MISSION PROMOTION OF IPR PROTECTION IN CHILE

C O N F I D E N T I A L SANTIAGO 002350

SIPDIS

SIPDIS

STATE FOR WHA/EPSC
STATE PLEASE PASS TO USTR FOR MARY SULLIVAN
COMMERCE FOR SARA MCDOWELL

E.O. 12958: DECL: 11/16/2015
TAGS: ECON ETRD PGOV KIPR CI
SUBJECT: MISSION PROMOTION OF IPR PROTECTION IN CHILE

REF: A. SANTIAGO 1424


B. SANTIAGO 2256

C. SANTIAGO 2315

D. WARD/YANG/SHERIDAN E-MAILS

E. SANTIAGO 2331

F. SECSTATE 175907

Classified By: Ambassador Craig Kelly for Reasons 1.4 (b) and (d)


1. (SBU) Summary. One of the Mission's top priorities in
2005 has been to focus attention in Chile on the continuing
failure to implement full protection of intellectual
property. The overall U.S.-Chile relationship, including the
bilateral trade relationship, is better than ever, and the
U.S.-Chile Free Trade Agreement has been a major success for
both sides. However, there is poor respect in Chile for IPR,
with spotty understanding in government circles, competing
political and commercial interests, and courts generally
unprepared to deal with cases. To address this and to
support U.S. firms harmed by IPR violations, the Mission has
undertaken a number of initiatives highlighted below.
Progress has been incremental at best. End Summary.


2. (SBU) By most measures, the U.S. bilateral relationship
with Chile is better than ever. With the Free Trade
Agreement that came into force on January 1, 2004, the trade
relationship is stronger than ever, with bilateral trade up
by double digits. In addition to trade, related cooperation
under the FTA on labor and environmental protection is going
smoothly. The one dark cloud hanging over the trade
relationship is Chile's continuing failure in IPR
enforcement. The lack of Chilean protection for IPR,
especially for pharmaceuticals, is significant. Below is a
chronological roundup of the main Mission efforts to raise
the profile of IPR protection in Chile, and positively shift
public and government approaches to IPR protection. In this
endeavor - several tugboats trying to turn around the Queen
Mary - we have found like-minded advocates in some unexpected
places.

Training Judges
--------------


3. (U) In May, the Embassy, the University of Chile's Law
School and the Chilean Supreme Court jointly sponsored a
one-day training workshop for judges who will hear IPR cases.
The workshop was financially supported by the Embassy's
Public Affairs section and the Mission's inter-agency Law
Enforcement Committee. A district judge from Maryland, Andre
Davis, and Jason Gull from the Department of Justice's IPR
Crime Office traveled to Chile to participate.

Joint Demarches with Swiss
--------------


4. (SBU) In meetings with European counterparts, the
Ambassador learned that EU countries were encountering the
same difficulties with the GOC on IPR issues. While some EU
members wanted to work formally with the U.S., in the end
they could not obtain clearance from Brussels on the proposed
demarche points. However, the Swiss were eager to move ahead
separately with the U.S., as their pharmaceuticals have been
victimized by the same lack of protection as U.S. firms. The
Ambassador and Swiss Ambassador Regli paid three joint calls
in June on the Minister of Health, the Foreign Minister and
the Under Secretary for Economy (ref A). While the
Ambassadors received cordial receptions from all, it was
clear that there was no overall Chilean coordinator on this
issue. Subsequent to these joint demarches, the GOC did
create an inter-ministerial commission to coordinate
internally on IPR issues (ref B).

Inter-Agency IPR Commission
--------------


5. (SBU) The GOC's inter-ministerial commission is composed
of five ministries -- Foreign Affairs, Commerce, Agriculture,
Education and Health. The commission has three levels, with
technical experts meeting at least once a month. At the
vice-ministerial level, there are to be meetings every 45
days, and ministers are to meet under the auspices of the
Commission three to four times per year. Carolina Belmar,
who is the head of the intellectual property unit at the MFA,
told econoff the explicit goal in creating the Commission was
to foster dialogue and understanding on IPR issues among
ministries (ref B). The Embassy had sent Belmar to the U.S.
in September as an IV visitor on an IPR-related program.

IPR Speech to AmCham
--------------


6. (U) In September, the Ambassador launched a constructive
public initiative, designed to turn up the heat on the GOC,
with a speech directly to the business community. At a
September 28 meeting of the American Chamber of Commerce, he
outlined ten reasons why improved IPR protection was in
Chile's own best interest. The speech received extensive
press coverage, including editorials of support of the U.S.
position. The speech also led to further press interviews
over the next month with the Ambassador and other Embassy
officers on IPR protection and its benefits.

Follow-up with MFA
--------------


7. (SBU) In response to SecState 175907, the Ambassador paid
an additional call on FM Walker in September to discuss the
Eli Lilly case involving its Stratera product. Walker had
not been briefed on the issue, but asked for details
outlining the case. Working with USTR, language was drafted
and cleared and the information sent on September 28. Since
then, the Ambassador has been reassured by Walker that the
GOC is working on "addressing U.S. concerns" on IPR
protection in Chile, but he has not provided specifics.

Call on the President's Office
--------------


8. (SBU) The Ambassador and Swiss Ambassador Regli met with
Secretary General of the Presidency Dockendorff in September

SIPDIS
to discuss Chile's inadequate response to our IPR concerns
and to seek President Lagos' intervention. After the
meeting, Minister Dockendorff sent a written response to
Ambassador Kelly assuring him that new Chilean legislation
would address the USG,s concerns. He also mentioned the
creation of the inter-ministerial commission tasked with
examining and coordinating the GOC position on IPR.
Dockendorff's letter also mentioned the passage of Law No.
19,996, which would adapt Chilean domestic law to meet
international commitments signed by Chile. To date the
implementing regulations for this law have not been passed,
but the initial assessment we have from pharmaceutical
sources who have seen the draft regulations is not
encouraging.

Continuing High Level Dialogue
--------------


9. (C) FM Walker told the Ambassador in a follow-up meeting
on November 10 that the GOC was continuing to take steps to
address our IPR concerns (ref C). Walker said the GOC was
improving inter-ministerial coordination, and that progress
was imminent on addressing U.S. data protection concerns.
Also in November, the Ambassador met with newly-appointed
Constitutional Court President Jose Luis Cea Egana (ref E).
Cea agreed with the Ambassador that Chile was doing a poor
job of protecting IPR.


10. (C) Summary: Mission-wide efforts have generated some
positive responses from the GOC and from the business
community in Chile. We believe the Ambassador's
interventions and joint demarches with the Swiss have
certainly gotten the attention of major players like FM
Walker and presidential advisor Dockendorff. We know that
President Lagos was fully briefed to discuss the IPR issue
during his bilateral meeting with President Bush on the
margins of the Summit of the Americas two weeks ago. We will
follow up with MFA on the demarche to FM Walker concerning
the Eli Lily drug Stratera (ref F). To date we have not
received an answer.


11. (C) Summary continued: We have seen positive responses
both publicly and in private to the Ambassador's September
speech to the AmCham. We believe the creation of the GOC's
inter-ministerial commission was a direct outcome of the
pressure applied by the joint demarches with the Swiss.
Despite that, it remains unclear if the GOC has begun to
change its fundamental attitude toward IPR protection (i.e.
leave it to the companies to take their cases to court). We
continue to see violations of patents, most egregiously in
pharmaceuticals. Our outreach, training and advocacy efforts
will continue, but we see a long and potentially bumpy road
ahead before Chile truly changes the way it handles IPR.
KELLY