VZCZCXYZ0001
RR RUEHWEB

DE RUEHQT #0151/01 0621838
ZNR UUUUU ZZH
R 031838Z MAR 09
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 0106
INFO RUEHBO/AMEMBASSY BOGOTA 7987
RUEHCV/AMEMBASSY CARACAS 3410
RUEHLP/AMEMBASSY LA PAZ MAR LIMA 3054
RUEHGL/AMCONSUL GUAYAQUIL 4133
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS QUITO 000151 
 
SENSITIVE 
SIPDIS 
 
USTR FOR JENNIFER CHOE GROVES 
STATE FOR EB/TPP/IPE TIM MCGOWAN AND JOELLEN URBAN 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD ECON EC
 
SUBJECT:  ECUADOR 2009 SPECIAL 301 REPORT 
 
REF: State 8410 
 
¶1.  (SBU) Summary and recommendation.  No U.S. industry entities 
submitted complaints or comments regarding Ecuador for the 2009 
Special 301 review.  Ecuador has made some progress on IPR during 
the past year, but enforcement remains a serious problem.  The 
enforcement problem warrants that Ecuador remain on the Watch List, 
but the lack of industry interest in Ecuador draws into question 
whether Ecuador should be cited in the Special 301 review. 
 
¶2.  (SBU) Overall protection for IPR goods has not changed 
significantly over the past year, although the Ecuadorian 
Intellectual Property Institute (IEPI) has made progress on patent 
applications, training, and enforcement, and both the Prosecutor 
General and Customs have developed special IPR units for 
investigation and seizures.  IEPI is in the process of digitalizing 
its files and plans to provide online patent applications by the end 
of 2009, which would greatly increase speed and transparency of the 
patent application process.  Despite this, overall enforcement of 
IPR remains a key problem, resulting in high piracy levels in the 
software, publishing, recording, and film industries.  Data 
exclusivity and protection continue to be problematic.  Ecuador's 
health code permits granting marketing approvals without regard to 
whether or not a medication is patented.   End summary and 
recommendation. 
 
¶3.  (U) Ecuador's comprehensive Intellectual Property law enacted in 
May 1998 was a step forward for IPR protection, covering copyright, 
trademark, patent, and semiconductor chip protection.  It also 
addressed preliminary enforcement measures and other procedures, and 
created the IEPI. 
 
IEPI 
---- 
 
¶4.  (SBU) The IEPI is responsible for patent and trademark 
registration, and is also the lead GOE agency to coordinate IPR 
enforcement.  Alfredo Corral, former IPR negotiator for Ecuador's 
FTA negotiations with the U.S., and a strong proponent of IPR 
protection, has been the President of IEPI since May 2007.  Under 
his guidance, IEPI has made progress in a number of important areas. 
 IEPI's 2007 initiative to reduce the backlog of trademark and 
patent registrations continued successfully in 2008.  The number of 
patent cases handled also increased notably, from 427 patents in 
2007 to 520 patents in 2008, according to IEPI's Director of 
Patents. 
 
¶5.  (SBU) A key effort has been digitalizing IEPI's paper files, 
which would provide better access to information and greater 
transparency.  This project has been supported with USAID 
assistance.  IEPI plans to have all of its files digitalized and to 
offer online patent applications by the end of 2009.  Online 
applications are expected to significantly speed up the application 
process.  IEPI also expects to have its processes certified as ISO 
9001 compliant by the end of 2009. 
 
¶6.  (SBU) IEPI has invested significantly in training over the past 
year.  Corral reported that IEPI sent over 50 employees (out of a 
total of 150) to IP training outside of Ecuador in 2008.  Five of 
those employees attended IPR training programs provided by the USPTO 
in Washington.    Presently, 10 IEPI employees are completing a 
IEPI-sponsored Masters degree in Intellectual Property at an 
Ecuadorian university. 
 
¶7.  (U) IEPI is also continuing a national campaign to raise 
awareness of the importance of respecting IPR through radio and 
television advertisements featuring local artists. 
 
Enforcement 
----------- 
 
¶8.  (SBU) Lack of enforcement remains a key problem for Ecuador. 
Production of pirate CDs is widespread.  According to Soprofon, 
Ecuador's Society of Phonogram Producers, in 2008 nearly $14.6 
million worth of CD-Rs and DVD-Rs legally entered Ecuador, with a 
similar amount entering as contraband.  Most were destined for 
piracy.  The motion picture and gaming industries suffer equally 
from widespread CD and DVD copying.  Business software piracy, both 
end-user piracy and pre-installed unlicensed software in new 
computers, continues to be a problem.  Pervasive commercial 
photocopying piracy victimizes the book publishing industry, 
including for educational textbooks.   The International 
Intellectual Property Alliance (IIPA) did not provide comments or 
estimated loss data for Ecuador in either the 2009 or 2008 Special 
301 processes. 
 
¶9.  (SBU) Corral reported that IEPI's cooperation with the 
Ecuadorian Customs Agency in 2008 was very good.  Both IEPI and 
Customs have increased enforcement actions in their areas of 
competence, administrative sanctions imposed by IEPI or interception 
of counterfeit goods by Customs, when they can act without a formal 
complaint by the right-holder.  Criminal enforcement actions must be 
initiated by a prosecutor's office and enforced by the police.  In 
2008, the Prosecutor General's office and Customs created special 
IPR units, focused on investigations, fines, and seizures. 
 
TRIPS Compliance 
---------------- 
 
¶10.  (SBU) While the Ecuadorian Intellectual Property Law does 
provide for data exclusivity, as does TRIPS Article 39.3, marketing 
approval for copy products has been routinely granted based on data 
produced by research companies for the original drug.  In addition, 
Instituto Izquieta Perez, the health authority, routinely provides 
sanitary registrations to copy products of patented drugs. 
Ecuador, citing legal opinions from the Andean Court of Justice, has 
failed to provide patents for second uses. 
 
Comment and Areas for Further Action 
------------------------------------ 
 
¶11.  (SBU) The Government of Ecuador has given IEPI the autonomy to 
move forward with a moderately aggressive modernization effort and 
created special IPR units in Customs and the Prosecutor's office, 
but otherwise has not shown the commitment to increased IPR 
enforcement that is necessary given the high level of IP piracy. 
 
¶12.  (SBU) Judges, local law enforcement and customs officials 
continue to need training on intellectual property rights protection 
and enforcement.  U.S. Patent and Trademark Office training in IP 
protection and enforcement continues to be a useful tool. 
 
¶13.  (SBU) Ecuador should correct contradictions between its Health 
Code and its Intellectual Property Law, to prevent issuance of 
sanitary registrations to products that violate registered patents, 
or to products whose applications are based on confidential data 
submitted by another company. 
 
HODGES