US embassy cable - 05ASUNCION972

UNCLAS SECTION 01 OF 03 ASUNCION 000972 
 
SIPDIS 
 
STATE FOR WHA/BSC, WHA/EPSC, EB/TPP/IPE 
STATE PASS TO USTR FOR LYANG 
USAID FOR AA/LAC ADOLFO FRANCO 
TREASURY FOR OSIA MAUREEN WAFER 
COMMERCE ITA SARAH COOK 
NSC FOR MIKE DEMPSEY AND SUE CRONIN 
SOUTHCOM FOR POLAD 
US SOUTHERN COMMAND MIAMI, FLORIDA 
 
E.O. 12958: N/A 
TAGS: ECON, KIPR, PREL, PA 
SUBJECT: IPR INVESTIGATIVE UNIT'S ACTIVITIES IN THE FIRST 
HALF OF 2005 
 
Ref: 05 Asuncion 595 
 
1.  Summary.  In its first 6 months of 2005, the Specialized 
Technical Unit (UTE) of the Ministry of Industry and 
Commerce (MIC), an IPR enforcement unit assisted with INL 
funds, conducted 23 operations in Asuncion, Ciudad del Este, 
and other parts of the interior. In all, over 275,000 DVDs, 
CDs, and video games, over 23,000 printer cartridges, and 
over 30,000 cell phone products were seized.  The operations 
were not limited to these specific products; falsified 
products ranging from Coca-Cola bottles to sporting 
equipment were also found.   With only two full-time members 
of UTE during this period, the results demonstrate the 
dedication and effectiveness of the unit's two founding 
members, as well as the GOP's continued political support 
for firm action against IPR violators.  Post expects the 
unit to grow to at least ten vetted members by September. 
End Summary. 
 
2.  This cable summarizes all operations conducted in the 
past six months by the Specialized Technical Unit (UTE) of 
the Ministry of Industry and Commerce (MIC) that we are 
assisting with an INL grant.  They are presented in 
chronological order starting with late December, 2004 and 
the details were provided by the UTE.  The locations are 
described as Asuncion, Ciudad del Este, and Interior 
(representing the rest of the country).  UTE had two members 
for this entire period.  New candidates are in the process 
of taking polygraphs, and we expect the unit to grow to at 
least ten members by September, when the unit's new office 
space should be completed.  Beginning in the first quarter 
of FY2006, we expect to see a significant increase in 
enforcement actions. 
 
Descriptions of Individual Operations 
------------------------------------- 
 
3.  Most of the leads for the raids described below came 
from the private sector, either the regional arm of the 
International Federation of the Phonographic Industry 
(IFPI), or from private trademark protection companies such 
as US-based McCabe and Associates. 
 
4.  Operation Carai Pyjare 1: After a nighttime raid in 
Asuncion, the MIC determined that the premises were 
dedicated exclusively to the mass production and 
commercialization of phonographic materials.  These products 
would then be given to traveling salesmen and thus 
distributed to the main markets in various towns.  In all, 
10,000 DVDs and CDs were confiscated. 
 
5.  Operation Truco: The 3rd floor of an apartment building, 
in the Interior, was being used to mass-produce phonographic 
materials.  The attorney general's office took control of 
the goods to aid with the prosecution of the case.  Around 
36,000 DVDs and CDs were seized along with a computer used 
to download and produce pirated material. 
 
6.  Operation Bat: The company in question, operating in the 
Interior, was suspected of falsifying British American 
Tobacco products.  Despite the presence of industrial 
machinery, no convincing evidence was found supporting this 
claim and the machinery did not appear to have been used 
recently.  The MIC was acting on a lawsuit brought against 
the company by lawyers of British American Tobacco. 
 
7.  Operation Turco: A container, valued at around 
US$800,000, full of counterfeit Nintendo games, Nokia 
products, and Sony PlayStation games, was seized in 
Asuncion.  The goods were of Chinese origin. 
 
8.  Operation Carai Pyjare 2: The operation was carried out 
in Asuncion.  It was deemed that the premises were dedicated 
exclusively to the mass production and commercialization of 
phonographic materials.  20,000 DVDs and CDs, along with 
200,000 DVD and CD covers were seized. All products were 
then transferred to the Attorney General's office. 
 
9.  Operation Carai Pyjare 3: two different locations were 
raided in Asuncion.  Both were found to be dedicated solely 
to phonographic piracy. 10,350 DVDs and CDs were 
confiscated, along with 18,000 DVD and CD covers and 2 
computers used to download and produce pirated materials. 
 
10.  Operation Pelicano 1: five different locations in two 
shopping malls were investigated in Ciudad del Este with the 
help of the Economic Crimes Unit (ECU) of the Public 
Ministry.  None of them had a single valid bill of sales and 
all carried pirated goods.  Before the team entered, the 
owners would leave employees in charge of the store, who 
were then instructed to cooperate but not reveal anything 
about the business.  Local policemen and documents recovered 
from the stores indicated Lebanese ownership.  In all, over 
22,000 DVDs, CDs, and Sony PlayStation video games were 
seized. 
 
11.  Operation Monte: A large container containing 1,225 
boxes of miscellaneous electronic goods was stopped by 
Customs in the Interior.  Valued at US$1 million, all goods 
were of Chinese origin. 
 
12.  Operation Mate: A container of falsified Nokia and 
Motorola cell phone covers was seized by customs in the 
Interior.  Valued at US$1 million, the products were of 
Chinese origin. 
 
13.  Operation Rodeo: This operation in the Interior 
included 3 houses found to be producing pirated phonographic 
material, four stores near the bus station selling pirated 
goods, and a photocopy shop that made the falsified covers. 
At the time of the report a full inventory of goods seized 
was not available.  UTE did notice that the bus station 
management had leased out the areas to the offending stores 
and is looking into the connection. 
 
14.  Operation Semana Santa: (reftel) 3 containers of CDs 
and DVDs from Uruguay were investigated in Asuncion and it 
was concluded that the importer had claimed several hundred 
thousand DVDs as CDs. Since the tax on CDs is less, the 
importer evaded taxes totaling $341,000.  Two customs 
inspectors and three MIC inspectors lied about their 
findings.  Their dismissal and criminal charges are still 
being pursued by the MIC. 
 
15.  Operation Otoal: The operation took place with the 
help of a local Special Operations Unit.  The store 
contained 9,900 pirated cell phone covers, batteries, and 
keyboards, all of which were confiscated by the Attorney 
General's office. 
 
16.  Operation Bono: In addition to cell phone batteries and 
covers, UTE found several other generic products at the 
location in the Interior.  All goods seized were valued at 
$121,250. 
 
 
17.  Operation Villetana: The seized container was turned 
over to authorities in the Interior after the importer 
claimed, and proved, that the contents were not those he had 
originally requested.  There was evidence that only 503 of 
the original 791 boxes of diverse software applications were 
in the container at the time of investigation. 
 
18.  Operation Juez: In the first part of the operation, a 
store in Ciudad del Este selling falsified HP and Epson 
toner and ink cartridges was raided, resulting in the 
confiscation of 198 ink cartridges.  The second part of the 
operation, the raid of an alleged sixth floor storeroom, was 
unsuccessful because the judge initially failed to authorize 
entrance into the sixth floor of the building. When 
authorization was finally granted, nothing was found in the 
room. 
 
19.  Operation Lustro: The goal of this operation, in the 
Interior, was to identify a distributor of falsified HP and 
Epson toner and ink cartridges.  Those were not found, but 
hundreds of boxes of pirated sports equipment and toys were 
recovered from the container initially investigated. 
 
20.  Operation Pelicano 2: This large operation consisted of 
raids in 6 different commercial locations, each producing 
and selling pirated phonographic material in Ciudad del 
Este.  One of the owners was identified as a Peruvian 
national with connections to Lebanon.  Many of those 
involved evidently were of Arab origin and are now 
candidates to be deported from the country by the Department 
of Immigration.  All of the stores failed to produce legal 
bills of sale for any of their products.  Of note, several 
of the stores had been raided in the past, after which they 
would restock with new pirated products and continue doing 
business. 
 
21.  Operation Pille 1: Ministry of Industry and Commerce 
(MIC) inspectors conducted a verification of businesses 
registered with the MIC.  Of the 27 Import/Export businesses 
registered in Ciudad del Este and included in this round of 
inspections, 15 of them were not located in the address on 
file. 
 
22.  Operation Coca-Cola: The objective of this raid was to 
identify a bottling operation falsely producing Coca Cola 
products in Asuncion.  Approximately 1000 bottles were found 
containing the Coca-Cola brand name as well as a large 
number of bottle caps with the same logo. 
 
23.  Operation Carai Pyjare 4: UTE investigated 16 Asuncion 
businesses suspected of producing and commercializing 
pirated phonographic material.  Over 117,000 CDs were 
confiscated during the operation.  Three people were 
identified as supposed leaders of the pirating operations 
and the attorney general's office is pursuing formal charges 
against them. 
 
24.  Operation Funebre: This raid took place at a funeral 
home in Asuncion where space was being rented out to 
producers of pirated phonographic materials.  In addition to 
around 40,000 CDs containing domestic and international 
music, investigators also found fake domestic currency and 
an automatic pistol.  The operation was carried out in 
cooperation with the ECU. 
 
25.  Operation Kaaguy Rory: two out of the five Ciudad del 
Este houses investigated showed proof of falsification of 
Epson ink cartridges with a total value of around $300,000. 
One man was arrested and all products were confiscated by 
the Attorney General's office. 
 
26.  Operation Duve Libra: The original goal of the mission 
was to find evidence of Sony PlayStation game duplication 
and commercialization in a Ciudad del Este business. 
Although the evidence against the company was suspicious, 
nothing concrete was found to implicate it in illegal 
piracy.  The company was, however, found to be undervaluing 
its imports and thus evading import taxes. A subsequent fine 
was issued for tax evasion. 
 
KEANE