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Cablegate: Canada: Embassy Ottawa 2008 Special 301

VZCZCXRO1701
OO RUEHGA RUEHHA RUEHQU RUEHVC
DE RUEHOT #0311/01 0601807
ZNR UUUUU ZZH
O 291807Z FEB 08
FM AMEMBASSY OTTAWA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7426
INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE

UNCLAS SECTION 01 OF 04 OTTAWA 000311

SIPDIS

SENSITIVE
SIPDIS

USTR FOR SULLIVAN, MELLE, GARDA
STATE FOR EEB/IPC (WALLACE) AND WHA/CA (RIOS)

E.O. 12958: N/A
TAGS: CA ECON ETRD KIPR
SUBJECT: CANADA: EMBASSY OTTAWA 2008 SPECIAL 301
RECOMMENDATION

REF: A. STATE 09475
B. 07 OTTAWA 2230
C. 07 OTTAWA 1962
D. 07 OTTAWA 1955
E. 07 OTTAWA 1764
F. 07 OTTAWA 1762
G. 07 OTTAWA 1639
H. 07 OTTAWA 1243
I. 07 OTTAWA 1076
J. 07 OTTAWA 887
K. 07 OTTAWA 783
L. 07 OTTAWA 765
M. 07 OTTAWA 691
N. 07 OTTAWA 448
O. 07 OTTAWA 187
P. 07 MONTREAL 150
Q. 07 MONTREAL 58
R. 07 TORONTO 466
S. 07 TORONTO 461
T. 07 TORONTO 366
U. 07 TORONTO 315
V. 07 TORONTO 120
W. 07 TORONTO 62
X. 07 TORONTO 60
Y. 07 TORONTO 45

Sensitive but unclassified. This message is part of an
internal U.S. Government deliberative process regarding the
annual Special 301 Report and must not be shared outside the
USG.

1. (sbu) Summary and Recommendation: Embassy Ottawa remains
frustrated by the Government of Canada,s continuing failure
to introduce - let alone pass - major copyright reform
legislation that would, inter alia, implement and ratify the
World Intellectual Property Organization (WIPO) Internet
treaties. Several recent factors compound this frustration,
including the fact that:

-- the Prime Minister told the President last August that
Canada would pass copyright legislation;

-- the November Speech from the Throne laying out the
government,s Parliamentary agenda stated that it would
"improve the protection of cultural and intellectual property
rights in Canada, including copyright reform;" and

-- senior GOC officials, especially Industry Minister
Prentice, repeatedly assured the Ambassador and senior
Mission Canada officers that the copyright bill would be
introduced "soon." Specifically, assurances were given that
the legislation had been finalized and would be introduced
prior to the Christmas recess, and then again immediately
upon Parliament's return in January. Neither of which
occurred.

In addition to the lack of Parliamentary action on a revised
copyright bill, the GOC continues to weigh recommendations
from an interagency task force that reviewed "best practices"
and regulations over a three-year period for improving
Canada,s IPR enforcement regime at the border, but has taken
no action so far.

2. (sbu) Despite our frustration, we must acknowledge
Canada,s close cooperation with the United States on
intellectual property matters in international fora, as well
as the excellent working relationship between U.S. and
Canadian border entities. In June 2007, the Canadian Royal
Mounted Police (RCMP) hosted the International Law
Enforcement IP Crime Conference in Niagara Falls, and will
co-host this year,s conference in Halifax with Interpol in
June. We also recognize that Canada has taken important
steps to improve protection and enforcement of intellectual
property rights over the last year. Last May, Parliament
enacted a law criminalizing illicit camcording in Canadian
movie theaters - a specific step that the U.S. sought in the
2007 Special 301 report on Canada. Throughout the last year,
Canadian law enforcement entities have carried out a number
of high-profile raids on pirating and counterfeiting
operations. We also believe - even in the face of repeated
delays - that the current government remains committed to
improving IPR protection in Canada.

3. (sbu) However, given the continuing failure of the GOC to
introduce a copyright bill into Parliament - coupled with the
apparent lack of significant steps to improve IPR protection
and enforcement along the border - Post reluctantly
Qand enforcement along the border - Post reluctantly
recommends that Canada be elevated to Special 301 Priority

OTTAWA 00000311 002 OF 004


Watch List in 2008. We would strongly recommend retaining
Canada on the Watch List if the Conservative government
introduces its copyright bill into Parliament in the coming
weeks before the release of the 2008 Special 301 report.
(Comment: We understand that elevation of Canada to the
Priority Watch List could adversely affect prospects for the
introduction and passage of a copyright bill in Parliament.
End comment) End Summary and Recommendation.

Copyright Legislation

4. (sbu) In December 2007, the GOC completed - and printed
into final bill form - major copyright reform legislation.
While details remain secret, Post understands that the
legislation would implement and ratify the WIPO Internet
Treaties (which Canada signed in 1997), and address Internet
Service Provider liability, circumvention devices,
educational use of copyrighted materials, and other
contentious issues.

5. (sbu) From December 2007 to mid-February, senior GOC
officials and well-informed private sector contacts assured
the Embassy that legislative calendar concerns were delaying
the copyright bill,s introduction into Parliament. Our
contacts downplayed the small - but increasingly vocal -
public opposition to copyright reform led by University of
Ottawa law professor Dr. Michael Geist. On February 25,
however, Industry Minister Prentice (please protect) admitted
to the Ambassador that some Cabinet members and Conservative
Members of Parliament - including MPs who won their ridings
by slim margins - opposed tabling the copyright bill now
because it might be used against them in the next federal
election. Prentice said the copyright bill had become a
"political" issue. He also indicated that elevating Canada
to the Special 301 Priority Watch List would make the issue
more difficult and would not be received well.

6. (sbu) On February 26, Liberal party leader Stephan Dion
made clear that his opposition party would not bring down the
minority Conservative government over the just-unveiled 2008
budget. Most political observers now believe that Dion,s
position pushes possible national elections until at least
the fall of 2008, and possibly even until October 2009 (the
next mandatory date). A senior GOC official told the
Ambassador on February 27 that the disappearing prospect of
an imminent election should make it easier to introduce the
copyright bill in Parliament, but offered no definitive
timetable for doing so. An influential Liberal MP on
intellectual property issues separately told EMIN on February
26 that the copyright bill would receive widespread support
from the Conservative, Liberal, and Bloc Quebecois parties if
and when the GOC sends it to Parliament. (Comment: James
Rajotte - chair of the Industry Committee, which would likely
receive a copyright bill - told the Ambassador on February 28
that the legislation would not have such smooth sailing. End
Comment) The Liberal MP stated that he has pressed Industry
Minister Prentice to release the legislation now, adding that
Canada is out of step with the rest of the (developed) world
on intellectual property rights and risks losing future
foreign investment. The MP dismissed the political
significance of the public efforts of Professor Geist and
hinted that Canada,s possible elevation to the Priority
Watch list would not be seen as a hostile U.S. action, but
show that its IPR regime is weak vis-a-vis its G-7 partners.
The MP indicated that other nations, especially France, are
also lobbying Parliament on a copyright bill. EMIN learned
Qalso lobbying Parliament on a copyright bill. EMIN learned
from his French Embassy counterpart that she would be
briefing Parliamentarians on this issue on March 4. Industry
Committee chair Rajotte separately confirmed this meeting
with the Ambassador.

7. (sbu) On February 27, EMIN and Econcouns were summoned to
Foreign Affairs Canada to receive the informal views of the
Canadian government on the Special 301 process. The meeting
was chaired by Doug George, the Director of DFAIT,s
Intellectual Property office and included representatives of
ten Canadian government agencies, including Industry Canada,
Canadian Heritage, Canada Border Services Agency (CBSA), and
the Canadian Embassy in Washington. After the usual
denouncement of the Special 301 process (which we hear every
year), George outlined the cooperative measures that Canada
undertakes with USG agencies and Interpol on IPR enforcement.
He stated that this cooperation, together with Canada,s
federal and local law enforcement efforts, gets short shrift
in USTR,s description of Canada in the Special 301 report.

8. (sbu) However, George and Industry Canada,s Susan
Bincoletto could not give EMIN any indication of when the

OTTAWA 00000311 003 OF 004


revised copyright bill would appear in Parliament. CBSA did
not know whether the C$75 million announced in the recent
budget over the next two years will be targeted toward
improving IPR enforcement. There was also no indication as
to when CBSA officials would get "ex officio" powers to
improve their enforcement efforts even though many Canadian
officials believe that this is needed. Finally, George
cautioned that if Canada were retained on the 301 Watch List
- or even elevated to the Priority Watch List - it could
affect future Canadian cooperation on IPR as well as give
ammunition to Dr. Geist and his acolytes, who see a revised
copyright bill as a "U.S. plot." In answer to EMIN,s
question, George claimed that only the United States is
pressing Canada on copyright reform. The EU, individual
European countries, and Japan do raise IPR issues, but George
implied that these efforts are perfunctory.

IPR Enforcement

9. (sbu) After three years of examining "best practices" and
regulations for improving IPR enforcement on Canada,s
borders, an interagency group made formal recommendations to
Canadian ministers in the fall of 2007. To date, the GOC has
yet to act on the recommendations, and the 2008 budget
(released on February 26) contained no apparent IPR-related
enforcement measures. In the past, GOC officials have
indicated that Canada should join the other G-7 countries in
updating its border enforcement regime and that border
officials should receive "ex officio" powers to seize
suspected counterfeit and pirated goods. Current
arrangements between customs officials and the Royal Canadian
Mounted Police (RCMP) for seizing suspected illegal goods are
cumbersome and relatively ineffective.

10. (sbu) Notably, the RCMP has increased its attention on
counterfeit and pirated goods,particularly relating to public
safety, health, and organized crime. Last June, the RCMP
hosted the International Law Enforcement IP Crime Conference
in Niagara Falls that was well attended by officials from the
United States and other countries. This year,s conference
in Halifax will be co-hosted by the RCMP and Interpol, June
24-26. In addition, Canadian law enforcement officials are
boosting action against illegal pirating and counterfeiting
operations. These illustrative 2007 examples are excerpted
from a more exhaustive list compiled by ConGen Toronto:

-- Toronto RCMP investigators seize pirated DVD copies of the
East Indian World Premiere movie Guru. Unauthorized copies
of the movie,s soundtrack and another popular East Indian
film also seized (February 21);

-- An Ontario husband and wife are arrested after police
officers seize over 750 counterfeit DVD,s at two convenience
stores with an estimated value of C$15,000 (March 5);

-- Windsor RCMP officers charge three men with 22 counts of
importing counterfeit goods. Examination of the goods reveal
23 different brand-name products with a value of C$250,000
(April 2);

-- In connection with satellite signal theft, Durham police
seize C$60,000 worth of satellite receivers, dishes, and
computer equipment. Estimated annual lost revenue lost is
C$240,000 (July 13);

-- Toronto police seize more than 20,000 music CDs along with
movies, video games, and equipment after a six-month
investigation initiated by the Canadian Recording Industry
Association. Police also seize cash, business documents, and
four CD/DVD burning towers, each with 6-8 burners, capable of
producing some 770 recorded discs per hour, or 30,720 discs
Qproducing some 770 recorded discs per hour, or 30,720 discs
in a 40-hour week (July 17);

-- Ontario police raid twenty-two locations in Mississauga,
Brampton, Burlington and Toronto, arresting 18 people and
seizing over 40,000 pirated DVD movies worth an estimated
C$800,000 as well as manufacturing equipment capable of
producing C$21 million worth of pirated DVD movies per year
(August 21);

-- RCMP and the York police officers search eight stores at
the Pacific Mall in Markham and two retail outlets and a
storage unit in the Dynasty Mall in Toronto. Several arrests
are made, and more than 15,000 DVD,s seized. Also seized
are 65 DVD burners located at a private residence (August
31); and

-- Toronto police recover C$10 million worth of counterfeit

OTTAWA 00000311 004 OF 004


luxury merchandise in a series of raids on local retailers
(December 3).

Canada Moves Against Camcording

11. (sbu) In June 2007, the government criminalized the act
of recording ("camcording") a movie in a theater without
consent of the theater manager. The legislation was broadly
supported by all political parties, and moved through
Parliament in less than a month. Several individuals have
been arrested under the new law and are currently pending
trial. Industry representatives have told Post that the
problem of illicit camcording in Canada - which was cited in
the 2007 Special 301 Report - has been significantly reduced
by this new law.

Pharmaceutical Concern

12. (sbu) The U.S. pharmaceutical industry remains generally
pleased with the October 2006 amendments to Canada,s data
protection regulations, and considers them a significant step
forward. Some U.S.-based pharmaceutical companies, however,
have raised concerns that recent judicial and Health Canada
decisions could be putting a number of existing drug patents
at risk. The U.S.-based companies believe that a further
regulatory change allowing them the Right of Appeal of an
adverse administrative decision would help alleviate their
concerns. Post understands that a proposed regulatory
amendment addressing this issue may soon be published in the
Canada Gazette for public comment.

Recommendation: No Copyright Bill Equals Special 301
Priority Watch List

13. (sbu) We believe that the minority Conservative
government is committed to improving the protection and
enforcement of intellectual property rights. However, given
the GOC,s failure so far to introduce a copyright reform
bill in Parliament - and the lack of significant steps to
strengthen IPR enforcement and protection on the border - the
Embassy reluctantly recommends that Canada be elevated to
Special 301 Priority Watch List. We would strongly recommend
retaining Canada on the Watch List if the government
introduces its copyright bill into the House of Commons
before the end of April. (Comment: Elevation of Canada to
the Priority Watch List could adversely affect prospects for
the introduction and passage of a copyright bill in
Parliament. End comment)

14. (sbu) This cable and its recommendation have been
reviewed and approved by the Ambassador.

Visit Canada,s Economy and Environment Forum at
http://www.intelink.gov/communities/state/can ada

WILKINS

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