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RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHMD #0224/01 0611432
ZNR UUUUU ZZH
R 021432Z MAR 09
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 0316
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 3870
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 06 MADRID 000224 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/WE AND EEB/TPP/IPE 
STATE PASS USTR FOR JGROVES AND DWEINER 
STATE PASS U.S. COPYRIGHT OFFICE 
USDOC FOR 4212/DCALVERT 
USDOC ALSO FOR PTO 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD ECON SP
SUBJECT: SPECIAL 301 REVIEW: SPAIN 
 
REF: A. STATE 08410 
     ¶B. 08 MADRID 1351 
     ¶C. 08 MADRID 1346 
     ¶D. 08 MADRID 1318 
     ¶E. 08 MADRID 1257 
     ¶F. 08 MADRID 1194 
     ¶G. 08 MADRID 1150 AND PREVIOUS 
     ¶H. 08 STATE 45107 
 
MADRID 00000224  001.2 OF 006 
 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY 
 
SUMMARY AND RECOMMENDATION 
 
¶1.  (SBU) Spain was placed on the Special 301 Watch List in 
April 2008 primarily due to the government's failure to take 
specific, concrete measures to address a growing Internet 
piracy problem.  One year later, Internet piracy continues to 
grow.  The government is attempting to address the problem in 
several ways - most notably by pressing for results in 
negotiations between Internet Service Providers (ISPs) and 
rights-holders on measures to prevent unauthorized downloads. 
 Because it does not want to take potentially controversial 
action without the agreement of both parties, the government 
has not yet initiated any legislative or regulatory measures 
to combat digital piracy, pending the conclusion of 
negotiations.  The government has taken a number of other 
steps to discourage piracy and raise public awareness.  In 
November 2008, the Minister of Culture introduced the 
government's third anti-piracy public awareness campaign in 
the past four years.  In the same month, the Ministry of 
Industry, Tourism, and Trade hosted its second annual 
conference on IPR in the digital environment, which featured 
a USG speaker.  Rights-holder groups praised the release by a 
GOS inter-agency group of an IPR good practices manual that 
includes guidance on investigating and prosecuting IPR 
crimes.  Notably, the manual emphasizes that unauthorized 
peer-to-peer (P2P) downloads are always illegal. 
 
¶2.  (SBU) The government is not investigating or prosecuting 
cases of file-sharing or P2P downloading, due in large part 
to the 2006 Circular of the Fiscalia (Prosecutor General's 
Office) stating that such activity should not be subject to 
criminal prosecution but rather treated as a civil violation. 
 In civil proceedings, investigators are unable to obtain 
identifying information from ISPs, making the civil route 
unproductive; the government may seek to address this problem 
once negotiations are completed.  Post is not aware of any 
efforts by the government to modify the Circular despite our 
efforts.  Separately, the Business Software Alliance reports 
strong cooperation on the part of the GOS, and Microsoft says 
software piracy levels declined in 2008.  Rights-holders 
praise the ongoing work of the National Police and Civil 
Guard in combating street piracy at the national level but 
note that Internet piracy is now a more important problem. 
Separately, police actions against informal street sellers 
have come under growing public criticism, and a movement to 
decriminalize such street sales has garnered media and 
Congressional attention. 
 
¶3.  (SBU) Recommendation: As described above, the GOS is 
acting against piracy in a number of significant ways. 
However, most observers agree that Internet piracy will 
continue to flourish until the ISPs and the GOS agree to 
regulatory and possibly legislative actions.  Post believes 
the private-sector negotiations will eventually produce an 
agreement that the government will then assist in 
implementing, but it is not clear whether this will happen in 
the next few months.  For this reason, post recommends 
keeping Spain on the Watch List.  End Summary and 
Recommendation. 
 
¶4.  (SBU) Intellectual property rights policy in Spain is the 
province of the Ministry of Industry, Tourism, and Trade and 
the Ministry of Culture.  The Ministry of Interior (which 
oversees the National Police and Civil Guard) and the 
Ministry of Justice (of which the Fiscalia is an independent 
branch) are responsible for enforcement.  Within the Ministry 
of Industry, Tourism, and Trade, the Office of Patents and 
Trademarks manages industrial property issues and receives 
high marks from industry representatives for its 
professionalism.  The Ministry of Culture has the lead on 
copyright issues in tandem with the Ministry of Industry, 
Tourism, and Trade's Secretariat of State for 
Telecommunications and the Information Society.  The Minister 
 
MADRID 00000224  002.2 OF 006 
 
 
of Culture chairs an Inter-Sectoral Committee created in 2005 
to implement the national anti-piracy plan and has been 
perhaps the most visible public figure speaking in defense of 
improving Spain's IPR enforcement.  Rights-holders give the 
Ministry of Culture credit for his understanding of the 
problem and strong desire to fix it, but lament the 
Ministry's lack of resources and clout.    The government has 
not centralized coordination of the fight against Internet 
piracy; however, a lack of coordination is less an issue than 
deficiencies in the legal regime. 
 
INTERNET PIRACY - GOVERNMENT PUSHES PRIVATE SECTOR 
NEGOTIATIONS 
 
¶5.  (SBU) At the urging of the Ministry of Industry, Tourism, 
and Trade, Redtel, the association comprising Spain's four 
largest ISPs (Telefonica, Orange, Vodaphone, Ono), began in 
May 2008 to meet with the Anti-Piracy Coalition, which 
represents the film, music, and video games industries and 
copyright management societies, to discuss ways to combat 
internet piracy.  After extensive discussions and exchanges 
of information, it was not until late September that Redtel 
made its initial proposal for the creation of a new 
government commisssion to hear complaints of digital 
copyright infringement and send notifications to alleged 
violators.  Content providers deemed Redtel's proposal 
problematic in various respects - cumbersome, potentially 
unworkable, not far-reaching enough - and had concerns as 
well about the cost burdens, but accepted it as a basis for 
further discussions.  The parties have continued to meet, and 
all agree the talks are serious and are advancing, albeit 
slowly and with occasional steps back.  The Minister of 
Industry, Tourism, and Trade, Miguel Sebastian, called for 
the parties to present to the government by December 31 a 
document listing their areas of agreement and disagreement, 
but they failed to meet this deadline.  The new target date 
is the first week of March, at which time the government 
hopes to make a public announcement. 
 
¶6.  (SBU) Rights-holders groups advise that any decision 
reached by that date will be general in nature, with many 
details remaining to be worked out.  The two sides and their 
lawyers are reportedly far apart on the legal measures that 
will be required to implement any such agreement, with the 
content providers arguing that a Ministerial decree may be 
sufficient while the ISPs have suggested that four or five 
laws may need to be amended, a process that would take at 
least two years and probably longer.  Progress on adopting a 
framework to make some content legally available online has 
been mixed, with the Redtel pushing hard for access to more 
music and especially films than the rights-holders are 
prepared to make available.  While rights-holders frequently 
complain about the slow pace of negotiations and about 
Redtel's tactics, and several have at one time or another 
threatened to pull out, the parties appear interested in 
reaching agreement, though the early March deadline may be 
unrealistic.  The GOS would prefer that the two sides reach 
agreement on as many aspects as possible, and one official 
has privately expressed concern that they may put forward two 
different proposals, requiring the government to act as 
broker. 
 
¶7.  (SBU) It should be noted that differing priorities and 
interests among the rights-holders' groups that comprise the 
Coalition have complicated the negotiations.  The music and 
film industries, for example, are at odds over Redtel's 
insistence that penalties for repeat offenders will not 
include suspension or cancellation of Internet services.  The 
Music Producers of Spain contend that the threat to cut off 
repeat violators must be an option, even if rarely exercised, 
for the system to work.  The Motion Picture Association and 
its local allies believe there are alternative sanctions, 
such as a significant reduction in bandwidth, that would be 
sufficient to deter recidivists. 
 
¶8.  (SBU) The government, for its part, has pushed the 
parties to continue to negotiate and has promised to assist 
in implementing any agreement once the parties agree on what 
regulatory/legislative changes are needed.  It remains 
reluctant to propose any legislative or regulatory measures 
that are not fully supported by the private sector, believing 
that any such initiatives would be unpopular and unlikely to 
succeed.  As a result, several legal obstacles to effective 
IPR protection that the USG has urged the government to 
 
MADRID 00000224  003.2 OF 006 
 
 
modify - e.g., the "actual knowledge" standard for ISP 
liability, the prohibition against identifying alleged 
infringers in the context of civil litigation - remain in 
place.  The government says it has prepared a number of 
possible legislative proposals, depending on what service 
providers and rights-holders agree to.  The government, like 
most rights-holders, is hopeful that relatively few, modest 
legal changes may be sufficient. 
 
¶9.  (SBU) Industry figures show that between July 2007 and 
June 2008, there were 1.9 billion music downloads, of which 4 
percent were from legal, paid services, and 250,000 film 
downloads, of which 2 percent were legal and paid,  Cynics 
among the rights-holders assert that the government's posture 
actually gives the ISPs an incentive to negotiate slowly, 
since an agreement could trigger government actions that the 
service providers would prefer to delay as long as possible. 
In pushing the parties to reach agreement, the government has 
threatened to impose its own solution if negotiations fail 
but is clearly reluctant to take such a step, and the parties 
know it.  The government, all agree, wants Telefonica and the 
other telecommunications companies that own the ISPs to 
voluntarily make some concessions - especially, to agree to a 
graduated response regime modeled on some combination of 
British and French approaches to the problem - in order to 
spare the government from having to take politically 
unpopular measures unilaterally.  However, the ISPs, eager to 
avoid customer resentment, stress that they will do whatever 
government requires through law or regulation, but only 
because they are required to do so.  Telefonica, as part of 
its corporate social responsibility programs, participates in 
a prominent anti-piracy public education campaign.  However, 
a company spokesperson recently told mass circulation daily 
El Pais that Telefonica is "neither judge nor party" in the 
controversy over file-sharing and P2P downloads and that it 
"will do whatever our regulator says when a decision is made" 
but is otherwise totally neutral on Internet piracy questions. 
 
SIGNS OF LEGISLATIVE SUPPORT 
 
¶10.  (U) On November 5, the Congress of Deputies issued a 
non-binding resolution urging the government to "promote an 
effective strategy, approved by consensus, to fight 
activities in the digital environment that violate 
intellectual property rights, based on agreement among all 
sectors involved: the content industry, internet operators, 
consumers, and users."  The government was not involved in 
the development of this resolution, but took it as a positive 
sign that, once the private parties agree on a way forward, 
there will be support in the Congress for enabling 
legislation.  A Ministry of Culture representative told 
Econoffs February 25 that Congress's Culture Committee had 
issued a resolution calling for a panel of experts to draft 
revisions to the Intellectual Property law, but post has no 
further information. 
 
GOS PUBLIC AWARENESS ACTIVITIES 
 
¶11.  (U) The GOS considers public opinion to be a key 
battleground in the struggle against all forms of IPR piracy, 
and public education and awareness to be critical elements in 
protecting digital content.  All observers agree that many 
Spaniards still do not view online piracy as a problem or 
even as an offense.  Due in part to the Fiscalia's 2006 
Circular, some believe peer-to-peer downloading is akin to 
making a private copy of a digital file and is thus 
permitted.  Others simply can't understand how there could be 
an issue over such an easy, convenient, unimpeded act.  Yet 
others see such downloading, though considered "wrong" by 
some, as a form of Robin Hood activity, stealing from wealthy 
artists, entertainers, and companies. 
 
¶12.  (U) The government has undertaken a number of activities 
in the past year to promote responsible Internet use and to 
discourage piracy.  The Ministry of Industry, Tourism, and 
Trade organized an International Conference on Digital 
Content (FICOD) in late November, with a separate conference 
involving many of the same participants on Protecting IPR in 
the Digital Environment.  The Minister, Miguel Sebastian, 
spoke at FICOD, and the Secretary of State for 
Telecommunications, Francisco Ros, at the IPR Conference. 
Both underscored the need for stronger IPR protection if the 
sector is to grow, and highlighted the government's 
commitment to combating digital piracy.  Also in late 
 
MADRID 00000224  004.2 OF 006 
 
 
November, Minister of Culture Cesar Antonio Molina launched 
the government's third anti-piracy public education campaign, 
aimed especially at young people, with the slogan, "If you're 
legal, you're all right."  The campaign and Minister Molina's 
public statements that the GOS would soon be publishing new 
regulations to protect digital content sparked expressions of 
concern among Spain's vocal pro-piracy Internet users' lobby, 
though both their effort to have Molina fired and a 
pro-piracy demonstration fizzled.  The Culture Ministry is 
planning to launch another public awareness campaign after 
the current one ends at the end of March and is also 
organizing seminars on subjects related to IPR protection. 
The Ministry of Industry, Tourism, and Trade, meanwhile, will 
begin on March 31 a campaign with the Business Software 
Alliance and a Spanish industry group to promote use of legal 
software. 
 
GOOD PRACTICES MANUAL 
 
13  (U) Another important GOS initiative was the December 11 
launch of a new "Manual of Good Practices" prepared by a 
broad inter-agency group coordinated by the Ministry of 
Culture.  The Manual is a general reference on IPR issues 
combined with guidelines and practical suggestions on how to 
recognize potentially infringing activity, conduct 
investigations, and prepare cases to be brought before 
judges.  Rights-holders' groups hailed the Manual as 
establishing "approved criteria" for investigating and 
prosecuting IPR crime.  In its section on Investigations, the 
Manual describes the phenomenon of P2P downloads and 
underscores that, when done without the content owner's 
authorization, such downloads are always illegal and, in 
contrast with the Fiscalia's Circular, characterizes as 
"erroneous" any notion that they might constitute permitted 
private copying. 
 
THE CIRCULAR REMAINS UNCHANGED 
 
¶14.  (SBU) One major issue that rights-holders unanimously 
cite as the main obstacle to effective online IPR enforcement 
is the 2006 "Circular" issued by the Fiscalia.  The Circular, 
a 115-page document consisting of instructions to 
prosecutors, was an attempt to incorporate into practice the 
2003 IPR amendments to the Penal Code, which among other 
things made IPR violations a public crime subject to ex 
officio action by authorities rather than an offense 
requiring a private complaint.  Numerous experts have praised 
the Circular as a significant advance for the protection of 
IPR, especially industrial property (patents and trademarks). 
 At the same time, there is near universal agreement that its 
treatment of Internet piracy, especially P2P file-sharing and 
downloading, constitutes a combination of misunderstanding, 
dubious interpretation, and misguided policy.  The Circular 
states that while websites that make available links to 
protected material are clearly not engaged in making a 
"private copy" as permitted under the so-called "Digital 
Canon," an Internet user who downloads from such a link or 
from a P2P network is in fact making a private copy.  In 
addition, the Fiscalia redefines "profit motive," identified 
by the Penal Code as a prerequisite for prosecuting 
IPR-infringing activity as a crime, to mean "commercial 
profit motive" and specifies that infringing activity must be 
of commercial scale to constitute a crime.  As such, no 
individual who downloads protected material can be criminally 
prosecuted, and those who make it available can be prosecuted 
only if they charge for the service, or, in theory, if they 
promote the availability of the material on their websites as 
a means of selling advertising. 
 
¶15.  (SBU) The Fiscalia's argument for treating illicit 
downloads and file-sharing as a civil, rather than as a 
criminal, offense, was twofold: That criminalizing all 
IPR-infringing activity as well as a broad cross-section of 
society that uses Internet technologies would violate the 
principle of "minimal intervention" by law enforcement (in 
other words, we can't prosecute half the population); and 
that criminal prosecution should be reserved for serious 
offenses and that illicit downloading represents a minor 
offense which can more appropriately be addressed in the 
civil courts.  The Circular has been interpreted by many 
Internet users, as well as by many police, prosecutors, and 
judges, as declaring P2P downloading to be a permitted 
activity that is no business of law enforcement.  Some judges 
have rejected criminal charges against infringing website 
 
MADRID 00000224  005.2 OF 006 
 
 
operators based on the Circular's reasoning. 
 
¶16.  (SBU) A Fiscalia official with whom post met recently 
repeated the GOS argument that the Circular is not binding on 
judges nor a statement of what the law is or is not, but 
rather a series of instructions designed to help orient 
prosecutors in their handling of IPR cases.  At the same 
time, she argued that the Circular was legally correct in its 
reflection of the Penal Code's "profit motive" requirement. 
If police decline to open criminal investigations against 
internet IPR violators, and prosecutors decline to press 
charges, they are correctly interpreting the Circular's 
intent.  However, it is not the Fiscalia's fault, she 
stressed, if some people misinterpret the Circular to mean 
that P2P downloading and file-sharing are permitted, legally 
sanctioned activities.  Nor can the Fiscalia be blamed for 
the fact that civil cases for Internet piracy tend to run 
aground on the Data Protection Law, which imposes a high 
threshold for identifying users according to the Internet 
Protocol addresses.  Those who don't like the Circular's 
assignment of P2P to civil jurisdiction, she suggested, 
should focus on either amending the Penal Code or improving 
civil procedure.  The Fiscalia has not considered issuing any 
sort of modification or clarification of the Circular, she 
said.  Nor, as far has post has been able to determine, has 
anyone in the government made a serious effort to convince it 
to do so, despite our efforts.  However, if private-sector 
negotiations produce an effective system of dissuasive 
measures, the Circular will likely become less of an issue. 
 
SOFTWARE PIRACY DECLINING 
 
¶17.  The Business Software Alliance (BSA) is not a member of 
the Anti-Piracy Coalition.  While BSA reports significant 
piracy problems, including on the Internet, it also enjoys 
strong and constructive relations with the government. 
Microsoft recently published a report citing GOS action 
against piracy and stating that software piracy rates 
declined in 2008 from their 2007 levels. 
 
ADVANCES AGAINST STREET PIRACY 
 
¶18.  (U) Rights-holders and government representatives all 
agree that law enforcement has done a good job of enforcing 
IPR laws against the sale of pirated and counterfeit goods. 
The National Police and the Civil Guard have conducted 
numerous investigations, resulting in a number of raids on 
street markets, of which the most significant were in June 
and November.  While statistics are not yet available for 
2008, preliminary estimates indicate that authorities 
conducted at least 40 IPR enforcement actions resulting in 
more than 300 arrests and the seizures of at least 26 million 
euros worth of pirated or counterfeit merchandise.  In 
addition, last month the National Police seized 1,150 
unauthorized copying and modification devices that enable 
video games to be uploaded to portable Nintendo consoles. 
Rights-holders note that coordination between national and 
local law enforcement varies from one city to another across 
Spain and tends to depend on relations between national 
government representatives and municipal governments, which 
may in turn depend on the political orientation of Mayors and 
city councils.  Catalonia is one region where the 
coordination is reported to be especially good, whereas 
representatives of the music industry cited Granada in the 
south as an example of a city where street piracy remains a 
problem due to poor coordination between national and local 
law enforcement.  Another problem cited by rights-holders is 
a lack of proactivity on the part of some public prosecutors 
in investigating and prosecuting offending vendors and an 
unwillingness on the part of some judges to levy fines and 
jail sentences.  In addition, one content providers' 
association head complained that police still require his 
organization to defray the costs of transporting and storing 
seized material.  That said, everyone we talked to agreed 
that authorities have continued to increase and improve their 
enforcement efforts against street piracy over the past year. 
 
 
¶19.  (U) Many, however, expressed concern over a new movement 
to decriminalize "top manta," the practice of selling pirated 
videos, CDs, video games, and other portable contraband 
displayed on sheets or blankets which can quickly be folded 
and gathered up to conceal the merchandise when police 
approach.  Police arrested approximately 700 "manteros" or 
 
MADRID 00000224  006.2 OF 006 
 
 
blanket people in 2008, and some 62 are in jail after being 
convicted of IPR violations.  A few recording artists have 
lent their names to a campaign calling for leniency for 
arrested manteros and for a change in the law.  One judge on 
Spain's Audiencia Nacional (High Court) has characterized top 
manta (which is generally conducted by immigrants from 
Africa) as "a minority business by the poor and for the poor" 
and referred to enforcement efforts against it as 
"criminalizing poverty."  Some even argue that street sales 
of pirated goods are insignificant because music, films, and 
games can be obtained so much more easily over the Internet. 
The campaign to decriminalize "top manta" has gained 
sympathetic media coverage in recent weeks and has come to 
legislators' attention.  On February 13, a group of 
Congressmen from small, left-wing parties from Catalonia 
introduced in the Justice Committee a resolution calling on 
the government to decriminalize blanket sales.  Although GOS 
officials say they will oppose this initiative, 
rights-holders are concerned that an adverse climate of 
public opinion may demoralize police and lead to a diminution 
of enforcement actions. 
 
EMBASSY IPR ACTIVITIES 
 
¶20.  (U) At the suggestion of Minister of Industry, Tourism, 
and Trade Sebastian following Spain's placement on the Watch 
List, Embassy set up a bilateral IPR working group with 
representatives of the Ministry of Industry, Tourism, and 
Trade and the Ministry of Culture.  The group has met several 
times to assess progress on the USG's recommendations and on 
ways to improve Spain's IPR performance.  The Ambassador met 
twice with Minister Sebastian and once with Minister of 
Culture Molina to advocate a more activist approach to 
combating piracy.  Both the outgoing and incoming DCMs 
discussed our IPR concerns with Secretary of State for 
Telecommunications and the Information Society Francisco Ros. 
 USPTO attorney-advisor Michael Shapiro was a presenter on 
two panels at the November IPR/Digital conference; during his 
visit, DCM hosted a lunch for representatives of the 
government, the Anti-Piracy Coalition, and Redtel.  Econoff 
meets regularly with rights-holders, service providers, and 
government officials to highlight USG's interest in the 
success of negotiations and the promulgation of effective 
legislation. 
 
COMMENT 
 
¶21.  (SBU) Post believes the many GOS actions to discourage 
piracy are significant, and that the GOS-promoted 
negotiations between rights-holders and ISPs are likely to 
identify measures that will reduce Internet piracy.  For 
these reasons, post does not recommend placing Spain on the 
Priority Watch List.  However, until ISPs and rights-holders 
reach agreement and the GOS begins to take the necessary 
implementing actions, we see no argument for removing Spain 
from the Watch List. 
 
¶22.  (SBU) We believe the year ahead offers important 
opportunities for us to press the GOS to take definitive 
steps forward.  The government is increasingly sensitive to 
its international image in the run-up to its assumption of 
the EU Presidency in January 2010.  It is also eager to 
strengthen and expand bilateral engagement with the new U.S. 
Administration, and hopes for high-level visits and meetings. 
 In this context, the government is aware that Spain's 
continuing Internet piracy problem hurts overall relations. 
We need to find additional ways to use this sentiment to our 
advantage.  End Comment. 
CHACON