UPDATE ON IPR PROTECTION: KEY RESIGNATION AND

C O N F I D E N T I A L SECTION 01 OF 03 MANILA 001647

SIPDIS

SIPDIS

STATE FOR EAP/MTS
STATE PASS TO USTR FOR BWEISEL, VESPINEL, AND DKATZ
BANGKOK FOR DOJ CHRIS SONDERBY
USDOC FOR 4430/ITA/MAC/SBERLINGUETTE
USDOC PASS TO USPTO FOR PETER FOWLER

E.O. 12958: DECL: 04/11/2016
TAGS: ETRD ECON KIPR EINV RP
SUBJECT: UPDATE ON IPR PROTECTION: KEY RESIGNATION AND
MANEUVERINGS

REF: A. REF A: 06 MANILA 836

B. REF B: 06 MANILA 187

C. REF C: 05 MANILA 5838

Classified By: Econ Counselor Robert Ludan for Reason 1.4 B and D.

--------------
SUMMARY
--------------


1. (C) The Executive Director of the Optical Media Board
(OMB),Marivic Benedicto, will resign effective April 14 due
to what she describes as a "personality conflict" with OMB
Chairman Edu Manzano. OMB has not named her successor.
Benedicto was responsible for OMB's day-to-day operations and
much of the agency's success. With increased high-level
attention to intellectual property rights in the last few
months (reftel A),Manzano seems to want to take a more
active, hands-on management role. Benedicto's departure
leaves all three OMB legal positions vacant. Manzano is a
consummate politician very concerned about his relations with
the business community. He does appear committed to OMB's
mission. The OMB is still waiting for the additional 2006
operation funds promised by President Arroyo (reftel B),
which have now been cut to less than $100,000. OMB needs
stronger and more consistent support from the GRP economic
team. The recent decision to place the OMB in the Department
of Trade and Industry could invest it with more authority and
possibly more resources. End Summary.

--------------
ONLY ROOM FOR ONE MANAGER
--------------


2. (C) Since OMB's inception two years ago, Benedicto has
been the key official responsible for defining the OMB's
role, setting goals, and managing day-to-day operations.
Ambitious and focused, her work resulted in numerous raids
and 116 cases filed in court. She worked closely with
intellectual property rights holders to facilitate
cooperation and gather the resources necessary for
operations. Significantly under-staffed and under-resourced,
the OMB has nevertheless achieved substantial results under
Benedicto's management. She still had much unfinished
business at the OMB but said that it would not help the
agency to have "two managers." She referred to Manzano as a
"micro-manager who is not interested in her input or
assistance."


3. (C) In recent months, Benedicto found that routine
decisions she made were often countermanded or questioned.
Manzano took away much of her authority and made it clear
that he wanted to manage operations himself. Benedicto fills
one of three legal positions at OMB, but the other two have
been vacant for several months. Chairman Manzano told
econoff on April 7 that he was sorry to see Benedicto go. He
said he intends to replace Benedicto with a lawyer who
previously worked for the Motion Picture Association of
America (MPAA) in the Philippines and that he had already
discussed this possibility with industry representatives.
Curiously, our MPAA contact said that Manzano had not
mentioned this to him, and he is not sure to whom Manzano
might be referring.


4. (C) Benedicto said that while Manzano is committed to the
success of the OMB, she does not think that he will be nearly
as aggressive as she had been on enforcement of the Optical
Media Act. Benedicto described Manzano as a politician. She
said he is concerned about what others think about him, which
may influence his decisions. Benedicto cited the example of
a recent raid that she had authorized. Manzano said that he
did not agree with the target, for no apparent reason, and
wanted the raid canceled. Benedicto speculated that Manzano
may have balked because a high-profile individual owned the
mall. Benedicto described another instance in which she
authorized a raid on a mall that resulted in gun shots that
wounded a young Muslim boy. When Manzano received a call
from a Muslim congressman, he blamed the incident on
Benedicto and told her that she should not have authorized
the raid. Benedicto argued that raids are law enforcement
actions, which run an inherent risk of injury, and while the
injury was regrettable, the raid itself was well-planned and
highly successful.

--------------

MANILA 00001647 002 OF 003


OMB CONTINUES TRAINING COOPERATION
--------------


5. (U) The OMB just concluded a one-day training for law
enforcement officials aimed at enhancing prosecution of IPR
cases. Benedicto said the sessions were very positive. The
training was sponsored by USAID and resulted in a manual of
operations for optical media law enforcement. Benedicto also
coordinated a two-day regional training with the U.S. Patent
and Trademark Office on optical media law and enforcement,
which took place April 5 and 6. About 100 participants from
the ASEAN region participated. Adrian Cristobal, Director
General of the Intellectual Property Office, presented
opening remarks on behalf of President Arroyo, stating that
"Our success in reducing IPR violations in optics media has
been made possible through the strong will of my government
which enabled concerned government agencies, led by the
Optical Media Board, and the private sector, particularly the
Intellectual Property Coalition, to forge a determined and
effective partnership to combat intellectual piracy."
Chairman Manzano was not available for remarks on the first
day due to illness, but did participate on the second day,
although he did not address the audience.

--------------
STILL WAITING FOR FUNDING
--------------


6. (U) Benedicto reported that the additional operation
funds from the proceeds of the Manila Film Festival promised
by President Arroyo (reftel B) have not yet been released.
In February, there were a number of rumors circulating that
President Arroyo might have been planning to replace Chairman
Manzano and those rumors reportedly caused the Budget Office
to freeze funding. Benedicto said that funds would likely be
released soon, though Manzano added that the actual funding
would probably be much less than originally promised.


7. (C) On the first directive from Malacanang, the OMB was
to receive 30 percent of the GRP's proceeds from the Manila
Film Festival in January. The OMB's share was then reduced
to 20 percent due to complaints from the Philippine
Anti-Piracy Council, whose own share had been severely cut.
In the latest communication to the OMB, the President has
dropped the OMB to 5 percent, increased the Anti-Piracy
Council's allotment by 5 percent, and increased her own
discretionary funds by 10 percent. When Manzano called
Malacanang to complain, he was told to "keep quiet." His
contacts told him that it is likely that President Arroyo
will privately give the OMB the additional 10 percent she
moved to her discretionary fund, but that she had to move it
in order to appease other agencies. He was told that as long
as he does not "make any noise," OMB will get the funds.

--------------
OMB NEARING FIRST IPR CONVICTION
--------------


8. (SBU) The OMB has organized about a dozen raids since
January 1, generating 22 new IPR cases. Of the OMB's 116
total cases, 38 might be dismissed. Benedicto said that she
agreed with the GRP Department of Justice on these dismissals
since the perpetrators were "John Does," and the agency does
not have any way to assert identity and pursue the cases.
The remaining 78 cases are proceeding through the justice
system. Benedicto noted that they may soon get one
conviction on a case in Davao City, dating from 2004. In
this case, the defendant wants to plea bargain down from a
count of illegal importation, which carries a sentence of one
to three years, to a count of possession of pirated goods,
which carries a sentence of one to three months. Benedicto
was initially hesitant to accept the plea bargain, but noted
that regardless of which count the defendant is convicted on,
either sentence would render the defendant eligible for
immediate probation under Philippine law as a first-time
offense. Benedicto said that the OMB will probably accept
the plea bargain to solidify a conviction. Benedicto added
that if the defendant is convicted for a second offense, he
would have no opportunity for probation.


9. (U) Benedicto also reported that the Department of Trade
and Industry (DTI) now has oversight responsibility for the
OMB. The agency was previously under the direct supervision
of the President, but under Executive Order 518 signed the
week of March 27, President Arroyo moved this authority to

MANILA 00001647 003 OF 003


DTI.
--------------
COMMENT
--------------


10. (C) Benedict's work at the OMB and the agency's
successes in2005 were key factors in the Embassy's
recommendtion for the 301 out-of-cycle review (reftel C).Manzano's ability to maintain OMB progress will depnd on his
ability to act independently of personl political concerns.
His next executive directo needs to have the critical legal
expertise and xperience, be able to work closely with him,
andalso be able to step back and let Manzano run thing.
This combination would help keep the agency moing in a
positive direction. In addition, Manzao needs to act
quickly to fill the other two legl positions. Benedicto
will return to the privae sector to work for Filipino-owned
Viva Records here she will still be involved in IPR issues,
tough more from a rights holder perspective than a aw
enforcement one. It is disappointing to loseher energy and
leadership at OMB. President Arryo's decision to reduce the
promised funding for MB is also disappointing. One of OMB's
challengs is finding adequate resources fr operations and
stronger, more consistent support from the President's office
and the GRP economic team. On the bright side, placing OMB
under Trade and Industry Secretary Favila could invest it
with more authority and possibly more resources.
Kenney