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Cablegate: Estonia - Voluntary Input for 2008 Special 301

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RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHTL #0090/01 0641334
ZNR UUUUU ZZH
R 041334Z MAR 08
FM AMEMBASSY TALLINN
TO RUEHC/SECSTATE WASHDC 0528
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 05 TALLINN 000090

SIPDIS

DEPT FOR EB/TTP/IPE BOGER, FOR EUR/NB GROVES
DEPT PLEASE PASS TO USTR FOR LMOLNAR
DOC FOR ITA/MAC/OIPR CASSIE PETERS
DOC PLEASE PASS USPTO

SIPDIS

E.O. 12958: N/A
TAGS: ETRD KIPR ECON EUR EN
SUBJECT: ESTONIA - VOLUNTARY INPUT FOR 2008 SPECIAL 301

REF: A) STATE 9475 B) 07 TALLINN 66 C) 08 Tallinn 79

1. (U) Summary: In 2007, the Government of Estonia
(GOE) continued to improve the country's IPR regime
through legislative changes and cooperation with rights
holders. Major changes to IPR legislation were
introduced in March, when the Law Amending the Penal
Code and Copyright Act came into force. In 2006, the
Estonian Parliament ratified the World Phonogram
Producers Treaty and the World Copyright Treaty.
However, the ratification letters have not been
submitted, due to the decision that the European
Community should submit the letters simultaneously.
While traditional forms of piracy continued to
decrease, Internet piracy in tech-savvy Estonia is an
ever-growing concern that calls for better training of
police, prosecutors and judges. In 2007, the embassy
and the American Chamber of Commerce's IPR committee
sponsored several events which directly support Embassy
Tallinn's FY2009 MSP goal of Promoting Economic
Prosperity through IPR education and enforcement. End
Summary.

A. NOTORIOUS MARKETS

2. (U) There are no notorious markets for
counterfeited goods in Estonia.

B. Optical Media Piracy (CDs, VCDs, DVDs)

3. (U) In 2007, optical media piracy in Estonia
continued to decline. The days of large-scale trade in
pirated materials are long gone. According to Estonia's
only anti-piracy NGO, the Estonian Organization for
Copyright Protection (EOCP), the physical market for
pirated audio-video items has decreased significantly,
including the harbor area, which over the past year has
been under special police surveillance.

C. Use/Procurement of Government Software

4. (U) The use of software in government offices is in
compliance with national and international copyright
standards. According to the GOE Informatics Center,
every government office has designated a person/section
to be responsible for information systems, including
procurement and development of software. The GOE
implements rules and regulations for government
software procurement.

D. TRIPS compliance, FTA Implementation and Other IP-
Related Issues

5. (U) Estonia continues to make progress on
promulgating IPR-related legislation. Major changes to
were introduced on March 15, when the Law Amending the
Penal Code and Copyright Act (LAPCCA) came into force.
The LAPCCA classifies trade in pirated copies as a
crime even when it occurs for the first time
(previously it was only a misdemeanor). Also the
maximum penalty for legal persons for violating the
Copyright Act was increased from USD 5,000 to USD
50,000. However, according to the LAPPCA the use of
pirated copy for a public performance or public display
of the work or for communication is a misdemeanor,
unless committed for commercial purposes. This
classification is posing difficulties for the
investigation of IPR crimes in the digital environment
- under Estonian legislation, no criminal investigative
techniques (such as going undercover and surveillance)
may be used when investigating a misdemeanor act.

6. (U) In November 2007, the Parliament passed
Amendments to the Electronic Communication Act (AECA),
implementing the EU Data Retention Directive. The AECA
will provide the legal basis to acquire user log
information from internet service providers and thus
contribute to the information exchange and cooperation
with law enforcement agencies in the fight against
internet piracy. The AECA will come into force on
March 15, 2009.

7. (U) On June 21, 2007 the Cabinet passed a decree to
form an IPR Committee under the Ministry of Culture
(MOC). The Committee replaced the previous IPR Expert
Committee as its five-year term expired. No major
changes occurred, as the new Committee is continuously

TALLINN 00000090 002 OF 005


chaired by the Media and Copyright Department of the
MOC and consists of representatives from the Ministry
of Justice, the Estonian Performers' Union, EOCP,
Estonian Public Broadcasting, the Ministry of Finance,
the Law School of Tartu University, the Estonian
Authors' Society, the MOC, the Publishers' Association,
the Business Software Alliance and the Estonian
Phonogram Producers Association. The role of the
Committee is to report to the Cabinet on the IPR
situation in Estonia bi-annually and make
recommendations how to improve the IPR regime. A new
function of the Committee is to serve as an
extrajudicial authority for conciliation proceedings on
IPR cases.

8. (U) In 2006, the IPR Expert Committed proposed to
draft a new Copyright Act. The current Copyright Act
dates from 1992 and has been amended 20 times. The aim
of the new Copyright Act is to harmonize the language,
restructure the Articles and add new regulations for
authors from the Soviet era. However, the drafting of
the new law was suspended in 2007, as the GOE still
needs to address issues related to protection of works
from the Soviet area and orphan works sooner than in
the four-year average time for adoption of a complex
law such as the Copyright Act.

9. (U) In 2007, the Ministry of Internal Affairs
initiated a Development Plan for Estonian Internal
Security, 2009-2013 that our contacts say will also
include IPR as a priority. Currently, the basis of the
Plan, the Estonian Security Guidelines for 2008-2015,
is awaiting Parliament's approval. The guidelines
require an upgrade in the capacity of law enforcement
authorities to fight against crimes in the digital
environment, including IPR violations.

10. (U) In 2007, two optical disc plants continued
production in Estonia: 'Digibox' in Tartu and the
Lithuanian-owned Baltic Optical Disc (BOD) plant in
Tallinn. The managers of these companies have declared
that their IPR activities fully comply with copyright
laws, they work very closely with IPR organizations,
and are actively involved in anti-piracy actions. The
International Federation of the Phonographic Industry
(IFPI) has taken samples of the mold of the CD/DVD
lines of both of the plants located in Estonia and
provided them with mold Source Identification Codes
(SID).

11. (U) While Estonia has no legislation mandating the
use of SIDs on locally manufactured CDs, BOD and
Digibox have each entered civil agreements with the
Nordic Copyright Bureau (NCB) on IPR protection.
According to the EOCP, such agreements between the IPR
organizations and producers have proven to be very
effective. As source identification in Estonia is
regulated by civil agreements, the GOE does not
anticipate making SID provisions mandatory by law.
According to the MOC however, the GOE will consider
this step if the production situation in Estonia
changes.

E. DATA PROTECTION

12. (U) Estonia's data protection, including
undisclosed test data submitted by pharmaceutical
companies, is in full compliance with data protection
in the European Union. There have been no reports of
marketing approvals against unfair commercial use or
about marketing approvals granted for generic copies of
patent infringing pharmaceutical products.

F. PRODUCTION, IMPORT AND EXPORT OF COUNTERFEIT GOODS

13. (U) Seizures of CDRs with pirated materials at
local shopping centers show that there is some domestic
production in Estonia. However, law enforcement
agencies as well as anti-piracy groups consider
Estonian more a transit country than a source country
for counterfeit goods. According to Estonian Customs,
most of the IPR-infringing goods that have been
detected have been in transit to Russia. Only a small
quantity of pirated goods was transported from Russia
to the European Union Customs territory via 'suitcase
piracy'.


TALLINN 00000090 003 OF 005


G. ENFORCEMENT

14. (U) In 2007, the Estonian Tax and Customs Board
detected 91 cases of counterfeit goods, seizing 53,007
items in total. The largest cases involved toys
(Marvel Comics characters, Legos, Shell Brands
International, etc.) in which authorities seized some
13,688 items. Also, spare parts for cellular telephones
form another big category in Estonian Customs' fight
against IPR infringement. In 2007, they seized 9,658
of these items. However, our contacts say that rights
holders rarely initiate legal proceedings in cases
where only small quantities of their own goods are
detected, as industry considers the proceedings too
time consuming relative to the perceived benefit of
pursuing them.

15. (U) Industry representatives, particularly the ones
located in Estonia have not been active submitting
annual applications to Customs which allow Customs to
seize suspected pirated goods on their behalf. (Note:
These applications are required in accordance with
European Council Decision EC1383/2003 of July 2003. End
Note) To date, industry has submitted roughly 450
applications, the vast majority of which come from
trademark representatives. Most of these applications
are valid throughout the entire EU, and are submitted
outside Estonia. All applications submitted by the
EOCP, which represents the music and film industry,
have expired. The Business Software Alliance has not
submitted a single application. Without such
applications, Customs can make ex-officio seizures of
suspected goods for a maximum of three days, which is
generally an insufficient time to determine whether the
goods are pirated.

16. (U) In 2007, 20 officers of the Central Criminal
Police were investigating solely IPR crimes, initiating
66 criminal cases and 12 misdemeanor cases. They
organized 14 raids in cooperation with EOCP. In one
April 2007 instance, a raid of a private apartment
netted a seizure of more than 1,000 pirated PS2 CD/DVDs
from a person offering Sony PlayStation 2 'mod-
chipping' services through magazines and websites. In
addition to police raids, the EOCP carried out 145
control visits to video and music shops and shopping
centers. While no legal action can be taken on the
site without the police, these raids serve well as
preventive measures. In total in 2007, the EOCP gave
expert opinions on 10,051 different audio-video media
carriers, mostly seized by the police and Customs.
However, according to our police contacts, the
reduction in seizures of pirated audio-video materials
is due to falling demand on the local market. Customers
who seek pirated materials consider the prices too
high, when they can often get the same products over
the internet for free.

17. (U) The biggest problem in IPR enforcement is the
lack of IP expertise in the Estonian prosecutor's
office, which has made it a low priority issue.
According to the EOCP, most criminal cases involving
copyright infringements are terminated by the public
prosecutors on the basis of lack of public interest in
proceedings, and negligible guilt. Also, our police
contacts find investigation of IPR discouraging, as so
many cases are dropped by the prosecutors.
Furthermore, most judges lack IPR practice as few cases
ever come before the courts. In November 2007,
however, a Harju County Court convicted a private
person for reproducing (uploading) a pirated copy of
the Estonian movie 'Klass' to a public server. (Note:
In 2007, this movie won several awards at film
festivals in Europe. End note.) The court ordered the
defendant to pay USD $1,300 in compensation to the
state. This is Estonia's first criminal sentence for
uploading pirated material to a public File Transfer
Protocol (FTP) server. IPR NGOs have high hopes that
this case may act as a precedent.

H. TREATIES

18. (U) In 2006, the Estonian Parliament ratified the
two WIPO treaties pending since Estonia's accession to
the EU: the World Phonogram Producers Treaty (WPPT) and
the World Copy Rights Treaty (WCT). However, according
to a March 2000 decision, WPPT and WCT ratification

TALLINN 00000090 004 OF 005


letters from member states and the European Community
should be submitted simultaneously. Our contacts in
MOC tell us that four EU member states have still not
ratified these treaties, and currently there is no time
frame when all ratification letters can be submitted.

I. INTERNET PIRACY AND COOPERATION WITH RIGHTS HOLDERS

19. (U) In 2007, the Internet continued to be the
biggest IPR challenge in Estonia, as in other countries
with well-developed IT sectors. While optical media
piracy has shown a vast decline in recent years, the
Internet has become the most active outlet for pirated
material in Estonia, especially the FTP servers and
peer-to-peer (P2P) systems. The EOCP has concluded a
memorandum of understanding (MOU) with ten major
Internet Service Providers (ISPs) calling for the
removal of illegal copyright materials from public FTP
servers. Still, there are small ISPs that offer their
servers to swap music, films and software. In April
2007, the EOCP and two major ISPs in Estonia (Netpoint
Systems and Elisa Eesti) concluded cooperation
agreements. The aim of these agreements is to
anticipate and prevent infringement of copyrights and
the rights related thereto on the Internet. The
agreements provide procedures for notice and takedown
of piracy websites and FTP serves, allowing better
control of large-scale FTP piracy in Estonia. In 2007,
the EOCP closed down 422 web sites and removed 155,906
copyright-infringing files. Also in 2007, EOCP issued
39 warnings to hand-to-hand distributors that offer
pirated copies through on-line magazines. However,
most of the music files were in foreign servers. File
sharing and P2P networks such as KaZaA, StreamCast, E-
Donkey, E-Mule, and BitTorrent remain the largest
source of Internet piracy in Estonia. These networks
are all located geographically outside of Estonia.

20. (U) In 2007, Estonian telecom companies Elion and
EMT opened a digital music store, which contains four
million songs from 12,000 labels all over the world,
including Universal, SonyBMG, EMI and Warner. Users can
download a single track or the whole album, and price
varies from $1.70 to $2.50 per piece. The music store
is available at EMT SurfPort and via the Internet at
Elion's web portal http://muusika.hot.ee Another
network for legal downloads was set up by Estonian
music producers at http://muusika24.ee

-------------------
J. POST'S ACTIVITIES
--------------------

21. (U) Intellectual Property Rights protection remains
a priority for Embassy Tallinn. Post regularly uses
all means available to help Estonia to improve its IPR
regime. On several occasions the Embassy has lobbied
the GOE to continue to upgrade its IPR regime. In
2007, we sent a Senior District Prosecutor on an
International Visitors Leadership Program (IVLP) on
Protection of Intellectual Property Rights.

22. (U) In 2007, two police officers, a Customs officer
and a prosecutor attended courses at the U.S. Patent
and Trademark Office's (USPTO) Global Intellectual
Property Academy (GIPA). The Estonian participants
told us they valued all of these trainings highly, and
they contributed to IPR law enforcement activities in
Estonia. These activities directly supported Embassy
Tallinn's FY2009 MSP goal of Promoting Economic
Prosperity through IPR education and enforcement.

23. (U) On January 17-18, 2007, Embassy Tallinn and the
USPTO held a workshop focusing on copyright
infringement in the digital environment. The event was
a rare coming together of 60 Estonian police,
prosecutors, judges, government officials, law
professors and industry representatives. The group
discussed enforcement problems resulting from limits on
investigative tools, the prosecutorial practice of
dropping cases for lack of 'public interest', and the
small size of the market. Panelists shared valuable
best practices and collaborated on techniques for
pursuing Internet-based IPR criminals. The event
received wide media coverage in local TV and press, and
accomplished its goal of raising IPR awareness. (Ref B)


TALLINN 00000090 005 OF 005


24. In 2006, on the basis of an embassy initiative, the
American Chamber of Commerce in Estonia (AmCham)
established an IPR Sub-Committee. In 2007, in order to
raise public awareness and promote IPR education, this
committee hosted two seminars: one for teachers and one
for small and medium businesses. The seminar for
teachers clearly demonstrated that there is a real need
for IPR education in schools, something AmCham is now
working to achieve. The committee continues its work
on IPR in schools, with embassy support. On February
6, 2008, the AmCham IPR Committee hosted a roundtable
at the embassy titled 'How to raise IPR awareness in
Schools' (Ref C). The next IPR seminar for teachers
will take place in April, when two U.S speakers will
provide IPR training for Estonian teachers.

PHILLIPS

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