VZCZCXYZ0018
RR RUEHWEB

DE RUEHMU #0227/01 0621351
ZNR UUUUU ZZH
R 031351Z MAR 09
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 3817
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE

UNCLAS MANAGUA 000227 
 
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: ETRD KIPR ECON USTR NU
SUBJECT: NICARAGUA: 2009 SPECIAL 301 REVIEW 
 
REFS: A) SECSTATE 8410, B) 08 MANAGUA 1051, C) 08 MANAGUA 0225 
 
SUMMARY 
------- 
 
¶1. (SBU) Although IPR enforcement and protection remain a low 
priority for senior GON officials, we believe continued engagement 
in 2009 will have a positive effect.  We cooperate well with working 
and mid-level police and prosecutors and we would like to step up 
our efforts to work with senior-level GON officials.  We recommend 
that Nicaragua not be named to the 2009 Special 301 Watch List.  See 
Action Request in Paragraph 6. 
 
¶2. (SBU) The Government of Nicaragua's (GON) enactment of the 
new criminal code in July 2009 does not restrict the Nicaraguan 
National Police to initiate ex-oficio IPR investigations, a CAFTA-DR 
requirement, because the 2001 criminal procedure code does.  The new 
criminal code, however, does not allow the Prosecutor General's 
Office to conduct ex-oficio IPR investigations without a private 
party making a formal complaint.  The new criminal code weakens 
penalties for all copyright violations.  Moreover, patent linkage 
and data protection for pharmaceutical products, which are CAFTA-DR 
commitments, remain unimplemented.  We believe that we are making 
progress in these areas and plan to continue our efforts to engage 
with senior government officials to help them fulfill Nicaragua's 
CAFTA-DR commitments. 
 
¶3. (SBU) Government and industry officials in the software, motion 
picture, and music industries are cooperating to combat piracy, 
trademark infringements, and copyright violations.  The police, with 
assistance from the Prosecutor General's Office and industry, 
implemented a strategy in 2008 to raise public awareness to combat 
piracy, train staff on the application of IPR laws and the detection 
of pirated goods, and conduct targeted raids and seizures of pirated 
goods and production equipment. 
 
CLARITY ON EX-OFICIO ENFORCEMENT 
-------------------------------- 

¶4. (SBU) On February 19, Econoff spoke with Dr. Leyla Prado, head of 
the IPR Unit for the Prosecutor General's Office.  Prado explained 
that while the new criminal code, which came into effect on July 9, 
2008, does not explicitly state that the police can conduct 
ex-oficio investigations, the 2001 criminal procedure code does. 
She confessed that neither her office nor the police had a clear 
understanding of the new criminal code until the interagency 
meetings with the Ministry of Trade, Industry and Development 
(MIFIC) cleared up matters last September (Ref B).  She pointed out 
that the new criminal code does not allow the Prosecutor General's 
Office to conduct raids without a formal complaint.  The 2006 
Copyright Law allowed prosecutors to conduct targeted raids without 
a formal complaint.  She complained that the new criminal code 
weakens her office's IPR enforcement capabilities, but acknowledged 
that an improved working relationship with the police allows her 
unit to respond quickly to formal complaints. 
 
WEAKER PENALTIES FOR IPR CRIMES 
------------------------------- 

¶5. (SBU) Prado admitted that penalties against copyright violations 
remain weak.  In 2006, amendments to the Copyright Law stiffened 
penalties for IPR crimes, allowing fines ranging from 3,000 to 
25,000 cordobas ($150 to $1,250) and prison sentences of up to two 
years.  The new criminal code borrowed aspects of Sweden's penal 
code to calculate the fine for an IPR offender, i.e., one-third of 
the person's monthly salary multiplied by 90 to 150, depending on 
the severity of the crime.  However, the new criminal code reduces 
prison sentences to a maximum of one year.  She noted that she and 
her colleagues in the police and MIFIC have attempted to persuade 
senior government officials to revert to the 2006 Copyright Law for 
IPR penalties and fines. 
 
TEST DATA PROTECTION AND PATENT LINKAGE 
--------------------------------------- 

¶6. (SBU) The Pharmaceutical Research and Manufacturers of America's (PhRMA) 2009 Special 301 submission states that the GON has yet to implement an effective system for test data protection and patent linkages on pharmaceutical products, as required by CAFTA-DR. Post shares PhRMA's concern. In February 2008 we met with officials from the Ministry of Health (MINSA) and MIFIC to discuss when the GON would implement these requirements. MINSA officials stated that data protection would be extended according to CAFTA-DR standards for drugs manufactured in countries that have signed the agreement. In February 2009, MIFIC acknowledged that there was no system in place to provide patent linkage. Action Request: We would appreciate USTR assistance in reviewing Nicaragua's compliance with test data protection provisions in CAFTA-DR.

MIXED RESULTS ON ENFORCEMENT EFFORTS 
------------------------------------ 

¶7. (SBU) The police, with assistance from the Prosecutor General's 
Office and local industry, implemented a strategy in 2008 to raise 
public awareness to combat piracy, train staff on the application of 
IPR laws and the detection of pirated goods, and conduct targeted 
raids and seizures of pirated goods and production equipment (Ref 
B).  The police believe that their campaign has raised public 
awareness about pirated goods.  Nevertheless, the GON did not 
convict, fine, or imprison an IPR offender in 2008. 
 
¶8. (SBU) With regard to raids and seizures of pirated goods, the 
police conducted six raids in 2008, considerably fewer than the 20 
raids they conducted in 2007.  In 2008, the police conducted six 
raids and the police seized 350,000 pirated music CDs and music 
video DVDs, 80,000 blank CDs and DVDs, 938 drums of bottled water, 
46 televisions, 12 computers, 6 recording units and 3 multicolor 
copiers.  The monetary value of the seized goods is approximately 
$803,000. 
 
¶9. (SBU) The Prosecutor General's Office indicted 25 IPR offenders 
in 2008.  Two cases are before the court awaiting a ruling while one 
case was resolved through mediation.  The Prosecutor General's 
Office also conducted two raids with assistance from the police to 
investigate formal complaints it received concerning trademark 
infringement of "Pura Fuente (Pure Fountain) and Lacoste clothing. 
Prado asserted that the Prosecutor General's Office would like to do 
more on IPR enforcement, but the loss of staff and budget cuts in 
fiscal year 2008 limited her unit's ability to participate in raids, 
conduct investigations, and file cases in court.  She feared that 
more budget cuts are on the way in fiscal year 2009 because of the 
government's recent budget shortfall, as a result of the reduction 
in donor assistance to the GON based on the fraudulent November 9, 
2008, municipal elections. 
 
COOPERATION AND TRAINING 
------------------------ 

¶10. (SBU) Government and industry officials in the software, motion 
picture, and music industries 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, commended the 
police and public prosecutors for their prompt response to formal 
complaints on IPR crimes.  With regard to training, government and 
industry officials organized six IPR enforcement workshops for 
police, public prosecutors, and customs officials in 2008.  The 
police seek more assistance from industry on detecting trademark and 
copyright infringement, and better equipment, such as computers and 
scanners, digital cameras, and digital product code scanners to 
enhance their capabilities.  Post also sent three judges, two MIFIC 
officials, and one public prosecutor to U.S. Patent and Trademark 
(USPTO) training in Washington in 2008. 
 
LOW PRIORITY FOR SENIOR GON OFFICIALS 
------------------------------------- 

¶11. (SBU) IPR enforcement and protection remain a low priority for 
senior-level GON officials.  In 2008, we met frequently with working 
level and mid-level officials from MIFIC, the Prosecutor General's 
Office, and the police to encourage IPR enforcement and improve 
interagency cooperation to enhance IPR protection.  However, these 
agencies are struggling with budget and staff cuts.  Prado said that 
on occasions, the police are instructed not to pursue illegal 
producers and vendors because of government policies.  In fact, 
Prado told us that President Ortega met with a national association 
of illegal producers and vendors of pirated goods in September 2008. 
 The result of the meeting was that President Ortega and the 
association reached an informal agreement that would continue to 
allow the selling of pirated goods.  She noted that these kinds of 
actions by senior-level officials deter any effective action against 
IPR offenders because no one wants to lose his/her job. 
 
 
COMMENT AND RECOMMENDATION 
-------------------------- 

¶12. (SBU) The lack of familiarity with IPR issues in MINSA impedes 
the implementation of test data protection.  USTR's review of 
MINSA's interpretation on test data protection and engagement on 
patent linkage would likely prompt GON compliance with its CAFTA-DR 
obligations.  We are not sure why the GON has failed to implement 
patent linkage, but poor interagency cooperation is partly to blame. 
 Politics and special interests have weakened enforcement efforts to 
combat IPR crimes against the behest of law enforcement and trade 
officials. 
 
¶13. (SBU) On the positive side, the GON has clarified that police 
have the authority to conduct ex-oficio investigations of IPR 
crimes.  While public prosecutors are no longer able to conduct 
ex-oficio investigations under the new criminal code, good relations 
with the police allow them to respond quickly to formal complaints. 
We continue playing an important role in building relationships 
between key GON officials and industry, and in improving interagency 
cooperation on IPR enforcement and developing capacity with 
USPTO-funded training.  For example, we organized a roundtable 
discussion on improving cooperation between the police and industry 
in August 2008 per the request of Major Francisco Obando, National 
Police Director for the Economic Crimes Unit. 
 
¶14. (SBU) We believe that we should step up our efforts to engage 
senior officials to improve IPR enforcement and protection and 
enforcement, especially as it relates to commitments under CAFTA-DR. 
 In 2008, the Embassy established strong ties with working and 
mid-level officials.  Continued cooperation would raise the profile 
of IPR with senior officials.  We believe that naming Nicaragua to 
the Watch List this year would complicate our efforts to help 
Nicaragua comply with its CAFTA-DR commitments. 
 
CALLAHAN