Cablegate: Philippines: 301 Special Out-of-Cycle Review On

DE RUEHML #0008/01 0041003
O 041003Z JAN 10





E.O. 12958: N/A
SUBJECT: Philippines: 301 Special Out-of-Cycle Review on
Intellectual Property Rights Protection

1. (SBU) Summary. On December 17, U.S. Trade Representative (USTR)
officials held a digital video conference with the Government of the
Republic of the Philippines (GRP) to discuss intellectual property
rights protection and enforcement as part of the 301 Special
Out-of-Cycle Review (OCR) of the Philippines. The delegations
discussed a variety of issues including legislative developments,
proposed special IP courts and procedural rules, increased IPR
enforcement actions, and the growing challenge of peer-to-peer
piracy. End Summary.

Out-of-Cycle Review on IPR Protection in the Philippines

2. (U) In April 2009, USTR announced that the Philippines would
undergo an OCR to assess progress on specific concerns regarding
illegal camcording, slow implementation of the WIPO Internet
treaties, and potential intellectual property (IP) ramifications of
the 2008 Cheaper Medicines Act. Meetings on these issues were
scheduled for November in Manila, but were postponed because of
intervening events. On December 17, U.S. and Philippine delegations
met via digital video conference, led by Assistant USTR Barbara
Weisel and Director for Intellectual Property and Innovation Rachel
Bae for the United States, and Department of Trade and Industry
(DTI) Senior Undersecretary Thomas Aquino and Intellectual Property
Office (IPO) Director General Adrian Cristobal, Jr. for the
Philippines. Other attendees included the Chairman of the Optical
Media Board, representatives from the Philippine National Police
(PNP), National Bureau of Investigation, Bureau of Customs, and
Department of Interior and Local Government. The U.S. delegation
included the Patent and Trademark Office (USPTO), the Department of
Commerce, the State Department, and the U.S. Copyright Office.

Legislative Progress but Most Timelines Unclear

3. (U) Cristobal reported that the Technology Transfer Bill is
awaiting final signature by President Macapagal-Arroyo. Citing this
as a victory for IPR, Cristobal thanked the USPTO and other USG
agencies that helped the Philippine government to develop this bill,
which was modeled after the U.S. Bayh-Dole Act to provide for the
commercialization of government-funded research and development.

4. (SBU) The Philippine delegation would not speculate on timelines
for the passage of other IP-related bills, but Cristobal pointed to
the January - March window as a historically productive time for
legislation. Cristobal noted that the Anti-Camcording Bill is
moving more quickly than expected due to its strong domestic
constituency in the movie theatre and film industries. The bill
passed the House and is pending second reading in the Senate. He
also said the implementing legislation for the WIPO Internet
treaties passed the House on second reading, but the Senate version
is still pending in committee level. Cristobal reported that there
is a strong push for passage of these treaties from both legislative
authors, Senator Angara and Congressman Rodriguez. In another
update, Cristobal mentioned that the Anti-Cable Television Piracy
Bill was approved on third reading in the House and is pending a
second reading in the Senate. Pointing to more long-term
legislative efforts, Cristobal shared that the IPO recently formed
an IP caucus of House members.

Judicial Reform: Moving Forward with IP Courts, Special Procedures

5. (SBU) Cristobal reported that Supreme Court Chief Justice
Reynato Puno formed a special judicial committee last week to review
draft IP rules submitted in October 2009. Cristobal predicted
adoption of the rules in early 2010, describing the IP courts as "an
idea whose time has come," with a broad constituency and receptive
Chief Justice.

6. (U) Cristobal claimed that the rules would streamline and
increase transparency of the IP judicial process by creating two or
three specialized courts in the National Capital Region with
national jurisdiction. The reforms would address the confiscation
of items, prohibit certain pleadings, and allow courts to tap the
IPO for technical and legal expertise. Cristobal provided a
speculative timeframe of Q3 implementation, cautioning that the IPO
plays only an "active supporting role." Before full implementation,
the new IP courts would need to reduce non-IP dockets to achieve a
50-50 mix of IP and non-IP cases. IP courts would have civil and
criminal jurisdiction and would operate within existing budgets.

MANILA 00000008 002 OF 003

7. (SBU) Cristobal also noted success for IP rights holders through
quasi-judicial mechanisms, such as the administrative process of the
IPO's Bureau of Legal Affairs (BLA). The BLA resolved 10 cases
during the first nine months of 2009 with an average case turnaround
time of 19 months and some early success stories. According to
Cristobal, BLA will also offer IP owners mediation in 2010, but
noted that funding restraints limit the BLA's capacity to assume a
greater workload.

IPR Enforcement Actions Increase In Spite of Uncertain Budgets

8. (U) Responding to concerns about lack of political will to fund
IPR enforcement, Cristobal acknowledged that the OMB's request for
additional funding is pending with the Office of the President,
adding that resources are being channeled to social programs in the
wake of several natural disasters earlier in the year. Cristobal
pointed out that enforcement actions had increased in spite of
budgetary constraints, highlighting the 100% increase in actions by
the PNP after the Chief of Police issued a nationwide directive on
IP enforcement and signed a MoU with the IPO. Cristobal added that
the five billion pesos of goods seized in 2009 was 40% more than
last year and a 500% increase from 2005, when the IPO was

9. (U) Of 4,158 enforcement actions, there were 360 raids (60 of
which were in notorious areas such as Quiapo, Manila) and 405 search
warrants issued. OMB attorney Cyrus Valenzuela remarked that the
OMB is also working closely with the government's Philippines
Anti-Piracy Team and industry association Business Software Alliance
to pursue enforcement through inspection orders, which do not
require judicial approval or IP rights holders' involvement.

Clash of Views on Copyright Protection

10. (SBU) Cristobal recognized a long-standing issue between the
International Intellectual Property Association (IIPA) and the IPO
regarding the process of obtaining search warrants, reiterating his
disagreement with the IIPA in their characterization of search
warrants as "difficult to obtain" in the Philippines. He stated
that the IIPA was basing its assessment on a comparison of seven
years ago, when search warrants were easily granted but were often
quashed at a later stage in the judicial process. Cristobal added
that he would welcome a dialogue with IIPA on this point.

11. (U) Questioned as to whether the IPO had good cooperation from
other IP entities, Cristobal noted a general hesitancy on the part
of U.S. pharmaceutical and publishing interests to support
Philippine efforts. He went on to express concern that U.S.
publishers were "quite slow" in responding to the Filipinas
Copyright Licensing Society (FILCOLS) initiative, established last
year. The U.S. delegation flagged concerns that reprographic rights
organizations such as FILCOLS were not up to international standards
or accepted practices, licensing fees were a fraction of those in
other markets, and U.S. publishers were concerned that their
interests were not being "represented proportionately." Cristobal
responded that empirical evidence can help resolve such issues,
adding that FILCOLS is a member of the International Federation of
Reproductive Rights Organizations (IFRRO), and that legitimate
distinctions between developed and developing countries exist.
Cristobal observed that, if the U.S. publishers decide they will not
participate in FILCOLS, there is nothing the Philippine government
can do.

Hot Spots: Pharmaceuticals, Camcording and Digital Piracy

12. (SBU) USPTO asked whether the USG would have an opportunity to
review the draft patent examination handbook before adoption;
Cristobal agreed to provide such an opportunity. Cristobal
acknowledged that the process of updating the data protection
provisions had been slow but he hoped to complete the revision by
early 2010. Of specific concern to the U.S. pharmaceutical
industry, these rules will shape implementation of the Cheaper
Medicines Act.

13. (U) On mobile devices/peer-to-peer (P2P) piracy, Cristobal
admitted progress has not been as constant as in other issue areas,
and that there were few arrests despite numerous raids. A

MANILA 00000008 003 OF 003

representative from the OMB explained that there is no Philippine
law outlining jurisdiction over illegal downloading, and the OMB
would like USG technical assistance to outline a legal basis for
asserting its jurisdiction on peer-to-peer and other digital piracy.
USTR indicated it would raise the issue with U.S. industry
representatives. Cristobal also sought collaboration with the
United States to address illegal camcording.

The End of Cristobal's Tenure and Next Steps for IPR Protection

14. (U) Noting Cristobal's upcoming departure after his term
expires on December 31, 2009, USTR officials communicated their
appreciation of Cristobal's leadership in the Philippines and in the
Association of Southeast Asian Nations (ASEAN) Working Group on
Intellectual Property. Cristobal confirmed that he intends to
return to the private sector, adding, "I like to think that what I
have done has been institutionalized." Members of the Philippine
delegation recognized USG assistance at several points in the
conference, including USPTO training of judges, support for the
technology transfer bill, support for a 12-member Philippine
delegation to a recent signal piracy conference, and other
capacity-building activities.

15. (SBU) The Philippine delegation seeks continued collaboration
with the USG, with Cristobal and Aquino expressing their hope that
USG officials might raise intellectual property issues in meetings
with senior Philippine officials. USTR informed GRP officials that
the Special 301 Subcommittee would meet next week to exchange views,
after which a decision on the Philippine OCR would be made early
next year.

16. (U) USTR cleared this cable.


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