US embassy cable - 04BOGOTA4328

C O N F I D E N T I A L SECTION 01 OF 03 BOGOTA 004328 
 
SIPDIS 
 
SENSITIVE 
 
STATE PLEASE PASS TO USTR BENNETT HARMAN 
 
E.O. 12958: DECL: 04/28/2014 
TAGS: ECON, ETRD, CO, FTA 
SUBJECT: ANDEAN FTA ANALYSIS: INTELLECTUAL PROPERTY RIGHTS 
IN COLOMBIA 
 
 
Classified By: DCM Milton Drucker for reasons 1.5 (b and d) 
 
1. (C) SUMMARY: Intellectual property rights (IPR) in 
Colombia are largely governed by Andean Community decisions, 
which are interpreted by GOC law.  The latter complies with 
the WTO, though in key areas Colombian protection is weaker 
than TRIPS  protections.  Enforcement of IPR law is the 
principle problem.  Though enforcement actions have redoubled 
in the past year, prosecution is weak and judicial action, 
often by judges unfamiliar with IPR, can take years.  This 
hampers the use of civil actions by right holders.  For the 
FTA talks, GOC will be concerned with protection of genetic 
material and traditional knowledge.  They can be expected to 
ask for more time for compliance and U.S. technical 
assistance to meet IPR protection standards. This is the 
second in a series of sector briefs developed in preparation 
for the Andean FTA.  The summaries are based on in-depth 
studies which are available from USAID Bogota. END SUMMARY. 
 
Background 
 
2. (U) Protection of intellectual property continues to 
improve in Colombia. Colombia is the only Andean nation to 
have established strong data secrecy protections for both 
pharmaceuticals and agrochemicals (although agrochemical 
protections were later weakened).  Colombian legislation also 
provides penalties for IP infringement.  But while the laws 
are on the books, and enforcement actions are increasing, 
prosecution remains a problem. The Uribe Administration and 
industry groups have demonstrated commitment to increase the 
level of protection, but are hampered by fiscal constraints 
and the poor performance of the judicial system.  Post has 
recommended that Colombia appear again on the Special 301 
Watch List this year. 
 
3. (U) Colombia lacks a unified IPR registration system.  The 
Superintendent of Industry and Commerce (SIC) acts as the 
Colombian patent and trademark office.  The agency suffers 
from a backlog of trademark and patent applications, but 
plans to provide electronic registration services for 
patents, industrial designs, and trademarks are expected to 
boost registrations.  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 issuance of 
pharmaceutical patents, while the Ministry of Justice issues 
literary copyrights.  Each organization suffers from 
significant financial and technical resource constraints. 
The GOC recognizes that information technology (IT) capital 
investment and technology transfer stimulate economic growth, 
and is beginning to see IPR protection as a vital concern. 
 
GOC Problems in Enforcement of Existing Agreements 
 
4. (U) Despite having signed some seven international 
agreements, Colombia has yet to successfully grapple with 
rampant piracy and copyright infringement, especially in 
recorded media.  Copyright infringement cost U.S. industries 
some $123 million in 2002, according to the International 
Intellectual Property Alliance (IIPA).  Music piracy is at 70 
percent and films at 75 percent. Although GOC doubled police 
raids to 2,467 in 2003, few of those caught were prosecuted, 
and the only two convictions are on appeal.  Jail time can be 
avoided under the current penal law.  Successes have been 
scored in business software piracy, now down from 78 to 51 
percent thanks to software industry efforts and the GOC's 
decision to use legal software despite fiscal constraints. 
Problems in the cable industry have abated with the licensing 
of illegal operators following aggressive legal action by 
industry groups and regulatory inspections. 
 
Intellectual Property Issues for Negotiation in an FTA 
 
5. (U) The Andean Common External Tariff applies rates of 15 
percent to 20 percent to imported hardware and software bound 
for domestic consumption.  These are reduced to an average of 
5 percent when treated under "Plan Vallejo," which provides 
tax exemptions on imported capital goods used to produce 
export products. 
 
6. (U) Protection of Business Software and Computer Designs. 
Semiconductor layout designs are not protected under GOC law. 
 While business software is protected for 50 years, it is not 
explicitly classified as a literary work. 
 
7. (U) Data Secrecy Protection for Pharmaceuticals and 
Agrochemicals for up to five years was provided for 
pharmaceuticals and agrochemicals in March, 2003 (though 
agrochemicals have 10 years under the Chile FTA and CAFTA). 
However, the subsequent passage of laws in 2003 significantly 
weakened agrochemical protections by restricting them to 
those not previously registered in Colombia.  Moreover, while 
the GOC agrees that TRIPS requires an exclusivity period, 
politically influential companies argue TRIPs only protects 
against pharmaceuticals using data that is not publicly 
available.  A recent decision by the Andean Community 
Secretary General upheld Decree 2085 that granted the 5 year 
 
SIPDIS 
protection period for data secrets for pharmaceuticals. 
 
8.(U) Patent Protection for "Second Use Innovations" has been 
denied by the Andean Court of Justice (ACJ) and the SIC.  The 
pharmaceutical industry dedicates much research to 
identifying second uses of known chemical substances to meet 
medical needs.  The SIC argues that Andean decisions mention 
protection of products and procedures but not use, adding 
that "use" is also not covered in TRIPs.  This is contrary to 
the position on secondary use protections. The WTO has 
reached no clear consensus on second uses. 
 
9. (SBU) Biotechnology Innovations and Plant Varieties.   GOC 
argues that microorganisms as found in nature are discoveries 
rather than innovations, and thus excluded from patent 
protection, except those that are genetically modified. 
Colombia allows patents for plant varieties, but not for 
plants and animals found in nature.  U.S. firms argue that 
this severely discourages biotech research and innovation. 
 
10. (C) Access to Genetic Resources is an issue GOC the would 
like specifically addressed in an FTA.  They argue that to 
provide patent protection for innovations developed from 
genetic resources, it must be demonstrated that the resources 
were obtained legally.  TRIPs does not specifically address 
this area, and the WTO has yet to develop clear guidelines 
regarding rules of origin for genetic resources. 
 
11. (C) Patent Protection for Traditional Knowledge and 
clarification of who should be entitled to it (indigenous or 
other communities) needs greater definition.  Colombia may 
seek a "sui-generis" protection regime in this area. 
However, developing a transparent and objective set of rules 
on incorporating community participation in patenting 
traditional knowledge would be extremely challenging in 
practice. 
 
12. (C) Getting to the Table:  What GOC Needs to Do 
 
A. GOC needs to improve IPR enforcement and to remedy 
weaknesses in the prosecution of cases, a critical area for 
trade capacity building. Civil and penal judges rule in IPR 
violation cases, but they lack training and specialization in 
IPR issues.  Although the Prosecutor General's Office has 
created a Specialized Unit for IPR that has had significant 
recent successes, more training of judges and investigators 
is needed.  The GOC should consider shifting from judicial to 
administrative IPR enforcement to speed adjudication of the 
current case backlog. 
 
B. GOC is considering a penal bill to increase penalties for 
violations of copyright and pirated use of plant varieties. 
Such a law would advance the FTA. 
 
C. The National Planning Department (DNP) has suggested 
merging all GOC institutions that manage IPR issues (patents, 
industrial designs, trademarks, copyrights, etc.) into a 
single institution with full power.  Such a Colombian "Patent 
Office" has been promoted by industry groups and would 
represent a significant step forward as well as an important 
area for trade capacity building. 
 
D. Access to technology and information for enforcement 
purposes needs to be upgraded, and outreach on the IPR rights 
of the business community is needed. 
 
E. The DNP has suggested establishment of a Superior Council 
on Intellectual Property Rights (to include the President and 
relevant Ministries) and an IPR section in the Ministry of 
Trade that would help set policy on IP issues.  Such steps 
could facilitate preparation for effective implementation of 
an FTA. 
 
13. (C) GOC Positions on Intellectual Property Protection 
 
A. GOC wishes to liberalize trade in intellectual property as 
the best means to transfer technology. 
 
B. GOC would like to specifically address protection of 
genetic material and traditional knowledge in an FTA.  Access 
to genetic material was not addressed in the Chile FTA. 
 
C. GOC would like more technical assistance to help in 
enforcement and judicial prosecution of IPR cases. 
 
14. (C) GOC Negotiating Strategy for Intellectual Property 
Protection 
 
A. GOC will point to recent enforcement results to 
demonstrate improvement in the IPR environment. 
WOOD