US embassy cable - 03ROME834

UNCLAS SECTION 01 OF 02 ROME 000834 
 
SIPDIS 
 
DEPT FOR EB/IPC WILSON, 
DEPT PLS PASS TO USTR ALVAREZ, DOC LASHLEY, USPTO URBAN, 
LOC TEPP 
USDOC FOR 4220/MAC/EUR/SED/DDEFALCO 
 
E.O. 12958: N/A 
TAGS: KIPR, ECON, ETRD, ECON, ETRD, IT, ITKIPR 
SUBJECT: MISSION ITALY INPUT FOR 2003 SPECIAL 301 REVIEW 
                       UNCLASSIFIED 
 
PAGE 02        ROME  00834  01 OF 02  280639Z 
 
REF: A. SECSTATE 43684 
     B. 02 ROME 844 
 
1.  SUMMARY:  MISSION ITALY RECOMMENDS THAT ITALY REMAIN ON 
THE 301 WATCH LIST. OVERALL FREQUENCY OF COPYRIGHT PIRACY HAS 
LEVELED OFF OR FALLEN SLIGHTLY SINCE 2000, WHEN ITALY'S NEW 
COPYRIGHT LAW WAS ENACTED.  NONETHELESS, TOTAL LOSSES DUE TO 
PIRACY ARE MOUNTING AND ITALY'S PIRACY AND COUNTERFEITING 
RATES REMAIN AMONG THE HIGHEST IN WESTERN EUROPE.  LAW 
ENFORCEMENT IN SOME CITIES IS AGGRESSIVE. OFTEN, HOWEVER, 
THEY ARE OUTPACED BY ORGANIZED CRIME NETWORKS THAT USE NEW 
COPYING AND COUNTERFEITING TECHNOLOGIES AND DISTRIBUTION 
MODALITIES TO EVADE THE LAW. TENACIOUS PROBLEMS REMAIN 
REGARDING THE JUDICIARY, CERTAIN MUNICIPAL LEADERS, AND THE 
SIAE (ITALY'S COPYRIGHT ROYALTY COLLECTION AGENCY). 
END SUMMARY. 
 
2.  THE IPR SITUATION IN ITALY IMPROVED ONLY SLIGHTLY IN 
2002, WITH PIRACY LEVELS REMAINING THE SAME IN MOST SECTORS 
ACCORDING TO THE INTERNATIONAL INTELLECTUAL PROPERTY ALLIANCE 
(IIPA).  THE ENACTMENT OF THE 2000 COPYRIGHT LAW IN SEPTEMBER 
2001 RAISED CRIMINAL PENALTIES AND LED TO INCREASED AWARENESS 
AMONG LAW ENFORCEMENT OFFICIALS AND THE PUBLIC THAT PIRACY IS 
A CRIME.  2002 HAS BEEN AMONG THE BEST YEARS FOR PIRACY 
ENFORCEMENT IN ITALY.  FIFTEEN HUNDRED PEOPLE WERE ARRESTED 
AND 2 MILLION CDS WERE SEIZED.  HOWEVER, MOST OF THOSE 
ARRESTED WERE IMMEDIATELY RELEASED.  ALMOST ALL OF THOSE 
SENTENCED RECEIVED NO MORE THAN SIX MONTHS AND SERVED NO TIME 
IN JAIL.  OF MANY RECENT RAIDS, ONE IN NOVEMBER 2002 SHUT 
DOWN AN INTERNET PIRACY RING WITH REVENUES OF 60 MILLION USD 
                       UNCLASSIFIED 
 
PAGE 03        ROME  00834  01 OF 02  280639Z 
PER YEAR.  THE RING WAS PIRATING A LARGE VARIETY OF ITEMS 
SUCH AS CAD SOFTWARE WITH A RETAIL VALUE OF 20,000 USD PER 
TITLE.  MORE ARRESTS HAVE STEMMED CERTAIN FORMS OF PIRACY, 
PARTICULARLY IN CITIES WHERE THE MAYORS AND PREFECTS SUPPORT 
POLICE EFFORTS.  BUT PIRATES ARE ALSO TAKING ADVANTAGE OF 
NEW, MORE DISPERSED DUPLICATION TECHNOLOGIES AND DISTRIBUTION 
NETWORKS WHICH ARE LESS VULNERABLE TO POLICE SEIZURES. 
 
3.  ENFORCEMENT VARIES FROM CITY TO CITY, DEPENDING UPON 
MUNICIPAL OFFICIALS.  FOR EXAMPLE, THE MAYOR AND PREFECT IN 
ROME HAVE BEEN UNWILLING TO ALLOW POLICE TO ACT AGAINST 
STREET VENDORS OF PIRATED MATERIAL.  AS A RESULT, SUCH STREET 
SALES HAVE CONTINUED UNIMPEDED.  OFFICIALS IN CERTAIN CITIES 
HAVE ATTEMPTED TO STOP LOCAL CARABINIERI FROM ACTING.  ON THE 
OTHER HAND, TRIESTE CITY OFFICIALS HAVE BEEN VERY SUPPORTIVE. 
 AS A RESULT, IN THAT CITY, STREET VENDORS OF PIRATED 
MATERIAL HAVE ALMOST DISAPPEARED AND PIRACY RATES ARE 
EXTREMELY LOW. 
 
4.   PROSECUTORS AND JUDGES VARY IN QUALITY AS WELL.  MOST 
PROSECUTORS ARE UNWILLING TO BRING CRIMINAL CHARGES AGAINST 
STREET VENDORS, FACTORY WORKERS OR SHOP WORKERS.  JUDGES ARE 
USUALLY UNWILLING TO CONVICT, ARGUING THAT "MINOR" ECONOMIC 
CRIMES DO NOT JUSTIFY CRIMINAL TREATMENT. 
 
USE / PROCUREMENT OF GOVERNMENT SOFTWARE 
---------------------------------------- 
 
5.  WE HAVE RECEIVED NO COMPLAINTS/INFORMATION REGARDING 
GOVERNMENT USE OF PIRATED SOFTWARE. 
 
                       UNCLASSIFIED 
 
PAGE 04        ROME  00834  01 OF 02  280639Z 
 
LEGISLATION 
----------- 
 
6.  ITALY AMENDED THE IMPLEMENTING REGULATIONS TO THE 2000 
COPYRIGHT LAW IN EARLY 2003 TO PERMIT ROUTINE EXEMPTIONS FROM 
THE SIAE STICKER FOR BUSINESS SOFTWARE.  THE ITALIAN 
PARLIAMENT APPROVED THE 2001 EU DIRECTIVES OMNIBUS BILL, 
WHICH DELEGATED AUTHORITY TO THE GOI TO INTEGRATE EU RULES 
GOVERNING COPYRIGHT INTO THE ITALIAN LEGAL CODE. IN 2002 THE 
ITALIAN GOVERNMENT PASSED LEGISLATION, INITIATED BY THE 
MINISTRY OF INDUSTRY, WHICH CALLS FOR THE CREATION OF A DOZEN 
NEW SPECIALIZED ADMINISTRATIVE AND CIVIL IPR COURT SECTIONS, 
ALLOCATES FIVE MILLION EURO TO THE MODERNIZATION OF THE 
ITALIAN PATENT AND TRADEMARK OFFICE, AND CLEARS THE WAY FOR 
THE RATIONALIZATION OF ITALY'S PATENT AND TRADEMARK LAW.  THE 
COMING YEAR WILL TELL WHETHER THESE INITIATIVES WILL BE 
EFFECTIVELY IMPLEMENTED. 
 
SIAE: WHERE DO THE COLLECTIONS GO? 
---------------------------------- 
 
7.  WE REMAIN CONCERNED BY THE INEFFECTIVE ANTI-PIRACY 
EFFORTS OF SIAE, THE COPYRIGHT ROYALTY COLLECTION ENTITY. 
IPR INDUSTRIES ARE WORKING INTENSIVELY -- WITH ACTIVE SUPPORT 
FROM EMBASSY ROME AND CONSULATES MILAN, NAPLES AND FLORENCE 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ7210 
 
PAGE 01        ROME  00834  02 OF 02  280639Z 
ACTION EB-00 
 
INFO  LOG-00   AGRE-00  AID-00   AMAD-00  CEA-01   CIAE-00  COME-00 
      CTME-00  DINT-00  DODE-00  ITCE-00  DOTE-00  SRPP-00  EXME-00 
      EUR-00   E-00     FAAE-00  UTED-00  VC-00    FRB-00   H-01 
      TEDE-00  INR-00   ITC-01   LAB-01   LOC-01   L-00     VCE-00 
      AC-01    NSAE-00  NSCE-00  OES-00   OMB-01   OPIC-01  PA-00 
      PRS-00   ACE-00   SP-00    SSO-00   SS-00    STR-00   TEST-00 
      TRSE-00  USIE-00  DRL-01   G-00     SAS-00     /009W 
                  ------------------3CCCEC  280639Z /38 
O 280545Z FEB 03 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC IMMEDIATE 8502 
INFO EU MEMBER STATES COLLECTIVE 
AMCONSUL FLORENCE 
AMCONSUL MILAN 
AMCONSUL NAPLES 
 
UNCLAS SECTION 02 OF 02 ROME 000834 
 
SIPDIS 
 
DEPT FOR EB/IPC WILSON, 
DEPT PLS PASS TO USTR ALVAREZ, DOC LASHLEY, USPTO URBAN, 
LOC TEPP 
USDOC FOR 4220/MAC/EUR/SED/DDEFALCO 
 
E.O. 12958: N/A 
TAGS: KIPR, ECON, ETRD, IT 
SUBJECT: MISSION ITALY INPUT FOR 2003 SPECIAL 301 REVIEW 
 
                       UNCLASSIFIED 
 
PAGE 02        ROME  00834  02 OF 02  280639Z 
-- TO IMPROVE ENFORCEMENT AND EDUCATION.  SO FAR, SIAE HAS 
BEEN MORE AN OBSTACLE THAN AN ALLY. 
 
8.  IN ACCORD WITH ARTICLE 11 OF THE 2000 COPYRIGHT LAW, SIAE 
IS RESPONSIBLE FOR ANTI-PIRACY EFFORTS IN ITALY.  BECAUSE 
SIAE RECEIVES ALL REVENUES FROM ITS STICKER, WHICH IS 
REQUIRED FOR COPYRIGHTED MATERIALS UNDER THE LAW (WITH THE 
EXCEPTION OF BUSINESS SOFTWARE), IT HAS ADEQUATE RESOURCES 
FOR THESE EFFORTS.  HOWEVER, SIAE APPEARS TO DIRECT ITS 
EFFORTS SOLELY AT INSPECTING LEGITIMATE COPYRIGHTED GOODS TO 
ENSURE THAT THESE CARRY A SIAE STICKER. SIAE HAS DONE 
NOTHING, TO OUR KNOWLEDGE, TO ACT AGAINST ILLEGALLY PRODUCED 
COPYRIGHTED GOODS. 
 
9.  INDUSTRY AND EMBASSY EFFORTS AT IPR EDUCATION AND 
ENFORCEMENT, WHILE EXTENSIVE, ARE NOT ENOUGH.  OUR COMBINED 
EFFORTS HAVE IMPROVED THE SITUATION, PARTICULARLY WITH LAW 
ENFORCEMENT AND, IN SOME CASES, WITH THE JUDICIARY.  HOWEVER, 
SIAE HAS THE NATIONAL RESPONSIBILITY AND THE RESOURCES.  WE 
HAVE PRESSED SIAE TO INVOLVE ITSELF IN EDUCATION AND 
ENFORCEMENT EFFORTS, BUT HAVE SEEN NO ACTION YET. 
 
WIPO TREATIES 
------------- 
 
10.  ITALY HAS NOT YET RATIFIED THE 1996 WIPO COPYRIGHT 
TREATY NOR THE WIPO PERFORMANCE AND PHONOGRAMS TREATY. 
 
OPTICAL MEDIA PIRACY (CDS, VCDS, DVDS) 
-------------------------------------- 
 
                       UNCLASSIFIED 
 
PAGE 03        ROME  00834  02 OF 02  280639Z 
11.  OVER THE PAST YEAR, THE LEVEL OF PIRACY HAS REMAINED 
ALMOST UNCHANGED, BUT THE METHOD OF PIRACY HAS CHANGED FROM 
LARGER VENUES TO SMALL-SCALE OPERATIONS USING COMMERCIAL CD-R 
BURNERS. PIRACY ACCOUNTS FOR AN ESTIMATED 23 PERCENT OF THE 
OVERALL MARKET IN ITALY, AND 50 PERCENT IN THE SOUTH OF 
ITALY.  BURNED DVDS ARE QUICKLY REPLACING PIRATED VIDEOS. THE 
ESTIMATED LOSS TO THE U.S. MOTION PICTURE INDUSTRY DUE TO 
AUDIOVISUAL PIRACY IN ITALY IS ESTIMATED TO BE 140 MILLION 
USD.  DVD PIRACY IS EXPECTED TO GROW IN 2003, REQUIRING 
GREATER VIGILANCE BY THE POLICE AND DETERRENT SENTENCES BY 
THE COURTS.  ILLEGAL IMMIGRANTS ARE OFTEN EMPLOYED TO SELL 
THE PIRATED GOODS ON STREET CORNERS THROUGHOUT ITALY.  THERE 
HAS BEEN INCREASED MEDIA COVERAGE OF THE ISSUE, AND JUDGES 
ARE BEGINNING TO HAND DOWN SERIOUS SENTENCES FOR PIRACY. 
 
COMMENT 
------- 
 
12.  THE IIPA RECOMMENDS THAT ITALY REMAIN ON THE WATCH LIST. 
 IPR INDUSTRY REPRESENTATIVES HERE SHARE THAT ASSESSMENT.  WE 
AGREE.  AS ITALY BEGINS TO IMPLEMENT ITS TOUGH COPYRIGHT LAW, 
THE SITUATION IS IMPROVING, BUT MUCH REMAINS TO BE DONE.  WE 
NEED TO KEEP OUR MARKER DOWN AND VISIBLE.  END COMMENT. 
SEMBLER 
 
                       UNCLASSIFIED 
 
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 2003ROME00834 - Classification: UNCLASSIFIED