Memorandum of Understanding on Intellectual Property Rights between the Government of the United States of America and the Government of the Republic of Paraguay

In the spirit of cooperation and consistent with international standards of intellectual property protection, the Government of the United States of America and the Government of Paraguay have reached a mutual understanding to strengthen the legal protection and enforcement of intellectual property rights in Paraguay.

I. Legislation - The Government of Paraguay shall ensure that its intellectual property legal regime complies fully with its obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs).

II. Enforcement - The Government of Paraguay shall develop and implement effective enforcement mechanisms and practices to significantly reduce the levels of copyright piracy and trademark counterfeiting occurring in its territory, including through the imposition of deterrent penalties.

III. Transparency and Reporting - The Government of Paraguay shall increase its current levels of transparency in the administration and enforcement of intellectual property rights, including developing objective means of measuring progress toward overall improvement of its intellectual property system and objective means for carrying out and reporting enforcement-related activities.

IV. Training and Technical Assistance - The Government of Paraguay and the Government of the United States of America intend to develop and implement a system of mandatory professional training for all Paraguayan officials who have a role in the development and maintenance (including enforcement) of an effective intellectual property system by developing and delivering appropriate training and technical assistance initiatives, on mutually agreed terms, and subject to the availability of appropriated funds. These initiatives may be provided in conjunction with, or through, international organizations and the private sector. With the exception of this paragraph, paragraph IV, implementation of this Memorandum of Understanding shall not be conditioned on the availability of training and technical assistance.

V. Consultation and Review - The Government of Paraguay and the Government of the United States shall consult regarding any matter related to this Memorandum of Understanding upon the request of either Party, and, under the auspices of the U.S.-Paraguay Trade and Investment Council, shall meet to review the implementation of this Memorandum of Understanding, preferably at six (6) month intervals, but no fewer than three (3) times, between the effective date of this Agreement and December 31, 2005. Additional meetings to review implementation may be held upon the request of either Party.

VI. Implementation and Term - The Annex to this Memorandum of Understanding is an integral part of this Memorandum of Understanding. This Memorandum of Understanding and Annex shall become effective, and the obligations shall be implemented, upon signature. This Memorandum of Understanding shall terminate on December 31, 2005, unless otherwise agreed by the Parties. If, in the view of the Government of the United States, the Government of Paraguay does not fulfill the commitments agreed to herein, the Government of the United States reserves the right to initiate a Special 301 Out-of-Cycle Review to determine whether to reinstate Paraguay’s Priority Foreign Country status.

Initialed in Asuncion, Paraguay on December 19, 2004, in two (2) original copies in English.


ANNEX

Action Plan

1. Legislation - The Government of Paraguay shall make best efforts to secure passage of legislation, and, where appropriate, best efforts to implement regulations or decrees, to:

a) improve the legal tools available to prosecutors and judges:

i) issue a decree to ensure that the pendency of a trademark application may not be used as a defense in civil or criminal cases, and to educate judges that such a defense is contrary to Paraguayan law;

ii) implement regulations that effectively ensure that goods found to be pirated or counterfeit in civil or criminal cases are destroyed, pursuant to Articles 159 and 169 of the Copyright Law and Article 86 of the Trademark Law; and

iii) use the best efforts to increase penalties available and applied in criminal copyright and trademark cases, through legislative changes and any other appropriate means;

iv) by improving deterrence by requiring imposition of mandatory minimum prison sentences (not only fines) on offenders convicted for manufacturing, importing, or distributing commercial quantities of pirated or counterfeit goods.

b) improve protection for pharmaceuticals and agricultural chemicals:

i) employ best efforts to grant patents to as many of the earlier deposited pharmaceutical applications as possible as of January 1, 2005, by hiring a minimum of two additional patent examiners who will be dedicated solely to processing pharmaceutical patent applications, provided that examiners receive the training and technical assistance by June 2004;

ii) by improving exclusive marketing rights for pharmaceutical products immediately by issuing a publicly available and legally binding interpretive statement clarifying that the exceptions provided in Article 94 of the Patent Law are not applicable to exclusive marketing rights;

iii) by ensuring that the administrative system for granting exclusive marketing rights is immediately and effectively operational; and

iv) by taking immediate steps to pass legislation protecting undisclosed test or other data from unfair commercial use for a period of ten (10) years for agricultural chemicals and five (5) years for pharmaceuticals (period not to be linked to patent term).

c) Paraguay shall provide the means for any interested parties to oppose the registration of a geographical indication, or cancel any registration of a geographical indication.

In particular, Paraguay shall ensure that the grounds for refusal of protection of a geographical indication and grounds for opposition and cancellation include that the geographical indication is likely to be confusingly similar to a trademark that is subject to a registration, or which has acquired rights through use in Paraguay.

Paraguay shall adhere to the principles of priority and exclusivity incorporated in the Paris Convention and TRIPS Agreement, with respect to rights in trademarks and geographical indications.

2. Enforcement - The Government of Paraguay shall undertake the following efforts to achieve actual, meaningful enforcement results:

a) coordinate enforcement efforts, without creating bureaucratic barriers to timely and effective action, including by full implementation of Decree No. 527, and formation of the Specialized Technical Unit established therein. (A detailed schedule and description of the activities to be performed by the Specialized Technical Unit will be developed in consultation with the U.S. Government);

b) the Statistics Center will gather and collect statistics, and in cooperation with the Specialized Technical Unit, will encourage and provide information to prosecutors to enable them to file criminal cases ex officio in appropriate cases, without first requiring a right holder to file a complaint; in addition, the Statistics Center will closely monitor the number and nature of cases filed by prosecutors ex officio, with the goal of ensuring that increasing numbers of cases are initiated over time;

c) provide for seizure of an infringer’s assets upon conviction for manufacturing, importing, or distributing commercial quantities of pirated or counterfeit goods;

d) improve deterrence by ensuring that prison sentences (not only fines) are imposed (and not suspended) on offenders convicted for manufacturing, importing, or distributing commercial quantities of pirated or counterfeit goods; in addition, the Statistics Center will closely monitor and publish information concerning the disposition of such cases and the sentences imposed;

e) improve border protection and enforcement:

i) full implementation of Decree No. 603, and formation of the Register of Importers of Magnetic and Optical Media and Raw Materials for their Production established therein;

ii) create the Intellectual Property Rights Unit at the Directorate General of Customs, which shall oversee enforcement of intellectual property border control measures, including the verification that products cleared by Customs do not infringe intellectual property rights, implement trademark registration at Customs, and train Customs officials on identifying and seizing infringing imports. Customs officials shall receive training no later than June 30, 2004. (A detailed schedule and description of the activities to be performed by the Intellectual Property Rights Unit will be developed in consultation with the U.S. Government);

iii) cooperate fully with private industry, including continued cooperation under the Cooperation Agreement Between the Ministry of Industry and Trade and the Paraguayan Association for Sound Recording Copyright Protection;

iv) increase use of ex officio actions.

f) focus criminal enforcement efforts to achieve meaningful and measurable results:

i) maintain the six (6) existing Special Prosecutors, and train 6 additional prosecutors in intellectual property rights enforcement;

ii) work with the judiciary to timely resolve existing cases and ensure that future cases are resolved expeditiously and not dismissed due to procedural delays;

g) improve the gathering, use, and sharing of law enforcement-related intelligence, including by periodically distributing to prosecutors lists of persons who have previously committed offenses against intellectual property rights, and encouraging that significant prison sentences and other significant penalties be imposed on such persons;

h) prepare and distribute guidelines and mandatory procedures for investigations, prosecutions, and sentencing to all investigators and, prosecutors;

i) train and provide informational materials to judges in intellectual property laws and the importance of their enforcement generally, including (i) any amendments increasing penalties for copyright and trademark infringement; (ii) the need for deterrent sentences, including prison sentences, where appropriate; (iii) the principles of Sentence No. 802 of May 28, 2003, for as long as that Sentence remains relevant;

j) fully implement the Software Legalization Decree and conduct an audit of public institution software to ensure full compliance with the Decree;

k) Educate the public, through programs in the schools and other appropriate measures, about intellectual property rights and the infringement and enforcement thereof, and encourage Paraguayan citizens to denounce violations of intellectual property rights.

3. Transparency and Reporting - The Government of Paraguay shall:

Create a Statistics Center under the Ministry of Industry and Commerce that will collect information on enforcement actions taken or instigated by the Government of Paraguay for the purpose of tracking criminal activity and determining the effectiveness of enforcement-related activities undertaken pursuant to this Understanding. The Statistics Center will generate reports for Government and private sector use and will publish, in a readily accessible medium, enforcement statistics, doctrines, and rulings related to intellectual property to deter the public from committing intellectual property crimes and to keep judges, prosecutors, and the public abreast of all sentences, statistics, and actions taken by government organizations in the fight against intellectual property rights infringement.

The Statistics Center shall collect at least the following information:

Border measures:
-Border measures taken by the Customs Office;
-Border measures initiated by the Customs Office at the urging of the Ministry of Industry and Commerce, without the participation of the right holder(s);
-Following the full implementation of Decree No. 603 and the training of Customs officials pursuant to Section 2(e)(ii) of this MOU, measures taken ex officio by the Customs Office;
-Following the implementation of the relevant regulations, trademarks registered with the Customs Registry;
-Violations of intellectual property rights detected by the Customs Office;
Invoiced value and actual quantity of infringing goods identified by the Customs Office; Identity of companies/individuals importing commercial quantities of infringing merchandise; and
-Identity of freight/import companies importing infringing goods into Paraguay and their country of origin.

Criminal proceedings:
-Proceedings initiated ex officio by prosecutors;
-Complaint submitted by members of the private sector;
-Judicial decisions/conclusions of cases, including sanctions imposed;
Status of goods, and materials or implements used to create infringing goods (whether and when seized or destroyed);
-Identity of those convicted of infringing intellectual property rights, including separate list of those convicted of infringing intellectual property rights more than once;
-Nature of offense(s) committed; and
-Updates concerning the procedural stage of each case.

Civil proceedings (with the assistance of the private parties involved):
-Proceedings initiated;
-Complainants and respondents;
-Decisions/conclusions, including sanctions imposed;
-Status and disposition of goods and materials and implements used to create infringing goods (whether and when seized or destroyed); and
-Procedural stage of case.

Administrative Proceedings:
-Proceedings referred by the Intellectual Property Directorate to other government entities;
-Proceedings initiated by the Intellectual Property Directorate and the defendants/respondents in such proceedings;
-Decisions/conclusions, including sanctions imposed and disposition of goods; and
-Procedural status of case.

4. Training and technical assistance - The Government of Paraguay shall:

a) identify intellectual property administration and enforcement training needs and priorities, and additional opportunities and audiences for training; and

b) use best efforts to engage private industry to provide technical assistance for fighting intellectual property crimes.