US embassy cable - 05MADRID3784

UNCLAS SECTION 01 OF 03 MADRID 003784 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12950: N/A 
TAGS: ETRD, KIPR, SP 
SUBJECT:  INTELLECTUAL PROPERTY RIGHTS (IPR) ROUNDTABLE IN 
MADRID 
 
 
1.  (U) Summary:  U.S. Commerce Deputy Assistant Secretary 
Eric Stewart and Spain's Under Secretary of Culture 
presided over a day-long U.S.-Spain IPR Roundtable in 
Madrid on September 28. This event stemmed from former 
Commerce Assistant Secretary William Lash's February 27 
Roundtable proposal to his Spanish interlocutors (reftel). 
Two issues emerged as key:  the alleged lack of 
implementation of the GOS's IPR anti-piracy plan, and a 
provision in Spain's draft implementing legislation to the 
EU's copyright directive to allow three "private copies" of 
CDs. The head of the local association representing video 
store owners also criticized GOS anti-piracy actions 
aggressively. The GOS actually invited USG comments on the 
anti-piracy plan, which gives us a good opening for follow- 
up. There was also positive press coverage. The Roundtable 
intentionally focused on copyright because this is where 
USG commercial interests are at stake; the U.S. currently 
has few patent and/or trademark related problems in Spain. 
End Summary. 
 
 
 
------------ 
PARTICIPANTS 
------------ 
 
2.  (U) DAS Stewart was accompanied by Deputy Office 
Director Dascher.  Other principal USG speakers included 
Department of Justice Senior Counsel Eric Klumb and United 
States Patent and Trademark Attorney-Advisors Michael 
Shapiro and Michael Smith. SCO and Trade Policy Officer 
also participated. Culture Ministry Under Secretary 
Hidalgo, Technical Secretary Concepcion Becerra, 
Subdirector Colmenares and Area Director Raquel Orts 
participated.  The Ministry of Industry, Tourism and Trade 
sent one representative for a fairly technical segment. 
Local trade associations sent representatives. MPA's 
Brussels-based Europe anti-piracy director attended, as 
well as a London-based Time-Warner executive. 
 
------- 
AGENDA 
------- 
 
3.  (U) The Roundtable agenda included the following 
elements. Opening Statements Presentation on Spanish anti- 
piracy plan Presentation on U.S. domestic anti-piracy 
strategy International Aspects of IPR Cooperation GOS- 
Industry Working Group on Internet IPR Issues Intellectual 
Piracy in the Age of the Internet, and the Challenge of 
Reconciling Technology and Content Provider Interests. 
 
Closing Statements - Press Conference.  There were two hours 
of time for comments/questions from attendees.  In addition, 
DAS Stewart hosted a lunch for Under Secretary Hidalgo and 
DCM Manzanares hosted a reception for all the attendees. 
 
----------------------------------------- 
SPAIN'S ANTI-PIRACY PLAN IN THE SPOTLIGHT 
----------------------------------------- 
 
 
4.  (SBU) As expected, Spain's anti-piracy plan was the 
center of the attendees' attention.  All of the attendees 
expressed support for the plan but felt that not enough was 
being done on implementation.  The Federacion para la 
Proteccion de la Propiedad Intelectual de la Obra Audiovisual 
(FAP) representative, Jose Manuel Tourne, Promusicae's D. 
Antonio Guisola, and the head of Union Videografica Espanola 
(UVE), Jordi Molist, were especially critical. (Note: 
Promusicae is associated with the International Federation of 
Phonographic Industries and FAP is associated with the Motion 
Picture Association of America (MPAA).  The Business Software 
Alliance (BSA) did not send a representative, although they 
were invited).  Essentially, they said that not enough 
resources were being devoted to the area, and that nobody had 
been appointed to head the plan yet.  The FAP representative 
complained that the Ministry of Culture had reneged on a 
commitment to allow FAP to use the Ministry logo on an anti- 
piracy campaign.  He also called for criminalizing the 
consumption of pirated goods.  All of the attendees had good 
words for the police but complained about judges and 
prosecutors - the plan envisages a Ministry of Justice 
circular to prosecutors instructing them to take IPR crimes 
more seriously, but this circular has still not been issued. 
The UVE representative was particularly scathing, saying that 
many of UVE's member firms were going out of business due to 
piracy.  The Ministry of Culture left the career official, 
Pedro Colmenares, take the brunt of the criticism. 
Colmenares asked for patience and noted that prior to April 8 
this year no government had crafted anything similar to the 
anti-piracy plan.  He also suggested that market reasons were 
negatively affecting video and DVD rental stores, as well as 
piracy.  (Note: The MPAA representative privately agreed that 
business reasons, as well as piracy, was affecting DVD/video 
rental stores.  He said the trend now was for consumers to 
buy the product or get it from other distribution channels.) 
With respect to criminalizing pirated good consumption, 
Colmenares said that France and Italy did indeed have such 
legislation on the books, but that those countries did not 
actually enforce it. 
 
------------------------------------ 
PRIVATE COPIES ALSO A STICKING POINT 
----------------------------------- 
 
5.  (SBU) Spain is currently crafting implementing 
legislation for the EU Copyright Directive.  The current 
draft contains a provision allowing for three private copies 
of CDs. Trade Policy Officer's understanding is that this 
would, in effect, make Technological Protection Measures 
(TPMs) for movie and music CDs illegal if they prevented 
consumers from making private copies.  The FAP representative 
was particularly critical of this provision.  He also noted 
that the movie industry was different from the music 
industry.  He contended that there might be a legitimate 
reason for consumers to make copies of music CDs.  However, 
this was not the case for movies because almost every copy of 
a movie CD displaced a sale that would otherwise have been 
made.  He wants a provision in the law stating that rights- 
holders have the right to determine whether private copies 
are permissible, and that copies would only be allowed under 
the TRIPS agreement's "three step test" (i.e. that exceptions 
shall be limited to certain special cases which do not 
conflict with the normal exploitation of the work and do not 
unreasonably prejudice the legitimate interests of the rights 
holder).  The GOS concedes that there is no "right" to make 
private copies.  However, the Spaniards claim that the draft 
legislation is sufficiently flexible to allow for more 
restrictions if the private copy exception does indeed prove 
to be ruinous to copyright-based industries in Spain.  The 
FAP representative said his organization would like to see 
this organized more or less along the lines of Italy's draft 
which would allow for only one copy. (Comment: This is 
clearly a huge issue for some U.S. companies. The Time Warner 
representative attended the Roundtable mostly to follow this 
matter.  She said that a similar provision was being proposed 
in France, but that because the French movie industry finally 
saw the dangers associated with uncontrolled private copying, 
the French government might adopt legislation less 
potentially prejudicial.) 
 
------------------------------------------- 
DAS STEWART - UNDER SECRETARY HIDALGO LUNCH 
------------------------------------------- 
 
6.  (SBU) DAS Stewart hosted a lunch for Under Secretary 
Hidalgo and his staff.  Stewart mentioned the Special 301 
process and noted that pharmaceutical problems related to 
intellectual property, as well as copyright issues, influence 
Special 301 determinations.  (Note: In Spain, other 
Ministries determine pharmaceutical market access issues. 
The government's cost containment measures are, a concern to 
the R&D-based pharmaceutical industry in Spain, including for 
American firms.  In another meeting described in septel, U.S. 
pharmaceutical industry representatives told Stewart that an 
agreement between the Ministry of Health and industry on this 
topic has not been reached, which contradicted press reports 
saying that a deal had been reached.  Industry 
representatives also raised concerns regarding patent 
protection for goods covered by Spain's older process patent 
system.  Industry reps believe that Spain may not be 
compliant with its TRIPS commitments, in this respect. 
Technical Secretary Concepcion Becerra noted that industry 
was never pleased with the government. She mentioned that the 
government had had to beat back attempts by the local 
industry to get the government to impose protectionist 
measures (screen quotas, for instance). Later, during the 
DCM's reception, Under Secretary Hidalgo also said that this 
was a problem. Becerra added that she would welcome USG 
comments on the government's anti-piracy plan. ( Comment: 
This gives us an opening to continue the dialogue with the 
GOS.) 
 
-------------- 
PRESS COVERAGE 
------------ 
7.  (U) DAS Stewart and Under Secretary Hidalgo conducted a 
press conference upon the conclusion of the Roundtable. The 
daily, El Mundo, and press agencies EuropaPress and EFE 
carried stories on the event on September 29. The stories 
were factual and basically recounted statements made by DAS 
Stewart and Under Secretary Hidalgo. 
 
-    ----------------------- 
Follow-up and Suggestion 
----------------------- 
 
8.  (U) Trade Policy officer will draft a letter for DAS 
Stewart's signature commenting on the anti-piracy plan.  Key 
elements in the draft will include praise for the 
comprehensive nature of the plan; a plea for arriving at an 
agreement with industry re:  what to do about private 
copies; appointing an accountable head of the plan 
expeditiously; issuing a Ministry of Justice circular 
emphasizing the importance of imposing deterrent-level 
sentences on IPR violators; publicity campaigns developed in 
consultation with stakeholders etc. 
 
9.  (U) One thing the Commerce Department might want to 
consider is to invite Spain to a U.S.-Spain IPR conference 
in the United States next year. This could be an important 
tool in keeping momentum on IPR issues going, and in making 
credible the notion that the U.S. and Spain are, in fact, 
partners in combating IPR piracy. 
------- 
COMMENT 
------- 
 
10.  (SBU) This was, at times, a confrontational event with 
three industry representatives criticizing the GOS severely. 
In the end though, the GOS and industry representatives 
conducted animated and substantive conversations on the 
margins of the Roundtable and during the reception. Our sense 
is that this event may serve to galvanize the GOS into 
stronger action in safeguarding copyrights, and was thus a 
useful initiative in serving our IPR policy objectives in 
Spain. 
MANZANARES