VZCZCXRO7377
OO RUEHCHI RUEHDT RUEHHM
DE RUEHML #5024/01 3520737
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O 180737Z DEC 06
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4304
INFO RUEHZS/ASEAN COLLECTIVE IMMEDIATE
RHHMUNA/USPACOM HONOLULU HI IMMEDIATE
RHEHNSC/NSC WASHDC IMMEDIATE
RUCPDOC/USDOC WASHDC IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE

UNCLAS SECTION 01 OF 02 MANILA 005024 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EAP/EX AND EAP/MTS 
STATE PASS USTR DKATZ 
STATE PASS USAID 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD EINV ECON RP
SUBJECT:  IPR Enforcement Moves Forward in the Philippines 
 
REF:  MANILA 4940 
 
¶1. Summary:  The visit of USTR Director for Southeast Asia and the 
Pacific David Katz provided an opportunity to meet with key players 
on IPR in the Philippines and assess progress.  It appears that 
legislative progress is only moderate.  Important legislation 
extending copyright protections has been submitted to Congress but 
will not pass in this session.  The Roxas bill, which looked like it 
would cause serious damage to the patent regime for pharmaceuticals, 
is likely to pass, but without some of the worst provisions. 
Enforcement agencies continue to act forcefully against violators of 
IPR, resulting in some decrease in the availability of violating 
products.  However, prosecution of IPR cases remains severely 
lacking.  While we have high hopes of continued progress in both 
legislation and enforcement, necessary reform of the judicial 
process is a long-term and difficult prospect.  End Summary. 
 
¶2.  USTR Director for Southeast Asia and the Pacific David Katz 
visited Manila on November 9 and 10 for regular consultations on 
trade and IPR issues.  Katz met with a wide range of IPR contacts, 
including three sessions with members of the Senate and the House of 
Representatives, meetings with representatives of several agencies 
of the executive branch, and a session with representatives of 
rights holders. 
 
Making the Case to Congress 
--------------------------- 
 
¶3. Katz met with Congressman Junie Cua, Chairman of the Trade and 
Industry Committee of the House and Senator Ralph Recto, Chairman of 
the Senate Ways and Means Committee, and hosted a dinner for 
Congressmen Gilbert Remulla, Jack Duavit, and Luis Villafuerte.  The 
evolution of IPR protections over the past year was the central 
theme of each meeting, and Katz took the opportunity in each meeting 
to press USTR concerns about proposed legislation limiting patent 
protections for pharmaceuticals (the "Roxas bill").  Katz explained 
in the meetings that the USG did not generally oppose GRP efforts to 
lower the prices of pharmaceuticals, but would object to legislation 
that contradicted the GRP's commitments under WTO TRIPS. (Note: 
Roxas has subsequently agreed to modify the legislation in a way 
that addresses some of our concerns.  See reftel.)  Duavit, who is 
one of six vice chairmen of the House Trade and Industry Committee, 
was upset at the prospect of legislation contravening TRIPS, and 
assured Katz that he would support amending the bill. 
 
¶4.  Cua confessed his worries about some slippage in certain aspects 
of IPR protection, especially in the areas of enforcement and 
prosecutions.  Katz and Cua discussed the prospects for guaranteeing 
stable funding for agencies working in IPR enforcement.  They also 
discussed legislation Cua is sponsoring that would incorporate the 
WIPO Copyright Treaties into Philippine legislation.  Cua did not 
believe time remained for Congress to pass the legislation this 
year. 
 
Encouraging the Executive Branch 
-------------------------------- 
 
¶5. Katz met with the leadership of all the key enforcement agencies: 
the Intellectual Property Office, Optical Media Board, Philippine 
National Police, and Customs.  Adrian Cristobal, Director General of 
the Intellectual Property Office, described enforcement efforts, 
especially an increasing number of raids and seizures.  He discussed 
a forthcoming memorandum of understanding with the US Patent and 
Trademark Office regarding training opportunities for IPO officials, 
and cited a realignment at the Department of Justice as increasing 
the number of prosecutors (while remaining tentative as to whether 
it would make a difference in the number and quality of 
prosecutions).  Edu Manzano, Chairman of the Optical Media Board, 
described his agency's successful raids and increased seizures.  He 
also highlighted the success other countries have had with forensic 
testing facilities that enable investigators to establish the 
origins of pirated products, and urged that one be procured for the 
use of GRP agencies (an idea Post is pursuing).  The head of the 
Anti-Fraud and Commercial Crimes Division of the Philippine National 
Police, Noel de los Reyes, complained that rights holders often do 
not lodge complaints necessary for PNP action.  Celso Templo, Deputy 
Director of the Customs Bureau, pointed to seizures of counterfeit 
Chinese garments in the process of transshipment to US ports.  He 
described the proposal for Customs reform currently before the 
Department of Trade and Investment, which would convert the IPR unit 
of Customs into a permanent bureau with greater resources and 
permanent personnel. 
 
Challenge of IPR Prosecutions 
----------------------------- 
 
MANILA 00005024  002 OF 002 
 
 
 
¶6. All representatives of the enforcement agencies expressed (albeit 
diplomatically) frustration with the justice system.  While raids 
are conducted and illegal product seized, lack of cooperation from 
rights holders often makes prosecution, and sometimes even retention 
of seized goods, impossible.  Even when prosecution would seem 
possible, it rarely moves forward successfully. 
 
¶7.  Katz met with Assistant Chief State Prosecutor Pedrito Rances at 
the Department of Justice and with Supreme Court staff to discuss 
these issues.  The meetings demonstrated that the justice system 
remains the most problematic aspect of defense of IPR in the 
Philippines.  Rances oversees a task force of 16 prosecutors within 
the Department of Justice who work on IPR investigations.  While 
more than 900 arrest warrants have been issued in the past several 
years, few actual prosecutions have been undertaken and only eight 
are presently active.  Even fewer convictions have resulted.  Rances 
said that many arrest warrants are "archived," meaning that the 
police do not even act on them.  In those cases where an arrest has 
been made, prosecutors encounter difficulties in arranging court 
appearances by witnesses (often police officers), and IPR holders 
must pay to store pirated materials for years as a case evolves (or 
does not evolve).  As a result, many complainants settle their cases 
out of court or decline to file complaints in the first place. Asked 
how much of the time of his prosecutors is devoted to IPR cases, 
Rances was unable to answer, though he agreed with a suggestion of 
"maybe about 10%." 
 
¶8. Rances presented Katz with a list of 16 IPR convictions that have 
taken place since 2000, but was unable to provide information about 
sentences that were imposed, or indicate whether fines were paid or 
if those sentenced remained in prison.  Notably, the list included 
Catherine Marquez, sentenced to prison in 2004 for book piracy, who 
jumped bail while her case was on appeal, remains at large, and is 
understood to remain active in illegal photocopying. 
 
Comment: 
-------- 
 
¶9. Although our allies in the executive branch and Congress are 
working hard and have some accomplishments to tout, serious 
weaknesses remain in the Philippine IPR regime.  Aggressive 
enforcement measures have made selling pirated goods a more 
high-risk activity, and while malls and shopping centers still have 
fakes on offer, sellers have become much more discreet.  However, 
the justice system remains a weakness whose effects can be felt not 
only in IPR protection but also in numerous economic issues.  The 
existing system is one in which police and prosecutors do not work 
together, adequate investigations do not take place, and only seven 
percent of all prosecutions result in convictions.  While the 
embassy is engaged on various fronts attempting to remedy this 
problem, it is the work of years and perhaps decades and is not 
susceptible to quick fixes. 
 
Kenney