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Cablegate: Panama Response to Request for Special 301

VZCZCXYZ0000
RR RUEHWEB

DE RUEHZP #0258/01 0522132
ZNR UUUUU ZZH
R 212132Z FEB 07
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC 9856
INFO RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
RHEFHLC/DEPT OF HOMELAND SECURITY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS PANAMA 000258

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EB/TPP/IPE JENNIFER BOGER
USTR FOR JENNIFER CHOE GROVES
COMMERCE FOR ITA/MAC/OIPR CASSIE PETERS

E.O. 12958: N/A
TAGS: ECON ETRD KIPR PGOV PM
SUBJECT: PANAMA RESPONSE TO REQUEST FOR SPECIAL 301
VOLUNTARY INPUT

REF: A. STATE 07944

B. 2006 STATE 180082
C. 2005 PANAMA 00413

1. (SBU) SUMMARY. The legal framework governing IPR
protection in Panama is substantive, although gaps exist
both in domestic legislation and participation in the full
complement of international treaties. Enforcement levels
and resources remain weak but 2006 saw positive trends in
seizures and convictions. Embassy Panama's IPR
Subcommittee (Econ, FCS, NAS, PAS and AID) meets regularly
to track IPR legislation and enforcement levels, identify
equipment and resourcing needs, select candidates for U.S.
Patent and Trademark Office (USPTO) and other IPR related
training, organize public outreach and focus Panama's
judiciary on IPR. Key Embassy sponsored events for 2006
included equipment donations to Panama's inter-
institutional IPR Committee, MPAA sponsored movie
screenings, judicial exchange between members of Panama's
judiciary and U.S. District Court in conjunction with the
Department of Justice. Of the industry association groups,
IFPI and MPAA are the most active in Panama. Outreach to
BSA, ESA and PhRMA by Econoff received friendly but
noncommittal responses. END SUMMARY

------------
IT'S THE LAW
------------

2. (U) Panama's domestic IPR legislation criminalizes
patent, trademark and copyright violations with penalties
ranging from two to four year jail terms. An Executive
branch sponsored review of Panama's entire judicial code
(Comision Codificadora) currently recommends increasing
penalties to four to six year jail terms, initially with
the exception of the use of published materials (copyright
protection). Post raised with the GOP our concern that this
exception under the proposed new judicial code would weaken
copyright protection. Panama's Trade Ministry, working
with the IPR Prosecutor and Panama's Inter-institutional
IPR Committee, responded quickly to ensure the draft code
would not weaken Panama's IPR legal framework.

3. (U) Panama is a signatory to the WIPO Copyright Treaty,
WIPO Performances and Phonograms Treaty, the Geneva
Phonograms Convention, the Brussels Satellite Convention,
the Universal Copyright Convention, the Bern Convention for
the Protection of Literary and Artistic Works, the Paris
Convention for the Protection of Industrial Property, the
International Convention for the Protection of Plant
Varieties, and the Rome and Stockholm Conventions.
However, Panama's domestic IPR legislation does not reflect
all of its obligations under these treaties. Examples
include the WIPO Copyright Treaty (WCT) and Performances
and Phonograms Treaty (WPPT). In 2005-2006, Panama entered
into a number of bilateral Free Trade Agreements including
Mexico, Central America, and Taiwan which contained
language supporting the enforcement of intellectual
property rights.

4.(U) In December 2006, the U.S. and Panama concluded
negotiations of a Trade Promotion Agreement (TPA), which
includes a chapter on IPR. In this TPA, Panama agreed to
ratify or accede to the Patent Cooperation Treaty, the
Budapest Treaty on the International Recognition of
the Deposit of Microorganisms for the Purposes of
Patent Procedure, the Trademark Law Treaty, and the
International Convention for the Protection of New Plant
Varieties. Panama also committed in the TPA to make all
reasonable efforts to ratify or accede to the Patent Law
Treaty, the Hague Agreement concerning the International
Registration of Industrial Designs and the Madrid Protocol.

--------------------
WHAT'S THE PROBLEM ?
--------------------

5. (U) The primary IPR violations in Panama are copyright
infringement (music and movie piracy) and trademark
infringement (counterfeit designer clothing and
accessories). In addition, Panama's Colon Free Zone (CFZ) is
the primary conduit for blank CDs imported from Asia and
re-exported throughout Latin America for use in audio and
video piracy as well as for counterfeit designer goods.
Wholesale vendors reported to the press an 80% decrease in

sales from the prevalence of pirated CD's in Panama and a
list of seven retail music stores/chains which have closed
as a result.

6. (U) According to the 2005 BSA/IDC 3rd World-wide Study
on Piracy, 71% of the software in use in Panama is
pirated. Legally, the GOP is required to use only properly
licensed software but anecdotal evidence suggests
compliance within GOP departments is low. Despite these
statistics, attempts to engage BSA/ESA in a compliance
project by Post were unsuccessful. According to the IPR
Prosecutor's office, only two cases of counterfeit
pharmaceuticals were reported in 2006, only one of which
resulted in a seizure and subsequent investigation.

---------------
IPR ENFORCEMENT
---------------

7. (U) Panama has less than six prosecutors specializing in
IPR violations, most of whom are based in Panama City.
There is no dedicated court for IPR violations. IPR cases
are tried in the geographic district in which they occur,
which results in inconsistent application of the law
depending on the sophistication and training of the sitting
judge. The IPR Prosecutor's office remains underfunded and
understaffed for the workload. Post's IPR Subcommittee has
targeted resources (equipment, training and operational
funding) for use by this organization.

8. (U) Nonetheless, available data indicates that IPR
enforcement efforts undertaken in 2005 and 2006 were
significantly higher than 2004 (Ref C). Panama's Customs
Authority reported $10 million in pirated and counterfeited
goods decommissioned between January and November of 2006.
The primary products seized were fake designer watches,
sweaters, sportswear, perfumes, jeans, shoes, hats and
counterfeit cigarettes. According to Panama's IPR
prosecutor, during the period between September 2005 and
July 2006, 654 cases of IPR violations were reported. As
of July 2006, 157 were under investigation and 471
proceeded to prosecution with 44 convictions, 4 acquittals
and 34 were dismissals (SIC). Media reports claim that
enforcement efforts in the Chiriqui province have
significantly reduced the sale of pirated music and movies
in the interior regions of Panama.

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ABSENTEE JUDICIARY
------------------

9. (SBU) The most significant IPR enforcement hurdle in
Panama remains the apathy and ignorance of the judiciary.
The sale of pirated goods is considered a victimless crime
at a minimum, and at times an important source of financial
support for poor Panamanians. Despite painstaking work by
the Prosecutor's office, most Panamanian courts look for a
technical violation in the application of procedural rules
that will allow them to dismiss the case.

10. (U) As a result, Post specifically designed a program
to raise the judiciary's consciousness on IPR issues.
Working with DoJ's Office of Overseas Prosecutorial
Development, Assistance and Training (OPDAT), a program of
exchanges with U.S. District Judges began in 2006.
Selected Panamanian judges are sent to observe proceedings
in a U.S. District court to demonstrate the professionalism
and efficiency of U.S. procedure and to build rapport. In
2007, it is anticipated that one or more U.S. District
judges will come to Panama to conduct a seminar and assist
the participating Panamanian judiciary in creating a "bench
book" on how to try IPR cases in Panama. The first
exchange took place in U.S. District court in Puerto Rico
on December 4th and 5th. Thanks to the good offices of both
DoJ and USPTO, Post was able to send the three
participating judges directly onto Miami for the
USPTO/SEICA Seminar for the Judiciary on IPR Enforcement
December 6 to 8th.

------------------
STAYING ON MESSAGE
------------------

11.(U) To counteract the perception of IPR violations as
"victimless" crimes and/or only harming large multinational

corporations, Post's IPR public diplomacy focuses on four
key messages: 1) the impact on local Panamanian music,
culture and indigenous art 2) the safety issues surrounding
counterfeit goods 3) the financial support of large
criminal organizations resulting from the purchase of
pirated goods including the damage to the economy from the
need to launder the proceeds and the lost tax revenue to
the government; and 4) the negative impact on innovation
and foreign direct investment from weak IPR enforcement.

12. (U) With the assistance of the MPAA, Embassy Panama
sponsored a screening of "An Inconvenient Truth" and other
films with opening remarks by the Ambassador in support of
IPR enforcement. As part of a general outreach, several
ELO's have visited the University of Panama's English
language classes to engage in dialogue with young
Panamanians on a variety of topics, including IPR.

13. During 2006, the Latin American arm of IFPI
established the non-profit organization PRODUCE in Panama.
PRODUCE will centralize the collection of royalties and
other fees for the public use of copyrighted material to be
remitted back to the appropriate artist/record company.
PRODUCE represents Sony, BMG, Universal, Warner and EMI.
The Panamanian government had some difficulty accepting
this activity under the banner of "non-profit" but
eventually IFPI/PRODUCE prevailed as they will also collect
and remit royalties related to the use of indigenous music
and Panamanian folklore which Warner has agreed to
distribute internationally under its label.

13. (U) PRODUCE told Emboffs that it is working with
Panama's small business organization (AMPYME) to assist
street corner CD/DVD vendors in forming micro-businesses
and distribute legitimate product. They are also planning
a public relations campaign of TV and radio ads by local
artist against piracy. A WIPO seminar is scheduled for the
end of March/first week in April 2007 including a session
on border IPR enforcement.

-------
COMMENT
-------

14. (SBU) It is the consensus of Post's inter-agency IPR
Subcommittee that Panama remains on a positive trajectory
regarding IPR enforcement. The three main obstacles to IPR
enforcement in Panama remain the strength of Panama's
informal economy, lack of resources for law enforcement
agencies, and a reluctant judiciary. The attitudes of
Panamanian IPR law enforcement and civil authorities
indicate a recognition of the importance of IPR
protection. The financial impact of IPR losses to industry
from Panama is relatively small compared to Mexico, Brazil,
and others in the region. However, all industry groups
express concern about the importance to the region of IPR
enforcement within the CFZ.
Eaton

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