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### Viewing cable 07BRASILIA2038, BRAZIL: POST OCR FINDINGS

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07BRASILIA2038 | 2007-10-26 18:45 | 2011-07-11 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Brasilia

`

    VZCZCXRO0785
    PP RUEHRG
    DE RUEHBR #2038/01 2991845
    ZNR UUUUU ZZH
    P 261845Z OCT 07
    FM AMEMBASSY BRASILIA
    TO RUEHC/SECSTATE WASHDC PRIORITY 0260
    INFO RUEHSO/AMCONSUL SAO PAULO 1023
    RUEHRI/AMCONSUL RIO DE JANEIRO 5295
    RUEHRG/AMCONSUL RECIFE 7248
    RUCPDOC/USDOC WASHDC

` `

    UNCLAS SECTION 01 OF 03 BRASILIA 002038

    SIPDIS

    SENSITIVE
    SIPDIS

    DEPT FOR EB/TPP/IPE JENNIFER BOGER
    DEPT PASS USPTO
    DEPT PASS USTR FOR KATHERINE DUCKWORTH AND JENNIFER CHOE GROVES
    USDOC FOR ITA/MAC/OIPR CASSIE PETERS
    USDOC FOR ITA/MAC/WH/OLAC/MCAMPOS

    E.O. 12958:  N/A
    TAGS: KIPR ETRD ECON BR
    SUBJECT: BRAZIL: POST OCR FINDINGS
    REF: A) State 107819; B) Brasilia 1620; C) Brasilia 680; D) Brasilia

    2813

    ¶1.  (SBU) Summary:  Post recommends retaining Brazil on the Watch
    List based on its continued strong overall anti-piracy enforcement
    efforts and in light of some continuing problem areas.  The value of
    pirated and contraband items seized by Receita Federal in the first
    six months of 2007 was over USD 285.5 million - an increase of more
    than 36 percent over the same period in 2006 and only 15 percent
    less than reported confiscations over the first nine months of last
    year.  GOB state and federal authorities have conducted anti-piracy
    operations in the Tri-Border Area and have taken action against
    street vendors and shops in some of the more notorious piracy
    districts of Sao Paulo and Rio de Janeiro, including the Stand
    Center, Galeria Page and various Camelodromos.  Projections based on
    Federal Police data predict a significant increase for 2007 in
    Federal Police confiscations of counterfeit and contraband
    electronics and pharmaceutical drugs, an 8.5 percent drop in
    seizures of pirated CDs and DVDs, and a slight decrease (3.5
    percent) in collections of contraband electronic goods.  (Note:  The
    third major federal anti-piracy enforcement agency, Rodoviaria
    Federal - Federal Highway Patrol - did not provide interdiction data
    to Post. End note.)  GOB action against internet piracy resulted in
    the removal of 19,878 internet advertisements, the ejection of 3,882
    companies from the internet and the closure of 183 web sites through
    September 2007.

    ¶2.  (SBU) The GoB is streamlining patent and trademark processing
    and expects backlogs for both areas to continue to decrease.
    Legislation developed by the public-private National Anti-Piracy
    Council (CNCP) that addresses many industry concerns, including
    partial sampling and destruction of pirated goods, has widespread
    support among key GoB ministries.  The bill is currently in
    President Lula's office for final, and expected, approval before
    submission to the Brazilian Congress for consideration.  Despite
    this progress, a number of issues remain outstanding.  A leading
    industry association continues to complain about copyright
    violations of printed materials at campus copy-shops. Post has
    received no indication of increased GoB vigilance at alternative
    border crossings. The GoB has not been able to provide numbers for
    arrests and convictions of IPR violators, although based on past
    experience, this number is expected to remain low.  End Summary.

    3  (U) Per reftel A, the following is Embassy Brasilia's input for
    the Special 301 Out-of-Cycle (OCR) Review of Brazil.  Because the
    GoB typically publishes its enforcement data at year-end, certain
    final data on its anti-piracy enforcement actions is not yet
    available for this report.  Nonetheless, Post believes that
    sufficient information is currently available to provide an accurate
    portrait of GoB anti-piracy enforcement efforts for 2007.

    ----------------------
    Enforcement Activities
    ----------------------

    ¶4.  (SBU) Two of the three main federal enforcement agencies
    involved in anti-piracy interdiction - Receita Federal (the
    Brazilian Customs and Internal Revenue Service) and the Federal
    Police - provided data on 2007 anti-piracy activities.  The third,
    Rodoviaria Federal (Federal Highway Patrol), did not.  The National
    Council Against Piracy (CNCP) provided consolidated state and
    federal data on major raids.  Receita Federal reported that it
    apprehended over USD 285.5 million in contraband items in the first
    six months of 2007, an increase of over 36 percent in comparison to
    the same period in 2006  (Note:  All figures were converted using
    the 10/19/07 exchange rate of BR 1.80/USD.  End Note.)

    ¶5.  (SBU) Based on Federal Police data on quantities of contraband
    seized through August 10, Post estimates an 8.5 percent drop in
    Federal Police confiscations of pirated CDs and DVDs and a slight
    drop (3.5 percent) in collections of contraband electronic goods for
    calendar year 2007.  In contrast, confiscations of counterfeit and
    contraband electronics and pharmaceutical drugs are projected to
    increase in 2007, up 15.6 and 43.4 percent respectively.

    ¶6.  (SBU) National Council Against Piracy (CNCP) data indicates that
    federal and state enforcement officials seized 1,472,528 contraband
    items in raids on known marketplaces through September 2007.  Among
    these actions is a year-long operation targeting buses crossing into
    Brazil in the Tri-Border area (538,038 seizures as of August 31) and
    ongoing actions against street vendors and shops in some of the more
    notorious piracy districts in Sao Paulo and Rio de Janeiro,
    including the Stand Center, Galeria Page and various Camelodromos.

    BRASILIA 00002038  002 OF 003

    ---------------
    Internet Piracy
    ---------------

    ¶7.  (SBU) The GoB appears to be taking internet piracy more
    seriously.  A key GoB official, Vice Minister of Justice Luiz Paulo
    Barreto assured recording industry representatives in April that he
    would drop his previous public opposition to legal actions filed by
    them against Brazilian end-users of pirated music (reftel C).  CNCP
    data showed that, through September 2007, Brazilian authorities had
    removed 19,878 internet advertisements touting pirated items,
    removed 3,882 companies from the internet and shut down 183 web
    sites - all for violation of Brazil's anti-piracy statutes.

    ----------------------
    Patents and Trademarks
    ----------------------

    ¶8.  (SBU) Although Brazil's patent backlog remains high, estimated
    at between 130,000 and 150,000 applications, the GoB has taken
    concrete steps to streamline processing, including an upgrade of its
    outdated computer system.  Over the past two years it has increased
    the number of patent and trademark examiners over 155% from 180 to
    460 and increased median salaries 50% to retain experienced
    employees.  By the end of 2007, the GoB estimates that new patent
    applications will be adjudicated within five years of submission; by
    the end of 2009 the goal is four years.  The GoB has also raised
    trademark approvals almost six-fold since 2003 and expects to
    shorten processing time to less than a year by the end of 2007, down
    from the current 18 month wait.

    -------------------
    Federal Legislation
    -------------------

    ¶9.  (SBU) The CNCP's Legislation Working Group, with input from a
    private sector forum, developed draft legislation in 2005 that
    proposes a number of changes in the country's penal code and
    industrial property law.  Among the suggested changes are:
    expansion of vehicle seizure authority, clarification of procedures
    for seizure and destruction of goods, and permission for law
    enforcement agencies to retain only samples for use in litigation.
    The bill also allows for different penalties for individual
    offenders from those involved in larger operations; incorporates
    penalties for software copyright violation into the penal code; and
    stiffens penalties if pirated goods are imported (reftel D).  The
    bill, widely supported by GoB Ministries, is currently in President
    Lula's office for final, and expected, approval before submission to
    the Brazilian Congress for consideration.  (Comment:  GoB
    anti-piracy legislation is generally TRIPS compliant. End Comment.)

    ¶10. (SBU)  GoB interlocutors have told EconOff they oppose any
    legislation that would impose a blanket increase in jail time for
    IPR violators on the grounds that there is no room in already
    overcrowded Brazilian prisons for small-time IPR offenders.  They
    also feel there is a social cost to incarcerating low income IPR
    violators, who are usually the sole support for their families.

    -----------------------------------------
    Pharmaceutical Data Protection
    -----------------------------------------

    ¶11.  (SBU) Although the Brazilian Law on Industrial Property
    currently prohibits disclosure and use of undisclosed test data,
    pharmaceutical industry representatives continue to voice concern
    over the potential for release of confidential data submitted to
    ANVISA as part of the drug patent approval process.  Brazil's
    multinational pharmaceutical industry association, Interfarma (which
    also includes representatives of U.S. companies), has been
    unsuccessful in its attempts to get Congress to pass a law
    specifically addressing data protection.  Currently, civil action is
    the only avenue available to drug companies harmed by the release of
    confidential data.  However, Interfarma has not brought to Post's

    SIPDIS
    attention any cases in which data confidentiality has, in fact, been
    breached.

    ----------------
    Border Crossings
    ----------------

    BRASILIA 00002038  003 OF 003

    ¶12.  (SBU) Brazil's opening of a customs office in front of the
    Amistad bridge crossing into Brazil has been a significant step in
    combating IPR piracy, increasing the cost to smugglers who have to
    use less convenient alternative routes.  Unfortunately, Post has
    received reports that these secondary routes, in particular through
    the state of Mato Grosso, are seeing more use and border crossings
    are not manned full-time by the GoB.  There are also indications
    that smugglers are taking advantage of Mercosul transportation rules
    and transporting pirated goods across Argentina to enter Brazil
    through Uruguay.

    -----------------
    Campus Copy-Shops
    -----------------

    ¶13.  (SBU) A representative of ABDR (Brazilian Association for
    Reprographic Rights) recently characterized the book piracy
    situation in Brazil as "critical" to EmbOff.  He attributed this
    problem to a lack of attention by GoB authorities, in particular the
    Ministry of Education, adding that the progress made with regards to
    software and music piracy is lacking in the book publishing
    industry.

    ¶14.  (SBU) According to ABDR, internal rules issued by University of
    Sao Paulo (USP) and the Pontifical Catholic University of Rio de
    Janeiro (PUC) allow books not written in Portuguese to be freely
    copied, if not available for sale at campus book stores.  ABDR
    claims that the university justifies its internal rule by stating
    that access to knowledge and education are fundamentally protected
    under the Brazilian constitution.  (Comment:  Under Brazilian
    copyright law, "the one-time reproduction of small passages of a
    work for the copier's private use without the intention of making a
    profit" is allowed, but the Law does not define what constitutes a
    "small passage."  End Comment.)

    -----------------------
    Arrests and Convictions
    -----------------------

    ¶15.  (SBU) GoB interlocutors were unable to provide consolidated
    arrest and conviction statistics for piracy and contraband
    activities.  The information provided by the CNCP on its IPR Hotline
    indicates that 17,622 emails, 2,958 calls and 1,935 other notices
    resulted in 67 "judicial actions."

    ------------------------------
    Other Significant Developments
    ------------------------------

    ¶16.  (U) Other significant developments since Post's Special 301
    submission in February include:

    -- Executive Director Andre Barcellos attended a June session of the
    USPTO Global Intellecutual Property Academy (GIPA) training in
    Virginia - a first for a CNCP Executive Director.

    -- The Brazilian state of Bahia recently formed an anti-piracy
    police unit, joining the states of Sao Paulo, Rio de Janeiro, Minas
    Gerais, Pernambuco and Rio Grande do Sul, which already have
    established state anti-piracy committees.

    -- The governor of Pernambuco, Eduardo Campos, has publicly directed
    his state police force to cooperate with Federal Police in enforcing
    IPR statutes.

    ¶17.  (SBU) Comment:  Post recommends that Brazil remain on the
    Special 301 Watch List based on the GoB's ongoing commitment to a
    strong overall anti-piracy enforcement regime and its determined
    actions to improve its patent and trademark processing.  However,
    Post feels that the GOB's need to undertake a more vigorous effort
    to address photocopying of copyrighted material by campus copy
    shops, improve a low rate of convictions for IPR piracy, and
    adequately police secondary smuggling routes into the country
    preclude any upgrade of the country's status at this time.

    Sobel

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