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Cablegate: Ipr in Spain: Round-Up of Recent Noteworthy

VZCZCXRO2366
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHMD #1346/01 3571322
ZNR UUUUU ZZH
R 221322Z DEC 08
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 5808
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3723
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 03 MADRID 001346

SENSITIVE
SIPDIS

STATE FOR EUR/WE, EEB/TPP/IPE, EEB/CIP
STATE PASS USTR DWEINER
USDOC FOR 4212/DCALVERT
USDOC ALSO FOR PTO

E.O. 12958: N/A
TAGS: ETRD KCRM KIPR SP
SUBJECT: IPR IN SPAIN: ROUND-UP OF RECENT NOTEWORTHY
ACTIVITIES

REF: A. MADRID 1318
B. MADRID 1194
C. MADRID 1150

MADRID 00001346 001.2 OF 003


SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY

SUMMARY

1. (U) On November 25, Spain's Congress issued a non-binding
resolution calling on the GOS to develop a strategy to combat
internet piracy. Separately, Culture Minister Molina
announced that the government anticipates new regulations to
protect online content. Content providers continue to
complain that the government is not doing enough about IPR
infringement on the internet. The Spanish chapter of the
Business Software Alliance (BSA) released a survey that shows
software piracy rates in Spain significantly higher than
elsewhere in Europe. The local BSA head, like other
rights-holders, opines that the government is reluctant to
press the telecommunications companies to do more to combat
internet piracy, but that if concrete progress is not made
soon, the government may see itself forced to act sometime in
the next year. The Anti-Piracy Coalition and the Internet
Service Providers' (ISP) association are expected to give the
Minister of Industry, Tourism, and Trade a bare-bones
agreement on a graduated response mechanism by December 31.
Rights-holders say the parties remain far apart on several
key issues, and bridging the difference will be a challenge,
but they expect the government to try to move quickly once an
agreement is presented. End Summary.

NON-BINDING CONGRESSIONAL RESOLUTION

2. (U) On November 25, the Plenary of the Congress of
Deputies (lower house of Parliament) communicated to the
government the following non-binding resolution:

"The Congress of Deputies, in accordance with the Conclusions
of the European Council of Culture Ministers of November 20,
2008 on development of legal offers of on-line cultural and
creative content and the prevention and combating of piracy
in the digital environment, urged the Government, in the
Framework of the Inter-Sectorial Commission against Piracy,
to promote an effective strategy, approved by consensus, to
fight activities in the digital environment that violate
intellectual property rights, based on agreement among all
sectors involved: the content industry, internet operators,
consumers, and users.

"This strategy must ensure fair balance in the exercise of
fundamental rights, particularly the right to the protection
of personal data, freedom of expression and of access to
information and communication secrecy, and defense of
intellectual property. Furthermore, this activity must be
supplemented by promoting respect for intellectual property
rights and support for the development of new markets and new
marketing models for the cultural industry that are fully
adapted to the digital environment."

3. (U) According to Salvador Soriano, Deputy Director for
Information Society Services in the Ministry of Industry,
Tourism, and Trade, the government did not initiate or
sponsor the resolution. Rather, it was the brainchild of a
Spanish Socialist Workers' Party (PSOE - ruling party) deputy
from Madrid, Rafael Simancas, spokesman of the Committee on
Culture. Soriano said the government was pleased with the
resolution because it suggests that Congress may be receptive
to whatever legislative proposals to provide stronger
protection for digital content might result from ongoing
discssions between content providers and ISPs.. Any such
proposal is expected to be controversial, especially among
internet users' associations, whose members tend to oppose
vocally any initiatives that might restrict or limit their
on-line activities. Hoping to blunt such opposition, the
government continues to press the ISP association, Redtel,
and the Anti-Piracy Coalition to agree on measures to protect
content online. While the parties are making progress in
their negotiations, they remain far apart on several issues,
especially legal requirements needed to implement an
agreement and the nature of a collaborative business model
between service and content providers to make
copyright-protected material legally available online.

MADRID 00001346 002.2 OF 003


CULTURE MINISTER SAYS NEW ANTI-PIRACY MEASURES COMING SOON

4. (U) In a December 17 speech, Minister of Culture Cesar
Antonio Molina said different approaches for sanctioning
repeat IPR offenders are being considered and that the GOS
expects to introduce new regulations in the not-too distant
future. The Minister acknowledged that the measures will be
unpopular but commented that "what is really unpopular,
ruinous, and a disaster is that the thousands of jobs
generated by culture could disappear as a result of this
illegitimate activity." Characterizing internet piracy as "a
termite that is destroying an entire industry network,"
Molina noted that the issue is the subject of frequent
discussion among EU Ministers. (Comment: We believe Molina
was referring to the GOS preparing to respond to an expected
joint request from Redtel and the Coalition for it to take
certain measures, and not to a separate effort. End
Comment.)


BUSINESS SOFTWARE ALLIANCE RELEASES STUDY

5. (U) On December 10, the Spanish chapter of the Business
Software Alliance (BSA) released a study on software piracy
that ranked Spain in 12th place worldwide in 2007 with losses
of USD 900 million generated by software piracy. The study
found that over the past five years, Spain has been
consistently 8-12 points above the western European average
in percentage of software pirated, with a 43 percent piracy
ratio in 2007 as opposed to 33 percent for western Europe.

6. (U) According to Luis Frutos Miralles of Sage Spain,
President of the Spanish chapter of BSA, business software
piracy in Spain comes in three forms. First is the
traditional practice, especially prevalent among small and
medium-sized enterprises, of purchasing one license and
distributing the software package to multiple employees. The
national government does not pirate software in this way.
BSA is less certain about the autonomous community
governments but believes that their compliance is generally
good. There are, however, a number of municipal governments
that BSA suspects of using pirated software, and Frutos said
further public education efforts are needed to bring these
towns into line. BSA regularly conducts campaigns aimed at
small and medium-sized businesses and is working to expand
its outreach to regional and local governments as well.

7. (U) Another source of piracy is for authorized
distributors, often in an effort to increase their
competitive advantage, to give away or sell at nominal prices
software as part of hardware installations and other
commercial agreements. Software companies, Frutos said, have
trouble policing all their distributors and enforcing the
terms of their contracts, and wondered if this was also a
problem in the U.S. or in other EU countries. Finally, Frutos
said, the volume of illegal downloads of protected software
on the internet is source of growing concern.

8. (SBU) BSA is not a member of the Anti-Piracy Coalition,
which comprises mostly movie and music companies and
copyright management societies; the local entertainment
software alliance has only just joined. However, in talking
about digital piracy and the government's efforts to curb it,
Frutos spoke in much the same terms as representatives of
PROMUSICAE or the Motion Picture Association (MPA) or the
General Society of Authors and Publishers (SGAE - see
septel). He said BSA has developed a proposal to send
warning letters to infringers, which it plans to present to
ISPs and the government. In his view, Telefonica and the
other major telcoms, which own the ISPs, are driving a very
hard bargain and resisting any commitment that would require
them to monitor or police their customers. The GOS,
especially the Ministry of Industry, Tourism, and Trade, is
reluctant to force the telecoms to do anything against their
will. At the same time, the government wants the telecoms to
show more flexibility so that the government can avoid
intervening overtly to impose a solution. Frutos predicted
that the situation will remain frozen until at some point in
the next year the government sees itself forced to take some
sort of forceful action against piracy.

COMMENT

9. (SBU) The recent GOS-sponsored Digital Content (FICOD)

MADRID 00001346 003.2 OF 003


and IPR Conferences and the launch of the Ministry of
Culture's public education campaign (ref A) appear to have
foreshadowed a series of other IPR-related events which have
increased public attention to the issue. The Congressional
resolution, while non-binding, shows that legislators
understand the need for action. The Ministry of Culture,
which sees artists as entertainers and their representatives
as important constituents, understands how serious the piracy
problem is and wants the government to be more proactive in
addressing the issue, as evidenced by the Minister's remarks
that new regulations are coming. However, another key
player, the Ministry of Industry, Tourism, and Trade, remains
somewhat less forward-leaning, and the GOS as a whole
continues to defer action pending an agreement between the
ISPs and rights-holders. The new President of the
Anti-Piracy Coalition and the local MPA representative told
us last week that Industry, Tourism, and Trade Minister
Miguel Sebastian wants to see an agreement by December 31,
and that the parties will oblige by presenting a bare-bones
document that lists some areas of agreement on development of
a graduated response regime, but both noted that the parties
remain far apart on several critical issues related to
implementation. They believe, however, that the government
may move quickly once this new agreement is presented. End
Comment.
AGUIRRE

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