This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 OTTAWA 000619 
 
SIPDIS 
 
SENSITIVE 
 
STATE FPR WJA/EPSC; EB/IPC - WILSON; WHA/CAN 
 
EB/DBT-CLTURNER AND EB/BTA/TDC 
 
STATE PASS USTR FOR ALVAREZ 
 
USDOC FOR LASHLEY 
 
USDOC ALSO USPTO - URBAN 
 
STATE PASS LIBRARY OF CONGRESS FOR TEPP 
 
E.O.  12958: N/A 
TAGS: KIPR ETRD ECON CA
SUBJECT: 2003 SPECIAL 301 REVIEW - CANADA 
 
REFS: (A) STATE 43677 (B) OTTAWA 0501 (C) 02 OTTAWA 3439 
 
     (D) 02 OTTAWA 3576 (E) 02 OTTAWA 3602 
     (F) 02 OTTAWA 3172 
 
¶1. SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY. 
 
¶2. (SBU) Summary and Introduction - Post recommends that 
Canada not be placed on the Special 301 Watch List.  Recent 
Canadian legislation has addressed several of the concerns 
outlined in previous 301 reports, such as the exclusion of 
Internet retransmission from the compulsory licensing 
regime, and thereby enhanced intellectual property 
protection in Canada.  Several long-standing 301 issues, 
including national treatment of U.S. artists in the 
distribution of proceeds from Canada's private copying levy 
and "neighboring rights" regime, have received little 
private sector support (Post has received no queries from 
U.S. interests on either of these issues) and may no longer 
warrant a Watch List recommendation.  Other high-profile 
issues that are of concern to U.S. interests, including the 
delisting of pharmaceutical patents and patenting of higher 
life forms, are currently being reviewed by the GOC and are 
not ripe for inclusion in the Watch List at this time.  Post 
is mindful of the various IP concerns and will continue to 
closely monitor these issues and raise them in meetings with 
GOC officials.  End Summary and Introduction. 
 
-- LEGISLATIVE AND JUDICIAL SUCCESS -- 
 
¶3. (SBU) Canada has made real progress in improving its IPR 
regime over the last couple of years. In December 2002, the 
GOC revised its Copyright Act (Bill C-11) to explicitly 
exclude Internet retransmissions from its compulsory 
licensing regime to the satisfaction of U.S. interests (ref 
E).  An Order-In-Council is expected on March 21, 2003, 
which will make C-11 enter into force immediately.  In 2001, 
the government amended its patent law to provide at least a 
20-year term of protection for patents filed before October 
1, 1989. 
 
¶4. There are legitimate concerns about Canada's border 
measures and weak enforcement of IP, both at the borders and 
throughout the country.  Canadian Customs and the Royal 
Canadian Mounted Police (RCMP) are required by law to take a 
passive approach to border enforcement and have not 
committed the necessary resources to address counterfeiting 
and piracy.  A recent judicial decision, however, is a step 
in the right direction.  In April 2002 the Supreme Court 
decided that Canadian law prohibits the decoding of all 
encrypted satellite signals.  Since this time the GOC, 
working with several cable associations, has stepped up 
efforts to both improve enforcement and address underlying 
legislative issues.  These efforts have not yet crossed over 
to problems related to border enforcement. 
 
-- LIMITED PRIVATE SECTOR INTEREST -- 
 
¶5. (SBU) The GOC has not resolved the outstanding issue of 
national treatment of U.S. artists in the distribution of 
proceeds from Canada's private copying levy and its 
"neighboring rights" regime and considers these issues to be 
relatively low priorities (Ref F).  Post has not received 
any support from U.S. industry on these issues in the five 
years that we have recommended Canada be placed on USTR's 
Watch List.  Since U.S. industry does not consider these 
issues significant enough for their involvement, we do not 
believe they warrant a Watch List recommendation. 
 
-- ISSUES NOT YET RIPE FOR INCLUSION ON THE WATCH LIST -- 
 
¶6. (SBU) Health Canada is currently engaged in an internal 
policy review of several patent issues, including delisting 
specific patents, and Notice of Compliance "linkage" 
regulations.  At the same time, Industry Canada is holding 
public hearings this month on a number of IP issues and will 
focus on linkage regulations.  Until the GOC publishes a 
report that indicates in what direction it will actually 
move, we believe it would be premature at this time to 
recommend placing the GOC on the Watch List because the GOC 
is, in fact, addressing these issues.  In their response to 
PhRMA's 301 submission, the GOC noted the complexity of the 
issues and regulations at hand and the fact that "Canada is 
not alone in facing difficult issues regarding patent 
eligibility as it relates to its linkage regime.  Issues 
surrounding patent eligibility and abuse are often the 
subjects of debate in US Congress.  For example, on October 
21, 2002, President Bush announced US intentions to address 
problems relating to perceived delays in the market entry of 
generic drugs." 
 
¶7. (SBU) In December 2002 the Canadian Supreme Court decided 
against allowing the patent on the "Harvard Mouse" on the 
basis that "a higher life form is not patentable because it 
is not a "manufacture" or "composition of matter" within the 
meaning of "invention" in s.2 of the Patent Act." (See ref 
C)  U.S. biotech companies are concerned that the Court's 
decision, if left intact, would exclude from patent 
eligibility any invention that is a higher life form.  In 
their decision the Supreme Court Justices made it explicit 
that their word is not the final one on this issue; that it 
is up to Parliament to bring in new legislation to deal with 
the patentability of higher life forms.  As reported in ref 
D, the GOC has stated its intent to modernize Canada's 
Patent Act.  While no definite timeline has been announced 
as yet, we do not see a justification to place Canada on the 
Watch List unless the GOC fails to make clear this year its 
determination to amend the Act.  Cellucci