VZCZCXYZ0009
RR RUEHWEB

DE RUEHPE #0273/01 0612148
ZNR UUUUU ZZH
R 022148Z MAR 09
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 0109
INFO RUEHBO/AMEMBASSY BOGOTA 6376
RUEHQT/AMEMBASSY QUITO 2355
RUEHLP/AMEMBASSY LA PAZ MAR SANTIAGO 2195
RUEHCV/AMEMBASSY CARACAS 1341
RUEHBU/AMEMBASSY BUENOS AIRES 3672
RUEHME/AMEMBASSY MEXICO CITY 3839
RUEHBR/AMEMBASSY BRASILIA 8114
RUEHRI/AMCONSUL RIO DE JANEIRO 0347
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAFCC/FCC WASHDC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC

UNCLAS LIMA 000273 
 
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 08410 
 
¶1. (SBU) Summary.  Post concurs with industry recommendations that 
Peru remain on USTR's Special 301 Watch List for 2009.  The 
Government of Peru's (GOP) swift effort to implement the necessary 
Intellectual Property Rights (IPR) legislation to comply with the 
provisions of the US - Peru Trade Promotion Agreement (PTPA) 
signaled its willingness and commitment to combat IPR violations. 
Peru continues to face high levels of patent, copyright, and 
trademark infringements in all sectors.  Reoccurring 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.  The legal 
framework exists, but the GOP and, in particular, the judiciary need 
to apply the provisions more strictly in order to improve the 
situation.   El Instituto Nacional de Defensa de la Competencia y de 
la Proteccisn de la Propiedad Intelectual (INDECOPI), the GOP's IPR 
administrative agency continues to focus on enforcement training, 
active public campaigns, and legislative reforms to comply with the 
requirements of the PTPA.  Nevertheless, the same challenges 
continue and the situation worsens.  End Summary. 
 
GOP Efforts and... 
------------------ 
¶2. (U) The GOP's swift effort to implement the necessary IPR 
legislation to comply with the provisions of the PTPA signaled its 
willingness and commitment to combat IP violations.  However, the 
GOP continues to fall short on allocating sufficient resources in 
the area of investigations and enforcement.  INDECOPI's trademark, 
patent and copyright offices perform 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 personnel and financial 
resources to perform their mandate. 
 
Laws and Regulations 
-------------------- 
¶3. (U) Peru's IP laws are generally adequate and TRIPS compliant. 
Under a Special Executive Decree and during a special Congressional 
session during a recess period, Peru passed IPR legislation to meet 
the requirements of the PTPA.  The PTPA corrects shortcomings and 
increases 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 secrets, and 
increase penalties for IP violations. 
 
Overall Infringement Levels Increased in 2008 
--------------------------------------------- 
¶4. (U) Infringement levels for 2008 remained steady or increased 
from 2007 levels.  According to the International Intellectual 
Property Alliance's (IIPA) 2008 estimates, 98% of sound recordings 
(same level as in 2007) and 74% of business software (up from 73% in 
2007 and 71% in 2006) in Peru were pirated, representing a loss of 
$110.5 million (up from $98.5 million in 2007 and $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) The Peruvian public does not appear willing or motivated to 
change their perception regarding IPR infringement.  INDECOPI 
continues to sponsor numerous public awareness campaigns to improve 
the public's perception and promote the legal purchase of original 
products.  Despite these efforts, the public continues to purchase 
illegal CDs, DVDs, and books from street vendors approaching their 
cars at stop lights, peddlers at popular beach destinations, or the 
more popular markets known for supplying these items.  The purchases 
continue openly since the public realizes there is only a remote 
chance they will receive a strict penalty or any prosecution for 
this behavior. 
¶6. (U) INDECOPI hosted its sixth "Intellectual Property Week" in 
2008 with giveaways, seminars and educational efforts, discounts, 
and massive destructions of seized products.  Among other events, 
the movie industry hosted a night at the cinema with reduced ticket 
prices. 
 
...Patents 
---------- 
¶7. (U) The IPR provisions in the US-PTPA, which entered into force 
on February 1, 2009, limit the grounds for revoking a patent, thus 
protecting against arbitrary revocation.  They clarify that test 
data and trade secrets submitted to a government for the purpose of 
product approval will normally be protected against unfair 
commercial use for a period of 5 years for pharmaceuticals and 10 
years for agricultural chemicals.  If Peru relies on U.S. FDA 
approval of a given drug, and meets certain conditions for 
expeditious approval of that drug in Peru, the period of data 
protection will be concurrent with the term of protection provided 
in the United States.  The US-PTPA requires the establishment of 
procedures and remedies to prevent the marketing of pharmaceutical 
products that infringe patents.  It provides protection for newly 
developed plant varieties. 
 
...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) On February 13, 2003, the GOP passed the Government Software 
Legalization Decree (Decreto Supremo No. 013-2003-PCM) mandating all 
government agencies to use legally procured software by March 31, 
¶2005.  The GOP extended this deadline to December 31, 2006, and, 
regrettably, again to December 31, 2008, and now again to December 
30, 2011.  Under the PTPA, the GOP must ensure that all government 
agencies obtain legally procured software. 
 
Law Enforcement 
--------------- 
¶10. (U) In 2008, approximately 50 operations were conducted by the 
Fiscal Police (DIRPOFIS), SUNAT (tax authority) and INDECOPI. 
Authorities conducted these raids at some of the largest and most 
popularly known markets for pirated goods.  They seized 882,966 
burned discs, 1,423,900 blank media, 89 burners, 12 computers, 4 
printers, and 26,304 art inlays.  Despite these raids, these markets 
continue to exist even during daylight hours and in the presence of 
enforcement officials. 
 
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 2008 remained 
minimal.  The average 2008 sentence was a three-year suspended 
sentence and the average 2008 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 continues to work with 
USPTO to coordinate IPR training in Peru. 
 
Treaties 
-------- 
¶13. (U) Under the PTPA, Peru 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. (SBU) Post recommends that Peru remain on USTR's Special 301 
Watch List. In 2008, the GOP made significant strides in 
implementing stricter legislation to comply with the provisions of 
the PTPA and to deter infringements.  Despite this legislation, 
GOP's action continues to come up short.  Over the past several 
years, piracy rates remained steady or increased.  Action to remove 
pirated software from government computers continues to be delayed 
bringing into question the GOP's commitment to fix the problem. 
Lastly, the courts continue to fail in applying deterrent sentences. 
 Commuted sentences and insignificant fines send the public a 
message that the judiciary views piracy as a less significant crime 
and supports the current public perception that purchasing pirated 
goods is tolerated behavior. 
 
¶15. (SBU) Post recognizes the legislative efforts being made by the 
GOP to address these issues.  In 2009, the GOP should focus more on 
enforcement procedures and applying deterrent measures to make the 
public and infringers aware that the GOP takes piracy seriously. 
Before Post can recommend a change in status, piracy rates need to 
reverse direction, illegal government software must be removed 100 
percent, and the judiciary needs to uniformly apply deterrent 
sentences. 
MCKINLEY