HCMC FACES REGIONAL IPR WOES

UNCLAS SECTION 01 OF 03 HO CHI MINH CITY 000538

SIPDIS

STATE PASS TO USTR FOR EBRYAN
USDOC FOR 3132/OIO/EAP/KELLEHER
USDOC FOR 1431/MAC/AP/HPPHO

E.O. 12958: N/A
TAGS: ECON ETRD KIPR VM IPROP
SUBJECT: HCMC FACES REGIONAL IPR WOES

SUMMARY
--------------

1. AFTER THE BILATERAL TRADE AGREEMENT JOINT COMMITTEE
UNCLASSIFIED

PAGE 02 HO CHI 00538 01 OF 03 211143Z
MEETING IN HANOI, MEMBERS OF THE US DELEGATION SPENT A DAY
IN HCMC FOCUSING ON INTELLECTUAL PROPERTY RIGHTS (IPR) IN
THE COUNTRY'S ECONOMIC HUB. LOCAL OFFICIALS INDICATED THEY
ARE AWARE OF IPR PROBLEMS AND ARE TRYING TO FIND WAYS TO
ADDRESS THEM. VIETNAMESE BUSINESSPEOPLE COMPLAIN THAT
RAMPANT IPR VIOLATIONS ARE HURTING THEIR BOTTOM LINE.
HOWEVER, PIRATED PRODUCTS, PARTICULARLY OPTICAL DISCS
PRODUCED IN CHINA, ARE WIDELY AVAILABLE THROUGHOUT HCMC.
ENFORCEMENT, SPLIT AMONG SEVERAL DIFFERENT AGENCIES, IS
UNCOORDINATED AND INEFFECTUAL. THE DELEGATION STRESSED TO
LOCAL OFFICIALS THAT IPR ENFORCEMENT WAS A KEY COMMITMENT IN
THE BTA, AND IMPORTANT TO ECONOMIC DEVELOPMENT, A SENTIMENT
WITH WHICH HCMC OFFICIALS EXPRESSED AGREEMENT. THE DAY
ENDED WITH A VISIT TO HCMC'S "HARD ROCK CAF" WHICH US
RIGHTS-HOLDERS HAVE BEEN TRYING - UNSUCCESSFULLY - TO CLOSE
DOWN FOR MORE THAN A YEAR. END SUMMARY.

DELEGATION STRESSES NEED TO PROTECT IPR
--------------

2. AT THE CONCLUSION OF THE FIRST MEETING OF THE JOINT
COMMITTEE OF THE BILATERAL TRADE AGREEMENT (BTA),MEMBERS OF
THE US DELEGATION FROM USTR, STATE, COMMERCE, AND THE
COPYRIGHT OFFICE JOINED CONGEN ECONOFFS IN HO CHI MINH CITY
TO REVIEW THE IPR SITUATION IN THE CITY. THE DELEGATION
REINFORCED THE MESSAGE DELIVERED IN HANOI: IMPROVING IPR
PROTECTION WAS A KEY BTA COMMITMENT, INTEGRAL TO THE WTO
ACCESSION PROCESS, AND VITAL TO VIETNAM'S ECONOMIC
DEVELOPMENT. NOT SURPRISINGLY, VIETNAMESE OFFICIALS - AT
THE DEPARTMENT OF TRADE, THE MARKET MANAGEMENT BOARD, AND
THE DEPARTMENT OF SCIENCE, TECHNOLOGY, AND THE ENVIRONMENT
(DOSTE - WHICH REGULATES PATENTS AND TRADEMARKS) AGREED.
UNCLASSIFIED

PAGE 03 HO CHI 00538 01 OF 03 211143Z
ALL SAID THEY WERE DOING THEIR BEST TO STOP INFRINGEMENTS,
BUT THE PROCESS WAS COMPLICATED BY THE LARGE NUMBER OF
DIFFERENT AGENCIES CHARGED WITH IMPLEMENTING AND ENFORCING
IPR LAWS. THEY ALSO OPERATE WITH INADEQUATE RESOURCES AND
UNDER CONSTRAINTS TO THEIR LEGAL AUTHORITY. FINES ARE
NOMINAL AND LIMITS ON THEIR AUTHORITY MAKE IT DIFFICULT TO
CATCH OFFENDERS AND ENFORCE THE LAW, THEY CLAIMED.

IPR IS IMPORTANT - IN THEORY
--------------

3. AT DOSTE, THE CHIEF OF THE INDUSTRIAL PROPERTY
MANAGEMENT SECTION, MS. TRUONG THUY TRANG, EXPLAINED THAT
FIVE AGENCIES WERE RESPONSIBLE FOR IPR ENFORCEMENT. HER
OFFICE HANDLES THE REGULATION OF TRADEMARK AND PATENTS. A
SEPARATE DOSTE INSPECTORATE IS RESPONSIBLE FOR ACCURATE
PRODUCT LABELING. SHE ALSO CITED THE MARKET MANAGEMENT
BOARD, THE ECONOMIC POLICE, CUSTOMS, AND THE CIVIL COURTS.
SHE LEFT OUT THE DEPARTMENT OF CULTURE AND INFORMATION,
WHICH REVIEWS AND CENSORS "SENSITIVE" MATERIAL, BUT IS ALSO
RESPONSIBLE FOR COPYRIGHT PROTECTION.


4. MS. TRANG ACKNOWLEDGED THAT THE ENFORCEMENT MECHANISMS
WERE MORE THEORY THAN REALITY, BUT CLAIMED HCMC HAD THE BEST
IPR ENFORCEMENT IN THE COUNTRY. ALTHOUGH HER AGENCY HAD NO
DIRECT ENFORCEMENT ROLE, IT OFTEN TRIED TO MEDIATE BETWEEN
RIGHTS-HOLDERS AND INFRINGERS. DOSTE COULD ALSO ADVISE
ENFORCEMENT AGENCIES OF IPR VIOLATIONS, SHE SAID, BUT COULD
NOT COMPEL THEM TO ACT. SHE STATED THAT WHILE THE MARKET
MANAGEMENT BOARD "HAD ALL OF THE POWER," THEY WERE OFTEN
LESS EFFECTIVE THAN DOSTE'S MEDIATION EFFORTS. SHE OFFERED
TO LOOK INTO ANY SPECIFIC CASES OF CONCERN.
UNCLASSIFIED

PAGE 04 HO CHI 00538 01 OF 03 211143Z


5. THE DELEGATION TOOK THE BAIT AND ASKED ABOUT THE CASE OF
HCMC'S "HARD ROCK CAF," RUN BY SOMEONE WHO DID NOT HAVE THE
RIGHT TO THE TRADEMARK. THE US RIGHTS-HOLDER HAD FILED A
COMPLAINT LAST YEAR TO TRY TO SHUT THE PLACE DOWN. MS.
TRANG STATED THAT SHE WAS AWARE OF THE CASE AND HAD MET WITH
THE OWNER IN A MEDIATION EFFORT. HE HAD PROMISED IN WRITING
TO REMOVE THE OUTDOOR SIGNATURE "HARD ROCK CAF" SIGN FROM
HIS ESTABLISHMENT. WHEN THE DELEGATION REMARKED IT WOULD BE
VISITING THE SITE LATER THAT AFTERNOON, SHE BACKTRACKED AND
STATED THAT THE LAW FIRM REPRESENTING THE RIGHTS-HOLDER HAD
NOT ADVISED HER AS TO WHETHER THE SIGN HAD ACTUALLY BEEN
REMOVED. SHE ALSO NOTED THAT DOSTE DID NOT HAVE AUTHORITY
TO ENTER THE RESTAURANT TO SEE IF THE TRADEMARK WAS BEING
USED IMPROPERLY INSIDE.


6. AT THE MARKET MANAGEMENT BOARD, WHICH IS RESPONSIBLE FOR
ENFORCING ALL LAWS RELATING TO DOMESTIC TRADE IN THE CITY,
DIRECTOR HUYNH TAN PHONG POINTED OUT THAT HIS OFFICE HAD
WORKED WELL WITH A NUMBER OF FOREIGN COMPANIES WHO HAD IPR
PROBLEMS, NAMING PHILIPS, PROCTER & GAMBLE, AND RICOH. (THE
ATTORNEY WHO HAD REPRESENTED RICOH - WHICH WAS TRYING TO
STOP THE SALE OF COUNTERFEIT TONER CARTRIDGES - HAD EARLIER
TOLD THE DELEGATION THAT THE MMB WERE SO UNDER-RESOURCED
THAT THE DIRECTOR HIMSELF VISITED A SHOP PRETENDING TO BE A
BUYER, IN ORDER TO ID THE COUNTERFEITS.) MR. PHONG
ACKNOWLEDGED THAT HCMC AND THE COUNTRY STILL FACED HUGE IPR
PROBLEMS, BUT PLEDGED TO ASSIST WITH ANY IPR-RELATED
UNCLASSIFIED

PAGE 02 HO CHI 00538 02 OF 03 211143Z
REQUEST. WHEN ASKED ABOUT THE "HARD ROCK CAF" CASE, HE
SAID THE FILE WAS STILL WITH DOSTE, SO HIS AGENCY DID NOT
YET HAVE THE AUTHORITY TO TAKE ACTION.


7. OFFICIALS AT THE LOCAL DEPARTMENT OF TRADE ALSO
REITERATED THE IMPORTANCE OF IPR ISSUES FOR HO CHI MINH
CITY. DIRECTOR PHAM THI KIM HONG NOTED THAT ONE OF THE
CITY'S MAJOR ECONOMIC DEVELOPMENT GOALS WAS TO ESTABLISH A
LOCAL INFORMATION TECHNOLOGY INDUSTRY. THIS COULD ONLY
HAPPEN IF INTELLECTUAL PROPERTY RIGHTS WERE TRULY PROTECTED.
AT THE SAME TIME, HOWEVER, SHE DISAVOWED ANY ENFORCEMENT
ROLE FOR THE DEPARTMENT OF TRADE. WHEN THE DELEGATION
POINTED OUT THAT THE MARKET MANAGEMENT BOARD FELL UNDER HER
DEPARTMENT'S JURISDICTION, SHE STATED IT WAS ONLY NOMINALLY
SO, AND THAT THE MMB OPERATED AUTONOMOUSLY. DEPUTY DIRECTOR
NGUYEN DINH MAI, WHO ALSO ATTENDED THE MEETING, STATED
INFORMALLY TO ONE DELEGATION MEMBER THAT IPR CONCERNS NEEDED
TO BE RAISED WITH THE HCMC PEOPLE'S COMMITTEE IN ORDER TO
MAKE PROGRESS.

IPR VIOLATIONS HURT LOCAL BUSINESS
--------------

8. LOCAL VIETNAMESE BUSINESSPEOPLE WHO MET THE DELEGATION
STRESSED THAT IPR INFRINGERS HAD AFFECTED THEIR BUSINESSES.
MR. LE HONG THANH, DIRECTOR OF SAIGON AUDIO, A LOCAL
RECORDING COMPANY, STATED THAT BECAUSE ALL OF HIS PRODUCTS
WERE COPIED, IT WAS EXTREMELY DIFFICULT TO GENERATE PROFITS
ON NEW MUSIC. IT WAS DIFFICULT TO SELL LEGITIMATE COPIES
AND RECOUP COSTS, LET ALONE GENERATE PROFITS IN A MARKET
WHERE PIRATED COPIES OUTNUMBERED LEGITIMATES BY ABOUT 20/30
TO ONE. TO GENERATE REVENUE, SAIGON AUDIO HAD TAKEN TO RE-
UNCLASSIFIED

PAGE 03 HO CHI 00538 02 OF 03 211143Z
RELEASING "OLDIES," WHICH COULD BE SOLD MORE CHEAPLY. THEY
ALSO REDUCED THE NUMBER OF NEW RECORDINGS BY VIETNAMESE
ARTISTS FROM 100 TO 40 PER YEAR. HIS COMPANY, ALONG WITH
OTHERS IN THE LOCAL AUDIO AND VIDEO INDUSTRY, HAD SUBMITTED
A PETITION TO THE CENTRAL GOVERNMENT ASKING FOR MORE
COPYRIGHT PROTECTION. HE BELIEVES SOME PIRATED PRODUCTION
IS OCCURRING IN VIETNAM, PARTICULARLY FOR LOCAL FILMS AND
TAPES. THIS IS IN CONTRAST TO PIRATED COPIES OF AMERICAN
AND OTHER FOREIGN FILMS/RECORDINGS, MOST OF WHICH ARE
BELIEVED TO COME FROM CHINA.


9. MR. NGUYEN VINH LOC, THE LOCAL DISTRIBUTOR OF BOSE
SPEAKERS, ALSO COMPLAINED THAT HIS COMPANIES HAVE TO COMPETE
WITH FAKES. HE SAID SHODDY COPIES ARE IMPORTED FROM CHINA
AND BETTER QUALITY COUNTERFEITS COME OUT OF TAIWAN. FALSE
BOSE LABELS ARE ATTACHED ONCE THE PRODUCT ENTERS THE
COUNTRY. MR. LOC STATED THAT A COUPLE OF YEARS AGO, BOSE
HAD TRIED WORK WITH LOCAL ENFORCEMENT AGENCIES AND AN
ATTORNEY TO STOP THE SALE OF THE FAKES. HE CLAIMED THIS WAS
COMPLETELY INEFFECTUAL. HE SUGGESTED THAT FOR IPR
ENFORCEMENT TO WORK THERE MUST BE POLITICAL WILL AT A
RELATIVELY HIGH LEVEL. HE FELT "THE VIETNAMESE WAY" WOULD
BE TO GO THROUGH THE PEOPLE'S COMMITTEE AND URGE THEM TO
SEND THE ORDER DOWN TO THE ENFORCEMENT AGENCIES. ONLY
WORKING WITH THE AGENCIES DID NOT BRING RESULTS.

CDS, DVDS, AND EXPENSIVE T-SHIRTS
--------------

10. AT THE END OF THE DAY, THE DELEGATION VISITED A
DOWNTOWN STREET LINED WITH SMALL SHOPS SELLING CDS AND DVDS,
NONE OF WHICH APPEARED TO BE LICENSED COPIES. DVDS SELL FOR
UNCLASSIFIED

PAGE 04 HO CHI 00538 02 OF 03 211143Z
ABOUT 20,000 VND (ABOUTUSD1.20). MOSTLY LOCAL PRODUCT WAS
DISPLAYED IN THE SHOPS, BUT FOREIGN FILMS AND AUDIO
RECORDINGS WERE ALSO AVAILABLE. THE GROUP ALSO STROLLED
OVER TO THE "HARD ROCK CAF" A FEW BLOCKS AWAY, WHERE THE
SIGN WAS STILL OVER THE FRONT ENTRANCE. INSIDE, THE WALLS
AND CEILING DRIPPED WITH ROCK N' ROLL EPHEMERA AND,
STRANGELY, AUTO AND MOTORCYCLE PARTS. THE INTERIOR MIGHT
NOT BE CONFUSED WITH ITS LICENSED COUNTERPARTS ELSEWHERE IN
THE WORLD, BUT THIS PLACE DID HAVE A BOOTH BY THE DOOR
SELLING EXPENSIVE "HARD ROCK CAF SAIGON" T-SHIRTS AND
TRINKETS. EVEN WITH ALL OF THE EFFORTS BY A LOCAL LAW FIRM
AND LOCAL AUTHORITIES, IT APPEARS THIS PLACE IS DOING
BUSINESS AS USUAL.

COMMENT
--------------

11. ALL OF THE LOCAL OFFICIALS WHO MET THE DELEGATION SPOKE
STRONGLY ABOUT THE NEED TO ATTACK VIETNAM'S IPR PROBLEMS AND
ACKNOWLEDGED THAT WEAK IPR ENFORCEMENT WOULD ACT AS A BRAKE
ON HCMC'S ECONOMIC DEVELOPMENT. THIS OFFERS SOME HOPE THAT,
EVEN IN THIS DIFFICULT ENVIRONMENT, LOCAL OFFICIALS AND
BUSINESS REALIZE THERE ARE CLEAR BENEFITS TO IPR PROTECTION.
AT THE SAME TIME, IN THE SAMPLE CASE WE RAISED AT EVERY
MEETING - THAT OF THE "HARD ROCK CAF" - OFFICIALS SEEMED
READY TO PASS THE BUCK - TO OTHER AGENCIES OR EVEN TO THE
LAW FIRM REPRESENTING THE RIGHTS-HOLDER. AND WHILE
SPIDERMAN IS UNLIKELY TO DESCEND AND ROUND UP ALL OF THE
SPECIAL INTERESTS PROFITING ON THE PIRATED GOODS AVAILABLE
UNCLASSIFIED

PAGE 02 HO CHI 00538 03 OF 03 211143Z
IN THE LOCAL MARKET, GOOD QUALITY COPIES OF SPIDERMAN ARE
ALREADY AVAILABLE HERE ON DVD.


12. THE DELEGATION DID NOT HAVE AN OPPORTUNITY TO CLEAR
THIS CABLE.

YAMAUCHI

UNCLASSIFIED