VZCZCXRO9620
PP RUEHRG
DE RUEHSO #1007/01 3601808
ZNR UUUUU ZZH
P 261808Z DEC 07
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC PRIORITY 7785
INFO RUEHBR/AMEMBASSY BRASILIA 8927
RUEHRG/AMCONSUL RECIFE 3943
RUEHRI/AMCONSUL RIO DE JANEIRO 8513
RUEHBU/AMEMBASSY BUENOS AIRES 3005
RUEHAC/AMEMBASSY ASUNCION 3251
RUEHMN/AMEMBASSY MONTEVIDEO 2565
RUEHSG/AMEMBASSY SANTIAGO 2262
RUEHLP/AMEMBASSY LA PAZ 3652
RUCPDOC/USDOC WASHDC 2996
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC
RUEHRC/USDA FAS WASHDC 0713

UNCLAS SECTION 01 OF 03 SAO PAULO 001007 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/BSC, WHA/EPSC, EEB/AMONSARRAT 
STATE PASS USTR FOR KATE DUCKWORTH 
STATE PASS FED BOARD OF GOVERNORS FOR ROBITAILLE 
STATE PASS EXIMBANK 
STATE PASS OPIC FOR DEMROSE, NRIVERA, CMERVENNE 
NSC FOR TOMASULO 
TREASURY FOR JHOEK 
USDOC FOR 4332/ITA/MAC/WH/OLAC 
USDOC ALSO FOR 3134/USFCS 
 
E.O. 12958: N/A 
TAGS: EFIN EINV ECON BR
SUBJECT: IPR ROUNDTABLE FOR A/S SULLIVAN'S VISIT TO SAO PAULO 
 
 
¶1.  SUMMARY: Assistant Secretary for the Bureau of Economic, Energy, 
and Business Affairs Daniel S. Sullivan held a roundtable on 
intellectual property rights (IPR) on December 12 at the U.S. 
Consulate in Sao Paulo.  Representatives from recording, film, 
publishing, healthcare, and Sao Paulo state industry all voiced 
concern about the growing preponderance of intellectual property 
rights violations in the country.  The common themes were the 
adverse affect on Brazilian culture that pirated goods represent and 
the apparent lack of interest by the Government of Brazil in 
enforcement of existing laws.  According to several of the 
interlocutors present, universities and the Government of Brazil 
(GOB) itself also distribute pirated goods.  A/S Sullivan told the 
group he would convey to the GOB the group's message about the 
damage to a country's cultural heritage pirated goods represent, and 
encouraged the participants to do the same.  END SUMMARY. 
 
Music and Film 
-------------- 
 
¶2.  Jorge Wilson Clayton, an attorney for the Association Against 
Piracy for the Movie and Music Industry (APCM) noted that the big 
problem in Brazil is sales of pirated CDs on the streets.  He noted 
more than 200 "burners" in Brazil where music and movies are 
illegally copied for sale in Brazil.  As a result, many legitimate 
movie rental chains (including Blockbuster which sold its chain of 
stores in Brazil to Lojas Americanas) have closed because they 
cannot compete with pirated videos sold on the street.  He noted 59 
percent of films sold in Brazil are pirated, but that the police 
regard movie piracy with a lower priority despite precincts 
dedicated to fighting IPR violations.  Clayton argued that the lack 
of prosecution encourages the behavior to continue because no one 
believes they will be punished for buying or selling pirated goods. 
 
 
¶3.  Clayton highlighted that piracy is not only of American artists, 
but of Brazilian movies and music as well.  The Brazilian movie 
Tropa de Elite (The Elite Troup) released earlier this year is the 
most pirated film in Brazil to date.  [Note: Millions of Brazilians 
watched pirated versions of this Paramount Studios movie before it 
came out in theaters, forcing Paramount to release the movie a month 
earlier than anticipated.  End Note.]  Furthermore, 80 percent of 
music sold in Brazil is of Brazilian bands and artists.  According 
to Clayton, Brazilian record labels are launching fewer bands each 
year because they are not generating adequate profits due to 
copyright violations.  He emphasized that local talent suffers in 
the long run and that eventually only foreign talent would be 
present in Brazil. 
 
Books and Educational Materials 
------------------------------- 
 
¶4.  Representatives from the publishing industry complained of a 
similar disregard for copyright laws for textbooks.  Dalton Spencer 
Morato Filho, Legal Director for the Brazilian Association of 
Reproduction Rights (ABDR) told A/S Sullivan that universities and 
students are the biggest culprits of pirated books and articles, 
including best sellers and books in foreign languages.  According to 
Dalton, ABDR raids of university copy centers that started in 2004 
have reduced the physical copying of books and articles; however, 
book piracy has moved to university intranet sites and to the 
internet.  ABDR has been somewhat successful in suspending Brazilian 
websites, but many foreign sites also host pirated material, 
including U.S. based websites.  Dalton noted the government and 
police have not seriously condemned book piracy because of the 
public perception that students are poor and have the right to free 
access to educational materials. 
 
¶5.  Dalton directed A/S Sullivan to a 2005 policy of the University 
of Sao Paulo, Brazil's largest and best public institution, that 
allows books that are not written in Portuguese and/or not published 
in Brazil to be reproduced without penalty.  ABDR claims the policy 
 
SAO PAULO 00001007  002 OF 003 
 
 
has created a standard for other universities and educational 
centers to follow.  Even though this activity is considered illegal 
according to Dalton, the GOB has not done anything to stop this 
activity. 
 
Healthcare 
---------- 
 
¶6.  Elter Santos, Coordinator of Operations at the Brazilian 
Association of Eyeglasses and Sunglasses (ABIOTICA), told A/S 
Sullivan that Brazil's informal economy supplies 50 percent of 
eyeglasses, creating an important health concern.  In 2006, there 
were 1.4 million glasses seized (both Brazilian and foreign brands) 
and ABIOTICA estimates the authorities seize only 10 percent of 
imported knock-offs, he said.  The verification process is 
time-consuming and expensive.  Santos estimated that it costs 
approximately USD 250 to 300 to test a single pair of glasses for 
authenticity, and that each pair within a shipment needs to be 
tested at an importer's expense.  As transportation, distribution, 
and marketing costs increase, legitimate importers are unable to 
cover the costs of pursuing fraudulent merchandise.  Furthermore, 
Santos said the government holds auctions to sell any fraudulent 
merchandise recovered. 
 
Sao Paulo Industry Perspective 
------------------------------ 
 
¶7.  The Sao Paulo Federation of Industries (FIESP) representative 
for IPR issues Ana Paula Villela stated that although Brazil is a 
huge consumer of pirated goods, most production occurs outside 
Brazil's borders.  As a result, FIESP focuses its efforts on 
educational seminars and training sessions to familiarize consumers 
on IPR issues (some of which U.S. Patent and Trade Office (USPTO) 
contributes to), and about the health and security concerns of 
pirated products.  She said that despite their efforts, a recent 
survey by the American Chamber of Commerce showed that Brazilians 
are aware they are buying pirated products, but value the price 
advantage of pirated goods over the legal implications of their 
actions.  In 2006, FIESP visited 12 ports and border regions to 
train customs agents and federal and local police about pirated 
goods and provide them the legal framework for IPR protection.  For 
the most part, FIESP has received positive feedback from training 
participants. 
 
Lack of Enforcement 
------------------- 
 
¶8.  All participants at the IPR Roundtable complained about the lack 
of committed IPR enforcement in Brazil.  FIESP noted in particular 
the need to increase criminal penalties for trademark 
counterfeiting.  According to participants, the current criminal 
penalty for copyright piracy is two to four years, while only one to 
six months for trademark counterfeiting.  A bill to increase the 
counterfeiting penalty has been stuck in Congress since 1999.  While 
the Lower House approved the original bill in 2001 and the Senate 
revised portions of the bill and approved it in September 2003, 
Congress has not promulgated the bill into law. 
 
¶9.  The Manager of Information Control at the Brazilian 
Telecommunications Company (EMBRATEL) Anderson Luis Cantarine also 
expressed concerns that the Federal government is devoting fewer 
resources to enforcement.  He noted that early internet reports 
suggest that the Federal government will be reducing transfers to 
the state governments for security, implying fewer resources 
available for IP enforcement. 
 
¶10.  COMMENT: A/S Sullivan mentioned to the IPR Roundtable that he 
is beginning to see traction in many countries for stronger IPR 
enforcement driven by governments' concerns for their own artists 
and culture and that IPR protection is not only an American issue, 
but has worldwide implications that many developing countries are 
 
SAO PAULO 00001007  003 OF 003 
 
 
now waking up to.  He noted that he would be seeing Brazilian 
officials the next day and would be raising these issues.  The 
assembled group agreed that it is also incumbent upon them to take 
the concerns of Brazilian industry to the Government of Brazil to 
underscore how the lack of enforcement has a negative economic 
impact on Brazilian companies.  A/S Sullivan cited groups of young 
entrepreneurs and executives such as those gathered as the strongest 
and most effective force for building better understanding that 
piracy is a serious crime.  Focusing this problem as detrimental to 
Brazilian workers, companies, artists, and culture will help 
highlight the issue for the GOB.  END COMMENT. 
 
¶12.  This cable has been cleared by A/S Sullivan's delegation. 
 
WHITE