CANADA: EMBASSY OTTAWA 2008 SPECIAL 301

UNCLAS SECTION 01 OF 04 OTTAWA 000311 SIPDIS SENSITIVE SIPDIS USTR FOR SULLIVAN, MELLE, GARDA STATE FOR EEB/IPC (WALLACE) AND WHA/CA (RIOS) E.O. 12958: N/A TAGS: CA ECON ETRD KIPR SUBJECT: CANADA: EMBASSY OTTAWA 2008 SPECIAL 301 RECOMMENDATION REF: A. STATE 09475 ¶B. 07 OTTAWA 2230 ¶C. 07 OTTAWA 1962 ¶D. 07 OTTAWA 1955 ¶E. 07 OTTAWA 1764 ¶F. 07 OTTAWA 1762 ¶G. 07 OTTAWA 1639 ¶H. 07 OTTAWA 1243 ¶I. 07 OTTAWA 1076 ¶J. 07 OTTAWA 887 ¶K. 07 OTTAWA 783 ¶L. 07 OTTAWA 765 ¶M. 07 OTTAWA 691 ¶N. 07 OTTAWA 448 ¶O. 07 OTTAWA 187 ¶P. 07 MONTREAL 150 ¶Q. 07 MONTREAL 58 ¶R. 07 TORONTO 466 ¶S. 07 TORONTO 461 ¶T. 07 TORONTO 366 ¶U. 07 TORONTO 315 ¶V. 07 TORONTO 120 ¶W. 07 TORONTO 62 ¶X. 07 TORONTO 60 ¶Y. 07 TORONTO 45 Sensitive but unclassified. This message is part of an internal U.S. Government deliberative process regarding the annual Special 301 Report and must not be shared outside the USG. ¶1. (sbu) Summary and Recommendation: Embassy Ottawa remains frustrated by the Government of Canada,s continuing failure to introduce - let alone pass - major copyright reform legislation that would, inter alia, implement and ratify the World Intellectual Property Organization (WIPO) Internet treaties. Several recent factors compound this frustration, including the fact that: -- the Prime Minister told the President last August that Canada would pass copyright legislation; -- the November Speech from the Throne laying out the government,s Parliamentary agenda stated that it would "improve the protection of cultural and intellectual property rights in Canada, including copyright reform;" and -- senior GOC officials, especially Industry Minister Prentice, repeatedly assured the Ambassador and senior Mission Canada officers that the copyright bill would be introduced "soon." Specifically, assurances were given that the legislation had been finalized and would be introduced prior to the Christmas recess, and then again immediately upon Parliament's return in January. Neither of which occurred. In addition to the lack of Parliamentary action on a revised copyright bill, the GOC continues to weigh recommendations from an interagency task force that reviewed "best practices" and regulations over a three-year period for improving Canada,s IPR enforcement regime at the border, but has taken no action so far. ¶2. (sbu) Despite our frustration, we must acknowledge Canada,s close cooperation with the United States on intellectual property matters in international fora, as well as the excellent working relationship between U.S. and Canadian border entities. In June 2007, the Canadian Royal Mounted Police (RCMP) hosted the International Law Enforcement IP Crime Conference in Niagara Falls, and will co-host this year,s conference in Halifax with Interpol in June. We also recognize that Canada has taken important steps to improve protection and enforcement of intellectual property rights over the last year. Last May, Parliament enacted a law criminalizing illicit camcording in Canadian movie theaters - a specific step that the U.S. sought in the 2007 Special 301 report on Canada. Throughout the last year, Canadian law enforcement entities have carried out a number of high-profile raids on pirating and counterfeiting operations. We also believe - even in the face of repeated delays - that the current government remains committed to improving IPR protection in Canada. ¶3. (sbu) However, given the continuing failure of the GOC to introduce a copyright bill into Parliament - coupled with the apparent lack of significant steps to improve IPR protection and enforcement along the border - Post reluctantly Qand enforcement along the border - Post reluctantly recommends that Canada be elevated to Special 301 Priority OTTAWA 00000311 002 OF 004 Watch List in 2008. We would strongly recommend retaining Canada on the Watch List if the Conservative government introduces its copyright bill into Parliament in the coming weeks before the release of the 2008 Special 301 report. (Comment: We understand that elevation of Canada to the Priority Watch List could adversely affect prospects for the introduction and passage of a copyright bill in Parliament. End comment) End Summary and Recommendation. Copyright Legislation ¶4. (sbu) In December 2007, the GOC completed - and printed into final bill form - major copyright reform legislation. While details remain secret, Post understands that the legislation would implement and ratify the WIPO Internet Treaties (which Canada signed in 1997),and address Internet Service Provider liability, circumvention devices, educational use of copyrighted materials, and other contentious issues. ¶5. (sbu) From December 2007 to mid-February, senior GOC officials and well-informed private sector contacts assured the Embassy that legislative calendar concerns were delaying the copyright bill,s introduction into Parliament. Our contacts downplayed the small - but increasingly vocal - public opposition to copyright reform led by University of Ottawa law professor Dr. Michael Geist. On February 25, however, Industry Minister Prentice (please protect) admitted to the Ambassador that some Cabinet members and Conservative Members of Parliament - including MPs who won their ridings by slim margins - opposed tabling the copyright bill now because it might be used against them in the next federal election. Prentice said the copyright bill had become a "political" issue. He also indicated that elevating Canada to the Special 301 Priority Watch List would make the issue more difficult and would not be received well. ¶6. (sbu) On February 26, Liberal party leader Stephan Dion made clear that his opposition party would not bring down the minority Conservative government over the just-unveiled 2008 budget. Most political observers now believe that Dion,s position pushes possible national elections until at least the fall of 2008, and possibly even until October 2009 (the next mandatory date). A senior GOC official told the Ambassador on February 27 that the disappearing prospect of an imminent election should make it easier to introduce the copyright bill in Parliament, but offered no definitive timetable for doing so. An influential Liberal MP on intellectual property issues separately told EMIN on February 26 that the copyright bill would receive widespread support from the Conservative, Liberal, and Bloc Quebecois parties if and when the GOC sends it to Parliament. (Comment: James Rajotte - chair of the Industry Committee, which would likely receive a copyright bill - told the Ambassador on February 28 that the legislation would not have such smooth sailing. End Comment) The Liberal MP stated that he has pressed Industry Minister Prentice to release the legislation now, adding that Canada is out of step with the rest of the (developed) world on intellectual property rights and risks losing future foreign investment. The MP dismissed the political significance of the public efforts of Professor Geist and hinted that Canada,s possible elevation to the Priority Watch list would not be seen as a hostile U.S. action, but show that its IPR regime is weak vis-a-vis its G-7 partners. The MP indicated that other nations, especially France, are also lobbying Parliament on a copyright bill. EMIN learned Qalso lobbying Parliament on a copyright bill. EMIN learned from his French Embassy counterpart that she would be briefing Parliamentarians on this issue on March 4. Industry Committee chair Rajotte separately confirmed this meeting with the Ambassador. ¶7. (sbu) On February 27, EMIN and Econcouns were summoned to Foreign Affairs Canada to receive the informal views of the Canadian government on the Special 301 process. The meeting was chaired by Doug George, the Director of DFAIT,s Intellectual Property office and included representatives of ten Canadian government agencies, including Industry Canada, Canadian Heritage, Canada Border Services Agency (CBSA),and the Canadian Embassy in Washington. After the usual denouncement of the Special 301 process (which we hear every year),George outlined the cooperative measures that Canada undertakes with USG agencies and Interpol on IPR enforcement. He stated that this cooperation, together with Canada,s federal and local law enforcement efforts, gets short shrift in USTR,s description of Canada in the Special 301 report. ¶8. (sbu) However, George and Industry Canada,s Susan Bincoletto could not give EMIN any indication of when the OTTAWA 00000311 003 OF 004 revised copyright bill would appear in Parliament. CBSA did not know whether the C$75 million announced in the recent budget over the next two years will be targeted toward improving IPR enforcement. There was also no indication as to when CBSA officials would get "ex officio" powers to improve their enforcement efforts even though many Canadian officials believe that this is needed. Finally, George cautioned that if Canada were retained on the 301 Watch List - or even elevated to the Priority Watch List - it could affect future Canadian cooperation on IPR as well as give ammunition to Dr. Geist and his acolytes, who see a revised copyright bill as a "U.S. plot." In answer to EMIN,s question, George claimed that only the United States is pressing Canada on copyright reform. The EU, individual European countries, and Japan do raise IPR issues, but George implied that these efforts are perfunctory. IPR Enforcement ¶9. (sbu) After three years of examining "best practices" and regulations for improving IPR enforcement on Canada,s borders, an interagency group made formal recommendations to Canadian ministers in the fall of 2007. To date, the GOC has yet to act on the recommendations, and the 2008 budget (released on February 26) contained no apparent IPR-related enforcement measures. In the past, GOC officials have indicated that Canada should join the other G-7 countries in updating its border enforcement regime and that border officials should receive "ex officio" powers to seize suspected counterfeit and pirated goods. Current arrangements between customs officials and the Royal Canadian Mounted Police (RCMP) for seizing suspected illegal goods are cumbersome and relatively ineffective. ¶10. (sbu) Notably, the RCMP has increased its attention on counterfeit and pirated goods,particularly relating to public safety, health, and organized crime. Last June, the RCMP hosted the International Law Enforcement IP Crime Conference in Niagara Falls that was well attended by officials from the United States and other countries. This year,s conference in Halifax will be co-hosted by the RCMP and Interpol, June 24-26. In addition, Canadian law enforcement officials are boosting action against illegal pirating and counterfeiting operations. These illustrative 2007 examples are excerpted from a more exhaustive list compiled by ConGen Toronto: -- Toronto RCMP investigators seize pirated DVD copies of the East Indian World Premiere movie Guru. Unauthorized copies of the movie,s soundtrack and another popular East Indian film also seized (February 21); -- An Ontario husband and wife are arrested after police officers seize over 750 counterfeit DVD,s at two convenience stores with an estimated value of C$15,000 (March 5); -- Windsor RCMP officers charge three men with 22 counts of importing counterfeit goods. Examination of the goods reveal 23 different brand-name products with a value of C$250,000 (April 2); -- In connection with satellite signal theft, Durham police seize C$60,000 worth of satellite receivers, dishes, and computer equipment. Estimated annual lost revenue lost is C$240,000 (July 13); -- Toronto police seize more than 20,000 music CDs along with movies, video games, and equipment after a six-month investigation initiated by the Canadian Recording Industry Association. Police also seize cash, business documents, and four CD/DVD burning towers, each with 6-8 burners, capable of producing some 770 recorded discs per hour, or 30,720 discs Qproducing some 770 recorded discs per hour, or 30,720 discs in a 40-hour week (July 17); -- Ontario police raid twenty-two locations in Mississauga, Brampton, Burlington and Toronto, arresting 18 people and seizing over 40,000 pirated DVD movies worth an estimated C$800,000 as well as manufacturing equipment capable of producing C$21 million worth of pirated DVD movies per year (August 21); -- RCMP and the York police officers search eight stores at the Pacific Mall in Markham and two retail outlets and a storage unit in the Dynasty Mall in Toronto. Several arrests are made, and more than 15,000 DVD,s seized. Also seized are 65 DVD burners located at a private residence (August 31); and -- Toronto police recover C$10 million worth of counterfeit OTTAWA 00000311 004 OF 004 luxury merchandise in a series of raids on local retailers (December 3). Canada Moves Against Camcording ¶11. (sbu) In June 2007, the government criminalized the act of recording ("camcording") a movie in a theater without consent of the theater manager. The legislation was broadly supported by all political parties, and moved through Parliament in less than a month. Several individuals have been arrested under the new law and are currently pending trial. Industry representatives have told Post that the problem of illicit camcording in Canada - which was cited in the 2007 Special 301 Report - has been significantly reduced by this new law. Pharmaceutical Concern ¶12. (sbu) The U.S. pharmaceutical industry remains generally pleased with the October 2006 amendments to Canada,s data protection regulations, and considers them a significant step forward. Some U.S.-based pharmaceutical companies, however, have raised concerns that recent judicial and Health Canada decisions could be putting a number of existing drug patents at risk. The U.S.-based companies believe that a further regulatory change allowing them the Right of Appeal of an adverse administrative decision would help alleviate their concerns. Post understands that a proposed regulatory amendment addressing this issue may soon be published in the Canada Gazette for public comment. Recommendation: No Copyright Bill Equals Special 301 Priority Watch List ¶13. (sbu) We believe that the minority Conservative government is committed to improving the protection and enforcement of intellectual property rights. However, given the GOC,s failure so far to introduce a copyright reform bill in Parliament - and the lack of significant steps to strengthen IPR enforcement and protection on the border - the Embassy reluctantly recommends that Canada be elevated to Special 301 Priority Watch List. We would strongly recommend retaining Canada on the Watch List if the government introduces its copyright bill into the House of Commons before the end of April. (Comment: Elevation of Canada to the Priority Watch List could adversely affect prospects for the introduction and passage of a copyright bill in Parliament. End comment) ¶14. (sbu) This cable and its recommendation have been reviewed and approved by the Ambassador. Visit Canada,s Economy and Environment Forum at http://www.intelink.gov/communities/state/can ada WILKINS