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Cablegate: Brazil: Ustr Ocr Meeting with Gob Officials

VZCZCXRO1544
PP RUEHRG
DE RUEHBR #0130/01 0251839
ZNR UUUUU ZZH
P 251839Z JAN 08
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 0921
INFO RUEHSO/AMCONSUL SAO PAULO 1512
RUEHRI/AMCONSUL RIO DE JANEIRO 5725
RUEHRG/AMCONSUL RECIFE 7637
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 06 BRASILIA 000130

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR EB/TPP/IPE JENNIFER BOGER
DEPT PASS USPTO
DEPT PASS USTR FOR KATHERINE DUCKWORTH AND JENNIFER CHOE GROVES
USDOC FOR ITA/MAC/OIPR CASSIE PETERS
USDOC FOR ITA/MAC/WH/OLAC/MCAMPOS

E.O. 12958: N/A
TAGS: KIPR ETRD ECON BR
SUBJECT: BRAZIL: USTR OCR MEETING WITH GOB OFFICIALS

REF: A) State 107819; B) Brasilia 1620; C) Brasilia 680; D) Brasilia
2813 E) Brasilia 2038 F) Page e-mail 1/17/08

1. (SBU) Summary and Introduction: On January 15, Deputy Assistant
United States Trade Representative (DAUSTR) Chris Wilson and
delegation met privately with Hadil Vianna, Director for Scientific
and Technical Affairs (DCT) at the Ministry of External Relations
(MRE) and later with members of the GoB's Inter-Ministerial Group on
Intellectual Property (GIPI), which Vianna chairs, to discuss USTR's
ongoing Special 301 Out-Of-Cycle Review (OCR) of Brazil's IPR
practices. Vianna emphasized overall "excellent" USG-GOB relations
and said he hoped the IP dialogue would be equally positive. He
noted increased Brazilian public awareness of IPR issues, but said
many in the GoB do not feel the USG has sufficiently recognized
Brazilian IPR efforts. He added that the GoB does not recognize its
inclusion on any intellectual property (IP) violators list (such as
the Special 301 or the EU's similar listing).

2. (SBU) The meeting was well-attended by representatives of the
Inter-Ministerial group (GIPI) and a variety of copyright and patent
issues were addressed. Otavio Brandelli, Chief of the Division of
Intellectual Property at the MRE, noted a new emphasis by the
National Council to Combat Piracy (CNCP) on targeting demand for
pirated goods and said CNCP members had not raised internet piracy
as an issue. Vianna added that, despite low internet penetration
rates, the GoB takes internet piracy seriously, having raised it at
the last Internet Governance Forum (IGF) meeting. Brandelli also
described a new CNCP legislative proposal that would, among other
initiatives, streamline the destruction process of seized
contraband. Deputy CNCP Executive Secretary Ana Lucia Soares
reported a decrease in demand for pirated goods in the country's
lower-income northeastern region. Representatives for the Receita
Federal (Brazilian IRS/Customs), the Rodoviaria Federal (Brazilian
Federal Highway Patrol), the Brazilian Federal Police and the
Ministry of Agriculture reported ongoing modernization and training
efforts as well as enforcement activities. All except Rodoviaria
reported an increase in contraband seizures. An official from the
National Health Vigilance Agency (ANVISA - the Brazilian FDA
equivalent) described Brazil's ongoing battle against counterfeit
medicine and outlined future ANVISA efforts in this area.

3. (SBU) Regarding U.S. concerns about textbook copying, Marcos
Alves de Souza, General Coordinator for Copyrights at the Ministry
of Culture, said the GoB is exploring use of a collective management
system (including internet sales) or taxes on media and reproductive
machines to ensure remuneration of rights holders. A National
Institute of Industrial Property (INPI) spokesperson said INPI had
increased human resources to address its patent backlog and was
implementing the e-MARCAS registration system. Brandelli called the
compulsory licensing of the Merck anti-retroviral drug Stocrin an
"unusual event" in Brazilian history that took place after all
negotiations had failed, and insisted that the action was TRIPS
compliant. An ANVISA representative defended his agency's handling
of data package protection. End Summary and Introduction.

4. (SBU) On January 15, Deputy Assistant United States Trade
Representative (DAUSTR) Chris Wilson and delegation met privately
with Hadil Vianna, Director for Scientific and Technical Affairs
(DCT) at the Ministry of External Relations (MRE) prior to meeting
with members of the GoB's Inter-Ministerial Group on Intellectual
Property (GIPI), which Vianna chairs, to discuss USTR's ongoing
Out-Of-Cycle Review (OCR). GIPI includes representatives from the
Ministries of Science and Technology; Justice; Health; Culture;
Environment; Agriculture; External Relations; Development, Industry
and Trade; and a representative of the President's office, Casa
Civil, as well as INPI and ANVISA. All GIPI members were
represented at the meeting except for the Ministry of the
Environment and Casa Civil. (Comment: The large turnout for the
meeting appeared to signal a keen GoB interest in dialogue with USTR
about GoB IPR enforcement efforts. End Comment.)

-------------------------
Meeting with Hadil Vianna
-------------------------

5. (SBU) Vianna told Wilson he believed that overall relations
between the USG and GoB are excellent and that he hoped the IP
dialogue would be equally positive. He observed that many in the
GoB do not feel the USG has sufficiently recognized its anti-piracy
efforts. Vianna added that the GoB does not recognize its inclusion
on any IPR violators' list (such as the Special 301 or the EU
"Blacklist"), but understands that it is a USG prerogative to
maintain such a list. He cautioned that the GoB avoids public
discussion on the Special 301 process to prevent creation of a

BRASILIA 00000130 002 OF 006


detrimental public atmosphere towards IPR.

6. (SBU) Vianna said a large investment of both time and resources
in the Brazilian IPR effort had led to an unprecedented increase in
public IPR awareness in Brazil, including increased media coverage.
In addition, Vianna pointed out that IP issues have appeared in
Brazilian soap operas, with the villain portrayed as an IPR
violator. During the meeting, he also solicited USG support for the
Brazilian candidate for the World Intellectual Property Organization
(WIPO) presidency.

7. (SBU) Wilson emphasized to Vianna that the purpose of his visit
was to learn more about the GoB intellectual property regime and
stated that the GoB was "not on trial" during the OCR process. He
referenced the GoB position on IPR in international fora as often at
odds with the USG position and signaled USG interest in discussing
these issues with the GoB in advance of international meetings in
order to enhance communication. In reference to Vianna's call for
USG support for the Brazilian WIPO candidate, Wilson relayed that
the USG was preparing to consider candidates for the position.

---------------------
OCR Meeting with GIPI
---------------------

8. (SBU) Wilson acknowledged to GIPI agency representatives that he
realized the Special 301 process as a point of contention, but said
his objective was to work on IP issues with the GoB in a spirit of
cooperation. He applauded the efforts of the GoB's National Council
to Combat Piracy (CNCP) and cited it as an example of a successful
public-private partnership that is frequently referenced as an
example to other countries.

-- National Council to Combat Piracy (CNCP)

9. (U) Otavio Brandelli, Director of the Division of Intellectual
Property at the MRE (a member of CNCP) said CNCP was preparing to
move beyond its focus on controlling the supply of pirated goods
into a second phase addressing demand. To accomplish this, he said,
CNCP activities will include an intensified GoB anti-piracy consumer
educational program, efforts to promote reform of the Brazilian tax
system, and cooperation with industry to make authentic products
available to consumers at a more reasonable price. CNCP plans to
evaluate and revise its National Anti-Piracy Plan beginning in
February 2008.
10. (SBU) Deputy CNCP Executive Secretary Ana Lucia Soares said
that more consumers now understand the link between piracy and
organized crime as a result of CNCP educational activity (which is
designed to demonstrate the impact of piracy on the Brazilian
consumer). She reported a drop in piracy rates in Brazil's
lower-income northeastern provinces as a result of stepped-up
enforcement and consumer education campaigns. (Note: ConRecife
notes that enforcement is highly visible in the press and the local
police have complained to PO about a lack of storage space for
confiscated media (ref F). End Note.) She also reported that in 2007
the first municipal-level anti-piracy commission was created in
Blumenau.

-- Enforcement Activities

11. (SBU) Frederico Vasconcellos, Head of the Division on Combating
Contraband and Customs Evasion at Receita Federal (Brazilian
IRS/Customs) said that the GoB was working on improvements in its
customs control strategies, including expansion of international
cooperation, increased training for customs officers and additional
investment in new equipment and facilities. Receita statistics
indicated a 2007 increase in seizures of smuggled goods (pirated
items were not listed separately from other contraband). Brazilian
legislation now allows for the seizure of buses and vehicles
involved in smuggling. He presented photographic evidence of dozens
of seized buses and vehicles that were to be donated to Brazilian
state and local governments. According to him, smugglers are now
seeking alternative routes to the Foz De Iguacu crossing from
Paraguay, mostly through the southeast, and the Brazilian
authorities have thus far been unable to address this new
development.

12. (SBU) Jetson da Silva, an official from the Rodoviaria Federal
(Brazilian Federal Highway Patrol) said his organization, which
oversees 61,000 km of federal highway, has conducted CNCP-assisted
anti-piracy interdiction training programs for its officers and held

BRASILIA 00000130 003 OF 006


educational campaigns in schools. Rodoviaria seizure data indicated
a drop in 2007, which the official attributed to use by smugglers of
secondary roads not frequented by his organization. According to a
Brazilian Federal Police Official, his agency has formulated both a
national and international strategic cooperative plan. He said the
Federal Police have begun efforts to fight internet piracy,
including modernization of outdated equipment and training of a
cyber crime unit, and was interested in exchanging technology and
information with other countries in this area.

13. (SBU) Helinton Rocha, the Ministry of Agriculture's Director of
the Department of Intellectual Property and Agriculture Technology
discussed Brazil's biosafety and seed laws and described inspection
and seizure activities. In 2007, the Ministry conducted 3,157
inspections of soybean seed lots and found 373 questionable lots
which resulted in fines on the culpable parties. Out of 606 cotton
and corn inspections, 36 were found to be questionable and resulted
in penalties assessed on the owners. Fines of up to R$1.5 million
were issued, with an average of R$250,000.

-- Legislation

14. (SBU) Brandelli said proposals included in a new CNCP sponsored
bill would, for example, streamline the destruction process of
seized contraband. He added that this legislative proposal has been
undergoing due process for a number of months and, once done, will
be presented to the Brazilian Congress. According to Brandelli,
CNCP is also assisting other states with formulation of anti-piracy
statutes. (Note: This legislation will also expand vehicle seizure
authority and allow law enforcement agencies to retain only samples
for use in litigation. It also provides different penalties for
individual offenders from those involved in larger operations;
incorporates penalties for software copyright violation into the
penal code; and stiffens penalties if pirated goods are imported
(see reftel D). End Note.)

-- Counterfeit Medicine

15. (SBU) Maristela Figueiredo, Health Regulation and Surveillance
Specialist at the National Health Vigilance Agency (ANVISA - the
Brazilian FDA equivalent), said counterfeit medicines remained a
problem in the country, although to a much lesser extent than in the
past. In 1997-98, there were a reported 172 cases of counterfeit
medicines; while in 2006-07, there were only 17. Figueiredo noted
the sudden increase in counterfeit drugs from 1997-98 led to the
passage of a 1998 law providing for stiffer penalties for drug
counterfeiters (10-15 years without parole or amnesty plus a fine)
and served as the impetus for the creation of ANVISA in 1999. GoB
regulations now call for usage of secure drug packaging and a
distributors' registry. ANVISA serves as the clearinghouse for
information on counterfeit drugs provided by a nationwide
notification network of 160 sentinel hospitals (known as Notivisa),
and state health vigilance units (VISAs).

16. (SBU) According to Figueiredo, future plans to combat
counterfeit medicine include closer coordination with Mercosul
partners, strengthening legislation, and implementing a more
thorough drug registry database that would facilitate tracking
counterfeit drugs to the end user. She also cited the need for more
training of Federal judges, who often do not take counterfeit drug
cases as seriously as illegal drug cases, although both have similar
penalties. Figueiredo stated that 130 Federal, State, and Municipal
level inspectors had been trained. (Note: Figueiredo later told
EconOff that ANVISA has an internal division that trains state and
municipal agents to conduct inspections for counterfeit medicines.
ANVISA, in conjunction with Receita, has participated in seminars on
counterfeit medicines conducted by the private industry group
National Forum to Combat Piracy (FNCP) and Public Ministries in
states throughout Brazil. ANVISA, which has previously concentrated
on training enforcement officials, has recently made plans to
address training of Federal judges. End Note.)

-- Internet Piracy

17. (SBU) Soares (CNCP) said that, although CNCP did not view
internet crime in Brazil as a top priority due to low internet
penetration rates in the country, CNCP has created a cyber-crime
division. Brandelli (MRE) stated that CNCP will address internet
piracy once its members raise the issue, which they have not done
thus far. Vianna added that Brazil's low number of computers does
not mean that the country is not concerned with internet crime. He

BRASILIA 00000130 004 OF 006


noted that the GoB raised the issue at the Internet Governance Forum
(IGF) Meeting in Rio de Janeiro in November 2007. Wilson noted the
importance of considering the emerging threat of Internet piracy and
the need to "get ahead of the curve" with regard to this problem.

-- Campus Copy-Shops

18. (SBU) Marcos Alves de Souza, General Coordinator for Copyrights
at the Ministry of Culture, told Wilson that actual book piracy was
rare in Brazil, but non-authorized copying of copyrighted works was
common on university and college campuses. He said this activity
was not organized-crime related. GoB believes that individuals have
a right to access information and knowledge in the country, which is
often difficult due to the high cost of books as a result of low
production runs, according to Souza. He noted that academic books
are very expensive, despite the fact that there are no federal taxes
imposed on these items. Souza asserted that legal action by book
publishers against professors and schools over illegal copying in
2006 -2007 led to a public backlash against IP laws.

19. (SBU) Brazilian copyright law allows for small segments of
copyrighted works to be reproduced, but does not define what
constitutes a small segment (reftel D). Souza said individual
universities use in-house rules to police the amount of a
publication that can be copied (ranging from 10 - 40 percent) or
limit copies to numbers of chapters. He relayed that the Ministry
of Culture plans to hold a forum this year to allow input from a
broad segment of society on the issue as it considers copyright law
reforms. He felt authors were due remuneration for their work and
said some ideas being considered were a collective management system
or a tax on blank media and reproductive machines that could be used
to recompense authors. The Ministry is also considering a system to
allow small segments of books to be sold over the internet.

-- Patents and Trademarks

20. (SBU) Wilson noted that, while the USG has recognized Brazilian
progress in the area of IPR enforcement, the U.S. remains concerned
that progress has been less noticeable in areas related to patents,
trademarks, and protection of pharmaceutical and agrichemical test
data. Wilson acknowledged that INPI has taken steps to address a
considerable backlog in patent and trademark applications, and
requested information on progress achieved to date. He mentioned
specifically the USG's ongoing questions about the unusual role of
the Brazilian health regulator (ANVISA) in the process of
considering pharmaceutical patents. With regard to compulsory
licensing of pharmaceuticals, Wilson noted that the USG has sought
to approach this delicate issue in a measured way, but continues to
stress the importance of full and transparent engagement between the
GoB and patent holders. Wilson also mentioned that the USG has
questions and concerns with regard to Brazil's system of protecting
data submitted in connection with the regulatory approval of
pharmaceutical and agricultural chemical products.

21. (SBU) Gustavo Travassos Pereira, International Cooperation
Advisor at the National Institute of Industrial Property (INPI) said
his organization had formed a "dynamic partnership" with the U.S.
Patent and Trademark Office (USPTO), which is providing training for
INPI employees. According to him, INPI has doubled its trademark
processing staff over the last year and tripled its patent
processing staff. He also noted that INPI was in the final stage of
implementation of the e-MARCAS system, which would allow for quicker
trademark registration. The ANVISA official stated that ANVISA
reviews (required for patent applications on certain products,
including medicines) take no more than 120 days with only a 3
percent rejection rate per 2005 statistics.

-- Compulsory Licensing

22. (SBU) Leandro Teixeira, Health Regulation and Surveillance
Specialist at ANVISA, said that after GoB ratification of TRIPS, the
increased price of medicine impeded access to drugs for many
Brazilians. He said that the GoB feels TRIPS "can and should" be
interpreted so as not to harm public health projects and provide
access to medicines for all. Brandelli called the compulsory
licensing of the Merck anti-retroviral Stocrin an "unusual event" in
Brazilian history and noted that the GoB has been obliged to provide
HIV/AIDS victims free access to medications since 1986, and has
76,000 such patients (while Thailand has 17,000). He said that
Brazil is one of the largest customers for these drugs, yet paid
four times more for the drug than Thailand.

BRASILIA 00000130 005 OF 006

23. (SBU) Without identifying Merck by name, Brandelli said
negotiations between the GoB and the company had been transparent
and failed to reach an agreement after six to seven months. At that
point, after the company decided not to negotiate further, the GoB
issued the compulsory license. He added that the drug's patent was
one of over 400 that are considered pipeline patents, and, thus, it
was already in the public domain when the patent was issued.
Brandelli added that if the GoB had adhered to the letter of the
TRIPS agreement, no patent would have been issued. He said the
company (Merck) has been in Brazil for many years and the compulsory
license has not affected the company's relationship with the GoB.

-- Data Package Protection

24. (SBU) In response to Wilson's question about industry
allegations of lax data package protection, Teixeira (ANVISA)
replied that this data had not been used to violate any patent
rights. He added that TRIPS was ambiguous on this point and he felt
the GoB was acting within the TRIPS agreement in its handling of
data packages.

------------------
Delegation Members
------------------

24. (SBU) Members of the delegations were:

U.S.
----

Chris Wilson, DAUSTR for Intellectual Property and Innovation

Katherine Duckworth, USTR Director for the Southern Cone

Dorian Mazurkevich, USPTO Attache, Consulate Sao Paulo

Tim Hall, Economic Officer, Embassy Brasilia (notetaker)

Brazil
------

- Ministry of External Relations (MRE):

Hadil da Rocha Vianna, Director of Department of Scientific and
Technical Issues (DCT)

Otavio Brandelli, Director of Intellectual Property Division (DIPI)

Joao Carlos Beato Storti, Deputy Director, Intellectual Property
Division (DIPI)

Fabio Alves Schmidt da Silva, Intellectual Property Division (DIPI)

- Ministry of Development, Industry and Trade:

Sancia Regina Magalhaes Ferrari, Trade Analyst and Acting
Coordinator-General of the Inter-Ministerial Group on Intellectual
Property (GIPI)

Carlos Alberto Alves de Oliveira, Trade Analyst

Jos Carlos Cavalcanti de Araujo Filho, Trade Analyst

- National Institute of Industrial Property (INPI)

Gustavo Travassos Pereira, International Cooperation Advisor

- Ministry of Culture:

Marcos Alves de Souza, General Coordinator for Copyrights (CGDA)

Samuel Barichello Conceicao, Assistant to General Coordinator for
Copyrights (CGDA)

- Ministry of Agriculture:

Helinton Jose Rocha, Director of Department for Intellectual
Technology and Agricultural Technology (MAPA)

Leontino Rezede Taveira, Department for Intellectual Technology and

BRASILIA 00000130 006 OF 006


Agricultural Technology (MAPA)

Marcos Vinicius Leandro, Jr., Coordinator, Department for
Intellectual Technology and Agricultural Technology (MAPA)

Luis Eduardo Rangel, Coordinator, Department for Intellectual
Technology and Agricultural Technology (MAPA)

- Ministry of Health:

Joao Carlos Azuma, Managing Director of Department of Regulatory
Affairs

Ana Maria Tapajos, Head of Technical Analysis Division,
International Affairs Office

Daniela Lucia Loiola, Advisor

- Ministry of Justice:

Ana Lucia Moraes Gomes, Acting Executive Secretary of the National
Council to Combat Piracy (CNCP)

- Ministry of Culture:

Marcos Alves de Souza, General Coordinator for Copyrights

Samuel Braichello Conceicao, Assistant General Coordinator for
Copyrights

- Receita Federal (Brazilian IRS/Customs):

Frederico Emmanuel Vasconcellos, Head of the Division on Combating
Contraband and Customs Evasion

Jorge Luiz Alves Caetano, Coordinator of Research and Investigation

- Federal Police:

William Marcel Murad, Head of the Division on Combating Revenue
Crime

- Rodoviaria Federal (Brazilian Federal Highway Patrol):

Jose Altair Gomes Benites, Officer

Wellker Cesar Faria, Officer

Jetson Jose da Silva, Officer

- National Health Vigilance Agency (ANVISA):

Erika Mattos da Veiga, Specialist on Health Regulation and
Surveillance

Leandro Teixeira de Morais, Specialist on Health Regulation and
Surveillance

Maristela Figueiredo de Almeida, Specialist on Health Regulation and
Surveillance

25. (U) THE DELEGATION HAS CLEARED THIS MESSAGE.

Sobel

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