09.11.11
Posted in Cablegate, Europe, Patents at 4:05 am by Dr. Roy Schestowitz
Eva Bjorling, photo by http://politik.in2pic.com
Summary: The EU Patent and ACTA are talked about in a year and a half old cable, Slovenia is also pushed to step into alignment
AS we continue to unearth cables about the EU Patent, we discover who played what role exactly. We also see the US politicians acting as cheerleaders for the change, which can in due course give more power to the USPTO and by inference to US-based corporations working in Europe. There is a price to pay and the payer is every citizen who buys stuff, ranging from medicine to food or even electronic gadgets. The patent system simply makes the rich even richer.
The following Cablegate cable speaks about EU Patent “breakthrough” and ACTA. Well, this does not necessarily suggest that one is used to promote the other, but a correlation is drawn and the two are brought into alignment in the same cable which shows US sentiments towards Sweden’s behaviour, commending the country for becoming more of a so-called ‘IPR’ maximalist, i.e. supporting monopolies as cornerstone doctrine. Here it is in full:
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Posted in America, Cablegate, Europe, Patents at 3:40 am by Dr. Roy Schestowitz
Summary: US perspective on the EU Patent, which is a prelude to a global patent, permitting far-reaching litigation even with software patents
EUROPE is under an assault to assimilate. We previously covered a related cable about the EU Patent, which helps create a bridge towards a Global Patent (more on that later). The effects would be devastating to everyone but monopolists and their patent lawyers.
The following 2006 Cablegate cable shows us how negotiations of the EU Patent has been going. ¶4 of the first cable says that “Notes from the Chancellery’s working group on IPR, provided by a BDI representative, focused on fighting piracy and cooperating more in the area of patents. On combating piracy, the working group recommends coordinating diplomatic efforts to apply political pressure on countries where piracy originates; improving cooperation among customs agencies; and taking political steps to implement a public consumer awareness campaign on pirated and counterfeit goods. For improving transatlantic cooperation on patents, the IPR working group recommends reaching agreement on the Substantive Patent Law Treaty (SPLT); recognizing common U.S.-EU standards; establishing an international court specializing in patent-law; and recognizing extended patent protection for substances that are subject to licensing procedures. The working group also recommended improving cooperation between the EU and U.S. patent offices through targeted programs like establishing exchanges of patent reports, creating a central database for formal data on patents, creating a worldwide standard patent application format, establishing higher quality standards for patent agencies and increased support for cooperation between U.S. and EU patent agencies. For patent applicants or users, the working group recommends prohibiting patents for business practices and formally prohibiting the practice of “patent trolling.” (Note: These recommendations have yet to be presented to the Chancellor for approval and will become part of a larger paper listing the working groups’ recommendations. End Note).”
Just “prohibiting the practice of patent trolling” is not going to address the main problem, which is monopolisation. Trolls are often just pawns in this battle and they mostly hurt the monopolists. Removing them only gives more incentive for multinationals to support this scheme. And as explained in the latter cable, “The EU has long had a goal of creating a single EU patent system under which, as in the United States, a patent could be applied for and granted through a single office, valid in all 27 member states.”
Their long term goal is a global patent subservient to the US system i.e. the USPTO with all of its software patents (hundreds of thousands of them, depending on criteria). We will show this separately in a cable about Japan. In the mean time, consider this:
VZCZCXRO6490
PP RUEHAG RUEHROV
DE RUEHRL #3518/01 3491551
ZNY CCCCC ZZH
P 151551Z DEC 06
FM AMEMBASSY BERLIN
TO RUEHC/SECSTATE WASHDC PRIORITY 6435
INFO RUCNMEU/EU INTEREST PRIORITY
RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUCNFRG/FRG COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
C O N F I D E N T I A L SECTION 01 OF 02 BERLIN 003518
SIPDIS
SIPDIS
STATE FOR EB/TPP, EUR/ERA, AND EUR/AGS
USTR FOR DDWOSKIN, MMOWREY, SDONNELLY
USDOC FOR KPARSONS
E.O. 12958: DECL: 12/14/2016
TAGS: ETRD [Foreign Trade],
EFIN [Financial and Monetary Affairs],
ECIN [Economic Integration and Cooperation],
KIPR [Intellectual Property Rights],
PREL [External Political Relations], GM [Germany]
SUBJECT: GERMANY HONING TRANSATLANTIC ECONOMIC INITIATIVE
REF: A. BERLIN 1747
B. BERLIN 3076
Classified By: DCM John Koenig for reasons 1.4(b) and (d).
¶1. (C) Summary: The Chancellor and other senior German
officials continue to note Germany's economic agenda for its
EU presidency includes promoting a more highly integrated
transatlantic market place, while at the same time
reiterating support for a successfully concluded Doha
Development Agenda (DDA). The exact parameters of the
Chancellor's transatlantic economic initiative have continued
to evolve over the past four months, moving from exploring
the possibility of a transatlantic free trade agreement
(TAFTA) (ref A) to the current formulation, which focuses
mostly on overcoming or alleviating regulatory barriers.
Merkel recently brought together leaders from business and
government to help define this transatlantic initiative. The
reformulation resulted from German officials concluding a
free trade agreement would not achieve much in terms of
tariff reduction on non-agricultural products and would face
the same challenges on agriculture market access the EU and
U.S. are currently confronting in the DDA. The Chancellery
and other ministries have become more careful to stress that
the primary objective remains a successful Doha Round, but
that they also see the transatlantic market place initiative
as something which could subsequently contribute to improved
prosperity on both sides of the Atlantic. German business
and government officials say they plan to reach out to
parliamentarians and Members of Congress to discuss the
initiative. End Summary.
--------------------------------------------- ---------------
Fleshing Out German Thoughts on Transatlantic Economic
Cooperation
--------------------------------------------- ---------------
¶2. (SBU) Taking a further step to refine thinking on
increasing trade between the U.S. and EU, representatives
from German government and business met November 22 at the
Chancellery to discuss how to integrate further the
transatlantic market economy. Starting from a premise that
any type of a transatlantic free trade agreement is
unrealistic, Chancellery and business representatives from
the Federation of German Industries (BDI) have sought to find
a more pragmatic way forward. Both government and business
representatives characterize their initiative as
complementary to Doha, rather than an alternative or
competing idea. All continue to stress the importance of a
successful DDA, even though many officials and business
people privately offer serious misgivings over the prospects
for the Round. At the request of Chancellor Merkel, who has
publicly stated her desire for a transatlantic economic
element in Germany's EU presidency, business and government
representatives created working groups in five key areas --
Energy, Finance, IPR, Standards, and Environment -- to flesh
out concrete proposals. Officials noted the first session
was intended to develop a work program for each group, with
the working groups presenting their recommendations on
December 20.
¶3. (SBU) According to Stefanie Conrad of the Chancellery's
Foreign Trade and G-8 Office, Merkel wants the U.S. and EU to
use what she sees as already excellent economic relations to
move forward on more challenging economic issues,
particularly on regulatory convergence and standards
recognition in the five aforementioned areas. The working
groups would develop recommendations in terms of what they
actually see as achievable. Chancellery officials see only
limited success in the previous efforts dealing with
regulatory and standards issues and say Merkel is looking to
give these efforts, and the overall transatlantic economic
relationship, a higher-profile. She wants political leaders
involved in the issues rather than leaving them to experts
for discussion. German officials see engaging Congress as an
important part of the equation. They see the Federation of
German Industry's annual US-German Roundtable, which brings
U.S. Members of Congress to Germany to discuss transatlantic
issues, as an opportunity for such engagement. The
roundtable is scheduled to take place in Hamburg in February
2007.
--------------------------------
BERLIN 00003518 002 OF 002
A Glimpse Inside A Working Group
--------------------------------
¶4. (C) Notes from the Chancellery's working group on IPR,
provided by a BDI representative, focused on fighting piracy
and cooperating more in the area of patents. On combating
piracy, the working group recommends coordinating diplomatic
efforts to apply political pressure on countries where piracy
originates; improving cooperation among customs agencies; and
taking political steps to implement a public consumer
awareness campaign on pirated and counterfeit goods. For
improving transatlantic cooperation on patents, the IPR
working group recommends reaching agreement on the
Substantive Patent Law Treaty (SPLT); recognizing common
U.S.-EU standards; establishing an international court
specializing in patent-law; and recognizing extended patent
protection for substances that are subject to licensing
procedures. The working group also recommended improving
cooperation between the EU and U.S. patent offices through
targeted programs like establishing exchanges of patent
reports, creating a central database for formal data on
patents, creating a worldwide standard patent application
format, establishing higher quality standards for patent
agencies and increased support for cooperation between U.S.
and EU patent agencies. For patent applicants or users, the
working group recommends prohibiting patents for business
practices and formally prohibiting the practice of "patent
trolling." (Note: These recommendations have yet to be
presented to the Chancellor for approval and will become part
of a larger paper listing the working groups'
recommendations. End Note).
¶5. (SBU) The transatlantic economic initiative might also be
a topic for the U.S.-EU Summit in April, according to
Chancellery officials. They note that Merkel is personally
involved in the decision making on this subject and thus
wants her stamp of approval on every aspect of this
initiative. As currently envisioned, points for discussion
would be on how to structure a more formal arrangement for
dealing with regulatory and standards issues, providing the
initiative with a strong political grounding, and agreeing to
clear goals that advance U.S. and German common interests
related to this initiative.
-------
Comment
-------
¶6. (C) Germany's current efforts to produce a workable
transatlantic market place initiative reflect a new approach
to old themes. The Chancellery's deliberate and evolving
approach shows as well the importance Merkel has attached to
producing a tangible objective for Germany's EU presidency
and a possible deliverable for the U.S.-EU Summit. Trade
affected by regulations and standards is a growing share of
the $3 trillion annual transatlantic ($160 billion
U.S.-Germany) economic relationship; progress in this area
could bring strong benefits to companies on both sides of the
Atlantic. The government's focus on standards and
regulations is a sign that German business and government
realize the transatlantic market place initiative cannot
replace a successful outcome to Doha, which remains a Germany
priority. By engaging a variety of upper and mid-level
business and government officials, German officials hope to
produce an honest assessment with broad commitment as to what
is achievable in terms of regulatory convergence and
standards recognition. Germany could use this assessment to
persuade skeptics in Brussels and other EU member states that
Germany's, and EU's, interests lie in accelerating the
important process of regulatory convergence and standard
recognition.
TIMKEN JR
Several years later, US politicians were jubilant, saying that the “EU Makes Progress Towards, An EU-wide Patent System” (from Monday, the 14th of December, 2009). “The ministers also reached a deal on the establishment of an EU patent court system,” says the cable, “that would set up a single European appeals courts for patent infringement disputes. The agreement paves the way for further discussion, under Spanish and later Presidencies, towards a future patent system, but, given institutional and procedural hurdles, such a system is likely still one or more years away.” Here is the full cable:
VZCZCXRO5488
RR RUEHIK
DE RUEHBS #1673/01 3481522
ZNR UUUUU ZZH
R 141522Z DEC 09
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHSS/OECD POSTS COLLECTIVE
UNCLAS SECTION 01 OF 02 BRUSSELS 001673
SENSITIVE
SIPDIS
STATE FOR EUR/ERA KESSLER
STATE FOR NSC KVIEN, DBELL
STATE FOR EEB/TPP/IPE URBAN
USDOC FOR ITA/MAC/EUR/OEU/DEFALCO
USDOC FOR ITA/MAS/OCG/JFERMAN
USDOC FOR ITA/MAS/OTEC/RBLANKENBAKER
STATE PASS TO USTR
E.O. 12958: N/A
TAGS: KIPR [Intellectual Property Rights],
EIND [Industry and Manufacturing],
ETRD [Foreign Trade], SENV [Environmental Affairs],
ECON [Economic Conditions], TPHY [Physical Sciences],
TSPL [Science and Technology Policy], EUR, EUN [European Union]
SUBJECT: EU MAKES PROGRESS TOWARDS, AN EU-WIDE PATENT SYSTEM
BRUSSELS 00001673 001.2 OF 002
¶1. SUMMARY: At a Competitiveness Council meeting in Brussels
December 4, EU industry ministers reached a political
agreement on a process to move toward setting up a single EU
patent to replace the multitude of national patents in force
across 27 member states. The ministers also reached a deal
on the establishment of an EU patent court system that would
set up a single European appeals courts for patent
infringement disputes. The agreement paves the way for
further discussion, under Spanish and later Presidencies,
towards a future patent system, but, given institutional and
procedural hurdles, such a system is likely still one or more
years away. END
SUMMARY
----------
BACKGROUND
----------
¶2. The EU has long had a goal of creating a single EU patent
system under which, as in the United States, a patent could
be applied for and granted through a single office, valid in
all 27 member states. Such a system would, according to
Commission proponents, save firms at least 150 million
Euros/year.
¶3. The EU has tried and failed to launch a common patent a
number of times. The first effort was the Community Patent
Convention (CPC) signed in Luxembourg, December, 1975, by the
nine EU states at the time, but never ratified. An Agreement
Related to Community Patents was signed by the EU 12, in
Luxembourg in December, 1989, but also was never ratified by
all signatories and thus never entered into force. A
political agreement on an approach to an EU patent was
achieved in 2003, but foundered in 2004 when the
Competitiveness Council failed to agree on details of the
regulation.
¶4. Unable to reach agreement on a common patent, European
member states agreed to the European Patent Convention, which
created the European Patent Office (EPO). This differs from
a community-wide patent in that the EPC is a mutual
recognition of nationally agreed patents and includes non-EU
European states as signatories. The arrangement does not,
however, represent a centrally enforceable, European
Union-wide patent.
-------------------------------------------
LATEST EFFORTS MAY BE MORE SUCCESSFUL . . .
-------------------------------------------
¶5. At a December 4 Competitiveness Council meeting, the
Swedish presidency was able to use new powers under the
Lisbon Treaty to gain get member states to agree to the basic
parameters of an approach to an EU common patent and
supporting institutions. The Commission will use this result
to draw up specific legislative proposals. Political
agreement on the key elements of the proposal should
facilitate adoption by the Council and European Parliament.
¶6. Article 118 of the Treaty on the Functioning of the
European Union (TFEU), which consolidates the Treaty of the
European Union with the Treaty of Lisbon, provides for the
creation of European intellectual property rights (IPR) and
the setting up of centralized, EU-wide arrangements for the
authorization, coordination, and supervision of IPR in the
EU. It also calls for establishment of language arrangements
for translations of European IPR, long an issue in the
creation of an EU patent. The entry into force of Lisbon on
December 1, then, provided additional clear legal support for
the patent.
¶7. The new political agreement on an Enhanced Patent System
in Europe calls for the creation of a European and EU Patents
Court (EEUPC), an EU patent (along with a separate regulation
governing translation arrangements for the EU patent), an
enhanced partnership with the EPO, and, as necessary,
amendments to the EPC. Under the agreement, the EEUPC would
be made up of a Court of First Instance, a Court of Appeals,
and a Registry. The EEUPC would be financed by court fees
and contributions from the EU member states at least during
the transition period (five years after entry into force).
The court would be composed of judges with patent litigation
experience at the national level. In addition, non-EU
BRUSSELS 00001673 002.2 OF 002
contracting members of the EPC could accede to the agreement
as well.
--------------------
. . . BUT NOT A LOCK
--------------------
¶8. But hurdles remain. The European Union Court of Justice
(EUCJ) is currently considering whether a new European patent
court can be set up (presumably out of concern that such a
system could be contrary to the EUCJ's role as guardians of
the EU Treaties). Member states are not united in their
support for an EU-wide patent, with national patent offices
set to lose patent renewal fees and some competence under the
proposal. And, while the Lisbon Treaty offers legal support
for both a centralized approach to IPR and patent systems and
translation arrangements, the mechanics of both are unclear.
----------
CONCLUSION
----------
¶9. While the notion of an EU-wide patent has been around for
some time, this agreement should come as welcome news for
supporters of a strong internal market and a more robust EU
patent regime. With entry into force of a final regulation
two or three presidencies away, there is time yet for a
roadblock or two, with the EUCJ opinion the largest potential
deal maker or breaker. But political will for an agreement,
combined with the legal support of Lisbon, make an EU-wide
patent regime more likely than not in the near future.
MURRAY
.
As pointed out above (and as we covered in this site before), “The European Union Court of Justice (EUCJ) is currently considering whether a new European patent court can be set up (presumably out of concern that such a system could be contrary to the EUCJ’s role as guardians of the EU Treaties). Member states are not united in their support for an EU-wide patent, with national patent offices set to lose patent renewal fees and some competence under the proposal. And, while the Lisbon Treaty offers legal support for both a centralized approach to IPR and patent systems and translation arrangements, the mechanics of both are unclear. [...] the EUCJ opinion the largest potential deal maker or breaker. But political will for an agreement, combined with the legal support of Lisbon, make an EU-wide patent regime more likely than not in the near future.”
We really need to stop this in order to keep software patents away and hopefully squash them all together, in one fell swoop. █
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Posted in America, Cablegate, Free/Libre Software at 3:12 am by Dr. Roy Schestowitz
Summary: The Government of Brazil (GoB) comes under US pressure and the increased adoption of Free software in the country is also being mentioned
TODAY’s coverage of Brazil contains several “Sensitive” Cablegate cables. It is more of the same colonisation effort.
Argentina was put on the "watch list" as part of the attempt to change the laws there, making the country more receptive towards foreign monopolies. “Post recommends that Brazil remain on the Priority Watch List for the 2004 Special 301 Review,” says the first cable that we present today, demonstrating the same approach of shame lists or the targeting of nations that step ‘out of line’. “Lula administration has not yet developed a comprehensive national strategy for addressing the country’s poor IPR enforcement, nor has it reduced the backlog of patent and trademark applications,” complain the diplomats.
So?
Does a government become “bad” for not providing patent monopolies?
As the cables show, the US is trying to help Brazil change. A cable says that “Monteiro is most proud of the IPR introductory training course now required at the federal police academy and hopes to duplicate the success of this program in all police training curricula (civil and military).”
Further down there is a section titled “Patents – Talk but Little Action”.
Recall what was done in Brazil for OOXML. The "IPR" card was being used to daemonise ODF, as cables revealed years after the act. Microsoft called it an “attack” on IPR.
The cable below speaks about copyrights as well, later on with a rant about “TRIPS Compliance and Related Issues” (we wrote about TRIPS before [1, 2, 3, 4]).
See ¶6 which says: “In July 2003 President Lula signed a law amending the Brazilian criminal code with respect to copyright violations (ref L). The law increases the minimum penalty from one to two years’ imprisonment, levies a fine and allows for improved seizure and destructions procedures for contraband. The law does not include increased sanctions for software infringement. The free software movement is building support within the GoB and throughout Brazil. GoB procurement regulations prohibit use of unlicensed software, according to Itamaraty officials, but no special decrees or directives exist to further encourage compliance with international standards of copyright protection.”
And ¶11 says: “In January 2004, Monsanto announced that it had reached an agreement with farmers from the Brazilian state of Rio Grande do Sul to receive remuneration for the use of Roundup Ready technology found in the company’s soybean variety grown widely throughout the state. The GoB’s position on biotechnology remains undecided, as the biotechnology bill is still under debate in Congress (ref D).”
Here goes the first cable.
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Posted in America, Cablegate at 2:36 am by Dr. Roy Schestowitz
Summary: A multi-year attempt to change Argentina through surrender to so-called ‘IPR’ monopolies (not Free software) and the role of a “watch list” (like sex offenders registry)
THE GOVERNMENT of Argentina (GOA) is under attack. Colonists from up north are adamant and determined to change Argentinian law not into something that benefits the population but something that benefits corporations. Argentinian corporations? Of course not. It’s about multinationals. The following cables are good demonstration of a lobby for so-called “IPR”, which is this case is clearly broken down into Patents, Copyrights, and Trademarks.
For those who are just joining us, the other day we covered the United States stating that “42 percent of Argentine firms use Linux on at least some of their computers,” which was the cause of some concern in a “sensitive” cable. Today’s 2006 Cablegate cable helps show another bit of concern about Argentines using copyleft software, which weakens the agenda of copyright maximalists. And for those who wish to know more about Argentina, also see:
In the following cables, watch how US diplomats based in Argentina are trying to pressure Argentina to be more like the US, with patent monopolies and everything. There is lobbying by big pharmaceutical companies that also fund this type of colonisation (yes, funding change of the law overseas). “Argentina amended its patent law (Law 24,481) in December 2003,” it says, “to implement an agreement between the USG and the GOA that had been signed in May 2002.”
A pattern we see in those cables is that they put monopolies before life, knowingly jeopardising the lives of many ill people just so that they can secure the profits of American companies. The tactics are damning to US politics/foreign affairs and also damning to Monsanto with its food embargoes. To quote ¶16, “Argentine farmers have the right to replant — although not to sell — seed generated from a harvest originating from registered seeds without paying royalties. However, Argentine farmers continue to sell “brown bag” seed (as opposed to bags of seed showing brand names) as brand-name product. This is a widespread problem with soybean seed, and it underlies Monsanto’s recent court actions in Europe, which have resulted in ships carrying Argentine soy being stopped and the cargo seized. Monsanto’s actions are aimed at collecting royalties that Argentine farmers are not paying via legal challenges in countries in which Monsanto has patent protection for the Roundup Ready soybean technology.”
And here is something from the Comment and Recommendation section: “the Argentine legal system remains an uncertain ally in the fight to protect intellectual property.”
Free software is mentioned in there too (¶13). To quote: “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 offices of the national government, and many GOA offices continue to use pirated software. Ministry of Interior Director of Information Management Eduardo Thill told a local news outlet in January 2005 that 90 percent of GOA agencies employing licensed software are using it illegally. There is a GOA move toward open source software, according to Thill, but there has been no legislation to date to bind the GOA to open source software solutions. That situation held true throughout 2005, although a representative of Thill’s office told the Embassy February 2006 that the percentage of GOA agencies using licensed software illegally had fallen to between 80 and 85 percent.”
They are blending FOSS and “pirated software” again.
The full text follows:
VZCZCXYZ0000
RR RUEHWEB
DE RUEHBU #0406/01 0482043
ZNR UUUUU ZZH
R 172043Z FEB 06
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 3529
INFO RUEHAC/AMEMBASSY ASUNCION 5344
RUEHBR/AMEMBASSY BRASILIA 5128
RUEHLP/AMEMBASSY LA PAZ FEB MONTEVIDEO 5320
RUEHSG/AMEMBASSY SANTIAGO 4944
RUEHRI/AMCONSUL RIO DE JANEIRO 1875
RUEHSO/AMCONSUL SAO PAULO 2769
UNCLAS BUENOS AIRES 000406
SIPDIS
SIPDIS
DEPT FOR EB/IPE CLACROSSE AND ANNA MARIA ADAMO
DEPT PLS PASS TO USTR JCHOE-GROVES
DOC FOR JBOGER, PLEASE PASS TO USPTO JURBAN AND LOC STEPP
E.O. 12958: N/A
TAGS: KIPR [Intellectual Property Rights], ETRD
[Foreign Trade], ECON [Economic Conditions], AR [Argentina]
SUBJECT: ARGENTINA'S 2006 SPECIAL 301 REVIEW
REF: A. STATE 014937
B. 05 BUENOS AIRES 01566
C. 05 BUENOS AIRES 01047
-------
Summary
-------
¶1. Argentine entities responsible for upholding IPR failed
to translate the momentum from a strong 2004 into tangible
successes in 2005. U.S. pharmaceutical companies are still
waiting for commercially valuable patents; CD and DVD piracy
rates appear to be rising, despite Argentina's economic
recovery; and a piece of draft legislation that would have
bolstered the protection of trademarked goods died in
committee during the year. The Embassy therefore recommends
that Argentina remain on the Special 301 Priority Watch List
until it can begin to point to concrete results across the
IPR gamut and, more specifically, until it ensures effective
protection of confidential and proprietary data developed by
pharmaceutical companies. End Summary.
-------
Patents
-------
¶2. Argentina's patent and trademark agency, The National
Institute of Industrial Property (INPI), 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, the INPI received 47,573 patent
applications but was able to resolve only 28,190 of those in
the queue, for a deficit of over 19,000 applications in those
eight years alone. That situation has now turned around,
with the INPI receiving 14,106 patent applications during
2003-2005 and resolving 18,334 during the same period.
Additionally, the rate at which the number of applications
resolved exceeds the number of applications received is
increasing.
¶3. INPI's improved efficiency stems from a number of reforms
that began to be introduced in 2003. The INPI, via a series
of resolutions, implemented fast-track procedures to reduce
what had grown to be a large patent application backlog of
over 30,000 cases. Specifically, all persons or companies
having more than one patent application pending were given
the opportunity to rank-order their applications, 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. U.S. and other research-based
pharmaceutical companies are also now authorized to present
studies used in other patent-granting countries to support
patent requests in Argentina, significantly easing the INPI's
investigation requirements.
¶4. The GOA also increased the INPI's budget by 11 percent in
2004, and kept those gains during 2005. The extra money
allowed the hiring of 27 new patent examiners, 10 of them in
the key pharmaceutical area. That initiative doubled the
total number of pharmaceutical examiners to 20. The INPI has
instituted a system of in-house training that an INPI
executive told Econoff has increased the examiners'
efficiency by up to 30 percent. One result has been a
reduction in the time it takes a patent application to
receive a preliminary examination from fifteen months to
eleven months. In another positive development, the INPI
sent two of its pharmaceutical inspectors to the U.S. Patent
and Trademark Office's (USPTO) academy for training in 2005.
That training, arranged by the Embassy and jointly funded by
the USPTO and research-based pharmaceutical companies, was a
first for Argentine patent inspectors. The Embassy also
arranged for an Argentine appeals court judge specializing in
IPR cases to attend USPTO training, another first.
¶5. The gains mentioned above, 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 were issued
following the expiration of the TRIPS transition period in
October 2000. Even those patents were for approximately 80
products of marginal commercial value. 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 the INPI counted as
"resolved" during 2005 were simply discarded after the
applicant failed to respond to an INPI instruction to
formally reaffirm the application.
¶6. 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 of these factors has
had a negative effect on the Argentina-derived business of
U.S.-based pharmaceutical companies. According to CAEMe, the
Argentine association that represents U.S. and other
research-based pharmaceutical companies, local pharmaceutical
firms now have over 50 percent of the Argentine market and
have reached almost 50 percent of the export market.
¶7. Argentina amended its patent law (Law 24,481) in December
2003 to implement an agreement between the USG and the GOA
that had been signed in May 2002. That agreement came after
approximately three years of consultations under the WTO's
dispute settlement mechanism. In a related development, the
U.S. agreed to give consideration to an Argentine request to
add specific products to the U.S. Generalized System of
Preferences (GSP) that allows for duty-free entry into the
U.S. The remaining unresolved pharmaceutical patent issue
relates to the effective legal protection of confidential and
proprietary data developed by pharmaceutical companies to
demonstrate the efficacy and safety of new medicines. U.S.
and other research-based pharmaceutical companies believe
this to be a critical issue and Argentina and the U.S. have
agreed to leave this issue within the WTO dispute settlement
mechanism for future action. (Note: The absence of data
protection has lead research-based pharmaceutical companies
to complain that Argentine health regulatory authorities
(ANMAT) rely inappropriately on data supplied by
research-based companies to approve 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.)
¶8. U.S. pharmaceutical companies also remain concerned about
the legal implications of two specific clauses in the 2003
agreement. Specifically, the amendment mandates an expert
opinion that can challenge the validity of a patent, and
requires consideration of the economic impact of an
injunction on both parties before the seizure of goods
alleged to violate the patent law. Since the agreement was
signed, research-based pharmaceutical companies have 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.
¶9. 2005 was the first year during which those fears were
realized. A U.S.-based pharmaceutical company discovered
several competitors trying to sell copies of its most
profitable drug, and sought injunctions to prevent those
sales. In one case, the issuance of an injunction was
delayed for months, and in another the application for an
injunction was rejected by a judge swayed by a local expert
hired by the defense, who claimed that the copycat drug did
not violate the U.S. pharmaceutical company's patent. In
another instance, a different U.S.-based pharmaceutical
company went to court 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 (Reftel B). More than six months after
the decision, however, those injunctions have yet to be
enforced.
¶10. A frequent complaint of U.S. pharmaceutical companies is
that there remains in Argentina no regulatory linkage between
the INPI and the ANMAT. While such linkage is not required
by TRIPS, 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. There were hints during 2005 of the beginnings
of a cooperative relationship between INPI and ANMAT (Reftel
C), but the Embassy has no evidence that such cooperation has
developed. As things stand, 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 INPI patents.
¶11. Law 25,649 adopted in 2002 requires medical doctors to
use a drug's generic name in all prescriptions. It is
believed that this law diverts sales from innovative
medicines to TRIPS-infringing copy products. U.S. and other
research-based pharmaceutical companies say 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. According to Law 25,649, doctors may also
include a trademarked version of a drug in their
prescriptions, but pharmacists may still offer a substitute.
According to Law 25,649, reasons must be indicated on a
prescription if a medical doctor does not want the
prescription substituted by a pharmacist. Another area of
concern is that Argentina has yet to become a contracting
state to the World Intellectual Property Organization's
(WIPO) Patent Cooperation Treaty.
----------
Copyrights
----------
¶12. Optical Media Piracy: The incidence of CD and DVD piracy
in Argentina does not appear to have declined in 2005.
Problems in this area include the widespread and open sale of
pirated copies of albums and videos and an apparently
increasing number of businesses that offer home delivery of
pirated artistic content. Argentina's laws provide generally
good nominal protection. However, the lack of any real bite
(pirates have not faced jail time), coupled with the extra
incentive provided by Argentina's devaluation in 2002, which
spiked prices for imported media, has spurred piracy. A
local attorney working copyright issues told Econoff that his
clients estimate that losses to U.S. companies due to optical
media piracy in Argentina exceeded USD 150 million in 2004.
The same attorney said 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 effect the seizure of counterfeit media, the
attorney said, but the existence of a personal relationship
with relevant authorities is helpful. Still, his client (a
IP content trade association) worked with police to effect
over 200 raids and seize over 100,000 pirated discs during
2005.
¶13. 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
offices of the national government, and many GOA offices
continue to use pirated software. Ministry of Interior
Director of Information Management Eduardo Thill told a local
news outlet in January 2005 that 90 percent of GOA agencies
employing licensed software are using it illegally. There is
a GOA move toward open source software, according to Thill,
but there has been no legislation to date to bind the GOA to
open source software solutions. That situation held true
throughout 2005, although a representative of Thill's office
told the Embassy February 2006 that the percentage of GOA
agencies using licensed software illegally had fallen to
between 80 and 85 percent.
¶14. Amendments to Existing Legislation: A promising piece of
legislation to modernize Argentina's quarter-century old
trademark law (Law 22,362) 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). The
Embassy was told by a local attorney who helped to draft the
legislation that it will be re-introduced in April 2006. The
same attorney blames the failure of the bill on the lethargy
of local Argentine business chambers, which he said did not
actively support the effort.
----------
Trademarks
----------
¶15. Argentina's trademark law (Law 22,362) fulfills
international standards, but legislation subsequent to its
enactment has rendered it relatively ineffective, with
penalties limited to probation and fines that are not high
enough to act as a significant deterrent (see paragraph 14).
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).
-------------
Plant Variety
-------------
¶16. Argentine farmers have the right to replant -- although
not to sell -- seed generated from a harvest originating from
registered seeds without paying royalties. However,
Argentine farmers continue to sell "brown bag" seed (as
opposed to bags of seed showing brand names) as brand-name
product. This is a widespread problem with soybean seed, and
it underlies Monsanto's recent court actions in Europe, which
have resulted in ships carrying Argentine soy being stopped
and the cargo seized. Monsanto's actions are aimed at
collecting royalties that Argentine farmers are not paying
via legal challenges in countries in which Monsanto has
patent protection for the Roundup Ready soybean technology.
Farm associations and industry representatives generally
agree that Argentina must elaborate and enact a new seed law
that better protects intellectual property, but negotiations
toward that end have broken down as of this writing. The
sale of "brown-bag" seed from Argentina to neighboring
countries has also led to the significant production 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.
--------
Training
--------
¶17. Reluctance by the various enforcement entities to
cooperate with each other is a problem that has long
contributed to ineffective anti-piracy action in Argentina.
The Embassy would therefore encourage any IPR training that
emphasizes a team approach and brings together
representatives from the full range of GOA institutions
involved in anti-piracy efforts. The trust and familiarity
that would result from such officials being brought together,
even if only for a short training session, would help to
foster inter-agency teamwork of the sort necessary to
effectively combat piracy.
--------------------------
Comment and Recommendation
--------------------------
¶18. The Embassy's Special 301 report for 2005 said: "Most of
the persons interviewed for this report believe that 2005
will be the year when it becomes clear whether the legal and
administrative improvements of the recent past will finally
manifest themselves in tangible successes." There was
evidence of improvement during 2005, but very few of the
hoped-for tangible successes. INPI appears to be functioning
more efficiently, but that procedural improvement has not
translated into the issuance of patents with significant
commercial value for U.S. pharmaceutical companies. Piracy
has not diminished, despite a significant recovery from an
economic crisis that was a real spur to piracy. Neither has
Argentina's legislature taken the steps necessary to clamp
down on piracy. As also noted herein, the Argentine legal
system remains an uncertain ally in the fight to protect
intellectual property. The Embassy therefore recommends that
Argentina remain on the Special 301 Priority Watch List for
2006. End Comment.
¶19. To see more Buenos Aires reporting, visit our classified
website at: http//www.state.sgov.gov/p/wh/buenosaires
GUTIERREZ
The following cable is from the following year and it says that the “GOA legislation to require use of open source software was introduced in 2001 but never passed.”
VZCZCXYZ0000
RR RUEHWEB
DE RUEHBU #0335/01 0521641
ZNR UUUUU ZZH
R 211641Z FEB 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 7333
RUCPDOC/USDOC WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUEHAC/AMEMBASSY ASUNCION 5952
RUEHMN/AMEMBASSY MONTEVIDEO 6190
RUEHSG/AMEMBASSY SANTIAGO 0198
RUEHBR/AMEMBASSY BRASILIA 5798
RUEHSO/AMCONSUL SAO PAULO 3171
RUEHRI/AMCONSUL RIO DE JANEIRO 2157
UNCLAS BUENOS AIRES 000335
SIPDIS
SIPDIS
SENSITIVE
DEPT FOR EB/TPP/IPE JENNIFER BOGER, RACHEL WALLACE AND ROBERT WATTS
DEPT PLS PASS TO USTR JENNIFER CHOE GROVES, SUE CRONIN
DOC/ITA/MAC/OIPR FOR CATHERINE PETERS
PLEASE PASS TO USPTO JURBAN AND LOC STEPP
E.O. 12958: N/A
TAGS: KIPR [Intellectual Property Rights], ETRD [Foreign Trade],
ECON [Economic Conditions], AR [Argentina]
SUBJECT: ARGENTINA'S 2007 SPECIAL 301 REVIEW
REF: A. STATE 7944
B. 06 BUENOS AIRES 406
-------
Summary
-------
¶1. (SBU) In 2006, 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. Proposed legislative amendments and regulations to
strengthen the IPR regime were not implemented in 2006. On patents,
the application process continued to improve, with more and more
timely adjudications. However, the application backlog remains
large, effectively curtailing the period of patent protection, and
injunctive relief for patent infringement has been 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, illegal
internet downloading/distribution has jumped in line with expanded
broadband access, and a court decision has sanctioned some
photocopying of copyrighted printed material. Trademark
falsification remains widespread, with illegal markets poorly
policed. Minimalist fines and penalties offer little deterrent to
falsification. While Customs authorities were granted broader
trademark enforcement powers in 2006, and there were a number of
highly publicized seizures of blank and pirated discs, these efforts
at best had marginal impact. The Embassy therefore recommends that
Argentina remain on the Priority Watch List in 2007, where it has
remained since 1996. An Embassy IPR action plan will be detailed
Septel. End Summary.
-------
Patents
-------
¶2. (SBU) Argentina's patent and trademark agency, the National
Institute of Industrial Property (INPI), 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 28,190 of those in
the queue, for a deficit of over 19,000 applications in those eight
years alone. According to the World Intellectual Property
Organization (WIPO), in 2005 Argentina ranked 18th in the world in
patent applications received. The backlog has since declined, with
INPI receiving 15,483 patent applications during 2003-2005 and
resolving 20,118 during the same period. (Note: This represents
total resolutions, which include cases rejected for procedural
reasons or abandoned. End Note.) Final approvals and denials after
full investigation in 2003-2005 totaled 1,061, 1,778, and 2,670
respectively. In 2006, final approvals and denials jumped to 4,468.
INPI officials are targeting 6,000 final approvals and denials 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 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 opportunity was announced in December 2006. 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 and 69
in 2005 to 84 in 2006, a 62% improvement in two years. As a
consequence, the time for a patent application to receive a
preliminary examination fell from fifteen months in 2004 to eleven
months in 2006. In another positive development, INPI sent two of
its pharmaceutical inspectors to the U.S. Patent and Trademark
Office's (USPTO) academy for training in 2005. That training,
arranged by the Embassy and jointly funded by the USPTO and
research-based pharmaceutical companies, was a first for Argentine
patent inspectors. Post is currently working with INPI to explore
sending more patent and/or trademark examiners for USPTO training in
2007, which the pharmaceutical chamber has again agreed in principle
to support. Post is also working with Argentine Customs authorities
to identify appropriate candidates for a customs border enforcement
training class, also provided by USPTO.
¶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. CAEMe (the Argentine Chamber of Medicinal
Specialties, an association that represents U.S. and other
research-based pharmaceutical companies) estimates this number as
approximately 4000. (Note: While INPI declined to share their
estimate of the current year-end 2006 patent application backlog,
local industry sources estimate it to be in the 23-24,000 range. End
Note.)
¶6. (U) With the Argentine 15 year patent protection clock starting
at the time of application, 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, all patents issued by INPI in 2006
had been applied for no later than in 2001 (and applications for
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. However,
for 2007, INPI's budget for patent examiners increased 58%,
including funds for new examiners and incentives for examiners to
complete more cases.
¶7. (U) 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 of these factors has had a negative effect on the
Argentina-derived business of U.S.-based pharmaceutical companies.
According to CAEMe, local pharmaceutical firms now have over 50
percent of the Argentine market and have reached 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 24,481)
in December 2003 to implement an agreement between the USG and the
GOA that had been signed in May 2002. That agreement came after
approximately three years of consultations under the WTO's dispute
settlement mechanism.
¶8. (SBU) The most important remaining unresolved pharmaceutical
patent issue relates to the effective legal protection of
confidential and proprietary data developed by pharmaceutical
SIPDIS
companies to demonstrate the efficacy and safety of new medicines
(i.e., "data protection"). U.S. and other research-based
pharmaceutical companies believe this to be a critical issue and
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 clinical studies results. This
might seem to be protection against "disclosure" on the part of the
GoA, and also avert the issue of "unfair." 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 even
attempt "unfair" methods.
¶9. (U) 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 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), 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 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 18 months
after the decision, however, those injunctions have yet to be
enforced - despite the fact that the judge in 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 copied 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. While such linkage is not explicitly required by TRIPS,
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.
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 INPI patents.
¶12. (U) Law 25,649 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. (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.
----------
Copyrights
----------
¶14. (U) The incidence of Argentine copyright piracy via
"traditional" CD and DVD copying does not appear to have declined in
Argentina, while the frequency of illegal electronic downloads has
expanded in line with the penetration of broadband access and the
copying of copyrighted books and documents has acquired some
domestic legal sanction. On the positive side, the Argentine
Customs Service made some large seizures of blank and pirated
optical disks, and local police raids netted more pirated disks in
2006 than in 2005.
¶15. (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.
However, the lack of any real enforcement bite (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, has 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. Still, his client (an IP content trade
association) worked with police to effect over 200 raids in 2006
that seized over 240,000 pirated discs and videotapes (about 4% of
the estimated piracy market), up from roughly 100,000 in 2005.
¶16. (SBU) In addition to local police actions, there were also
notable seizures of materials by the Argentine Customs Service. In
August 2006, they seized a million blank discs which had been
misclassified by the importer. The importer was also determined to
have brought in similar shipments previously. A shipment of over
500,000 pirated CDs and DVDs was seized in late 2006 in the
tri-border area (near Brazil and Paraguay) and destroyed. In early
2007, another shipment of blank discs was seized, this one with over
three million discs, which represents approximately half the pirated
discs sold in Argentina each year. (Note: Argentine customs
authorities told Econoff that the majority of the discs, once
protected materials had been copied on them, would likely have been
sold in Brazil, so the dent in the Argentine piracy market will
likely be less. End Note.)
¶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 there were
over 600 million illegal song downloads 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 by the end of 2006. CAPIF leaders say that the legal
downloads in Argentina total less than 1% of the illegal ones.
¶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 offices of the
national government, and many GoA offices continue to use pirated
software. GoA sources estimated in 2005 that over 90 percent of GoA
agencies employing licensed software are using it illegally. GOA
legislation to require use of open source software was introduced in
2001 but never passed.
¶19. (U) Legal Sanction of Photocopying: A new area of concern in
the copyright area is based on a 2006 Appeals Court ruling that
students at the primary Argentine public university could legally
make copies of copyrighted works (i.e., textbooks). The ruling,
which argued that this practice "facilitated the access of study
materials to all," extended to those who made copies and sold them
to the students.
¶20. (U) Artist's Legal Rights: Draft legislation titled the "Law of
the Musical Performer," introduced in late 2005 but yet to be
formally considered by congressional committees, created some
controversy when rumors surfaced that it would receive expedited
treatment in late 2006. One potential drawback of the draft (as it
relates to intellectual property protection) would be its
restriction of copyright-holders' "right of making available" via
digital media. It would also delegate that right exclusively to a
performers' group, though this could violate Argentina's obligations
under the WIPO Performances and Phonograms Treaty (WPPT) to provide
that right to producers as well. CAPIF is preparing a new bill
which would codify rights for both producers and performers and
expects this alternative draft legislation to be submitted for
congressional review in the first half of 2007.
¶21. (U) Proposed Augmentation of Copyright Penalties: Motion
picture and recording industry representatives inform Post that they
plan to propose 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
the law to address modern technologies.
----------
Trademarks
----------
¶22. (SBU) According to a former head of INPI who continues to work
in the IPR field, Argentina's 1982-era trademark law (Law 22,362)
does meet international standards, but amendments to the Penal Code
limiting penalties to probation periods have rendered it less
effective, and a schedule of nominal fines have not proven
significant deterrents to falsification. On a positive note, the
process of renewing trademarks is another 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 20,000 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 tell us that police conduct no enforcement
operations there due to fear of organized crime elements which
allegedly operate within the market.
¶23. (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 not 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, which has not yet
been introduced in Congress. (Note: An AmCham leader indicated that
it will likely not be introduced unless it can gain support from
leading domestic business chambers. End Note.)
Enforcement actions
¶24. (U) Law 25986, which took effect in January 2005, prohibits the
import or export of merchandise which violates international
property rights. However, regulations to implement this law have
yet to be issued two years later. 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. However, while
regulation of the law would also allow detention and seizure of
merchandise which violates copyright and patent norms (such as
copied pharmaceutical products), the decree only applies to
trademarks.
¶25. (U) There were some notable IPR-related prosecutions in 2006.
Two music pirates (who operated in the "La Salada" market) received
two-year prison sentences, albeit three years after their initial
arrest. In Rosario, Argentina's third largest city, four people
were arrested for running a large "home delivery" operation via
internet sites. The head of that organization has been charged
under organized crime laws, as well as tax evasion and money
laundering statutes. A six-country effort initiated by the
international recording industry had a limited impact in Argentina,
as a judge's ruling in favor of internet cafes (the focus of the
operation) prevented nearly all planned raids in the country. Out
of 213 cafes raided overall, only 12 were in Argentina.
---------------------
GMO Rights Protection
---------------------
¶26. (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 2006. This is a
widespread problem with soybean seed, and it underlies Monsanto's
recent court actions in Europe, which have resulted in ships
carrying Argentine soy being stopped and the cargo seized.
Monsanto's actions are aimed at collecting royalties that Argentine
farmers are not paying via legal challenges in countries in which
Monsanto has patent protection for the Roundup Ready soybean
technology. 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 Rounup Ready seeds for
which no royalties 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, but
negotiations toward that end have not prospered. 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 a GoA-sanctioned agreement with local growers is signed which
will ensure that Monsanto receives proper royalty payments.
Ambassador, Embassy officers and visiting Congressmen have raised
the Monsanto problem regularly in recent months, but without
achieving progress.
-----------------------
Embassy IPR Initiatives
-----------------------
¶27. (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 contributed to ineffective 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 training
opportunity is tentatively scheduled for 2007: With the assistance
of the U.S. Department of Justice, Post hopes to bring GoA and
Argentine private sector officials together to explore and develop
innovative IPR enforcement methodologies consistent with Argentina's
legal and regulatory framework. A broader Post IPR 2007 strategic
plan will be detailed septel.
--------------------------
Comment and Recommendation
--------------------------
¶28. (SBU) Argentina has been on the Special 301 Priority Watch List
since 1996, and few meaningful improvements were made in 2006 to
merit an upgrade in this designation. There was no movement on the
key issue of pharmaceutical patent data protection that appears to
violate TRIPS Article 39.3. While INPI continues to function more
efficiently and has won additional budget resources this year,
procedural improvements to date have only made minor inroads 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 those infringement cases where
injunctions have been obtained. The volume of copyright and
trademark violations has 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
the decree allowing trademark enforcement by Customs, industry
proposed legislation to increase currently nominal criminal
penalties and fines for copyright violations, and highly publicized
2006 seizures of blank and pirated discs are positive signs,
improvements in Argentina's IPR regime this year weren't
particularly significant. The Embassy therefore recommends that
Argentina remain on the Special 301 Priority Watch List for 2007.
End Comment.
¶22. To see more Buenos Aires reporting, visit our classified
website at: http://www.state.sgov.gov/p/wh/buenosaires
WAYNE
Clearly this is relevant not just to any one aspect of life. What it shows is the US fighting for assimilation in Argentina, in order to benefit American businesses at the expense of Argentina. Who does the GOA represent? Argentinians oughtn’t allow this to happen, but they are probably indoctrinated (Westernised) and programmed to think it’s the right thing to do. █
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Posted in Antitrust, Cablegate, Microsoft at 10:46 am by Dr. Roy Schestowitz
Summary: Regulation against several companies including Microsoft and how Microsoft viewed the appointment of Neelie Kroes at the time
FROM the following “SENSITIVE” Cablegate cable we learn that, according Director of Microsoft Netherlands Michel van der Bel, “the company had had good relations with Kroes in the past, including the granting to Bill Gates of an honorary doctorate from Nyenrode University during Kroes’ tenure as President there.”
UNCLAS SECTION 01 OF 02 THE HAGUE 002040
SIPDIS
SENSITIVE
E.O. 12958: N/A
TAGS: ECON [Economic Conditions], PREL [External Political Relations],
PGOV [Internal Governmental Affairs], PINR [Intelligence],
NL [Netherlands], EUN [European Union]
SUBJECT: DUTCH CELEBRATE CAPTURE OF EU COMPETITION PORTFOLIO
REF: THE HAGUE 01955
SENSITIVE BUT UNCLASSIFIED. PLEASE HANDLE ACCORDINGLY.
¶1. (SBU) SUMMARY. The Dutch are clearly satisfied and
claiming victory over the appointment of Neelie Kroes-Smit
(Kroes) as the new European Commissioner for Competition.
Prime Minister Balkenende's strategy of holding out for a
"heavy" portfolio appears to have paid off. Both the
Netherlands' and Balkenende's image are likely to get a boost
from this success. Kroes' reputation as a free-market and
pro-Atlantic thinker could be a real plus for soothing
tensions in the U.S.-EU relationship as well as opening a new
era of dialogue between Brussels and big business operating
in the EU. END SUMMARY.
¶2. (U) The Dutch press is hailing the appointment of former
Transport Minister Neelie Kroes-Smit as the new European
Commissioner for Competition as a real victory. All August
13 Dutch morning papers included front-page stories on the
appointment of Kroes, who comes from an entrepreneurial
Rotterdam family that founded a transport business in the
Netherlands. (See reftel for further biographic
information.) Most commentators acknowledged surprise but
also satisfaction with new European Commission President
Barroso's selection of Kroes for the prized job of regulating
mergers and acquisitions within the European Union as well as
state subsides. Spokespersons for all major political
parties have praised Prime Minister Jan Peter Balkenende for
his "subtle" negotiating strategy and success in winning for
the Netherlands what Liberals (free-market,conservative VVD)
Lower House Leader Jozias van Aartsen called a "dream
portfolio for a dream candidate." (Kroes is a VVD member.)
Christian Democratic (center right CDA) spokesperson Maxime
Verhagen spoke of winning the "top prize." Even the main
opposition Labor (PvdA) spokesperson Frans Timmmermans, who
had previously questioned Kroes' nomination by Balkenende and
predicted that she would receive a less important portfolio,
conceded his mistake and complimented Balkenende's cabinet
and Kroes on the nomination.
¶3. (U) Jacques Schraven, President of the influential
VNO-NCW Employers organization also praised the "outstanding
lobbying" of Balkenende, noting the importance of Kroes'
position for establishing more "direct lines" for business
and its boost for the Netherlands' image. Other reports
describe Barroso's appointment of Kroes and others as giving
a larger role to smaller member states within the EU,
injecting new life into an "ailing European economy," and
acknowledging the Netherlands position as the largest net
contributor to the EU. Balkenende himself told the press
that he was "very satisfied," describing Kroes' new job as a
"core portfolio" in the Commission and her appointment as
recognition of the key role the Netherlands has and will
continue to play in the EU. In an August 12 press conference
shortly after the announcement, Kroes pledged to maintain
good contacts with The Hague while not becoming a
"figurehead" for the GONL in Brussels.
¶4. (U) Former Belgian Commissioner for Competition Karel
van Miert, who also previously held the Transport portfolio,
publicly advised Kroes that the job's main challenge would be
to maintain her independence while also proving her knowledge
of business and her ability to judge issues objectively and
coherently. Van Miert praised Kroes, who had served as an
advisor to Miert in the early 1990s while he was Transport
Commissioner, for her energy and strength, noting that her
formidable negotiating skills would serve her well. He also
implied that the anti-trust case against Microsoft, brought
by outgoing Commissioner Mario Monti, could be a real test of
her abilities, especially if the European Court of First
Instance agrees to Microsoft's request to overturn Monti's
decision. The Director of Microsoft Netherlands Michel van
der Bel refused to comment to the press on the case, but
noted that the company had had good relations with Kroes in
the past, including the granting to Bill Gates of an honorary
doctorate from Nyenrode University during Kroes' tenure as
President there. (Kroes is also likely to inherit the task
of reaching final settlement of the Commission's five-year
anti-trust case with Coca-Cola.)
COMMENT -- AT THE TOP IN BRUSSELS
---------------------------------
¶5. (SBU) Balkenende's August 3 nomination of Kroes as the
Dutch candidate for European Commissioner was initially met
with some skepticism among political circles as well as
annoyance with current Dutch Internal Market Commissioner
Frits Bolkenstein's decision not to opt for a second term.
VVD leadership actually decided in June to put Kroes forward
as a candidate and subsequently reached agreement among the
three coalition parties VVD, CDA, and Liberal Democrats
(center left D66) not to name a particular candidate until
Balkenende was able to negotiate for a "heavy" portfolio.
Kroes apparently was always the front-runner, although
Agriculture Minister Cees Veerman was an alternative for the
Agriculture portfolio in the event that Balkenende's strategy
failed. Balkenende reportedly first raised the issue with
Barroso during a Netherlands-Germany soccer match during the
July European Championship in Portugal and the discussion
continued during Netherlands-Portugal game. Barroso
continued to ask Balkenende for a female candidate, while
Balkenende maintained that such an option was only possible
if the Netherlands received a "heavy" financial-economic
portfolio. On Tuesday afternoon, August 3, Barroso made that
promise by telephone, whereupon Balkenende announced the
nomination of Kroes.
¶6. (SBU) Balkenende's strategy appears to have paid off.
Both the Netherlands' and Balkenende's image, both
domestically and internationally, are likely to gain from
this success, which comes on the heels of the selection of
Jaap de Hoop Scheffer for the prestigious NATO SYG post.
Meanwhile, both domestic and international press are lauding
Kroes as a free-market and pro-Atlantic thinker, whose
occupancy of the "most important" EU Competition job could
help to calm tensions in the U.S.-EU relationship and open an
era of dialogue between Brussels and wary big business. END
COMMENT.
RUSSEL
For a little more about this theme, see the following cables:
Cablegate helps those who study history. Next up we’ll look at some other themes. █
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Posted in Antitrust, Cablegate, Europe, Microsoft, Patents at 10:22 am by Dr. Roy Schestowitz
Summary: A look at accusations from private companies, directed at the mere enforcement of interoperability and fair competition
“Attack” on IPR (the sacred cow) is how the US described Brazil's choice of a mostly American/international standard, OpenDocument Format.
In the following Cablegate cable (several parts culminating in ¶11), the sort of nonsense Kroes had to cope with for merely pressuring (or punishing) a monopoly abuser can be seen. It it also being rebutted in the cable.
VZCZCXRO5104
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHBS #0172/01 0371546
ZNR UUUUU ZZH
P 061546Z FEB 09
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
UNCLAS SECTION 01 OF 03 BRUSSELS 000172
SENSITIVE
SIPDIS
JUSTICE FOR C. HARROP
STATE PLS PASS TO FTC FOR J. PARISI
PLEASE PASS TO USTR
STATE FOR E, EUR/ERA, EEB/TPP
NSC FOR KRISTINA KVIEN
NOT FOR INTERNET DISTRIBUTION
E.O. 12958: N/A
TAGS: ECIN [Economic Integration and Cooperation], ECON [Economic Conditions], EFIN [Financial and Monetary Affairs], EINV [Foreign Investments], ECPS [Communications and Postal Systems], EUN [European Union]
SUBJECT: EU COMPETITION AUTHORITIES HOPE TO MAKE GOOD U.S.-EU
COOPERATION EVEN BETTER
¶1. (SBU) SUMMARY. DG Competition officials told USEU January
14 they hope to work closely with the Obama Administration to
improve already strong U.S.-EU competition policy cooperation.
Officials in the DG Competition Chief Economist’s office and
International Unit said bilateral cooperation has been strong
on mergers and cartels but can improve in the antitrust area.
The officials hoped that an Obama DOJ will move closer to FTC
positions on mergers and unilateral conduct by firms. DG
Competition’s chief economist stressed the increasing role of
economic analysis in EU competition case review, and said
high-profile cases against Intel and Microsoft support this
trend and have not weakened EU support for IP protection. The
officials seek to cooperate with the U.S. on support for new
competition agencies in India, China and elsewhere. While the
Competition Commissioner and Director General will change late
this year, DG COMP’s keen interest in engaging with new senior
U.S. officials offers a good opportunity to deepen this
important relationship. END SUMMARY.
DG COMP OFFICIALS SEEK TO IMPROVE ALREADY STRONG U.S.-EU
COMPETITION COOPERATION
——————————————— ———
¶2. (SBU) Dominique Van Der Wee, Unit Head for International
Relations at the European Commission Directorate General for
Competition (DG COMP), told USEU January 14 that Competition
Commissioner Kroes, Director General Philip Lowe, and other DG
COMP officials value highly their existing close relations
with U.S. competition officials at the Federal Trade
Commission (FTC) and Department of Justice (DOJ). Van Der Wee
said DG COMP sees a difference in antitrust enforcement
attitudes between FTC and DOJ, however, and expressed the hope
that incoming Obama DOJ officials will move toward FTC’s “more
aggressive” positions, particularly on mergers and unilateral
conduct by firms. He said that existing bilateral cooperation
has been strong on mergers and cartels, but can improve in the
area of unilateral conduct. He noted that a U.S.-EU agreement
in fall 2008 to establish high-level regular phone calls on
unilateral conduct cases, to function as an “early warning”
system of major actions, has yet to be implemented fully; he
hoped this could resume with incoming officials by March.
¶3. (SBU) Van Der Wee said there is “enormous interest”
throughout DG COMP in meeting incoming senior FTC and DOJ
officials, perhaps at the ABA Conference in Washington March
25-27.
¶4. (SBU) On February 2 USEU EconMin heard the same message of
cooperation from DG COMP chief economist Damien Neven and two
members of his team (Oliver Stehmann, deputy chief economist,
and Miguel de la Mano, economist). Neven said his office has
had good relations generally for the past few years with the
economists’ teams at FTC and DOJ, although in 2008, relations
were less active due to the pending U.S. presidential
transition. He said he had suggested recently to DOJ that the
annual chief economists’ exchanges be restarted, possibly in
July this year, and seemed to get a positive response. Neven
explained that working level contacts on mergers have
continued to be particularly strong, noting extensive DG COMP-
FTC discussions during consideration in late 2007 and early
2008 of Google-DoubleClick merger (NOTE: which both the U.S.
and EU approved. End note).
BUT CHALLENGES REMAIN OVER ANTITRUST COOPERATION
——————————————— —
¶5. (SBU) Neven noted that antitrust cooperation has been more
complicated, and suggested that more extensive U.S.
confidentiality requirements may limiting useful information
exchange after the USG has opened an investigation. He said
this leads the U.S. side “to ask lots of questions but not be
able to share as much.” (Note: U.S. and EU rules on
confidentiality waivers differ in some respects, but the U.S.
can share information with waivers. End note).
¶6. (SBU) Neven also pointed to the “wide gap” between FTC and
DOJ over unilateral conduct, which he said had made it more
difficult to establish points of common concern with the USG.
He said DG COMP hopes that the DOJ enforcement report on
Section 2 of the Sherman Antitrust Act was an “outlier,” in
BRUSSELS 00000172 002 OF 003
advocating a “more extreme position,” and thought this view
would change under the Obama team. (Note: the 2008 report
covered unilateral conduct by firms, and was not endorsed by
FTC. End note). Neven did say that Deputy Director General
for antitrust and mergers Nadia Calvino’s one conference call
in 2008 with DOJ and FTC was very productive, however, and
hoped these could continue.
ROLE OF EU CHIEF ECONOMIST IN CASE REVIEW
—————————————–
¶7. (SBU) USEU asked about Neven the evolving role of the Chief
Economist’s office in DG COMP review of competition cases.
Neven said there has been a consistent trend for stronger
economic input on “theory of harm” into case analysis, with
measurable results. (Comment: EU competition law has evolved
from a purely legal analysis to more emphasis over the last
decade on economic impacts in evaluating antitrust and merger
concerns. End comment). Neven highlighted the example of the
RyanAir-Aerlingus merger report from 2008, which contains 100
pages of economic analysis (of 400 total).
¶8. (SBU) Neven’s office details one to three staff to specific
DG COMP case teams, he continued. He said his team is
increasingly involved in sectoral inquiries, with three of his
staff working on the ongoing pharmaceutical inquiry. (Note:
DG COMP issued a preliminary report on its major
pharmaceutical inquiry in November; the final report is
expected in mid-2009). Neven’s office was less involved in
the influential 2005 energy sectoral inquiry, which led to the
proposed EU 3rd energy liberalization package. (Note: this
package remains under consideration by the EU Council and
Parliament. End note).
¶9. (SBU) Neven underscored, however, the “schizophrenic”
nature of his office, which remains independent from the case
teams even as it supports case review. He noted that the non-
horizontal merger guidelines, adopted a year ago, have led to
the issuance of different analyses than would have earlier
been the case. He also said his office had been heavily
involved in state aid review of the many recent financial
sector bailouts, and has played a strong policy development
role here.
CHIEF ECONOMIST: KEY CASES SUPPORT TREND TOWARD ECONOMIC
ANALYSIS, DON’T UNDERMINE IP RIGHTS
——————————————— ———
¶10. (SBU) USEU asked Neven’s views on Intel’s concerns that
the Commission’s seven-year case against the firm for
potential antitrust violations has been “politicized.” He
said it was strange that Intel didn’t respond to the
Commission’s second Statement of Objections (SO) charging the
firm with potential violations. He thought the European Court
of First Instance (CFI) correct in tossing out in early
February Intel’s argument for an extension of its time to
prepare its case. He said Intel may think the Commission has
been very selective in reviewing evidence, but said Intel has
itself been very selective in arguing its position. He said
that both SOs against Intel were economic effects-based,
rejecting Intel’s argument that the Commission dropped an
effects-based position in its second SO. At Intel’s hearing
last year, Neven said a “junior member” of the legal team had
stood up and said “remember the case law,” which doesn’t
directly require effects-based analysis, which Neven
considered the basis for Intel’s (unjustified) claim that the
Commission is ignoring economic effects in evaluating the
firm’s case.
¶11. (SBU) USEU raised concerns increasingly expressed by the
private sector concerns that DG COMP decisions have begun to
undermine support for intellectual property (IP) rights in
Europe. Neven disagreed with this view, declaring that the
2004 Microsoft decision was a special case soundly based on
refusal to supply, with the decision and subsequent CFI
decision expressly recognizing IP rights. His staff explained
that the recent Article 82 guidance paper incorporated these
experiences and lays out how to operationalize such special
tests.
BRUSSELS 00000172 003 OF 003
INTEREST IN COOPERATION ON THIRD COUNTRIES
——————————————
¶12. (SBU) Van Der Wee said DG COMP seeks to develop a
coordinated approach with the U.S. on technical support for
new third country competition agencies, beginning with India,
currently establishing its agency. He added that DG COMP also
seeks to encourage China to join the International Competition
Network (ICN), which may require asking Taiwan to change its
nameplate at ICN, a sensitive issue.
COMMENT
——-
¶13. (SBU) DG COMP clearly expects the advent of a new
Administration will bring changes to U.S. competition
enforcement, and hopes this will “bring the U.S. closer” to EU
positions on unilateral conduct and other key issues.
Competition Commissioner Kroes’ term will end with the
European Commission changeover at the end of this year, while
Director General Philip Lowe will be replaced by Alexander
Italianer, a Dutch economist with whom USEU has strong ties.
EU perceptions of prior U.S.-EU divergences in approach on key
competition issues may be exaggerated, but DG COMP’s keen
interest in engaging with new senior U.S. officials offers a
good opportunity to deepen this important relationship. END
COMMENT.
MURRAY
There are several cables related to this, but they do not show anything of particular interest, so we skip them. █
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