This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 BRASILIA 000445 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR WHA/BSC AND EB/IPC WILSON 
COMMERCE FOR KSCHLEGELMILCH 
PLS PASS USTR BPECK, USPTO JURBAN/DLASHLEY-JOHNSON, 
AND LOC STEPP 
 
E.O. 12958: N/A 
TAGS: KIPR ECON ETRD KCRM PGOV BR IPR
SUBJECT:  BRAZIL - 2004 SPECIAL 301 RESPONSE 
 
Refs:  A) State 29549 B) Sao Paulo 276  C)  Rio de Janeiro 128 
D) Brasilia 313 E) Brasilia 222 F) Brasilia 202 G) 2003 Sao 
Paulo 2199  H) 2003 Brasilia 3868 I) 2003 Brasilia 3138 J) 2003 
Brasilia 3122 K) 2003 Brasilia 2943 L) 2003 Sao Paulo 1186 
 
SENSITIVE BUT UNCLASSIFIED, PROTECT ACCORDINGLY. 
 
¶1. (SBU) Summary:  Post recommends that Brazil remain on the 
Priority Watch List for the 2004 Special 301 Review.  Despite 
several positive developments, including tougher penalties for 
copyright infractions and increased (but isolated) police 
action against copyright theft, the Lula administration has not 
yet developed a comprehensive national strategy for addressing 
the country's poor IPR enforcement, nor has it reduced the 
backlog of patent and trademark applications.  Several signs 
suggest that substantial progress is in the offing, but to date 
there has been little concrete improvement in Brazil's 
enforcement record.  Widespread recognition of the harm caused 
by IPR abuse to Brazilian artists, tax revenues, and 
technological progress/industrial development has increased, 
due in part to successful public awareness campaigns launched 
by both the private and public sectors.  The federal government 
has incorporated intellectual property regime improvements in 
its 2004-2007 Pluriannual Plan, and the formation of a 
Commission of Parliamentary Inquiry (CPI) and a permanent 
Caucus (Frente Parlamentar) on the issue of piracy and tax 
evasion in Brazil's Congress has generated much positive 
momentum. Leaving unaltered Brazil's Special 301 status while 
recognizing the progress it has made would send the clear 
signal that its continued poor IPR enforcement is a significant 
bilateral concern, but not damage the efforts of those within 
Brazil who seek tangible improvement.  End summary. 
 
Copyright Piracy - Positive Strides But Piracy Still Rampant 
 
¶2. (SBU) Several of the industry Special 301 submissions 
welcome the increased interest in piracy and tax evasion 
generated in the Brazilian Congress in 2003.  The Chamber of 
Deputies' Piracy CPI and the spin-off permanent Caucus may well 
represent the best hope for national-level action to improve 
copyright enforcement.  As IIPA's submission suggests, the 
CPI's final report due in June will include several private 
sector generated action proposals for the federal government 
that should substantially remedy the lack of concrete 
coordinated action against piracy.  While the issue gains 
prominence, the crime continues unabated.  Special piracy task 
forces or police units in some Brazilian states and 
municipalities have produced enforcement successes and worked 
cooperatively with the CPI to make some high-profile arrests 
(refs E, G, H, I, K).  These encouraging but isolated foci of 
activity are not coordinated and exist despite the 
Administration's failure to formulate a national strategy. 
 
¶3. (SBU) The administration's Inter-ministerial Committee to 
Fight Piracy (IMC) met 11 times during its first year under the 
leadership of former federal police official Clovis Monteiro da 
Silva, but was bogged down in the bureaucracy of transition to 
the new Lula administration for much of the first half of 2003. 
Residing in the Ministry of Justice, the IMC continues to 
disappoint most with its lack of vision in addressing the fight 
against piracy.  One member of the committee told econoff 
recently that the IMC has lots of great ideas but no authority 
or resources to implement them.  Monteiro notes that the IMC 
still suffers from insufficient funds to accomplish its 
mission, and some ambitious 2003 plans, such as a Mercosul IPR 
conference, had to be postponed. 
 
¶4. (SBU) Ref B notes Brazil-based industry representatives' 
assessment of the IMC as largely ineffective, but several of 
the committee's actions in 2003 deserve mention.  Monteiro is 
most proud of the IPR introductory training course now required 
at the federal police academy and hopes to duplicate the 
success of this program in all police training curricula (civil 
and military).  The public awareness campaign initiated in 2003 
with radio, billboards and isolated television spots in a few 
cities will be expanded nationwide to include anti-piracy movie 
trailers.  Monteiro insists that the educating role of the IMC 
is significantly undervalued, and that in the long-term, this 
effort will reduce piracy.  He admits that the IMC would gain 
from improved self-promotion and publicity to inform the 
interested public of its activities and accomplishments. 
According to Monteiro, the Committee's role of coordinating 
action within the Federal government, including with the police 
and customs officials where true enforcement takes place, is 
difficult to appreciate, but he believes that the growing 
recognition of the scope of Brazil's piracy problem is due to 
the quiet, consistent work of the Committee.  There wouldn't be 
a CPI on piracy if the IMC did not exist, he told econoff. 
 
¶5. (SBU) The IMC and the Federal Police are developing a 
database of piracy actions that will be accessible by federal, 
state civil and military police.  This effort entails modifying 
an existing crime database to include crimes related to piracy. 
The IMC has not yet finalized its 2004 action plan, which is to 
be included in the National Public Security Plan, but held its 
first meeting of the year on February 19.  Monteiro plans to 
focus on widening the public awareness campaign and 
strengthening ties within Mercosul and with WIPO.  The IMC will 
also be studying changes to the legislation that created the 
Committee to strengthen its powers and expand its jurisdiction. 
Contrasted with the CPI's warm and cooperative relationship 
with the private sector, the IMC appears to regard the industry 
associations with a certain suspicion, particularly concerning 
industry statistics on damages caused by piracy -- which the 
IMC maintains are not credible.  The IMC is working on 
developing its own statistics and studying the economic impacts 
of the creation and theft of intellectual property.  With the 
start of the CPI, the private sector's involvement with the IMC 
has waned, but the IMC invited private associations to 
participate in several 2003 meetings, according to Monteiro. 
 
¶6. (SBU) In July 2003 President Lula signed a law amending 
the Brazilian criminal code with respect to copyright 
violations (ref L).  The law increases the minimum penalty 
from one to two years' imprisonment, levies a fine and 
allows for improved seizure and destructions procedures for 
contraband.  The law does not include increased sanctions 
for software infringement.  The free software movement is 
building support within the GoB and throughout Brazil.  GoB 
procurement regulations prohibit use of unlicensed software, 
according to Itamaraty officials, but no special decrees or 
directives exist to further encourage compliance with 
international standards of copyright protection. 
 
Patents - Talk but Little Action 
 
¶7. (SBU) As ref C illustrates, Brazil's difficulties in 
granting patents and trademarks continues to worsen, as INPI 
lacks much needed resources and the involvement of the Ministry 
of Health's Sanitary Vigilance Agency (ANVISA) in 
pharmaceutical patents become more pronounced.  INPI's Patent 
Director estimates the current patent backlog at 50,000. 
PhRMA's estimate of 450,000 pending trademark applications 
strikes us as reasonable.  The administration's industrial 
policy goals, focusing on improving the technological base of 
Brazilian industry with special emphasis on software and 
pharmaceutical industries, put INPI in the spotlight.  The 2004- 
07 Pluriannual Plan fixes the objective of reducing processing 
time for patents from seven to four years and for trademarks 
from four to one year. 
 
¶8. (SBU) There appears to be recognition within the 
administration that the INPI/ANVISA linkage with regard to 
patent approval for pharmaceutical products or processes has 
taken on negative dimensions, but no remedies have been 
proposed (refs C and F).  INPI's staffing woes should be 
ameliorated somewhat this year with the addition of 108 
positions now available to qualified civil servants, and 
officials from the Ministry of Development Industry and Foreign 
Trade (MDIC) expect a permanent President of INPI to be named 
shortly. 
 
TRIPS Compliance and Related Issues 
 
¶9. (SBU) Presidential Decree 4370/03 amends existing patent 
legislation regarding compulsory licensing in situations of 
national emergency or public interest.  The GoB quickly 
instituted the measure after the August 30 WTO Access to 
Medicines Agreement while in the midst of price negotiations 
with several pharmaceutical companies regarding medicines for 
its world-renowned HIV/AIDS treatment program.  The measure has 
not been invoked, and its TRIPS compliance is uncertain (ref 
J).  Legislation pertaining to designs for integrated circuits 
(Bill 1787/96) remains pending in Congress; Itamaraty officials 
have repeatedly requested priority action on the bill, to no 
avail. 
¶10. (SBU) Previous Brazilian legislation dealing with 
aspects of genetic "patrimony" or heritage related to 
biodiversity conservation, integrity of genetic patrimony 
and traditional knowledge was superceded by the issuance of 
Provisional Measure 2.186 of August 23, 2001, which together 
with Decree 3.945 of 2001 and subsequent regulations, 
subject access and transfer of genetic patrimony to the 
approval of the Genetic Heritage Management Council (GHMC) - 
- a body composed of several ministries, academics, and 
others which is directed by the Ministry of Environment -- 
and to the sharing of benefits in contractual terms and 
legally established conditions.  New draft legislation on 
genetic patrimony, which would replace the Provisional 
Measure and subsequent regulations, is reportedly under 
consideration in the Brazilian Executive Branch, and could 
be introduced in the Brazilian Congress later this year. 
 
Biotechnology 
 
¶11. (SBU) In January 2004, Monsanto announced that it had 
reached an agreement with farmers from the Brazilian state of 
Rio Grande do Sul to receive remuneration for the use of 
Roundup Ready technology found in the company's soybean variety 
grown widely throughout the state.  The GoB's position on 
biotechnology remains undecided, as the biotechnology bill is 
still under debate in Congress (ref D). 
 
¶12. (SBU) Itamaraty confirms that the GOB has no plans to 
ratify the 1996 WIPO Copyright treaty or the WIPO Performances 
and Phonograms Treaty. 
 
Recommendation 
 
¶13. (SBU) Despite positive strides in some sectors, post 
believes that the continued lack of tangible improvements in 
IPR protection and enforcement as a whole in the last year 
manifestly precludes lowering Brazil's Special 301 status. 
However, we recognize a positive momentum that should bear 
fruit this year, with projects in the pipeline such as the 
CPI's final report and INPI's increased staffing.  We concur 
with industry submissions that suggest that retaining Brazil 
as a Priority Watch List country will appropriately convey 
the importance of the issue in our bilateral relationship, 
and believe that this position would not unduly discourage 
the forces of positive change within Brazil.  To ensure that 
we can use the announcement to promote further progress we 
request that, should Brazil's status be maintained, USTR's 
announcement clearly recognize the positive developments 
regarding IPR that did occur and the USG's desire to work 
collaboratively to produce tangible results in the coming 
year. 
 
HRINAK