Cablegate: Embassy Mexico City 2006-2007 Ipr Protection

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PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #4222/01 2122108
ZNR UUUUU ZZH
P 312108Z JUL 06
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 2429
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 03 MEXICO 004222

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/MEX, EB/TPP/IPE, INL/C/CP
DEPT PASS TO DOJ FOR CCIPS AND OPDAT
USTR FOR JMELLE/VESPINEL
DOC FOR 4320/ITA/MAC/ONAFTA/ARUDMAN/GWORD
USPTO FOR BHARDMAN

E.O. 12958: N/A
TAGS: ECON ETRD KIPR KPAO WTRO MX
SUBJECT: EMBASSY MEXICO CITY 2006-2007 IPR PROTECTION
PLANS/RECOMMENDATIONS

REF: A. MEXICO 2951

B. STATE 67311
C. 05 MEXICO 893
D. 05 MEXICO 4795

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SUMMARY
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1. (U) Despite the increases in raids and seizures carried
out over the last year by Mexican Customs (Aduanas) and the
Specialized IPR Unit within the Attorney General's office
(PGR), markets selling counterfeit goods are ubiquitous and
abuse of intellectual property rights (IPR) remains rampant.
Combined losses to Mexican and international companies -
especially in the film, music, software, textile and
pharmaceutical industries - are in the hundreds of millions
of dollars annually. This cable lays out action
recommendations and key challenges for the next year. End
Summary.

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GENERAL SETTING
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2. (U) Although IPR laws on the books are largely in
compliance with NAFTA and WTO TRIPS, they are poorly
understood and weakly applied by overburdened Mexican judges
who often reject IPR cases. As a result, prosecutors rarely
put forward the effort to build cases to take to trial,
focusing instead on meeting the extensive legal requirements
necessary to carry out raids (Ref A). In the 2006 Special
301 report, in which Mexico remained on the Watch List, the
USG recognized Mexico's increased enforcement efforts against
IPR violators, but pointed out the need for significant
improvement in follow-on prosecutions and deterrent penalties
(Ref B).

3. (U) Mexico's IPR challenges are deep rooted and defy easy
solutions. The United States cannot create the political
will within the Mexican government to fully carry out its IPR
laws. Nor can we change the underlying socio-economic
situation in which the informal economy and piracy thrive.
However, we can help build capacity of the main IPR
protecting bodies within the government, train
non-governmental organizations in effective public diplomacy
and lobbying strategies, educate the public and our
government interlocutors of the high societal costs
associated with piracy, and continue to raise our concern for
IPR protection with the GOM.

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OVERALL PLANS
-------------

4. (SBU) As with our 2005 Action Plan (Ref C), Post plans to
work closely with the Department of Justice's Office of
Computer Crime and Intellectual Property Section (CCIPS) and
the Office of Overseas Prosecutorial Development, Assistance
and Training (OPDAT). OPDAT administers an INL-funded budget
for Mexican IPR initiatives that Post used in 2005 and early
2006 to carry out last year's IPR Action Plan. Our plans for
the remainder of 2006 and the first half of 2007 rely on
using these existing OPDAT funds, which are approximately
$70,000.

5. (U) On July 2, Mexico held national elections and Post
expects that many of our most important contacts at Aduanas,
PGR, and the Intellectual Property Institute (IMPI) will
resign in the coming months. The personnel changes are
likely to temporarily disrupt, if not halt, IPR enforcement
during the interregnum and for several months after the new
administration takes over in December. Consequently, Post
expects delays to our outreach and training efforts.

6. (U) Nevertheless, in the next few months we should be able
to carry out a few training programs already in progress.
Once the new administration is in place, our first step will
be to establish trust and strong working relationships with
the new personnel. The extensive private sector contacts we
developed over the past year and our involvement in the
Inter-Institutional Committee (Ref D) should help pave the
way.

MEXICO 00004222 002 OF 003

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TRAINING AND OUTREACH - SECOND HALF 2006
----------------------------------------

7. (U) In March 2006, Econoff, a CCIPS attorney and two
officers from the Department of Homeland Security's Office of
Immigration and Customs Enforcement (ICE) conducted
investigation and prosecutorial training for officials from
PGR, Aduanas, and Public Security in Mexico City and
Guadalajara. Felipe Munoz, the current head of PGR's IPR
Unit, has requested a second round of this training for
district attorneys from each state. Munoz said the training
would need to take place in August or September before he and
his boss, Assistant Attorney General Carlos Aguilar, leave
their posts. Econ FSN is currently working with Munoz and
CCIPS to set the actual training dates. (Note: although Munoz
is willing to carry out the training, the final decision
depends not on his boss Aguilar, but on another Assistant
Attorney General.)

8. (U) Over the past year, Post has sent several personnel
from IMPI, Aduanas, PGR, INDAUTOR, and the Mexican judiciary
for training at the U.S. Patent and Trademark Office's
(USPTO) Global Intellectual Property Academy (GIPA) and the
Enforcement Academy. USPTO training programs have been very
well received by our contacts and help build professional
capacity within these important IPR agencies. GIPA trainings
have recently been broken out by individual IPR topic (e.g.
patents, trademarks, etc.) and therefore can be better
targeted to our contacts' needs. Post plans to continue
actively nominating candidates for USPTO training; funding
those we can while also requesting GOM and USPTO funding as
appropriate.

9. (SBU) As referenced above, the Mexican judiciary is a weak
link in the Mexican IPR regime. However, Post's ability to
engage judges in training has been difficult due to
professional sensitivities - i.e. it can be perceived as a
criticism of their knowledge and abilities. Other private
sector organizations also recognize this challenge and are
working to address it. Alejandro Bustos, Legal Director at
media conglomerate Televisa, is developing an IPR symposium
for judges this summer and early fall. Bustos requested our
support and has asked us to invite two or three U.S. judges
to participate in the roundtable. Post identified a
Spanish-speaking judge who will be participating in the forum
scheduled for August 22. The forum will focus on Mexico's IP
obligations under international provisions and treaties.

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FIRST HALF OF 2007
------------------

10. (U) In April, several leading anti-piracy organizations,
including the Motion Picture Association, Alianza Contra
Pirateria, National Apparel Chamber, and the Business
Software Alliance, announced they were forming a new
anti-piracy NGO. Roberto Castaneda, President of Alianza
Contra Pirateria and Nike's internal legal counsel, said they
will focus their efforts on government lobbying and public
outreach. The organization has requested Post's assistance
to develop a training program on effective lobbying and a
public service announcements campaign. Target dates for both
efforts are 2007.

11. (U) In September 2005, Post, DOJ and the Customs and
Border Protection (CBP) conducted operational training at the
port city of Manzanillo for Aduanas inspectors from
throughout Mexico. The weeklong training program included
basic classroom IPR education - what is IPR, why it is
important to protect, what are the basic laws, etc. - as well
as hands-on targeting and inspection work at the port. An
important result was the seizure of 28,000 counterfeit Mont
Blanc pens with a street value of over $1 million. The
training was extremely well received by Aduanas. Several
participants commented that it was the first training they
had received on any topic. At the conclusion of the event we
held a brainstorming session to develop ideas for future
capacity building events. The most popular idea was to
develop an IPR "tool box," to include instructional and
educational material, which would be sent to every major
customs location and used as a reference tool for expanding
IPR knowledge. Post also recommends sending few new Aduanas

MEXICO 00004222 003 OF 003

officials to a U.S. Strategic Trade Center, ideally during an
IPR Trade Fair, to enable them to see CBP and ICE best
practices at a U.S. port.

12. (U) The U.S. International Trade Commission and the
Jalisco state government are interested in organizing a Latin
America-wide Anti-Piracy Congress in Guadalajara to bring
together industry, government, NGOs and other experts to
discuss the growing piracy problem in Latin America and to
identify best practices on protecting IPR. The idea is in
its early stages, but it could be an interesting way to
highlight the impact that piracy has on Latin America's own
indigenous industries and artists, as opposed to large U.S.
multinationals. Post will continue to discuss the idea with
ITC and the Jalisco state government.

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FURTHER DOWN THE ROAD
---------------------

13. (SBU) PGR and Aduanas are fundamental to Mexico's
enforcement of its IPR laws. Unfortunately, the anti-piracy
divisions within these agencies lack the capacity and funding
to fully carry out their missions. PGR's Specialized IPR
unit, as discussed in Ref A, lack computers and printers and
have virtually no investigation devices. Aduanas, which
controls the entry of goods to Mexico, has no database of
registered trademarks nor digital examples of authentic
products against which they can verify suspicious shipments.
And, when they believe they have identified and detained
counterfeit product, they have no listing of rights holders
to contact in order to take the next legal step necessary
according to Mexican law to seize the product.

14. (SBU) Addressing this lack of capacity within two of
Mexico's principal IPR protection agencies could
significantly reduce the quantity of fake products that enter
the country, as well as improve PGR's ability to build cases
and carry out raids. Together it could mean less fake
products offered for sale in the numerous popular street
markets. Post will need to further investigate the viability
and cost of the idea. Ultimately it will only be possible
with strong commitment and support from the new heads of
these agencies under the new administration. If this support
is forthcoming Post could submit a proposal to INL in the
2007 budget request.

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CONCLUSION
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15. (SBU) It is true that the GOM has made improvements in
IPR protection in the last few years. At the same time,
limited funding and personnel at the key agencies, laws that
restrict agencies' ability to carry out enforcement actions,
the paucity of convictions, lack of fines for IPR violators,
and the existence of thousands of street vendors and markets
selling pirated products with near impunity to a willing
public, all point to the urgent need for further
improvements. As in the past, IPR protection in Mexico will
improve only when the GOM makes enforcement and prosecution a
higher priority.

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GARZA

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