SPECIAL 301 REVIEW -- THAILAND

UNCLAS SECTION 01 OF 04 BANGKOK 001050

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT PASS TO USTR JCHOE-GROVES
COMMERCE PASS USPTO FOR JURBAN

E.O. 12958: N/A
TAGS: ECON ETRD KIPR TH
SUBJECT: SPECIAL 301 REVIEW -- THAILAND

REF: SECSTATE 14937


1. (SBU) Summary and Recommendation: Piracy rates of
intellectual property in Thailand remain high and few
dramatic steps were taken during 2005 that would predict
significant reductions in those rates in the near future.
Nevertheless, legislative developments and enforcement
actions for the year have been predominantly positive. The
RTG continues to tighten its IP legal framework, including
enactment of the Optical Disc Law and progress on amending
the Copyright Law. Rights holders have seen better
cooperation with enforcement officials, particularly with
Thai Customs, and have seen the emergence of a more powerful
partner in the Department of Special Investigations that
holds promise for more and larger seizures of infringed goods
in 2006. Thailand has settled in to what portends to be a
long-term struggle against infringement. Though decisive
victory over piracy seems unlikely anytime soon, we are
generally satisfied with the steps being taken on the road to
pursue that victory. The Embassy recommends that Thailand
remain on the Watch List. End Summary and Recommendation.


2. (SBU) IPR enforcement in Thailand proceeded apace in
2005, without dramatic campaigns to clean up the streets of
bootleg merchandise once and for all, but rather with a
steady stream of raids and arrests. The Department of
Intellectual Property (DIP) released statistics for 2005
showing seizures of 2,261,567 infringing products and 7,689
arrests. Rights holders agreed that the number of overall
raids on infringers was up for the year and seizures of
contraband merchandise were higher than in 2004, but the
total amount of merchandise for sale on the streets of
Thailand does not appear to have diminished.


3. (SBU) Individual rights holders have seen progress on
reduction of piracy rates on specific products in concert
with active enforcement programs. One apparel manufacturer
has seen counterfeiting of its product drop 95 percent over
the last ten years thanks to ongoing investigations into
counterfeit manufacturers and frequent raids of
establishments selling contraband copies of its product.
Counterfeit sellers have learned it does not pay to
counterfeit that particular brand, but that has meant simply
that they have moved on to counterfeit other brands where the
rights holders are less active.

Police and Customs
--------------


4. (SBU) Rights holders cite improved cooperation from local
police in taking down establishments retailing counterfeit
product. Although the rights holders are generally expected
to do their own investigations and provide the evidence
necessary to obtain a warrant, police are enthusiastic about
participating in raids, not least because the rights holders
provide bonuses for successful raids. However, a common
complaint is that police fail to follow up on evidence
gathered during a raid to pursue the bigger fish, the
manufacturers and larger distributors of the counterfeit
product. Most often, police on a raid will seize product at
the site and bring the 17-year-old girl minding the shop down
to the station for booking. Content with a successful raid,
and unable (or unwilling) to directly finger the store owner,
the police store the seizure for later destruction and file
the case away. There have been cases of police units taking
ex officio action and seizing counterfeits on their own
volition, but rights holders say the actions are not
necessarily cost-effective as police expect rewards for
making the seizure.


5. (SBU) The Department of Special Investigations (DSI),a
disappointment in its formative years as far as IPR
enforcement, played a more important role in 2005. DSI,
formed as an equivalent to the FBI with enforcement and
investigative power to crack down on large-scale crime,
including intellectual property crime, initiated three
substantial trademark cases and two copyright cases, seizing
a total of 189,674 infringing goods for the year. More
importantly, minimum thresholds for cases that had hamstrung
DSI in the past were lifted as of the beginning of 2006.
Previously DSI was restricted to investigating only cases
where the value of merchandise was over five million Baht
(USD 125,000),based on the value of counterfeit merchandise.
The threshold has now been lowered to 500,000 Baht (USD
12,500) and is now based on the value of the legitimate
product, enabling DSI to pursue larger numbers of cases.
DSI,s resources and reputation for being less corrupt than

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the regular police force give some hope for more effective
enforcement in 2006.


6. (SBU) The Customs Department was a particularly bright
light, showing dramatic improvement and sustained activity in
IPR enforcement. Customs was responsible for numerous large
seizures and were credited with seizure of 765,438 infringing
goods for the year. Rights holders lauded Customs,
willingness to undertake ex officio investigations, not only
stopping almost 200 pirate shipments in 2005, but also saving
rights holders the time and expense of doing investigations
expected by other enforcement arms. Customs officials have
also shown enthusiasm for participating in enforcement
seminars and liaising with customs officials in other
countries to crack down on shipments of bootleg merchandise.
However, it is notable that nearly all seized shipments are
incoming; Customs officials have placed substantially less
importance on inspecting outgoing shipments for infringing
goods.

IP Court talent being wasted
--------------


7. (SBU) Thailand,s Intellectual Property Court gets high
marks for its professionalism and interest in trying IP
cases. The court processes a large number of cases annually
in a reasonable time frame and with judgments on cases that
the legal community considers to be fair. The thirty judges
on the court have shown great willingness to participate in
IP seminars and are genuinely interested in intellectual
property issues and the range of disputes involved. However,
resident IP lawyers in Thailand have noticed that the steady
stream of routine low-level cases brought to court through
police raids on small shops selling bootleg DVDs or blue
jeans is taking its toll on judges who are becoming
increasingly bored and disillusioned. The IP Court handled
approximately 13,000 cases in 2005, nearly all of which were
small-time offenders who plead guilty and accepted a
relatively small fine as punishment. The low level of
penalties exasperates rights holders who see infringers
accepting the fines as simply a cost of doing business, but
judges are unwilling to impose harsh punishments on
defendants who most everyone agrees are the small fry in the
world of counterfeiting. Some judges have begun handing down
sentences requiring only community service (sweeping local
temples, etc.),and others are advocating decriminalizing
low-level IP crime in order to clear their dockets of
small-time cases.


8. (SBU) The IP Court has been stricter of late on issuance
of search warrants out of dissatisfaction with some rights
holders who they feel have been abusing the court,s
authority. Numerous rights holders (mostly local) have been
accused of brandishing warrants to sellers of pirated goods,
threatening them with arrest if they do not make &royalty8
payments. Although the rights holders see this as just
another revenue stream that would be otherwise lost to them,
the Court views it as a form of extortion. As a result,
rights holders in general are finding it more difficult to
acquire warrants, some of which are valid for only a few
hours.

Legislation
--------------


9. (SBU) Thailand,s long-awaited Optical Disc Law went into
effect on August 29, 2005. Though too early to have any real
effect on enforcement, the Department of Intellectual
Property (DIP) said the law has helped them to develop more
information on the operations of the 38 optical disc
manufacturing plants they monitor. DIP is preparing to
collect exemplar discs from each manufacturing line to better
track the source of bootleg OD,s using new OD forensics
technology being acquired with Embassy assistance and
financing. One criticism of the Optical Disc law was that
while it required copyright codes, there was no specific
requirement to use industry standard SID codes, and DIP
developed their own code system. However, DIP says that
plants are eligible to use SID codes if they choose and
fifteen OD plants, which account for the majority of OD
production in Thailand, have opted to do so.


10. (SBU) DIP is reviewing intellectual property laws as
part of a general overview of all laws by the Thai
government. Amendments to the Copyright Law that have been
circulating for some time are now with the Cabinet for
approval and DIP expects parliamentary approval sometime in

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2006. Next on DIP,s agenda for review are amendments to the
Patent and Trademark Law. DIP has sought comments for
suggested improvements to the law, particularly on measures
that may need to be brought into compliance with WTO rules.
The Trade Secrets Act is on tap for review for 2007, though
implementing regulations for the original Act still have yet
to be implemented. The regulations now sit with the Minister
of Public Health, but it is expected that action on the draft
regulations will not take place until after Thailand
completes FTA negotiations with the U.S. DIP has also taken
steps toward eventual membership for Thailand in the Patent
Cooperation Treaty, the Paris Convention, and organized a
committee to examine possible membership in the Madrid
Protocol on trademark protection.

Internet
--------------


11. (SBU) The increasing availability of the Internet in
Thailand is fueling a nascent but looming demand for illegal
downloading of music and movies. Although the penetration
rate of the Internet is still low compared to developed
countries, analysts predict ten percent annual growth in
Internet users, and 60-90 percent annual growth in data rates
and bandwidth. Rights holders estimate 80 to 100 sites offer
free downloads of infringed music in Thailand. Although
Internet service providers have been cooperative in taking
down sites upon request, many of the same sites pop up
quickly thereafter on other servers. Enforcement for
Internet crime falls to the cybercrime unit of the Economic
Crimes Investigation Division of the police, but the unit has
limited manpower and broad responsibility for numerous other
types of Internet fraud. Although bandwidth is not broad
enough to permit rapid downloading of large movie files, the
increasing availability of broadband in Thailand makes it
more likely that illegal movie downloads will be a greater
problem in the future.

Training and Public Awareness
--------------


12. (SBU) Embassy Bangkok is currently administering a
$265,000 grant to improve IPR enforcement measures for the
Thai Customs Department. The two initial phases are complete
and U.S. Customs and Border Protection is in the process of
developing materials for the next phase, a conference on
&training the trainers8 to improve enforcement at all ports
of entry in Thailand. The Embassy is also finalizing
preparations for purchase of an optical disc forensics
machine for the Thai police forensics lab which will enable
the police to accurately trace the origin of a counterfeit CD
or DVD to the manufacturing line and plant. IFPI developed
the technology and has already financed training for several
Thai police officials in London in the use of the machine.
Once the machine is acquired, DIP is prepared to procure
exemplar discs from each optical disc plant in the country to
serve as a resource for police to track infringing discs to
their source.


13. (SBU) DIP has been working with rights holders on public
awareness campaigns on infringement, aimed particularly at
teenagers. DIP developed a &No Buying, No Selling, No
Using8 campaign against IPR infringement and have organized
public relations campaigns at a number of local shopping
areas and in the provinces. Anti-piracy trailers are
regularly shown in cinemas. DIP worked with the Business
Software Alliance and Microsoft on software asset management
and held seminars on end user piracy of software.

Comment
--------------


14. (SBU) Members of the intellectual property community in
Thailand generally agree that, with some notable exceptions,
the legislative framework for effective IP enforcement is in
place. There exist few if any quick fixes that would
dramatically improve enforcement in a short span of time and
significantly improve piracy rates. We are now engaged in a
long, twilight struggle against infringement which holds no
promise for quick or easy victory, nor any guarantee that
victory, however it may be defined, will ever be reached.
Progress, if it is to be made, will come through steady and
determined action, slugging it out daily with the
manufacturers, distributors, retailers and importers of
counterfeit goods.


15. (SBU) Incremental improvements in legislation and

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enforcement measures were made in 2005 and we expect similar
incremental improvements in 2006. Although piracy levels
remain unacceptably high and commitment to effective
enforcement still lower than what anyone would prefer, we
continue to see progress across the board in improved
legislation, better enforcement cooperation and higher
awareness among the public and the RTG of the importance of
IPR. There has been little deterioration in any of these
areas and for these reasons we see no reason to downgrade
Thailand,s position on the Watch List.
BOYCE