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### Viewing cable 07MADRID2128, USG REPRESENTATIVES REITERATE INTEREST IN WORKING

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07MADRID2128 | 2007-11-19 09:09 | 2010-12-21 12:12 | CONFIDENTIAL | Embassy Madrid

`

    VZCZCXRO9689
    RR RUEHAG RUEHROV
    DE RUEHMD #2128/01 3230903
    ZNY CCCCC ZZH
    R 190903Z NOV 07
    FM AMEMBASSY MADRID
    TO RUEHC/SECSTATE WASHDC 3815
    INFO RUCNMEM/EU MEMBER STATES COLLECTIVE

` `

    C O N F I D E N T I A L SECTION 01 OF 06 MADRID 002128

    SIPDIS

    SIPDIS

    STATE FOR EB/TPP/IPE (JURBAN, JBOGER) AND EUR/WE (ESAMSON)
    STATE PASS USTR (JGROVES, CWILSON)
    STATE PASS COMMERCE (ITA - DCALVERT)
    STATE PASS USPTO (MSHAPIRO)
    STATE PASS U.S. COPYRIGHT OFFICE (MSKELTON)

    E.O. 12958: DECL: 11/15/2012
    TAGS: ECON ETRD KIPR PGOV ADCO SP
    SUBJECT: USG REPRESENTATIVES REITERATE INTEREST IN WORKING
    WITH SPAIN ON COPYRIGHT ISSUES IN CONNECTION WITH NOVEMBER
    7-8, 2007 MADRID CONFERENCE

    REF: (A) MADRID 01807 (B) SECSTATE 107629

    Classified By: Deputy Charge d'Affaires a.i., Hugo Llorens, for reasons
    1.5 b and d.

    ¶1. (U) Summary: Associate Register of Copyrights David
    Carson, U.S. Patent & Trademark Office Senior Counsel Michael
    Shapiro and Deputy Chief of Mission Hugo Llorens used the
    Spanish government organized Madrid November 7-8, 2007
    "Conference on Intellectual Property Rights in the Digital
    Environment" to reiterate to the Spanish government our
    continuing interest in working with Spain on
    copyright-related intellectual property rights (IPR) issues.
    Ministry of Industry, Tourism and Trade Secretary of State
    Francisco Ros expressed an interest in judge-to-judge
    exchanges on IPR matters. The Spanish government's view
    remains that Internet Service Providers (ISPs) and content
    providers should engage in self-regulation to limit internet
    piracy. However, the government is considering mandating
    that ISPs include in service contracts a provision that
    service can be cut off if users infringe copyrights.
    Moreover, the government is considering making a special
    effort to encourage stakeholders to move quickly on an
    internet notice system, leaving takedown for later. These
    would be positive steps that would begin to address U.S.
    concerns. Para 2 provides background. Paras 3-4 report on
    the U.S.-Spain bilateral held on the margins of the
    conference. Paras 5-6 report on the lunch DCM hosted in
    connection with the conference. Paras 7-8 report on an
    industry-government meeting held following the conference.
    Para 9 summarizes highlights from the conference. Para 10
    contains an Embassy concluding comment. End Summary

    BACKGROUND
    ----------

    ¶2. (C) The Spanish government is aware that it came very
    close to being watchlisted during the latest Special 301
    process. This no doubt partly explained Secretary of State
    Ros' desire to host the November 7-8 conference. His staff
    made a point of inviting David Carson from the Copyright
    Office to speak at the conference. The organizers also
    invited representatives from the UK, France, South Korea and
    the EU, as well as important local stakeholders. The
    government is juggling sometimes conflicting objectives.
    These objectives include, but are not necessarily limited to:
    increasing broadband internet penetration, thereby benefiting
    national champion Telefonica; limiting piracy both because
    the Spanish government agrees with that objective and also to
    keep Spain off the Special 301 watchlist; and containing the
    possible political damage caused by consumer groups and
    internet surfer ("internauta") groups. There are not many
    Spaniards in the latter category, but they have a media
    impact out of all proportion to their numbers. With
    elections coming up in March 2008, the government is
    sensitive to them.

    U.S. - SPAIN BILATERAL
    NOVEMBER 7, 2007
    ----------------------

    ¶3. (U) Participants: DCM Hugo Llorens, Associate Register of
    Copyright David Carson, U.S. Patent and Trademark Office
    Senior Counsel Michael Shapiro and Economic Officer Carl
    Schonander participated for the U.S. Ministry of Industry,
    Tourism and Trade Secretary of State for Telecommunications
    Francisco Ros was accompanied by Chief of Staff Juan Junquera
    Temprano and Subdirector General for Information Society
    Services Salvador Luis Soriano Maldonado.

    ¶4. (C) DCM said that the U.S. remained very interested in
    working with Spain on combatting internet related copyright
    piracy, and that the conference was a laudable initiative.
    Ros emphasized that the problems discussed at the conference
    were "important" and "difficult." He expressed pleasure that
    the attendees were "first level." Ros said that the internet
    had to accomodate different business models, including those
    who favored traditional copyright protection and those who
    were interested in other models. Junquera said that it was
    very difficult to change the "mentality" of Spaniards with
    respect to internet downloading even though the government
    had conducted several anti-piracy campaigns. He also said
    that legal instruments were available to rights-holders to
    protect their their intellectual property. Carson emphasized
    that the U.S. experience was that public awareness campaigns

    MADRID 00002128 002 OF 006

    had to be accompanied by the prospect of "personal
    consequences" for those who engaged in internet piracy. Ros
    said that Spanish law did, in fact, permit action against
    internet pirates, although the law had not been used
    adequately by rights-holders. He also explained that his
    ministry's proposed notice and takedown legislation had been
    struck down because the Council of State found that the
    proper consultation procedures had not been followed.
    Shapiro recounted that a conference participant had said that
    the cultural industry accounted for 4% of Spain's GDP and
    that this should be kept in mind in framing internet piracy
    policy. Ros reiterated that Spanish law provided for ways in
    which rights-holders could protect their property, although
    his Chief Staff added that the law was very "garantista,"
    which in practice made it difficult for rights-holders to
    protect their intellectual property. Shapiro suggested the
    possibity of meetings between U.S. judges and Spanish judges
    to compare experiences on how to deal with internet-related
    piracy matters. Ros said he would talk to his Ministry of
    Justice counterpart about this possibility. Soriano
    mentioned that in the last two months, Spanish police had
    shut down two internet portals and that the owners were being
    prosecuted. (Note: Rights-holders typically have nothing but
    praise for the police. Rights-holders' complaints center on
    the judiciary, as well as a Justice Ministry "circular" to
    prosecutors that effectively decriminalizes peer to peer file
    sharing unless there is a commercial profit motive.) Ros
    concluded by saying that his ministry would focus on judge to
    judge meetings and more publicity campaigns.

    DCM-HOSTED LUNCH
    NOVEMBER 8, 2007
    ----------------

    ¶5. (U) Participants: Industry Ministry Subdirector General
    Salvador Soriano, Industry Ministry Advisor for EU Trade
    Policy Carmen Jordan Asensi, Promusicae Chairman and CEO
    Antonio Guisasola, Federacion Antipiratera (FAP) Director
    General Jose Manuel Tourne, Spanish General Society of
    Authors and Publishers Corporate Relations Director Pedro
    Farre Lopez, Microsoft Iberia Director Arnedo Txema, National
    Association of Electronic and Telecommunications Industries
    (AETIC) President D. Edmundo Fernandez participated from the
    Spanish side. DCM Hugo LLorens was accompanied by Economic
    Counselor James Dudley, David Carson, Michael Shapiro and
    Carl Schonander.

    ¶6. (C) DCM opened by saying that the USG remained committed
    to working with Spain to find ways to combat internet piracy,
    and that he hoped the conference and the lunch would prove to
    be two fora that contributed to achieving this goal. The
    lunch exposed once again the divisions between the content
    providers and the ISPs. The AETIC representative (AETIC
    represents major ISPs such as Telefonica) emphasized that no
    notice and takedown system for the internet could be
    developed without "legal security." Content providers
    complained that it was virtually impossible to obtain
    information from ISPs on customers suspected of trafficking
    in pirated property, and that ISPs were too slow to act
    against internet piracy. Complaints from the content
    providers were then directed to the Ministry of Industry,
    Tourism and Trade representative, Salvador Soriano. He said
    that the government remained committed to self-regulation
    among the stakeholders. Soriano acknowledged, however, that
    in the meantime a tremendous amount of piracy was taking
    place on the internet. He suggested that the government and
    stakeholders focus on developing a notice system for the
    internet, leaving takedown for later.

    CONFERENCE GENERATES MOMENTUM
    IPR INDUSTRY - GOVERNMENT MEETING
    NOVEMBER 13, 2007
    ---------------------------------

    ¶7. (C) Chief of Staff Juan Junquera Temprano and Subdirector
    General Soriano met with FAP Director General Jose Manuel
    Tourne and Promusicae President Antonio Guisasola on
    11/13/07. (Note: EconOff received a read-out on this meeting
    from Tourne.) Tourne said that Junquera had agreed to work
    on the following measures:

    a) An amendment to the 2002 Information Society Law in
    Article 16.1 that would absolve ISPs of liability with
    respect to rights-holders if they acted pursuant to voluntary
    agreements with rights-holders. This would provide a measure

    MADRID 00002128 003 OF 006

    of legal security for ISPs with respect to lawsuits generated
    by rights-holders, although presumably ISPs would still be
    liable for "consumer" generated lawsuits. The point of this
    legal amendment would be to encourage content provider-ISP
    anti-piracy agreements.

    b) Contracts between ISPs and customers would include a
    clause stating that ISPs can suspend service to customers who
    are found to be infringing copyrights.

    c) A government-sponsored "urgent" negotiation on a notice
    process, leaving takedown for later.

    d) Assess the current "private copy" exception's negative
    impact and make clear to the public that peer to peer
    downloads are illegal.

    e) Encourage sectoral meetings with a view to creating a
    climate favoring the protection of content on the internet.

    ¶8. (C) Comment: In principle these measures are positive.
    However, we have seen the Ministry of Industry, Tourism and
    Trade promise action to the content industry in the past and
    then fold when faced with opposition. Indeed, Tourne
    received an 11/14/07 phone call from Junquera saying that
    Senate approval would be difficult to obtain for the first
    measure. Rights-holders and the government have agreed on a
    low key approach for now. However, if the government wants
    to do something serious to protect content on the internet,
    it will have to withstand some criticism.

    HIGHLIGHTS FROM
    THE CONFERENCE
    ---------------

    ¶9. (U) For those who are interested in a conference agenda,
    please contact Carl Schonander at SchonanderCE@state.gov.
    Conference highlights follow below.

    Secretary of State

    SIPDIS
    for Telecommunications
    Francisco Ros
    ----------------------

    Ros opened the conference. He spent a lot of time talking
    about the vast quantities of information on the internet.
    The Secretary of State emphasized the need for
    self-regulation among the stakeholders. He called for
    internet regulation which respected different business
    models, including a model based on traditional copyright law.

    Douglas Lippoldt
    Directorate for
    Science, Technology
    and Industry, OECD
    -------------------

    Lippoldt mentioned the OECD's emphasis on fostering
    innovation and shared tentative empirical findings suggesting
    a positive relationship between protection for IPRs and the
    flow of FDI.

    Michael Keplinger
    Deputy Director General
    WIPO
    -----------------------

    Keplinger went through the fundamental tenets of the internet
    treaties and mentioned that WIPO has posted a guide to the
    treaties on its website. He said WIPO was committed to
    creating an IPR "culture".

    Tilman Luder
    Unit Chief
    DG Internal
    Market and Services
    European Commission
    -------------------

    Luder said that his Commissioner, Charles McGreevy, firmly
    believed that "less is more" and that the EU was therefore
    currently in an "evaluation mode" with respect to IPR
    legislation in Europe. He spent quite a bit of time
    reviewing a number of European cases that have to do with

    MADRID 00002128 004 OF 006

    defining what a reproduction is. He said that the Commission
    was reviewing how effective ISPs were in preventing their
    services from being abused to commit copyright policy
    violations.

    Helen Montluc
    Head of Intellectual
    Property Office
    Ministry of Culture
    France
    --------------------

    Montluc said that President Sarkozy was interested in
    reducing internet piracy. The head of France's biggest music
    retailer, FNAC, was working with stakeholders on proposals.
    Montluc acknowledged that peer to peer file sharing caused
    "grave damages". She said that peer to peer file sharing
    must be curbed. The French government is considering whether
    to reform the criminal code to provide for "proportional
    sanctions" more along the lines of traffic fines, rather than
    the maximum of three years in jail and/or a euros 300,000
    fine that the law currently permits.

    David Carson
    Associate Register
    U.S. Copyright Office
    ---------------------

    Carson gave two presentations focusing on the main provisions
    of the Digital Millenium Copyright Act (DMCA) and ISP
    liability. He reviewed other legislation affecting ISP
    liability and the Napster and Grokster cases. Carson
    emphasized that consumers must believe that there will be
    consequences for illegal downloading if piracy is to be
    stemmed. He also suggested that because ISPs are now getting
    into the content business, their traditional reluctance to
    accomodate rights-holders' concerns may be receding.

    Pedro Farre
    Corporate Relations Director
    Society of Authors and Editors
    (SGAE)
    ------------------------------

    Farre made an impassioned plea for understanding that
    "content is king" on the internet, i.e. without content
    nobody would buy internet services. He noted that cultural
    industries represented 4% of Spain's GDP. Farre complained
    that the government was not doing enough to stop internet
    piracy. He said that the copyright levies that SGAE collects
    on the sales of blank CDs and some electronic devices were
    only a "palliative" compared with the losses his members were
    suffering as a result of piracy.

    Barbaro Navarro
    Antipiracy Director
    NBC Universal Spain
    -------------------

    Navarro shared information on successful anti-piracy
    publicity campaigns in the UK.

    Txema Arnedo
    IP Development Director
    Microsoft Spain
    and Vice President
    Business Software
    Alliance (BSA)
    Spain
    -----------------------

    Arnedo said that Spain's software piracy rate of 46% compared
    unfavorably with 20% in the U.S.

    Georg Herrnleben
    Director for Central and
    Eastern Europe, BSA
    ------------------------

    Herrnleben said that the software piracy rate in Spain in
    2006 was 10% higher than the EU average, 12% higher than the
    western European average, 11% higher than the world average,
    and 25% higher than the U.S. average. Herrnleben attributed
    this to the fact that small and medium sized businesses are
    dominant in Spain, and that they do not take software

    MADRID 00002128 005 OF 006

    seriously. He also said that retailers, eager to sell
    computers, often loaded machines with free software to entice
    customers. However, the BSA representative mentioned that
    the Spanish government had conducted with BSA awareness
    campaigns, and that the police had been cooperative.

    Thierry Desurmont
    Vice President
    SACEM
    France
    -----------------

    Desurmont called peer to peer file sharing "hugely
    detrimental". He emphasized that nothing could be done about
    the problem without real ISP collaboration. He said the EU's
    2000 E-commerce directive needs to be "reopened" because it
    does not impose effective responsibility on ISPs.

    Luis Javier Martinez
    Director of Pixbox
    Distribution Platform
    Telefonica
    ---------------------

    Martinez acknowledged that content providers (Martinez was a
    former Walt Disney executive before taking his current
    position at Telefonica) had been slow to pass on some of the
    savings that the new technologies made possible to consumers,
    thereby contributing to engendering a consumer backlash
    against content providers. However, he insisted that the
    current culture of "gratis total" (totally free product over
    the internet) was not sustainable.

    Antonio Guisasola
    President
    Promusicae
    -----------------

    Guisasolo noted that in 2006 there was only euros 22 million
    worth of legal internet music sales in Spain, and that 87% of
    those sales were in the cell phone market. He said this was
    because cell phone P2P file sharing does not work so
    consumers were compelled to go the legal route for music.
    Guisasola said that the big French music retailer, FNAC, did
    no internet busines in Spain because internet piracy levels
    were too high.

    Victor Domingo
    President
    Internet Users
    Association (AI)
    Spain
    ----------------

    Domingo said he wanted to issue a "declaration of innocence"
    on behalf of internet users. He rejected the notion of
    illegal internet downloads, saying that the levy system
    compensates creators. Besides, judges had consistently ruled
    in favor of internet users. He rejected the notion that
    consumers believed in totally free content and referred to
    the relatively high prices Spanish consumers pay for internet
    service connections.

    Juan Junquera Temprano
    Chief of Staff to
    Secretary of State for

    SIPDIS
    Telecommunications
    Francisco Ros
    Ministry of Industry, Tourism
    and Trade
    -----------------------------

    Temprano made it very clear that the levy system did not
    compensate for peer to peer file sharing. (Note and Comment:
    The levy system theoretically exists to compensate
    rights-holders for the private copies that consumers are
    allowed to make in Spain. However, the copy has to be from a
    legally acquired product. Material obtained through peer to
    peer file sharing is not legally acquired so by definition it
    is not a copy and therefore outside the levy system.
    Temprano's statement was important because there is a
    tremendous amount of damaging misinformation in Spain about
    the levy system. End Note and Comment)

    Jose Manuel Tourne

    MADRID 00002128 006 OF 006

    Director General
    Antipiracy Federaton (FAP)
    --------------------------

    Tourne said that certain aspects of Spanish law had created a
    "perfect storm" for the copyright-based industries. Notably,
    he said that the "effective knowledge" requirement, i.e. a
    court order rather than information provided by a
    rights-holder, for ISPs to act against infringers puts
    an undue burden on the movie and music industries. Tourne
    said that in the UK, Germany and France, the law permitted
    rights-holders to provide "effective knowledge" to
    rights-holders. In Italy, "effective knowledge" is not
    defined according to Tourne. The FAP representative said
    that within the EU, Finland has a functioning notice and
    takedown system.

    Edmundo Fernandez
    Electronics and
    Environment Director
    (AETIC)
    --------------------

    Fernandez, representing ISPs, said his organization remained
    willing to discuss internet issues with rights-holders.
    However, he said that AETIC demanded "legal security" for its
    members.

    COMMENT
    -------

    ¶10. (C) Clearly, there are limits as to what can be achieved
    between now and Spain's national elections, which will be
    held in March 2008. However, we will be consulting closely
    with industry and the government to see what can be done.
    Certainly the kinds of actions described in para. 8 would be
    welcome. Embassy appreciates David Carson's and Michael
    Shapiro's participation in the bilateral and conference as
    they helped highlight the USG's intense interest in internet
    piracy. While the GOS will continue to cite political limits
    on what it can achieve, the government is aware that it needs
    to show some progress for Special 301 purposes.

    LLORENS

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