VZCZCXRO6069
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #6229/01 3532055
ZNR UUUUU ZZH
P 192055Z DEC 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 9967
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEAHLA/DEPT OF HOMELAND SECURITY PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEAWJA/DEPT OF JUSTICE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
UNCLAS SECTION 01 OF 05 MEXICO 006229
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/MEX WOLFSON AND EEB/TPP/MTA/IPC URBAN AND WALLACE
STATE PASS USTR FOR EISSENSTAT/MELLE/SHIGETOMI/BAE/MCCOY/GARDE STATE PASS COPYRIGHT OFFICE
COMMERCE FOR ITA/JACOBS/WORD/WILSON/WRIGHT/ISRAEL
COMMERCE PASS USPTO FOR MORALES/BERDUT/RODRIGUEZ/MERMELSTEIN JUSTICE FOR CCIPS/MERRIAM/KOUAME/GARLAND DHS FOR
CBP/RANDAZZO AND ICE/JLOZANO E.O. 12958: N/A
TAGS: KIPR ETRD PINS MX
SUBJECT: MEXICO IPR: 301 UPDATE; INTERNATIONAL POSTURE; USG PROGRAMS REF: (A) SECSTATE 158938 (B) SECSTATE 107629 (C)
MEXICO 4467 (D) MEXICO 6196
Summary and Comment -------------------
1. (SBU) There has been some progress on a number of concerns included in the Mexico Special 301 Initiative demarche
(e.g., increased enforcement activity, improved cooperation with local governments, no new patent linkage problems), but
other concerns remain unaddressed (e.g., ex officio authority and data protection for pharmaceuticals). Mexican IPR
officials have been keen to highlight their increasingly active role in the international arena, stressing their
willingness to join the Anti-Counterfeiting Trade Agreement (ACTA) negotiations and their push-back against Brazilian
efforts to undermine IPR in international health organizations. The U.S. Mission, together with Washington-based
agencies, recently organized U.S. participation in a judicial event on trademarks and hosted a workshop in Monterrey
aimed at encouraging greater federal-local cooperation in IPR protection in northern Mexico. Spring 2008 will be even
busier, with a PTO training course on patent issues planned for January, a customs IPR training course scheduled for
early February, a State-sponsored voluntary visitor program for Mexican legislators to visit Washington at the
invitation of their U.S. congressional counterparts to discuss IPR in mid-February, an international judges forum on IPR
issues being hosted by Mexico in late February, and DoJ assistance on computer forensics and writing an IPR handbook for
prosecutors to take place sometime in the first half of the year. These exchanges are proving very useful in advancing
U.S. interests in Mexico, particularly with regard to raising IPR consciousness among Mexican judges. End summary and
comment. 301 Update ----------
2. (U) Enforcement: Mexican IPR prosecutors from the Office of the Attorney General of the Republic (PGR - rough
equivalent of U.S. Department of Justice) have recorded increased arrests and seizures of pirates, counterfeiters, and
infringing products this year, and have obtained four convictions as of December 18, 2007, versus two for all of 2006
(see http://pirateria.prg.gob.mx for stats and other IPR info in Spanish). Mexican IPR prosecutors have registered 166
indictments so far this year (including the first ever against an on-line pirate) versus 158 in all 2006. Many of those
indicted are in jail while awaiting a judge's final ruling. While these numbers are headed in the right direction, they
are still small compared to the rampant scale of commercial piracy and counterfeiting here. Lack of ex officio authority
to go after infringers (see following para), conflicting interpretations who has legal standing to represent
right-holders, and lack of IPR awareness on the part of many judges continue to hamper criminal enforcement. On the
administrative enforcement side, the Mexican Institute of Industrial Property (IMPI - rough equivalent of USPTO) reports
that it has conducted 3,642 inspection visits (including an aggressive campaign against cyber-cafes involved in Internet
piracy), levied USD 2.8 million in fines, and confiscated another USD 1 million in infringing products through November
of this year. We understand that these numbers are higher than last year's (we are still trying to get IMPI's 2006
enforcement statistics) and reflect IMPI's increased enforcement manpower (IMPI hired dozens of new personnel for its
enforcement division this year), but administrative enforcement continues to suffer from relatively light fines
available under current law, the seemingly endless process of legal appeals that malefactors can take advantage of to
avoid penalties for years, and lack of IPR awareness on the part of many judges.
3. (SBU) Ex Officio: A legislative amendment to make MEXICO 00006229 002 OF 005 commercial IPR infringement an ex
officio offense remains pending in the Chamber of Deputies after having been approved by the Senate earlier this year.
The Chamber of Deputies Justice Commission has had its hands full the last several months with a major presidential
initiative to overhaul Mexico's criminal justice system, which will be voted on when Congress re-convenes in February
2008 (REF D). PGR and the movie and music industries are strong supporters of the ex officio amendment, which would
allow PGR to investigate and prosecute cases even without specific right-holder complaints, which are required under
current law. It would also end the currently legal practice whereby a right-holder can settle with and pardon an
infringer, regardless of where a PGR case stands in the penal process. Other industry groups and most IPR attorneys are
either ambivalent or opposed to the amendment, citing corruption as a good reason to leave the steering wheel in the
hands of the right-holders and/or their lawyers. Beyond concerns of official corruption, though not admitted out loud,
there is reason to believe that IPR lawyers would lose a bit of business in filing complaints were the amendment to
pass. Passage of ex officio will not be a panacea for Mexico's IPR enforcement woes, but Post continues to believe that
without more latitude to enforce Mexican IPR laws, we cannot expect PGR to significantly ramp up deterrence. In the
meantime, PGR and Customs are reaching out on a more systematic basis to right-holders to seek industry complaints when
they encounter infringing goods or suspicious shipments and to discourage pardons for defendants whose cases PGR is
already in the process of prosecuting.
4. (SBU) State/local cooperation: Mexico has earned strong marks in this area. This past year has seen the State of
Mexico and the Municipality of Toluca sign anti-piracy agreements under which they have pledged to work with the federal
government and right-holders in combating commercial infringement and re-capturing local markets for legal commerce. In
recent months both governments have been actively engaged in IPR protection activities, winning praise from a number of
industry representatives. The industry coalition that has been promoting these state and municipal-level agreements is
hoping to get several more states to jump on-board in 2008. Mexico City has not signed such an agreement, but has also
engaged in unprecedented cooperation this year with federal officials and right-holders in trying to rein in the city's
sprawling informal economy. The State of Jalisco, together with the Business Software Alliance (BSA) and IMPI, launched
a campaign this year called ""Cleaning House"" under which it has agreed to have an outside auditor check the computer
programs being used in state government offices and to work with BSA and its member companies to bring all state
government software users into compliance.
5. (SBU) WIPO Implementation: The new head of the National Copyright Institute (INDAUTOR), Manuel Guerra, told Post that
his agency would analyze current Mexican law to determine whether there are still gaps in implementation of the WIPO
Internet Treaties. Guerra would not offer a timeline for the completion of this analysis - it certainly will not be
completed in 2007 - but said INDAUTOR would push for legislative fixes if and when gaps were identified. 6. (U) Data
protection: Despite pressure from the Embassy, the European Union, the international R and D pharmaceutical industry,
and the Ministry of Economy (under which IMPI falls), the Health Ministry did not include data protection rules in
recent changes to its health inputs regulations, due in large part to pressure from domestic generic producers. The
Health Ministry response has been that, since Mexico considers international treaties to have the force of law, the
relevant NAFTA provisions (1711.5 and 1711.6) are self-executing in Mexico and thus data protection does not need to be
incorporated into new regulations unless the R and D industry can demonstrate cases in which its data was used MEXICO
00006229 003 OF 005 by third parties to obtain marketing approval. On December 14, the Health Ministry convened
representatives of the R and D industry, the national generic makers, the Ministry of Economy, and IMPI to discuss the
pros and cons of regulations on data protection. At the meeting, the representative of the R and D industry lobbied for
a clearer data protection regime, but failed to identify specific violations of data protection. Embassy awaits further
clarification from the R and D industry on whether there have been concrete cases of NAFTA non-compliance.
7. (U) Patent link: The pharmaceutical R and D industry reports that there have been no repeat occurrences of the
patent link failures that took place in 2006, giving Mexico a good grade on this issue.
International Profile ---------------------
8. (SBU) Mexico has been actively engaged in the work of the IPR Working Group under the Security and Prosperity
Partnership this year, hosting the WG's trilateral meeting in Cancun earlier this year. Mexico also agreed in 2007 to
participate in negotiating an Anti-Counterfeiting Trade Agreement for enhanced IPR enforcement. IMPI officials have also
stressed to Post that they have taken fire from both domestic critics and other developing countries for their
opposition in recent months to Brazilian government initiatives to undermine patent rights in various international
health fora, such as the Pan-American Health Organization.
9. (SBU) On the other hand, Mexico stayed on the sidelines in the imbroglio involving the tarnished Director General of
the World Intellectual Property Organization Kamil Idris. Post has heard rumors that Mexico was not averse to seeing
Idris resign, but did not want to appear to be ""piling on"" because Jorge Amigo, IMPI's longstanding Director General,
might want to throw his hat into the ring as a possible successor. Consequently, Mexico did not want to anger African
nations who took exception with the way Idris' indiscretions were handled.
Recent IPR Capacity Building Programs -------------------------------------
10. (U) Trademark Roundtable for Judges: The Mexican judiciary and IMPI, together with the Embassy and the Mexican bar
association, organized a November 8-9 roundtable in Mexico City on the likelihood of confusion in trademark law. Embassy
worked with USPTO to provide three U.S. speakers for the program: U.S. District Court judge Ronald Lew; USPTO Trademark
Trial and Appeal Board administrative judge David Mermelstein; and attorney-adviser Jackie Morales from USPTO's Office
of Enforcement. Over the course of five panel discussions, consensus emerged on the following critiques of the Mexican
system: 1) the criteria Mexican judges use to evaluate likelihood of confusion vary significantly and are insufficiently
developed; 2) it is administratively difficult for IMPI to cancel a registered mark that is similar to a pre-existing
one; 3) repeated recourse to constitutional appeals (amparos) as currently allowed under the law can delay final
resolution of administrative and civil trademark proceedings and imposition of penalties (which are too light in any
case) for years, thus fostering impunity; and therefore 4) there is little incentive for parties to settle, as the
alleged infringer has little to fear in either the short or medium term. Several of the Mexican speakers, including top
IMPI officials and circuit court judges, noted that strong IPR protection is essential for competing in today's global
economy and admitted that Mexico is falling short, inasmuch as Mexican trademark proceedings are lengthy, expensive, and
highly uncertain. They called for legislative amendments to increase penalties and limit repeat appeals MEXICO 00006229
004 OF 005 (amparos de rebote). Judge Mermelstein explained that in the United States the criteria for examining the
similarity of marks are detailed and consistent among USPTO examiners and administrative judges as well as federal
appeals judges. Judge Lew commented on how he had used the criteria Judge Mermelstein had described to decide specific
civil and criminal trademark cases, and emphasized the importance of making administrative and judicial rulings, as well
as their underpinning logic, accessible to the public in order to provide greater transparency and predictability. All
the Mexican participants (judges, IMPI officials, right-holders and lawyers) expressed great appreciation for the U.S.
speakers and said that they drew very helpful contrasts between the two countries' IPR regimes.
11. (U) Workshop on Cooperation in Protecting IPR: The Embassy and Consulate General Monterrey organized a three-day
event December 3-5 that brought together PGR, IMPI, tax officials, federal judges, economic and law enforcement
officials from Mexico's key northern states and cities, USG experts from DoJ and ICE, and right-holders. The workshop
aimed at fostering cooperation among federal IPR agencies, state and local governments, and affected industries.
Right-holders and academics expounded on the economic and safety risks that result from widespread IPR violations.
Mexican federal officials discussed their respective roles in enforcing IPR, and together with speakers from the BSA,
the State of Mexico, and Mexico City, reported on their recent collaborative initiatives described in para 4 above. A
week later one of the participants -- the Director of Economic and Financial Affairs for Ciudad Juarez -- announced that
the city government would seek to sign a municipal-level anti-piracy agreement with right-holders and the federal IPR
agencies in early 2008.
Upcoming IPR Capacity Building Programs ---------------------------------------
12. (U) USPTO Patent Course: In January 2008, USPTO will conduct a three-day capacity-building exercise with IMPI
counterparts on patent-related issues.
13. (U) Customs Training Course: The Embassy will hold a customs training course at the Port of Manzanillo February 5-8,
2008. This course will be patterned on the one we did at the Port of Veracruz in July 2007. In addition to speakers from
CBP, ICE, DOJ, and the World Customs Organization, we also plan to have PGR, IMPI, and Customs officials who attended
the Veracruz training give presentations. We hope to arrange a live-time tracking exercise of suspicious inbound
containers.
14. (U) Legislative Exchange Visit: The bicameral, bipartisan U.S. Congressional Anti-Piracy Caucus has invited eight
Mexican legislators who head IPR-related committees in both the upper and lower chambers of the National Congress to
visit Washington DC February 11-13 to meet with their U.S. legislator counterparts, USG experts, and right-holders to
discuss the importance of strong copyright protection and pending legislative issues in the U.S. and Mexico.
15. (U) International Judicial IPR Forum: The Mexican Judiciary, IMPI, and INDAUTOR are organizing a forum February
26-29 to which they are inviting judges, IPR officials, right-holders and academics from North America (including the
U.S.), Latin America, Europe, and WIPO. The focus will be on international comparative experiences in applying IPR law.
We hope to have U.S. federal judges as well as USPTO and DOJ representatives participate.
16. (U) DOJ-PGR Activities: DOJ and PGR plan to hold two additional exercises in the first half of 2008. The first will
be a technical training course on the use of computer/IT forensics in investigating cybercrimes, including Internet
piracy. The second will be a workshop to draft an IPR manual MEXICO 00006229 005 OF 005 for all PGR prosecutors,
especially those assigned to the state delegations (rough equivalents of U.S. district attorneys) with little or no
background in IPR crimes.
Finally Talking with Judges ---------------------------
17. (SBU) As described in paras 10, 11, and 14, we have finally succeeded in re-engaging with Mexican judges on IPR
matters. Those who participated in the Trademark Roundtable were all administrative judges, while the two judges who
spoke at the Monterrey Workshop were penal judges, both of whom had participated in the December 2006 seminar on IPR
enforcement organized by USPTO for Central American and Mexican judges in Miami. The nascent dialogue between the
judiciary and other stakeholders is welcome and important, but to date has illustrated the many shortcomings of Mexico's
IPR regime. Similar to the problems described in para 10 with regard to administrative trademark enforcement, the penal
judges in Monterrey (one of whom had previously been a PGR prosecutor) outlined what they considered to be one of the
major impediments to obtaining criminal convictions -- an overly cumbersome burden under the law to prove the plaintiff
has legal standing to represent an actual right-holder. On this issue alone the two judges confessed to having thrown
out large numbers of cases presented by PGR prosecutors. PGR prosecutors and private IPR attorneys in the audience
protested that the criteria used by different penal judges on the issue of standing vary widely, to which the two judges
responded that the system is simply designed that way. Since the conclusion of the workshop, Post has been consulting
with PGR's IPR unit about setting up a judicial exchange event (perhaps modeled on the Trademark Roundtable format)
between U.S. and Mexican IPR prosecutors and penal judges to more fully hash out varying legal interpretations of
standing requirements. The February judicial IPR forum in Cancun (which is being organized by the same pro-IPR judges
who put together the Trademark Roundtable) will be presided over by the President of Mexico's Supreme Court and might
have Mexico's Secretary of Economy and Attorney General in attendance. This high-level event should send a strong signal
to the entire Mexican judiciary of the importance of IPR. We hope it will also highlight major problems and generate
political momentum to address them. Post will conitnue its efforts to engage both administrative and penal judges in
dialogue with enforcement agencies and right-holders. 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 / BASSETT