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Cablegate: Brazil: 2008 Special 301 Recommendation

VZCZCXRO7185
PP RUEHRG
DE RUEHBR #0254/01 0571104
ZNR UUUUU ZZH
P 261104Z FEB 08
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 1057
INFO RUEHSO/AMCONSUL SAO PAULO 1633
RUEHRI/AMCONSUL RIO DE JANEIRO 5814
RUEHRG/AMCONSUL RECIFE 7715
RUEHAC/AMEMBASSY ASUNCION 6593
RUEHMN/AMEMBASSY MONTEVIDEO 7225
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 09 BRASILIA 000254

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR EB/TPP/IPE JENNIFER BOGER
DEPT PASS USTR FOR KATHERINE DUCKWORTH AND JENNIFER CHOE GROVES
DEPT PASS USPTO
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: 2008 Special 301 Recommendation

REF: A) State 9475; B) 07 Brasilia 680; C) 07 Brasilia 787; D) 07
Brasilia 1648; E) 07 Brasilia 2038; F) 07 Sao Paulo 1007; G) 08
Brasilia 130; H) 07 Brasilia 2193; I) 07 Brasilia 944; J) 05
Brasilia 2813; K) 06 Brasilia 367

1. (U) Per reftel A, the following is Embassy Brasilia's input for
the 2008 Special 301 Review of Brazil.

2. (SBU) Summary: Post recommends that Brazil remain on the Special
301 Watch List based on the GoB's ongoing commitment to a strong
overall anti-piracy enforcement regime and its determined actions to
improve patent and trademark processing. However, Post feels that
the GOB's need to undertake a more vigorous effort to address
photocopying of copyrighted material by campus copy shops, address
issues involving data protection, and adequately police secondary
smuggling routes into the country preclude any upgrade of the
country's status at this time. End Summary.

--------
OVERVIEW
--------

3. (SBU) The GoB has continued its emphasis on copyright
enforcement activities. This effort has yielded substantial
increases in some confiscation statistics as well as in detected and
penalized violations, though a drop in a few enforcement-related
statistics are attributed to modifications in smuggling patterns.
Internet piracy issues appear to be slowly gaining attention in some
areas of the GoB with some modest enforcement success. Illegal book
copying on college campuses remains a problem without an easy
solution. Constitutional rights to information and education are in
direct conflict with the rights of copyright holders. The prospects
for legislation to clarify the rights of copyright holders of
educational materials appears unlikely in the short-term.

4. (SBU) The Brazilian patent and trademark office is taking
concrete steps to address Brazil's high patent and trademark
backlogs with demonstrable results. In the agricultural biotech
field, the process for approval of commercial licensing of
genetically modified organisms and their derivatives was streamlined
in 2007, but efforts for new product approval were frustrated by
legal intervention on behalf of some NGOs.

5. (SBU) In the pharmaceutical area, lengthy delays in approval by
Brazil's National Health Vigilance Agency (ANVISA - the Brazilian
FDA equivalent), and data protection remain concerns. Post has
become aware of several cases where marketing approval was granted
(although the products have not yet entered the market) to generic
drug manufacturers apparently based on information submitted in
connection with approval of the original drug. The GoB asserts that
its compulsory licensing action in May 2007 was price-driven and
contends that the drug's patent was already in the public domain
when the patent was issued, since it was a "pipeline patent" (ref
G). Post is not aware at this time of any imminent additional
compulsorily licensing actions by the GoB.

6. (SBU) Draft criminal IP legislation, which would enable enhanced
enforcement efforts, is currently stalled in the president's office
for review. In August 2007, additional legislation was introduced
to increase the penalties for trademark violations. Brazil's plans
to join the Madrid Protocol are still under consideration.

7. (SBU) While the GoB continues to emphasize enforcement as its
primary means to combat piracy, it also appears committed to ongoing
educational and training efforts, often in conjunction with industry
organizations and often targeting children and young adults.

-------------------
Enforcement Efforts
-------------------

8. (SBU) In a report to the National Council to Combat Piracy
(CNCP), Receita Federal (the GoB customs and internal revenue
service) registered contraband seizures in 2007 totaling over 1.05
billion Brazilian Reais (approximately USD 601.55 million), claiming
a 21 percent increase over 2006. Receita noted a 72 percent rise in
its anti-contraband operations over the previous year (to 2,269 in
2007), which resulted in 6,881 federal charges. (Note: The report
did not segment out piracy-related charges from other charges. End
Note.) Receita noted a 252 percent increase in seizures of recorded

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media (CDs and DVDs), shoes, watches and sunglasses. The agency
cited the PRC as the main country of origin of confiscated
contraband items, followed by the U.S., India and Paraguay. (Note:
The Receita report listed the origin of 57.9 percent of the items
seized as "Other, including unknown origin"; 25.41 percent from the
PRC; 4.17 percent as originating in Brazil; 3.28 percent from the
U.S.; 2.06 percent from India; and, 1.94 percent from Paraguay. End
Note.)

9. (SBU) For 2007, Rodoviaria Federal (the Federal Highway Patrol)
reported a 22.78 percent decrease in confiscations of pirated media
from the previous year (approx 5.8 million units confiscated versus
7.5 million in 2006) and a 4.85 percent decrease in seizures of
illegal computer products (from approx 129 thousand in 2006 to
around 123 thousand in 2007). Rodoviaria reported a 22.25 percent
increase in apprehensions of contraband electronics items (from
about 273 thousand in 2006 to over 334 thousand in 2007) and a 3.96
percent increase in seizures of contraband medicines (approx 323
thousand units versus around 310 thousand in 2006). Rodoviaria
claimed that the drop in confiscations was due to an increase in the
use of secondary roads by smugglers where Rodoviaria has less
presence (ref G).

10. (SBU) The third major enforcement agency, the Brazilian Federal
Police, reported 8,698 piracy investigations in 2007, a 25.51
percent increase over 2006 (6,930 investigations reported). The
Federal Police have not provided 2007 seizure information to Post.
(Note: CNCP officials recently told EconOff that release of the
annual report containing consolidated federal agency enforcement
statistics will be delayed this year until June - it was released in
January last year - to incorporate new policy changes and to
consolidate data collection. This report has contained Federal
Police contraband seizure information in the past. End Note.)

11. (SBU) In 2007, Ministry of Agriculture Department of
Intellectual Property and Agriculture Technology (MAPA) data
indicates that 373 out of 3,157 inspections of soybean seed lots,
resulted in fines to the owners. Out of 606 cotton and corn
inspections (an 18.8 percent increase over 2006), 36 (verses 55 in
2006) were found to be questionable and resulted in average fines of
$R 250 thousand (USD 142 thousand) (ref G).

-- Counterfeit Medicine

12. (SBU) According ANVISA counterfeit medicines remain
problematic, although to a lesser extent than in the past. In
1997-98, there were 172 reported cases of counterfeit medicines;
while in 2006-07, there were only 17. Penalties for drug
counterfeiters are stiff: 10-15 years without parole or amnesty
plus a fine. 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) (ref G).

-- Raids on Known Markets

13. (SBU) State and federal enforcement authorities continued
action against known marketplaces of counterfeit goods. CNCP data
indicates that federal and state enforcement officials seized
1,472,528 contraband items in raids on known marketplaces through
September 2007. Among these actions are year-long operations
targeting buses crossing into Brazil in the Tri-Border area (538,038
seizures as of August 31) and ongoing actions against street vendors
and shops in some of the more notorious counterfeit markets in Sao
Paulo and Rio de Janeiro, including the Stand Center, Galeria Page
and various Camelodromos (Ref E). In a November enforcement
operation, Federal Police in Brasilia conducted operation "Seven
Errors" against contraband items in the "Paraguay Fair," a known
market for counterfeit goods. The operation resulted in 18 arrests.
Another November anti-contraband operation in Mato Grosso do Sul
targeted among other items, agrochemicals, tires and electronics,
and resulted in 70 arrests. In Sao Paulo, state, federal and
municipal authorities raided the city's notorious "25th of May"
Street on Dec. 11, and the "Stand Center" and "Promo Center" on Dec.
19. Both the Stand Center and Promo Center remained closed during
the Christmas holiday season. On January 11, 2008, Federal Highway
police reported the seizure of over half-million blank CDs and DVDs
in the state of Rio Grande de Sul hidden in wooden crates. (Note:
Updated information on raids of notorious marketplaces and other

BRASILIA 00000254 003 OF 009


enforcement actions will most likely be included in the 2007 CNCP
report due to be released later in the year. End Note.)

-- Border Crossings

14. (SBU) Brazil's customs office at the Amistad Bridge crossing
into Brazil has forced many smugglers to use alternative routes,
such as through the state of Mato Grosso do Sul. There are also
indications that smugglers are using Mercosul transportation rules
to bring pirated goods across Argentina into Brazil through Uruguay
(ref E). The President of a leading IP organization recently told
EconOff that this problem is ongoing and that many of the border
stations at secondary crossings, including some of those on the
border with Uruguay, are unmanned from 6:00PM until 7:00AM. (Note:
An April 30, 2007 media report claimed that traffic from Peru was
able to enter the Brazilian state of Acre without inspection by GoB
authorities. Due to the remote nature of this location, Post has
not yet been able to obtain independent confirmation of this claim
or determine if the report referred to a situation that has since
been resolved. End Note.)

-- Arrests and Convictions

15. (SBU) Citing difficulties in consolidating various state and
federal databases, GoB interlocutors have thus far been unable to
provide arrest and conviction statistics for piracy and contraband
activities to Post. Information provided by the Federal Police on
raids in 2007 indicates around 339 arrests as a result of these
operations, but piracy charges were not segmented out from other
charges such as income tax evasion. (Note: Post's 2006 Special 301
report indicates the GoB reported only 14 convictions for piracy
related crimes in 2005 (ref K). End Note.)

---------------
Internet Piracy
---------------

16. (SBU) Opinions within the GoB are mixed as to the extent and
importance of Brazilian efforts against internet piracy. In a
January meeting, GoB officials voiced seemingly conflicting views.
A CNCP official said that although CNCP did not view internet crime
in Brazil as a top priority due to low internet penetration rates in
the country (just 14.5 % according to some estimates), CNCP has
created a cyber-crime division. A MRE official (MRE is a member of
CNCP) stated that CNCP will address internet piracy once its members
raise the issue, which he said they have not done thus far. Another
MRE official added that Brazil's low number of computers does not
mean that the country is not concerned with internet crime and
pointed to GoB attention to the issue at the Internet Governance
Forum (IGF) Meeting in Rio de Janeiro in November 2007 (reftel E).

17. (SBU) Meanwhile, there is some evidence of efforts underway in
this area. Vice Minister of Justice Luiz Paulo Barreto assured
recording industry representatives in April that he would drop his
public opposition to legal actions filed by them against Brazilian
end-users of pirated music (reftel B). CNCP data indicates that,
through September 2007, Brazilian authorities had removed 19,878
internet advertisements touting pirated items, removed 3,882
companies from the internet and shut down 183 web sites - all for
violation of Brazil's anti-piracy statutes. The Brazilian Federal
Police have begun efforts to fight internet piracy, including
modernization of outdated equipment and training of a cyber crime
unit, and have indicated interest in exchanging technology and
information with other countries (ref E).

-----------------------------------
GoB Education and Training Programs
-----------------------------------

18. (SBU) While the GoB continues to emphasize enforcement as its
primary means to combat piracy, it also appears committed to ongoing
educational and training efforts, many of which target young adults
and children. In 2007, CNCP supported the American Chamber of
Commerce's elementary school program, "Combating Piracy is Learned
at School." CNCP partnered with the U.S. Chamber to support the
Chamber's ongoing "Citizenship Game" that targets youths and
university students. A component of this program teaches students
the importance of protecting intellectual property rights in the
context of social responsibility and gives them the opportunity to
present their ideas on how to address IP infringement in Brazil.

BRASILIA 00000254 004 OF 009


The Program launched a website, (www.atitudeoriginal.com.br) in
June. CNCP continues to promote the SINDIRECITA (Union of Receita
Employees) program "Pirate, I'm out. I only use the Original,"
focused on college students, and has provided training to the
Brazilian office of Consumer Protection (PROCONS) and interns at the
Secretariat of Economic Development (SDE). CNCP also assists with

SIPDIS
the Federation of Industries of Rio De Janiero (FIRJAN) "Authentics"
campaign to educate high school students.

19. (SBU) Through its internal training division, ANVISA has
instructed 130 state and municipal level inspectors on conducting
counterfeit medicine inspections (as of June 2007). ANVISA, in
conjunction with Receita, has also participated in seminars on
counterfeit medicines conducted by the private industry group
National Anti-Piracy Forum (FNCP) and Public Ministries in states
throughout Brazil. The agency recently announced plans to expand
its training for enforcement officials to include judges, who the
organization feels do not take adjudications for counterfeiting
medicine seriously enough (ref G). In 2007, the National Institute
of Industrial Property (INPI - the Brazilian patent and trademark
office) held 28 courses on technology management and patent drafting
at Brazilian universities and research institutes (in 2008, 59 such
courses are planned) and conducted eight courses for GoB officials.


----------------------------------
USG and Industry Provided Training
----------------------------------

20. (SBU) State governments and GoB agencies have been receptive to
USG funded and organized training. In 2007, the U.S. Patent and
Trademark Office (USPTO) provided training to more than 70 Brazilian
patent and trademark examiners via DVCs and participation in its
Virginia-based Global Intellectual Property Academy (GIPA). In May,
the American Chamber of Commerce in Sao Paulo coordinated with the
Sao Paulo State Secretariat of Public Safety, to conduct a
USTDA-funded training seminar for Sao Paulo police and prosecutors.
CNCP Executive Secretary, Andre Barcellos, attended a June session
of the USPTO Global Intellectual Property Academy (GIPA) in
Virginia. In July, DHS/ICE coordinated an IP enforcement training
program at the International Law Enforcement Academy in Lima, Peru,
which included participation of an official of the state of Bahia's
newly formed anti-piracy committee (GEPPI), as well as officials
from the anti-piracy unit in Rio de Janeiro. attended a In
December, Consulate Recife coordinated with the state government of
Pernambuco and the industry association National Forum Against
Piracy (FNCP) to hold an INL funded training seminar targeting
enforcement officials, prosecutors and judges. In that same month,
the Rio Grande do Sul Civil Police hosted an FBI sponsored training
seminar for 60 federal, civil and military police officials as well
as prosecutors and judges that included training in IPR enforcement.
GoB officials have also reached out recently to the USG for
technical assistance. At a January 2008 meeting with EmbOffs,
Ministry of Agriculture officials expressed an active interest in
USG help with patent protection and in streamlining the patent
process for agricultural products.

21. (SBU) Brazilian private industry organizations have also
conducted extensive IPR training programs. In 2007, over 2000
police officials and prosecutors participated in seminars conducted
throughout the country by FNCP, which the organization plans to
expand to different locales in 2008. The Federation of Industries
of State of Sao Paulo (FIESP) partnered with the U.S. Chamber of
Commerce to conduct 16 training seminars for Brazilian customs
officials in airports, ports and border customs posts. The U.S.
Chamber joined with the Brazilian Textile and Apparel Industry
Association (ABIT) to conduct a half-day program for the Association
of Federal Judges of Brazil (AJUFE) on the impact of piracy on
Brazil. In 2008, the U.S. Chamber plans an additional 12 training
programs at various ports and border crossings.

----------------------------------------
Anti-Piracy Committees and State Efforts
----------------------------------------

22. (SBU) In April, the film and music industries merged their
enforcement efforts and created the Association Anti-Piracy Cinema
and Music (APCM) (ref B). The state of Bahia formed a specialized
police unit to combat piracy and counterfeiting (GEPPI) in May.
Bahia's state program joins existing programs in the Brazilian

BRASILIA 00000254 005 OF 009


states of Sao Paulo, Rio de Janeiro, Rio Grande do Sul, and Minas
Gerais.

23. (SBU) Shortly after assuming office in 2007, the governor of
Pernambuco, Eduardo Campos, publicly directed his state police force
to cooperate with Federal Police in enforcing IPR statutes. In
September, the city of Blumenau in Santa Catarina state launched the
"Municipal Council to Combat Piracy" in conjunction with the
announcement of a State and Municipal Department of Education (APCM)
coordinated program, "City without Piracy." APCM envisions
replicating the Blumenau program in other states and in 2008,
already has plans to expand this program to the city of Uberlandia
in Minas Gerais.

-----------------
Campus Copy-Shops
-----------------

24. (SBU) According to the Brazilian Association for Reprographic
Rights (ABDR), internal rules issued by University of Sao Paulo
(USP) and the Pontifical Catholic University of Rio de Janeiro (PUC)
allow books not written in Portuguese to be freely copied, if
unavailable for sale at campus book stores. ABDR claims that the
university justifies its internal rule by stating that access to
knowledge and education are fundamentally protected under the
Brazilian constitution. (Comment: Under Brazilian copyright law,
"the one-time reproduction of small passages of a work for the
copier's private use without the intention of making a profit" is
allowed, but the Law does not define what constitutes a "small
passage." End Comment.) In an October discussion with EmbOff, an
ABDR representative characterized the book piracy situation in
Brazil as "critical." He claimed that GoB authorities, in
particular the Ministry of Education, have not placed a high
priority on this issue and that progress in this area is lagging in
comparison to software and music piracy (ref E).

25. (SBU) At a January meeting, an official at the Ministry of
Culture (MoC) said actual book piracy was rare in Brazil, but
non-authorized copying of copyrighted works was common on university
and college campuses. He said the GoB supports the right of
individuals to access information and knowledge, which is often
difficult due to the high cost of textbooks, despite their tax
exempt status, as a result of low production runs. He 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 (ref G).

26. (SBU) According to the MoC official, 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 MoC plans a forum this year to obtain
public input as it considers copyright law reforms. Some of the
ideas being considered by the MoC to provide remuneration to authors
are a collective management system or a tax on blank media and
reproductive machines. The MoC is also considering a system to
allow small segments of books to be sold over the internet (ref G).

---------------------------------------
Patents, Trademarks and Data Protection
---------------------------------------

- Patents and Trademarks

27. (SBU) The National Institute of Industrial Property (INPI - the
Brazilian patent and trademark office), continues to have a
substantial backlog in pending patent and trademark applications.
INPI has taken concrete steps to improve its processing of patents
and trademarks, including an ongoing upgrade of its outdated data
processing systems. The GoB budgeted USD 100 million for INPI
operations in 2008 and 2009 (it was USD 40 million in 2004).

28. (SBU) The patent backlog is estimated at between 130,000 and
150,000 applications. In 2007, INPI received 24,081 patent
applications, and issued 17,333 final decisions (1,855 granted
patents; 824 denied; 14,611 withdrawn). In 2008, INPI plans to
introduce an electronic patent application filing system and
establish four "Control Divisions" to monitor quality and processing
issues. Over the past two years, INPI has increased the number of
patent and trademark examiners approximately 200% and has plans to
further increase patent examiners from the current level of 255

BRASILIA 00000254 006 OF 009


full-time examiners to 360 full-time examiners by the end of 2008
and has increased median salaries 50% to retain experienced
employees. (INPI currently employees 110 trademark examiners and
has not announced plans to hire more.) New patent examiners go
through a two-year formal on-the-job training program that covers
patent law and examination (including major national and
international legislation and jurisprudence). With this new
staffing, INPI expects to increase its patent processing capacity
from the current 20,000 applications/year to 30,000/year by the end
of 2008. By 2009, INPI expects new patent applications to be
decided within four years, which would represent the end of the
backlog.

29. (SBU) The trademark backlog is estimated at approximately
470,000 applications. In 2007, INPI brought on-line a new
electronic trademark filing system (e-Marcas) to streamline
adjudications. The agency estimates that 107,446 trademark
applications were filed in 2007 (59,582 paper; 47,864 e-Marcas) and
it issued 296,258 final decisions (128,540 granted trademarks;
111,190 withdrawn; 24,744 denied). According to INPI, new trademark
applications are now being initially processed within a maximum of
12 months.

30. (SBU) In 2006, Brazil announced plans to join the Madrid
Agreement Concerning the International Registration of Marks
("Madrid Protocol"), but the executive branch has yet to submit this
proposal to the Brazilian Congress for approval. Should this plan
be realized, Brazil would become the first country in South America
where this system is available. At its 2007 General Assembly
meeting, WIPO appointed INPI an International Searching Authority
(ISA) and International Preliminary Examining Authority (IPEA) under
the Patent Cooperation Treaty (PCT) for international patent
applications.

31. (SBU) Law 10196 (2001) includes a requirement that National
Health Vigilance Agency (ANVISA) approval be obtained prior to the
issuance of a pharmaceutical patent, raising transparency concerns,
and possible conflicts with Article 27 of the TRIPS agreement. U.S.
companies have complained of lengthy delays in getting the AVISA
approval required before pharmaceuticals can receive final approval
by INPI. ANVISA claims that its reviews take no more than 120 days
with only a three percent rejection rate (ref E). Medical device
manufacturers continue to voice concerns over a 2006 ANVISA
regulation requiring disclosure of data prior to approval of medical
devices that they believe to be overly burdensome and threatens to
infringe on the companies' proprietary financial information.

-- One Roadblock to Agricultural-Biotech Product Approvals Removed

32. (SBU) In March 2007, law 11460 changed the requirement for
approval of commercial licensing of genetically modified organisms
(GMOs) and GMO derivatives by Brazil's 27 member National Technical
Commission of Biosafety (CTNBio) Board from a two-thirds majority to
an absolute majority, theoretically removing an impediment to
commercial licensing of GMOs and GMO derivatives, since the board is
heavily influenced by environmentalists and anti-biotech groups.
Since then, at least three commercial biotech applications (GMO
corn) have been approved, but anti-biotech groups have blocked their
release through a federal court injunction.

-- Data Protection

33. (SBU) In contrast to previous reports, Post has become aware of
several cases where ANVISA granted marketing approval to generic
drug manufacturers based on undisclosed test results and other
confidential data submitted in connection with approval of the

SIPDIS
original drug on which the generic is based, raising concerns of
consistency with TRIPS Article 39.3. However, in these cases, the
generic product has not entered the market following such approval,
possibly because patent rights are still in force for the original
product upon whose test data the generic had relied. ANVISA has
taken the position that reliance on the previously granted marketing
approval is not a violation of Brazil's unfair competition laws or
its international obligations.

34. (SBU) Brazil's Industrial Property Law (9279/1996; Art. 195,
XIV) provides for civil and criminal penalties for "anyone
who...divulges, exploits, or utilizes, without authorization,
results of tests or other undisclosed data whose preparation
involves considerable effort and that were submitted to government

BRASILIA 00000254 007 OF 009


agencies as a condition for obtaining approval to commercialize
products." However, this provision also provides an exception
whereby disclosure by government agency is permitted "when necessary
to protect the public." Law 10603/2002 mandates the protection of
test data for veterinary pharmaceuticals and agrochemicals for 2-5
years (depending on whether it is a new or known chemical entity).
This law does not cover pharmaceuticals for human use. According to
Article 7 of this law, if the product is not commercialized within
two years of the date of sanitary registration, third parties may
request use of the data for registration purposes.

-- Compulsory Licensing

35. (SBU) Invoking TRIPS provisions, on May 4 Brazil issued a
compulsory license for Merck Sharp & Dohme's anti-retroviral drug
efavirenz (brand name: Stocrin), used in treating HIV/AIDS, after a
breakdown in negotiations with the company. The Brazilian
government cited the reason as a need for cost savings in its free
public treatment program for HIV victims. A GoB official stated to
EmbOffs at a January meeting that the drug's patent was one of over
400 pipeline patents, and, thus, was already in the public domain
when the patent was issued (ref G). Post is not aware at this time
of any imminent additional compulsory licensing actions by the GoB.

-----------
Legislation
-----------

36. (SBU) While the GOB has yet to take steps to adopt the WIPO
Copyright Treaty (WCT) or the WIPO Performers and Phonograms Treaty
(WPPT), industry groups and GOB agencies continue to seek to
strengthen existing IP legislation. During a December meeting of
industry representatives with A/S Dan Sullivan, a representative of
the Federation of Industries of the State of Sao Paulo (FIESP) noted
in particular the need to increase criminal penalties for trademark
counterfeiting (reftel F).

37. (SBU) Legislation introduced in 1999 that would have stiffened
the criminal penalties for piracy remains stalled in the Brazilian
legislature and does not appear to have a significant chance of
passage. A GoB official recently told EconOff that alternative
CNCP-sponsored draft IP legislation is currently in the president's
office for review, the last step before submission to the Brazilian
congress. He said there is a significant backlog of legislative
proposals at casa civil and he did not know if/when the legislation
would move forward to the congress. (Comment: Such delays within
the executive as well as once a proposal moves to congress are
common in Brazil. End Comment.)

38. (SBU) This CNCP-sponsored legislation, developed by CNCP's
Legislation Working Group with input from a 2005 private sector
forum, proposes a number of changes to the country's penal code and
industrial property law. Most suggested changes are practical in
nature, such as providing a rights-holder with additional time for
initiating legal proceedings; providing law enforcement agencies
with the authority to seize maritime and aviation craft, in addition
to buses, used to transport pirated goods; clarification of
procedures for seizing and destroying goods, as well as enabling law
enforcement agencies the ability to retain only samples for use in
litigation; introducing differentiation in penalties between
individual offenders (such as street vendors) and those involved in
a larger operation; holding owners of media responsible for
advertisements that promote buying, renting, exporting or importing
goods produced in violation of IPR laws; incorporating penalties for
software copyright violation into the penal code; and stiffening
penalties if pirated goods are imported (ref J).

39. (SBU) In August 2007, new legislation (PL 1807/07) was
introduced into the Brazilian Congress that would amend article 189
of Brazil's Industrial Property Law (9279/1996) and increase the
penalties for trademark violations from three to twelve months to
two to six years. The bill is currently in Constitution, Justice
and Citizenship Committee of the Chamber of Deputies.

- Optical Disk Regulations

40. (SBU) Brazil does not have any regulations on optical media
manufacturing for the purpose of controlling domestic production or
any laws or regulations requiring the use of source identification
(SID) codes in the mastering or replication of optical media. Post

BRASILIA 00000254 008 OF 009


does not believe that the implementation of these regulations would
have a significant impact on the production or distribution of
pirated optical goods since industry reports that there are
approximately a dozen optical disc plants in Brazil and most of
these plants appear to be operating legitimately and are not a
significant source of pirated media. Most pirated media in Brazil
appears in CD-R and DVD-R formats, which are usually smuggled in
completed form directly from Paraguay. Blank optical disks usually
originate in China and parts of Southeast Asia.

--------------------------
A View from Local Industry
--------------------------

41. (SBU) GoB reports of increased enforcement activity have done
little to ease the concerns of Brazilian industry. At a December
IPR-related meeting in Sao Paulo, representatives from recording,
film, publishing, healthcare, and Sao Paulo state industry voiced
concern about the growing number of intellectual property rights
violations in the country (ref F). According to a representative of
the recording industry, approximately 80% of Brazilian music sold is
pirated.

-------------------
Consumer Perception
-------------------

42. (SBU) A U.S. Chamber of Commerce/Brazil-U.S. Business
Council/ANGARDI (National Association to Guarantee Intellectual
Rights) commissioned report noted that the GoB had intensified its
efforts to combat piracy in 2007 and opined that these efforts
demonstrated clearly that piracy continued to be a priority for the
GoB. The report found that piracy costs the GoB over 20 billion
Brazilian Reais (approx USD 11.38 billion) annually and called for
more interest by the Brazilian judiciary in piracy issues.

43. (SBU) The report included data from polls conducted in October
2007 in Sao Paulo, Rio De Janeiro, Recife (Pernambuco state) and
Belo Horizonte (Minas Gerais state) as a follow-up to a survey
conducted in November 2006. Consumer spending on pirated goods in
Belo Horizonte decreased 22 percent, in Recife it decreased 20
percent, and it Sao Paulo the decrease was 37 percent. Rio de
Janeiro posted an increase of 19 percent. However, the poll found
that spending on pirated goods in the tennis, clothing and toy
sectors increased eight percent. (Note: In 2006, the poll noted a
17 percent growth overall in consolidated data on commercial piracy
for the cities of Rio de Janeiro, Belo Horizonte and Sao Paulo along
with a 45 percent increase in pirated items in the tennis, clothing
and toy sectors. Individually, Sao Paulo showed a 14 percent
reduction in the sale of pirated goods. End Note.) Consumers in
all cities surveyed, except Recife, felt that anti-piracy
enforcement efforts had increased. In Recife, consumers felt that
it had decreased.

------------
Future Plans
------------

44. (SBU) According to GoB officials, the National Council to
Combat Piracy (CNCP) will meet in late February or early March to
review its strategy to combat piracy and include increasing the
organization's efforts to address consumer demand for counterfeit
goods more effectively. To accomplish this, CNCP plans to intensify
its consumer educational program, increase efforts to promote reform
of the Brazilian tax system, and encourage industry to lower prices
on authentic products (ref G). ANVISA's future goals 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 end users (ref G).

46. (SBU) Comment: As this report clearly shows, GoB efforts to
combat piracy are involved and include a number of agencies and
organizations. While the GoB still bristles at being included on
the USTR watch list, the degree of GoB participation at the January
OCR meeting with USTR is one indication of how the USG dialogue with
GoB interlocutors has improved over the past year. ANVISA has shed
its previous reluctance to interact with Mission and become more
accessible. INPI now regularly interacts with USPTO and is
participating in USG sponsored training programs. The GoB still

BRASILIA 00000254 009 OF 009


must address areas of concern including potential TRIPS violations
in its use of undisclosed data and GoB-condoned copyright
infringements at campus copy shops, but appears to be committed to a
strong anti-piracy policy. End Comment.

Sobel

© Scoop Media

 
 
 
 
 
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