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P 131302Z FEB 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 8082
INFO RUEHSO/AMCONSUL SAO PAULO 9203
RUEHRI/AMCONSUL RIO DE JANEIRO 3855
RUEHRG/AMCONSUL RECIFE 6228
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 06 BRASILIA 000249 
 
SIPDIS 
 
RIO FOR J. MALHEIRO 
SAO PAULO FOR D. MAZURKEVICH 
 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EB/TPP/IPE JENNIFER BOGER 
DEPT PASS USTR FOR VICTORIA ESPINEL, CHRIS WILSON, SUE CRONIN AND 
JENNIFER CHOE GROVES 
USDOC FOR ITA/MAC/OIPR CASSIE PETERS 
USDOC FOR ITA/MAC/WH/OLAC/MCAMPOS 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD ECON BR
SUBJECT:  BRAZIL: Copyright Scenesetter:  Piracy Enforcement Efforts 
Yield Results; Challenges Lie Ahead 
 
REF:  A) Sao Paulo 71; B) 06 Brasilia 993; C) Sao Paulo 1206 
 
¶1.  Post sends this telegram in advance of A/USTR Espinel's visit to 
Brazil the week of February 26.  Our Special 301 reporting cable, 
which (inter alia) will include industry views and a look at the 
patent/trademark situation, will follow septel. 
 
¶2. (SBU) Summary:  The December "Report on Activities" released by 
the GOB National Council to Combat Piracy (CNCP) indicates that the 
overall nine-month results of GOB interdiction efforts as of 
September 30, 2006 surpassed those for the entire year of 2005.  The 
GOB report set forth the government's approach to combating IPR 
piracy involving enforcement, public education, and economic 
efforts, and noted a 54 percent increase in the total value of goods 
confiscated during the first nine months of 2006 in comparison with 
the same period in 2005.  The report also highlighted public 
outreach activities such as the "Pirate: I'm Out!" initiative and 
the planned 2008 "Brazil Against Piracy" caravan across the country. 
 In sessions with USG interlocutors, GOB officials continue to 
express frustration at USG inclusion of the country on the "Priority 
Watch List." However, based on comments made during a recent meeting 
with EmbOffs and the GOB's refusal to allow EU speakers at a planned 
March IPR training seminar, it appears that Brazil's dialogue with 
the EU on IPR is even pricklier than that with the USG. 
 
¶3.  (U) Notwithstanding the above-noted enforcement efforts, a U.S. 
Chamber of Commerce/Brazil-U.S. Business Council commissioned poll 
released in December 2006 found that the purchase of pirated goods 
had increased among 25-39 year olds and those over 50 in certain 
cities.  The poll suggested a 17 percent growth overall in 
commercial piracy in the cities of Rio de Janeiro, Belo Horizonte 
and Recife and a 14 percent reduction in the sale of pirated goods 
in Sao Paulo city.  End Summary. 
 
¶4. (U) The December "Report on Activities" released by the GOB 
Ministry of Justice (MOJ) National Council to Combat Piracy (CNCP) 
indicates a substantial increase in GOB piracy enforcement efforts. 
Although most of the data included for 2006 only covers the first 
three quarters, the overall results equal or surpass calendar year 
¶2005.  The GOB report outlined its three-pronged approach to 
combating IPR crime:  enforcement, public education, and economic 
efforts.  While prior year efforts focused heavily on public 
education, the GOB currently appears to be pursuing the enforcement 
approach more vigorously than the other two. 
 
¶5. (U) GOB IPR enforcement typically involves two ministries:  the 
Finance Ministry (Customs and Tax Authority) and the Ministry of 
Justice (Federal Police and Federal Highway Patrol).  Through the 
CNCP, the Ministry of Justice coordinates interagency IPR 
enforcement activities and state level authorities, who often have 
primary jurisdiction.  In turn, the Division of Intellectual 
Property at the Ministry of Foreign Affairs (MFA) is involved in 
these efforts and liaises with international actors. 
 
¶6.  (U) The CNCP report segments out efforts by these ministries and 
provides an overall view of total seizures of pirated goods.  Among 
the highlights, the GOB reports a 54 percent increase in the total 
value of goods confiscated during the first nine months of 2006 
(approximately USD 283.1 million) versus the same period in 2005 
(approximately USD 183 million).  The CNCP report shows seizures 
over the first nine months of 2006, outstripping all of 2005 by over 
USD 3.1 million.  However, it did not provide consolidated 
information on arrests and convictions for piracy and contraband 
activities. 
 
¶7.  (U) The 2006 rundown of individual law enforcement agencies 
activities follows below.  Note that while many of the CNCP figures 
do not separate piracy from contraband investigations and seizures, 
they do demonstrate increased activity by GOB authorities in 
containing the movement of illegal products in Brazil, including 
counterfeited items. 
 
------------------- 
Enforcement Actions 
------------------- 
 
--Customs Authority 
 
 
BRASILIA 00000249  002 OF 006 
 
 
¶8.  (U) The Customs Authority reported a significant increase in 
both vehicles apprehended while smuggling unlicensed and illegal 
goods and in total contraband seized during its ongoing "Armed 
Border" operation conducted on the frontier with Paraguay in the 
"Tri-Border" area (see chart below).  The CNCP report notes that a 
new customs office, inaugurated in July and located on the Brazilian 
side of the Friendship Bridge in Foz Do Iguacu, is inspecting all 
traffic coming from Paraguay as opposed to the estimated five 
percent of vehicles stopped for inspection before construction of 
the office. 
 
Operation Armed Border 
 
                      2005     2006 (9/30) Change (percent) 
                      -----    -----       ------ 
Vehicles Apprehended  1458     2452         68.2 
 
Goods Seized* 
(selected categories) 
 
Computer Related        8.08      9.06      12.17 
Electronics             6.69      8.31      24.22 
Toys                    1.84      1.67      -9.06 
 
Total                  16.61     19.04      14.68 
 
*(in millions USD, rounded up) 
 
--Federal Police 
 
¶9.  (U) Piracy and contraband investigations by the Federal Police 
increased during 2006 and by September 30 had surpassed the total 
for the year 2005.  These figures also include "tax evasion" 
investigations, now a common charge in connection with piracy 
cases. 
 
Investigations   2005   2006 (9/30)   Change (percent) 
                 ----   ----          ------ 
                 6186   6930           12.03 
 
¶10.  (U) During 2006, the Federal Police opened a new station in 
Cascavel, Parana, a key road juncture on the route from Foz do 
Iguacu to the rest of Brazil.  In coordination with Brazilian 
software, music and industrial property business associations, the 
Police carried out "Operation I-Commerce" to combat internet piracy 
on October 16, which resulted in the issuance of 79 search and 
arrest warrants in 13 states and the Federal District, and 20 
arrests. 
 
--Federal Highway Patrol 
 
¶11.  (U) According to the CNCP report, the Federal Highway Patrol, 
through "Special Operations Centers" located throughout the country, 
provided training on combating piracy and contraband to local and 
state authorities. 
 
¶12.  (U) As with the other divisions, Federal Highway Patrol 
statistics represent a marked increase in anti-piracy and contraband 
seizure activities: 
 
Seizures:       2005        2006 (9/30) Change (percent) 
                ----        ----        ------ 
CDs and DVDs    2,013,411   5,496,512   170.71 
(units) 
 
Medicines         120,212     198,554    65.17 
(boxes) 
 
--States and Municipalities 
 
¶13.  (U) The CNCP report lists a number of state and municipal 
anti-piracy actions.  Among the highlights are the confiscation of 
illegal products by police in the following states:  Ceara - 75,717 
counterfeit Time Warner and Disney products; Rio de Janeiro - 
244,960 DVDs, 367,679 CDs, 35,934 VHS tapes and 108,927 software 
applications and games; Sao Paulo - 1,204,724 DVDs and 672,975 CDs; 
Piaui - 64,249 DVDs and 170,456 CDs; Pernambuco - 282,647 DVDs and 
42,093 CDs; Minas Gerais - 83,319 DVDs and 107,943 CDs; and Goias - 
 
BRASILIA 00000249  003 OF 006 
 
 
91,462 DVDs, CDs, VHS tapes and games. 
 
--GOB Anti-Piracy Raids on "Notorious Markets" 
 
¶14.  (U) GOB agencies have conducted raids on a number of known 
counterfeit goods markets, often in coordination with state and 
local authorities.  In many cases, the deterrent effect on the sale 
of pirated goods is limited, but the goods confiscated often 
represent a significant financial loss to the vendors of these 
products. 
 
¶15.  (U) A May 2006 Federal Police raid on Brasilia's "Import Fair" 
involved 120 police, netted over 150,000 pirated items - mostly CDs 
and DVDS - and resulted in the shutdown of 95 retail outlets.  (In a 
visit one week later, EconOffs found the market to be functioning 
normally with widespread sale of pirated goods - reftel B.) 
 
¶16.  (U) In January 2006, Federal Customs Police, acting on a tip 
from an informant, used a helicopter to stop eight small busses 
carrying around USD 400 thousand in contraband that had entered 
Brazil from the Paraguayan side of Foz do Iguacu.  The busses were 
stopped 80 kilometers inside Brazil and the contraband confiscated. 
 
 
¶17.  (U) Police from Rio de Janeiro's Delegation to Repress Crimes 
Against Intangible Property (DRCPIM) confiscated pirated CDs, DVDs, 
tennis items, and other contraband during a March 2006 search of 
1,500 street vendor stalls on the notorious Rua Uruguaiana.  As a 
result, the police arrested the president of the association of 
street venders on charges of contraband, piracy and usurping the 
public power.  In May, DRCPIM officials shut down facilities used 
for illegal reproduction of CDs and DVDs.  One of the piracy 
operations contained 25 DVD recorders. 
 
¶18.  (U) Local authorities teamed with the state's Military Police 
to conduct the January anti-piracy effort "Operation 25 de Marco" in 
downtown Sao Paulo, during which police collected 21 thousand 
illegal CDs and DVDs.  In August, the same agencies teamed together 
to conduct "Operation Windstorm" on the well-known Rua Santa 
Ifigenia marketplace. In this maneuver, the 70 member taskforce 
confiscated almost USD 300 thousand in illegal merchandise. 
 
-------------------- 
Educational Activity 
-------------------- 
 
--Pirate: I'm Out!  I Only Use the Original. 
 
¶19.  (U) An initiative of the Union of Customs Employees with 
support from the National Confederation of Industry and the CNCP, 
the "Pirate:  I'm Out!  I only use the Original," campaign seeks to 
raise public consciousness about piracy and contraband in Brazil and 
emphasize the importance of intellectual property protection.  Aimed 
at the 16 - 24 year old age group, found by a 2005 U.S. Chamber 
sponsored survey to be the largest group of consumers of pirated 
goods, the project highlights the advantages of consuming only 
legally licensed products. 
 
¶20.  (U) The campaign was "pre-launched" in Bahia during the crowded 
2006 Carnival celebrations, attended by a number of artists and 
entertainment personalities, in an attempt to raise public 
consciousness about intellectual property piracy.  Organizers 
canvassed beaches and shopping malls to distribute leaflets and 
other materials advertising the campaign. 
 
¶21.  (U) Campaign organizers carry their message to schools and 
universities and sponsor anti-piracy messages in both print and 
broadcast media.  They also distribute fliers, t-shirts, buttons, 
bumper stickers, caps, and textbooks bearing their distinctive logo. 
 (Comment: In a January 24 visit to the MOJ, EconOff noticed the 
anti-piracy slogan flashing across a display panel in the MOJ 
elevators.  End Comment.)  In July, the campaign targeted a musical 
event in Teresina (state of Piaui) and plans to launch a national 
caravan, "Brazil Against Piracy," early next year to reach youths in 
state capitals throughout the country. 
 
--Creativity in Combating Piracy Award 
 
 
BRASILIA 00000249  004 OF 006 
 
 
¶22.  (U) The "Creativity in Combating Piracy," award is part of the 
"Pirate: I'm Out" campaign and is sponsored by a Brazilian 
consultancy in connection with the U.S. Chamber of Commerce, NIKE, 
the Motion Picture Association and a Brazilian state owned bank.  It 
targets university students and is intended to promote leadership, 
social responsibility and awareness of the causes and impacts of 
piracy. 
 
--"Citizenship Game" 
 
¶23.  (U) The "Citizenship Game" is a public-private effort intended 
to promote social responsibility among youths and university 
students.  Among its programs is the opportunity for participants to 
participate in training courses given by major corporations and the 
U.S. Chamber on combating piracy. 
 
---------------- 
Economic Efforts 
---------------- 
 
¶24.  (U) The GOB is encouraging corporations to look for "creative 
alternatives" to provide legal goods at a lower cost to reduce the 
attractiveness of cheaper counterfeit items to lower income 
citizens.  Several companies are already taking note.  Media reports 
indicate the U.S. National Basketball Association (NBA) and the 
Brazilian soccer club Atletico Minas Gerais have announced 
commencement of alternative merchandise lines that will sell in 
Brazil at reduced prices.  This still embryonic initiative calls for 
tax reductions on select products. 
 
---------------------------------- 
USG and Industry Provided Training 
---------------------------------- 
 
¶25.  (U) The last year has seen a growth in momentum of USG and 
industry provided training in Brazil.  During CY 2006, the USG 
partnered with the Brazilian Association for the Defense of 
Intellectual Property (ADEPI) to conduct a series of INL funded 
copyright piracy seminars for Brazilian federal and state law 
enforcement officials in Brasilia, Porto Alegre, Belo Horizonte and 
Recife.  Additional 2006 seminars built upon these efforts and 
included as sponsors the U.S. Chamber of Commerce, Sao Paulo State 
Federation of Industries, CNCP, Minas Gerais State Federation of 
Industries and private industry representatives.  Held in major 
cities and ports around the country, these seminars targeted various 
audiences including port customs officials, judges, prosecutors, 
state law enforcement officials, college students and teachers. 
 
¶26.  (U) Various groups have planned a total of eleven separate IPR 
training programs in Brazil for 2007.  Sponsors include USPTO, INL, 
USDOC, U.S. Chamber of Commerce, USTDA, the U.S. Chamber of 
Commerce, Sao Paulo State Federation of Industries, CNCP and the 
American Chamber of Commerce in Brazil.  These seminars will be 
designed to reach not only law enforcement personnel and government 
officials, but also college students and the business community. 
 
¶27.  (U) The CNCP report also notes GOB partnerships with a wide 
range of Brazilian industry associations to provide anti-piracy 
training to public officials.  In 2006, in-country training 
collaborators included the Brazilian Association of Software 
Companies (ABES), the Entertainment Software Association (ESA), 
Association for the Protection of Phonographic Intellectual Rights, 
ADEPI, Sao Paulo State Federation of Industries, and the Rio de 
Janeiro Delegation for Repression of Crimes against Intangible 
Property.  Last October, CNCP received the Motion Picture 
Association of America's anti-piracy award for its contribution to 
the reduction of piracy and the raising of public and government 
awareness of the problem. 
 
---------------------- 
Other State Activities 
---------------------- 
 
--Anti-Piracy Committees 
 
¶28.  (U) Sao Paulo, Brazil's most populous state, began the year 
with the creation of the Inter-Agency Committee to Combat Piracy. 
This group, which coordinates its efforts with the CNCP, is composed 
 
BRASILIA 00000249  005 OF 006 
 
 
of the Governor, his Chief of Staff, the Attorney General, six State 
Secretaries (Justice; Finance; Public Security; Labor; Culture; and 
 
SIPDIS 
Science, Technology, and Economic Development), and members of their 
staffs.  Sao Paulo joins the states of Rio de Janeiro and Rio Grande 
do Sul, which already have established state anti-piracy committees, 
and the state of Minas Gerais, which formed a similar committee in 
2006 (reftel C). 
 
----------- 
Legislation 
----------- 
 
--Federal Legislation 
 
¶29.  (U) The 2006 legislative session ended without action on three 
proposed amendments to federal anti-piracy legislation covering 
software, industrial property and intangible property.  The 
legislation, endorsed by the International Intellectual Property 
Alliance (IIPA), would have stiffened criminal penalties for piracy. 
 
 
--State Legislation 
 
¶30.  The Federal District and the states of Sao Paulo, Mato Grosso, 
and Rio de Janeiro took steps to strengthen anti-piracy legislation. 
 In Sao Paulo, an enterprise can now be banned from conducting 
business for five years for selling pirated goods.  The prohibition 
extends to any branch or other attempt to open a similar business in 
another name.  Mato Grosso is reportedly considering similar 
legislation. 
In the Federal District, vendors of pirated goods can be fined up to 
approximately USD 25,000. In Rio de Janeiro, sellers of pirated 
goods can lose their business licenses. 
 
¶31.  (U) However, there are states with far weaker anti-piracy 
legislation.  For example, in Rio Grande do Sul (reftel A), sale of 
pirated items is subject to a relatively minor fine and the 
legislation allows counterfeiters to retain their illicit goods 
after paying the fine. 
 
--------------------------------------------- 
Increased Media Coverage and Ongoing Problems 
--------------------------------------------- 
 
¶32.  (U) A January 28 media report highlighted the arrest of 38 
Federal Highway Patrol members, 23 Federal Police agents and four 
customs officials on charges of facilitating the movement of 
contraband to Brazil from Paraguay.  While underscoring the problem 
of corruption among officials charged with policing piracy, the 
article is one of several that have appeared in recent days about 
Brazil's piracy problem, and evinces media consciousness on the 
subject. 
 
¶33.  (U) A U.S. Chamber of Commerce/Brazil-U.S. Business 
Council-commissioned poll released in December 2006, found that 
price is the determining factor in the Brazilian consumer's 
purchasing decisions. The survey also found that the purchase of 
pirated goods increased in the 25-39 year old age group and with 
those over 50.  The report acknowledges increased GOB efforts to 
combat piracy, but the results do not show a major movement in 
consumer behavior away from purchasing pirated goods. 
 
¶34.  (U) The poll also noted a 17 percent growth overall in 
commercial piracy in the cities of Rio de Janeiro, Belo Horizonte 
and Recife, including a 45 percent increase in pirated items in the 
clothing, tennis and toy sectors.  By contrast, in Sao Paulo city, 
the country's largest and a key focal point of increased GOB 
anti-piracy effort, the survey found a 14 percent reduction in the 
sale of pirated goods. 
 
¶35.  (SBU) Comment:  While there is much yet to be accomplished, 
particularly in the area of public consciousness, the December 2006 
CNCP report highlights the progress the GOB has made in its fight 
against piracy in 2006.  GOB authorities are becoming increasingly 
frustrated over Brazil's continued inclusion on the USTR "Priority 
Watch List" despite what they consider greatly improved IPR 
enforcement mechanisms and efforts.  This manifests itself in both 
large and small ways, the most egregious example of the latter being 
 
BRASILIA 00000249  006 OF 006 
 
 
when the MFA protocol office requested the USPTO representative in 
Sao Paulo to stop using "IPR Attache" in his official title because 
he had not been declared as such to the GOB. 
 
¶36.  (SBU) For what its worth, relations between Brazil and the EU 
on IPR are worse.  In meetings on January 24 and January 30, 
representatives of the CNCP and the MFA both told EconOff they were 
frustrated by their continued inclusion on the EU IPR "Blacklist" 
and felt the GOB had a much more fluid dialogue with the USG on IPR 
issues.  One official told EconOff that he felt the Europeans reach 
conclusions first and then look at the facts, noting that the EU had 
based its decision on 1999 piracy data.  The GOB's dialogue with the 
EU over IPR issues has deteriorated to the point that the GOB 
insisted that no EU or G-8 speakers participate in a proposed joint 
US-EU intellectual property rights enforcement seminar planned for 
Foz do Iguacu in March. End Comment. 
 
Sobel