VIETNAM: REORGANIZATION OF IPR AGENCIES - FUTURE OF

UNCLAS SECTION 01 OF 04 HANOI 001559

SIPDIS

SENSITIVE

STATE FOR E, EB/IPC:DRBEAN, EAP/BCLTV AND EB/ODC
STATE ALSO PASS USTR BURCKY/ALVAREZ AND BRYAN
STATE ALSO PASS USPTO FOR URBAN
STATE ALSO PASS LIBRARY OF CONGRESS FOR TEPP
USDA FOR FAS/FAA/AO HUETE
USDOC FOR LASHLEY AND 4431/MAC/AP/OKSA/HPPHO
USDOC ALSO FOR ITA/TD/OTEA/JJANICKE AND ITA/TD/SIF/CMUIR

E.O. 12958: N/A
TAGS: ETRD EINV ECON KIPR VM IPROP
SUBJECT: VIETNAM: REORGANIZATION OF IPR AGENCIES - FUTURE OF
TRADEMARK OFFICE IN LIMBO

SENSITIVE BUT UNCLASSIFIED - HANDLE ACCORDINGLY


1. (SBU) SUMMARY: In a move that has left Vietnamese IPR
agencies, foreign donors, and trademark holders/seekers
stunned and seriously concerned, the Government of Vietnam
has decided to transfer the trademark function from the
National Office of Industrial Property (NOIP) in the
Ministry of Science and Technology (MOST) to the Ministry of
Trade (MOT). This move increases the number of Ministries
involved in IPR from 2 to three and splits trademarks away
from patents (which remain under NOIP),contrary to
international trends in IP administration. In addition,
copyright issues related to software will be moved from the
Copyright office (COV) at the Ministry of Culture and
Information (MOCI) to NOIP. The decision was made at the
highest political level via Prime Ministerial Decree and
against the recommendations of IPR experts and donors. The
decree effectively strips NOIP of its responsibility for
trademarks and adds responsibility for copyright (except for
cultural and art works). In addition, the decree changes
NOIP's name to the National Office of Intellectual Property.
Decree 54 was published in the Official Gazette on June 06
and will become effective June 21. Therefore, as of Friday
June 20, 2003, Vietnam's ability to register, adjudicate or
enforce trademarks will be suspended for an indeterminate
period of time. The adjudication of all pending
applications or complaints is already suspended and no new
applications are being accepted.


2. (SBU) While the political decision has been made, it
appears the GVN has not given much thought to how it will
implement these changes; as of June 20 no detailed plan has
been released regarding how this handover will be done - or
when. Although there has been no announcement, NOIP
believes that all its trademark personnel and "movable"
facilities will be transferred to MOT and that a decree will
be issued next week. (MOT currently does not have any
trademark specialists on its staff.) Even after the change
is effected, the consensus in the IPR community here is that
Vietnam is moving toward a more incoherent system of IPR
management. Although NOIP apparently made a valiant effort
to argue the merits of the proposed change, their factual
arguments (and those of other experts) have fallen on deaf
ears. The changes put in jeopardy the extensive investment
international donors (particularly the Japanese and the
Swiss) have made in enhancing the capacity of NOIP. Vietnam
has not notified WIPO of the changes and may soon be in
violation of its international obligations, in particular,
to accept, process, and enforce trademark applications.


3. (SBU) Embassy's attempts to clarify the status with MOT
have been unsuccessful. No one in the GVN seems to know
what will happen or why Vietnam has chosen to reverse the
progress it has made. If there is a greater policy strategy
out there, no one in the IPR community here has been able to
discover it. Although we hesitate to draw the simplest
conclusion, i.e. follow the money and power, it may be the
most accurate in this case. The Minister of Trade's star
seems to be rising, partly because of his tough stance with
the U.S on catfish and textiles, as well as the success for
Vietnam of the BTA. Few believe that the Prime Minister's
decision can be reversed but Embassy is working with local
experts and Embassies to take a concerted approach with the
GVN, registering our concern about the change, in particular
the effect on NOIP and Vietnam's ability to manage
trademarks, and outlining our expectations that Vietnam
fulfill its international obligations. In addition,
Embassies discussed recommending to the GVN that they assign
overall coordinating responsibility for IPR to the Office of
the Government under the Prime Minister (OOG),in the same
manner that OOG coordinates BTA implementation. END SUMMARY.

History of a Questionable Decision
--------------


4. (SBU) Last year, the Ministry of Science and
Technology's National Office of Industrial Property, other
international IPR experts and a number of donors proposed a
strengthening and consolidation of the IPR responsibilities
in the Vietnamese government (GVN). Expectations were that
NOIP would receive more authority, including taking over
copyright from the Ministry of Culture and Information.
However, the Ministry of Trade (MOT) has apparently been
lobbying heavily with the Prime Minister's office to have
the trademark registration function of the trademark office
moved to MOT. The Decree stipulate that trademark office in
its entirety is not moving, just the registration and
renewal function. The remainder of trademark function and
patents will remain with NOIP, now to be renamed the
National Office of INTELLECTUAL Property. The trademark
office generates revenues of about USD 3 million per year,
which constitutes 80 percent of NOIP's total revenues. NOIP
keeps about 20 percent of that total to finance the
operation of the patent and trademark office. Local IPR
experts assume that MOT will now keep those funds (and cite
it as a possible motivation for this move). Officially, the
GVN has not clarified how much - if any - of those funds
will be retained at NOIP to finance the rest of its
operations.


5. (SBU) While the political decision has been made, it
appears the GVN has not given much thought to how it will
implement these changes. The change is set to take place on
June 23, however, no detailed plan has been released
regarding how this handover will be done - or when. Neither
MOT nor MOCI have submitted to the Government the
legislation describing the parallel changes that need to be
made to their own organizational structure, although we have
heard that one on MOT is coming out soon. No formal
announcement has been made regarding whether NOIP staff will
be transferred to MOT. MOT currently does not have trademark
specialists on its staff and, according to a number of
contacts, does not want to bring onboard NOIP's trademark
specialists. However, we understand from NOIP that they
expect that personnel and "movable" facilities will be
transferred to MOT.


6. (SBU) Additionally, NOIP will apparently continue to be
in charge of the drafting of laws and provision of
information to the public related to trademarks. It is not
clear how the adjudication and appeal functions will work
as MOT did not request their transfer. The only thing that
is clear at this point is that NOIP won't be doing trademark
registration and renewals or collecting those fees.
Additionally, counter to the need to tighten search and
examination procedures with new registrations, one of MOT's
"selling points" was their promise to register trademarks in
15 days or less, which would make adequate search,
examination, and opposition periods impossible. While
officials from MOT have been quiet on the issue, officials
from both COV and MOST have expressed a great deal of
frustration with the decision.


7. (SBU) Econ Counselor recently met with local IPR lawyers,
technical assistance experts, visiting experts from IPR
associations in Bangkok, and other donor Embassies. All
are extremely concerned by this turn of events and all of
whom confirmed that they, like us, had been unable to obtain
any clarification of the GVN's plans, even though as of
Friday June 20, 2003, Vietnam will apparently cease to
issue, adjudicate, enforce, or initiate new trademarks.
Even after the change is effected, the consensus in the IPR
community here is that Vietnam is moving toward a more
incoherent system of IPR management. In the short- to medium
term this reorganization will make both registration and
protection of IPR more complicated and difficult than it
already is. Businesses will now need to go NOIP for pirated
computer software, the COV for pirated music CDs/DVDs and
movies, and the yet to be established trademark office under
MOT for counterfeit goods.


8. (SBU) Most disturbing about this turn of events is that
NOIP apparently made a valiant effort to argue the merits of
the proposed change. However, their factual arguments (and
those of other experts and donors) have fallen in deaf ears.
In particular, NOIP clarified for the PM's office that
registration of IP rights is a legal procedure for
establishment of IPR, not for administrative management,
that is, registration is the process of establishment of
trademark and appellation origin rights. They argued that
internationally, most countries have a combined office for
patents and trademarks, primarily because procedures for
registration of trademark, patent and design tend to be
uniform; splitting the offices will cause duplication and
redundancy and is counter to international norms. NOIP
argued that the move would cause trademark registration 350
trademark applications/ week) to come to a standstill, as
the details of the move is sorted out. Finally, NOIP argued
that at present, the most serious challenges for Vietnam are
raising awareness of IPR and enforcement of existing laws.
They argued that the focus of any change should be to give
higher priority to protection of IPR and improved service
quality from GVN agencies. Specifically, several Ministries
and agencies (including MOT) already have significant
responsibility for protecting IPR which they have yet to
fulfill. (MOT for example heads the Market Management
Bureau, which has responsibility for ensuring that IPR
infringing products are not being sold in stores.)


9. (SBU) In a highly unusual move, the Director of NOIP
gave several candid interviews to major newspapers and and
TV news programs this week, where he was publicly critical
of the decision. (Note: We understand that the Director was
"called in" to speak to his superiors following the
appearance of the articles.) In both his public statements
and his private discussions with the Embassy, he was
distraught over the dismantling of an organization that he
personally, as well as many others, have worked so hard to
improve over the last few years. He cited the waste of human
and infrastructure resources and he despaired over the
effect on NOIP's modernization project.


10. (SBU) The changes put in jeopardy the extensive
investment international donors (particularly the Japanese
and the Swiss) have made in enhancing the capacity of NOIP.
(Note: Both the Swiss and the EU in their donor status
unsuccessfully attempted to dissuade the GVN from making
these changes.) Currently, NOIP handles about 10,000 patent
and trademark applications every year. Through JICA, Japan
has been funding the "Modernization of Industrial Property
Management Project", a 4-year, $4 million project to
computerize the patent and trademark office. The JICA
representative who is seconded to NOIP told Econ Counselor
that Tokyo has said the project was targeted to NOIP and
that no resources can be transferred to MOT. When trademark
registration goes, JICA can no longer provide any technical
or resource assistance on trademarks.


11. (SBU) A visiting regional IP lawyer based in Bangkok
briefed Econ Counselor on his meetings with the GVN, UNDP,
and other IPR experts in Hanoi. He noted that the GVN
seemed oblivious to their international obligations to
accept, process, and enforce trademark applications and have
not notified WIPO. (Note: The Bilateral Trade Agreement
(BTA) also addresses Vietnam's obligation to register and
protect trademarks in Chapter II, Article 6.) He
characterized the GVN plan to separate registration from the
rest of the trademark function as "insane." He also
predicted that breaking out registration and trying to do it
in 15 days would only result in increased litigation, as
there is no way to do due diligence in the search,
examination and opposition requirements. He also noted his
concern over the GVN position that plant varieties are "not
IPR." (Note: In the BTA, although Vietnam may exclude some
plants and animal varieties from patentability, it must
protect them under the UPOV Convention.) Finally, he noted
that although this was a problem for all trademark
holders/seekers, it was a more serious one for Vietnamese
businesses, who can't easily go abroad to register their
marks but have only a domestic option.


12. (SBU) From a different perspective though, one expat IP
attorney told Econoff he believed the change could be good
for the processing and enforcement of trademarks in Vietnam.
The attorney expressed a great deal of frustration with
NOIP's handling of trademarks and noted that perhaps MOT
would "take trademarks in a different direction" - something
that could ultimately be good for Vietnam.


13. (SBU) COMMENT AND NEXT STEPS: Embassy's attempts to
clarify the status with MOT have been unsuccessful, with our
contacts telling us that literally, no one knows. The big
question is why Vietnam would choose to reverse the progress
it has made to consolidate, modernize, and professionalize
its trademark and other IPR functions. And the
responsibility would be shifted to MOT, which is currently
unable to carry out the functions it already has as it
struggles with BTA implementation, WTO accession, and
implementation of numerous bilateral trade agreements, such
as textiles.


14. (SBU) If there is a greater policy strategy out there,
no one in the IPR community here has been able to discover
it. Although we hesitate to draw the simplest conclusion,
i.e. follow the money and power, it may be the most accurate
in this case. The Minister of Trade's star seems to be
rising, partly because of his tough stance with the U.S on
catfish and textiles, as well as the success for Vietnam of
the BTA. Washington agencies will remember that the current
Minister of Trade negotiated the BTA and took a lot of
criticism for "giving away" too much. Now, he can point to
the enormous increase in exports and take credit.


15. (SBU) Econ Counselor met with local IPR experts and
other embassy reps to discuss possible next steps. Few
believe that the Prime Minister's decision can be reversed
but Embassy believes that it can be modified or at least its
impact lessened (although it's not easy, we've done it
before). Embassies agreed to take a concerted approach with
the GVN, registering our concern about the change, in
particular the effect on NOIP and Vietnam's ability to
manage trademarks, and outlining our expectations that
Vietnam fulfill its international obligations. In addition,
we discussed recommending to the GVN in the future that they
assign overall coordinating responsibility for IPR to the
Office of the Government under the Prime Minister (OOG),in
the same manner that OOG coordinates BTA implementation.
END COMMENT AND NEXT STEPS.