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05BANGKOK1425
2005-02-25 09:24:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Bangkok
Cable title:  

SPECIAL 301 REVIEW -- EMBASSY RECOMMENDS WATCH

Tags:   ETRD  PREL  ECON  KIPR  TH 
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						UNCLAS SECTION 01 OF 05 BANGKOK 001425 

SIPDIS

SENSITIVE

DEPT FOR EB/IPC SWILSON
DEPT PLS PASS TO USTR JCHOE-GROVES, DOC JBOGER,
USPTO JURBAN, AND LOC STEPP

E.O. 12958: N/A
TAGS: ETRD PREL ECON KIPR TH
SUBJECT: SPECIAL 301 REVIEW -- EMBASSY RECOMMENDS WATCH
LIST FOR THAILAND

REF: A. 2004 BANGKOK 06501


B. 2004 BANGKOK 04885



1. (U) Sensitive but Unclassified. Please handle accordingly.



2. (SBU) Overall IPR protection in Thailand remains woefully
inadequate by any measure. During the past year, however,
the RTG has modestly improved upon its commitments to improve
IPR protection. Minister of Commerce Wattana Muangsuk
initiated an extended anti-piracy campaign in June, and, in
November and December 2004, the Royal Thai Police conducted
dozens of factory and warehouse raids, seizing millions of
pirate ODs and decommissioning several replication machines
used for copyright infringement. The most significant item of
IPR legislation ) the Optical Disk Manufacturing Law ) was
passed by the Parliament in October 2004. Because of these
successes, local industry representatives agree that the
overall IPR enforcement environment has improved slightly
since the beginning of the year ) but much work remains to
be done. The RTG has put other legislative items, such as
Amendments to the Copyright Act and the implementing
regulations for the Trade Secrets Act, on hold pending the
outcome of U.S.-Thai Free Trade Agreement (FTA) negotiations.
Enforcement campaigns are still often linked to timely
political events ) such as the start of FTA talks ) rather
than focused on gradual, sustained reductions. The
proliferation of cable piracy continues to be a major concern
for US rights holders. Nevertheless, most local rights
holders recognize that the IPR situation ) which is, by all
accounts, deplorable ) is no worse than it was last year,
and slightly improved in some areas. Furthermore, urgent
tsunami recovery efforts have diverted some of the RTG's IPR

SIPDIS
protection resources. For these reasons, the Embassy
recommends that Thailand remain on the Watch List.

RTG Enforcement Campaign Shows Some Results



3. (SBU) Under the leadership of Minister of Commerce Wattana
Muangsuk, the RTG initiated a major IPR enforcement campaign
in June 2004. This campaign was sparked by the signing of yet
another Memorandum of Understanding (MOU) between Thai
agencies involved in enforcement efforts, and rights holders
and their representatives. (Note: This MOU, forged between
rights holders and RTG enforcement agencies, is similar to
previous agreements, but details specific obligations to
rights holders, who pledge to cooperate with enforcement
agencies and not to use out of court settlements, and to the
police, who are charged with keeping 36 specified areas free
of pirated goods. The 36 areas are divided into &red8 and
&yellow8 zones, depending on the severity of pirate and
counterfeit retail operations.) The timing of this campaign
was noteworthy, coming just before the opening round of

Thai-U.S. Free Trade Agreement (FTA) talks, and several weeks
before the International AIDS Conference, held in Bangkok,
which brought thousands of government officials, activists,
scientists, and journalists to Thailand.



4. (SBU) Rights holders acknowledge that IPR enforcement has
improved slightly, and that these enforcement campaigns have
shown long-term progress in some key areas. The focus on the
red and yellow zones has reduced ) though certainly not
eliminated ) retail piracy in many of those areas. Trademark
brand owners and their representatives report increased
cooperation with the police and other enforcement agencies;
as is usually the rule, those brand owners that are most
proactive in protecting their trademarks achieve the greatest
results. In September, Econoff toured four local police
stations with the Secretary to the Commerce Minister, Oratai
Thanajaro, to evaluate progress in improving enforcement in
the red and yellow areas in their jurisdiction. While two of
the four police chiefs were clearly uninterested in cleaning
up retail piracy ) provoking an uncharacteristically heated
argument between Oratai and the police ) the two other
police officials were able to point to measurable successes
in reducing piracy in their jurisdiction. Six months after
this visit, Sukhimvit Road, a major thoroughfare popular with
foreign tourists just a few blocks from the Embassy, is still
largely clear of pirate retailers where before it was the
home of dozens.

&Operation Eradicate:8 Major Enforcement Operations
Initiated in Late 2004



5. (SBU) In October 2004, Royal Thai Police (RTP) Lt. Gen.
Noppadol Somboonsup, currently the Deputy Police Commander
for Legal Affairs, was reappointed head of IPR suppression
operations. Soon after taking on this assignment, Gen.
Noppadol and police enforcement teams launched &Operation
Eradicate,8 an initiative directed at factories and large
warehouses. He conducted a raid on a factory in the Eastern
Seabord Industrial Zone, in Rayong Province, seizing one
optical disk replicating line, one printing machine, one ton
or polycarbonate, and 6000 pirated VCDs and CDs. In addition,
the police arrested two Taiwanese nationals, two Burmese, and
one Thai. At the same time, the police raided a warehouse
owned by a connected company in Bangkok and seized 100,000
pirated DVD/VCD/CDs. This combined factory/warehouse raid )
the first since Gen. Noppadol ended his last tenure as IPR
enforcement czar in 2002 ) netted ODs and equipment
estimated at 70 million THB (almost 2 million USD). In
December 2004, Gen. Noppadol and his team again raided a
production facility in a province near Bangkok, seizing 100
CD-R burners, each with a capacity of burning 8000 CD-R disk
per day, and 5000 pirated music CDs. Gen. Noppadol has
invited Embassy officers to accompany him and his officers on
future raids, and we intend to take him up on his offer. (A
note on organized crime: Multinational organized crime has
always been present in the vice trade in Thailand, and since
IPR violations are treated less harshly than drug smuggling,
it is no surprise that foreign criminal gangs appear to be
involved.)



6. (SBU) Another police Special Task Force appointed by Prime
Minister Thaksin, led by Col. Adul Narongsak, conducted
several raids in and around Bangkok in late 2004. Two major
raids on November 30 netted over 1,000,000 pirated CDs and
DVDs, two replicating lines, and three printing machines. Two
weeks later, these teams raided 17 spots in Bangkok, netting
over 1 million pirated ODs, one replicating line, and two
printing machines. A coordinated raid on the notorious pirate
retailing center, Panthip Plaza, yielded no pirated goods
after a complete search of the premises. (Note: This last
raid underscores the unusual difficulties ) even when raids
are coordinated by motivated authorities ) in shutting down
piracy at Panthip.) The police and other law enforcement
teams ) including teams from the border control police )
conducted further raids throughout the month. According to
Department of Intellectual Property statistics, the RTG
seized over 800,000 ODs in 2004, and arrested 5179 persons.
The Central Investigation Division, under the leadership of
Maj. General Jurumporn Suramani, has also initiated a number
of anti-piracy raids on copyright infringers, earning the
praise of rights holders.



7. (SBU) Disappointing to rights holders, however, is the
Department of Special Investigations (DSI), which was to take
over responsibility for fighting IP crime from the Economic
Crimes Investigation Division (ECID) and other branches of
the Royal Thai Police (RTP). Although it has been up and
running for over a year, the DSI still lacks significant
personnel, resources, and direction to take on this task. In
addition, a recent administrative decision to divide IPR
crime investigative responsibilities between the ECID and the
DSI ) which gives DSI the right to investigate crimes valued
upwards of 5 million THB ($125,000) ) has created some
confusion in IPR circles. Still not clear is how this amount
will be valued ) street value? retail value? ) or, if even
this division of labor truly exists, since DSI seems to be
doing little in the way of IPR enforcement.

Tsunami Tragedy Will Put Some Enforcement Operations on Hold

SIPDIS



8. (SBU) The December 26, 2004 tsunami devastated large
swaths of Thailand's western coastline and caused over 9000
fatalities. In the days following the tsunami, Thailand's
security and police forces and government agencies focused
all of their attention in assisting those in need, restoring
a degree of normalcy, and launching reconstruction
initiatives. In Phuket and other places hard hit by the
tsunami, police are still devoted to efforts supporting

SIPDIS
reconstruction work, leaving few personnel able to return to
IPR enforcement. Most significantly, Gen. Noppadol was tapped
to oversee the multinational Thailand Tsunami Victim
Identification effort, which is now striving to locate,
identify and repatriate, where necessary, the thousands of
victims. This immense and unprecedented ) and extremely
sensitive -- task will take many months to sort out, making
it unlikely that Gen. Noppadol and some of his staff will
return to IPR enforcement activities in the near term.

IP Court and RTP Not Working Together



9. (SBU) Rights holders ) and the RTP ) have both expressed
concern with the search warrant application procedures of the
International Trade and Intellectual Property Court (IP
Court), reporting that some judges have set arbitrary
guidelines and standards for the issuance of search warrants.
In addition, rights holders remain unsatisfied with IP Court
judgments, which they claim are too lenient and do not
provide a sufficient deterrent. IP Court judges have
acknowledged the problems with search warrants, and are in
the process of designing guidelines for the approval of
search warrant applications. Court judges have reported to
Econoff that the police often do not follow proper procedures
in requesting, and carrying out, search warrants (a complaint
echoed by rights holders). Court judges have also said that
police sometimes are not familiar enough with the cases they
bring forward to answer basic questions about the warrant
request, and do not report the results of the search to the
Court afterwards, as required. (This last point is
significant because police are often suspected to use search
warrants to extort money from violators instead of executing
the warrant.) No matter who is at fault, this kind of basic
conflict hinders rights holders in their efforts to quickly
pursue enforcement actions.

Legislation: OD Law Passes, but FTA Intervenes



10. (SBU) The RTG has moved forward to pass legislation
crucial to IP protection efforts. Introduced to the
Parliament in August 2003, the Optical Disk Manufacturing Law
passed both houses on Parliament in October 2004. While this
legislation is not as strong as many rights holders would
have liked ) this draft does not provide for a licensing
system for replication machines, introduce SID codes, or
incorporate &sufficiently deterrent8 penalties ) it will
still enhance the powers of the Department of Intellectual
Property (DIP) and the RTP to monitor and enforce IPR
violations. In late January 2005, a group of Senators
petitioned the Constitutional Court to review a provision
that allowed for the seizure of a replication machine when
manufacturers fail to notify the DIP about the acquisition,
transfer, or movement of a machine. These Senators were
concerned that the penalties for violating an administrative
provision ) making it a criminal offense subject to
forfeiture of the equipment -- were too extreme. Arguing that
these penalties violate constitutional rights to the use of
private property, the Constitutional Court removed these
provisions from the legislation. Violators of these
provisions still face fines, however, and proven copyright
violators will, under this law, have their machines seized.
In a February 25 meeting with Econoffs, DIP DG Kanissorn
Navanugraha said that this act, which he believes will
bolster their enforcement powers considerably, will be signed
into law within two months.



11. (SBU) Amendments to the Copyright Act, which have
undergone several reviews by a government-led committee --
which includes an IP industry representative ) have passed
the juridical council and the Cabinet. However, RTG officials
have said that further revisions and legislative reviews of
this Amendment will await the outcome of the ongoing FTA
negotiations. The Thai Food and Drug Administration (FDA) has
finished drafting implementing regulations for the Trade
Secrets Act, and, in December 2004, invited stakeholder

SIPDIS
groups ) such as local and foreign pharmaceutical companies
-- to comment on the proposed draft. Multinational
pharmaceutical companies have objected to the proposed 2-year
data exclusivity provisions, but FDA officials and
scientists, some local pharmaceutical manufacturing
companies, and many vocal NGOs oppose extending the
protection period. However, the Secretary-General of the FDA,
Dr. Phakdee Photsiri, has said that these provisions will
also be subject to negotiation in the FTA talks. On April 28,
2004, the Geographical Indications Act came into effect,
completing Thailand's adherence to TRIPS legal obligations.

Cable Piracy: Still a Problem



12. (SBU) The past year has seen very little movement towards
establishing some kind of order in the cable television
industry. Pirate cable operations continue to proliferate,
mounting a significant challenge to U.S. content providers.
One of the major hurdles in correcting this problem is the
lingering controversy over the selection of the National
Broadcasting Commission (NBC), which, as outlined in the
Telecommunications Business Act of 2001, would regulate the
cable industry. (Note: Civil society activists and industry
representatives have clashed over the qualifications of the
selection committee members; a similar conflict over its
counterpart body, the National Telecommunications Commission,
ended in late 2003.) Currently, neither the Public Relations
Department (PRD), which currently has responsibility for
overseeing the cable industry, nor the DIP, which has
authority over copyright matters, has been willing ) or able
-- to take on this issue until the NBC is formed.



13. (SBU) In the meantime, Prime Minister Thaksin appointed
his Deputy Secretary-General, Squadron Leader Sita Divari, to
organize the various licensed and unlicensed cable providers
into the Channel 11 framework that was originally proposed in
November 2003. (This plan would put all cable providers under
the supervision of state-owned Channel 11, which would hold
and administer licenses with content providers on behalf of
the providers as a stopgap measure.). Several deadlines for
implementing this plan have come and gone ) the most recent
was October 15 ) and it is not at all clear when or if RTG
officials will take on this formidable problem.

The Bright Side: Thai Customs



14. (SBU) Rights holders and representatives report that Thai
Customs has been especially proactive in seizing infringing
goods at Thai ports of entry. Although no statistics are
available, rights holders report that Thai Customs agents
call with increasing frequency to examine suspect shipments
containing a wide array of products ) brand name clothes,
car parts, shoes, cell phones and parts, and other items.
Rights holders note that while these interdictions have
focused mostly on imports, Thai Customs has begun to inspect
outgoing shipments as well, where specific information on
infringing goods is available.

Training, Technical Assistance, and Public Education



15. (SBU) Over the past year, the USG has provided technical
assistance and capacity building training for a number of RTG
departments and agencies. In October 2004, Econoff and Legatt
Adviser arranged a digital video conference between a U.S.
federal judge in Hawaii and 15 judges from the IP Court to
discuss sentencing options in IPR convictions. The Embassy is
currently in the process of administering a $265,000 grant
from NAS directed at improving IPR enforcement in the Thai
Customs Department. USG Customs and Border Protection
officials have already conducted the first phase of this
program ) a thorough needs assessment ) in November 2004,
and will begin to implement the training, technical
assistance, and capacity building elements of the plan in
mid-2005. In addition, the Embassy plans to purchase an
optical disk forensic testing kit for the Thai police, which
will be under the supervision of Gen. Noppadol and the police
forensic labs. This forensic kit was developed by the
International Federation of Phonographic Industries (IFPI) in
London, and works on the same principles as ballistic
testing: each OD mould leaves unique errors and
characteristic marks which can be used to trace the
manufacturing origins of pirated ODs around the world. This
technology will be extremely useful for producing evidence
leading to increased factory raids. While the USG, through
the Bangkok NAS office, will provide the funds (an estimated
$80,000), IFPI has agreed to set up and install this kit, and
provide all necessary training. This technology has already
been used successfully by the Malaysian and Hong Kong police
to locate and raid factories producing pirated ODs.



16. (SBU) In addition to organizing two major IP Thailand
exhibitions -- which serve to promote the idea of IP to
investors, inventors, manufactures and others -- DG Kanissorn
plans to initiate a "No Fakes" certification campaign modeled
on a similar initiative in Hong Kong. In coordination with
retailers and rights holders, this campaign would promote
outlets that sell only genuine items and, at the same time,
build public awareness about IPR protection.

The Panthip Plaza Accords



17. (SBU) The owner of the notorious Panthip Plaza, the
Sirivadhanabhakdi Group (SG) is also the owner of a number of
high-end hotels in Thailand often used by US Embassy
personnel and agencies for TDY visits and events. In February
2003, Panthip Plaza,s resilience as the center of pirate
retailing in Bangkok led the Embassy to take the unusual step
of initiating a commercial boycott of these hotels for all
official purposes. In the following months, Econoffs used
this leverage to engage with SG and the Panthip management on
reducing infringement at their property, with few results.
The Panthip management claimed that they inherited several
dozen tenants with 30-year leases from the previous owners,
preventing them from ejecting shopowners selling pirated
products. In November 2004, the new management of one of
SG,s premier hotels, the Plaza Athenee, sought to end this
impasse and compete again for US Embassy business at their
property. At the suggestion of the Embassy, the management
offered to install closed circuit security cameras throughout
the property in order to discourage overt illegal activity
and to provide rights holders with concrete evidence to be
used in law enforcement actions. As a result of this offer,
and with the cooperation of SG and the Panthip management,
the Embassy agreed to rescind the boycott. We expect the
cameras to be operational by March 2005. While we don't see
the cameras as a panacea, they are a modest step forward in
that they serve as a deterrent -- some customers will think
twice about being recorded on film performing an illegal act,
so transactions will have to be done surreptitiously, e.g.,
in bathrooms, making pirated DVD sales more akin to drug
deals. The hope is that, given these conditions, many
potential customers will choose to stay away.

Comment



18. (SBU) Comment: Despite the ups and downs throughout the
year, overall, IP enforcement is somewhat better now that it
was a year ago. The RTG,s efforts to target enforcement
actions on the most visible and profitable pirate retailing
centers have largely reduced the most egregious markets for
pirated and counterfeited goods. Enforcement actions in the
last few months of 2004 have yielded impressive numbers of
infringing goods and replicating machinery. Similarly, on the
legislative side, the OD manufacturing bill will soon become
law. While weaker than the IP industry wants, it is still the
most effective tool the RTG has at its disposal to address OD
infringement. In addition, FTA negotiations are soon to be
our best forum to take up USG concerns over the Trade Secrets
Act regulations and the Copyright Amendment; we believe the
RTG can make concessions in the FTA context that would be
otherwise difficult. The IIPA 2005 Special 301 Report for
Thailand is accurate in many of its details, and provides an
excellent inventory of the problems rights holders face here.
However, the evidence, as evinced in the IIPA report and
elsewhere, does not in our view support the call to upgrade
Thailand to the Priority Watch List. All local rights holders
agree that IPR protection has improved in one way or the
other, and in no area has the situation deteriorated from
where it was this time last year. We are also mindful of the
fact that significant IPR protection resources have been
diverted to urgent tsunami recovery efforts, something we are
reluctant to criticize, even implicitly. In view of these
considerations, Embassy recommends that Thailand be kept on
the Watch List.
BOYCE