KUWAIT: COMMENTS FOR 2006 SPECIAL 301 REVIEW

UNCLAS SECTION 01 OF 03 KUWAIT 000508

SIPDIS

SENSITIVE
SIPDIS

STATE PASS TO USTR

E.O. 12958: N/A
TAGS: ETRD ECON KIPR KU
SUBJECT: KUWAIT: COMMENTS FOR 2006 SPECIAL 301 REVIEW

REF: A. STATE 14937


B. KUWAIT 39

C. 05 KUWAIT 2251

D. 05 KUWAIT 3222

E. 05 KUWAIT 3608

F. 05 KUWAIT 4402

G. 05 KUWAIT 847


1. (SBU) Kuwaiti government agencies continued to improve
their enforcement performance in 2005, and demonstrated that
IPR protection has become a routine priority for them. The
Ministry of Information (MOI),which is legally charged with
IPR protection and has long been the weakest performer in
Kuwait's IPR regime, made substantial progress in 2005 under
the leadership of Undersecretary Ibrahim Al-Nouh. MOI has
hired and trained new inspectors, and has eagerly
participated in USG training opportunities. Kuwait Customs
and the Ministry of Commerce have both increased the
frequency and effectiveness of raids and seizures of pirated
goods. Kuwait Customs has been particularly aggressive,
posting a 94 percent increase in seizures over the previous
year (Ref B). The Municipality has become more involved and
vendors no longer sell goods openly on sidewalks. The new
inter-ministerial IPR committee has improved cooperation
among agencies, and that cooperation has made prosecuting
violators somewhat easier.


2. (SBU) Although problems remain, including a
TRIPS-incompliant copyright law, weak penalties, and
imperfect inter-agency cooperation, the bottom line is that
Kuwaiti IPR enforcement improved markedly in 2005. Post,
therefore, recommends that Kuwait be removed from the Special
301 Priority Watchlist and be placed on the Watchlist. Post
maintains close contact with industry IPR monitoring
organizations, e.g., the Arabian Anti-Piracy Alliance. In
recent consultations, that organization stated that major
industry watchdogs favored moving Kuwait from the Priority
Watchlist to the Watchlist. Post feels that upgrading
Kuwait's position on the Special 301 Report will encourage
the expanding cadre of aggressive IPR enforcers in the GOK,
and may act as a catalyst for further improvement,
specifically amendment of the 1999 copyright law. In the
2006 Special 301 Report, Post strongly urges USTR to praise
Kuwait Customs and the Ministries of Commerce, and
Information for their work, while continuing to highlight the
need for Kuwait to amend its copyright and sentencing laws.

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Optical Media Piracy
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3. (SBU) The copyright industry claims that Kuwait's optical
media piracy rate is 91 percent of sales, although the
Ministry of Information disputes this figure. However, since
the Ministry of Information does not compile its own
statistics, the industry figure is all that is available.
Although very high, the 91 percent figure is an improvement
over the industry's 2004 estimate of 95 percent. In 2005,
Customs conducted several raids in which CD/DVD duplicating
equipment was seized. Clearly, based on the seizure of large
quantities of discs, as well as duplicating equipment, during
raids by Customs and Commerce inspectors, there is no doubt
that optical media piracy rates are very high in Kuwait.

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TRIPS Compliance
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4. (SBU) Kuwait's 1999 copyright law is not TRIPS-compliant.
The Ministry of Information (MOI) has drafted extensive
amendments to the law, which it believes will bring the law
into conformity with international standards. As part of the
TIFA process, USG experts have reviewed the law and provided
feedback for the Kuwaitis' consideration. Amendments to the
copyright law are still not finished, despite being in the
works for nearly two years. MOI contacts have stated that
the amendments are 85 percent complete, but could not say
when they expect full completion.


5. (SBU) The Minister of Information submitted draft
legislation in 2004 to increase penalties for IPR violators,
but the National Assembly has not taken up the bill for
discussion. Post, however, is encouraged that all raids in
2005 resulted in cases being filed. Most sentences included
a fine (up to $1,700) and confiscation of the goods. While
penalties are still rather weak, a few convictions in 2005
included jail sentences of up to two weeks. Post is
encouraged to see jailtime meted out to offenders, but the
enactment of minimum sentences, and their consistent

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application by the judiciary, will be critical to combating
piracy in Kuwait.

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Enforcement
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6. (SBU) Enforcement efforts and effectiveness differ by
agency. Agencies have various levels of authorization needed
to inspect and seize pirated goods, and to arrest and
prosecute offenders. Inter-ministerial cooperation, which
was virtually non-existent in previous years, improved
notably in 2005. However, enforcement remains hampered by an
apparent lack of willingness to prosecute Kuwaiti citizens
who run piracy rings (prosecution is usually reserved for
foreigners who work for Kuwaitis). Enforcement efforts
against internet piracy have been inconsistent. For example,
while the pirate music website "6arab.com" was shut down in
2004, another Kuwait-based site, "salmiya.net," is operating
freely.


7. (SBU) Kuwait Customs. Kuwait Customs continues to be the
most aggressive and most effective agency enforcing IPR.
Customs uses a complex tracking system to catalogue seizures
and the disposition of each case (e.g., referral to the
prosecutor's office, penalties imposed on the spot, goods
impounded and destroyed). Customs interdicts a variety of
pirated and counterfeit goods, including clothing, toys,
DVDs, CDs, movies, watches, video games and automobile parts.
In 2005, Kuwait Customs boasted a 94% increase in seizures
over 2004, with 364 seizures versus 187 the previous year.
(NOTE: In Ref B, Post reported that Customs' seizures in
2005 increased 57% from 2004, but that figure was recently
revised upward to 94%.) The bulk of these seizures were of
counterfeit auto parts, followed by pharmaceuticals and
optical media. Optical media seizures fell nearly 80% vs.
2004, but this can be largely attributed to a few very large
busts in 2004 that inflated that year's numbers, and a new
reluctance on the part of prosecutors to issue search
warrants, rather than a real drop-off in Customs' enforcement
efforts. (NOTE: Customs reports the value of goods seized
in 2005 as $5.1 million, but this figure represents the
materials costs, not the street value or value of legitimate
goods.) Customs does at times allow shipments of pirated
goods to be re-exported after the importer pays a penalty,
rather than confiscating or destroying the goods. The U.S.
Customs adviser has informed Kuwait Customs that this
violates Kuwait's international IPR and customs commitments;
Kuwait Customs has stopped permitting the re-export of media
(which it destroys),but continues to allow re-export of
other counterfeit materials. In some cases, IP
rights-holders have agreed to absorb the costs of destruction
in order to avoid the goods being re-exported.


8. (SBU) Ministry of Commerce and Industry (MOC). That
Ministry became more active in IPR protection following the
initial Trade and Investment Framework Agreement (TIFA)
Council meeting in 2004. As the head of Kuwait's TIFA
delegation, the Minister of Commerce was actively involved in
pushing both his ministry and other agencies to improve IPR
protections. MOC approaches IPR enforcement from a consumer
protection standpoint, arguing that counterfeit products
marketed as legitimate goods deceive consumers. In 2005, the
Ministry created an IPR "task force" (Refs D & F) to focus
its efforts. Because it does not have the statutory
authority to do so, MOC is not able to take action against
vendors who openly acknowledge that their goods are pirated
and do not attempt to pass them off as legitimate; only MOI
may discipline such vendors. One of the most encouraging
signs of Kuwait's committment to IPR enforcement in 2005 was
the increased cooperation between the Ministries of Commerce
and Information was MOI's willingness to close down vendors
identified by MOC's inspectors. Highlights of MOC's reported
seizures in 2005 include 760,000 optical media discs (audio,
DVD, VCD, video games, and software) and the referral of 82
cases for prosecution.


9. (SBU) Ministry of Information. MOI has primary statutory
responsibility for enforcing IPR in Kuwait, but has long been
the weakest link in the chain. The Ministry has been
hindered by disinterested leadership and a few key
personalities who endeavor to block any real progress.
However, in 2005 MOI appeared to get serious about IPR,
hiring 30 new inspectors and creating (with Post's
assistance) new training courses for them. MOI sent several
of these new inspectors for training at USPTO headquarters in
Virginia. MOI's inspectors still struggle with a lack of
resources, as they must often resort to driving their own
vehicles on inspections or requesting transportation

KUWAIT 00000508 003 OF 003


assistance from the Municipality. However, Post was
encouraged by the removal of inspections head Ghannas
Al-Adwani (who often refused to send out MOI's inspectors
(Ref G)),and his replacement by the aggressive Rasha
Al-Sabah. Post expects MOI's improvement to continue.


10. (SBU) In 2005, the Ministry of Information began keeping
records of inspections and seizures. Highlights from
Information's reported activity in 2005 include:

-- 6,800 seized computer software discs
-- 375,000 seized video game discs
-- 355,000 seized audio CDs
-- 54,000 seized VHS cassettes
-- Most significantly: 293 cases referred for prosecution,
with 266 sentences passed.

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WIPO Copyright Treaty and Performances and Monograms Treaty
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11. (SBU) Kuwait is not a party to either treaty.
LeBaron