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Viewing cable 04CARACAS627, EMBASSY CARACAS COMMENTS ON 2004 SPECIAL 301 REVIEW

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Reference ID Created Released Classification Origin
04CARACAS627 2004-02-25 12:32 2011-08-24 01:00 UNCLASSIFIED Embassy Caracas
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS  CARACAS 000627 
 
SIPDIS 
 
 
STATE FOR EB/IPC - WILSON; ALSO FOR WHA/EPSC, WHA/AND 
STATE PASS TO USTR - BPECK, 
STATE PASS TO USPTO - JURBAN/DLASHLEY-JOHNSON 
STATE PASS TO LIBRARY OF CONGRESS - STEPP 
COMMERCE FOR KSCHLEGELMILCH 
 
E.O. 12958: N/A 
TAGS: KIPR ECON VE
SUBJECT: EMBASSY CARACAS COMMENTS ON 2004 SPECIAL 301 REVIEW 
 
REF: A. CARACAS 00555 
     B. CARACAS 03354 
 
This cable is sensitive but unclassified.  Please handle 
accordingly. 
 
------- 
SUMMARY 
------- 
 
1. (SBU)  The GOV continues to show signs of slippage in its 
commitment to the protection of intellectual property rights. 
 In 2003 the government persisted in its policy of approving 
domestic copies of internationally patented pharmaceutical 
products for sale in Venezuela.  Venezuela's anti-trust 
agency ruled that this practice did not constitute an act of 
unfair competition.  The GOV also maintained its refusal to 
issue second use patents to international pharmaceuticals in 
2003.  Industry contacts say the National Assembly is 
debating proposed changes to the new Industrial Property Law 
which would worsen the legal framework for protection of 
intellectual property.  Piracy and contraband have grown 
increasingly problematic, while government efforts toward 
deterrence and prosecution remain minimal.  Venezuela's 
ongoing political and economic troubles have resulted in a 
large informal sector including ever-increasing numbers of 
vendors who sell illicit products on the street.  Based on 
the GOV's demonstrated lack of willingness to take action 
against piracy and its continued lack of adequate IPR 
protection, we recommend that Venezuela remain on the special 
301 watch list this year. 
 
 
--------------------------------------------- ------- 
NO CHANGE ON DATA EXCLUSIVITY AND SECOND USE PATENTS 
--------------------------------------------- ------- 
 
2. (SBU)  Venezuela has ratified many of the relevant 
international treaties for TRIPS compliance, however, the GOV 
continues to pursue policies which demonstrate a lack of 
commitment to international standards on IPR protection.  The 
Venezuelan government still allows data on internationally 
patented drugs, most of which require lengthy and expensive 
development, to be used by domestic companies seeking 
approval for their own versions of the same product. 
Venezuela's food and drug regulatory agency (INH) began 
approving the commercialization of these copies in February 
2002.  In July 2003 the Venezuelan anti-trust agency 
(PROCOMPETENCIA) ruled on one of the many cases alleging 
unfair competition brought by international pharmaceutical 
companies against domestic companies selling bioequivalents 
of their products.  PROCOMPETENCIA ruled that trading 
replicas of anti-allergy drug Allegra in the Venezuelan 
market did not constitute an act of unfair competition. 
 
3. (SBU)  PROCOMPETENCIA's president explained the ruling as 
the inevitable result of a conflict between domestic health 
legislation which mandates data revelation as part of the 
regulatory process and existing legislation on IPR protection 
which does not specifically protect test data.  At least 
three other cases brought by international pharmaceutical 
companies are pending.  The Association of Foreign 
Pharmaceutical Companies (CAVEME) is one of the entities, 
which has proposed explicitly including five year test data 
protection in the new Industrial Property Law which is 
currently being debated by the National Assembly.  According 
to CAVEME, government officials including the president of 
Venezuela's Patent and Copyright Office (SAPI) have indicated 
their opposition to this proposal.  GOV officials have said 
the five year rule would be detrimental to national health 
concerns.  International pharmaceutical contacts tell us the 
length of protection afforded to data within the system is so 
short that legitimate new products may enter the market after 
illicit copies do. 
 
4. (SBU)  The GOV maintained its policy of refusing to issue 
second-use patents on the basis that they do not qualify as 
inventions.  According to SAPI officials, only four patents 
for new pharmaceutical products were issued in 2003.  This 
appears to be the result of new politically driven policy at 
SAPI.  Several long-serving SAPI officials, including the 
head of the patent division, were fired in the final months 
of 2003 for what, they claim, are political reasons. 
Industry contacts tell us these officials have been replaced 
by political appointees with much less experience in the 
 
sector.  We are told by a Ministry of Production and Commerce 
counterpart that Venezuela is unlikely to ratify or implement 
the two internet treaties; the WIPO Copyright Treat and the 
WIPO Performances and Phonograms Treaty because of opposition 
from the president of SAPI. 
 
-------------------- 
PIRACY GETTING WORSE 
-------------------- 
 
5. (SBU)  Piracy and contraband trade remain significant 
problems for Venezuela, which has still not moved 
aggressively to implement an effective law enforcement 
regime.  The commission created by President Chavez in 2002 
to address the problem did not generate viable 
recommendations or solutions, despite GOV concern about 
losses due to tax evasion on contraband.  According to 
Venezuela's association of authors and artists, 80 percent of 
the optical media and 50 percent of the computer software 
currently sold in Venezuela is pirated.  Piracy of compact 
discs and DVDs worsened as the economic downturn in 2003 
forced more Venezuelans to seek work in the informal sector, 
mainly as street vendors.  In response to concerns raised by 
the legitimate optical media industry, the GOV insisted on 
finding a solution which included street vendor 
participation.  When private industry representatives 
proposed making street vendors part of their supply chain by 
allowing them to market legitimate products, government 
representatives counter-proposed the creation of street 
vendor cooperatives which would produce as well as distribute 
product.  More than 50 percent of working Venezuelans are 
employed in the informal sector, amaking it unlikely the GOV 
will take any effective action against piracy which would 
deprive these a number of these citizens of their livelihood 
in a potential election year. 
 
------------------------------- 
LAW ENFORCEMENT STILL A PROBLEM 
------------------------------- 
 
6. (SBU)  The issue of enforcement of intellectual property 
rights remains problematic in Venezuela, due to a lack of 
political will and severe budgetary constraints.  The entire 
staff of the National Copyright and Trademark Protection 
Police (COMANPI) was rotated to another unit in March, 2003. 
The new team of seven inspectors for the entire country is 
new to the field of IPR enforcement.  It continues to operate 
with extremely limited resources and only one special 
prosecutor with jurisdiction over criminal IP violations. 
Complicating their job is the fact that COMANPI has no 
jurisdiction within Venezuelan ports and must coordinate 
their actions with Venezuela's Customs and Tax Service 
(SENIAT).  In addition, the special prosecutor's workload 
remains split between intellectual property cases and human 
rights violations, which often take priority.  As a result 
the prosecutor's office is extremely slow to process charges 
of criminal IP violations even when successful raids were 
carreid out by the police and infringing goods are available 
as evidence.  Most cases of trademark infringement continue 
to be settled out of court. 
 
------- 
COMMENT 
------- 
 
7. (SBU)  The ongoing political confrontation between the GOV 
and its opposition remains a significant factor in the 
government's commitment (or lack thereof) to implementing 
adequate IP protection.  As part of his strategy to maintain 
control, Chavez has placed ideologically motivated supporters 
in key positions throughout the government, including in 
SAPI.  As a result, we are unlikely to see any softening in 
Venezuela's position with regard to second-use patents and 
data exclusivity.  The GOV will most likely avoid taking any 
action against piracy which could have negative impact on the 
growing number of low-income informal sector workers who 
depend on illicit sales for their livelihood.  Accordingly, 
we recommend that Venezuela's current status on the special 
301 watch list be maintained. 
SHAPIRO 
 
 
NNNN 
 
      2004CARACA00627 - UNCLASSIFIED