ECUADOR 2009 SPECIAL 301 REPORT

UNCLAS QUITO 000151 SENSITIVE SIPDIS USTR FOR JENNIFER CHOE GROVES STATE FOR EB/TPP/IPE TIM MCGOWAN AND JOELLEN URBAN E.O. 12958: N/A TAGS: KIPR ETRD ECON EC SUBJECT: ECUADOR 2009 SPECIAL 301 REPORT REF: State 8410 ¶1. (SBU) Summary and recommendation. No U.S. industry entities submitted complaints or comments regarding Ecuador for the 2009 Special 301 review. Ecuador has made some progress on IPR during the past year, but enforcement remains a serious problem. The enforcement problem warrants that Ecuador remain on the Watch List, but the lack of industry interest in Ecuador draws into question whether Ecuador should be cited in the Special 301 review. ¶2. (SBU) Overall protection for IPR goods has not changed significantly over the past year, although the Ecuadorian Intellectual Property Institute (IEPI) has made progress on patent applications, training, and enforcement, and both the Prosecutor General and Customs have developed special IPR units for investigation and seizures. IEPI is in the process of digitalizing its files and plans to provide online patent applications by the end of 2009, which would greatly increase speed and transparency of the patent application process. Despite this, overall enforcement of IPR remains a key problem, resulting in high piracy levels in the software, publishing, recording, and film industries. Data exclusivity and protection continue to be problematic. Ecuador's health code permits granting marketing approvals without regard to whether or not a medication is patented. End summary and recommendation. ¶3. (U) Ecuador's comprehensive Intellectual Property law enacted in May 1998 was a step forward for IPR protection, covering copyright, trademark, patent, and semiconductor chip protection. It also addressed preliminary enforcement measures and other procedures, and created the IEPI. IEPI -------------- ¶4. (SBU) The IEPI is responsible for patent and trademark registration, and is also the lead GOE agency to coordinate IPR enforcement. Alfredo Corral, former IPR negotiator for Ecuador's FTA negotiations with the U.S., and a strong proponent of IPR protection, has been the President of IEPI since May 2007. Under his guidance, IEPI has made progress in a number of important areas. IEPI's 2007 initiative to reduce the backlog of trademark and patent registrations continued successfully in 2008. The number of patent cases handled also increased notably, from 427 patents in 2007 to 520 patents in 2008, according to IEPI's Director of Patents. ¶5. (SBU) A key effort has been digitalizing IEPI's paper files, which would provide better access to information and greater transparency. This project has been supported with USAID assistance. IEPI plans to have all of its files digitalized and to offer online patent applications by the end of 2009. Online applications are expected to significantly speed up the application process. IEPI also expects to have its processes certified as ISO 9001 compliant by the end of 2009. ¶6. (SBU) IEPI has invested significantly in training over the past year. Corral reported that IEPI sent over 50 employees (out of a total of 150) to IP training outside of Ecuador in 2008. Five of those employees attended IPR training programs provided by the USPTO in Washington. Presently, 10 IEPI employees are completing a IEPI-sponsored Masters degree in Intellectual Property at an Ecuadorian university. ¶7. (U) IEPI is also continuing a national campaign to raise awareness of the importance of respecting IPR through radio and television advertisements featuring local artists. Enforcement -------------- ¶8. (SBU) Lack of enforcement remains a key problem for Ecuador. Production of pirate CDs is widespread. According to Soprofon, Ecuador's Society of Phonogram Producers, in 2008 nearly $14.6 million worth of CD-Rs and DVD-Rs legally entered Ecuador, with a similar amount entering as contraband. Most were destined for piracy. The motion picture and gaming industries suffer equally from widespread CD and DVD copying. Business software piracy, both end-user piracy and pre-installed unlicensed software in new computers, continues to be a problem. Pervasive commercial photocopying piracy victimizes the book publishing industry, including for educational textbooks. The International Intellectual Property Alliance (IIPA) did not provide comments or estimated loss data for Ecuador in either the 2009 or 2008 Special 301 processes. ¶9. (SBU) Corral reported that IEPI's cooperation with the Ecuadorian Customs Agency in 2008 was very good. Both IEPI and Customs have increased enforcement actions in their areas of competence, administrative sanctions imposed by IEPI or interception of counterfeit goods by Customs, when they can act without a formal complaint by the right-holder. Criminal enforcement actions must be initiated by a prosecutor's office and enforced by the police. In 2008, the Prosecutor General's office and Customs created special IPR units, focused on investigations, fines, and seizures. TRIPS Compliance -------------- ¶10. (SBU) While the Ecuadorian Intellectual Property Law does provide for data exclusivity, as does TRIPS Article 39.3, marketing approval for copy products has been routinely granted based on data produced by research companies for the original drug. In addition, Instituto Izquieta Perez, the health authority, routinely provides sanitary registrations to copy products of patented drugs. Ecuador, citing legal opinions from the Andean Court of Justice, has failed to provide patents for second uses. Comment and Areas for Further Action -------------- ¶11. (SBU) The Government of Ecuador has given IEPI the autonomy to move forward with a moderately aggressive modernization effort and created special IPR units in Customs and the Prosecutor's office, but otherwise has not shown the commitment to increased IPR enforcement that is necessary given the high level of IP piracy. ¶12. (SBU) Judges, local law enforcement and customs officials continue to need training on intellectual property rights protection and enforcement. U.S. Patent and Trademark Office training in IP protection and enforcement continues to be a useful tool. ¶13. (SBU) Ecuador should correct contradictions between its Health Code and its Intellectual Property Law, to prevent issuance of sanitary registrations to products that violate registered patents, or to products whose applications are based on confidential data submitted by another company. HODGES