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.

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Summary
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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.

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Pharmaceuticals
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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.

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Recored Media and Software
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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