VZCZCXYZ0051
RR RUEHWEB

DE RUEHPE #0297/01 0511832
ZNR UUUUU ZZH
R 201832Z FEB 08
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 7953
INFO RUEHBO/AMEMBASSY BOGOTA 5526
RUEHQT/AMEMBASSY QUITO 1763
RUEHLP/AMEMBASSY LA PAZ FEB SANTIAGO 1755
RUEHCV/AMEMBASSY CARACAS 1054
RUEHBU/AMEMBASSY BUENOS AIRES 3289
RUEHME/AMEMBASSY MEXICO 3618
RUEHBR/AMEMBASSY BRASILIA 7772
RUEHRI/AMCONSUL RIO DE JANEIRO 0340
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAFCC/FCC WASHDC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC

UNCLAS LIMA 000297 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR WHA/AND, EB/IPE JBOGER 
COMMERCE FOR 4331/MAC/WH/MCAMERON, ITA/MAC/OIPR CPETERS 
USPTO FOR JURBAN 
AMCONSUL RIO FOR DMAZURKEVICH 
 
E.O. 12958: N/A 
TAGS: KIPR ECON ETRD USTR PE
SUBJECT: PERU: SPECIAL 301 REVIEW 
 
REF: STATE 00009475 
 
¶1.  (U) Summary.  Post concurs with industry recommendations that 
Peru remain on USTR's Special 301 Watch List for 2008.  Peru 
continues to face high levels of patent, copyright and trademark 
infringements in all sectors.  Challenges include adequate funding, 
increasing inspections, strengthening enforcement and border 
controls, combating public acceptance of pirated and counterfeit 
goods, enacting deterrent sentences, and further reducing government 
use of unlicensed software.  On the positive side, El Instituto 
Nacional de Defensa de la Competencia y de la Proteccisn de la 
Propiedad Intelectual (INDECOPI), the Government of Peru's (GOP) IPR 
administrative agency, has focused on enforcement training, 
continues an active public campaign in partnership with the private 
sector dedicated to educating the public on the harmful affects of 
purchasing pirated and counterfeit goods, and continues to make 
improvements, including legislative, to meet the requirements 
established in the U.S. Peru Trade Promotion Agreement (PTPA).  End 
Summary. 
 
GOP Efforts and... 
------------------ 
 
¶2.  (U) The GOP has made some effort to combat IP violations, and is 
committed to further improvements by approving the PTPA; however 
more resources need to be allocated in the area of investigations 
and enforcement.  INDECOPI's trademark, patent and copyright offices 
do good work with limited staff and funding.  INDECOPI officials and 
public ministry prosecutors have ex oficio powers, allowing them to 
conduct investigations and seizures, and file charges, without an 
industry complaint.  However, INDECOPI continues to be restrained by 
a lack of financial resources to perform their mandate. 
 
Laws and Regulations 
-------------------- 
 
¶3.  (U) Peru's IP laws are generally adequate and TRIPS compliant. 
The U.S.-Peru Trade Promotion Agreement (PTPA) would correct 
shortcomings and increase some protections beyond TRIPS 
requirements.  For example, the PTPA includes provisions that 
enhance trademark protections, provide copyright protection related 
to the Internet, mandate government use of legal software, protect 
confidential pharmaceutical and agrochemical test data and trade 
 
SIPDIS 
secrets, and increase penalties for IP violations.  INDECOPI has 
 
SIPDIS 
indicated that the legislative changes are being made and the agency 
is well on track to meet the requirements established by the PTPA. 
 
Overall Infringement Levels Increased in 2007 
--------------------------------------------- 
 
¶4.  (U) Infringement levels for 2007 remained steady or increased 
from 2006 levels.  According to the International Intellectual 
Property Alliance's (IIPA) 2007 estimates, 98% of sound recordings 
(same level as in 2006) and 73% of business software (up from 71% in 
2006) in Peru were pirated, representing a loss of $98.5 million (up 
from $85.5 million in 2006).  Pirated CDs and DVDs, illegal copies 
of books, and counterfeit clothing and toys can easily be found 
throughout the country at markets, on street corners, and in beach 
areas. 
 
...Public Indifference 
---------------------- 
 
¶5.  (U) Changing the public's perception is perhaps one of the more 
difficult challenges facing those who want to improve IPR protection 
in Peru.  INDECOPI continues to sponsor numerous public awareness 
campaigns to improve the public's perception and promote the legal 
purchase of original products. 
 
¶6.  (U) April 20-27 was "Intellectual Property Week" in Peru, 
celebrated with giveaways, discounts, and massive destructions of 
seized products.  INDECOPI commemorated its fifth annual Destruction 
Day, destroying confiscated pirated CDs and DVDs, and educating the 
public about how IPR violations hurt the overall well-being of 
Peruvians.  Among other events, the movie industry hosted a night at 
the cinema with reduced ticket prices. 
 
...Patents 
---------- 
 
¶7.  (U) Confidential test data submitted for the marketing approval 
of pharmaceutical and agrochemical products remains unprotected, 
though the PTPA should resolve this once implemented. 
 
...Copyrights 
------------- 
 
¶8.  (U) INDECOPI's Copyrights Office conducted 21 inspections of 
businesses alleged to use illegal software and music CDs in 2007, 
this represents a decrease from 270 inspections in 2006. No formal 
cases reached the courts.  Fines totaled over $840,000. 
 
Government Software Improvements 
-------------------------------- 
 
¶9.  (U) In 2003, the GOP passed a decree mandating that all 
government agencies use legally procured software by March 31, 2005. 
 This deadline was extended to December 31, 2006, and, regrettably, 
again to December 31, 2008.  The percentage of central government 
computers carrying pirated software is 43%.  The GOP is making an 
effort to meet its targets before the new deadline, and committed to 
resolve this problem in the PTPA. 
 
Law Enforcement 
--------------- 
 
¶10.  (U) In 2007, 47 operations were conducted: 29 by the Fiscal 
Police (DIRPOFIS), 17 by SUNAT (tax authority) and 1 by INDECOPI. 
In 2007, SUNAT created a special group to tackle the street piracy 
problem. In November 2007, SUNAT conducted a major street raid and 
seized about 200,000 recorded pirate music CDs and 70,000 blank 
CD-Rs. The number of operations is down from 65 operations led in 
¶2006. 
 
Prosecutors and Judiciary: Minimal Convictions 
--------------------------------------------- - 
 
¶11.  (U) Despite the creation in November 2006, of four special 
courts and one special appeal court with national jurisdiction on 
IPR crimes, amendments to penalize recidivist offenders with 
stronger sanctions, and additional penalties for more crimes, the 
number of penal convictions and deterrent sentences in 2007 remained 
minimal.  The average 2007 sentence was a three-year suspended 
sentence and the average 2007 fine was S/1000 (nuevo soles, 
approximately US$300). 
 
¶12.  (U) In addition to the regular training INDECOPI and Customs 
provide law enforcement officials, these entities have developed 
extensive training for the new judges and prosecutors.  Thanks to 
USPTO, post has sent several judges and over twenty government 
officials for trainings on enforcement, patent and trademark 
administration in Alexandria, Virginia.  Post is working with USPTO 
to coordinate IPR training in Peru this coming year. 
 
Treaties 
-------- 
 
¶13.  (U) Under the PTPA, Peru has agreed to ratify or accede to the 
following agreements by the date of entry into force of the 
agreement: The Convention Relating to the Distribution of 
Programme-Carrying Signals Transmitted by Satellite (1974); the 
Budapest Treaty on the international Recognition of the Deposit of 
Microorganisms for the Purpose of Patent Procedure (1977), as 
amended in 1980; the WIPO Copyright Treaty (1996); and the WIPO 
Performances and Phonograms Treaty (1996).  Peru shall ratify or 
accede to the following agreements by January 1, 2008, or the date 
of entry into force of the PTPA, whichever is later: the Patent 
Cooperation Treaty (1970), as amended in 1979; the Trademark Law 
Treaty (1994); and the International Convention for the Protection 
of New Varieties of Plants (1991).  Peru shall make all reasonable 
efforts to ratify or accede to the following agreements:  the Patent 
Law Treaty (2000); the Hague Agreement Concerning the International 
Registration of Industrial Designs (1999); and, the Protocol 
Relating to the Madrid Agreement Concerning the International 
Registration of Marks (1989). 
 
Comment: Recommend No Change in Status 
-------------------------------------- 
 
¶14.  (U) Post recommends that Peru remain on USTR's Special 301 
Watch List due to the continued high levels of copyright and 
trademark infringements, the lack of protection for confidential 
test data submitted for the marketing approval of pharmaceutical and 
agrochemical products, and the need for increased enforcement 
efforts, particularly the application of strong penalties for IPR 
violators necessary for deterrence.  Post recognizes the efforts 
being made by INDECOPI to address these issues, particularly as Peru 
works towards the implementation of the PTPA; however, additional 
work must be achieved and resources allocated to address IP 
enforcement before Post can recommend a change in status. 
 
MCKINLEY