U.S. puts Poland on priority piracy watch list

By Timothy Sifert

The United States Trade Representative's (USTR) verdict to put Poland on a more critical watch list for intellectual property (IP) violations has the country's antipiracy crusaders gearing up for a more effective effort and more palpable results in scaling down the corruption that plagues the music, film and software industries with hundreds of million of dollars in losses.

The USTR issues an annual survey of the intellectual property rights compliance all of U.S. trade partners based on stated requirements. For years Poland has been on a watch list for IP violations and unsatisfactory results in combating them, the result of the USTR's research for its "Special 301 Report."

Roughly 40% of illegal compact discs and 53% of business software are pirated. The Federation for Protection of Audiovisual Works (FOTA), a unit of the Motion Picture Association (MPA), notes that pirated DVDs sold in the country cost the film industry €22 million ($25 million) last year.

Piracy in the music industry alone cost the local government some €60 million in lost income tax and VAT, according to one estimate.

For some time there has been a striking impetus for action. But while there have been substantive improvements, some in the industry say that the increased concern on behalf of the U.S. will more forcibly push the hand of local government, customs officials and police to get the job done.

"The American administration will pay even more attention to what is going to happen in Poland as a result of the position on the priority watch list," said Jan Bałdyga, antipiracy coordinator at the Polish Society of the Phonographic Industry (ZPAV), part of the International Federation of the Phonographic Industry (IFPI).

At the beginning of this month, the USTR ratcheted up its concern over intellectual property rights in Poland and placed the country in the more specific "priority watch list."

People involved in antipiracy issues say that the move indicates that law enforcement, even after previously voiced concern from the U.S., is still unsatisfactory.

And while there are no immediate repercussions for the country's trade relations with the U.S., the heightened concern could make the difference, according to Bałdyga.

"It's a political issue, so I think that our responsible people - the prime minister, the ministries, the minister of interior or the customs officials - they will do much more against piracy," he said.

Though the national government does pay attention to piracy issues - and has done so to a growing extent since the early 1990s - this greater number of examples of illegal action is a reflection of both technological innovations that make illegal media reproduction simple and more lucrative, and the inadequate execution of the laws the country already has on the books.

The USTR considers its "Special 301 Report" one of its most effective tools in improving IP standards. In effect, it warns countries of USTR concerns, but also tips off potential investors in those countries that their IP rights might not be adequately protected there. Poland is certainly not the only country the U.S. has in its crosshairs; also on the priority watch list are Argentina, the Bahamas, Brazil, Russia and the European Union, among others.

The news is a wake-up call to also put into force what plans the national institutions already had on the drawing board before the report was issued.

"For us this is not good information," said Wojciech Dziomdziora, a deputy director at the department of law and legislation in the ministry of culture. "We were aware of the possibility that Poland would be put on the priority watch list. We were asking U.S. officials to delay their decision one year."

He explained that the government made such overtures to the U.S. because it needed time to implement a plan that is under construction at present. These intellectual property and copyright issues were on the agenda of a preparatory committee of the council of ministers last week, Dziomdziora said. The committee approved the initial plan to slow IP violations.

"In the next few weeks it will be on the agenda of the council of ministers," he said, pointing to some actual momentum in the antipiracy battle. "In the next three months I would like to have a strategy that says what public service is responsible for what," he added. The strategy would delineate specifically what ministries, customs officials and police must do and provide deadlines and benchmarks by which the government in the next few years can better measure its progress.

Dziomdziora, for his own part, is very ambitious.

"I would like not to have pirated goods in the (Stadion Dziesięciolecia) by the end of the year," he said.

The Stadion, or the "Russian Market," featured heavily in the 301 report as the site of the most rampant corruption in Poland.

Besides the evident damage copyright infringement has on any industry, Dziomdziora said that he sees a sense of urgency also because of the USTR decision.

Dziomdziora said that while the USTR decision would not have an immediate effect, "in the future it is possible. If Poland remains on the list for one, two, three years, then it will be moved up to 'priority foreign country' status."

That assignation, which the USTR only gives to Ukraine, could carry with it some economic sanctions.

Nonetheless, most say that the country, through better education and more effective execution of laws and prosecution of criminals, will no doubt be in better standing with the American government in the near future.

Antipiracy measures are Bałdyga's bailiwick.

Through the might and concern of ZPAV and other related organizations, there are now five local CD manufacturers under criminal investigation for making and distributing pirated music. Bałdyga asserted that there is evidence that five of the nine CD plants operating in the country are guilty of IP infringement. He was quick to point out that the other four CD plants operate legally.

Only 15%-20% of the illegal CDs sold in the country are manufactured locally. But cutting that number will make a substantial enough dent in the activity here, while it remains difficult to tackle the mounting piracy problem in the former Soviet republics.

Soon Bałdyga expects to see a case against CD manufacturer Pomerania Optical Disk sent to the courts. He estimated that the company could have cost the music industry €3.5 million ($4 million).

"The investigation at this stage is over to the public prosecutor, (who) sent all the papers to the court and the court hearing will take place in the middle of June," he said. "We have managed with our colleagues at the IFPI to collect good evidence against them. It was proved in a local forensic laboratory and so we have a good case against (them)."

Mariusz Kaczmarek, director general of FOTA, and Bałdyga also spent part of last week in Gdańsk training and educating 120 public prosecutors about piracy in music and movies.

"We show them how to identify pirated products, how to proceed (after identification) and how we can help with the process," Kaczmarek said.

For FOTA, the USTR's heightened concern is a good thing.

"It makes our work a little bit easier," Kaczmarek said. "So we try to talk to the government about doing more about this."

He explained that this year alone there have been 400 raids on the Russian Market, and FOTA has provided assistance to authorities on identifying illegal goods.

But there is still work to be done in terms of these raids resulting in prosecutions. Thus FOTA and ZPAV take the educational route in teaching public prosecutors what they know.

Bartlomiej Witucki, spokesman for the Business Software Alliance (BSA) in Poland, said his organization has a very specific way of stemming software corruption.

He said that half of the business software used in the country is pirated. In the United Kingdom piracy levels are 25%; in Romania, 70-80%; and in Russia and China, about 95%.

Witucki said that the BSA's main piracy problem is that computer hardware sellers vend their wares with illegal business software already installed. "It's often sold with no license," he said.

In that environment, he said, the BSA provides software to businesses through which they can check whether their software is legal. The BSA does not request the results of the tests. Its intention is to spread awareness of the problem.

"Many companies in Poland don't even know that they have illegal software on their hardware," he said. "And we are not interested in the results (of the tests)."

But what these institutions are interested in is results from the government. The sharpened U.S. concern hopefully will provide the needed kick.

"From our point of view nothing has changed," said ZPAV's Bałdyga. "Here in Warsaw the situation is absolutely not acceptable."