  We discuss the relation between entanglement and nonlocality in the hidden
nonlocality scenario. Hidden nonlocality signifies nonlocality that can be
activated by applying local filters to a particular state that admits a local
hidden-variable model in the Bell scenario. We present a fully-biseparable
three-qubit bound entangled state with a local model for the most general
(non-sequential) measurements. This proves for the first time that bound
entangled states can admit a local model for general measurements. We
furthermore show that the local model breaks down when suitable local filters
are applied. Our results demonstrate the first example of activation of
nonlocality in bound entanglement. Hence, we show that genuine hidden
nonlocality does not imply entanglement distillability.
