VIETNAM: MICROSOFT FOCUSED ON IPR

UNCLAS SECTION 01 OF 02 HANOI 000966

SIPDIS

SENSITIVE

STATE FOR 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
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: KIPR ETRD ECON VN IPROP
SUBJECT: VIETNAM: MICROSOFT FOCUSED ON IPR

SENSITIVE BUT UNCLASSIFIED PROTECT ACCORDINGLY

REF: HCMC 367


1. (SBU) Summary. While disappointed in the lack of
progress in improving IPR protection in Vietnam, Microsoft
remains committed to engaging the GVN on this critical
issue. Microsoft and Business Software Alliance (BSA)
representatives are looking at ways to encourage the GVN to
adopt a legitimate software initiative and asked the USG to
encourage the Prime Minister to send a letter to all GVN
agencies ordering them to use only legitimate software. End
summary.


2. (SBU) On March 30, Economic/C and Econoff met with
Singapore and Bangkok-based representatives of Microsoft and
the Business Software Alliance (BSA) to discuss Intellectual
Property Rights issues in Vietnam. Microsoft employees were
both regional senior managers and corporate government
affairs representatives. Throughout the meeting it was
clear that while Microsoft is frustrated with the lack of
progress on IPR issues in Vietnam, it is committed to
finding opportunities to engage with the GVN and to work out
a strategy to develop positive momentum for change.
Microsoft representatives indicated they would continue to
engage senior level officials, including at the DPM level,
to prioritize IPR issues.


3. (U) Econoffs explained that the Ambassador and Econoffs
frequently highlight to GVN officials at every level two key
points on the importance of IPR to Vietnam:

-- The GVN has prioritized attracting foreign direct
investment (FDI) to Vietnam. Strong IPR is a critical
factor attracting FDI, not only in the IT sector, but also
across the board. Econoffs suggested that Microsoft work
with other international software and hardware companies
(including its competitors) to deliver a unified message to
the GVN that IT companies will not look seriously at Vietnam
until there is better IP protection. Microsoft noted that
the Business Software Alliance (BSA) included a number of
both hardware and software firms and was be a good vehicle
for making such an approach.

-- Strong IPR enforcement is critical to the development of
domestic industries that depend on IP - most notably the IT
sector. Econoffs recommended Vietnam work with and provide
assistance to the Vietnam Software Association (VINASA) to
help this organization develop itself as a stronger advocate
for the domestic software industry and improve VINASA's
ability to influence government policy vis--vis IPR.



4. (SBU) Microsoft representatives noted that in their
experience several things have to happen before a country is
capable of effective IPR enforcement. First, Vietnam needs
a strong legal framework that includes significant penalties
for enforcement. Additionally high-level engagement on the
issue is necessary. Microsoft noted that in some countries,
a letter from the Prime Minister to all government agencies
(on IP protection, including the use of legitimate software)
has been the catalyst for change. And, of course, there is
the need for effective enforcement. Finally, Microsoft
noted that development of the private sector is also
important - a domestic constituent base interested in IP
enforcement is useful in engaging government action.


5. (SBU) Microsoft wants to encourage the GVN to ensure that
all Government offices use only legitimate software.
However, cost is clearly a concern for the GVN as well as an
excuse for the negligible progress the GVN has made in this
regard. Microsoft is looking into the possibility of IFI
funding (ADB, WB etc) or concessionary commercial financing
for a GVN strategy to implement a legitimate software
initiative for all or some GVN national government entities.
Microsoft representatives asked that in our engagement with
the GVN - perhaps at the next BTA Joint Committee meeting in
May - we suggest that a positive and tangible step the GVN
could take on IPR would be to have the Prime Minister send a
letter to all government agencies instructing them to use
only legitimate software.


6. (SBU) Microsoft representatives also highlighted their
concerns about recent GVN comments that it plans to switch
to open source software (like Linux) to "fix" its IPR
problems. While acknowledging that the decision on what
type of software the GVN wants to use is up to the
Government, Microsoft asked us to help convey the message
that the GVN should not switch to open source for the "wrong
reasons." Switching to open source does not insulate the
GVN from the responsibility of ensuring that all software
used by the GVN is legitimately licensed, Microsoft
asserted. Econoffs noted they had already raised this issue
with the GVN.


7. Comment: Many of the factors Microsoft mentions as
essential for strong IPR protection are beginning to come
together in Vietnam. While the private sector still faces
significant disadvantages vis-a-vis the state-owned sector,
greater attention is being given to the importance of
fostering the private sector development each day. New,
albeit fledgling, business and music associations are
cropping up with IPR enforcement at the top of their list of
priorities. In addition, donors (including the USAID-funded
Support for Trade AcceleRation (STAR) Project) and the GVN
are dedicating significant resources toward revising IPR-
related legislation, including Vietnam's Civil Code, Civil
Procedure Code and regulations on remedies. However, the
GVN is not "leading by example" on the issue of copyright
piracy. Government agencies of all shapes and sizes are
loaded down with pirated software. An effort by the GVN to
move toward comprehensive use of legitimate software - even
if it is done ministry by ministry - would be a significant
step forward and we should do everything we can to encourage
and support such an effort.
BURGHARDT