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Viewing cable 06BOGOTA1948, YEAR 2006 SPECIAL 301 REVIEW: POST RECOMMENDATION

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Reference ID Created Released Classification Origin
06BOGOTA1948 2006-03-03 21:02 2011-08-25 00:00 UNCLASSIFIED Embassy Bogota
VZCZCXYZ0010
OO RUEHWEB

DE RUEHBO #1948/01 0622102
ZNR UUUUU ZZH
O 032102Z MAR 06
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2767
INFO RUEHBU/AMEMBASSY BUENOS AIRES 1769
RUEHCV/AMEMBASSY CARACAS 7254
RUEHLP/AMEMBASSY LA PAZ MAR LIMA 3311
RUEHZP/AMEMBASSY PANAMA 8817
RUEHQT/AMEMBASSY QUITO 3934
RUEHSG/AMEMBASSY SANTIAGO 1949
RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS BOGOTA 001948 
 
SIPDIS 
 
SIPDIS 
 
COMMERCE PLEASE PASS USPTO FOR JOELLEN URBAN, STATE PLEASE 
PASS USTR FOR JENNIFER CHOE-GROVES 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD ECON CO
SUBJECT: YEAR 2006 SPECIAL 301 REVIEW:  POST RECOMMENDATION 
FOR COLOMBIA 
 
REF: STATE 14937 
 
1.  Summary.  Post recommends that Colombia remain on USTR's 
Special 301 Watch List for 2006.  While data protection for 
pharmaceuticals and agrochemicals remained in effect, 
Colombia continued to face high levels of copyright piracy in 
2005.  Colombia has the legal tools necessary to combat 
piracy but a lack of sufficiently strong enforcement actions 
and a weak judicial system for prosecuting IPR violations 
limits deterrent effects on piracy.  End Summary. 
 
Data Protection for Pharmaceuticals, Agrochemicals Remains in 
Place But Counterfeit Pharmaceuticals Are a Problem 
--------------------------------------------- --------- 
 
2.  Colombia,s four-year-old decree 2085 (issued in August, 
2002) that protects product and patent process data for 
pharmaceuticals remains in effect after withstanding a 
variety of challenges at the Congressional, judicial, and 
Andean Community level.  It remains the only Andean country 
with such protection.  Colombia,s data protection norm for 
the agrochemical sector pursuant to the obligation under 
TRIPS 39.3 (Decree 502/503) provides five years of protection 
to agrochemicals.  The Andean Tribunal recently ruled that 
the GOC had overstepped its authority in issuing 2085. 
Colombia, Peru and Ecuador are attempting to modify Andean 
regulations to allow 2085, and the data protection agreed to 
by Peru in the USATPA negotiation to stand. 
 
3.  As reported last year, counterfeit pharmaceutical 
products continue to be a problem in Colombia.  The regular 
market contains generic products of assured quality, but 
recent surveys such as the CRECER project reveal that in 
rural areas, there are more counterfeit pharmaceutical 
products than original ones.  The CRECER project found that 
only ten percent of the counterfeit products contain the 
correct active ingredient and dosage, while 60 percent do not 
contain any active ingredient and 30 percent contain the 
wrong active ingredient or the wrong dosage.  The local 
pharmaceutical industry loses more than USD 35 million 
annually because of contraband, counterfeiting, and 
adulteration of drugs according to the National Association 
of Pharmaceutical Industries (NAPI).  NAPI estimates that 8 
percent of the national market is illegal. 
 
Copyright - Making Significant Progress Proves Difficult 
--------------------------------------------- ----------- 
 
4.  The rate of business software piracy remained steady at 
55 percent of the market, the same level reported for 2004 by 
the Business Software Alliance (BSA), the industry watchdog 
group.  BSA estimated that overall dollar losses fell from 
USD 46 million to USD 44.8 million.  In a 2005 study 
conducted with the International Data Corporation, BSA 
contended that if Colombia reduced the piracy rate by ten 
percent, USD 581 million would be added to the economy, 1,900 
jobs created, local industry sales increased by USD 450 
million, and an additional USD 38 million added in additional 
tax revenues.  BSA,s business software anti-piracy campaign 
continues to receive backing from Colombian government 
agencies and the private sector although DAS (Security 
Department of the Ministry of Justice) removed its support in 
2004 stating that its focus would be restricted to national 
security issues.  IIPA reported that despite Colombia,s 
lower software rate compared to regional neighbors, business 
software piracy remains a problem among small to medium-sized 
organizations, particularly outside Bogota.  Evidence of 
paramilitary group involvement in counterfeiting operations 
and distribution of illegal software added to the scope of 
the problem according to IIPA. 
 
5.  Colombia continues to obtain improvements in reducing 
cable signal piracy in response to the attentiveness to 
licensing and inspections by the CNTV (National Television 
Commission) and MPA legal actions.  According to MPA, 
remaining television piracy is mostly limited to rural areas 
or quasi-legal community associations where enforcement 
actions have limited effectiveness.  CNTV licensing and 
inspections also contributed to the significant reduction in 
television piracy.  Cable signal piracy continued to decline 
through buyouts of pirated systems by legal operators and 
MPA,s active use of the legal system.  In 2004, CNTV 
launched an aggressive anti-piracy campaign and signed its 
first cooperation agreement with FOX Sports to combat piracy 
in the television market. 
 
6.  Piracy in the recording industry remains a major concern 
in Colombia.  The number of illegal copies in the Colombian 
music market was steady at 71 percent and monetary losses 
decreased from USD 51.6 million in 2004 to USD 47.7 million 
in 2005.  According to IIPA, heightened levels of optical 
disk piracy (CD-R and DVD-R) in Colombia pose increasing 
dangers to legitimate sales and distribution.  The industry 
estimated that over 60 million blank CD-R,s came to Colombia 
in 2005, most arrived from Asia through Panama and were 
priced at 3 cents per unit.  This number of legally imported 
disks probably outstripped demand for legitimate purposes 
with the remainder diverted to piracy operations.  As 
reported last year, the market crisis created by piracy 
caused Warner Music to close its Colombian operation in 2004. 
 The Motion Picture Association (MPA) did not have estimates 
of industry losses in 2005 at the time of this report but in 
2004, IIPA estimated the U.S. motion picture industry lost 
approximately USD 40 million in 2004 and had a piracy rate of 
75 percent.  For 2005, MPA reported that enforcement activity 
has improved and the GOC has provided funding to the Film 
Development Fund (Fondo para el Desarrollo Cinematografico) 
for anti-piracy activities. 
 
Enforcement and Judicial Action Continue As Principle Problems 
--------------------------------------------- --------- 
 
7.  While enforcement actions exist, prosecution is weak and 
judicial action, often by judges unfamiliar with IPR, can 
take years.  IIPA reported that while there were 1,885 police 
raids of pirating operations in the recording industry in 
2005, most were directed at street level markets with only 32 
raids aimed at copying or storage facilities where the effect 
would be maximized.  While these raids seized an estimated 7 
million pirated CD-Rs and 794 CD burners, the number was 
proportionally small compared to a 2004 estimate of 17 
million illegal copies sold in Colombian street markets and 
stalls.  In addition, most of the seizures took place in 
Cucuta and Bucaramanga rather than in the larger commercial 
centers of Bogota and Medellin where there is a heavier flow 
of pirated products. 
 
8.  Enforcement actions against book piracy improved in 2005 
when the Ministry of Education began a campaign against 
illegal book copying.  According to IIPA, the police seized 
more than 161,000 copies of pirated books and 8,300 books on 
CD.  The Colombian national police reported that 60 percent 
of the 900,000 books pirated annually are produced in 
Medellin.  As in other areas of copyright piracy, these 
efforts have had only a marginal effect on the USD 6 million 
in annual industry losses due to book piracy. 
 
9.  Enforcement efforts notwithstanding, the judicial system 
does a poor job of prosecuting and punishing those arrested 
in Colombia for piracy.  Few of those caught for piracy are 
prosecuted and those found guilty often do not receive prison 
terms.  In 2005, 42 pirates received sentences, none 
involving incarceration, according to IIPA.  The recording 
industry asserts that Colombian courts take an average of 45 
months to process most cases resulting in a high number of 
suspended or dismissed cases.  (Comment:  This situation 
should improve as Colombia transitions to the accusatorial 
system for hearing cases.) 
 
10.  Colombia would improve its IPR judicial process if the 
government provided adequate training for civil and penal 
judges who rule on IPR violations.  Although the Prosecutor 
General,s Office created a Specialized Unit for IPR that has 
had significant recent successes, more training of judges and 
investigators is needed, especially as Colombia implements 
the accusatorial system that will require greater competence 
in the technical presentation of cases.  The IPR unit began 
functioning in November 1999 and has 60 cases under 
investigation on different issues including usurped 
trademarks, counterfeit pharmaceuticals, pirated books, CD's, 
and movies, violations to industrial secrecy, and cases 
against pirate television programming broadcasters. 
 
11.  Post has supported the need to improve the investigative 
abilities of Colombian investigators and prosecutors and 
enhance awareness of U.S. IPR policy and law.  To improve 
skills in conducting IPR investigations, the U.S. Department 
of Justice (DOJ) Judicial Reform Sector Reform Program in 
Bogota developed a three-day IPR Seminar.  The seminar 
focused on the IPR law, piracy and terrorism, software 
piracy, identification of counterfeit music and DVD products, 
trademark violations, and hypothetical case studies.  The DOJ 
Computer Crime and Intellectual Property Section (CCIPS) from 
Washington, DC participated in the course development and 
assisted in delivering the first seminar held in Bogota in 
April 2005.  Other seminars were held in Cali, Barranquilla, 
and Medellin.  Over 109 Colombian law enforcement officials 
and prosecutors have attended these seminars.  The economic 
section also sent the head of the Industrial Property Office 
of the GOC Superintendence for Industry and Commerce to the 
U.S. Patent and Trademark Office,s International Visitor 
Program in February 2005 in Washington DC. 
 
Improvements Made to Penalties but Deterrence Still Weak 
--------------------------------------------- ----------- 
 
12.  Colombia enhanced criminal penalties for breaches of 
copyright law during the past year.  In January 2005, Law No. 
890 increased the incarceration time for copyright 
infringement from a range of 4 years to 8 years.  The new law 
also modifies parole guidelines so that judges can only 
approve parole if the inmate has completed two-thirds of the 
prison term with demonstrated good behavior and full payment 
of all fines.  Another new law (No. 906) effective as of 
January 2005 requires incarceration for piracy cases when the 
value of the seized merchandise exceeds 150 times a 
designated salary rate (approximately $20,000). 
 
Bureaucratic Improvements Still Needed 
-------------------------------------- 
 
13.  Colombia lacks a unified IPR registration system.  The 
grant, registration, and administration of IPR are carried 
out by four different government entities.  The 
Superintendence of Industry and Commerce (SIC) acts as the 
Colombian patent and trademark office.  While it has IPR 
policy control, the agency suffers from inadequate financing 
and personnel, a high turnover rate, and a large backlog of 
trademark and patent applications leading to a large number 
of appeals.  SIC has only 16 patent examiners for the whole 
country.  The staff has a high turnover rate, resulting in a 
large backlog of trademark and patent applications. This has 
led to a large number of appeals.  The patent office at SIC 
believes that the number of new patent and trademark 
applications (currently 1,600 patent and 15,000 trademark 
requests per year) will double in the next two or three 
years, without considering the increase in applications that 
the signing of a free trade agreement with the U.S. would 
likely produce.  The Colombian Agricultural Institute (ICA) 
is in charge of the issuance of plant variety 
protection-related and agro-chemical patents.  The Ministry 
of Social Protection is in charge of licensing pharmaceutical 
products, while the Ministry of Justice is in charge of 
issuing literary copyrights.  Each of these entities also 
suffers from significant financial and technical resource 
constraints.  Moreover, the lack of uniformity and 
consistency in IPR registration and oversight procedures 
limits the transparency and predictability of the IPR 
enforcement regime. 
 
Post Recommendation - Keep Watch List Status 
-------------------------------------------- 
 
14.  Post recommends that Colombia remain on USTR's Special 
301 Watch List due to continuing high levels of piracy and 
problems with enforcement and obtaining successful judicial 
prosecutions for piracy.  We recognize the progress Colombia 
has made on legal protections for pharmaceuticals and 
agrochemicals.  Colombian legislation provides penalties for 
IP infringement; Colombia has signed seven international 
agreements regarding piracy and copyright infringement, and 
losses to U.S. companies have generally stabilized during the 
last five years.  However, Colombia can do more to enhance 
the deterrent effect of established legal remedies and 
improve its enforcement actions.  Once in force, the recently 
concluded intellectual property chapter of the US-Andean 
Trade Promotion Agreement should go a long ways toward 
improving the IP situation in Colombia. 
WOOD