VZCZCXRO7431
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHPG #1228/01 3191528
ZNR UUUUU ZZH
P 151528Z NOV 07
FM AMEMBASSY PRAGUE
TO RUEHC/SECSTATE WASHDC PRIORITY 9817
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 PRAGUE 001228 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/NCE AND EB/IPE JBOGER 
STATE PASS USTR FOR JCHOE-GROVES AND WMOORE 
COMMERCE FOR 4232/ITA/MAC/MROGERS 
COMMERCE PASS USPTO 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD ECON PGOV EZ
SUBJECT: CZECH REPUBLIC: POST RECOMMENDS WATCH LIST FOR 
SPECIAL 301 OUT-OF-CYCLE REVIEW 
 
REF: A. 11/7 TLAPA-AMBASSADOR LETTER 
     ¶B. PRAGUE 849 
     ¶C. PRAGUE 742 
     ¶D. PRAGUE 578 
     ¶E. PRAGUE 457 
     ¶F. STATE 56305 
     ¶G. PRAGUE 399 
     ¶H. PRAGUE 315 
     ¶I. PRAGUE 274 
     ¶J. PRAGUE 244 
 
¶1. (SBU) SUMMARY AND RECOMMENDATION: Post recommends the 
Czech Republic be placed on the Special 301 Watch List at the 
upcoming out-of-cycle IPR review (OCR).  The Czechs have had 
seven months to develop and implement an action plan with 
limited progress to report.  The Czech IPR inter-ministerial 
committee developed and presented an action plan to the 
cabinet on October 3, and the committee has not initiated 
concrete actions to implement this plan.  The IPR violations 
at the border markets originally noted by recording industry 
watchdog groups in April have continued relatively free from 
prosecution, and the border markets have grown in size and 
permanence.  Post has visited the pirate markets on multiple 
occasions and viewed first-hand the scale of IPR violations 
and lack of legitimate business at the markets.  End Summary 
and Recommendation. 
 
Fair Warning Given 
---- ------- ----- 
¶2. (SBU) Since the April 30 announcement that the Czech 
Republic will face an out-of-cycle IPR review, Post has 
regularly engaged the Ministry of Industry and Trade (MIT) 
and the IPR inter-ministerial committee to explain 
Washington's position and press for the development and 
execution of an action plan to combat piracy at these 
markets.  In his July 17 meeting with Deputy Minister of 
Industry and Trade Martin Tlapa (ref H), Ambassador Graber 
reinforced the U.S. position, including the need to see 
measurable results for the CR to stay off the Special 301 
Watch List. (Note: Minister of Industry and Trade Martin 
Riman was unavailable for this meeting with Ambassador 
Graber, which Post believes was due to an unrelated political 
issue.  End Note.)  Tlapa got the message but noted that, 
"lots of people here think you won't put us on the Watch 
List." During each subsequent visit with Czech government 
officials, Emboffs made clear that both an action plan and 
measurable accomplishments were needed before the OCR, and 
failure to show results could result in Czech placement on 
the Watch List.  The Ambassador made a final appeal to Tlapa 
November 1, urging the Czechs to provide the USG with a 
statement for the Special 301 OCR, including evidence of 
enforcement actions taken and a timeline for the action plan 
items.  Post has not yet received a statement, and does not 
expect a response other than the November 7 letter from Tlapa 
to Ambassador Graber. 
 
Baby Steps in the Right Direction But Still Falling Short 
---- ----- -- --- ----- --------- --- ----- ------- ----- 
¶3. (SBU) The Czechs have held four inter-ministerial meetings 
since May to discuss the problem and possible solutions. 
Emboffs have been invited to three of these meetings, and 
representatives from the recording industry to two.  The 
action plan developed from these meetings includes about 60% 
of the suggestions made by the USG and industry, including a 
no tolerance policy, increased criminal regulations, higher 
penalties and training for judges and prosecutors.  However, 
the action plan lacks some items suggested by the USG, 
including increased law enforcement presence at the markets, 
legislating landlord liability and revocation of business 
licenses for IPR violators, and it is devoid of concrete 
implementation timelines for any of the items. 
 
¶4. (SBU) New legislation increased fines and punishments for 
IPR violations as expected, but the lack of consistent 
enforcement and quick judicial proceedings hobbles the 
usefulness of these changes. While the pace of progress has 
been limited, these legislative changes are positive and 
create a stronger future framework for IPR protection. 
Enforcement of existing laws remains the biggest problem.  To 
remedy this, Post and industry groups are coordinating 
training opportunities, including USPTO-sponsored courses, 
for the Czech Ministry of Interior on a number of IPR 
enforcement topics. 
 
¶5. (SBU) The positive trend in IPR enforcement at the border 
 
PRAGUE 00001228  002 OF 002 
 
 
markets in late 2006 and early 2007 did not continue into the 
summer.  Although 6,000 armed inspectors of the Customs 
Directorate were given authority to address the IPR issue, 
the number of confiscations and raids dropped in the first 
half of 2007.  According to MIT-provided statistics, the 
Czech Business Inspectorate performed twenty-eight raids in 
September and October and confiscated approximately $1.7 
million USD in pirated goods.  However, discussions with 
Customs officers indicates that these statistics are 
questionable, and that the raids were not as successful as 
MIT presented.  The Customs officers complained that the 
recent shift from occasional raids and inspections conducted 
by individual agencies to more infrequent, large-scale raids 
with participation from all agencies led to the market owners 
being tipped off ahead of time, with a resultant reduction in 
confiscations. 
 
Political Will Vacuum 
--------- ---- ------ 
¶6.  (SBU) Tlapa's November 7 letter to Ambassador Graber (ref 
A) is evidence of the continuing lack of political will. 
Despite his promise to Department of Commerce Assistant 
Secretary Bohigian to address IPR violations at the border 
 
SIPDIS 
markets after his March 8 visit to Washington, Tlapa failed 
to match his statements with actions.  His letter claims that 
public condemnation of the piracy problem is by itself a 
strong signal of government engagement.  It further explains 
his belief that the appropriate government role is high-level 
coordination and makes excuses for the lack of progress and 
for why a detailed action plan is not needed, including the 
ludicrous statement that GOCR cannot tell us what they are 
doing to fight IPR violations because this information is con 
fidential. 
 
¶7. (SBU) Industry watchdog groups feel the Czechs have 
dragged their feet developing and implementing their action 
plan and should be placed on the Priority Watch List.  One 
explanation, although hardly excusable, is that the action 
plan was developed over the summer vacation season, when many 
government employees are out of the office for long periods 
of time.  Consequently, the action plan was not approved by 
the Minister of Industry and Trade until September and 
finally presented to government in October.  While these 
difficulties do not fully mitigate the Czech government's 
lack of progress, the action plan is now in place and the 
GOCR needs time to demonstrate it will follow through.  While 
placement on the Special 301 Watch List will send a strong 
signal and give needed support to our allies in the Czech 
ministries, placement directly on the Priority Watch List 
could complicate efforts to constructively engage the Czech 
government in the future. 
 
Rollout Plan 
------- ---- 
¶8. (SBU) Post continues to sensitize Czech officials about 
the possibility of being placed on the Watch List and we are 
developing a rollout strategy to inform the relevant 
ministries about the upcoming OCR decision.  Any information 
Washington can provide on the timing of the OCR decision 
process will be greatly appreciated.  Despite our repeated 
warnings, we believe that most Czechs will be somewhat 
surprised if they are placed on the Watch List.  The GOCR has 
listed IPR issues (specifically in relation to China) as a 
priority during EU Presidency, and being placed on the Watch 
List could cause some embarrassment.  Although a handful of 
people with the most sober understanding of the situation and 
process are aware of this reality, most simply do not believe 
the USG will take this action because of other bilateral 
political considerations such as missile defense.  Placement 
on the Special 301 Watch List will provide political cover 
for our allies within the Czech government, allowing them to 
push through needed improvements to the IPR situation without 
alienating or leaving them feeling hopeless by jumping ahead 
to the Priority Watch List. 
Graber