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### Viewing cable 08QUITO161, ECUADOR 2008 SPECIAL 301 REPORT

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08QUITO161 | 2008-02-21 17:05 | 2011-05-02 00:12 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Quito

`

    VZCZCXYZ0037
    OO RUEHWEB

    DE RUEHQT #0161/01 0521715
    ZNR UUUUU ZZH
    O 211715Z FEB 08
    FM AMEMBASSY QUITO
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 8489
    INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 7333
    RUEHCV/AMEMBASSY CARACAS PRIORITY 2877
    RUEHLP/AMEMBASSY LA PAZ FEB 0904
    RUEHPE/AMEMBASSY LIMA PRIORITY 2378
    RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 3300
    RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

` `

    UNCLAS QUITO 000161

    SIPDIS

    SENSITIVE
    SIPDIS

    USTR FOR JENNIFER CHOE GROVES
    STATE FOR EB/TPP/IPE JENNIFER BOGER

    E.O. 12958: N/A
    TAGS: KIPR ETRD ECON EC

    SUBJECT:  ECUADOR 2008 SPECIAL 301 REPORT

    REF: State 9475

    ¶1.  (SBU) Summary and recommendation.  Post concurs with PhRMA
    recommendation that Ecuador remain on the Special 301 Watch List for
    ¶2008.  Overall protection for IPR goods has not changed
    significantly over the past year, although the Ecuadorian
    Intellectual Property Institute (IEPI) has new, more assertive
    leadership and has made better use of available resources and
    improved its effectiveness.  Despite increased enforcement
    activities on the part of IEPI and the Ecuadorian Customs, 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 a problem.  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
    required the creation of specialized IP courts.  In addition, it
    created the Ecuadorian Intellectual Property Institute (IEPI).

    IEPI
    ----

    ¶3.  (SBU) The Ecuadorian Intellectual Property Institute (IEPI) is
    responsible for patent and trademark Registration, and is also the
    lead GOE agency to coordinate IPR enforcement.  A new IEPI
    President, Alfredo Corral, was appointed in May 2007.  According to
    Corral, IEPI has developed initiatives to reduce the backlog of
    trademark and patent registrations, hire additional personnel, and
    buy computers to provide a better service and push for stronger IPR
    enforcement.  These efforts are supported by assistance from USAID
    and other donors.  According to PhRMA, the backlog of pending patent
    cases within IEPI decreased in 2007 and patent examination
    productivity increased by 300 percent.  Corral reported that IEPI is
    developing a national campaign to raise awareness of the importance
    of respecting intellectual property rights.

    Enforcement
    -----------

    ¶4.  (SBU) Lack of enforcement remains a key problem for Ecuador.
    Production of pirate CDs is reaching large-scale levels.  The
    recording industry estimates that more than 80 million CD-Rs and
    DVD-Rs legally enter Ecuador every year and a similar amount enters
    as contraband, with most destined for piracy.  This year, the
    International Intellectual Property Alliance (IIPA) did not take a
    position on Ecuador for the Special 301 process.  However, in
    earlier reports, IIPA estimated that pirated products accounted for
    98% of the domestic record and music industry in Ecuador in 2006,
    with estimated damage due to music piracy of USD 33 million.  In
    contrast, the official market for recordings in Ecuador amounted to
    a mere 400,000 units in 2006, per IIPA, a 21 percent drop from 2005.

    ¶5.  (SBU) 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.

    ¶6.  (SBU) Corral reported that IEPI and the Ecuadorian 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.  According to IEPI the number of
    these enforcement actions increased from 3,826 operational cases in
    September 2006 to April 2007, to 11,260 cases in May to December
    ¶2007.  However, criminal enforcement actions must be initiated by a
    prosecutor's office and enforced by the police.  We do not have any
    indication that there was any appreciable change in criminal
    enforcement efforts in 2007, although without information from a
    centralized data collection point such as IIPA, that perspective is
    difficult to verify.

    Legal Environment
    --------------------
    ¶7.  (SBU) The Law on Intellectual Property of 1998 required the
    creation of specialized intellectual property courts, which to date
    have not been established.  According to officials from the Ministry
    of Justice, the courts might not be created in 2008, because
    National Judiciary Council is waiting for the new National
    Constitution before making any significant reforms.  This
    long-awaited action, if it comes to be, would improve IPR
    enforcement since Ecuador's judiciary in the past has largely been
    ineffective in enforcing the IP law.  Post will provide more
    information when available.

    ¶8.  (SBU) Reflecting potential positive change in the legal IPR
    environment in Ecuador, a court decision in 2006 that characterized
    efforts by a patent holder to remove illegal copies from the market
    as an illegal competitive practice was overturned on appeal.  The
    court ruled in favor of the patent holder in October 2007.

    TRIPS Compliance
    ----------------

    ¶9.  (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.
    According to PhRMA, the sanitary authorities have approved copies
    for all innovative pharmaceutical products covered by patents in
    Ecuador.  A modification to Ecuador's health code in late 2006
    permits sanitary registrations without regard to whether or not a
    medication is patented, which could further facilitate the marketing
    of patent-infringing pharmaceutical products.  Ecuador, citing legal
    opinions from the Andean Court of Justice, has failed to provide
    patents for second uses.

    Comment and Areas for Further Action
    ------------------------------------

    ¶10.  (SBU) The Correa administration, which took office in January
    2007, has rarely spoken on IPR matters.  It has given IEPI the
    autonomy to move forward with a moderately aggressive modernization
    effort, but otherwise has not shown a strong interest in increasing
    IPR enforcement.  Likewise, it has not shown indications that it
    wants to reduce the current level of IPR protection or modify the
    current IPR law.  However, some observers are concerned that a
    competition law that is currently being drafted might have some
    provisions affecting IPR protection.  Corral reported that a
    proposal to combine IEPI into a new competition agency has been
    dropped.  The law is being drafted in a very closed process, but
    post will monitor the status of the competition law.

    ¶12.  (SBU) Judges, local law enforcement and customs officials need
    training on intellectual property rights protection and enforcement.
     U.S. Patent and Trademark Office training in IP protection and
    enforcement is 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.

    JEWELL

`