ID

194719

Etiquetas

KIPR, ETRD, ECON, SP

Fecha

2009-03-02 14:32:00

RefID

09MADRID224

Origen

Embassy Madrid

Clasificación

UNCLASSIFIED//FOR OFFICIAL USE ONLY

Destino

08MADRID1150

08MADRID1194

08MADRID1257

08MADRID1318

08MADRID1346

08MADRID1351

08STATE45107

09STATE8410

Encabezado

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DE RUEHMD #0224/01 0611432

ZNR UUUUU ZZH

R 021432Z MAR 09

FM AMEMBASSY MADRID

TO RUEHC/SECSTATE WASHDC 0316

INFO RUCNMEM/EU MEMBER STATES COLLECTIVE

RUEHLA/AMCONSUL BARCELONA 3870

RUCPDOC/DEPT OF COMMERCE WASHDC

Contenido

UNCLAS SECTION 01 OF 06 MADRID 000224

SENSITIVE

SIPDIS

@ELIMINADO@

E.O. 12958: N/A

TAGS: KIPR, ETRD, ECON, SP

SUBJECT: SPECIAL 301 REVIEW: SPAIN

REF: A. STATE 08410

B. 08 MADRID 1351

C. 08 MADRID 1346

D. 08 MADRID 1318

E. 08 MADRID 1257

F. 08 MADRID 1194

G. 08 MADRID 1150 AND PREVIOUS

H. 08 STATE 45107

MADRID 00000224 001.2 OF 006

SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY

SUMMARY AND RECOMMENDATION

1. (SBU) Spain was placed on the Special 301 Watch List in

April 2008 primarily due to the government's failure to take

specific, concrete measures to address a growing Internet

piracy problem. One year later, Internet piracy continues to

grow. The government is attempting to address the problem in

several ways - most notably by pressing for results in

negotiations between Internet Service Providers (ISPs) and

rights-holders on measures to prevent unauthorized downloads.

Because it does not want to take potentially controversial

action without the agreement of both parties, the government

has not yet initiated any legislative or regulatory measures

to combat digital piracy, pending the conclusion of

negotiations. The government has taken a number of other

steps to discourage piracy and raise public awareness. In

November 2008, the Minister of Culture introduced the

government's third anti-piracy public awareness campaign in

the past four years. In the same month, the Ministry of

Industry, Tourism, and Trade hosted its second annual

conference on IPR in the digital environment, which featured

a USG speaker. Rights-holder groups praised the release by a

GOS inter-agency group of an IPR good practices manual that

includes guidance on investigating and prosecuting IPR

crimes. Notably, the manual emphasizes that unauthorized

peer-to-peer (P2P) downloads are always illegal.

2. (SBU) The government is not investigating or prosecuting

cases of file-sharing or P2P downloading, due in large part

to the 2006 Circular of the Fiscalia (Prosecutor General's

Office) stating that such activity should not be subject to

criminal prosecution but rather treated as a civil violation.

In civil proceedings, investigators are unable to obtain

identifying information from ISPs, making the civil route

unproductive; the government may seek to address this problem

once negotiations are completed. Post is not aware of any

efforts by the government to modify the Circular despite our

efforts. Separately, the Business Software Alliance reports

strong cooperation on the part of the GOS, and Microsoft says

software piracy levels declined in 2008. Rights-holders

praise the ongoing work of the National Police and Civil

Guard in combating street piracy at the national level but

note that Internet piracy is now a more important problem.

Separately, police actions against informal street sellers

have come under growing public criticism, and a movement to

decriminalize such street sales has garnered media and

Congressional attention.

3. (SBU) Recommendation: As described above, the GOS is

acting against piracy in a number of significant ways.

However, most observers agree that Internet piracy will

continue to flourish until the ISPs and the GOS agree to

regulatory and possibly legislative actions. Post believes

the private-sector negotiations will eventually produce an

agreement that the government will then assist in

implementing, but it is not clear whether this will happen in

the next few months. For this reason, post recommends

keeping Spain on the Watch List. End Summary and

Recommendation.

4. (SBU) Intellectual property rights policy in Spain is the

province of the Ministry of Industry, Tourism, and Trade and

the Ministry of Culture. The Ministry of Interior (which

oversees the National Police and Civil Guard) and the

Ministry of Justice (of which the Fiscalia is an independent

branch) are responsible for enforcement. Within the Ministry

of Industry, Tourism, and Trade, the Office of Patents and

Trademarks manages industrial property issues and receives

high marks from industry representatives for its

professionalism. The Ministry of Culture has the lead on

copyright issues in tandem with the Ministry of Industry,

Tourism, and Trade's Secretariat of State for

Telecommunications and the Information Society. The Minister

MADRID 00000224 002.2 OF 006

of Culture chairs an Inter-Sectoral Committee created in 2005

to implement the national anti-piracy plan and has been

perhaps the most visible public figure speaking in defense of

improving Spain's IPR enforcement. Rights-holders give the

Ministry of Culture credit for his understanding of the

problem and strong desire to fix it, but lament the

Ministry's lack of resources and clout. The government has

not centralized coordination of the fight against Internet

piracy; however, a lack of coordination is less an issue than

deficiencies in the legal regime.

INTERNET PIRACY - GOVERNMENT PUSHES PRIVATE SECTOR

NEGOTIATIONS

5. (SBU) At the urging of the Ministry of Industry, Tourism,

and Trade, Redtel, the association comprising Spain's four

largest ISPs (Telefonica, Orange, Vodaphone, Ono), began in

May 2008 to meet with the Anti-Piracy Coalition, which

represents the film, music, and video games industries and

copyright management societies, to discuss ways to combat

internet piracy. After extensive discussions and exchanges

of information, it was not until late September that Redtel

made its initial proposal for the creation of a new

government commisssion to hear complaints of digital

copyright infringement and send notifications to alleged

violators. Content providers deemed Redtel's proposal

problematic in various respects - cumbersome, potentially

unworkable, not far-reaching enough - and had concerns as

well about the cost burdens, but accepted it as a basis for

further discussions. The parties have continued to meet, and

all agree the talks are serious and are advancing, albeit

slowly and with occasional steps back. The Minister of

Industry, Tourism, and Trade, Miguel Sebastian, called for

the parties to present to the government by December 31 a

document listing their areas of agreement and disagreement,

but they failed to meet this deadline. The new target date

is the first week of March, at which time the government

hopes to make a public announcement.

6. (SBU) Rights-holders groups advise that any decision

reached by that date will be general in nature, with many

details remaining to be worked out. The two sides and their

lawyers are reportedly far apart on the legal measures that

will be required to implement any such agreement, with the

content providers arguing that a Ministerial decree may be

sufficient while the ISPs have suggested that four or five

laws may need to be amended, a process that would take at

least two years and probably longer. Progress on adopting a

framework to make some content legally available online has

been mixed, with the Redtel pushing hard for access to more

music and especially films than the rights-holders are

prepared to make available. While rights-holders frequently

complain about the slow pace of negotiations and about

Redtel's tactics, and several have at one time or another

threatened to pull out, the parties appear interested in

reaching agreement, though the early March deadline may be

unrealistic. The GOS would prefer that the two sides reach

agreement on as many aspects as possible, and one official

has privately expressed concern that they may put forward two

different proposals, requiring the government to act as

broker.

7. (SBU) It should be noted that differing priorities and

interests among the rights-holders' groups that comprise the

Coalition have complicated the negotiations. The music and

film industries, for example, are at odds over Redtel's

insistence that penalties for repeat offenders will not

include suspension or cancellation of Internet services. The

Music Producers of Spain contend that the threat to cut off

repeat violators must be an option, even if rarely exercised,

for the system to work. The Motion Picture Association and

its local allies believe there are alternative sanctions,

such as a significant reduction in bandwidth, that would be

sufficient to deter recidivists.

8. (SBU) The government, for its part, has pushed the

parties to continue to negotiate and has promised to assist

in implementing any agreement once the parties agree on what

regulatory/legislative changes are needed. It remains

reluctant to propose any legislative or regulatory measures

that are not fully supported by the private sector, believing

that any such initiatives would be unpopular and unlikely to

succeed. As a result, several legal obstacles to effective

IPR protection that the USG has urged the government to

MADRID 00000224 003.2 OF 006

modify - e.g., the "actual knowledge" standard for ISP

liability, the prohibition against identifying alleged

infringers in the context of civil litigation - remain in

place. The government says it has prepared a number of

possible legislative proposals, depending on what service

providers and rights-holders agree to. The government, like

most rights-holders, is hopeful that relatively few, modest

legal changes may be sufficient.

9. (SBU) Industry figures show that between July 2007 and

June 2008, there were 1.9 billion music downloads, of which 4

percent were from legal, paid services, and 250,000 film

downloads, of which 2 percent were legal and paid, Cynics

among the rights-holders assert that the government's posture

actually gives the ISPs an incentive to negotiate slowly,

since an agreement could trigger government actions that the

service providers would prefer to delay as long as possible.

In pushing the parties to reach agreement, the government has

threatened to impose its own solution if negotiations fail

but is clearly reluctant to take such a step, and the parties

know it. The government, all agree, wants Telefonica and the

other telecommunications companies that own the ISPs to

voluntarily make some concessions - especially, to agree to a

graduated response regime modeled on some combination of

British and French approaches to the problem - in order to

spare the government from having to take politically

unpopular measures unilaterally. However, the ISPs, eager to

avoid customer resentment, stress that they will do whatever

government requires through law or regulation, but only

because they are required to do so. Telefonica, as part of

its corporate social responsibility programs, participates in

a prominent anti-piracy public education campaign. However,

a company spokesperson recently told mass circulation daily

El Pais that Telefonica is "neither judge nor party" in the

controversy over file-sharing and P2P downloads and that it

"will do whatever our regulator says when a decision is made"

but is otherwise totally neutral on Internet piracy questions.

SIGNS OF LEGISLATIVE SUPPORT

10. (U) On November 5, the Congress of Deputies issued a

non-binding resolution urging the government to "promote an

effective strategy, approved by consensus, to fight

activities in the digital environment that violate

intellectual property rights, based on agreement among all

sectors involved: the content industry, internet operators,

consumers, and users." The government was not involved in

the development of this resolution, but took it as a positive

sign that, once the private parties agree on a way forward,

there will be support in the Congress for enabling

legislation. A Ministry of Culture representative told

Econoffs February 25 that Congress's Culture Committee had

issued a resolution calling for a panel of experts to draft

revisions to the Intellectual Property law, but post has no

further information.

GOS PUBLIC AWARENESS ACTIVITIES

11. (U) The GOS considers public opinion to be a key

battleground in the struggle against all forms of IPR piracy,

and public education and awareness to be critical elements in

protecting digital content. All observers agree that many

Spaniards still do not view online piracy as a problem or

even as an offense. Due in part to the Fiscalia's 2006

Circular, some believe peer-to-peer downloading is akin to

making a private copy of a digital file and is thus

permitted. Others simply can't understand how there could be

an issue over such an easy, convenient, unimpeded act. Yet

others see such downloading, though considered "wrong" by

some, as a form of Robin Hood activity, stealing from wealthy

artists, entertainers, and companies.

12. (U) The government has undertaken a number of activities

in the past year to promote responsible Internet use and to

discourage piracy. The Ministry of Industry, Tourism, and

Trade organized an International Conference on Digital

Content (FICOD) in late November, with a separate conference

involving many of the same participants on Protecting IPR in

the Digital Environment. The Minister, Miguel Sebastian,

spoke at FICOD, and the Secretary of State for

Telecommunications, Francisco Ros, at the IPR Conference.

Both underscored the need for stronger IPR protection if the

sector is to grow, and highlighted the government's

commitment to combating digital piracy. Also in late

MADRID 00000224 004.2 OF 006

November, Minister of Culture Cesar Antonio Molina launched

the government's third anti-piracy public education campaign,

aimed especially at young people, with the slogan, "If you're

legal, you're all right." The campaign and Minister Molina's

public statements that the GOS would soon be publishing new

regulations to protect digital content sparked expressions of

concern among Spain's vocal pro-piracy Internet users' lobby,

though both their effort to have Molina fired and a

pro-piracy demonstration fizzled. The Culture Ministry is

planning to launch another public awareness campaign after

the current one ends at the end of March and is also

organizing seminars on subjects related to IPR protection.

The Ministry of Industry, Tourism, and Trade, meanwhile, will

begin on March 31 a campaign with the Business Software

Alliance and a Spanish industry group to promote use of legal

software.

GOOD PRACTICES MANUAL

13 (U) Another important GOS initiative was the December 11

launch of a new "Manual of Good Practices" prepared by a

broad inter-agency group coordinated by the Ministry of

Culture. The Manual is a general reference on IPR issues

combined with guidelines and practical suggestions on how to

recognize potentially infringing activity, conduct

investigations, and prepare cases to be brought before

judges. Rights-holders' groups hailed the Manual as

establishing "approved criteria" for investigating and

prosecuting IPR crime. In its section on Investigations, the

Manual describes the phenomenon of P2P downloads and

underscores that, when done without the content owner's

authorization, such downloads are always illegal and, in

contrast with the Fiscalia's Circular, characterizes as

"erroneous" any notion that they might constitute permitted

private copying.

THE CIRCULAR REMAINS UNCHANGED

14. (SBU) One major issue that rights-holders unanimously

cite as the main obstacle to effective online IPR enforcement

is the 2006 "Circular" issued by the Fiscalia. The Circular,

a 115-page document consisting of instructions to

prosecutors, was an attempt to incorporate into practice the

2003 IPR amendments to the Penal Code, which among other

things made IPR violations a public crime subject to ex

officio action by authorities rather than an offense

requiring a private complaint. Numerous experts have praised

the Circular as a significant advance for the protection of

IPR, especially industrial property (patents and trademarks).

At the same time, there is near universal agreement that its

treatment of Internet piracy, especially P2P file-sharing and

downloading, constitutes a combination of misunderstanding,

dubious interpretation, and misguided policy. The Circular

states that while websites that make available links to

protected material are clearly not engaged in making a

"private copy" as permitted under the so-called "Digital

Canon," an Internet user who downloads from such a link or

from a P2P network is in fact making a private copy. In

addition, the Fiscalia redefines "profit motive," identified

by the Penal Code as a prerequisite for prosecuting

IPR-infringing activity as a crime, to mean "commercial

profit motive" and specifies that infringing activity must be

of commercial scale to constitute a crime. As such, no

individual who downloads protected material can be criminally

prosecuted, and those who make it available can be prosecuted

only if they charge for the service, or, in theory, if they

promote the availability of the material on their websites as

a means of selling advertising.

15. (SBU) The Fiscalia's argument for treating illicit

downloads and file-sharing as a civil, rather than as a

criminal, offense, was twofold: That criminalizing all

IPR-infringing activity as well as a broad cross-section of

society that uses Internet technologies would violate the

principle of "minimal intervention" by law enforcement (in

other words, we can't prosecute half the population); and

that criminal prosecution should be reserved for serious

offenses and that illicit downloading represents a minor

offense which can more appropriately be addressed in the

civil courts. The Circular has been interpreted by many

Internet users, as well as by many police, prosecutors, and

judges, as declaring P2P downloading to be a permitted

activity that is no business of law enforcement. Some judges

have rejected criminal charges against infringing website

MADRID 00000224 005.2 OF 006

operators based on the Circular's reasoning.

16. (SBU) A Fiscalia official with whom post met recently

repeated the GOS argument that the Circular is not binding on

judges nor a statement of what the law is or is not, but

rather a series of instructions designed to help orient

prosecutors in their handling of IPR cases. At the same

time, she argued that the Circular was legally correct in its

reflection of the Penal Code's "profit motive" requirement.

If police decline to open criminal investigations against

internet IPR violators, and prosecutors decline to press

charges, they are correctly interpreting the Circular's

intent. However, it is not the Fiscalia's fault, she

stressed, if some people misinterpret the Circular to mean

that P2P downloading and file-sharing are permitted, legally

sanctioned activities. Nor can the Fiscalia be blamed for

the fact that civil cases for Internet piracy tend to run

aground on the Data Protection Law, which imposes a high

threshold for identifying users according to the Internet

Protocol addresses. Those who don't like the Circular's

assignment of P2P to civil jurisdiction, she suggested,

should focus on either amending the Penal Code or improving

civil procedure. The Fiscalia has not considered issuing any

sort of modification or clarification of the Circular, she

said. Nor, as far has post has been able to determine, has

anyone in the government made a serious effort to convince it

to do so, despite our efforts. However, if private-sector

negotiations produce an effective system of dissuasive

measures, the Circular will likely become less of an issue.

SOFTWARE PIRACY DECLINING

17. The Business Software Alliance (BSA) is not a member of

the Anti-Piracy Coalition. While BSA reports significant

piracy problems, including on the Internet, it also enjoys

strong and constructive relations with the government.

Microsoft recently published a report citing GOS action

against piracy and stating that software piracy rates

declined in 2008 from their 2007 levels.

ADVANCES AGAINST STREET PIRACY

18. (U) Rights-holders and government representatives all

agree that law enforcement has done a good job of enforcing

IPR laws against the sale of pirated and counterfeit goods.

The National Police and the Civil Guard have conducted

numerous investigations, resulting in a number of raids on

street markets, of which the most significant were in June

and November. While statistics are not yet available for

2008, preliminary estimates indicate that authorities

conducted at least 40 IPR enforcement actions resulting in

more than 300 arrests and the seizures of at least 26 million

euros worth of pirated or counterfeit merchandise. In

addition, last month the National Police seized 1,150

unauthorized copying and modification devices that enable

video games to be uploaded to portable Nintendo consoles.

Rights-holders note that coordination between national and

local law enforcement varies from one city to another across

Spain and tends to depend on relations between national

government representatives and municipal governments, which

may in turn depend on the political orientation of Mayors and

city councils. Catalonia is one region where the

coordination is reported to be especially good, whereas

representatives of the music industry cited Granada in the

south as an example of a city where street piracy remains a

problem due to poor coordination between national and local

law enforcement. Another problem cited by rights-holders is

a lack of proactivity on the part of some public prosecutors

in investigating and prosecuting offending vendors and an

unwillingness on the part of some judges to levy fines and

jail sentences. In addition, one content providers'

association head complained that police still require his

organization to defray the costs of transporting and storing

seized material. That said, everyone we talked to agreed

that authorities have continued to increase and improve their

enforcement efforts against street piracy over the past year.

19. (U) Many, however, expressed concern over a new movement

to decriminalize "top manta," the practice of selling pirated

videos, CDs, video games, and other portable contraband

displayed on sheets or blankets which can quickly be folded

and gathered up to conceal the merchandise when police

approach. Police arrested approximately 700 "manteros" or

MADRID 00000224 006.2 OF 006

blanket people in 2008, and some 62 are in jail after being

convicted of IPR violations. A few recording artists have

lent their names to a campaign calling for leniency for

arrested manteros and for a change in the law. One judge on

Spain's Audiencia Nacional (High Court) has characterized top

manta (which is generally conducted by immigrants from

Africa) as "a minority business by the poor and for the poor"

and referred to enforcement efforts against it as

"criminalizing poverty." Some even argue that street sales

of pirated goods are insignificant because music, films, and

games can be obtained so much more easily over the Internet.

The campaign to decriminalize "top manta" has gained

sympathetic media coverage in recent weeks and has come to

legislators' attention. On February 13, a group of

Congressmen from small, left-wing parties from Catalonia

introduced in the Justice Committee a resolution calling on

the government to decriminalize blanket sales. Although GOS

officials say they will oppose this initiative,

rights-holders are concerned that an adverse climate of

public opinion may demoralize police and lead to a diminution

of enforcement actions.

EMBASSY IPR ACTIVITIES

20. (U) At the suggestion of Minister of Industry, Tourism,

and Trade Sebastian following Spain's placement on the Watch

List, Embassy set up a bilateral IPR working group with

representatives of the Ministry of Industry, Tourism, and

Trade and the Ministry of Culture. The group has met several

times to assess progress on the USG's recommendations and on

ways to improve Spain's IPR performance. The Ambassador met

twice with Minister Sebastian and once with Minister of

Culture Molina to advocate a more activist approach to

combating piracy. Both the outgoing and incoming DCMs

discussed our IPR concerns with Secretary of State for

Telecommunications and the Information Society Francisco Ros.

USPTO attorney-advisor Michael Shapiro was a presenter on

two panels at the November IPR/Digital conference; during his

visit, DCM hosted a lunch for representatives of the

government, the Anti-Piracy Coalition, and Redtel. Econoff

meets regularly with rights-holders, service providers, and

government officials to highlight USG's interest in the

success of negotiations and the promulgation of effective

legislation.

COMMENT

21. (SBU) Post believes the many GOS actions to discourage

piracy are significant, and that the GOS-promoted

negotiations between rights-holders and ISPs are likely to

identify measures that will reduce Internet piracy. For

these reasons, post does not recommend placing Spain on the

Priority Watch List. However, until ISPs and rights-holders

reach agreement and the GOS begins to take the necessary

implementing actions, we see no argument for removing Spain

from the Watch List.

22. (SBU) We believe the year ahead offers important

opportunities for us to press the GOS to take definitive

steps forward. The government is increasingly sensitive to

its international image in the run-up to its assumption of

the EU Presidency in January 2010. It is also eager to

strengthen and expand bilateral engagement with the new U.S.

Administration, and hopes for high-level visits and meetings.

In this context, the government is aware that Spain's

continuing Internet piracy problem hurts overall relations.

We need to find additional ways to use this sentiment to our

advantage. End Comment.

CHACON;"