MEXICO IPR UPDATE - APRIL 2008

UNCLAS SECTION 01 OF 04 MEXICO 001533 SENSITIVE SIPDIS SIPRNET STATE FOR WHA/MEX/WOLFSON, EEB/TPP/IPC, INL/CCP/VIGIL STATE PASS USTR FOR SHIGETOMI/MCCOY STATE PASS COPYRIGHT OFFICE FOR STEVE TEPP USDOC FOR 4320/ITA/MAC/ONAFTA/GERI WORD AND ITA/MAC/IPR/WILSON AND WRIGHT USDOJ FOR CCIPS/MARIE-FLORE KOUAME DHS FOR E.O. 12958: N/A TAGS: KIPR ECON MX SUBJECT: MEXICO IPR UPDATE - APRIL 2008 REF: SECSTATE 43132 Summary and Comment -------------- ¶1. (U) This cable reports on Mexican reaction to the Special 301 2008 report on Mexico and the following recent IPR-related developments in Mexico: the "International Forum on IPR and the Judiciary" event held in Cancun in February and the establishment of a specialized IPR tribunal to review administrative rulings; lobbying efforts for a bill to provide ex oficio authority to go after pirates; recent criminal IPR verdicts of interest; government initiatives on IPR education and cooperation with various industries; enhanced coordination with Mexican customs; and ongoing efforts by the State of Mexico and Mexico City to combat illicit commerce. Piracy and counterfeiting continue to occur on epic scales here in Mexico, but the federal government, some of its local counterparts, and the private sector are clearly devoting more time and attention to creative and coordinated efforts to strengthen IPR protection, generating hope that better days lie ahead for right-holders and their industries. End summary and comment. Reaction to Special 301 -------------- ¶2. (U) Econoff spoke with three key Mexican officials regarding the 2008 Special 301 report on Mexico (REF A). They were 1) Jorge Amigo, Director General of the Mexican Institute of Industrial Property (IMPI - rough equivalent of the U.S. PTO),2) Alfredo Tourne, Director for Rights Protection of the Mexican Copyright Institute (INDAUTOR - rough equivalent of the U.S. Copyright Office),Jose Luis Cervantes, chief of the specialized IPR unit of the Office of the Attorney General of the Republic (PGR - rough equivalent of the U.S. Justice Department). All three acknowledged the problem areas identified in the report and committed to taking concrete action to address them before the 2009 Special 301 drafting process begins. In particular, INDAUTOR plans to review whether Mexican law is in full compliance with Mexican obligations under the WIPO Internet treaties, IMPI plans to work in closer coordination with health authorities on IP issues related to the pharmaceutical industry, and PGR intends to continue its focus on higher quality prosecutions that result in deterrent convictions. Judicial IPR Forum and Specialized Tribunal -------------- ¶3. (U) The Mexican Federal Judiciary, IMPI, INDAUTOR, a group of private sector representatives, and the U.S. Embassy organized the International Forum on the Judiciary and IPR that was held in Cancun February 26-29. Around two hundred judges, IPR officials, and attorneys from Mexico, the rest of Latin America, Europe, and the World Intellectual Property Organization participated in the forum, as did U.S. federal judges Ronald Lew and Bernice Donald, Wayne Paugh from DoC, Oliver Metzger of the U.S. Copyright Office, Marie-Flore Kouame from DoJ, U.S. PTO's John Rodriguez and Jeff Siew, and Embassy Econoffs. The Forum was kicked off by Mexican Deputy Attorney General Felipe Munoz, Governor Felix Gonzalez of the State of Quintana Roo (of which Cancun is the largest city), and Jorge Camero, the President of Mexico's College of Federal Judges. U.S. participants were speakers on the following five of the twelve panel discussions on the program: 1) pharmaceutical issues; 2) geographical indicators; 3) IPR on the Internet; 4) enforcement and precautionary measures; and 5) penalties/damages for IPR infringement. There were several non-Mexicans included on each panel, and the audience (which included a large number of Mexican corporate lawyers) used the Q&A sessions to draw attention to areas where Mexico's IPR regime fell short of international standards. Several Mexican judges who spoke on various panels were also quick to highlight shortcomings of their domestic administrative and criminal IPR regimes. The MEXICO 00001533 002 OF 004 Forum was an excellent mechanism for raising the IPR awareness of the Mexican judges in attendance, and the importance of IPR was further highlighted by the fact that Guillermo Ortiz, President of Mexico's Supreme Court, attended and spoke at the closing ceremony. Embassy is working with the other Forum organizers to make electronic copies of all the presentations and distribute them to the entire federal judiciary of Mexico. ¶4. (U) Supreme Court President Ortiz made news at the closing ceremony by announcing that the Federal Tribunal of Fiscal and Administrative Justice would be forming a specialized IPR court to handle appeals of administrative rulings made by IMPI. Accordingly, several weeks after the Cancun Forum, Mexico's Diario Oficial (functional equivalent of the Federal Register) published a judicial resolution declaring that such a court will indeed be established, and that it will have jurisdiction over all administrative IPR appeals in Mexico. The court will consist of three federal administrative/fiscal judges with expertise in IPR who have yet to be named -- private sector representatives are understandably anxious that the judges chosen favor strong IPR protection. Its operating procedures also remain to be determined -- right-holder reps are hoping they will be designed in such a way as to help reduce the excessive amounts of time it takes to reach final resolution of contested administrative cases, most of which are currently appealed to the circuit court level of the administrative/fiscal system and spend years in litigation. One lawyer who represents U.S. firms told econoff that the ideal solution would be to add another specialized court at the appeals level, though that proposal is not currently on the table. ¶5. (SBU) There is a bill that was passed by the Chamber of Deputies last year that remains pending with the Senate that, if passed into law, would nullify the formation of the specialized IPR court by removing all administrative cases originating with IMPI from the jurisdiction of the Federal Administrative Procedure Law and thus the Federal Tribunal of Fiscal and Administrative Justice, under which the specialized IPR court would operate. If this bill were to be passed, appeals of IMPI rulings could only be made before constitutional courts, which differ from Mexico's administrative/fiscal courts in two key ways: 1) constitutional courts can deny requests to hear such appeals, and 2) constitutional courts cannot over-rule the substance of IMPI decisions. They can only rule on whether a defendant was treated fairly and in accordance with proper procedures. Such a system would clearly strengthen IMPI and thus the executive branch vis-a-vis the judiciary with regard to administrative enforcement, though a specialized administrative/fiscal court made up of judges who understand the value of IPR protection would also be a clear improvement over the status quo. Industry is close to unanimous that either of these two options would be an improvement over the status quo but is not taking sides publicly over which one is preferable. The make-up of the new court and its operating procedures will clearly be the decisive factors in either winning over right-holders or driving them to lobby for passage of the bill to remove IMPI from the jurisdiction of the Federal Tribunal of Fiscal and Administrative Justice. Lower Chamber Passes Ex Oficio - Internet Piracy Conviction -------------- -------------- ¶6. (U) Under Mexican law, criminal law enforcement authorities can only pursue pirates and counterfeiters if they received a formal right-holder complaint. Previous efforts to amend the law to provide ex oficio authority have stalled due to conflicting views in the Senate and the Chamber of Deputies regarding the bill's scope, with the Senate opposed to criminalizing consumer purchases of infringing goods and the Chamber of Deputies wishing to eliminate specific penalties on complicit public officials. The Embassy, the music and movie industries (which recently MEXICO 00001533 003 OF 004 combined their enforcement efforts under the aegis of the newly formed APCM, or Protective Association for Movies and Music of Mexico),and the American Chamber of Commerce proposed a clean version of the ex oficio bill and persuaded the Chamber of Deputies' Justice Committee to push the bill through to a vote before the end of the April legislative session. Two deputies, including Antonio Diaz-Athie, who participated in the legislators' IPR Voluntary Visitor program to Washington that Post organized in February, agreed to sponsor the bill, and it was passed by the Chamber of Deputies on April 29, sending it back to the Senate for what will hopefully be final approval before the end of the year. The bill is not perfect, but its passage would undoubtedly strengthen the PGR's hand in taking on organized criminal infringers. ¶7. (U) Through May 16 of this year, PGR had recorded 70 indictments and five convictions for IPR crimes (versus 166 indictments and five convictions for all 2007). Two cases worth special attention were the conviction and sentencing to six years in prison of a man who had been selling movies on-line and the acquittal of multiple defendants who had been charged with selling counterfeit medicines that had resulted in the deaths of two children. Reaching Out to Kids -------------- ¶8. (U) INDAUTOR reports that its proposal to include IPR awareness materials in primary school civics textbooks has been approved by the Secretariat of Public Education (SEP), but predicts that such materials will not be ready until the 2009-2010 school year at earliest, due in part to INDAUTOR's skimpy budget and fairly complicated clearance process within the SEP bureaucracy for any changes to textbooks. In the meantime, INDAUTOR is considering adapting certain WIPO materials for use in comic books or brochures that can be distributed in public schools. The State of Mexico, the country's largest by population and the only state to have formally signed an anti-piracy agreement with the private sector and federal government, plans to disseminate a comic book called "Pirate Town" that was developed by a state university. IMPI plans to coordinate with the State of Mexico on this project and perhaps expand it to other states. Agreement on Clean Schools -------------- ¶9. (U) On March 28, the Mexican Book Publishers Association (CEMPRO) signed an agreement with IMPI and the American Chamber of Commerce called "Clean Schools" under which IMPI has committed to conduct inspection visits on copy centers located close to schools and universities in an effort to dissuade the illegal copying of textbooks. This program is similar to the agreement IMPI has with the Mexican music and movie industries under which it conducts inspection visits to cyber cafes in Mexico City. IMPI inspection visits do not result in fines or other sorts of administrative sanctions versus infringers, though IMPI can begin punitive proceedings once an inspection visit has uncovered unlawful activity. Both the copy-shop and cyber cafe initiatives are currently targeted more at raising awareness and promoting compliance rather than actually punishing violators, an approach that the book, movie and music industries seem content with, at least for now. Enhanced Customs Cooperation -------------- ¶10. (U) Over the past year and a half we have witnessed significant improvement in interagency cooperation on IPR enforcement that has led to numerous success stories, such as seizures of infringing goods at the Port of Lazaro Cardenas resulting in both criminal and administrative investigations. We have heard from numerous official contacts that the MEXICO 00001533 004 OF 004 participation of multiple agencies in raids and seizures also reduces the opportunity for corruption by making it harder for a single official or office to make "deals" with pirates without arousing the suspicion of other agencies involved in the case. IMPI and Mexican Customs have recently begun acting on an initiative to share expeditiously information on suspicious in-bound shipments of goods bearing the 20 most commonly counterfeited brand-names (e.g., Nike, Louis Vutton, Tommy Hilfiger). IMPI claims it already has one success story under this new cooperative initiative. Status of State and Municipal Efforts -------------- ¶11. (U) Through the beginning of 2008 the State of Mexico and the Municipality of Toluca registered significant progress under their respective anti-piracy agreements with the federal government and the private sector. On public education, an anti-piracy comic book has been developed for distribution to school children, and seminars have been held at state universities explaining the importance of IPR to the creation of quality jobs. The State of Mexico is also working on a study of the informal economy in the state, which will include a directory of vendors and prices. State and municipal police have worked with federal authorities to close down Toluca's largest black market, Juarez, in part guided by an organized crime map put together by the state law enforcement agency. Authorities and participating private sector groups are working to license the Juarez vendors, move them to legal venues, and supply them with legitimate products that will appeal to their clientele. Momentum was slowed in the first months of this year due to changes in key leadership positions in the state law enforcement and interior departments, but econoffs and IMPI officials met with the state-wide coordinating official in April to discuss several concrete areas for renewed collaborative efforts, including a campaign to ensure that all state government offices are using legitimate business software. Draft anti-piracy agreements with the states of Morelos, Tlaxcala, Puebla, and Hidalgo are in one phase or another of negotiation. Up until now, a coalition of industries has taken the lead in these state-level negotiations, but PGR, which has the interagency lead in federal anti-piracy efforts, has now decided to spearhead these efforts in close collaboration with the private sector. ¶12. (U) In Mexico City, the administration of Mayor Marcelo Ebrard continues to expend substantial efforts in re-converting the informal vendors who used to rule the streets of the city's historic center. In April, city law enforcement forces had several confrontations with black marketeers who resisted attempts to move them. There have been newspaper reports that pressure on illegal commerce in downtown Mexico City has forced some pirates and counterfeiters to re-locate either to other parts of the capital or nearby cities such as Puebla. However, Ebrard's police forces have begun to conduct raids in other parts of Mexico City in close coordination with federal enforcement agencies, inlcuding the PGR. In addition to the raids, the government continues to expropriate real estate and others assets used by those engaged in all forms of illegal commerce. The Mexico City police's intelligence efforts are improving and have led to investigations of five of the most important bands of contraband/piracy/drug distributors in the capital. The long-term goal of the Ebrard administration is to "re-convert" informal vendors into licensed, legal merchants operating out of authorized locations where the government can supervise their activities. Visit Mexico City's Classified Web Site at http://www.state.sgov.gov/p/wha/mexicocity and the North American Partnership Blog at http://www.intelink.gov/communities/state/nap / GARZA