VZCZCXRO9993
RR RUEHAO RUEHCD RUEHGA RUEHGD RUEHGR RUEHHA RUEHHO RUEHMC RUEHNG
RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHCV #0710/01 1001646
ZNR UUUUU ZZH
R 101646Z APR 07
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC 8317
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RUEATRS/DEPT OF TREASURY
RHEHNSC/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE

UNCLAS SECTION 01 OF 03 CARACAS 000710 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EB/IPE 
DEPT PLEASE PASS TO LIBRARY OF CONGRESS, COPYRIGHT OFFICE 
USTR FOR JENNIFER CHOE GROVES 
TREASURY FOR KLINGENSMITH AND NGRANT 
COMMERCE FOR 4431/MAC/WH/MCAMERON 
NSC FOR DTOMLINSON 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KIPR OTRA VE
SUBJECT: MORE BRV POLICY CONTRADICTIONS: IPR "REFORM" AND 
MERCOSUR 
 
REF: CARACAS 366 
 
¶1.  (SBU) Summary:  Venezuela's withdrawal from the Andean 
Community (CAN) in April 2006 has created legal uncertainty 
as to both the present and future legal framework of IPR. 
Venezuela must now deal with an awkward reality of three 
concurrent IPR regimes - vestiges of the CAN, outdated 
domestic legislation, and nascent Mercosur obligations.  The 
BRV is expected to introduce controversial legislation under 
the Enabling Law that would further weaken IPR protections in 
Venezuela.  The BRV's push for "southern" regional trade 
integration through Mercosur is incompatible with radical IPR 
"reform."  In an example of the contradictions that have come 
to typify BRV politics, Chavez' legal advisors who are 
drafting radical IPR reform are also arguing for Venezuela to 
harmonize IPR protections with Mercosur members.  Septel will 
address the broader political and economic dimensions of 
Venezuela's Mercosur integration.  End Summary. 
 
------------------------------------------- 
IPR Protection in the BRV: What Law Applies? 
------------------------------------------- 
 
¶2.  (SBU) Prior to Venezuela's withdrawal from the CAN, IPR 
protection was governed by CAN Commission Decision 486, 
signed in September 2000 by the Andean Commission.  Decision 
486 is one of over 650 Andean Community Decisions 
incorporated into Venezuela's domestic law.  Decision 486 
implements a common intellectual property regime for patents 
and trademarks in member states, while Decision 351 covers 
copyrights.  These decisions obligate member states to 
provide most favored nation status to one another and 
national treatment. 
 
¶3.  (SBU) Venezuela's withdrawal from the CAN has created a 
legal vacuum for the IPR regime.  Affected industries, in 
particular the pharmaceutical industry, called on Venezuela's 
courts to enunciate the applicable law regarding IPR after 
withdrawal from the CAN, which the judiciary has so far 
failed to do (Reftel).  If Decision 486 were not the 
applicable law in Venezuela, the only alternative source of 
patent protection would be the outdated 1955 Law on 
Industrial Property.  That said, there is an argument that 
the BRV would still be bound by Decision 486: according to 
Article 135 of the Cartagena Accord establishing the CAN, 
"advantages received and granted subsequent to a member 
state's renunciation of the treaty remain in effect for a 
period of five years from the denunciation."  The article 
does not specify whether it applies to goods and services or 
all the preferential provisions accorded under the Accord. 
Since IPR harmonization is referenced in Article 55 of the 
Cartagena Accord, the clear language of the provision would 
imply that Venezuela should continue to apply Decision 486 
for a five year period with respect to other member states. 
Consequently, there appear to be three co-existent IPR 
regimes in Venezuela.  Outdated domestic legislation - the 
Industrial Property Law of 1955 and Copyright Law of 1993, 
Decision 486 of the CAN for an additional five years, and 
Mercosur norms (see para 6). 
 
--------------- 
Domestic Reform 
--------------- 
 
¶4.  (SBU) Post contacts in the pharmaceutical and recording 
industries told Econoff in February 2007 that radical IPR 
legislation with respect to copyright protection and patents 
is on the BRV's agenda this year.  They expect that Chavez 
will introduce such legislation in the form of a decree-law 
pursuant to the Enabling Law, which grants him diktat powers 
for the next 16 months.  The legislation was first discussed 
in 2005 but never placed on the National Assembly's 
legislative agenda.  According to industry sources, the bill 
would essentially eviscerate IPR protection. 
 
¶5.  (SBU) Dr. Hildegard Rondon de Sanso is reportedly 
spearheading the BRV's IPR reform.  (Note: Rondon, 73, is a 
former Venezuelan Supreme Court justice and Energy Minister 
Ramirez' mother-in-law.  She is also rumored to be the 
primary drafter of constitutional reform, though she is not 
an official member of the President's Committee on 
 
CARACAS 00000710  002 OF 003 
 
 
Constitutional Reform.  End Note.)  Post has obtained a copy 
of a presentation she gave in late 2006 discussing IPR reform 
in Venezuela and obligations under the CAN and Mercosur.  She 
previews what the BRV may contemplate on the horizon with 
respect to IPR reform.  Rondon argues that three guiding 
points of IPR reform in Venezuela should be 1) industrial 
property norms have been established by patent producing 
developed countries and unfairly favor such countries; 2) 
Venezuela is a consumer of technology and not a producer; and 
3) WTO IPR norms are being challenged by developing 
countries. 
 
¶6.  (SBU) The proposed copyright legislation would severely 
hamper domestic and foreign rights holders' ability to 
exploit their works in Venezuela.  According to our industry 
contacts, the measure would violate 31 of Venezuela's 
bilateral and multilateral obligations, including TRIPS, if 
passed in its current form.  The bill would reduce the period 
of protection from 60 to 50 years and give the BRV broad 
powers to expropriate artistic works for purposes of the 
"collective benefit."  Proposed patent reform would further 
weaken provisions for test data protection and codify 
Venezuela's failure to protect second-use patents, such as 
Viagra, originally used to treat hypertension (Reftel). 
 
---------------- 
Mercosur and IPR 
---------------- 
 
¶7.  (SBU) Venezuela acceded to the Treaty of Asuncion and 
Mercosur membership in July 2006, joining Argentina, Brazil, 
Uruguay and Paraguay as the fifth "full member" in the 
trading block.  Venezuela is to extend full trade benefits to 
other member states by 2012.  Mercosur's goal is to establish 
a common market and common external tariff.  Generally, trade 
blocks strengthen IPR protections.  The premise of IPR 
protections in Mercosur stems from the principle of 
territoriality, providing that each member state should 
define the scope of its intellectual property regime using 
multilateral obligations such as TRIPS as a baseline. 
Mercosur envisions several measures to coordinate IPR 
protection because discordant IPR regimes can pose a 
substantial barrier to trade and circulation of goods and 
services.  Two Mercosur protocols call for harmonization on 
industrial designs and trademarks.  (Note: The protocol on 
industrial designs is not yet in force and Argentina and 
Brazil have yet to deposit the protocol on trademarks.  End 
Note.)  The Mercosur protocols aim to set minimal standards 
of common protection to ensure that the common market 
functions smoothly.  Specific areas of IPR protection that 
Mercosur seeks to harmonize are patentability, licensing 
requirements, duration of patent and trademark rights, and 
parallel imports/exports. 
 
¶8.  (SBU) According to Article 27 of the 1995 Protocol of 
Harmonization of Norms on Intellectual Property in Mercosur 
for Trademarks, National Origin, and Denomination of Origin, 
countries that accede to the Treaty of Asuncion agree to be 
bound by the provisions of the Protocol.  According to 
Rondon, Mercosur also envisions creation of a supranational 
patent office responsible for issuing community-level 
patents.  During a March 28 conference on Mercosur in 
Caracas, Hernando Diaz, a partner in the U.S. law firm Squire 
Sanders, offered IPR protections as an example of an area in 
which the BRV's domestic legal reform would have to be more 
restrained out of respect for Mercosur integration. 
 
------- 
Comment 
------- 
 
¶9.  (SBU) Venezuela's IPR regime is currently an awkward mix 
and match from antiquated domestic legislation, CAN decisions 
and fledgling Mercosur obligations.  A mitigating factor in 
analyzing potential damage that BRV IPR legislation could 
wreak on Mercosur is that the trade bloc's other four members 
historically have shown little interest in stringent IPR 
protections.  However, the fact that a key BRV legal advisor 
is drafting radical domestic IPR reform on the one hand, and 
lecturing on Mercosur IPR harmonization on the other, 
underscores the contradictions in BRV policy, which have 
 
CARACAS 00000710  003 OF 003 
 
 
become more and more typical. 
 
BROWNFIELD