VZCZCXYZ0000
RR RUEHWEB

DE RUEHMU #0225/01 0572330
ZNR UUUUU ZZH
R 262330Z FEB 08
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 2141
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE

UNCLAS MANAGUA 000225 
 
SIPDIS 
 
STATE FOR WHA/CEN, EB/TPP/MTA/IPC 
STATE PLEASE ALSO PASS TO USTR FOR ANDREA MALITO 
TREASURY FOR SARA GRAY 
USDOC FOR 4332/ITA/MAC/WH/MSIEGELMAN 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KIPR ECON USTR NU
SUBJECT: NICARAGUA: 2008 SPECIAL 301 REVIEW 
 
REFS: A) SECSTATE 9475, B) 07 MANAGUA 2654, C) 07 MANAGUA 2616 
 
SUMMARY AND INTRODUCTION 
------------------------ 
 
¶1. (SBU) Nicaragua's participation in the United States - Central 
America - Dominican Republic Free Trade Agreement (CAFTA-DR) 
required the passage of legislation making the country's framework 
for the enforcement and protection of intellectual property rights 
(IPR) consistent with U.S. and emerging international standards. 
However, the Government of Nicaragua (GON) subsequently passed 
legislation that repealed provisions that had strengthened criminal 
penalties for IPR theft and allowed the GON to initiate ex oficio 
IPR investigations, a CAFTA-DR requirement.  Moreover, as the 
Pharmaceutical Research and Manufacturers of America (PhRMA) raises 
in its 2008 Special 301 Submission, patent linkage and test data 
protection for pharmaceutical products, also CAFTA-DR requirements, 
remain unimplemented. 
 
¶2. (SBU) Nicaragua's failure to meet CAFTA-DR IPR commitments is a 
serious concern.  However, CAFTA-DR is still young, and many GON 
officials lack familiarity with IPR issues.  The fact is that GON 
officials and industry are cooperating to combat piracy, trademark 
infringements, and copyright violations.  In 2007, the GON conducted 
20 raids and the police seized 58,547 pirated DVDs, 21,629 CDs, 13 
computers, 3 multi-purpose copiers, and other audiovisual equipment 
worth approximately $123,000.  Officials at the Ministry of Trade, 
Industry, and Development (MIFIC) are interested in meeting CAFTA-DR 
IPR commitments.  On February 22, after receiving notification that 
PhRMA had named Nicaragua in its 2008 Special 301 Submission, MIFIC 
Minister Solorzano wrote Health Minister Gonzalez seeking his 
cooperation on test data protection. 
 
¶3. (SBU) For these reasons, post would like to work with GON 
officials over the course of the year to find a way to resolve 
Nicaragua's IPR issues.  In lieu of naming Nicaragua to the 2008 
Special 301 Watch List, we recommend that a senior Washington-based 
official pen a letter to President Ortega outlining our IPR concerns 
in terms of CAFTA-DR commitments.  We believe that naming Nicaragua 
to the Watch List this year could result in a negative political 
reaction that would complicate our efforts to help Nicaragua comply 
with its CAFTA-DR IPR commitments. 
 
CAFTA-DR IMPROVES LEGAL FRAMEWORK 
--------------------------------- 
 
¶4. (SBU) CAFTA-DR made Nicaraguan standards for protection and 
enforcement of IPR consistent with U.S. and emerging international 
standards.  To implement the agreement the GON passed several new 
IPR laws that 1) provide state-of-the-art protections for digital 
products such as software, music, text and videos; 2) afford 
stronger protection for patents, trademarks and test data, including 
an electronic system for the registration and maintenance of 
trademarks; and, 3) deter piracy and counterfeiting.  Major IPR laws 
include the Patent, Utility Model, and Industrial Design Law 
(amended 2007/634); the Copyright and Related Rights Law (2006/577); 
the Satellite Signal Programming Protection Law (amended 2006/578); 
and the Trademark and Other Distinctive Signs Law (amended 
2006/580). 
 
NEW CRIMINAL CODE UNDERMINES CAFTA-DR REFORMS 
--------------------------------------------- 
 
¶5. (SBU) Unfortunately, recent reforms to the new Criminal Code 
would weaken IPR enforcement and undermine legislation passed in 
2006 to implement CAFTA-DR.  On April 16, 2006, the GON approved 
amendments to the Copyright Law to add a provision that the 
Prosecutor General's Office could investigate an IPR crime ex 
oficio, without a formal complaint.  However, a new Criminal Code 
approved on November 13, 2007, repeals this provision.  The code 
awaits publication. 
 
¶6. (SBU) The Ortega administration has also weakened penalties for 
copyright violations under the new Criminal Code.  In 2006, 
amendments to the Copyright Law stiffened penalties for IPR crimes, 
including fines ranging from 3,000 to 25,000 cordobas ($160 to 
$1,315) and prison sentences of up to two years.  The new Criminal 
Code approved on November 13, 2007 adopts aspects of Sweden's penal 
code to calculate the fine for an IPR offender based on one-third of 
that person's daily salary multiplied by 90 to 150, depending on the 
severity of the crime.  The new Criminal Code also reduces prison 
sentences to a maximum of one year. 
 
¶7. (SBU) The new Criminal Code will come into effect once published 
in the Official Gazette, a process that has been delayed as part of 
President Daniel Ortega's power struggle with former President 
Arnoldo Aleman over unrelated provisions of the new Criminal Code 
(Ref C).  A MIFIC official responsible for CAFTA-DR implementation 
was surprised to learn that the new Criminal Code would repeal 
legislation allowing ex oficio IPR investigations and weaken 
penalties for copyright violations; he clearly understood the 
implications for CAFTA-DR compliance. 
 
TEST DATA PROTECTION AND PATENT LINKAGE 
--------------------------------------- 
 
¶8. (SBU) PhRMA's 2008 Special 301 Submission claims that the GON has 
yet to implement an effective system for test data protection and 
patent linkage for pharmaceutical products, as required by CAFTA-DR. 
 Post shares PhRMA's concern that nearly two years after the 
agreement's entry into force and more than a year after President 
Ortega took office, the GON has not met these CAFTA-DR commitments. 
Industry representatives visited Nicaragua several times in 2007 to 
encourage officials at the Ministry of Health (MINSA) and Ministry 
of Trade, Industry, and Development (MIFIC) to implement these 
CAFTA-DR requirements.  Neither ministry took an active role in 
pushing for implementation in 2007, but on February 22, after 
receiving notification that PhRMA had named Nicaragua in its 2008 
Special 301 submission, MIFIC Minister Solorzano wrote Health 
Minister Gonzalez seeking his cooperation on test data protection. 
On agricultural chemical test data, a representative of CropLife 
Latin America reports that the Nicaraguan Ministry of Agriculture 
and Livestock has established an effective system. 
 
LIMITED PROGRESS ON IPR ENFORCEMENT 
----------------------------------- 
 
¶9. (SBU) In 2007, the GON conducted 20 raids and the police seized 
58,547 pirated DVDs, 21,629 CDs, 13 computers, 3 multi-purpose 
copiers, and other audiovisual equipment worth approximately 
$123,000.  For 2008, the National Police launched a public awareness 
campaign in three major open markets in Managua to inform vendors 
who sell pirated goods that they risk arrest.  Government officials 
say that in March the police will begin to seize pirated goods and 
arrest the vendors in those markets. 
 
¶10. (SBU) In July 2007, the GON successfully prosecuted a case in a 
local court against a Nicaraguan citizen selling pirated music CDs. 
In the case, originally filed in 2005, the offender was sentenced to 
two years in prison -- later reduced to parole -- and fined 5,000 
cordobas ($267).  Indeed, GON officials complain about the courts' 
slow adjudication of IPR cases.  The Prosecutor General's Office 
filed 17 IPR cases in 2006 and 2007, but the courts have not ruled 
on any of them.   The Prosecutor General and National Police are 
currently investigating 28 intellectual property cases for possible 
prosecution. 
 
COOPERATION AND TRAINING 
------------------------ 
 
¶11. (SBU) GON officials and industry are cooperating to combat 
piracy, trademark infringements, and copyright violations.  A 
representative of Nicautor, an association that advocates IPR 
enforcement and protection for book authors and music companies, 
said the police and public prosecutors normally respond promptly to 
formal complaints on IPR crimes.  GON officials noted that they and 
industry representatives are meeting to finalize an IPR best 
practices manual they began drafting in a USG-funded IPR training 
course in December 2007 (Ref C).  One Nicautor representative added 
that GON officials and industry representatives may establish an 
interagency working group on IPR enforcement. 
 
COMMENT AND RECOMMENDATION 
-------------------------- 
 
¶12. (SBU) Unfamiliarity with IPR issues among new Health Ministry 
officials and a lack of interagency cooperation within the GON, now 
that the Technical Secretariat of the Presidency has been disbanded, 
complicate implementation of CAFTA-DR commitments on test data 
protection and patent linkage.  We are not sure what is behind the 
repeal of legislation providing for ex oficio investigation of IPR 
crimes and stronger sentences for copyright violators.  Poor 
interagency coordination is at least partly to blame, as we do know 
that law enforcement officers and trade officials have been caught 
by surprise by what is happening.  We suspect that the rest of the 
blame belongs with National Assembly politics and special 
interests. 
 
¶13. (SBU) On the positive side, MIFIC appears to have the political 
will to tackle the issues raised by PhRMA and to force the 
government to take a closer look at implications to CAFTA-DR 
embodied by changes to the Criminal Code.  We have seen interagency 
cooperation at the working level on the IPR best practices manual. 
We are building a relationship with key officials and are committed 
to helping their staff members participate in USG-funded IPR 
training with the U.S. Patent and Trademark Office and the 
Department of Justice's Office of Overseas Prosecutorial 
Development, Assistance, and Training. 
 
¶14. (SBU) Post believes that more engagement with mid-level and 
senior-level GON officials will encourage Nicaragua to enhance its 
IPR enforcement and protection efforts in compliance with CAFTA-DR. 
The Embassy has good communication with GON working-level 
counterparts on IPR.  However, IPR is a low priority for mid- and 
senior-level officials.  We would like to work with these officials 
over the course of the year to raise the profile of IPR and find a 
way to resolve these CAFTA anomalies.  In lieu of naming Nicaragua 
to the 2008 Special 301 Watch List, we recommend that a senior 
Washington-based official pen a letter to President Ortega outlining 
our IPR concerns in terms of CAFTA-DR commitments.  We would follow 
up at the ministerial level and with members of the National 
Assembly.  We believe that naming Nicaragua to the Watch List this 
year could result in a negative political reaction that would 
complicate our efforts to help Nicaragua comply with its CAFTA-DR 
IPR commitments. 
 
TRIVELLI