Identifier
Created
Classification
Origin
04ROME709
2004-02-25 16:03:00
UNCLASSIFIED
Embassy Rome
Cable title:  

MISSION ITALY INPUT FOR 2004 SPECIAL 301 REVIEW

Tags:  KIPR ECON ETRD IT 
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UNCLAS ROME 000709 

SIPDIS


DEPT FOR EB/IPC WILSON
DEPT PASS TO USTR- BPECK
COMMERCE FOR KSCHEGELMILCH
COMMERCE ALSO FOR USPTO - DURBAN/PLASHLEY-JOHNSON,

USDOC FOR 4220/MAC/EUR/SED/DDEFALCO

E.O. 12958: N/A
TAGS: KIPR ECON ETRD IT
SUBJECT: MISSION ITALY INPUT FOR 2004 SPECIAL 301 REVIEW

Ref: (A) State 29551

(B) 03 Rome 5420

UNCLAS ROME 000709

SIPDIS


DEPT FOR EB/IPC WILSON
DEPT PASS TO USTR- BPECK
COMMERCE FOR KSCHEGELMILCH
COMMERCE ALSO FOR USPTO - DURBAN/PLASHLEY-JOHNSON,

USDOC FOR 4220/MAC/EUR/SED/DDEFALCO

E.O. 12958: N/A
TAGS: KIPR ECON ETRD IT
SUBJECT: MISSION ITALY INPUT FOR 2004 SPECIAL 301 REVIEW

Ref: (A) State 29551

(B) 03 Rome 5420


1. Summary: Mission Italy recommends that Italy remain on
the 301 watch list. Overall frequency of copyright piracy has
remained essentially stable since 2000, when Italy's copyright
law was enacted. Nonetheless, total losses due to piracy are
mounting, and Italy's piracy and counterfeiting rates are
among the highest in Western Europe. Law enforcement activity
by prosecutors and Italy's Finance Police (Guardia di Finanza)
has become more aggressive, but street vending and local
enforcement remain significant problems. Industry
associations are concerned that high levels of traditional
piracy are now combined with the use of digital copying and
counterfeiting technologies and new distribution modalities.
Tenacious problems persist with the judiciary and, with
respect to business software stickering and the SIAE, Italy's
copyright royalty collection agency. Following the June 2003
U.S.-Italy Joint Declaration on Cooperation on Intellectual
Property and subsequent outreach efforts on the part of the
Embassy (ref b),magistrates are becoming more aware of
economic and criminal implications of piracy. End Summary.

--------------
PIRACY RATES
--------------


2. According to our industry and Finance Police contacts,
piracy and counterfeit rates in Italy have remained
essentially stable since the enactment of the 2000 Copyright
Law. The software industry (BSA - Business Software Alliance)
reports piracy at about 47 percent of the market with
estimated annual losses in the range of 510 million USD. This
rate represents a two-percent increase over the previous year,
compared with falling rates elsewhere in Europe. The music
industry (FPM) reports piracy at approximately 25 percent of
the market with estimated yearly losses to industry in the
range of 150 million USD. The film industry (FAPAV) reports
piracy at approximately 20 percent of the market with losses
to industry in the range of 140 million USD. Another concern
expressed by all industry representatives is that high levels
of traditional piracy in Italy are now combined with the use
of digital copying and counterfeiting technologies and new

distribution modalities. Damages from digital piracy are not
quantifiable.

--------------
LEGAL ENVIRONMENT AND ENFORCEMENT
--------------


3. There have been several positive developments.
Associations and enforcement agencies believe that Italy's
legislative environment is among the more advanced in Europe
with the 2000 Copyright Law providing for relatively severe
criminal penalties for serious piracy violations. A new law
also requires the immediate destruction of pirated material.
Industry associations tell us that enforcement activities at
the national level have been more aggressive, with the Finance
Police being particularly committed to combating pirates.
Italian national enforcement agencies and some local judiciary
representatives seem to understand the economic and social
implications of piracy, and the close ties between pirates and
organized crime. Naples prosecutors and police officials have
carried out several investigations that reveal such
connections, uncovering a number of well-organized groups
operating internationally, from Europe to Asia. High-level
Finance Police officials stress that profits from
counterfeiting activities are just part of a wider web of
criminal activity, including narcotics, arms and human
trafficking. According to IP industry representatives, many
Italian prosecutors are active in the prosecution of piracy
violations. Anti-mafia prosecutors have expressed their
commitment to investigating piracy connected to mafia
organizations.

--------------
THE WEAK LINKS: LOCAL AUTHORITIES
--------------


4. On the other hand, our IP industry contacts lament weak
enforcement by local administrations. Enforcement varies from
city to city, depending upon municipal officials. In general,

local authorities are reluctant to dedicate significant energy
to combating pirates and counterfeiters and tend to
underestimate the problem. For example, the mayor and prefect
in Rome have been unwilling to allow police to act
systematically against street vendors of pirated/counterfeited
material. As a result, such street sales have continued
largely unimpeded. This inaction, according to our industry
sources, causes immediate economic damage, and perpetuates the
perception among citizens that piracy and counterfeiting are
minor offences, and that street vending of illegal products is
acceptable. A Naples retailers' association has publicly
criticized the lack of action by local authorities, calling
for stronger measures against street vendors selling
counterfeited products directly in front of stores in Naples
shopping areas. In Milan, by contrast, local police are
cracking down on street vending, making thousands of seizures
of counterfeit goods annually.

--------------
AND JUDGES
--------------


5. Aside from the lack of attention by local authorities,
judges are considered the real weak link in combating piracy
in Italy. Most judges still view piracy as a petty offence.
They argue that it is better for street vendors sell
counterfeit goods than to commit more serious crimes.
Magistrates do not associate piracy with organized crime and
financial fraud. They are often unwilling to convict, arguing
that "minor" economic crimes do not justify criminal
treatment. As a result, existing laws are loosely applied, or
not applied at all. The situation may improve as a result of
the U.S.-Italy Joint Declaration of Cooperation, signed June
20, 2003, regarding exchanges on the judicial aspects of IPR
protection. Another example of Italy taking IP more seriously
is the creation in 2002 of a dozen new specialized
administrative and civil IPR court sections. While these
sections focus on civil litigation, they have raised the
profile and importance of IPR protection, and magistrates are
now more aware of the economic implications of IP violations.

--------------
SIAE -- THE STICKER PEOPLE
--------------


6. In early 2003, Italy amended the implementing regulations
of the 2000 copyright law to permit routine exemptions from
the SIAE sticker for business software. However, the BSA
remains concerned with the current SIAE sticker waiver
procedure since, while free of direct costs, it imposes heavy
administrative and procedural burdens on the business software
industry. Moreover, BSA claims that the sticker waiver in its
current form leaves unresolved the serious problems related to
protection of products that are not stickered. Some IP
industry representatives maintain that software lacking the
SIAE sticker, although legitimate, may not be protected under
the current laws.


7. We have received no complaints/information regarding
government use of pirated software.

--------------
COMMENT
--------------


8. Industry contacts recommend that Italy remain on the 301
Watch List. We agree. While law enforcement agencies and
prosecutors have increased their commitment to combating
piracy, magistrates and local authorities, as well as many in
the business community, still remain largely non-engaged. A
continued vigorous outreach effort, which Embassy, Consulates
and industry associations are pursuing, is still warranted.
End Comment.


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2004ROME00709 - Classification: UNCLASSIFIED