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Viewing cable 09CARACAS271, 2009 SPECIAL 301 RECOMMENDATION: KEEP VENEZUELA

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Reference ID Created Released Classification Origin
09CARACAS271 2009-03-03 18:28 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Caracas
VZCZCXRO8270
PP RUEHAO RUEHCD RUEHGA RUEHGD RUEHGR RUEHHA RUEHHO RUEHMC RUEHMT
RUEHNG RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHCV #0271/01 0621828
ZNR UUUUU ZZH
P 031828Z MAR 09
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC PRIORITY 2678
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RUCPDOC/DEPT OF COMMERCE
UNCLAS SECTION 01 OF 02 CARACAS 000271 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/IPE 
DEPT PLS PASS TO USTR 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KIPR
SUBJECT: 2009 SPECIAL 301 RECOMMENDATION:  KEEP VENEZUELA 
ON PRIORITY WATCH LIST 
 
REF: A. STATE 8410 
     B. 08 CARACAS 1427 
     C. 07 CARACAS 366 
     D. 06 CARACAS 486 
 
1. (SBU) Summary: The Government of the Bolivarian Republic 
of Venezuela (GBRV) continues to chip away at protection of 
intellectual property rights.  In 2008, the GBRV resurrected 
a 50 year old law disallowing the patenting of medicines and 
food.  Enforcement remains a problem as the police agency 
primarily responsible for IPR is defunct.  SAPI, the agency 
that oversees IPR and issues patents, has not issued a single 
patent since 2004.  Based on the GBRV's aversion to IPR, weak 
enforcement, and possible legal changes to further weaken IPR 
protections, Post recommends that Venezuela remain on the 
Special 301 Priority Watch List for 2009.  End Summary. 
 
-------------------------------- 
Weakened Legal Protection of IPR 
-------------------------------- 
 
2. (SBU) Until Venezuela's April 2006 withdrawal from the 
Andean Community, Venezuela had incorporated over 650 legal 
decisions from the Andean Community into domestic law, 
including Decision 486, which provided the legal framework 
for patent and trademark protections.  In September 2008, 
SAPI, the Autonomous Intellectual Property Service (the 
country's primary IPR authority), announced in a press 
release that it had resurrected the Ley de Propriedad 
Industrial de 1955 (the 1955 law).  The 1955 law states that 
drinks, foodstuffs, drugs of any kind and other chemical 
reactions and combinations may not be patented. 
 
3. (SBU) Creative works are protected pursuant to the 
Copyright Law of 1993, Decision 351 of the Cartagena 
Agreement, the Bern Convention and the Universal Copyright 
Convention.  Venezuelan law protects the rights of authors of 
creative intellectual works.  Currently, copyright protection 
is valid for the life of the author, plus 60 years.  However, 
the pharmaceutical and recording industries continue to be 
concerned that Chavez may sign into law a copyright bill 
drafted in 2004.  The draft legislation would violate many of 
Venezuela's bilateral and multilateral IPR treaty 
obligations, reduce the protection period for copyrights from 
60 to 50 years and would allow the GBRV to appropriate 
artistic rights for the public sector.  Venezuela has also 
not deposited the instruments of ratification for the WIPO 
Copyright Treaty or the WIPO Performances and Phonograms 
Treaty, and has not sent an official delegation to WIPO 
committee meetings since 2004. 
 
4. (SBU) Trademarks are registered with SAPI, granted for ten 
years and may be renewed for successive ten-year periods. 
Trademark rights can be enforced through civil, 
administrative and criminal actions.  As a result of civil 
action, a registered trademark owner may be entitled to 
relief, which is at the discretion of the judge.  However, 
the registered trademark owner cannot prohibit a third party 
from using a trademark in connection with products that are 
provided by the trademark owner.  A trademark may be canceled 
at the request of any interested third party if it has not 
been used in Venezuela for three years. 
 
--------------------------- 
The Pharmaceutical Industry 
--------------------------- 
 
5. (SBU) Eduardo Saman, the former Director of SAPI and 
current Director of the Venezuelan consumer protection 
agency, the Institute for the Defense of People's Access to 
Goods and Services (INDEPABIS), has argued that trademarks 
and patents hindering the fabrication of generic medicines or 
the reproduction of technology should be considered 
monopolies, which are prohibited under the Venezuelan 
constitution.  Despite his move to INDEPABIS, Saman continues 
to carry weight on IPR issues.  SAPI has not issued a patent 
for an imported pharmaceutical product since 2003, and has 
not issued a patent in any sector since 2004.  Since 2002, 
the GBRV has failed to protect pharmaceutical testing and 
other confidential data for product submissions that have not 
yet received patent protection.  As the GBRV does not link 
patents and sanitary registrations, counterfeiters can 
receive sanitary registration approval in the absence of a 
patent -- equivalent to marketing approval for a counterfeit 
product. 
 
--------------------------- 
 
CARACAS 00000271  002 OF 002 
 
 
Recorded Media and Software 
--------------------------- 
 
6. (SBU) In 2004, the GBRV passed legislation that required 
the use of open source software throughout the public sector. 
 While not a violation of IPR in and of itself, the software 
industry has concerns about a lack of transparency in its 
implementation and favoritism shown to certain vendors.  The 
piracy rate for business software in 2008 was 87 percent, 
according to the Business Software Alliance.  The market for 
legitimate CDs and DVDs continues to decline.  As Venezuela 
imports a high number of virgin discs, the country may be a 
distribution source and a production center for counterfeit 
products.  The National Film Law, passed in August 2005, 
requires distributors to locally copy a percentage of the 
movies they distribute and to register all films, leading to 
unauthorized release of confidential information and piracy. 
 
------------------ 
Other IPR BARRIERS 
------------------ 
 
7. (SBU) Another barrier to IPR in Venezuela is foreign 
currency controls.  The Currency Exchange Administration 
(CADIVI), the agency that administers the GBRV's currency 
controls, may block access to foreign exchange for companies 
attempting to pay royalties, patent license fees, and 
franchise fees.  (To receive US dollars at the official 
exchange rate for transactions such as dividend repatriation 
and operating costs, a company must obtain CADIVI approval. 
There are no reliable figures for how much money US companies 
as a whole have requested from CADIVI.)  Post has received 
reports of CADIVI not acting on foreign currency exchange 
requests due to "improper paperwork".  While denial of 
currency requests may not be related to IPR enforcement, not 
acting on them prevents businesses from complying with IPR 
laws. 
 
--------------- 
IPR Enforcement 
--------------- 
 
8. (SBU) The enforcement situation in Venezuela remains the 
same as last year.  An ongoing lack of political will, 
lengthy legal processes, unprepared judges, and a lack of 
resources for investigation and prosecution create effective 
barriers to IPR enforcement.  A special prosecutor with one 
assistant is responsible for IPR issues in Venezuela and 
investigations are severely backlogged.  Under current 
Venezuelan law, IPR enforcement actions can only take place 
as a result of a complaint by the rights holder and the 
complainant is responsible for the storage cost of the 
illicit goods.  Furthermore, only violators operating at a 
fixed location are prosecutable, effectively barring 
prosecution of street vendors. 
 
9. (SBU) With its "zero tax evasion" and "zero contraband" 
programs, SENIAT, the customs and tax enforcement agency, has 
undertaken IPR enforcement.  Despite these efforts, SENIAT 
fired its lone IPR advocate in 2007.  Throughout 2008, 
however, SENIAT published reports that it had destroyed 
pirated goods.  COMANPI, the Venezuelan copyright and 
trademark enforcement branch of the police, is also charged 
with IPR enforcement and maintains a small staff of permanent 
investigators.  Local IPR contacts have said that COMANPI, an 
agency known for its lack of personnel, limited budget, and 
inadequate storage facilities for seized goods, no longer has 
a functioning headquarters. 
 
------- 
Comment 
------- 
 
10. (SBU) The protection of intellectual property rights in 
Venezuela continues to deteriorate.  The legal regime is 
increasingly tenuous, with a reversion to a 1955 law covering 
medicinal and food patents in 2008.  Enforcement continues to 
remain weak and high ranking officials continue to express 
their disdain for IPR protection.  Few resources are 
dedicated to investigating and prosecuting IPR crimes.  Post 
recommends keeping Venezuela on the Special 301 Priority 
Watch List for 2009. 
GENNATIEMPO