TorrentFreak

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 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 leading politicians 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 the
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.