ITALY JUDICIAL REFORM AND IPR, AN INITIAL

UNCLAS SECTION 01 OF 03 ROME 003881

SIPDIS

SENSITIVE

STATE FOR EB/TPP/IPE (GREEN, URBAN)
STATE PASS USTR (ESPINEL, SANFORD)
UDOC PASS USPTO

E.O. 12958: N/A
TAGS: KIPR ETRD EINV IT ITALIAN POLITICS
SUBJECT: ITALY JUDICIAL REFORM AND IPR, AN INITIAL
ASSESSMENT

REF: A. STATE 207519

B. ROME 3818

C. ROME 1569

This cable is Sensitive But Unclassified. Please
protect accordingly, not for distribution outside the
USG, not for Internet publication.


1. (SBU) Summary: GOI officials, including the
Minister of Justice, have denied that the "ex-
Cirielli" legislation to reform Italy's criminal
justice system will have a major impact on IPR
enforcement. A recently adopted amendment limits the
bill's impact on current cases and reduces the
likelihood that changes in the statute of limitations
would result in a massive dismissal of piracy cases,
as originally alleged by the Recording Industry
Association of America. We expect Parliament to
approve the bill by the end of the year but will
continue to monitor its impact on IPR cases. End
Summary.

Background
--------------


2. (U) The "ex-Cirielli" legislation (named for its
original sponsor in the Chamber of Deputies, National
Alliance Parliament member Edmondo Cirielli)
represents an attempt by Prime Minister Silvio
Berlusconi's administration to reform Italy's slow
criminal justice system. The law primarily:

--Increases penalties for repeat offender (according
to the bill's sponsors, 60-70 percent of crimes in
Italy are committed by repeat offenders);

--Stiffens penalties for mafia-related crimes;

--Reduces judicial discretion in extending trials by
restricting the statute of limitations (see below);
and

--Allows the elderly (70 and over) and pregnant women
to serve criminal sentences at home.


3. (SBU) While promoted by the GOI as a needed fix for
Italy's glacial justice system, the bill had been
trashed by the opposition because, not for the first
time, Berlusconi's associates would have benefited from
a parliamentary change in the criminal code. For a
time, the bill went by the nickname the "Save Previti
Law" because, in its original form, it would have
resulted in the dismissal of the conviction of Forza
Italia MP Cesare Previti. Previti, who previously
served as Berlusconi's lawyer, was convicted of bribing
a judge in the early 1990s and his case is still in the
appeals process.

Amendment Excludes Most Current Cases
--------------


4. (SBU) In response to these concerns and the
prospect of a mass amnesty for current defendants, the
Union of Christian and Center Democrats (UDC),a
member of the governing center-right coalition,
introduced an amendment to exempt most cases already
under trial or in the appeals process from the new statue
of limitations. The amendment has made the bill less
controversial. "Ex-Cirielli" passed the Chamber of
Deputies November 9 and is now awaiting a final vote
by the Italian Senate (which had already passed an
earlier version).

Massive Dismissal of Current IPR Cases Unlikely
-------------- --


5. (SBU) Even with the UDC amendment, copyright
industry groups--most importantly the Recording
Industry Association of American (RIAA) and its
Italian sister-organization, the Federazione Industria
Musicale Italiana (FIMI)--are alarmed by the proposed
reduction of the statute of limitations. If the bill
becomes law as expected, the statute of limitations in
a case will not be able to exceed the maximum sentence
for the crime (i.e. the trial and appeals for a crime
punishable by up to 10 years would need to be
completed within 10 years). Of more importance to the
copyright industries, however, is the minimum statute
of limitations, which applies to all "minor" crimes,
such as IPR theft, where the maximum sentence is 3-4
years. Ex-Cirielli would lower the minimum statute of
limitation from seven-and-a-half to six years.


6. (SBU) Originally RIAA/FIMI predicted that the bill
would result in a massive dismissal of 90 percent of
music piracy cases currently before the court (382 of
the 471 cases the music industry was pursuing in Italy
as of 2004). The UDC amendment significantly reduces
the number of current cases that will be dismissed
when ex-Cirielli enters into force. The GOI claims
that, with the UDC amendment, any impact on IPR would
be minor (see paragraph 8 below).

But Future Prosecutions May Dip
--------------


7. (SBU) Italy-based copyright associations are now
emphasizing the legislation's potential negative
impact on future IPR prosecutions. According to a
joint statement released by FIMI, the Business
Software Alliance (BSA),and FAPAV (an Italian movie
industry group that represents American studios here),
the new six-year statute of limitations for minor crimes
would discourage prosecutors from pursuing IPR cases.
The average IPR case currently takes six-to-nine years to
complete, according to the groups, and even under the
current seven-and-a-half-year limit the statute of
limitations on many IPR cases expires before the final
appeal is finished. The associations argue that the
six year statute of limitations would increase the
likelihood that defense attorneys could simply run out
the clock. Prosecutors, knowing the difficulties of
completing an IPR case within six years, may simply not
bother to bring charges.

GOI: Impact on IPR Minimal
--------------


8. (SBU) GOI officials have generally denied industry
claims that ex-Cirielli will severely impact IPR
enforcement. Ambassador Spogli raised this issue in a
November 15 meeting with Justice Minister Roberto
Castelli (ref B). Castelli said he doubted the
legislation would have a serious effect on IPR. He
said the ex-Cirielli bill would only affect pending
criminal cases with a possible sentence greater than
four years. IPR violations, he noted, only carry a
maximum sentence of four years. (Comment: It is true
that the greatest impact of "ex-Cirielli" will be on
more serious criminal cases. We believe Castelli's
skepticism that the law will harm IPR enforcement is
because there will be relatively little change in the
minimum statute of limitations, from seven-and-a-half
to six years. End Comment.) In fact, Castelli said
only seven percent of all pending criminal cases would
be affected by the ex-Cirielli legislation. Castelli
promised to perform a study on the possible impact of
the legislation on IPR cases and report back to the
Ambassador. Embassy will report findings septel.


9. (SBU) Poloff met November 22 with Forza Italia
Deputy Gabriella Carlucci and mentioned the concerns
of U.S. IP industries. She said the UDC amendment
should address most of their worries. She predicted
the legislation would pass the Senate the week of
November 28 without any changes. If the industries
still have a problem with the modified ex-Cirielli
bill, she suggested introducing an "Ordine del Giorno"
(somewhat analogous to a unanimous consent agreement)
expressing the will of the Chamber to look into fixing
the problem at some other date.


10. (SBU) Separately, Econoffs raised this issue with
Massimo Leggeri, MFA Deputy Director General for
Multilateral Economic Affairs and Ludovica Agro,
Director of the Italian Patent and Trademark Office.
While saying he was not familiar with the details of
ex-Cirielli, Leggeri reiterated Castelli's prediction
that the legislation will not have much impact on IPR.
Leggeri stated that Italy would not pass a law that
violated Italy's commitments under TRIPS. Agro,
meanwhile, stated that she shares the industry concerns
and would further research the effect of the ex-Cirielli
reforms on IPR and possible TRIPS implications.

Comment: The Sky Is Not Falling
--------------


11. (SBU) Comment: The Embassy will continue to press
Castelli's office for its promised report of the IPR
ramifications of these reforms. We also will deliver
ref A points at as many opportunities as we can.
With the UDC amendment, however, it appears that
RIAA's initial claim that 90 percent of current IPR
cases would be thrown out of court is no longer valid.


12. (SBU) Comment continued. The Embassy shares the
industry's concerns that, in the future, ex-Cirielli
may dampen prosecutor's enthusiasm to invest resources
in IPR cases. At this point, however, this argument
is hypothetical and unlikely to sway GOI decision
makers. A senior Senate staffer tells us that
toughening sentences for repeat offenders will
likely lead to better IPR enforcement (an argument
BSA, FIMI, and FAPAV strongly reject). Another
contact, a senior officer in the Ministry of
Interior's anti-mafia task force, likewise says the
anti-mafia provisions in the reforms (much commercial-
scale piracy is controlled by the Naples-based Camorra
organization) will similarly allow Italian prosecutors
to raise the stakes against pirates and
counterfeiters.

Justice Delayed Is Justice Denied
--------------


13. (SBU) Comment continued: USG approaches on ex-
Cirielli should remain limited to the narrow issues of
IPR and foreign bribery cases, rather than opposition
to the entire legislation. Berlusconi's alleged
personal interests aside, Italy has good reason to
want to reform its dysfunctional criminal justice
system. Criminal trials that stretch beyond two
decades (not an uncommon occurrence here) undermine
the rule of law. As industry groups readily admit,
the system as it stands does not result in significant
convictions or punishment for IPR crimes in Italy.
The key factor, regardless of these reforms, is the
willingness of Italian judges to hand down guilty
sentences and meaningful prison time for
counterfeiting and piracy. Because of this, the
Embassy continues to focus its IPR outreach efforts on
Italian judges (ref C).
SPOGLI