San José, Costa Rica, since 1956

Idea Theft Sparks Heady Legislative Debate

At first surprised and confused, entrepreneur Claudio Pinto later shrugged off the news that his $10,000 software was selling for $15 at a flea market in the Dominican Republic. He didn’t sue, figuring it wasn’t worth the time and money.

“It’s pretty hard to go after a guy sitting in the corner of a flea market,” he said. “It’s just a lot of legal fees” and it takes so long, “you don’t even know you’ll be alive” when a verdict is reached.

Intellectual property violations often go unpunished in Central America because civil cases are long and expensive, and prosecutors have few resources to spend on criminal cases.

As Costa Rican legislators and ministers haggled over a new intellectual property bill last month, lawyers cautioned that the problem runs deeper than the law.

“We are pessimistic that (the bill) will increase respect for intellectual property rights,” said Luis Diego Castro, who practices law at the firm Castro & Pal. “At the end of the day, what the law says is not as important as the how it is enforced.”

The Central American Free-Trade Agreement with the United States, which asks members to pass laws and make policies that deter intellectual property violations, has added new urgency to the issue.

After Costa Rica approved CAFTA in a nationwide referendum in October, Foreign Trade Minister Marco Vinicio Ruiz proposed a bill that would put trademark and copyright violators in prison for four to six years.

Even some pro-CAFTA legislators were outraged. They said the bill was too severe and lumped serious infractions together with petty ones. For example, on paper, illegally copying a compact disk would receive the same prison term as operating a business that sold clothes with false trademarks.

Ruiz defended the proposal in an editorial in the daily La Nación: “Neither current law, nor actions by authorities, has been an effective deterrent to date.”

In fact, intellectual property violations are no more common in Costa Rica than in the rest of Latin America. For example, 64% of all business software on the market in Costa Rica is pirated, compared with a regional average of 66%, according to the U.S.-based Business Software Alliance. That figure is even higher for all other CAFTA signers except the United States.

The International Intellectual Property Alliance, an industry trade group, recommended last year that the U.S. trade representative put Costa Rica on a “priority watch list” of countries that do a poor job of protecting intellectual property rights. That should be taken with a dose of salt, said Rebecca Tushnet, a professor at GeorgetownUniversityLawCenter in Washington, D.C. Chief prosecutor Francisco D’Allanese has been heavily criticized for his public decision to investigate intellectual property violations only if they involve terrorism, public health, money laundering or narcotrafficking.

Prosecutors in the United States don’t bring many cases against copyright infringement, either, Tushnet said.

Still, Castro said, that attitude is less harmful in the United States because civil cases are more effective there than in Costa Rica. Here such cases can take years, and the defendant can often avoid paying damages.

Owners of intellectual property can bring criminal cases, but their chances of success are gloomy, Castro said. To win a case, one must gather evidence of a willful violation – a much harder task without support from the chief prosecutor’s office.

Maximum jail time for intellectual property violations is three years, but judges generally impose probation.

Ruiz’s bill was perhaps an effort to solve these problems. But legislators from his own National Liberation Party (PLN) quickly rejected it, instead supporting prison terms ranging from two months to six years, depending on the seriousness of the infraction.

The bill is now under discussion in a 19-member legislative committee with the power to approve laws.

Still, Castro doubts the law, whatever form it eventually takes, will deter intellectual property violations. Entrepreneurs like Pinto are relying on other safeguards. Pinto’s latest creation, a Nintendo game in which a “nature guardian” fights a “misguided industrialist,” is difficult to copy because it runs only on cartridges manufactured by Nintendo. But even if he finds a pirate, Pinto likely won’t go to court. Besides, being costly and tedious, he said, aggressive legal action tends to alienate honest customers.


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