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US industries want Washington to press Moscow on copyright, intellectual property laws

WASHINGTON, DC - 05/23/05 - If the US wants to curb already rampant piracy in Russia, it must learn from mistakes it made with China - and fast, according to several experts in recent testimony before a Congressional committee studying the issue of international product piracy.

The recent testimony on product and intellectual property piracy in Russia and China before the House Judiciary Committee panel on intellectual property came on the heels of a major government report labeling China as the world's leading export of counterfeit goods only four years after it entered the WTO with promises to crack down on bootlegging.

Acting Assistant US Trade Representative for Intellectual Property Victoria Espinel told the committee that agency could file a case against China if it does not make changes and that trade officials are "raising these and other concerns" in talks with the Russian government.

Successfully combating the rampant piracy and counterfeiting that currently exist in Russia is "a top priority," said Espinel, adding that Russia currently ranks second to China in the worldwide production and selling of counterfeit goods.

She said President Bush and Russian President Vladimir Putin havee discussed improving protection of intellectual property in Russia at several recent summits, including their meeting earlier this month in Moscow.

Russia is on the 2005 Special 301 Priority Watch List report released on April 29 as part of the USTR's annual review of countries' IPR practices.

The so-called Special 301 provision of US trade law authorizes measures against US trade partners for failing to protect US patents, copyrights, and other intellectual property (IP).  Sanctions have been applied against Ukraine, which has been identified as a Priority Foreign Country, the ranking reserved for the worst situations. 

Fourteen US trading partners, including Russia, are on the 2005 Priority Watch List of countries meriting close attention to IPR problems.

The Special 301 report cited concerns over piracy of Cd's and DVDs in Russia as well as and Internet piracy of copyrighted works. The USTR plans to conduct an out-of-cycle review in 2005 to monitor progress by Russia on a number of issues involving intellectual property.

"Recent discussions have focused on Russia's enforcement regime, legislative deficiencies, including the need for a comprehensive regulatory regime on optical media production and Internet piracy," said Espinel. "Through these and other ongoing efforts we have seen an improvement in cooperation at the working level on IP issues, especially from Rospatent  [the Russian government patent office] and the Ministry of the Interior."

Espinel said US embassy officials meet regularly with senior representatives of the Ministry of Interior, the prosecutors, Rospatent, and the Russian Supreme Court to track and press for enforcement in major criminal cases involving optical disc manufacturing facilities and Internet piracy.

The US is also working on IPR issues within the context of Russia's World Trade Organization (WTO) accession negotiations, she said, adding that the US is "raising these and other concerns in the accession negotiations" and has "made it clear to the Russian government that progress on IPR will be necessary to complete the accession progress."

While acknowledging that Russia has strengthened its intellectual property laws to provide better protection for existing works, sound recordings, patents, and computer software and databases, "further improvements in Russia's laws are necessary," said Espinel.

Russian law enforcement agencies have taken some anti-piracy action, including raids by police, but "these actions have not resulted in the kind of robust prosecution and meaningful penalties that would deter the significant increase in piracy that [we have] observed in Russia."

"Enforcement efforts in Russia must increase dramatically," she said.  "We need to see improvements in enforcement of Russia's criminal law against piracy, improved enforcement at the border, and better administrative and civil procedures such as providing for ex-parte procedures in civil cases."

Espinel expressed particular concern about the amount of excess optical-media (CDs and DVDs) capacity in Russia, and about Russia's lack of a comprehensive regulatory regime to control illegal optical-media operations.

"Russia must establish an effective system for inspecting the optical media plants to ensure that only authorized product is being made," she said.

With regard to criminal enforcement, Espinel cited as problems frequent delays in prosecutions, the imposition of minimal penalties, the return of pirated goods to the market, and the continued operation of Internet sites that are spreading pirated material.

"Russia has made little progress in permanently closing down illegal production plants and bringing offenders to justice," she summed up.

Other witnesses at the hearing included Eric Schwartz, vice president and special counsel to the International Intellectual Property Alliance; Bonnie Richardson of the California-based Motion Picture Association of America; and Matthew Gerson of the Universal Music Company in Los Angeles.
 
According to Schwartz, US industry lost over $1.7 billion last year alone to copyright piracy in Russia, and over $6 billion in the last five years.

As Russia seeks admission into the World Trade Organization, the White House "must threaten serious trade sanctions and the ineligibility of duty-free imports into the US unless Moscow cracks down on intellectual property violations," he said.

Richardson made a point of acknowledging that there are honest officials in Russia who put their lives on the line in trying to protect intellectual property, but he also recounted instances of official corruption and involvement with organized crime.

Reform, she asserted, "must start with Russian President Vladimir Putin. There won't be any progress on the issue unless [President] Putin himself demands accountability from his senior officials."

"Only he can do it," she said, noting that many of the estimated 34 plants mass-producing pirated movies sit on government property and military installations, and that all eight plants raided last year are still in operation.

Gerson urged the committee and the Bush Administration to consider what might be done to work with Japanese and European businesses and parliamentarians and other government officials to try to come up with a plan to address the intellectual property rights theft going on in China and Russia.

Rep. Howard Berman (D-California), the leading Democrat on the subcommittee, said the US has "an opportunity to learn from its mistakes with China" and get a "meaningful commitment" on intellectual property from Moscow.

He criticized the Bush Administration for not having filed any WTO actions dealing with piracy against China, saying, "That's billions of dollars in our economy."

Schwartz estimated the entertainment industry alone lost about $1.7 billion to Russia last year alone in bootlegged goods. He said eight of the known 34 piracy plants are dedicated to making DVDs at a rate of about 400 million discs each year.

"We think the time for the Russian government is up," Schwartz said.

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