US embassy cable - 05ANKARA971

UNCLAS SECTION 01 OF 02 ANKARA 000971 
 
SIPDIS 
 
DEPT FOR EB/TPP/MTA/IPE - SWILSON/JURBAN AND EUR/SE 
DEPT PASS USTR FOR JCHOE-GROVES 
DEPT PASS LIBRARY OF CONGRESS FOR STEPP 
DEPT PASS USPTO FOR JURBAN AND EWU 
USDOC FOR ITA/MAC/DDEFALCO AND JBOGER 
 
E.O. 12958: N/A 
TAGS: ETRD, KIPR, TU 
SUBJECT: Special 301 - Recommendation to Continue 
Turkey's Priority Watch List Status (SBU) 
 
Ref:  (A) State 23950 (B) Ankara 394 (C) Ankara 839 
 
(D) Ankara 941 (E) Ankara 939 
 
Summary 
------- 
 
1. (SBU)  The GOT has taken a number of steps in the 
last year to improve intellectual property protection, 
especially for copyright owners.  However, Turkey has 
not implemented fully TRIPS-consistent data exclusivity 
protection, and piracy and counterfeiting rates remain 
high.  Embassy recommends maintaining Turkey on the 
Priority Watch List in the 2005 Special 301 Review, and 
continuing to engage the GOT with a view to enhancing 
intellectual property protection.  End Summary. 
 
Pharmaceuticals 
--------------- 
 
2. (U) Citing concerns on data exclusivity and patent 
linkage, the Pharmaceuticals Research and Manufacturers 
Association (PhRMA) claimed IP-related losses of USD 887 
million - 20 percent of sales in Turkey, up sharply from 
USD 600 million last year, and from much lower estimates 
in previous years.  Describing serious non-IP problems 
with respect to Turkish price controls and reimbursement 
system reforms, PhRMA recommended elevating Turkey to 
Priority Foreign Country status. 
 
3. (U) Embassy notes that data exclusivity comprises 
only USD 146 million of PhRMA's estimated damages.  It 
is not clear what patent-related damages are represented 
by the remaining USD 741 million claimed by PhRMA.  We 
have requested further clarification from PhRMA of the 
causes of these additional lost sales. 
 
4. (U) The GOT introduced limited data exclusivity 
protection in a regulation issued by the Health Ministry 
in January 2005.  Retroactive application is limited to 
original products licensed in a Customs Union country 
after January 1, 2001 for which no generic manufacturers 
have applied for licenses in Turkey.  The term of 
exclusivity is limited to the duration of the drug 
patent.  The six-year term of protection starts on the 
date of licensing in an EU Customs Union country, 
implying a shorter term of protection because of the 
length of the marketing approval process in Turkey (ref 
B). 
 
5. (SBU) On the issue of patent linkage, the Health 
Ministry recently told us that a coordination mechanism 
has been established between the Turkish Patent 
Institute (TPI) and the Ministry to prevent generic 
applications from being filed for drugs with a valid 
patent (ref C).  However, TPI sources subsequently 
advised that the Health Ministry has asked for a list of 
patented medicines, but that beyond this, no formal 
coordination mechanism exists.  To our knowledge, the 
Health Ministry has not approved a patent-infringing 
copy of Zyprexa, though at least one application has 
been in its "final" stages for some time. 
 
6. (SBU) While the data exclusivity regulation is 
inadequate, it does represent a significant step 
forward, given that the GOT had previously resisted 
implementation before the end of 2007.  GOT officials 
have indicated that the regulation is not set in stone 
(ref C) and indeed the GOT is still engaged in a 
dialogue with the EC in the context of the Trade Barrier 
Review.  However, we believe the Turks will continue to 
resist broadening the scope of retroactivity because the 
GOT believes it cannot legally do so in cases where 
there is already a generic application pending.  Turkey 
is also likely to insist on terminating data exclusivity 
protection upon patent expiration so long as EU members 
are permitted by relevant directives to do this.  It is 
post's understanding that EC Directive 2004/27 delinking 
patent and data exclusivity terms will not be mandatory 
for EU members until late 2005. 
 
7. (SBU) Embassy will continue to raise the issue of 
fairness for research-based companies in the Turkish 
pricing system and in reimbursement reform.  Given the 
fiscal constraints imposed by Turkey's reform program 
and the overarching U.S. priority of reinforcing 
Turkey's recovery from financial crisis, we need to 
ensure that our message on pricing and reimbursement is 
framed in terms of fair treatment for innovators rather 
than opposition to the GOT's efforts to seek cost- 
savings. 
Copyright, Trademarks and Other IP Issues 
----------------------------------------- 
 
8. (U) Both the International Intellectual Property 
Alliance (IIPA) and the International AntiCounterfeiting 
Coalition (IACC) recommend that Turkey remain on the 
Watch List.  They point to continued high levels of 
piracy and counterfeiting, and call on the GOT to 
improve enforcement.  IIPA estimates industry losses in 
Turkey at USD 187 million. 
 
9. (U) Turkey has taken a number of significant positive 
steps in copyright enforcement in the last year.  These 
include: 
 
-- Legislation banning street sales of all copyright 
products, leading to effective sweeps in major Turkish 
markets; 
 
-- The first deterrent sentences we are aware of imposed 
on pirates, including large fines and imprisonment; 
 
-- A Finance Ministry circular on investigating and 
prosecuting convicted pirates for tax evasion; 
 
-- A Culture and Tourism Ministry computerized system to 
license vendors and other commercial users of copyright 
products nationwide; 
 
Further information on these measures is provided ref D. 
 
10. (U) Overall, Embassy believes that the GOT is making 
a good faith effort to improve enforcement of copyright 
and will continue to do so.  However, we have not seen 
the same focus on curbing trademark counterfeiting. 
 
11. (U) In 2004, Turkey published its first Plant 
Variety Protection (PVP) Law.  However, at least one 
subsidiary of a U.S. seed company has been unable to 
obtain protection for its commercial seed under this new 
law. 
 
Comment/Recommendation 
---------------------- 
 
12. (SBU) The new data exclusivity regulations, stepped 
up copyright enforcement and deterrent sentences 
represent more progress than we have seen in several 
years on intellectual property protection.  At the same 
time, serious deficiencies continue in the 
pharmaceuticals, copyright and trademark areas.  Raising 
Turkey to the Priority Watch List in 2004 may have 
played a role in prodding the GOT to making some of the 
improvements we have seen.  Although there is a case for 
returning Turkey to the Watch List in 2005, Embassy 
suggests that, on balance, maintaining Priority Watch 
List status is preferable because it should generate 
pressure on the GOT to do more.  Embassy will continue 
to seek appropriate opportunities to deliver our message 
on intellectual property, including in the Trade and 
Investment Framework Agreement (TIFA) meetings due to be 
hosted by the GOT.  In this regard, we recommend that 
USTR correspond with its Turkish counterpart, the 
Foreign Trade Undersecretariat, to reiterate our 
interest in scheduling a TIFA meeting in the near 
future. 
Edelman