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OO RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHSM #0141/01 0611357
ZNR UUUUU ZZH
O 021357Z MAR 09
FM AMEMBASSY STOCKHOLM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4176
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 03 STOCKHOLM 000141 
 
STATE FOR EEB/TPP/IPE:TIMOTHY R MCGOWAN 
 
STATE PLEASE PASS TO USTR FOR JENNIFER CHOE GROVES 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KIPR ECON ETRD PGOV SW
SUBJECT: SPECIAL 301 FOR SWEDEN: POST RECOMMENDATION 
 
REF: A) STATE 8410; B) 08 STATE 45106 
 
¶1.  (SBU) Summary.  Embassy Stockholm recommends that Sweden 
continues to be placed in the Special 301 Initiative, and not be on 
the Watch List for 2009.  We are aware of the differing 
recommendations of the International Intellectual Property Alliance 
(IIPA) and PhRMA.  Post recommendation is based on: 
 
-- The progress made by the Government of Sweden (GOS) in five out 
of the six items identified in the Special 301 Initiative Action 
plan we communicated to the GOS last year; and 
 
-- The sensitive domestic politics that the GOS needs to manage in 
order to step up internet piracy enforcement in Sweden.  The GOS 
struggles, with good intentions, against a very negative media 
climate and against a vocal youth movement.  For example, we want to 
highlight the risk that negative media attention on the file sharing 
issue gives the Pirate Party a boost in the EU Parliamentary 
elections in June 2009. 
 
¶2.  (SBU)  This cable reviews the progress Sweden has made on the 
Special 301 Initiative Action plan which we presented to the GOS at 
the conclusion of the Special 301 review 2008 (Ref B).  Post 
continues to engage very constructively with the GOS, and has good 
access and a good working relationship with key senior and working 
level GOS officials.  The actions taken since last year's review 
strengthen the legislative framework and provide better enforcement 
tools for combating piracy.  The Pirate Bay trial is currently being 
heard in the district court in Stockholm.  The last day of the trial 
is March 4, and the verdict can be expected on or about March 25. 
 
¶3.  (SBU)  Embassy Stockholm believes it would be counter-productive 
to watch list Sweden at this point.  Likely negative political and 
media reaction to a watch listing must be taken into account.  The 
Justice Ministry, with primary responsibility for this issue, is 
fully on board and well aware of what is at stake.  It is currently 
battling with the Ministry of Enterprise, Energy, and Communication 
about the next appropriate steps to curb internet piracy.  Now that 
the Enforcement Directive implementation will finally enter into 
force on April 1, and there will soon be a first District court 
decision in the Pirate Bay case -- the Justice Ministry will turn 
its attention to other key issues, primarily the ISP liability issue 
and extra resources to investigative capabilities.  The GOS (led by 
the Justice Ministry) has to conduct a delicate balancing act, 
advancing this issue shortly before Sweden assumes the Presidency of 
the EU, in the early days of the Obama administration, and in the 
budding election campaign for the EU Parliamentary elections. 
 
End summary. 
 
Background 
---------- 
 
¶4.  (U) The International Intellectual Property Alliance (IIPA) has, 
in its yearly Special 301 submission to USTR, identified widespread 
internet piracy and difficulties in achieving effective enforcement 
against criminal copyright infringement as problems in Sweden, and 
has requested that Sweden be placed on the Special 301 Watch List 
for 2009.  Sweden was not placed on the Watch list in 2008, despite 
industry's demands, but was rather placed in the relatively recent, 
middle step, named Special 301 Initiative.  As part of the 
Initiative, post conveyed a Special 301 Action plan to the GOS, 
covering six items where the USG hoped to see progress during 2008. 
 
Review of progress on action plan 
--------------------------------- 
 
¶5.  (U) The Special 301 Initiative Action plan 2008 contained 
recommendations in six specific areas.  The GOS has acted, in 
various degrees, in five of those areas.  A review of progress in 
the six areas follows in paras 6-11: 
 
¶6.  (SBU) Industry consultations/ISP liability:  The GOS held a 
series of industry consultations in the summer/fall of 2008, with 
the explicit aim to discuss a voluntary industry agreement involving 
ISPs and right-holders organizations.  Industry contacts reported 
that the ISP's were not willing (they claim they are not able) to 
take on any action on a voluntary basis.  The first round of 
consultations was concluded without results during the fall of 2008. 
 The Justice Ministry is currently working internally in the GOS to 
get acceptance for a second round with a clear incentive for 
progress, i.e. threatening with legislation in the absence of a 
voluntary agreement.  There is some resistance in the Center party 
led Ministry of Enterprise, Energy, and Communications, and 
negotiations are on-going at senior GOS-levels. 
 
¶7.  (U) Injunctive relief:  The one item without any progress is 
 
STOCKHOLM 00000141  002 OF 003 
 
 
Action plan item 2, Injunctive relief.  The GOS maintains that there 
are adequate provisions currently on the books in Sweden, and does 
not intend to introduce new legislation.  (Note that industry claims 
to the contrary were supported by the recommendations of the Renfors 
Commission, a government study commissioned to look into the file 
sharing issue.  The GOS has declared that it will not further 
implement Renfors' recommendations.  End note.) 
 
¶8.  (U) Implementation of the Enforcement Directive: The bill was 
approved by Parliament on February 25, and the new provisions will 
enter into force on April 1, 2009.  The political sensitivities made 
the final handling of the Bill very delicate for the Alliance 
government.  Much of the debate and negotiations have been done in 
public, and there has been tremendous pressure put on individual 
MPs.  The passage of the implementing legislation is therefore a 
much greater victory for the GOS than it might appear.  Major 
changes, compared to the original proposal, are: 
 
-- the law will not be retroactive, i.e. only for copyright 
infringements committed after the law has entered into force can a 
court order that the identity behind an IP-number be handed out. 
 
-- The court will make a proportionality assessment, i. e. weigh the 
need of the rights-holder to get access to the personal identity 
against integrity aspects of the person behind the IP number.  The 
law now stipulates that a certain scale of infringement will be 
needed for the court to decide that the information should be handed 
out.  Normally, that would be the case when the infringement 
consists of up-loading a single film or musical piece -- since that 
typically incurs significant damage to the rights-holder.  The same 
judgment will be made for a significant scale of down-loading 
copyright protected material. The law establishes that if the 
infringement is the down-loading of only a "few pieces", then 
normally the court's assessment should be that the integrity 
interest must take precedence and the information must not be handed 
out. 
 
-- The law includes provisions that the GOS intends to observe and 
assess how the law is used, to ensure that the law is indeed used to 
go after significant cases of copyright infringements.  This 
monitoring will commence immediately once the law has entered into 
force. 
 
¶9.  (U) Granting police and prosecutors the right to identities 
behind IP numbers of individuals potentially implicated in copyright 
crimes of lower dignity, i.e. fines rather than prison sentences: 
The Justice Ministry has also worked towards the goal of changing 
legislation so that police and prosecutors can get access to 
information about identities behind IP numbers in cases where the 
crime could lead to a fine (rather than a prison sentence).  The 
usual Swedish term for this type of crime (punishable by fine, not 
prison) is "crime of lower dignity."  At present, law enforcement 
officials are only allowed to get such information if the 
infringement could lead to a prison sentence.  The GOS has agreed to 
change the legislation, and it was made part of a study commissioned 
to propose the steps needed to implement such a change.  The 
proposed changes were recently separated out from the rest of the 
study, and were reported in advance to Justice Minister Ask late 
January 2009.  Although the slow legislative process is 
disappointing, the GOS has already agreed on the necessary changes 
that will strengthen the investigative tools of enforcement 
officials. 
 
¶10.  (SBU) Police and prosecutors:  There are now two full-time 
prosecutors dedicated to IPR/copyright issues.   Police officers 
have been trained, but we understand that they are not allowed to 
devote attention to IPR/copyright issues.  They are back in their 
regular line of duty in their districts, where there are conflicting 
priorities.  We have understood that the prosecutors have alerted 
that this is a problem for their work - they are "stuck" with a 
backlog of old errands and without the support of investigative 
officers.  The prosecutors ask for investigative officers that are 
exclusively devoted to IPR issues, today there are no such 
investigative capacities.  The Justice Ministry has repeatedly asked 
the Head of the Swedish Police for information about how he plans to 
come to terms with the investigation deficiencies.  Although the GOS 
recognizes the needs, the budget bill for next year will likely not 
contain significant increases for law enforcement, given the harsh 
economic conditions.  This is an area where post can work with the 
GOS and industry to highlight the significant impact additional 
resources in this area might have. 
 
¶11. (SBU) Public education: In the fall of 2008, the GOS released a 
new information material, primarily aimed for youth, which will be 
broadly distributed in Swedish schools.  Justice Minister Ask's 
staffers are currently considering the pros and cons of engaging 
Cabinet members in the public debate.  Given all the negative 
 
STOCKHOLM 00000141  003 OF 003 
 
 
attention around the Enforcement directive and the Pirate Bay trial, 
the determination thus far has been to keep a low profile.  The GOS 
recognizes that there is a real risk that the window of opportunity 
was lost already several years ago -- when leadingQticians 
didn't take the debate.  How to engage at this point is a delicate 
matter. 
 
Pirate Bay 
---------- 
 
¶12.  (U) After the raid on Pirate Bay on May 31, 2006, the issue of 
internet piracy was fiercely debated in Sweden.  Press coverage was 
largely, and still is, unfavorable to the positions taken by 
rights-holders and the USG.  The Pirate Bay raid was portrayed as 
the GOS caving to USG pressure.  The delicate situation made it 
difficult, if not counter-productive, for the Embassy to play a 
public role on IPR issues.  Behind the scenes, the Embassy has 
worked well with all stakeholders.  After 18 months of 
investigation, the prosecutor filed indictments against four 
individuals for contribution to copyright infringement because of 
their activities administrating the Pirate Bay bit torrent webpage. 
The case is currently being heard in the district court in 
Stockholm, and the trial is scheduled to be completed on March 4. 
The sentence is expected on or about March 25, i.e. before the 
conclusion of the Special 301 review process.  However, we fully 
expect that any outcome will be appealed to a higher court, which 
means that the final verdict will not be known for several years. 
 
PhRMA's drug pricing issue 
-------------------------- 
 
¶13.  (U)  PhRMA has also requested that Sweden be put on thQ 
Special 301 Watch List.  The request is based on the GOS decision to 
de-regulate the pharmacy market in Sweden and the alleged plans to 
reduce prices of patented pharmaceuticals on the Swedish market with 
the aim to finance the redesign.  The price cut is believed to be as 
high as 10 percent. 
 
¶14.  (U)  According to the Swedish Ministry of Health and Social 
Affairs, the GOS does not plan to impose a general price cut on 
patented pharmaceuticals, but rather has the intention of 
maintaining a model for a value based pricing system.  TLV, the 
Dental and Pharmaceutical Benefits Agency, a central government 
agency, has been assigned to suggest principles for pharmacy mark-up 
and to suggest how the profitability in the pharmacy market will be 
assessed and followed up.  TLV will present its proposals to the GOS 
on April 1 this year. 
 
¶15.  (U)  As of March 2 there is no decision, nor anything in 
writing, that confirms that the GOS is actually proposing a 10 
percent general price cut on patented pharmaceuticals.  Therefore 
the Embassy does not recommend that Sweden be put on the 2009 
Special 301 Watch List as concerns the de-regulation of the Swedish 
pharmacies.  However, should the GOS as a result of the April 1 TLV 
report reach a decision to impose a general 10 percent price cut on 
patented pharmaceuticals, the Embassy will engage in high-level 
advocacy with the GOS on the issue again. 
 
SILVERMAN