VZCZCXRO0037
OO RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHML #0008/01 0041003
ZNR UUUUU ZZH
O 041003Z JAN 10
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6145
RUCPDOC/USDOC WASHDC IMMEDIATE
RUCNASE/ASEAN MEMBER COLLECTIVE IMMEDIATE

UNCLAS SECTION 01 OF 03 MANILA 000008 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR EAP/MTS, EAP/EP 
DEPARTMENT FOR EEB/TPP/MTA/IPC 
STATE PASS USTR FOR BWEISEL, RBAE AND BKLEIN 
STATE ALSO PASS USAID 
BANGKOK FOR USPTO JENNIFER NESS 
USDOC FOR 4430/ITA/MAC 
USDOC PASS USPTO 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD EAGR RP
SUBJECT:  Philippines: 301 Special Out-of-Cycle Review on 
Intellectual Property Rights Protection 
 
¶1. (SBU) Summary.  On December 17, U.S. Trade Representative (USTR) 
officials held a digital video conference with the Government of the 
Republic of the Philippines (GRP) to discuss intellectual property 
rights protection and enforcement as part of the 301 Special 
Out-of-Cycle Review (OCR) of the Philippines.  The delegations 
discussed a variety of issues including legislative developments, 
proposed special IP courts and procedural rules, increased IPR 
enforcement actions, and the growing challenge of peer-to-peer 
piracy.  End Summary. 
 
Out-of-Cycle Review on IPR Protection in the Philippines 
---------------------------------- 
 
¶2.  (U) In April 2009, USTR announced that the Philippines would 
undergo an OCR to assess progress on specific concerns regarding 
illegal camcording, slow implementation of the WIPO Internet 
treaties, and potential intellectual property (IP) ramifications of 
the 2008 Cheaper Medicines Act.  Meetings on these issues were 
scheduled for November in Manila, but were postponed because of 
intervening events.  On December 17, U.S. and Philippine delegations 
met via digital video conference, led by Assistant USTR Barbara 
Weisel and Director for Intellectual Property and Innovation Rachel 
Bae for the United States, and Department of Trade and Industry 
(DTI) Senior Undersecretary Thomas Aquino and Intellectual Property 
Office (IPO) Director General Adrian Cristobal, Jr. for the 
Philippines.  Other attendees included the Chairman of the Optical 
Media Board, representatives from the Philippine National Police 
(PNP), National Bureau of Investigation, Bureau of Customs, and 
Department of Interior and Local Government.  The U.S. delegation 
included the Patent and Trademark Office (USPTO), the Department of 
Commerce, the State Department, and the U.S. Copyright Office. 
 
Legislative Progress but Most Timelines Unclear 
----------------------------------- 
 
¶3.  (U) Cristobal reported that the Technology Transfer Bill is 
awaiting final signature by President Macapagal-Arroyo.  Citing this 
as a victory for IPR, Cristobal thanked the USPTO and other USG 
agencies that helped the Philippine government to develop this bill, 
which was modeled after the U.S. Bayh-Dole Act to provide for the 
commercialization of government-funded research and development. 
 
¶4.  (SBU) The Philippine delegation would not speculate on timelines 
for the passage of other IP-related bills, but Cristobal pointed to 
the January - March window as a historically productive time for 
legislation.  Cristobal noted that the Anti-Camcording Bill is 
moving more quickly than expected due to its strong domestic 
constituency in the movie theatre and film industries. The bill 
passed the House and is pending second reading in the Senate.  He 
also said the implementing legislation for the WIPO Internet 
treaties passed the House on second reading, but the Senate version 
is still pending in committee level.  Cristobal reported that there 
is a strong push for passage of these treaties from both legislative 
authors, Senator Angara and Congressman Rodriguez.  In another 
update, Cristobal mentioned that the Anti-Cable Television Piracy 
Bill was approved on third reading in the House and is pending a 
second reading in the Senate.  Pointing to more long-term 
legislative efforts, Cristobal shared that the IPO recently formed 
an IP caucus of House members. 
 
Judicial Reform:  Moving Forward with IP Courts, Special Procedures 
----------------------------------- 
 
¶5.  (SBU) Cristobal reported that Supreme Court Chief Justice 
Reynato Puno formed a special judicial committee last week to review 
draft IP rules submitted in October 2009.  Cristobal predicted 
adoption of the rules in early 2010, describing the IP courts as "an 
idea whose time has come," with a broad constituency and receptive 
Chief Justice. 
 
¶6.  (U) Cristobal claimed that the rules would streamline and 
increase transparency of the IP judicial process by creating two or 
three specialized courts in the National Capital Region with 
national jurisdiction.  The reforms would address the confiscation 
of items, prohibit certain pleadings, and allow courts to tap the 
IPO for technical and legal expertise.  Cristobal provided a 
speculative timeframe of Q3 implementation, cautioning that the IPO 
plays only an "active supporting role."  Before full implementation, 
the new IP courts would need to reduce non-IP dockets to achieve a 
50-50 mix of IP and non-IP cases.  IP courts would have civil and 
criminal jurisdiction and would operate within existing budgets. 
 
MANILA 00000008  002 OF 003 
 
 
 
¶7.  (SBU) Cristobal also noted success for IP rights holders through 
quasi-judicial mechanisms, such as the administrative process of the 
IPO's Bureau of Legal Affairs (BLA).  The BLA resolved 10 cases 
during the first nine months of 2009 with an average case turnaround 
time of 19 months and some early success stories.  According to 
Cristobal, BLA will also offer IP owners mediation in 2010, but 
noted that funding restraints limit the BLA's capacity to assume a 
greater workload. 
 
IPR Enforcement Actions Increase In Spite of Uncertain Budgets 
------------------------------------ 
 
¶8.  (U) Responding to concerns about lack of political will to fund 
IPR enforcement, Cristobal acknowledged that the OMB's request for 
additional funding is pending with the Office of the President, 
adding  that resources are being channeled to social programs in the 
wake of several natural disasters earlier in the year.  Cristobal 
pointed out that enforcement actions had increased in spite of 
budgetary constraints, highlighting the 100% increase in actions by 
the PNP after the Chief of Police issued a nationwide directive on 
IP enforcement and signed a MoU with the IPO.  Cristobal added that 
the five billion pesos of goods seized in 2009 was 40% more than 
last year and a 500% increase from 2005, when the IPO was 
established. 
 
¶9.  (U) Of 4,158 enforcement actions, there were 360 raids (60 of 
which were in notorious areas such as Quiapo, Manila) and 405 search 
warrants issued.  OMB attorney Cyrus Valenzuela remarked that the 
OMB is also working closely with the government's Philippines 
Anti-Piracy Team and industry association Business Software Alliance 
to pursue enforcement through inspection orders, which do not 
require judicial approval or IP rights holders' involvement. 
 
Clash of Views on Copyright Protection 
------------------------------------ 
 
¶10.  (SBU) Cristobal recognized a long-standing issue between the 
International Intellectual Property Association (IIPA) and the IPO 
regarding the process of obtaining search warrants, reiterating his 
disagreement with the IIPA in their characterization of search 
warrants as "difficult to obtain" in the Philippines.  He stated 
that the IIPA was basing its assessment on a comparison of seven 
years ago, when search warrants were easily granted but were often 
quashed at a later stage in the judicial process.  Cristobal added 
that he would welcome a dialogue with IIPA on this point. 
 
¶11.  (U) Questioned as to whether the IPO had good cooperation from 
other IP entities, Cristobal noted a general hesitancy on the part 
of U.S. pharmaceutical and publishing interests to support 
Philippine efforts.  He went on to express concern that U.S. 
publishers were "quite slow" in responding to the Filipinas 
Copyright Licensing Society (FILCOLS) initiative, established last 
year.  The U.S. delegation flagged concerns that reprographic rights 
organizations such as FILCOLS were not up to international standards 
or accepted practices, licensing fees were a fraction of those in 
other markets, and U.S. publishers were concerned that their 
interests were not being "represented proportionately."  Cristobal 
responded that empirical evidence can help resolve such issues, 
adding that FILCOLS is a member of the International Federation of 
Reproductive Rights Organizations (IFRRO), and that legitimate 
distinctions between developed and developing countries exist. 
Cristobal observed that, if the U.S. publishers decide they will not 
participate in FILCOLS, there is nothing the Philippine government 
can do. 
 
Hot Spots:  Pharmaceuticals, Camcording and Digital Piracy 
------------------------------------ 
 
¶12.  (SBU) USPTO asked whether the USG would have an opportunity to 
review the draft patent examination handbook before adoption; 
Cristobal agreed to provide such an opportunity.  Cristobal 
acknowledged that the process of updating the data protection 
provisions had been slow but he hoped to complete the revision by 
early 2010.  Of specific concern to the U.S. pharmaceutical 
industry, these rules will shape implementation of the Cheaper 
Medicines Act. 
 
¶13.  (U) On mobile devices/peer-to-peer (P2P) piracy, Cristobal 
admitted progress has not been as constant as in other issue areas, 
and that there were few arrests despite numerous raids.  A 
 
MANILA 00000008  003 OF 003 
 
 
representative from the OMB explained that there is no Philippine 
law outlining jurisdiction over illegal downloading, and the OMB 
would like USG technical assistance to outline a legal basis for 
asserting its jurisdiction on peer-to-peer and other digital piracy. 
 USTR indicated it would raise the issue with U.S. industry 
representatives.  Cristobal also sought collaboration with the 
United States to address illegal camcording. 
 
The End of Cristobal's Tenure and Next Steps for IPR Protection 
------------------------------------ 
 
¶14.  (U) Noting Cristobal's upcoming departure after his term 
expires on December 31, 2009, USTR officials communicated their 
appreciation of Cristobal's leadership in the Philippines and in the 
Association of Southeast Asian Nations (ASEAN) Working Group on 
Intellectual Property.  Cristobal confirmed that he intends to 
return to the private sector, adding, "I like to think that what I 
have done has been institutionalized."  Members of the Philippine 
delegation recognized USG assistance at several points in the 
conference, including USPTO training of judges, support for the 
technology transfer bill, support for a 12-member Philippine 
delegation to a recent signal piracy conference, and other 
capacity-building activities. 
 
¶15.  (SBU) The Philippine delegation seeks continued collaboration 
with the USG, with Cristobal and Aquino expressing their hope that 
USG officials might raise intellectual property issues in meetings 
with senior Philippine officials. USTR informed GRP officials that 
the Special 301 Subcommittee would meet next week to exchange views, 
after which a decision on the Philippine OCR would be made early 
next year. 
 
¶16.  (U)  USTR cleared this cable. 
 
Kenney