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Cablegate: Piracy Cpi Concludes; New Legislation Put Forward

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 05 BRASILIA 002150

SIPDIS

STATE FOR WHA/BSC, EB/TPP/MTA/IPC SWILSON, AND CA/VO
STATE PASS TO USTR FOR SCRONIN, LYANG AND BPECK
USDOC FOR
4322/ITA/MAC/WH/OLAC/WBASTIAN/JANDERSEN/DMCDO UGALL/DRISCOLL
USDOC FOR 3134/USFCS/OIO/EOLSON/DDEVITO
TREASURY FOR OASIA/SEGAL
NCS FOR DEMPSEY

E.O. 12958: N/A
TAGS: KIPR ETRD KCRM PGOV ECON BR IPR
SUBJECT: PIRACY CPI CONCLUDES; NEW LEGISLATION PUT FORWARD

REFS: A) BRASILIA 2017 B) BRASILIA 1668

1. The highly respected Chamber of Deputies' Parliamentary
Investigative Commission (CPI) on Piracy (ref B) formally
concluded its year-long proceedings on August 11, 2004. In
the three-hour-long closing ceremony, members of the
commission and from the private sector uniformly stressed
the need for a greater recognition within society of the
importance of intellectual-property protection, and for
active follow-up to the CPI's report. In at times
emotional statements, the Deputies called for a cultural
mind-shift, emphasizing that beyond the self-evident
economic damage caused by piracy -- the loss of tax
revenues and of jobs, the stifling of creativity and
innovation - basic governance in Brazil is threatened by
the growth of the informal economy and of organized crime
associated with piracy. Deputy Semeghini noted with some
consternation that the USG is threatening to remove trade
benefits from Brazil under the Generalized System of
Preferences for inadequate IPR protection at the very time
Brazil is itself mobilizing to address the issue (ref A).

2. In a formal ceremony on August 12, Deputy Medeiros led
the CPI in presenting the Commission's final report to
President Lula, who was flanked by Minister of Political
Coordination, Aldo Rebelo, and Minister of Justice Marcio
Bastos. President Lula did not speak, but Minister Bastos
used the occasion to announce the formation of a public-
private sector National Council for the Defense of
Intellectual Property and for the Fight Against Piracy. As
of this report, the decree establishing this council is not
final; report to follow septel.

3. As a result of their work, Deputies of the CPI
introduced on July 16, 2004 five pieces of legislation,
three aimed at stiffening penalties for copyright
infringement. Although the CPI deputies are intent on
making this legislation a priority, it is unlikely the
Brazilian Congress will pass these bills before spring of
2005. Below is Embassy's unofficial translation of one of
the bills (the other four will be transmitted septel.) The
"Justification" which follows the text of the bill provides
a summary of the changes being introduced into domestic IPR
legislation and their rationale.

4. "Bill PL 3964/2004 of the Piracy CPI

Modifies Articles 184 and 186 and adds Article 184-A to the
Penal Code; alters regulations in the Criminal Procedure
Code, with regard to crimes against non-material property.

The National Congress decrees:

Article 1 - This Law modifies and adds regulations to the
Penal Code and Criminal Procedure Code to aid the fight
against piracy.

Article 2 - Article 184 of Decree-law no. 2.848 of December
7, 1940, is amended with the new text in paragraphs 1 and 2
and the following paragraph 5 below being added:

"Article 184. ...........................................

Paragraph 1: If the violation consists in the total or
partial reproduction, by any means or process, fixed in any
support, tangible or intangible, with the intent to profit
directly or indirectly, from an intellectual work, computer
software, phonogram, videotape, interpretation or
execution, without the express authorization of the author,
interpreter, executor, producer or of those who represent
them:

Penalty - detention for 2 (two) years and 2 (two) months to
4 (four) years, and a fine.

Paragraph 2: The same penalty applies to whoever acquires,
distributes, sells, puts on sale, rents, introduces into
the country, hides, loans, exchanges or warehouses, with
the intent to profit directly or indirectly, original or
copy of an intellectual work or express audiovisual by any
means or fixed in any support, tangible or intangible,
produced or reproduced in violation of the author's rights,
without the express authorization of the owners of the
rights or those who represent them.

Paragraph 3: ...........................................

Paragraph 4: ...........................................

Paragraph 5: Independent of the conviction of the
perpetrator of the crime, whenever the counterfeiting of an
intellectual work or industrial product is certified
through an expert's finding, the judge can, ex officio, by
means of a petition from the author whose rights were
violated or by the Public Ministry, determine the
destruction of the criminal production or reproduction, or
send it to aid institutions or social programs that house
minors or elderly people, as long as the substance is not
detrimental to health or physical well-being." (new
wording)

Article 3 - Decree-law no. 2.848 of December 7, 1940, will
now be amended to include the following Article 184-A:

"Article 184-A. To publish, offer publicity services or
transmit by any means, conventional or electronic, ads or
information destined towards the purchase, sale, rental,
import, export of original or copy of an intellectual work
in violation of the author's or interpreter's rights,
phonogram, videotape or any industrialized product
registered under the terms of Law no. 9.279/96 without the
express authorization of the owners of the rights or their
representatives.

Penalty - detention for 2 (two) years and 2 (two) months to
4 (four) years, and a fine.

Paragraph 1 - The same penalty applies to whoever divulges
information about the means, form of manufacture or
acquisition of raw materials destined to the counterfeiting
of products listed in the caput of this article, even if
the author of the counterfeiting is not identified and
independent of his conviction.

Paragraph 2 - In case of recidivism, the penalty will be
increased by two-thirds."

Article 4 - Clause II of Art. 186 of Decree-law no. 2.848,
of December 7, 1940, will be amended to include the
following text:

"Article 186 ...........................................

II unconditional public penal action, for crimes covered in
paragraphs of Article 184 and in the circumstances
described in art. 184-A; (new wording)"

Article 5 - Article nos. 527, 530-B to 530-F and 530-H of
Decree-law no. 3.689, of October 3, 1941, will be amended
to include the following text:

"Art. 527. The search or seizure investigation, in the
case of private penal action, will be performed by two
experts named by the judge, who will verify the existence
of grounds for the seizure, and whether this happens or
not, the expert opinion will be presented within 3 (three)
days after closure of the search process. (new wording)

Art. 530-B. In cases of infractions determined in the
paragraphs of Articles 184, 184-A of the Penal Code and
paragraphs 1 and 2 of Article 12 of Law no. 9.609/98, the
police authority will proceed with the seizure of goods
illegally produced or reproduced, support and material that
contribute to counterfeiting, as long as they are
principally destined to illegal practices or
commercialization of their product.

Art. 530-C. At the time of seizure a document will be
drafted, signed by 2 (two) or more witnesses, containing
the description of all seized goods and information about
the location of seizure, and, if possible, of the person
who had them in his possession, in a way that will permit
his identification and individualization, which will become
an integral part of the police inquiry or trial. (new
wording)

Art. 530-D. Subsequent to the seizure, an investigation
will be done, by official experts, or lacking these, by a
technically apt person, on samples of the seized goods in
sufficient quantity to prove the crime, and a report will
be prepared that will become part of the police inquiry or
trial. (new wording)

Art. 530-E. The titleholders of author's rights and those
connected to them or, alternatively, the association of
titleholders of author's rights and those connected to
them, will be the true holders of all seized goods, placing
them at the disposition of the judge during the trial.

Art. 530-F. Except for the necessity of preserving the
corpus delicti (material evidence), the judge can
determine, before passing sentence or during the
inquisitorial phase, at the request of the injured party or
the Public Ministry, the latter always being heard, the
destruction of the seized production or reproduction when
its legitimacy is not contested or when the penal action
cannot be initiated due to lack of determination of the
author of the crime.

Sole paragraph: Independent of the conviction of the author
of the crime, the judge can determine the use of the
counterfeit merchandise by aid entities or social programs
for children, adolescents or the aged, as long as it is not
detrimental to the health or physical safety of the
recipients. (new wording)

Art. 530-H. The associations of copyright titleholders and
those connected to them can, in their own name, function as
assistants to the prosecution for the crimes determined in
Art. 184 and 184-A of the Penal Code and art. 12 of Law no.
9.609 of February 19, 1998, when those crimes are to the
detriment of any of its associates.

Article 6 - This law goes into effect on the date of its
publication.

JUSTIFICATION

The bill that the Piracy CPI hereby presents has as its
objective to modify the penal law in order to fight piracy,
so prevalent in our society.

During all these months of work, besides all those directly
affected by piracy, the Commission heard various
representatives of the Public Ministry. They were
unanimous in stating that despite the good intentions of
the legislature with regard to Laws no. 9.099 and 10.259/00
concerning Special Civil and Criminal State and Federal
Judgeships respectively, the regulations in Art. 89 of Law
9.099, described in Law no. 10.259/00, create the
impression that piracy is a crime of lesser importance.

These regulations concede the benefit of procedural sursis
to the author of a crime whose minimum penalty is equal to
or less than one year.

Since as a result of the work done by the CPI the
connection between piracy and organized crime became
overwhelmingly proven, the stiffening of some penalties is
necessary, not simply for the sake of saying that the law
is rigorous, but to avoid that people involved in these
criminal organizations operate on the margins of the law,
freely transiting Brazilian territory, with so-called
organized crime becoming more and more deeply rooted, and
reinforcing a "sense of impunity".

The minimum and maximum fines set forth in Article 184 were
also removed, inasmuch as the system adopted in the general
part of the Penal Code allows the imposition of even larger
penalties. Besides, it is known that monetary penalties in
nominal values lose their impact over time, which is not
desirable.

Also, a provision was added to the Penal Code to establish
as a crime the advertising (by various means), manufacture
or acquisition of raw materials for the counterfeiting of
pirated products, even in cases in which the identity of
the counterfeiter is unknown and independent of the
counterfeiter's conviction, because it is unacceptable to
exclude this type of crime and culpability from the law
when the perpetrator is unknown, since his existence is
proven.

Regarding the changes to the Criminal Procedure Code, we
strove to make them compatible with changes made by this PL
to the Penal Code, and, in the case of art. 530-B,
determined that the investigations of search and seizure
should encompass the totality of counterfeit merchandise
and the equipment for its non-authorized production or
reproduction, besides enabling the seizure of documents
that can identify those who acquire the counterfeit
material or the members that make up a specific gang.

The modification of Article 530-C is to ensure that the act
of seizure be as detailed as possible, since it becomes an
integral part of the evidence.

Currently, art. 530-D determines that an expert opinion on
seized merchandise be done on all goods seized. Seizures
can consist of hundreds of thousands of units of the same
product. It is not reasonable to demand an expert opinion
on all of them. A sampling, in this case, is a measure of
reasonability, by which we propose "expert opinion on
samples of the goods seized in a quantity sufficient to
prove crime."

Evoking the same measure of reasonability, we are proposing
a change in Article 530-E, so that associations of
titleholders of author's rights can be named valid holders,
since most of the time it is impossible for an individual
to maintain sufficient storage to accommodate the absurd
amount of merchandise being seized in Brazil.

Article 530-E is compatible with paragraph 5, inserted by
us in Art. 184 of the Penal Code.

Finally, the new version of Article 530-H allows that in
new cases covered in Article 184-A of the Penal Code,
contained in this bill, and in cases of Article 12 of Law
no. 9.609 of February 19, 1998, that regulates the
protection of software intellectual property, the
associations of titleholders of author's rights and those
connected to them can, in their own name, function as
assistants to the prosecution.

Through the above and the belief that the adoption of the
measures hereby proposed will aid in the fight against
piracy, the Piracy CPI counts on the support of the
illustrious Deputies for the conversion of this bill into
law.

Deputy Medeiros, President
Deputy Josias Quintal, Reporter"

(End Unofficial Embassy Translation.)

Danilovich

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