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R 071628Z AUG 06
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UNCLAS SECTION 01 OF 02 CARACAS 002331 
 
SIPDIS 
 
SIPDIS 
 
COMMERCE FOR 4331/MAC/WH/CAMERON 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD VE
SUBJECT: IPR IMPLICATIONS OF LEAVING THE ANDEAN COMMUNITY 
AND JOINING MERCOSUR 
 
 
This message is sensitive but unclassified, please treat 
accordingly. 
 
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Summary 
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¶1. (SBU)  Venezuela's hasty withdrawal from the Andean 
Community (CAN) has left a legal void regarding intellectual 
property rights protection.  Though some BRV agencies, such 
as the Autonomous Intellectual Property Service (SAPI), 
continue to apply CAN norms, legal experts are questioning 
whether the norms remain binding if Venezuela is no longer a 
member.  If they are abandoned, the country would return to 
existing laws -- for copyrights, a 1993 law is fairly 
protective, but not so for industrial property, whose 1957 
legislation is sorely outdated.  Mercosur, in contrast to 
CAN's strong IPR regime, has minimal IPR protections.  If CAN 
norms are kept, they could only be superseded by new laws, 
which are already on the National Assembly's 2006 schedule. 
Currently, there is draft legislation on copyrights and 
industrial property - and both are offers that weaken IPR 
protection.  End Summary. 
 
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Legal void? 
----------- 
 
¶2. (U)  Article 153 of Venezuela's Constitution stipulates 
that norms adopted under international agreements 
automatically become Venezuelan law.  However, Venezuelan law 
also stipulates that legislation must be published in the 
Official Gazette.  Some CAN decisions and norms were 
published without congressional approval, others with 
congressional approval, and some weren't published at all.  A 
handful of legal experts allege that only those norms 
ratified by congress now apply, while others maintain that 
all norms, regardless of publication in the gazette, continue 
to be Venezuelan law.  Other experts, such as the head of 
CAVEME (Venezuelan Pharmaceutical Chamber) believe that CAN 
norms are no longer valid if Venezuela is not a member of the 
Andean Community  (Note: With the exception of trade 
preferences, which remain in effect for five years.  End 
Note).  Since no branch of the BRV has come forward to 
clarify the issue, there is general confusion regarding 
applicability of CAN norms (i.e. a legal void). 
 
¶3. (SBU)  Despite differing opinions, the majority of legal 
experts and some in the BRV, such as the Autonomous 
Intellectual Property Service (SAPI), are still applying CAN 
norms.  The legal questions will not be fully clarified until 
the Supreme Court (TSJ) makes either a general ruling on 
applicability of CAN norms, or it rules on an individual case 
and sets precedent.  (Comment: A TSJ ruling or other BRV 
clarification is unlikely, as the negative consequences of 
leaving CAN are rarely discussed publicly -- they would be an 
affront to President Chavez, who was vehement that "CAN is 
dead."  End Comment.) 
 
-------------------------------- 
If CAN regulations are abandoned 
-------------------------------- 
 
¶4. (SBU) Andean Community norms on intellectual property 
offer adequate protection.  Renouncing these would mean 
Venezuela would have to return to existing national law for 
patents, copyrights, and other IPR protections.  Venezuela's 
1993 Copyright Law is protective of IPR, and is generally 
considered a strong piece of legislation.  However, there is 
a draft copyright law currently in the National Assembly (NA) 
which requires mandatory national registration of all artists 
seeking copyright protections, sets high fees and low 
royalties, has strong penalties for non-compliance, and 
 
CARACAS 00002331  002 OF 002 
 
 
includes a clause allowing the BRV to use a work if it is in 
"national interest."  If the law passes in its current form, 
it would provide little incentive for international artists 
to enter the Venezuelan market, and it would weaken 
protections for local copyright holders. 
 
¶5. (SBU) If CAN norms are abandoned, Venezuela would also 
revert to the 1957 Industrial Property Law (governing 
patents) -- an outdated piece of legislation that offers 
inadequate IPR protections.  Returning to this legislation 
would certainly weaken an already fragile IPR regime.  The 
National Assembly is currently debating a draft industrial 
property law, whose details are unknown.  Hildegard Rondon, a 
former TSJ magistrate and supposed author of the draft law, 
stated that "industrial property is authored by rich 
countries so it favors them" and that Venezuela needs to find 
"its own solution."  She then introduced the idea of an 
"Author Invention Certificate," which would give recognition 
to an inventor, but not exclusivity.  Nobody in the industry 
has seen the current draft law, and a National Assembly 
representative who was invited to speak at an IPR-CAN event 
in early July merely told the audience he "couldn't discuss 
the law" but that it would be open to public debate soon.  If 
this draft law follows the path of other legislation, the NA 
will seek private sector opinions but ultimately their 
recommendations will not be incorporated into the law.  With 
Rondon's hints about content, the law will likely have poor 
industrial property rights protection. 
 
------------------------ 
The Mercosur alternative 
------------------------ 
 
¶6. (U) Unlike the Andean Community, Mercosur does not offer a 
strong IPR protection regime.  The body has only one 
agreement on trademarks, harmonized protocols for 
geographical and source indications, but no regulations on 
patents.  It also (for now) lacks a court to field disputes, 
or a parliament.  There are two committees that deal with IPR 
issues: the IPR Commission (part of the industrial subgroup) 
and a Commerce and Customs Technical Committee.  In the works 
is a Protocol for Combatting Piracy, which is being discussed 
by Justice and Interior Ministers of member states.  Mercosur 
does have some trade denominations for patents and technical 
drawings and multiple agricultural agreements (some of which 
could protect vegetable varieties, for example).  As opposed 
to the CAN, where adopted norms automatically became law, 
Mercosur's member states must each ratify norms for them to 
be binding.  Mercosur's protections are a far cry from those 
of the Andean Community and membership could essentially mean 
a return to the TRIPS standard and WTO as a baseline for IPR 
protection. 
 
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Comment 
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¶7. (U) For now, the BRV is continuing to apply CAN norms, and 
nothing has suggested that the TSJ will make a clarifying 
ruling to interpret the legal consequences of withdrawal. 
Despite Chavez making the decision to withdraw from CAN 
unilaterally (and without consultation), there has been 
little public discussion about the negative ramifications of 
leaving the organization, especially for IPR.  The lack of 
BRV forethought is apparent -- the government is remaining 
silent because they haven't thought the issue through. 
Though Venezuela had lackluster implementation of CAN norms 
before departing, the regulations did serve as a legal basis 
to protect IPR despite anti-IPR voices within the country. 
Now, the door is left wide open for draft legislation 
infringing upon IP rights to sail through the National 
Assembly and become law. 
WHITAKER