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Viewing cable 06ROME1858, FOURTH-ANNUAL IPR RETREAT: ITALIAN JUDGES SEE

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Reference ID Created Released Classification Origin
06ROME1858 2006-06-23 09:47 2011-08-26 00:00 UNCLASSIFIED Embassy Rome
VZCZCXRO8475
PP RUEHFL RUEHNP
DE RUEHRO #1858/01 1740947
ZNR UUUUU ZZH
P 230947Z JUN 06
FM AMEMBASSY ROME
TO RUEHC/SECSTATE WASHDC PRIORITY 5187
INFO RUCPDOC/USDOC WASHDC PRIORITY
RUCNMEU/EU INTEREST COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 1223
RUEHMIL/AMCONSUL MILAN 7276
RUEHNP/AMCONSUL NAPLES 1586
RUEHFL/AMCONSUL FLORENCE 1515
RUEAHLC/DEPT OF HOMELAND SECURITY WASHINGTON DC
RUCPDOC/USDOC WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
UNCLAS SECTION 01 OF 03 ROME 001858 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB A/S SULLIVAN, EB/TPP/IPE JOELLEN URBAN, 
CANDY GREEN 
STATE PASS USTR FOR JAMES SANFORD 
DOC PASS USPTO 
DOJ FOR DAAG LAURA PARSKY 
DHS PASS ICE 
 
E.O. 12356: N/A 
TAGS: ETRD EINV KIPR CH IT
SUBJECT: FOURTH-ANNUAL IPR RETREAT: ITALIAN JUDGES SEE 
GROWING CHINESE AND MAFIA INVOLVEMENT IN COUNTERFEITING 
 
THIS CABLE IS SENSITIVE BUT UNCLASSIFIED 
 
Refs: A) ROME 548, B) 05 ROME 4046, C) 05 ROME 1569 
 
1. Summary: Mission Italy's fourth-annual IPR judicial 
workshop brought together judges and prosecutors from 
across Italy with their U.S. counterparts to discuss 
the investigation and prosecution of IPR crime.  The 
U.S. delegation included two federal judges, two 
federal prosecutors, and  Department of Justice and 
Immigration and Customs enforcement officials.  Key 
themes included the growing threat of Chinese 
counterfeiting and the need to balance administrative 
and criminal penalties for IPR violations.  There was 
near-unanimous agreement on the need for greater 
consumer education to change attitudes about IPR 
crimes.  Italy's national anti-mafia directorate 
intends to step up IPR investigations to help fight 
organized crime.  End summary. 
 
Background 
---------- 
 
2. Italian judges continue to be a "weak link" in 
Italy's IPR enforcement regime.  Italy's IPR laws are 
among the toughest in Europe and contemplate prison 
terms of up to four years.  In reality, though, few 
defendants receive serious punishments.  While the 
number of Italian judges who "get it" on IPR is 
growing, others continue to find defendants not guilty 
based on the concept of economic need--i.e.,piracy is 
okay for the unemployed with no alternative income. 
Suspended sentences are the norm in Italy, even for 
cases of commercial-scale piracy.  The belief that 
piracy and counterfeiting are social safety valves-- 
providing employment to illegal aliens who might 
otherwise turn to more serious crime--remains 
frustratingly prevalent. 
 
3. To counter these attitudes, the Embassy in 2003 initiated 
a program to sensitize Italian judges to IPR issues.  This 
year, Embassy Rome hosted its fourth-annual IPR judicial 
retreat May 22-24.  Thirty high-level Italian prosecutors, 
judges, and law enforcement officials attended.  To 
stimulate frank discussion, these workshops are off-the- 
record.  The Business Software Alliance (BSA), the 
Federazione Industria Musicale Italiana (FIMI, a music 
industry group that represents both Italian and American 
labels), the Federazione Anti-Pirateria Audiovisiva (FAPAV, 
an Italy-based anti-piracy organization funded principally 
by the Motion Picture Association of America), and the 
International Anti-Counterfeiting Coalition (IACC) once 
again co-sponsored this workshop and paid the most costs. 
This year's event featured sessions on IPR and organized 
crime, internet piracy, and administrative versus criminal 
penalties. 
 
4. The American delegation this year included Deputy 
Assistant Attorney General Laura Parsky, Federal Appeals 
Court Judge Arthur Gajarsa, Federal Judge (District of 
Massachusetts) William Young, Department of Justice Senior 
Litigation Counsel Eric Klumb, Deputy U.S. Attorney 
(District of Miami) Richard Boscovich, and David Faulconer 
of the Bureau of Immigration and Customs Enforcement. 
 
5. Italian participants included the Director General of the 
Ministry of Justice, Nicola Cerrato; Deputy Anti- 
Counterfeiting High Commissioner, Sebastiano Sorbello; and 
Court of Cassation (Supreme Court) Judge Vittorio Ragonesi. 
The Italian side also included several high-level 
prosecutors from Italy's Direzione Nazionale Antimafia (DNA, 
the national anti-mafia directorate within the Ministry of 
Justice), as well as prosecutors from key Italian district 
courts, such as Trieste, Milan, Florence, Bologna, Rome, 
Naples and Palermo. 
 
 
ROME 00001858  002 OF 003 
 
 
Piracy On the Rise Again 
------------------------ 
 
6. The industry cosponsors opened the workshop by 
reporting that piracy levels, after several years of 
improvement, are on the increase again.  Italy's 
prolonged economic stagnation is partly to blame, 
particularly for the stubbornly high level of software 
piracy.  BSA reported that business software piracy 
rates in Italy have once again risen to just over 50 
percent, as Italian businesses try to save money on 
unlicensed software. 
 
China, China, China 
------------------- 
 
7. While the problem of Chinese counterfeiting was 
mentioned in previous judicial retreats, this year the 
"China threat" was center stage.  An Italian prosecutor 
gave a case study on a criminal group that has been 
pirating pay-per-view soccer matches and re- 
broadcasting them over the Internet via servers in 
China.  Other Italian prosecutors told of recent cases 
of Chinese nationals arrested leaving Naples' 
Capodichino airport with millions of euros in cash, the 
proceeds from the sale of knockoff goods smuggled from 
China.  Richard Boscovich recounted very similar cases 
in Miami, where Chinese counterfeiters have brought in 
large quantities of fakes, sold them quickly, and then 
departed the country before getting caught.  David 
Faulconer gave a presentation on the Bureau of 
Immigration and Customs Enforcement's IPR programs and 
ICE's efforts to cultivate contacts within the Chinese 
customs services.  Faulconer offered to help Italian 
participants better liaise with Chinese authorities. 
 
Fines Versus Jail 
----------------- 
 
8. Another focus point was the appropriate balance 
among criminal, civil, and administrative enforcement. 
Some Italian participants sharply criticized Italy's 
euro 10,000 ($13,000) fine for possession of 
counterfeit goods.  The fine, etablished in 2005, is 
simply too large to be practical, some argued.  In the 
rare cases where police actually have enforced the 
fine, one critic noted, they have mainly targeted 
foreign tourists. 
 
9. One prosecutor, however, asserted that an over 
reliance on criminal sanctions was also unworkable, 
given Italy's overburdened and glacially slow criminal 
courts.  An anti-mafia prosecutor noted that for 
members of the Naples-based Camorra crime organization- 
-which is believed to control much of the Italian 
market for fakes--a prison sentence of a few years is 
no deterrent.  Many young mafiosi consider prison a 
right of passage.  Also, he continued, the profits from 
counterfeiting and piracy rival that of narcotic 
smuggling, meaning even the maximum sentence of four 
years appears, in the eyes of Camorra members, a very 
low risk given the potential rewards of IPR crime. 
 
10. Several participants argued that a well-managed 
system of administrative punishment for consumers and 
sellers, coupled with criminal penalties only for the 
most serious of cases, would be more effective than 
increasing criminal sanctions across the board.  Some 
of the anti-mafia prosecutors argued that Italian and 
EU law should explicitly recognize piracy and 
counterfeiting as an organized criminal activity.  In 
Italy, such a change would allow investigation and 
prosecution of IPR crime to be centrally coordinated by 
the national antimafia directorate (DNA).  The industry 
representatives said allowing rights' holders to pursue 
punitive damages in civil cases (something not 
 
ROME 00001858  003 OF 003 
 
 
currently allowed under Italian law) would also greatly 
improve enforcement, especially for software 
violations. 
 
More Public Education 
--------------------- 
 
11. Though there were differences of opinion on the 
efficacy of criminal sanctions, everyone agreed that 
Italy must offer more public education.  Many commented 
that efforts of police, courts and prosecutors will 
come to naught unless Italian consumers understand the 
damage IPR crime is doing to Italy's economy and 
society.  In particular, consumers ignore that 
counterfeit products, such as pharmaceuticals, 
cosmetics, detergents, electrical equipment, car parts, 
etc., are on the market and endanger their health and 
safety. [Note: In October 2005, the Mission sponsored 
its first-ever bilateral exchange on public education, 
bringing together IPR experts from the Dept. of Justice 
and USPTO with their Italian counterparts (see ref B). 
End note.] 
 
Comment 
------- 
 
12. We believe our annual judicial IPR workshops are 
paying dividends.  Four years into this effort, the 
Embassy IPR retreat is gaining a reputation as a 
prestigious program that now has an informal alumni 
network.  Our program received favorable mention at the 
most recent national meeting of the Italian magistrates 
association.  The quality of the discussion was higher 
this year, with fewer platitudes about the importance 
of IPR and more exchange about specific investigative 
techniques and legal issues.  The Italian participants 
also came better prepared this year in comparison with 
the earlier conferences and expressed great interest in 
attending similar meetings in the future. 
 
13. Comment continued: While we have given repeat 
invitations to a few high-ranking, influential judges 
and prosecutors who are already committed to IPR, we 
also try to invite judges who are less sympathetic and 
even openly skeptical.  Following this years event, one 
prosecutor (who had previously been among the skeptics) 
contacted us to say that, as a result of what he 
learned at the workshop, he was dedicating more 
investigative resources to a piracy case in his 
district and had issued additional search warrants.  An 
official with the Direzione Nazionale Antimafia said 
this year's workshop prompted him to engage more 
closely with Italy's financial police on IPR cases.  He 
said his office is now exploring ways to approach the 
Chinese Embassy in Rome to address piracy and 
counterfeiting. 
 
14. Comment continued: We intend to continue this 
dialogue by holding at least one such judicial outreach 
event every year.  We are also considering ways to 
reach an even greater number of judges, perhaps by 
holding smaller workshops in individual districts.  For 
more information on Mission Italy's IPR outreach, 
please contact Acting Economic Minister Counselor for 
Economic Affairs Kathleen Reddy (ReddyKM@State.gov) or 
FSN Economic Specialist Piero Ippolito 
(IppolitoP@State.gov). 
 
Spogli