US embassy cable - 05SOFIA345

UNCLAS  SOFIA 000345 
 
SIPDIS 
 
 
DEPT FOR EB/IPE SWILSON, JURBAN, EUR/NCE SBRANDON 
DEPT PLEASE PASS TO USTR JCHOE-GROVES, LERRION, LOC STEPP 
DOC JBOGER, SSAVICH 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, KIPR, BU 
SUBJECT: 2005 SPECIAL 301 REVIEW - BULGARIA 
 
 
1. (SBU) SUMMARY:  Based on the amount of pirated goods 
flowing through Bulgaria and the lack of necessary 
government action despite repeated prodding by all levels of 
the embassy and industry, we feel that this government lacks 
seriousness in addressing intellectual property rights (IPR) 
violations. 
 
2. (SBU) RECOMMENDATION: Move Bulgaria up to Priority Watch 
List, with a sharply worded warning to improve conditions, 
and provide USG and private sector resources to help improve 
the situation.  END SUMMARY. 
 
3. (SBU) In our opinion the situation of pirated Optical 
Disk Media (ODM) and counterfeit spirits has gotten worse in 
recent months, and government efforts to improve the 
environment are limited.  On-the-ground enforcement by 
Customs and Tax police seems to be slowly improving, but is 
severely limited by lack of resources and training.  Because 
of loopholes in the law, street vendors do not appear to 
fear regular police.  Downloading pirated goods off internet 
sites continues unimpeded.  Prosecutors and judges continue 
to fail to punish the most egregious violators of the 
existing law, while legislation to improve the regime is 
stalled and the government and parliament are pointing 
fingers at each other.  Overall cooperation between agencies 
is virtually non-existent, and the government's overall tone 
is more defensive and less responsive than ever.  Beyond the 
obligatory rhetoric in support of IPR, there is no strong 
leadership commitment to address the issue here. 
 
4. (U) Following is our analysis of the key areas of 
consideration and suggestions for tackling the problem. 
 
PIRATED GOODS INCREASING IN THE STREETS, HOMES AND CAFES 
 
5. (SBU) It is impossible to quantify the amount of pirated 
OPM on the streets, but a walking tour gives the impression 
there are more vendors selling greater numbers of pirated 
goods without fear of arrest than there have been in 
previous years.  The increase is most dramatic when compared 
to 1999-2000, when the USG dropped Bulgaria from the list 
due to its successful measures to shut down IPR crime.  Even 
the current government privately agrees that organized crime 
stands behind the vendors and producers, and is a major area 
of concern.  Most popular CDs, DVDs, games, and software can 
be easily purchased at several spots in the central business 
area for low prices.  Perhaps more disturbing is the 
proliferation of internet cafes where illegal material is 
downloaded directly off the internet.  This practice is 
increasingly happening in homes.  Disinterested parties and 
industry's forensic evidence also indicate that pirate 
facilities are operating once again in Bulgaria.  As far as 
American spirits are concerned, we can assume that only the 
largest international stores are carrying legitimate 
bourbon. 
 
GOVERNMENT'S EFFORTS ARE MIXED 
 
6. (SBU) Ironically, the meager efforts to rein in IPR 
violations are coming from the working -- rather than the 
political -- level of government.  The Ministry of Finance's 
Customs and Tax Police appear to be slightly more aggressive 
in their efforts to identify and seize pirated and smuggled 
ODM and counterfeit bottles and molds, but have not 
succeeded in stemming their proliferation.  Municipal police 
and Ministry of Culture inspectors, however, do not seem to 
be working sufficiently to enforce the laws -- although the 
police have stepped up efforts somewhat against counterfeit 
spirits.  Neither the Ministries of Economy and Culture, nor 
the Parliament is taking the responsibility for pushing the 
stalled legislation through. 
 
7. (SBU) The GOB abolished its inter-ministerial cabinet- 
level council for IPR issues in 2002, and the replacement, 
an expert council headed by the Ministry of Culture, has 
proved ineffectual.  The lack of overall coordination 
between agencies is perhaps the biggest reason piracy has re- 
surged in the past 5-6 years.  In addition, the Ministries' 
failure to engage substantively in response to -- and in 
some cases even to respond to -- the Ambassador's letters on 
IPR issues indicates to us a lack of seriousness in 
addressing the issue. 
 
POLITICAL/STRATEGIC ISSUES 
 
8. (SBU) Bulgaria is a close ally with troops in Iraq and 
Afghanistan.  The government already feels we do not do 
enough to appreciate them, and bumping them up to Priority 
Watch list would likely be perceived as a poke in the eye. 
 
SUGGESTIONS FOR USG AND INDUSTRY 
 
9. (U) IIPA and DISCUS make accurate criticisms and very 
good recommendations in their reports.  We feel that in 
order to seriously address the problem here it is important 
for industry and the USG to provide more assistance and 
funding to help the GOB.  Putting Bulgaria on the Watch List 
last year for first time in five years did not light a fire 
under the GOB, but perhaps a concerted effort by industry 
and the USG will improve the situation. 
 
In addition to placing Bulgaria on the Priority Watch List, 
we recommend: 
 
--ASSISTANCE IN SETTING UP AN INTER-AGENCY COUNCIL: 
Participate at a high-level -- Ambassador and/or Washington 
official -- in an EU sponsored seminar in Sofia in April to 
improve coordination between the various institutions 
(Ministry of Justice, Ministry of Interior, Ministry of 
Culture, Customs Agency, Patent Office and industry.)  We 
could propose and offer to fund the resumption of the inter- 
governmental council led by either the Ministry of Interior 
or Finance, and provide training in how the U.S. inter- 
agency process functions, and how industry plays a role in 
the enforcement process; 
 
--TRAINING: for judges, prosecutors, inspectors, police; 
 
--FINANCE/GRANTS: to establish mobile teams, which will 
combine officials from the Customs Agency, Ministry of 
Culture, Tax Administration and Police; 
 
--TECHNICAL ASSISTANCE: Software and hardware to build a 
database for rights registration; 
 
--INTERPOL COOPERATION:  Assistance from the USG and 
Interpol's newly established counterfeit task force; and 
 
--PUBLIC AWARENESS CAMPAIGN: Public advertising, posters, TV 
and radio ads showing how harmful counterfeited products 
such as alcohol could be to consumers; how organized crime 
benefits from illegal purchases; and how people who purchase 
illegal CDs are in effect stealing from up-and-coming 
entertainers.  Industry could do this easily through public 
service messages in coordination with the GOB. 
 
10. (SBU) COMMENT:  Bulgarian officials do not give 
sufficient priority to resolving IPR violations.  In the 
context of other economic issues in Bulgaria and the level 
of violations in other countries, the government is not 
taking important measures to resolve IPR issues.  Hopefully, 
moving Bulgaria to the Priority Watch List will generate a 
change in attitude.  END COMMENT