2009 SPECIAL 301 REVIEW: INPUT FROM GUATEMALA

UNCLAS GUATEMALA 000198

SENSITIVE
SIPDIS

DEPARTMENT PASS TO USTR

E.O. 12958: N/A
TAGS: KIPR ECON ETRD GT
SUBJECT: 2009 SPECIAL 301 REVIEW: INPUT FROM GUATEMALA

REF: A. SECSTATE 8410

B. GUATEMALA 557

C. GUATEMALA 1422


1. (U) Summary: Post recommends that Guatemala be moved to
the Special 301 Priority Watch List for 2009 and that
specific actions be requested to improve the enforcement of
Intellectual Property Rights (IPR). In November 2008, the
Ambassador communicated USG concerns over IPR enforcement
with Attorney General Velasquez and followed up in February
2009 with a letter announcing the Special 301 process.
Unfortunately, Attorney General Velasquez, who took over the
Public Ministry in July 2008, inherited a weak institution
and faces demands to improve performance in many
high-priority areas including organized crime, homicide, and
narco-trafficking. However, we will continue to press the
GOG at the highest levels for concrete actions against IPR
violations and believe that inclusion on the Priority Watch
List would demonstrate the importance the USG places on
protecting IPR. End Summary.


A disappointing year
--------------


2. (SBU) In November 2008, the Ambassador met with Attorney
General Jose Amilcar Velasquez and stressed the need for
Guatemala to improve its enforcement of Intellectual Property
Rights (IPR). As discussed in reftels, local industry groups
shared their concerns with the Embassy regarding the lack of
enforcement capacity in patents and trademarks, the lack of
any significant legal cases against manufacturers of pirated
or counterfeit goods, and the difficulty companies had in
pursuing cases with the special IPR prosecutor. Following up
on the Ambassador's meeting, Econoff, the IPR Registrar who
reports to the Minister of Economy, and leadership of the
American-Guatemalan Chamber of Commerce (AmCham) met with
Attorney General Velasquez and requested that IPR prosecutor
Norma Bonilla be replaced. Velasquez expressed his
understanding of the importance of protecting IPR as a
prerequisite for economic growth, protecting consumers and
attracting investment. Velasquez promised he would replace
the ineffective IPR prosecutor Norma Bonilla once she
returned from extended medical leave and strengthen the IPR
office, including bringing back a key staff member, Hugh
Garcia, who was forced out of the IPR office by prosecutor
Bonilla due to his refusal to stall IPR cases. Garcia had
recently returned from a Department of State voluntary
visitor program focused on IPR protection.


3. (SBU) Attorney General Velasquez, who inherited a
dysfunctional organization upon taking over its leadership in
July 2008, faces many demands to improve the organization he
leads including focusing on such high-priority areas as
organized crime, homicides, and nacro-trafficking.
Unfortunately, the lack of attention paid to IPR enforcement
in 2008 resulted in a very disappointing year. Velasquez's
Secretary General informed Pol/EconCouns that as of end of
February 2009, inefficient IPR prosecutor Bonilla remained on
extended medical leave and no formal action could therefore
be taken to re-organize the section until she returned. The
Public Ministry did not respond to our request for IPR
enforcement statistics for the year. However, the GOG
reported in response to question 126 of the World Trade
Organization's Trade Policy Review for Guatemala that during
2008 only ten IPR cases were pursued with nine resulting in a
sentence. This number indicates a drop of more than half
from the 23 cases that were prosecuted in 2007. While damage
caused by lack of IPR enforcement is difficult to estimate,
the Business Software Alliance lists Guatemala as second in
piracy in Central America and in the world's top twenty
Qpiracy in Central America and in the world's top twenty
offenders with a piracy rate of 81%. The AmCham released a
CID Gallup Latin America study in December 2007 that
estimated $324 million is spent annually on pirated goods in
Guatemala.

Improvements needed
--------------


4. (SBU) The most important step that should be taken by
Attorney General Velasquez is to formally remove IPR
prosecutor Norma Bonilla and re-organize the IPR prosecutor's
office, including bringing back legal advisor Hugo Garcia who
received substantial USG IPR training. The Public Ministry
should also improve its coordination with the Ministry of
Government to conduct raids against entities suspected of IPR
violations and pursue cases against manufactures of pirated
and counterfeit goods rather than focus on small-scale
distributors. In addition, the IPR prosecutor should
re-establish links with industry and the number of IPR cases
pursued in 2009 should increase from the 2007 level of 23.
The USG and industry will continue to encourage the
nomination of a strong IPR prosecutor and coordinate on
providing training as needed. We therefore recommend that
Guatemala be considered for inclusion in the Special 301
Priority Watch List for 2009 to emphasize that stronger
enforcement of intellectual property rights in Guatemala is a
USG priority.
McFarland