Cablegate: Mexico Ipr Update - April 2008

DE RUEHME #1533/01 1412057
P 202057Z MAY 08




E.O. 12958: N/A


Summary and Comment

1. (U) This cable reports on Mexican reaction to the Special
301 2008 report on Mexico and the following recent
IPR-related developments in Mexico: the "International Forum
on IPR and the Judiciary" event held in Cancun in February
and the establishment of a specialized IPR tribunal to review
administrative rulings; lobbying efforts for a bill to
provide ex oficio authority to go after pirates; recent
criminal IPR verdicts of interest; government initiatives on
IPR education and cooperation with various industries;
enhanced coordination with Mexican customs; and ongoing
efforts by the State of Mexico and Mexico City to combat
illicit commerce. Piracy and counterfeiting continue to
occur on epic scales here in Mexico, but the federal
government, some of its local counterparts, and the private
sector are clearly devoting more time and attention to
creative and coordinated efforts to strengthen IPR
protection, generating hope that better days lie ahead for
right-holders and their industries. End summary and comment.

Reaction to Special 301

2. (U) Econoff spoke with three key Mexican officials
regarding the 2008 Special 301 report on Mexico (REF A).
They were 1) Jorge Amigo, Director General of the Mexican
Institute of Industrial Property (IMPI - rough equivalent of
the U.S. PTO), 2) Alfredo Tourne, Director for Rights
Protection of the Mexican Copyright Institute (INDAUTOR -
rough equivalent of the U.S. Copyright Office), Jose Luis
Cervantes, chief of the specialized IPR unit of the Office of
the Attorney General of the Republic (PGR - rough equivalent
of the U.S. Justice Department). All three acknowledged the
problem areas identified in the report and committed to
taking concrete action to address them before the 2009
Special 301 drafting process begins. In particular, INDAUTOR
plans to review whether Mexican law is in full compliance
with Mexican obligations under the WIPO Internet treaties,
IMPI plans to work in closer coordination with health
authorities on IP issues related to the pharmaceutical
industry, and PGR intends to continue its focus on higher
quality prosecutions that result in deterrent convictions.

Judicial IPR Forum and Specialized Tribunal

3. (U) The Mexican Federal Judiciary, IMPI, INDAUTOR, a group
of private sector representatives, and the U.S. Embassy
organized the International Forum on the Judiciary and IPR
that was held in Cancun February 26-29. Around two hundred
judges, IPR officials, and attorneys from Mexico, the rest of
Latin America, Europe, and the World Intellectual Property
Organization participated in the forum, as did U.S. federal
judges Ronald Lew and Bernice Donald, Wayne Paugh from DoC,
Oliver Metzger of the U.S. Copyright Office, Marie-Flore
Kouame from DoJ, U.S. PTO's John Rodriguez and Jeff Siew, and
Embassy Econoffs. The Forum was kicked off by Mexican Deputy
Attorney General Felipe Munoz, Governor Felix Gonzalez of the
State of Quintana Roo (of which Cancun is the largest city),
and Jorge Camero, the President of Mexico's College of
Federal Judges. U.S. participants were speakers on the
following five of the twelve panel discussions on the
program: 1) pharmaceutical issues; 2) geographical
indicators; 3) IPR on the Internet; 4) enforcement and
precautionary measures; and 5) penalties/damages for IPR
infringement. There were several non-Mexicans included on
each panel, and the audience (which included a large number
of Mexican corporate lawyers) used the Q&A sessions to draw
attention to areas where Mexico's IPR regime fell short of
international standards. Several Mexican judges who spoke on
various panels were also quick to highlight shortcomings of
their domestic administrative and criminal IPR regimes. The

MEXICO 00001533 002 OF 004

Forum was an excellent mechanism for raising the IPR
awareness of the Mexican judges in attendance, and the
importance of IPR was further highlighted by the fact that
Guillermo Ortiz, President of Mexico's Supreme Court,
attended and spoke at the closing ceremony. Embassy is
working with the other Forum organizers to make electronic
copies of all the presentations and distribute them to the
entire federal judiciary of Mexico.

4. (U) Supreme Court President Ortiz made news at the closing
ceremony by announcing that the Federal Tribunal of Fiscal
and Administrative Justice would be forming a specialized IPR
court to handle appeals of administrative rulings made by
IMPI. Accordingly, several weeks after the Cancun Forum,
Mexico's Diario Oficial (functional equivalent of the Federal
Register) published a judicial resolution declaring that such
a court will indeed be established, and that it will have
jurisdiction over all administrative IPR appeals in Mexico.
The court will consist of three federal administrative/fiscal
judges with expertise in IPR who have yet to be named --
private sector representatives are understandably anxious
that the judges chosen favor strong IPR protection. Its
operating procedures also remain to be determined --
right-holder reps are hoping they will be designed in such a
way as to help reduce the excessive amounts of time it takes
to reach final resolution of contested administrative cases,
most of which are currently appealed to the circuit court
level of the administrative/fiscal system and spend years in
litigation. One lawyer who represents U.S. firms told
econoff that the ideal solution would be to add another
specialized court at the appeals level, though that proposal
is not currently on the table.

5. (SBU) There is a bill that was passed by the Chamber of
Deputies last year that remains pending with the Senate that,
if passed into law, would nullify the formation of the
specialized IPR court by removing all administrative cases
originating with IMPI from the jurisdiction of the Federal
Administrative Procedure Law and thus the Federal Tribunal of
Fiscal and Administrative Justice, under which the
specialized IPR court would operate. If this bill were to be
passed, appeals of IMPI rulings could only be made before
constitutional courts, which differ from Mexico's
administrative/fiscal courts in two key ways: 1)
constitutional courts can deny requests to hear such appeals,
and 2) constitutional courts cannot over-rule the substance
of IMPI decisions. They can only rule on whether a defendant
was treated fairly and in accordance with proper procedures.
Such a system would clearly strengthen IMPI and thus the
executive branch vis-a-vis the judiciary with regard to
administrative enforcement, though a specialized
administrative/fiscal court made up of judges who understand
the value of IPR protection would also be a clear improvement
over the status quo. Industry is close to unanimous that
either of these two options would be an improvement over the
status quo but is not taking sides publicly over which one is
preferable. The make-up of the new court and its operating
procedures will clearly be the decisive factors in either
winning over right-holders or driving them to lobby for
passage of the bill to remove IMPI from the jurisdiction of
the Federal Tribunal of Fiscal and Administrative Justice.

Lower Chamber Passes Ex Oficio - Internet Piracy Conviction
--------------------------------------------- --------------

6. (U) Under Mexican law, criminal law enforcement
authorities can only pursue pirates and counterfeiters if
they received a formal right-holder complaint. Previous
efforts to amend the law to provide ex oficio authority have
stalled due to conflicting views in the Senate and the
Chamber of Deputies regarding the bill's scope, with the
Senate opposed to criminalizing consumer purchases of
infringing goods and the Chamber of Deputies wishing to
eliminate specific penalties on complicit public officials.
The Embassy, the music and movie industries (which recently

MEXICO 00001533 003 OF 004

combined their enforcement efforts under the aegis of the
newly formed APCM, or Protective Association for Movies and
Music of Mexico), and the American Chamber of Commerce
proposed a clean version of the ex oficio bill and persuaded
the Chamber of Deputies' Justice Committee to push the bill
through to a vote before the end of the April legislative
session. Two deputies, including Antonio Diaz-Athie, who
participated in the legislators' IPR Voluntary Visitor
program to Washington that Post organized in February, agreed
to sponsor the bill, and it was passed by the Chamber of
Deputies on April 29, sending it back to the Senate for what
will hopefully be final approval before the end of the year.
The bill is not perfect, but its passage would undoubtedly
strengthen the PGR's hand in taking on organized criminal

7. (U) Through May 16 of this year, PGR had recorded 70
indictments and five convictions for IPR crimes (versus 166
indictments and five convictions for all 2007). Two cases
worth special attention were the conviction and sentencing to
six years in prison of a man who had been selling movies
on-line and the acquittal of multiple defendants who had been
charged with selling counterfeit medicines that had resulted
in the deaths of two children.

Reaching Out to Kids

8. (U) INDAUTOR reports that its proposal to include IPR
awareness materials in primary school civics textbooks has
been approved by the Secretariat of Public Education (SEP),
but predicts that such materials will not be ready until the
2009-2010 school year at earliest, due in part to INDAUTOR's
skimpy budget and fairly complicated clearance process within
the SEP bureaucracy for any changes to textbooks. In the
meantime, INDAUTOR is considering adapting certain WIPO
materials for use in comic books or brochures that can be
distributed in public schools. The State of Mexico, the
country's largest by population and the only state to have
formally signed an anti-piracy agreement with the private
sector and federal government, plans to disseminate a comic
book called "Pirate Town" that was developed by a state
university. IMPI plans to coordinate with the State of
Mexico on this project and perhaps expand it to other states.

Agreement on Clean Schools

9. (U) On March 28, the Mexican Book Publishers Association
(CEMPRO) signed an agreement with IMPI and the American
Chamber of Commerce called "Clean Schools" under which IMPI
has committed to conduct inspection visits on copy centers
located close to schools and universities in an effort to
dissuade the illegal copying of textbooks. This program is
similar to the agreement IMPI has with the Mexican music and
movie industries under which it conducts inspection visits to
cyber cafes in Mexico City. IMPI inspection visits do not
result in fines or other sorts of administrative sanctions
versus infringers, though IMPI can begin punitive proceedings
once an inspection visit has uncovered unlawful activity.
Both the copy-shop and cyber cafe initiatives are currently
targeted more at raising awareness and promoting compliance
rather than actually punishing violators, an approach that
the book, movie and music industries seem content with, at
least for now.

Enhanced Customs Cooperation

10. (U) Over the past year and a half we have witnessed
significant improvement in interagency cooperation on IPR
enforcement that has led to numerous success stories, such as
seizures of infringing goods at the Port of Lazaro Cardenas
resulting in both criminal and administrative investigations.
We have heard from numerous official contacts that the

MEXICO 00001533 004 OF 004

participation of multiple agencies in raids and seizures also
reduces the opportunity for corruption by making it harder
for a single official or office to make "deals" with pirates
without arousing the suspicion of other agencies involved in
the case. IMPI and Mexican Customs have recently begun
acting on an initiative to share expeditiously information on
suspicious in-bound shipments of goods bearing the 20 most
commonly counterfeited brand-names (e.g., Nike, Louis Vutton,
Tommy Hilfiger). IMPI claims it already has one success
story under this new cooperative initiative.

Status of State and Municipal Efforts

11. (U) Through the beginning of 2008 the State of Mexico and
the Municipality of Toluca registered significant progress
under their respective anti-piracy agreements with the
federal government and the private sector. On public
education, an anti-piracy comic book has been developed for
distribution to school children, and seminars have been held
at state universities explaining the importance of IPR to the
creation of quality jobs. The State of Mexico is also
working on a study of the informal economy in the state,
which will include a directory of vendors and prices. State
and municipal police have worked with federal authorities to
close down Toluca's largest black market, Juarez, in part
guided by an organized crime map put together by the state
law enforcement agency. Authorities and participating
private sector groups are working to license the Juarez
vendors, move them to legal venues, and supply them with
legitimate products that will appeal to their clientele.
Momentum was slowed in the first months of this year due to
changes in key leadership positions in the state law
enforcement and interior departments, but econoffs and IMPI
officials met with the state-wide coordinating official in
April to discuss several concrete areas for renewed
collaborative efforts, including a campaign to ensure that
all state government offices are using legitimate business
software. Draft anti-piracy agreements with the states of
Morelos, Tlaxcala, Puebla, and Hidalgo are in one phase or
another of negotiation. Up until now, a coalition of
industries has taken the lead in these state-level
negotiations, but PGR, which has the interagency lead in
federal anti-piracy efforts, has now decided to spearhead
these efforts in close collaboration with the private sector.

12. (U) In Mexico City, the administration of Mayor Marcelo
Ebrard continues to expend substantial efforts in
re-converting the informal vendors who used to rule the
streets of the city's historic center. In April, city law
enforcement forces had several confrontations with black
marketeers who resisted attempts to move them. There have
been newspaper reports that pressure on illegal commerce in
downtown Mexico City has forced some pirates and
counterfeiters to re-locate either to other parts of the
capital or nearby cities such as Puebla. However, Ebrard's
police forces have begun to conduct raids in other parts of
Mexico City in close coordination with federal enforcement
agencies, inlcuding the PGR. In addition to the raids, the
government continues to expropriate real estate and others
assets used by those engaged in all forms of illegal
commerce. The Mexico City police's intelligence efforts are
improving and have led to investigations of five of the most
important bands of contraband/piracy/drug distributors in the
capital. The long-term goal of the Ebrard administration is
to "re-convert" informal vendors into licensed, legal
merchants operating out of authorized locations where the
government can supervise their activities.

Visit Mexico City's Classified Web Site at and the North American
Partnership Blog at /

© Scoop Media

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