INDONESIA: 2006 IPR PROJECT PROPOSALS

UNCLAS SECTION 01 OF 03 JAKARTA 003897

SIPDIS

FOR EAP/IET, INL/C ASHANTI, EB/TPP/IPE EFELSING
DEPT PASS TO USTR DKATZ, VESPINEL AND JGROVES

SIPDIS

E.O. 12598: N/A
TAGS: KIPR ETRD ID
SUBJECT: INDONESIA: 2006 IPR PROJECT PROPOSALS

REF: A. JAKARTA 3296 "Police Enforcement Continues"


B. JAKARTA 3531 "Special 301 Submission"


1. Summary: The tide is turning in a favorable direction
on IPR enforcement in Indonesia. A year ago, the IP
industry, which was oddly cutting resources here, had marked
Indonesia as the next hub for regional piracy and
counterfeit syndicates. However, contrary to such
expectations, over the past six months, the reform-minded
Yudhoyono Administration -- with USAID assistance and
encouragement from our Trade and Investment Council (TIC)
talks -- has begun an earnest effort to implement new
optical disc regulations (ODR) and brought enforcement
efforts to new levels. One MPA regional representative
describes recent events as "the most remarkable developments
in Indonesia in the last six years." In May 2006, two INL-
funded ICITAP senior technical advisors will begin working
with the Ministry of Industry and Police to assist further
the Government of Indonesia's (GOI) ODR implementation and
supporting police enforcement, an initiative both agencies
warmly embrace. If the success of the last year's limited
USAID assistance to the Ministry of Industry is any
indication, we expect these two full-time advisors and the
GOI to accomplish much in the coming year. But there are
many enforcement challenges here, and we should not expect
to solve them all in one year, nor should we plan to
dramatically reduce our engagement and assistance at a time
when we finally have serious GOI attention to this issue.
As such, Embassy Jakarta requests FY 2006 funding for one
senior IPR technical advisor to continue to support the
Indonesian police and other agencies with IPR enforcement
and ODR implementation for a second and final year. End
Summary.


2. In the past year, the USG has stepped up its engagement
with the Government of Indonesia (GOI) on Intellectual
Property Rights (IPR) protection through reinvigorated TIC
talks and an IPR action plan. For the first time in recent
memory, the GOI has initiated a sustained and significant
enforcement campaign, backed by high level GOI political
support, against pirate vendors and factories.


3. The Ministry of Industry (MOI),with USAID and IP
industry support, has established and provided preliminary
training to an interagency optical disc (OD) factory
monitoring team. That team has registered nearly all of
Indonesia's 22 known OD factories, issued SID codes, and
started regular random and unannounced inspections.
Following a late December directive from Indonesia Police
Chief Sutanto to step up IPR enforcement, the police have
worked with the IP industry to conduct sustained raids
against street and mall vendors and factories. Throughout
the greater Jakarta metropolitan area alone, MPA
representatives tell us police in February conducted 211
raids, detained 145 individuals, and seized more than
200,000 pirated optical discs. Jakarta police informed us
they have eighteen individuals under detention and awaiting
prosecution for IPR infractions, including one factory owner
from a February 9 raid. IP industry reps tell us piracy
levels in Jakarta are down by as much a 10 percent, and by
as much as 60 percent in Surabaya, Indonesia's second
largest city.


4. These are impressive developments given that a year ago,
the IP industry, which was oddly cutting its resources here,
had marked Indonesia as the next hub for regional piracy and
counterfeit syndicates. Still, there remains much work to
be done, and it is important to safeguard and nurture the
current positive momentum by building on USAID's efforts to
establish and train the MOI-led OD factory monitoring team.


5. We are very grateful for two FY 2005 INL-funded ICITAP
senior IPR technical advisors for Indonesia, both of whom
will begin their engagements in May 2006. One advisor will
follow-up on USAID's recently-completed assistance efforts
and provide full-time support for the Ministry of Industry
OD factory monitoring team's efforts to implement a credible
and effective factory monitoring regime. The second advisor
will provide full-time enforcement training and technical
support to Indonesian National Police that will complement
the efforts of the first advisor. The GOI has warmly
welcomed this initiative and we expect the two advisors to
accomplish much in the next year.


6. However, in our judgment, it would be a mistake to
dramatically reduce our engagement and assistance after one
year when we have serious GOI attention to this issue. As
such, Embassy Jakarta requests FY 2006 funding to provide
one senior IPR technical advisor to the GOI to continue to
support the Indonesian police and other agencies with IPR

JAKARTA 00003897 002 OF 003


enforcement and ODR implementation for a second and final
year. Specifically, that advisor would build off the
accomplishments of his two predecessors, collaborate further
with police and what should be a fully operational OD
monitoring team, and continue to focus more attention on
training and advice for the Attorney General's Office and
Courts in support of more prosecutions.

IPR Enforcement and Prosecution Mentoring
--------------


7. The Indonesian police Special Economic Crimes Division
has chief responsibility for IPR enforcement, including
optical media piracy. Indonesian prosecutors and the courts
have a poor record for IPR prosecutions and, with the
upswing in police enforcement activity, are quickly becoming
a new center of focus. (Note: Two Indonesian prosecutors
attended a one-week USPTO course on IPR enforcement in the
U.S. last month, and more are expected to attend an IPR
enforcement seminar in Hong Kong in May). The Ministry of
Justice Directorate General for IPR nominally coordinates
GOI IPR enforcement and awareness efforts. Our advisor
would be attached directly to the police, but would liaise
and coordinate closely with all five agencies. Ideally, the
senior advisor would have law enforcement and IPR
investigative experience, preferably in Indonesia or
Southeast Asia. The IPR advisor's specific duties would
include:

-- Mentoring police on IPR investigation techniques,
including technical training related to ODR implementation,
identification of end-user piracy, and internet-related
piracy.
-- Cooperating closely with MOI optical disc factory
monitoring team and IP industry representatives to identify
unregistered factories and establish targets for factory,
retail and end-use raids.
-- Working closely with police investigators, the US DOJ
Resident Legal Advisor (RLA) in Jakarta, and DOJ's new
regional IPR Enforcement Coordinator to mentor prosecutors
and ensure appropriate follow-on investigations and
referrals of cases for prosecution.
-- Developing closer cooperation on IPR enforcement between
police, other agencies (i.e.: customs, MOI, Ministry of
Trade, Ministry of Justice, Attorney General's Office and
the Criminal and Commercial Courts).
-- Developing effective and appropriate media awareness
campaigns related to IPR enforcement.

Existing USG Programming
--------------


8. The FY2006 advisor would continue to complement other
USG near-term USG assistance projects in the IPR area,
include the following:

-- USAID is providing up to USD 20 million to reform and
strengthen Indonesia's specialized courts. Emphasis will be
on the Commercial Court, which has responsibility for IPR
and bankruptcy cases, and on the Anti-Corruption Court.
This effort will provide technical assistance to enhance
administration; training to improve and expedite
adjudication; and, hardware to modernize operations.
According to IPR Industry representatives, most Commercial
Court decisions on IPR cases, particularly trademark cases,
have been decided correctly.

-- DOJ/OPDAT, with USD 700,000 in INL funding, is providing
a full-time U.S. Resident Legal Advisor (RLA) through 2007
to work with the Indonesian Attorney General's Office. The
RLA is training Indonesian prosecutors and providing
technical assistance, including that related to IPR, to
Indonesia's Transnational Crime Task Force. We will also
expect the newly appointed DOJ IPR Enforcement Coordinator
in SE Asia, stationed in Bangkok, to support these efforts.
The IPR Enforcement Coordinator, a DOJ prosecutor who will
be visiting Jakarta in May, will become increasingly engaged
in supporting law enforcement efforts in Indonesia. The FBI
legal attache at post may also provide additional
opportunities to engage Indonesia police and prosecutors on
IPR enforcement matters.

-- Finally, the USG through USAID has a major new Trade
Capacity Building project with Minister of Trade Marie
Pangestu. This three-year project assists the Ministry to
build and strengthen its legal staff in order to more
effectively and professionally engage in international trade
dialogue. The three year $15 million project is critical to
enhancing the body of Trade Law, Regulation and Policy that
will promote Indonesia's ongoing participation in regional

JAKARTA 00003897 003 OF 003


and global trade pacts, including to those related to IPR.

Requested Funding
--------------


9. Based on estimates from DOJ/ICITAP, senior technical
advisors require approximately USD 300,000 in basic funding
per year. Each advisor would need travel and training
budgets. Estimate travel costs are USD 5,000 for domestic
travel and $20,000 for regional travel (including
accompanying GOI officials). The cost of four training
sessions per year, including the use of foreign trainers, is
approximately USD 40,000. Therefore, to fund the project,
Embassy requests USD 365,000 in INL FY2006 Intellectual
Property Rights (IPR) Training and Technical Assistance
Program funds. DOJ/ICITAP representatives at post have
agreed to assist in the administration of this project.

PASCOE