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Cablegate: Special 301 Out-of-Cycle Review: Embassy Views On

DE RUEHOT #3179/01 2932026
P 202026Z OCT 06





E.O. 12958: N/A

REF: A. STATE 149667

B. OTTAWA 3171

1. (sbu) Summary: Canada is starting to take important steps
toward improving protection for intellectual property rights
since USTR kept Canada on the "Special 301" Watch List in
April 2006. The new Conservative government is more
receptive than its predecessor to U.S. concerns and on
October 18 published new data protection regulations for
pharmaceuticals, an action long advocated by the USG. The
Canadian government is also preparing to introduce new
copyright legislation designed to implement the WIPO Internet
Treaties and address other IPR concerns. Cabinet secrecy
rules prohibit GOC officials from discussing details in the
legislation, but the bill is expected to be introduced in
Parliament later in the fall. In addition, a Canadian
interagency task force continues to examine international
"best practices" for improving border enforcement against
pirated / counterfeit goods. GOC officials stated that
granting "ex officio" powers to border agents will likely be
a key request of the task force. Canadian officials,
however, are reluctant to make the act of camcording in movie
theaters a criminal offense, which motion picture
distributors seek to deal with a rapidly growing problem that
is causing considerable revenue loss. End Summary

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2. (sbu) In April 2006, USTR retained Canada on the "Special
301" Watch List, and announced an Out-of-Cycle Review in the
fall to monitor Canada,s progress in providing adequate and
effective protection of intellectual property rights. USTR
noted that the USG would look to the Government of Canada to:

-- ratify and implement the World Intellectual Property
Organization Copyright Treaty and the World Intellectual
Property Organization Performances and Phonograms Treaty
(WIPO Treaties);

-- amend Canada,s copyright law to provide adequate and
effective protection of copyrighted works in the digital
environment; and

-- enact legislation to protect against unfair commercial use
of undisclosed testing and other data submitted by
pharmaceutical companies seeking marketing approval for their

USTR also called on Canada to improve its weak border
enforcement measures, in part by granting customs officers
the authority to seize products suspected of being pirated or
counterfeit without the need of a court order.

Post Views: Out of Cycle Review of Canada

3. (sbu) Since April, Canada,s new government has started to
take important steps aimed at improving intellectual rights
protection on three principal fronts: data protection for
pharmaceuticals, new copyright legislation, and improving
border enforcement. In a significant action, the GOC
published new data protection measures for pharmaceuticals in
the Canada Gazette Part II on October 18, a step that the USG
has long advocated. Progress in other IPR areas has been
less public.

Data Protection Measures Published

4. (sbu) The GOC published new data protection measures for
pharmaceuticals in the Canada Gazette Part II on October 18.
Canadian officials state that the regulations will protect
new and innovative drugs, ensure that generic pharmaceuticals
come into the market with a greater certainty, and improve
Canada,s international competitiveness - while providing
QCanada,s international competitiveness - while providing
opportunities for U.S. companies to enter the Canadian
market. GOC officials tell us that new chemical entities
("innovative drugs" containing an ingredient not previously
introduced in Canada or a variation of a previously
ingredient) will enjoy eight years of data exclusivity, and
that filings for generic drugs will be prohibited for six
years (with an additional six months exclusivity for
pediatric studies). New dosage formulations, changes in drug
use, and changes in dosages are to be protected under the
proposed regulations

OTTAWA 00003179 002 OF 003

The data protection regulations can be found at:

Copyright Legislation Being Drafted

5. (sbu) The GOC is preparing copyright legislation expected
to be introduced in Parliament later this fall. Canadian
Heritage and Industry Canada officials representing the two
ministries responsible for drafting the copyright bill
decline to discuss details of the legislation because of
strict Cabinet secrecy rules - but tell us that USG views are
well known. These were recently outlined to the GOC in a
bilateral meeting in Ottawa on October 5 (ref B). On October
11, USTR Schwab sent a letter to Industry Minister Maxime
Bernier to reiterate the USG's specific interests in the
pending copyright legislation. Copies of the letter were
also delivered to Canadian Heritage Minister Beverley Oda and
Trade Minister David Emerson.

6. (sbu) Canadian Heritage Minister Oda and Industry Minister
Bernier have stated that WIPO implementation is a priority,
and GOC officials intimate that the new legislation will be
stronger than C-60, the previous government,s attempt to
update Canada,s copyright regime, which failed to pass
Parliament prior to the January 2006 election. For their
part, Canadian Heritage officials admit that C-60 had been
weak regarding circumvention devices, and note that Oda wants
the new copyright bill to meet international standards.
(Comment: Bill C-60 contained serious flaws including
overly-broad ISP liability exceptions, a lack of ISP
notice-and-takedown requirements, and weak or nonexistent
deterrents against circumvention. End comment)

7. (sbu) GOC officials have been even less forthcoming on
plans regarding Internet Service Provider (ISP) liability,
but tell us that they are well aware of the USG,s preference
for a "notice and takedown" model. Officials suggest that a
"notice and notice" system would be acceptable to domestic

Border Enforcement Improvements Still Being Studied
--------------------------------------------- ------

8. (sbu) A Canadian interagency group continues to examine
"best practices" and regulations to improve border
enforcement. GOC officials are vague when formal
recommendations will be made to Cabinet, but say the work of
the group is "far advanced." GOC officials acknowledge that
Canada is the only G-7 country yet to update its border
enforcement regime, and appear to recognize that border
officials should receive "ex officio" powers to seize
suspected counterfeit / pirated goods. Officials also
acknowledge that current arrangements between customs
officials and the Royal Canadian Mounted Police (RCMP) for
seizing illegal goods are cumbersome. However, law
enforcement officials in some parts of Canada are
occasionally willing to investigate and shut down illegal DVD
operations, such as occurred in August in Toronto where local
police arrested four individuals, seized over 140 DVD
burners, and confiscated more than 20,000 counterfeit movie
Reluctance to Move on Camcording

9. (sbu) GOC officials question industry estimates about the
extent of DVD piracy sourced from camcording in Canadian
movie theaters, and are reluctant to make the act of
camcording in theaters a criminal offense. (Canada,s
Department of Justice considers camcording with an intent to
distribute to be a criminal offense under Section 402 of the
Qdistribute to be a criminal offense under Section 402 of the
Copyright Act, but proving intent is often prohibitively
difficult for prosecutors.) GOC officials also state that
Canada,s law regarding camcording is modeled on
international obligations requiring enforcement against
"willful commercial piracy" (i.e., willful infringement for
commercial purpose), and that the WTO TRIPs Agreement does
not require camcording to be a criminal offense. Canadian
DOJ officials also state that local police officers are
generally not interested in taking action against individuals
using camcorders in movie theaters. Official also suggest
the motion picture industry should provide more reliable
figures on camcording to back allegations that legislation is
needed to combat the problem.

OTTAWA 00003179 003 OF 003

10. (sbu) The Canadian Motion Picture Distributors
Association believes that close to 75 percent of all films
illegally camcorded in Canada are recorded in theaters in and
around Montreal, which was recently identified as the topcity
in the world for surreptitious camcording (ref C). The
industry believes that this is a rapidly growing problem that
is causing a considerable loss in revenue. It has also
traced pirated DVDs to copies first recorded in theaters in
Ontario, Nova Scotia, Alberta, and British Columbia.

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