Cablegate: 2008 Special 301 Review: Egypt


DE RUEHEG #0348/01 0521529
P 211529Z FEB 08





E.O. 12958: N/A
SUBJECT: 2008 Special 301 Review: Egypt


B. STATE 9475

Sensitive but Unclassified, not for Internet distribution.

1. (SBU) SUMMARY: Egypt has made incremental progress in
the protection of Intellectual Property Rights during the
last three years. The GOE has worked with the private
sector and USG to improve its system for granting
pharmaceutical patents and increase enforcement against
copyright pirates, winning praise from some private-sector
stakeholders while leaving others discouraged at the pace
of progress. Some shortcomings in data protection and
copyright enforcement remain. We recommend that USTR move
Egypt from the Special 301 Priority Watch List to the Watch
List as the best way to press Egypt for further reform.

2. (U) Ref A provides our latest assessment of Egypt's
progress on action items identified by USTR under the
Special 301 Initiative and other issues cited in ref B.
Following are additional updates as well as our views of
the political and economic context influencing GOE IPR
policy and the positions of private-sector stakeholders.


3. (SBU) USTR elevated Egypt to the Priority Watch List in
2004 primarily as a result of the Egyptian government?s
issuance of marketing approval for local manufacturers to
produce patent-infringing copies of four U.S.
pharmaceutical products. At the time, the Pharmaceutical
Research and Manufacturers of America (PhRMA) recommended
that Egypt be named a Priority Foreign Country. In 2005,
the outgoing Minister of Health and Population authorized
another local generic copy of an innovator drug based upon
unauthorized reliance on confidential test data.

4. (SBU) Although GOE interpretation of the legal
framework leaves open the possibility of more approvals
based on unauthorized reliance on confidential test data,
the current Minister of Health and Population, Hatem El
Gabaly, has pledged not to permit this, and in fact we
understand that the GOE has not granted marketing approval
for unauthorized generic pharmaceuticals since 2005.
Meanwhile, in the last three years the GOE has restructured
its patent office, worked to clear a backlog of pending
patent applications, improved the capacity of judicial and
regulatory officials working on IPR issues, and otherwise
strengthened its IPR regulatory regime and enforcement.

5. (SBU) The GOE has not changed its interpretation of its
obligations to protect pharmaceutical test data under the
Trade-Related Aspects of Intellectual Property Rights
(TRIPS) agreement. It continues to hold the position that
data exclusivity and the principle of non-reliance are
above and beyond GOE TRIPS obligations. USG officials have
raised concerns about the GOE interpretation repeatedly in
high-level meetings during the last three years, including
discussions over the Trade and Investment Framework
Agreement (TIFA) and, most recently, the November 2007
meeting between Gabaly and USTR Schwab in Washington. Data
protection was expected to be one of the significant points
of contention in negotiations over a free trade agreement,
which the USG opted not to launch in the spring of 2006.

6. (SBU) After the USG retained Egypt on the Priority
Watch List in 2007, Gabaly and Minister of Trade and
Industry Rachid Rachid wrote the Embassy to protest that we
had failed to recognize Egypt's improvements. The GOE and
USG increased engagement on IPR this year, including visits
by GOE delegations in Washington and visits by USTR and
U.S. Patent and Trademark Office (USPTO) officials to

Technical Assistance, Capacity Building

7. (U) Thanks in part to technical assistance provided by
USPTO and USAID, the Egyptian Trademark Office is
completing examination of applications in seven months,
compared with 12 months previously, even though annual
trademark applications have now more than doubled from
7,553 in 2004 to 16,076 in 2007. The GOE has taken
advantage of training on topics such as patent and
trademark examination, specialized pharmaceutical patent
examination, Patent Cooperation Treaty application
processing, industrial design examination, trademark
examination, and digital age copyright issues, as well as
judicial training in IPR law and enforcement.

8. (U) The Information Technology Industry Development
Agency (ITIDA) reported in the GOE's Special 301 submission
that it organized IPR legal training for 463 judges, 618
public prosecutors, and 152 enforcement officers in 2007.

9. (SBU) Revisions of Book 4 of the IPR Law covering the
protection of new plant varieties are now before the
Cabinet for their review. The revisions, drafted by the
Ministry of Agriculture, are part of Egypt's efforts to
join the International Union for the Protection of New
Varieties of Plants (UPOV). The changes originated in an
IPR committee led by the Prime Minister that is now
considering further improvements to IPR laws.

10. (SBU) In addition, the Ministry of Trade and Industry
is proposing the revision of 14 laws governing internal
trade with the objective of keeping dangerous, counterfeit,
and other illegal products out of the market.

11. (SBU) In another recent development, a committee to
hear appeals of Patent Office decisions has been
constituted and was scheduled to meet and hear appeals
February 21.

12. (SBU) The GOE still appears unable to implement the
120-day streamlined drug registration system in force in
January 2007 for drugs carrying a US Food and Drug
Administration (FDA) or European Medicines Agency (EMEA)
approval. Gabaly's senior adviser indicates that they are
fully cognizant of this issue and would soon amend the
process to speed up the registration period. USAID is
financing the training of three or four employees of the
Ministry of Health at a USFDA program on drug registration
in April in order to help maximize the data protection
period. In practice, the period begins at the filing date
of drug registration application, and is therefore
minimized by unnecessary delays in the approval process.

Pharmaceutical Industry Views

13. (SBU) In its 2008 Special 301 submission, PhRMA
recommended that Egypt be removed from the Special 301
report altogether, stating that "Egypt has made significant
efforts to improve its protection and enforcement of
intellectual property in 2007." PhRMA cited training of
judges and patent examiners, modernizing the infrastructure
of the Egyptian patent office, and appointment of new
personnel in key functions. PhRMA says it expects the GOE
to conclude the processing of "mailbox" pharmaceutical
patent applications by the beginning of this year.

14. (SBU) In a briefing at the Embassy, a PhRMA
representative visiting from Washington praised the efforts
of Gabaly to improve Egypt's IPR regime. The PhRMA
representative cautioned that Gabaly, who faces significant
domestic pressure from Egyptian pharmaceutical producers
and consumers, would disengage on IPR and relax IPR
protection in Egypt if the USG and private-sector
stakeholders failed to acknowledge Egyptian improvements in
IPR protection. He asked that the USG "not get ahead of
industry" on the issue.

Copyright Industry and Enforcement

15. (U) The International Intellectual Property Alliance
(IIPA) recommended in its 2008 Special 301 submission that
Egypt remain on the Priority Watch List, citing a lack of
enthusiasm for "taking the steps necessary to eliminate
piracy and foster legitimate growth of the copyright
industries." The IIPA noted climbing levels of music
piracy and called for more vigorous enforcement against
pirated entertainment software led by ITIDA. However, the
IIPA report also notes steadily decreasing business
software piracy rates in the Egyptian market from 69% in
2003 to 60% in 2007.

16. (SBU) The IIPA submission alluded to the case of the
US game manufacturer EA, noting that the Egyptian company
that pirated EA software continues to sell its products and
that the Ministry of Culture has been reluctant to state
that there is no legitimate basis for the Ministry's
license to the pirate company. Ministry officials have
told us the license expired in summer 2007 and have given
us their assurances that it will not be renewed, although
the issue remains under review by the GOE.

17. (U) IIPA also noted that the Business Software
Alliance (BSA) is satisfied with ITIDA activities. ITIDA
stated in its 301 submission that its IPR office assisted
in the adjudication of 372 IPR cases through submission of
expert reports to the courts and prosecutors in 2007.
However, BSA noted concern over lingering uncertainty about
enforcement authority. The association argues that ITIDA
should have enforcement authority, to the exclusion of the
Ministry of Culture.

18. (SBU) Microsoft Egypt described its relations with
Egyptian enforcement authorities as "fruitful and long-
term" in a draft 301 submission (ref B). Microsoft
estimated that the GOE conducts 150 raids a month against
software pirates.

19. (SBU) Egypt has not acceded to the WIPO internet
treaties; however we understand that Egyptian IPR law and
copyright provisions are largely consistent with the
protections provided by the treaties. The GOE made this
argument as well in its Special 301 submission.

20. (SBU) SUMMARY: We face significant challenges in
improving IPR protection in Egypt. At the same time, we
agree with the judgments of PhRMA and Microsoft - the
private-sector stakeholders who are working most actively
to improve IPR in Egypt - that the IPR regime here has
improved steadily, if slowly, during the last three years.
The Priority Watch List has served to focus our engagement
with the GOE during that time. From our perspective, the
issue before us is how to use Section 301, as Congress
intended, to influence the GOE to accomplish more on IPR
reforms. We judge that the GOE would interpret as punitive
a decision to keep Egypt on the Priority Watch List another
year, and IPR protection in Egypt would suffer as a result.


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