US embassy cable - 05TEGUCIGALPA417

UNCLAS SECTION 01 OF 03 TEGUCIGALPA 000417 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR EB/IPE SWILSON 
DEPT PLS PASS TO USTR JCHOE-GROVES 
DEPT PLS PASS TO DOC JBOGER 
DEPT PLS PASS TO USPTO JURBAN 
DEPT PLS PASS TO LOC STEPP 
 
E.O. 12958: N/A 
TAGS: KIPR, ECON, ETRD, HO 
SUBJECT: HONDURAS: INPUT FOR 2005 SPECIAL 301 REVIEW 
 
REF: STATE 24592 
 
1. (SBU) Summary and Comment: There have been no significant 
moves in the past year by the GOH to either strengthen or weaken 
the protection of Intellectual Property Rights (IPR) in Honduras. 
Honduran legislation regarding IPR is largely in compliance with 
the WTO Agreement on Trade Related Aspects of Intellectual 
Property Rights (TRIPs).  However, Honduran authorities have 
failed to dedicate the personnel and resources necessary to wage 
a truly effective campaign against copyright or other IPR 
violations.  While the current level of enforcement is 
disappointing, moves to increase the staffing of the IPR 
prosecutor's office, as well as legal changes which will come 
into effect with the ratification of CAFTA-DR, should enable the 
GOH to increase its enforcement efforts in the year to come. 
Embassy therefore recommends that Honduras remain off the Special 
301 watch list for 2005.  End Summary and Comment. 
 
2. (U) The responses below are keyed to paragraph 16 of reftel. 
 
----------------------------------------- 
A) Optical Media Piracy (CDs, VCDs, DVDs) 
----------------------------------------- 
 
3. (U) The sale of pirated CDs, DVDs, and computer software in 
Honduras is widespread and goes largely unpunished.  GOH 
officials report that some pirating of optical media is suspected 
to be taking place in Honduras, in the northern city of San Pedro 
Sula.  GOH officials believe that most pirated goods are imported 
from China via other countries in the region, such as Panama. 
Confiscation of counterfeit media, which in the past involved 
sporadic seizures of pirated compact discs and DVDs, has ceased 
entirely in recent years (see paragraph 9 on enforcement, below). 
Under CAFTA, the GOH prosecutor for IPR will gain ex officio 
powers, significantly enhancing that office's ability to conduct 
raids and seizures.  Success in controlling optical piracy will 
then rest primarily on the GOH's will to effectively implement 
its current laws, rather than a need for further legislation. 
 
----------------------------------------- 
B) Use/Procurement of Government Software 
----------------------------------------- 
 
4. (U) More government ministries and agencies are using legally 
licensed software in recent years, largely due to private sector 
efforts to persuade government entities to obtain legal licenses 
to the software that they were already using.  However, several 
government agencies continue to use illegally-procured software, 
or to use multiple copies based on a single legal purchase.  U.S. 
software companies intend to work with Honduran authorities to 
further reduce the number of non-compliant ministries in months 
ahead.  The Public Ministry (which prosecutes IPR crimes) is not 
involved in investigation or prosecution of improper government 
use of software, as no software company has brought a formal 
complaint against the GOH for use of unlicensed software. 
 
--------------------------------------------- -- 
C) TRIPs Compliance and Other IP-Related Issues 
--------------------------------------------- -- 
 
5. (U) No new TRIPs-related legislation was introduced or passed 
by the Honduran Congress in 2004, nor were any amendments to 
existing legislation introduced or passed. 
 
6. (U) Honduras largely complied with the TRIPs agreement by the 
required January 2000 deadline, by passing, in late 1999, two 
laws to correct deficiencies in previous legislation concerning 
copyrights, patents and trademarks.  The Copyright Law added more 
than 20 different criminal offenses related to copyright 
infringement and establishes fines and suspension of services 
that can be levied against offenders.  The Law of Industrial 
Property, Decree 12-99E, covers both trademarks and patents, and 
includes modifications on patent protection for pharmaceuticals, 
extending the term from seventeen to twenty years to meet 
international standards.  The term for cancellation of a 
trademark for lack of use was extended from one year to three 
years.  To be protected under Honduran law, patents and 
trademarks must be registered with the Ministry of Industry and 
Trade.  Post has been made aware of several instances of this 
Ministry registering multiple holders for the same trademark (see 
paragraph 11 on enforcement, below).  As of this writing, U.S. 
firms are currently involved in a number of lawsuits seeking to 
defend their trademark rights following such errors in the 
Ministry. 
 
7. (U) Honduras will be in complete compliance with the TRIPs 
agreement once it ratifies or accedes to two remaining 
conventions: the International Convention for the Protection of 
New Varieties of Plants (UPOV Convention) and the Washington 
Treaty on Intellectual Property in Respect of Integrated 
Circuits.  Under CAFTA-DR, Honduras has committed to ratify or 
accede to the UPOV Convention by January 1, 2006, or to provide 
effective patent protection for plants by the time CAFTA-DR 
enters into force.  CAFTA-DR does not specifically address the 
Treaty on Integrated Circuits. 
 
8. (U) Honduras became a member of the World Intellectual 
Property Organization (WIPO) in 1983, ratified the Paris 
Convention for the Protection of Industrial Property in 1994, and 
became party to both the WIPO Copyright Treaty and the WIPO 
Performances and Phonograms Treaty in 2002.  Honduras and the 
U.S. initialed a Bilateral IPR Agreement in March 1999, but 
substantive issues arose during the language conformity process, 
and subsequent efforts to push the GOH for additional IPR 
commitments were pursued as part of the CAFTA-DR negotiations. 
The Honduran Congress is expected to ratify CAFTA-DR in the first 
half of 2005. 
 
-------------- 
D) Enforcement 
-------------- 
 
9. (U) A reform of the Criminal Procedures Code in 2002 changed 
the criminal judicial system from a traditional written 
inquisitorial trial system to an adversarial, oral, and public 
trial system.  As a result of this change, Honduran officials 
lost the legal authority to seize pirated goods ex officio, that 
is, without first receiving a complaint from an injured party. 
Consequently, confiscation and seizure of pirated goods, which 
had been at best erratic prior to the legal change, have since 
ceased entirely, as no companies whose rights have been infringed 
have come forth to file a formal complaint.  CAFTA-DR, when 
ratified, will correct this deficiency in Honduran law, as it 
requires each signatory to provide that its authorities may, at 
least in cases of suspected trademark counterfeiting or copyright 
piracy, conduct investigations or exercise other enforcement 
measures ex officio, without the need for a formal complaint by a 
private party or right holder. 
 
10. (U) Responsibility for prosecuting IPR crimes lies with the 
Public Ministry, under the direction of the Attorney General. 
Currently, there is only one prosecutor assigned, part-time, to 
IPR crimes.  Some U.S. companies have expressed concern that, as 
a result of this low level of staffing, attempts to prosecute 
computer software infringement cases face significant delays.  In 
early 2005, the Prosecutor for General Crimes (who oversees the 
IPR prosecutor) reported to EmbOffs that the IPR prosecutor will 
soon be moved to IPR crimes full-time, effectively doubling the 
prosecutorial manpower devoted to IPR crimes.  If carried out, 
this would be a positive change and should lead to a notable 
increase in the number of IPR cases prosecuted in Honduras. 
 
11. (U) Success in securing convictions would then depend on the 
willingness and capacity of the judiciary to hear and effectively 
adjudicate IPR cases.  However, the Honduran legal system is not 
efficient or transparent: many U.S. claimants (in cases unrelated 
to IPR) frequently complain about the lack of transparency and 
the slow administration of justice in the courts.  There are also 
complaints that the Honduran judicial system caters to 
favoritism, external pressure, and bribes. 
 
12. (U) The Intellectual Property Division of the Ministry of 
Industry and Trade is responsible for the registration of 
trademarks in Honduras.  On two different occasions in 2004, the 
Embassy received complaints from U.S. companies that a trademark 
that had been previously awarded to a U.S. company was 
subsequently also awarded to another company.  (The Embassy is 
also aware of Honduran companies that claim to have suffered the 
same injustice; the practice does not seem to be targeted at U.S. 
firms.)  The companies involved suspect that corruption, not mere 
incompetence, is to blame. 
 
13. (U) The Intellectual Property Division of the Ministry of 
Industry and Trade is also responsible for handling 
administrative complaints regarding satellite piracy, and the 
telecom regulatory agency, CONATEL, checks on compliance with 
anti-piracy rules before extending cable TV licenses.  In 2003 
and 2004, the Embassy received complaints from one U.S. company, 
arguing that the Ministry of Industry and Trade's IPR Division 
appeared to be singling out the U.S. company for investigations 
of satellite piracy, while ignoring alleged violations on the 
part of the U.S. company's Honduran rival.  Embassy officials 
discussed the issue with appropriate Ministry and IPR officials, 
urging a strong and balanced approach to investigations of all 
IPR violations. 
 
14. (U) The Embassy received no complaints over GOH protection of 
data exclusivity during 2004, though such concerns have been 
raised by U.S. companies in the past.   For example, in 2002, a 
U.S. pharmaceutical company complained that the Ministry of 
Health, in approving a competing company's pharmaceutical 
product, did not respect their data exclusivity rights as 
guaranteed under article 39 of the WTO TRIPs agreement and 
article 77 of Honduras' Industrial Property Law.  (Honduran law 
provides five-year exclusive use of data provided in support of 
registering pharmaceutical products.)  The Ministry of Health 
approved the competing pharmaceutical product despite 
communication from Honduras' IPR Division that the U.S. company's 
research and data were protected under Honduran law.  The U.S. 
company argues that in order for the competing product to be 
legally registered with the Ministry of Health, the company needs 
to provide the research and data to support its application. 
When a similar situation arose with a separate application in 
2003, the Ministry of Health recognized that the competing 
company's product was a copy of the U.S. company's protected 
product, and did not approve the competing company's application. 
 
15. (U) The GOH Customs and Tax Authority (DEI) is responsible 
for impeding the flow of illegal goods into Honduras.  However, 
IPR officials in the Public Ministry and the Ministry of Industry 
and Trade have reported that police and DEI officials lack the 
skills and resources to identify and control the flow of pirated 
products at the nation's borders. 
 
16. (U) Capacity building:  In 2004 and 2005, four GOH officials 
responsible for IPR enforcement participated in training given by 
the U.S. Patent and Trademark Office (USPTO).  These officials 
included the legal advisor in the Ministry of Industry and Trade, 
the Deputy Director of the Intellectual Property Division of the 
Ministry of Industry and Trade, and from the Public Ministry, the 
prosecutor responsible for IPR crimes and the Prosecutor for 
General Crimes.  All participants praised the training as being 
highly practical and very useful to their work. 
 
Pierce