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### Viewing cable 10MADRID179, SPAIN IPR: AUSTR WILSON'S MEETINGS WITH GOS, OPPOSITION,

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
10MADRID179 | 2010-02-16 07:07 | 2010-12-21 12:12 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Madrid

`

    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.

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