CROATIA SPECIAL 301 REVIEW

UNCLAS SECTION 01 OF 02 ZAGREB 000223

SIPDIS

SIPDIS

SENSITIVE

COMMERCE PASS USPTO
STATE PASS USTR

E.O. 12958: N/A
TAGS: KIPR ETRD ECON HR
SUBJECT: CROATIA SPECIAL 301 REVIEW

REF: A) STATE 14937

B) 05 ZAGREB 1721


1. Summary and Recommendation: Croatia's
intellectual property (IP) protection regime is
generally adequate and in accordance with accepted
standards. However, problems in the area of
patent protection for pharmaceuticals continue.
Unfortunately, the GOC has done nothing in the
last year to resolve this issue, despite our
continued pressure. Although pharmaceutical
patent infringement is an anomaly within Croatia's
IP regime, post recommends that Croatia remain on
the Special 301 Watch List. We do not believe,
however, that this problem is of sufficient
gravity to warrant moving Croatia to the Priority
Watch List, as industry has recommended. End
Summary and Recommendation.

Pharmaceutical Protection Weak
--------------

2. Croatia's main weaknesses in IP protection are
in patent linkage (see ref B) and inconsistent
enforcement of the bilateral memorandum of
understanding (MOU) on data exclusivity. Post has
worked consistently over the past year to urge the
GOC to implement some form of patent linkage to
prevent marketing authorization from being given
for generic copies of drugs that are still
protected by a valid patent in Croatia.
Unfortunately, the GOC has not yet acted to
address this problem, although we are hopeful that
pressure brought to bear in Croatia's EU accession
negotiations could prove instrumental in finally
bringing about a resolution in the near term.


3. Croatia's implementation of data exclusivity
legislation in late 2004 was a significant, if
imperfect, step forward in tightening IP
protection for pharmaceuticals. Enforcement of
the MOU, however, appears to be inconsistent.
Post was made aware of one instance where the
state drug agency was on the verge of issuing
marketing authorization for a compound still
protected by 6-year data exclusivity in Croatia.
Authorization was ultimately withheld following
post's intervention with the health ministry.

301 Recommendation
--------------

4. Although we do not believe that either of
these problems is endemic or indicative of overall
weakness in Croatia's IP protection regime, we
nevertheless recommend that Croatia remain on the
Special 301 Watch List. Despite the relatively
narrow scope of the problem, removing Croatia from
the Watch List would send the wrong signal about
the seriousness of the 301 process. However, we
do not believe that Croatia should be moved to the
Priority Watch List, as PhRma has recommended.


5. Post is aware of the other concerns raised by
PhRMA concerning market access and reimbursements
for pharmaceutical products. Although we are
sympathetic to these problems and urge the GOC at
every opportunity not to jeopardize public access
to innovative drugs, we do not believe that this
is an IP issue that should be factored into the
301 decision on Croatia.

Other Developments
--------------

6. Croatia is currently undergoing "screening" on
IP protection as part of its EU accession
negotiations. In November, the GOC released a new
National Strategy for IP protection in an effort
to bring Croatia's laws into conformity with the
EU acquis.


7. In general, Croatia's enforcement of IP laws
is good. Nevertheless, piracy remains a constant
problem, with police and customs officials making
regular seizures of pirated audio and video
material. Software piracy remains common among
private users, although business and industry
generally use legal copies.


ZAGREB 00000223 002 OF 002


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