Cablegate: Ipr Implications of Leaving the Andean Community

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UNCLAS SECTION 01 OF 02 CARACAS 002331

SIPDIS

SIPDIS

COMMERCE FOR 4331/MAC/WH/CAMERON

E.O. 12958: N/A
TAGS: KIPR ETRD VE
SUBJECT: IPR IMPLICATIONS OF LEAVING THE ANDEAN COMMUNITY
AND JOINING MERCOSUR

This message is sensitive but unclassified, please treat
accordingly.

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Summary
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1. (SBU) Venezuela's hasty withdrawal from the Andean
Community (CAN) has left a legal void regarding intellectual
property rights protection. Though some BRV agencies, such
as the Autonomous Intellectual Property Service (SAPI),
continue to apply CAN norms, legal experts are questioning
whether the norms remain binding if Venezuela is no longer a
member. If they are abandoned, the country would return to
existing laws -- for copyrights, a 1993 law is fairly
protective, but not so for industrial property, whose 1957
legislation is sorely outdated. Mercosur, in contrast to
CAN's strong IPR regime, has minimal IPR protections. If CAN
norms are kept, they could only be superseded by new laws,
which are already on the National Assembly's 2006 schedule.
Currently, there is draft legislation on copyrights and
industrial property - and both are offers that weaken IPR
protection. End Summary.

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Legal void?
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2. (U) Article 153 of Venezuela's Constitution stipulates
that norms adopted under international agreements
automatically become Venezuelan law. However, Venezuelan law
also stipulates that legislation must be published in the
Official Gazette. Some CAN decisions and norms were
published without congressional approval, others with
congressional approval, and some weren't published at all. A
handful of legal experts allege that only those norms
ratified by congress now apply, while others maintain that
all norms, regardless of publication in the gazette, continue
to be Venezuelan law. Other experts, such as the head of
CAVEME (Venezuelan Pharmaceutical Chamber) believe that CAN
norms are no longer valid if Venezuela is not a member of the
Andean Community (Note: With the exception of trade
preferences, which remain in effect for five years. End
Note). Since no branch of the BRV has come forward to
clarify the issue, there is general confusion regarding
applicability of CAN norms (i.e. a legal void).

3. (SBU) Despite differing opinions, the majority of legal
experts and some in the BRV, such as the Autonomous
Intellectual Property Service (SAPI), are still applying CAN
norms. The legal questions will not be fully clarified until
the Supreme Court (TSJ) makes either a general ruling on
applicability of CAN norms, or it rules on an individual case
and sets precedent. (Comment: A TSJ ruling or other BRV
clarification is unlikely, as the negative consequences of
leaving CAN are rarely discussed publicly -- they would be an
affront to President Chavez, who was vehement that "CAN is
dead." End Comment.)

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If CAN regulations are abandoned
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4. (SBU) Andean Community norms on intellectual property
offer adequate protection. Renouncing these would mean
Venezuela would have to return to existing national law for
patents, copyrights, and other IPR protections. Venezuela's
1993 Copyright Law is protective of IPR, and is generally
considered a strong piece of legislation. However, there is
a draft copyright law currently in the National Assembly (NA)
which requires mandatory national registration of all artists
seeking copyright protections, sets high fees and low
royalties, has strong penalties for non-compliance, and

CARACAS 00002331 002 OF 002

includes a clause allowing the BRV to use a work if it is in
"national interest." If the law passes in its current form,
it would provide little incentive for international artists
to enter the Venezuelan market, and it would weaken
protections for local copyright holders.

5. (SBU) If CAN norms are abandoned, Venezuela would also
revert to the 1957 Industrial Property Law (governing
patents) -- an outdated piece of legislation that offers
inadequate IPR protections. Returning to this legislation
would certainly weaken an already fragile IPR regime. The
National Assembly is currently debating a draft industrial
property law, whose details are unknown. Hildegard Rondon, a
former TSJ magistrate and supposed author of the draft law,
stated that "industrial property is authored by rich
countries so it favors them" and that Venezuela needs to find
"its own solution." She then introduced the idea of an
"Author Invention Certificate," which would give recognition
to an inventor, but not exclusivity. Nobody in the industry
has seen the current draft law, and a National Assembly
representative who was invited to speak at an IPR-CAN event
in early July merely told the audience he "couldn't discuss
the law" but that it would be open to public debate soon. If
this draft law follows the path of other legislation, the NA
will seek private sector opinions but ultimately their
recommendations will not be incorporated into the law. With
Rondon's hints about content, the law will likely have poor
industrial property rights protection.

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The Mercosur alternative
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6. (U) Unlike the Andean Community, Mercosur does not offer a
strong IPR protection regime. The body has only one
agreement on trademarks, harmonized protocols for
geographical and source indications, but no regulations on
patents. It also (for now) lacks a court to field disputes,
or a parliament. There are two committees that deal with IPR
issues: the IPR Commission (part of the industrial subgroup)
and a Commerce and Customs Technical Committee. In the works
is a Protocol for Combatting Piracy, which is being discussed
by Justice and Interior Ministers of member states. Mercosur
does have some trade denominations for patents and technical
drawings and multiple agricultural agreements (some of which
could protect vegetable varieties, for example). As opposed
to the CAN, where adopted norms automatically became law,
Mercosur's member states must each ratify norms for them to
be binding. Mercosur's protections are a far cry from those
of the Andean Community and membership could essentially mean
a return to the TRIPS standard and WTO as a baseline for IPR
protection.

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Comment
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7. (U) For now, the BRV is continuing to apply CAN norms, and
nothing has suggested that the TSJ will make a clarifying
ruling to interpret the legal consequences of withdrawal.
Despite Chavez making the decision to withdraw from CAN
unilaterally (and without consultation), there has been
little public discussion about the negative ramifications of
leaving the organization, especially for IPR. The lack of
BRV forethought is apparent -- the government is remaining
silent because they haven't thought the issue through.
Though Venezuela had lackluster implementation of CAN norms
before departing, the regulations did serve as a legal basis
to protect IPR despite anti-IPR voices within the country.
Now, the door is left wide open for draft legislation
infringing upon IP rights to sail through the National
Assembly and become law.
WHITAKER

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