VZCZCXRO7185
PP RUEHRG
DE RUEHBR #0254/01 0571104
ZNR UUUUU ZZH
P 261104Z FEB 08
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 1057
INFO RUEHSO/AMCONSUL SAO PAULO 1633
RUEHRI/AMCONSUL RIO DE JANEIRO 5814
RUEHRG/AMCONSUL RECIFE 7715
RUEHAC/AMEMBASSY ASUNCION 6593
RUEHMN/AMEMBASSY MONTEVIDEO 7225
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 09 BRASILIA 000254 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EB/TPP/IPE JENNIFER BOGER 
DEPT PASS USTR FOR KATHERINE DUCKWORTH AND JENNIFER CHOE GROVES 
DEPT PASS USPTO 
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: 2008 Special 301 Recommendation 
 
REF:  A) State 9475; B) 07 Brasilia 680; C) 07 Brasilia 787; D) 07 
Brasilia 1648; E) 07 Brasilia 2038; F) 07 Sao Paulo 1007; G) 08 
Brasilia 130; H) 07 Brasilia 2193; I) 07 Brasilia 944; J) 05 
Brasilia 2813; K) 06 Brasilia 367 
 
¶1. (U) Per reftel A, the following is Embassy Brasilia's input for 
the 2008 Special 301 Review of Brazil. 
 
¶2. (SBU) Summary:  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 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, address 
issues involving data protection, and adequately police secondary 
smuggling routes into the country preclude any upgrade of the 
country's status at this time.  End Summary. 
 
-------- 
OVERVIEW 
-------- 
 
¶3.  (SBU) The GoB has continued its emphasis on copyright 
enforcement activities.  This effort has yielded substantial 
increases in some confiscation statistics as well as in detected and 
penalized violations, though a drop in a few enforcement-related 
statistics are attributed to modifications in smuggling patterns. 
Internet piracy issues appear to be slowly gaining attention in some 
areas of the GoB with some modest enforcement success.  Illegal book 
copying on college campuses remains a problem without an easy 
solution.  Constitutional rights to information and education are in 
direct conflict with the rights of copyright holders.  The prospects 
for legislation to clarify the rights of copyright holders of 
educational materials appears unlikely in the short-term. 
 
¶4.  (SBU) The Brazilian patent and trademark office is taking 
concrete steps to address Brazil's high patent and trademark 
backlogs with demonstrable results.  In the agricultural biotech 
field, the process for approval of commercial licensing of 
genetically modified organisms and their derivatives was streamlined 
in 2007, but efforts for new product approval were frustrated by 
legal intervention on behalf of some NGOs. 
 
¶5.  (SBU) In the pharmaceutical area, lengthy delays in approval by 
Brazil's National Health Vigilance Agency (ANVISA - the Brazilian 
FDA equivalent), and data protection remain concerns. Post has 
become aware of several cases where marketing approval was granted 
(although the products have not yet entered the market) to generic 
drug manufacturers apparently based on information submitted in 
connection with approval of the original drug.  The GoB asserts that 
its compulsory licensing action in May 2007 was price-driven and 
contends that the drug's patent was already in the public domain 
when the patent was issued, since it was a "pipeline patent" (ref 
G).  Post is not aware at this time of any imminent additional 
compulsorily licensing actions by the GoB. 
 
¶6.  (SBU) Draft criminal IP legislation, which would enable enhanced 
enforcement efforts, is currently stalled in the president's office 
for review.  In August 2007, additional legislation was introduced 
to increase the penalties for trademark violations.  Brazil's plans 
to join the Madrid Protocol are still under consideration. 
 
¶7.  (SBU) While the GoB continues to emphasize enforcement as its 
primary means to combat piracy, it also appears committed to ongoing 
educational and training efforts, often in conjunction with industry 
organizations and often targeting children and young adults. 
 
 ------------------- 
Enforcement Efforts 
------------------- 
 
¶8.  (SBU) In a report to the National Council to Combat Piracy 
(CNCP), Receita Federal (the GoB customs and internal revenue 
service) registered contraband seizures in 2007 totaling over 1.05 
billion Brazilian Reais (approximately USD 601.55 million), claiming 
a 21 percent increase over 2006.  Receita noted a 72 percent rise in 
its anti-contraband operations over the previous year (to 2,269 in 
2007), which resulted in 6,881 federal charges. (Note:  The report 
did not segment out piracy-related charges from other charges. End 
Note.)  Receita noted a 252 percent increase in seizures of recorded 
 
BRASILIA 00000254  002 OF 009 
 
 
media (CDs and DVDs), shoes, watches and sunglasses.  The agency 
cited the PRC as the main country of origin of confiscated 
contraband items, followed by the U.S., India and Paraguay.  (Note: 
The Receita report listed the origin of 57.9 percent of the items 
seized as "Other, including unknown origin"; 25.41 percent from the 
PRC; 4.17 percent as originating in Brazil; 3.28 percent from the 
U.S.; 2.06 percent from India; and, 1.94 percent from Paraguay.  End 
Note.) 
 
¶9.  (SBU) For 2007, Rodoviaria Federal (the Federal Highway Patrol) 
reported a 22.78 percent decrease in confiscations of pirated media 
from the previous year (approx 5.8 million units confiscated versus 
7.5 million in 2006) and a 4.85 percent decrease in seizures of 
illegal computer products (from approx 129 thousand in 2006 to 
around 123 thousand in 2007).  Rodoviaria reported a 22.25 percent 
increase in apprehensions of contraband electronics items (from 
about 273 thousand in 2006 to over 334 thousand in 2007) and a 3.96 
percent increase in seizures of contraband medicines (approx 323 
thousand units versus around 310 thousand in 2006).  Rodoviaria 
claimed that the drop in confiscations was due to an increase in the 
use of secondary roads by smugglers where Rodoviaria has less 
presence (ref G). 
 
¶10.  (SBU) The third major enforcement agency, the Brazilian Federal 
Police, reported 8,698 piracy investigations in 2007, a 25.51 
percent increase over 2006 (6,930 investigations reported).  The 
Federal Police have not provided 2007 seizure information to Post. 
(Note:  CNCP officials recently told EconOff that release of the 
annual report containing consolidated federal agency enforcement 
statistics will be delayed this year until June - it was released in 
January last year - to incorporate new policy changes and to 
consolidate data collection.  This report has contained Federal 
Police contraband seizure information in the past.  End Note.) 
 
¶11.  (SBU) In 2007, Ministry of Agriculture Department of 
Intellectual Property and Agriculture Technology (MAPA) data 
indicates that 373 out of 3,157 inspections of soybean seed lots, 
resulted in fines to the owners.  Out of 606 cotton and corn 
inspections (an 18.8 percent increase over 2006), 36 (verses 55 in 
2006) were found to be questionable and resulted in average fines of 
$R 250 thousand (USD 142 thousand) (ref G). 
 
-- Counterfeit Medicine 
 
¶12.  (SBU) According ANVISA counterfeit medicines remain 
problematic, although to a lesser extent than in the past.  In 
1997-98, there were 172 reported cases of counterfeit medicines; 
while in 2006-07, there were only 17.  Penalties for drug 
counterfeiters are stiff:  10-15 years without parole or amnesty 
plus a fine.  GoB regulations now call for usage of secure drug 
packaging and a distributors' registry.  ANVISA serves as the 
clearinghouse for information on counterfeit drugs provided by a 
nationwide notification network of 160 sentinel hospitals (known as 
Notivisa), and state health vigilance units (VISAs) (ref G). 
 
-- Raids on Known Markets 
 
¶13.  (SBU) State and federal enforcement authorities continued 
action against known marketplaces of counterfeit goods.  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 are year-long operations 
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 counterfeit markets in Sao 
Paulo and Rio de Janeiro, including the Stand Center, Galeria Page 
and various Camelodromos (Ref E).  In a November enforcement 
operation, Federal Police in Brasilia conducted operation "Seven 
Errors" against contraband items in the "Paraguay Fair," a known 
market for counterfeit goods.  The operation resulted in 18 arrests. 
 Another November anti-contraband operation in Mato Grosso do Sul 
targeted among other items, agrochemicals, tires and electronics, 
and resulted in 70 arrests.  In Sao Paulo, state, federal and 
municipal authorities raided the city's notorious "25th of May" 
Street on Dec. 11, and the "Stand Center" and "Promo Center" on Dec. 
¶19.  Both the Stand Center and Promo Center remained closed during 
the Christmas holiday season.  On January 11, 2008, Federal Highway 
police reported the seizure of over half-million blank CDs and DVDs 
in the state of Rio Grande de Sul hidden in wooden crates.  (Note: 
Updated information on raids of notorious marketplaces and other 
 
BRASILIA 00000254  003 OF 009 
 
 
enforcement actions will most likely be included in the 2007 CNCP 
report due to be released later in the year.  End Note.) 
 
-- Border Crossings 
 
¶14.  (SBU) Brazil's customs office at the Amistad Bridge crossing 
into Brazil has forced many smugglers to use alternative routes, 
such as through the state of Mato Grosso do Sul.  There are also 
indications that smugglers are using Mercosul transportation rules 
to bring pirated goods across Argentina into Brazil through Uruguay 
(ref E).  The President of a leading IP organization recently told 
EconOff that this problem is ongoing and that many of the border 
stations at secondary crossings, including some of those on the 
border with Uruguay, are unmanned from 6:00PM until 7:00AM.  (Note: 
An April 30, 2007 media report claimed that traffic from Peru was 
able to enter the Brazilian state of Acre without inspection by GoB 
authorities.  Due to the remote nature of this location, Post has 
not yet been able to obtain independent confirmation of this claim 
or determine if the report referred to a situation that has since 
been resolved.  End Note.) 
 
-- Arrests and Convictions 
 
¶15.  (SBU) Citing difficulties in consolidating various state and 
federal databases, GoB interlocutors have thus far been unable to 
provide arrest and conviction statistics for piracy and contraband 
activities to Post.  Information provided by the Federal Police on 
raids in 2007 indicates around 339 arrests as a result of these 
operations, but piracy charges were not segmented out from other 
charges such as income tax evasion.  (Note:  Post's 2006 Special 301 
report indicates the GoB reported only 14 convictions for piracy 
related crimes in 2005 (ref K).  End Note.) 
 
--------------- 
Internet Piracy 
--------------- 
 
¶16.  (SBU) Opinions within the GoB are mixed as to the extent and 
importance of Brazilian efforts against internet piracy.  In a 
January meeting, GoB officials voiced seemingly conflicting views. 
A CNCP official said that although CNCP did not view internet crime 
in Brazil as a top priority due to low internet penetration rates in 
the country (just 14.5 % according to some estimates), CNCP has 
created a cyber-crime division.  A MRE official (MRE is a member of 
CNCP) stated that CNCP will address internet piracy once its members 
raise the issue, which he said they have not done thus far.  Another 
MRE official added that Brazil's low number of computers does not 
mean that the country is not concerned with internet crime and 
pointed to GoB attention to the issue at the Internet Governance 
Forum (IGF) Meeting in Rio de Janeiro in November 2007 (reftel E). 
 
¶17.  (SBU) Meanwhile, there is some evidence of efforts underway in 
this area.  Vice Minister of Justice Luiz Paulo Barreto assured 
recording industry representatives in April that he would drop his 
public opposition to legal actions filed by them against Brazilian 
end-users of pirated music (reftel B).  CNCP data indicates 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.  The Brazilian Federal 
Police have begun efforts to fight internet piracy, including 
modernization of outdated equipment and training of a cyber crime 
unit, and have indicated interest in exchanging technology and 
information with other countries (ref E). 
 
----------------------------------- 
GoB Education and Training Programs 
----------------------------------- 
 
¶18.  (SBU) While the GoB continues to emphasize enforcement as its 
primary means to combat piracy, it also appears committed to ongoing 
educational and training efforts, many of which target young adults 
and children.  In 2007, CNCP supported the American Chamber of 
Commerce's elementary school program, "Combating Piracy is Learned 
at School."  CNCP partnered with the U.S. Chamber to support the 
Chamber's ongoing "Citizenship Game" that targets youths and 
university students.  A component of this program teaches students 
the importance of protecting intellectual property rights in the 
context of social responsibility and gives them the opportunity to 
present their ideas on how to address IP infringement in Brazil. 
 
BRASILIA 00000254  004 OF 009 
 
 
The Program launched a website, (www.atitudeoriginal.com.br) in 
June.  CNCP continues to promote the SINDIRECITA (Union of Receita 
Employees) program "Pirate, I'm out.  I only use the Original," 
focused on college students, and has provided training to the 
Brazilian office of Consumer Protection (PROCONS) and interns at the 
Secretariat of Economic Development (SDE).  CNCP also assists with 
 
SIPDIS 
the Federation of Industries of Rio De Janiero (FIRJAN) "Authentics" 
campaign to educate high school students. 
 
¶19.  (SBU) Through its internal training division, ANVISA has 
instructed 130 state and municipal level inspectors on conducting 
counterfeit medicine inspections (as of June 2007).  ANVISA, in 
conjunction with Receita, has also participated in seminars on 
counterfeit medicines conducted by the private industry group 
National Anti-Piracy Forum (FNCP) and Public Ministries in states 
throughout Brazil.  The agency recently announced plans to expand 
its training for enforcement officials to include judges, who the 
organization feels do not take adjudications for counterfeiting 
medicine seriously enough (ref G).  In 2007, the National Institute 
of Industrial Property (INPI - the Brazilian patent and trademark 
office) held 28 courses on technology management and patent drafting 
at Brazilian universities and research institutes (in 2008, 59 such 
courses are planned) and conducted eight courses for GoB officials. 
 
 
---------------------------------- 
USG and Industry Provided Training 
---------------------------------- 
 
¶20.  (SBU) State governments and GoB agencies have been receptive to 
USG funded and organized training.  In 2007, the U.S. Patent and 
Trademark Office (USPTO) provided training to more than 70 Brazilian 
patent and trademark examiners via DVCs and participation in its 
Virginia-based Global Intellectual Property Academy (GIPA).  In May, 
the American Chamber of Commerce in Sao Paulo coordinated with the 
Sao Paulo State Secretariat of Public Safety, to conduct a 
USTDA-funded training seminar for Sao Paulo police and prosecutors. 
CNCP Executive Secretary, Andre Barcellos, attended a June session 
of the USPTO Global Intellectual Property Academy (GIPA) in 
Virginia.  In July, DHS/ICE coordinated an IP enforcement training 
program at the International Law Enforcement Academy in Lima, Peru, 
which included participation of an official of the state of Bahia's 
newly formed anti-piracy committee (GEPPI), as well as officials 
from the anti-piracy unit in Rio de Janeiro. attended a  In 
December, Consulate Recife coordinated with the state government of 
Pernambuco and the industry association National Forum Against 
Piracy (FNCP) to hold an INL funded training seminar targeting 
enforcement officials, prosecutors and judges.  In that same month, 
the Rio Grande do Sul Civil Police hosted an FBI sponsored training 
seminar for 60 federal, civil and military police officials as well 
as prosecutors and judges that included training in IPR enforcement. 
 GoB officials have also reached out recently to the USG for 
technical assistance.  At a January 2008 meeting with EmbOffs, 
Ministry of Agriculture officials expressed an active interest in 
USG help with patent protection and in streamlining the patent 
process for agricultural products. 
 
¶21.  (SBU) Brazilian private industry organizations have also 
conducted extensive IPR training programs.  In 2007, over 2000 
police officials and prosecutors participated in seminars conducted 
throughout the country by FNCP, which the organization plans to 
expand to different locales in 2008.  The Federation of Industries 
of State of Sao Paulo (FIESP) partnered with the U.S. Chamber of 
Commerce to conduct 16 training seminars for Brazilian customs 
officials in airports, ports and border customs posts.  The U.S. 
Chamber joined with the Brazilian Textile and Apparel Industry 
Association (ABIT) to conduct a half-day program for the Association 
of Federal Judges of Brazil (AJUFE) on the impact of piracy on 
Brazil.  In 2008, the U.S. Chamber plans an additional 12 training 
programs at various ports and border crossings. 
 
---------------------------------------- 
Anti-Piracy Committees and State Efforts 
---------------------------------------- 
 
¶22.  (SBU) In April, the film and music industries merged their 
enforcement efforts and created the Association Anti-Piracy Cinema 
and Music (APCM) (ref B).  The state of Bahia formed a specialized 
police unit to combat piracy and counterfeiting (GEPPI) in May. 
Bahia's state program joins existing programs in the Brazilian 
 
BRASILIA 00000254  005 OF 009 
 
 
states of Sao Paulo, Rio de Janeiro, Rio Grande do Sul, and Minas 
Gerais. 
 
¶23.  (SBU) Shortly after assuming office in 2007, the governor of 
Pernambuco, Eduardo Campos, publicly directed his state police force 
to cooperate with Federal Police in enforcing IPR statutes.  In 
September, the city of Blumenau in Santa Catarina state launched the 
"Municipal Council to Combat Piracy" in conjunction with the 
announcement of a State and Municipal Department of Education (APCM) 
coordinated program, "City without Piracy."  APCM envisions 
replicating the Blumenau program in other states and in 2008, 
already has plans to expand this program to the city of Uberlandia 
in Minas Gerais. 
 
----------------- 
Campus Copy-Shops 
----------------- 
 
¶24.  (SBU) According to the Brazilian Association for Reprographic 
Rights (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 
unavailable 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.)  In an October discussion with EmbOff, an 
ABDR representative characterized the book piracy situation in 
Brazil as "critical."  He claimed that GoB authorities, in 
particular the Ministry of Education, have not placed a high 
priority on this issue and that progress in this area is lagging in 
comparison to software and music piracy (ref E). 
 
¶25.  (SBU) At a January meeting, an official at the Ministry of 
Culture (MoC) said actual book piracy was rare in Brazil, but 
non-authorized copying of copyrighted works was common on university 
and college campuses.  He said the GoB supports the right of 
individuals to access information and knowledge, which is often 
difficult due to the high cost of textbooks, despite their tax 
exempt status, as a result of low production runs.  He asserted that 
legal action by book publishers against professors and schools over 
illegal copying in 2006-2007 led to a public backlash against IP 
laws (ref G). 
 
¶26.  (SBU) According to the MoC official, individual universities 
use in-house rules to police the amount of a publication that can be 
copied (ranging from 10 - 40 percent) or limit copies to numbers of 
chapters.  He relayed that the MoC plans a forum this year to obtain 
public input as it considers copyright law reforms.  Some of the 
ideas being considered by the MoC to provide remuneration to authors 
are a collective management system or a tax on blank media and 
reproductive machines.  The MoC is also considering a system to 
allow small segments of books to be sold over the internet (ref G). 
 
--------------------------------------- 
Patents, Trademarks and Data Protection 
--------------------------------------- 
 
- Patents and Trademarks 
 
¶27.  (SBU) The National Institute of Industrial Property (INPI - the 
Brazilian patent and trademark office), continues to have a 
substantial backlog in pending patent and trademark applications. 
INPI has taken concrete steps to improve its processing of patents 
and trademarks, including an ongoing upgrade of its outdated data 
processing systems.  The GoB budgeted USD 100 million for INPI 
operations in 2008 and 2009 (it was USD 40 million in 2004). 
 
¶28.  (SBU) The patent backlog is estimated at between 130,000 and 
150,000 applications.  In 2007, INPI received 24,081 patent 
applications, and issued 17,333 final decisions (1,855 granted 
patents; 824 denied; 14,611 withdrawn).   In 2008, INPI plans to 
introduce an electronic patent application filing system and 
establish four "Control Divisions" to monitor quality and processing 
issues.  Over the past two years, INPI has increased the number of 
patent and trademark examiners approximately 200% and has plans to 
further increase patent examiners from the current level of 255 
 
BRASILIA 00000254  006 OF 009 
 
 
full-time examiners to 360 full-time examiners by the end of 2008 
and has increased median salaries 50% to retain experienced 
employees.  (INPI currently employees 110 trademark examiners and 
has not announced plans to hire more.)  New patent examiners go 
through a two-year formal on-the-job training program that covers 
patent law and examination (including major national and 
international legislation and jurisprudence).  With this new 
staffing, INPI expects to increase its patent processing capacity 
from the current 20,000 applications/year to 30,000/year by the end 
of 2008.  By 2009, INPI expects new patent applications to be 
decided within four years, which would represent the end of the 
backlog. 
 
¶29.  (SBU) The trademark backlog is estimated at approximately 
470,000 applications.  In 2007, INPI brought on-line a new 
electronic trademark filing system (e-Marcas) to streamline 
adjudications.  The agency estimates that 107,446 trademark 
applications were filed in 2007 (59,582 paper; 47,864 e-Marcas) and 
it issued 296,258 final decisions (128,540 granted trademarks; 
111,190 withdrawn; 24,744 denied).  According to INPI, new trademark 
applications are now being initially processed within a maximum of 
12 months. 
 
¶30.  (SBU) In 2006, Brazil announced plans to join the Madrid 
Agreement Concerning the International Registration of Marks 
("Madrid Protocol"), but the executive branch has yet to submit this 
proposal to the Brazilian Congress for approval.  Should this plan 
be realized, Brazil would become the first country in South America 
where this system is available.  At its 2007 General Assembly 
meeting, WIPO appointed INPI an International Searching Authority 
(ISA) and International Preliminary Examining Authority (IPEA) under 
the Patent Cooperation Treaty (PCT) for international patent 
applications. 
 
¶31.  (SBU) Law 10196 (2001) includes a requirement that National 
Health Vigilance Agency (ANVISA) approval be obtained prior to the 
issuance of a pharmaceutical patent, raising transparency concerns, 
and possible conflicts with Article 27 of the TRIPS agreement.  U.S. 
companies have complained of lengthy delays in getting the AVISA 
approval required before pharmaceuticals can receive final approval 
by INPI.  ANVISA claims that its reviews take no more than 120 days 
with only a three percent rejection rate (ref E).  Medical device 
manufacturers continue to voice concerns over a 2006 ANVISA 
regulation requiring disclosure of data prior to approval of medical 
devices that they believe to be overly burdensome and threatens to 
infringe on the companies' proprietary financial information. 
 
-- One Roadblock to Agricultural-Biotech Product Approvals Removed 
 
¶32.  (SBU) In March 2007, law 11460 changed the requirement for 
approval of commercial licensing of genetically modified organisms 
(GMOs) and GMO derivatives by Brazil's 27 member National Technical 
Commission of Biosafety (CTNBio) Board from a two-thirds majority to 
an absolute majority, theoretically removing an impediment to 
commercial licensing of GMOs and GMO derivatives, since the board is 
heavily influenced by environmentalists and anti-biotech groups. 
Since then, at least three commercial biotech applications (GMO 
corn) have been approved, but anti-biotech groups have blocked their 
release through a federal court injunction. 
 
-- Data Protection 
 
¶33.  (SBU) In contrast to previous reports, Post has become aware of 
several cases where ANVISA granted marketing approval to generic 
drug manufacturers based on undisclosed test results and other 
confidential data submitted in connection with approval of the 
 
SIPDIS 
original drug on which the generic is based, raising concerns of 
consistency with TRIPS Article 39.3.  However, in these cases, the 
generic product has not entered the market following such approval, 
possibly because patent rights are still in force for the original 
product upon whose test data the generic had relied.  ANVISA has 
taken the position that reliance on the previously granted marketing 
approval is not a violation of Brazil's unfair competition laws or 
its international obligations. 
 
¶34.  (SBU) Brazil's Industrial Property Law (9279/1996; Art. 195, 
XIV) provides for civil and criminal penalties for "anyone 
who...divulges, exploits, or utilizes, without authorization, 
results of tests or other undisclosed data whose preparation 
involves considerable effort and that were submitted to government 
 
BRASILIA 00000254  007 OF 009 
 
 
agencies as a condition for obtaining approval to commercialize 
products."  However, this provision also provides an exception 
whereby disclosure by government agency is permitted "when necessary 
to protect the public."  Law 10603/2002 mandates the protection of 
test data for veterinary pharmaceuticals and agrochemicals for 2-5 
years (depending on whether it is a new or known chemical entity). 
This law does not cover pharmaceuticals for human use.  According to 
Article 7 of this law, if the product is not commercialized within 
two years of the date of sanitary registration, third parties may 
request use of the data for registration purposes. 
 
-- Compulsory Licensing 
 
¶35.  (SBU) Invoking TRIPS provisions, on May 4 Brazil issued a 
compulsory license for Merck Sharp & Dohme's anti-retroviral drug 
efavirenz (brand name: Stocrin), used in treating HIV/AIDS, after a 
breakdown in negotiations with the company.  The Brazilian 
government cited the reason as a need for cost savings in its free 
public treatment program for HIV victims.  A GoB official stated to 
EmbOffs at a January meeting that the drug's patent was one of over 
400 pipeline patents, and, thus, was already in the public domain 
when the patent was issued (ref G).  Post is not aware at this time 
of any imminent additional compulsory licensing actions by the GoB. 
 
----------- 
Legislation 
----------- 
 
¶36.  (SBU) While the GOB has yet to take steps to adopt the WIPO 
Copyright Treaty (WCT) or the WIPO Performers and Phonograms Treaty 
(WPPT), industry groups and GOB agencies continue to seek to 
strengthen existing IP legislation.  During a December meeting of 
industry representatives with A/S Dan Sullivan, a representative of 
the Federation of Industries of the State of Sao Paulo (FIESP) noted 
in particular the need to increase criminal penalties for trademark 
counterfeiting (reftel F). 
 
¶37.  (SBU) Legislation introduced in 1999 that would have stiffened 
the criminal penalties for piracy remains stalled in the Brazilian 
legislature and does not appear to have a significant chance of 
passage.  A GoB official recently told EconOff that alternative 
CNCP-sponsored draft IP legislation is currently in the president's 
office for review, the last step before submission to the Brazilian 
congress.  He said there is a significant backlog of legislative 
proposals at casa civil and he did not know if/when the legislation 
would move forward to the congress.  (Comment: Such delays within 
the executive as well as once a proposal moves to congress are 
common in Brazil.  End Comment.) 
 
¶38.  (SBU) This CNCP-sponsored legislation, developed by CNCP's 
Legislation Working Group with input from a 2005 private sector 
forum, proposes a number of changes to the country's penal code and 
industrial property law.  Most suggested changes are practical in 
nature, such as providing a rights-holder with additional time for 
initiating legal proceedings; providing law enforcement agencies 
with the authority to seize maritime and aviation craft, in addition 
to buses, used to transport pirated goods; clarification of 
procedures for seizing and destroying goods, as well as enabling law 
enforcement agencies the ability to retain only samples for use in 
litigation; introducing differentiation in penalties between 
individual offenders (such as street vendors) and those involved in 
a larger operation; holding owners of media responsible for 
advertisements that promote buying, renting, exporting or importing 
goods produced in violation of IPR laws; incorporating penalties for 
software copyright violation into the penal code; and stiffening 
penalties if pirated goods are imported (ref J). 
 
¶39.  (SBU) In August 2007, new legislation (PL 1807/07) was 
introduced into the Brazilian Congress that would amend article 189 
of Brazil's Industrial Property Law (9279/1996) and increase the 
penalties for trademark violations from three to twelve months to 
two to six years.  The bill is currently in Constitution, Justice 
and Citizenship Committee of the Chamber of Deputies. 
 
- Optical Disk Regulations 
 
¶40.  (SBU) Brazil does not have any regulations on optical media 
manufacturing for the purpose of controlling domestic production or 
any laws or regulations requiring the use of source identification 
(SID) codes in the mastering or replication of optical media.  Post 
 
BRASILIA 00000254  008 OF 009 
 
 
does not believe that the implementation of these regulations would 
have a significant impact on the production or distribution of 
pirated optical goods since industry reports that there are 
approximately a dozen optical disc plants in Brazil and most of 
these plants appear to be operating legitimately and are not a 
significant source of pirated media.  Most pirated media in Brazil 
appears in CD-R and DVD-R formats, which are usually smuggled in 
completed form directly from Paraguay.  Blank optical disks usually 
originate in China and parts of Southeast Asia. 
 
-------------------------- 
A View from Local Industry 
-------------------------- 
 
¶41.  (SBU) GoB reports of increased enforcement activity have done 
little to ease the concerns of Brazilian industry.  At a December 
IPR-related meeting in Sao Paulo, representatives from recording, 
film, publishing, healthcare, and Sao Paulo state industry voiced 
concern about the growing number of intellectual property rights 
violations in the country (ref F). According to a representative of 
the recording industry, approximately 80% of Brazilian music sold is 
pirated. 
 
------------------- 
Consumer Perception 
------------------- 
 
¶42.  (SBU) A U.S. Chamber of Commerce/Brazil-U.S. Business 
Council/ANGARDI (National Association to Guarantee Intellectual 
Rights) commissioned report noted that the GoB had intensified its 
efforts to combat piracy in 2007 and opined that these efforts 
demonstrated clearly that piracy continued to be a priority for the 
GoB.  The report found that piracy costs the GoB over 20 billion 
Brazilian Reais (approx USD 11.38 billion) annually and called for 
more interest by the Brazilian judiciary in piracy issues. 
 
¶43. (SBU) The report included data from polls conducted in October 
2007 in Sao Paulo, Rio De Janeiro, Recife (Pernambuco state) and 
Belo Horizonte (Minas Gerais state) as a follow-up to a survey 
conducted in November 2006.  Consumer spending on pirated goods in 
Belo Horizonte decreased 22 percent, in Recife it decreased 20 
percent, and it Sao Paulo the decrease was 37 percent.  Rio de 
Janeiro posted an increase of 19 percent.  However, the poll found 
that spending on pirated goods in the tennis, clothing and toy 
sectors increased eight percent.  (Note: In 2006, the poll noted a 
17 percent growth overall in consolidated data on commercial piracy 
for the cities of Rio de Janeiro, Belo Horizonte and Sao Paulo along 
with a 45 percent increase in pirated items in the tennis, clothing 
and toy sectors.  Individually, Sao Paulo showed a 14 percent 
reduction in the sale of pirated goods.  End Note.)  Consumers in 
all cities surveyed, except Recife, felt that anti-piracy 
enforcement efforts had increased.  In Recife, consumers felt that 
it had decreased. 
 
------------ 
Future Plans 
------------ 
 
¶44.  (SBU) According to GoB officials, the National Council to 
Combat Piracy (CNCP) will meet in late February or early March to 
review its strategy to combat piracy and include increasing the 
organization's efforts to address consumer demand for counterfeit 
goods more effectively.  To accomplish this, CNCP plans to intensify 
its consumer educational program, increase efforts to promote reform 
of the Brazilian tax system, and encourage industry to lower prices 
on authentic products (ref G).  ANVISA's future goals to combat 
counterfeit medicine include closer coordination with Mercosul 
partners, strengthening legislation, and implementing a more 
thorough drug registry database that would facilitate tracking 
counterfeit drugs to end users (ref G). 
 
¶46.  (SBU) Comment:  As this report clearly shows, GoB efforts to 
combat piracy are involved and include a number of agencies and 
organizations.  While the GoB still bristles at being included on 
the USTR watch list, the degree of GoB participation at the January 
OCR meeting with USTR is one indication of how the USG dialogue with 
GoB interlocutors has improved over the past year.  ANVISA has shed 
its previous reluctance to interact with Mission and become more 
accessible.  INPI now regularly interacts with USPTO and is 
participating in USG sponsored training programs.  The GoB still 
 
BRASILIA 00000254  009 OF 009 
 
 
must address areas of concern including potential TRIPS violations 
in its use of undisclosed data and GoB-condoned copyright 
infringements at campus copy shops, but appears to be committed to a 
strong anti-piracy policy.  End Comment. 
 
Sobel