Identifier
Created
Classification
Origin
06SANSALVADOR464
2006-02-23 21:28:00
UNCLASSIFIED
Embassy San Salvador
Cable title:  

OPTIONAL 2006 SPECIAL 301 REPORT

Tags:  KIPR ETRD ECON ES CAFTA 
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UNCLAS SECTION 01 OF 03 SAN SALVADOR 000464 

SIPDIS

STATE FOR EB/IPE-CLaCrosse
STATE PASS USTR-JChoe-Groves
STATE PASS AID/LAC
USDOC FOR 4332/ITA/MAC/MSIEGELMAN
USDOC FOR 3134/ITA/USFCS/OIO/MKESHISHIAN/BARTHUR
USDOC FOR JBOGER
USDOC PASS USPTO-JUrban and LOC-STepp

E.O. 12958: N/A
TAGS: KIPR ETRD ECON ES CAFTA
SUBJECT: OPTIONAL 2006 SPECIAL 301 REPORT

REF: STATE 14937

UNCLAS SECTION 01 OF 03 SAN SALVADOR 000464

SIPDIS

STATE FOR EB/IPE-CLaCrosse
STATE PASS USTR-JChoe-Groves
STATE PASS AID/LAC
USDOC FOR 4332/ITA/MAC/MSIEGELMAN
USDOC FOR 3134/ITA/USFCS/OIO/MKESHISHIAN/BARTHUR
USDOC FOR JBOGER
USDOC PASS USPTO-JUrban and LOC-STepp

E.O. 12958: N/A
TAGS: KIPR ETRD ECON ES CAFTA
SUBJECT: OPTIONAL 2006 SPECIAL 301 REPORT

REF: STATE 14937


1. Summary: On December 15, 2005, the Legislative
Assembly passed a number of IPR-related reforms to meet
CAFTA-DR obligations. Enforcement remains weak, but
the government appears willing to step-up efforts once
CAFTA-DR is in force. However, institutional
weaknesses in law enforcement will remain an important
constraint on the government's ability to enforce IPR
laws. Regular training and technical assistance would
address some of these deficiencies. End summary.

TRIPS Compliance, FTA Implementation, and Other IP-
Related Issues
-------------- --------------

2. On December 15, 2005, the Legislative Assembly
passed a number of IPR-related reforms to meet CAFTA-DR
obligations. President Saca signed these bills into
law on January 9. Revisions to the 1993 Intellectual
Property Promotion and Protection Law aim to strengthen
copyrights by improving the definition of audio-visual
work; limiting the use of temporary copies of literary
and artistic works, recordings, and performances; and
extending the term for copyright protection from 50 to
70 years.


3. The reforms extend IPR protection to satellite
signals and the content they carry and specifically
prohibit the importing, manufacturing, or distribution
of any device primarily used to decode a codified
satellite signal without authorization. They also
prohibit the reception and subsequent distribution of a
signal that originated as a codified satellite signal.


4. Medicines, previously granted 15-year patents, are
now eligible for 20-year protection, although in
practice 20-year terms have been provided since 2000.
Industrial designs are now protected for 10 years; the
previous term was 5 years. In addition, the reforms
extended patent terms to compensate for unreasonable
delays in granting the patent, as well as unreasonable
curtailment of the effective patent term as a result of
the marketing approval process for pharmaceutical
products. Patent holders also have exclusive
distribution rights.


5. The amended law calls for patent linkage to prevent

marketing approval for copies of patented medicines.
Data exclusivity is extended to pharmaceuticals and
agricultural chemicals by prohibiting copycat
manufacturers from submitting another firm's test data
to regulatory authorities. The periods of protection
are five years for pharmaceuticals and ten years for
agricultural chemicals.


6. The Legislative Assembly also revised the 2002
Trademarks and Other Distinctive Signs Law.
Certification marks and sounds are now protected as
trademarks. Trademark or distinctive signs may not be
registered if doing so would cause confusion with an
already registered one. The reforms set out
transparent rules for the registration and use of marks
and geographic indicators. For example, the use of
confusing geographic indicators in marketing a product
or service is prohibited, and foreign appellations of
origin may now be registered. Clear rules for domain-
name management, including a dispute resolution
procedure to prevent trademark cyber-piracy, are also
established.


7. Reforms to the Penal Code intend to strengthen law
enforcement efforts to discipline IPR violations.
Maximum and minimum jail terms for a variety of IPR
crimes were increased under the new law, with the terms
depending on the severity of the offense. The
punishment for most copyright infringement, including
unauthorized reproduction, import, export, and
wholesale distribution, is now two to four years in
jail, with four to six years possible for more serious
circumstances. Illegally downloading satellite signals
is also subject to a two to four year jail term, as are
trademark violations. The Penal Code was revised to
authorize enforcement agencies to seize suspected
pirated and counterfeit goods, the equipment used to
make or transmit them, and documentary evidence. The
courts have the authority to order the forfeiture
and/or destruction of such items. Enforcement agencies
can also take action at the border against pirated or
counterfeit goods without waiting for a formal
complaint.

Use/Procurement of Government Software
--------------

8. In 2002, the Salvadoran Government, with the
support of the Business Software Alliance (BSA),
launched a voluntarily legalization campaign that BSA
believes was successful in reducing the piracy rate for
software used in government institutions to 25 percent;
in some institutions, BSA reports that there is no
piracy or only 5 percent piracy. However, the Ministry
of Health, Electoral Supreme Court, National Civilian
Police, Human Rights Office, and the Attorney General's
Office have made few advances in their legalization
processes, according to BSA. BSA is planning to launch
a new anti-piracy campaign after March elections and
CAFTA-DR's entry into force.

Enforcement
--------------

9. Music and software piracy are the main forms of
copyright violations in El Salvador. Between January
and October 2005, the Attorney General's office
received 69 complaints of music copyright violations.
During that period, the Attorney General's office
carried out 425 raids, seizing 231,726 compact disks,
36,016 cassette recordings, and 99,320 movies.
Meanwhile, the Business Software Alliance (BSA)
estimates the rate of software piracy at 80 percent.
While music and software piracy are the main concerns,
there has also been concern expressed about inadequate
enforcement of cable broadcast rights and the
competitive disadvantage it places on legitimate
providers of this service. Regarding trademark
violations, there were 11 complaints for counterfeiting
or illegal use of trademarks filed in 2005 with the
Attorney General's office. There were 12 raids to
seize products with such trademarks.


10. McDonald's continues to be involved in a long-term
trademark dispute with a former franchisee. The
dispute is still not fully resolved. In June 2003, the
Supreme Court ruled in favor of McDonald's and the
company was allowed to remove infringing names and
arches from the restaurants of the former franchisee.
In December 2005, an appeals court ruled against
McDonald's on a related contractual issue, awarding the
former franchisee $24 million in compensation and
damages. McDonald's is appealing the ruling to the
Supreme Court.


11. Although PhRMA did not name El Salvador in its
2006 Special 301 submission, as it had in years past,
El Salvador still does not provide TRIPS-compliant
protection for test data for new pharmaceuticals. The
Superior Council for Public Health (CNSP),which is
tasked with providing marketing approval for new drugs,
continues to allow a copy-cat manufacturer to submit an
innovator's test data in place of its own. CNSP staff
have told ECONOFF that with the implementation of CAFTA-
related IPR reforms, this practice will no longer be
acceptable, and the government will be obligated to
protect test data for pharmaceuticals for a five-year
term. CNSP staff also recognize the need to establish
an effective system of patent linkage with the National
Registry Center, where patents are registered.


12. There is a widespread view that most Salvadoran
judges lack adequate legal preparation to adjudicate
IPR cases. Currently, IPR violations are seen in
mercantile and penal Courts. David Gonzalo Cabezas,
President of the National Judicial Counsel (CNJ),has
suggested there should be "specialized judges
exclusively dedicated to apply justice in intellectual
property," but no plans exist to establish such
specialized courts. He stated that they have discussed
and are trying to address the issue with the World
Intellectual Property Organization (WIPO) and with the
Supreme Court of Justice. In 2004, the Attorney
General's Office merged the independent Intellectual
Property Crimes Unit with the larger Crimes Against
Private Property Division, which handles fraud, theft,
and robbery. This unit is called the Private Property
and Intellectual Property Unit. The staff includes one
unit chief and five prosecutors.


13. Anticipation of stricter enforcement of IPR laws
under CAFTA-DR has evoked occasionally violent protests
from vendors of illicit CDs and DVDs; they claim that
60,000 people will see their livelihoods destroyed with
CAFTA-DR implementation. The Ministry of Economy, with
Post's assistance, has been working with
representatives of the U.S. recording industry to
implement what executives from the Recording Industry
Association of America (RIAA) and International
Federation of the Phonographic Industry (IFPI) describe
as a conversion program, modeled after a similar
program in Mexico. Essentially, informal vendors now
selling stolen music and video would have the
opportunity to sell legitimate catalogue music at
competitive prices through a distribution system backed
by concessional financing.


14. Comment: Post has impressed upon the Ministry of
Economy the importance of zero-tolerance enforcement of
the new IPR law if this conversion program is to
succeed. To prepare for that enforcement push, Post's
Immigration and Customs Enforcement (ICE) Attache
recently organized training for police, prosecutors,
and judges on how to enforce the new IPR laws,
especially the ex-oficio search and seizure provisions.
The police, in consultation with the ICE Attache, are
developing an aggressive enforcement plan that will
first target large-scale distributors of stolen and
video, cutting off the vendors supply. Vendors will
also be subject to enforcement activity under this
plan. End comment.

Treaties
--------------

15. The Legislative Assembly ratified the 1996 WIPO
Copyright Treaty in March 6, 2002, and the WIPO
Performance and Phonograms Treaty in May 20, 2002.
Besides, in compliance with CAFTA provisions, El
Salvador should ratify, within specified time frames,
the International Convention for the Protection of New
Varieties of Plants, the Trademark Law Treaty, the
Brussels Convention Relating to the Distribution of
Programme-Carrying Satellite Signals, and the Patent
Cooperation Treaty.

Training
--------------

16. Implementing IPR laws consistent with CAFTA-DR
will seriously test the capacity of the Salvadoran
courts and law enforcement agencies. We believe the
executive branch is committed to accomplishing this
task, although it is one of the most sensitive areas
for CAFTA-DR implementation. That political will,
however, must be matched with the rule of law if IPR is
to be protected in a manner consistent with El
Salvador's trade obligations. Law enforcement officers
and prosecutors will require significant training in
how to best use their new ex-oficio search and seizure
powers. Judges, too, must be educated. Post's ICE
Attache has taken a leading role in providing such
training, and in January offered an introductory course
to police officers, prosecutors, and judges.
Salvadorans have also attended USPTO's two-part CAFTA-
DR academy. However, additional regular training on
identifying pirated goods would be useful--industry
experts could play a helpful role in this effort.
Assistance will also be required to improve evidence
collection, in terms of analyzing computer hardware and
software, and to establish storage facilities for
confiscated goods. Training for judges, meanwhile
could be coursed through the National Judicial Counsel
(CNJ),the court system's training arm. One
potentially effective way to do so would be through the
development of an IPR-law curriculum that could become
a regular part of the CNJ's course offerings.
Technical assistance would be useful in the area of
data protection for pharmaceuticals--helping the
Superior Council for Public Health design an
information network with the National Intellectual
Property Registry would be an effective means to
ensuring that patent linkage is implemented.

BUTLER