VZCZCXYZ0000
RR RUEHWEB

DE RUEHSJ #0137/01 0631259
ZNR UUUUU ZZH
R 041259Z MAR 09
FM AMEMBASSY SAN JOSE
TO RUEHC/SECSTATE WASHDC 0542
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE

UNCLAS SAN JOSE 000137 
 
SENSITIVE 
SIPDIS 
 
EEB/TPP/IPE FOR TMCGOWAN AND SKEAT 
PLEASE PASS TO USTR FOR JGROVES AND GVETERE 
 
E.O. 12958: N/A 
TAGS: ETRD ECON KIPR CS
SUBJECT: 2008 SPECIAL 301 REVIEW - COSTA RICA 
 
REF:  A) 09 STATE 8410 
      B) 06 SAN JOSE 0464 
      C) 07 SAN JOSE 0335 
      D) 08 SAN JOSE 0155 
      E) 08 SAN JOSE 0959 
 
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SUMMARY 
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¶1.  (U) Since last year's report (Ref D), the GOCR enacted a number 
of laws related to Intellectual Property Rights (IPR) as required by 
the Central American Free Trade Agreement (CAFTA-DR), but the 
success in passing new IPR legislation highlighted the country's 
failure to enforce existing laws.  Costa Rica's Attorney General 
publicly and repeatedly stated that Costa Rica should use its 
limited investigative and prosecutorial resources to pursue violent 
and drug-related crimes and instructed staff prosecutors to pursue 
IPR cases only if they implied harm to people or the environment. 
 
¶2.  (U) Nonetheless, there was IPR progress.  The Costa Rican 
Industrial Registry issued many more patents than in recent years. 
A number of Costa Rican officials received training in IPR 
enforcement, administration, prosecution, and customs from USPTO, 
DHS, WIPO, and others.  The Judicial Branch, through the Judicial 
School, has engaged in IPR training and wants to provide more 
training opportunities for judges and prosecutors.  Due to the 
CAFTA-DR-related legislative gains (which required significant 
political will by the executive branch), and improvements with 
registrations, Post recommends that Costa Rica's ranking not be 
lowered, and that the country remain on the Watch List for the 2009 
Special 301 Report (Ref A).  END SUMMARY. 
 
---------------------------- 
IPR BACKGROUND IN COSTA RICA 
---------------------------- 
 
¶3.  (U) After a difficult and extended implementation review 
process, CAFTA-DR entered into force (EIF) for Costa Rica on January 
1, 2009.  However, entry into force did not quiet CAFTA and IPR 
critics.  Issues related to IPR rose to the forefront of public 
debate during the campaign leading up to the October 7, 2007 
nationwide referendum to ratify the country's participation in 
CAFTA-DR.  Those opposed routinely spoke out against the Agreement's 
requirements to create effective deterrents against IPR infringement 
as well as protections for IPR, politicizing the issues.  Opposition 
leaders asserted that increased penalties for IPR violators would 
"send students to jail for copying textbooks" and increased IPR 
protection would bankrupt the local social security system since it 
would be forced to purchase original, innovative pharmaceuticals 
rather than generics.  The Costa Rican public ultimately rejected 
such arguments and approved CAFTA-DR by a slim margin, but the 
negative campaign created an environment where issues related to IPR 
remain politically controversial. 
 
--------------------------------------------- -- 
NOW CAFTA-DR COMPLIANT. . .WITH AN IPR FOOTNOTE 
--------------------------------------------- -- 
 
¶4.  (U) After Costa Rica was included in the Priority Watch List in 
2001, the country took the necessary steps to bring into force the 
WIPO Copyright Treaty (WCT) and the WIPO Performance and Phonograms 
Treaty (WPPT) on March 6, 2002 and May 20, 2002, respectively. 
Costa Rica also ratified the Patent Cooperation Treaty (PCT).  Costa 
Rica posted incremental -- but limited -- IPR progress over the past 
several years (Refs B and C). 
 
¶5.  (SBU) Since last year's Special 301 Report, Costa Rica made all 
the necessary legislative reforms to comply with CAFTA-DR 
obligations related to IPR.  In recognition of meeting CAFTA 
standards through legislative reforms, the United States Trade 
Representative (USTR) certified Costa Rican CAFTA-DR compliance in 
late 2008, paving the way for EIF a few weeks later.  However, three 
technical corrections remain for legislative action by the Costa 
Rican national assembly.   Packaged into one final piece of 
legislation, the corrections (Ref E) must be passed into law by 
January 1, 2010.  Failure to do so will result in a holdback of 
tariff preferences on a select category of Costa Rican export 
products, most likely sugar.  The Arias Administration is confident 
that the process will be completed in 2009. 
 
------------------------------------------- 
. . . BUT SADDLED BY ENFORCEMENT CHALLENGES 
------------------------------------------- 
 
¶6.  (U) Despite these legislative victories, real challenges remain 
in effectively ensuring that the laws have an impact on the local 
IPR environment.  Throughout 2008, Costa Rica continued to falter in 
enforcing its IPR laws, which criminalize counterfeiting and piracy. 
 The country's public prosecutors have consistently demurred from 
prosecuting IPR cases unless they involve potential harm to people 
or the environment.  The prosecution of IPR crimes is handled by 
public prosecutors in the "various crimes" divisions of the branch 
offices of the Attorney General's office (in which an individual was 
appointed with responsibility for IPR prosecution).  Crimes related 
to IPR form only a portion of the portfolio of these prosecutors and 
receive little attention.  Rather, the prosecutors tend to invoke 
"opportunity criteria" (akin to prosecutorial discretion) to avoid 
opening investigations into reported IPR crimes. 
 
¶7.  (U) The Attorney General of Costa Rica, Francisco Dall'Anese, 
publicly and privately reiterated that he does not support diverting 
limited resources to the prosecution of IPR crimes.  Rather, he 
maintains that private companies can seek redress in civil courts or 
can initiate a criminal public action through private application. 
By this process, a private party (almost always through an attorney) 
files a complaint and jointly conducts the investigation and 
prosecution of the case with the public prosecutor.  While this 
could be an effective means of prosecuting IPR violators, the 
reality is that the private sector and the prosecutor's office have 
yet to coordinate in a meaningful way.  Likewise, the use of the 
civil courts to pursue private cases against IPR violators is 
hampered by the extreme length of time it takes to receive a civil 
judgment (up to 15 years) and the small monetary damages awarded. 
 
¶8.  (SBU) Industry and others have asked Dall'Anese to halt the 
nearly automatic use of opportunity criteria with IPR crimes, but he 
has rebuffed their calls, and is in a position to do so.  The 
position of Attorney General in Costa Rica is entirely independent 
of the Costa Rican Executive and Legislative Branches. 
Constitutionally, the position falls under the Judiciary, but, in 
practice, it is almost completely autonomous.  Dall'Anese was 
reelected to a second four year term as Attorney General in late 
¶2007.  (COMMENT:  Knowledgeable local contacts tell us that 
Dall'Anese is unlikely to run for a third term in 2011.  END 
COMMENT.) 
 
¶9.  (U) The few prosecutions that wound their way through the 
criminal court system over the last two years were originally 
started long before. In February 2008, industry successfully 
concluded a prosecution against a counterfeiter of apparel.  As has 
been the case in previous successful IPR prosecutions, the judge 
immediately paroled the convicted counterfeiter as it was her first 
offense and the sentence was for less than three years. (COMMENT: No 
matter the crime, judges in Costa Rica have the latitude to 
immediately parole first-offenders who have been sentenced to less 
than three years of prison.  Judges generally use this power in all 
criminal cases when it can be applied. END COMMENT.) 
 
-------------------------------------- 
AT THE BORDER:  ARE THE GOODS GENUINE? 
-------------------------------------- 
 
¶10.  (U) Officers within the FBI-equivalent Judicial Police (OIJ) 
state that most counterfeit goods within Costa Rica are imported 
from elsewhere rather than manufactured in the country. 
Unfortunately, Costa Rica's Customs service continues to face 
difficulties in halting the flow of counterfeit goods into the 
country.  The leadership of Customs is aware of the importance of 
seizing pirated goods, but most customs agents lack the necessary 
training to recognize counterfeits. Local industry has also 
expressed an interest in providing counterfeit recognition training 
to Customs officials. 
 
¶11. (U) In addition, the laws regulating the filing of criminal 
cases can impede the seizure of pirated goods at the border.  If a 
customs agent recognizes that a shipment contains pirated goods, the 
agent can order the shipment seized for 48 hours.  If, at the end of 
that period, the holder of the IPR for the product involved has not 
filed a criminal complaint against the importer, the customs agent 
must either release the goods or file a criminal complaint. The 
latter action can open the agent up to personal liability through a 
countersuit by the importer if the criminal complaint is ultimately 
unsuccessful. 
 
¶12. (U) Recent changes in the law give the customs agent ten days 
from seizure to file the criminal complaint, but the customs agent 
continues to be personally liable if the complaint is unsuccessful. 
Increased communication between Customs and industry would help 
solve this problem by providing time for the owner of the trademark 
or patent to file the police report.  In such cases, even if the 
prosecutor ultimately invokes opportunity criteria and abandons 
his/her role in the criminal prosecution, the private party could 
continue the action, aided by the fact that the goods have already 
been seized by Customs. 
 
--------------------------------------------- --- 
COSTA RICAN PATENT OFFICE:  CAPACITY BY CONTRACT 
--------------------------------------------- --- 
 
¶13.  (SBU) In 2008 the Costa Rican Industrial Property (IP) Office 
of the National Registry finally began to address severe delays in 
processing patent applications.  Through 2007, patent attorneys in 
Costa Rica related that the office had not yet begun processing 
patent cases first submitted in 2004 and 2005.  The table below 
illustrates progress, although the backlog may take years to erase. 
 
              Number of Application Approvals 
                Year 2005  2006  2007  2008 
Patent                 13    4    13    53 
Utility Model           0    1     1     2 
Industrial Model        4    3     2    21 
Industrial Design       1    1     -    15 
               TOTAL   18    9    16    91 
Source:  Industrial Property Registry 
 
The IP Office informs us that in 2008 the office completed the 
review of a total of 140 applications, approving the 91 shown above 
and rejecting 49.  While new patent applications are immediately 
processed, there is still a backlog of about 1,200 patent 
applications waiting for technical review. 
 
¶14.  (U) The IP Office believes that it is on the verge of hiring 
five in-house patent examiners with training and experience in 
specific areas of science and technology.  It has taken several 
years to create these positions.  These in-house examiners will not 
be hired within the Civil Service structure and therefore may be 
paid salaries commensurate with their expertise.  To date, the IP 
office has relied heavily on contract relationships with the Costa 
Rican Technical Institute and the Pharmacists Board Association to 
provide experts to serve as outside examiners.  The IP Office will 
continue to use these and other outside examiners to move through 
the backlog of patent applications. 
 
¶15.  (U) The World Intellectual Property Organization (WIPO) has 
worked closely with the Costa Rican IP Office to train employees. 
WIPO also offered training to officials in the judiciary that have 
an interest in IPR.  In addition, the U.S. Embassy sent eight Costa 
Rican officials to the USPTO's Global Intellectual Property Academy 
for training. 
 
-------------------------------------- 
USE/PROCUREMENT OF GOVERNMENT SOFTWARE 
-------------------------------------- 
 
¶16.  (U) The 2002 Executive Decree #30, 151-J, mandated that all 
government ministries use only legally-licensed computer software. 
According to this decree, each ministry was to conduct an internal 
audit and submit a statement of compliance no later than July 31, 
¶2003.  The government subsequently claimed full certification of all 
ministries, although there had been no independent confirmation. 
 
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COMMENT 
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¶17.  (SBU) In general, parts of the Costa Rican government, notably 
the judiciary, do not yet view IPR as a tool to spur innovation. 
The executive branch recognizes the value of IPR enforcement and 
prosecution and the private sector wants judicial action on IPR 
cases.  After making progress in IPR legislation as instituted by 
CAFTA-DR's entry into force, the focus of attention is now on the 
judiciary and how it handles cases in a CAFTA-DR compliant IPR 
regime. 
 
¶18. (SBU) Therefore, based on the GOCR's progress to date in 
improving the country's IPR framework -- legislative reforms, 
political will in the executive branch, sharp increase in patent 
application approvals, and receptivity to training opportunities -- 
Post recommends that Costa Rica remain on the Watch List.  This is 
the properly-modulated message, in our view.  To lower Costa Rica's 
standing immediately after the GOCR finally completed its CAFTA-DR 
implementation obligations would be too harsh a signal.  Such a move 
would likely be viewed as provocative by the Arias administration, 
which worked very hard to pass the necessary IPR legislation for 
CAFTA-DR EIF.  This would also be counterproductive to our low-key 
but steady efforts to work with the GOCR and the private sector (and 
around the Attorney General, if necessary) to improve IPR 
protection. 
 
CIANCHETTE