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Cablegate: Argentina's 2008 Special 301 Review

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RR RUEHWEB

DE RUEHBU #0231/01 0571010
ZNR UUUUU ZZH
R 261010Z FEB 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 0312
RUCPDOC/USDOC WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUEHAC/AMEMBASSY ASUNCION 6812
RUEHMN/AMEMBASSY MONTEVIDEO 7013
RUEHSG/AMEMBASSY SANTIAGO 1034
RUEHBR/AMEMBASSY BRASILIA 6709
RUEHSO/AMCONSUL SAO PAULO 3651
RUEHRI/AMCONSUL RIO DE JANEIRO 2422

UNCLAS BUENOS AIRES 000231

SIPDIS

DEPT FOR EB/TPP/IPE JENNIFER BOGER, RACHEL WALLACE AND ROBERT WATTS
DEPT PLS PASS TO USTR JENNIFER CHOE GROVES, KATHARINE DUCKWORTH
DOC/ITA/MAC/OIPR FOR CATHERINE PETERS
PLEASE PASS TO USPTO JURBAN AND LOC STEPP

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: KIPR ETRD ECON AR
SUBJECT: ARGENTINA'S 2008 SPECIAL 301 REVIEW

REF: A. STATE 9475
B. 07 BUENOS AIRES 335
C. 07 BUENOS AIRES 927

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Summary
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1. (SBU) In 2007, Argentine authorities responsible for providing
"adequate and effective protection to intellectual property rights"
made few meaningful improvements in IPR legislation, regulation and
enforcement, and there remain serious weaknesses in each of these
areas. Customs authorities' implementation of a new trademark fraud
prevention program and expanded federal police agencies seizures of
pirated goods were notable positive exceptions. Proposed legislative
amendments and regulations to strengthen the IPR regime were not
implemented in 2007, and, in fact, a proposal by the executive branch t
limit border protections would represent a step in the wrong direction,
if implemented. On patents, the application process continued to
improve, with more and more timely adjudications. However, the
application backlog from previous years remains large, effectively
curtailing the period of patent protection, and injunctive relief for
patent infringement continues to be complex, slow and variably enforced
On the key issue of "data confidentiality," there has been no progress,
with proprietary third-country pharmaceutical data routinely used by
domestic competitors in violation of TRIPS Article 39.3. On
copyrights, CD and DVD piracy remains prevalent, and illegal internet
downloading/distribution has continued to rise in step with expanded
broadband access. Trademark falsification remains widespread, with
illegal markets poorly policed. Minimalist fines and penalties offer
little deterrent to falsification. On the positive side, Customs
authorities took advantage of broader trademark enforcement powers in
2007, seizing a significantly higher amount of counterfeit goods, and
there were several substantial seizures of blank and pirated discs.
While those are certainly steps in the right direction, the overall
lack of progress (and the unfortunate backwards movement on border
protection initiated by the GoA) leads Embassy to recommend that
Argentina remain on the Priority Watch List in 2008. A report card on
Embassy's 2007 IPR action plan (Ref C) and a presentation of our IPR
objectives for 2008 will be detailed Septel. End Summary.

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Patents
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2. (SBU) Argentina's patent and trademark agency, the National
Institute of Industrial Property (INPI), has made significant progress
toward streamlining Argentina's patent system over the past several
years. That system appeared close to breakdown until 2002, with patent
applications coming in much more quickly than they could be processed.
From 1995 until 2002, for example, INPI received 47,573 patent
applications, but was able to resolve only 28,186 of those in the
queue, for a deficit of over 19,000 applications in those eight years
alone. The backlog has since declined, with INPI receiving 27,342 paten
applications in the 2003-2007 period, while resolving 31,561 during the
same period. (Note: This represents total resolutions, which include
cases rejected for procedural reasons or abandoned. End Note.) INPI
officials are targeting 7,300 final approvals and denials in 2008, up
15% from nearly 6,400 such adjudications in 2007.

3. (U) INPI's improved efficiency stems from a number of reforms
implemented beginning in 2003, including fast-track procedures to
reduce a patent application backlog of over 30,000 cases. All
applicants with more than one patent application pending were given the
opportunity in 2005 to rank-order their applications (with some
restrictions), allowing them to jump the application of a potentially
more-valuable product ahead of a less-promising application that had
been submitted at an earlier date. A second such rank-order exercise
was carried out in March 2007. Since 2003, U.S. and other
research-based pharmaceutical companies are also allowed to present
studies used in third country patent applications to support patent
requests in Argentina, significantly easing INPI's investigation
requirements.

4. (SBU) The GOA also increased INPI's real budget resources to allow
the hiring of 27 new patent examiners in 2004, doubling the number of
pharmaceutical examiners from 10 to 20. According to INPI, improved in
house training has boosted the average number of applications resolved
per examiner per year from 52 in 2004, 69 in 2005, and 84 in 2006 to 89
in 2007, a 71% improvement in the last three years. In another
positive development, Post arranged for one of INPI's patent supervisor
to attend a 2007 training course on advanced patent adjudication at the
U.S. Patent and Trademark Office's (USPTO) academy. The training was
funded by the USPTO, and travel by CAEMe (the Argentine Chamber of
Medicinal Specialties, an association that represents U.S. and other
research-based pharmaceutical companies).

5. (SBU) These gains, while undeniably positive, proceed from a very
low baseline. The right to patent pharmaceutical products in Argentina
was recognized only in 1996, and the first pharmaceutical patents for
approximately 80 products of marginal commercial value were only issued
following the expiration of the TRIPS transition period in October
2000. A small number of other pharmaceutical patents of greater value
were granted in subsequent years, but only after long and arduous
processes.

Many of the patent applications INPI counted as "resolved" during 2005
were simply discarded after the applicant failed to respond to an INPI
instruction to formally reaffirm the application during the rank-
ordering process (in 2005, but not in 2007). According to statistics
provided by INPI leadership to Post, 4807 applications were abandoned
in 2005 (as compared to an average of 406 in the preceding eight years,
and just 155 in 2006). Without those abandoned applications increasing
the total resolutions, the backlog would have increased slightly from
2003- 2007. (Note: While INPI declined to its their estimate of the
current year-end 2007 patent application backlog, local industry source
estimate it to be in the 23-24,000 range. End Note.)

6. (SBU) With the Argentine 15 year patent protection clock starting at
the time of application rather than issuance, U.S. research-based
pharmaceutical companies operating here complain that INPI's extended
patent processing backlog effectively curtails their period of
exclusive patent protection. For example, most patents issued by INPI
in 2006 had been applied for no later than in 2001, and applications fo
pharmaceutical and other chemical products take longer than average to
process. INPI faces the continuing challenge of maintaining adequate
human resources, with trained examiners frequently hired away by the
private sector and long in-house training periods required to bring
newly hired examiners up to competence. Fortunately, for 2008, the
INPI budget for patent examiner salaries increased 46%, after rising 58
in 2007. The 2008 budget includes additional funding for new examiners
and incentives for examiners to complete more cases. No new patent
examiners were actually hired in 2007, so the salary increases
represent higher pay and incentive bonuses for examiners.

7. (SBU) The lack of patents for many products, coupled with
Argentina's devaluation in 2002, which resulted in sharp price
increases for imported products, increased incentives for local
pharmaceutical companies to produce unlicensed copies of products that
had been patented or for which patents were pending. The combination o
these factors has had a negative effect on the Argentina-derived
business of U.S.-based pharmaceutical companies. According to CAEMe,
local pharmaceutical firms hold over 50 percent of the Argentine
prescription and over-the-counter market as well as almost 50 percent
of the export market. (Note: not all local pharmaceutical firms are
perceived as patent infringers. Some of the producers/exporters,
according to CAEMe, deal only in products which are either licensed or
have expired patent protection, and therefore are legitimate generics.
End Note.) Argentina amended its patent law (Law 24481) in December
2003 to implement an agreement between the USG and the GOA that had bee
signed in May 2002. That agreement came after approximately three year
of consultations under the WTO's dispute settlement mechanism.

8. (SBU) The most important unresolved pharmaceutical patent issue
remains the lack of effective "data protection" (i.e., the legal
protection of confidential and proprietary data developed by
pharmaceutical companies that demonstrates the efficacy and safety of
new medicines). U.S. and other research-based pharmaceutical companies
(as well as plant biotech firm Monsanto) believe this to be the most
significant IPR challenge they face. Argentina and the U.S. have
agreed to leave this issue within the WTO dispute settlement mechanism
for future action. GoA policies have led research-based pharmaceutical
companies to complain that Argentine health regulatory authorities (in
particular ANMAT, the National Administration of Medicines, Food, and
Medical Technology, the equivalent of the FDA) rely inappropriately on
data developed by research-based companies and presented by companies
which did not participate in such research to ANMAT to obtain marketing
approval of unauthorized copies of innovative medicines. According to
CAEMe, ANMAT interprets the public disclosure of partial data as an
indicator that the data should be regarded as in the public domain.
Article 39.3 of the TRIPS agreement requires WTO members to protect
data submitted for pharmaceutical marketing approval "against unfair
commercial use" and "disclosure." The GoA argument appears to be based
upon the fact that infringing companies need only present publicly-
available information, such as an existing FDA approval of a product,
rather than confidential portions of clinical studies results. This
might seem to be protection against "disclosure" on the part of the
GoA, and also avert the issue of "unfair commercial use." The question
remains, however, as to what exactly constitutes unfair use of
protected data. If an infringer can obtain permission to market their
copied products doing what is legal, there appears to be no need to eve
attempt "unfair" methods. CAEMe, in a December 2007 letter to Post,
concludes that "in practical terms, there is no protection of
confidential data."

SIPDIS

9. (SBU) U.S. pharmaceutical companies also remain concerned about the
legal implications of two specific clauses in the 2003 amendment.
Specifically, it mandates an expert opinion, and requires consideration
of the economic impact of an injunction on both parties to determine
whether or not goods alleged to violate the patent law should be
seized. When the amendment was passed into law, research-based
pharmaceutical companies feared that those clauses could preclude the
granting of preliminary injunctive relief and limit the success they
have achieved in protecting their products through the use of
preliminary injunctions.

10. (SBU) Those fears have been realized. In January 2007, Bristol-
Myers Squibb (BMS) received a patent for a product already being
produced without permission by competitors, a clear example of the lack
of data protection. By February, BMS obtained a preliminary injunction
blocking illegal copies of the product. The court cited TRIPS
procedures as reasons for granting the injunction. However, in May
2007, the injunction was overturned on appeal. BMS was forced to file
the case based not on TRIPS treaty obligations, but on Argentina's
patent law alone. This process is much slower - while the initial
injunction took barely a month (in a time of year when many courts are
closed), no action has been achieved in over six months since the
appeal. Prior cases illustrate other weaknesses in the injunction
process of the patent law. In 2005, Eli Lilly discovered several
Argentine competitors selling copies of its lead oncological drug, and
sought injunctions to prevent those sales. An injunction against one
infringer was issued after an 18-month judicial process, but was later
revoked when the infringer presented what it claimed was an alternate
process to produce the medication (the patent is based on the process,
not the molecule, as in the BMS case), without evidence that the
process was in use, or that it even worked. For another infringer, the
application for an injunction was rejected by a judge convinced by a
local expert hired by the defense, who claimed that the copycat drug
did not violate the U.S. pharmaceutical company's patent. Of the three
known infringers of Eli Lilly's medication, two had already signed
agreements in court not to produce copies, and proceeded - and still
continue, in 2007 - to violate those agreements. In another instance,
Merck Sharp and Dohme went to court in 2005 to remove five copies of
one of its joint-venture drugs from the Argentine market. In a
promising ruling, the judge issued injunctions ordering the copies off
the market. More than 30 months after the decision, however, those
injunctions have yet to be enforced - despite the fact that the judge i
the case ruled the legal basis for the copy drug's approval
unconstitutional, as well as in violation of TRIPS Article 39.3. (Note
the injunction ordered ANMAT to rescind marketing approval of the copie
product, which ANMAT has not yet done. AcCording to CAEMe, the only
further legal recourse available to Merck would be to demand the arrest
of those responsible for the GoA's failure to comply with the court
order - the Director of ANMAT and/or the Minister of Health. Merck is
unwilling to pursue this course of action. End Note.)

11. (SBU) A frequent complaint of U.S. pharmaceutical companies is
that there remains in Argentina no regulatory linkage between INPI and
ANMAT. Its absence in Argentina allows ANMAT to grant local
pharmaceutical producers authorization to manufacture and sell products
that have already been patented or for which a patent has been
requested. The Embassy and multinational pharmaceutical companies have
urged the GOA to establish a linkage between ANMAT and INPI that would
prevent ANMAT from continuing to authorize local pharmaceuticals to
produce products for which an INPI patent has been granted or is
pending. While such linkage is not explicitly required by TRIPS, its
implementation would provide a potential remedy for the lack of data
protection. There were hints during 2005 of the beginnings of a
cooperative relationship between INPI and ANMAT, but the Embassy has no
evidence that such cooperation has developed. (Note: the head of INPI
told Econoff in late 2006 that INPI and ANMAT were in close
communication; the head of ANMAT told Econoff that there is no
communication at all between the agencies. The head of
INPI also told Econoff that ANMAT's decisions were constrained by
applicable laws - the most relevant of which doesn't just allow but
requires marketing approval of drugs already approved in certain other
countries, including the U.S., and makes no mention of patents - and
that the proper authority to make decisions over potentially
conflicting patents was the court system, not ANMAT. End Note.) U.S.
and other research-based pharmaceutical companies must incur the legal
costs of obtaining injunctions to stop the production and sale of
products produced by local pharmaceutical companies for which the
research-based companies have Argentine patents.

12. (U) Law 25649 adopted in 2002 requires medical doctors to use a
drug's generic name in all prescriptions. Doctors may also include a
trademarked version of a drug (and no more than one) in their
prescriptions, but pharmacists may still offer a substitute. If a
medical doctor does not want a substitute provided, the reason must be
indicated on the prescription. U.S. and other research-based
pharmaceutical companies operating in Argentina believe this law
diverts sales from innovative medicines to TRIPS-infringing copy
products. Some of these firms argue that true generics do not exist in
Argentina because copy products are not required to demonstrate their
bioequivalence or bioavailability with original products, meaning local
producers can sell drug copies that lack quality and safety assurances.

13. (SBU) Concerns have also been expressed by market players over
criteria for patentability. U.S. biotech company Monsanto notes that
INPI resolution 243/2003 precludes the issuance of patents for
transgenic plants and animals, despite the fact that the patent law
(Law 24481, a higher legal authority than a resolution) excludes from
patentability only living material that is "pre-existing in nature."
International pharmaceutical firms and CAEMe told Post that, late in
2007, INPI refused to grant patents for two new pharmaceutical products
for "lack of an inventive step." The products were reformulations of
previously patented medications (i.e., "evergreen" products), but such
products had consistently received patents before. Both adjudications
have been appealed back to INPI for review, so it is not clear if this
represents an actual shift in patentability criteria.

14. (U) Argentina has yet to become a contracting state to the World
Intellectual Property Organization's (WIPO) Patent Cooperation Treaty.
The WIPO treaty's mutual patent recognition provisions among 135
Contracting Parties would eliminate much of INPI's current patent
application backlog, since the majority of patent applications are from
foreign individuals and entities.

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Copyrights
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15. (SBU) The incidence of Argentine copyright piracy via
"traditional" CD and DVD copying does not appear to have declined in
Argentina: The IIPA estimates that the music piracy rate was 60% in
2007, the same level as in 2006 and 2005, and estimates that business
software piracy rose 2% to 77% in 2007. The frequency of illegal
electronic downloads has expanded in line with the penetration of
broadband access. On the positive side, the Argentine Customs Service
and Argentina police forces made large seizures of blank and pirated
optical disks: In January 2007, Customs seized 2.8 million blank CD-Rs
(about 18% of legal CD sales in 2006) and 140,000 blank DVD-Rs (about
21% of estimated legal DVD sales in 2006) in the same shipment as
266,000 pairs of sunglasses with counterfeit brands. In March 2007,
Customs destroyed approximately 400,000 copied music CDs and cassettes
seized in several enforcement actions. In September 2007, a prosecutor
in the Province of Buenos Aires discovered that a pirated CD
producer/vendor was paying a police officer for protection. (It was
later determined that the police officer had a warrant for his arrest
dating to before he joined the police.) In October 2007, the Federal
Police conducted the Argentine portion of Operation Jupiter (coordinate
by Interpol), seizing an estimated US$ 2.5 million in pirated and
counterfeit goods and arresting 22. (NOTE: Interpol reports that the
January 2007 Customs seizure came about as a result of Operation Jupite
in 2006.) Also in October, the Gendarmeria seized over 8.6 million
labels which were to be inserted in the cases of copied CDs, along with
136,000 pirated CDs and 273 CD burners in the notorious Greater Buenos
Aires street fair called "La Salada" (see para 20). Four people were
arrested. In December 2007, the Gendarmeria seized 500,000 pirated CDs
and 100 CD burners and arrested five, also in "La Salada." The IIPA
reports that total seizures of optical media were 4.6 million discs, up
162% from 1.7 million in 2006.

16. (SBU) Optical Media Piracy: Problems in this area include the
widespread and open sale of pirated copies of CDs and DVDs, and
increasing number of businesses offering home delivery (often
coordinated entirely online) of pirated artistic content. Argentina's
copyright regime, largely based on the 1933 Copyright Act (as amended),
provides generally good nominal protection, including authority for
Customs to seize imported products which violate copyrights. However,
the lack of any real enforcement (in current practice, pirates will
only face jail time if their involvement can also be defined as
organized crime), coupled with the 2002 devaluation-linked disincentive
to purchase legitimate - but now more expensive - imported products, ha
spurred piracy. A survey sponsored by the local American Chamber of
Commerce in 2006 showed that, while more than half the population
believes that piracy precludes job creation and facilitates tax
evasion, two-thirds of Argentines have knowingly bought pirated
products. A local attorney specializing in copyright issues told
Econoff that, while the Argentine legal system does not function at a
first-world level, it is "not bad for the region." The legal system
will generally respond when needed to seize counterfeit media, the
attorney said, but the existence of a personal relationship with
relevant authorities is helpful.

17. (U) Illegal Downloads: Electronic delivery of copyright
infringing materials is on the rise. CAPIF (the Argentine Chamber of
Phonograph and Videograph Producers) estimates that 99% of all songs
downloaded from the Internet in 2006 and 2007 were downloaded illegally
over 600 million illegal songs were downloaded in Argentina in 2006, a
nearly 50% increase from 2004. This growth is roughly in line with the
increase in broadband internet access, which reached 13 million lines b
the end of 2006. In 2007, legal music downloads, including cellphone
downloads, grew 294%, reaching 4.1% by value of total legal music sales
in Argentina. In 2007, thanks to the International Federation for the
Phonographic Industry (IFPI), a major file-sharing site called "HUB
Puerto Digital" was shut down, with cooperation from the local internet
service provider. This was reportedly the first peer-to-peer file-
sharing hub based in Latin America to be shut down.

18. (U) Use/Procurement of Government Software: The GOA has yet to
fully comply with its 1999 agreement with the local software industry
to legalize unlicensed software used in some national government
offices. GoA sources estimated in 2005 that over 90 percent of GoA
agencies employing licensed software are using it illegally.

19. (U) Proposed Augmentation of Copyright Penalties: Motion picture
and recording industry representatives proposed to Congress a
modification of the criminal code in 2007 that would increase currently
nominal criminal penalties and fines for copyright violations. It
would also facilitate the destruction of pirated goods by providing
discretion to the rights holder over disposition of infringing goods as
well as make updates to the law to address modern technologies. While
the bill was formally proposed for Senate consideration by two
parliamentarians, including the current Senate President Pro Tempore, n
legislative action was taken on the bill in 2007.

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Trademarks
----------

20. (SBU) According to a former head of INPI who continues to work in
the IPR field, Argentina's 1982-era trademark law (Law 22362) does meet
international standards, but nominal fines have not proven significant
deterrents to falsification. A number of amendments to the Penal Code
over the past six years have limited penalties to probation periods and
rendered it less effective. The former INPI head and industry
participants charge that these amendments render trademark protection
inconsistent with WTO norms. They argue that existing remedies no
longer meet TRIPS Article 61 requirements, which obligate members to
adopt trademark laws which "include imprisonment and/or monetary fines
sufficient to provide a deterrent" to counterfeiting. On a positive
note, the process of renewing trademarks is an area where INPI's
increasing efficiency has become evident. Whereas an applicant for
renewal had to wait five months only a few years ago, the process is
now completed in less than two months. Raids by local police on flea
markets where counterfeit merchandise is openly sold have not been
frequent or widespread enough to lessen the availability of pirated
goods. Representatives of industries frequently targeted by
counterfeiters claim that over forty large, well-established markets
exist in Buenos Aires alone that are almost completely dedicated to the
sale of counterfeit goods (in addition to innumerable smaller points of
sale throughout the country). The largest of these markets, which is
reputed to be the largest in South America, is called "La Salada."
According to reports, 6,000 people work there, and up to 50,000
customers visit and make USD 9 million in purchases daily. (Note: The
EU highlighted this market in its October 2006 301-equivalent report,
which received considerable press attention in Argentina. End Note.)
"La Salada" has a dangerous reputation, and post IPR contacts have told
us that organized crime elements operate within the market. The
enforcement actions mentioned in paragraph 15 are thought to be the
first such actions in "La Salada," and they were also notable for the
number of officials included - more than 300 in the October 2007 raid
(see para 15).

21. (SBU) Amendments to Existing Legislation: Proposed legislation to
modernize Argentina's trademark law died in committee in 2005. That
draft law, introduced in August 2004, contained several measures that
would have strengthened Argentina's anti-trademark piracy regime.
Specifically, the draft law would have: involved Argentina's tax agency
(AFIP) in trademark piracy (counterfeit merchandise) investigations;
expanded the authority of Argentina's Financial Investigations Unit
(UIF) to include trademark piracy among the crimes that entity is able
to investigate; and increased penalties for those convicted of
trademark piracy (eliminating community service as a possible sentence)
An attorney who helped draft the text blamed the failure of the bill on
the lethargy of local Argentine business chambers, which he said did no
actively support the effort. The bill was, in fact, viewed negatively
by several members of the American Chamber of Commerce's (AmCham)
Intellectual Property Committee, some of whom preferred that more
discretion be granted to the trademark holder to determine the degree
of the penalty and the disposition of infringing goods. While the
legislation has not been re-introduced, the same congressman who
originally submitted the draft bill in 2004 proposed in September 2006
the creation of a public attorney's office dedicated specifically to
trademark crimes. The proposal has not moved forward. Meanwhile, the
AmCham committee created a new draft trademark law, using the 2004
proposal as a base. This AmCham draft was presented to the Congress by
a likeminded parliamentarian in June, but no further legislative action
was taken in 2007 on this issue. In October 2007, another
parliamentarian presented a proposal to approve the Madrid Protocol on
international trademark applications, but no legislative action was
taken on the bill in 2007.

22. (SBU) A court case on counterfeiting has sent poor signals about
trademark protection in Argentina. In August 2007, a judge in Tucuman
(a province in northwest Argentina) ruled that a vendor of counterfeit
athletic shoes acted "in good faith" in part because he had legal
invoices for his purchases. This decision came despite a reported
agreement (presented as evidence in the case) between the vendor and
the manufacturer, which acknowledged that the shoes were made with a
copied trademark. The case is pending appeal by the trademark owner.

-------------------
Enforcement actions
-------------------

23. (SBU) Law 25986, which was passed in December 2004, prohibits the
import or export of merchandise which violates international property
rights. However, regulations to implement this law have yet to be
issued three years later. The head of the Argentine Customs agency
publicly blamed the delay on the then-Secretary of Industry (who later
became the Minister of Economy). Further, in 2007 the executive branch
submitted to the Argentine Congress a proposal to modify the law by
restricting the authority of Customs to intervene only in cases of
copyrights (which is already permitted under the Argentine copyright
law) and trademarks, but eliminating intervention for any "other
intellectual or industrial property rights." The proposal was put

forward by the then-Ministers of Economy and Health, and the Chief of
Cabinet. The deletion appears consistent with TRIPS Article 51, which
requires border measures to prevent "the importation of counterfeit
trademark or pirated copyright goods." However, it appears non-
compliant with TRIPS Article 28.1, which specifies that a patent shall
allow its owner to "prevent third parties not having the owner's
consent" from importing, as well as selling, that product.
Interestingly, this never-enacted law was highlighted in the Rio
Declaration of June 14, 2005, as an example of "effective and efficient
border measures."

24. (SBU) In October 2006, AFIP (the Federal Administration of Public
Revenue, an IRS-equivalent and with authority over Argentina's Customs
agency) issued a decree which allows Customs to detain potential
trademark violating merchandise until the holder of the locally
registered trademark authenticates the shipment, and seize it if the
holder does not. This new trademark interdiction program, which became
operational in April 2007, has proven successful: According to data
provided by Customs, the total retail value of trademark violations
seized was US$ 32.9 million - an 867% increase over such seizures in
2006.

25. (SBU) However, while regulation of law 25986 would also allow
detention and seizure of merchandise which violates patent norms (such
as copied pharmaceutical products), the decree only applies to
trademarks. The program was lauded by the Secretary General of the
World Customs Organization at a conference organized by the WCO in
Buenos Aires in November. (The Director of Customs told IPR Officer
that the WCO decided to hold the conference in Argentina in recognition
of the new program.)

26. (SBU) On training, a Post-nominated Customs employee attended a
USPTO course on border enforcement measures, paid for completely by
USPTO. The employee is a key advisor of the Argentine Customs
Director. Post also made arrangements for a total of nine GoA officials
- three from the Gendarmeria, three from the Prefectura, 2 from the
Federal Police, and one federal prosecutor - to attend a week-long IPR
training course in Lima, Peru, at the International Law Enforcement
Academy (ILEA) there.

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GMO Rights Protection
---------------------

27. (SBU) Argentine farmers have the legal right to replant - although
not to sell - seed generated from a harvest originating from registered
seeds without paying additional royalties. However, Argentine farmers
have long sold registered seeds without payment of required royalties,
a practice which continued in 2007. This is a widespread problem with
soybean seed. According to the president of an Argentine seed producer
association (in which Monsanto participates), 65-70% of all soy grown
in Argentina is produced from Roundup Ready seeds for which no royaltie
have been paid. Farm associations and industry representatives
generally agree that Argentina must elaborate and enact a new seed law
that better protects intellectual property. The government of
Argentina has recognized the need for a new law, but pressures from
competing interests have delayed its development, and no complete draft
was produced in 2007. The sale of registered seed from Argentina to
neighboring countries, also without payment of royalties, has led to
significant planting of unregistered biotech soybeans in Brazil and
Paraguay. Argentina is a party to the 1978 Act of the International
Union for the Protection of New Varieties of Plants (UPOV), but has not
signed the 1991 UPOV convention revision. Monsanto reps have told post
that they do not intend to introduce the next generation of Roundup
Ready until Monsanto is assured that it will receive proper royalty
payments. Ambassador, Embassy officers and visiting Congressmen have
raised the Monsanto problem frequently in 2007, and the government of
Argentina appears to be taking our (and Monsanto's) concerns into
account while drafting the seed law.

-----------------------
Embassy IPR Initiatives
-----------------------

28. (SBU) Beyond significant regulatory and enforcement deficiencies
detailed above, reluctance by the various GoA enforcement entities to
cooperate with each other is a problem that has long impeded effective
anti-piracy action in Argentina. The Embassy therefore encourages IPR
training that brings together representatives from the full range of
GOA institutions involved in anti-piracy efforts. The trust and
familiarity resulting from such cooperation would help foster GoA
inter-agency teamwork of the sort necessary to effectively combat
piracy. One such opportunity occurred in 2007. With the assistance of
the U.S. Department of Justice, Post brought GoA and Argentine private
sector officials together for a workshop to explore and develop
innovative IPR enforcement methodologies consistent with Argentina's
legal and regulatory framework. GoA officials from nine different
government entities attended, including a federal judge, a federal
prosecutor, the Gendarmeria, the Prefectura, the Federal Police,
Customs, AFIP (parent agency of Customs and IRS-equivalent), and
prosecutors from both the Province and City of Buenos Aires. The
successful end product was a draft manual, which participants plan to
publish in March 2008 with DOJ, Post and INL assistance. The working
group was the first public/private IPR working group to meet in
Argentina in several years, if not ever. The workshop was a key
deliverable in Post's 2007 strategic IPR plan (Ref C). A complete
review of that plan and objectives for 2008 will be provideed septel.

--------------------------
Comment and Recommendation
--------------------------

29. (SBU) Argentina has been on the Special 301 Priority Watch List
since 1996. The success of the GoA's 2007 Customs trademark fraud
interdiction program is laudable, and the increased seizures of optical
media by Customs and police forces have been significant. However,
there has been no significant positive movement on key issues of data
protection, patent backlog, injunctive relief, and trademark and
copyright fraud rates. The lack of pharmaceutical patent data
protection is the issue most often called to Post's attention by U.S.
industry participants, and appears to violate TRIPS Article 39.3.
While INPI is functioning more efficiently and has won additional budge
resources in each of the last three years, procedural improvements have
only made minor inroads to date into a patent application backlog that
significantly curtails the periods of patent protection. Patents that
do get issued carry a questionable legal weight, as evidenced by
ongoing problems with copied products, the lack of legal resolution of
some infringement cases, and variable enforcement of thos infringement
cases where injunctions have been obtained. Estimated rates of
copyright and trademark violations have not diminished; Argentina's
legislature and enforcement arms have not undertaken measures necessary
to discourage new violations; and the Argentine judiciary remains an
uncertain ally in the fight to protect intellectual property. While th
Customs trademark fraud program, industry-proposed legislation to
increase currently nominal criminal penalties and fines for copyright
violations, and increased seizures of blank and pirated discs are
positive steps, the improvements in Argentina's IPR regime this year
were not particularly significant. To an extent, positive GoA actions
to improve IPR protection in 2007 were offset by a proposed initiative
to weaken legislative protection for imports of patented goods. The
Embassy therefore recommends that Argentina remain on the Special 301
Priority Watch List for 2008. End Comment.

30. (SBU) Septel will review Post's performance on our 2007 IPR
strategic plan, and suggest new 2008 country-specific and regional IPR
initiatives. To see more Buenos Aires reporting, visit our classified
website at: http://www.state.sgov.gov/p/wh/buenosaires

WAYNE

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