VZCZCXYZ0000
RR RUEHWEB

DE RUEHZP #0258/01 0522132
ZNR UUUUU ZZH
R 212132Z FEB 07
FM AMEMBASSY PANAMA
TO RUEHC/SECSTATE WASHDC 9856
INFO RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
RHEFHLC/DEPT OF HOMELAND SECURITY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS PANAMA 000258 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB/TPP/IPE JENNIFER BOGER 
USTR FOR JENNIFER CHOE GROVES 
COMMERCE FOR ITA/MAC/OIPR CASSIE PETERS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KIPR PGOV PM
SUBJECT: PANAMA RESPONSE TO REQUEST FOR SPECIAL 301 
VOLUNTARY INPUT 
 
REF: A. STATE 07944 
 
     ¶B. 2006 STATE 180082 
     ¶C. 2005 PANAMA 00413 
 
¶1. (SBU) SUMMARY.  The legal framework governing IPR 
protection in Panama is substantive, although gaps exist 
both in domestic legislation and participation in the full 
complement of international treaties.  Enforcement levels 
and resources remain weak but 2006 saw positive trends in 
seizures and convictions.  Embassy Panama's IPR 
Subcommittee (Econ, FCS, NAS, PAS and AID) meets regularly 
to track IPR legislation and enforcement levels, identify 
equipment and resourcing needs, select candidates for U.S. 
Patent and Trademark Office (USPTO) and other IPR related 
training, organize public outreach and focus Panama's 
judiciary on IPR.  Key Embassy sponsored events for 2006 
included equipment donations to Panama's inter- 
institutional IPR Committee, MPAA sponsored movie 
screenings, judicial exchange between members of Panama's 
judiciary and U.S. District Court in conjunction with the 
Department of Justice.  Of the industry association groups, 
IFPI and MPAA are the most active in Panama.  Outreach to 
BSA, ESA and PhRMA by Econoff received friendly but 
noncommittal responses.  END SUMMARY 
 
------------ 
IT'S THE LAW 
------------ 
 
¶2. (U) Panama's domestic IPR legislation criminalizes 
patent, trademark and copyright violations with penalties 
ranging from two to four year jail terms.  An Executive 
branch sponsored review of Panama's entire judicial code 
(Comision Codificadora) currently recommends increasing 
penalties to four to six year jail terms, initially with 
the exception of the use of published materials (copyright 
protection).  Post raised with the GOP our concern that this 
exception under the proposed new judicial code would weaken 
copyright protection.  Panama's Trade Ministry, working 
with the IPR Prosecutor and Panama's Inter-institutional 
IPR Committee, responded quickly to ensure the draft code 
would not weaken Panama's IPR legal framework. 
 
¶3. (U)  Panama is a signatory to the WIPO Copyright Treaty, 
WIPO Performances and Phonograms Treaty, the Geneva 
Phonograms Convention, the Brussels Satellite Convention, 
the Universal Copyright Convention, the Bern Convention for 
the Protection of Literary and Artistic Works, the Paris 
Convention for the Protection of Industrial Property, the 
International Convention for the Protection of Plant 
Varieties, and the Rome and Stockholm Conventions. 
However, Panama's domestic IPR legislation does not reflect 
all of its obligations under these treaties.  Examples 
include the WIPO Copyright Treaty (WCT) and Performances 
and Phonograms Treaty (WPPT).  In 2005-2006, Panama entered 
into a number of bilateral Free Trade Agreements including 
Mexico, Central America, and Taiwan which contained 
language supporting the enforcement of intellectual 
property rights. 
 
4.(U) In December 2006, the U.S. and Panama concluded 
negotiations of a Trade Promotion Agreement (TPA), which 
includes a chapter on IPR.  In this TPA, Panama agreed to 
ratify or accede to the Patent Cooperation Treaty, the 
Budapest Treaty on the International Recognition of 
the Deposit of Microorganisms  for the Purposes of 
Patent Procedure, the Trademark Law Treaty, and the 
International Convention for the Protection of New Plant 
Varieties.  Panama also committed in the TPA to make all 
reasonable efforts to ratify or accede to the Patent Law 
Treaty, the Hague Agreement concerning the International 
Registration of Industrial Designs and the Madrid Protocol. 
 
-------------------- 
WHAT'S THE PROBLEM ? 
-------------------- 
 
¶5. (U) The primary IPR violations in Panama are copyright 
infringement (music and movie piracy) and trademark 
infringement (counterfeit designer clothing and 
accessories). In addition, Panama's Colon Free Zone (CFZ) is 
the primary conduit for blank CDs imported from Asia and 
re-exported throughout Latin America for use in audio and 
video piracy as well as for counterfeit designer goods. 
Wholesale vendors reported to the press an 80% decrease in 
 
sales from the prevalence of pirated CD's in Panama and a 
list of seven retail music stores/chains which have closed 
as a result. 
 
¶6. (U) According to the 2005 BSA/IDC 3rd World-wide Study 
on Piracy, 71% of the software in use in Panama is 
pirated.  Legally, the GOP is required to use only properly 
licensed software but anecdotal evidence suggests 
compliance within GOP departments is low.  Despite these 
statistics, attempts to engage BSA/ESA in a compliance 
project by Post were unsuccessful.  According to the IPR 
Prosecutor's office, only two cases of counterfeit 
pharmaceuticals were reported in 2006, only one of which 
resulted in a seizure and subsequent investigation. 
 
--------------- 
IPR ENFORCEMENT 
--------------- 
 
¶7. (U) Panama has less than six prosecutors specializing in 
IPR violations, most of whom are based in Panama City. 
There is no dedicated court for IPR violations.  IPR cases 
are tried in the geographic district in which they occur, 
which results in inconsistent application of the law 
depending on the sophistication and training of the sitting 
judge.  The IPR Prosecutor's office remains underfunded and 
understaffed for the workload.  Post's IPR Subcommittee has 
targeted resources (equipment, training and operational 
funding) for use by this organization. 
 
¶8. (U) Nonetheless, available data indicates that IPR 
enforcement efforts undertaken in 2005 and 2006 were 
significantly higher than 2004 (Ref C). Panama's Customs 
Authority reported $10 million in pirated and counterfeited 
goods decommissioned between January and November of 2006. 
The primary products seized were fake designer watches, 
sweaters, sportswear, perfumes, jeans, shoes, hats and 
counterfeit cigarettes.  According to Panama's IPR 
prosecutor, during the period between September 2005 and 
July 2006, 654 cases of IPR violations were reported.  As 
of July 2006, 157 were under investigation and 471 
proceeded to prosecution with 44 convictions, 4 acquittals 
and 34 were dismissals (SIC).  Media reports claim that 
enforcement efforts in the Chiriqui province have 
significantly reduced the sale of pirated music and movies 
in the interior regions of Panama. 
 
------------------ 
ABSENTEE JUDICIARY 
------------------ 
 
¶9. (SBU) The most significant IPR enforcement hurdle in 
Panama remains the apathy and ignorance of the judiciary. 
The sale of pirated goods is considered a victimless crime 
at a minimum, and at times an important source of financial 
support for poor Panamanians.  Despite painstaking work by 
the Prosecutor's office, most Panamanian courts look for a 
technical violation in the application of procedural rules 
that will allow them to dismiss the case. 
 
¶10. (U)  As a result, Post specifically designed a program 
to raise the judiciary's consciousness on IPR issues. 
Working with DoJ's Office of Overseas Prosecutorial 
Development, Assistance and Training (OPDAT), a program of 
exchanges with U.S. District Judges began in 2006. 
Selected Panamanian judges are sent to observe proceedings 
in a U.S. District court to demonstrate the professionalism 
and efficiency of U.S. procedure and to build rapport.  In 
2007, it is anticipated that one or more U.S. District 
judges will come to Panama to conduct a seminar and assist 
the participating Panamanian judiciary in creating a "bench 
book" on how to try IPR cases in Panama.  The first 
exchange took place in U.S. District court in Puerto Rico 
on December 4th and 5th. Thanks to the good offices of both 
DoJ and USPTO, Post was able to send the three 
participating judges directly onto Miami for the 
USPTO/SEICA Seminar for the Judiciary on IPR Enforcement 
December 6 to 8th. 
 
------------------ 
STAYING ON MESSAGE 
------------------ 
 
11.(U) To counteract the perception of IPR violations as 
"victimless" crimes and/or only harming large multinational 
 
corporations, Post's IPR public diplomacy focuses on four 
key messages: 1) the impact on local Panamanian music, 
culture and indigenous art 2) the safety issues surrounding 
counterfeit goods 3) the financial support of large 
criminal organizations resulting from the purchase of 
pirated goods including the damage to the economy from the 
need to launder the proceeds and the lost tax revenue to 
the government; and 4) the negative impact on innovation 
and foreign direct investment from weak IPR enforcement. 
 
¶12. (U) With the assistance of the MPAA, Embassy Panama 
sponsored a screening of "An Inconvenient Truth" and other 
films with opening remarks by the Ambassador in support of 
IPR enforcement.  As part of a general outreach, several 
ELO's have visited the University of Panama's English 
language classes to engage in dialogue with young 
Panamanians on a variety of topics, including IPR. 
 
¶13.  During 2006, the Latin American arm of IFPI 
established the non-profit organization PRODUCE in Panama. 
PRODUCE will centralize the collection of royalties and 
other fees for the public use of copyrighted material to be 
remitted back to the appropriate artist/record company. 
PRODUCE represents Sony, BMG, Universal, Warner and EMI. 
The Panamanian government had some difficulty accepting 
this activity under the banner of "non-profit" but 
eventually IFPI/PRODUCE prevailed as they will also collect 
and remit royalties related to the use of indigenous music 
and Panamanian folklore which Warner has agreed to 
distribute internationally under its label. 
 
¶13. (U) PRODUCE told Emboffs that it is working with 
Panama's small business organization (AMPYME) to assist 
street corner CD/DVD vendors in forming micro-businesses 
and distribute legitimate product.  They are also planning 
a public relations campaign of TV and radio ads by local 
artist against piracy.  A WIPO seminar is scheduled for the 
end of March/first week in April 2007 including a session 
on border IPR enforcement. 
 
------- 
COMMENT 
------- 
 
¶14. (SBU) It is the consensus of Post's inter-agency IPR 
Subcommittee that Panama remains on a positive trajectory 
regarding IPR enforcement.  The three main obstacles to IPR 
enforcement in Panama remain the strength of Panama's 
informal economy, lack of resources for law enforcement 
agencies, and a reluctant judiciary.  The attitudes of 
Panamanian IPR law enforcement and civil authorities 
indicate a recognition of the importance of IPR 
protection.  The financial impact of IPR losses to industry 
from Panama is relatively small compared to Mexico, Brazil, 
and others in the region.  However, all industry groups 
express concern about the importance to the region of IPR 
enforcement within the CFZ. 
Eaton