VZCZCXYZ0000
OO RUEHWEB

DE RUEHSG #0188/01 0611932
ZNR UUUUU ZZH
O 021932Z MAR 09
FM AMEMBASSY SANTIAGO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4538
INFO RUCNMER/MERCOSUR COLLECTIVE
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS SANTIAGO 000188 
 
STATE PLEASE PASS TO USTR KDUCKWORTH, JENNIFER CHOE GROVES 
STATE FOR WHA/EPSC, EEB/TPP/IPE - TIMOTHY MCGOWAN 
TREASURY FOR BLINDQUIST 
COMMERCE FOR KMANN 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EINV ETRD KIPR PREL CI
 
SUBJECT:  CHILE - INPUT FOR 2009 SPECIAL 301 REVEW 
 
REF:  A) STATE 8410 B) 08 SANTIAGO 1045 C) 08 SANTIAGO 1088 
 
¶1. (SBU) SUMMARY:  Post recommends Chile remain on the 2009 Special 
301 Priority Watch List (PWL) for a third year.  There was less 
progress on intellectual property rights (IPR) than hoped for in 
¶2008.  Post has identified four priority areas for GOC action: 
anti-piracy and counterfeiting, data protection and patent linkage, 
copyrights/trademarks, and supporting legislation.  The GOC made 
progress in some areas, such as approval of the Patent Cooperation 
Treaty (PCT).  Chile agreed to a review of its IPR commitments under 
the U.S.-Chile Free Trade Agreement (FTA) at the December 2008 Free 
Trade Commission.  The PWL remains an important tool for motivating 
the GOC to make progress on IPR.  END SUMMARY. 
 
BACKGROUND:  Chile's History on the PWL 
--------------------------------------- 
 
¶2. (SBU) In 2004, the U.S.-Chile FTA entered into force.  Chile was 
the subject of an Out-of-Cycle Review by the Office of the U.S. 
Trade Representative (USTR) in 2006, because of unfulfilled 
commitments under the IPR chapter of the FTA.  In 2007, USTR 
determined Chile had failed to comply with its IPR obligations and 
placed it on the PWL.  Chile has remained on the PWL since that 
time, with some progress made on its commitments in those two years. 
 Chile's inclusion in the PWL has raised public awareness about IPR 
problems in the country.  In 2007, it increased GOC efforts to 
improve IPR protections. 
 
ANTI-PIRACY OR COUNTERFEITING:  Progress Made 
--------------------------------------------- 
 
¶3. (SBU) The GOC stepped up efforts to combat piracy and 
counterfeiting in 2008.  In January, it created a special 12-person 
brigade within the Chilean investigative police force to handle 
intellectual property crimes (BRIDEPI).  In its first year of 
operation, the brigade made more seizures of pirated or counterfeit 
products than were made in all of 2007 by regular Chilean law 
enforcement.  Between March and July, the GOC organized a public 
anti-piracy campaign, which included fines for those who were found 
purchasing pirated or counterfeit products. 
 
¶4. (SBU) Despite GOC efforts, piracy and counterfeiting remain a 
significant problem.  Pirated films, music, and software are 
relatively easy to find.  In November 2008, the upper house of the 
Chilean Congress (Senate) approved a draft Illegal Commerce Law. 
The Senate's version of the legislation must now be approved by the 
lower house (Chamber of Deputies) before it becomes law.  The draft 
legislation includes a variety of measures including:  tougher fines 
for buyers or sellers of pirated/counterfeit products, making it 
easier to shut down suspected markets of pirated/counterfeit 
products, and extending these protections to industrial property. 
 
DATA PROTECTION AND PATENT LINKAGE:  Limited Progress 
--------------------------------------------- -------- 
 
¶5. (SBU) In 2008, Chile made limited progress on data protection and 
patent linkage.  Chile passed a law in April 2008 creating the new 
National Institute for Industrial Property (INAPI), which commenced 
operations in January 2009.  INAPI replaced the old Department of 
Industrial Property (DPI), which had been a part of the Ministry of 
Economy.  INAPI is a regulatory and enforcement authority in charge 
of all administrative actions related to industrial property 
registration and protection, including patents and trademarks. 
 
¶6. (SBU) Despite the creation of INAPI, patent problems continued 
especially in Chile's pharmaceutical sector.  Approvals are still 
granted for Chilean pharmaceuticals that violate existing patents. 
The GOC continues to allow local companies to use exclusive company 
data from Asian, European, and North American companies as the 
scientific basis for granting approval for the generic copies.  The 
Institute of Public Health (ISP), Chile's version of the FDA, issues 
a "sanitary" approval which in effect is also a marketing approval. 
International pharmaceutical companies continue to cite violations 
of exclusive company test data in the Chilean drug approval 
process. 
 
¶7. (SBU) Chile has not established linkage between granting market 
access and the existence of valid patents.  The GOC maintains that 
linkage is provided through the judicial system, which international 
pharmaceutical companies perceive is problematic in protecting valid 
patents.  The GOC states that the issue of linkage is subject to 
interpretation of the obligations under the U.S.-Chile FTA.  One 
notable court case that upheld a patent violation was in 2007. 
However, the case was not resolved quickly, the resulting fine was 
minimal, and sales of the drug at issue were never suspended.  In 
2008, the GOC claimed it shut down a domestic laboratory over patent 
concerns, but the details of the case remain unclear. 
 
¶8. (SBU) The Ministry of Health is still considering new rules that 
would modify Supreme Decree 153, which regulates how the ISP can 
enforce data protection.  The Ministry posted the draft regulations 
on its website for comment between April and July 2008.  One 
significant proposal would prevent the use of data published by a 
foreign government's regulatory agency in the patent application of 
a generic pharmaceutical in Chile.  Post knows of at least one 
incident in which an international pharmaceutical company reported 
that a Chilean laboratory had successfully used the international 
company's proprietary data (which the U.S. FDA published on its 
website) in the Chilean laboratory's patent application. 
 
¶9. (SBU) By February 2009, the draft rules to modify Supreme Decree 
153 had not yet been approved.  The Ministry of Health proposed 
changes to the draft rules in February.  One suggested change would 
have eliminated the protection of proprietary data published by 
foreign governments' regulatory agencies (described above).  This 
proposal was reportedly rejected, but it remains unclear which of 
the suggested changes were approved.  Once the Ministry of Health 
has a final text for the new rules, it must be approved by Chile's 
Controller General, which assesses the legality of government 
policies.  The rules must then be signed by the President and 
officially published before they can take effect.  International 
pharmaceutical companies indicated that the draft rules published in 
April 2008 would mark a step forward, but fell short of 
comprehensive data protections. 
 
COPYRIGHTS AND TRADEMARKS:  Some Progress 
----------------------------------------- 
 
¶10. (SBU) Much of Chile's recent efforts on copyrights and 
trademarks is reflected in landmark legislation pending approval in 
Congress since 2007.  The law contains many provisions including 
establishing IPR enforcement penalties and assessing Internet 
Service Provider liability for IPR violations.  By February 2009, 
the law had passed the Chamber of Deputies but still required Senate 
approval (it had over 250 proposed amendments).  In 2008, the GOC 
and U.S. carried on a positive and sustained dialogue regarding 
suggested changes to the law.  It remains uncertain to what degree 
the final version will reflect U.S. suggestions.  In December 2008, 
the Ambassador met with members of Congress, the Minister in charge 
of the Presidency, the trade minister equivalent, and other key 
actors on IPR.  He stressed the importance of fulfilling IPR 
obligations under the FTA and speeding passage of pending IPR 
legislation.  His meetings received a positive response, and members 
of Congress and the Minister in charge of the Presidency agreed to 
examine moving IPR legislation more rapidly. 
 
SUPPORTING LEGISLATION:  Progress Made 
-------------------------------------- 
 
¶11. (SBU) Under the IPR chapter of the U.S.-Chile FTA, Chile is 
obliged to ratify or accede to several key international forums or 
treaties (e.g., Patent Cooperation Treaty).  This requires the 
appropriate legislation for ratification or accession, for which the 
FTA defines a precise timeframe.  The Chilean Congress approved the 
Patent Cooperation Treaty (PCT) in October 2008.  Passage of the PCT 
was required by January 2007 under the FTA.  The PCT helps 
coordinate patent recognition between signatories.  The GOC also 
sent two pieces of draft legislation to the Congress in January 
2009:  a law to ratify the 1991 revisions to the International 
Convention for the Protection of New Varieties of Plants (UPOV 91) 
and a law to ratify the Trademark Law Treaty (TLT).  Both drafts 
remain pending in the Congress although passage was required by 
January 2009 under the FTA. 
 
RECOMMENDATION:  Chile Should Stay on the PWL 
--------------------------------------------- 
 
¶12. (SBU) Chile made limited progress on IPR in 2008.  During the 
December 2008 U.S.-Chile Free Trade Commission, Chile agreed to a 
2009 technical review of its IPR obligations under the FTA.  Many 
GOC contacts express their displeasure at Chile's inclusion in the 
PWL.  They reaffirm the need to get off the list.  Post concludes 
that removing Chile from the PWL would eliminate one of the tools in 
motivating Chile to make progress on its IPR obligations. 
SIMONS