Addressing Piracy: Trademark enforcement in the Republic of Bulgaria

by Simon Walters of SD PETOSEVIC

The Republic of Bulgaria lies in the South East of Europe and is bordered by Romania, Serbia, Macedonia, Greece and Turkey, with the Black Sea along the length of its eastern border. As a result of its extensive borders and strategic location close to European Union states, Bulgaria has been a transit entry
point for counterfeit goods and also producer of such goods.

This article gives a brief overview of the intellectual property laws applicable to the country, then looks at the Customs procedure, and finally considers enforcement provisions in practical terms.

Bulgaria is a signatory to: Hague Convention; Madrid Agreement and Protocol; Nice Agreement; Paris Convention; TRIPS; and WIPO Convention. The main legislation relating to trademarks is the Law on Marks and Geographical Indications, No. 81 of 1999 (Law on Marks).

The first trademark filed has the best rights, unless one can show bad faith at the time of filing, or one has a well-known trademark. Registration takes up to one-and-a-half years on average.

The most recent amendments to the Law on Marks were implemented in August 2005. One notable addition to the Law on Marks is an opposition system in relation to national and International trademark applications, to complement the cancellation procedure originally in place against registered marks. Also, one can now cancel a trademark on the basis of an earlier company name registered under the Commercial Law.

As Bulgaria’s economy has become more liberal after the overthrow of Communism, intellectual property protection has increased in importance. It is moving its legislation towards harmonization with the EU for entry in 2007 by adapting and modifying existing legislation, and adopting new laws such as
Law on National Standardization and Law on Technical Requirements. Customs Law has been in conformity with EU legislation since 1998, based on the Community Customs Code. Bulgaria is also a member of World Customs Organization and World Trade Organization.

Seizures in Bulgaria

The following provisions of Bulgarian legislation govern the seizure of counterfeit goods in Bulgaria:

• Law on Marks
• Regulations on Border Measures for Protection of Intellectual Property Rights
• Civil Procedure Code

Customs watching can be initiated at the request of the trademark owner by entering a registered mark on the surveillance list of the Customs authorities of the Republic of Bulgaria. The Law on Marks foresees that: Goods carried across the border of the Republic of Bulgaria without the consent of its owner
and bearing a registered mark or an imitation thereof shall be seized by
the customs authorities at the written request of the owner.

Art. 2 (1) of the Regulations on Border Measures for Protection of Intellectual Property Rights, sets out the required documents and legal action to initiate this procedure:

• filing a written request at the Central Customs Office
• submission of a notarised and legalised Power of Attorney, issued by the owner of the registered mark and signed on behalf of the trademark owner
• submission of a certified and legalised extract from the Trade Register (Company Register) together with its certified Bulgarian translation
• submission of a copy (simple copy not certified) of the Registration Certificate of the mark
• payment of official fee for filing a written request in the amount of 500.- BGN and payment of official fees for general watching in the amount of 150.- BGN per month.

After the registered mark has been entered on the surveillance list, the Central Customs Office sends out a copy of the trademark registration certificate and a copy of the power of attorney to all Customs in the Republic of Bulgaria instructing them to seize any counterfeit goods bearing the registered mark.

When goods are found

If the Customs authorities find any counterfeit goods, the relevant Customs bodies contact the authorised representative of the mark owner. Upon receipt of a notice in relation to seized counterfeit goods, the representative of the trademark owner may file a Statement of Claim with the Sofia City Court. In order to initiate a lawsuit, the Statement of Claim has to be accompanied by a
notarised and legalised Power of Attorney issued by the owner of the registered mark and signed on behalf of the mark owner, a notarised and legalised extract from the Trade Register together with its certified translation in Bulgarian; a copy of the Articles of association of the legal entity together with its certified translation in Bulgarian and a copy of the Registration Certificate of the mark.

The Statement of Claim is filed in the short procedure order in accordance with Art. 126a (xv) of the Civil Procedure Code. The Statement of Claim includes a claim for attachment of the seized goods and is sent to the relevant Customs Authorities. The Sofia City Court judge rules on the claim for attachment of the seized goods and issues an attachment order. The authorised representative sends a copy of the attachment order to the relevant Customs Authorities.

The representative of the registered mark owner sends the attachment order issued by Sofia City Court to an Executive Magistrate at the respective District Court for the district where the goods are seized. The representative of the registered mark owner contacts the Executive Magistrate and together with him and an expert goes to the place where the goods are kept. The expert evaluates the seized goods, and the Executive Magistrate makes an inventory of the goods and attaches them. Upon completion of the lawsuit and enforcement of the court judgement, the counterfeit goods are destroyed.

Customs initiatives

The Law on Marks and the Regulations on Border Measures for Protection of Intellectual Property Rights also provides a procedure for seizure of counterfeit goods on the initiative of the Customs Authorities. Customs Authorities in this instance are not allowed to seize goods for more than 10 days, and if within this period the above-mentioned steps are not undertaken, the Customs Authorities are obliged to release the counterfeit goods. From April 2004, the Danish Patent and Trademark Office has been leading the project to develop and implement a computer system, to interlink various national bodies to assist with border control and surveillance. These bodies are Bulgarian Ministry of Culture; Customs Authorities; Ministry of Interior; Ministry of Justice; and the Patent and Trademark Office. The IT project aims to improve access to information and disseminate such information to the relevant agencies, which is seen as a
major step forward in the fight against counterfeits and crime.

At the same time as liberalisation of the economy and harmonisation with the EU, the Bulgarian market has become more attractive, and unfair competition, violation of trademarks and counterfeiting have increased. The major counterfeit goods are cigarettes from China, and optical disc media. Difficulties
associated with optical disc media are a good illustration of how the Bulgarian system operates.

A reputation for piracy

In the 1990s, Bulgaria was one of the biggest exporters of pirated goods, particularly optical media products and CD software. Foreign governments pressured Bulgaria to undertake legal reforms to regulate the production and distribution of optical disk media to lessen the number pirated. Some plants were closed down.

Legislative reform has led to amendment of Bulgaria’s copyright and criminal laws, and it has adopted new legislation on CD plant verification. Bulgaria has also deposited its instruments of ratification for both the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty. The copyright law amendments of 2000 went far toward implementing many WIPO obligations.
Practical enforcement in Bulgaria of the legislation still remains a problem and needs to be substantially improved. Bulgaria is on piracy watch lists maintained by various organisations as a result of resurgence in piracy in the production, distribution and importation of optical disc media. Record industry bodies believe that 80% of music CDs sold in Bulgaria are counterfeit. In addition, shipments of pirated CDs from the Russian Federation to the Balkans, Greece and Turkey pass through Bulgaria.

Title verification and CD plant licensing by the Ministry of Culture for the production of CDs should go some way to alleviate the problem. However, counterfeiters are sophisticated and base their licences on false documents. The Ministry of Culture does not carry out any investigation prior to granting the production license; there is a backlog at the overworked Ministry; and the
sanctions for non-compliance are minor with small fines. Altogether, the system is ineffective in preventing counterfeiting.

The Bulgarian government should put targets in place to make anti-counterfeiting measures efficient and effective. Such measures should include: improvements to title verification and plant licensing; surveillance of plant facilities; monitoring of CD raw materials (polycarbonates); encouraging the use of source identification codes (SID) in CD manufacture; faster prosecutions through the criminal system; larger fines; and confiscation of equipment used in piracy.

The music recording industry in Bulgaria (BAMP/IFPI Sofia) cooperates
with the local police force against piracy, by sharing information and assisting in identifying counterfeit product. In 2001, over 400 police raids were carried out against pirate retail outlets. Over 100 of those police raids involved individuals from BAMP/IFPI Sofia. 172,098 counterfeit items were seized in these actions. Of these 400 raids, the police filed 116 cases. Six people were sentenced to prison terms, and sanctions were imposed on 14 people totalling US$2,200.

Prosecutions and judicial sentencing have been ineffective and not a deterrent — only 5% of criminal cases have been successful, leading to a preconception amongst counterfeiters that they are likely to get away with their illegal behavior. The criminal procedure is very slow, with some corruption among both executive authorities and the judiciary. A lack of police, magistrate
investigator and judicial knowledge and experience in the field of computer software and IT crimes has led to delays in police investigations and court proceedings. In relation to music piracy, a huge backlog in prosecution cases has been caused by delays in providing expert reports prepared by the Ministry of Culture.

The Copyright Department of the Ministry of Culture is the only authorised body allowed to give an expert opinion and report, which includes a description of each counterfeit work. The Copyright Department lacks the resources and staff to do this. The Penal Proceedings Code needs amendment so that
copyright owners can prepare reports themselves. Out of 98 software raids conducted, only one has resulted in a criminal sentence. The sentence was a fine of US$350 per defendant, and confiscation and destruction of the illegal software.

In most criminal trials for counterfeiting, a suspended sentence is given. Fines are usually less than US$500. Judicial reform is urgently required if Bulgaria is to satisfy accession requirements to join the EU.

In September 2005, Laszlo Kovacs, European Commissioner for taxation and customs, said that Bulgaria’s new government had some way to go in addressing corruption, counterfeiting and fraud, if the country is to join the European Union in 2007. Kovacs said:

“Bulgaria has achieved a lot but there is still a lot to do to complete the preparation. Some progress has been achieved in curbing corruption but this should remain a priority as a key element of a modern state administration and of taxation and customs in particular. Counterfeiting is still a concern in Bulgaria because of the production of fake CDs and transit of counterfeit products from Turkey towards the EU through Bulgaria”.

Businesses that wish to invest in Bulgaria note the difficulties in obtaining enforcement of their rights in Bulgaria. The government has some way to go to adequately protect intellectual property rights and ensure investment in its economy.

Sources consulted:

• Law on Marks and Geographical Indications
• Regulations on Border Measures for Protection of Intellectual Property Rights
• Civil Procedure Code
• International Intellectual Property Alliance 2002 Special 301 Report
• Danish Patent Office Website
• Forbes News items