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Cablegate: Peru: Special 301 Review

VZCZCXYZ0051
RR RUEHWEB

DE RUEHPE #0297/01 0511832
ZNR UUUUU ZZH
R 201832Z FEB 08
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 7953
INFO RUEHBO/AMEMBASSY BOGOTA 5526
RUEHQT/AMEMBASSY QUITO 1763
RUEHLP/AMEMBASSY LA PAZ FEB SANTIAGO 1755
RUEHCV/AMEMBASSY CARACAS 1054
RUEHBU/AMEMBASSY BUENOS AIRES 3289
RUEHME/AMEMBASSY MEXICO 3618
RUEHBR/AMEMBASSY BRASILIA 7772
RUEHRI/AMCONSUL RIO DE JANEIRO 0340
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAFCC/FCC WASHDC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC

UNCLAS LIMA 000297

SIPDIS

SIPDIS

DEPT FOR WHA/AND, EB/IPE JBOGER
COMMERCE FOR 4331/MAC/WH/MCAMERON, ITA/MAC/OIPR CPETERS
USPTO FOR JURBAN
AMCONSUL RIO FOR DMAZURKEVICH

E.O. 12958: N/A
TAGS: KIPR ECON ETRD USTR PE
SUBJECT: PERU: SPECIAL 301 REVIEW

REF: STATE 00009475

1. (U) Summary. Post concurs with industry recommendations that
Peru remain on USTR's Special 301 Watch List for 2008. Peru
continues to face high levels of patent, copyright and trademark
infringements in all sectors. Challenges include adequate funding,
increasing inspections, strengthening enforcement and border
controls, combating public acceptance of pirated and counterfeit
goods, enacting deterrent sentences, and further reducing government
use of unlicensed software. On the positive side, El Instituto
Nacional de Defensa de la Competencia y de la Proteccisn de la
Propiedad Intelectual (INDECOPI), the Government of Peru's (GOP) IPR
administrative agency, has focused on enforcement training,
continues an active public campaign in partnership with the private
sector dedicated to educating the public on the harmful affects of
purchasing pirated and counterfeit goods, and continues to make
improvements, including legislative, to meet the requirements
established in the U.S. Peru Trade Promotion Agreement (PTPA). End
Summary.

GOP Efforts and...
------------------

2. (U) The GOP has made some effort to combat IP violations, and is
committed to further improvements by approving the PTPA; however
more resources need to be allocated in the area of investigations
and enforcement. INDECOPI's trademark, patent and copyright offices
do good work with limited staff and funding. INDECOPI officials and
public ministry prosecutors have ex oficio powers, allowing them to
conduct investigations and seizures, and file charges, without an
industry complaint. However, INDECOPI continues to be restrained by
a lack of financial resources to perform their mandate.

Laws and Regulations
--------------------

3. (U) Peru's IP laws are generally adequate and TRIPS compliant.
The U.S.-Peru Trade Promotion Agreement (PTPA) would correct
shortcomings and increase some protections beyond TRIPS
requirements. For example, the PTPA includes provisions that
enhance trademark protections, provide copyright protection related
to the Internet, mandate government use of legal software, protect
confidential pharmaceutical and agrochemical test data and trade

SIPDIS
secrets, and increase penalties for IP violations. INDECOPI has

SIPDIS
indicated that the legislative changes are being made and the agency
is well on track to meet the requirements established by the PTPA.

Overall Infringement Levels Increased in 2007
---------------------------------------------

4. (U) Infringement levels for 2007 remained steady or increased
from 2006 levels. According to the International Intellectual
Property Alliance's (IIPA) 2007 estimates, 98% of sound recordings
(same level as in 2006) and 73% of business software (up from 71% in
2006) in Peru were pirated, representing a loss of $98.5 million (up
from $85.5 million in 2006). Pirated CDs and DVDs, illegal copies
of books, and counterfeit clothing and toys can easily be found
throughout the country at markets, on street corners, and in beach
areas.

...Public Indifference
----------------------

5. (U) Changing the public's perception is perhaps one of the more
difficult challenges facing those who want to improve IPR protection
in Peru. INDECOPI continues to sponsor numerous public awareness
campaigns to improve the public's perception and promote the legal
purchase of original products.

6. (U) April 20-27 was "Intellectual Property Week" in Peru,
celebrated with giveaways, discounts, and massive destructions of
seized products. INDECOPI commemorated its fifth annual Destruction
Day, destroying confiscated pirated CDs and DVDs, and educating the
public about how IPR violations hurt the overall well-being of
Peruvians. Among other events, the movie industry hosted a night at
the cinema with reduced ticket prices.

...Patents
----------

7. (U) Confidential test data submitted for the marketing approval
of pharmaceutical and agrochemical products remains unprotected,
though the PTPA should resolve this once implemented.

...Copyrights
-------------

8. (U) INDECOPI's Copyrights Office conducted 21 inspections of
businesses alleged to use illegal software and music CDs in 2007,
this represents a decrease from 270 inspections in 2006. No formal
cases reached the courts. Fines totaled over $840,000.

Government Software Improvements
--------------------------------

9. (U) In 2003, the GOP passed a decree mandating that all
government agencies use legally procured software by March 31, 2005.
This deadline was extended to December 31, 2006, and, regrettably,
again to December 31, 2008. The percentage of central government
computers carrying pirated software is 43%. The GOP is making an
effort to meet its targets before the new deadline, and committed to
resolve this problem in the PTPA.

Law Enforcement
---------------

10. (U) In 2007, 47 operations were conducted: 29 by the Fiscal
Police (DIRPOFIS), 17 by SUNAT (tax authority) and 1 by INDECOPI.
In 2007, SUNAT created a special group to tackle the street piracy
problem. In November 2007, SUNAT conducted a major street raid and
seized about 200,000 recorded pirate music CDs and 70,000 blank
CD-Rs. The number of operations is down from 65 operations led in
2006.

Prosecutors and Judiciary: Minimal Convictions
--------------------------------------------- -

11. (U) Despite the creation in November 2006, of four special
courts and one special appeal court with national jurisdiction on
IPR crimes, amendments to penalize recidivist offenders with
stronger sanctions, and additional penalties for more crimes, the
number of penal convictions and deterrent sentences in 2007 remained
minimal. The average 2007 sentence was a three-year suspended
sentence and the average 2007 fine was S/1000 (nuevo soles,
approximately US$300).

12. (U) In addition to the regular training INDECOPI and Customs
provide law enforcement officials, these entities have developed
extensive training for the new judges and prosecutors. Thanks to
USPTO, post has sent several judges and over twenty government
officials for trainings on enforcement, patent and trademark
administration in Alexandria, Virginia. Post is working with USPTO
to coordinate IPR training in Peru this coming year.

Treaties
--------

13. (U) Under the PTPA, Peru has agreed to ratify or accede to the
following agreements by the date of entry into force of the
agreement: The Convention Relating to the Distribution of
Programme-Carrying Signals Transmitted by Satellite (1974); the
Budapest Treaty on the international Recognition of the Deposit of
Microorganisms for the Purpose of Patent Procedure (1977), as
amended in 1980; the WIPO Copyright Treaty (1996); and the WIPO
Performances and Phonograms Treaty (1996). Peru shall ratify or
accede to the following agreements by January 1, 2008, or the date
of entry into force of the PTPA, whichever is later: the Patent
Cooperation Treaty (1970), as amended in 1979; the Trademark Law
Treaty (1994); and the International Convention for the Protection
of New Varieties of Plants (1991). Peru shall make all reasonable
efforts to ratify or accede to the following agreements: the Patent
Law Treaty (2000); the Hague Agreement Concerning the International
Registration of Industrial Designs (1999); and, the Protocol
Relating to the Madrid Agreement Concerning the International
Registration of Marks (1989).

Comment: Recommend No Change in Status
--------------------------------------

14. (U) Post recommends that Peru remain on USTR's Special 301
Watch List due to the continued high levels of copyright and
trademark infringements, the lack of protection for confidential
test data submitted for the marketing approval of pharmaceutical and
agrochemical products, and the need for increased enforcement
efforts, particularly the application of strong penalties for IPR
violators necessary for deterrence. Post recognizes the efforts
being made by INDECOPI to address these issues, particularly as Peru
works towards the implementation of the PTPA; however, additional
work must be achieved and resources allocated to address IP
enforcement before Post can recommend a change in status.

MCKINLEY

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