On 28 July 2023, the Members of Parliament (“MPs”) approved, on second reading and with slight amendments, the Draft Amending and Supplementing Act of the Criminal Code (the “Draft Act”) that was proposed by the Council of Ministers. With the newly adopted texts, the State's criminal policy in the field of intellectual property protection aims to adapt to contemporary forms of IP infringements, focusing on imposing criminal liability for individuals creating conditions for online piracy.
Pursuant to the Motives to the Draft Act the need for adopting these changes arises from the dynamic development of technologies, which creates conditions for more frequent and substantial violations of intellectual property rights on the Internet. The Council of Ministers highlights the necessity of creating new criminal liability provisions that correspond to the changed realities in public relations and counteract the technological possibilities for easy and uncontrolled access by an unlimited number of individuals to an unlimited number of intellectual property objects. Such actions cause significant harm to rightsholders when protected content is used without authorisation in a digital environment.
In April 2023, the Office of the United States Trade Representative (USTR) reported a troubling trend and once again added Bulgaria to the watchlist for the protection of intellectual property rights. The report states that the country has not adequately addressed the deficiencies in investigating and prosecuting cases of online piracy. Globally, criminal activity related to intellectual property ranks second in generating revenues with minimal or zero risk for the perpetrators.
The adopted amendments to the Criminal Code (the “CC”) aim to specify the legal framework for crimes against intellectual property in the digital environment and address the criticisms levelled against Bulgaria under Section 301 of the U.S. Trade Law(1). The new texts criminalise the behaviour of individuals creating conditions for online piracy, such as establishing and maintaining torrent tracker websites, web platforms, chat groups in online communication applications for the online exchange of pirated content, and any similar activities that facilitate unauthorised access to protected works.
As users of pirated works are not subject to criminal repression, a new paragraph 2 of Article 172a of the CC is introduced to achieve the intended goal. This paragraph criminalises the construction or maintenance of an information system or the provision of a service to the information society. The offence is formal, and its completion only requires the actual execution of the act. For criminal liability to incur, the perpetrator must have acted with a specific intent to commit crimes that violate copyright and related rights, as well as with an intent to obtain a material benefit. The presence of criminal intent should be proven in each specific case. The prescribed punishment is imprisonment from 1 to 6 years and a fine of up to BGN 10,000.
Furthermore, the existing paragraph 2 of Article 172a of the CC becomes paragraph 3, introducing changes that relate to cases of crimes against multiple protected objects of copyright or related rights and/or material carriers containing protected objects. In its new version, the provision introduces two quantitative criteria: for the monetary equivalence of one or more objects to exceed 70 minimal wages and for the number of affected objects to exceed 50.
Thirdly, with the new amendment to Article 172a, paragraph 7 of the CC, the legislator resolves a long-standing conceptual problem arising from the provisions of the earlier 2006 edition concerning the seizure and destruction of the object of the crime, regardless of its ownership. The previous regime has been subject to significant criticism in doctrine and judicial practice as it deviates from the general regime of seizure of property for the benefit of the state under Article 53 of the CC and violates the absolute right to property of third parties unrelated to the criminal act. With the legislative correction, the object of the crime is seized for the benefit of the state only when it belongs to the perpetrator.
The initiative to take measures to effectively combat intellectual property infringements in the online environment is a step in the right direction. However, many questions remain unanswered. Firstly, it should be discussed whether explicitly criminalising the establishment and maintenance of torrent tracker websites and online platforms for the exchange of pirated content is the solution to the piracy problem in Bulgaria. The complexity of combating online piracy has always stemmed primarily from the dynamic nature of the internet environment in which these infringements occur. The individuals behind a particular pirate site are particularly difficult to identify (this problem is not addressed by the changes in the Criminal Code), and the technical skills of the administrators of such sites allow them to quickly transfer their activities to another site, domain, server, or jurisdiction, thereby staying one step ahead of law enforcement authorities (this issue is not addressed in the new amendments either). On the other hand, the contribution of the Court of Justice of the European Union (CJEU) in the field of online piracy should be mentioned. In its judgment in the case of BREIN/Ziggo in June 2017, the Court held that Article 3(1) of the InfoSoc Directive(2) (right of authors to prohibit public communication) must be interpreted as covering the making available and management, on the internet, of a sharing platform which, by means of indexation of metadata relating to protected works and the provision of a search engine, allows users of that platform to locate those works and to share them in the context of a peer-to-peer network. In other words, the administration of pirate platforms in itself has constituted a violation of copyright law until now too. What is lacking in our legislation are rather the means to effectively prevent and terminate the activities of such platforms. At present, there are ongoing proceedings against the major pirate platforms in our jurisdiction, and the lack of explicit criminalisation of their activities is not the obstacle to terminating their operations.
A more effective approach would be to block the access to platforms with pirated content. Of course, this should be done while respecting fundamental human rights, particularly freedom of speech. The practice in many EU countries shows that measures allowing for the quick blocking of access to pirate websites are the most efficient means of preventing intellectual property infringements in the online environment. In our country, a similar approach is known, for example, in the field of online gambling. However, for years the doctrine has discussed, the lack of transposition of Article 8(3) of the InfoSoc Directive into the local Copyright and Neighbouring Rights Act, according to which "Member States shall ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right." A similar provision was included in the Trademarks and Geographical Indications Act of 2019 (Article 116(3)). Still, to this day, the Copyright and Neighbouring Rights Act does not contain an explicit text to that effect. At this point, it is worth mentioning a recent decision of the Sofia City Court, which accepts the argument that the current Copyright and Neighbouring Rights Act should be interpreted as providing the right for the holder of an affected intellectual property right to claim an injunction against intermediaries whose services are used by third parties(3). Whether the decision will be confirmed by the appellate instance and what effect it will have remains to be seen. Undoubtedly, the effect will be significantly delayed, considering the time the legal proceedings took (they started in February 2020), during which time the administrators of the targeted platforms have had time to reorganise their activities, establish new domain names, etc.
In light of the above, legislation in Bulgaria needs not so much the explicit criminalisation of the activities of online piracy platforms but rather effective measures for the quick takedown of such platforms or blocking user access to them.
Finally, it is worth mentioning some of the weaknesses of the newly introduced texts. The terms "building and maintaining," used in the new paragraph 2 of Article 172a of the CC, could also apply to persons engaged in technical activities for a given website (e.g., hosting) without having any control over the content, which improperly expands the circle of persons subject to criminal prosecution. In addition, the terms "provides a service to an information society" and "for the purpose of [...] obtaining a material benefit" allow for a certain freedom of interpretation that is inadvisable in criminal law. The new texts also lack a distinction between platforms with 100% pirated content and those that primarily contain content with valid rights but also distribute works without the necessary authorisations from rightholders. The important issue of the need for urgent legal remedies to successfully prevent crimes against intellectual property in the digital environment where time is of the essence is not addressed. For example, what actions can a film producer take when a film is about to be released in cinemas and simultaneously uploaded to a pirate platform? The new texts in the Criminal Code do not provide significant opportunities for effective measures.
The plenary debate concerning the vote on the amendments revealed a lack of comprehension among the MPs regarding the intricacies of the subject matter. It remains to be seen whether the legislator will seek solutions to the aforementioned obstacles to the successful protection of intellectual property in the online environment, particularly considering the issue raised in the Motives to the Draft Act that crimes against intellectual property should be perceived as highly socially dangerous acts, not only in terms of the rights and interests of individual authors that they affect but also in terms of financial losses for the holders of those rights, which also impact state budget revenues. In this sense, it would be wise to reconsider the ratio of sanctions for these crimes, which currently emphasise imprisonment, while the objectives of punishment under Article 36 of the Criminal Code would probably be achieved more effectively by increasing the extent of the economic sanctions.
(2) Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society
(3) Judgment of 31 May 2023 on commercial case 397/2020 of the Sofia City Court, Commercial Division, VI-2 chamber