VZCZCXRO4049
PP RUEHIK
DE RUEHMD #0179/01 0470709
ZNR UUUUU ZZH
P 160709Z FEB 10
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC PRIORITY 1938
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 4364
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 04 MADRID 000179 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/WE, EUR/ERA, AND EEB/TPP/IPE 
STATE PASS USTR FOR DAVID WEINER AND JENNIFER GROVES 
STATE PASS ALSO U.S. COPYRIGHT OFFICE FOR M.WOODS and M.PALLANTE 
COMMERCE FOR 4212/DON CALVERT 
COMMERCE ALSO FOR USPTO 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD EUN SP
SUBJECT: SPAIN IPR: AUSTR WILSON'S MEETINGS WITH GOS, OPPOSITION, 
AND PRIVATE SECTOR 
 
REF: 09 MADRID 1161 AND PREVIOUS 
 
MADRID 00000179  001.3 OF 004 
 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY 
 
SUMMARY 
 
¶1. (SBU) During a February 4-5 visit to Madrid, Assistant USTR for 
Europe met with government officials, private sector 
representatives, and an opposition politician to discuss USG 
concerns over Internet piracy in Spain and the government's 
legislative proposal.  Content industry representatives described in 
some detail how piracy is hurting their business.  They support the 
government's proposal as a step in the right direction but are 
unanimous that further action is required.  The rights-holders are 
very concerned that the opposition Popular Party (PP) may defeat or 
hold up the legislation for political gain, and urged the USG to 
continue to reach out to the PP on this issue.  On the government 
side, State Secretary Ros and DG Corral underscored the government's 
commitment to get the legislation passed but asked for USG help not 
only with the PP but with two smaller parties whose votes could 
affect the outcome.  PP Deputy Alvaro Nadal told AUSTR Wilson that 
his party might be able to support the anti-piracy provisions with 
amendments to give the judiciary a more prominent in the process of 
shutting down websites, but noted that the politics of the issue 
were complicated and that the PP vigorously opposes other provisions 
of the Law for a Sustainable Economy (LES).  AUSTR Wilson also met 
with Trade and Foreign Ministry officials to discuss EU Presidency 
trade issues and WTO/Doha Round negotiations.  He also gave an 
interview for a major newspaper's Sunday economic supplement.  End 
Summary. 
 
THE COALITION 
 
¶2. (SBU) At a lunch hosted by the Coalition of Creators and Content 
Industries, AUSTR outlined the USG approach to promoting worldwide 
intellectual property protection and the Special 301 process. 
Representatives of the film, music, electronic and video games, and 
book publishing industries attended, as well as officials 
representing major copyright management entities (collecting 
societies).  Coalition president Aldo Olcese explained how the 
Coalition had come up with the "Spanish model" to combat piracy, 
which involves targeting commercial-scale pirate websites instead of 
individual users.  Cultural industries, he said, do not want to make 
enemies of millions of Internet users by threatening them with 
punishment.  Depriving them of unauthorized content by shutting down 
or blocking websites is a more practical method, in his view. 
 
¶3. (SBU) Not all Coalition members agree fully with this approach. 
Antonio Guisasola of the Music Producers of Spain (Promusicae) and 
James Armstrong of Sony Computers (on behalf of the digital games 
industry) expressed concern that the government's initiative would 
leave much peer-to-peer (P2P) activity undisturbed.  The "Spanish 
model" is essentially a watered-down version of an earlier proposal 
by the Coalition in negotiations with Internet Service Providers' 
(ISP) association, Redtel.  Those negotiations were suspended in 
April 2009 and most Coalition members now believe that Redtel never 
had any intention of entering into an agreement.  Now that the 
government has submitted its legislative proposal, Redtel is no 
longer interested in negotiating.  Guisasola confirmed that Spain's 
music industry favors moving Spain to the Priority Watch List in 
this year's Special 301 review.  Armstrong indicated that the 
computer games industry is of similar mind. 
 
¶4. (SBU) Like the GOS itself, industry representatives are concerned 
about prospects for the legislation's passage.  On January 20, a 
collection of small blocs in Congress held a press conference 
demanding that the government withdraw its proposal and threatening 
to boycott deliberations in the subcommittee on culture.  At the 
last minute the main opposition Popular Party (PP) disassociated 
itself from this initiative, as did the smaller Catalan party, 
Convergencia i Unio (CiU).  Nevertheless, government and 
rights-holders remain concerned that the PP will defeat or stall the 
legislative proposal.  Aldo Olcese noted that the PP has advocated 
for an entirely judicial proceeding, as opposed to the government's 
mixed administrative-judicial proceeding, to shut down or block 
websites.  While in principle this seems not unreasonable, in light 
of experience with Spain's judiciary it would likely be 
unsustainably slow and cumbersome.  Coalition members urged AUSTR 
Wilson and the Embassy to remind PP legislators of their ideological 
interest in protecting private property and their strong bond with 
the United States. 
 
OPPOSITION MEMBER OF CONGRESS 
 
MADRID 00000179  002.3 OF 004 
 
 
 
¶5. (SBU) Assistant USTR Wilson met February 5 with Alvaro Nadal, a 
PP Deputy who is one of his party's experts on economic issues. 
Wilson outlined the purpose of his visit and the concerns of U.S. 
government and private industry about the IPR situation in Spain. 
He characterized the government's proposal as encouraging while 
noting that it won't entirely solve the piracy problem.  He also 
acknowledged that the relationship between the Internet and IPR 
protection is controversial in the United States; in that context, 
the vocal opposition of the Internet users' community in Spain to 
the government's proposal is not so surprising.  Wilson recognized 
that the PP will be influential in the legislative process and asked 
for Nadal's views on how the bill will fare and how the USG can be 
most constructive. 
 
¶6. (SBU) Nadal divided the issue into two parts: policy and 
politics.  With respect to policy, he said the PP is not far from 
the government on the website shut-down provisions in the draft 
Sustainable Economy Law (LES).  The PP supports strong IP protection 
and agrees that something must be done about pirate websites.  It 
makes sense to deter and punish illicit activity.  But the 
government proposes a mixed administrative-judicial process, whereas 
the PP wants a 100 percent judicial process, which Nadal said the 
Constitution and Spanish legal tradition require.  He argued that an 
administrative body - in this case an Intellectual Property 
Commission affiliated with the Culture Ministry - cannot play a 
decisive role in an enforcement action that touches on fundamental 
rights such as communications and freedom of expression.  The PP's 
objection is purely legal, and this is its only area of contention 
with the proposal. 
 
¶7. (SBU) Politically, however, there are other issues.  The PP led 
the opposition in 2006 to the "digital canon," under which 
computers, blank disks, and other media are taxed with to compensate 
rights-holders with a "private copy levy."  (Note: The canon is an 
entirely separate issue from P2P and piracy concerns, though they 
are often confused and conflated in the public mind.)  As a result, 
the PP is close to the Internet technology and service provider 
community.  On the other hand, relations between the PP and Spain's 
cultural establishment and elites are not good.  From the PP's 
perspective, movie stars, directors, prominent authors, and other 
cultural icons always work on behalf of the ruling PSOE and against 
the PP.  Thus, some voices in the party want to oppose the content 
providers by holding up the bill which so many artists and 
entertainers - the same ones who campaigned for President Zapatero - 
are lobbying for.  Some also believe that the legislation would 
mainly benefit foreign industry.  The PP, which hopes to return to 
power in the near future, has to be accountable to its voters. 
 
¶8. (SBU) A complicating factor is that many other provisions of the 
draft LES are anathema to the PP, which believes they represent a 
philosophically misguided approach to restructuring the economy. 
Even if the party can support the anti-Internet piracy provisions, 
it will not easily swallow the law as a whole.  However, Nadal said, 
the PP strongly supports fair trade, open business relations, the 
free market, and protection of private property.  It also cherishes 
strong its ties to the U.S. and close affinity with the United 
States, regardless of which party is in power there.  Nadal 
suggested the USG not overtly or publicly express support for the 
law, since so many of its advocates are leftists and some are even 
anti-American in their orientation.  In the end, he intimated, the 
government may round up enough votes from small parties to pass the 
legislation without PP support. 
 
GOVERNMENT OFFICIALS 
 
¶9. (SBU) AUSTR Wilson also met February 5 with State Secretary for 
Telecommunications and the Information Society Francisco Ros, whom 
he had seen two weeks earlier during Ros's visit to Washington.  Ros 
reiterated that the GOS is strongly committed to passing the 
legislation but noted that public and industry reaction had not been 
entirely positive.  The previous day, content providers, service 
providers, consumer groups, and labor unions met with the Advisory 
Committee on Telecommunications and the Information Society (CATSI), 
one of the many consultative committees that must weigh in on the 
bill before Congress can begin debating it.  The Coalition expressed 
support for the government's proposal, but most other participants 
called for its withdrawal.  According to press reports, Internet 
users' groups ("Internautas") presented a petition signed by 22,000 
citizens opposing the measures. 
 
¶10. (SBU) Ros stressed the importance of digital content to all 
European countries and said that in his EU Presidency-related 
 
MADRID 00000179  003.3 OF 004 
 
 
meetings in Brussels, he has called on other EU Member States to 
coordinate and develop a common approach to Internet piracy, because 
no one country can succeed on its own in this battle.  He said that 
as more economic activity moves online, there will be a "very 
difficult" 5-10-year transition period.  New business models are 
needed to take advantage of the Internet's potential.  With respect 
to piracy, the important thing is to decide on a course of action 
that can be implemented, he emphasized; putting in place ineffective 
or inappropriate measures would be counter-productive. 
 
¶11. (SBU) Ros said his meetings in Washington had gone very well. 
Within the International intellectual Property Alliance (IIPA), 
which is preparing its recommendations for the USG's Special 301 
review, he identified several different opinions.  The Motion 
Picture Association of America (MPAA), he said, is very pleased with 
the government's proposal.  (Comment: This may be a slight 
overstatement of the MPAA's position.)  The Business Software 
Alliance (BSA) is satisfied with the GOS, with whom its members 
partner on a "legal software" campaign that has been effective.  The 
computer games industry, he acknowledged, is "not happy," a 
circumstance that surprised Ros.  And the biggest problem is the 
music industry, which he said "doesn't give any value to [the GOS's] 
decision and commitment," or to the political realities that 
complicate the government's task. 
 
¶12. (SBU) Ros expressed disappointment that private sector groups 
have not given Spain credit for its efforts.  The music industry 
suffers the most from digital piracy, he acknowledged, and is ahead 
of the other industries in offering legal content online, but there 
still isn't enough legal content available.  The government can 
encourage, support, and even help fund portals for legitimate 
content, he said, but industry has to take the lead.  Wilson cited 
industry arguments that services offering legal content haven't 
prospered in Spain due to competition from free downloads.  Both 
dissuasive measures and legal offer need to move forward together. 
 
¶13.  (SBU) AUSTR Wilson assured State Secretary Ros that the USG 
does not pick models and does not favor any one specific approach to 
combating piracy.  Our concern is that Spain implement measures that 
will be effective.  Spain is under the spotlight in this years' 
Special 301 review, he said.  Some industry associations may want 
Spain moved to the Priority Watch List, though others may believe it 
would be a mistake to increase pressure on Spain when it has begun 
to act.  The USG's decision will be informed by industry's 
recommendation, but will also consider the full range of views 
within the U.S. Government.  Understanding the sensitivities, the 
USG will be careful about how it announces the ultimate result. 
Stressing that the USG's Special 301 review process is only just 
under way and without prejudging outcomes, Wilson sought to downplay 
any expectation of Spain being removed from the Watch List in 2010 
given the size of the problem and the fact that the legislation will 
not have passed by late April. 
 
¶14. (SBU) AUSTR Wilson described briefly to Ros his meeting with PP 
Deputy Nadal.  He asked whether the PP-proposed 100 percent judicial 
process could be problematic given constraints on judicial 
resources.  Ros noted that the purpose of a mixed 
administrative-judicial process is to speed things up.  Judges take 
a long time to investigate and decide.  A panel of independent 
experts will not be biased and will work faster.  Ros stressed that 
the GOS cannot do any more than it is doing, changing the law to 
make the system work better.  He closed by saying that Spain's 
highest Internet priorities for its EU Presidency are IPR protection 
and cyber-security. 
 
¶15. (SBU) At a lunch hosted by the Foreign Ministry (see paragraph 
20), AUSTR Wilson spoke with Guillermo Corral, Ministry of Culture 
Director General for Cultural Policy and Industries, who accompanied 
State Secretary Ros on his Washington visit in late January.  Corral 
indicated that the ruling Spanish Socialist Workers Party (PSOE) is 
having trouble with some of its own Deputies and regional party 
officials over the proposed legislation.  In light of perceptions 
that the GOS is being pressured by the USG to toughen its 
anti-piracy regime, Corral thought it would probably be 
counter-productive for the Embassy to approach PSOE opponents of the 
initiative.  He did, however, suggest that the Embassy talk to 
Deputies from the regional Convergencia i Unio (CiU - Cataluna) and 
Basque National Party (PNV - Basque Country) about the legislation. 
(Note: The PNV joined the January 20 call for the government to 
withdraw the legislation; CiU did not.  Post will follow up.  End 
Note.)  Corral also expressed concern that the upcoming Special 301 
decision might affect the legislative debate; AUSTR Wilson said he 
understood this concern and said USG wanted the Special 301 review 
 
MADRID 00000179  004.3 OF 004 
 
 
for Spain to be constructive. 
 
¶16. (U) In a follow-up conversation with Econoff, Corral sought to 
clarify his comments in Washington on how the GOS legislative 
proposal might affect some P2P activity.  He acknowledged that many 
music files are transferred from one individual Internet account to 
another without passing through a website that can be blocked, but 
said that some other P2P traffic passes through sites, and there are 
indexation and linking pages, which he characterized as "P2P 
crossroads."  Judges in Spain have declined to sanction owners or 
managers of such sites due to lack of a clearly defined profit 
motive as required by the Penal Code and the Prosecutor General's 
2006 Circular, but if an administrative body were to order them 
blocked, he believes judges would probably authorize it.  Corral 
also commented that there is a trend for more music to be downloaded 
from streaming sites, which would be subject to shut-down or 
blocking under the proposed legislation. 
 
TRADE AND THE EU PRESIDENCY 
 
¶17. (SBU) AUSTR Wilson also discussed a range of trade issues, 
especially related to Spain's EU Presidency, with Secretary General 
for Trade Alfredo Bonet, and again at a lunch hosted by MFA Director 
General for EU Affairs Alfonso Diez Torres.  Bonet commented on some 
of the challenges of implementing the Lisbon Treaty, especially the 
European Parliament's (EP) role in approving legislation and 
international agreements.  The EP, he said, is not happy that the 
European Council can apply new agreements provisionally while 
waiting for the EP to approve them.  There are a number of issues 
that need to be deconflicted of the EP is to approve the Free Trade 
Agreement with South Korea and other important legislation. 
 
¶18. (SBU) AUSTR Wilson praised the very positive and helpful role 
Spanish officials played in recent negotiations in Guadalajara, 
Mexico towards an Anti-Counterfeiting Trade Agreement (ACTA). 
Thanks to Spain's leadership, negotiators made progress on the 
Agreement's criminal enforcement chapter.  Bonet cited ACTA as 
another area where the EP is skeptical, criticizing a lack of 
transparency. 
¶19. (SBU) On Doha Round negotiations, AUSTR Wilson cited a difficult 
trade policy environment in the U.S., but noted President Obama's 
reference to Doha and FTAs in the State of the Union address as a 
positive sign.  Priority FTAs include Panama, Colombia, and South 
Korea.  Bonet said Spain as EU Council President would keep pressing 
on Doha.  Bonet noted the EU also has issues to be resolved with 
Colombia.  FTA negotiations with Peru, Colombia, and now Ecuador 
remain difficult.  He also discussed briefly implementation of the 
banana agreement and FTA negotiations with Central America, which 
have been suspended since July.  On the Transatlantic Economic 
Council (TEC), Bonet said that even though there will be no U.S.-EU 
Summit in May as Spain had hoped, the GOS still wanted a TEC meeting 
during its Presidency, though definition of objectives, schedule, 
and other details remain to be worked out.  AUSTR Wilson noted that 
NSC and the European Commission are discussing what to do about the 
TEC. 
 
¶20. (SBU) MFA DG Diez Torres covered some of the same issues in his 
February 5 lunch with AUSTR Wilson.  He said he would soon accompany 
MFA State Secretary for Latin American de Laiglesia on a trip to the 
region to try to progress on the FTAs.  He noted also that during a 
recent visit to the U.S., a European Commission DG had sensed 
reduced interest on the part of USG officials in engaging with the 
EU on trade issues, even before the announcement that President 
Obama would not attend a proposed U.S.-EU Summit.  Wilson responded 
by noting that the U.S. regards the U.S.-EU trade relationship as 
uniquely mature and well-functioning, and suggested that European 
trade officials should have greater confidence in existing channels 
for dialogue and communication on trade issues. 
 
COMMENT 
 
¶21. (SBU) The GOS remains committed to getting its legislative 
proposal on Internet piracy through Congress, but at this time the 
outlook is uncertain.  Post will escalate its engagement with 
government, opposition, and other stakeholders throughout the 
Special 301 process and beyond.  End Comment. 
 
¶22. (U) Assistant USTR Wilson cleared this cable.