KUWAIT: THREE IPR SEMINARS IN THREE WEEKS

UNCLAS SECTION 01 OF 05 KUWAIT 001965

SIPDIS

SENSITIVE

STATE PLEASE PASS USTR JFENNERTY

E.O. 12958: N/A
TAGS: ETRD ECON PREL KIPR KU
SUBJECT: KUWAIT: THREE IPR SEMINARS IN THREE WEEKS

REF: A. KUWAIT 36


B. KUWAIT 790

C. 04 KUWAIT 4217

D. 04 KUWAIT 3828

This cable is sensitive but unclassified; please protect
accordingly. Not for internet distribution.


1. (SBU) Summary and Comment. After their country was
strongly criticized this past year for its poor intellectual
property rights (IPR) record, Kuwaitis from inside and
outside the government organized three different IPR seminars
in late April and early May. The first event, an April 25
roundtable organized by the Kuwait Bar Association, brought
together four discussants to debate the International
Intellectual Property Alliance's (IIPA) 2005 Special 301
submission on Kuwait. Most participants agreed that Kuwait's
1999 copyright law is inadequate and that the penalties for
convicted pirates are insufficient. They also spoke about
losses the Kuwaiti economy sustains as a result of
infringement. One speaker, however, defended Kuwait's
copyright law and penalty regime, and claimed that Kuwait
does not need to join the Berne or Rome Conventions because
they are subsumed within TRIPs (which, as an obligatory
international protocol, is automatically considered part of
Kuwaiti domestic law, he contended).


2. (SBU) On May 2-4, Kuwait Customs held an internal,
three-day IPR training session for 60 of its employees.
(Note. This was training not in direct response to the
Special 301 decision for 2005, but was as part of the
agency's ongoing, regular program to combat IPR crimes. End
Note.) The seminar featured presentations by representatives
of international companies, who educated Customs employees
about how to detect counterfeits of their products. As a
result of the training Customs received from General Motors
(GM),they determined that an entire recent shipment of auto
parts from Saudi Arabia were fakes, and GM learned about a
previously unknown factory counterfeiting its products.


3. (SBU) Finally, the Ministry of Information and Kuwait
Chamber of Commerce and Industry organized a two-day seminar
on IPR on May 9-10 that included speakers from the
government, private sector and academia. Again, most
participants agreed that Kuwait's IP laws are inadequate, and
that more training and interministerial cooperation are
necessary. Of special note, however, was a speaker from the
Ministry of Commerce and Industry's Patents and Trademarks
Department, who asserted that intellectual property rights
holders share some of the blame for Kuwait's lousy IP record
because their products are too expensive, "forcing" consumers
to buy cheaper knock-offs.


4. (SBU) During the conference's second day, which was
devoted to the private sector's role in upholding IPR, a
speaker from the Kuwait Bar Association's IPR committee was
highly critical of the Information Ministry's Experts
Department, which she said has no IP experts and no standards
for determining piracy. As a result, she said, the courts do
not trust the experts' opinions when assessing an IP case.
She also scolded the GOK for arguing with the veracity of
international reports about Kuwait's IP shortfalls and
failing to enact their recommendations. A representative
from the Ministry of Information's Artistic Works Department
concluded the seminar with a somewhat defensive presentation
on the ministry's achievements. Of note, however, were the
statistics that she presented showing that within a 20 day
period starting in mid-April, the ministry conducted raids
that led to the confiscation of more pirated goods than the
ministry had seized in all of 2004.


5. (SBU) Comment. The negative fall-out from the Special
301 process has evidently gotten the Kuwaitis' attention, and
raised the profile of IPR. Although the audience at the
Ministry of Information's seminar was tiny, the conference
was not well organized, and at times it seemed as though
Information was simply going through the motions to prove
that it is doing something about IPR, it did provide an
interesting range of opinion from government, academia and
the private sector. The Bar Association, in translating the
IIPA Special 301 submission into Arabic, distributing it
widely, and openly criticizing the GOK for rebuffing its
offer to cooperate on IPR, has ratcheted up the pressure
significantly. We are hopeful that this, combined with the
need for IP improvement to advance the TIFA process, will
convince the GOK to launch a coordinated, sustained and
serious campaign (following on Kuwait Customs' lead) to
better its IP record in 2005. End Summary and Comment.

Kuwait Bar Association Discusses Special 301
--------------


6. (SBU) After being strongly criticized this past year for
Kuwait's poor intellectual property rights (IPR) record,
Kuwaitis from inside and outside the government organized
three different IPR seminars in late April and early May.
The first event, an April 25 roundtable organized by the
Kuwait Bar Association, brought together four discussants to
debate the International Intellectual Property Alliance's
(IIPA) 2005 Special 301 submission on Kuwait. The Bar, which
paid to have the report translated in full into Arabic, had
distributed the report widely to its membership in advance of
the seminar. Several members commented to econoff that they
were "shocked" to read how poorly Kuwait had fared in this
"harsh" report; they did not, however, disagree with its
substance.


7. (SBU) The forum brought together Ahmad Al-Mulaifi, a
liberal nationalist member of Parliament (MP); the Ministry
of Information,s outgoing Legal Adviser and IPR Committee
Chief Judge Khaled Al-Hendi; Dr Fayez Al-Kanderi, a civil law
professor at Kuwait University,s law school (Al-Kanderi will
soon be replacing Al-Hendi, who is being recalled to the
bench, at the Ministry of Information); and Sami Al-Anzy,
Microsoft,s compliance manager for Kuwait. The participants
spoke to a full house of about 40 audience members; the
seminar was covered widely by the print and broadcast media.


8. (SBU) MP Al-Mulaifi began by offering an overview of
Kuwait,s 1999 copyright law, which he readily admitted is
inadequate and does not protect new, innovative technologies
(particularly in the information technology sector).
Al-Mulaifi strongly advocated increasing the low maximum
penalties for convicted pirates (a fine of 500 Kuwaiti dinar,
or about $1700, and up to one year in jail; the courts have
never, however, imposed a jail sentence). He also noted that
while IP crimes are extremely profitable to pirates, they are
equally destructive to the Kuwaiti economy and potentially
harmful to consumers' health and safety.


9. (SBU) During his presentation, Al-Hendi offered a neutral
reading of the history of the Special 301 process, and
described its importance to the U.S.-Kuwait Trade and
Investment Framework Agreement (TIFA) discussions. Al-Hendi,
who is a member of Kuwait,s TIFA team, did not argue with
Kuwait,s placement on the Priority Watchlist, which he said
IIPA had recommended based on (among other things) Kuwait,s
insufficient legal protection for IPR. Like Al-Mulaifi,
Al-Hendi commented on the economic harm that rampant piracy
inflicts, and noted that this must be rectified for Kuwait to
attract serious investment. Al-Anzy's presentation likewise
focused on Kuwait's economic losses that stem from IP
infringement. Yet rather than dwell on what Kuwait is doing
wrong, Al-Anzy reframed the argument to show how Kuwait would
benefit from greater IP protection.


10. (SBU) Unlike the other three speakers, Al-Kandari
defended Kuwait,s copyright law (which the U.S. considers to
be inconsistent with TRIPs requirements). According to him,
the law has provisions that can be adapted to guard against
new types of IP crimes. He also contended that the copyright
law should not be seen in isolation from other Kuwaiti laws,
and he criticized IIPA for, in his view, not being familiar
with the legal system in Kuwait. He said that while he is
amenable to increasing the financial penalty for piracy, he
does not agree with increasing the maximum one-year prison
sentence. Furthermore, he claimed that Kuwait does not need
to join the Berne or Rome Conventions, which he said are
subsumed within TRIPs. Since Kuwait is a member of the WTO
and therefore obliged to uphold TRIPs, he contended, these
conventions' provisions are considered part of Kuwaiti
domestic law. (Note. This interpretation is at odds with
that of the current Ministry of Information Legal Advisor,
who was actively pushing for Kuwait to join Berne and Rome.
End Note.)


11. (SBU) Following the seminar, Microsoft's Al-Anzy (please
protect) commented to econoff that because Al-Kandari is an
academic who is outside the government, he (Al-Kandari) looks
at piracy from a theoretical perspective and does not
recognize the extent of Kuwait's problem. Al-Azny also
believes that Al-Kandari does not yet grasp the larger
implications of poor IP protection, namely that Kuwait will
not be able to liberalize its market until it increases IP
protection. Still, he is hopeful that once Al-Kandari
assumes his position as the Minister of Information's legal
adviser, he will come around.

Kuwait Customs: Leading the Way in the GOK
--------------


12. (SBU) On May 2-4, Kuwait Customs held an internal,
three-day IPR training session for 60 of its employees.
(Note. This was training not in direct response to the
Special 301 decision for 2005, but was as part of the
agency's ongoing, regular program to combat IP crimes. End
Note.) Customs has been the pioneer agency within the GOK on
IP enforcement, and continues to be the cornerstone of the
GOK's IPR program. (Note. The U.S. Customs Liaison Officer
has played an active, key role in pushing Kuwait Customs to
fight IP violations. End Note.) The Kuwait Customs IPR team
opened the conference by outlining the team's role and
discussing the ways in which they can assist Customs
inspectors in determining whether goods are infringing.
Customs then turned the conference over to representatives of
international companies, who educated Customs employees
about how to detect counterfeits of their products. Chanel
and Louis Vuitton officials, whose high-end merchandise is
frequently copied, conducted an extensive training session on
their goods' distinguishing features. They also spoke about
possible concealment methods that pirates use to export
fradulent goods.


13. (SBU) Several presenters spoke about the threat that
counterfeit products pose to consumers. For example, the
French company Schneider Electric offered information about
the danger of counterfeit electronics. General Motors (GM)
and Toyota flew trainers into Kuwait to teach Customs how to
detect counterfeit auto parts. (Note. This has become a
high-profile issue lately, with the Ministry of Commerce and
Industry recently carrying out large raids on shops selling
fake auto parts. End Note.) The session also demonstrated
the benefits that can accrue to both the trainers and the
trainees. Upon learning about the auto parts that GM
manufactures legitimately in Saudi Arabia, one Kuwait Customs
inspector commented that Customs had just cleared a shipment
of a different GM car part that had been manufactured in
Saudi Arabia. Because of what they learned from GM, Customs
now knows that those items were counterfeits. At the same
time, GM now can trace (and hopefully shut down) a new source
of fake auto parts, based on what they learned from the
seminar participants.


14. (SBU) According to the IPR team members, most of the
audience was very attentive and had good questions and
comments throughout. Customs plans to hold similar training
sessions every 2-3 months.

Ministry of Information Organizes 1st IP Seminar
-------------- ---


15. (SBU) At a two-day seminar organized by the Ministry of
Information and the Kuwait Chamber of Commerce and Industry
on May 9-10, speakers from the government, private sector and
academia spoke about different aspects of intellectual
property rights. Although the new Minister of Information
was scheduled to open the two-day conference, his deputy came
in his stead and delivered the Minister's speech for him.


16. (SBU) Manal Al-Baghdadi, the Ministry of Information,s
Legal Controller within the Intellectual Property Department,
opened the May 9 session, which was centered on the
government's role in protecting IPR. She noted that the
Undersecretary has begun requiring her department to submit
quarterly reports on its IPR actions, and said that the
number of inspectors has been increased from 24 to 30.
Al-Baghdadi contended that protecting IP is critical to
encouraging local inventors to continue innovating, so that
they can be assured that their discoveries will remain
proprietary. She also noted that piracy results in job
losses in the local economy, and can lead to increased crime.


17. (SBU) Al-Baghdadi was frank in admitting that Kuwait,s
1999 copyright law is inadequate. She also acknowledged that
the maximum penalty of 500 Kuwaiti dinar (about $1700) for
convicted IPR violators is too low. According to
Al-Baghdadi, the Ministry is drafting a new law that will
increase the penalties for violators and address the
copyright law,s weaknesses. (Note. Al-Baghdadi's comments
at the seminar contrasted with remarks she made the previous
week to a local newspaper, in which she complained vigorously
about the unfairness of IIPA's Special 301 submission, and
particularly its targeted criticisms of the Ministry of
Information. She was quoted by the newspaper as saying, "We
are not Superman, but we are doing our best." End Note.)


18. (SBU) Other government presenters spoke about shortfalls
in Kuwait's IP program that are often raised by the USG and
the IP industry. For example, the Ministry of Interior,s
Col. Adel Al-Khazam lamented the lack of coordination among
GOK ministries, and said that an interministerial committee
was necessary so that different agencies could benefit from
each other's experiences and expertise. (Note. According to
Microsoft,s enforcement manager, the Council of Ministers
this week approved the creation of such a committee. End
Note.)


19. (SBU) Rania Al-Essa from Kuwait Customs spoke about the
benefits of training, especially that offered by rights
holders. She noted that the rights holders can also learn
from the experiences of enforcement (as illustrated by
Customs' and GM's exchange on counterfeit auto parts,
described in para 13). Like Al-Khazam, Al-Essa underscored
the importance of cooperation among agencies, saying that
Customs works regularly with the Ministries of Health,
Information and Commerce.

Do Rights Holders Share Blame for Piracy?
--------------


20. (SBU) Other government speakers were less willing to
accept blame for Kuwait's IP record. Mansour Al-Mutairi from
the Ministry of Commerce and Industry's Patents and
Trademarks Department admitted that piracy is a problem in
Kuwait, and while he cited evidence of his Ministry,s
commitment to upholding IPR - referring 63 piracy cases to
the public prosecutor,s office and seizing 680,000 pirated
CDs and games in the first quarter of 2005 - he cautioned
that better IP protection will take time. Al-Mutairi then
asserted that intellectual property rights holders share some
of the blame for Kuwait's lousy record. In his view, rights
holders are charging too much for proprietary products, and
should be willing to sell their products for less if they
want to make a dent in counterfeit sales. Al-Mutairi cited
the case of a businessman who was looking to purchase
software for his company, but who claimed he could not afford
to buy original software and was therefore "forced" to buy
pirated copies. (Note. Microsoft, for one, sells discounted
software in the Kuwaiti market. For example, all ministry
employees are eligible to purchase Microsoft Office for 5
Kuwaiti dinar, or $17; university students and faculty are
also given a discount. End Note.)


21. (SBU) Professor Ahmad Mouneer Al-Najjar from Kuwait
University took strong issue with Al-Mutairi's contention
that rights holders should bear the burden of upholding IPR.
Al-Najjar emphatically stressed that compliance with TRIPs
provisions is mandatory for all WTO members, including
Kuwait, and noted that the Government of Kuwait is obliged to
enforce IPR as part of the government's international
commitments. He also refuted the notion that companies are
pricing their products irrationally. According to him,
product pricing reflects certain sunk costs (such as research
and development) that decrease over time, particularly as
legitimate competition emerges. For this reason, he said,
countries need to focus on developing competitive industries
rather than allowing pirate markets to flourish. He also
noted that better IP protection will yield greater foreign
direct investment and enhance consumer protection.


22. (SBU) Al-Najjar emphasized the importance of public
education, saying that if young people (and students
particularly) do not understand the importance of IPR, they
will not abide by regulations protecting it. While
advocating the use of the "stick" to enforce IP laws, he also
called for using education to convince people that they
should be self-motivated to obey IP regulations. He noted
that to this end, the university hopes to offer an elective
course on intellectual property rights, which would be
sponsored by an international corporation.

Day Two: Role of the Private Sector
--------------


23. (SBU) On day two, which was devoted to the private
sector's role in upholding IPR, the audience thinned
considerably from about 40 on the first day to no more than a
dozen. Representatives from Microsoft and Rotana, an Arabic
music production and distribution company, spoke about their
companies' methods of combatting piracy and about the
economic harm that they suffer as a result of piracy in the
Kuwaiti market. The Rotana representative called on the
public to ensure that the products they are buying are
genuine, and urged the GOK to enforce IP laws and impose
suitable penalties on violators.


24. (SBU) Bader Al-Mubarak from Enhanced Engineering and
Multi-Technologies Company, an international information
technology group, said that the private sector should offer
seminars and training to educate the public about the
importance of IP protection. At the same time, he said, the
private sector should press hard on the government to carry
out its IPR laws. Al-Mubarak was critical of the Kuwait
Chamber of Commerce and Industry for not taking IPR more
seriously, and called on it to set up an IPR program. He
also lamented the fact that no Kuwaiti companies had agreed
to participate as speakers in the seminar (all of the
conference's private sector participants were representatives
of international companies),and precious few had sent
representatives to observe.

An Experts Department without Expertise
--------------


25. (SBU) A particularly blunt speaker was Nidal Al-Hamaydan
from the Kuwait Bar Association's IPR committee. She called
for greater collaboration between the ministries and the Bar
(which has significant expertise on IP matters),and
expressed her disappointment that the Ministries of
Information and Interior have thus far rebuffed the Bar's
formal requests for cooperation. As had previous speakers,
Al-Hamaydan agreed that Kuwait's IP laws are inadequate,
especially with regard to prescribing punishments. She also
criticized the Ministry of Information for its inspection
regime, saying that the ministry does not take seriously its
legal responsibility to close stores selling pirated goods.


26. (SBU) According to Al-Hamaydan, the individuals working
in the Information Ministry's Experts Department are not IP
experts, and have no specialized training. As a result, she
said, the courts do not trust the experts' opinions when
assessing an IP case. (Note. We have heard this same
criticism from Judge Khaled Al-Hendi, the Ministry of
Information's departing legal advisor. End Note.)
Al-Hamaydan also decried the lack of standards within the
department, claiming that each employee interprets the law
differently from the other. Al-Hamaydan called for the
ministry to implement a clear policy on how the law should be
interpreted, and then enforce that policy.


27. (SBU) Al-Hamaydan called the 2005 Special 301 report
"alarming," and said that it clearly demonstrates that
Kuwait's IP problem is worsening. She criticized the GOK for
arguing with the veracity of reports coming from embassies
and international organizations about Kuwait,s IP
shortfalls. "These are facts," she said, and she advocated
that the government begin implementing the recommendations
contained in these reports. Finally, she noted that there
was a seminar in Jordan recently on e-commerce and piracy
that had high-level participation from other Arab countries,
including a juror from Saudi Arabia. There was no such
attendance by the GOK.


28. (SBU) Rasha Al-Mulla from the Ministry of Information's
Artistic Works Department concluded the seminar with a
somewhat defensive presentation on the ministry's
achievements. Of note, however, were the statistics that she
presented. According to her, within a 20 day period starting
in mid-April, the new Assistant Undersecretary for IP
Enforcement, Brahim Al-Nouh, ordered raids on 94 targets that
led to the confiscation of more pirated goods than the
ministry had seized in all of 2004. She claimed that this
should be enough to refute international criticism of
Kuwait's IP record.
LEBARON