June 29th 2005. Media Center, Belgrade, Serbia

Address by Mr. Christian Wright, Vice Consul of the Embassy of the United States of America, Belgrade, Serbia and Montenegro:

Talking Points IPR - June 28, 2005

Intellectual property rights protection is one of the top priorities of the US Government policy worldwide.

The huge global trade in pirated and counterfeit goods represents economic theft on a massive scale. In today's knowledge-based economy, this theft of the output of the factory of ideas and creativity threatens the economies of countries based on innovation, and those of developing countries seeking the opportunities offered by an advanced services economy.

Counterfeiting destroys creativity and innovation, eliminating jobs and livelihoods and bankrolling organized crime.

Counterfeiting has developed from a localized industry into a massive, sophisticated global business. Fake products - from CDs, DVDs, software and watches to electronic equipment, clothing, processed foods, consumer products and auto parts - are estimated to account for up to 7% of global trade and cost legitimate right holders around the world billions of dollars annually.

Counterfeiting of such a broad range of products on a global scale affects more than just the companies that produce legitimate products. While it has direct impact on the sales and profits of those companies, counterfeits also hurt the consumers who waste their money and sometimes put themselves at risk by purchasing fake goods. It also hurts the countries since counterfeiters generally pay neither taxes nor duties.

Just to illustrate the level and significance of piracy, here is the data published in the International Federation of the Phonographic Industry (IFPI)' 2005 Commercial Piracy Report.

• In 2004 illegal pirate music was worth US$ 4.6 billion globally
• 1.2 billion pirate discs were sold in 2004 - every third disc sold worldwide is pirate
• In 31 countries fake recordings outsell legal copies
• Copyright industries represent 5% of the GDP of the US and European economies
• The entertainment and media sectors are worth around 1 trillion US dollars globally

As we all know, protection of IPR in SAM represents serious problem. Sale of pirated optical media (DVDs, CDs, software) as well as counterfeit trademarked goods is fairly widespread.

According to IFPI report, music piracy level in SAM is around 80%. The report also says that (quote) "SAM slipped back after a slight improvement in 2003. The new Serbian government has prioritized IPR enforcement, but the necessary clamp down on pirate street sales has yet to materialize." (end quote)
The United States Embassy has been working hard with SAM authorities in order to improve situation in this area. We were pleased to see signs of progress, such as the State Union parliament passage of five cornerstone IPR laws in 2004. This marked a tremendous step forward. These were laws on protection of patents, copyright, trademarks, designs, and topography of integrated circuits.

These laws will provide protection for the products and ideas of the highly creative Serbian people and help encourage industries based on innovation such as pharmaceuticals and information technology companies to look at Serbia as a potential investment site.

Encouraging sign from the Government side was also when Finance Minister Dinkic announced in February 2005 that the Government was formulating a plan to “completely destroy piracy” via a new Ministry of Interior Department devoted to combating piracy and via more severe fines for piracy.

We were also very pleased when all three governments (Serbian, Montenegrin and State Union) adopted an action plan for enhancing protection of IPR. This action plan outlines necessary steps and defines target dates for each step, steps that should help improve legislative and institutional IPR environment. The US Government stands ready to continue to assist government with accomplishing the tasks set out in the Action Plan.

However, the key problem of IPR protection in SAM remains ineffective enforcement. There have been positive developments in Serbia in 2004 with respect to increased police and customs actions against IP offenders and seizures of pirated goods, but more is needed.

Improving enforcement through integration and application of new IPR laws, further enhancements to republic criminal codes, republic-level legislation to provide necessary authorities to enforcement agencies (particularly market inspection), and training of police, prosecutors and judges are all necessary next steps to provide an environment the sufficiently and effectively protects U.S. commercial interests.

We are also very pleased to see that local creative community sees the threat from piracy. Local artists have creative, vibrant local environment in Serbia with big economic potential and we are pleased that they also recognize the threat to their interests and livelihoods coming from piracy. I hope that together we will all find ways to fight it.