Cablegate: Successful Ipr Conference Highlights Border

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






E.O.: N/A

1. (SBU) Summary. Post, in collaboration with the U.S.
Patent and Trade Office and U.S. Customs and Border
Protection, hosted a two-day conference October 24-25,
highlighting the urgent need for Peru to better protect
intellectual property rights. During the conference, 70
officials from Peruvian Customs/SUNAT and Indecopi (Peru's
Intellectual Property Rights Administrator) heard
presentations from private sector and government officials
on how Peru's IPR system functions, the dire situation with
optical disc piracy in Peru, an overview of the WTO TRIPS
Agreement, and best practices from U.S. Customs on
cooperation efforts and risk analysis. After two days, it
became apparent that the Peruvian entities responsible for
protecting IPR, including Customs/SUNAT, Indecopi, police,
and the judiciary, need to improve cooperation to achieve
desired results. Additionally, local Customs officials are
woefully ignorant of Peru's customs obligations under the
TRIPS agreement, foreshadowing possible difficulties with
the implementation of TRIPS plus customs measures under a
U.S.-Andean Free Trade Agreement. End Summary.

Helping Customs and Indecopi Understand
Why IPR Really Matters

2. (U) Since 2001, USTR has listed Peru on its Special 301
Priority Watch List. Piracy can be found in all sectors,
including textiles and apparel, pharmaceuticals, software,
literature, music and movies/media. Optical disc piracy is
rampant; 98 percent of the music industry, 80 percent of the
motion picture industry and 55 percent of the software
industry is pirated in Peru. Imports of optical discs
totaled 130 million in 2004 -- Indecopi officials expect
this amount to increase to approximately 140 million units
in 2005. 85 percent of blank optical discs imported exhibit
the name of Princo, manufactured in Taiwan. Of the total
130 million imported discs, only 10 million CDs and DVDs are
used for legitimate purposes, with the rest used to produce
pirated products.

3. (U) Because Peru's optical disc piracy levels continue
to worsen annually, Post and the U.S. Patent and Trade
Office co-sponsored a training seminar for Peruvian
officials entitled "The Application of Intellectual Property
Rights: the Case of Optical Discs," October 24-25 in Lima.
Customs officials from Lima's Port of Callao, six customs
officials from key border areas including Tacna, Arequipa,
Iquitos and Tumbes, and officials from Indecopi attended the
conference, where they heard presentations explaining why
Peru needs to improve its efforts to protect IPR.

4. (U) Experts from both the public and private sector
emphasized the need to eliminate optical disc piracy. In
addition to noting how IPR protections will encourage
creative thinking and the development of new products,
particularly in Peru's robust software industry, Richard
Llaque, Head of the Tax Control Office at SUNAT, noted that
Peru loses between $15-20 million in tax revenue annually
due to piracy of optical discs. The loss of revenue, he
emphasized, means that the GOP does not have the money to
improve social development programs or build infrastructure,
such as improving the Port of Callao.

5. (U) Jacqueline Morales from the U.S. Patent and Trade
Office then reviewed the WTO TRIPS Agreement, highlighting
sections 51-60, which detail member countries' customs
obligations. During her presentation, several Customs
officials noted that, despite provisions for Ex Oficio
action under TRIPS, Peruvian Customs is prohibited under the
law from taking such action.

Emphasis on Border Measures

6. (U) After laying the foundation, the presentations
became more specific, detailing U.S. Customs efforts and
practices in its daily fight against shipments of contraband
and IPR violations. J. Todd Reeves, Legal Advisor at U.S.
Customs and Border Protection, explained best practices in
the United States, highlighting the need for agencies to
share information, how to establish a database of
information on patents and trademarks, and why a good
relationship with the private sector can make it easier to
stop fakes. Kimberly Wachtel, Import Specialist with U.S.
Customs, reviewed how to conduct targeted risk analysis,
noting that Customs officials need to pay attention to
details, such as where a product is imported from, whether
the company is one that is suspect, and how bad packaging
can signal a contraband shipment.

7. (U) Local Customs and Indecopi officials responded well
to these presentations, asking questions about how they can
better improve their efforts. We also engaged participants
in a discussion on how they conduct their searches locally;
most officials admitted that they had never conducted a
search before because they were unaware of telltale signs of
IPR infringements or contraband. Customs officials, who
appreciated the information, noted that they will take the
information back to headquarters and incorporate some of the
U.S. best practices into their daily activities

Inherent Tension between Customs and Indecopi

8. (SBU) During our discussion on a day in the life of a
local Customs officers, several participants noted that in
Peru, Customs does not have the authority to determine
whether a good is legitimate or a pirated copy. Instead,
that responsibility remains with Indecopi officials, who
must give their official approval before Customs can seize a
shipment of allegedly pirated goods. One Customs official
noted that it often takes Indecopi several days to return
their call or make a determination; often too late, as
Customs turns over goods to the importer within 48 hours.
For example, one Customs agent who works at courier office
at the Jorge Chavez Airport in Lima explained that she often
receives shipments of optical discs on a spindle -- most of
these discs are "software" programs. She noted that she
believes these discs, which do not come in a jewel case or
in any official packaging, to be pirated. However, as there
is no Indecopi official at the airport to determine the
legitimacy of the shipment, she cannot detain the shipments
without cause, letting the pirated product enter the market.

9. (SBU) Several Indecopi officials noted that Indecopi is
working with SUNAT to place officials at the ports. One
agent was recently assigned to the Port of Callao. Martin
Moscoso, Director of Indecopi's Office of Derechos de Autor,
explained that while Indecopi is willing to give
Customs/SUNAT officials Ex Oficio ability, SUNAT agents do
not have immunity under Peruvian law to protect them if they
detain a legitimate shipment. Customs/SUNAT officials have,
he stated, rejected their ability to make immediate
determinations, even though they have the ability to access
Indecopi's records of Peruvian right holders.


10. (SBU) During the two day conference, several issues
became apparent. In addition to continuing tension and lack
of communication and understanding between Customs and
Indecopi officials, we noted that many of the Customs agents
were unaware of Custom's obligations under the TRIPS
Agreement. Peruvian Customs officials receive minimal
training before becoming an agent; most of our participants
from Customs could not explain what TRIPS was, let alone
describe how Customs is meeting its TRIPS obligations. This
phenomenon foreshadows potential problems in the future, as
Peru draws near to the conclusion of FTA negotiations with
the United States. Under our FTA trade capacity building
measures, we will look to educate Peruvian Customs officials
on their WTO TRIPS obligations and support them as they move
to implemented TRIPS-plus commitments under an FTA.


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