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FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5685
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UNCLAS SECTION 01 OF 03 MANILA 002327 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR EAP/MTS, EAP/EP, AND EB/IFD 
DEPARTMENT FOR EEB/TPP/IPE 
STATE PASS USTR FOR BWEISEL, RBAE AND BKLEIN 
STATE ALSO PASS USAID, OPIC, USDA 
BANGKOK FOR USPTO JENNIFER NESS 
TREASURY FOR OASIA 
USDOC FOR 4430/ITA/MAC 
USDOC PASS USPTO 
STATE ALSO PASS LOC 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR ECON RP
SUBJECT:  Philippines: Intellectual Property Rights Updates for 
Out-of-Cycle Review 
 
REF: A. Manila 505; B. Manila 1923 
 
¶1. Summary. The U.S. Trade Representative (USTR) announced in April 
2009 that the Philippines would remain on the intellectual property 
rights (IPR) Special 301 Watch List, but that USTR would conduct an 
Out-of-Cycle Review (OCR) to gauge progress on key issues.  While 
progress is being made in judicial reform, anti-camcording 
legislation, and IPR outreach, other initiatives have stalled.  In 
particular, implementing legislation for the World Intellectual 
Property Organization (WIPO) Internet treaties has seen little 
movement, and funding for some intellectual property (IP) units 
remain uncertain.  Passage of the Cheaper Medicines Act raised 
concerns about patent protection, and compulsory licensing is still 
a possibility.  While the strengthening of IP-focused governmental 
institutions remains a challenge, maturing institutions such as the 
Intellectual Property Office (IPO) and National Committee on IPR 
(NCIPR) suggest some momentum in favor of improved IPR protection in 
the Philippines.  End Summary. 
 
Proposal for New Rules of Procedures for IP Cases Delivered to the 
Philippine Supreme Court 
------------------------------ 
 
¶2. (U) The Philippine judicial system is often cited by IP 
stakeholders as a bottleneck to effective IPR protection.  In 
response to Supreme Court Chief Justice Reynato Puno's November 2008 
request, a special working group delivered a proposal for new 
procedural rules to govern IP litigation on October 27 to expedite 
and clarify the judiciary's IPR litigation process (reftel A).  The 
working group members represent the IPO, NCIPR, state prosecutors, 
law enforcement, customs, regional trial court judges, and private 
sector lawyers. 
 
¶3. (SBU) The proposed rules aim for cases to be resolved within an 
average of one year.  Specific provisions include procedures for the 
quick destruction of seized counterfeit goods; streamlined 
procedures for subject matter expert testimony; alternative dispute 
resolution; and the establishment of specialized IP courts with 
national jurisdiction.  The Supreme Court is directing the formation 
of a judicial study committee to review the proposed rules and 
present the revised procedures to the Supreme Court for adoption. 
These two steps are expected to conclude within Chief Justice Puno's 
term, which expires in May 2010. 
 
Recent and Ongoing Judicial Cases 
---------------------------------- 
 
¶4.  (SBU) Two notable and recent out-of-court settlements uphold IPR 
rights, although many more cases are pending.  In July 2009, Turtle 
Cable reached a settlement with Cable and Satellite Broadcasting 
Association of Asia (CASBAA) approximately one year after the case 
was filed with IPO's Bureau of Legal Affairs (IPO/BLA).  The 
settlement required Turtle Cable to publicly apologize for cable 
piracy, commit to the use of only authorized programming, and 
symbolic restitution.  Still, Newell Rubbermaid continues to press 
its trademark infringement cases again its former partner, 
Amalgamated Specialties Corporation (AMSPEC) through the IPO 
adjudication process, as well as in local courts, first filed in 
June 2008.  There appears to be little movement in the long-standing 
case against Phillips Seafood Philippines Corporation (PSPC), a 
subsidiary of U.S.-based Phillips Seafood, in which competitor 
Kanemitsu Yamaoka alleges patent infringement in tuna processing. 
The case has been pending with IPO/BLA since mid-2003. 
 
Patents:  The Cheaper Medicines Act 
------------------------------------ 
 
¶5.  (U) The passage and implementation of the Cheaper Medicines Act 
raised concerns within the pharmaceutical industry about the 
possible weakening of patent protection.  Since the last cycle 
review, President Macapagal-Arroyo reduced the price of five brand 
name pharmaceuticals by executive order (reftel B).  These price 
controls have not been accompanied by any movement towards 
compulsory licensing, however.  After many months, the issue remains 
in the discussion phase within the IPO and the Philippine Department 
of Health. 
 
 
MANILA 00002327  002 OF 003 
 
 
¶6.  (U) In a related issue, pharmaceutical company Pfizer filed a 
complaint against United Laboratories alleging patent infringement 
of the anti-cholesterol drug Lipitor.  The case was filed with the 
Makati Regional Trial Court on October 6, with Pfizer maintaining 
that it owns the patent on atorvastatin, the active ingredient of 
Lipitor, until 2012.  Unilab had previously filed a case with the 
IPO seeking to invalidate Pfizer's patent on atorvastatin. 
 
Mixed Progress Confronting Digital Piracy 
----------------------------------------- 
 
¶7. (SBU) The passage of national anti-camcording legislation during 
this session is uncertain.  The House passed the Anti-Camcording Act 
(House Bill 5699) in February and the counterpart (Senate Bill 3300) 
was filed in June.  The Senate Committee on Public Information and 
Mass Media conducted technical working group meetings and public 
hearings.  The Committee report is being circulated for member 
signatures.  Congress is expected to take up the bill soon after it 
resumes session in November.  Several influential senators are 
supportive of the anti-camcording bill, though the committee 
encourages stakeholders to actively advocate passage, suggesting it 
needs a push. 
 
¶8. (U) In 2008, the Manila City Legislative Council passed a city 
ordinance against camcording in movie theaters.  Two nationwide 
movie theater chains, Shoe Mart (SM) and Ayala, regularly run 
trailers asking viewers to alert management if they see patrons 
using recording devices.  At theater entrances, large signs 
explaining the camcording prohibition greet movie-goers. 
 
¶9.  (U) The slow pace of WIPO Internet treaty implementation 
illustrates the difficulty of capturing legislators' attention in an 
election year.  Contacts in the IP community cite the need for 
better education of legislators and the public regarding WIPO and 
the enabling legal framework that those treaties would provide 
Philippine IP enforcement units. 
 
Control over Pirated Goods Distribution Improves 
--------------------------------------------- ---- 
 
¶10. (SBU) Seizures in the first nine months of 2009 have already 
surpassed 2008 totals, and include eight replicating machines with 
an annual capacity of 32 million DVDs; and 17 confiscations worth 
about $20 million USD of pirated DVDs, counterfeit shoes and 
apparel, cell phone accessories, and automobile parts, mostly 
originating from China. 
 
¶11. (SBU) The Intellectual Property Rights Division of the National 
Bureau of Investigation (IPR/NBI) conducted 31 operations, served 
214 search warrants, filed 202 cases and seized goods worth more 
than $11 million USD from January to September of 2009. With nine 
agents based in Metro Manila, IPR/NBI uncovered unlicensed software 
usage by retailers, business process outsourcing firms, multimedia 
and creative design firms, construction and engineering design 
firms, as well other establishments.  During the same period, the 
Anti-Fraud and Commercial Crimes Division of the Philippine National 
Police (PNP) conducted 28 operations, served 164 search warrants, 
and made seizures worth more than $51.3 million. Police carried out 
enforcement actions against offices using unlicensed Microsoft and 
Autocad software, and retail outlets and warehouses that were 
selling counterfeit products that range from luxury bags, shoes, 
apparel, beauty products, batteries, and electrical products. 
Despite the high volume of seizures, we are not aware of any 
resulting convictions or penalties. 
 
¶12.  (SBU) In addition to these law enforcement efforts, the Optical 
Media Board seized more than 3.2 million optical disks valued at 
$20.9 million USD in the first nine months of 2009, and carried out 
958 inspections in the first three quarters of 2009. 
 
¶13.  (U) New collective licensing agreements between publishers and 
universities aim to reduce certain types of piracy.  The Filipinas 
Copyright Licensing Society (FILCOLS) is working with the National 
Book Development Board and the IPO to impress upon universities the 
importance of intellectual property.  Working with De La Salle 
University, FILCOLS expects to pilot a collective licensing 
agreement on the use of copyrighted books and materials by the end 
 
MANILA 00002327  003 OF 003 
 
 
of the year.  De La Salle University is one of 29 universities in 
the Philippines with an explicit IP policy, the result of efforts 
stemming from a Memorandum of Understanding (MoU) between IPO and 
the Commission of Higher Education. 
 
The Challenge of Institutionalization 
--------------------------------------- 
 
¶14.  (SBU) Although the 2008 Executive Order creating IP units 
within key executive agencies was a welcome move, many of those 
units have been hampered by low budgets and demoralized staff.  More 
recently, some IP Units have received additional fiscal and 
personnel resources.  For example, Executive Order 736 converted the 
Bureau of Customs IP Unit into a permanent administrative division 
(reftel A) and Finance Secretary Teves approved staff increases for 
the division.  Although its permanent establishment and budget have 
not yet been formally approved by the Department of Budget and 
Management, the Unit moved to a new, larger office in October 2009. 
 
¶15. (SBU) The Optical Media Board (OMB) continues to face budget 
constraints (reftel A).  For this reason, the OMB has had difficulty 
attracting managers who are knowledgeable in IP and dedicated to 
institutional development.  Like his predecessor, the new chairman 
of OMB, who was appointed October 23, is a former actor considered 
to have electoral ambitions; it is too early to tell whether he will 
be vigorous in carrying out enforcement activities. 
 
IPR for National Development 
----------------------------- 
 
¶16.  (U) IPO is pushing public-private initiatives with a recent 
focus on the judiciary.  Its annual colloquium on intellectual 
property hosts substantive discussion of IPR, this year on 
procedural rules for IP litigation.  The IPO also advocated for a 
judicial branch member on the National Committee on Intellectual 
Property Rights (NCIPR). 
 
¶17.  (U) In the area of commercialization and management of IP 
assets, the Intellectual Property Research and Training Institute 
(IPRTI), established in 2008, has trained over 200 scientists, 
researchers, lawyers, business executives.  Since 2007, over 43 
regulators and practitioners working in the field have traveled to 
the U.S. for IPR-related training.  The Philippine government is 
becoming more engaged at the regional and global level on 
intellectual property protection and assumed the chairmanship of the 
Association of Southeast Asian Nations (ASEAN) Coordinating 
Committee on Intellectual Property Policy and Cooperation (ACIPC) in 
June 2009. 
 
Comment 
-------- 
 
¶18.  (SBU) In each branch of national government, some positive 
developments indicate modest progress on IPR protection.  The 
Philippine Supreme Court is leading the much-needed reform of the IP 
litigation process.  Significant improvement in judicial reform 
would render enforcement more consequential, complementing the 
executive branch's upward trend in pirated goods seizures.  An 
anti-camcording law would also bolster enforcement, although passage 
of the bill remains uncertain in this election cycle. For longer 
term gains, the IPO engages broadly with the university, business, 
and scientific communities to assert IPR as a tool for national 
development.  While substantial areas for improvement remain in the 
Philippines, this set of initiatives targets increasingly limited 
government resources on attainable goals. 
 
KENNEY