Identifier
Created
Classification
Origin
09MEXICO1081
2009-04-15 21:19:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Mexico
Cable title:  

IP VIOLATORS AND MEXICO'S COMPLICATED PARDONER'S TALE

Tags:  KIPR ECON ETRD MX 
pdf how-to read a cable
VZCZCXRO0865
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #1081/01 1052119
ZNR UUUUU ZZH
P 152119Z APR 09
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 6123
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
RHMFIUU/CDR USNORTHCOM PETERSON AFB CO
RHMFISS/CDR USSOUTHCOM MIAMI FL
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
UNCLAS SECTION 01 OF 03 MEXICO 001081 

SENSITIVE, SIPDIS

STATE FOR EB/TPP/MTA/IPE/KEAT/URBAN
STATE FOR WHA/MEX/WOLFSON
STATE PASS TO USTR FOR MELLE/MCCOY/SHIGETOMI/VETERE
STATE PASS TO JUSTICE FOR CCIPS/MERRIAM,KOUAME AND
OPDAT/TRUEBELL AND RAMOS
STATE PASS TO COMMERCE FOR ITA/MAC/ONAFTA/WORD
STATE PASS TO COMMERCE FOR ITA/MAC/IPR/WILSON,BOGER
COMMERCE PASS TO USPTO FOR RODRIGUEZ/BERDUT/MORALES

E.O. 12958: N/A
TAGS: KIPR ECON ETRD MX
SUBJECT: IP VIOLATORS AND MEXICO'S COMPLICATED PARDONER'S TALE

Summary
-------

UNCLAS SECTION 01 OF 03 MEXICO 001081

SENSITIVE, SIPDIS

STATE FOR EB/TPP/MTA/IPE/KEAT/URBAN
STATE FOR WHA/MEX/WOLFSON
STATE PASS TO USTR FOR MELLE/MCCOY/SHIGETOMI/VETERE
STATE PASS TO JUSTICE FOR CCIPS/MERRIAM,KOUAME AND
OPDAT/TRUEBELL AND RAMOS
STATE PASS TO COMMERCE FOR ITA/MAC/ONAFTA/WORD
STATE PASS TO COMMERCE FOR ITA/MAC/IPR/WILSON,BOGER
COMMERCE PASS TO USPTO FOR RODRIGUEZ/BERDUT/MORALES

E.O. 12958: N/A
TAGS: KIPR ECON ETRD MX
SUBJECT: IP VIOLATORS AND MEXICO'S COMPLICATED PARDONER'S TALE

Summary
--------------


1. (SBU) Summary: PGR has expressed its frustration over the
recent pardons by two rightholders of IP violators. At first
glance, its concern is valid - if PGR is to bring IP violators
to justice, it needs the support of the rightholder. However,
although the first rightholder recanted and went through with
the complaint, the case was dismissed on a technicality. In
the case of the second rightholder, the pardon may have been
forged, suggesting a high level of sophistication on the part
of the criminal gangs that control the pirated and counterfeit
goods network. The more we learn of the circumstances
surrounding these pardons, the greater we see the need for a
comprehensive strategy to address PGR's - and the
rightholders' - disquiet. End Summary.


2. (SBU) Both PGR and the rightholders bear a heavy
responsibility in curbing IP violations in Mexico. PGR is
responsible for enforcing the law and bringing violators to
justice, but cannot do so without the willingness of the
rightholder to see the case through to the bitter end. It is
of great consternation to PGR when a rightholder, after filing
a complaint and at times following years of work by PGR in
preparing a case, decides to drop the charges against a
patent, trademark or copyright infringer and requests a
pardon. PGR, under pressure from both the Calderon
administration and the USG for more arrests, more
prosecutions, and more convictions of IP violators, is left in
a very frustrating position.

Nike
--------------


3. (SBU) So it should come as no surprise that on March 25,
when the local representative for Nike met with PGR's senior
IP Unit leadership to inform them that Nike was considering
dropping the charges against Leonardo Cruz Hernandez, PGR was
extremely displeased. Cruz was arrested on March 23 by
Mexican authorities for IPR violations, after a 3-year
investigation. Following his arrest, Nike Mexico's General

Manager received enormous pressure from Nike's wholesalers to
pardon Cruz, including from a brother of a senior PRI
politician. The decision to consider dropping the charges was
made on March 24 in a telcon between Nike Mexico and Nike
corporate headquarters in Portland. The conditions for the
possible pardon included community service, auditing of Cruz's
financial records, and cooperation with PGR in its
reconversion program. No financial remuneration was included
in the pardon.


4. (SBU) PGR's IP team reached out to ECONOFF, ICE Attach
and the DOJ, to inform us of Nike's decision and to ensure
that Nike corporate headquarters was aware. That same day,
Nike Mexico met again with PGR to let them know that Nike had
decided to go ahead and allow the case to proceed. PGR was
pleased. However, on March 26, the judge of the 11th Federal
Court of the Recusorio Oriente, where Cruz was being held,
dismissed the charges against him and allowed Cruz to go free.
The judge's clerk found fault with the paperwork in which PGR
outlined the case against him, and the case was dismissed on a
technicality.

MPAA
--------------


5. (SBU) In a meeting with a senior IP official at PGR on
Friday, April 3, the official voiced his frustration to
ECONOFF and ICE Attach with the attorneys who represent U.S.
rightholders. He said he felt like he was fighting two fronts
- the pirates and the attorneys. He mentioned another case,
in which the local legal representative for MPAA pardoned six
persons arrested following a major sweep in Veracruz for the
production and distribution of pirated DVD's. ECONOFF had
previously been told by a contact at the MPAA Washington
office that their lead local investigator had received

MEXICO 00001081 002 OF 003


personal threats, including an envelope hand-delivered to his
residence containing a note card with the letter 'Z'
emblazoned on it - indicating the notorious 'Los Zetas'
criminal gang - and a bullet. The PGR official argued that
the envelope did not surface until after the local MPAA
representatives had acted to dismiss the case. He was also
dismissive of the envelope, remarking that he was not entirely
convinced it was real, and that even if it was credible, in
this line of work "you have to be used to such threats."


6. (SBU) On Tuesday, April 7, ECONOFF met with the Managing
Director of MPA Mexico, to collect MPAA's story. He said the
raid on Coatzacoalcos, Veracruz, occurred in early March, and
was a military raid in which guns and drugs were seized along
with over a million pirated and blank CD's and DVD's. (NOTE:
The March 5 IFPI press release reports that Mexican law-
enforcement and military personnel raided a domicile in
Veracruz, Mexico that was utilized as a major replicating
center for 'Los Zetas.' Seized in this raid were: 350,500
music CDRs, 300,360 film DVDRs, 1,800 Burners, 30,000 blank
DVDRs, and 380,000 film and music inlay cards. A total of
seven individuals were arrested in the raid. There was no
mention of arms or drugs. END NOTE.)


7. (SBU) Following this raid, the PGR IP Unit contacted MPA
Mexico and requested that they file a complaint. (NOTE:
Under the Mexican system, the Mexican authorities lack ex-
officio authority, and can act only upon receiving a complaint
from the right-holder. END NOTE.) MPA Mexico did so, and the
authorities charged the six arrested with IP violations. In
mid-March, MPA Mexico discovered that the case had been
dismissed, and the six arrested had gone free based on a
pardon from MPA Mexico. MPA Mexico obtained a copy of the
judicial pardon from Veracruz, which had allegedly been signed
by their legal representative. However, the legal
representative swore that he had never made such a pardon,
that he was not in Veracruz on the date of the pardon, and
that he had not signed such a document. It was when he was
ready to go to Veracruz in an attempt to refute the pardon and
clear his name that he received a text message on his cell,
signed 'Z', threatening him, and the envelope (described
above) appeared on the investigator's doorstep.


8. (SBU) Since then, MPA Mexico's lead investigator left
Mexico for Peru on Friday, March 27 for a possible extended
stay. The legal representative who allegedly signed the
pardon was dismissed (amicably),and another has resigned out
of fear. This incident has effectively eviscerated MPA
Mexico's enforcement activities. On Friday, April 6, PGR
asked MPA Mexico if they would file a complaint against the
alleged boss of the six pardoned individuals - presumably the
seventh person arrested in the Veracruz sweep. MPA Mexico's
Managing Director told ECONOFF they are mulling over their
options.

Comment
--------------


9. (SBU) Comment: The possibility of a forged pardon and the
subsequent threats reflect a high level of sophistication on
the part of the Zetas. If true, PGR should launch an
investigation of these events, and perhaps determine to what
extent the judicial system in Veracruz is complicit. More
importantly, rightholders must feel assured that when they
bring charges against IP violators, they will be protected by
the Mexican authorities and any threats against them will not
be summarily dismissed.


10. (SBU) It is understandable that rightholders feel
discouraged by sometimes awaiting justice for years as PGR
prepares a case, only to have it dismissed on a technicality
or perhaps even based on a judicial lack of understanding. On
the other hand, as the first case demonstrates, PGR must be
assured that it has the complete and consistent support of the
rightholder when pursuing a case. The Departments of Commerce
and Justice have compiled some suggested courses of action,

MEXICO 00001081 003 OF 003


recommending that U.S. rightholders review their agreements
with local legal representatives and ensure that cases cannot
be settled without the express consent of the U.S.
rightholder, and providing PGR with rightholders' local and
U.S. headquarters points of contact.


11. (SBU) The more we learn of the circumstances surrounding
these pardons, the greater we see the need for a comprehensive
strategy to address PGR's - and the rightholders' - concerns.
This is an opportunity to push for Mexican legislative
approval of ex-officio authority, which would not only remove
the ability of rightholders to request pardons, it would
reduce the possibility of harm befalling them as they would no
longer be responsible for bringing charges against IP
violators. We should also develop stronger training programs
with PGR and Mexico's judicial officials, enhancing the
authorities' abilities to investigate, prepare, and present IP
cases as well as adjudicate them in a fair, timely, and
effective manner. End comment.

BASSETT