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Cablegate: Zapatero Promises Action to Combat Internet Piracy

DE RUEHMD #1052/01 3011529




E.O. 12958: N/A


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1. (SBU) In an October 21 speech to the American Business
Council, President Zapatero addressed internet piracy in
public for the first time, acknowledging that deficiencies in
IPR protection in Spain are a source of concern to the USG
and the GOS. Zapatero pointed to the October 9 creation by
the Council of Ministers (Cabinet) of an Inter-Ministerial
Commission to study Internet piracy, which he said will
submit recommendations to the government before the end of
this year. The Commission appears to formalize and enhance
ongoing working-level Inter-Ministerial discussions. Its
formation, the December 31 deadline, and Zapatero's
high-profile statement are encouraging signs suggesting that
progress may be forthcoming. Post believes Zapatero's
October 13 meeting with the President has contributed to both
the formation of the Commission and Zapatero's willingness to
go on record emphasizing the need for a solution.

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2. (SBU) Meanwhile, developments continue on other fronts,
and the decline in music, video, and movie sales this year
provides more evidence of the seriousness of the problem.
The government continues to urge the content providers and
the Internet Service Providers' (ISP) association (the
"Coalition" and "Redtel," respectively) to reach agreement on
measures to deter piracy. The two sides continue to exchange
proposals, but Coalition sources advise that any agreement
reached will be of modest scope. The Coalition also
announced it is developing a "macroweb" to make content
legally available online, which it plans to deploy in 2010
once the government begins to implement measures to protect
online content. Separately, rights-holders' groups have won
some internet piracy court cases and lost others. On October
19, the Coalition sent the Ministry of Industry, Tourism, and
Trade (MITYC) a list of some 200 commercial-scale pirate
websites, asking the Ministry to take dissuasive action and
also to pass the list to the Prosecutor General's office
(Fiscalia) for criminal charges. End Summary.


3. (U) During the weeks leading up to President Zapatero's
October 13 meeting with President Obama, U.S.
copyright-dependent groups such as MPAA and the Recording
Industry Association of America (RIAA) pressed actively to
have President Obama raise internet piracy with Zapatero.
Members of Congress sent a letter to USTR and the Commerce
Department with the same message.

4. (U) On October 9, Spain's Council of Ministers (Cabinet)
announced the establishment of an Inter-Ministerial
Commission to address the problem of IPR violations on the
internet. The Council tasked the Commission with analyzing
the existing regulatory framework and identifying actions
that will make the criminal and civil judicial processes more
effective in protecting copyrights online and offering
remedies to rights-holders. The Commission is to provide the
Council with its preliminary conclusions and recommendations
by December 31.

5. (U) Senior officials (roughly Under Secretary and
Assistant Secretary equivalents) of the following eight
Ministries will comprise the Commission: MITYC, Culture,
Interior, Justice, Education, Foreign Affairs and
Cooperation, Economy and Finance, and the Presidency. The
Commission held its first meeting October 23 to set its work
agenda. The Commission will build on informal collaborative
efforts undertaken over the past several months at the
working level by MITYC, Culture, Industry, and Justice.

6. (U) In an October 22 meeting with Charge, MITYC State
Secre tary for Telecommunications and the Information Society
Francisco Ros acknowledged the challenge of coordinating
among eight Ministries but stressed the benefits of including
all relevant actors in the discussion of possible solutions.

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He framed the problem as one of reconciling IPR with privacy
and other fundamental rights, arguing that in Spain and other
countries, government attempts to regulate the Internet have
sparked protests by privacy advocates and counter-measures by

7. (SBU) Rights-holders are convinced that the mere
possibility of Zapatero's having to address the issue in his
meeting with the President spurred the government to action.
Coalition President Aldo Olcese called the Council of
Ministers' announcement, which our government contacts had
played up all week as imminent good news that would
demonstrate the government's seriousness, "a cynical maneuver
to give Zapatero something to say" in case President Obama
did raise the issue. Olcese also called the announcement of
the Commission a delaying tactic, since it pushes any
solution into the future. He predicts the Commission will
recommend among other things that Spain seek a European-wide
approach to Internet piracy during its EU Presidency, an
approach that State Secretary Ros is known to support but
which rights-holders fear could lead to further delay.


8. (SBU) The reported discussion of internet piracy by a
senior White House official with close advisors of Zapatero,
and GOS pleasure with Zapatero's visit to DC as a whole,
appear to have resonated at senior levels of the GOS. In an
October 21 speech to the American Business Council (ABC) on
economic issues, Zapatero addressed the issue in public for
the first time. He cited Spain's impressive performance in
attracting foreign investment but noted the need for
improvement in several areas, including IPR, as part of a
broader effort to enhance Spain's attractiveness to foreign
investors. Without specifically naming internet piracy, he
noted that IPR protection was of concern to both the USG and
the GOS. He pointed out that Spain boasts the world's fourth
largest cultural industry and that the "creative sector"
accounts for 4% of GDP. Zapatero expressed support for the
Coalition-Redtel negotiations and reiterated that the newly
formed Inter-Ministerial Commission is to present its
proposal by year's end.


9. (U) Representatives of copyright groups have presented an
array of evidence to dramatize the plight of their
industries. Legitimate music sales in Spain fell by more
than 30% in the first six months of 2009 compared with the
same period in 2008. Video sales were down 33% and rentals
down 44%. Movie attendance has declined significantly over
the past two years. While the severe recession contributed
to these losses, industry representatives point the finger at
competition from illicit downloads and file-sharing.


10. (U) Per reftels, beginning in May 2008, the government
had urged the Coalition and Redtel to negotiate an agreement
on deterring and combating digital piracy. The parties
worked for almost a year in three different areas -
dissuasive measures (including recommendations for
legislative and regulatory reforms), public education and
awareness, and new business models, i.e., making more content
legally available online.

11. (U) As reported ref B, Redtel broke off negotiations in
April 2009. According to Redtel executive director Maria
Teresa Arcos, Redtel and the Coalition have not conducted any
formal negotiations since then. Sometimes Coalition and
Redtel presidents Aldo Olcese and Miguel Canalejo meet
together with senior officials of MITYC or the Culture
Ministry; the two groups also sometimes communicate through
third parties, especially government officials; and they have
also passed draft proposals back and forth. The government
is eager to have a private-sector agreement, however modest
or narrow, on which to base its own initiatives. The
Coalition is willing to keep trying for an agreement as a
means of keeping the government engaged, but it says it has
become disillusioned with the continued dilution of its
proposals. It has given up, at least for now, any measures
to sanction or even notify individual users who infringe

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copyrights online, and its proposal that ISPs or the
government shut down or block pirate websites probably would
require controversial legislation. It does not expect the
"de minimis" agreement to advance its interests much.

12. (U) Redtel's primary emphasis in the negotiation has been
on the business model issue, as its ISP members hoped to
enter into lucrative business deals with such Coalition
members as the Motion Picture Association of America (MPAA)
and various recording companies to market their products
legally online. The ISPs' inability to achieve their
objectives in this area was the ostensible reason for
suspension of the negotiations. However, content providers'
representatives note that the ISPs and their parent
telecommunications companies (Telefonica, Orange, Vodaphone,
and Ono) have a number of contentious issues pending with the
government involving taxation, competition, and regulation,
and may be using the Internet piracy negotiations as leverage
with the government on other matters. In public, Redtel
executives have said if the government wants to solve the
piracy problem, it should take action, and the ISPs will
comply with their obligations, but the government should not
expect voluntary concessions from Redtel.

13. (U) Meanwhile, the Coalition announced October 19 its own
new business model: a "macro-website" offering access at
reasonable prices to its members' products, including the
much-desired and much-pirated movies made available by major
U.S. studios. The new site is reportedly based on the U.K.
website and will also contain music and
games. Coalition president Olcese noted that consolidating
the content in one place will offer an attractive alternative
to illegal downloads and file-sharing. He stated, however,
that the "macroweb" will not be formally launched until the
government has begun to implement measures to combat piracy
and protect content, which the Coalition hopes will be in
early 2010. Rights-holders argue that Spain's current
lawless online environment makes legal content offers futile.
During a visit to Madrid, International Federation of the
Phonographic Industry (IFPI) president John Kennedy
characterized Spain's situation as a "vicious circle" in that
such legal websites can never compete against free downloads
as long as piracy remains unpunished, and are therefore not a
sound investment.


14. (U) The government claims it is doing everything it can
under current authority to combat Internet piracy. At State
Secretary Ros' recent meeting with AmCham's IP Committee (ref
A), Salvador Soriano, Deputy Director General for Information
Society Services in the Ministry of Industry, Tourism, and
Trade (MITYC), cited statistics showing that in the past four
years, law enforcement authorities have investigated 100
websites over allegations of illicit activity; 43 criminal
complaints have been filed by either private parties or
government entities; 43 arrests have been made; and 34 cases
are currently before investigating judges.

15. (U) Comment: These figures cover activity since 2005.
According to Jose Manuel Tourne of the Federation for the
Protection of Intellectual Property in Audiovisual Works
(FAP), authorities conducted 21 investigations for Internet
piracy in 2006 and more than 20 in 2007. Many of those cases
are still working their way through the judicial system and
are still awaiting decisions by investigating judges or have
been appealed to provincial courts. Many have been thrown
out by judges following the reasoning of the Circular (see
ref D) issued in May 2006 by the Prosecutor General's office
(Fiscalia). One case in April (ref C) in La Rioja resulted
in an important precedent with the first-ever conviction of a
web operator for running a pirate website that generated
profit for advertising revenues. Sources in the National
Police, Civil Guard, and Fiscalia have told post that in the
past two years police and prosecutors have largely given up
pursuing these cases because the Circular sets such a high
bar. While the government continues to insist that the
Circular is not binding on judges, its language has directly
influenced judges and led to unfortunate outcomes in a number
of such cases.

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16. (U) Comment continued: In the Circular - a series of
guidelines for prosecutors to follow in investigating and
prosecuting IPR cases - the Fiscalia argued against pursuing
criminal charges against file-sharers on the grounds that it
was impractical and undesirable to penalize "a broad
cross-section of society that uses technological advances to
access protected works." Most rights-holders do not pursue
criminal charges against individual Internet users except in
the most egregious circumstances. They believe, however,
that prison sentences and/or suspension of Internet access
are not necessarily disproportionate in such extreme
circumstances, and also that, if available, such sanctions
would provide a strong deterrent against illicit downloads
where none currently exists. End comment.

17. (U) Rights-holders' groups were heartened by a September
decision of a three-judge appellate panel of the Provincial
Court of Murcia. An investigating judge had dismissed a
criminal complaint filed by rights-holders in 2006 against a
website ("Elite Divx") that made files available for
peer-to-peer (P2P) downloading. The lower court followed the
interpretation contained in the Circular, according to which
most unauthorized P2P activity should be pursued as a civil
wrong rather than as a crime. (Note: In large part because
of the Circular, media routinely report, and the Spanish
public at large generally believes without question, that P2P
activity is entirely legal. End note.) In sending the case
back to the lower court to be re-tried, the appellate court
found that unauthorized P2P activity is in fact covered by
the relevant sections of the Penal Code; that it comprises a
form of "public the form of making
(content) available"; that therefore (in direct contradiction
of the Circular) the "private copy exception" does not apply;
and that - even accepting the Circular's controversial
interpretation that a commercial profit motive must be
present for criminal penalties to apply - the revenues earned
by the website from advertising demonstrate that it is "an
authentic business receiving important economic benefits
which increase based on the number of visits" and thus
covered by the Penal Code.

18. (U) The Murcia court's decision does not have binding
precedential force, but rights-holders believe that because
it was issued by an appellate court (albeit not a national
one), and because, unlike many judicial decisions, it
explains the judges' reasoning so forcefully and clearly, it
is likely to influence other pending and future internet
piracy cases elsewhere in the court system. That said, many
cases arising out of a series of police raids and website
shutdowns in 2006-7 have already resulted in acquittals or
have been summarily dismissed by investigating judges based
at least in part on the Circular's influence.

19. (U) In a separate case, rights-holders' groups were
dismayed on October 15, when an investigating judge in Madrid
rejected a complaint filed by the Music Producers of Spain
(Promusicae) and music companies Universal, Warner, Sony, and
EMI against an individual (identified in court by only his
Internet Protocol number) who uploaded approximately 9,000
music recordings without authorization using a P2P
application, making them available to anyone who wanted them.
The judge quoted from the Circular's language stating that
in order to constitute a crime, P2P activity must involve
commercial profit. Accordingly, he found that the only
exchange taking place was that of "sharing among different
users the material at their disposal, which constitutes
socially acceptable and very widespread behavior that in the
end is in no way illicit enrichment; rather, said conduct
would raise the possibility of obtaining copies for private
use, which leads to the conclusion that in this case there is
no infraction deserving of criminal sanction." Promusicae is
appealing the verdict.


20. (U) At his October 19 press conference, Olcese also
announced that the Coalition, in partnership with the
self-described anti-piracy investigative entity CoPeerRight
Agency, had developed a list of 200 commercial-scale pirate
websites, of which 62 operate from Spain. Olcese said he was
sending the list to MITYC in the hopes that the government
will take action against the offending sites, which

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CoPeerRight estimates generate average annual revenues of 1.5
million euros from advertising directly related to their
offers of infringing content. Olcese also asked MITYC to
pass the list to the Fiscalia for criminal prosecution.

21. (SBU) Comment: MITYC currently has no authority to take
any action against the sites except perhaps impose weak
administrative sanctions. There is no reason the Coalition
could not file a criminal complaint with the police, provide
them with the list and accompanying documentation, and ask
them to investigate. However, the Coalition believes Spanish
law enforcement authorities are much more likely to
investigate vigorously and prosecute if the material is given
to them by a government entity such as MITYC.

22. (SBU) Comment continued: The Coalition's other reason for
sending the list to MITYC is to implicate that Ministry in
the piracy problem and hold it accountable for finding a
solution. The Coalition is trying to keep the public
spotlight and pressure on the government - and especially
MITYC - while the Inter-Ministerial Commission explores
possible initiatives. The rights-holders' objective is the
creation of a new government administrative body - a pale
imitation of the High Authority contemplated by recent
legislation in France - that would have the power to shut
down or block pirate websites. Rights-holders' groups
believe that State Secretary Ros opposes the creation of such
a body because he does not want his office, which oversees
Internet matters, to become responsible for the problem.
Content providers, who continue to believe in the face of
Ros' recent "urban legend" remark (see ref A) that Spain has
one of the highest rates of Internet piracy in the world, are
determined to make him face up to the problem. End Comment.

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