international IPR 
workshops in 2008. 
 
OBSTACLES IN IPR ENFORCEMENT 
 
¶3. (SBU) Despite these positive developments, post's assessment is 
that IPR legislation still is not vigorously enforced in Romania. 
The ability to successfully prosecute IPR crimes, leading to 
conviction, remains weak.  IPR cases are technically complex, time 
consuming, and frequently dismissed by judges based on a "lack of 
social harm."  While on the decline since 2007, infringements 
involving ambient music (music broadcast in public spaces, such as 
in bars) still represented 30 percent of IPR enforcement cases 
concluded in 2008. 
 
¶4. (U) Internet piracy remained the most serious IPR infringement 
problem in 2008.  Although the legal framework is in place to combat 
Internet piracy, enforcement lags far behind.  Law enforcement 
capabilities generally were weakened in 2008 when Parliament voted 
to modify the criminal code, limiting data retention by authorities 
to six months and making it harder for authorities to open criminal 
investigations.  Enforcement agencies deplored these changes. 
Internet piracy is exacerbated by the fact that many Internet 
Service Providers (ISPs) actively market their downloading speeds 
for movies, music, and games, and have been reluctant to cooperate 
 
BUCHAREST 00000136  002 OF 004 
 
 
with enforcement authorities.  While the market for physical pirated 
optical discs has diminished, both at the retail (street) level and 
through website sales, Internet piracy and peer-to-peer (P2P) file 
sharing grew in 2008 in the wake of wider access to high-speed 
broadband Internet services.  Additionally, many Internet cafes 
offer customers both a venue to download and burn copyrighted 
software and to play and use unlicensed products, such as games. 
 
 
¶5. (U) Despite significant improvements in police and prosecutor 
handling of individual cases, there are still substantial delays in 
criminal investigations.  However, the Copyright Office (ORDA), a 
quasi-independent government agency funded through the Ministry of 
Culture, improved its turn-around time in 2008 on technical 
assessments of seized goods to police, a formal requirement to 
pursue criminal charges.  ORDA's administration of the obligatory 
hologram marking system for music and video products remained 
unpopular with the optical disc industries, who questioned its 
effectiveness and its high costs.  ORDA reported a 70.2 percent 
decrease in the number of items subject to technical inspection in 
2008 from 2007, reportedly due to the increase in Internet piracy 
and therefore need for fewer product physical analyses.  While ORDA 
sold 12.1 percent less holograms to phonogram copyright holders, it 
registered a 96.7 percent in hologram sales to video copyright 
holders.  ORDA also reported a 23.9 percent drop in the number of 
software programs recorded in the national registry in 2008 compared 
to the previous year. 
 
¶6. (U) A major concern raised by the software industry is the 
current legal requirement for investigators to have a computer 
search warrant issued in advance of any inspection of the licensing 
status of installed software.  Industry representatives said this 
requirement is particularly onerous for business-related raids. 
Such a warrant may only be issued by a judge and only if a criminal 
investigation has been officially initiated.  However, a criminal 
investigation may only be initiated upon verification of sufficient 
evidence.  In practice, this has been a Catch-22 and it has been 
difficult to meet the evidentiary threshold required to launch an 
investigation. 
 
2008 ENFORCEMENT STATISTICS 
 
¶7. (U) In 2008, Romania registered 5,715 new IPR-related files, down 
46.4 percent from the previous year, and concluded 5,080 IPR-related 
cases, down 7.5 percent from 2007.  91 of these cases ended with an 
indictment, a decrease of 43.8 percent compared to the prior year. 
The majority of concluded cases (70 percent) involved non-ambient 
music files, a 50 percent increase compared to 2007.  2,528 cases 
were dismissed in the criminal court in 2008 due to a finding of 
"lack of social harm," an 11.3 percent decline from 2007.  110 cases 
were settled out of court, a 14.7 percent decrease from the previous 
year.  In 2008, there were 36 final court sentences (down from 102 
in 2007): 21 cases resulted in prison convictions (down from 51 in 
2007) and three were assessed fines (down from 16 in 2007).  The 
criminal court dismissed ten cases (compared to nine such decisions 
in 2007) and reassigned two cases to the civil court (compared to 24 
in 2007), both of which ended with administrative fines due to a 
finding of "lack of social harm."  There were no acquittals in 2008 
(versus two in 2007). 
 
¶8. (U) In 2008, the State Office for Inventions and Trademarks 
(OSIM), a GOR institution with no enforcement duties, provided 
expert, technical industrial property rights assessments in 461 
cases brought by police, border authorities, prosecutors, and 
customs, down 6.9 percent from 2007.  OSIM reported 161 industrial 
property rights cases to the courts in 2008, down from 458 cases 
sent during the previous year.  Out of these, 120 cases involved 
trademarks, 14 involved patents, 13 involved industrial design, and 
14 involved other infringements.  Of the 161 cases, 57 were 
cancellation requests (trademarks, patents, industrial design); 36 
were requests for forfeiture of rights (trademarks); and 42 were 
lawsuits regarding prohibition of imports and the marketing of 
suspected counterfeit products. 
 
¶9. (U) Customs officials reported seizing approximately 20.9 million 
pieces of counterfeited goods in 2008, down from 27.3 million pieces 
in 2007.  Clothing, cosmetics and toiletries, footwear, cigarettes, 
lighters, leather goods, vehicle spare parts, medicines, and DVDs 
accounted for most of the seizures.  The national police also seized 
17.6 million USD worth of goods in 2008, compared to 5.5 million USD 
in goods for 2007.  The national police expressed frustration over 
the fact that many pirated software seizures come from PCs imported 
into Romania from other EU countries; while the pirated software 
does not originate in Romania, police must count it against 
Romania's national piracy rate, giving a distorted picture of 
reality. 
 
 
BUCHAREST 00000136  003 OF 004 
 
 
¶10.  (U) In 2008, Romanian national police units combating 
IPR-related crimes reported 6,168 such crimes, of which 3,764 were 
intellectual property rights infringements and the rest were 
infringements of industrial property rights.  The police solved 
3,591 IPR-related cases in 2008, out of which 2,610 cases involved 
intellectual property rights and the rest industrial property 
rights.  With the 2007 dissolution of RO-ACT (the film industry's 
anti-piracy association), and no successor organization in place, 
the police have frozen 42 infringement cases formerly brought by 
RO-ACT. 
 
¶11.  (U) Despite a decrease in the number of prosecuted cases 
reported by the General Prosecutor's Office (GPO) and acknowledged 
by the national police, the two enforcement authorities concluded 
this was chiefly the effect of decreasing the number of files 
involving ambient music and focusing on more serious cases.  Both 
the national police and the GPO believe that ambient music 
infringements should be de-criminalized and treated as 
administrative (civil) offenses, punishable only by fines, in order 
to dedicate additional resources to serious IPR crimes.  The 
specialized IPR enforcement units of the national police and the GPO 
confirmed that Internet piracy has become the leading trend in 
Romania and have requested specialized training programs on how to 
investigate and prosecute such cases. 
 
THE VIEW FROM INDUSTRY REPRESENTATIVES 
 
¶12.  (SBU) Private industry representatives told post that Romania 
has adequate laws in place to protect intellectual property rights. 
The problem lies with enforcement:  industry would like to see more 
prosecutions, stiffer deterrent penalties, and fewer dismissals 
based on "lack of social harm."  Court proceedings are still very 
lengthy, and often require further in-depth investigations of piracy 
channels.  Industry representatives are mainly concerned about P2P 
downloading, such as with Bit Torrent, and they expect this trend to 
continue as broadband Internet penetration increases.  Industry 
representatives stressed the need for Romanian enforcement agencies 
to stay abreast of technological advances in piracy, but did affirm 
that collaboration with the police was good in 2008 and should 
continue to improve.  Although private industries noted incremental 
progress in ORDA's response to court requests for IPR forensic 
analyses, they also noted a problem with the increasing costs ORDA 
charged industry members for such work. 
 
¶13. (SBU) The Business Software Association (BSA) states that its 
relationship with the local enforcement authorities has 
significantly improved since ORDA was stripped of enforcement duties 
in 2005, in favor of police and prosecutor enforcement authorities. 
In 2008, based on BSA complaints, police conducted more than 470 new 
raids involving end-user and re-seller cases.  While the number of 
raids on hard disk loaders remained steady, BSA noted more big 
companies were targeted than in previous years and one such company 
raid of thee office locations resulted in more than 700 PC seizures. 
 There were three cases in 2008 where re-sellers were convicted and 
sent to jail for software copyright infringement; one case resulted 
in a Romanian record sentence for an IPR crime (six years and seven 
months' imprisonment).  BSA reported 41 total convictions in 2008, 
compared to 61 convictions in 2007.  Prison sentences averaged one 
year but were typically suspended; however, such sentences 
outnumbered criminal fines imposed, as was typical in previous 
years.  BSA reported that in 2008 Romanian authorities undertook 
numerous enforcement actions without having to be prompted by 
industry and were receptive to private sector tips and referrals. 
 
 
¶14. (SBU) An attorney who specializes in entertainment software IPR 
enforcement and who represents two major gaming companies reported 
that the bulk of IPR violations affecting these companies involved 
unauthorized use of games in Internet cafes and retail sales of 
burned pirated products, both of which decreased slightly in 2008 
compared to 2007.  Problems with delays in court proceedings, weak 
sentencing, and difficulties in getting required search warrants for 
computers, particularly in businesses, continued in 2008.  The 
entertainment software representative reported nearly 200 new 
criminal cases in 2008, though this was less than the previous year. 
 The representative also remarked that there were fewer pre-trial 
settlements and more cases resulting in actual court verdicts. 
Still, the representative complained that since 2002 no appeals 
filed with the court against prosecutors' decisions to close a case 
for "lack of social harm" have been successful, although the 
Bucharest Appeals Court in 2008 did agreed to hear one such appeal 
later in 2009.  The industry complains that in addition to the lack 
of feedback regarding the status of pending cases, court proceedings 
were still too lengthy.  Courts generally remained reluctant to 
impose penalties stiff enough to have a deterrent effect.  The 
entertainment software industry's relationship with the national 
police remained solid in 2008, and ORDA decreased the length of 
 
BUCHAREST 00000136  004 OF 004 
 
 
procedures for certifying technical reports to an average of four to 
five weeks from several months. 
 
¶15. (SBU) The Phonogram Producers Union in Romania (UPFR) estimated 
that Internet piracy continued to increase in 2008, albeit at a 
lower rate than the previous year.  In 2008, UPFR requested damages 
in 221 criminal files and received no feedback from police or 
prosecutors on the current status of their cases.  UPFR also filed 
128 criminal complaints on digital piracy crimes, 13 of which were 
dropped by the prosecutor.  Regarding physical piracy, 236 cases 
were dropped by prosecutors, four percent of which were opened in 
2008, 89 percent in 2007, and seven percent in 2006.  Additionally, 
39 criminal cases filed in 2008 are currently in court proceedings. 
Out of all criminal cases sent to court between 2006 and 2008, 43 
resulted in convictions and four were acquittals.  Convictions 
typically ranged from one to five years' imprisonment and often were 
suspended.  UPFR reported that in 2008, 169 music sales points were 
verified and 52 raids were conducted on both illegal studios and 
DC++ user households, where over 48,000 items (pirated CDs, DVDs, 
inlays), five laptops, 16 servers and 26 HDDs were seized by 
enforcement officers.  The UPFR reported good collaboration with the 
national police, no change in the efficiency of the judicial system 
and ongoing frustration with increasing ORDA tariffs for music title 
registration. 
 
¶16. (SBU) COMMENT: Post recommends that Romania remain on the Watch 
List for 2009.  Although there has been significant progress in 
eradicating street vendors of pirated optical discs, post notes that 
overall enforcement efforts have generally not satisfied industry or 
post expectations.  Romanian enforcement authorities are poorly 
equipped and insufficiently trained to effectively combat the rising 
Internet piracy trend.  Investigation and prosecution of Internet 
piracy cases remains inadequate due to lack of experience and 
training on how to handle such cases.  Post plans to organize 
Internet piracy training in cooperation with U.S. law enforcement 
agencies to assist the police and prosecutors in 2009. 
Additionally, the prosecutors and judges need to improve 
transparency and provide better, more regular feedback to patent, 
trademark, and copyright holders on the status of cases.  Law 
enforcement authorities have yet to demonstrate persistent, concrete 
results in defending intellectual property rights, and this 
challenge will increase as the GOR faces severe budgetary 
constraints in 2009 that will likely constrain the operating 
capabilities of police, prosecutors, and judges.  END COMMENT. 
 
GUTHRIE-CORN