US embassy cable - 05SOFIA1916

UNCLAS SECTION 01 OF 03 SOFIA 001916 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR EB/IPE JURBAN; SWILSON 
DEPT PLEASE PASS USTR LERRION 
DOC FOR SSAVICH 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, KIPR, ASEC, BU 
SUBJECT: BULGARIAN REACTION TO IP ACTION PLAN; NEXT STEPS 
 
REF: A) SECSTATE 183379 
 
     B) SOFIA 1546 
 
1.  (SBU) SUMMARY:  The Bulgarian government's reaction to 
our proposed intellectual property (IP) action plan (REF A) 
has been generally favorable.  More than ever, the GOB 
appears eager to demonstrate progress on IP issues largely 
because the EU has identified it as a key area of concern. 
Despite a string of successful enforcement activities 
lately, there still is not adequate high-level political 
support for IPR, which is sorely needed to energize 
attention to this issue at the working-level.  The Embassy's 
priority in the coming months will be reinforcing GOB 
political will as well as encouraging further enforcement 
efforts and formulating training programs for judges, 
prosecutors and police.  We hope to use the current momentum 
in the bilateral relationship, boosted by the recent meeting 
between President Bush and President Purvanov, to press for 
advances in IPR.  We will also stress that improving IPR 
will open the door to more US investment. END SUMMARY. 
 
BULGARIAN GOVERNMENT RECEPTIVE TO IP ACTION PLAN 
--------------------------------------------- ------- 
 
2. (U) The Embassy has delivered the proposed IP Action Plan 
to a number of ministries both at the senior and working 
levels.   Ambassador Beyrle shared the Action Plan and 
talking points with Minister of Economy and Energy Rumen 
Ovcharov. Ovcharov appeared receptive to the plan and 
underscored the importance of working together to 
successfully fight the piracy of optical disc media (ODM). 
The two agreed that experts would meet in the coming months 
to discuss specific details and timetables relating to this 
cooperation. 
 
3.(U) We also shared the action plan with the Deputy 
Ministers of Interior and Culture, and other officials who 
work on IPR at the expert level, including the Director for 
Registering, Licensing and Control at the Economic Ministry; 
and the Director for Copyright and Related Rights at the 
Culture Ministry.  Overall, our interlocutors expressed 
their thanks for the action plan and stated it would be a 
useful tool in assisting the Bulgarian government to improve 
its IPR regime and enforcement.  Most officials, at least in 
their rhetoric, pledged support for the overall goals of the 
plan. 
 
4. (U) The timing is ripe for advancing IP issues here given 
the importance Brussels has placed on it for Bulgaria's EU 
accession.  In its latest monitoring report on Bulgaria, the 
European Commission identified IPR issues as one of five 
areas of "serious concern" requiring decisive action before 
EU accession.  As a result, the GOB appears particularly 
focused and possibly more willing to take steps to 
strengthen their IP regime.  Gergana Tsareva, the Director 
for Registering, Licensing and Control at the Economic 
Ministry, shared with us a draft of the government's own IP 
action plan, which attempts to address many of the EU's 
concerns.  The Bulgarian plan incorporates a number of U.S. 
measures, including improving interagency IP coordination 
with senior level support, increasing training and launching 
an IP awareness campaign.  According to Tsareva, the Council 
of Ministers is expected to approve the IPR action plan this 
year. 
 
ENFORCEMENT: A BRIGHT SPOT ON THE IPR FRONT 
-------------------------------------------- 
 
5. (U) The most encouraging development on the IPR front has 
been in enforcement.  The Bulgarian police--in conjunction 
with local industry representatives--have continued to 
conduct a series of raids following the August raid that 
dismantled a major IPR bootlegging ring (Ref B).  In 
September, the police (with the assistance of industry 
representatives) initiated a sweep against a number of 
retail outlets and warehouses engaged in the distribution of 
counterfeit sporting goods on the Black Sea coast and in 
Plovdiv.  As a result, the police seized about 5,000 
counterfeited items bearing various trademarks such as 
Adidas, Nike, Puma and Reebok.  Thanks to the follow-up 
investigation of these cases, the police in October were 
able to break up a significant counterfeit operation based 
in Plovdiv.  The owner of the factory was arrested--the 
first arrest for trademark infringement.  The police 
reportedly are pursuing criminal prosecutions in the case. 
 
6. (U) Also in October the National Service for Combating 
Organized Crime (NSCOC) raided a major counterfeit clothing 
and sports-shoes warehouse.  The police found vast 
quantities of fake goods bearing well-known names like 
Adidas, Puma, Reebok, Nike, Miss Sixty, Energie and Diesel. 
The seized goods were estimated to be worth as much as 1.5 
million Bulgarian leva (915,000 USD).  The investigation 
revealed that the counterfeit products originated in Dubai, 
China and Turkey and had been exported to Greece, Macedonia 
and Bulgaria, where they were sold in some of the best 
retail shops in Sofia.  According to police, the bust 
represents their biggest clothing counterfeit operation to 
date.  With an eye towards eventual prosecution, the police 
now are trying to collect evidence related to customs and 
tax violations. 
 
7. (U) In addition to these operations, which received 
extensive media coverage, the head of the Motion Picture 
Association, Rozalina Apostolova, also informed us of 
another 15 raids and inspections carried out by the police 
during September.  Through these efforts, the police seized 
over 30,000 illegal audio cassettes, CDs, and DVDs as well 
as 57 DVD-R burners and CD-R burners.  Svetlozar Sokolov, 
whose law firm ARSIS represents a number of major 
international companies in Bulgaria with IP concerns, also 
confirmed that street-level enforcement in Bulgaria has 
improved and is not a major area of concern for the industry 
at the moment. 
 
COODINATION AND POLITICAL WILL REMAIN A CHALLENGE 
--------------------------------------------- ------ 
8. (U) Currently, Bulgaria's main vehicle for coordinating 
IP actions is an expert-level council chaired by the 
Ministry of Culture's Director for Copyright Protection, 
Georgi Damyanov.  The council is made up of representatives 
from NSCOC, the Economic Police, the Customs Agency, the 
Ministry of Culture, and the Ministry of Economy.  Despite 
its interagency membership, the primary function of the 
council (which was established by the Minister of Culture in 
November 2002) is to help the Ministry of Culture better 
perform its tasks related to IP protection, rather than 
coordinate the entire government's effort against IPR.  As 
Damyanov told us the council in its current form is 
ineffective and lacks real political support.  He, as 
director for example, has no real authority to order other 
ministries to take action.  The council therefore has no 
enforcement ability and is little more than a consultative 
body of experts. 
 
9. (SBU) Based on pressure from the EU as well as the U.S., 
the GOB is in the process of creating a new interagency IP 
body with higher level participation which is meant to 
improve cooperation.  However, our contacts tell us that the 
new body is the primary sticking point preventing approval 
of the government's IP action plan.  According to Gergana 
Tsareva, none of the ministries are willing to take on the 
 
SIPDIS 
responsibility of establishing and physically hosting this 
new agency.  Tsareva confided that she refused to host the 
new body, arguing she did not have enough time and staff. 
She added that there is little support or interest in such a 
body from her immediate supervisor, the Deputy Minister of 
Economy, or even Minister of Economy Ovcharov himself. 
Other ministries reportedly are saying the same thing. 
However, Damyanov told us that the Ministry of Culture will 
agree to host the new body if no other ministry is willing 
to.  The GOB hopes to resolve the issue by the end of 
November. 
 
 NEXT STEPS FOR ADVANCING THE IP ACTION PLAN 
------------------------------------------- 
 
10. (SBU) The Embassy team working on IPR issues has 
identified three general areas we intend to focus on in the 
coming months: building greater political will for IP 
issues, encouraging the government's enforcement efforts and 
designing training programs.  Specific steps will include: 
 
--Identifying a minister or two who can give greater 
political support to the GOB's interagency group for IPR 
issues. We also will try to identify appropriate candidates 
for a possible IVP program to see how the USG inter-agency 
process works; 
--Continuing to pressure the relevant ministries to continue 
improved enforcement; 
--Drafting proposals for the training of judges, police and 
prosecutors.  The Pol/Econ section is working with USAID on 
a proposal for the training of judges under the World 
Learning Group project.  Additionally, DOJ is working on 
arranging funding for two broad types of training for police 
and prosecutors.  The plan is for each group to have their 
own separate, specifically-tailored workshop followed by a 
joint training session; 
--Assisting local industry in their plans to launch a public 
awareness campaign on IPR.  Industry representatives are 
planning a free concert and public awareness campaign with 
Bulgarian artists to highlight through various media 
outlets--television, radio, newspapers and billboards--the 
costs of IP violations.  The industry has funding for this 
effort but inquired about getting additional support from 
us, particularly on enlisting the government's backing for 
and possible participation in the campaign. 
 
11. (SBU) Comment: The EU's emphasis on improved IPR 
compliance has created new opportunities for us to press 
this issue.  We believe EU pressure along with our campaign 
to highlight the positive connection between IPR protection 
and increased U.S. investment will keep the Bulgarians 
motivated.  End Comment. 
 
BEYRLE