The Prague Post Online: News: Country's piracy woes worsen

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July 6th, 2008

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Country's piracy woes worsen

Failure to protect property rights could lead to trade sanctions

February 6th, 2008 issue

By Kimberly Hiss

COURTESY PHOTO

A customs officer cordons off a border market after an inspection revealed the sale of pirated goods. enlarge

Staff writer

The problem of pirated goods is nothing new in the Czech Republic. But the hot water the country recently found itself in over the issue could lead to some major developments.

Having reviewed the nation’s track record on protecting and enforcing intellectual property rights, the Office of the United States Trade Representative (USTR) placed the Czech Republic on its Special 301 Watch List in January. The listing is the first in a series of disciplinary steps that — if not sufficiently heeded by the government — could eventually lead to trade sanctions.

The Czech Republic has long felt international pressure to crack down on the sale of counterfeit goods, a problem most pronounced at its 60 border markets (and spotlighted this week as a west Bohemian seller was charged with attempted murder for attacking a customs officer during an inspection). The warnings have gotten more serious over the past year from the USTR as well as the advocacy group International Federation of the Phonographic Industry (IFPI).

“We’ve raised this issue time and time again,” said Stefan Krawczyk, IFPI European deputy regional director. “Over the months [the government] understood that foreign pressure was not going to go away.”

The USTR carries out annual country reviews, and each spring issues its list of nations inadequately protecting intellectual property rights (IPR). If a country known to be problematic is not listed, it is still closely monitored, and could be the subject of an Out of Cycle Review later in the year. The Czech Republic was one such country in 2007, and was inspected twice that year. The first visit in the spring went poorly, as an official was assaulted by a seller for refusing to buy a Pink CD.

In June, the IFPI, for its part, sent the government a list of action points, suggesting measures to combat piracy. Recommendations included strengthening market licensing rules and introducing criminal and civil liability for market organizers and landowners. The document went to officials from the Industry and Trade Ministry and the Justice Ministry.

In October, the government responded with its own action plan of IPR protections. According to Industry and Trade Ministry spokesman Tomáš Bartovský, the document was part of an effort in which “the ministry, in cooperation with the Finance, Interior and Agriculture ministries, shall propose wider coordination of controls.” Such efforts would involve “Czech Retail Inspection, Czech Police, trade licensing offices, state agricultural and food inspections and the general customs directorate.”

The IFPI was largely unimpressed. Krawczyk said Czech officials were unreceptive to suggested legislative changes, and that the country’s only concrete response was to increase market raids, an effort he dismissed as “symbolic and temporary.”

Last fall, the USTR visited a second time to conduct its Out of Cycle Review, and concluded that recent efforts to combat piracy were still insufficient. As a result, the USTR officially placed the Czech Republic on its watch list in January.

“The USTR is of the opinion that the government has not significantly implemented the action plan in a consistent manner, and did not succeed in reducing the sales of pirated and counterfeit goods available at border markets,” said Bartovský of the listing.

A matter of enforcement

Border markets selling pirated goods from CDs to cigarettes started taking hold in the mid-1990s, steadily growing from hastily set-up stalls into established brick-and-mortar shops.

“The main reason for their stable prosperity is the generally low enforcement of the IPR,” said Lenka Hečková, legal and public relations manager for the Czech Anti-Piracy Union. She adds that such shortcomings include “imperfect legislation and lightly imposed sentences of the crime of copyright infringement.”

To combat these markets, Hečková said the union uses techniques such as “controls and raids in cooperation with local customs authorities and police as well as various inspections.” She concedes that such measures are time-consuming and largely ineffective. “A short time after the control and seizure of counterfeits, the markets are supplied with new goods and all is the same as before,” she said.

Krawczyk is sensitive to such shortcomings. “We deeply appreciate the great work that the customs are doing,” he said, adding that, however, “We’re talking about law enforcement agencies that don’t have enough manpower responsible for intellectual property crime.”

What happens now

Placement on the watch list is the first of three disciplinary steps. If the situation has not improved in a year, the country may be moved to the Priority Watch List, meaning it will receive more intensive reviews. If conditions still fail to improve, the country could then be given Priority Foreign Country status, meaning the USTR will start a six-month investigation with the aim of finally resolving the problem. Failure at this final stage could result in trade sanctions or even World Trade Organization settlement proceedings.

In the case of the Czech Republic, if improvements aren’t adequate, Priority Foreign Country status could happen in 2010, but officials seem to realize the listing’s impact.

“We are fully aware of the fact that this unfavorable situation may influence the decision-making process of foreign business operators and investors,” Bartovský said.

But not everyone is upset by the listing. Indeed, it could help the Czech Anti-Piracy Union do its job. “Such pressure should positively influence political interest in the IPR problem, and thereby the level of legislation and enforcement,” said Hečková, adding that, for the union specifically, “it should help us with our argument that piracy is a great problem here in the Czech Republic and a higher level of protection is more than necessary.”

Krawczyk said he hopes the listing will have a big-picture effect. The IFPI’s efforts to improve IPR issues in non-EU countries such as Russia and China have suffered from the noncompliance of member nations like the Czech Republic.

“We can’t criticize markets outside the EU if we can’t get our act together inside the EU,” he said, adding that the IFPI has gotten the message to “talk to your brothers the Czechs and tell them they need to clean up their own house. They’re embarrassing the EU.”

Kimberly Hiss can be reached at khiss@praguepost.com

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