VZCZCXRO1024
PP RUEHRG
DE RUEHBR #0844/01 1221351
ZNR UUUUU ZZH
P 021351Z MAY 06
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 5254
INFO RUCPDO/USDOC WASHDC
RUEHLP/AMEMBASSY LA PAZ 4534
RUEHSO/AMCONSUL SAO PAULO 6849
RUEHRG/AMCONSUL RECIFE 4681
RUEHRI/AMCONSUL RIO DE JANEIRO 1971
RUEHAC/AMEMBASSY ASUNCION 5385
RUEHMN/AMEMBASSY MONTEVIDEO 6204
RUEHBU/AMEMBASSY BUENOS AIRES 3970
RUEHSG/AMEMBASSY SANTIAGO 5461
RUEATRS/DEPT OF TREASURY WASHDC
RUEAWJC/DEPT OF JUSTICE WASHDC

UNCLAS SECTION 01 OF 04 BRASILIA 000844 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS TO USTR FOR MSULLIVAN/KLEZNY 
NSC FOR SUE CRONIN 
DEPT OF TREASURY FOR FPARODI 
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D 
USDOC FOR 3134/USFCS/OIO/SHUPKA 
USDOJ FOR CHRIS MERRIAM 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR BR
SUBJECT:  Brazil 2006 Special 301 Notification 
 
REF:  A) State 14937 
 
¶1.  (SBU) On April 27, Econ Counselor delivered USG talking points 
to Otavio Brandelli, the chief of the Ministry of External 
Relations's IPR office.  Speaking informall, Brandelli termed the 
USG's decision to maintain Brazil on the 2006 Priority Watch List as 
both "unpleasant" and "lamentable."  Observing that up to now the 
United States and the GOB have enjoyed excellent cooperation on IPR 
issues, he wondered whether this relationship could continue in 
light of the USG's decision. 
 
¶2. (SBU)  In response to our points on pharmaceutical patents, 
Brandelli specifically noted that 1) drug test data were "totally 
protected by Brazilian law,"  and 2) the new examiners the national 
patent office (INPI) was in the process of hiring would eliminate 
the patent backlog.  He added that the time-frame for protecting 
patents under review was automatically extended in the case of 
delay, and that pipeline protection was not obligatory under TRIPs. 
 
 
¶3.  (U)   Late in the afternoon of April 28, subsequent to USTR's 
announcement of the Special 301 decisions, the Ministry of External 
Relations issued the following press release. 
 
BEGIN TEXT OF INFORMAL TRANSLATION OF PRESS RELEASE 
 
Intellectual Property:  Continuation of Brazil on the U.S. Priority 
Watch List 
 
The Brazilian government received with displeasure the U.S. 
government's April 28 announcement of its decision to maintain 
Brazil on the Special 301 trade legislation Priority Watch List. 
Brazil has been included in the Priority Watch List since 2002.  In 
the view of the Brazil government, this situation does not reflect 
the reality regarding protection of intellectual property in the 
country.  Four months ago, on January 13, 2006, the U.S. government 
terminated the administrative review that threatened to withdraw 
Brazil's tariff benefits under GSP.  This was done in recognition of 
the noteworthy efforts that had been taken by the Brazilian 
government and society in combating copyright piracy and other 
crimes against intellectual property through the creation in the 
Ministry of Justice of the National Anti-Piracy Council and the 
adoption of enforcement, educational, and economic measures. 
 
The decision to maintain Brazil on the Special 301 Priority Watch 
List is not consistent with the standards of intellectual property 
protection enshrined in Brazilian law, which is completely 
compatible with the international commitments undertaken by Brazil 
in multilateral fora, such as the World Intellectual Property 
Organization (WIPO) and the WTO, and in particular the WTO TRIPs 
agreement. 
 
The Brazilian government thus deplores the U.S. decision to maintain 
Brazil on the Priority Watch List, as this is inconsistent with the 
positive bilateral dialogue, on both the political and technical 
level, between the two countries on the issue of intellectual 
property.  During the course of this dialogue, the Brazilian 
government at all times demonstrated an unequivocal constructive 
spirit. 
 
Additional Information 
 
Position of Brazil on the Special 301 Priority Watch List for the 
Past 10 Years 
 
Year  Priority Foreign Country    PWL List       Watch List 
1996                                                X 
 
1997                                                X 
 
1998                     Brazil not on any list 
1999                                                X 
 
2000                                                X 
 
BRASILIA 00000844  002 OF 004 
 
 
 
2001                                                X 
 
2002                                 X 
 
2003                                 X 
 
2004                                 X 
 
2005                                 X 
 
2006                                 X 
 
 
In the ambit of Special 301, based upon information furnished by the 
U.S. private sector (the pharmaceutical, software, motion picture, 
publishing, and recording industries, among others), the U.S. 
organization responsible for trade - USTR - publishes annually three 
lists of countries which, in the U.S. government's view, allegedly 
fail to offer adequate and effective protection of intellectual 
property:  priority foreign countries, the Priority Watch List, and 
the Watch List. 
 
¶2.   The maintenance of Brazil on the Priority Watch List is 
incompatible with the high standards of Brazilian intellectual 
property legislation.  Brazil has not only declined to take full 
advantage of the transition periods in the TRIPs agreement 
contemplated for developing countries (the year 2000 in general and 
2005 for pharmaceutical patents), but, in some cases, has 
established in national legislation requirements stricter than those 
agreed to in the WTO.  The Brazilian law implementing TRIPs were all 
enacted before 2000:  the industrial property law in 1996 (Law # 
9,279/96), vegetable/cultivation varieties in 1997 (Law # 9,456/97), 
copyright in 1998 (Law # 9,610/98) and software also in 1998 (Law # 
9,609/98).  Specifically, with respect to pharmaceutical patents, 
the time-frame for allowing them could have been the year 2005, but 
instead, however, they were legalized in the Industrial Property Law 
(IPL) of 1996. 
 
¶3.   In substantive terms, the Brazilian IPL granted so-called 
"pipeline" patent protection --  not contemplated in the TRIPs 
agreement - for the time remaining on  patents in areas previously 
excluded from patentability (pharmaceuticals, chemicals, and 
foodstuffs) that before, by law in Brazil, fell into the public 
domain.  Regarding copyrights, its worthwhile mentioning the 
following provisions of TRIPs-plus character adopted in the 
Brazilian juridical framework:  (a) the protection period for 
property rights (articles 41and 44, Law # 9,610/98) is 70 years when 
in TRIPs the period is 50 years (article 12);  (b) while under TRIPs 
the right to authorize licenses must be allowed, at the minimum, for 
computer programs and cinematographic works (article 11,  Law # 
9,610/98), Brazilian law provides for licensing rights for all 
property protected by copyright, including phonographic works 
(article 29), (c) Law # 9,610/98 confers on phonogram producers 
exclusive rights to authorize, or prohibit, not only the direct or 
indirect reproduction of phonograms, but also the distribution 
through sale or rental; the divulgation to the public through public 
performances; and through any other methods, existing or which come 
to be invented.  For its part, TRIPs, only provides for "the 
producers of phonograms to enjoy the right to authorize or license 
the direct or indirect reproduction of their phonograms. 
 
¶4.    In 2004, after the conclusion of the Chamber of Deputies 
Congressional Investigative Commission (CPI) on Piracy, the 
President of the Republic decreed the creation of a National 
Anti-Piracy Council (CNCP).  The CNCP  represents an unprecedented 
qualitative leap in the coordination between public and private 
organs in Brazil.  Diverse piracy and counterfeiting enforcement 
operations took place under the coordination of the CNCP during the 
course of 2004 and 2005.  According to Receita Federal [the 
Brazilian IRS-equivalent] data, in 2005 there was an increase of 
32.8 percent in the amount of merchandise apprehended compared to 
2004, constituting a record total of R$601 million - R$149 million 
more than in the year 2004.  The apprehension of illegal media by 
 
BRASILIA 00000844  003 OF 004 
 
 
the Federal Highway Police in the first 4 months of 2006  (2.2 
million)  practically equals the apprehensions for both the years 
2005 (2 million) and 2004 (450,000) put together.  The Federal 
Police detained 1,200 smugglers in 2005, 30 times more than in 2004 
(39).  Among the various public education efforts, the Government 
launched the "Pirata to for a; so uso original" campaign (a 
partnership between the CNCP and the SINDIRECEITA), in addition to 
education programs aimed at schools, colleges, and universities.  In 
the various States of the Brazilian federation, diverse regional 
initiatives were also implemented. 
 
¶5.   Its worthwhile highlighting at this juncture that the recurring 
U.S. allegations about losses in the Brazilian market due to the 
violation of intellectual property rights are relative.  During the 
past 10 years, the repatriation of foreign exchange from Brazil to 
the United States originating from intellectual property rights grew 
from US$161.31 million in 1994 to US$1.04 billion in 2004, an 
increase of 550%. 
 
¶6.  The decision announced by USTR on 1/13/06 to terminate the 
investigation under Section 502 of U.S. trade law regarding the 
allegation of inadequate protection of copyright in Brazil and to 
maintain in full the preferences accorded the country under GSP, in 
and of itself recognizes the advances made by Brazil on the issue of 
enforcement.  One would have expected, however, that the U.S. 
government decision would have been consistent with that on GSP, 
with Brazil being withdrawn from the list in the 2005 Special 301 
review. 
 
¶7.  Other elements, moreover, reinforce the perception that the 
inclusion of Brazil on the Special 301 list is inopportune and 
inadequate: 
 
PROCESSING OF PATENT REQUESTS:  The exponential increase in requests 
for patents worldwide, tied with the fact that Brazil had included 
"pipeline" patents and areas previously excluded from patentability 
in the 1996 LPI, has led to the relative delay in the patent 
process, although INPI has begun to remedy this by hiring 440 new 
employees.  Those posts have been created by the Federal Government 
and the selection process is ongoing; 60 new workers are currently 
being trained.  In addition to this, Article 40 of the LPI 
contemplates extension of a patent's term in cases where than has 
been a prolonged delay in examining that patent.  Up to now, 
however, there has been no verified delay in the examination of 
patents which would lead to the application of the cited article. 
 
PRIOR REVIEW BY ANVISA:   Law # 10,196/01, Article 229-C established 
that patent letters can only be granted for pharmaceutical processes 
and products after a prior review by ANVISA [Brazil's FDA 
equivalent].  ANVISA intervention in the examination of 
pharmaceutical patents constitutes a complex Executive Branch act; 
one cannot do without the "expertise" of that agency in the area of 
drug medications as until the 1996 LPI pharmaceuticals were not 
patentable in Brazil. 
 
COMMERCIAL REGISTRATION/TEST DATA/CONFIDENTIALITY:  Article 39.3 of 
the WTO TRIPs agreement establishes the duty to protect confidential 
information contained in commercial registration requests presented 
to sanitary authorities - given that the development of such 
involves considerable effort.  Protection is accorded against any 
disloyal commercial use.  However, the same article mentions that 
where necessary to protect the public such information may be 
released.  The TRIPs agreement deals with the question of protecting 
confidential information under the rubric of disloyal competition 
 
SIPDIS 
and not as a property rights matter.  Based upon the obligations 
imposed by the TRIPs agreement, the Brazilian Industrial Property 
Law (Law # 9,279/96) establishes a specific penal category for these 
types of disloyal competition offenses (Article 195, section XIV, 
paragraph 2).  ANVISA fully respects these legal standards as it 
takes care to guard the confidentiality of information presented by 
companies in registration requests, watching out for any 
anti-competitive practices. 
 
VOLUNTARY LICENSING OF ANTI-RETROVIRAL MEDICATIONS (ARVs):  Given 
 
BRASILIA 00000844  004 OF 004 
 
 
the necessity to make the DST/AIDS program sustainable [Brazil's 
national anti-AIDS program], with universal, free access to 
treatment in conformity with Law 9313/96, in 2005 the Ministry of 
Health initiated the process of negotiating voluntary licenses of 
ARVs with three U.S. laboratories.  The negotiations with one 
laboratory were concluded satisfactorily on 10/11/2005 via an 
understanding between the parties.  The negotiating process 
continues with two other laboratories.  While international 
agreements and Brazilian industrial property legislation establish 
and make available the instrument of compulsory licensing, Brazil - 
contrary to the perceptions of U.S. public opinion - never took the 
step of "breaking patents and instead put priority on understandings 
based on non-compulsory actions. 
 
TRANSGENIC SOY:  In the past, the "American Soybean Association 
(ASA" presented to the Special 301 Committee a petition to "identify 
Brazil for denying adequate and effective protection of patent 
protection laws applicable to the use of genetically modified 
herbicide-resistant soybean seed developed by Monsanto Company 
(RoundUp Ready soybeans) by Brazilian farmers."  Notwithstanding the 
allegations of that group, the Brazilian judicial system did not 
fail to guarantee to holders of the patent for "RoundUp" technology 
the right of indemnization for the unauthorized use of this 
technology. 
 
¶8.   Complementary information regarding the efforts undertaken by 
the Brazilian government in combating the violation of intellectual 
property rights, especially with respect to copyright, can be found 
in the National Anti-Piracy Council's Activity Reports available on 
the internet page: 
http://www.mj.gov.br/combatepirataria/relator io.asp 
 
END TEXT OF INFORMAL TRANSLATION OF PRESS RELEASE. 
 
Chicola