Cablegate: Microsoft Sees Gob Attacks Against Ipr

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E.O. 12958: DECL: 12/20/2017
TAGS: ECON ETRD ECIN PREL
SUBJECT: MICROSOFT SEES GOB ATTACKS AGAINST IPR

Classified By: Econ/Pol Chief James Story for reasons 1.5 b and d.

1. (C) SUMMARY: In a December 20 meeting in Sao Paulo with
Ambassador Sobel, Microsoft Brazil President Michel Levy
stated that current GOB policies are antagonistic towards
Intellectual Property Rights (IPR). According to Levy, the
GOB through the Foreign Ministry (Itamaraty) has mounted an
international campaign to discredit Microsoft's proprietary
XML format and is pushing for countries to adopt the ODF
(Open Document Format) at the expense of XML at the March
meeting of the International Standards Organization in
Geneva. Levy sees both ideological issues as well as
commercial interests at work in the GOB position. END
SUMMARY.

2. (C) Microsoft Brazil President Michel Levy requested a
meeting with Ambassador Sobel on December 20 to discuss ways
forward on working with what he characterized as an
antagonistic GOB. According to Levy, Itamaraty has pressured
the purportedly independent Brazilian Technical Standards
Agency, ABNT to adopt a more aggressive posture against using
XML as one of two possible standards, along with ODF, in
Brazil. In addition, Levy stated that he is in the
possession of unsigned letters from Itamaraty to various
foreign governments requesting that the governments work
together to support only the open source ODF as the
international standard.

3. (C) Levy believes that this issue has turned ideological
and is a manifestation of anti-Americanism within Itamaraty.
He cited President Lula's Chief of Staff Dilma Rousseff as
well as high-ranking advisor Celso Alvarez as being the chief
architects of an anti-IPR, anti-royalties strategy within the
GOB. According to Levy, these advisors have convinced
President Lula that there is no difference between ODF and
proprietary XML software. His main concern is that the GOB
will use the ABNT to adopt an ODF only standard by decree
rather than going through Congress where Microsoft would at
least have an opportunity to explain the differences between
the software systems. Levy used as an example that all of
Embraer's designs are created through XML and that the
current ODF software simply can't do the same job. If ODF is
the only standard, Levy argued, there could be economic
ramifications for Brazil.

4. (C) Levy then pointed out that commercially Microsoft
faces an uneven playing field in Brazil. He stated that in
addition to several bills in the Brazilian Congress that
would deny the GOB the ability to buy proprietary software,
there are reports that many recent bids that went to tender
had specific, if unwritten, instructions that disallowed any
Microsoft bids. He further stated that the issue of
cross-retaliation on IPR from the cotton subsidies case is
alive and well and could potentially come to pass in 2008.

5. (C) While Levy made it clear that Microsoft is not
asking for any USG advocacy at this point, and in fact
requested that our communication be kept strictly
confidential, Ambassador Sobel did offer advice on various

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approaches Microsoft could take in generating support for
standards that would have room for both ODF and XML software.
Specifically, the Ambassador thought Mircosoft should work
through various trade groups to begin a discussion with the
GOB on this issue. The Ambassador also indicated that
Microsoft should get Brazilian companies to put this issue
high on the agenda of the CEO Forum meetings to take place
with Department of Commerce Secretary Gutierrez early next
year.

6. (C) COMMENT: The debate among various international
standards (GPS, telecommunications, etc.) is not new in
Brazil, and Levy's concerns about an anti-American ideology
in the Brazilian Foreign Ministry are not only Microsoft's
concern. Microsoft's concerns that the GOB is seeking to
adopt one standard that does not allow for proprietary
softwear, bears watching. A multi-industry push for a
strategy that allows for Congressional debate over the
relative merits of the software systems will certainly yield
better results than Microsoft fighting this issue alone. END
COMMENT.
WHITE

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