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Viewing cable 08BUCHAREST139, 2008 SPECIAL 301 REVIEW -- ROMANIA

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Reference ID Created Released Classification Origin
08BUCHAREST139 2008-02-21 06:03 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Bucharest
VZCZCXRO3262
RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHBM #0139/01 0520603
ZNR UUUUU ZZH
R 210603Z FEB 08
FM AMEMBASSY BUCHAREST
TO RUEHC/SECSTATE WASHDC 7938
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS SECTION 01 OF 04 BUCHAREST 000139 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR/NCE - AJENSEN 
DEPT FOR EEB/TPP/IPE - JBOGER 
DEPT PASS TO USTR JCHOE-GROVES 
USDOC FOR ITA/MAC/OIPR - CPETERS 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD ECON RO
SUBJECT: 2008 SPECIAL 301 REVIEW -- ROMANIA 
 
REF:  STATE 09475 
 
Summary 
------- 
 
1. (SBU) Post recommends that Romania remain on the Special 301 
Watch List for 2008.  Although industry contacts report that there 
has been a decline in physical optical disc piracy, the growth of 
internet piracy - both peer-to-peer file sharing and 
business-to-consumer piracy - is a worrisome trend.  Romania has an 
adequate legal framework for IPR protection, but enforcement efforts 
remain ineffective and a low priority for judges, prosecutors, and 
police.  There has been increased cooperation between enforcement 
authorities and industry representatives, but post has yet to 
witness consistent prosecutorial results.  Too many IPR cases are 
dismissed by prosecutors for a perceived "lack of social harm."  End 
Summary. 
 
IPR Progress 
------------ 
 
2. (SBU) Following is a list of positive developments in the field 
of IPR enforcement since last year's Special 301 review: 
 
-- The number of dedicated IPR prosecutors at the General 
Prosecutor's Office (GPO) increased from four to nine.  The number 
of designated prosecutors at the tribunal and appellate court levels 
has increased to 102. 
 
-- The EU "Phare" Program was established to strengthen the 
institutional capacity of IPR protection.  In 2007, the Government 
of Romania (GOR) requested technical assistance to establish an 
online inter-institutional system, professional training courses, 
media campaigns, and a study to establish a methodology to estimate 
piracy rates.  The system was initiated by Danish technical experts 
in 2007 and is scheduled to become operational in 2008. 
 
-- There has been a steady decrease in the number of pirated optical 
discs sold by street vendors.  This is due both to the fact that 
street vendors are easy targets for the police, and because market 
changes have made it easier and cheaper for end-users to acquire 
products via the internet. 
 
-- In 2007, post sponsored a senior expert on patents, a senior 
expert on trademarks, an IPR judge, and a chief IPR prosecutor to 
attend training at the U.S. Patent and Trademark Office's IPR 
Enforcement Academy in Alexandria, Virginia.  During the first 
quarter of 2008, post will send another chief IPR prosecutor and the 
President of the Civil and IPR Section of the Supreme Court for 
training.  The Danish Patent and Trademark Office, the U.K. 
Intellectual Property Office, and private industry sources have also 
provided training opportunities for Romanian judges, prosecutors, 
police, border officials, and industrial property rights experts. 
 
-- Post organized and hosted several well-received and well-attended 
IPR events in 2007, including a U.S.-EU IPR Roundtable, with key 
addresses by Department of Commerce Deputy Assistant Secretary Paul 
Dyck and a chief representative of the U.K. Patent Office in London. 
 Post also sponsored a three-day Cyber-Crime conference; hosted an 
IPR Border Measures workshop with the American Chamber of Commerce; 
and participated in the GPO's IPR Seminar at the National Institute 
of Magistrates (NIM), with econoff responsible for the IPR portfolio 
giving the keynote address. 
 
-- Romania adopted the Singapore Treaty on Trademarks of the World 
Intellectual Property Organization (WIPO) on August 22, 2007. 
 
 
-- Legal reform continued in 2007 with further amendments to the 
basic Patent Law of 1991 and the Industrial Design Protection Law of 
1992 to make them fully consistent with EC directives.  Also, for 
the first time, Romania enacted legal regulation of utility models 
to protect the rights of inventors (Utility Model Number 350/2007). 
 
 
Obstacles in IPR Enforcement 
---------------------------- 
 
3. (SBU) Despite these positive developments, post's assessment is 
that the GOR still does not effectively enforce IPR legislation. 
Successful prosecution of IPR crimes, leading to conviction, remains 
the weakest link.  Romanian prosecutors are magistrates, and their 
professional evaluations are based on obtaining successful verdicts 
from the courts.  IPR cases are technically complex, time consuming, 
and frequently dismissed by judges based on a "lack of social harm." 
 
BUCHAREST 00000139  002 OF 004 
 
 
 Therefore, prosecutors often try to maintain positive evaluations 
by imposing administrative sanctions, only risking a push for 
criminal sanctions when the "social harm" is incontrovertible and 
the evidence is overwhelming. 
 
4. (U) Internet piracy was the fastest-growing IPR infringement 
phenomenon in 2007.  Although the legal framework is in place to 
combat internet piracy, enforcement lags far behind.  Internet 
piracy is exacerbated by the fact that many Internet Service 
Providers (ISPs) actively market their downloading speeds for 
movies, music, and games, and have been hesitant to cooperate with 
enforcement authorities.  While the market for physical pirated 
optical discs has diminished, both at the retail (street) level and 
through website sales, internet piracy and peer-to-peer (P2P) file 
sharing grew significantly in 2007 in the wake of wider access to 
high-speed broadband internet services.  Additionally, many internet 
cafes offer customers both a venue to download and burn copyrighted 
software and to play and use unlicensed products, such as games. 
 
 
5. (U) Despite significant improvements, there are still substantial 
delays in criminal investigations.  The Copyright Office (ORDA), a 
quasi-independent government agency funded through the Ministry of 
Culture, often required several months - and in some cases, more 
than a year - to deliver technical assessments of seized goods to 
the police.  ORDA still administers an obligatory system of placing 
hologram stickers on music and video products, unpopular with the 
optical disc industries for these media due the costs incurred and 
doubts about its efficacy.  ORDA reported a 37 percent increase in 
the number of items subject to technical inspection (year over year) 
while selling 86 percent more holograms to phonogram copyright 
holders and almost three times more holograms to video copyright 
holders. 
 
6. (U) One of the major concerns, first raised by the Business 
Software Alliance (BSA), is the current legal requirement for 
investigators to have a computer search warrant issued in advance of 
a check of the licensing status of installed software.  Such a 
warrant may only be issued by a judge and only if a criminal 
investigation has been officially initiated.  However, a criminal 
investigation may only be initiated upon verification of sufficient 
evidence.  In practice, this has been a Catch-22 and it has been 
difficult to meet the evidentiary threshold required to launch an 
investigation. 
 
Enforcement Statistics (2007) 
----------------------------- 
 
7. (U) In 2007, Romania concluded 5,492 IPR-related cases, down 27.8 
percent year over year.  Only 162 of these cases ended with an 
indictment, an increase of 6.6 percent compared to the previous 
year.  The majority of concluded cases (51.9 percent) only resulted 
in administrative fines short of trial due to a determination that 
the crime lacked social harm, a minor decrease from the year before 
(54.9 percent).  2.3 percent of the cases were dismissed because the 
charges were dropped or the case was settled out of court, down from 
18 percent in 2006. In 2007, there were 122 final court dispositions 
(up from 54 in 2006): 43 cases ended in fines (up from 21); 38 ended 
with a suspended prison sentence (up from 21); the criminal court 
reassigned 24 cases to the civil court (nine in 2006); and 17 cases 
ended in acquittal (an increase from five in 2006). 
 
8. (U) In 2007, the State Office for Inventions and Trademarks 
(OSIM), a GOR institution with no enforcement duties, provided 
expert, technical industrial property rights assessments in 495 
police, border authority, prosecutors' offices, and customs cases, 
up 70 percent year over year.  OSIM reported 458 industrial property 
rights cases to the courts in 2007, a 52.7 percent increase from the 
previous year.  Out of these, 410 cases involved trademarks, 35 
involved industrial design, and 13 involved patents.  368 cases were 
cancellation requests (trademarks, patents, industrial design), 60 
were requests for forfeiture of rights (trademarks), and 30 were 
lawsuits regarding the prohibition of imports and the marketing of 
suspected counterfeit products. 
 
9. (U) Customs officials reported seizing approximately 20.2 million 
pieces of counterfeited goods in 2007, up substantially from 9.6 
million pieces in 2006 and 3.6 million in 2005.  Footwear, clothing, 
cell phone accessories, cosmetics and toiletries, cigarettes, 
leather goods, and sunglasses accounted for most of the seizures. 
 
The View from Industry Representatives 
-------------------------------------- 
 
10. (SBU) Private industry representatives tell post that Romania 
 
BUCHAREST 00000139  003 OF 004 
 
 
has adequate laws in place to protect intellectual property rights. 
The problem lies with enforcement: they would like to see more 
prosecutions, stiffer deterrent penalties, and fewer dismissals 
based on "lack of social harm."  Court proceedings are still very 
lengthy, and often require further in-depth investigations of piracy 
channels.  Industry representatives noted a sharp increase in P2P 
downloading, such as with the BitTorrent or the less popular eDonkey 
protocol, and they expect this trend to continue as broadband 
internet penetration increases.  (Note: Although the broadband 
penetration rate is the second lowest in the EU at an estimated 10.5 
percent, broadband connectivity increased over 90 percent in 2007. 
End note.)  Industry representatives stressed the need for Romanian 
enforcement agencies to stay abreast of technological advances in 
piracy.  The industry says that collaboration with the police has 
been relatively good and improving, but they report no improvement 
in their cooperation with prosecutors.  Although private industries 
noted incremental progress in ORDA's response to court requests for 
IPR forensic analyses, the average response time remains 
unsatisfactory. 
 
11. (SBU) BSA estimates that the piracy rate for business software 
likely declined slightly in 2007, down from an estimated 69 percent 
piracy rate in 2006.  End-user piracy (corporate and household) and 
illegal distribution (hard disk loading and distribution of 
home-burned optical discs) has had the most damaging impact on the 
local market.  No industrial-scale optical disc piracy has been 
reported yet; all copying is done by home burning - often in 
home-based "burning studios."  BSA's relationship with the local 
enforcement authorities has significantly improved since the less 
reliable ORDA was stripped of enforcement duties in 2005, with sole 
enforcement responsibility remaining with the police and 
prosecutors.  In 2007, authorities conducted over 680 raids of 
end-users and re-sellers, up from 600 cases in 2006.  BSA reported 
61 total convictions in 2007, with two convictions of illegal 
re-sellers of business software leading to deterrent sentences, 
including a sentence for five years, seven months' imprisonment 
without the possibility of suspension or parole. 
 
12. (SBU) An attorney who specializes in entertainment software IPR 
enforcement and who represents two major gaming companies reported 
that the bulk of IPR violations involved unauthorized use of games 
in internet cafes and retail sales of burned pirated products, both 
of which increased slightly in 2007.  Pirated products are largely 
produced domestically; only one case was identified as having been 
imported from replication factories in the Republic of Moldova or 
Ukraine.  The attorney said she is unaware of any seizures or 
detentions of entertainment software products by Romanian customs 
authorities in 2007.  Cooperation with local police remained solid 
in 2007, with the attorney praising the initiative of the police in 
pursuing IPR infringers.  There was no change in the number of cases 
dismissed for lacking social harm from the year before; however, in 
a positive development, prosecutors' decisions are more commonly 
communicated to the copyright holders. 
 
13. (U) Problems with delays, weak sentencing, and difficulties in 
collecting court-ordered damages remain, according to the 
entertainment industry.  It takes the police a minimum of three to 
four months, and sometimes up to ten months, to transfer cases to 
the court.  The average amount of time needed to obtain a criminal 
court decision is between one and three years, with appeals taking 
even longer.  Romanian courts are still reluctant to impose 
deterrent penalties. They typically impose, in descending order, 
suspended jail sentences (from one to two years), criminal fines 
(from USD 150 to USD 4,200) or administrative fines (same range as 
above).  The only sentence in 2007 for imprisonment (one year, seven 
months) without suspension involved a case of a recidivist copyright 
infringer with six other open criminal complaints.  In a majority of 
2007 convictions, the court awarded the damages claimed by the 
plaintiff.  However, defendants generally did not comply with the 
court order to pay the damages unless the rights holder initiated 
further legal proceedings. 
 
14. (SBU) The Romanian Organization against Copyright Theft (RO-ACT) 
represented the Motion Picture Association (MPA) on IPR matters 
until MPA Brussels decided in late 2007 to discontinue financing 
local associations in Romania, Slovakia, Bulgaria, Cyprus, and 
Lebanon.  The RO-ACT representative noted that until that time, he 
witnessed significant growth in internet piracy due to the wider 
availability of broadband internet services and falling prices from 
regular Internet Service Providers (ISPs) and small neighborhood 
companies using Local Area Networks (LANs).  In larger cities, 
significant numbers of video files are shared over these LANs, which 
often have much lower service fees than traditional ISPs. 
BitTorrent and eDonkey P2P sites represent another type of emerging 
piracy.  Individuals and small companies, many of which also offer 
 
BUCHAREST 00000139  004 OF 004 
 
 
discount internet access, maintain a majority of these sites.  The 
RO-ACT representative stated that police cooperation was acceptable, 
but complained that the weakest link is at the magisterial level. 
He forecast that internet piracy will increase hand-in-hand with 
broadband internet penetration. 
 
15. (SBU) The Phonogram Producers Union in Romania (UPFR) estimated 
that although physical piracy nearly disappeared in 2007, internet 
piracy has increased dramatically.  The International Federation of 
Phonogram Industries (IFPI) complained in writing to both the 
national police and General Prosecutor's Office in November 2007 on 
behalf of the UPFR about the lack of progress in 16 criminal 
complaints of internet piracy, first filed in April 2007.  UPFR 
reported in 2008 that there has been no progress in 15 of the cases, 
and that one case has moved forward incrementally.  The national 
police told UPFR that the 15 cases do not meet their evidentiary 
threshold and that they will not be investigated further.  UPFR 
feels that the evidence in the cases is comparable to similar cases 
that were prosecuted successfully in other countries in the region. 
Efforts by UPFR to get clarification on the actual evidentiary 
requirements have been unsuccessful.  UPFR is increasing their 
number of complaints in the hopes that at least one of them will 
move forward.  Eighteen complaints were filed in December 2007, and 
a similar number in January 2008. 
 
16.  UPFR hopes that the first successful prosecution of internet 
piracy will bring needed media attention to the issue.  UPFR is in 
the final stages of planning a national and regional media campaign 
against internet music piracy, which would hopefully build on a 
deterrent-creating, precedent-setting conviction.  Both UPFR and the 
GPO have acknowledged to post that cooperation between them has been 
unsatisfactory.  Additionally, UPFR shares the frustration that 
rigid warrant regulations hamper the ability of investigators to 
gather the evidence needed to prosecute cases successfully. 
 
Comment and Recommendation 
-------------------------- 
 
17. (SBU) Post recommends that Romania remain on the Watch List for 
2008.  Although there has been significant progress in eradicating 
street vendors of pirated optical discs, post notes that overall 
enforcement efforts have failed to live up to IPR industries' and 
analysts' expectations, particularly in light of Romania's accession 
to the EU one year ago.  Despite participation by officials in 
numerous training programs, including many funded and conducted by 
the USG, there remains a persistent and pervasive lack of 
understanding of the need for determined enforcement and deterrent 
convictions throughout Romania's judicial system.  This is 
compounded by a reluctance to commit the resources and time required 
to stay current with the technological developments in piracy. 
Romanian authorities are poorly positioned to combat the torrential 
rise in internet piracy, prosecution of which remains inadequate as 
prosecutors downplay the seriousness of IPR offences in comparison 
with other types of criminal activity.  In too many instances, 
either prosecutors fail to pursue IPR cases or magistrates take the 
easiest path by dismissing cases for a perceived lack of social 
harm.  Another remaining issue is insufficient feedback from the 
enforcement bodies and courts to the copyright holders.  Romanian 
magistrates have yet to demonstrate sustained, concrete results in 
defending intellectual property rights.  End Comment. 
 
Taubman