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Cablegate: Brazil: Ipr Training Request

VZCZCXRO3569
PP RUEHRG
DE RUEHBR #1431/01 2071908
ZNR UUUUU ZZH
P 261908Z JUL 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 9599
INFO RUEHSO/AMCONSUL SAO PAULO 0470
RUEHRI/AMCONSUL RIO DE JANEIRO 4828
RUEHRG/AMCONSUL RECIFE 6981
RUEHAC/AMEMBASSY ASUNCION 6223
RUEHBU/AMEMBASSY BUENOS AIRES 4926
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 05 BRASILIA 001431

SIPDIS

SIPDIS

DEPT FOR EB/TPP/IPE AND INL/C

E.O. 12958: N/A
TAGS: KIPR ECON BR
SUBJECT: BRAZIL: IPR TRAINING REQUEST

REF: A) 07 SECSTATE 55928
B) 05 BRASILIA 1163
C) 07 BRASILIA 944
D) 07 BRASILIA 249
E) 07 RECIFE 37
F) 07 BRASILIA 1105

1. Embassy is resending this as an amendment to reftel F to
incorporate suggestions made by the Recording Industry Association
of America (RIAA).

2. SUMMARY: In accordance with requirements presented in reftel A,
Embassy Brasilia submits the following proposal for 2007 IPR
enforcement training. The proposal is for a grant of US 75,940 to
provide a three-day high-level workshop for law enforcement
officials (Federal Police, Customs, and Highway Patrol) and judicial
authorities (local and state prosecutors and judges) in the state of
Pernambuco, a key locale in Mission Brazil's efforts to fight IPR
piracy. The workshop is modeled on two other sets of workshops: (1)
the five training programs, held in the States of Minas Gerais,
Bahia, Parana, Rio Grande do Sul, and Mato Grosso do Sul, funded
under the same IPR program; and, (2) seminars proposed that will
focus on providing training to judges and prosecutors so that they
have a better understanding of IPR law that will result in criminal
sentences more in line with the current IPR laws already in
existence.

3. The workshop will focus on expanding law enforcement's knowledge
of existing laws against piracy and protection of intellectual
property rights so that civil and criminal cases against
intellectual property rights abusers hold up in court (see para 19).
By reviewing what laws exist, what is enforceable, what has been
done to combat piracy and protect intellectual property rights,
working relationships between those in the field and those
prosecuting are strengthened. Mission Brazil proposes to use
leading Brazilian experts and NGOs such as the Motion Picture
Association's enforcement affiliate in Brazil - the Association for
the Defense of Intellectual Property (ADEPI), the American Chamber
of Commerce, the National Association for Guaranteeing Intellectual
Rights (ANGARDI), and the Northeast Association for Intellectual
Property (ANEPI) - to provide key expertise in organizing and
conducting the workshop. Use of the very qualified Brazilian
experts resident in these organizations will allow us to better
adapt the training program to Brazilian sensitivities, while saving
money on the international air-fare necessary to bring outside
experts from the U.S.

4. To complement the workshop, technical assistance will also be
provided. The recommendations of the joint industry and government
National Anti-Piracy Council (CNCP) in its 99 point action plan
include the creation up of Task Forces that would attack piracy at
the Regional level. This is seen by the music industry as a very
important step and one that needs to encouraged and nurtured.
Therefore five sets of i2 software and training will be distributed
amongst the Pernambuco Anti-Piracy Task Force and the Brazilian
Federal Police in order to combat music piracy.

5. To date, USG has not focused sufficiently on anti-piracy efforts
in Brazil's Northeast, an area more than 3 times the size of France
and also a focal point for the movement of vast quantities of
pirated goods. A cohesive IPR strategy must include this region of
Brazil and must combine both training and technical assistance.
Pernambuco, in particular, represents a unique opportunity to take a
novel approach to anti-piracy. The Federal Police have explicitly
asked USG for more training programs. In addition, governor there
has instructed state officials to cooperate with Federal officials
on piracy issues - a rather novel approach since there has not been
that sort of cooperation in the past.

6. Identify Priority Countries/Regions that Threaten Intellectual
Property Rights: Brazil continues to be a high priority country for
USG efforts in improving IPR enforcement. The Northeast of Brazil
has seen a surge in recent piracy activity that has resulted in high
profile enforcement actions. This has been especially pronounced in
Pernambuco.

7. Economic Impact: The enormity of the effects of piracy in Brazil
is hard to exaggerate. Brazil's illegal market in just 3 types of
products (clothes, tennis shoes, and toys) resulted in tax revenue
losses of at least 18.6 billion reais (roughly USD 8.86 billion).
This figure is equivalent to 45% of the annual deficit in Brazil's
bankrupt social security system. A February 2007 International
Intellectual Property Alliance (IIPA) report noted that losses due
to copyright piracy of business software rose almost 30% in 2006;
entertainment software industry losses increased 24 % over the same

BRASILIA 00001431 002 OF 005


period. A national survey showed a 45% increase countrywide in the
monetary amount of illegitimate toys, clothing and sports footwear
traded in Brazil and that counterfeit CDs are the most produced and
purchased items in the contraband market. Countrywide, over 30
million pirated CDR's are sold annually and 1 billion songs
downloaded illegally. Because the Northeast is geographically large
and heavily populated, it is home to a significant amount of this
illegal trade.

8. In 2006, the American Chamber of Commerce and ANGARDI conducted
a poll in Recife, Sao Paulo, Rio de Janeiro and Belo Horizonte to
determine consumers' buying habits and what they thought about the
economic effects of buying pirated goods. The results for Recife
(the capital of Pernambuco) were startling and point out the
importance of fighting piracy in the Northeast. While the report
showed a decline in sale of pirated goods in Sao Paulo, Brazil's
major metropolitan area, it disturbingly pointed out that Recife
consumers buy more pirated goods and are less likely to understand
the social and economic impacts of piracy than consumers in the
other cities. The 2006 commercial value of 13 categories of pirated
goods in Recife (ranging from toys to pocketbooks/wallets to
batteries) amounted to USD 83.9 million according to the report. If
pirated goods are sold at half the price of legitimate goods, this
amount reflects a loss of USD 167.7 million in the formal economy,
and a loss in tax revenue of USD 66.7 million.

9. Crime and Security: While the Triborder region (Brazil,
Paraguay and Argentina) continues to be a major route for pirated
goods, law enforcement officials and NGOs have noted the increasing
involvement of the Northeast in the movement of pirated goods due to
stepped-up GOB customs enforcement efforts in the Triborder region.
Citing one example, the town of Caruaru (about an hour's drive from
Recife) is the well-know wholesale market center and source of most
pirated products in the Northeast. Experts describe an almost wild
west atmosphere in Caruaru with perceived threats to anti-piracy
activists (reftel E).

10. Relevance to Other U.S. Objectives: Intellectual property
protection is a key U.S. government objective and is one of the
primary goals in our Mission Strategic Plan (MSP). IPR violations
cost U.S. (and local) industry, reduce the incentives to invest in
research and development, and contribute to a culture of
lawlessness. Piracy, in particular, has connections to illicit
trade in general, and its illegally-gained revenues are easily
laundered into other illegal activities. Industry has been engaged
in a long struggle to enter the highly-protected markets of Latin
America, and piracy strikes at the gradual gains made over time in
this regard.

11. Political Will: Both the executive branch and the legislative
branch have indicated a political will to continue the fight against
piracy. In 2004, the GOB established the National Anti-Piracy
Council (CNCP), a public-private endeavor overseen by the Ministry
of Justice to coordinate national IPR protection efforts. Since
then, the GOB has evidenced more effective anti-piracy enforcement
efforts. For example, the value of seizures by local and federal
authorities of counterfeit and contraband goods in the first nine
months of 2006 increased 54% over the same period in 2005.

12. Capacity to Achieve Measurable Progress: As a result of
encouragement and actions taken by the CNCP, Brazil's law
enforcement agencies are creating specialized IP units to better
focus and coordinate their enforcement activities and to help
develop essential expertise. The CNCP plans to develop an
operational database to help coordinate law enforcement actions. It
also is considering methods for measuring/gauging progress in
enforcement efforts. Progress on enforcement will also be
measurable by the annual enforcement statistics released by the GOB
National Anti-Piracy Council (CNCP) and through statistics on
estimated intellectual piracy loses compiled by industry
organizations such as IIPA.

II. Components of an Effective IPR Regime

13. Legal framework: This proposal is being made with consideration
of instituting a more comprehensive framework for conducting
bilateral technical cooperation on IPR enforcement, which the USG is
trying to develop with the GOB. Brazil has many elements of what
could be an effective IPR regime, but in most cases, the
capabilities of these elements need to be enhanced and better
coordinated to provide effective enforcement.

14. Enforcement capacity: Brazil's laws covering copyright issues
are considered adequate; the principal problems are enforcement and
criminal prosecution. Brazilian law enforcement agencies operate as

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professional units with substantial capabilities. Brazil's customs
service is heavily engaged in combating piracy and is upgrading its
intelligence gathering and analysis, infrastructure and personnel
capabilities. However, in all these units, many individuals have
not been adequately trained in the specialized area of IP crimes,
particularly in geographic areas with less concentrated piracy
activity. A lack of effective, institutional coordination between
Brazilian law enforcement agencies has also further complicated and
undermined attempts to mobilize Brazilian law enforcement to combat
piracy in a comprehensive manner.

15. Border controls: Brazil's customs service has the ability to
block and intercept pirated products, and is seeking greater
latitude in handling seized goods. Due to the sheer volume,
however, Brazil's 16,886 km land border has been an area of
particular weakness in the country's copyright and trademark
enforcement. Once the border is penetrated, movement of pirated
goods throughout Brazil is hard to deter. There is evidence that as
the border with Paraguay is better enforced, pirated goods are now
crossing the remote western and northern areas bordering Colombia,
Venezuela, and Guyana as well as arriving by sea to the Northwest
(reftel C).

16. Government-Industry Cooperation: Cooperation between the
government enforcement agencies and the private sector has improved
substantially in the last two years through their collective efforts
within the CNCP and creation of a national anti-piracy plan.

17. Effective International Cooperation: Brazil is a signatory to
World Intellectual Property Organization (WIPO) and GOB officials
have participated in IPR enforcement seminars, including a recent
seminar in Asuncion. Representatives of various GOB states and
other entities are slated to attend an IPR enforcement seminar in
Lima in July. Additionally, the executive secretary of the CNCP
attended a USPTO sponsored IPR enforcement program in Alexander,
Virginia this June. In November, 2006, USPTO detailed a patent
attorney to Sao Paulo to serve as IPR Attach. He works closely
with the Brazilian patent agency, INPI.

18. Public Awareness: The GOB and various companies have sponsored
public awareness campaigns. The CNCP - with support of the Union of
Customs Employees and the National Confederation of Industry -
launched a major anti-piracy campaign in 2006 to raise public
consciousness about piracy and contraband in Brazil and emphasize
the importance of intellectual property protection. This program
was aimed at the 16 - 24 year old age group, found by a 2005 U.S.
Chamber sponsored survey to be the largest group of consumers of
pirated goods. Campaign organizers carry their message to schools
and universities and sponsor anti-piracy messages in both print and
broadcast media. They also distribute fliers, t-shirts, buttons,
bumper stickers, caps, and textbooks bearing their distinctive
anti-piracy logo.

19. The "Creativity in Combating Piracy," award is part of this
campaign and is sponsored by a Brazilian consultancy in connection
with the U.S. Chamber of Commerce, NIKE, the Motion Picture
Association and a Brazilian state owned bank. It targets university
students and is intended to promote leadership, social
responsibility and awareness of the causes and impacts of piracy.

20. Senior-level Engagement by Public Officials: GOB IPR
enforcement typically involves two ministries: the Finance Ministry
(Customs and Tax Authority) and the Ministry of Justice (Federal
Police and Federal Highway Patrol). Through the CNCP (which is
overseen by the Vice Minister of Justice), the Ministry of Justice
coordinates interagency IPR enforcement activities and state level
authorities, who often have primary jurisdiction. In turn, the
Division of Intellectual Property at the Ministry of Foreign Affairs
(MFA) is involved in these efforts and liaises with international
actors. Several Brazilian states - notably Rio de Janeiro, Sao
Paulo, Rio Grande do Sul and, most recently, Bahia - have formed
state level anti-piracy groups.

III. Project criteria and metrics

21. Targeted U.S. priorities: Brazil accounts for the largest
estimated trade losses due to piracy in the hemisphere - over $927
million according to a recently updated IIPA report, yet arrest and
incarceration figures remain difficult to obtain and appear dismally
low in relation to the scope of the piracy problem. This project
directly targets the main problem areas in Brazil of law enforcement
and criminal prosecution.

22. Strong support of host government: The Brazilian government
has committed to combating piracy in a systematic and sustainable

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manner through establishment of the public-private National
Anti-Piracy Council (CNCP), adoption of a 99 point national action
plan, and annual reports on anti-piracy activities. The GOB has
been prompted by a need to combat piracy because of the harm it
causes Brazil through increased criminality, lost tax revenues,
increased unemployment in the formal economy, economic damage to
Brazilian artists, and the country's international image. The
creation of a working intellectual property rights division at the
Ministry of External Relations is also indicative of the GOB
interest in controlling the problem.

23. Addresses key gap in, or is a fundamental part of, a strategy
to improve IPR enforcement in a country/region: The underlying
concept of the workshop is to bring together law enforcement and
judicial officials, along with NGOs engaged in anti-piracy efforts,
in order to improve the lines of communication between those on the
ground fighting piracy and those tasked with prosecuting. Of
primary importance for any effective anti-piracy effort within the
Brazilian social and institutional context is the creation of
networks that allow for permanent, voluntary and routine
communication. In particular, the increased piracy activity and
chronic corruption among some officials coupled with a perceived
lack of attention to piracy activities in the state have made
training and the creation of an anti-piracy network in Pernambuco a
critically high priority (reftel C). This project would help close
that gap.

24. Has the capacity to achieve near term, measurable success, with
clear metrics: We would expect to see the establishment of formal
or informal working groups or teams, comprised of the all the
relevant law enforcement and perhaps judicial officials in
Pernambuco, shortly after completion of the training program. As a
next phase, we would monitor the success of these teams, looking for
increases in actions taken, such as number of raids, seizures,
arrests, and convictions; in instances where data may not have
historically been gathered, a baseline would have to be determined.

25. Has strong project oversight, accountability measures, and
interagency support: The Department of Homeland Security within
Embassy Brasilia will participate in the program and assess its
strengths and weaknesses on an on-going basis. DHS works
extensively with the GOB on piracy related issues and has the
capability to assess both the program elements and the quality of
GOB participation. In addition to DHS backing, Mission has worked
closely with the regional USPTO IPR Attach who also supports this
proposal.

26. Course Outline
Purpose: To train professionals from a variety of public law
enforcement and judicial organs in Pernambuco to detect, prevent,
and punish intellectual property violations, and to provide
technical assistance through trained intelligence analysts using the
proper equipment to collect, collate and analyze the information
available. In combating music piracy in particular, tracking and
analytical support in the form of i2 software along with the
necessary training to utilize the software will be provided to the
Task Forces.

General Goals:
(1) to create the critical mass necessary to strengthen the capacity
of the Brazilian government to enforce intellectual property laws;
(2) to train and motivate public officials to identify which
intellectual property laws can be applied within their jurisdiction
and capacity; and
(3) to facilitate informational exchange among various enforcement
organs so that they can coordinate anti-piracy efforts at the
national level, mirroring the highly-effective organizational
structure of those groups practicing piracy.

Specific Goals:
Participants of the workshop will:
(1) understand the organization and modus operandi of the criminal
groups practicing piracy;
(2) be familiar with the pertinent legislation;
(3) know how to identify illegal reproductions; and
(4) understand the importance of constantly updating their operating
methods to keep up with the advances in technology applied by
pirates.

Teaching Tools and Methods: theoretical training; workshops; case
studies; site visits; and technical assistance.

Syllabus: 24 hours

Module 1: Piracy: An overview

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Students will be trained to understand the basic principles of the
penal and procedural code, as well as specific IP laws, they apply
to piracy.

Module 2: Analysis of Existing IP Legislation
Students will learn which elements of existing legislation can be
applied to which modes of piracy.

Module 3: Technology
Students will become familiar with the technology used in
disseminating legally-protected works and how they can be
protected.

Module 4:
By providing training to judges and prosecutors we expect them to
have a better understanding of IPR law that will result in criminal
sentences more in line with the current IPR laws already in
existence. In addition, we expect to improve the effectiveness of
Anti- Piracy operations carried out in the projected areas.

Participants:
Class size: 35 (for days one and two)
Location: Courses will be held in the State of Pernambuco.
Participants will be selected from throughout Pernambuco, from
Offices of the Public Prosecutor, the Federal Highway Police, the
Military Police, the Civil Police, Scientific Police; Federal Tax
Authority. Consideration is given to their potential as training
multipliers within their organizations.

Class size: 10 (for day three)
Location: Courses will be held in the State of Pernambuco.
Participants will be judges and prosecutors from Pernambuco.
Consideration is given to their potential as training multipliers
within their organizations.


Co-Participating Institutions: To provide the broadest possible
perspective, ADEPI conducts the course in cooperation with other
entities dedicated to protecting intellectual property, including
ABC (Brazilian Cinematographic Association), UBV (Brazilian Video
Union), APDIF (Association for the Protection of Phonographic
Intellectual Property), BSA (Business Software Alliance), and the
National Anti-Piracy Council (CNCP). These organizations recommend
and/or provide instructors in their specific areas; provide the
latest information on technology and best-practice enforcement
methods, and arrange site visits. The conference site is to be
provided by government authorities, as has been customary with ADEPI
programs. Each training session will incorporate USG participation
by including instructors from DHS and other relevant law enforcement
offices from within the U.S. Mission in Brazil and/or from
Washington.

Expenses (for a total class of 45, in U.S. dollars):
Airfare for students to central location: $13,750
Airfare for USG instructors (max.4): $ 5,280
Per diem for instructors: $ 4,400
Simultaneous interpretation: $ 5,280
Hotel and Meals for students: $ 22,000
Class materials: $ 4,950
Incidentals/coffee and water: $ 1,650
Ground transportation: $ 1,925
Data show: $ 1,705
(3rd day only) Combined per package
cost for training and purchase of
the i2 software $ 5,000
Five Laptops at $2,000 ea. $10,000

TOTAL: $ 75,940

Sobel

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