This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 WARSAW 000280 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EUR/NCE/MSESSUMS 
STATE PASS USTR FOR DONNELLY/ERRION 
COMMERCE FOR 4232/ITA/MAC/EUR/OECA/MROGERS 
 
REF: (A) 2005 Warsaw 01869 (B) 2005 Warsaw 02210 (C) 2005 
Warsaw 02385 (D) 2005 Warsaw 03022 (E) 2005 Warsaw 03267 (F) 
2005 Warsaw 03361 (G) 2005 Warsaw 03411 (H) 2005 Warsaw 
03451 (I) 2005 Warsaw 03780 (J) Warsaw 0068 (K) 27JAN06 
Birdsey-Burgess/Rogers Email (L) 2005 Warsaw 3593 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR PL
SUBJECT: POLAND: Embassy Warsaw Special 301 Input 
 
----------------------------- 
Slow Progress, New Government 
----------------------------- 
 
¶1. (SBU) Despite lingering problems in enforcement and, 
particularly, in judicial adjudication of optical disc (OD) 
piracy cases, there has been slow, but nonetheless steady, 
progress in Poland's handling of IPR violations, warranting 
maintenance of Poland's position on the Watch List.  And 
while problems related to market access for pharmaceutical 
firms continue unabated, at this time we have no new 
evidence of specific IPR violations related to data 
exclusivity.  That said, the legacy of problems dating back 
to poorly-enforced data exclusivity regulations continues to 
pinch the revenues of innovative firms, especially when 
combined with non-IPR related problems such as lack of 
access to the public health system drug reimbursement list. 
U.S. firms also point out post-accession additions to the so- 
called "ghost list" of market approved drugs, though not 
actually available, as they can be used to establish 
reimbursement prices well below that of the existing 
innovative drug. 
 
--------------------- 
Optical Disc Progress 
--------------------- 
 
¶2. (SBU) Secretary Gutierrez praised Poland's anti-piracy 
efforts and progress despite lingering problems in some 
areas (Ref K).  Persistent efforts to encourage Poland's law 
enforcement to be more active, particularly at bazaars along 
the German border (Refs D, G, I) paid off last year not only 
with an increase in raids on pirates.  Significantly, these 
efforts also provided the foundation for an industry 
initiative that brought legal experts from other EU 
countries to Poland, sensitizing the judiciary in south 
western Poland to the criminal nature of OD piracy. 
 
¶3. (SBU) The December conference in Wroclaw, coordinated by 
the local Polish affiliate of the International Federation 
of the Phonographic Industry (IFPI) was noteworthy for 
several reasons, but mostly because it was a shining example 
of industry-government cooperation.  It was this type of 
cooperative effort that the Polish government highlighted in 
its anti-piracy strategy (Ref D) released last spring.  The 
increase in cooperation is evident from statistics of 
seizures of pirated goods. 
 
---------- 
Statistics 
---------- 
 
¶4. (U) Poland has made great strides in optical disk 
seizures over the past year starting in calendar year 2005. 
Compared to the previous year, the number of total cases 
increased from 1208 to 1221. Regions showing significant 
improvement indicated by an increase in the number of cases 
from 2004 to 2005 include: Lubuskie, Malopolskie, 
Swietokrzyskie, Zacholdniopomorskie and Warszawa.  The most 
impressive growth took place in the Warszawa and Malopolskie 
regions with an increase of 84 and 43 cases respectively 
when compared to 2004 data.  In descending order, Polish 
authorities seized the largest number of foreign CDs, 
totaling 233,873 followed by CDR (95,853), MP3 (76,803), CD 
polish (60,179), DVDs (22,036), foreign cassettes (2,453), 
Polish cassettes (832) and CDRW (766). 
 
¶5. (U) When analyzing the data, general trends emerge. For 
example, more CDs than cassettes were seized and more 
optical disks with foreign materials were seized when 
compared to purely Polish material.  With regard to specific 
regions, Warszawa seized the largest number of foreign CDs 
(68,725) and Polish CDs (20,098) with the Malopolskie region 
coming in second with 17,411 Polish CD seizures.  The most 
pirated DVDs were found in the Malopolskie region (8433) 
with Warszawa coming in a distant second with 5550 DVDs 
seized in 2005.  Seizures of cassettes are much lower than 
CDs, DVDs and MP3 materials due to improvements in 
technology.  The largest number of seizures of Polish 
cassettes, foreign cassettes and MP3 pirated material took 
place in the Mazowieckie region: 215, 929, and 22,611 
respectively.  Lastly, the largest number of CDR seizures 
took place in the Zachodniopomorskie region with 23,332. Of 
note, aside from CDRW seizures in the Pomorskie and 
Dolnoslaskie region with 753 and 13 respectively, no other 
region seized any pirated CDRW materials.  In discussions 
last year with Wroclaw police officials, they noted that 
college students burning CDRWs for profit is a particular 
problem in their area.  The CDRW seizures in Dolnoslaskie 
appear to support their claims. 
 
------------------------- 
But Not All Is Rosy . . . 
------------------------- 
 
¶6. (SBU) Despite the evident progress, there are still 
several reasons why Poland should be maintained on the Watch 
List. 
 
- Since the departure from the Ministry of Culture of a key 
contact active in anti-piracy efforts, and the relatively 
quick dismissal of his successor, it has been increasingly 
difficult to find someone who will take "ownership" of the 
piracy issue in this key government office. 
 
- Related to this point, key elements pertaining to awarding 
damages of the EU Enforcement Directive are apparently being 
weakened in legislation currently under consideration. 
 
- Although retail sales in the Warsaw Stadium have 
decreased, evidence indicates that the Stadium continues to 
serve as a "wholesale" distribution site. 
 
- The judicial process, already slow and cumbersome, is 
backlogged with cases, and there appears to be limited 
interest in addressing some of the more egregious causes of 
prosecutorial sloth (such as procedural issues related to 
expert testimony, see Ref I).  It should be noted that 
Poland's judicial system is equally inefficient in dealing 
with non-IPR commercial disputes. 
 
- IFPI notes that Poland's production capacity has grown to 
775 million units.  The Embassy has visited the largest 
producer of CDs and DVDs in Poland (the Thomson plant 
outside Warsaw, which produces - for export -- OD media 
almost exclusively for major western firms) and is less 
concerned, given the current lack of evidence, with gross 
production capacity figures.  We believe the real concern is 
the "missing" production line from Wroclaw, which somehow 
vanished from police storage as reported last spring. 
 
----------------- 
Next Steps for OD 
----------------- 
 
¶7. (SBU) In discussions with visiting MPA representatives, 
we outlined what we believe to be the most efficacious 
course of action in dealing with outstanding piracy issues. 
A stronger focus on legislative fixes to evidentiary 
requirements, an emphasis on stronger criminal penalties, 
and a strengthening, rather than dilution, of legislation 
when implementing EU directives are the most salient points. 
Further cooperation with industry (see Ref D) and the 
judiciary will, we believe, support these efforts most 
effectively. 
 
--------------- 
Pharmaceuticals 
--------------- 
 
¶8. (SBU) More thorny are the issues facing the 
pharmaceutical industry.  The Polish government has been 
less than aggressive in protecting intellectual property 
(read data exclusivity) in the past; however, now we are 
dealing with the legacy of the ghost of the data exclusivity 
past, with no strong evidence of new violations of TRIPs 
obligations being brought forth.  It is understandable that 
the innovative drug industry is frustrated with its lack of 
market access, but we believe the best way to assist the 
industry is to focus on tangible issues we can attack now, 
rather than go through the repetitive and less effective 
process of reminding the Poles of their international 
obligations (Ref J). 
 
¶9. (SBU) As Secretary Gutierrez noted in his discussions 
with both industry representatives and Health Minister 
Religa, the biggest obstacle for innovative firms is lack of 
access to the public health system drug reimbursement list. 
Attacking the Poles on older cases related to data 
exclusivity deficiencies will not address this problem. 
 
---------- 
The Issues 
---------- 
 
¶10. (SBU) As noted, the lack of access to the reimbursement 
list means that innovative drugs are paid for by the Polish 
health care consumer 100 percent out of pocket.  Although, 
by our count, four new molecules were added to the 
reimbursement list last year, these were the first additions 
to the list in seven years.  With the lack of innovation 
represented in the reimbursed Polish pharmaceutical market, 
it is at the same time astounding to realize that Poles pay 
more for prescription medicines than any other EU country. 
 
¶11. (SBU) In addition, the still unresolved Customs and 
Margins case (see Refs A,L) creates tremendous uncertainty 
for innovative firms, most of which import their products. 
Additional troubling calls from the Health Ministry for cost 
of production data (a complete non-starter for most of 
innovative firms) raises the spectre of a new rash of 
problems with data exclusivity, given Poland's problematic 
track record of protecting data in the 1990s. 
 
------------------------------- 
And Where We Go From Here . . . 
------------------------------- 
 
¶12. (SBU) Nonetheless, these problems have less to do with 
strict IPR-related issues than they do with tremendous 
market access obstacles.  As noted in Ref L, we believe the 
best way to address these issues is with increased dialogue 
with Ministry of Health officials, which now seems to be a 
real possibility. 
 
¶13.  (SBU) In discussions with Secretary Gutierrez, Minister 
Religa offered to have the Health Ministry engage in 
dialogue with the innovative drug industry.  To that end, 
the Embassy is working with the Pharmaceutical Committee of 
the AmCham to invite Religa to the March 2-3 meeting in 
Warsaw of the chief executives of major innovative firms. 
The Ambassador is conveying directly the importance of the 
meeting to the Minister. 
 
¶14. (SBU) In any event, we hope to establish an 
"institutionalized dialogue," perhaps on a monthly basis, 
between industry and the Ministry.  The receptivity of the 
Minister to transparency and dialogue during the Gutierrez 
visit is something we believe should be pounced on.  At the 
same time, we believe maintaining Poland on the Watch List 
will provide us with leverage, should problems related to 
cost of production data move forward.  Keeping our powder 
dry and testing the Ministry's willingness to engage in 
fruitful discussions is, we believe, the proper course of 
action.