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### Viewing cable 08SANJOSE155, 2008 SPECIAL 301 REVIEW - COSTA RICA

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08SANJOSE155 | 2008-02-26 21:09 | 2011-03-02 16:04 | UNCLASSIFIED | Embassy San Jose
Appears in these articles: http://www.nacion.com/2011-03-02/Investigacion.aspx

`

    VZCZCXYZ0014
    RR RUEHWEB

    DE RUEHSJ #0155/01 0572158
    ZNR UUUUU ZZH
    R 262158Z FEB 08
    FM AMEMBASSY SAN JOSE
    TO RUEHC/SECSTATE WASHDC 9473
    INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE

` `

    UNCLAS SAN JOSE 000155

    SIPDIS

    SIPDIS

    DEPT FOR WHA/CEN
    EEB/TPP/IPE FOR JBOGER
    STATE PASS TO USTR FOR JENNIFER CHOE GROVES

    E.O. 12958: N/A
    TAGS: ETRD ECON KIPR CS
    SUBJECT: 2008 SPECIAL 301 REVIEW - COSTA RICA

    REF:  A) 05 SAN JOSE 0508

          B) 06 SAN JOSE 0464
          C) 07 SAN JOSE 0335

    =======
    SUMMARY
    =======

    ¶1.  Since last year's report (Ref C), the GOCR has made
    some progress in advancing laws related to Intellectual
    Property Rights (IPR) required by the Central American Free
    Trade Agreement (CAFTA-DR).  However, Costa Rica must still
    take several major steps to adequately protect and enforce
    IPR, beginning with enacting the necessary IPR laws and
    regulations to meet its CAFTA-DR obligations.  In addition,
    Costa Rica has not demonstrated a concerted resolve to
    enforce its current IPR laws.  Instead, the country's
    Attorney General has publicly and repeatedly stated that
    Costa Rica should use its limited investigative and
    prosecutorial resources to pursue violent and drug-related
    crimes.  Nonetheless, there has been some progress.  The
    Costa Rican office that issues patents has recently ended a
    lengthy pause in examining patent applications.  A number
    of Costa Rican officials have received training in IPR
    enforcement, administration, prosecution, and customs from
    USPTO, DHS, WIPO, and others.  Due to these slight
    improvements, as well as to the understanding that the GOCR
    will address the additional shortcomings in Costa Rica's
    laws and regulations this year, Post recommends that Costa
    Rica remain on the Watch List.

    ============================
    IPR BACKGROUND IN COSTA RICA
    ============================

    ¶2.  Issues related to IPR rose to the forefront of Costa
    Rica's public debate during the campaign leading up to the
    October 7, 2007 nationwide referendum to ratify the
    country's participation in CAFTA-DR.  This was the first
    referendum in Costa Rica's history and generated enormous
    national interest in all of the issues associated with
    CAFTA-DR, including IPR.  Those opposed to CAFTA-DR
    routinely spoke out against the agreement's requirements to
    create effective deterrents against IPR infringement as
    well as protections for IPR, politicizing the issues.
    Opposition leaders asserted that increased penalties for
    IPR violators would "send students to jail for copying
    textbooks" and increased IPR protection would bankrupt the
    local social security system that would be forced to
    purchase original, innovative pharmaceuticals rather than
    generics.  The Costa Rican public ultimately rejected such
    arguments and approved CAFTA-DR by a slim margin, but the
    negative campaign created an environment where issues
    related to IPR remained controversial.

    ============================================= ==============
    AIMING FOR TRIPS COMPLIANCE THROUGH A LEGISLATIVE AGENDA
    ============================================= ==============

    ¶3.  After Costa Rica was included in the Priority Watch
    List in 2001, the country took the necessary steps to bring
    into force the WIPO Copyright Treaty (WCT) and the WIPO
    Performance and Phonograms Treaty (WPPT) on March 6, 2002
    and May 20, 2002, respectively.  Costa Rica has also
    ratified the Patent Cooperation Treaty (PCT).
    Nevertheless, the country remained non-compliant with
    several TRIPS measures, such as data protection and
    deterrent measures.  These deficiencies are addressed in
    CAFTA-DR, which the country signed in 2004, but has not yet
    implemented and entered-into-force.

    ¶4.  Since last year's Special 301 Report, Costa Rica has
    made some progress in enacting needed legislative reforms
    to become compliant with CAFTA-DR obligations related to
    IPR.  The legislature is working one four bills and the
    ratification of two treaties that deal with IPR.  When
    these bills are enacted and the treaties ratified, Costa
    Rica should be compliant with TRIPS.  Since the opponents
    of increased IPR protection attempted to water-down the IPR
    bills through the introduction of hundreds of amendments,
    the progress of bills has been very slow.  Nevertheless,
    the GOCR is energetically directing the legislative process
    and is confident that the laws, when finally enacted, will
    meet the country's CAFTA-DR obligations.  To date, the
    legislature has approved one of the four IPR-related laws
    (on trademarks) and both of the treaties (Budapest and
    UPOV). Supreme Court review and further legislative action
    remain to be completed, however.
    ===================================
    BUT SADDLED BY ENFORCEMENT PROBLEMS
    ===================================

    ¶5.  Despite these legislative victories, real challenges
    remain in effectively ensuring that the laws have an impact
    on the local IPR environment. Throughout 2007, Costa Rica
    continued to falter in enforcing its current IPR laws.
    While the country's current laws do not provide for
    significant prison time or monetary damages for IPR
    violators, they do criminalize counterfeiting and piracy.
    Nevertheless, the country's public prosecutors have
    consistently demurred from prosecuting IPR cases.  The
    prosecution of IPR crimes is handled by public prosecutors
    in the "various crimes" divisions of the branch offices of
    the Attorney General's office.  Crimes related to IPR,
    however, form only a small portion of the portfolio of
    these prosecutors and receive little or no attention.
    Rather, the prosecutors invoke "opportunity criteria" (akin
    to prosecutorial discretion) to avoid opening an
    investigation into reported IPR crimes.

    ¶6.  In late 2007, the Attorney General of Costa Rica,
    Francisco Dall'anese, publicly reiterated that he does not
    support diverting limited resources to the prosecution of
    IPR crimes.  Rather, he maintains that private companies
    can seek redress in civil courts or can initiate a criminal
    public action through private application.  By this
    process, a private party (almost always through an
    attorney) files a complaint and jointly conducts the
    investigation and prosecution of the case with the public
    prosecutor.  While this could be an effective means of
    prosecuting IPR violators, the reality is that prosecutors
    continue to avoid handling IPR cases by invoking
    opportunity criteria.  When that occurs, private attorneys
    do not have the standing to petition for the seizure of
    counterfeit goods.  Likewise, the use of the civil courts
    to pursue private cases against IPR violators is hampered
    by the extreme length of time it takes to receive a civil
    judgment (up to 15 years) and the small monetary damages
    awarded.

    ¶7.  Industry and others have asked Dall'anese to halt the
    nearly automatic use of opportunity criteria with IPR
    crimes, but he has rebuffed their calls.  The position of
    Attorney General in Costa Rica is entirely independent of
    the Costa Rican Executive and Legislative Branches.
    Constitutionally, the position falls under the Judiciary,
    but, in practice, it is almost completely autonomous.
    Dall'anese was unexpectedly reelected to another four year
    term as Attorney General in late 2007.

    ¶8.  The few prosecutions that have wound their way through
    the criminal court system over the last two years were
    originally started several years ago.  In February 2008,
    industry successfully concluded a prosecution against a
    counterfeiter of apparel.  As has been the case in previous
    successful prosecutions of IPR violators, the judge
    immediately paroled the convicted counterfeiter as it was
    her first offense and the sentence was for less than three
    years. (COMMENT: No matter the crime, judges in Costa Rica
    have the latitude to immediately parole first-offenders who
    have been sentenced to less than three years of prison.
    Judges generally use this power in all criminal cases when
    it can be applied. END COMMENT.)

    ======================================
    AT THE BORDER:  ARE THE GOODS GENUINE?
    ======================================

    ¶9.  Costa Rica's Customs service continues to face
    difficulties in halting the flow of counterfeit goods into
    the country.  The leadership of Customs is aware of the
    importance of seizing pirated goods, but most customs
    agents lack the necessary training to recognize
    counterfeits.  In April 2007, the U.S. Embassy took
    advantage of a regional program offered by DHS to send a
    number of Costa Rican officials for training in recognizing
    counterfeits.  Local industry has also expressed an
    interest in providing counterfeit recognition training to
    Customs officials.

    ¶10. In addition, the laws regulating the filing of criminal
    cases can impede the seizure of pirated goods at the
    border.  If a customs agent recognizes that a shipment
    contains pirated goods, the agent can order the shipment
    seized for 48 hours.  If, at the end of that period, the
    holder of the IPR has not filed a criminal complaint
    against the importer, the customs agent must either release
    the goods or file a criminal complaint, which can open the
    agent up to personal liability through a countersuit by the
    importer if the criminal complaint is ultimately
    unsuccessful.  Increased communication between Customs and
    industry would help solve this problem by providing time
    for the owner of the trademark or patent to file the police
    report.  In such cases, even if the prosecutor ultimately
    invokes opportunity criteria and abandons his/her role in
    the criminal prosecution, the private party could continue
    the action, aided by the fact that the goods have already
    been seized by Customs.

    ============================================= ===
    COSTA RICAN PATENT OFFICE:  CAPACITY BY CONTRACT
    ============================================= ===

    ¶11.  Throughout most of 2007, the Costa Rican Industrial
    Property (IP) Office continued to experience severe delays
    in processing patent applications.  Patent attorneys in
    Costa Rica relate that the office has not yet begun
    processing patent cases first submitted in 2004 and 2005.
    Currently, the IP Office does not have any in-house patent
    examiners.  Instead, the office relies on a contract
    relationship with the Costa Rican Technical Institute and
    the Pharmacists Board Association to provide technical
    experts to serve as examiners.  The IP Office has been
    formalizing this arrangement for at least two years.  It
    previously contracted with the University of Costa Rica's
    PROINNOVA office to conduct patent examinations.  That
    entity, however, never began concerted work in examining
    patents, and its relationship with the IP Office terminated
    in late 2006.

    ¶12. This "out-sourcing" arrangement has only just begun to
    result in examined applications, with the examiners
    affiliated with the Pharmacists Board completing the first
    20 pharmaceutical examinations in December 2007.  The IP
    Office will likely use these outside examiners to move
    through the enormous backlog of thousands of patent
    applications that have accumulated over the last several
    years (during which virtually no applications were
    examined).  Additionally, the IP Office intends to hire its
    own in-house experts to better oversee the work of the
    outside examiners.

    ¶13.  The World Intellectual Property Organization (WIPO)
    has worked closely with the Costa Rican IP Office to train
    employees.  WIPO has also started to offer training to
    officials in the judiciary that have an interest in IPR.
    In addition, the U.S. Embassy has sent several Costa Rican
    officials to the USPTO's Global Intellectual Property
    Academy for training.

    ======================================
    USE/PROCUREMENT OF GOVERNMENT SOFTWARE
    ======================================

    ¶14.  The 2002 Executive Decree #30, 151-J, mandated that
    all government ministries use only legally licensed
    computer software.  According to this decree, each ministry
    was to conduct an internal audit and submit a statement of
    compliance no later than July 31, 2003.  The government
    subsequently claimed full certification of all ministries,
    although there had been no independent confirmation.

    =======
    COMMENT
    =======

    ¶15.  In general, Costa Rica does not yet view IPR as a tool
    to spur innovation. The measures underway in the
    legislature are more the result of outside pressure, than
    of a home-grown realization that increased IPR protections
    can spark innovation which can fuel greater high-tech
    economic development.  However, the GOCR's incremental
    improvements to the IPR protection and enforcement regime
    are a positive sign.  The GOCR must further advance by
    finalizing the related IPR bills and corresponding
    regulations so that the country will be compliant with its
    CAFTA-DR obligations.  Post believes that the GOCR will
    ultimately complete all the CAFTA-DR required implementing
    legislation and regulations in 2008.  Therefore, based on
    the GOCR's progress to date (albeit limited) in improving
    the country's IPR regime, Post recommends that Costa Rica
    remain on the Watch List.  This is the properly-modulated
    message, in our view.  To lower Costa Rica's standing at
    precisely the time the GOCR is (finally) completing its
    CAFTA-DR implementation obligations would be too harsh a
    signal that might risk stalling the current CAFTA-DR
    momentum.  Such a move might also be viewed as provocative
    by the Arias administration, and especially by the Attorney
    General.  This would be counterproductive to our low-key
    but steady efforts to work with the GOCR to improve IPR
    protection.

    BRENNAN

`