2006 SPECIAL 301 RECOMMENDATION - KEEP VENZUELA

UNCLAS SECTION 01 OF 03 CARACAS 000486 SIPDIS SIPDIS STATE FR EB/IPE CLACROSSE, DEPT PLS PASS TO USTR JCHOE-ROVES, DOC JBOGER, DOC PLS PASS TO USPTO JURBAN AN LOC STEPP E.O. 12958: N/A TAGS: KIPR VE SUBJECT: 2006 SPECIAL 301 RECOMMENDATION - KEEP VENZUELA ON PRIORITY WATCH LIST REF: 05 CARACAS 0596 This message is sensitive but unclassified please treat accordingly. -------------- Summary -------------- ¶1. (SBU) The BRV continues to exhibit lackluster performance in protection and enforcemnt of intellectual property rights. In the pastyear, little has been done to strengthen an alredy weak enforcement regime. The market for legiimate music CDs is minuscule, and CD, DVD, and software piracy remains high. SAPI, the government aency that oversees IPR enforcement and issues paents has not issued a single patent to an importd drug since 2004, and has attempted to raise reistration fees without due process. In addition,the BRV has proposed a new Copyright Law (still nder consideration by the National Assembly) that ould effectively eviscerate copyright protection. Both the head of SAPI and President Chavez hiself have questioned publicly the concept of intelectual property rights. Only SENIAT, the custos and tax agency, has taken positive steps by encting a regulation allowing ex officio seizures of contraband material and mounting public anti-pircy campaigns. Based on the BRV's antipathy to IP, weak enforcement, and given the possibility of legislation that would further weaken IPR, Post recommends Venezuela stay on the Special 301 Prioity Watch List for 2006. End Summary. -------------- Pharmaceuticals -------------- ¶2. (SU) The international pharmaceutical industry contnues to see a weakening of the intellectual property environment in Venezuela. Despite Venezuela having the highest per-capita medicine consumption in Latin America, and being the third largest market in the region, SAPI the Autonomous Intellectual Property Service (the country's primary IPR authority),has not issued a single patent to an imported pharmaceutical product in the last two years. Applications languish at SAPI and mandatory government sanitary regstration of pharmaceutical products results in increased counterfeiting due to BRV refusal to provide confidential data protection for product submissions which have not yet received patent protection. ¶3. (SBU) The BRV does not protect second use patents for products such as the male impotence drug Viagra, which is only patented for its originl use as a hypertension medication. Counterfeit medications remain a problem in Venezuela. Accoding to the Chamber of Pharmaceutical Companies CAVEME),these medications make up 10 percent of the market. (Note: According to a private pharmacetical company contact, Venezuelans consumption has historically had strong brand loyalty, which hs favored legitimate providers. End Note). TheMinistry of Health ended a public awareness campign against counterfeit products when relations beteen CAVEME and the Ministry soured in late 2005. ¶4. (SBU) In June 2005, the director of SAPI, Edardo Saman, unilaterally raised patent registraton fees by 2,000 percent without National Assemby approval. COVAPI, the bar association for indutrial property lawyers, filed suit and won in Jauary 2006, forcing SAPI to return to original fee schedules. -------------- Recored Media and Software -------------- ¶5. (SBU) The market for legitimate CDs and DVDs continues to decline, as street vendors operate in a free, unregulated environment. According to SACVEN, the association of recording artists and producers, only 70 legitimate record stores exist in Venezuela. The piracy rate for music CDs has now climbed to a reported 83 percent, according to local IPR contacts (this figure is consistent with International