VZCZCXYZ0041
RR RUEHWEB

DE RUEHMU #1043/01 1311837
ZNR UUUUU ZZH
R 111837Z MAY 06 ZDK
FM AMEMBASSY MANAGUA
TO SECSTATE WASHDC 6257

UNCLAS MANAGUA 001043 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR INL/C/CP - JAMES VIGIL, EB/TPP/MTA/IPC - EVAN 
FELSING, EB/TPP/IPE - ANNA MARIA ADAMO 
 
E.O. 12958: N/A 
TAGS: KIPR KCRM ABUD AFIN SNAR ECON ETRD
SUBJECT: IP ENFORCEMENT FUNDING PROPOSAL FOR NICARAGUA 
 
REF: A. SECSTATE 34733 
     ¶B. SECSTATE 28249 
     ¶C. MANAGUA 645 
     ¶D. MANAGUA 411 
 
¶1. (SBU) Summary: Working with a broad range of Nicaraguan 
partners, Post has developed a proposal for the intellectual 
property (IP) enforcement funding outlined in REFTEL A. 
While the Government of Nicaragua (GON) has recently taken 
several encouraging actions related to strengthening IP 
protections and the National Assembly (NA) passed a series of 
IP reforms required for entry into force of the Central 
America Free Trade Agreement (CAFTA), enforcement remains a 
stumbling block.  The Nicaraguan National Police (NNP) 
Economic Crimes Unit (ECU) specifically requested assistance 
for training NNP investigators in IP enforcement.  Private 
sector leaders of the intellectual property rights (IPR) 
coalition and GON interlocutors agreed that the fact that the 
ECU only has four investigators - who are responsible for all 
types of economic crimes - greatly inhibits IP enforcement. 
Also, the Nicaraguan Copyright and Patent Protection Society 
(NICAUTOR) has been an outstanding partner in Post's efforts 
to pass IP reforms and change the culture of piracy in 
Nicaragua.  Post seeks funding to create an anti-piracy 
center (APC) that will train 120 officials in IP enforcement 
by utilizing NICAUTOR facilitators.  There is also a public 
outreach element.  This program will increase law enforcement 
effectiveness and provide capacity building to a key private 
sector partner.  The cost of the APC is USD 55,100. See Paras 
18 - 24 for proposal details.  End Summary. 
 
The Cost of IP Piracy in Nicaragua to US Business 
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¶2. (SBU) While Post did not recommend Nicaragua for Special 
301 listing thanks to progress on IP issues, significant 
problems remain for US businesses.  The US entertainment 
industry faces an uphill struggle in Nicaragua in the face of 
rampant piracy.  Many outlets openly sell unlicenced goods, 
knowing that the GON lacks the resources to investigate and 
prosecute.  In the last year, 13,000 cassettes, 19,000 CDs 
(music and movie), and several pieces of equipment for making 
illegal copies of music and movies were seized and destroyed 
by the NNP.  The fact that these raids were carried out 
against only nine establishments and vendors in an open air 
market show the extent of the problem.  Almost all of these 
outlets are now operating again. 
 
¶3. (SBU) Nicaraguan Customs (Aduana) figures show that 
538,125 tons of blank CDs were imported legally into 
Nicaragua in 2005.  Since there are only a few small outlets 
for purchasing or renting legal music, movies, and software, 
it is clear that a large percentage of those imported blank 
CDs are for the purpose of illegal copying.  While there are 
a few legitimate video rental outlet operating in the 
capital, Blockbuster found that it could not profitably 
operate in Nicaragua. 
 
¶4. (SBU) One of the largest cable television companies in 
Nicaragua was recently presented with a "cease and desist" 
letter from the Motion Picture Association of America for 
broadcasting US-owned movies and television programs without 
license, although the cable company denies responsibility 
because the programming runs on a separately organized cable 
channel (that it broadcasts and with which ownership is 
overlapping).  In the run up to the vote on IP reforms in 
February, a coalition of cable companies was the most vocal 
opponent to the new legislation since several may have not 
been paying for the right to broadcast American-owned 
content.  Although computer use is growing rapidly, there are 
few outlets where properly licensed software is available. 
Recent media reports and anecdotal evidence also indicate 
that knockoff pharmaceuticals are readily available in open 
air markets. 
 
Close Cooperation on IP Issues and Proposal Development 
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¶5. (U) Post has developed a close partnership with many 
sectors in a campaign against IP piracy in Nicaragua.  REFTEL 
C describes how this coalition helped pass IP reforms needed 
for CAFTA entry into force, and fostered an ongoing public 
information drive utilizing famous Nicaraguan musicians aimed 
at changing the culture of piracy.  To draft the IP 
enforcement proposal described in this cable, econoff 
collaborated with IP prosecutors, Ministry of Trade (MIFIC) 
IP experts, ECU investigators, NICAUTOR and several 
representatives of the entertainment industry. 
 
¶6. (U) The primary thrust of the proposal is based on a 
request from NNP ECU investigators who identified their lack 
of resources and a corresponding lack of understanding of the 
IP issue amongst their fellow police officers (as well as 
other officials) as the biggest hindrances to effective 
enforcement.  Given NICAUTOR's energetic cooperation with 
Post on other IP issues, and its own need for capacity 
building, utilizing this association for IP enforcement 
training was quickly agreed to by IP coalition members. 
 
The Capacity of the GON and Civil Society to Combat Piracy 
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶7. (SBU) As mentioned above, the ECU conducted several 
successful raids over the last year.  Given their lack of 
resources, almost all of those enforcement actions were taken 
with the active participation of civil society.  NICAUTOR, 
with funding from a national music producer and a local 
company that represents Vista Entertainment, took on the task 
of conducting initial investigations and identifying 
enforcement targets to the ECU.  The private sector has even 
purchased gasoline so police could drive to the offending 
businesses. 
 
¶8. (SBU) Since its creation in 2003 by 17 of Nicaragua's most 
important contemporary writers and artists, NICAUTOR has 
worked closely with national and foreign authors and 
businesses.  To date, NICAUTOR-supported seizures include 
80,000 CDs, 30 CPUs containing at least seven CD/DVD burners 
each, and other miscellaneous articles required for the 
manufacture of illegal material.  NICAUTOR also coordinates 
closely with IP prosecutors. 
 
¶9. (SBU) This year, the GON created an office dedicated to 
prosecuting IP crimes within the Office of the Public 
Prosecutor for Managua.  There are currently two IP 
prosecutors (both of whom have received US-funded training). 
The two prosecutors have been proactive in seeking 
partnerships with civil society and the USG.  They were 
actively involved in creating the APC proposal. 
 
¶10. (SBU) The GON IPR Office also facilitated the 
non-judicial resolution of at least 12 cases involving IP 
infringements on music, software, photographs, videos and 
other works.  Many of these cases also involved working with 
NICAUTOR. 
 
NICAUTOR's Strong Record as a USG Partner Against IP Piracy 
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¶11. (SBU) NICAUTOR's close cooperation in achieving USG IP 
goals this year has been remarkable.  As part of this year's 
campaign for passage of IP reforms, NICAUTOR agreed that the 
Embassy Managua-conceived plan could be conducted under its 
auspices to maintain focus on the benefits to Nicaraguan 
businesses and culture.  NICAUTOR launched the campaign with 
a well attended press conference.  It then followed up by 
organizing direct lobbying by well-known Nicaraguan musicians 
(from across the political spectrum) to national legislators 
and editorial boards.  With a small USG grant and many free 
services from the private sector, NICAUTOR also produced a CD 
containing music and pro-IPR messages from Nicaraguan 
cultural icons, which was distributed to legislators, media, 
and others who could influence the terms of the debate. 
 
¶12. (SBU) With the same USG grant and private sector support, 
NICAUTOR also produced four anti-piracy spots for continuing 
broadcast in every movie theater in Nicaragua, several TV 
stations, the Internet, and (in audio version) on several 
radio stations. 
 
Links To Other US Foreign Policy Objectives 
- - - - - - - - - - - - - - - - - - - - - - 
 
¶13. (SBU) CAFTA implementation and trade capacity building 
are identified in Post's Mission Program (MPP) Plan as the 
most important economic goals for Nicaragua.  IP piracy in 
Nicaragua - the second poorest country in the hemisphere - 
directly hinders international investment.  Once an 
international leader in music in the arts, Nicaragua's local 
artistic community is also inhibited by piracy, which damages 
the ability to produce and export artistic products.  The APC 
will foster an improved business climate for creators of and 
investors in intellectual property. 
 
¶14. (SBU) Another major MPP goal is improving the rule of law 
in Nicaragua.  Post has identified lawlessness as a major 
roadblock on Nicaragua's path to full democracy and a modern, 
vibrant economy.  Evidence shows that many economic crimes 
are directly linked to the corrupt political class.  As 
Nicaragua faces critical national elections in November 2006, 
the USG must seek creative solutions to systemic corruption. 
This proposal builds capacity inside and outside of the 
government to take on that challenge. 
 
Regional Partnering 
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¶15. (SBU) While regional partnering is not an explicit 
component of this proposal, with additional funding it could 
easily be adapted to accommodate other Central American 
countries.  A second facilitator could travel to other 
countries or the process could be duplicated.  This would 
provide Spanish-language training for regional IP officials, 
which is generally not available from the USPTO acadamy. 
Sending regional representatives to the APC would also be a 
less expensive option. 
 
High Impact/Low Cost 
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¶16. (SBU) Although IP piracy in Nicaragua in absolute terms 
is not as costly to US businesses as is the case in more 
populous and wealthier countries, the close cooperation Post 
enjoys with anti-piracy partners and the nature of the 
problem here, give the USG an opportunity to have a profound 
and rapid impact for relatively little cost.  Police, 
prosecutors, MIFIC, NICAUTOR and legal businesses are anxious 
to tackle this problem.  Even Aduana and DGI, which have 
traditionally been primarily concerned that pirates pay their 
taxes rather than with how they earn their money, are 
involved in this project. 
 
¶17. (SBU) Under our multi-faceted plan, a budget of USG 
55,100 will allow the training of 120 police, DGI, Aduana, 
and other officials, create a reference and training capacity 
within NICAUTOR for future use, and provide funding for 52 
outreach events to tackle the culture of piracy in Nicaragua. 
 This plan will also strengthen NICAUTOR so it can continue 
its anti-piracy efforts. 
 
Proposal Details 
- - - - - - - - 
 
¶18. (SBU) Post proposes to fund an Anti-Piracy Center (APC) 
in partnership with NICAUTOR.  Using a "train the trainers" 
approach, a full-time APC facilitator/coordinator and a 
short-term assistant facilitator (to work only during four 
3-day training academies) will receive US Patent and 
Trademark Office (USPTO) enforcement training of the type 
that is regularly conducted in the United States for foreign 
IP officials.  Post will also approach the U.S. Justice 
Department (DOJ) and Department of Homeland Security/ 
Immigration and Customs Enforcement (DHS/ICE) for training 
assistance.  The NICAUTOR APC facilitators will then train 
Nicaraguan officials on IP enforcement. 
 
¶19. (SBU) The APC will conduct four IP enforcement training 
academies (one every three months) for NNP investigators from 
all over Nicaragua, DGI and Aduana officials, and 
prosecutors.  From time to time, journalists and private 
sector partners may also be invited to participate.  There 
will be 30 participants per academy for a total of 120 over a 
year.  As mentioned above, there are currently four ECU 
investigators and two dedicated prosecutors.  The academies 
will educate participants on the seriousness of the problem, 
Nicaraguan IP law, investigative techniques unique to IP 
cases, evidence preservation, making charging decisions, 
drafting indictments, and preparing cases for trial. 
 
¶20. (SBU) For the three months leading up to the first 
academy, the APC facilitators will receive their training and 
prepare investigation and prosecution handbooks for 
specialized personnel.  They will also create audiovisual and 
other training materials.  A private sector video production 
company has agreed to provide its services at reduced cost. 
All materials used to present the enforcement academies, as 
well as other accumulated anti-piracy materials, will be made 
available as an IPR library within the APC. 
 
¶21. (SBU) In addition to conducting the conferences, the APC 
facilitator will also be required to lead an anti-piracy 
public information campaign.  At least once a week, he or she 
will conduct outreach to educational institutions, business 
chambers, media and/or artistic organizations.  The person 
hired as a facilitator will be paid a Nicaragua-scale 
professional wage in hopes of attracting a dynamic individual 
who can, in turn, be developed as an IPR leader for the 
future.  An attorney or person with entertainment business 
credentials would be a strong candidate.  USG lectures from 
USPTO, DOJ, ICE, and IPR association (pharmaceutical, motion 
picture, music, software, etc.) will be encouraged to 
participate as lecturers as well. 
 
¶22. (SBU) This proposal will also build organizational 
capacity for NICAUTOR, which is a not for profit 
organization.  Despite its successes, NICAUTOR has neither an 
office nor a staff.  It's sole employee is Engel Ortega, a 
well known Nicaraguan song writer.  Several international 
copyright protection societies are partnered with NICAUTOR 
but are reluctant to provide direct funding until it can show 
success in forging royalty contracts with the Nicaraguan 
private sector.  Post believes that this proposal will give 
NICATOUR the organizational strength needed for it to become 
self-sufficient in a short time. 
 
Cost Breakdown (USD, For One Year) 
- - - - - - - - - - - - - - - - - 
 
¶23.  A. Renting and maintaining an office: $7,000 
     ¶B. Facilitator/coordinator: $20,000 
     ¶C. Assistant facilitator: $1,600 ($400 per academy) 
     ¶D. Administrative assistant: $2,800 
     ¶E. Rental of facilities for four training academies 
        (including lunch for participants): $8,000 
     ¶F. Academy attendee materials: $500 
     ¶G. Support for public outreach (including travel): $1,000 
     ¶H. Accountant (two visits per month): $1,200 
     ¶I. Auditor: $5,000 
     ¶J. Training/Audiovisual Materials: $2,000 
     ¶K. Training of facilitators: $6,000 
 
 
Total: $55,100 
 
Measuring Results and Verifying the Appropriate Use of 
Official Funds 
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¶24. (SBU) A committee consisting of three officers from POL 
(INL), ECON (IPR), and USAID (TCB-IPR) will oversee this 
program.  NICAUTOR will be required to submit monthly reports 
on its activities.  This proposal covers the cost of 
contracting accounting services.  Also, $5,000 will be used 
to contract an independent auditor to verify the appropriate 
use of official funds and other contract requirements.  Post 
will also monitor the number of siezures, arrests, and 
convictions to measure the direct impact of this program. 
 
Points of Contact 
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¶25. Post looks forward to receiving feedback on this 
proposal.  Points of Contact are Dana Deree 
(DereeDD@state.gov) until May 31, and Nicole Chulick 
(ChulickNA@state.gov) thereafter. 
TRIVELLI