Two friends have a good chat about free software at OSCON.

The CarrierIQ issue, even if it is part of an organized campaign to smear and ruin Android [2], is showing people the dangers of using non free software. Even one piece of non free software can betray users, so mostly free, “pragmatic” systems can be just as bad as regular non free systems. The free software community should capitalize on this awareness to change people’s attitudes towards their devices so that they will reject non free software in the future. Software freedom must be complete for users to have real conrtol and privacy.

Richard Stallman wrote an extensive review of Android back in September. It lists all of the parts of available phones that can be used maliciously against users, which surprisingly include the radio control firmware. The conclusion was unequivocal, “Android is a major step towards an ethical, user-controlled, free-software portable phone, but there is a long way to go. … While any computing system might have bugs, these devices might be bugs.”

When the CarrierIQ scandal broke, Mr. Stallman was not surprised. His comment was,

The root cause of this problem is that the users don’t control the software on these phones. So if they didn’t put in this surveillance package [Carrier IQ], they would put in some other. The users’ only protection against malicious features (surveillance, intentional restrictions, and back doors) is to insist on free software.

Anyone in the Open Source community who’s surprised should think hard about what the Free Software Society has been telling them. About four years ago at a “Web 2.0″ meeting, Eben Moglen urged the Tim O’Reilly and the Open Source community to quit, “wasting time promoting commercial products.” O’Reilly was sad that Moglen did not want to talk about protecting people’s data on other people’s computers in “the cloud,” but CarrierIQ makes it plain that those rights and protections are meaningless if the user is stripped of privacy by malware in their pocket. It might have been useful ten years ago to hide scary talk about freedom from big companies like IBM. It worked, thanks, but talk about “best tool for the job” and “pragmatic” mixes of free and non free software should now be considered counter productive and the results dangerous.

There are community alternatives to carrier issued Android. Stallman mentions Replicant, a 100% free software replacement for Android. There is also a less careful distribution called CyanogenMod that is focused on performance and includes non free software from Google and perhaps device drivers. Jeff Hoogland, the founder of Bodhi GNU/Linux, is working on Debian for cell phones and we can be sure many others are as well. In the mean time, if you must have a smart phone, it might as well be Android because there is no chance a phone from Apple or Microsoft will be liberated, but don’t expect it to be a Freedom Box the community really wants [2 and don't trust it until it's really free.

Sadly, US law is mostly a hindrance. Senator Al Franklin had some very pointed questions about possible violations of law for the company and a lawsuit has been launched against the guilty parties - Apple, HTC, Samsung, Motorola, AT&T, Sprint, T-Mobile and Carrier IQ. That's good but it will be difficult to prove what actually happened, and the free software community can do better. Like Vista and Windows 7, CarrierIQ establishes encrypted communications to hide the data transmitted. It would be better to have free software on your cell phone, so the FSF has petitioned the Librarian of Congress for a DMCA Exemption Without that, it may be against US law for people to replace the software on their phones or even to delete CarrierIQ malware.

The lack of freedom in cell phones is not a natural state but is unlikely to end without changes and enforcement of US law. Android has emerged as the top cell phone OS because it is free software and creates a productive commons for the odd hundred companies that must cooperate to make a cell phoneThe obnoxious US patent system has allowed Microsoft and Apple to practice judicial extortion that should have been blocked by US anti-trust and racketeering laws[1, 2,3, 4, 5, 6, 7, 8, 9, 10]. Spectrum licensing itself is a technically obsolete and harmful practice but the FCC could demand adherence to technical standards, demand the publication of technical standards required to operate phones, and forbid practices such as phone locking as the price carriers pay for spectrum as it transitions to open spectrum.

We are in this hole because a long running propaganda campaign by non free software owners has played down ethical issues while convincing people that they are helpless. Billions of dollars in propaganda spending still drown out the basic truth of the situation and non free software use remains prevalent even among people who have every reason to fear spying by the rich and powerful. CarrierIQ gives us a good chance to fix that.

Summary: Knowledge withheld as a business model (and what can be done about it)

Copyrights are being contested by a form of unprecedented sharing of information, promoted greatly by the Internet and currently impeded by the rise of DRM in literature and applications (especially in mobile devices). Artificial limits on the sharing of knowledge are a business model to some. Failing to use copyrights for this purpose, some have escalated and harnessed patents, which make illegal even one’s own personal expression (and application) of ideas. What we are going through right now is a period where we can choose to use technology for the better or simply to use it for selfish and potentially malicious purposes. The decision is in our hands, but at the same time it is not in our hands because we depend on companies like Amazon and Apple to make or distribute products which a lot of people use. The matter of fact is, there are two competing camps — one that hoards and one which is being robbed. The idea that without planned obsolescence and artificial scarcity there will be no incentive to research and innovate is ludicrous and it is as case of wishful thinking in several different ways. If we look back at the industrial revolution and what made it possible, it is none of the things lawyers speak about. The light bulb has in some ways become a symbol of innovation even though it was the result of many ideas and attempts laid on top of each other. It was the sharing of understanding that improved the lives of so many people. Since to many readers this is a national holiday, we’ll keep the news lighter today. █

Summary: Words you cannot use when Apple’s police is out hunting

WE often criticise intellectual monopolies for impeding knowledge, but what about language? Apple is going far too far with its brand-bullying campaigns. What brand does Apple claim to own anyway? Just the name of a fruit. And it goes after small shops that actually serve fruit because Apple is all about branding and if the brand gets ‘diluted’, then Apple can be finished as a brand. The problem is, apple is a common English word. Had the small businesses been able to take this the court, they would have won easily. Cost of litigation is high though. Perhaps this is why Apple tends to crush small businesses, this time a “tiny restaurant in Luxembourg” based on a report which says: [via Walt]

The mighty international Apple Inc. fears consumers worldwide will be confused by a tiny restaurant in Luxembourg named AppleADay. Their slogan? “Balanced Fast Food.” Apple’s response? Threaten to sue.

Can you get a better David vs Goliath story? Three young people in Luxembourg worked with a dietician to create a bistro menu of fast food that’s healthy. “We wanted to return to the original taste of the food,” said one of the owners. Local authorities gave the name their approval of the name suggested by the bistro’s communications company. The logo looks much more like a Georgia Peach logo than the Apple computer logo, but that’s before the lawyers got involved.

The insane nature of intellectual monopolies is made ever more crazy when you add proprietary software vendors to it. Microsoft claims to own the word “windows”, “lindows”, and even someone’s name (Mike Rowe). █

Summary: Bad companies and selfish people are making the patent system worse for everyone; the White House is urged to bring about change, but petition signers are not of the 1% (or less) that influence and sponsor the party

BACK we go to the subject of software patents, which we have not covered quite so thoroughly as of late.

This subject is not about any one particular company. It affects everyone, including proprietary and Free software developers. It also affects non-developing members of the public because hefty tax is being silently passed to them.

It is hard to get over the news about Halliburton expanding the boundaries of software patents, bringing some more of them to Europe (or to the UK, to be more specific). At Computer Weekly, one who was previously accused of helping Microsoft’s agenda (we were not persuaded by the evidence presented to us though) writes that “The High Court has overturned a decision of the UK Intellectual Property Office (IPO), explicitly confirming that technical design methods are patentable.”

As one can see in our IRC logs, the president of the FFII was rather disturbed by this. It was also brought up there that Gurry's patent boosting at WIPO (which the FFII previously pointed out) carries on with more outrageous statements:

Last June, the Swiss Press Club held a launch for the Global Innovation Index at which various speakers were invited to talk about innovation. After the head of CERN and the CEO of the Internet Society spoke about how important it was that the Web’s underlying technology hadn’t been patented, Francis Gurry, the Director General of the UN’s World Intellectual Property Organization (WIPO), took the mic to object.

In Gurry’s view, the Web would have been better off if it had been locked away in patents, and if every user of the Web had needed to pay a license fee to use it (and though Gurry doesn’t say so, this would also have meant that the patent holder would have been able to choose which new Web sites and technologies were allowed, and would have been able to block anything he didn’t like, or that he feared would cost him money).

We also mentioned Gurry in [1, 2, 3], including leaked material from Cablegate.

These disturbing ideas from WIPO are not surprising. We have been pointing out this dangerous attitude from WIPO for quite a few years. Then there are patent lawyers and their blogs that spread more propaganda about patents and their supposed ‘benefit’ to society. Consider the post “EU confident over unitary patent plans” (too many contradictions as shown by Axel).

Other patent lawyers’ blog still tilt the balance in favour of software patents. For example:

Ultramercial v. Hulu: Computer Programs and Patentable Subject Matter

[...]

Software is patentable
Layered on top of this finding is the court’s rejection of the argument that software programming amounts to abstract subject matter. “The digital computer may be considered by some the greatest invention of the twentieth century, and both this court and the Patent Office have long acknowledged that “improvements thereof” through interchangeble software or hardware enhancements deserve patent protection. Far from abstract, advances in computer technology—both hardware and software—drive innovation in every area of scientific and technical endeavor.” Slip Op. at 12.

This holding is in tension with the Federal Circuit’s recent opinion in Cyber Source Corp. v. Retail Decisions, Inc., No. 2009-1358 (Fed. Cir. Aug. 16, 2011), in which a panel consisting of Judges Bryson, Dyk and Prost concluded that a method of verifying a credit card transaction over the Internet constituted an unpatentable process. While the panel in Ultramercial recognized this tension, it distinguished Cyber Source as an instance of “purely mental steps.” Ultramercial Slip Op. at 13 (emphasis in original). The line, at least from the point of view of this panel, thus lies somewhere between logical steps that humans can perform without the aid of a computer versus those that require a computer to carry out.

The whole “embedded” trick is completely dishonest. To paint software as “machine” is like painting mathematics as “abacus” or comparing a musical piece to “gramophone” to justify patents on drum beats, vocals, or a short sequence of words. It is truly absurd, but patent lawyers would go as far as they can to justify more and more patents on everything which people think about and do. It is a tax on society and the lawyers take a cut from all these fees.

“To paint software as “machine” is like painting mathematics as “abacus” or comparing a musical piece to “gramophone” to justify patents on drum beats, vocals, or a short sequence of words.”How much should we be willing to remove from our thoughts and actions just to feed a redundant industry that prevents small businesses from threatening the status quo? These are mere gate keepers. Just watch Microsoft as it gets a trademark for retail store plans (no, it is not a joke). The Register says that “Microsoft has been awarded a trademark on its design for a store selling all things high tech.” (trademark registration #4036534).

How many shops are infringing? Should they all be shut down or be forced to pay Microsoft? It is a little reminiscent of the Lindows case.

The Economist, a reputable paper which is neither run by lawyers nor written by engineers, ought to view this whole pyramid/MLM scheme of a system as a bad idea. Not so long ago it posted some rants against the patent system and now it’s airing a piece titled “programmed nonsense”. To quote the relevant parts:

The message is finally getting through. When the White House opened a website earlier this month for people to create and sign petitions they feel passionate about, one immediate favourite asked the president to “direct the [USPTO] to cease issuing software patents”. The petition garnered more than 12,000 signatures in the first few days. The White House has promised to respond to any petition that collects 5,000 signatures during the first month.

Software patents and business-method patents (invariably based on some software algorithm) are unlike any other type. As a rule, mechanical, chemical, material and even biological inventions and discoveries are concerned with some novel feature that can be measured and uniquely defined. But software programs deal almost exclusively with mathematical relationships that are well known and widely used. In writing software, programmers do not have to make novel, serendipitous discoveries, as inventors in other fields do. In many ways, that makes programming a good deal easier, and certainly more predictable, than inventing.

The corporate press can say the truth, unlike all those “IP” people who run blogs for patent lawyers or even “UN”-painted bodies like WIPO, which is also run by the “IP” crowd. Why are those foxes allowed to have so much influence over the hen house, aka White House? The republic needs to be run for the benefit of the people, not parasites. █

Summary: The USPTO (shown above) comes under more fire as a so-called ‘reform’ fails to make it harmonious with science, technology, and human rights

THE USPTO IS happily granting software patents/monopolies and processing some patent-pending ones on green energy, demonstrating that it is still dissociated from the betterment of society and instead dedicated to protectionism.

The First Amendment is said to be violated by some particular types of patents, according to TechDirt which argues:

Do Patents On Medical Diagnostics Violate The First Amendment?

We’ve been following the extremely worrisome Prometheus Laboratories v. Mayo Collaborative Services case for a while now. This is the case in which Prometheus patented some basic medical diagnostics tests, and then sued the Mayo Clinic for daring to do similar diagnostics without paying up. Tragically, CAFC, the court of appeals for the Federal Circuit, has ruled that it’s just fine and dandy to patent a diagnostic test. The Supreme Court agreed to hear the appeal on this in the upcoming term, and folks at the Cato Institute have filed a very interesting amicus brief, arguing that such a diagnostic test should not be patentable on two key points. I don’t know that it’ll convince the court, but they try out the argument that doing so would actually be a First Amendment violation, and even cite the famous Eldred case to make their argument (emphasis mine in the quote here):

As we explained yesterday, antitrust concerns too help shed doubt on the legitimacy of the patent system. Google may have bought some more patents from IBM (mentioned in the context of software patents in [1, 2, 3, 4, 5, 6, 7]), but deterrence does not work when Microsoft uses patent trolls to wage anti-competitive legal wars. This whole systems looks more and more like s sham. Even NPR did a show about it about 3 days ago. To quote a part of it:

BLOCK: What is the broader goal in terms of job creation here?

SYDELL: Well, this is what they say. What they say is if we speed things up and we get that backlog cleared up, then there are all these startups that are just waiting to move to the next phase of financing and get their products to market. And they’ll be able to do that and they’ll hire people in the process. So that’s what they’re saying.

BLOCK: And what about those businesses, Laura, or inventors, entrepreneurs – do they think that the law will, in fact, encourage hiring, make them hire more people?

SYDELL: No, I’m not hearing that largely at all. I’m hearing a lot of skepticism about the bill. I think one of the problems that entrepreneurs and startups face is that there are a lot of bad patents that are out there, particularly in the realm of software and business method. And the bill doesn’t really do anything to address that.

So one of the problems that you have is you have a lot of these, they call them patent trolls. They’re companies that buy up patents, particularly broad patents. They buy them up and they go out and they sue startups and they demand licensing fees. And this has put a lot of startups out of business. And this bill doesn’t really do anything to address that problem.

The Patent Office has granted, for example, in 2000, they granted a patent for a method of making toast. Really, seriously.

BLOCK: Laura, what other solutions would there be to this problem of bad patents that you’re talking about that wouldn’t involve Congress?

SYDELL: The courts could step in. And, in fact, it is the courts who initially pushed to have, for example, software patents and business method patents granted. So they could pull back and there is some evidence they are. But I think it could be a long time before they address it directly. And people are concerned about that.

I think a lot of people wish Congress would revisit this soon. And they’re worried that because they just granted and created this new act it’ll be a long time before Congress steps in again, which really would be the fastest and most efficient way to address the problem.

BLOCK: NPR’s Laura Sydell. We were talking about the new U.S. patent bill that was signed into law by President Obama today.

There are more news articles about it, e.g. [1, 2], but only few mention software patents. The government which signed this ridiculous bill ignores the real issues, spews out a load of nonsense which contradicts research, and one GNU/Linux advocate had this to say on Saturday:

Patent "reform"? Not really.
From: Homer
Date: Saturday 17 Sep 2011 14:38:53
Groups: comp.os.linux.advocacy


Apparently "patent reform" happened already, and nobody noticed. But
what exactly happened, and what effect will it have on patent trolls
like Myhrvold, Apple, Microsoft and Oracle, perhaps the biggest threats
to Linux, Free Software and innovation in general?

[quote]
Late last night the Senate voted 89-9 to pass the America Invents Act
that would radically reshape patent laws, and President Obama is
expected to sign it without delay. It's the first such significant bill
in 60 years, and it has one key component: It moves the onus from merely
"inventing" a patentable idea first to becoming the person who actually
files for an innovation first.

...

But "first to invent" has some big pitfalls, including the ability of an
inventor to totally gut the hopes of someone else with a similar or
identical idea, and who then files for a patent--because the original
inventor, without necessarily having to make any move toward realizing
the innovation, can claim they invented it. A complex legal battle may
then ensue, and perhaps the second filer may choose to settle privately,
license the idea, or fight the situation in an expensive court case.

This trolling completely destroys the idea that a successful new thing
is built on 1% inspiration and 99% perspiration--a troll, perhaps even a
rich troll who's made money from previous innovations they've dreamed up
(or, more materialistically, bought from someone), can simply keep the
legal upper hand by saying they're the real innovator without actually
building anything.
[/quote]

http://www.fastcompany.com/1779071/first-to-file-a-patently-obvious-reform

Sorry (and excuse the pun) but this is patently wrong. Invention is
invention, not manufacturing; it's the idea (strictly - the method) not
the implementation. If you're not the first to have a particular idea,
then you're not its inventor. Period. This "reform" simply transforms
"invention" into a brawl, where being the first to find or create
something doesn't necessarily secure ownership - you can be mugged for
it by someone more powerful.

Is this really all the "America Invents Act" has to offer? Is this the
best "reform" congress could come up with? Pathetic.

/Real reform/ would have been a re-examination and redefinition of what
exactly is patentable, a more rigorous patent examination process (or,
let's be honest, /any/ patent examination process), and stricter (or
again - /any/) remedies against those who persistently file trivial
claims.

/Real reform/ would have made patents non-transferable, thus completely
solving the problem of patent harvesting by non-practising entities.

/Real reform/ would have made it impossible to patent something as
trivial and non-inventive as a "rounded rectangle" or a "record button".

But no, that's not what the "America Invents Act" has done at all. All
it's done is make innovation impossible for anyone who lacks the
financial means to bribe the USPTO, and allows the wealthy to steal
others' ideas. The US patent system was already an abomination, but now,
incredibly, it's actually an order of magnitude /worse/.

Apart from anything else, it seems to completely undermine the premise
of "prior art", since apparently the only thing that counts now is being
the "first to file", regardless of who actually came up with, or even
implemented, the idea first.

Consider the case of IP Innovation LLC and the Technology Licensing
Company (ex-Microsoft employees, and likely just two of Myhrvold's many
shell companies) vs.  Red Hat & Novell, where the litigants claimed
they'd "invented" multiple workspaces. Of course, their definition of
"invented" was "harvested patents from Xerox".

Unfortunately for the patent trolls, those patents were granted in 1991,
some 6 years /after/ multiple workspaces ("screens") had already been
implemented on the Amiga, and so they lost the case. Indeed Commodore
implemented the concept as a commercial product in 1985, a full year
before it was even first implemented internally by Xerox PARC, and the
Amiga implementation was based on ideas devised by Jay Miner (of the
original "Amiga Corporation") as far back as 1982, some two years before
it was even first imagined at Xerox PARC.

But that prior art would apparently mean nothing in the new patent
regime, since neither Jay Miner nor Commodore thought to patent the
concept of multiple workspaces, despite clearly being the inventors and
first implementers of the concept. Xerox PARC was the "first to file",
and that's all that matters in a gun-slinger economy. Anyone with enough
money can now file patents against other people's prior art, use them as
weapons to extort money, from anyone - including the /actual/ inventors,
then pass those weapons on to other gun-slingers to do likewise.

Meanwhile those same gun-slingers remain free to claim "invention" of
every trivial speck of dust in the world, completely unchallenged until
they turn up in the "great" troll-friendly State of Texas, and either
win on the basis of the corrupt court's pro-patent bias, or bleed their
victims dry in the process.

So much for "patent reform".

It’s all about inflating the elevating the amount of patents (under the assumption that patents have real value, as legal types wish us to believe), but if the assumption is that this bill will give more jobs to patent lawyers, maybe they have a point. Just creating more and more monopolies is like overprinting money, which devalues the currency but works well for the mint. Watch McKool Smith in the news last week, pulling $391,000,000 from an actual practicing company based on this press release:

Attorneys from McKool Smith have secured a $391 million court judgment in favor of firm client Versata Software Inc., a pioneer in front-office enterprise software, following a successful patent infringement lawsuit against global software giant SAP America Inc. and its German-based parent company SAP AG (NYSE: SAP).

That is some really expensive “patent infringement”. Notice that SAP America Inc. is the target. The USPTO really needs to get its act together or go away. █

Summary: A look at cables where Microsoft’s Craig Mundie (one of the very top chiefs) is mentioned as involved

According to the following Cablegate cable, “Microsoft Chief Research and Strategy Officer Craig Mundie to Peking University Guanghua School of Management Dean Zhang Weiying emphasized China’s need to create an environment that would allow innovators to be financially rewarded for the risks they took to innovate. They cited the need for real intellectual property rights…”

In other public talks, Mundie was bashing the GPL. It matters because Mundie is influential [1, 2] and he speaks to influential people (he is also among those attending Bilderberg meetings). The following two cables help us see where he’s making these engagements (see ¶7 in the first cable and 1045-1145 for the middle eastern programme in the second cable).

VZCZCXRO8717
RR RUEHCN RUEHGH
DE RUEHGH #7085/01 3310818
ZNR UUUUU ZZH
R 270818Z NOV 06
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 5292
RUCPDOC/USDOC WASHINGTON DC
INFO RUEHUL/AMEMBASSY SEOUL 0028
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHBK/AMEMBASSY BANGKOK 0101
RUEHBY/AMEMBASSY CANBERRA 0006
RUEHMO/AMEMBASSY MOSCOW 0001
RUEHNE/AMEMBASSY NEW DELHI 0012
RUEHGP/AMEMBASSY SINGAPORE 0020
RUEHBJ/AMEMBASSY BEIJING 0642
RUEHRL/AMEMBASSY BERLIN 0001
RUEHCN/AMCONSUL CHENGDU 0331
RUEHHK/AMCONSUL HONG KONG 0421
RUEHLO/AMEMBASSY LONDON 0001
RUEHOT/AMEMBASSY OTTAWA 0004
RUEHFR/AMEMBASSY PARIS 0001
RUEHSH/AMCONSUL SHENYANG 0334
RUEHIN/AIT TAIPEI 0303
RUEHBS/USEU BRUSSELS 0001
RUEHGV/USMISSION GENEVA 0008
RUEHGZ/AMCONSUL GUANGZHOU 0313
RUEHGH/AMCONSUL SHANGHAI 5610

UNCLAS SECTION 01 OF 04 SHANGHAI 007085 

SIPDIS 

SENSITIVE
SIPDIS 

USDOC FOR 4420/ITA/MAC/CEA/MCQUEEN
USDOC ALSO PASS TO NIST AND BEA
STATE PASS USTR
USTR FOR STRATFORD/WINTER/MCCARTIN/ALTBACH/READE
TREASURY FOR OFFICE OF INTERNATIONAL INVESTMENT
TREASURY FOR OASIA/ISA -- DOHNER, HAARSAGER AND CUSHMAN
GENEVA PASS USTR
PARIS PASS TO USOECD 

E.O. 12958: N/A
TAGS: ECON [Economic Conditions], EFIN [Financial and Monetary Affairs], EINV [Foreign Investments],
ETRD [Foreign Trade], PGOV [Internal Governmental Affairs],
PREL [External Political Relations], CH [China (Mainland)],
WTO [World Tourism Organization]
SUBJECT: INNOVATION REQUIRED FOR CHINA'S ECONOMIC GROWTH 

REF: BEIJING 23856 

¶1. (SBU) Summary: The National Bureau of Statistics and the
U.S.-based Conference Board hosted a national forum on
Innovation and China Economic Growth October 20- 22 in Suzhou,
Jiangsu Province.  During the conference, PRC officials from the
Chinese People's Political Consultative Conference (CPPCC),
National Bureau of Statistics (NBS), People's Bank of China
(PBOC) and the Shanghai Stock Exchange, as well as
representatives of foreign multinational corporations, discussed
"self-innovation" and identified systemic changes necessary to
foster innovation in China.  The systemic changes included:
increased IPR protection, financial sector liberalization,
openness to the world, and creation of a society in which
failure was acceptable.  End summary. 

--------------------------- 

CHINA:  Big, but not Strong 

--------------------------- 

¶2. (U) CPPCC Vice Chairwoman Zhang Meiying stressed in her
keynote address the importance that China's leadership has
placed on innovation.  Zhang said that while China's total GDP
made it the fourth largest economy in the world, on a per capita
basis, China ranked only 110th in the world.  This showed that
China was a big country, but not a strong country.  According to
Zhang, under President Hu Jintao's leadership, China has decided
that the way to create strength from size is through self
innovation. 

¶3. (U) Zhang said that rapid growth over the past twenty years
had placed strains on national resources that would lead to
decreased economic development.  China needed to rely on
innovation to create a foundation for sustainable growth.  China
had a low proportion of clean, high-technology industries.
China's leadership realized that the environment was not a free
commodity and that environmental damage would devour many of
China's economic gains.  While China manufactured low-technology
items, it was dependent on other countries for its
high-technology needs.  Additionally, China's consumption of
energy and raw materials per unit of production far exceeded
that of developed world and was not sustainable, she said.  If
China did not develop its own human resources, China would
continue to be only the manufacturing base for the rest of the
world. 

¶4. (U) According to Zhang, in major industries, such as the
petroleum and electronics industries, China was dependent on
imported technology for 75-80 percent of its needs.  She said
that China needed to learn to innovate to create its own core
technologies.  She said that China needed to "digest
technologies from other countries" before it could "re-innovate
these technologies for other purposes."  China needed to
generously fund its own scientists to insure its "leap-frog in
development."  She also criticized the "longstanding planned
economy mindset" in China that meant that companies were too
passive -- not taking on risks or investing in the future.  As a
result, she said, these companies were not positioned for
success, and China lagged behind.  Zhang's speech was widely
quoted and referred to by other government speakers during the
course of the weekend conference. 

SHANGHAI 00007085  002 OF 004 

------------------- 

What is Innovation? 

------------------- 

¶5. (SBU) When asked how the Chinese government defined
"self-innovation," National Bureau of Statistics (NBS) China
National Research Association Secretary General Zhang Zhongliang
said: "China is a big country, but it has no power.  China needs
to import 90 percent of its technology.  China needs to develop
its own name-brands and self-proprietary technology so that it
can build a strong economy.  To be a strong country, China needs
to develop its own innovative abilities." 

¶6. (U) In his talk, Development Research Center of the State
Council (DRC) Deputy Director Liu Shijin outlined what was meant
by self-innovation.  He said that the three kinds of innovation
are prime innovation, re-innovation, and the integration of
innovation from abroad into China.  Liu said that foreign
companies with investments or joint ventures in China had
expressed their concern with China's emphasis on self-innovation
and begun to limit their investment in innovative areas.  He
tried to put them at ease by explaining that any innovation done
in China by foreign companies located here was actually "Chinese
self-innovation" because ultimately these companies would
contribute to the building of China and its capabilities.
Ministry of Commerce Vice Minister Shang Ming was more explicit
when he said, "Self-innovation does not rule out the importation
of innovative technologies from abroad." 

--------------------------------------------- ---------- 

Requirements for Innovation - IPR and Financial Reforms 

--------------------------------------------- ---------- 

¶7. (U) Multiple speakers from Microsoft Chief Research and
Strategy Officer Craig Mundie to Peking University Guanghua
School of Management Dean Zhang Weiying emphasized China's need
to create an environment that would allow innovators to be
financially rewarded for the risks they took to innovate.  They
cited the need for real intellectual property rights to protect
innovation and a competitive financial sector that fostered
"innovations" such as venture capital and other mechanisms for
the efficient distribution of financial resources. 

¶8. (U) People's Bank of China Vice Governor Su Ning said that
due to increased global competition, China needed to tear down
restrictions in the financial sector.  He said that Chinese
banks needed to reform and innovate in order to increase their
margins of profitability.  He also said that China needed to
reform its regulatory framework to allow for financial products
such as bonds, funds, options and other ways to diversify
financial risk.  He stressed that China needed a unified credit
database to enable efficient access to financing. 

¶9. (U) Shanghai Stock Exchange (SSE) President Zhu Congjiu noted
that while there was 30 trillion RMB (about USD 3.8 trillion)
worth of capital available in China, Chinese companies had a
"weak capability to engage in venture capital."  He said this 

SHANGHAI 00007085  003 OF 004 

was why quality companies chose to go public abroad, rather than
in China.  It also meant, he added, that 83 percent of all
venture capital in China was from foreign sources.  According to
Zhu, the SSE planned to make the reforms necessary to keep
Chinese companies in China by creating an environment where they
would have access to the capital they needed domestically.  In
response to a question, Zhu admitted that for the financial
sector, "innovation" actually meant reforming the Chinese system
to be more like the international financial market standard. 

--------------------------------------------- --- 

Innovative Translation -- Some Words Left Unsaid 

--------------------------------------------- --- 

¶10. (SBU) The conference theme as translated in English was
"Innovation and China Economic Growth."  In Chinese, however,
the title was "Self-Innovation (Zizhu Chuangxin) and China
Economic Growth."  Chinese government speakers all used the word
"self-innovation," but the translators uniformly translated it
as "innovation."  Conference speaker European Union Economics
and Regional Officer Leila Fernandez-Stembridge noted to Econoff
that this appeared to be an intentional "mistranslation."  Price
Waterhouse Coopers Senior Advisor Kenneth DeWoskin, another
conference speaker, speculated that a political decision had
been made to de-emphasize the Chinese-centric focus on "self" in
an attempt to soften the tone of the conference. 

--------------------------------------- 

When Innovation Means Using an Airbrush 

--------------------------------------- 

¶11. (SBU) DeWoskin noted to Econoff that the "palpable unspoken
undercurrent" had been the sacking of NBS head Qiu Xiaohua eight
days before the conference in connection with the Shanghai
pension corruption scandal.  No mention of Qiu was made
publicly, even when Xie was introduced as only having been on
the job for a week.  An NBS employee who helped organize the
conference materials told Econoff about the "huge amount of
work" that he had to re-do in replacing Qiu Xiaohua's
information and name with that of new leader Xie Fuzhen in all
of the many professionally produced bound conference materials.
An NBS press officer commented that his office had been given no
notice of the sacking and been inundated with "questions we
cannot answer." 

------------------------------------- 

Challenges Facing Innovation in China 

------------------------------------- 

¶12. (SBU) Sixteen non-governmental speakers at the conference,
including Sun Microsystems Vice President Piper Cole, GE China
Technology Center Managing Director Bijan Dorri, and The
Conference Board Executive Vice President Gail Fosler, China
were tasked with outlining how China could create and nurture an
environment that led to innovative people and companies.  These
speakers described several challenges that China faced to its 

SHANGHAI 00007085  004 OF 004 

drive for self-innovation, including: 

- China needed to stay open to the world.  Innovation would be
greatly hampered in a closed system. 

- China needed to avoid "nationalizing" or "branding" its
innovations in a way that would limit its global reach.  By
creating a "China standard" different from global standards,
China would shut itself out of competition. 

- China needed to protect intellectual property rights in order
to protect those who had taken risk. 

- China needed to create the financial market conditions that
would support venture capital in order to reward risk takers. 

- China needed to create a social milieu in which failure was
acceptable.  If the price of failure was too high, no one would
take any risks. 

- China needed to develop educational systems that continued to
foster interest in math and science. 

¶13. (SBU) Chinese government speakers appeared receptive and
largely agreed to the above list of prescriptions.  However,
they tended to stress the importance of Chinese brands and
standards being the mark of Chinese innovation.  As one speaker
commented, "We hope that the day will come when the label does
not read 'Made in China' but 'Created in China.'" 

¶14. (SBU) Comment:  Innovation -- or self-innovation -- has
clearly been identified as the next necessary step in  China's
economic development strategy.  While the mission is clear,
China still faces enormous systemic economic, legal, educational
and social barriers to create an innovation-friendly environment.
JARRETT

VZCZCXYZ0000
PP RUEHWEB

DE RUEHC #2095 0361847
ZNR UUUUU ZZH
P 051838Z FEB 10
FM SECSTATE WASHDC
TO RUEHGB/AMEMBASSY BAGHDAD PRIORITY 0000
RUEHLB/AMEMBASSY BEIRUT PRIORITY 0000
RUEHEG/AMEMBASSY CAIRO PRIORITY 0000
RUEHDO/AMEMBASSY DOHA PRIORITY 0000
RUEHKU/AMEMBASSY KUWAIT PRIORITY 0000
RUEHMK/AMEMBASSY MANAMA PRIORITY 0000
RUEHMS/AMEMBASSY MUSCAT PRIORITY 0000
RUEHRH/AMEMBASSY RIYADH PRIORITY 0000
RUEHYN/AMEMBASSY SANAA PRIORITY 0000
INFO RHMFISS/JOINT STAFF WASHINGTON DC PRIORITY
RUEAFCC/FCC WASHINGTON DC PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY
RHMFISS/CDR USCENTCOM MACDILL AFB FL PRIORITY
RUEHAM/AMEMBASSY AMMAN 0000

UNCLAS STATE 012095 

SIPDIS 

E.O. 12958: N/A
TAGS: ECIN [Economic Integration and Cooperation],
ECPS [Communications and Postal Systems], EINT [Economic and Commercial Internet], MARR [Military and Defense Arrangements],
MCAP [Military Capabilities], PREL [External Political Relations],
XF [Middle East]
SUBJECT: GULF REGION COMMUNICATIONS CONFERENCE 2010 UPDATE 

REF: 09 STATE 122229 

¶1. This is an action request. See paragraph 6. 

¶2. SUMMARY. Reftel announced a by-invitation-only Gulf Region
Communications Conference (GRCC) in Amman, Jordan, 21-23
February 2010, co-hosted by United States Central Command
(USCENTCOM) and the Jordanian Armed Forces (JAF). Reftel
requested posts deliver a hold-the-date request to regional
civilian and/or government attendees pending release of
formal invitations. A separate notification was distributed
to military attendees through military channels. On 4
February 2010, USCENTCOM forwarded to posts, in care of the
security assistance offices, hard copy and electronic
versions of the formal GRCC invitations, along with RSVP
registration information and conference agenda, for delivery
to attendees.   Invitations are co-signed by Commander,
USCENTCOM and by Chairman of the Joint Chiefs of Staff, JAF.
This cable requests posts deliver invitations and an update
notification to regional civilian and/or government attendees
to further highlight the conference and encourage
participation.  In order to ensure timely delivery of
invitations, please deliver update notifications based on
receipt of, and in conjunction with, the electronic
invitations, and forward hard copy versions when they arrive.
Draft update notification language is provided in paragraph
¶6. END SUMMARY 

¶3. For reference, the following is the text for USCENTCOM's
half of the formal joint invitation. 

Dear Mr. Communications Minister, 

On behalf of United States Central Command, I am pleased to
invite you to attend the 2010 Gulf Region Communications
Conference in Amman, Jordan during 21-23 February 2010. 

The conference follows last year's inaugural conference in
Bahrain.  Again, our intent is to gather regional
communications representatives to collaborate on topics of
mutual interest in a Regional forum.  Ministers of
communications, communications regulatory commissioners, and
senior military communicators from each of eleven Gulf Region
states are invited to participate.  Also, senior United
States communications representatives from the federal,
military, and private sectors are invited.  Regional private
sector representatives will also be invited. 

Conference participants will be able to address regional
communications capabilities and concerns and discuss
opportunities to support regional stability and security
efforts.  The enclosed conference agenda is provided for your
information. 

We would be honored to have you join us.  Mr. John Simpson,
the Central Command point of contact (813-827-3931,
simpsoja@centcom.mil), will accept replies.  A detailed
conference information packet will be sent separately. 

With warm regards, 

DAVID H. PETRAEUS
General, U.S. Army
Commander,
United States Central Command 

¶4.  Also for reference, the following is the text for JAF's
half of the formal joint invitation. 

Dear Honorable Minister, 

On behalf of the Hashemite Kingdom of Jordan, I am pleased to
invite you to attend the 2010 Gulf Region Communications
Conference (GRCC) in Amman, Jordan during 21-23 February 2010. 

We believe last year's conference in Bahrain was a great
success, and we are looking forward to hosting distinguished
communicators within the Kingdom of Jordan. 

This next GRCC will enable us, as partners, to continue our
examination and discussion of the Region's most significant
communications concerns.  We are hopeful that this forum and
its actions will lead to improved capabilities, stability,
and security within the Gulf Nations and across the Region. 

Communications ministers and regulatory commissioners, and
senior military communicators from each of eleven Gulf Region
states are invited to participate. Also, senior United States
communications representatives from the federal, military,
and private sectors are invited.  Representatives of the Gulf
Region's private sector will also be invited.  The enclosed
conference agenda is provided for your information. 

We would be honored to have you join us in the Hashemite
Kingdom of Jordan. 

With utmost respect, 

General
Khaled J. Al-Sarayreh
Chairman Of The Joint Chiefs Of Staff
Jordan Armed Forces 

¶5.  The agenda's structure and content reflect extensive
collaboration with JAF, including integration of
JAF-recommended panel discussions. Each participating nation
will be given one speaking part (seat) on each panel and one
speaking part (five minute presentation) during closing
remarks. All attendees will be invited to participate in
roundtable discussions.  For reference, the GRCC Agenda
follows: 

21-23 February 2010
Grand Hyatt Hotel
Amman, Hashemite Kingdom of Jordan 

Sunday, 21 February 

Arrival of conference participants and registration at Grand
Hyatt Hotel, Amman, Jordan, Telephone: 962-6-456-1234 

1830-2000
RECEPTION (Hotel Location TBD) - For ministers and
distinguished visitors (DVs)
HOST:  U.S. Central Command (USCENTCOM)
ATTIRE/GENTLEMEN: Business/National Dress
ATTIRE/LADIES: Business (dress, pants outfit)/National Dress 

Monday, 22 February 

ATTIRE/GENTLEMEN: Business/National Dress/Class A Uniform
ATTIRE/LADIES: Business (dress, pants outfit)/National
Dress/Class A Uniform 

0800-0850
NO-HOST BREAKFAST 

0900-0905
CONFERENCE WELCOME (Hotel Grand Ballroom) - Brigadier General
Ghazi Salem Salman al-Jobor, Director of the Special
Communications Commission, Jordan Ministry of Defense 

0905-0910
TRANSLATION EQUIPMENT FAMILIARIZATION 

0910-0930
CONFERENCE OPENING REMARKS - USCENTCOM and Kingdom of Jordan
Representatives (TBD) 

0930-1000
PRESENTATION 1 - His Excellency Marwan Juma, Jordan Minister
of Information and Communications Technology
TOPIC:  Sector Policy--Mobile Communications, Fixed Services,
and Regional Connectivity 

1000-1030
PRESENTATION 2 - Jordan Telecommunications Regulatory
Commission
TOPIC:  Regulation of Telecommunications 

1030-1045
BREAK 

1045-1145
PRESENTATION 3 - Mr. Craig Mundie, Chief Research and
Strategy Officer, Microsoft Corporation, United States
TOPIC:   Cloud Computing 

1145-1245
PANEL DISCUSSION 1 - Industry/Government Representatives
TOPIC:   Implementing Cloud Computing Solutions to
Information Exchange Challenges 

1245-1345
LUNCH (Hotel Restaurant TBD) - For ministers and DVs
HOST:  Jordan Ministry of Information and Communications
Technology 

1400-1415
GROUP PHOTO SESSION (Hotel Location TBD) 

1415-1515
ROUNDTABLE 1 - Roundtable Moderator, TBD
TOPIC:  Policy and Regulation Perspective--Improving
Telecommunications across the Region and across the
Commercial, Government, and Military Sectors 

1515-1535
PRESENTATION 4A - Brigadier General Ghazi Salem Salman
al-Jobor, Jordan Ministry of Defense
TOPIC:  Mobile Communications in Support of Relief Operations 

1535-1555
PRESENTATION 4B - Brigadier General Mowafaq Assaf, Royal
Jordanian Air Force
TOPIC:  Fiber Infrastructure in Support of Government and
Civilian Agencies 

1555-1655
PANEL DISCUSSION 2 - Military Communicators
TOPIC:  Mobile, Fixed, and Fiber Communications 

1655-1830
FREE TIME 

1830-1900
COCKTAILS (Hotel Location TBD) - For ministers and DVs
HOST:  USCENTCOM
ATTIRE/GENTLEMEN: Business/National Dress
ATTIRE/LADIES: Business (dress, pants outfit)/National Dress 

1900-2100
DINNER (Hotel Location TBD) - For ministers and DVs
HOST:  Jordan Telecommunications Regulatory Commission
ATTIRE/GENTLEMEN: Business/National Dress
ATTIRE/LADIES: Business (dress, pants outfit)/National Dress 

Tuesday, 23 February 

ATTIRE/GENTLEMEN: Business/National Dress/Class A Uniform
ATTIRE/LADIES: Business (dress, pants outfit)/National
Dress/Class A Uniform 

0800-0850
NO-HOST BREAKFAST 

0900-0915
ADMINISTRATIVE REMARKS (Hotel Grand Ballroom) - Brigadier
General Ghazi 

0915-0945
PRESENTATION 5 - Lieutenant General Carroll F. Pollett,
United States Army, Director, Defense Information Systems
Agency
TOPIC:  Synchronizing Commercial, Government, and Military
Communications Priorities in the United States 

0945-1015
PRESENTATION 6 - Mr Sami Smeirat, Chief Executive Officer,
Orange Company, Jordan
TOPIC:  Regional Reach 

1015-1030
BREAK 

1030-1130
ROUNDTABLE 2 - Roundtable Moderator
TOPIC:  Synchronizing Wireless Challenges and Potential
Solutions 

1130-1200
PRESENTATION 7 - Mr. Nidal Qanadilo, Investment Manager,
Jordan Ministry of Information and Communications Technology
TOPIC:   Fiber Communications in Support of E-learning,
E-government, and Rural Areas 

1200-1300
LUNCH (Hotel Restaurant TBD) - For ministers and DVs
HOST:  USCENTCOM 

1345-1415
ROUNDTABLE 3 - Roundtable Moderator
TOPIC:   Regional Fiber Backbone Solutions to Civilian,
Government and Military Challenges 

1415-1445
ROUNDTABLE 4 - Brigadier General Donahue, Roundtable Moderator
TOPIC:  2010 Conference Action Items and 2011 Conference
Theme and Topics 

1445-1500
BREAK 

COUNTRY REMARKS
1500-1510, Kingdom of Bahrain
1510-1520, Arab Republic of Egypt
1520-1530, Republic of Iraq
1530-1540, State of Kuwait
1540-1550, Republic of Lebanon
1550-1600, Sultanate of Oman
1600-1610, State of Qatar
1610-1620, Kingdom of Saudi Arabia
1620-1630, United Arab Emirates
1630-1640, Republic of Yemen 

1640-1700
CLOSING REMARKS - USCENTCOM and Jordan Representatives TBD 

1700
CONFERENCE CONCLUDES 

¶6. Action Request: Washington agencies request posts ensure
delivery of invitations and deliver the following update
notification regarding GRCC 2010 to the appropriate regional
civilian and/or government attendees by 8 February 2010.
Please notify the USCENTCOM and State POCs in paragraph 7 on
completion of action by 10 February 2010.  Email replies are
acceptable. 

Dear (Embassies, please address invitations to appropriate
individuals listed), 

ABU DHABI:
-- His Excellency Muhammad bin Ahmad Alqamzi, Chairman
Telecommunications Regulatory Authority
-- His Excellency Mohamed Nassar Al Ghanim, Director General
and Board Member Telecommunications Regulatory Authority 

BAGHDAD:
-- His Excellency Farooq Abdulqadir Abdulrahman, Minister of
Communications
-- Barhan Shawi Al-Tamimi, DG, Communications & Media
Commission
-- His Excellency Mazin Hashim Al-Haboubi, CEO Deputy for
Administrative Affairs 

BEIRUT:
-- His Excellency Mr. Charbel Nahas, Minister of
Telecommunications
-- Dr. Kamal S. Shehadi, Chairman & Chief Executive Officer
of Telecommunications Regulatory Agency 

CAIRO:
-- His Excellency Dr. Tarek Kamel, Minister of Communications
and Information Technology
-- Dr. Amr Badawy, Executive President of National
Telecommunications Regulatory Authority 

DOHA:
-- His Excellency Dr. Hessa Al-Jaber, Secretary General
Supreme Council of Information & Communications Technology
-- Mister William Fagan, Director, Supreme Council of
Information & Communications Technology 

KUWAIT:
-- Dr. Mohammed Mohsen Al-Busairi, Minister of Communications 

MANAMA:
-- Dr. Mohammed Al Amer, Chairman and Acting General
Director, Telecommunications Regulatory Authority 

MUSCAT:
-- His Excellency Dr. Khamis bin Mubarak al Alawi, Minister
of Transportation and Communications
-- His Excellency Mohammed Nasser Al-Khusaibi, Chairman,
Telecommunications Regulatory Authority 

RIYADH:
-- Mister Mohammed Jameel bin Ahmed Mulla, Minister of
Communications and Information Technology
-- Dr. Abdulrahman Al-Jafari, Governor Communications and
Information Technology Commission 

SANAA:
-- His Excellency Kamal Al-Jabri, Minister of
Telecommunications & Information Technology 

United States Central Command and the Jordanian Armed Forces
will co-host the by-invitation-only Gulf Region
Communications Conference (GRCC) 2010 in Amman, Jordan on
21-23 February 2010. Formal invitations have been distributed
to you separately along with details regarding RSVPs and
registration and the conference agenda. GRCC 2010 will
continue GRCC 2009 multilateral engagement on regional
telecommunications and information sharing capabilities and
will foster cooperation among our respective entities in
order to overcome challenges, to include crisis response
and/or disaster relief missions. 

GRCC 2010 presentations and discussions support a theme of
Synchronizing Commercial, Government and Military
Communications Priorities. GRCC 2010 adds panel discussions
to the GRCC 2009 conference format of presentations and
roundtables. Each nation attending the conference will be
given one seat for a national representative on each panel.
As with GRCC 2009, roundtable discussions will be open to
participation by all attendees. Each nation attending the
conference will also be given five minutes for one national
representative to present closing remarks. Please identify to
the conference co-hosts as soon as possible those individuals
who will represent (post, please insert here your nation) on
each panel and present closing remarks. 

I encourage you to attend the conference. 

Sincerely,
(DoS originator name)
(DoS originator title)
U.S. Department of State 

¶7. CENTCOM point of contact for the conference: 

Jim Ramirez DAFC
U.S. Central Command
Deputy, Strategic C4 Architecture Programs and Policy
Division
* (813) 827-5816 DSN 651-5816
* ramirejs@centcom.mil
* ramirejs@centcom.smil.mil 

State Department points of contact for the conference: 

COL Dave Huggins
Senior Military Advisor, Near Eastern Affairs Bureau
* (202) 647-3945
* HugginsWD@state.sgov.gov 

Steve Simpson
Communications and Information Policy / Middle East
Energy, Economic, and Business Affairs
* (202) 647-5306
* SimpsonSC@state.gov
* SimpsonSC@state.sgov.gov
CLINTON

Yes, that latter cable is signed by Clinton. Interestingly enough, Mundie is doing politics. █

Summary: 3 cables from Brussels and Geneva, all demonstrating growing acceptance of artificial trans-Atlantic monopolies with similar trends within Europe itself

According to EU authorities, there is no reason to worry about expanding the scope of patents, opening the door to increased litigation and damages.

In the following 3 cables we see the subject brought up several times. In the second cable, “Lorrain added that patent harmonization would be interesting, along with a discussion on copyrights and other current IPR issues.”

The third cable says: “A key area that would further innovation in the seed industry would be patent harmonization of plant protection, as the existing rules under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) allow for protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof. As a result, there are varying degrees of patent protection for plants from one territory to another. ”

We wrote about TRIPS in [1, 2, 3, 4]. The three cables from 2008 and 2009 are as follows:

VZCZCXYZ0000
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DE RUEHBS #0859/01 1581339
ZNR UUUUU ZZH
R 061339Z JUN 08
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
INFO RHEHAAA/WHITE HOUSE WASHDC
RHEHNSC/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEAUSA/DEPT OF HHS WASHDC
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCNMEU/EU INTEREST COLLECTIVE

UNCLAS USEU BRUSSELS 000859 

SENSITIVE 

SIPDIS 

White House for NSC/Price, Herrmann
White House for OMB for OIRA/Dudley, Mancini
USTR for USTR Schwab, EUR
HHS for FAO/von Eschenbach
Pass SEC for Commissioner Atkins 

E.O. 12958:  N/A
TAGS: ECON [Economic Conditions], ETRD [Foreign Trade],
EIND [Industry and Manufacturing],
EINV [Foreign Investments],
EFIN [Financial and Monetary Affairs],
EAGR [Agriculture and Forestry], ENRG [Energy and Power],
ECIN [Economic Integration and Cooperation], EUN [European Union]
SUBJECT: Second Meeting of the U.S.-EU Transatlantic
Economic Council, May 13, 2008, Brussels 

Ref: USEU (scene-setter) 

¶1. Summary:  The May 13 U.S.-EU Transatlantic
Economic Council: 

-- discussed in a principals-only lunch policy
issues related to Russia and protectionism (reported
septel); 

-- agreed that EU Commission would follow through on
its November 2007 commitment to remove a major
impediment to EU imports of U.S. poultry, with the
EU Commission proposing legislation to allow the
U.S. meat cleaning process, explicitly acknowledging
the absence of a scientific basis for a continued
ban and committing to work actively to get the
proposal adopted; 

-- acknowledged a Commission administrative fix to
problems importers of U.S. cosmetics could face when
implementation of the EUQs new chemicals legislation
REACH begins June 1 while agreeing the Commission
would take steps to provide transparency, greater
legal certainty, and non-discrimination in
implementation of REACH ; 

-- accepted a Department of Labor offer to publish a
Request for Information on the subject of suppliers
declaration of conformity  for low-risk electrical
equipment; 

-- issued a joint statement on Open Investment ; 

-- welcomed steps to avoid unnecessary divergences
in our approaches to regulation, improve
consideration of international trade and investment
impacts of our regulation, enhance import safety
through better sharing of confidential information,
and improve our approaches to risk assessment; and 

-- discussed recent steps to further transatlantic
capital markets integration, including through steps
to grant equivalence to one anotherQs accounting
standards, achieve mutual recognition of our
comparable securities regimes, and address
structural and other potential problems in our
insurance markets. 

End Summary 

¶2. The U.S.-EU Transatlantic Economic Council met
in Brussels on May 13, 2008.  The U.S. side was co-
chaired by Assistant to the President for
International Economic Policy Dan Price, and
included Secretary of Agriculture Ed Schafer,
Secretary of Labor Elaine Chao, United States Trade
Representative Susan Schwab, Treasury Deputy
Secretary Robert Kimmitt, State Department Under
Secretary for Economic Affairs Reuben Jeffery III,
Commissioner of Food and Drugs Andrew von
Eschenbach, SEC Commissioner Paul Atkins, Special
Envoy to the European Union C. Boyden Gray and OMB
Office of Information and Regulatory Affairs
Administrator Susan Dudley.  EU Commission Vice
President Guenter Verheugen co-chaired on the
European Union (EU) side, accompanied by Trade
Commissioner Peter Mandelson, internal Market
Commissioner Charlie McCreevy, Consumer Safety
Commissioner Meglena Kuneva, and Taxation and
Customs Commissioner Laszlo Kovacs. 

¶3. The Council addressed a wide range of subjects,
including : 

-Russia and combating protectionist sentiments (in a
principals-only lunch, reported separately);
-steps to reduce unnecessary regulatory divergences
between the U.S. and EU, improve the sharing of
information relating to import safety, take better
account of the trade and investment impacts of
domestic regulation and improve risk analysis;
-specific sectoral regulatory problems and issues
such as the EU ban on the import of U.S. poultry
meat processed using chlorinated pathogen reduction
treatments, the U.S. requirement for independent
third party certification that certain electrical
equipment is safe for the workplace and the effect
of the EUQs chemicals regulation on imports,
especially of cosmetics;
-measures being taking to integrate transatlantic
capital markets, including in the areas of
accounting, securities and insurance ;
-the need for open investment policies; and
-next steps for the Council. 

¶4. The TEC issued a Progress Report to the Summit,
including as an annex a Joint Statement on Open
Investment.  It also received two reports from the
High-Level Regulatory Cooperation Forum:  one on the
analysis of trade and investment impacts of
regulation, and one on our respective approaches to
import safety, particularly our approaches to
information sharing. 

¶5. The co-chairs also met with a small group of EU
parliamentarians.  The co-chairs and the U.S.
delegation then met with the TEC Advisory Group
(consisting of the U.S. and European co-chairs of
the Transatlantic Legislators Dialogue, the
Transatlantic Business Dialogue and the
Transatlantic Consumer Dialogue); these meetings, as
well as the TEC co-chairs post-session debrief of
the Advisory Group, are reported separately. 

I. Review of TEC Achievements 

¶6. Commissioner Verheugen opened the first plenary
session commenting that the stakeholders session was
a strong indicator that the TEC project would surely
be successful as it already had a strong and visible
impact on transatlantic economic relations.  Both
Price and Verheugen highlighted the significant
concrete accomplishments TEC already has under its
belt.  Price emphasized the strategic importance of
the crucial relationship, and the need to ensure
sustainability of the TEC to continue to build on
this relationship, identifying short, medium and
long term goals.  He affirmed our obligation to get
it right amongst usQ so that we can get it right
with others.  He pointed to common commitments
already made, including horizontal regulatory
cooperation to bring regulatory processes in line,
science-based approaches to regulation, improved
transparency and more rigorous impact assessments.
Price pointed to three areas where there has been
concrete action beyond simply agreeing to roadmaps:
1)  IPR enforcement highlighting Operation
Infrastructure, the joint customs border operation
in which at least 360,000 integrated circuits with
40 different faked marks were seized in the last
months of 2007 2) E-Accessibility where the European
Commission has invited NIST and GSA to join their
experts group on developing standards while the USG
has invited Commission experts to join discussion on
reassessment of U.S. regulations; and 3) further
enhanced cooperation on medicinal products whereby,
based on the joint administrative simplification
goals, there will be several specific initiatives
related to inspections, including joint inspections. 

¶7. Verheugen reminded the group of the TECQs long-
term vision of removing obstacles to achieve the
transatlantic economyQs full potential, ensuring our
continued competitiveness.  He asserted that the
TECQs political guidance gets things moving even
on a nasty issue like poultry.  TEC
accomplishments include a Federal Communications
Commission commitment to begin a rulemaking on
allowing use of suppliers declaration of conformity
for products it regulates; a joint roadmap on patent
harmonization; Food and Drug Administration/DG
Enterprise cooperation on administrative
simplification (including enhanced inspection
cooperation), collaboration on biomarker development
and validation, parallel scientific advice and other
regulatory cooperation initiatives for veterinary
medicines that should reduce costs of pharmaceutical
R&D and get new medicines to market sooner; car
safety cooperation including cooperation at the
UNECE to establish new global technical
regulations(GTRs), including adoption of two recent
GTRs; biofuels standards cooperation; FDA/DG
Enterprise agreement to facilitate and support a
more routine and formal process by which the EU, US,
Canadian, and Japanese alternative testing
validation organizations can work more cooperatively
to address validation priorities, methodologies, and
processes.  In addition, FDA/DG Enterprise have
agreed to work together bilaterally on the
regulatory acceptance with respect to cosmetics of
validated animal tests.  Both of these initiatives
should assure public health protection and help
mitigate possible interruptions to trade that may be
caused by the upcoming EU ban on animal testing for
cosmetics.  Verheugen said this progress was going
too slow to address the looming crisis, and asked
why scientists cannot agree.  (Comment:  This
reference was to the disingenuous assessment that if
not for the intransigence of the U.S. scientists,
the EU requirement to move to non-animal testing of
cosmetics would be possible by the 11 March 2009
deadline set in EU legislation.  Alternative methods
to determine certain safety requirements have not
yet been validated or accepted in both the EU and
the U.S. as the science has not yet caught up to
this EU statutorily-imposed deadline. End comment) 

II. Horizontal Regulatory Cooperation and the High
Level Regulatory Cooperation Forum (HLRCF): 

A. Impact Assessment, Transparency and Consultation 

¶8. EU Commission Deputy Secretary General Alexander
Italianer and OMB/OIRA Administrator Susan Dudley
summarized the accomplishments of the meeting of the
High Level Regulatory Cooperation Forum (HLRCF) that
took place on 25 April.  The Secretariat General and
OMB completed a joint report on including trade and
investment impacts in regulatory analyses that both
opened to comment.  Italianer explained that
although there were few comments, those who did
comment (including the U.S. Chamber of Commerce and
BusinessEurope) represented the major players in
transatlantic trade and investment.  At the HLRCF
stakeholders discussion, both the USG and the
European Commission broadly outlined how
transparency and public participation are handled
under our respective systems.  Administrator Dudley
added that, in the future, OMB would likely ask U.S.
agencies to identify which regulations might have
trade and investment impacts or might otherwise be
of use to our trading partners. 

B.  Risk Assessments 

¶9. Dudley explained the conviction both sides have
that we need a sound risk-based pathway to
regulation.  Sharing of data and analysis will help
build a broader consensus on risk assessments,
limiting but not excluding regulatory divergence at
the risk management stage. Dudley referred to the
trilateral (EU-US-Canada) government-only workshop
on risk assessment, management and communication in
July, whose conclusions will be reported at the fall
TEC.  Conclusions from this session would be folded
into the broader international conference hosted by
DG SANCO in November in Brussels. 

¶10. Dan Price asked EU participants how they
QsquaredQ risk assessment with their variant of the
precautionary principle.  SANCO Director General
Robert Madelin underscored that scientists
understand uncertainty and that the precautionary
principle had nothing to do with risk assessment and
everything to do with risk management. He stated
that the objective was not zero risk, and not to
default to prohibition, but he recognized the
political challenge of risk managers to avoid
distortion of the precautionary principle.  Price
felt that the risk assessment conference would help
to dispel the caricature of U.S. and EU positions,
allowing us to focus on our agreed goals of science-
based approaches to prevent new barriers from
arising. 

¶11. SEC Commissioner Paul Atkins pointed out SECQs
statutory requirement to use cost/benefit analysis
when formulating new regulations.  Without it, their
regulations could, and likely would, be overturned
in court.  FDA Commissioner von Eschenbach hoped the
U.S. and EU regulators would also emphasize benefits
of regulated technology/activity when doing
cost/benefit analysis and risk assessments.
Highlighting benefits, for example for
nanotechnology, is crucial when communicating risks. 

¶12. USTR Schwab suggested that such risk discussions
would go a long way towards precluding prolonged and
intractable bilateral disputes by Qmanaging issues
at the front end.  Emphasizing the need to use
sound science and objective criteria, Schwab warned
that any abuse in the U.S. and the EU would be
copied and worsened in third countries creating
bigger non-tariff barriers. 

¶13. Verheugen pointed out how the conversation in
the room did not reflect that this is a very hot
issue.  He wondered how the precautionary principle
impacts (EU) legislation practically, suggesting
that it would be a topic for future discussion.
Italianer noted that we have different priorities
and societal preferences, and that the precautionary
principle could lead risk managers to preclude
taking any risk.  Dudley commented about the risks
of action and inaction, pointing out that an overly
precautionary approach could create serious
opportunity costs or prevent society from enjoying
crucial benefits in areas such as nanotechnology and
biotechnology. 

¶14. Verheugen felt efforts to create consistent
methodologies and risk assessment benchmarks would
be crucial.  Taking a step further, Verheugen
believed that U.S. and EU policymakers looking at
equivalent risk assessments should also be able to
Qfind a common approach to deal with the issue at
hand.  Von Eschenbach added that regulatory agencies
often wait for science to come to them.  His hope
was that aligning our regulatory processes ahead of
scientific developments, for example in
nanotechnology, could make sure our approaches were
more integrated. 

C.  Import Safety 

¶15. Dudley explained that the joint paper on
strengthening transatlantic cooperation on import
safety was almost complete.  (Comment:  the report
was completed on Thursday, May 15th and released to
the public on the ECQs website shortly thereafter.
End comment)  The report has recommendations in
several product areas:  motor vehicles,
pharmaceuticals, cosmetics, toys, electrical
equipment for consumer use, food and customs
procedures.  One key challenge highlighted in the
report was the importance of confidentiality among
regulators, especially with respect to the
protection of confidential business information.
The U.S. import safety working group would be
providing a report on its efforts. 

¶16. EU Consumer Safety Commissioner Meglena Kuneva
stressed the importance of information sharing,
stating her conviction that once U.S. legislation is
adopted expanding Consumer Product Safety Commission
(CPSC) authorities for external communication,
information sharing would be easier.  Kuneva
implored the USG, specifically CPSC, to gain a more
thorough understanding of their rapid alert system
(RAPEX), to better understand the type of safety
information that could be shared.  (This was in
reference to a comment made during Commissioner
NordQs last Brussels visit that the RAPEX system did
not contain much information useful for CPSC.) She
assured all that Commission efforts to improve
safety would not affect open trade policy.  Kuneva
reminded the group that she invited Chinese Minister
Li and Commissioner Nord to Brussels in November for
a trilateral meeting to Qproperly communicate
priorities. 

¶17. Price asked what precludes our regulators from
sharing information, for instance on product
recalls.  Dudley stated that even where cooperation
is already mature and deep, such as in
pharmaceuticals and cosmetics, improvements can be
made.  She pointed out that EU and Member States
need to set up mechanisms to ensure that
confidentiality is adequately protected across their
network.  Some U.S. agencies lack statutory
authority to engage in more extensive information
exchange, for example CPSC.  Commissioner von
Eschenbach said FDA was looking beyond its borders,
and that even if barriers existed to external
outreach, political will could overcome those
barriers and impediments. 

¶18. Agriculture Secretary Schafer provided examples
of where international cooperation in international
organizations was complementary and at other times
counterproductive.  At the international standards
setting body for food safety (aka CODEX), U.S. and
the EU agreed on aflatoxin presence levels in tree
nuts.  However, the EU was also using CODEX to
export its non-science-based, non-food-safety based
policies on food labeling by recommending that CODEX
focus on specific standards for biotech food
labeling instead of sticking with the perfectly
acceptable existing CODEX language.  He asserted
that TEC could help spur actions for bilateral
opportunities.  Here he pointed to EU legislation on
equivalence of meat standards.  The EUQs 17
exporting member states represent only 4% of US meat
imports, but 50 percent of U.S. foreign inspection
funds.  Given the generally uniform EU food safety
system, and more consistent EU audit results, this
could allow the USDA to work on an EU-wide basis,
greatly reducing resource costs. 

¶19. Verheugen agreed on TEC prospects in this area,
and suggested they consider food safety for the next
meeting.  Verheugen pointed to the impacts of the
EUQs improved market surveillance efforts resulting
in sharp increases in import bans and recalls. 

¶20. Price asked for clarification on EUQs
information sharing limitations related to
reciprocity requirements.  (Note: At the HLRCF,
SANCO Deputy Director General Paola Testori
indicated that the EU could not and would not share
with the U.S. information on safety if they were not
getting what they considered Qreciprocal
information from the U.S.  The conversation was
largely related to a misunderstanding of OSHAQs
responsibilities, but also related to CPSC statutory
limitations.)  SANCO Director General Madelin
indicated that the European Commission has more
discretion to share information than the U.S.  He
hinted that information would not be shared if not
considered reciprocal.  At the same time, he stated
that safety information held by one side when it is
known that products are also imported by the other
side should be shared to avoid incident.   He stated
that in his experience, when agencies trust each
other, issues get on the radar screen sooner.
Madelin mentioned that, in other cases, they could
not be confident that silence means nothing is
going on.  (Madelin was referring to an incident in
which a U.S. technology company reported minute
traces of an unapproved biotech corn event in a
small amount of seed.  There were no safety concerns
related to the incident and no corn is shipped to
the EU.  Despite this, the USG shared the
information with the EU shortly before the
information went public, at the same time it shared
the information with major corn importers such as
Japan.  SANCO had, however, learned of the event
from the company earlier, some two months after it
was reported to U.S. authorities, which is why he is
concerned that it could be difficult to report to
the European Parliament that silence from the U.S.
side means there are no problems.) 

¶21. Commenting on MadelinQs statement, Deputy FDA
Commissioner Murray Lumpkin reminded the group that
FDA (like its EU counterparts) is prohibited by
statute from sharing trade secrets; however, FDA and
its EU counterparts, under executed confidentiality
agreements, have been sharing other non-public
information (commercial confidential, investigative,
pre-decisional, etc) for many years.  In addition,
on the matter of information that has significant
public health implication, he stated that even in
the case when FDA is not sure if the product is
marketed in Europe, FDA notifies its European
counterparts anyway just to be sure. 

¶22. Kuneva asserted that, in addition, we do not
sufficiently share third party information.  She
touted the EUQs four-year young RAPEX system as a
well-built enforcement tool, complaining that US
officials preferred to go to Member States.
(Comment:  Despite her reference to improved
statistics on reporting into the RAPEX system, there
is inconsistent use of this tool throughout the EU,
thus requiring communication with Member States to
get a fuller picture. End comment) 

¶23. Referring to MadelinQs hints that some in the
U.S. were not sufficiently sharing, Dan Price asked
him to name names.  During a side conversation at
the end of the session, Madelin told Price about the
biotech product incident. 

¶24. Speaking more generally on the third party
issue, OMBQs Dudley reported that in the April
meeting between OMB and Commission, DG Enterprise
Director General Zourek suggested when analyzing
standards both sides should first look to see what
international regulations and standards are in
place.  Deputy Secretary General Italianer suggested
both sides needed to discuss standards.  He
indicated that the EU has done away with EU
standards for autos and instead uses
international/UN standards.  FDAQs von Eschenbach
stated that the US has begun to bring China and
India into the international discussions on
harmonization of technical requirements for
registration of pharmaceuticals (ICH) and medical
devices (GHTF). 

D.  Regulatory Burdens 

¶25. Treasury D/S Kimmitt asked for an update on EU
efforts to reduce regulations, although this was not
on the formal agenda.  Commissioner Verheugen
described the program as part of the CommissionQs
Better Regulation efforts.  He indicated that
fulfilling reporting requirements of various kinds
cost 3.5% of EU GDP and for SMEQs the cost of
complying can be as high as 10% of turnover.  More
than 100 reporting requirements stem from the
Company Law alone.  Seventeen Member States have
started screening administrative procedures and the
Commission is now measuring the costs of complying.
The ten actions they have taken this year saved 1.9
billion Euro.  Unfortunately it is not a net savings
because in the meantime the EU is proposing other
legislation.  The Commissioner offered to share any
of the details of the program with the US side. 

III.  Removing Barriers to Transatlantic Trade 

¶26. The third major part of the TEC agenda was a
discussion of steps either side is taking to remove
barriers to transatlantic trade in key areas.  In
summary, on the question of suppliersQ declaration
of conformity, Secretary Chao indicated the
Department of Labor would publish a new Request for
Information in the Federal Register.  On poultry, by
the end of May the Commission will table a proposal
to amend two pieces of EU legislation to allow the
import of poultry meat processed using pathogen
reduction treatments (PRTs), as well as the use of
PRTs in the EU for processing poultry meat for
consumption in the EU.   (Comment:  EU law already
allows the use of PRTs in the processing of poultry
meat for export.  End comment.)  On REACH, the
Commission asserted its pragmatic approach to the
cosmetics problem would avoid immediate trade
disruption.  Verheugen agreed a legislative change
was needed to provide legal certainty to  industry,
but could not commit to Commission support for such
a legislative fix at this time as he cannot yet
guarantee that all Commissioners would support this. 

A. Suppliers Declaration of Conformity (SDOC) 

¶27. Verheugen indicated the issue had been on the
table since the first TEC meeting, and he was happy
to note that OSHA is willing to review its
requirement that certain electrical equipment be
tested and certified under the NRTL (Nationally
Recognized Testing Laboratories) system even where
suppliers are willing to provide their own
certifications.  He hoped the request for
information (RFI) would be open soon and without a
pre-judged outcome. 

¶28. Dan Price confirmed the U.S. understands this
issue is a high priority for the EU; the U.S.
government has given the issue a lot of attention.
Secretary Chao then reviewed the many meetings Labor
has had with the Commission and with other
stakeholders on SDOC and confirmed the plans to
release an RFI.  She then outlined some of the
strengths of the NRTL system including the fact that
it is open to laboratories from all countries, it
relies on the private sector not a government
bureaucracy and it has proven effective in
delivering safety in the workplace.  In considering
SDOC, Secretary Chao mentioned her concern about the
budget impact that establishing a post market
surveillance program would require and indicated
several aspects could require legislative changes.
She also wanted to better understand how EU Member
States implemented SDOC as there appear to be
different approaches in different countries.  She
emphasized that its process is open and that
regulatory decisions are based on the best data, not
the volume of submissions.  Finally, she offered to
talk to the Commission about other trade
facilitation issues besides SDOC.  Verheugen ended
the discussion by expressing hope that OSHA would
continue the process that has started. 

B.  Pathogen reduction treatments (PRT) for poultry 

¶29. Price emphasized that (despite complaints of
some about the attention paid to PRTs in the TEC),
the issue had not received undue but appropriate
attention.  There is no substantive basis for what
is an effective ban on the import of U.S. poultry
meat; further, the EU had earlier agreed to lift the
ban.  He thanked Verheugen for his efforts to move
this issue.  He also distributed copies of a
Financial Times article (published May 12 on page 4)
on EU use of PRTs. 

¶30. Verheugen agreed the attention to the issue was
appropriate.  He expressed regret that the
Commissioner in charge of the issue [Comment:
Probably referring to DG Environment Commissioner
Dimas, but note that Commissioners Vassiliou and
Fisher-Boel, who also have a role and were not
present] was not at the TEC meeting and committed
that the Commission would adopt a proposal to amend
the two relevant pieces of legislation (Food Hygiene
and Marketing Regulations) before the end of the
month; these proposals will be with the Council and
Parliament before the Summit.  He noted that the
scientific studies indicate no health concerns from
the use of PRTs, and that there are no known
environmental concerns related to use of PRTs in the
EU.  That said, he commented -- as he had done in
the stakeholders meeting -- that it made no sense to
him to ban imported chicken because of possible
concerns about environmental impacts in Europe,
especially when European producers used PRTs for
exported poultry meat. 

¶31. Verheugen expressed confidence the Council would
support the changes.  The European Parliament was
less certain but based on the discussions earlier in
the day with the European members of the
Transatlantic Legislators Dialogue and a motion
passed by Parliament on the transatlantic economic
relationship, he believed the two largest political
blocks in Parliament supported the changes.  He
ended his opening remarks by pointing out this issue
would not have moved without the TEC. 

¶32. Price commented that it was inconceivable that
there would be an environmental risk in the EU from
US use of PRTs.  Ambassador Schwab thanked Verheugen
but stressed that, after 12 years, real success
would only result from actually selling poultry in
the market, thus we look forward to the next step in
the process.  Ambassador Schwab asked what assurance
the U.S. had that the proposal would not be blocked
by the Member States, what strategy the Commission
had for overcoming such obstacles, and what role the
Slovenian presidency would be playing in the Council
to remove this problem. 

¶33. Price then directly asked Slovene Minister of
Economy Vizjak whether the Presidency would support
the proposed changes in Council and whether poultry
would be flowing by the next TEC meeting.  The
Slovenian representative indicated Slovenia supports
the changes and would try to play a major role in
the discussions but since the discussions had not
yet started they could not speculate where other
member states were on the issue.  Verheugen stressed
that Member State positions would be decided at the
highest levels, not by agriculture ministers.  He
suggested the US not put too much public pressure on
the EU now as it could be counterproductive.  In
terms of timing Verheugen said the solution could
possibly be in place by the next TEC meeting and
there was a high chance it would be resolved (i.e.,
chicken trade would commence) by the end of the year
and this administration. 

¶34. At the end of the discussion a representative of
the French Ministry of Economics stated that the
Financial Times article was not accurate: France
banned PRT use in 1997 and has not used them for
exports since 2005. 

C.  REACH/Cosmetics 

¶35. The U.S. delegation then raised concerns with
the EUQs new Regulation on the Review, Evaluation
and Authorization of Chemicals (REACH).  Price
mentioned two sets of issues: first, the June 1
deadline affecting U.S. personal care products
(including cosmetics) exports; second, broader and
more long-term concerns with the REACH regulation
itself. 

¶36. Price believed the cosmetics problem was
unintended but that a legislative fix was necessary.
Ambassador Schwab stated that REACH is an example of
regulation that would have benefited from closer
bilateral dialogue.  She pointed to significant and
growing concerns being voiced about various aspects
of REACH including the list of candidate substances
requiring further evaluation and authorization that
could act as a Qblack listQ that creates a chilling
effect and could promote substitution to untested
chemicals, and the QOnly RepresentativeQ (OR)
provisions that put US suppliers at a disadvantage
over their EU counterparts since non-EU suppliers
must use an intermediary to register and may have to
divulge proprietary information to competitors.  She
stated that impacts from REACH implementation are
broader than these few issues; implementing REACH
will be a nightmare.  The estimated cost for
registering and testing a single substance is
$100,000 and there are 400 substances in a single
perfume.  On cosmetics, EU ingredients for export
were grandfathered from the June 1 deadline and
receive a phase-in period; US ingredients were not
which raises national treatment concerns.  More than
$2 billion in trade could be impacted by this
discriminatory treatment.  She predicted there will
be other REACH issues in the future and said that
how we resolve will be an example for the TEC. 

¶37. Verheugen responded that probably no one fully
understood REACH, including himself.  The final
legislation was a complex compromise between all
three bodiesQthe Commission, the Parliament and the
Council.  Trade offs during the legislative process
led to some unintended consequences.  No one wanted
discrimination; no one was aware that EU ingredients
had previous chemical registration (EINECs) numbers
but US ingredients did not. 

¶38. Unfortunately, according to the Commission Legal
Services, this aspect of REACH cannot be changed by
a simple written procedure (corrigendum) as this
would be a substantive rather than technical change
to the legislation.  However, the Commission wanted
to resolve the problem and is working out a
pragmatic solution with the European Chemicals
Agency (ECHA), essentially allowing suppliers of
imported cosmetics and their ingredients to submit
partial files on June 1 and then have a longer
period of time to complete these.  This should
ensure there is no risk that trade would be
disrupted.  [ Comment:  ECHA has not yet opined on
whether this is feasible.] 

¶39. On the other REACH issues, Verheugen said the
candidate list and OR provisions were not
discriminatory.  The candidate list would be done in
the most transparent way possible and the actual
authorization list would not come until much later,
perhaps only after 15 years.  (Comment:  Verheugen
seems to have missed the point.  The fact that the
authorization list will not come until much later is
precisely the problem.  Inclusion of a substance on
the candidate list means that it is in a sort of
limbo.  Consumers may well refrain from using the
substance for fear that it eventually will be
prohibited.  They may well resort to substitutes
with unproven track records.  This is what is meant
by a black list effect.  End comment.)  He suggested
technical people on both sides get together to
discuss the other issues. 

¶40. Price responded that we need to finalize our
understanding of the path forward.  He summarized
the Commission would propose an amendment to give
the companies legal certainty on the cosmetics
issue.  Verheugen stressed he would try, but could
not give that assurance because REACH is a shared
responsibility and Environment Commissioner Dimas is
against such a change.  Price noted that it was
unfortunate that two Commissioners with issues
before the TEC did not attend.  (Comment:  Price was
referring to Dimas and Fischer Boel, who also did
not attend.  End comment.) 

IV.  Capital Markets Integration 

¶41. (SBU) Charlie McCreevy, Commissioner for
Internal Market and Services, began the discussion
of joint progress in capital market liberalization.
McCreevy lauded the excellent cooperation between
Treasury and the SEC with his Directorate General
for Internal Market and Services (DGMARKT) through
the five-year old Financial Markets Regulatory
Dialogue (FMRD), which predates the TEC.  He said
the FMRD had made great strides in cooperation,
which were unthinkable five years ago.  McCreevy
underscored how the U.S. and EU economies have
become inextricably linked, accounting for 80
percent of global capital market flows. 

¶42. He stressed how current financial turmoil has
heightened the importance of transatlantic
cooperation, and that increased integration enhances
financial market resilience.  In addition, existing
priorities must continue. 

A. Progress on Accounting Equivalence:
¶43. McCreevy emphasized how the first TEC meeting in
all 2007 had contributed to progress on U.S.-EU
accounting convergence, based on work in the FMRD.
He noted that the SECQs action in December, 2007 to
abolish the reconciliation requirement for foreign
companies using International Financial Reporting
Standards (IFRS) as issued by the International
Accounting Standards Board (IASB) was a Qremarkable
achievementQ. McCreevey assured TEC members that the
EU is making good progress toward a reciprocal
declaration Q as outlined in the 2005 U.S. QEU
accounting QroadmapQ Q to accept U.S. Generally
Accepted Accounting Principles (GAAP) as equivalent
to IFRS, allowing U.S. firms to file in the EU
without reconciliation. 

¶44. The Commission has received good technical
advice on this issue from the Committee of European
Securities Regulators (CESR), he noted, which issued
a recommendation in January 2008 that U.S. GAAP is
equivalent to IFRS.  The Commission will issue a
proposal to this effect within a few weeks, he
continued.  The Council and European Parliament will
consider the proposal, said McCreevy, and he expects
final approval by the end of 2008.  This would meet
the roadmap deadline of eliminating the
reconciliation requirement by 2009. 

¶45. McCreevy then noted the importance of also
making progress on IASB governance issues. In
particular, he underscored the need to improve the
IASBQs transparency and public accountability.  He
welcomed the joint SEC, Japanese FSA, and European
Commission statement at the IOSCO meeting last fall
in Japan as providing a good basis for forward
progress.  He was encouraged that the IASB had
accepted the proposal, but expressed frustration at
the pace of progress.  He encouraged increased
monitoring and engagement by both sides on this
issue to encourage changes in the IASBQs process. 

¶46. Treasury Deputy Secretary Kimmitt complimented
McCreevy in response on the good bilateral
cooperation in both the FMRD and TEC.  He stressed
that such cooperation has been vital to addressing
market confidence during the current financial
crisis.  Kimmitt noted that the strong consensus
within the Financial Stability Forum (FSF) on how to
address policy issues raised by the financial crisis
closely tracked the analysis and recommendations in
the PresidentQs Working Group on Financial Markets
and the European CommissionQs own work in this area.
Kimmitt also praised SEC work with the Commission on
accounting convergence and issues around mutual
recognition of securities regimes, saying this had
been moving swiftly. 

¶47. SEC Commissioner Paul Atkins likewise stressed
the strength of transatlantic cooperation on
security regulatory issues. He noted that open
issues include the funding and governance of the
IASB.  In addition, he noted that more work remains
to be done regarding consistency of application of
IASB standards.  He agreed that the SECQs decision
to eliminate the reconciliation requirement between
IFRS and US GAAP would have been unbelievable five
years ago. He noted the March 2008 CESR
recommendation that the EU make an equivalence
determination.  Atkins also noted that MEPS seem
still confused by the U.S. process, with some
seeming to think that Congressional action might be
needed to make the SECs regulation on IFRS final.
He clarified that no Congressional action was needed
in this area and expressed an interest in helping
the Commission with outreach to the European
Parliament if necessary in order to facilitate
approval of the CommissionQs draft regulation. 

¶48. Atkins then asked McCreevy for a more specific
timeline for EU action.  McCreevy reiterated that
the Commission would issue a proposed equivalence
regulation within weeks, affirming that he fully
expects it will be approved by the Council and
European Parliament this year (despite some MEP
concerns).  McCreevy underscored his personal
commitment to obtaining approval from Parliament and
the Member States in the Council. 

B.  Mutual Recognition of Comparable Regimes for
Brokers 

¶49. McCreevy noted that work on mutual recognition
of securities regimes is proceeding well.  He
recalled his joint statement with SEC Chairman Chris
Cox in February 2008 defining a process to engage in
discussions regarding mutual recognition of U.S. and
EU Member State securities regimes in mid-2008.  He
stressed that the aim of such discussions should be
a system based on mutual trust, greater coordination
between regulators, and transparency.  He welcomed
the Qunilateral opennessQ associated with the SEC
proposal to provide expanded exemptive relief for
certain foreign brokers as an update to rule 15a-6
for large investors.  However, he noted the
ultimate, long-term goal of these discussions should
be regulatory convergence. 

¶50. Atkins underscored the SECs commitment to
moving forward on a broad range of mutual
recognition issues.  He explained that the SEC is
also in talks with Australia and Canada on mutual
recognition, noting it might conclude an agreement
first with one of these countries before the EU. He
noted skepticism exists in the U.S. Senate regarding
broad mutual recognition agreements in the
securities area and that much work can proceed using
the SECQs broad exemptive authority. 

C.  Insurance Issues 

¶51. McCreevy then turned to address reinsurance
collateral, which he recognized was a thorny issue
in the U.S.  He explained that currently EU
reinsurers in the U.S. must post 100 percent
collateral against their gross liabilities.  In
contrast, U.S. reinsurers do not face such a
requirement.  He estimated that the cost of the U.S.
requirement to EU firms was $500 million/year.  He
indicated that his goal was to achieve mutual
recognition for insurance supervisory systems as
well, but that reform in the United States was a
necessary precondition for such agreement.  He
expressed sympathy for the difficulty the Treasury
Department faces in addressing this issue, since
insurance regulation authority is reserved to U.S.
states.  He welcomed, therefore, the U.S. Blueprint
for Financial Regulatory Reform, which proposes an
optional federal charter for insurance and an
interim Treasury insurance office to with authority
to engage internationally. He lauded a legislative
proposal in the Congress that would establish an
Office of Insurance Oversight in the Treasury
Department as part of the solution.  He also
expressed frustration with the difficulties the
Commission sometimes faces in engaging the National
Association of Insurance Commissioners. 

¶52. Kimmitt noted that significant progress had been
made in other areas of the Financial Markets
Regulatory Dialogue because the relevant parties in
the United States had authority to address the
issue. 

¶53. He appreciated the CommissionerQs understanding
of the challenges created by the state-based
insurance regulatory structure.  Regarding
reinsurance collateral, he noted that the U.S. is
open to foreign insurers, which have 85 percent of
the U.S. reinsurance market, so this is not a market
access issue. 

¶54. Kimmitt then noted that there are actually two
different insurance issues on the TEC agenda:
reinsurance collateral and the EUQs proposed
treatment of the insurance companies from third
countries that do not have consolidated home country
supervision (the proposed Solvency 2 directive).
Solvency 2 would require an equivalence
determination; it seems likely that the 50 state
systems in the U.S. would not receive such a
determination, which could significantly affect the
ability of U.S. insurance firms to operate on an
equal footing in the EU. 

¶55. Kimmitt expressed an interest in working with
the Commission at the tactical level to address
Solvency 2 and other insurance issues in the FMRD.
He noted that one key aspect of the Treasurys
proposed blueprint would be to create an optional
federal charter.  An intermediate step would be to
create an office of federal insurance oversight
inside the Treasury Department, and noted that, as
Commissioner McCreevy had observed, Mr. Kanjorski
and Ms. Pryce in the U.S. House of Representatives
had already introduced a bill to make this a
reality.  He indicated that the U.S. and the EU
would need to work closely together to avoid a
potentially distracting and counterproductive fight
over Solvency 2.  He also noted that in an earlier
meeting with the Commissioner that day, they had
agreed to work together and that the Treasury
Department would be sending specific ideas on how to
address the issues raised by Solvency 2. 

V.  Keeping our Investment Regimes Open 

¶56. Trade Commissioner Peter Mandelson opened this
part of the meeting by underscoring the importance
of working together to promote open investment
regimes, calling this a Qkey economic issue for the
coming decade.Q  He stressed that foreign direct
investment (FDI) is an important driver for the
competitiveness of both the EU and U.S. economies,
noting that FDI is critical to support our supply
chains in foreign countries.  There is nothing to
gain, Mandelson continued, from tit for tat
policies restricting foreign investment.  He
underscored that there is no international regime
backstopping global openness to investment, pointing
out it is subject to political pressure within
countries. 

¶57. National security reviews of investment have a
legitimate place, Mandelson said, but should not be
overused.  In this regard, the EU and U.S. must
avoid applying a double standard to Qstate backed
investment.  National security restrictions on
investment should be Qcarefully calibrated
exceptions to a strong rule,Q he explained. 

¶58. Mandelson said the U.S.-EU Open Investment
Statement adopted by the TEC was strong but should
be backed up with concrete steps.  He identified two
specific EU concerns regarding the U.S: tax code
requirements for EU firms and the negative political
response to the recent Northrup-EADS military tanker
contract announcement.  The latter must be upheld on
a technical basis, he declared, noting that we must
apply our standards consistently and objectively. 

¶59. Commissioner McCreevy underscored the EUs
treaty commitments to open investment with limited
exceptions. He then noted that some Member States
are seeking to expand these exceptions to strategic
sectors. He stressed that DG MARKT examines all EU
legislation on investment to ensure compliance with
EU rules, and underscored that the Barroso
Commissions is more pro open-investment than prior
Commissions. In his opinion, efforts to create an
EU-level security 

¶60. review process would generate a system based on
the lowest common denominator, which would not be a
good thing. He considered that protectionist
pressure may have eased somewhat over the last year,
saying it is an ongoing, fluctuating problem. 

¶61. Dan Price responded that U.S. foreign affiliate
sales overseas dwarf U.S. exports, so it is critical
to get investment rules right.  He encouraged the
Commission to remember its roots in the pioneering
bilateral investment treaties with Germany, the
Netherlands, and the U.K.  Those treaties created
only narrow exceptions to the principle of national
treatment and open investment markets to address
national security issues.  He encouraged the EU to
lead by example globally, particularly given
developments in Japan, Canada, and France. 

¶62. Kimmitt said that a free flow of capital based
on investment policies is the lubricant of the
global economy.  He highlighted how establishment of
the U.S.-EU Investment Dialogue last fall was an
early TEC success that has already borne fruit in
improving legislative proposals in Germany.  He
noted excellent U.S.-EU cooperation in developing
policy toward Sovereign Wealth Funds (SWFs) through
the OECD, and he congratulated the Commission on its
recent communication regarding SWFs.  Even though it
is important for SWFs to develop best practices in
consultation with the IMF, Kimmitt noted that the
U.S., EU, and other recipient countries also have
responsibilities to promote basic principles of
openness, transparency, nondiscrimination and
predictability regarding investment policy.  He
underscored the importance of the first ever joint
statement between the U.S and the EU on this topic
as a good foundation on which to build. He suggested
that in the next year the U.S. discussion will
likely shift to investment by State Owned
Enterprises (SOEs), which raise more complex issues
than those of SWFs. 

¶63. Much more work is needed on maintaining open
investment climates, Kimmitt underscored, noting
recent actions by Japan and Canada to block FDI.  We
need to publicize better the benefits of open
investment, such as the three to four million U.S.
jobs created by EU FDI.  When EU business leaders
are in the U.S., he said, they should visit not just
FDI sites around the country and the Administration,
but also Congress to highlight their role in
providing jobs and other benefits associated with
FDI. 

VI.  Sustaining the Work of the TEC 

¶64. Verheugen then moved on to discussing next steps
for the TEC.  He noted that there are good reasons
to hold the next meeting in Washington in October,
before the U.S. elections; Price agreed.  Kimmitt
suggested that the TEC should discuss an agenda for
the next year or two, to show continuity across
administrations.  Verheugen agreed, saying that
stakeholders have asked for an 18 month-two year
workplan.  Kimmitt said that TEC members should ask
stakeholders for their suggestions on such a
workplan; Verheugen said this was a great idea. 

VII.  Finalizing the Joint Statement and Progress
Report 

¶65. Price and Verheugen then discussed finalizing
the TEC joint statement and progress report.
Verheugen suggested the documents needed some work,
including additional language to provide greater
political emphasis, before release.  Price expressed
serious concern about having the concluding TEC
session with stakeholders and a press conference
without having finalized the Joint Statement.  He
asked if there were any issues still open that the
TEC itself should resolve.  When told yes, he asked
that the negotiators be brought into the room to
report to the TEC plenary. 

¶66. The first unresolved issue that was addressed
concerned the language in the Progress Report on
poultry.  Price pushed hard for recognizing in the
document that the scientific reports the Commission
had received in March concluded that the use of PRTs
was safe.  Verheugen was clearly concerned about
making such a flat statement, saying that while it
applied to consumer consumption of the poultry, the
environmental studies left open that some problems
might arise.  He also noted during the at times
animated discussion that he was facing
interference (presumably from the French presidency
representative) and even that the staff of President
Barroso was telling him not to go any farther.
Price wryly commented that the Commission was
unlikely to adopt a proposal that would allow for
something that was unsafe, and then proposed that
instead the Progress Report note that the studies
showed there was no scientific basis for continuing
the ban on imported poultry.  A commission staffer
noted the ban was on the use of PRTs, not on imports
per se.  After conferring with each of the
Commissioners present (Mandelson for Trade, Kuneva
for Consumer Safety, McCreevy for Internal Market,
and Kovacs for Customs and Taxation), Verheugen
agreed to this language. 

¶67. A second issue related to poultry was related to
the wording of an explicit commitment from the
Commission to take active steps with the Council
and the Parliament to get the proposal enacted
before the next TEC meeting in the Fall.  This was
ultimately agreed. 

¶68. The third issue addressed concerned REACH and
cosmetics, and specifically the nature of the
commitment the Commission could enter into to
describe what the Commission would do, in addition
to its administrative measures, to provide legal
certainty for imported products.  Verheugen again
reiterated that he could not bind the Commission to
seek an amendment to REACH, but that he would
advocate this.  The language ultimately agreed was
softer than this, but indicates a clear commitment
not to allow REACH to disrupt trade in these
products. 

¶69. Finally, Kovacs asked to make sure that the
language about the EUs concerns about the U.S.
legislative requirement for 100 pct scanning of
containerized cargo imports was sufficiently strong.
He agreed to the language after it was read to him,
and seemed pleased that the TEC had agreed this
issue would be addressed in more detail at the next
TEC meeting. 

¶70. The Progress Report was then closed (pending
some additional political language for the opening).
Price and Verheugen both agreed that the Joint
Statement should be aligned with the language that
had just been agreed. 

¶71. Price and Verheugen thanked participants for an
incredibly worthwhile meeting.  Price said the TEC
is proving its worth as a key problem-solving
mechanism; Verheugen agreed. 

VIII.  Other TEC-Related Outcomes 

¶72. While the TEC discussed poultry, SDOC, REACH,
capital markets and investment, the process leading
to the TEC, and discussions on the margins of it,
brought additional accomplishments.  Among other
things, Verheugen agreed to chair on the EU side a
Council-level video-conference of climate change and
energy issues.  In addition, the two sides agreed to
bring experts together to get an overview of the
various sanitary and phytosanitary issues each has
with the other. 

Comment 

¶73. Indeed, the TEC has proved its worth if in fact
the poultry issue Q a stumbling block in U.S.-EU
trade relations effectively since the Chicken Wars
of the early 1960s is finally resolved.  The
Framework and the TEC provide a vehicle for
identifying priority issues to address to promote
transatlantic economic integration, providing a
political profile to those issues, shining a bright
spotlight on the work experts are undertaking to
address them, and ultimately, if necessary, actually
resolving them at the political level.  This can be
particularly important where the issues are long-
term such as ensuring greater coherence in the way
the U.S. and EU approach regulation and where each
side has long-cherished approaches that
(intentionally or unintentionally) impede trade.
Further, the opportunity to have a principals-only
inter-agency/inter-services discussion of our
respective approaches to such strategic economic
policy issues as China, Russia, protectionism and
investment provides policy makers valuable insight
into how the other side perceives these issues.  All
these advantages should help assure the TECs
continued viability through the 2008 change in
Administration in the United States and change in
the Commission in 2009. 

Murray

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E.O. 12958:  N/A 

TAGS: ECON [Economic Conditions], EFIN [Financial and Monetary Affairs],
EIND [Industry and Manufacturing], EAGR [Agriculture and Forestry],
ETTC [Trade and Technology Controls], ENRG [Energy and Power],
KIPR [Intellectual Property Rights], PREL [External Political Relations], EUN [European Union]
SUBJECT: CONSUMERS: TRANSATLANTIC ECONOMIC COUNCIL NEEDS
STRONGER CONSUMER FOCUS, MORE TRANSPARENCY 

¶1. (SBU) Summary: At a February 4 meeting with USEU,
TransAtlantic Consumer Dialogue (TACD) representatives raised
concerns over and suggested new directions for the
Transatlantic Economic Council (TEC) process.  TACD is
concerned about the need for more transparency in the drafting
of the TEC agenda, and the TEC's heavy focus on business
concerns, when they believe the consumer organizations can
contribute usefully to transatlantic discussions on
innovation, energy technologies, IPR and other issues.  USEU
will continue working with TACD to help build this
constructive approach.  End Summary. 

Background
---------- 

¶2. (SBU) At USEU's initiative, Econoffs met with
representatives of the Transatlantic Consumer Dialogue (TACD)
February 4 as a follow-up to the December Transatlantic
Economic Council (TEC) meeting.  TACD participants included
Benedicte Federspiel (TACD Chair), Julian Knott, Willemien Bax
and Anne-Catherine Lorrain.  Bax is also Deputy Director
General for the European Consumer's Organization (BEUC).
(Note: TACD's U.S. and EU co-chairs, along with their
Transatlantic Business and Legislators' Dialogues (TABD and
TALD) counterparts, were included in the group of advisors to
the TEC Co-chairs when the TEC was created in 2007.  End
note). 

Overview
-------- 

¶3. (SBU) Federspiel opened the discussion by welcoming the USG
outreach to TACD and willingness to discuss a broad range of
issues related to the U.S.-EU Transatlantic Economic
Integration Framework (TEF), saying that "this meeting in
itself sends a message."  After explaining her role (current
and past president, rotates among members of board, presidency
alternates between US and EU consumer groups) she addressed
the TEC.  She said TACD members have both procedural and
substantive concerns with the TEC as it has operated to date. 

¶4. (SBU) The group's main concern, Federspiel said, is around
a lack of transparency around the TEC process.  This
encompasses the lack of information exchanged between USG and
TACD members on what has been discussed and decided, agendas
and schedules for meetings, what is planned, and who has
responsibility for various elements of TEC work.  As a result,
TACD representatives feel their suggestions have not been
incorporated into the TEC agenda.  She said the process of
reviewing stakeholder input should be improved. 

¶5. (SBU) In addition, Federspiel said, TEC agendas have been
too heavily focused on issues of interest to business.  Many
issues that TEC takes up are not "consumer friendly."  She
suggested that moving EU TEC management away from DG
Enterprise, which addresses mainly business issues, to the
Council Secretariat (coordinating body for member state
issues) or the Commission's interdisciplinary foreign
relations directorate (DG RELEX) would help address this. 

TEC Dynamics
------------ 

¶6. (SBU) USEU presented some initiatives the co-chairs have
undertaken to improve the TEC, including completing and
publishing a workplan and establishing parallel USG and
Commission websites for TEC/TEF documents; in addition,
Econoffs indicated State and Commerce will work to facilitate
interagency coordination and continuity.  Willemien asked
whether the workplan would simply be a list of activities that
occurred within the TEF framework and a list of additional
planned activities, or whether we would use it as an
evaluative tool, to measure the effectiveness of these
activities.  Econoffs explained that it is likely to be
primarily a factual inventory of specific project commitments,
goals, progress to date, and next steps. 

BRUSSELS 00000202  002 OF 003 

¶7. (SBU) Knott asked about the various sectoral dialogues
under the TEC.  Econoffs described the U.S.-EU Investment
Dialogue and the High-Level Regulatory Cooperation Forum
(HLRCF).  The HLRCF is strong, and expected to continue with
or without a TEC process.  Bax said there should be greater
coordination among the dialogues.  She also said that BEUC had
been invited to brief EU member state reps who follow
transatlantic relations (COTRA working group) on their view of
the TEC.  Federspiel also noted that at the May 2008 TEC
meeting, (she was unable to attend in December), there were
definite personality problems among some participants, which
led to a sometimes uncomfortable situation and less
productivity for the meeting overall. 

TACD Recommendations
-------------------- 

¶8. (SBU) TACD shared several specific recommendations with
Econoffs.  TACD suggested that actual TEC meetings put a
greater emphasis on discussion of broad, strategic issues
(e.g. financial crisis impacts and responses).  Federspiel
said one challenge in balancing the dialogue would be
addressing how to improve competitiveness in the transatlantic
marketplace versus using the political weight of the TEC to
resolve discreet, thorny, problematic issues.  To this end,
Federspiel suggested removing poultry from the TEC agenda,
citing it as an example of an issue that had loomed too large
in TEC discussions, taking up too much time to the exclusion
of other issues that could have been addressed.  She said the
only person in the Commission who supported allowing U.S.
poultry into the EU market was Verheugen, and as he was not a
"dictator," he alone could not get poultry accepted,
especially as 26 member states voted against allowing poultry
and one, the UK, abstained. 

¶9. (SBU) TACD interlocutors again emphasized the need to move
EU management of the TEC to DG RELEX or the Council
Secretariat.  Federspiel pointed out that having DG Enterprise
run the TEC for the Commission has led to an overemphasis on
business interests on the agenda.  Under this dynamic, it is
difficult to get buy-in on TEC participation from
Commissioners like Dimas (Environment) and Vassiliou (Health),
whom she suggested would not like to put themselves in a
position of going to the TEC to "be bossed around by
Verheugen."  She suggested DG RELEX would be a better home for
the TEC due to its neutrality, but added that "TABD may not
make the same recommendation." 

¶10. (SBU) Federspiel said that perhaps different meeting
formats could be considered for the TEC, such as a shorter
plenary and more time allowed for breakout sessions, where
discussion could be freer.  She lamented the fact that members
of the TEC advisory committee were allotted five minutes to
speak at the beginning of the meeting, then sat there silently
for hours on end Q a wasted opportunity for the advisors to
provide useful input. 

¶11. (SBU) Knott and Federspiel emphasized above all the need
to broaden the agenda to include "consumer-friendly issues."
Federspiel noted that TACD had submitted recommendations for
all previous meetings for the TEC, which included suggestions
the agenda should not be dominated by "crises of common
interest" to the consumer and business communities, but should
also include positive and proactive discussions on topics such
as nanotechnology, innovation, and sustainability.  Knott
proposed that the TEC examine the connection between
innovation, access to technology and potential reexamination
of IP rights, particularly for developing countries, as well
as general access to knowledge.  Lorrain added that patent
harmonization would be interesting, along with a discussion on
copyrights and other current IPR issues. 

Next Steps
---------- 

BRUSSELS 00000202  003 OF 003 

¶12. (SBU) On next steps, Knott agreed to update and send USEU
four papers on TEC issues, along with other recommendations.
All agreed on the usefulness of the meeting and voiced their
commitment to reinforce the dialogue between the Mission and
TACD, and improve communication.  TACD thanked USEU again for
proactively reaching out to TACD on these issues.  Federspiel
closed by noting that TACD would hold its annual meeting June
7-10, 2009 in Brussels, to which the Mission and senior USG
TEC officials would be invited.  She suggested that this
provided a great opportunity to meet with Commission leaders
on TEC issues.  (Note: TACD formerly held meetings twice
annually, one in DC and the other in Brussels, but for
budgetary reasons, can now only do one per year. End note.) 

Comment
------- 

¶13. (SBU) TACD clearly feels the advent of a new U.S.
administration offers them the chance to correct what they see
to have been an excessive focus on business issues and
concerns in prior TEC meetings.  TACD recommendations on TEC
structural reform should be considered thoroughly as part of a
larger process of USG review of the TEC's continuation,
functioning and structure.  USEU will work to strengthen our
dialogue with the group and will work to integrate it more
effectively into the network of TEC stakeholders. 

MURRAY

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E.O. 12958: N/A
TAGS: ECON [Economic Conditions],
KIPR [Intellectual Property Rights],
SENV [Environmental Affairs],
WIPO [World Intellectual Property Organization]
SUBJECT:  WIPO Conference on Public Policy 

¶1. SUMMARY (SBU):  During the July 13-14 World Intellectual Property
Organization (WIPO) Conference on Intellectual Property (IP) and
Public Policy Issues in Geneva, Switzerland, participants explored
and clarified the connection between IP and several major public
policy issues such as climate change, public health, food security
and protection of traditional knowledge.  The conference was held at
the behest of the WIPO Standing Committee on Patents (SCP) and
provided an opportunity for WIPO not only to reinsert itself into
debates on IP's role in addressing key public policy issues, but
also to claim a leadership role that WIPO hopes will result in
better understanding of the IP aspect of public policy issues by
intergovernmental organizations, non-governmental organizations and
member states.  A Chair's report on the public policy conference
will be submitted to the next SCP meeting in November 2009, at which
time, developing countries may push to have the conference's topics
become a new focal point for work under the SCP.  To address
concerns from some WIPO Member States that the focus of the public
policy conference not be diverted from the patent system, WIPO held
a separate conference on access to reading material for the visually
impaired on the morning of July 13 (septel). END SUMMARY. 

Climate Change
-------------- 

¶2. (U) The role of IP in promoting the development and diffusion of
green technologies to combat climate change was at the heart of
discussions at a two-day international conference on IP and public
policy issues.  The overall view at the Conference was that IP is a
key incentive for the creation of new green technologies to address
climate change problems.  To assess the extent of the climate change
problem, Michel Jarraud, Secretary General the World Meteorological
Organization (WMO) pointed to unequivocal scientific evidence on the
tremendous impacts of climate change on health and food security.
He noted that IP should be a catalyst, and not an obstacle, to
solving problems associated with climate change.  Jarraud emphasized
the advantages of international cooperation and the need for a
multi-disciplinary approach to the challenges arising from climate
change, as well as the importance of facilitating technology
transfer. 

¶3. (U) Britain's Minister for Higher Education and Intellectual
Property, Mr. David Lammy, and WIPO DG Gurry also provided similar
messages emphasizing the importance of IP rights in facilitating the
transition to clean technologies and renewable energies, and the
range of options offered by the IP system in identifying,
transferring, and disseminating those technologies to address
climate change.  Lammy specifically noted that the technology
transfer issue was crucial to the success of climate change
negotiations in the United Nations Framework Convention on Climate
Change (UNFCCC).  DG Gurry added that IP rights offered the
necessary incentives to develop green technologies, noting moves by
several countries to develop systems to fast track the examination
of patent applications in the area of clean technologies and
renewable energy.  The IP system offers a proven means of
encouraging investment in the clean technologies required to adapt
to and mitigate climate change. 

¶4. (U) As referenced in the speeches of UK Minister Lammy and DG
Gurry, technology transfer of green technology is a key issue among
NGOs, developing countries and the IP community.  It is also a key
feature in the UNFCCC, which is slated to have a finalized agreement
by the end of the year.  Wanna Tanunchaiwatana, Manager of the
Technology Sub-Program of the UNFCCC, reported that draft language
concerning technology transfer would commit developed countries 'to
take all practicable steps to promote, facilitate and finance, as
appropriate, the transfer of, or access to, environmentally sound
technologies and know-how to other parties, particularly developing
country parties' (Article 4.5 of the UNFCCC).  Tanunchaiwatana
believes that difficulty in negotiating the IP section of the UNFCC
agreement does not rest with the idea of transferring IP-dependent
green technologies itself, but with the broader challenge of how to
implement and encourage the diffusion of all relevant technologies
to reduce the impacts of climate change on a global scale.  She
reminded attendees of the short amount of negotiating time remaining
before the December deadline, and encouraged parties to work through
the current standstill on IPR in the UNFCCC talks. 

¶5. (U) In response to the growing debate on whether the solution to
climate change should mirror the compulsory license solution reached
in the WTO for improving access to pharmaceuticals for poor
countries, economist Daniel Johnson and Chief IP Counsel for General
Electric Carl Horton noted empirical research illustrating that
weakening IPR protection for climate change-related technologies is
an unsound policy and will harm innovation.  It was noted that there
are very few patents on green technologies (fewer than in the
pharmaceutical sector), making compulsory licensing unnecessary in
most cases.  Panelists emphasized that a lack of green technology
patents in this area shows that IP is not an obstacle to development
and it allows for open access and further innovation.  They
concluded that proposals in the UNFCCC for mandatory technology
transfer and/or compulsory licensing under UNFCCC will have the
unintended effect of hampering any investment and innovation in this
area.  It was also highlighted that technology transfer concerns
must be addressed on a commercial basis and not through government
enforcement. 

Public Health and Traditional Knowledge
--------------------------------------- 

¶6. (U) Evident throughout the discussions related to public health
was a theme calling for 'strong collaborative action' among IGOs and
the private sector to address questions on IP, trade and public
health.  WHO Director General Dr. Margaret Chan stated that while
innovation has a key role to play in new drug development, market
forces alone are insufficient to ensure the delivery of affordable
and universal public health solutions.  She noted that both needs-
and profit-driven incentives should be explored to address both
access problems faced by the poor and lack of new treatments for
neglected diseases. 

¶7. (U) Dr. Chan said that international agreements can be shaped in
ways favoring health needs of the poor and cited the May 2008 World
Health Assembly-adopted resolution on public health, innovation and
intellectual property, as a model.  According to Dr. Chan, the
global strategy and plan of action contained in the resolution
provide agreed-upon lines of action for making health care products
more accessible and affordable, especially in the developing world.
Further, Chan noted that creative solutions to address the health
needs of the poor that complement the IP system include UNITAID's
patent pool, a voluntary system created with the intent to reduce
expenses and increase access to IP essential to make medicines that
are needed by poor countries facing the HIV/AIDS crisis.  Chan also
cited other IP-complementary solutions, such as WHO's
pre-qualification program, which helps developing county producers
achieve necessary quality standards to produce safe and effective
medicines. 

¶8.  (U) World Trade Organization (WTO) Director General Pascal Lamy
also underlined a need for effective international partnerships.
With interdependent issues of public health, climate change,
biodiversity and food security, "no single international agency has
a monopoly on these diverse areas of policy," said Lamy.  Noting
that climate change will likely have a severe impact on disease
patterns and on agriculture, Lamy stressed that the effective use of
the IP system and of TRIPS flexibilities are important, but do not
stand alone: IP law and policy must be harnessed with drug
procurement policies, pro-competition safeguards, and regulation of
drugs for safety and quality. 

¶9. (U) Tony Wood, Vice President of Medicinal Chemistry at Pfizer
Global Research and Development, noted that IP is absolutely
essential from the researchers' point of view.  He added that 10 to
12 years elapse between inventing the right molecule and undertaking
all the necessary testing and trials to bring it to market. Without
patents, the research would be held as a trade secret during
testing, holding back medical research that is aided by disclosure
in patent applications. 

¶10. (U) Joseph Straus of the Max Planck Institute for Intellectual
Property agreed, saying a precondition of access to medications is
their existence, which means research and development must be
incentivized.  Robert Sebbag, Vice President of Access to Medicines
at Sanofi-Aventis, added that important progress is being made to
effectively address access to medicine concerns for the poor through
public and private partnerships.  Moreover, he noted that the
industry is utilizing alternative models to deliver lower profit
medicines at higher volumes to treat neglected diseases without
dismantling the patent system.  He reminded the audience that access
to affordable medicines is just one piece of the puzzle, and that
education and communication are key in fighting diseases. 

TRADITIONAL KNOWLEDGE
--------------------- 

¶11. (U) Discussions also centered on the role of traditional
knowledge in addressing IP and public health concerns.  Claudia Ines
Chamas, senior advisor in the Secretariat of Sciences and Technology
and Strategic Inputs at Brazil's Ministry of Health noted that for
many neglected diseases, the medicines are old, toxic, expensive, or
in short supply. She stated that access to medicine is not possible
without reasonable efforts towards increasing local capacity and
building a local basis of knowledge.  Yonah Seleti, Director General
of South Africa's Department of Science and Technology stated that
the "African renaissance can only be borne on the role of indigenous
knowledge systems".  According to Seleti, indigenous people have
enormous economic and social potential in their knowledge, but the
current IP system sometimes fails to protect that knowledge.  It was
also noted that misappropriation of traditional knowledge must be
stopped. 

¶12. (U) Vinod Kumar Gupta, head of the Information Technology
Division at the Traditional Knowledge Digital Library (TKDL), a
project of the Council of Scientific and Industrial Research in
India, reported on his efforts to use the TKDL to catalogue
traditional knowledge in a patent-like format so that it is easier
to identify as prior art.  He mentioned that a recent agreement with
the European Patent Office has made the database available for
patent examiners to use in grant procedures, and a similar agreement
is expected soon with the U.S. Patent and Trademark Office.  He
concluded by noting that collaborative research between traditional
knowledge and modern medicine can yield great public health
benefits, but IP agreements must find ways to protect traditional
knowledge. 

¶13.  (SBU) COMMENT: It should be noted that, though not specifically
raised at the Conference, the issue of providing IP protection for
traditional knowledge/access to genetic resources/traditional
cultural expressions (TKGRTCE) has been examined by Member States
for several years at WIPO's Intergovernmental Committee (IGC) on
TKGRTCEs.  WIPO technical assistance units also continue to provide
essential advice to developing and least developed countries on the
effective use of existing IP principles and systems for these
IP-related interests.  All Member States support the need for
protecting traditional knowledge and are committed to making
progress on the protection, preservation and promotion of TKGRTCEs.
However, the Africa Group, along with Brazil, India, Indonesia,
Iran, Pakistan, and many Caribbean nations are currently demanding
that an internationally-binding treaty be negotiated at the IGC and
concluded and signed by Member States in 2012.  Developed countries,
as well as two developing countries (South Korea and Singapore),
believe that it would be premature to agree upon the nature of the
text to be negotiated (i.e. that it would be a binding treaty)
without a pre-agreement on the content of that text. The U.S. and
others also maintain that no outcome of the IGC should be precluded,
including the adoption of a legally binding international
instrument, but that, at this point, no outcome should be prejudged
either. END COMMENT 

Food Security
------------- 

¶14.  (U)  In opening remarks under the topic of IP and Sustainable
Agriculture, Algerian Ambassador Idriss Jazaory stated that the
number of malnourished people in the world has topped one billion.
WIPO's role here is to ensure that the system for IP protection
contributes to the creation of new food and agricultural resources,
but at the same time does not become an obstacle to the most
vulnerable people in the most vulnerable places having access to
them, said Jazaory.  He noted that IPR could be used to justify food
cartels or to alleviate hunger; how this plays out depends on the
international community. 

¶15.  (U) Shakeel Bhatti, Secretary of the International Treaty on
Plant Genetic Resources for Food and Agriculture at the Food and
Agriculture Organization (FAO) of the United Nations added that
access to seeds has impacted food security. The treaty has, he said,
made significant breakthroughs in funding its access and benefit
sharing system, while waiting for the built-in time lag of 5 to 7
years before commercial products start growing out of it. 

¶16.  (U) Kanayo Nwanze, President of the International Fund for
Agricultural Development (IFAD) noted that it is not tenable to
separate IP from sustainable development.  Intellectual property
rights can serve as catalysts for sustainable agricultural growth,
but there needs to be a shift in thinking on technology development
from the public/private divide to partnerships and equitable
benefits for both stakeholders. 

¶17.  (U) Richard Jefferson, Chief Executive of non-profit Cambia,
proposed one way in which the IP system might be set up for improved
collaboration.  He reported on the Initiative for Open Innovation, a
new project in collaboration with WIPO and the Gates Foundation
launched in July 2009, which aims to create a "free, open, global
web-based facility" that will map in all languages not only patents,
but also regulatory data and science and technology literature,
cross-referencing them with key genes and compounds, creating
'patent landscapes' that will allow for a clear picture of what is
patented, where it is patented, and who controls it. 

¶18.  (U) As a part of the Initiative for Open Innovation, Cambia has
proposed the creation of a new legal tool they call a 'concord;' a
mutual agreement not to assert IP rights in a particular field of
use.  For example, Jefferson said companies might agree not to
assert any IP rights related to research, development, manufacture,
delivery or support of malaria interventions.  The patents might be
enforced for other purposes, but this allows for collaborative
innovation to solve specific problems, and will reduce costs for
small players who want to work on such problems. 

¶19.  (U) Michael Kock, the Global Head of IP at agriculture
technology firm Syngenta International, compared the seed industry
to the entertainment industry, as copying and counterfeits continue
to be major problems for the seed industry.  He clarified that
Syngenta does not seek patents for plants/seeds in least developed
countries or enforce rights used in subsistence farming.  He noted
that the enforcement issues arise in the context of use by large
farmers in developed countries.  He continued in emphasizing that
the disclosure of origin of genetic resources, which has been
proposed as a way to protect small growers, is problematic because
it increases uncertainty for innovators and will discourage the use
of genetic diversity.  A key area that would further innovation in
the seed industry would be patent harmonization of plant protection,
as the existing rules under the WTO Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPs) allow for protection
of plant varieties either by patents or by an effective sui generis
system or by any combination thereof.  As a result, there are
varying degrees of patent protection for plants from one territory
to another. 

Closing remarks
---------------
¶20.  (SBU) In summarizing the two-day Conference, the Chair of the
Standing Committee of Patents (SCP), Maximiliano Santa Cruz (Chile),
noted that IP is not an end in itself, but an instrument to promote
innovation, creativity and the dissemination of knowledge.  He added
that while the IP system may present some challenges, it can also be
part of the solution to development questions.  The SCP Chair noted
that a common theme during the Conference was that innovation and
technology coupled with technology transfer is no doubt an important
contribution to solving problems that may arise in other areas of
development.  The Chair is charged with reporting back to Member
States on the outcome of the Conference.  Though proposals have yet
to be made, certain developing countries are likely to push for
further discussion of the topics raised at the Conference,
particularly those concerning technology transfer at future SCP
meetings, as well as follow up conferences. 

¶21.  (U) All PowerPoint Presentations and audio speeches can be
found at:  http://www.wipo.int/meetings/en/2009/ip_gc_ge /
program.html 

GRIFFITHS#

That ought to be enough cables for now. █

Summary: The position of the Nicolas Sarkozy regime on intellectual monopolies including patents

POOR CHINA. The West is too obsessed with (afraid of) this highly productive nation that exports almost everything people buy in the shops if it’s economic to transport by ship. Japan et al. try to limit China's trade using intellectual monopolies, which can impede domestic production under independent brands (Apple, for instance, is notorious for shutting down competing factories in China under the pretext of “IPR”). In any event, according to the following Cablegate cable (under ¶4), the Nicolas Sarkozy regime “recently ratified the London protocol and would support adoption of a Community patent during its presidency, he said. “Common reflection” on patent harmonization issues was a potential area for TEC discussion. France also was supportive of the International Anti-counterfeiting and Piracy Agreement (?) (ACTA).”

The information came from Novelli, who “had accompanied President Sarkozy to China in late 2007 and the message on IPR had been “very firm.” Pushing together for a stronger Chinese approach on IPR was important.” Important to who? Surely not the Chinese population.

The position from Paris and EU authorities matters a lot and the cable below is not so out of date. It’s also about ACTA.

VZCZCXYZ7332
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DE RUEHFR #0386/01 0641756
ZNR UUUUU ZZH
R 041756Z MAR 08
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 2152
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS PARIS 000386 

SIPDIS 

SENSITIVE
SIPDIS 

DEPARTMENT PASS USTR 

E.O. 12958: N/A
TAGS: ECON [Economic Conditions], ETRD [Foreign Trade],
ENRG [Energy and Power], PREL [External Political Relations],
EAGR [Agriculture and Forestry], EUR, FR [France; Corsica]
SUBJECT: FRENCH RECEPTIVE TO A/S SULLIVAN'S PITCH ON TEC 

REF: 2/11 PARIS POINT ON FRENCH GMO LAW 

¶1. (U) Embassy Action Request Para 14. 

¶2. (SBU) Summary:  In February 13-14 meetings French Trade
Minister Novelli, MFA Economic Director Masset and PM
Diplomatic Advisor Lapouge told A/S Dan Sullivan they would
be supportive of the Trans-Atlantic Economic Council (TEC)
as an important part of France's EU presidency.  On other
issues Novelli said France would pay attention to
"reciprocity" in EU foreign economic relations during its
presidency.  France's position on agricultural bio-
technology was evolving, with the amended draft law on GMOs
recently approved by the French Senate a more "balanced"
approach than that of the initial draft.  Lapouge said
energy supply issues would figure among France's EU
presidency priorities and briefed on PM Fillon's early
February trip to Kazakhstan.  End summary. 

Novelli on TEC, 100% Screening, IPR
- - - - - - - - - - - - - - - - - 

¶3. (SBU) In a February 13 meeting A/S Sullivan, accompanied
by Ambassador Stapleton and SE Boyden Gray, told French
Trade Junior Minister Herve Novelli the U.S. hoped France
would put the TEC high on its agenda for the French EU
presidency.  He underscored that the TEC not only could
help deepen transatlantic economic relationship by reducing
and harmonizing regulatory barriers, but also it has a much
broader strategic rationale:  enabling the U.S. and EU to
more closely coordinate economic policies vis-`-vis rising
economic powers.  France's endorsement would be key to a
successful TEC, and one that helped ensure the
institution's longevity.  Novelli said the GOF saw the TEC
as "very important" and the French presidency could "play a
key role" in advancing it.  But the May TEC and June U.S.-
EU Summit would precede the French presidency and it would
be important to focus on these first. 

¶4. (SBU) Novelli described cargo security and IPR as GOF
priorities (both in and out of the TEC).  U.S. requirements
for 100% screening of containers were a top French concern
given the "costs it would impose" on trans-Atlantic trade.
Novelli saw convergence in U.S. - French interests on IPR.
France recently ratified the London protocol and would
support adoption of a Community patent during its
presidency, he said. "Common reflection" on patent
harmonization issues was a potential area for TEC
discussion.  France also was supportive of the
International Anti-counterfeiting and Piracy Agreement (?)
(ACTA).  Novelli had accompanied President Sarkozy to China
in late 2007 and the message on IPR had been "very firm."
Pushing together for a stronger Chinese approach on IPR was
important. 

Environmental Issues
- - - - - - - - - - 

¶5. (SBU) In the wake of its late 2007 "Grenelle"
environmental pact France would be "exemplary" on cutting
carbon emissions.  The GOF was considering a variety of
eco-taxes (and had already implemented some) as part of
this effort.  It would use its EU presidency to encourage
an "awakening" on the use of such measures among its EU
partners.  Cuts in CO2 emissions were inevitable, Novelli
said, the key would be to do so without impacting French
productivity. (Note: Novelli said nothing about France's
proposal for a carbon tax on imports from countries that do
not impose binding limits on CO2 emissions. End note)
A/S Sullivan underscored U.S. - EU convergence on climate
change, especially through the Major Economies process. 

¶6. (SBU) Sullivan raised the issue of GMOs, and Novelli
said the GOF's position was evolving.  The French Senate
had passed a "more balanced" amended version of the GMO law
than the one presented to parliament (ref).  The position
of Minister of Ecology and Sustainable Development Borloo
was shifting, Novelli claimed, "in spite the views of
environmental groups."  France's current ban on MON810
"could be lifted," he said, though he did not specify the
timing or circumstances of a possible rescission. 

Reciprocity
- - - - - - 

¶7. (SBU) Novelli previewed other priority issues within his
remit for the French presidency.  The GOF would pursue a
European Small Business Act, to include regulatory
simplification and access to public procurement.  The GOF
had presented its ideas in Brussels to "enrich the debate"
and the Commission was preparing an initial draft.  The GOF
would encourage movement towards freer trade and investment
regimes, but on the basis of reciprocity.  The GOF wanted
Europe to be "as open as our partners," but it would demand
a level playing field.  Discussion on EU trade defense
measures was a possible "element" in France's strategy for
pursuing reciprocity. 

¶8. (SBU) France continued to hope for a Doha deal, Novelli
said, but it "must be balanced."  The GOF felt the
Commission had done the "maximum," in fact surpassing
negotiating mandates on agriculture and industrial access.
France would not "sacrifice its interests" for the sake of
a deal.  Sullivan underscored very strong U.S. commitment
to getting a "good, ambitious" agreement.  He also noted
the importance of maintaining a public commitment to open
trade and investment, saying that foreign direct investment
was a net benefit regardless of reciprocal limitations that
partners might impose. 

TEC Strategic Dialogue Timely
- - - - - - - - - - - - - 

¶9. (SBU) In a separate meeting MFA Economic Director
Christian Masset echoed Novelli's support for the TEC.  He
warmed to A/S Sullivan's description of the strategic
nature of the TEC as demonstrated by the dialogue that had
occurred over lunch at the November meeting.  Such dialogue
could be particularly useful given that France would host
EU summits with a number of key developing economies during
its presidency, including China and India. 

¶10. (SBU) Masset expanded on the French EU presidency
priorities of climate change and energy.  The GOF would
look to move forward with Phase II of the Emissions Trading
System, the framework directive on renewables, and a
directive for carbon capture and storage.  To reach 2020
reduction goals, half of the gains would come through the
functioning of the ETS, the other half from sectors not
covered by the trading system.  It would take strong action
in both areas to achieve EU goals. 

¶11. (SBU) On energy security, France would "put more
emphasis" on dialogue with the Central Asia/Caspian region
on diversification.  Masset was keen on A/S Sullivan's
views on the region, and Sullivan highlighted elements of
his latest trip to Turkey, Azerbaijan, and Turkmenistan.
Masset and Sullivan also touched on eventual membership of
India and China in the IEA (septel). 

PM Fillon in Kazakhstan
- -  - - - - - - - - - - 

¶12. (SBU) PM Fillon's diplomatic advisor Jacques Lapouge
briefed Sullivan on the Prime Minister's early February
visit to Kazakhstan (the first such visit in 15 years).
Calling the trip "pretty encouraging," Lapouge said Fillon
brought a message of support for development of westward
hydrocarbon supply routes.  Supply diversification would,
in fact, be a theme of the French EU presidency.  Lapouge
said Nazarbayev talked to Fillon about shipping product
across the Caspian, as well as a possible pipeline skirting
the southern shore of the Caspian.  He expressed continued
interest in a pipeline to Iran. 

¶13. (SBU) On other issues, Lapouge responded positively to
A/S Sullivan's briefing on TEC (though an advisor had heard
disappointment at EU technical levels over a perceived lack
of progress on EU issues at the first TEC).  On G8, the
former Sous-Sherpa questioned whether there was sufficient
follow-through in meeting commitments, notably on ODA.  The
body's "credibility is at stake," Lapouge thought.  On IPR,
the Heilegendamm Process must aim high and not be pulled
down to the lowest common denominator.  Lapouge indicated
the French were interested in keeping alive their proposal
for a FATF-like body for IPR in G8 discussions. 

Embassy Action Request
- - - - - - - - - - - 

¶14. (SBU) French views on energy supply diversification
opportunities in the Caspian Basin are evolving.  With the
GOF ready to engage more actively on energy diplomacy in
the region during its EU presidency, this is an auspicious
time to contribute to French thinking.  Post encourages the
visit of an appropriate Department, or inter-agency,
delegation to Paris in the coming months for in-depth
discussions with French counterparts on these issues. 

¶15. (U) A/S Sullivan has cleared this cable. 

ROSENBLATT

In the next post we shall look at cables from Brussels. █

Summary: How Microsoft and Bill Gates are seen by US diplomats who try to shame Kazakhstan into accepting laws that would harm the population

THE FOLLOWING triplet of Cablegate cables shows what we already knew — that in a cumulative transmission we can learn about US pressure for Kazakhstan to change its laws until they better align with US laws (think DMCA). The same shame game is being used to pressure just about any country to become more of a colony and Microsoft does its role through a company called Samgau, with Bill Gates getting personally involved despite having claimed that he moved on.

Kazakhstan Kazakhstan was going to move to ODF (which has no patent-imposed limitations) after Microsoft had lobbied there.

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DE RUEHTA #0584/01 0790430
ZNR UUUUU ZZH
R 190430Z MAR 08
FM AMEMBASSY ASTANA
TO SECSTATE WASHDC 2069

UNCLAS ASTANA 000584 

SIPDIS 

SENSITIVE
SIPDIS 

STATE FOR SCA/CEN (O'MARA) and EB/TPP/IBE (JBOGER)
STATE PASS USTR FOR JCHOE-GROVES
COMMERCE FOR ITA/MAC/OIPR (CPETERS) 

E.O. 12958: N/A
TAGS:  ETRD [Foreign Trade], KIPR [Intellectual Property Rights],
ECON [Economic Conditions], KZ [Kazakhstan]
SUBJECT:  KAZAKHSTAN: SPECIAL 301 

REF:  (A) STATE 09475 (B) 06 ASTANA 009 (C) 07 ASTANA 0454 

-------
SUMMARY
------- 

¶1. (SBU) Over the past year, the Government of Kazakhstan (GOK) has
continued to demonstrate a commitment to the development and
modernization of its IPR protection regime. Despite an increase in
the domestic production of pirated CD's and DVD's in Kazakhstan's
two largest cities, the GOK, and more specifically the IPR Committee
of the Ministry of Justice, continues to move forward in meeting
international standards and addressing the concerns of the
international community for the enhanced protection of IPR on the
legislative, judicial, and enforcement fronts.  Facing a continuing
challenge to stem the flow of pirated goods from Russia and China,
the GOK has also proposed legislation to further empower customs
officials to seize counterfeit materials before they enter the
country.  Although criminal sentencing remains at low levels, and
the lack of a public perception of the seriousness of IPR violations
is problematic, ongoing educational programs and proposed
legislative changes set to come to parliament for ratification in
late spring 2008 are expected to significantly improve the IPR
environment.  Therefore, post recommends continuing Kazakhstan's
exclusion from the Special 301 Watch List.  End Summary. 

--------------------------------------------- ----
ENFORCEMENT INCREASES, BUT CRIMINAL SENTENCES LAG
--------------------------------------------- ---- 

¶2.  (SBU) IPR enforcement efforts continue to increase, and the
numbers of convictions for administrative and criminal offenses grew
in the last year.  According to combined 2007 statistics released by
the Ministry of Justice IPR Committee, and the Procurator General, 

 -- 1971 IPR-related raids were conducted.  As a result of these
raids, 1418 entities (organizations and individuals) were charged
with administrative penalties;
-- 2670 administrative cases were initiated;
-- 20,250,755 KZT ($168,056) was collected in administrative fines
(compared to 14,385,725 KZT, or $116,013 in 2006);
-- 229,979 counterfeit copies valued at 132,369,884 KZT ($1,098,505)
with unlicensed or illegal trademarks were confiscated (compared to
121 million KZT, or $975,806, in 2006); and
-- 658 criminal cases were initiated (compared to 268 in 2006). 

¶3.  (SBU) Of the 658 criminal cases initiated in 2007, 447 were sent
to courts.  Of these, 108 people were convicted under Part 1 of
Article 184 of the Criminal Code, one person was convicted under
Part 2, and 54 under Part 3.  (NOTE: Parts 1-3 of Article 184
represent, in order, increasing categories of severity in both the
level of the offense and severity of punishment, based on amount of
damage, scale of the offense, repetition of the violation, etc.  End
note.)  Penalties for those convicted of violations of Article 184
vary. They include fines ranging from 100 to 700 times the Monthly
Calculation Unit (one Monthly Calculation Unit is currently set to
1,168 tenge, or $9.60), the confiscation of 5 to 10 months' wages,
community service of 100 to 240 hours, or imprisonment from 2 to 5
years and the possible confiscation of property. 

¶4.  (SBU) Despite the relatively high number of criminal
convictions, no data has been made available regarding sentencing.
According to an official at the General Prosecutor's Office, this
most likely indicates that no individuals have been incarcerated,
and that the criminal sentences were either reduced to
administrative penalties, or suspended. (Comment:  The lack of jail
sentences remains of concern, indicating a continued perception
within the courts that copyright infringement alone, in the absence
of other criminal violations, does not merit incarceration. End
Comment.) 

----------------------------
NEW AND CONTINUED CHALLENGES
---------------------------- 

¶5.  (SBU) Outside of Kazakhstan's two largest cities (Almaty and
Astana), the vast majority of pirated media available originates in
Russia and China.  Russia -- with its many railway links to northern
Kazakhstan -- presents a particular challenge for Kazakhstani
authorities. As noted by the IIPA, customs officials continue to
lack the ex officio authority required to seize counterfeit
materials at the borders, when they are discovered. 

¶6.  (SBU) According to private industry representatives, 2007 has
witnessed an increase in the availability and sales, particularly in
Almaty and Astana, of domestically produced counterfeit CD's and
DVD's. This is largely due to the increasing availability of
pirating technology and the willingness of small-time media pirates
to engage the police in the "cat and mouse" game of street sales. 

Industry representatives assert that local police charged with
enforcing the prohibition of street sales are often unmotivated and
indifferent to the presence of such vendors, if not directly paid to
ignore them. 

¶7.  (SBU) The pursuit of rulings against IPR violators in civil
courts remains problematic because of legal norms carried over from
Soviet times.  According to the Prosecutor General's office and
private industry representatives, this is particularly so when
licensed copyright holders attempt to sue vendors of pirated
material for damages.  Under current IPR legislation, plaintiffs are
subjected to an unnecessarily heavy burden of proof, whereby they
are required to demonstrate a direct contractual link to the artist
or author whose pirated material is being illegally sold. (Note:  An
example would be a direct contract between a performer and record
store. End note.) If a licensed copyright holder or distributor can
not substantiate this direct linkage, they can not, in the eyes of
the court, demonstrate financial damages caused by illegal sales.
In addition, civil claims must also be brought in a court in the
region where the infringement is alleged to have occurred.  Regional
courts tend to lack regular exposure to -- and knowledge of -- this
relatively new and complex area of law, which has historically
inhibited the successful prosecution of violations. 

------------------------
OPTICAL MEDIA PROTECTION
------------------------ 

¶8.  (SBU) Two plants in Kazakhstan produce optical discs.  One
specializes in films and music, the other in software.  Both plants
have source identification codes (SID's) issued by the IFPI
(International Federation of the Phonographic Industry) and, as IIPA
notes, provide samples of their products for use as forensic
evidence. 

----------------------------
SOFTWARE INDUSTRY ENGAGEMENT
---------------------------- 

¶9.  (SBU) According to local Microsoft representatives, all newly
procured government computers have licensed software.  While some
older government computers may still be loaded with unlicensed
software, overall the Microsoft representative expressed strong
satisfaction with the government procurement situation.  Most
recently, Microsoft founder Bill Gates and the CEO of Samgau
(Kazakhstan's state-owned technology and innovation holding company)
signed an MOU on plans for future cooperation in the development of
educational technologies, as well as collaboration in IPR protection
and enforcement.  Microsoft is recognized for its successful
engagement in defense of IPR in Russia; its enhanced partnership
with the GOK is expected to improve IPR protective capacity in
Kazakhstan, with a particularly heavy focus on the prevention of
internet-related piracy. 

¶10.  (SBU) Despite the positive relations developing between
Microsoft and the GOK, Microsoft representatives recommend that
Kazakhstan be placed on the Special 301 Watch List. Recent findings
from Microsoft-funded research indicated that levels of privately
used pirated (or unlicensed) software remains extremely high.
According to their data, 92.9 percent of privately owned PC's in
Kazakhstan utilize of illegally obtained software. (Note: Their data
also indicated that the overwhelming majority of respondents
believed piracy rates would decrease if the prices of commercially
available software were to be lowered.  This opinion was also shared
by the General Prosecutor's Office. End note.) 

--------------------------------------------- -----
SCHEDULED AND ENACTED IPR LEGISLATIVE IMPROVEMENTS
--------------------------------------------- ----- 

¶11.  (SBU) During the reporting period, Kazakhstan continued to
pursue legislative changes that strengthen the government's hand in
protecting intellectual property rights.  The legal basis for
preventing and prosecuting IPR violations remains the "Law on
Amending Legislative Acts of the Republic of Kazakhstan on the
Issues of Intellectual Property", which entered into force on
November 26, 2005. This law amended the country's Criminal Code,
Criminal Procedure Code, Civil Code, Administrative Code, and the
Copyright Law as they pertain to the protection of intellectual
property (ref B).  Amendments to the Patent Law were ratified in
2007, significantly simplifying the patent system (as compared with
the old Soviet two-stage system) and bringing it into closer
conformity with international standards. 

¶12.  (SBU) Proposed amendments to the Copyright Law, Law on Trade
Marks, Law on Licensing, and Customs Code are currently being
evaluated by independent experts.  Proposed amendments to the
Copyright Law have been praised by private industry representatives
in as much as they directly address the weaknesses hindering
copyright enforcement in civil courts (see para 7 above).   New
amendments will relieve IPR holders of the heavy burden of proof,
and will facilitate effective law enforcement. In accordance with
WIPO requirements, the draft amendments also detail the use of
technical means for the protection of copyrights, specifically
prohibiting the removal of any types of technical or coded copyright
protection technologies. The IPR Committee is confident that the
proposed amendments to the Licensing Law stipulating mandatory
licensing for the commercial reproduction of any copyright protected
audio and visual recordings meet WTO requirements.  These amendments
are scheduled to come before Parliament in late May-early June
2008. 

¶13.  (SBU) Amendments to Customs Legislation granting ex officio
authority to customs agents are scheduled to come before Parliament 

in November 2008.  These amendments will grant customs agents the
authority to more readily seize counterfeit goods at the border,
which has long been recommended by the International Intellectual
Property Alliance (IIPA.) 

-------------------------------------
IIPA REPORTING AND CONCERNS ADDRESSED
------------------------------------- 

¶14.  (SBU) Over the last several years, IIPA reporting has
consistently reiterated several concerns regarding the development
and efficacy of IPR protective measures in Kazakhstan.  They have
also, however, continued to report several significant inaccuracies. 

¶15.  (SBU) The IIPA report states that "only the Ministry of Justice
(Copyright Office) and not the police can bring charges for
[administrative violations]" and recommends "that the existing
police authority be broadened to include administrative violations
as well."  Article 620 of the Administrative Violations Code
specifically provides such powers to the police. 

¶16.  (SBU) The IIPA's assertion that the 2004 statutes only provide
for a 50-year term of copyright protection is inaccurate, as the
November 2005 amendments specifically provide for the extension of
copyright protection to 70 years, in keeping with international
standards. 

¶17.  (SBU) The IIPA repeats another error from its 2006 and 2007
reports, overstating the minimum damages threshold for criminal
prosecution.  IIPA misinterprets what it calls "the key amendment"
in the November 2005 legislation. i.e., the change to Article 184 of
the Criminal Code, which repealed the undefined "huge damage"
threshold for criminal cases and replaced it with a threshold of 100
Monthly Calculation Units (MCU's).  The IIPA incorrectly reported
that one MCU is the equivalent of 36,495 tenge ($304), when in fact
it is currently set to just 1,168 tenge ($9.60).  Thus, the IIPA
overstates the all-important minimum damages threshold for criminal
prosecution by a factor of more than thirty. 

¶18. (SBU) The IIPA cites Kazakhstan's need to establish a legal
basis for the confiscation and destruction of equipment used in the
criminal manufacture of pirated goods.  The IPR Committee continues
to assure post that a combination of statutes in the Criminal Code
and the Criminal Procedure Code constitutes an adequate provision
for the confiscation of such equipment. Moreover, the IPR Committee
has stated that such confiscations are routinely carried out and do
not require a court order.  A court order is necessary only to
destroy such equipment -- a procedural requirement which the IPR
Committee defends as necessary to preserve potentially material
evidence. It should also be noted that the abovementioned proposed
amendments to the Copyright Law will require judges, in the event of
a conviction, to make a ruling regarding the named piracy equipment.
This provision is expected to increase occasions in which
confiscated equipment will be destroyed. 

-------
COMMENT
------- 

¶19.  (SBU) Kazakhstan's continued progress on and commitment to IPR
protection merits its continued exclusion from the Special 301 Watch
List.  The efforts of the IPR Committee within the Ministry of
Justice are expected to bear fruit in 2008 in the ratification of
amendments to numerous IPR-related laws.  Post takes growing private
sector participation in the enforcement of IPR as a very positive
indicator of progress.  At this stage, acknowledging Kazakhstan's
significant achievements while stressing to the GOK that they must
continue to enhance their IPR efforts is a better approach to
facilitate further U.S.-Kazakhstani IPR cooperation and achieve
results on the grounds than returning Kazakhstan to Watch List
status.  End Comment. 

ORDWAY

Another earlier transmission:

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DE RUEHTA #0555/01 0790307
ZNR UUUUU ZZH
R 190307Z MAR 08
FM AMEMBASSY ASTANA
TO SECSTATE WASHDC 2042

UNCLAS ASTANA 000555 

SIPDIS 

SENSITIVE
SIPDIS 

STATE FOR SCA/CEN (O'MARA) and EB/TPP/IBE (JBOGER)
STATE PASS USTR FOR JCHOE-GROVES
COMMERCE FOR ITA/MAC/OIPR (CPETERS) 

E.O. 12958: N/A
TAGS:  ETRD [Foreign Trade], KIPR [Intellectual Property Rights],
ECON [Economic Conditions], KZ [Kazakhstan]
SUBJECT:  KAZAKHSTAN: SPECIAL 301 

REF:  (A) STATE 09475 (B) 06 ASTANA 009 (C) 07 ASTANA 0454 

-------
SUMMARY
------- 

¶1. (SBU) Over the past year, the Government of Kazakhstan (GOK) has
continued to demonstrate a commitment to the development and
modernization of its IPR protection regime. Despite an increase in
the domestic production of pirated CD's and DVD's in Kazakhstan's
two largest cities, the GOK, and more specifically the IPR Committee
of the Ministry of Justice, continues to move forward in meeting
international standards and addressing the concerns of the
international community for the enhanced protection of IPR on the
legislative, judicial, and enforcement fronts.  Facing a continuing
challenge to stem the flow of pirated goods from Russia and China,
the GOK has also proposed legislation to further empower customs
officials to seize counterfeit materials before they enter the
country.  Although criminal sentencing remains at low levels, and
the lack of a public perception of the seriousness of IPR violations
is problematic, ongoing educational programs and proposed
legislative changes set to come to parliament for ratification in
late spring 2008 are expected to significantly improve the IPR
environment.  Therefore, post recommends continuing Kazakhstan's
exclusion from the Special 301 Watch List.  End Summary. 

--------------------------------------------- ----
ENFORCEMENT INCREASES, BUT CRIMINAL SENTENCES LAG
--------------------------------------------- ---- 

¶2.  (SBU) IPR enforcement efforts continue to increase, and the
numbers of convictions for administrative and criminal offenses grew
in the last year.  According to combined 2007 statistics released by
the Ministry of Justice IPR Committee, and the Procurator General, 

 -- 1971 IPR-related raids were conducted.  As a result of these
raids, 1418 entities (organizations and individuals) were charged
with administrative penalties;
-- 2670 administrative cases were initiated;
-- 20,250,755 KZT ($168,056) was collected in administrative fines
(compared to 14,385,725 KZT, or $116,013 in 2006);
-- 229,979 counterfeit copies valued at 132,369,884 KZT ($1,098,505)
with unlicensed or illegal trademarks were confiscated (compared to
121 million KZT, or $975,806, in 2006); and
-- 658 criminal cases were initiated (compared to 268 in 2006). 

¶3.  (SBU) Of the 658 criminal cases initiated in 2007, 447 were sent
to courts.  Of these, 108 people were convicted under Part 1 of
Article 184 of the Criminal Code, one person was convicted under
Part 2, and 54 under Part 3.  (NOTE: Parts 1-3 of Article 184
represent, in order, increasing categories of severity in both the
level of the offense and severity of punishment, based on amount of
damage, scale of the offense, repetition of the violation, etc.  End
note.)  Penalties for those convicted of violations of Article 184
vary. They include fines ranging from 100 to 700 times the Monthly
Calculation Unit (one Monthly Calculation Unit is currently set to
1,168 tenge, or $9.60), the confiscation of 5 to 10 months' wages,
community service of 100 to 240 hours, or imprisonment from 2 to 5
years and the possible confiscation of property. 

¶4.  (SBU) Despite the relatively high number of criminal
convictions, no data has been made available regarding sentencing.
According to an official at the General Prosecutor's Office, this
most likely indicates that no individuals have been incarcerated,
and that the criminal sentences were either reduced to
administrative penalties, or suspended. (Comment:  The lack of jail
sentences remains of concern, indicating a continued perception
within the courts that copyright infringement alone, in the absence
of other criminal violations, does not merit incarceration. End
Comment.) 

----------------------------
NEW AND CONTINUED CHALLENGES
---------------------------- 

¶5.  (SBU) Outside of Kazakhstan's two largest cities (Almaty and
Astana), the vast majority of pirated media available originates in
Russia and China.  Russia -- with its many railway links to northern
Kazakhstan -- presents a particular challenge for Kazakhstani
authorities. As noted by the IIPA, customs officials continue to
lack the ex officio authority required to seize counterfeit
materials at the borders, when they are discovered. 

¶6.  (SBU) According to private industry representatives, 2007 has
witnessed an increase in the availability and sales, particularly in
Almaty and Astana, of domestically produced counterfeit CD's and
DVD's. This is largely due to the increasing availability of
pirating technology and the willingness of small-time media pirates
to engage the police in the "cat and mouse" game of street sales. 

Industry representatives assert that local police charged with
enforcing the prohibition of street sales are often unmotivated and
indifferent to the presence of such vendors, if not directly paid to
ignore them. 

¶7.  (SBU) The pursuit of rulings against IPR violators in civil
courts remains problematic because of legal norms carried over from
Soviet times.  According to the Prosecutor General's office and
private industry representatives, this is particularly so when
licensed copyright holders attempt to sue vendors of pirated
material for damages.  Under current IPR legislation, plaintiffs are
subjected to an unnecessarily heavy burden of proof, whereby they
are required to demonstrate a direct contractual link to the artist
or author whose pirated material is being illegally sold. (Note:  An
example would be a direct contract between a performer and record
store. End note.) If a licensed copyright holder or distributor can
not substantiate this direct linkage, they can not, in the eyes of
the court, demonstrate financial damages caused by illegal sales.
In addition, civil claims must also be brought in a court in the
region where the infringement is alleged to have occurred.  Regional
courts tend to lack regular exposure to -- and knowledge of -- this
relatively new and complex area of law, which has historically
inhibited the successful prosecution of violations. 

------------------------
OPTICAL MEDIA PROTECTION
------------------------ 

¶8.  (SBU) Two plants in Kazakhstan produce optical discs.  One
specializes in films and music, the other in software.  Both plants
have source identification codes (SID's) issued by the IFPI
(International Federation of the Phonographic Industry) and, as IIPA
notes, provide samples of their products for use as forensic
evidence. 

----------------------------
SOFTWARE INDUSTRY ENGAGEMENT
---------------------------- 

¶9.  (SBU) According to local Microsoft representatives, all newly
procured government computers have licensed software.  While some
older government computers may still be loaded with unlicensed
software, overall the Microsoft representative expressed strong
satisfaction with the government procurement situation.  Most
recently, Microsoft founder Bill Gates and the CEO of Samgau
(Kazakhstan's state-owned technology and innovation holding company)
signed an MOU on plans for future cooperation in the development of
educational technologies, as well as collaboration in IPR protection
and enforcement.  Microsoft is recognized for its successful
engagement in defense of IPR in Russia; its enhanced partnership
with the GOK is expected to improve IPR protective capacity in
Kazakhstan, with a particularly heavy focus on the prevention of
internet-related piracy. 

¶10.  (SBU) Despite the positive relations developing between
Microsoft and the GOK, Microsoft representatives recommend that
Kazakhstan be placed on the Special 301 Watch List. Recent findings
from Microsoft-funded research indicated that levels of privately
used pirated (or unlicensed) software remains extremely high.
According to their data, 92.9 percent of privately owned PC's in
Kazakhstan utilize of illegally obtained software. (Note: Their data
also indicated that the overwhelming majority of respondents
believed piracy rates would decrease if the prices of commercially
available software were to be lowered.  This opinion was also shared
by the General Prosecutor's Office. End note.) 

--------------------------------------------- -----
SCHEDULED AND ENACTED IPR LEGISLATIVE IMPROVEMENTS
--------------------------------------------- ----- 

¶11.  (SBU) During the reporting period, Kazakhstan continued to
pursue legislative changes that strengthen the government's hand in
protecting intellectual property rights.  The legal basis for
preventing and prosecuting IPR violations remains the "Law on
Amending Legislative Acts of the Republic of Kazakhstan on the
Issues of Intellectual Property", which entered into force on
November 26, 2005. This law amended the country's Criminal Code,
Criminal Procedure Code, Civil Code, Administrative Code, and the
Copyright Law as they pertain to the protection of intellectual
property (ref B).  Amendments to the Patent Law were ratified in
2007, significantly simplifying the patent system (as compared with
the old Soviet two-stage system) and bringing it into closer
conformity with international standards. 

¶12.  (SBU) Proposed amendments to the Copyright Law, Law on Trade
Marks, Law on Licensing, and Customs Code are currently being
evaluated by independent experts.  Proposed amendments to the
Copyright Law have been praised by private industry representatives
in as much as they directly address the weaknesses hindering
copyright enforcement in civil courts (see para 7 above).   New
amendments will relieve IPR holders of the heavy burden of proof,
and will facilitate effective law enforcement. In accordance with
WIPO requirements, the draft amendments also detail the use of
technical means for the protection of copyrights, specifically
prohibiting the removal of any types of technical or coded copyright
protection technologies. The IPR Committee is confident that the
proposed amendments to the Licensing Law stipulating mandatory
licensing for the commercial reproduction of any copyright protected
audio and visual recordings meet WTO requirements.  These amendments
are scheduled to come before Parliament in late May-early June
2008. 

¶13.  (SBU) Amendments to Customs Legislation granting ex officio
authority to customs agents are scheduled to come before Parliament 

in November 2008.  These amendments will grant customs agents the
authority to more readily seize counterfeit goods at the border,
which has long been recommended by the International Intellectual
Property Alliance (IIPA.) 

-------------------------------------
IIPA REPORTING AND CONCERNS ADDRESSED
------------------------------------- 

¶14.  (SBU) Over the last several years, IIPA reporting has
consistently reiterated several concerns regarding the development
and efficacy of IPR protective measures in Kazakhstan.  They have
also, however, continued to report several significant inaccuracies. 

¶15.  (SBU) The IIPA report states that "only the Ministry of Justice
(Copyright Office) and not the police can bring charges for
[administrative violations]" and recommends "that the existing
police authority be broadened to include administrative violations
as well."  Article 620 of the Administrative Violations Code
specifically provides such powers to the police. 

¶16.  (SBU) The IIPA's assertion that the 2004 statutes only provide
for a 50-year term of copyright protection is inaccurate, as the
November 2005 amendments specifically provide for the extension of
copyright protection to 70 years, in keeping with international
standards. 

¶17.  (SBU) The IIPA repeats another error from its 2006 and 2007
reports, overstating the minimum damages threshold for criminal
prosecution.  IIPA misinterprets what it calls "the key amendment"
in the November 2005 legislation. i.e., the change to Article 184 of
the Criminal Code, which repealed the undefined "huge damage"
threshold for criminal cases and replaced it with a threshold of 100
Monthly Calculation Units (MCU's).  The IIPA incorrectly reported
that one MCU is the equivalent of 36,495 tenge ($304), when in fact
it is currently set to just 1,168 tenge ($9.60).  Thus, the IIPA
overstates the all-important minimum damages threshold for criminal
prosecution by a factor of more than thirty. 

¶18. (SBU) The IIPA cites Kazakhstan's need to establish a legal
basis for the confiscation and destruction of equipment used in the
criminal manufacture of pirated goods.  The IPR Committee continues
to assure post that a combination of statutes in the Criminal Code
and the Criminal Procedure Code constitutes an adequate provision
for the confiscation of such equipment. Moreover, the IPR Committee
has stated that such confiscations are routinely carried out and do
not require a court order.  A court order is necessary only to
destroy such equipment -- a procedural requirement which the IPR
Committee defends as necessary to preserve potentially material
evidence. It should also be noted that the abovementioned proposed
amendments to the Copyright Law will require judges, in the event of
a conviction, to make a ruling regarding the named piracy equipment.
This provision is expected to increase occasions in which
confiscated equipment will be destroyed. 

-------
COMMENT
------- 

¶19.  (SBU) Kazakhstan's continued progress on and commitment to IPR
protection merits its continued exclusion from the Special 301 Watch
List.  The efforts of the IPR Committee within the Ministry of
Justice are expected to bear fruit in 2008 in the ratification of
amendments to numerous IPR-related laws.  Post takes growing private
sector participation in the enforcement of IPR as a very positive
indicator of progress.  At this stage, acknowledging Kazakhstan's
significant achievements while stressing to the GOK that they must
continue to enhance their IPR efforts is a better approach to
facilitate further U.S.-Kazakhstani IPR cooperation and achieve
results on the grounds than returning Kazakhstan to Watch List
status.  End Comment. 

ORDWAY

And the final transmission from a couple of days earlier was as follows:

VZCZCXYZ0008
RR RUEHWEB

DE RUEHTA #0525/01 0771133
ZNR UUUUU ZZH
R 171133Z MAR 08 ZDK
FM AMEMBASSY ASTANA
TO SECSTATE WASHDC 2019

UNCLAS ASTANA 000525 

SIPDIS 

SENSITIVE
SIPDIS 

STATE FOR SCA/CEN (O'MARA) and EB/TPP/IBE (JBOGER)
STATE PASS USTR FOR JCHOE-GROVES
COMMERCE FOR ITA/MAC/OIPR (CPETERS) 

E.O. 12958: N/A
TAGS:  ETRD [Foreign Trade], KIPR [Intellectual Property Rights],
ECON [Economic Conditions], KZ [Kazakhstan]
SUBJECT:  KAZAKHSTAN: SPECIAL 301 

REF:  (A) STATE 09475 (B) 06 ASTANA 009 (C) 07 ASTANA 0454 

-------
SUMMARY
------- 

¶1. (SBU) Over the past year, the Government of Kazakhstan (GOK) has
continued to demonstrate a commitment to the development and
modernization of its IPR protection regime. Despite an increase in
the domestic production of pirated CD's and DVD's in Kazakhstan's
two largest cities, the GOK, and more specifically the IPR Committee
of the Ministry of Justice, continues to move forward in meeting
international standards and addressing the concerns of the
international community for the enhanced protection of IPR on the
legislative, judicial, and enforcement fronts.  Facing a continuing
challenge to stem the flow of pirated goods from Russia and China,
the GOK has also proposed legislation to further empower customs
officials to seize counterfeit materials before they enter the
country.  Although criminal sentencing remains at low levels, and
the lack of a public perception of the seriousness of IPR violations
is problematic, ongoing educational programs and proposed
legislative changes set to come to parliament for ratification in
late spring 2008 are expected to significantly improve the IPR
environment.  Therefore, post recommends continuing Kazakhstan's
exclusion from the Special 301 Watch List.  End Summary. 

--------------------------------------------- ----
ENFORCEMENT INCREASES, BUT CRIMINAL SENTENCES LAG
--------------------------------------------- ---- 

¶2.  (SBU) IPR enforcement efforts continue to increase, and the
numbers of convictions for administrative and criminal offenses grew
in the last year.  According to combined 2007 statistics released by
the Ministry of Justice IPR Committee, and the Procurator General, 

 -- 1971 IPR-related raids were conducted.  As a result of these
raids, 1418 entities (organizations and individuals) were charged
with administrative penalties;
-- 2670 administrative cases were initiated;
-- 20,250,755 KZT ($168,056) was collected in administrative fines
(compared to 14,385,725 KZT, or $116,013 in 2006);
-- 229,979 counterfeit copies valued at 132,369,884 KZT ($1,098,505)
with unlicensed or illegal trademarks were confiscated (compared to
121 million KZT, or $975,806, in 2006); and
-- 658 criminal cases were initiated (compared to 268 in 2006). 

¶3.  (SBU) Of the 658 criminal cases initiated in 2007, 447 were sent
to courts.  Of these, 108 people were convicted under Part 1 of
Article 184 of the Criminal Code, one person was convicted under
Part 2, and 54 under Part 3.  (NOTE: Parts 1-3 of Article 184
represent, in order, increasing categories of severity in both the
level of the offense and severity of punishment, based on amount of
damage, scale of the offense, repetition of the violation, etc.  End
note.)  Penalties for those convicted of violations of Article 184
vary. They include fines ranging from 100 to 700 times the Monthly
Calculation Unit (one Monthly Calculation Unit is currently set to
1,168 tenge, or $9.60), the confiscation of 5 to 10 months' wages,
community service of 100 to 240 hours, or imprisonment from 2 to 5
years and the possible confiscation of property. 

¶4.  (SBU) Despite the relatively high number of criminal
convictions, no data has been made available regarding sentencing.
According to an official at the General Prosecutor's Office, this
most likely indicates that no individuals have been incarcerated,
and that the criminal sentences were either reduced to
administrative penalties, or suspended. (Comment:  The lack of jail
sentences remains of concern, indicating a continued perception
within the courts that copyright infringement alone, in the absence
of other criminal violations, does not merit incarceration. End
Comment.) 

----------------------------
NEW AND CONTINUED CHALLENGES
---------------------------- 

¶5.  (SBU) Outside of Kazakhstan's two largest cities (Almaty and
Astana), the vast majority of pirated media available originates in
Russia and China.  Russia -- with its many railway links to northern
Kazakhstan -- presents a particular challenge for Kazakhstani
authorities. As noted by the IIPA, customs officials continue to
lack the ex officio authority required to seize counterfeit
materials at the borders, when they are discovered. 

¶6.  (SBU) According to private industry representatives, 2007 has
witnessed an increase in the availability and sales, particularly in
Almaty and Astana, of domestically produced counterfeit CD's and
DVD's. This is largely due to the increasing availability of
pirating technology and the willingness of small-time media pirates
to engage the police in the "cat and mouse" game of street sales.
Industry representatives assert that local police charged with
enforcing the prohibition of street sales are often unmotivated and
indifferent to the presence of such vendors, if not directly paid to
ignore them. 

¶7.  (SBU) The pursuit of rulings against IPR violators in civil
courts remains problematic because of legal norms carried over from
Soviet times.  According to the Prosecutor General's office and
private industry representatives, this is particularly so when
licensed copyright holders attempt to sue vendors of pirated
material for damages.  Under current IPR legislation, plaintiffs are
subjected to an unnecessarily heavy burden of proof, whereby they
are required to demonstrate a direct contractual link to the artist
or author whose pirated material is being illegally sold. (Note:  An
example would be a direct contract between a performer and record
store. End note.) If a licensed copyright holder or distributor can
not substantiate this direct linkage, they can not, in the eyes of
the court, demonstrate financial damages caused by illegal sales.
In addition, civil claims must also be brought in a court in the
region where the infringement is alleged to have occurred.  Regional
courts tend to lack regular exposure to -- and knowledge of -- this
relatively new and complex area of law, which has historically
inhibited the successful prosecution of violations. 

------------------------
OPTICAL MEDIA PROTECTION
------------------------ 

¶8.  (SBU) Two plants in Kazakhstan produce optical discs.  One
specializes in films and music, the other in software.  Both plants
have source identification codes (SID's) issued by the IFPI
(International Federation of the Phonographic Industry) and, as IIPA
notes, provide samples of their products for use as forensic
evidence. 

----------------------------
SOFTWARE INDUSTRY ENGAGEMENT
---------------------------- 

¶9.  (SBU) According to local Microsoft representatives, all newly
procured government computers have licensed software.  While some
older government computers may still be loaded with unlicensed
software, overall the Microsoft representative expressed strong
satisfaction with the government procurement situation.  Most
recently, Microsoft founder Bill Gates and the CEO of Samgau
(Kazakhstan's state-owned technology and innovation holding company)
signed an MOU on plans for future cooperation in the development of
educational technologies, as well as collaboration in IPR protection
and enforcement.  Microsoft is recognized for its successful
engagement in defense of IPR in Russia; its enhanced partnership
with the GOK is expected to improve IPR protective capacity in
Kazakhstan, with a particularly heavy focus on the prevention of
internet-related piracy. 

¶10.  (SBU) Despite the positive relations developing between
Microsoft and the GOK, Microsoft representatives recommend that
Kazakhstan be placed on the Special 301 Watch List. Recent findings
from Microsoft-funded research indicated that levels of privately
used pirated (or unlicensed) software remains extremely high.
According to their data, 92.9 percent of privately owned PC's in
Kazakhstan utilize of illegally obtained software. (Note: Their data
also indicated that the overwhelming majority of respondents
believed piracy rates would decrease if the prices of commercially
available software were to be lowered.  This opinion was also shared
by the General Prosecutor's Office. End note.) 

--------------------------------------------- -----
SCHEDULED AND ENACTED IPR LEGISLATIVE IMPROVEMENTS
--------------------------------------------- ----- 

¶11.  (SBU) During the reporting period, Kazakhstan continued to
pursue legislative changes that strengthen the government's hand in
protecting intellectual property rights.  The legal basis for
preventing and prosecuting IPR violations remains the "Law on
Amending Legislative Acts of the Republic of Kazakhstan on the
Issues of Intellectual Property", which entered into force on
November 26, 2005. This law amended the country's Criminal Code,
Criminal Procedure Code, Civil Code, Administrative Code, and the
Copyright Law as they pertain to the protection of intellectual
property (ref B).  Amendments to the Patent Law were ratified in
2007, significantly simplifying the patent system (as compared with
the old Soviet two-stage system) and bringing it into closer
conformity with international standards. 

¶12.  (SBU) Proposed amendments to the Copyright Law, Law on Trade
Marks, Law on Licensing, and Customs Code are currently being
evaluated by independent experts.  Proposed amendments to the
Copyright Law have been praised by private industry representatives
in as much as they directly address the weaknesses hindering
copyright enforcement in civil courts (see para 7 above).   New
amendments will relieve IPR holders of the heavy burden of proof,
and will facilitate effective law enforcement. In accordance with
WIPO requirements, the draft amendments also detail the use of
technical means for the protection of copyrights, specifically
prohibiting the removal of any types of technical or coded copyright
protection technologies. The IPR Committee is confident that the
proposed amendments to the Licensing Law stipulating mandatory
licensing for the commercial reproduction of any copyright protected
audio and visual recordings meet WTO requirements.  These amendments
are scheduled to come before Parliament in late May-early June
2008. 

¶13.  (SBU) Amendments to Customs Legislation granting ex officio
authority to customs agents are scheduled to come before Parliament
in November 2008.  These amendments will grant customs agents the
authority to more readily seize counterfeit goods at the border,
which has long been recommended by the International Intellectual
Property Alliance (IIPA.) 

-------------------------------------
IIPA REPORTING AND CONCERNS ADDRESSED
------------------------------------- 

¶14.  (SBU) Over the last several years, IIPA reporting has
consistently reiterated several concerns regarding the development
and efficacy of IPR protective measures in Kazakhstan.  They have
also, however, continued to report several significant inaccuracies. 

¶15.  (SBU) The IIPA report states that "only the Ministry of Justice
(Copyright Office) and not the police can bring charges for
[administrative violations]" and recommends "that the existing
police authority be broadened to include administrative violations
as well."  Article 620 of the Administrative Violations Code
specifically provides such powers to the police. 

¶16.  (SBU) The IIPA's assertion that the 2004 statutes only provide
for a 50-year term of copyright protection is inaccurate, as the
November 2005 amendments specifically provide for the extension of
copyright protection to 70 years, in keeping with international
standards. 

¶17.  (SBU) The IIPA repeats another error from its 2006 and 2007
reports, overstating the minimum damages threshold for criminal
prosecution.  IIPA misinterprets what it calls "the key amendment"
in the November 2005 legislation. i.e., the change to Article 184 of
the Criminal Code, which repealed the undefined "huge damage"
threshold for criminal cases and replaced it with a threshold of 100
Monthly Calculation Units (MCU's).  The IIPA incorrectly reported
that one MCU is the equivalent of 36,495 tenge ($304), when in fact
it is currently set to just 1,168 tenge ($9.60).  Thus, the IIPA
overstates the all-important minimum damages threshold for criminal
prosecution by a factor of more than thirty. 

¶18. (SBU) The IIPA cites Kazakhstan's need to establish a legal
basis for the confiscation and destruction of equipment used in the
criminal manufacture of pirated goods.  The IPR Committee continues
to assure post that a combination of statutes in the Criminal Code
and the Criminal Procedure Code constitutes an adequate provision
for the confiscation of such equipment. Moreover, the IPR Committee
has stated that such confiscations are routinely carried out and do
not require a court order.  A court order is necessary only to
destroy such equipment -- a procedural requirement which the IPR
Committee defends as necessary to preserve potentially material
evidence. It should also be noted that the abovementioned proposed
amendments to the Copyright Law will require judges, in the event of
a conviction, to make a ruling regarding the named piracy equipment.
This provision is expected to increase occasions in which
confiscated equipment will be destroyed. 

-------
COMMENT
------- 

¶19.  (SBU) Kazakhstan's continued progress on and commitment to IPR
protection merits its continued exclusion from the Special 301 Watch
List.  The efforts of the IPR Committee within the Ministry of
Justice are expected to bear fruit in 2008 in the ratification of
amendments to numerous IPR-related laws.  Post takes growing private
sector participation in the enforcement of IPR as a very positive
indicator of progress.  At this stage, acknowledging Kazakhstan's
significant achievements while stressing to the GOK that they must
continue to enhance their IPR efforts is a better approach to
facilitate further U.S.-Kazakhstani IPR cooperation and achieve
results on the grounds than returning Kazakhstan to Watch List
status.  End Comment. 

ORDWAY

Many other countries receive the same treatment. It’s imperialistic. █

Summary: Yet more blatant promotion of Monsanto’s food monopolies, courtesy of Monsanto investors and publicists

TECHRIGHTS has written dozens of posts about Monsanto and about Gates’ lobbying for their monopoly on seeds (and food). For Gates, solving the world’s hunger needs to be a profitable enterprise and he wants to be part of the profit-making. Some even allege that by doing so Gates actually creates “food shortages”. To quote:

According to Reuters the Gates Foundation has a long history in agricultural development, spending over $2 billion for projects in developing countries including partnering with agricultural industry heavy weights Monsanto and Cargill.
The Seattle Times reports the Gates Foundation bought 500,000 shares of Monsanto stock between April and June 2010 to a total value of $27.6 million.

Do not be deceived by those big numbers of supposed “donation”. When one issues a “licence” to use a seed (not the same as giving a seed), this is not a donation. It’s seeding the market, both figuratively and literally. Using the “Bill Gates” brand (which Gates spends over a million dollar per day promoting), Monsanto is advancing a very malicious agenda and investigative journalists who actually do their work give voice to the other side in this debate:

Day said her organization welcomes the Gates Foundation interest in trying to help smallholder farmers in Africa. But she said the philanthropy’s approach, with its emphasis on science and technology, is really most favorable to the large agricultural corporations like Monsanto and Cargill.

Indeed. This is what all publications ought to be saying, but they don’t. They have been paralysed and put in a state of fear of criticising Gates. The PR industry that Gates has been using for the past decade has made one a borderline “k00k”for even suggesting that Gates is not a villain-turned-hero. █

Summary: An analogy is being used to exemplify the absurdity of patenting ideas for 20 years, coming from the same person who has urged for patents rethink for several years

Rick Falkvinge, a former Microsoft employee whom we mentioned here before on many occasions [1, 2], is a good activist. He moved away from his Microsoft roots and proceeded to making a Pirate Party. He is a reformist.

In interesting news, Masnick draws people’s attention to an interesting patents analogy:

Rick Falkvinge has posted a thought-provoking piece that analogizes the patent system to various forms of web caching and their impact on discussions. As he notes, in online discussion forums and blogs, if there’s a delay from when your comment is made to when it appears, the conversations tend to be slower and less involved. It gets really bad when all comments need to be moderated and that’s because you don’t get that immediate fulfillment. Honestly, one of the reasons why I think Twitter took off at the level it did was because it felt so realtime (and became more so over time).

Here is the original piece (from Sweden), stating: “Now, imagine a twenty-year web cache server. If you come up with a good idea, people won’t be able to improve on your ideas and take them to the next level for twenty years. Another twenty for a total of forty years before you could respond in turn. You suffer. They suffer. The exchange of ideas as a whole doesn’t just suffer, it crawls to a near-stop, its velocity measurable only by laser precision measurements.”

Is it reassuring to see people who depart from the sociopaths of Microsoft (currently extorting rivals with patents) and see the light. █

Summary: “Miguel and his team can expect to be spending much time in the company of lawyers,” says The Guardian

Xamarin trademarks are an issue we wrote about before. It is an issue so prominent (yet under-covered) that should be enough to deter potential investors. Well, it turns out that our analysis was right on point even though nobody else covered those points. Microsoft’s MVP de Icaza “set up Xamarin, a company with one purpose: to recreate the MonoTouch and MonoDroid products and create something called Xamarin Studio,” explains the Bill Gates-funded Guardian (giving publicity to Mono).

Quoing further: “This idea seems strange when you look at it. Often when an employee of Company A leaves and sets up Company B that produces identical products those that he built whilst working for Company A, Company A will sue Company B out of existence. It’s hard to see how Xamarin Studio can possibly have anything other than a very short life, unless of course Novell grants or sells the appropriate intellectual property over to Miguel’s new organisation. I, for one, would feel far more confident about recommending MonoTouch and MonoDroid if they were more upfront about this.

“I’ve repeatedly asked Xamarin and Novell to comment on this issue, to no avail.”
      –The Guardian“To me this comes down to whether it was deliberately killed or whether it just stopped being of interest to Novell. Obviously if it was deliberately killed, Miguel and his team can expect to be spending much time in the company of lawyers. If Novell is just not particularly interested, I’m sure they’d welcome to competition. Perhaps they would even gift the IP over.

“I’ve repeatedly asked Xamarin and Novell to comment on this issue, to no avail.”

Wow. Isn’t that a bummer? So the whole project/company is at danger of being sued by more than one party. Typically they get coverage from Microsoft boosters who love promoting .NET. The funny thing is that in Planet SUSE we’ve just found ‘The «Banshee» incident’. Mono gets a little less love in SUSE circles, which are mostly located in Europe (unlike Mono which is in the Boston area).

Almost nobody seems to have mentioned the fact that Canonical is dropping Evolution, just that it is embracing Thunderbird. Since Ubuntu already removes this one Novell/Ximian component, why not another (Banshee and Mono from Novell)? We shall see if Canonical comes to its senses and responds to the patent threat of Mono now that Microsoft extorts many companies using patents. we can always hope. █

Summary: The Pirate Party of New Zealand stands up for the interests of New Zealand (NZ) and commends Simon Power for disowning foreign interests

New Zealand’s patent law is under attack by companies from America. They want NZ-based companies to have NZ-hostile laws. Microsoft in particular is trying to colonise and subjugate NZ-based companies by changing the law of this distant foreign country, using lies, lobbyists, and subversion of political processes. We gave a lot of evidence before. Microsoft does not always do this behind proxies.

According to this new press release from the Pirate Party of NZ, “Pirate Party condemns pro-patent spin on software patents” and its co-leader Bruce Kingsbury “condemned the suggestion that software patents may be required in New Zealand law.”

“There is no ‘inventive step’ in software development,” he wrote, “as would be required for patenting.”

He then names Microsoft’s role in the lobbying. “Microsoft’s attempt to spin this as a change of position or some insurmountable problem with the select committee’s decision is little more than a last-minute attempt by them to subvert the democratic process to their own advantage” (Microsoft uses allies and lobbying groups to do this too).

He ends with some kind words for Mr. Power, whom we mentioned some days ago (EN | ES). “We congratulate Commerce Minster Simon Power and the Government for continuing to support the select committee’s recommendation and doing what is best for New Zealand software developers and the wider IT community. We hope the Government will continue to resist this unwelcome pressure from foreign interests’ lobby groups,” concludes the press release. Thanks to the Pirate Party of New Zealand for these constructive words. █

Summary: Distortion of language and euphemistic spin/lies are being devised in order to harm innovation and promote monopolisation (with stagnation) instead

The words that receive bad reputation are often essential to explaining key ideas. By ruining those words, those who wish to impede particular lines of operation or thinking may succeed. Hollywood likes using the word “pirate” and the mainstream press loves making use of the word “conspiracy” (as in, one company colludes or conspires with another, e.g. price-fixing) to become a loaded term and thus its use discouraged.

As we explained here several times before (although not with sufficient emphasis), the big people with big money and big monopolies have been co-opting the word “innovation” to promote “monopolisation”. They try to sell to people the illusion that patent monopolies are required for the industry to move forward. It’s one of those patterns of deception — those talking points that go along with “job creation” and “free market” (meaning freedom to corporations, i.e. deregulation). To counter the spin we must realise and recognise the truth, which does not at all agree with those talking points, neither theoretically nor empirically. A glance at history helps resolve these false dilemmas and call the lobbyists “liars”. They are paid to deceive politicians as well as the public (although the public cannot write legislation directly).

According to this new article, something called “declaration of innovation” (euphemism-gasm!) turns out to be a Trojan horse for — you’ve guessed it — lobbying:

Gary Shapiro, president and CEO of the Consumer Electronics Association (CEA), announced the launch of the Declaration of Innovation, an online pledge for Americans to sign in support of policies that ensure innovation remains the strategic advantage of the United States of America.

CEA’s Innovation Movement urges lawmakers to support policies that promote innovation. The Declaration of Innovation specifically states:

“We believe American innovators should be able to buy and sell their products around the world.
“We believe that more spectrum must be available for wireless broadband.
“We believe in welcoming the best and brightest minds to the United States.
“We believe in cutting the federal deficit.”

It is a great call which I think will remain incomplete as long as monopolies and messy Software Patent Laws exist in the US.

Conspicuously missing from many such petitions are discouragements of patents. When the lobbyists push for something called “innovation” they usually beg for more patents to be granted and their funding sources (to which they are a front) turn out to be big businesses that want to erect fences around themselves, to essentially stifle competition. We recently wrote about the SME Innovation Alliance, which is actually against SME interests. They are talking utter nonsense and the latest debunking comes from Mr. Masnick, who notes that they are just lobbyists for software patents, even in the UK where these are not permitted (and rightly so):

[T]he UK does have a software industry. Apparently Mitchell just doesn’t know where to look. Furthermore, plenty of countries that don’t recognize software patents have a software industry. Why would he argue otherwise? Either way, I would think this seems like good evidence for why innovative companies should not want to be a part of the SME Innovation Alliance, as the organization’s views seem woefully out of touch on actual innovation.

It is out of touch with SMEs as well. Based on its site we cannot even tell who is funding this thing. A disclosure would be nice.

It should be noted that this problem is not unique to just patents on software and even some mechanical companies have woes to testify about.

Over the past week we found and shared 3 headlines that celebrate innovation in the context of Free software. This is good. We are taking back the word innovation and not allowing it to just become synonymous with patents. The likes of the lobbying groups (that sometimes put “innovation” in their name or events they organise) would like people to believe that Free/open source software is a threat to innovation, despite the fact that a lot of today’s innovation comes from academia, where scientific findings and code are largely shared. Innovation is a dog whistle that can affect politicians, so we must make an attempt to take that back and associate innovation with sharing. As we showed last year, the word “innovative” (or “novel”) is used interchangeably to mean “patent-encumbered” (or “patent pending”) and the same word is currently being misused by US-based companies that try to change NZ’s patent law (Intel for example). This will be the subject of our next post. █

(ODF | PDF | English/original)

Resumen: El Partido Pirata de Nueva Zelanda defiende los intereses de Nueva Zelanda (NZ), y elogia a Simon Power por luchar contra los intereses extranjeros.

La legislación de Nueva Zelandia de patentes está siendo atacada[http://techrights.org/wiki/index.php/Software_Patents_in_New_Zealand] por las empresas de Estados Unidos. Quieren que empresas neozelandezas tengan leyes hostiles a Nueva Zelanda. Microsoft, en particular, está tratando de colonizar y subyugar a empresas con sede en Nueva Zelanda al tratar de cambiar la ley de este país extranjero, lejano, con MENTIRAS, CABILDEROS, y la SUBVERSION DE LOS PROCESOS POLITICOS. Hemos mostrado un montón de pruebas antes. Microsoft no siempre hace esto detrás de proxys -usando otras empresas.

De acuerdo con este nuevo comunicado de prensa[http://www.scoop.co.nz/stories/BU1106/S00823/pirate-party-condemns-pro-patent-spin-on-software-patents.htm] del Partido Pirata de Nueva Zelanda, “El Partido Pirata condena el giro pro-patentes en las patentes de software” y su co-líder Bruce Kingsbury “condenó la sugerencia de que las patentes de software pueden ser necesarios en las leyes de Nueva Zelanda.”

“No hay ninguna” actividad inventiva “en el desarrollo de software”, escribió, “lo que sería necesario para la obtención de patentes.”

A continuación, nombra al rol de Microsoft en el lobby. “El intento de Microsoft para hacer aparecer esto como un cambio de posición o algún problema insuperable con la decisión del comité de selección es poco más que un intento de último minuto por parte de ellos -Microsoft- para subvertir el proceso democrático en su propio beneficio” (Microsoft utiliza sus aliados y a los grupos de presión -cabilderos- para hacer esto también).

Y termina con unas palabras amables para el Sr. Power, a quien hemos mencionado hace unos días (EN[http://techrights.org/2011/06/18/simon-power-on-swpats/] | ES[http://techrights.org/2011/06/19/simon-power-on-swpats_es/]). “Felicitamos al Ministro de Comercio de alimentación Simon Power y al Gobierno por seguir apoyando a la recomendación del comité de selección y hacer lo que es MEJOR para los desarrolladores de software de Nueva Zelanda y la comunidad de TI. Esperamos que el Gobierno seguirá resistiendo esta presión no deseada por parte de los grupos de presión de intereses extranjeros “, concluye el comunicado de prensa. Gracias al Partido Pirata de Nueva Zelandia por estas palabras constructivas. █

Traducción hecha por Eduardo Landaveri, Administrator of the Spanish portal of Techrights.

Translation produced by Eduardo Landaveri, the administrator of the Spanish portal of Techrights.

(ODF | PDF | English/original)

Resumen: La distorsión del lenguaje y las mentiras eufemísticas/propaganda están siendo diseñandas con el fin de perjudicar la innovación y promover la monopolización (y el estancamiento) en su lugar.

Las palabras que reciben mala reputación a menudo son esenciales para explicar las ideas principales. Al arruinar esas palabras, aquellos que desean impedir determinadas líneas de operación o pensamiento pueden tener éxito. A Hollywood le gusta usar la palabra “piratas” y a la prensa le encanta hacer uso de la palabra “conspiración” (como en, un acto de complicidad que una empresa o conspire con otra, por ejemplo, en la fijación de precios) para convertirse en un término cargado de significado y por lo tanto desalienta su uso.

Como ya hemos explicado aquí varias veces (aunque no con suficiente énfasis), la gente grande con mucho dinero y los grandes monopolios han estado co-optando la palabra “innovación” para promover la “MONOPOLIZACION”. Ellos tratan de vender a la gente la ilusión de que los MONOPOLIOS DE PATENTES SON NECESARIOS para el avance de la industria. Es uno de los patrones de engaño – los puntos de discusión que van junto con “la creación de empleo” y el “libre mercado” (es decir, libertad para las corporaciones, es decir, la desregulación). Para contrarrestar este giro, debemos darnos cuenta y reconocer la verdad, que en absoluto no está de acuerdo con los temas de conversación, ni teórica ni empíricamente. Una mirada a la historia ayuda a resolver estos dilemas falsos y llamar a los grupos de presión -cabilderos – “MENTIROSOS”. Se les paga para engañar a los políticos, así como al público en general (aunque el público no puede escribir directamente la legislación).

De acuerdo con este nuevo artículo[http://www.muktware.com/news/23/2011/1503], algo que se llama “declaración de la innovación” (euphemism-gasm!) resulta ser un caballo de Troya para – usted lo adivinó – CABILDEO:

Gary Shapiro, presidente y CEO de la Consumer Electronics Association (CEA), ha anunciado el lanzamiento de la Declaración de la Innovación, un compromiso en línea para los estadounidenses a firmar en apoyo de políticas que garanticen la innovación sigua siendo la ventaja estratégica de los Estados Unidos de América.

Movimiento de Innovación de la CEA insta a los legisladores para apoyar las políticas que promuevan la innovación. La Declaración de la innovación específicamente:

“Creemos que los innovadores de América debe ser capaz de comprar y vender sus productos en todo el mundo.
“Creemos que un mayor espectro debe estar disponible para la banda ancha inalámbrica.
“Creemos que dar la bienvenida a las mentes más brillantes y de los Estados Unidos.
“Creemos en la reducción del déficit federal”.

Es una gran llamada que creo que seguirá siendo incompleto mientras los monopolios y las desordenadas leyes de patentes de software existan en los EE.UU..

Notoriamente ausente de muchas peticiones de este tipo son los desalientos de las patentes. Cuando los grupos de presión para empujar algo que se llama “innovación” suelen pedir más concesión de patentes a sus fuentes de financiación (de los que están al frente) resultan ser las grandes empresas que quieren erigir cercos a su alrededor, para sofocar la esencialmente a la competencia. Hace poco escribí sobre la Alianza de innovación de las PYME[http://techrights.org/2011/06/17/sme-front-for-patent-monopoly_es/], que es en realidad contra los intereses de las PYME. Están hablando puras tonterías y la última en ser desacreditada por el Sr. Masnick, quien señala que no son más que grupos de presión por las patentes de software[http://www.techdirt.com/articles/20110619/23401414741/uk-lobbyists-claim-uk-software-industry-trouble-because-it-doesnt-have-software-patents.shtml], incluso en el Reino Unido, donde estas no son permitidas (y con toda razón):

El Reino Unido tiene una industria de software. Al parecer, Mitchell no sabe dónde buscar. Además, un montón de países que no reconocen las patentes de software tienen una industria del software. ¿Por qué él afirmar lo contrario? De cualquier manera, yo creo que esto parece como una buena evidencia de por qué las empresas innovadoras no quieren ser parte de la Alianza de innovación de las PYME, como puntos de vista de que esta organización parece lamentablemente fuera de contacto con la innovación real.

Está fuera de contacto con las PYMEs. Sobre la base de su sitio web ni siquiera podemos decir quien está financiandolos. La divulgación de ello no estaría mal.

Cabe señalar que este problema no es exclusivo sólo las patentes de software, e incluso algunas empresas mecánicas tienen problemas para testificar acerca de ello[http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202498014629&Under_the_Hood_of_Automobile_Patent_Litigation_Issues].

Durante la última semana hemos encontrado y compartido tres títulos que celebrar la innovación en el contexto del Software Libre. Esto es bueno. Estamos recuperando la palabra innovación, y no permitiendo que se convierta simplemente en sinónimo de patentes. De los gustos de los grupos de presión -cabilderos- (que a veces ponen la “innovación” en su nombre o en eventos que organizan), también quisieran que la gente crea que el Software Libre/Código Abierto es una amenaza para la innovación, a pesar de que muchas de las innovaciones actuales proviene de la academia , donde los descubrimientos científicos y el código son ampliamente compartidos. La innovación es un silbato para perros que puede afectar a los políticos, por lo que debemos hacer un intento de recuperar la palabra innovación de nuevo y asociarla con el libre intercambio. Como lo demostramos el año pasado, la palabra “innovación” (o “novedad”) se utiliza indistintamente para referirse a “patente gravado” (o “patente pendiente”) y la misma palabra que está siendo mal utilizada por empresas con sede en los EE.UU. que tratan de cambiar la ley de patentes de Nueva Zelanda[http://techrights.org/wiki/index.php/Software_Patents_in_New_Zealand] (Intel, por ejemplo[http://techrights.org/2011/06/13/intel-for-swpats/]). Este será el tema de nuestro próximo post. █

Traducción hecha por Eduardo Landaveri, Administrator of the Spanish portal of Techrights.

Translation produced by Eduardo Landaveri, the administrator of the Spanish portal of Techrights.

“Hey, Steve, just because you broke into Xerox’s store before I did and took the TV doesn’t mean I can’t go in later and steal the stereo.”

–Bill Gates, Microsoft

Summary: Apple’s abusive behaviour (e.g. trademark bullying and patent hoarding) is noted and responded to

LAST night we wrote about Apple's abusive behaviour. With wealth comes Hubris, so it’s time to call Nemesis out again. It came out and nearly bankrupted Apple just over a decade ago.

Continuing the subject we addressed last night, Apple thinks that it owns the name of a fruit and now “Appl” too. As a Microsoft sympathiser put it:

[T]he team has decided to organise a naming contest for the Amahi application store. My personal favourite so far? Appl store. You know, appl, short for application. It’s sad that they have to go through this, but I fully understand them in not being willing to take on Apple in court.

For those who have not paid attention, Apple sent a threat to an open source project for using the “Appl” word. There is also a trademark on “app store”. As Neil Richards put it, “Apple has already sued Amazon.com for using the term for its own Android store. It was not Apple which conceptualized the name AppStore. The name came from former Apple executive Marc Benioff, now head of Salesforce.”

Isn’t that ironic?

In other Apple news, what Apple calls “pro” is actually outright rubbish, based on this report from another Microsoft sympathiser. She writes:

Apple released a completely overhauled version of its Final Cut Pro software yesterday, much to the chagrin of some of its users.

The early response to Final Cut Pro X is at best mixed, with some complaining that the film editing application lacks XML support, and worse still, is bereft of backward compatibility with previous versions of the software.

Others who use Final Cut Pro are saying it’s too early to be moaning about the application, which Apple said yesterday had been “rebuilt from the ground up”.

The complete re-write of the software has left many film and video editors perplexed by the radical changes to Apple’s Final Cut Pro, which competes with Avid in the film editing software market.

A steady stream of insults against and in support of Apple is currently flowing around the blogosphere.

As we stated many time before, Apple had ripped off so many other companies (not just Xerox) and resorted to using its hype machine. It then pretended that it actually invented what was shamelessly lifted. Apple is currently patenting many ideas on which there is clearly prior art, most latterly this patent on touch screens:

The U.S. Patent and Trademark Office has awarded Apple a key patent for touch screen functionality on portable devices, such as the iPhone and iPad.

For a little bit of context, Xerox had touch screens even in the 1980s. None of this is new and Apple’s alleged invention is probably a little tweak upon existing knowledge. Apple is the Edison of the 21^st century–the aggressive patent troll who is mistakenly believed to be an innovator. All Edison did was take other people's ideas, made minor changes to them, and then claimed credit for them (using a patent). He hacked the patent system. Edison was just a businessman, like Bill Gates. To him, technology was just a way of doing business and gaining power/glory. He happens to be the man behind GE, which is a prominent proponent of software patents [1, 2, 3]. █

Summary: BitTorrent is called a (software) patent violation, domain management too leads to a patent lawsuit, and Internet phones lead to lawsuits in several countries

PATENT reform (real reform) is a matter of urgency in the United States (more so than in other countries), as we noted minutes ago. And “according to a lawsuit filed at a U.S. District Court this week,” reports TorrentFreak, “BitTorrent is also an infringement in its own right.

“Tranz-Send Broadcasting Network filed a complaint at the court this week where it alleges that BitTorrent is infringing on a patent originally filed in April 1999. The company claims to have suffered significant losses and wants to be compensated for the ongoing patent infringement.”

Hollywood would love it, everyone else would suffer. And apparently receiving better service from a registrar too is an infringement, according to allegations in a lawsuit against GoDaddy (which personally I ditched last year). Quoting The Register:

Go Daddy has been sued for allegedly infringing two patents when it sends email alerts to customers whose domain names and web hosting accounts are about to expire.

Its accuser is WhitServe, a patent licensing company based in Connecticut. It also runs NetDocket, a service designed to make renewing trademark registrations and patents easier.

Lastly, as as mentioned last week, Microsoft too is being sued for Skype, showing perhaps that even phone calls over the Internet are verboten unless one surrenders to extortion and can pay up somehow (in a market where the margins are very low or 0 because people are accustomed to free calls):

Skype Inc. was sued by a Luxembourg company for infringing its patents in a federal court in the United States on Thursday. Via Vadis filed similar lawsuits against the internet video phone company in Europe.

It would be easy to laugh it off because it’s Microsoft’s problem, but this case can have severe consequences for free/libre alternatives.

Welcome to the fantasy world of patents — a fantasy for the bad guys and a living Hell for the rest. █

Resumen: ¿Cuántas personas que están en contra de las patentes de software con el tiempo se convierten en nombradas por los empresas de monopolios de patentes.

Con suficiente claridad, hay un punto en el que el pago de un salario se convierte en condición de no ser sincero con uno mismo. Este tema fue discutido ayer en el IRC, y también se mencionó hace unos años cuando vimos personas de Novell/GNOME solicitar patentes de software[http://techrights.org/2008/10/22/michael-meeks-novl-patent/] (debido a la presión del empleador). Se trata de patentes que terminan en manos de Microsoft, atacando a Linux y demás software libre/código abierto. Recuerde lo que el inventor de Java, escribió acerca de sus patentes después de que estos habían sido utilizados en contra de los proyectos complementarios de Java.

Los desarrolladores no tienen ideas erróneas acerca de las patentes. Para los abogados de patentes es como una fe, no importa lo que es verdadero, siempre y cuando sea conveniente. La principal víctima es el público en general, contra el cual las grandes corporaciones y sus abogados están librando una guerra. Muchos miembros del público, que se supone que son representados por los políticos, realmente se deje tentar por la ilusión de la correlación de las patentes con la innovación, donde la relación es falsamente supuesta causal. La causalidad aquí sólo es que las patentes causan disminución de ritmo de la innovación, ya que ofrecen privilegios exclusivos, el MONOPOLIO DE CLASE.

Los miembros del público no están obligados a beber el Kool-Aid, pero ¿qué pasa cuando de los salarios de uno depende de tales vidws? La cultura del adoctrinamiento por los directivos es muy peligrosa por la misma razón que las órdenes de los soldados obedecen ciegamente a sus “superiores”, puede conducir a la catástrofe. Se elimina la lógica y la ética, lo que resulta en lo que a veces es llamado “hombre máquina” (o mujeres, para ser políticamente correcto en estos días).

Hace varios meses, se demostró que la parcial propiedad de Microsoft Facebook[http://techrights.org/wiki/index.php/Facebook], se había convertido en un matón de patentes[http://techrights.org/2010/11/11/facebook-swpats-aggression/]. Se trata de amasar patentes de software, ya sea por depósito o mediante su compra. Este nuevo artículo[http://www.law.com/jsp/ca/PubArticleCA.jsp?id=1202496948212&At_Facebook_Learning_to_Like_Patents&slreturn=1&hbxlogin=1] nos dice que dentro de Facebook, a los ingenieros no les gusta las patentes, pero que están siendo presionados para cambiar sus puntos de vista:

Facebook es “Hack-Maratones” son materia de la leyenda geek. Cada mes o dos, los ingenieros de software de permanecer despiertos toda una noche en una lluvia de ideas nuevas y escribir código para crearlas.

Los refrigeradores están llenos de Red Bull. Comida china es entregada. La música suena hasta la mañana – y también lo hacen algunos de Facebook Inc. ‘s los abogados de la empresa.

El abogados de patentes Nair Flores se impresionó tanto cuando los ingenieros en una reciente sesión le dio un hack-a-thon premio de “héroe” . Una réplica del casco que lleva por Boba Fett en “El imperio contraataca”,

“Ser capaz de relacionar e integrar en el hack-a-thon tiene un gran respeto de los ingenieros”, dice Facebook Consejero General Theodore Ullyot.

Desde la llegada de Ullyot en 2008, él y su equipo han hecho patentes una prioridad. Una de las cosas que están haciendo es tratando de convencer a más patentes de los ingenieros al derribar los muros que los separan de sus abogados.

Qué vergüenza. Esto es lo que los abogados de patentes de llevar a una cultura viva de código. No están allí para reproducir innovación si no para crear cercos. Se debe mencionar que, como hemos demostrado en muchas ocasiones, los desarrolladores de Microsoft en el presente y el pasado de vez en cuando hablan en contra de las patentes de software. Se trata de una opinión de riesgo que puedan compartir, porque su sueldo depende de ello. Parte de su salario proviene de la extorsión de patentes de Microsoft. █

Translation produced by Eduardo Landaveri, the esteemed administrator of the Spanish portal of Techrights.

(ODF | PDF | English/original)

Resumen: Los monopolios están protegidos por leyes controvertidas en su mayoría con el apoyo de super-ricos empresarios y los líderes que ellos ayudan a nombrar.

GRACIAS a Benjamin Henrion (FFII – Fundación para una Infraestructura de Información Libre) nos enteramos de que la “EPO (Oficina Europea de Patentes) concedió la patente sobre la barra de progreso a Apple, ahora dice que su concesión de patentes es de alta calidad” (que nos enlaza a esta página de la EPO, que dice: “Los líderes del G8 apoyan un sistema de “calidad” de patentes”)[http://blog.epo.org/uncategorized/g8-leaders-support-a-quality-patent-system/].

Como hemos explicado anteriormente esta semana, para referirnos al problema de las patentes como un problema de “calidad” en vez de alcance es desviar la atención del verdadero problema que la EPO también ha estado teniendo. Es por eso que no tienen en cuenta el movimiento Wilcox [1[http://techrights.org/2011/06/01/wilcox-should-learn-from-eu_es/], 2[http://techrights.org/2011/06/16/transporting-software-patents-to-eu_es/], 3[http://techrights.org/2011/06/01/nyls-idea-re-swpats-in-uk_es/], 4[http://techrights.org/2011/06/01/patent-mopolies-in-the-eu_es/], 5[http://techrights.org/2011/06/15/software-monopolies-in-fr-and-uk_es/]] que consideramos uno ingenuo. Sólo va a ayudar a validar algunas patentes de software, incluyendo algunos de Microsoft, tales como FAT[http://techrights.org/2011/06/15/software-monopolies-in-fr-and-uk_es/].

“Excepto por el escritorio de GNU/Linux compañías como Novell/SUSE/Attachmate y Xandros, aquellos que pagan a Microsoft por Linux son Turbolinux LG, Fuji Xerox, Brother, Melco, Samsung, Kyocera Mita, de IO Data, y HTC.”El uso de la extorsión con patentes de software, Microsoft ha sido más exitoso en Asia. A excepción del escritorio de GNU/Linux compañías como Novell / SUSE / Attachmate y Xandros, aquellos que pagan a Microsoft por Linux son Turbolinux LG, Fuji Xerox, Brother, Melco, Samsung, Kyocera Mita, de IO Data, y HTC. También lo hace Amazon (por el servidor y embebidos en Kindle), que decidió pagar su estado vecino de Microsoft después de que muchos de sus nuevos gerentes fueron nombrados por Microsoft Corp.

Lo que pasa en Washington (el estado y el Distrito Federal) tiene mucha importancia en este momento porque Bill Gates y su compadre Nathan van de la manito desde el estado de DC para cabildear mucho en favor de las patentes[http://techrights.org/2011/06/16/defenceless-lobbying/] (Gates, por su parte, se reune con los líderes del G8, dar dinero de los contribuyentes a los titulares de patentes el las que él mismo invierte[http://techrights.org/2010/06/30/instructions-to-stephen-harper/], como hemos explicado antes[http://techrights.org/wiki/index.php/Gates_Foundation_Critique]). No se distraiga por la Ley de los Estados Unidos Inventa. Todo esto es una falsa “reforma” que se asemeja a lo que vemos en Europa[http://www.politico.com/news/stories/0611/57029.html] – un enfoque que está todo mal:

La Ley América Inventa fomenta la innovación y fomenta la creación de empleos. Cambia el nivel de aprobación de la patente del “primer inventor” al “primero que registra”.

Suena como que es BUENO PARA LOS EMPRESARIOS,NO PARA LOS CIENTIFICOS. Así que, por supuesto, los políticos podrían apoyar eso. Ellos saben de donde las contribuciones vienen.

La patente de Nathan (el más grande troll de patentes del mundo y ex director de tecnología Microsoft) sigue ACOSANDO a los competidores Microsoft y Groklaw se esfuerza por derribar esta patente por la cooperación dentro de la comunidad[http://www.groklaw.net/article.php?story=2011061608115990]:

Como hemos señalado en el artículo de ayer, uno de los desarrolladores de formas más eficaces (y cualquier otra persona que cree Lodsys es desmesurado) se puede responder mediante la identificación de previas técnicas que sean relevante para las invenciones reivindicadas por Lodsys. Lodsys ha tomado la posición que sus reivindicaciones son muy amplias, y el problema con esa posición, ya que aprender, es que abre las anchas puertas de previas técnicas que va a derrumbar los reclamos generales. Y ahí es donde entras tú.

Más de las últimas noticias al respecto se puede encontrar en los medios de comunicación corporativos, que a diferencia de la cobertura de las fuentes contraria TechEye[http://www.techeye.net/business/lodsys-patents-under-attack] y otros, no van lo suficientemente lejos. Pretende informar en lugar de promover, pero que termina la elección de la cobardía, no sólo el conformismo.

Lo que más alentador es que los reguladores han comenzado por lo menos un paso adelante para abordar los aspectos anticompetitivos de las patentes, a pesar de que no cumplen los objetivos reales[http://techrights.org/2011/04/27/bn-and-changing-the-patent-system/] y Microsofnt les empuja hacia falsos[http://techrights.org/2011/06/18/taxing-competitors-with-moles_es/]. Para citar recientemente noticias [1[http://www.itbusinessedge.com/cm/blogs/bentley/department-of-justice-keeping-close-watch-on-nortel-patent-auction/?cs=47283], 2[http://www.zdnetasia.com/report-us-doj-probing-bids-for-nortel-patents-62300594.htm]], donde se menciona CPTLN:

Las patentes se han convertido en una herramienta cada vez más potente en tecnología, como las pequeñas empresas demandan a los más grandes en caso de infracción, y las grandes empresas pagan caro para acumular patentes para protegerse de futuros litigios. En abril, el Departamento de Justicia obligó a un grupo de empresas que comprarían las patentes de Novell, incluyendo Apple y Microsoft, a licenciar en lugar de comprar algunas de las 882 patentes y solicitudes de patentes sobre las preocupaciones sobre el impacto en el software de código abierto.

Microsoft también ha estado aplastando empresas por las patentes como las que se puso en CPTLN. Hemos escrito sobre el uso de Microsoft de Nokia, el otro día[http://techrights.org/2011/06/18/taxing-competitors-with-moles_es/]. “Estas empresas se han convertido esencialmente en Novell”, escribe Sarah Lacy[http://techcrunch.com/2011/06/13/yawn-how-did-big-tech-companies-turned-into-big-boring-banks/] en relación con este tipo de barrido de las empresas más pequeñas (no necesariamente sus patentes). ¿Quién en la Tierra apoyaría este tipo de patentes que no sean las multinacionales y los políticos que sirven a sus intereses? La gente debe ponerse de pie y denunciarlas. █

Translation produced by Eduardo Landaveri, the esteemed administrator of the Spanish portal of Techrights.