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OO RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHSF #1622/01 3341105
ZNR UUUUU ZZH
O 301105Z NOV 06
FM AMEMBASSY SOFIA
TO RUEHC/SECSTATE WASHDC PRIORITY 2900
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE IMMEDIATE
RUCPDOC/USDOC WASHINGTON DC

UNCLAS SECTION 01 OF 03 SOFIA 001622 
 
SIPDIS 
 
DEPT PLEASE PASS TO USTR LMOLNAR; JCHOE-GROVES 
DEPT FOR EB/IPE JURBAN; SWILSON; JBOGER 
DOC FOR SSAVICH 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON KIPR ETRD BU
SUBJECT: SPECIAL 301 UPDATE - BULGARIA MAKING PROGRESS 
 
REF:  (A) Sofia 0983 (B) Sofia 0462 (C) State 183379 
 
¶1. (SBU) SUMMARY: The GOB has made strong progress this year towards 
improving its Intellectual Property Rights (IPR) Regime.  The 
inter-ministerial council, which we urged them to create, has been 
instrumental in implementing much of our IPR Action Plan, pushing 
through legislative changes and improving cooperation between 
enforcement bodies.  Although the government has increased 
enforcement - and done a decent job of cleaning up one notorious 
piracy area of Sofia - it needs to be more consistent and spread its 
effort to the resort areas.  Insufficient government resources and 
internet piracy remain weak spots.  The government's provocative 
public awareness campaign has attracted attention, but it still must 
better explain to the general public the value of intellectual 
products for the economy and the individual. END SUMMARY 
 
DEMARCHE DELIVERED ENCOURAGING FURTHER ACTION 
--------------------------------------------- 
 
¶2. (SBU) We delivered ref C demarche on November 21 and 22 to the 
Deputy Minister of Economy, Lachezar Borisov, and Deputy Minister of 
Culture, Ina Kileva, who lead the GOB's IPR efforts.  We described 
again the 301 review process, thanked the GOB for its very strong 
efforts in the past 12 months, and urged them to step up their 
work. 
 
¶3. (SBU) Borisov described his Ministry's major successes in IPR 
enforcement, many of which were contained in a joint report with the 
Ministry of Culture, e-mailed separately to DOC, USTR, and State's 
Economic Bureau and the Bulgaria desk.  In order to strengthen 
control over optical disc (ODs) production, the government conducted 
15 unannounced inspections of the licensed OD manufacturing 
facilities since the new OD Media Law entered into force in 
September 2005.  Twenty licenses for OD Media production were issued 
in accordance with the new law, and a database register for imported 
polycarbonates and equipment for OD production was updated.  Borisov 
asked to meet again soon to discuss specific points we raised; he 
will then follow up with a meeting with industry association 
representatives. 
 
¶4. (SBU) Kileva, probably the most active and effective IPR player 
for GOB, told us that in the inter-agency Council's 11 meetings this 
year it has drafted and modified laws and regulations, including the 
Law on Marks and Geographical Indications, and the Law on Industrial 
Design and the Penal Code, whose texts were reviewed by the 
industry's legal experts.  As a result of the increased enforcement 
measures, there is no counterfeit production from licensed 
manufacturers at present, Kileva said.  Kileva was also happy to see 
the Sofia City Court more actively involved in the work of the IPR 
Council.  We urged her to convey our desire that the Court actively 
pursue its cases and not be shy about handing out severe penalties 
to IP violators.  We note that USAID training of judges in IPR cases 
will expand next year. 
 
GOB ACTION 
---------- 
 
¶5. (SBU) In addition to the steps listed above, Kileva told us about 
the Culture and Interior Ministries' joint enforcement efforts, 
which have succeeded in reducing the level of street-level piracy. 
From January to October, the enforcement record includes: 
 
--51,750 audio and video discs, 300 audio cassettes, 3,708 video 
cassettes seized; 22,000 DVDs "Tom and Jerry" confiscated in July 
2006; 
--582 computer systems seized; 
--800 computer games seized; 
--61 operational systems erased; 
--19 servers seized; 
--20 administrative acts for infringements; 
--5,738 certificates of rights registrations issued. 
 
The Ministry of Interior's enforcement record includes: 
 
--760 special police operations conducted; 
--1,880 market places inspected; 
--51,750 ODs and over 216,072 paper covers seized; 
--105 computer configurations seized; 
--6 investigations initiated; 
--458 trade centers and bazaars inspected; 
--58,000 counterfeit goods of various types seized; 
 
The Bulgarian Patent Office has issued 61 penal injunctions and 
sanctions in the amount of 7,500 leva (USD 4,800).  The Customs 
Agency has seized 51,782 counterfeit goods.  The Sofia City Court 
initiated 87 magistrate cases, issued 10 convictions, reported 3 
in-court and 18 out of court settlements. 
 
 
SOFIA 00001622  002 OF 003 
 
 
PHYSICAL PIRACY MAY BE DOWN, BUT INTERNET PIRACY GOES UP 
--------------------------------------------- ------ 
 
¶6. (SBU) Internet piracy, as in most countries, is a serious problem 
for Bulgarian law enforcement authorities.  For instance, both the 
GOB and industry estimate the internet music piracy rate at almost 
100 percent.  The Ministry of Culture estimates annual losses to 
domestic industry from pirated music in the amount of 4.5 million 
leva (USD 3 million), with a total of 300 jobs lost each year.  U.S. 
industry numbers are much higher.  The government suffers from a 
lack of resources and qualified experts to pursue Internet crimes. 
 
The Ministry of Interior's record so far includes: 
--74 Raids with 7,319 PC Games seized; 
--36 Raids with 8,770 Sony Play Stations seized; 
--34 Raids on Internet Downloadable Media. 
 
NEW LEGISLATION STRENGTHENS IPR PROTECTION 
------------------------------------------ 
 
¶7. (U) The Bulgarian Parliament passed amendments to the Penal Code 
in August 2006, for which the USG and industry had energetically 
lobbied.  The amendments criminalize the storage of protected 
material in commercial quantities, and increase the penalties for 
industrial property offences.  The amendments also provide for the 
destruction and forfeiture to the state of the infringing material 
regardless of whose property it is. 
 
¶8. (SBU) Parliament passed in July 2006 amendments to the Law on 
Patents and Utility Models, which aims to strengthen the 
administrative process of patent infringement.  According to 
industry, however, the revised Patent Law is not compliant with EU 
principles, as it withdraws the "transitional patent protection" for 
pharmaceutical products.  The result will be that companies will not 
receive five years of extended protection for drugs granted under 
the old law - and hence, will invest less in the local industry.  We 
are lobbying to get this changed. 
 
¶9. (U) In August 2006, Parliament passed amendments to the Law on 
Marks and Geographical Indications and the Law on Industrial Design. 
 The two laws aim to introduce local regulation of community marks 
and community designs; synchronize with WIPO recommendations on 
well-known marks; and eliminate certain shortcomings and 
inconsistencies impeding the efficiency of IPR enforcement.  The new 
legislation, however, must be strengthened with greater 
harmonization of border measures for IPR protection; i.e., through 
the introduction of an effective export-import inspection regime 
with more active involvement of border authorities. 
 
NEW PROSECUTOR - A PROMISING START 
---------------------------------- 
 
¶10. (SBU) The Prosecutor General and the Supreme Cassation 
Prosecutor's Office are receptive to our concerns and ready to 
improve IPR enforcement.  Through the Department of Justice, we have 
trained prosecutors and police to increase their skills in IPR 
protection.  We are working to ensure that the Prosecutor General's 
forward-thinking will be seen as a model for other prosecutors and 
the legal system in general to pursue vigorously IPR infringement 
cases. 
 
EXPOSING A PROBLEM: NATIONAL PUBLIC AWARENESS CAMPAIGN 
--------------------------------------------- ------ 
 
¶11. (U) The Bulgarian government responded well to our suggestions 
to launch a public awareness campaign on IPR.  They kicked it off in 
August 2006 in cooperation with industry and the major electronic 
and printed media, aimed at raising respect for IPR among the 
public.  The ongoing campaign includes TV, radio and press 
advertisements, posters, flyers, and photo exhibitions, 
demonstrating the importance of IPR protection.  A TV spot was aired 
on ten of the leading channels in September-November 2006, to be 
followed by another one in November-December featuring well-known 
national artists and intellectuals.  To capture attention, the 
artists, who discuss the need to protect intellectual property by 
saying "piracy robs", are naked -with strategically-placed banners. 
(Samples were emailed separately to DOC, USTR and State's Economic 
Bureau and the Bulgaria desk.) 
 
¶12. (SBU) The GOB's campaign will continue on the Internet involving 
the biggest Bulgarian Internet portals such as Netinfo, Dir.BG, 
Investor.BG, Avtora.com.  The banners are being developed and will 
be presented in December and January.  The Ministry of Culture 
together with the Ministry of Education and Science plans a 
follow-up (re-designed) campaign targeting schools. 
 
USG INVOLVEMENT 
--------------- 
 
SOFIA 00001622  003 OF 003 
 
 
 
¶13. (U) In addition to committing itself to an extensive public 
awareness campaign, the GOB wants to continue to receive adequate 
training and technical assistance.  Resource-poor, Bulgarian 
authorities depend on U.S. aid to supplement its own coffers.  To 
sustain and increase momentum, the Embassy IPR team recommends 
increased USG engagement with the government, and more assistance 
and funding. 
 
Initiatives/Programs concluded to date include: 
--A sequence of five training modules organized by the Association 
of Prosecutors in Bulgaria as part of a U.S. Embassy Democracy 
Commission grant to assist regional prosecutors in their IPR work 
continues until May 2007.  US DoJ was invited as a co-organizer and 
contributed a U.S. expert who lectured and participated in the Q and 
A session of the first seminar; 
 
--Through USAID, we developed, piloted and delivered to the National 
Institute of Justice (the organization that trains magistrates) a 
training module on the criminal law aspects of IPR in mid-October. 
The course is now a sustainable part of the NIJ's continuing legal 
education curriculum and complements their civil law IPR training 
module developed with EU assistance.  In addition, USAID provided 
assistance to courts in the regions to deliver IPR training. 
 
--We nominated two Bulgarian Patent Office officials for the USPTO's 
Academy on the Enforcement of Intellectual Property Rights in 
January 2007.  We also nominated two Ministry of Culture officials 
for the USPTO's Academy on Copyright in the Digital Environment in 
January 2007; 
 
--High-level Washington visitors from State, Commerce and USTR have 
included IPR issues in their meetings with Bulgarian leaders.  We 
are preparing a letter from the Ambassador to the Minister of 
Culture urging resolution of specific IPR cases. 
 
¶14. (SBU) We also recommend holding regional workshops to include 
Bulgaria, Greece, Turkey, Romania, Serbia and Macedonia to address 
cross-border sales of pirated goods, and to examine how Bulgaria's 
and Romania's entry into the EU will help or hinder law enforcement 
efforts.  We thank Washington agencies, especially DOJ, for funding 
a position to work with prosecutors to address IP issues. 
 
COMMENT 
------- 
 
¶15. (SBU) The Bulgarian government is taking its IPR 
responsibilities seriously.  Political will and coordinated efforts 
have yielded positive results in some IPR enforcement areas.  We 
believe that law enforcement efforts need to be regularized, as 
relatively few violators have been successfully convicted, fined or 
imprisoned to date.  Bulgaria's piracy rates are still well above 
Western levels, but the government is working harder than it has in 
years to change this.  We will continue to press the GOB to move 
faster in making Bulgaria an IP-friendly country, which is 
especially important given its 2007 EU membership. 
 
BEYRLE