VZCZCXRO0865
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #1081/01 1052119
ZNR UUUUU ZZH
P 152119Z APR 09
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 6123
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
RHMFIUU/CDR USNORTHCOM PETERSON AFB CO
RHMFISS/CDR USSOUTHCOM MIAMI FL
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC

UNCLAS SECTION 01 OF 03 MEXICO 001081 
 
SENSITIVE, SIPDIS 
 
STATE FOR EB/TPP/MTA/IPE/KEAT/URBAN 
STATE FOR WHA/MEX/WOLFSON 
STATE PASS TO USTR FOR MELLE/MCCOY/SHIGETOMI/VETERE 
STATE PASS TO JUSTICE FOR CCIPS/MERRIAM,KOUAME AND 
OPDAT/TRUEBELL AND RAMOS 
STATE PASS TO COMMERCE FOR ITA/MAC/ONAFTA/WORD 
STATE PASS TO COMMERCE FOR ITA/MAC/IPR/WILSON,BOGER 
COMMERCE PASS TO USPTO FOR RODRIGUEZ/BERDUT/MORALES 
 
E.O. 12958: N/A 
TAGS: KIPR ECON ETRD MX
SUBJECT: IP VIOLATORS AND MEXICO'S COMPLICATED PARDONER'S TALE 
 
Summary 
------- 
 
¶1.  (SBU) Summary:  PGR has expressed its frustration over the 
recent pardons by two rightholders of IP violators.  At first 
glance, its concern is valid - if PGR is to bring IP violators 
to justice, it needs the support of the rightholder.  However, 
although the first rightholder recanted and went through with 
the complaint, the case was dismissed on a technicality.  In 
the case of the second rightholder, the pardon may have been 
forged, suggesting a high level of sophistication on the part 
of the criminal gangs that control the pirated and counterfeit 
goods network.  The more we learn of the circumstances 
surrounding these pardons, the greater we see the need for a 
comprehensive strategy to address PGR's - and the 
rightholders' - disquiet.  End Summary. 
 
¶2.  (SBU) Both PGR and the rightholders bear a heavy 
responsibility in curbing IP violations in Mexico.  PGR is 
responsible for enforcing the law and bringing violators to 
justice, but cannot do so without the willingness of the 
rightholder to see the case through to the bitter end.  It is 
of great consternation to PGR when a rightholder, after filing 
a complaint and at times following years of work by PGR in 
preparing a case, decides to drop the charges against a 
patent, trademark or copyright infringer and requests a 
pardon.  PGR, under pressure from both the Calderon 
administration and the USG for more arrests, more 
prosecutions, and more convictions of IP violators, is left in 
a very frustrating position. 
 
Nike 
---- 
 
¶3.  (SBU) So it should come as no surprise that on March 25, 
when the local representative for Nike met with PGR's senior 
IP Unit leadership to inform them that Nike was considering 
dropping the charges against Leonardo Cruz Hernandez, PGR was 
extremely displeased.  Cruz was arrested on March 23 by 
Mexican authorities for IPR violations, after a 3-year 
investigation.  Following his arrest, Nike Mexico's General 
Manager received enormous pressure from Nike's wholesalers to 
pardon Cruz, including from a brother of a senior PRI 
politician.  The decision to consider dropping the charges was 
made on March 24 in a telcon between Nike Mexico and Nike 
corporate headquarters in Portland.  The conditions for the 
possible pardon included community service, auditing of Cruz's 
financial records, and cooperation with PGR in its 
reconversion program.  No financial remuneration was included 
in the pardon. 
 
¶4.  (SBU) PGR's IP team reached out to ECONOFF, ICE Attach 
and the DOJ, to inform us of Nike's decision and to ensure 
that Nike corporate headquarters was aware.  That same day, 
Nike Mexico met again with PGR to let them know that Nike had 
decided to go ahead and allow the case to proceed.  PGR was 
pleased.  However, on March 26, the judge of the 11th Federal 
Court of the Recusorio Oriente, where Cruz was being held, 
dismissed the charges against him and allowed Cruz to go free. 
The judge's clerk found fault with the paperwork in which PGR 
outlined the case against him, and the case was dismissed on a 
technicality. 
 
MPAA 
---- 
 
¶5.  (SBU) In a meeting with a senior IP official at PGR on 
Friday, April 3, the official voiced his frustration to 
ECONOFF and ICE Attach with the attorneys who represent U.S. 
rightholders.  He said he felt like he was fighting two fronts 
- the pirates and the attorneys.  He mentioned another case, 
in which the local legal representative for MPAA pardoned six 
persons arrested following a major sweep in Veracruz for the 
production and distribution of pirated DVD's.  ECONOFF had 
previously been told by a contact at the MPAA Washington 
office that their lead local investigator had received 
 
MEXICO 00001081  002 OF 003 
 
 
personal threats, including an envelope hand-delivered to his 
residence containing a note card with the letter 'Z' 
emblazoned on it - indicating the notorious 'Los Zetas' 
criminal gang - and a bullet.  The PGR official argued that 
the envelope did not surface until after the local MPAA 
representatives had acted to dismiss the case.  He was also 
dismissive of the envelope, remarking that he was not entirely 
convinced it was real, and that even if it was credible, in 
this line of work "you have to be used to such threats." 
 
¶6.  (SBU) On Tuesday, April 7, ECONOFF met with the Managing 
Director of MPA Mexico, to collect MPAA's story.  He said the 
raid on Coatzacoalcos, Veracruz, occurred in early March, and 
was a military raid in which guns and drugs were seized along 
with over a million pirated and blank CD's and DVD's.  (NOTE: 
The March 5 IFPI press release reports that Mexican law- 
enforcement and military personnel raided a domicile in 
Veracruz, Mexico that was utilized as a major replicating 
center for 'Los Zetas.'  Seized in this raid were: 350,500 
music CDRs, 300,360 film DVDRs, 1,800 Burners, 30,000 blank 
DVDRs, and 380,000 film and music inlay cards.  A total of 
seven individuals were arrested in the raid.  There was no 
mention of arms or drugs.  END NOTE.) 
 
¶7.  (SBU) Following this raid, the PGR IP Unit contacted MPA 
Mexico and requested that they file a complaint.  (NOTE: 
Under the Mexican system, the Mexican authorities lack ex- 
officio authority, and can act only upon receiving a complaint 
from the right-holder.  END NOTE.)  MPA Mexico did so, and the 
authorities charged the six arrested with IP violations.  In 
mid-March, MPA Mexico discovered that the case had been 
dismissed, and the six arrested had gone free based on a 
pardon from MPA Mexico.  MPA Mexico obtained a copy of the 
judicial pardon from Veracruz, which had allegedly been signed 
by their legal representative.  However, the legal 
representative swore that he had never made such a pardon, 
that he was not in Veracruz on the date of the pardon, and 
that he had not signed such a document.  It was when he was 
ready to go to Veracruz in an attempt to refute the pardon and 
clear his name that he received a text message on his cell, 
signed 'Z', threatening him, and the envelope (described 
above) appeared on the investigator's doorstep. 
 
¶8.  (SBU) Since then, MPA Mexico's lead investigator left 
Mexico for Peru on Friday, March 27 for a possible extended 
stay.  The legal representative who allegedly signed the 
pardon was dismissed (amicably), and another has resigned out 
of fear.  This incident has effectively eviscerated MPA 
Mexico's enforcement activities.  On Friday, April 6, PGR 
asked MPA Mexico if they would file a complaint against the 
alleged boss of the six pardoned individuals - presumably the 
seventh person arrested in the Veracruz sweep.  MPA Mexico's 
Managing Director told ECONOFF they are mulling over their 
options. 
 
Comment 
------- 
 
¶9.  (SBU) Comment:  The possibility of a forged pardon and the 
subsequent threats reflect a high level of sophistication on 
the part of the Zetas.  If true, PGR should launch an 
investigation of these events, and perhaps determine to what 
extent the judicial system in Veracruz is complicit.  More 
importantly, rightholders must feel assured that when they 
bring charges against IP violators, they will be protected by 
the Mexican authorities and any threats against them will not 
be summarily dismissed. 
 
¶10.  (SBU) It is understandable that rightholders feel 
discouraged by sometimes awaiting justice for years as PGR 
prepares a case, only to have it dismissed on a technicality 
or perhaps even based on a judicial lack of understanding.  On 
the other hand, as the first case demonstrates, PGR must be 
assured that it has the complete and consistent support of the 
rightholder when pursuing a case.  The Departments of Commerce 
and Justice have compiled some suggested courses of action, 
 
MEXICO 00001081  003 OF 003 
 
 
recommending that U.S. rightholders review their agreements 
with local legal representatives and ensure that cases cannot 
be settled without the express consent of the U.S. 
rightholder, and providing PGR with rightholders' local and 
U.S. headquarters points of contact. 
 
¶11.  (SBU) The more we learn of the circumstances surrounding 
these pardons, the greater we see the need for a comprehensive 
strategy to address PGR's - and the rightholders' - concerns. 
This is an opportunity to push for Mexican legislative 
approval of ex-officio authority, which would not only remove 
the ability of rightholders to request pardons, it would 
reduce the possibility of harm befalling them as they would no 
longer be responsible for bringing charges against IP 
violators.  We should also develop stronger training programs 
with PGR and Mexico's judicial officials, enhancing the 
authorities' abilities to investigate, prepare, and present IP 
cases as well as adjudicate them in a fair, timely, and 
effective manner.  End comment. 
 
BASSETT