Identifier
Created
Classification
Origin
04PANAMA441
2004-02-25 18:33:00
UNCLASSIFIED
Embassy Panama
Cable title:  

PANAMA'S SCORECARD ON INTELLECTUAL PROPERTY RIGHTS

Tags:  ETRD KIPR PM ECONOMIC AFFAIRS 
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UNCLAS SECTION 01 OF 03 PANAMA 000441 

SIPDIS


DEPT FOR WHA/CEN AND EB/IPC - WILSON/QUIGLEY
DOC FOR KSCHLEGELMILCH
DEPT PLS PASS TO USTR - BPECK
DEPT PLS PASS TO USPTO - JURBAN/DLASHLEY-JOHNSON
DEPT PLS PASS TO LOC - STEPP


E.O. 12958: N/A
TAGS: ETRD KIPR PM ECONOMIC AFFAIRS
SUBJECT: PANAMA'S SCORECARD ON INTELLECTUAL PROPERTY RIGHTS

UNCLAS SECTION 01 OF 03 PANAMA 000441

SIPDIS


DEPT FOR WHA/CEN AND EB/IPC - WILSON/QUIGLEY
DOC FOR KSCHLEGELMILCH
DEPT PLS PASS TO USTR - BPECK
DEPT PLS PASS TO USPTO - JURBAN/DLASHLEY-JOHNSON
DEPT PLS PASS TO LOC - STEPP


E.O. 12958: N/A
TAGS: ETRD KIPR PM ECONOMIC AFFAIRS
SUBJECT: PANAMA'S SCORECARD ON INTELLECTUAL PROPERTY RIGHTS


1. Summary and Comment: Overall, Panama's intellectual
property rights regime is headed in the right direction
and has improved during the past year. Panama has
relatively well-developed intellectual property laws and
institutions, and the GoP has increased specialized IPR
training and technical support for local stakeholders.
The GoP has also redoubled its efforts to legalize its
software holdings this year, has strengthened its penal
code, and is striving to fully implement its WCT and WPPT
obligations. The specialized IP prosecutor,s office leads
concrete and energetic GoP efforts to pursue cases and
enforce the law.



2. Enforcement, however, is far from ideal as police,
customs, and prosecutors suffer from a lack of resources,
and cases often stall in the judicial system. In addition,
data exclusivity has become a concern. We are especially
concerned with the dearth of resources for IPR enforcement
in the Colon Free Zone (CFZ),outstanding international
obligations, and the continuing lack of understanding of
IPR within the judiciary. In short, penalties applied in
the CFZ have often not had a deterrent effect. While
the Embassy does not/not support a recommendation that
Panama be placed on the Special 301 Watch List, we will
continue to work with local stakeholders as well as U.S.
industry representatives to press for continued
improvement of IPR enforcement in Panama. End Summary
and Comment.


Some GoP Institutions are Strong
--------------



3. The GoP Inter-institutional Commission for Intellectual
Property includes Public Ministry prosecutors, Customs and
the Education Ministry's Copyright Office officials, Colon
Free Zone (CFZ) administration, and representatives from
the Commerce Ministry's international trade office
(VICOMEX) and industrial property registry (DIGERPI). The
Commission takes the lead on IPR activities and is
proactive in developing campaigns against IPR infringement.
Using GoP funds, the Commission organized and executed a
series of four regional workshops in 2003 throughout Panama
to raise general awareness of IP, and also proactively
sought Interamerican Development Bank matching funds for a
total of $1 million to continue the campaign and also aid

in modernizing Panama,s IP laws.



4. The Industrial Property Office (DIGERPI) of the
Commerce Ministry maintains a centralized electronic
database of all registered trademarks, accessible to remote
users in the Intellectual Property Departments of both
Customs and the CFZ, which allows those agencies to make
determinations in potential infringement cases, and also to
contribute information directly to the database. In 2003,
the system "went mobile" as investigators can now use
wireless connectivity with laptop computers to access
the data while actually inspecting merchandise at a port or
at the CFZ.


GoP,s Software Legalization Finally Underway
--------------



5. The GoP negotiated a government software legalization
agreement with the Business Software Alliance (BSA),
which President Mireya Moscoso signed as Presidential
Decree 273 on December 27, 2000. The agreement allowed
for an 18-month analysis period, during which every
government agency would audit the extent of its piracy,
followed by an 18-month period of implementation, during
which the GoP would license its software stock. The entire
process was to be completed by December 2003. In April
2003, 40% of GoP agencies still hadn't undertaken the
audit, and even fewer had legalized their holdings. In
response, the Ambassador and Embassy mounted an aggressive
campaign to focus GoP attention on this matter, and
included the agreement on the agenda of the Embassy-GoP Ad
Hoc Investment Commission and the USTR-led Trade and
Investment Committee. In the past few months, the GoP has
finally moved to catalogue its software and most major
ministries have either legalized or appropriated funds to
legalize their holdings. In January 2004, BSA,s local
representative noted the sea change with the GoP, and
emphasized that it was the direct result of Embassy
intervention.


Panama Modernizes its IPR Penal Code
--------------



6. Law 1, promulgated on January 5, 2004, consolidated
four previous IP-related laws, including parts of
Panama's penal code. It clarifies the definition of IP
itself and violations against it while strengthening IP
penalties. While minimum jail sentences remain at one
year, maximums have been increased to six years
generally, and even up to twelve if a prosecutor can
prove a linkage between IP violations and money
laundering. The law also allows for "preventive
detention" and sets a minimum of $5,000 for bond while
cases are investigated. While the law does not consider
minimum financial penalties/fines, it does allow for
companies, Colon Free Zone trading permits to be revoked,
as well as suspension of work permits for street vendors.
The law is a significant step forward for Panama. It
includes a number of punishments that can be harsh enough
to dissuade possible criminals from acting, yet allows
for compassion in those cases where it's warranted.


Panama ratifies WIPO treaties, almost in full compliance
-------------- --------------



7. The GoP has signed and ratified ten World Intellectual
Property Organization (WIPO) instruments, including the
Copyright Treaty (WCT) and the Performances and Phonograms
Treaty (WPPT). DIGERPI and the Education Ministry estimate
that Panama's national law is about 90 percent in
compliance with these two key international treaties, but
the GoP readily recognizes that it must update its
copyright laws to be completely in line. The office
of the Vice Minister of Education took the lead on a law
project to modernize the copyright law, but the proposal
died in committee in the second legislative session of

2003. To date, the Ministry has not given a timeline to
the Embassy for re-introduction of the bill, though we
have provided useful texts and guidance from private
industry to help with drafting the law.


Agencies Striving to Enforce IPR law
--------------



8. The specialized IP prosecutor,s office with national
jurisdiction (Ninth Circuit attorney--created in December
2002),has streamlined the execution of IPR cases, and now
has four staff lawyers (twice as many as in 2002). The
office has even taken on the role of training other
prosecutors to serve in backup roles, most importantly the
Tenth Circuit attorney. In one significant operation in
November 2003, the office led an interagency team of
prosecutors from Chiriqui province, the Technical Judicial
Police, and National Police into nine different warehouses
in the city of David. The operation led to the seizure of
counterfeit Levis jeans and the closure of five of the
warehouses. In another significant case in May 2003, the
IP prosecutor led a team that seized 5000 counterfeit
books. Panama's Customs Authority seized significant
amounts of contraband and fake goods during the year,
including over 20,000 pieces of diverse merchandise like
Black&Decker in one operation in Balboa and 2 full
containers of pirated CD's in another. The Colon Free
Zone IP office averaged one on-site inspection per week
in 2003 and seized over 11,000 cases of counterfeit and
pirated goods. In a display of judicial strength, a
circuit court judge ordered 7 million pirated CD's to
be destroyed in December, related to cases that have
resulted in 20 convictions since 1999.


Lack of Resources and a Still Weak Judiciary
--------------



9. U.S. companies have expressed concern about the general
scarcity of resources and low priority given to IPR cases
by Panama's Attorney General's office. The specialized IPR
prosecutor lacks even basic resources to conduct
investigations and handle cases--and his office is better
equipped than most other prosecutors,. Prosecutors often
ask victims to pay fees for storing evidence and other
incidental costs related to seizures and investigations.
This is disturbing considering that enormous merchandise
trade flows through the Colon Free Zone, mostly from Asia
to other Latin American countries. Indeed, over 70% of
IPR-related seizures in the CFZ originated from Asia in

2003. In addition, the music industry estimates that
sales dropped by 30% in 2003, in large part due to piracy.



10. In spite of some successes like the destruction of 7
million CD's mentioned in para 8, Panama's judicial system
is generally weak, and the slow and inefficient criminal
processes against IPR violators often deny victims any
meaningful remedy. (Note: Regrettably, this applies to the
wider judicial system.) Cases brought before the criminal
courts usually take years to be heard. Despite the
GoP,s concerted efforts to instill a better understanding
of IPR, judges still lack a fundamental grasp of IP law and
regard IP violations as misdemeanors, though the new penal
code simplifies the laws and clarifies crimes. In one
especially egregious example in Colon, a CFZ merchant who
had been convicted of previous IP violations was acquitted
in 2003 in a case that had first started in 1999. The
judge had direct personal connections to the merchant and
the merchant's company was clearly shipping several
containers of contraband Philip Morris product.


Data Exclusivity a Concern
--------------



11. Panama's Health Ministry requires companies that wish
to sell drugs and chemicals to apply for "sanitary
registers" that detail chemical makeups and laboratory
results related to the development of the products.
Several U.S. companies have applied for the registers,
been approved, and begun sale of their products, only to
find that a generic, locally produced version appears on
the market soon after. This indicates that the Health
Ministry is not respecting the data exclusivity clause of
Panama's Law 23 and is allowing other companies to view
the proprietary data used in applying for sanitary
registers. According to Health Ministry lawyers, the
Ministry's organic law ("ley unica") does not contemplate
data exclusivity and takes precedence over any other law.
Ministry officials have expressed their willingness to
address this issue and the Ministry is currently
undertaking an extensive review of how to bring the two
laws into harmonization, but has given no indication of
when this might be achieved.


USG Provides Resources, Training
--------------



12. The Embassy has helped bridge some of the GoP,s more
glaring resource gaps. Using Narcotics Affairs Section
(NAS) funds, we have provided a photocopier, cable
internet connection, and a computer projector to the IPR
prosecutor to help with IPR training and investigations.
We have helped cover the costs of storing evidence for IPR
cases. The CFZ uses USG-donated computers in several
offices, and we are now undertaking a broader strategy of
strengthening CFZ institutions. We have sent two DIGERPI
officials to a USPTO conference in the United States in

2003. Finally, the Embassy is aggressively pursuing
anti-corruption and justice reform programs.
WATT