INFORMATION FOR NICARAGUA SPECIAL 301 REVIEW

UNCLAS MANAGUA 000411

SIPDIS

SENSITIVE
SIPDIS

STATE FOR LIBRARY OF CONGRESS COPYRIGHT OFFICE, COMMERCE FOR USPTO

E.O. 12958: N/A
TAGS: KIPR ECON ETRD NU
SUBJECT: INFORMATION FOR NICARAGUA SPECIAL 301 REVIEW

REF: STATE 14937


1. (SBU) Summary. Nicaragua is not currently placed on any
Special 301 list, and post recommends maintaining this
status. This recommendation is offered in spite of the fact
that there remains room for improvement on legal structure
and judicial attitudes, and that the Dole Food Company has
written to the USTR requesting Nicaragua's placement on the
Priority Watch List due to the "seizure" of Dole's trademark
by a Nicaraguan court. Nevertheless, the Government of
Nicaragua (GON) has taken several encouraging actions in the
last year which improve upon the areas of weakness.
Authorities have conducted several enforcement actions,
participated in high-level, USG-sponsored enforcement
training academies, sponsored their own large-scale IP
workshops, and worked diligently with Embassy personnel on
changing the culture of piracy. Furthermore, Nicaragua is a
party to DR-CAFTA and post remains cautiously optimistic that
a range of intellectual property rights reforms (necessary
for DR-CAFTA entry into force) will be passed shortly. All
of these factors lead post to believe that the IPR climate
will continue to improve. End Summary.

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Legal Framework
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2. (U) Since 2000, Nicaragua has modernized its domestic IP
laws and signed several major international conventions.
Five international agreements entered into force in Nicaragua
in 2003:

- The Locarno Agreement on International Classification of
Designs and Industrial Models;
- The Strasbourg Agreement on International Classification of
Patents;
- The World Intellectual Property Organization (WIPO)
Copyright Treaty;
- The WIPO Performances and Phonograms Treaty (WPPT); and
- The Patent Cooperation Treaty (PCT).

Additionally, Nicaragua ratified the Dominican Republic -
Central America Free Trade Agreement in 2005. The
Intellectual Property Registry (RPI) of the Ministry of
Industry, Commerce and Development (MIFIC) has worked closely
with the USTR in recent months to harmonize the new
CAFTA-related IPR obligations with existing national laws and
regulations, and agreed on language required for new IPR
reforms which have been added to the Nicaraguan National
Assembly's agenda and are expected to be voted on in the near
future as a condition for DR-CAFTA entry into force.
(Comment: Post remains cautiously optimistic that these
reforms will pass and is working cooperatively with the GON
and legislative and private sector allies to promote their
passage. End Comment.)


3. (SBU) Although Nicaragua possesses a solid legal framework
for the protection of intellectual property rights, a lack of
strong penalties for violations, inadequate implementation of
existing law, and ineffective enforcement remain areas of
concern. Nicaragua suffers from weak institutions due to a
lack of resources and susceptibility to official corruption.
Additionally, the legal system suffers from a general lack of
knowledge of the subject matter, and a judiciary which is
open to improper outside influence. Regardless, both the
National Prosecutor and the Nicaraguan National Police (NNP)
Economic Crimes Unit have demonstrated an interest in IPR and
have expressed a desire to work with the affected industry
representatives to crack down on piracy. (Note: The bulk of
reported IPR related violations in Nicaragua involve pirated
movies and music CDs. End Note.)

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Training and GON Institutional Support for Intellectual Property Rights
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4. (SBU) The National Intellectual Property Rights Office and
Intellectual Property Registry (RPI),which are sub-units of
the Ministry of Trade (MIFIC),have increased efforts to
train judges, prosecutors, police and GON officials in
implementation and enforcement of IPR commitments. In the
past year, RPI sponsored nine seminars in various regions of
the country, which trained over 600 Government, law
enforcement, prosecution, and judicial officials in various
aspects of IPR enforcement. Several high-level RPI and NNP
Economic Crimes Unit personnel also participated in two IPR
enforcement academies in the United States sponsored by the
U.S. Patent and Trademark Office. Post is nominating
additional candidates for a USPTO enforcement academy in
April that includes Spanish-language translation. The
National IPR Office also prepared IP guides for childen,
which it is distributing in schools, and published three
editions of an electronic IP magazine.


5. (SBU) RPI initiated several institutional reforms over the
last two years. In the area of industrial property, the
national patent office has upgraded its capacity to handle
international requests per the Patent Cooperation Treaty. In
2005, RPI also strengthened the protection of new plant
varieties in Nicaragua under the International Union for the
Protection of New Varieties of Plants (UPOV) Convention.
Nicaragua is a leader in the region in the implementation of
the UPOV Convention. RPI assisted over 1,800 students,
attorneys, and business people who used its trademark
registry for research and due diligence checks. 3,896 new
trademarks were registered in the last year. As of February
2006, 41% of the trademark data base has been digitalized.
RPI expects the percentage to rise to 59% in 2006-2007. The
GON acted to adhere to the conditions of the Budapest Treaty,
recognizing the International Deposit of Microorganisms, and
has instituted inter-institutional coordination for the
protection of test data. On the international front,
Nicaragua actively supports U.S. proposals on geographic
indicators (GI) and is strongly against anti-competitive EU
GI proposals in the WTO. Nicaragua favors the U.S. position
on a revised Trademark Law Treaty in the March 2006 WIPO
Diplomatic Conference in Singapore and supported U.S.
proposals at the July 2005 WIPO Diplomatic Conference on the
Protection of Broadcasting Organizations in Cartegena.


6. (U) MIFIC worked closely with the private sector to
develop the pro-IPR Nicaraguan Copyright Association
(NICAUTOR) which is actively involved in a public and
legislative campaign to pass IPR reforms and foster a culture
of respect for intellectual property. NICAUTOR has also been
active in conducting research on behalf of, and providing
critical support to, the NNP Economic Crimes Unit. Most
recently, NICAUTOR (with substantial ECON support and a
$2,000 USAID grant) has organized a publicity campaign by a
coalition of Nicaraguan musicians, concert promoters, video
production companies, and legal importers of videos and
movies to raise public awareness of the economic and cultural
cost of piracy, to promote respect for intellectual property
and to support the pending IP reforms. Recognizing the
threat to Nicaragua's international commitments, including
those involving intellectual property, the GON reacted
aggressively to prevent passage of anti-GMO "biosecurity"
legislation in 2005.

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Enforcement
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7. (U) MIFIC, the National Prosecutor, the NNP Economic
Crimes Unit, and private industry (including NICAUTOR) have
worked together on several large enforcement actions over the
past year. As a result of raids on outlets selling pirated
goods, 13 thousand cassettes, 19 thousand CDs, and several
pieces of equipment for making illegal copies of music and
movies were seized and destroyed. These raids against nine
establishments and vendors in Nicaragua,s largest open air
market took place between March 2005 and January 2006. These
actions were given high profile attention by Nicaraguan
media. (Note: Due to the weakness of the current law,
authorities could only seize the contraband items. They
could not prosecute the makers and sellers of pirated goods.
This weakness is addressed in pending IP reform legislation.
End Note.) The National IPR Office also facilitated the
non-judicial resolution of at least twelve cases involving IP
infringements on music, software, photographs, videos and
other works. (Comment: Despite the successful enforcement
measures noted above, additional action needs to be taken
against the sale of pirated goods in "reputable"
establishments. End Comment).

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THE DOLE COMPLAINT
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8. (SBU) Dole Food Company comments to the USTR highlight the
serious issue of an assault on the intellectual property
rights of a U.S. corporation by the Nicaraguan courts. The
basis of Dole's complaint is a judge's order to "embargo" and
auction Dole's Nicaraguan trademark in order to enforce
judgments against Dole in cases arising under Nicaragua Law

364. Law 364, enacted in 2001, established special
procedures for claimants alleging injury from the use of
Dibromochloropropane (DBCP)-based pesticides in the 1970,s
and (allegedly) 1980,s. Under Law 364, Dole has been
subjected to judgments in 16 Nicaraguan cases involving 959
claimants which total $885.9 million. In the U.S. and
Nicaragua, Dole is involved in current cases with claimed
damages of approximately $22 billion. Dole argues that the
Nicaraguan court ordered the attachment of Dole's trademarks
"because the Nicaraguan plaintiffs and their U.S. lawyers
have been unable to find a court anywhere in the hemisphere
that would enforce the judgments issued by the Nicaraguan
courts..." (Note: Dole no longer has any business operations
or other attachable assets in Nicaragua, although there are
vendors who buy Dole products abroad and import them to
Nicaragua for re-sale. End note.)


9. (SBU) Comment on the Dole Complaint: Dole Food Company
raises legitimate concerns, but we do not believe that this
case warrants Nicaragua's placement on the Priority Watch
List. The USG has continuously and strenuously objected to
Law 364 and subsequent actions taken by the Nicaraguan legal
system which wrongly damage Dole's interests. We expect
continuing attention from the highest levels to remedy the
unjust treatment of Dole and other U.S. companies, which is
detrimental to Nicaragua's aspirations for increased foreign
investment and economic stability. Reform of the Nicaraguan
legal system also remains a core mission objective. The GON
view is that this trademark issue is only tangentially
related to broader IPR concerns, and it is not fair to punish
Nicaragua for the actions of the courts in light of progress
made on a host of other fronts. (Note: The Nicaraguan courts
are notoriously hostile to executive branch interests. End
Note.) We understand the Dole comments were the only
negative comments about Nicaragua's IPR enforcement received
by the USTR.

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RECOMMENDATION
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10. (SBU) Post remains concerned about the GON's weakness
in both capacity and will to broadly enforce its IPR
commitments, as well as the Dole trademark issue; however, we
believe that the GON has demonstrated a commitment to
strengthening institutional capacity to deal with this issue
and has taken a series of concrete actions towards that end.
We believe that the GON's actions in 2005 and 2006 described
above, and its negotiation of new commitments under DR-CAFTA,
are sufficient reasons to maintain Nicaragua's current status
under Special 301.
TRIVELLI