2009 SPECIAL 301 RECOMMENDATION: KEEP VENEZUELA

UNCLAS SECTION 01 OF 02 CARACAS 000271

SENSITIVE
SIPDIS

STATE FOR EEB/IPE
DEPT PLS PASS TO USTR

E.O. 12958: N/A
TAGS: ECON ETRD KIPR
SUBJECT: 2009 SPECIAL 301 RECOMMENDATION: KEEP VENEZUELA
ON PRIORITY WATCH LIST

REF: A. STATE 8410

B. 08 CARACAS 1427

C. 07 CARACAS 366

D. 06 CARACAS 486


1. (SBU) Summary: The Government of the Bolivarian Republic
of Venezuela (GBRV) continues to chip away at protection of
intellectual property rights. In 2008, the GBRV resurrected
a 50 year old law disallowing the patenting of medicines and
food. Enforcement remains a problem as the police agency
primarily responsible for IPR is defunct. SAPI, the agency
that oversees IPR and issues patents, has not issued a single
patent since 2004. Based on the GBRV's aversion to IPR, weak
enforcement, and possible legal changes to further weaken IPR
protections, Post recommends that Venezuela remain on the
Special 301 Priority Watch List for 2009. End Summary.

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Weakened Legal Protection of IPR
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2. (SBU) Until Venezuela's April 2006 withdrawal from the
Andean Community, Venezuela had incorporated over 650 legal
decisions from the Andean Community into domestic law,
including Decision 486, which provided the legal framework
for patent and trademark protections. In September 2008,
SAPI, the Autonomous Intellectual Property Service (the
country's primary IPR authority),announced in a press
release that it had resurrected the Ley de Propriedad
Industrial de 1955 (the 1955 law). The 1955 law states that
drinks, foodstuffs, drugs of any kind and other chemical
reactions and combinations may not be patented.


3. (SBU) Creative works are protected pursuant to the
Copyright Law of 1993, Decision 351 of the Cartagena
Agreement, the Bern Convention and the Universal Copyright
Convention. Venezuelan law protects the rights of authors of
creative intellectual works. Currently, copyright protection
is valid for the life of the author, plus 60 years. However,
the pharmaceutical and recording industries continue to be
concerned that Chavez may sign into law a copyright bill
drafted in 2004. The draft legislation would violate many of
Venezuela's bilateral and multilateral IPR treaty
obligations, reduce the protection period for copyrights from
60 to 50 years and would allow the GBRV to appropriate
artistic rights for the public sector. Venezuela has also
not deposited the instruments of ratification for the WIPO
Copyright Treaty or the WIPO Performances and Phonograms
Treaty, and has not sent an official delegation to WIPO
committee meetings since 2004.


4. (SBU) Trademarks are registered with SAPI, granted for ten
years and may be renewed for successive ten-year periods.
Trademark rights can be enforced through civil,
administrative and criminal actions. As a result of civil
action, a registered trademark owner may be entitled to
relief, which is at the discretion of the judge. However,
the registered trademark owner cannot prohibit a third party
from using a trademark in connection with products that are
provided by the trademark owner. A trademark may be canceled
at the request of any interested third party if it has not
been used in Venezuela for three years.

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The Pharmaceutical Industry
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5. (SBU) Eduardo Saman, the former Director of SAPI and
current Director of the Venezuelan consumer protection
agency, the Institute for the Defense of People's Access to
Goods and Services (INDEPABIS),has argued that trademarks
and patents hindering the fabrication of generic medicines or
the reproduction of technology should be considered
monopolies, which are prohibited under the Venezuelan
constitution. Despite his move to INDEPABIS, Saman continues
to carry weight on IPR issues. SAPI has not issued a patent
for an imported pharmaceutical product since 2003, and has
not issued a patent in any sector since 2004. Since 2002,
the GBRV has failed to protect pharmaceutical testing and
other confidential data for product submissions that have not
yet received patent protection. As the GBRV does not link
patents and sanitary registrations, counterfeiters can
receive sanitary registration approval in the absence of a
patent -- equivalent to marketing approval for a counterfeit
product.

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CARACAS 00000271 002 OF 002


Recorded Media and Software
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6. (SBU) In 2004, the GBRV passed legislation that required
the use of open source software throughout the public sector.
While not a violation of IPR in and of itself, the software
industry has concerns about a lack of transparency in its
implementation and favoritism shown to certain vendors. The
piracy rate for business software in 2008 was 87 percent,
according to the Business Software Alliance. The market for
legitimate CDs and DVDs continues to decline. As Venezuela
imports a high number of virgin discs, the country may be a
distribution source and a production center for counterfeit
products. The National Film Law, passed in August 2005,
requires distributors to locally copy a percentage of the
movies they distribute and to register all films, leading to
unauthorized release of confidential information and piracy.

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Other IPR BARRIERS
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7. (SBU) Another barrier to IPR in Venezuela is foreign
currency controls. The Currency Exchange Administration
(CADIVI),the agency that administers the GBRV's currency
controls, may block access to foreign exchange for companies
attempting to pay royalties, patent license fees, and
franchise fees. (To receive US dollars at the official
exchange rate for transactions such as dividend repatriation
and operating costs, a company must obtain CADIVI approval.
There are no reliable figures for how much money US companies
as a whole have requested from CADIVI.) Post has received
reports of CADIVI not acting on foreign currency exchange
requests due to "improper paperwork". While denial of
currency requests may not be related to IPR enforcement, not
acting on them prevents businesses from complying with IPR
laws.

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IPR Enforcement
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8. (SBU) The enforcement situation in Venezuela remains the
same as last year. An ongoing lack of political will,
lengthy legal processes, unprepared judges, and a lack of
resources for investigation and prosecution create effective
barriers to IPR enforcement. A special prosecutor with one
assistant is responsible for IPR issues in Venezuela and
investigations are severely backlogged. Under current
Venezuelan law, IPR enforcement actions can only take place
as a result of a complaint by the rights holder and the
complainant is responsible for the storage cost of the
illicit goods. Furthermore, only violators operating at a
fixed location are prosecutable, effectively barring
prosecution of street vendors.


9. (SBU) With its "zero tax evasion" and "zero contraband"
programs, SENIAT, the customs and tax enforcement agency, has
undertaken IPR enforcement. Despite these efforts, SENIAT
fired its lone IPR advocate in 2007. Throughout 2008,
however, SENIAT published reports that it had destroyed
pirated goods. COMANPI, the Venezuelan copyright and
trademark enforcement branch of the police, is also charged
with IPR enforcement and maintains a small staff of permanent
investigators. Local IPR contacts have said that COMANPI, an
agency known for its lack of personnel, limited budget, and
inadequate storage facilities for seized goods, no longer has
a functioning headquarters.

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Comment
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10. (SBU) The protection of intellectual property rights in
Venezuela continues to deteriorate. The legal regime is
increasingly tenuous, with a reversion to a 1955 law covering
medicinal and food patents in 2008. Enforcement continues to
remain weak and high ranking officials continue to express
their disdain for IPR protection. Few resources are
dedicated to investigating and prosecuting IPR crimes. Post
recommends keeping Venezuela on the Special 301 Priority
Watch List for 2009.
GENNATIEMPO