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

UNCLAS SECTION 01 OF 04 ANKARA 000854 
 
SIPDIS 
 
DEPT FOR EB/TPP/MTA/IPE - CLACROSSE/JURBAN AND EUR/SE 
DEPT PASS USTR FOR JCHOE-GROVES 
DEPT PASS USPTO FOR JURBAN 
USDOC FOR ITA/MAC/CRUSNAK 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR TU USTR
SUBJECT: Special 301 - Recommendation to Downgrade 
Turkey to Watch List Status (SBU) 
 
Ref:  (A) State 14937 (B) 05 Ankara 6378 (C) 05 Ankara 
 
7097 (D) 05 Ankara 6899 (E) 05 Ankara 971 (F) 06 
Istanbul 124 (G) 06 Ankara 479 (H) 05 Ankara 7308 (I) 05 
Ankara 7296 
 
Summary 
------- 
 
¶1. (SBU) Over the past year, the GOT has continued to 
improve intellectual property protection, especially for 
copyright owners.  Turkish courts began rendering 
increasingly deterrent sentences for copyright 
infringers in a more expedited manner.  An expanded data 
exclusivity regulation provides protection for new 
pharmaceutical molecules, although it is still short of 
TRIPS and EU requirements and leaves the fate of 35 
products in question.  The most productive way to ensure 
that Turkey continues to move toward full implementation 
of international IPR standards would be to include 
Turkey on the Watch List in the 2006 Special 301 Review 
and continue to engage the GOT to improve intellectual 
property protection.  Such steps would recognize the 
successful actions taken over the past year and set a 
clear agenda for further work in the period ahead.  End 
Summary. 
 
Pharmaceuticals 
--------------- 
 
¶2. (U) Inadequate protection of the confidential test 
data of pharmaceutical companies has been Turkey's most 
egregious IPR shortcoming.  In response to intense EU 
and USG pressure, however, the GOT broadened data 
protection in a regulation issued by the Health Ministry 
in June 2005.  Data exclusivity is provided to all 
products granted marketing approval in Turkey after 
January 1, 2005.  The six-year term of protection starts 
on the date of licensing in a European Customs Union 
(ECU) country.  The GOT argues that it cannot 
differentiate itself from other ECU countries with 
respect to data exclusivity.  EU representatives in 
Turkey concede that, while the ECU system is complex and 
this issue is not entirely clear in its regulations, 
this is probably the case.  They add that under ECU 
statutes, an ECU country cannot block access to a 
product that has been approved or produced in other ECU 
countries.  Using the leverage of the EU accession 
process, the EU continues to engage the GOT at the 
highest level, including letters from Commissioner 
Mandelson to FM Gul and meetings with State Minister 
Babacan, to push the GOT to implement fully EU-compliant 
regulations on this issue. 
 
¶3.  (SBU) Prior to the January 1, 2005 start of enhanced 
data protection, generic manufacturers in Turkey filed a 
number of "midnight" applications for approval of 
products not yet registered in the Turkish market. 
Pharmaceuticals Research and Manufacturers Association 
(PhRMA) companies in Turkey remain concerned about the 
data protection available to up to 35 molecules for 
which such generic applications were filed (ref B).  MOH 
officials argue that under Turkish law they must process 
these applications, but that this in no way guarantees 
that they will subsequently gain approval (ref C). 
Local representatives of PhRMA companies tell us that 
under Turkish law these files do not qualify for 
approval because they may rely on research-based 
companies' full data submissions that were not filed in 
Turkey prior to January 1, 2005.  MOH officials also 
tell us that the 210 day processing deadline for 
applications does not apply to files submitted prior to 
January 1, 2005, and therefore they have made it a 
priority to process the applications submitted after 
this date and will get to the "midnight filings" as time 
becomes available.  While the MOH has not been willing 
to definitively state whether or not these 35 products 
enjoy data exclusivity, officials have indicated to us 
that they may be solving the problem by waiting for what 
would have been the end of the data exclusivity period 
before making a decision. 
 
¶4. (SBU) On the issue of patent linkage, the Health 
Ministry recently told us that the Turkish Patent 
Institute (TPI) holds responsibility for patent linkage 
reviews.  Under Turkish law, there is no linkage 
requirement between a patent search and licensing 
approval.  There does exist, however, a requirement to 
determine whether or not a patent exists prior to 
granting marketing approval, the final step before a 
product becomes available to the Turkish market. 
¶5. (U) Citing concerns on data exclusivity and patent 
linkage, PhRMA claimed IP-related losses of USD 1.36 
billion - 21.8 percent of sales in Turkey in 2005, up 
from USD 887 million last year.  Describing serious non- 
IP problems with respect to Turkish price controls and 
reimbursement system reforms, PhRMA again recommended 
elevating Turkey to Priority Foreign Country status. 
Embassy notes that data exclusivity comprises only USD 
205 million of PhRMA's estimated damages.  We also note 
that, following the MOH's expansion of data protection 
in June 2005, the pharmaceutical companies operating 
here have expressed a willingness to let implementation 
take its course for now rather than pushing for our 
continued high-level engagement.  It is not clear what 
if any patent-related damages are represented by the 
remaining USD 1.16 billion claimed by PhRMA. 
 
Copyright, Trademarks and Other IP Issues 
----------------------------------------- 
 
¶6. (U) While the International AntiCounterfeiting 
Coalition (IACC) did not recommend that Turkey remain in 
any Special 301 category in 2005, the International 
Intellectual Property Alliance (IIPA) recommended that 
Turkey remain a Priority Watch List Country.  While 
doing so, however, IIPA's submission describes a number 
of improvements made by the GOT to fight piracy and 
strengthen enforcement in 2005.  IIPA estimates 2005 
industry losses in Turkey at over USD 160 million, down 
from 2004 estimated loss of USD 190 million. 
 
¶7. (U) Turkey has indeed taken a number of significant 
positive steps in copyright enforcement in the last 
year.  These include the following: 
 
-- 3.5 million pirated goods were confiscated in 2005 
during raids and other ex officio actions (those not 
requiring a court order) by the Turkish National Police 
(TNP). 
 
-- In July 2005, the Turkish Court of Cassation (the 
highest appeal court) upheld a previous Ankara IPR Court 
ruling cited in our 2005 submission (ref E) against 
three individuals who were sentenced to 2.5 years in 
prison and a YTL 60,000 (approx USD 44,000) fine.  This 
ruling now provides a precedent for future cases and 
should lead to expedited decisions during the appeals 
process. 
 
-- In January 2006, the Istanbul IPR Court sentenced a 
pirated optical disk producer to 2 years, 13 months and 
15 days imprisonment for illegally copying and 
distributing copyrighted material, an additional 2.5 
years imprisonment for violating a copyright without the 
right owner's consent, the confiscation of 4,700 pirated 
DVDs, and the sale of the production equipment worth YTL 
160,447 (approx USD 120,000).  This was the first time 
in which the production equipment was seized and sold in 
Turkey and responds directly to IIPA's recommendation 
that criminal liability include seizure and forfeiture 
of all equipment and goods found in such facilities. 
 
-- The Culture and Tourism Ministry (MOTC) and the 
Ministry of Education (MOE) created an IPR-related 
curriculum as part of primary and secondary school 
civics programs. 
 
-- The MOE began a public-education campaign targeting 
universities and places of business providing photocopy 
services in their vicinity stating that the reproduction 
of copyrighted material is illegal. 
 
-- Due to private sector and inter-agency GOT pressure, 
a proposed amendment that would remove criminal 
penalties for infringing goods produced outside of 
Turkey (ref D) has been set aside and is not expected to 
be passed by the Parliament. 
 
¶8. (U) In 2004, Turkey published its first Plant Variety 
Protection (PVP) Law.  At least one subsidiary of a U.S. 
seed company, however, reported difficulty obtaining 
protection for its commercial seed under this new law. 
In the last six months, however, we have had no further 
contact from the company regarding this issue. 
 
Unlicensed Software Use 
----------------------- 
 
¶9. (SBU) In the 1990s, the GOT implemented an internal 
memorandum banning the use of unlicensed software. 
According to NGOs in Turkey that monitor this usage, the 
memorandum's requirements are sufficient for the 
protection of software rights holders.  Official 
statistics, however, are not available concerning the 
percentage of government offices in compliance, and no 
formal mechanism of enforcement exists. 
 
¶10. (SBU) The private business and home use of 
unlicensed software remains a problem.  In a January 
2006 visit to Turkey, however, Microsoft's Bill Gates 
congratulated the GOT on its effort to reduce software 
piracy and launched a new program, "My First Computer," 
which aims to provide low cost computers (approx USD 
300) to 80 percent of Turkish households (ref F).  Gates 
described Turkey as a "dynamic emerging market" and 
alluded to the possibility of further IT investment in 
the country.  According to Turkey's chapter of the 
Business Software Alliance, approximately 66 percent of 
the software in Turkey is pirated.  (Note: While this 
seems high, compared to other more developed developing 
countries, Turkey's home computer use is low, estimated 
at only 16 percent of households or an estimated 10 
million people using 750,000 computers.  End note.) 
 
International Treaties 
---------------------- 
 
¶11. (SBU) Turkey has not yet ratified the 1996 WIPO 
Copyright Treaty (WCT) or the WIPO Performances and 
Phonograms Treaty (WPPT).  MOCT officials recently told 
us, however, that the matters were at the Parliament and 
they hoped, but were not certain, that they would be 
considered and approved during the 2006 Parliamentary 
session.  They added that in practice Turkey already 
complies with these treaties. 
 
Training 
-------- 
 
¶12. (SBU) As a result of the October 2005 start of 
Turkey's EU accession talks, the GOT has begun a 
harmonization effort to align its IPR regulations with 
those of the EU.  In an effort to strengthen Turkey's 
copyright protection and to enhance enforcement, GOT IPR 
judges, prosecutors, police and customs officials have 
participated in a number of training programs and 
twining projects in which officials from another EU 
country work closely with relevant officials on specific 
IPR issues.  Most recently 8 additional judges and 
several additional prosecutors were selected to serve in 
the IPR courts and receive training.  The MOCT also held 
a seminar for 75 TNP officers on detection of pirated 
goods, investigation and enforcement.  2005 also marked 
the addition of a former IPR court judge to the Court of 
Cassation, thus providing much-needed expertise to that 
court of appeal.  This should hopefully expedite future 
appeals in 2006. 
 
¶13. (U) While the GOT's EU accession process will 
provide many training opportunities, we continue to 
support USG training courses for Turkey's IPR judges, 
prosecutors, police and customs officials.  One useful 
avenue of training would be a course linking IPR crimes 
with organized crime and terrorist organizations.  Many 
GOT officials believe that proceeds from pirated 
products fund the PKK terrorist organization, although 
no connection has been found.  It would be useful for 
Turkey's prosecutors and investigators to receive 
training on how to detect and link such activities with 
these organizations and prosecute the offenders. 
 
Comment/Recommendation 
---------------------- 
 
¶14. (SBU) The June 2005 expanded data exclusivity 
regulations, stepped up copyright enforcement and 
deterrent sentences represent significant progress on 
intellectual property protection.  Due to Turkey's EU 
harmonization process, the USG and the EU are working 
together to emphasize the importance of these issues and 
provide training and technical support.  In addition, 
these issues were emphasized during the January Trade 
and Investment Framework (TIFA) Council meeting by USTR 
representatives.  We supported putting Turkey on the 
Priority Watch List in 2004 and 2005 in order to apply 
the pressure needed for the GOT to implement much-needed 
reform.  Serious steps have been taken and should be 
recognized.  Keeping Turkey there in 2006 could slow 
down this progress if there is a political backlash 
against outside pressure, especially if this pressure is 
seen as not taking into account Turkey's progress.  With 
the increase in raids and contraband seizures, a more 
expedited judicial process that is issuing more punitive 
penalties for IPR infringers, and the assurance of data 
exclusivity for all but 35 remaining pharmaceutical 
molecules, we believe that downgrading Turkey to the 
Watch List in 2006 would encourage the GOT to reinforce 
and continue its IPR enforcement efforts while still 
maintaining pressure to continue its efforts. 
Wilson