VZCZCXRO0785
PP RUEHRG
DE RUEHBR #2038/01 2991845
ZNR UUUUU ZZH
P 261845Z OCT 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 0260
INFO RUEHSO/AMCONSUL SAO PAULO 1023
RUEHRI/AMCONSUL RIO DE JANEIRO 5295
RUEHRG/AMCONSUL RECIFE 7248
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 03 BRASILIA 002038 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EB/TPP/IPE JENNIFER BOGER 
DEPT PASS USPTO 
DEPT PASS USTR FOR KATHERINE DUCKWORTH 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: POST OCR FINDINGS 
REF: A) State 107819; B) Brasilia 1620; C) Brasilia 680; D) Brasilia 
 
2813 
 
¶1.  (SBU) Summary:  Post recommends retaining Brazil on the Watch 
List based on its continued strong overall anti-piracy enforcement 
efforts and in light of some continuing problem areas.  The value of 
pirated and contraband items seized by Receita Federal in the first 
six months of 2007 was over USD 285.5 million - an increase of more 
than 36 percent over the same period in 2006 and only 15 percent 
less than reported confiscations over the first nine months of last 
year.  GOB state and federal authorities have conducted anti-piracy 
operations in the Tri-Border Area and have taken action against 
street vendors and shops in some of the more notorious piracy 
districts of Sao Paulo and Rio de Janeiro, including the Stand 
Center, Galeria Page and various Camelodromos.  Projections based on 
Federal Police data predict a significant increase for 2007 in 
Federal Police confiscations of counterfeit and contraband 
electronics and pharmaceutical drugs, an 8.5 percent drop in 
seizures of pirated CDs and DVDs, and a slight decrease (3.5 
percent) in collections of contraband electronic goods.  (Note:  The 
third major federal anti-piracy enforcement agency, Rodoviaria 
Federal - Federal Highway Patrol - did not provide interdiction data 
to Post. End note.)  GOB action against internet piracy resulted in 
the removal of 19,878 internet advertisements, the ejection of 3,882 
companies from the internet and the closure of 183 web sites through 
September 2007. 
 
¶2.  (SBU) The GoB is streamlining patent and trademark processing 
and expects backlogs for both areas to continue to decrease. 
Legislation developed by the public-private National Anti-Piracy 
Council (CNCP) that addresses many industry concerns, including 
partial sampling and destruction of pirated goods, has widespread 
support among key GoB ministries.  The bill is currently in 
President Lula's office for final, and expected, approval before 
submission to the Brazilian Congress for consideration.  Despite 
this progress, a number of issues remain outstanding.  A leading 
industry association continues to complain about copyright 
violations of printed materials at campus copy-shops. Post has 
received no indication of increased GoB vigilance at alternative 
border crossings. The GoB has not been able to provide numbers for 
arrests and convictions of IPR violators, although based on past 
experience, this number is expected to remain low.  End Summary. 
 
3  (U) Per reftel A, the following is Embassy Brasilia's input for 
the Special 301 Out-of-Cycle (OCR) Review of Brazil.  Because the 
GoB typically publishes its enforcement data at year-end, certain 
final data on its anti-piracy enforcement actions is not yet 
available for this report.  Nonetheless, Post believes that 
sufficient information is currently available to provide an accurate 
portrait of GoB anti-piracy enforcement efforts for 2007. 
 
---------------------- 
Enforcement Activities 
---------------------- 
 
¶4.  (SBU) Two of the three main federal enforcement agencies 
involved in anti-piracy interdiction - Receita Federal (the 
Brazilian Customs and Internal Revenue Service) and the Federal 
Police - provided data on 2007 anti-piracy activities.  The third, 
Rodoviaria Federal (Federal Highway Patrol), did not.  The National 
Council Against Piracy (CNCP) provided consolidated state and 
federal data on major raids.  Receita Federal reported that it 
apprehended over USD 285.5 million in contraband items in the first 
six months of 2007, an increase of over 36 percent in comparison to 
the same period in 2006  (Note:  All figures were converted using 
the 10/19/07 exchange rate of BR 1.80/USD.  End Note.) 
 
¶5.  (SBU) Based on Federal Police data on quantities of contraband 
seized through August 10, Post estimates an 8.5 percent drop in 
Federal Police confiscations of pirated CDs and DVDs and a slight 
drop (3.5 percent) in collections of contraband electronic goods for 
calendar year 2007.  In contrast, confiscations of counterfeit and 
contraband electronics and pharmaceutical drugs are projected to 
increase in 2007, up 15.6 and 43.4 percent respectively. 
 
¶6.  (SBU) National Council Against Piracy (CNCP) data indicates that 
federal and state enforcement officials seized 1,472,528 contraband 
items in raids on known marketplaces through September 2007.  Among 
these actions is a year-long operation targeting buses crossing into 
Brazil in the Tri-Border area (538,038 seizures as of August 31) and 
ongoing actions against street vendors and shops in some of the more 
notorious piracy districts in Sao Paulo and Rio de Janeiro, 
including the Stand Center, Galeria Page and various Camelodromos. 
 
 
BRASILIA 00002038  002 OF 003 
 
 
 
--------------- 
Internet Piracy 
--------------- 
 
¶7.  (SBU) The GoB appears to be taking internet piracy more 
seriously.  A key GoB official, Vice Minister of Justice Luiz Paulo 
Barreto assured recording industry representatives in April that he 
would drop his previous public opposition to legal actions filed by 
them against Brazilian end-users of pirated music (reftel C).  CNCP 
data showed that, through September 2007, Brazilian authorities had 
removed 19,878 internet advertisements touting pirated items, 
removed 3,882 companies from the internet and shut down 183 web 
sites - all for violation of Brazil's anti-piracy statutes. 
 
---------------------- 
Patents and Trademarks 
---------------------- 
 
¶8.  (SBU) Although Brazil's patent backlog remains high, estimated 
at between 130,000 and 150,000 applications, the GoB has taken 
concrete steps to streamline processing, including an upgrade of its 
outdated computer system.  Over the past two years it has increased 
the number of patent and trademark examiners over 155% from 180 to 
460 and increased median salaries 50% to retain experienced 
employees.  By the end of 2007, the GoB estimates that new patent 
applications will be adjudicated within five years of submission; by 
the end of 2009 the goal is four years.  The GoB has also raised 
trademark approvals almost six-fold since 2003 and expects to 
shorten processing time to less than a year by the end of 2007, down 
from the current 18 month wait. 
 
------------------- 
Federal Legislation 
------------------- 
 
¶9.  (SBU) The CNCP's Legislation Working Group, with input from a 
private sector forum, developed draft legislation in 2005 that 
proposes a number of changes in the country's penal code and 
industrial property law.  Among the suggested changes are: 
expansion of vehicle seizure authority, clarification of procedures 
for seizure and destruction of goods, and permission for law 
enforcement agencies to retain only samples for use in litigation. 
The bill also allows for different penalties for individual 
offenders from those involved in larger operations; incorporates 
penalties for software copyright violation into the penal code; and 
stiffens penalties if pirated goods are imported (reftel D).  The 
bill, widely supported by GoB Ministries, is currently in President 
Lula's office for final, and expected, approval before submission to 
the Brazilian Congress for consideration.  (Comment:  GoB 
anti-piracy legislation is generally TRIPS compliant. End Comment.) 
 
¶10. (SBU)  GoB interlocutors have told EconOff they oppose any 
legislation that would impose a blanket increase in jail time for 
IPR violators on the grounds that there is no room in already 
overcrowded Brazilian prisons for small-time IPR offenders.  They 
also feel there is a social cost to incarcerating low income IPR 
violators, who are usually the sole support for their families. 
 
----------------------------------------- 
Pharmaceutical Data Protection 
----------------------------------------- 
 
¶11.  (SBU) Although the Brazilian Law on Industrial Property 
currently prohibits disclosure and use of undisclosed test data, 
pharmaceutical industry representatives continue to voice concern 
over the potential for release of confidential data submitted to 
ANVISA as part of the drug patent approval process.  Brazil's 
multinational pharmaceutical industry association, Interfarma (which 
also includes representatives of U.S. companies), has been 
unsuccessful in its attempts to get Congress to pass a law 
specifically addressing data protection.  Currently, civil action is 
the only avenue available to drug companies harmed by the release of 
confidential data.  However, Interfarma has not brought to Post's 
 
SIPDIS 
attention any cases in which data confidentiality has, in fact, been 
breached. 
 
---------------- 
Border Crossings 
---------------- 
 
 
BRASILIA 00002038  003 OF 003 
 
 
¶12.  (SBU) Brazil's opening of a customs office in front of the 
Amistad bridge crossing into Brazil has been a significant step in 
combating IPR piracy, increasing the cost to smugglers who have to 
use less convenient alternative routes.  Unfortunately, Post has 
received reports that these secondary routes, in particular through 
the state of Mato Grosso, are seeing more use and border crossings 
are not manned full-time by the GoB.  There are also indications 
that smugglers are taking advantage of Mercosul transportation rules 
and transporting pirated goods across Argentina to enter Brazil 
through Uruguay. 
 
----------------- 
Campus Copy-Shops 
----------------- 
 
¶13.  (SBU) A representative of ABDR (Brazilian Association for 
Reprographic Rights) recently characterized the book piracy 
situation in Brazil as "critical" to EmbOff.  He attributed this 
problem to a lack of attention by GoB authorities, in particular the 
Ministry of Education, adding that the progress made with regards to 
software and music piracy is lacking in the book publishing 
industry. 
 
¶14.  (SBU) According to ABDR, internal rules issued by University of 
Sao Paulo (USP) and the Pontifical Catholic University of Rio de 
Janeiro (PUC) allow books not written in Portuguese to be freely 
copied, if not available for sale at campus book stores.  ABDR 
claims that the university justifies its internal rule by stating 
that access to knowledge and education are fundamentally protected 
under the Brazilian constitution.  (Comment:  Under Brazilian 
copyright law, "the one-time reproduction of small passages of a 
work for the copier's private use without the intention of making a 
profit" is allowed, but the Law does not define what constitutes a 
"small passage."  End Comment.) 
 
----------------------- 
Arrests and Convictions 
----------------------- 
 
¶15.  (SBU) GoB interlocutors were unable to provide consolidated 
arrest and conviction statistics for piracy and contraband 
activities.  The information provided by the CNCP on its IPR Hotline 
indicates that 17,622 emails, 2,958 calls and 1,935 other notices 
resulted in 67 "judicial actions." 
 
------------------------------ 
Other Significant Developments 
------------------------------ 
 
¶16.  (U) Other significant developments since Post's Special 301 
submission in February include: 
 
-- Executive Director Andre Barcellos attended a June session of the 
USPTO Global Intellecutual Property Academy (GIPA) training in 
Virginia - a first for a CNCP Executive Director. 
 
-- The Brazilian state of Bahia recently formed an anti-piracy 
police unit, joining the states of Sao Paulo, Rio de Janeiro, Minas 
Gerais, Pernambuco and Rio Grande do Sul, which already have 
established state anti-piracy committees. 
 
-- The governor of Pernambuco, Eduardo Campos, has publicly directed 
his state police force to cooperate with Federal Police in enforcing 
IPR statutes. 
 
¶17.  (SBU) Comment:  Post recommends that Brazil remain on the 
Special 301 Watch List based on the GoB's ongoing commitment to a 
strong overall anti-piracy enforcement regime and its determined 
actions to improve its patent and trademark processing.  However, 
Post feels that the GOB's need to undertake a more vigorous effort 
to address photocopying of copyrighted material by campus copy 
shops, improve a low rate of convictions for IPR piracy, and 
adequately police secondary smuggling routes into the country 
preclude any upgrade of the country's status at this time. 
 
Sobel