VZCZCXRO4116
PP RUEHROV
DE RUEHEG #0478/01 0530441
ZNR UUUUU ZZH
P 220441Z FEB 07
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC PRIORITY 3710
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS SECTION 01 OF 03 CAIRO 000478 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
NEA FOR ELA 
EB FOR TPP/IPE BOGER 
USTR FOR SAUMS AND GROVES 
COMMERCE FOR OBERG AND ITA/MAC/OIPR PETERS 
NSC FOR WATERS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KIPR EG
SUBJECT: 2007 SPECIAL 301 REVIEW FOR EGYPT 
 
REF: A. STATE 7944 
 
     ¶B. 2006 CAIRO 1262 
 
¶1. (SBU) SUMMARY: Embassy Cairo recommends that USTR move 
Egypt from the Special 301 Priority Watch List to the Watch 
List in recognition of improvements in Egypt's regime for 
protecting Intellectual Property Rights in 2005 and 2006, and 
to encourage further progress.  During the last two years, 
GOE officials have made some of the institutional reforms 
necessary to improve IPR protection, and the government is 
laying the groundwork for future improvements.  Embassy 
recommended last year that GOE actions were not yet 
sufficient to warrant removal from the Priority Watch List 
(ref B).  However, following meaningful steps toward IPR 
reform this past year, we believe we can best influence the 
process by signaling our support for those GOE officials and 
institutions that will ultimately determine the state of IPR 
protection in Egypt.  END SUMMARY 
 
---------- 
Background 
---------- 
 
¶2. (U) Egypt was listed on the Special 301 Priority Watch 
List in 1997 for intellectual property protection well below 
international standards.  In 2002, Egypt passed a 
comprehensive IPR law to protect intellectual property to 
bring the country into compliance with its TRIPS obligations. 
 The government issued executive regulations dealing with 
patents, trademarks, and plant variety protection in 2003. 
In response, USTR moved Egypt from the Priority Watch List to 
the Watch List that year.  However, in late 2003, the 
Egyptian government issued approvals for local pharmaceutical 
manufacturers to produce drugs that infringed on U.S. 
patents, contravening Egypt's obligations to protect the 
holder of the intellectual property rights.  As a result, 
USTR moved Egypt back to the Priority Watch List in 2004. 
 
¶3. (U) Since that time, the GOE has made progress toward 
establishing and strengthening institutions necessary to 
protect intellectual property, and IPR enforcement has 
improved.  Regulations protecting copyright and related 
rights under the new IPR law were first issued in 2005. 
Provisions allowing the patenting of pharmaceutical products 
also took effect in 2005.  A modern, computerized Egyptian 
Patent Office has been working to improve its ability to 
receive and examine paper or electronically filed patent 
applications. 
 
¶4. (U) Egypt has also taken advantage of USAID and United 
States Patent and Trademark Office (USPTO) technical 
assistance on topics such as copyright, patent and trademark 
examination; pharmaceutical patent examination; and IPR 
enforcement.  USAID is working with the GOE to strengthen IPR 
enforcement, including supporting a Ministry of Justice 
program to increase the legal awareness of judges on IPR 
issues and building institutional capacity to handle 
infringement cases. 
 
¶5. (U) In 2005 and 2006, 1,375 judges (30 percent of sitting 
judges) received training in intellectual property rights 
programs. In addition, in 2006, 400 judges from the Courts of 
First Instance received training on IPR and the use of 
injunctions.  Before this program, judges issued trademark 
injunctions only once every few years in Egypt.  In the 
months following the program, judges issued 10 injunctions. 
Also, 150 civil inspectors received training in IPR 
enforcement procedures. 
 
-------------------------------------------- 
Optical Media Piracy and Government Software 
-------------------------------------------- 
 
¶6. (U) High levels of piracy continue to adversely affect 
most copyright industries in Egypt, including motion 
pictures, sound recordings, books and other printed matter, 
and computer software.  The GOE has improved its protection 
of computer software in recent years and took steps to ensure 
the authorized use of legitimate business software in 
government departments and schools.  However, in its 2007 
Special 301 submission, the International Intellectual 
Property Alliance (IIPA) estimated that 63 percent of 
business software in Egypt was pirated.  IIPA recommends that 
Egypt remain on the Priority Watch List for 2007 for this 
reason. 
 
CAIRO 00000478  002 OF 003 
 
 
 
¶7. (U) In the past, the Ministry of Culture did not 
effectively enforce exclusive rights for software.  In its 
2007 Special 301 submission, IIPA listed the creation of an 
effective enforcement unit under MCIT as its top priority 
action requested for 2007.  New copyright regulations issued 
in December 2006 give the Information Technology Industry 
Development Agency (ITIDA), which falls under the Ministry of 
Communications and Information Technology (MCIT), sole 
responsibility for copyright law enforcement for software and 
databases, a step welcomed by U.S. industry. 
 
¶8. (U) ITIDA is developing plans to implement its new mandate 
under the December 2006 regulations, including awareness 
campaigns for the public and government officials.  ITIDA 
officials indicate they will assert their new enforcement 
role more strongly after concluding the awareness campaigns. 
 
¶9. (SBU) The U.S. company Electronic Arts (EA), an electronic 
games manufacturer, may prove a test case for GOE enforcement 
in 2007.  ITIDA has recently indicated a willingness to work 
with EA and the Embassy to address long-standing IPR 
enforcement concerns and has scheduled a meeting with EA 
officials and Embassy Cairo in March.  This will be the first 
meeting between EA and ITIDA, with its new expanded 
enforcement role. 
 
------------------------------------ 
TRIPS, Data Protection, and Folklore 
------------------------------------ 
 
¶10. (U) Egypt is the largest producer of pharmaceutical 
products in the Middle East and North Africa. The 364 
registered pharmaceutical companies produce a wide array of 
drugs worth an estimated $1.6 billion in 2005.  Egypt is also 
a leading exporter to Arab countries. 
 
¶11. (SBU) In 2004 and 2005, the USG expressed strong concern 
about Egyptian plans to approve unauthorized copies of U.S. 
pharmaceutical products for marketing in Egypt based on 
confidential test data submitted by U.S. firms.  The USG 
 
SIPDIS 
noted such action would violate Egypt's TRIPS obligations, 
its own IPR law, and GOE assurances to the USG.  Even so, in 
late 2005 an Egyptian company introduced an unauthorized 
generic version of a flagship product of a U.S. 
pharmaceutical company, while an Egyptian court rescinded a 
U.S. firm's exclusive marketing rights for a product pending 
patent approval. 
 
¶12. (U) In accordance with its TRIPS obligations, the 
Egyptian Patent Office opened the "mailbox" for 
pharmaceutical patent applications on January 1, 2005, and 
began examining the approximately 1,500 pharmaceutical patent 
applications submitted for approval through this process.  In 
late October 2006, the patent office completed substantive 
examination of its first two pharmaceutical product 
applications from the mailbox and accepted them for 
publication.  Under the new IPR law, these applications may 
receive a final grant if no oppositions are filed within 60 
days of their publication in the official gazette. 
 
¶13. (U) One of the first mailbox applications accepted for 
publication was for Eli Lilly's Zyprexa, accepted on October 
31, 2006.  However, the patent office did not actually 
publish the application until January 2007, delaying the 
earliest possible final grant date to March 2007.  Delays in 
publication are now adding unnecessary extra time to the 
opposition process, which appears a necessary precursor to 
final issuance.  In fact, the Embassy is not aware of any 
final approvals yet from "mailbox" applications. 
 
¶14. (U) The Ministry of Health and Population (MOHP) issued a 
decree effective January 1, 2007, to streamline the approval 
process to 120 days for drugs that have already been approved 
for marketing in the United States and the European Union, or 
in other specified circumstances.  This is particularly 
important for the pharmaceutical industry because the data 
protection period in Egypt runs five years from the date the 
application for registration is received by the ministry.  In 
recognition of this and other indications by MOHP that it 
intends to improve IPR protection, PhRMA has recommended 
moving Egypt to the Watch List for 2007. 
 
¶15. (U) Several companies have reported that MOHP appears to 
be implementing the decree in such a way that it would avoid 
 
CAIRO 00000478  003 OF 003 
 
 
its TRIPS data protection obligations.  The Ministry's Drug 
Planning and Policy Center has informed the companies that it 
will not process their applications to register new drugs 
until the companies state in writing that their applications 
do not contain any undisclosed data.  Protection of 
undisclosed data, including test data required for marketing 
approval, is a TRIPS obligation. 
 
¶16. (SBU) The Embassy has raised with the MOHP USG concerns 
that applicants are not permitted to submit undisclosed data 
in their file unless specifically requested by the MOHP. This 
policy is a concern because, if MOHP officials do not require 
such data for approval of new products, applicants other than 
the company that developed the product could successfully 
petition for approval to sell unauthorized copies. 
 
¶17. (U) A government committee has been meeting for more than 
a year to consider a policy or legislation regarding the 
protection of traditional knowledge or expressions of 
folklore.  We are not aware of any action taken by this 
committee. In addition, IPR regulations state that patent 
applications using traditional knowledge or folklore must 
state that any traditional knowledge or folklore used in 
creating the invention must have been properly obtained. 
 
--------------------------------------- 
Notorious Markets and Counterfeit Goods 
--------------------------------------- 
 
¶18. (U) Pirated DVDs, CDs, software and other counterfeit 
products are available from street vendors in Egypt although 
there are no large, notorious markets known to specialize in 
such goods.  However, Embassy noted that Philip Morris cited 
Port Said on the Suez Canal as being one of the main transit 
points for counterfeit cigarettes coming into Europe in its 
2007 Special 301 submission.  According to Philip Morris, 
Egyptian officials permitted the transshipment of counterfeit 
cigarettes through an Egyptian port in September 2006, even 
though the Egyptian Trademark Office had already determined 
the cigarettes were counterfeit, based on the argument that 
the cigarettes were not bound for Egypt. 
 
¶19. (U) While infringement of trademarks, textile designs, 
and industrial designs remains a problem, the GOE has taken 
steps to improve enforcement by training civil inspectors in 
IPR enforcement, issuing improved inspection procedures, and 
taking steps to implement measures at its borders to prevent 
the importation of counterfeit and pirated goods.  The 
government is developing new regulations and procedures to 
implement TRIPS obligations relating to border measures.  In 
2006, the government acceded to the Nice agreement on 
trademark classification. 
 
------- 
Comment 
------- 
 
¶20. (SBU) Our long-standing engagement with the GOE on IPR 
protection has had mixed results, but the overall trend has 
been generally positive.  Although the actual gains during 
that period have not been dramatic, the GOE's positive steps 
the last two years give us reason to believe that continued 
engagement and scrutiny will help us solidify improvement in 
IPR protection, if we can retain the cooperation and goodwill 
of like-minded GOE officials.  Moving Egypt from the Priority 
Watch List back to the Watch List will reward positive GOE 
actions, and demonstrate our own goodwill and our intention 
to work together with the GOE to promote this vital interest, 
while leaving us the option to respond to backsliding by 
returning Egypt to the Priority Watch List in the future, if 
necessary. 
RICCIARDONE