Identifier
Created
Classification
Origin
06KUALALUMPUR794
2006-05-02 04:15:00
UNCLASSIFIED
Embassy Kuala Lumpur
Cable title:  

U.S.-MALAYSIA INTELLECTUAL PROPERTY

Tags:  ETRD KIPR MY 
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VZCZCXRO0200
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHKL #0794/01 1220415
ZNR UUUUU ZZH
R 020415Z MAY 06
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC 6530
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
UNCLAS SECTION 01 OF 05 KUALA LUMPUR 000794 

SIPDIS

SIPDIS

STATE FOR EB/TPP/MTA/IPC - FELSING
STATE PASS USTR FOR B. WEISEL, J. JENSEN, V.
ESPINEL
USDOC FOR JENNIFER BAKER
COMMERCE PASS USPTO FOR P. FOWLER

E.O. 12958: N/A
TAGS: ETRD KIPR MY
SUBJECT: U.S.-MALAYSIA INTELLECTUAL PROPERTY
RIGHTS ROUNDTABLE

Summary and Introduction
------------------------

UNCLAS SECTION 01 OF 05 KUALA LUMPUR 000794

SIPDIS

SIPDIS

STATE FOR EB/TPP/MTA/IPC - FELSING
STATE PASS USTR FOR B. WEISEL, J. JENSEN, V.
ESPINEL
USDOC FOR JENNIFER BAKER
COMMERCE PASS USPTO FOR P. FOWLER

E.O. 12958: N/A
TAGS: ETRD KIPR MY
SUBJECT: U.S.-MALAYSIA INTELLECTUAL PROPERTY
RIGHTS ROUNDTABLE

Summary and Introduction
--------------


1. The U.S. and Malaysia held a long-anticipated
IPR Roundtable on April 20 in Kuala Lumpur.
Approximately seventy participants from the
Malaysian and U.S. governments, as well as
industry and civil society, gathered to discuss
IPR enforcement efforts, industry views on
combating piracy, IPR protection within the
context of free trade agreements, and the U.S.
perspective on IPR protection, including the use
of specialized IPR courts. Participants also
discussed U.S.-Malaysian cooperation efforts,
including the ongoing provision by the U.S. of
capacity building for Malaysian officials. The
Ambassador and the Minister of Domestic Trade and
Consumer Affairs launched the event and also held
a joint press conference. The Roundtable was co-
chaired by the DCM and by Deputy Secretary General
Mohamed Nor Hj. Abd Aziz of the Ministry of
Domestic Trade and Consumer Affairs (MDTCA).

Ambassador LaFleur and Minister Shafie Launch the
-------------- --------------
Roundtable
--------------


2. Ambassador LaFleur kicked off the event with a
speech that countered common excuses made by
purchasers of stolen IP, such as the cost of
optical media and the alleged lack of harm to IP
producers. He emphasized the need for the U.S.
and Malaysia to continue to work together to
change the common perception among consumers that
IPR piracy is not a true crime. The Ambassador
urged Malaysia's leaders to project more public
opposition to IPR piracy. High-level advocacy was
essential not only to stem retail piracy, but more
broadly to further Malaysia's goal of developing a
knowledge-based economy, which is strongly
influenced by foreign investors' assessments of
whether their IPR would be protected. The
Ambassador welcomed Minister of Domestic Trade and
Consumer Affairs Shafie Apdal's commitment to
implement a specialized IPR court, as well as his
more recent initiative to obtain legal authority
to act against owners of retail premises that
routinely sell pirated products.


3. Minister Shafie placed the IPR Roundtable in
the context of the upcoming U.S.-Malaysia FTA

negotiations, expressing his hope that negotiators
of the FTA's IPR chapter would build on the day's
events. He acknowledged that IPR theft was a
drain on Malaysia's economic growth and would
inhibit its ultimate economic success, and noted
his particular concern about Malaysia's reputation
as one of the leading exporters of pirated optical
disc media. Shafie listed a range of actions that
Malaysia had undertaken to attack piracy,
including an increasing number of seizures, more
effective prosecution that included higher fines
and longer sentences for convicted IPR pirates,
and the creation of an export enforcement unit to
strengthen controls at international air and sea
gateways. He noted the ministry's intention to
hire over 700 new enforcement officers this year
and reiterated his plan to implement soon a
specialized IPR court.


4. The Ambassador and Minister Shafie held a
joint press conference following the opening
session, which received wide coverage from the
media. They conveyed many of the same themes in
their remarks to the press. Press questions
focused on a news report that the Recording
Association of Malaysia had brought suit against a
local shopping mall for its failure to stop sales
of pirated CD's on its premises. Minister Shafie
confirmed that he is seeking administrative
authority to enable his Ministry to independently
pursue such cases.


KUALA LUMP 00000794 002 OF 005


U.S. and Malaysian Approaches to Enforcement
--------------


5. Econoff presented the USG STOP Initiative as
an effort by the United States to improve its
interagency coordination in IPR enforcement.
Although the United States has long led global
efforts to protect intellectual property, enhanced
coordination through STOP was helping U.S.
agencies to improve their effectiveness against
organized IP crime. Econoff noted that engagement
with U.S. trading partners on IPR protection was a
key component of the initiative; our commitment to
improving IPR enforcement in the region was shown
by the recent posting to Bangkok of an IP attach
and an IP law enforcement coordinator, both with
regional responsibilities. The U.S. would continue
to provide IP training and capacity building
programs for foreign officials, and welcomed
Malaysia's ongoing participation in such
initiatives.


6. Roslan bin Mahayuddin, MDTCA Acting Director
General for Enforcement, gave an overview of
Malaysia's recent enforcement activity, noting in
particular that 2006 was shaping up to be a record
year in terms of seizures of pirated IPR in
Malaysia. Roslan reiterated Shafie's statement
that the establishment of the MDTCA's Export Unit
in April 2005 was a key component of Malaysia's
strengthened enforcement efforts. More than RM 50
million (approximately USD 13.8 million) in
merchandise has been seized so far this year,
compared to seizures worth just over RM 100
million in all of 2005, in part through better
coordination on seizures destined for export.
Roslan noted that the number of licensed optical
media disc factories in Malaysia has been reduced
from 44 to 38 in the last year, and several other
pending license revocations would continue to
bring that number down to a level more
commensurate with the legitimate Malaysian market.
An optical disc forensic laboratory was
established in 2003 in coordination with the
government Chemistry Department; Roslan
acknowledged that no cases have yet been developed
based on forensics evidence corroborated by the
new lab, though he suggested that would soon
change.


7. USPTO Senior Counsel Peter Fowler provided an
overview of U.S. judicial enforcement of IPR. The
U.S. has long experience in protecting IPR that
could inform other countries like Malaysia on the
most effective means to enforce IPR. Fowler
highlighted a number of facets of U.S. IPR
enforcement, including a reliance on civil
litigation, supplemental use of criminal
prosecution, and the predominance of the federal
court system for litigation rather than state or
local courts. Government must be involved in IPR
enforcement because such protection is in the
public interest, going beyond the interests of
individual piracy victims. Fowler added that
piracy is often committed without the victim's
knowledge, and the victim usually has no direct
relationship with the infringer; in such
situations a victim might be unable to pursue
civil remedies, leaving criminal penalties as the
only effective recourse. Criminal sanctions may
also be necessary in cases where fines might be
treated by IPR violators as just a cost of doing
business.


8. Fowler presented a number of models that
Malaysia could consider as it moves toward
implementing a specialized IPR court, including
separate specialized courts or judicial panels,
such as in Thailand and Korea, or designated
existing courts to handle IPR cases, as in Japan,
Singapore, Indonesia, Taiwan and the Philippines.
He noted that the U.S. had no designated IPR
court, though we do have a special appeals court
to handle patent litigation. Regardless of the

KUALA LUMP 00000794 003 OF 005


approach, a specialized IPR judicial regime was
important given technically complicated cases
involving science, technology innovation, patents,
and transnational civil litigation.
Specialization would allow for a better-informed
judiciary, more focused law enforcement, better
case management and dedicated resources to
continuously promote protection.

IPR Protection in the FTA Context
--------------


9. Econ Counselor gave a general overview of the
typical provisions of an IPR chapter in a U.S.
free trade agreement, after cautioning that his
presentation should not be seen as pre-judging the
treatment of IPR in the upcoming U.S-Malaysia FTA
negotiations. He noted that U.S. Trade Promotion
Authority (TPA) sets as an FTA negotiating
objective the promotion of effective IPR
protection through accelerated implementation of
TRIPS, in particular its enforcement aspect; by
ensuring that FTA provisions reflect a standard of
protection similar to U.S. law; and by providing
strong protection for new and emerging
technologies. Typical IPR chapters in past FTAs
have included provisions on trademarks,
copyrights, patents, Internet domain names,
satellite broadcasts, and enforcement and criminal
procedures.

Industry Views - Improving Enforcement, Continuing
Concerns
-------------- --------------
--------------


10. While representatives from a range of IPR
industry associations expressed appreciation for
the Malaysian government's recent enforcement
successes and its commitment to IPR protection,
they were not shy about raising their varied
concerns on the state of IPR protection here.
Jeff Hardee, Regional Vice President of the
Business Software Alliance, noted that an
effective IPR court would necessitate better-
trained prosecutors than exist at present, and he
called on Malaysia to fully implement all WIPO
treaties. He also pointed out that BSA supports
technology neutral government procurement, given
that its membership straddles both sides of the
open source software debate. Neil Gane, Senior
Operational Director of the Motion Picture
Association, noted MPA's appreciation for the
government's enforcement efforts, which had
reduced DVD piracy substantially in the last few
years. Despite reducing the number of licensed OD
factories, however, MPA continues to believe the
country has far too many production lines, and
which keeps it a significant exporter of pirated
products. Gane also raised the significant
funding through IPR crime of other criminal
activity.


11. Su Siew Ling, a Kuala Lumpur attorney who
represents the Association of American Publishers,
said the AAP's primary concern in Malaysia is the
widespread photocopying of textbooks, particularly
around university campuses. She pointed out that
illegal photocopiers typically produce on demand,
keeping virtually no stock on hand that would help
authorities prove counterfeit production.
Photocopiers are aided by Malaysia's copyright
law, which allows for possession of up to three
copies of a work for private/personal use. Siew
Ling said AAP continued to advocate stronger anti-
piracy action by means of increased surveillance
in chronic areas, such as near universities; an
increased willingness by authorities to enforce
actions against photocopiers, and to follow up
with effective prosecution of such cases; an
enhanced public awareness program, especially
among teachers and students; and increased use of
civil action against violators.


KUALA LUMP 00000794 004 OF 005



12. Cyril Chua, a Singapore attorney who
represents the Entertainment Software Alliance,
noted the particularly high rates of piracy in
Malaysia in that area of optical media (over 90
percent by some estimates). Like his industry
colleagues, he pointed to the weak prosecution of
cases as a prime concern, noting that the
government has not strengthened prosecution to
keep up with its strengthened enforcement efforts.
Tom Hart of Aztra Zeneca, who represented Amcham's
pharmaceutical committee, pointed out that, while
his industry faces different obstacles from
optical media industry, counterfeit
pharmaceuticals posed a direct threat to the
health of Malaysian consumers, and thus
necessitated particularly strong enforcement and
prosecution.

Current and Future Cooperation
--------------


13. The U.S. and Malaysia continue to cooperate on
a number of capacity building programs. Peter
Fowler noted that the most effective training
programs are those that can reach a broad set of
officials, and that can be institutionalized
relatively quickly so that an organization's
improved performance does not depend on the
continued employment of those officials who
initially receive training. Fowler pointed out
the May 2006 seminar on IP prosecution in KL,
which is an ASEAN-sponsored event with significant
financial and logistical support from USPTO. He
noted USPTO's active training schedule in
Southeast Asia, where it typically works through
ASEAN to set up capacity building sessions. He
also pointed out the recent inauguration of the
Global Intellectual Property Academy at USPTO,
which has already trained several Malaysian
participants. Siti Eaisah of the Malaysian
Intellectual Property Office (MyIPO) noted her
appreciation of the training USPTO has provided to
MyIPO officials, and said her office needed
particular assistance in training patent examiners
in specialized areas like biotechnology and
engineering. Othman Nawang of the MDTCA's
enforcement division said his officers would
benefit from training in surveillance and
detecting techniques, combating Internet piracy,
criminal profiling, and optical disc forensics.


14. Industry representatives were united about the
need to improve public awareness on the need to
protect intellectual property. Chua said ESA has
launched an IP initiative in public schools aimed
at young children, viewed as the most persuadable
audience, even if the results from such outreach
may not be apparent until such kids reach their
early teenage years. MPA likewise sees schools as
a main focus of its outreach efforts. While
agreeing on the importance of educating consumers,
particularly children and young adults, BSA's Jeff
Hardee pointed out that there are no shortcuts to
strong enforcement measures. He raised the issue
of piracy in the U.S., which continued to be a
major concern throughout the IP industry despite
extensive public outreach (he noted that, while
U.S. piracy rates are fairly low by Southeast
Asian standards, overall losses there remain very
high). Strong enforcement is a tool along with
education in deterring IP theft, he added.


15. The DCM wrapped up the Roundtable by
acknowledging our existing and future cooperative
efforts, including the Roundtable itself. Our
bilateral cooperation had been one factor in
Malaysia's improving ability to fight piracy, and
the U.S was committed to continuing our effective
collaboration. The U.S. looked forward to
Malaysia's continuing efforts, including the
upcoming establishment of an IPR court. The FTA
talks would ensure that IPR protection would be a
prime topic of bilateral government discussion in
the coming year, which we hoped would lead to an

KUALA LUMP 00000794 005 OF 005


FTA that would continue to advance our
cooperation.

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


16. The IPR Roundtable was a welcome opportunity
for an open discussion of Malaysia's efforts to
protect intellectual property, and was especially
well timed given our imminent launch of
negotiations on an FTA. MDTCA officials are
understandably proud of the progress they have
made in enhancing enforcement and expressed a
strong commitment to furthering those gains. They
also recognize that one of the government's
principal goals in the just released Ninth
Malaysia Plan - creating a more knowledge-based
economy - will depend heavily on the government's
ability to protect IPR, both to encourage local
entrepreneurs as well as the foreign investors who
would help support them. Our industry
representatives acknowledged Malaysia's progress
and commitment, but made clear that the government
had a long way to go in creating an effective
deterrent that would help effect a significant
shift in the average Malaysian's attitude toward
IPR piracy.


17. Embassy was pleased by the large, diverse
turnout at the Roundtable, which included some NGO
participants that have been vocal critics of the
U.S.-Malaysia FTA. Their comments during the
Roundtable indicated they we didn't change any
minds, but we were pleased to be able to explain
to them our views on the benefits of an FTA to
Malaysia, including through enhanced IPR
protection. The Roundtable deepened our bilateral
dialogue on IPR, and could lead to the
organization of similar events in the future,
perhaps after the conclusion of our upcoming FTA
negotiations.

LAFLEUR