VZCZCXRO3763
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHSF #0111/01 0521435
ZNR UUUUU ZZH
P 211435Z FEB 08
FM AMEMBASSY SOFIA
TO RUEHC/SECSTATE WASHDC PRIORITY 4783
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 03 SOFIA 000111 
 
SIPDIS 
 
STATE FOR USTR LMOLNAR, JCHOE-GROVES, FOR EEB/TPP/IPE JURBAN, 
SWILSON and JBOGER; EUR/NCE MTURNER 
COMMERCE FOR SSAVICH and ITA/MAC/OIPR CPETERS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON KIPR ETRD BU
SUBJECT: SPECIAL 301 2008:  BULGARIA MAINTAINS IPR MOMENTUM BUT 
SIGNIFICANT WORK STILL AHEAD 
 
Ref: A. 07 Sofia 1365 B. State 9475 
 
¶1.  (SBU)  Summary:  The year after being taken off the Special 301 
list, the Government of Bulgaria continued to make impressive 
strides on IPR.   The GOB's model intergovernmental working group 
continues to meet under new leadership and is taking steps to become 
even more inclusive.  The Ministry of Culture increased its 
copyright inspections five-fold.   With EU accession, Customs 
tightened border measures resulting in a 600 percent increase in 
seizures of pirated products.   In response to the rise in internet 
piracy, the Cyber Crime Unit notched up its raids on torrent sites, 
Internet Service Providers and end users by 60 percent.  Prosecutors 
show an increased willingness to take on IPR cases, although judges 
still have little experience dealing with IPR cases, and convictions 
still usually carry only administrative fines. 
 
¶2.  (SBU)  Given the sustained GOB commitment to improving IPR  -- 
shown clearly in the statistics above -- we agree with industry that 
Bulgaria should not be placed on the Special 301 Watch List. 
Embassy efforts, including outreach, training and advocacy, are 
focused on what we consider to be the weakest link in Bulgaria's IPR 
regime - the prosecutors and courts.  When announcing the results of 
the 2008 Special 301 process, we recommend that our message commend 
progress made, while stressing the need to increase convictions, 
fines and jail time to show pirates the GOB has zero tolerance for 
IP crimes.    End Summary. 
 
INTERAGENCY COORDINATION 
------------------------ 
 
¶3.  (SBU)  Bulgaria's well-regarded intergovernmental IPR council 
continues to operate effectively under its new chair, Deputy 
Minister of Culture Yavor Milushev.   Milushev, a former actor and 
Member of Parliament with experience in crafting IPR legislation, 
came to office in fall 2007, with a stated personal commitment to 
improve Bulgaria's IPR regime.  While Milushev's direct personal 
style has some industry groups taking a "wait and see" attitude 
toward the changes he has proposed so far, they do not deny that the 
council continues to take effective action under his direction. 
 
¶4.  (SBU)  Milushev has included Embassy representatives as 
non-voting members on the IPR council.  He has created a new working 
group (scheduled to meet for the first time in February 2008) 
designed to give industry representatives more of a say in the 
country's IPR plan.  Milushev has also increased five-fold his 
Ministry's copyright inspections in retail establishments and 
computer halls and has expanded these inspections to include 
restaurants, hotels and entertainment facilities.  The 
intergovernmental IPR council's action plan for 2008 includes 
outreach to journalists and Bulgarian youth; improving communication 
with Internet Service Providers (ISPs); and enforcing fee payment 
for use of copyrighted art, especially by cable tv operators. 
Milushev told us February 19 that improving relations with industry 
representatives will be a key priority for the IPR council in 2008. 
 
INTERNET PIRACY 
---------------- 
 
¶5.  (SBU)  Despite concerted efforts to combat it, internet piracy 
in Bulgaria continues to grow.  Local industry estimates that almost 
all downloaded music in Bulgaria is illegal, while 80-90 percent of 
downloaded movies are pirated.  The police Cyber Crime Unit launched 
a total of 80 operations against large torrent sites, ISPs, and end 
users in 2007, up from 50 operations in 2006 - a 60 percent 
increase.   On February 13, 2008, the Cyber Crime Unit, along with 
special police forces, conducted their biggest raid ever in the 
northeast town of Dobrich.  They seized 12 ftp servers equal to 25 
terabytes of illegal content from the local ISP "Bergon-Internet." 
The police continue to investigate the case under the supervision of 
the Dobrich prosecutor's office. 
 
¶6.  (SBU)  While the Cyber Crime Unit wins kudos from industry and 
post for its dedication, we are all watching closely the progress of 
the Dobrich case along with the results of a highly-publicized March 
2007 raid in which the Cyber Crime Unit shut down four major torrent 
sites -- Arenabg.com, zamunda.net, Data.bg, and bol.bg -- to judge 
whether the prosecution side of Bulgaria's IPR regime is improving. 
Arenabg.com, which temporarily moved to Texas, is in operation again 
in Bulgaria, but with less stored volume.  The prosecution is 
drafting an indictment and plans to file it in court in early March. 
  Zamunda.net moved its server outside Sofia, and the Cyber Crime 
Unit is actively trying to determine whether it is operating from 
Bulgaria.  No indictment has been filed.   Data.bg shut down its 
torrent tracker and turned itself into a legal "free server" called 
4storing.com.  The Cyber Crime Unit continues to monitor it for 
illegal activity.  No indictment has been filed.  Bol.bg shut down 
 
SOFIA 00000111  002 OF 003 
 
 
its torrent site, and the pre-court investigation against the group 
has been dropped, for as-yet unexplained reasons. 
 
OPTICAL MEDIA PIRACY 
-------------------- 
 
¶7.  (SBU)  Street-level piracy has been reduced visibly in Sofia, 
partly due to sound enforcement and partly due to the rise in 
internet piracy.  Street sales of pirated optical disks take place 
notably in the summer and winter resort areas.  Home burning of 
copyrighted materials on compact discs (CDs) and DVDRs is 
widespread, according to industry.  Local recording industry 
representatives estimate optical disc (OD) piracy between 40-45 
percent, compared to 75 percent in 2006.  The drop is attributed to 
improved legislation, increased inspections and the rise in internet 
piracy.  Illegal movie content in 2007 was estimated at 60 percent 
in 2007 (no change from 2006.) 
 
¶8.  (SBU)  Local IFPI representatives tell us that three of nine 
operating CD/DVD production facilities continue to refuse industry 
representatives voluntary access to their plants.  According to 
current legislation, industry representatives are not allowed to 
accompany Ministry of Economy (MOEE) officials on their inspections 
of these plants.  Our MOEE interlocutors continue to inspect these 
plants regularly and have reported no illegal production. 
 
BORDER MEASURES IMPROVE 
----------------------- 
 
¶9.  (SBU)  Bulgarian Customs reported significant progress in the 
seizure of counterfeit goods in 2007.  Last year Customs reported 
1823 seizures totaling 6,776,976 pirated items - a 600 percent 
increase over the 263 seizures totaling 173,326 pirated goods in 
¶2006.  Custom's enhanced performance is attributed to tightened 
border controls demanded by EU membership, increased inspections of 
transit goods, and improved cooperation with industry, notably 
pharmaceutical companies. 
 
PROGRESS ON DRUG/PATENT PROTECTIONS 
------------------------------- 
 
¶10.  (SBU)  In April 2007, a new drugs law was enacted which 
eliminated the direct relationship between data exclusivity and the 
term of patent protection, allowing pharmaceutical companies to take 
advantage of their full patent terms.  This law also extended the 
term of patent protection on pharmaceuticals to eight years from the 
patent date plus two years for market exclusivity and an additional 
one year for "significant, new use" drugs.  Post is unaware of any 
pending IPR-related U.S. pharmaceutical cases in Bulgaria. 
 
BUSINESS SOFTWARE 
----------------- 
 
¶11.  (SBU)  Data on the use of pirated software was not available 
for 2007.  In 2006 the Business Software Alliance reported illegal 
business software use was at 69 percent, down from 71 percent in 
¶2005.  The Government of Bulgaria is taking the use of business 
software seriously.  In December 2007 it announced Microsoft had won 
a tender worth 84.9 Bulgarian leva (USD 60 million) for 
government-use software.  With this tender, the GOB is now buying 
business software rather than paying subscription fees for its use. 
 
PROSECUTORS MAKE PARTIAL PROGRESS 
--------------------------------- 
 
¶12.  (SBU)  Our industry and local contacts tell us cooperation 
between police, investigators, and prosecutors continues to improve 
and the prosecutor's office demonstrates an increased willingness to 
take IPR offenses seriously.  In the first nine months of 2007, 
prosecutors formed 254 pre-trial, IPR-related proceedings, compared 
to 158 in the first nine months of 2006.  Problems remain. 
Prosecutors still often lack familiarity with IPR cases and as a 
result at times are unable to see these pre-trial cases though the 
court phase.   Many cases languish in the pre-trial process, only to 
be dropped at a later date. 
 
¶13.  (SBU)  Prosecutors are developing their IPR expertise.  The 
Bulgarian Association of Prosecutors, in cooperation with the U.S. 
Department of Justice, organized training sessions on IPR crime 
prosecution in January and April 2007 in three appellate regions, 
training 47 prosecutors.  The training module was approved by the 
National Institute of Justice and is incorporated in this 
institute's training program.  The program boasts a broad trainer 
base including representatives of the private sector.   As a direct 
result, the lecturers developed a manual which was approved by the 
Prosecutor General as the official prosecutorial guidebook on IPR 
 
SOFIA 00000111  003 OF 003 
 
 
cases.  The publication of the guidebook was developed with U.S. 
Department of Justice expert and financial support. 
 
THE COURTS - BULGARIA'S ACHILLES' HEEL 
-------------------------------------- 
 
¶14.  (SBU)  The courts remain the weakest link in Bulgaria's IPR 
regime.  According to the Supreme Cassation Prosecutor, in the first 
nine months of 2007, only 71 IPR cases ended up in court.  As a 
result of these cases, 62 people were sanctioned.  Convictions 
usually carry only administrative fines.  No one was sent to prison. 
 Under Bulgarian law repeat offenders receive higher sentences, but 
to date not even repeat offenders have received jail time.  As noted 
above, we continue to watch the criminal proceedings initiated 
against the owners of the four major Internet torrent sites raided 
in 2007, as well as the 2008 Dobrich case, but none of these cases 
have yet reached the courts. 
 
 
EMBASSY EFFORTS 
--------------- 
 
¶15.  (SBU)  The Embassy continued to stress IPR in its 2007 
workplan.  Outreach efforts by the Commercial Service, and the 
Departments of State, Agriculture and Justice extended across 
government ranks from the working level to the Prime Minister.  In 
2007 the Embassy sent nine GOB officials to USPTO training in 
Washington, compared with five in 2006.  In 2007, we sent a 
proactive supreme cassation prosecutor on an IPR-focused 
International Visitor Program.  In October 2007 the U. S. Department 
of Justice initiated a joint training program on Cyber Crime between 
the National Institute of Justice and the Police Academy.  The 
program also covered IPR crimes over the internet.  In November 
2007, the U.S. Department of Justice Intellectual Property Law 
Enforcement Coordinator for Eastern Europe took up residence at 
Embassy Sofia.  In December, he provided training to judges from 
Bulgaria, Macedonia, Serbia and Romania on investigating, 
prosecuting, and adjudicating online piracy cases at a conference 
held in Plovdiv, Bulgaria. 
 
COMMENT 
------- 
 
¶16.  (SBU)  Bulgaria's impressive IPR performance over the past year 
allays our earlier concerns that being removed from the Watch List 
in 2006 would slow or reverse the progress that had been achieved 
over the past several years.  Clearly, the GOB has institutionalized 
its seriousness on IPR.  Still, much work lies ahead, especially on 
the enforcement side.  In our future communications with the GOB on 
IPR, we should commend progress made, but also stress the need to 
continue to work closely and collaboratively with industry; keep 
highly-motivated elements of Bulgaria's IPR team well-funded, and, 
especially, to take the steps needed to improve the record of IPR 
cases in court. 
 
BEYRLE