Cablegate: Ipr Enforcement Moves Forward in the Philippines

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FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4304
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RHHMUNA/USPACOM HONOLULU HI IMMEDIATE
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UNCLAS SECTION 01 OF 02 MANILA 005024

SIPDIS

SIPDIS

DEPT FOR EAP/EX AND EAP/MTS
STATE PASS USTR DKATZ
STATE PASS USAID

E.O. 12958: N/A
TAGS: KIPR ETRD EINV ECON RP
SUBJECT: IPR Enforcement Moves Forward in the Philippines

REF: MANILA 4940

1. Summary: The visit of USTR Director for Southeast Asia and the
Pacific David Katz provided an opportunity to meet with key players
on IPR in the Philippines and assess progress. It appears that
legislative progress is only moderate. Important legislation
extending copyright protections has been submitted to Congress but
will not pass in this session. The Roxas bill, which looked like it
would cause serious damage to the patent regime for pharmaceuticals,
is likely to pass, but without some of the worst provisions.
Enforcement agencies continue to act forcefully against violators of
IPR, resulting in some decrease in the availability of violating
products. However, prosecution of IPR cases remains severely
lacking. While we have high hopes of continued progress in both
legislation and enforcement, necessary reform of the judicial
process is a long-term and difficult prospect. End Summary.

2. USTR Director for Southeast Asia and the Pacific David Katz
visited Manila on November 9 and 10 for regular consultations on
trade and IPR issues. Katz met with a wide range of IPR contacts,
including three sessions with members of the Senate and the House of
Representatives, meetings with representatives of several agencies
of the executive branch, and a session with representatives of
rights holders.

Making the Case to Congress
---------------------------

3. Katz met with Congressman Junie Cua, Chairman of the Trade and
Industry Committee of the House and Senator Ralph Recto, Chairman of
the Senate Ways and Means Committee, and hosted a dinner for
Congressmen Gilbert Remulla, Jack Duavit, and Luis Villafuerte. The
evolution of IPR protections over the past year was the central
theme of each meeting, and Katz took the opportunity in each meeting
to press USTR concerns about proposed legislation limiting patent
protections for pharmaceuticals (the "Roxas bill"). Katz explained
in the meetings that the USG did not generally oppose GRP efforts to
lower the prices of pharmaceuticals, but would object to legislation
that contradicted the GRP's commitments under WTO TRIPS. (Note:
Roxas has subsequently agreed to modify the legislation in a way
that addresses some of our concerns. See reftel.) Duavit, who is
one of six vice chairmen of the House Trade and Industry Committee,
was upset at the prospect of legislation contravening TRIPS, and
assured Katz that he would support amending the bill.

4. Cua confessed his worries about some slippage in certain aspects
of IPR protection, especially in the areas of enforcement and
prosecutions. Katz and Cua discussed the prospects for guaranteeing
stable funding for agencies working in IPR enforcement. They also
discussed legislation Cua is sponsoring that would incorporate the
WIPO Copyright Treaties into Philippine legislation. Cua did not
believe time remained for Congress to pass the legislation this
year.

Encouraging the Executive Branch
--------------------------------

5. Katz met with the leadership of all the key enforcement agencies:
the Intellectual Property Office, Optical Media Board, Philippine
National Police, and Customs. Adrian Cristobal, Director General of
the Intellectual Property Office, described enforcement efforts,
especially an increasing number of raids and seizures. He discussed
a forthcoming memorandum of understanding with the US Patent and
Trademark Office regarding training opportunities for IPO officials,
and cited a realignment at the Department of Justice as increasing
the number of prosecutors (while remaining tentative as to whether
it would make a difference in the number and quality of
prosecutions). Edu Manzano, Chairman of the Optical Media Board,
described his agency's successful raids and increased seizures. He
also highlighted the success other countries have had with forensic
testing facilities that enable investigators to establish the
origins of pirated products, and urged that one be procured for the
use of GRP agencies (an idea Post is pursuing). The head of the
Anti-Fraud and Commercial Crimes Division of the Philippine National
Police, Noel de los Reyes, complained that rights holders often do
not lodge complaints necessary for PNP action. Celso Templo, Deputy
Director of the Customs Bureau, pointed to seizures of counterfeit
Chinese garments in the process of transshipment to US ports. He
described the proposal for Customs reform currently before the
Department of Trade and Investment, which would convert the IPR unit
of Customs into a permanent bureau with greater resources and
permanent personnel.

Challenge of IPR Prosecutions
-----------------------------

MANILA 00005024 002 OF 002

6. All representatives of the enforcement agencies expressed (albeit
diplomatically) frustration with the justice system. While raids
are conducted and illegal product seized, lack of cooperation from
rights holders often makes prosecution, and sometimes even retention
of seized goods, impossible. Even when prosecution would seem
possible, it rarely moves forward successfully.

7. Katz met with Assistant Chief State Prosecutor Pedrito Rances at
the Department of Justice and with Supreme Court staff to discuss
these issues. The meetings demonstrated that the justice system
remains the most problematic aspect of defense of IPR in the
Philippines. Rances oversees a task force of 16 prosecutors within
the Department of Justice who work on IPR investigations. While
more than 900 arrest warrants have been issued in the past several
years, few actual prosecutions have been undertaken and only eight
are presently active. Even fewer convictions have resulted. Rances
said that many arrest warrants are "archived," meaning that the
police do not even act on them. In those cases where an arrest has
been made, prosecutors encounter difficulties in arranging court
appearances by witnesses (often police officers), and IPR holders
must pay to store pirated materials for years as a case evolves (or
does not evolve). As a result, many complainants settle their cases
out of court or decline to file complaints in the first place. Asked
how much of the time of his prosecutors is devoted to IPR cases,
Rances was unable to answer, though he agreed with a suggestion of
"maybe about 10%."

8. Rances presented Katz with a list of 16 IPR convictions that have
taken place since 2000, but was unable to provide information about
sentences that were imposed, or indicate whether fines were paid or
if those sentenced remained in prison. Notably, the list included
Catherine Marquez, sentenced to prison in 2004 for book piracy, who
jumped bail while her case was on appeal, remains at large, and is
understood to remain active in illegal photocopying.

Comment:
--------

9. Although our allies in the executive branch and Congress are
working hard and have some accomplishments to tout, serious
weaknesses remain in the Philippine IPR regime. Aggressive
enforcement measures have made selling pirated goods a more
high-risk activity, and while malls and shopping centers still have
fakes on offer, sellers have become much more discreet. However,
the justice system remains a weakness whose effects can be felt not
only in IPR protection but also in numerous economic issues. The
existing system is one in which police and prosecutors do not work
together, adequate investigations do not take place, and only seven
percent of all prosecutions result in convictions. While the
embassy is engaged on various fronts attempting to remedy this
problem, it is the work of years and perhaps decades and is not
susceptible to quick fixes.

Kenney

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