ID

231832

Etiquetas

ETRD, KIPR, EINV, ECPS, KCRM, SP

Fecha

2009-10-28 15:29:00

RefID

09MADRID1052

Origen

Embassy Madrid

Clasificación

UNCLASSIFIED//FOR OFFICIAL USE ONLY

Destino

09MADRID224

09MADRID410

09MADRID417

09MADRID982

Encabezado

VZCZCXRO3097

RR RUEHIK

DE RUEHMD #1052/01 3011529

ZNR UUUUU ZZH

R 281529Z OCT 09 ZDK MULT SVCS

FM AMEMBASSY MADRID

TO RUEHC/SECSTATE WASHDC 1384

INFO RUCNMEM/EU MEMBER STATES COLLECTIVE

RUEHLA/AMCONSUL BARCELONA 4176

RHEHNSC/NSC WASHDC

RUCPDOC/DEPT OF COMMERCE WASHDC

Contenido

UNCLAS SECTION 01 OF 05 MADRID 001052

SENSITIVE

SIPDIS

@ELIMINADO@

E.O. 12958: N/A

TAGS: ETRD, KIPR, EINV, ECPS, KCRM, SP

SUBJECT: ZAPATERO PROMISES ACTION TO COMBAT INTERNET PIRACY

REF: A. MADRID 982

B. MADRID 417

C. MADRID 410

D. MADRID 224

MADRID 00001052 001.3 OF 005

SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY

SUMMARY

1. (SBU) In an October 21 speech to the American Business

Council, President Zapatero addressed internet piracy in

public for the first time, acknowledging that deficiencies in

IPR protection in Spain are a source of concern to the USG

and the GOS. Zapatero pointed to the October 9 creation by

the Council of Ministers (Cabinet) of an Inter-Ministerial

Commission to study Internet piracy, which he said will

submit recommendations to the government before the end of

this year. The Commission appears to formalize and enhance

ongoing working-level Inter-Ministerial discussions. Its

formation, the December 31 deadline, and Zapatero's

high-profile statement are encouraging signs suggesting that

progress may be forthcoming. Post believes Zapatero's

October 13 meeting with the President has contributed to both

the formation of the Commission and Zapatero's willingness to

go on record emphasizing the need for a solution.

2. (SBU) Meanwhile, developments continue on other fronts,

and the decline in music, video, and movie sales this year

provides more evidence of the seriousness of the problem.

The government continues to urge the content providers and

the Internet Service Providers' (ISP) association (the

"Coalition" and "Redtel," respectively) to reach agreement on

measures to deter piracy. The two sides continue to exchange

proposals, but Coalition sources advise that any agreement

reached will be of modest scope. The Coalition also

announced it is developing a "macroweb" to make content

legally available online, which it plans to deploy in 2010

once the government begins to implement measures to protect

online content. Separately, rights-holders' groups have won

some internet piracy court cases and lost others. On October

19, the Coalition sent the Ministry of Industry, Tourism, and

Trade (MITYC) a list of some 200 commercial-scale pirate

websites, asking the Ministry to take dissuasive action and

also to pass the list to the Prosecutor General's office

(Fiscalia) for criminal charges. End Summary.

THE NEW COMMISSION

3. (U) During the weeks leading up to President Zapatero's

October 13 meeting with President Obama, U.S.

copyright-dependent groups such as MPAA and the Recording

Industry Association of America (RIAA) pressed actively to

have President Obama raise internet piracy with Zapatero.

Members of Congress sent a letter to USTR and the Commerce

Department with the same message.

4. (U) On October 9, Spain's Council of Ministers (Cabinet)

announced the establishment of an Inter-Ministerial

Commission to address the problem of IPR violations on the

internet. The Council tasked the Commission with analyzing

the existing regulatory framework and identifying actions

that will make the criminal and civil judicial processes more

effective in protecting copyrights online and offering

remedies to rights-holders. The Commission is to provide the

Council with its preliminary conclusions and recommendations

by December 31.

5. (U) Senior officials (roughly Under Secretary and

Assistant Secretary equivalents) of the following eight

Ministries will comprise the Commission: MITYC, Culture,

Interior, Justice, Education, Foreign Affairs and

Cooperation, Economy and Finance, and the Presidency. The

Commission held its first meeting October 23 to set its work

agenda. The Commission will build on informal collaborative

efforts undertaken over the past several months at the

working level by MITYC, Culture, Industry, and Justice.

6. (U) In an October 22 meeting with Charge, MITYC State

Secre tary for Telecommunications and the Information Society

Francisco Ros acknowledged the challenge of coordinating

among eight Ministries but stressed the benefits of including

all relevant actors in the discussion of possible solutions.

MADRID 00001052 002.3 OF 005

He framed the problem as one of reconciling IPR with privacy

and other fundamental rights, arguing that in Spain and other

countries, government attempts to regulate the Internet have

sparked protests by privacy advocates and counter-measures by

legislatures.

7. (SBU) Rights-holders are convinced that the mere

possibility of Zapatero's having to address the issue in his

meeting with the President spurred the government to action.

Coalition President Aldo Olcese called the Council of

Ministers' announcement, which our government contacts had

played up all week as imminent good news that would

demonstrate the government's seriousness, "a cynical maneuver

to give Zapatero something to say" in case President Obama

did raise the issue. Olcese also called the announcement of

the Commission a delaying tactic, since it pushes any

solution into the future. He predicts the Commission will

recommend among other things that Spain seek a European-wide

approach to Internet piracy during its EU Presidency, an

approach that State Secretary Ros is known to support but

which rights-holders fear could lead to further delay.

ZAPATERO RECOGNIZES THE PROBLEM

8. (SBU) The reported discussion of internet piracy by a

senior White House official with close advisors of Zapatero,

and GOS pleasure with Zapatero's visit to DC as a whole,

appear to have resonated at senior levels of the GOS. In an

October 21 speech to the American Business Council (ABC) on

economic issues, Zapatero addressed the issue in public for

the first time. He cited Spain's impressive performance in

attracting foreign investment but noted the need for

improvement in several areas, including IPR, as part of a

broader effort to enhance Spain's attractiveness to foreign

investors. Without specifically naming internet piracy, he

noted that IPR protection was of concern to both the USG and

the GOS. He pointed out that Spain boasts the world's fourth

largest cultural industry and that the "creative sector"

accounts for 4% of GDP. Zapatero expressed support for the

Coalition-Redtel negotiations and reiterated that the newly

formed Inter-Ministerial Commission is to present its

proposal by year's end.

SALES DROP ILLUSTRATES SERIOUSNESS OF PROBLEM

9. (U) Representatives of copyright groups have presented an

array of evidence to dramatize the plight of their

industries. Legitimate music sales in Spain fell by more

than 30% in the first six months of 2009 compared with the

same period in 2008. Video sales were down 33% and rentals

down 44%. Movie attendance has declined significantly over

the past two years. While the severe recession contributed

to these losses, industry representatives point the finger at

competition from illicit downloads and file-sharing.

PRIVATE SECTOR NEGOTIATIONS

10. (U) Per reftels, beginning in May 2008, the government

had urged the Coalition and Redtel to negotiate an agreement

on deterring and combating digital piracy. The parties

worked for almost a year in three different areas -

dissuasive measures (including recommendations for

legislative and regulatory reforms), public education and

awareness, and new business models, i.e., making more content

legally available online.

11. (U) As reported ref B, Redtel broke off negotiations in

April 2009. According to Redtel executive director Maria

Teresa Arcos, Redtel and the Coalition have not conducted any

formal negotiations since then. Sometimes Coalition and

Redtel presidents Aldo Olcese and Miguel Canalejo meet

together with senior officials of MITYC or the Culture

Ministry; the two groups also sometimes communicate through

third parties, especially government officials; and they have

also passed draft proposals back and forth. The government

is eager to have a private-sector agreement, however modest

or narrow, on which to base its own initiatives. The

Coalition is willing to keep trying for an agreement as a

means of keeping the government engaged, but it says it has

become disillusioned with the continued dilution of its

proposals. It has given up, at least for now, any measures

to sanction or even notify individual users who infringe

MADRID 00001052 003.3 OF 005

copyrights online, and its proposal that ISPs or the

government shut down or block pirate websites probably would

require controversial legislation. It does not expect the

"de minimis" agreement to advance its interests much.

12. (U) Redtel's primary emphasis in the negotiation has been

on the business model issue, as its ISP members hoped to

enter into lucrative business deals with such Coalition

members as the Motion Picture Association of America (MPAA)

and various recording companies to market their products

legally online. The ISPs' inability to achieve their

objectives in this area was the ostensible reason for

suspension of the negotiations. However, content providers'

representatives note that the ISPs and their parent

telecommunications companies (Telefonica, Orange, Vodaphone,

and Ono) have a number of contentious issues pending with the

government involving taxation, competition, and regulation,

and may be using the Internet piracy negotiations as leverage

with the government on other matters. In public, Redtel

executives have said if the government wants to solve the

piracy problem, it should take action, and the ISPs will

comply with their obligations, but the government should not

expect voluntary concessions from Redtel.

13. (U) Meanwhile, the Coalition announced October 19 its own

new business model: a "macro-website" offering access at

reasonable prices to its members' products, including the

much-desired and much-pirated movies made available by major

U.S. studios. The new site is reportedly based on the U.K.

website findanyfilm.com and will also contain music and

games. Coalition president Olcese noted that consolidating

the content in one place will offer an attractive alternative

to illegal downloads and file-sharing. He stated, however,

that the "macroweb" will not be formally launched until the

government has begun to implement measures to combat piracy

and protect content, which the Coalition hopes will be in

early 2010. Rights-holders argue that Spain's current

lawless online environment makes legal content offers futile.

During a visit to Madrid, International Federation of the

Phonographic Industry (IFPI) president John Kennedy

characterized Spain's situation as a "vicious circle" in that

such legal websites can never compete against free downloads

as long as piracy remains unpunished, and are therefore not a

sound investment.

COURT CASES - WIN SOME, LOSE MORE: THE "CIRCULAR" CASTS ITS

SHADOW

14. (U) The government claims it is doing everything it can

under current authority to combat Internet piracy. At State

Secretary Ros' recent meeting with AmCham's IP Committee (ref

A), Salvador Soriano, Deputy Director General for Information

Society Services in the Ministry of Industry, Tourism, and

Trade (MITYC), cited statistics showing that in the past four

years, law enforcement authorities have investigated 100

websites over allegations of illicit activity; 43 criminal

complaints have been filed by either private parties or

government entities; 43 arrests have been made; and 34 cases

are currently before investigating judges.

15. (U) Comment: These figures cover activity since 2005.

According to Jose Manuel Tourne of the Federation for the

Protection of Intellectual Property in Audiovisual Works

(FAP), authorities conducted 21 investigations for Internet

piracy in 2006 and more than 20 in 2007. Many of those cases

are still working their way through the judicial system and

are still awaiting decisions by investigating judges or have

been appealed to provincial courts. Many have been thrown

out by judges following the reasoning of the Circular (see

ref D) issued in May 2006 by the Prosecutor General's office

(Fiscalia). One case in April (ref C) in La Rioja resulted

in an important precedent with the first-ever conviction of a

web operator for running a pirate website that generated

profit for advertising revenues. Sources in the National

Police, Civil Guard, and Fiscalia have told post that in the

past two years police and prosecutors have largely given up

pursuing these cases because the Circular sets such a high

bar. While the government continues to insist that the

Circular is not binding on judges, its language has directly

influenced judges and led to unfortunate outcomes in a number

of such cases.

MADRID 00001052 004.3 OF 005

16. (U) Comment continued: In the Circular - a series of

guidelines for prosecutors to follow in investigating and

prosecuting IPR cases - the Fiscalia argued against pursuing

criminal charges against file-sharers on the grounds that it

was impractical and undesirable to penalize "a broad

cross-section of society that uses technological advances to

access protected works." Most rights-holders do not pursue

criminal charges against individual Internet users except in

the most egregious circumstances. They believe, however,

that prison sentences and/or suspension of Internet access

are not necessarily disproportionate in such extreme

circumstances, and also that, if available, such sanctions

would provide a strong deterrent against illicit downloads

where none currently exists. End comment.

17. (U) Rights-holders' groups were heartened by a September

decision of a three-judge appellate panel of the Provincial

Court of Murcia. An investigating judge had dismissed a

criminal complaint filed by rights-holders in 2006 against a

website ("Elite Divx") that made files available for

peer-to-peer (P2P) downloading. The lower court followed the

interpretation contained in the Circular, according to which

most unauthorized P2P activity should be pursued as a civil

wrong rather than as a crime. (Note: In large part because

of the Circular, media routinely report, and the Spanish

public at large generally believes without question, that P2P

activity is entirely legal. End note.) In sending the case

back to the lower court to be re-tried, the appellate court

found that unauthorized P2P activity is in fact covered by

the relevant sections of the Penal Code; that it comprises a

form of "public communication...in the form of making

(content) available"; that therefore (in direct contradiction

of the Circular) the "private copy exception" does not apply;

and that - even accepting the Circular's controversial

interpretation that a commercial profit motive must be

present for criminal penalties to apply - the revenues earned

by the website from advertising demonstrate that it is "an

authentic business receiving important economic benefits

which increase based on the number of visits" and thus

covered by the Penal Code.

18. (U) The Murcia court's decision does not have binding

precedential force, but rights-holders believe that because

it was issued by an appellate court (albeit not a national

one), and because, unlike many judicial decisions, it

explains the judges' reasoning so forcefully and clearly, it

is likely to influence other pending and future internet

piracy cases elsewhere in the court system. That said, many

cases arising out of a series of police raids and website

shutdowns in 2006-7 have already resulted in acquittals or

have been summarily dismissed by investigating judges based

at least in part on the Circular's influence.

19. (U) In a separate case, rights-holders' groups were

dismayed on October 15, when an investigating judge in Madrid

rejected a complaint filed by the Music Producers of Spain

(Promusicae) and music companies Universal, Warner, Sony, and

EMI against an individual (identified in court by only his

Internet Protocol number) who uploaded approximately 9,000

music recordings without authorization using a P2P

application, making them available to anyone who wanted them.

The judge quoted from the Circular's language stating that

in order to constitute a crime, P2P activity must involve

commercial profit. Accordingly, he found that the only

exchange taking place was that of "sharing among different

users the material at their disposal, which constitutes

socially acceptable and very widespread behavior that in the

end is in no way illicit enrichment; rather, said conduct

would raise the possibility of obtaining copies for private

use, which leads to the conclusion that in this case there is

no infraction deserving of criminal sanction." Promusicae is

appealing the verdict.

THE COALITION'S CHALLENGE

20. (U) At his October 19 press conference, Olcese also

announced that the Coalition, in partnership with the

self-described anti-piracy investigative entity CoPeerRight

Agency, had developed a list of 200 commercial-scale pirate

websites, of which 62 operate from Spain. Olcese said he was

sending the list to MITYC in the hopes that the government

will take action against the offending sites, which

MADRID 00001052 005.3 OF 005

CoPeerRight estimates generate average annual revenues of 1.5

million euros from advertising directly related to their

offers of infringing content. Olcese also asked MITYC to

pass the list to the Fiscalia for criminal prosecution.

21. (SBU) Comment: MITYC currently has no authority to take

any action against the sites except perhaps impose weak

administrative sanctions. There is no reason the Coalition

could not file a criminal complaint with the police, provide

them with the list and accompanying documentation, and ask

them to investigate. However, the Coalition believes Spanish

law enforcement authorities are much more likely to

investigate vigorously and prosecute if the material is given

to them by a government entity such as MITYC.

22. (SBU) Comment continued: The Coalition's other reason for

sending the list to MITYC is to implicate that Ministry in

the piracy problem and hold it accountable for finding a

solution. The Coalition is trying to keep the public

spotlight and pressure on the government - and especially

MITYC - while the Inter-Ministerial Commission explores

possible initiatives. The rights-holders' objective is the

creation of a new government administrative body - a pale

imitation of the High Authority contemplated by recent

legislation in France - that would have the power to shut

down or block pirate websites. Rights-holders' groups

believe that State Secretary Ros opposes the creation of such

a body because he does not want his office, which oversees

Internet matters, to become responsible for the problem.

Content providers, who continue to believe in the face of

Ros' recent "urban legend" remark (see ref A) that Spain has

one of the highest rates of Internet piracy in the world, are

determined to make him face up to the problem. End Comment.

CHACON;"