VZCZCXYZ0014
RR RUEHWEB

DE RUEHSJ #0155/01 0572158
ZNR UUUUU ZZH
R 262158Z FEB 08
FM AMEMBASSY SAN JOSE
TO RUEHC/SECSTATE WASHDC 9473
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE

UNCLAS SAN JOSE 000155 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR WHA/CEN 
EEB/TPP/IPE FOR JBOGER 
STATE PASS TO USTR FOR JENNIFER CHOE GROVES 
 
E.O. 12958: N/A 
TAGS: ETRD ECON KIPR CS
SUBJECT: 2008 SPECIAL 301 REVIEW - COSTA RICA 
 
REF:  A) 05 SAN JOSE 0508 
 
      B) 06 SAN JOSE 0464 
      C) 07 SAN JOSE 0335 
 
======= 
SUMMARY 
======= 
 
¶1.  Since last year's report (Ref C), the GOCR has made 
some progress in advancing laws related to Intellectual 
Property Rights (IPR) required by the Central American Free 
Trade Agreement (CAFTA-DR).  However, Costa Rica must still 
take several major steps to adequately protect and enforce 
IPR, beginning with enacting the necessary IPR laws and 
regulations to meet its CAFTA-DR obligations.  In addition, 
Costa Rica has not demonstrated a concerted resolve to 
enforce its current IPR laws.  Instead, the country's 
Attorney General has publicly and repeatedly stated that 
Costa Rica should use its limited investigative and 
prosecutorial resources to pursue violent and drug-related 
crimes.  Nonetheless, there has been some progress.  The 
Costa Rican office that issues patents has recently ended a 
lengthy pause in examining patent applications.  A number 
of Costa Rican officials have received training in IPR 
enforcement, administration, prosecution, and customs from 
USPTO, DHS, WIPO, and others.  Due to these slight 
improvements, as well as to the understanding that the GOCR 
will address the additional shortcomings in Costa Rica's 
laws and regulations this year, Post recommends that Costa 
Rica remain on the Watch List. 
 
============================ 
IPR BACKGROUND IN COSTA RICA 
============================ 
 
¶2.  Issues related to IPR rose to the forefront of Costa 
Rica's public debate during the campaign leading up to the 
October 7, 2007 nationwide referendum to ratify the 
country's participation in CAFTA-DR.  This was the first 
referendum in Costa Rica's history and generated enormous 
national interest in all of the issues associated with 
CAFTA-DR, including IPR.  Those opposed to CAFTA-DR 
routinely spoke out against the agreement's requirements to 
create effective deterrents against IPR infringement as 
well as protections for IPR, politicizing the issues. 
Opposition leaders asserted that increased penalties for 
IPR violators would "send students to jail for copying 
textbooks" and increased IPR protection would bankrupt the 
local social security system that would be forced to 
purchase original, innovative pharmaceuticals rather than 
generics.  The Costa Rican public ultimately rejected such 
arguments and approved CAFTA-DR by a slim margin, but the 
negative campaign created an environment where issues 
related to IPR remained controversial. 
 
============================================= ============== 
AIMING FOR TRIPS COMPLIANCE THROUGH A LEGISLATIVE AGENDA 
============================================= ============== 
 
¶3.  After Costa Rica was included in the Priority Watch 
List in 2001, the country took the necessary steps to bring 
into force the WIPO Copyright Treaty (WCT) and the WIPO 
Performance and Phonograms Treaty (WPPT) on March 6, 2002 
and May 20, 2002, respectively.  Costa Rica has also 
ratified the Patent Cooperation Treaty (PCT). 
Nevertheless, the country remained non-compliant with 
several TRIPS measures, such as data protection and 
deterrent measures.  These deficiencies are addressed in 
CAFTA-DR, which the country signed in 2004, but has not yet 
implemented and entered-into-force. 
 
¶4.  Since last year's Special 301 Report, Costa Rica has 
made some progress in enacting needed legislative reforms 
to become compliant with CAFTA-DR obligations related to 
IPR.  The legislature is working one four bills and the 
ratification of two treaties that deal with IPR.  When 
these bills are enacted and the treaties ratified, Costa 
Rica should be compliant with TRIPS.  Since the opponents 
of increased IPR protection attempted to water-down the IPR 
bills through the introduction of hundreds of amendments, 
the progress of bills has been very slow.  Nevertheless, 
the GOCR is energetically directing the legislative process 
and is confident that the laws, when finally enacted, will 
meet the country's CAFTA-DR obligations.  To date, the 
legislature has approved one of the four IPR-related laws 
(on trademarks) and both of the treaties (Budapest and 
UPOV). Supreme Court review and further legislative action 
remain to be completed, however. 
=================================== 
BUT SADDLED BY ENFORCEMENT PROBLEMS 
=================================== 
 
¶5.  Despite these legislative victories, real challenges 
remain in effectively ensuring that the laws have an impact 
on the local IPR environment. Throughout 2007, Costa Rica 
continued to falter in enforcing its current IPR laws. 
While the country's current laws do not provide for 
significant prison time or monetary damages for IPR 
violators, they do criminalize counterfeiting and piracy. 
Nevertheless, the country's public prosecutors have 
consistently demurred from prosecuting IPR cases.  The 
prosecution of IPR crimes is handled by public prosecutors 
in the "various crimes" divisions of the branch offices of 
the Attorney General's office.  Crimes related to IPR, 
however, form only a small portion of the portfolio of 
these prosecutors and receive little or no attention. 
Rather, the prosecutors invoke "opportunity criteria" (akin 
to prosecutorial discretion) to avoid opening an 
investigation into reported IPR crimes. 
 
¶6.  In late 2007, the Attorney General of Costa Rica, 
Francisco Dall'anese, publicly reiterated that he does not 
support diverting limited resources to the prosecution of 
IPR crimes.  Rather, he maintains that private companies 
can seek redress in civil courts or can initiate a criminal 
public action through private application.  By this 
process, a private party (almost always through an 
attorney) files a complaint and jointly conducts the 
investigation and prosecution of the case with the public 
prosecutor.  While this could be an effective means of 
prosecuting IPR violators, the reality is that prosecutors 
continue to avoid handling IPR cases by invoking 
opportunity criteria.  When that occurs, private attorneys 
do not have the standing to petition for the seizure of 
counterfeit goods.  Likewise, the use of the civil courts 
to pursue private cases against IPR violators is hampered 
by the extreme length of time it takes to receive a civil 
judgment (up to 15 years) and the small monetary damages 
awarded. 
 
¶7.  Industry and others have asked Dall'anese to halt the 
nearly automatic use of opportunity criteria with IPR 
crimes, but he has rebuffed their calls.  The position of 
Attorney General in Costa Rica is entirely independent of 
the Costa Rican Executive and Legislative Branches. 
Constitutionally, the position falls under the Judiciary, 
but, in practice, it is almost completely autonomous. 
Dall'anese was unexpectedly reelected to another four year 
term as Attorney General in late 2007. 
 
¶8.  The few prosecutions that have wound their way through 
the criminal court system over the last two years were 
originally started several years ago.  In February 2008, 
industry successfully concluded a prosecution against a 
counterfeiter of apparel.  As has been the case in previous 
successful prosecutions of IPR violators, the judge 
immediately paroled the convicted counterfeiter as it was 
her first offense and the sentence was for less than three 
years. (COMMENT: No matter the crime, judges in Costa Rica 
have the latitude to immediately parole first-offenders who 
have been sentenced to less than three years of prison. 
Judges generally use this power in all criminal cases when 
it can be applied. END COMMENT.) 
 
====================================== 
AT THE BORDER:  ARE THE GOODS GENUINE? 
====================================== 
 
¶9.  Costa Rica's Customs service continues to face 
difficulties in halting the flow of counterfeit goods into 
the country.  The leadership of Customs is aware of the 
importance of seizing pirated goods, but most customs 
agents lack the necessary training to recognize 
counterfeits.  In April 2007, the U.S. Embassy took 
advantage of a regional program offered by DHS to send a 
number of Costa Rican officials for training in recognizing 
counterfeits.  Local industry has also expressed an 
interest in providing counterfeit recognition training to 
Customs officials. 
 
¶10. In addition, the laws regulating the filing of criminal 
cases can impede the seizure of pirated goods at the 
border.  If a customs agent recognizes that a shipment 
contains pirated goods, the agent can order the shipment 
seized for 48 hours.  If, at the end of that period, the 
holder of the IPR has not filed a criminal complaint 
against the importer, the customs agent must either release 
the goods or file a criminal complaint, which can open the 
agent up to personal liability through a countersuit by the 
importer if the criminal complaint is ultimately 
unsuccessful.  Increased communication between Customs and 
industry would help solve this problem by providing time 
for the owner of the trademark or patent to file the police 
report.  In such cases, even if the prosecutor ultimately 
invokes opportunity criteria and abandons his/her role in 
the criminal prosecution, the private party could continue 
the action, aided by the fact that the goods have already 
been seized by Customs. 
 
============================================= === 
COSTA RICAN PATENT OFFICE:  CAPACITY BY CONTRACT 
============================================= === 
 
¶11.  Throughout most of 2007, the Costa Rican Industrial 
Property (IP) Office continued to experience severe delays 
in processing patent applications.  Patent attorneys in 
Costa Rica relate that the office has not yet begun 
processing patent cases first submitted in 2004 and 2005. 
Currently, the IP Office does not have any in-house patent 
examiners.  Instead, the office relies on a contract 
relationship with the Costa Rican Technical Institute and 
the Pharmacists Board Association to provide technical 
experts to serve as examiners.  The IP Office has been 
formalizing this arrangement for at least two years.  It 
previously contracted with the University of Costa Rica's 
PROINNOVA office to conduct patent examinations.  That 
entity, however, never began concerted work in examining 
patents, and its relationship with the IP Office terminated 
in late 2006. 
 
¶12. This "out-sourcing" arrangement has only just begun to 
result in examined applications, with the examiners 
affiliated with the Pharmacists Board completing the first 
20 pharmaceutical examinations in December 2007.  The IP 
Office will likely use these outside examiners to move 
through the enormous backlog of thousands of patent 
applications that have accumulated over the last several 
years (during which virtually no applications were 
examined).  Additionally, the IP Office intends to hire its 
own in-house experts to better oversee the work of the 
outside examiners. 
 
¶13.  The World Intellectual Property Organization (WIPO) 
has worked closely with the Costa Rican IP Office to train 
employees.  WIPO has also started to offer training to 
officials in the judiciary that have an interest in IPR. 
In addition, the U.S. Embassy has sent several Costa Rican 
officials to the USPTO's Global Intellectual Property 
Academy for training. 
 
====================================== 
USE/PROCUREMENT OF GOVERNMENT SOFTWARE 
====================================== 
 
¶14.  The 2002 Executive Decree #30, 151-J, mandated that 
all government ministries use only legally licensed 
computer software.  According to this decree, each ministry 
was to conduct an internal audit and submit a statement of 
compliance no later than July 31, 2003.  The government 
subsequently claimed full certification of all ministries, 
although there had been no independent confirmation. 
 
======= 
COMMENT 
======= 
 
¶15.  In general, Costa Rica does not yet view IPR as a tool 
to spur innovation. The measures underway in the 
legislature are more the result of outside pressure, than 
of a home-grown realization that increased IPR protections 
can spark innovation which can fuel greater high-tech 
economic development.  However, the GOCR's incremental 
improvements to the IPR protection and enforcement regime 
are a positive sign.  The GOCR must further advance by 
finalizing the related IPR bills and corresponding 
regulations so that the country will be compliant with its 
CAFTA-DR obligations.  Post believes that the GOCR will 
ultimately complete all the CAFTA-DR required implementing 
legislation and regulations in 2008.  Therefore, based on 
the GOCR's progress to date (albeit limited) in improving 
the country's IPR regime, Post recommends that Costa Rica 
remain on the Watch List.  This is the properly-modulated 
message, in our view.  To lower Costa Rica's standing at 
precisely the time the GOCR is (finally) completing its 
CAFTA-DR implementation obligations would be too harsh a 
signal that might risk stalling the current CAFTA-DR 
momentum.  Such a move might also be viewed as provocative 
by the Arias administration, and especially by the Attorney 
General.  This would be counterproductive to our low-key 
but steady efforts to work with the GOCR to improve IPR 
protection. 
 
BRENNAN