SAUDI ARABIA: MICROSOFT GM'S TAKE ON IPR

C O N F I D E N T I A L RIYADH 002340

SIPDIS

SENSITIVE
SIPDIS

USTR FOR JASON BUNTIN
USDOC FOR TYLER HOFFMAN

E.O. 12958: DECL: 09/17/2017
TAGS: ECON ETRD KIPR PGOV SA
SUBJECT: SAUDI ARABIA: MICROSOFT GM'S TAKE ON IPR
ENFORCEMENT

REF: STATE 107629

Classified By: Economic Counselor Robert B. Murphy
for reasons 1.4 (b) and (d).


1. (SBU) SUMMARY. Khaled al-Dhaher, General Manager of
Microsoft in Saudi Arabia, shared his perception of
intellectual property rights (IPR) enforcement in the Kingdom
during a meeting on November 20, 2007. Al-Dhaher identified
three major areas of concern: (a) the failure of the SAG to
license most of the Microsoft software it uses, (b) the
failure of the SAG to impose deterrent penalties, such as
harsh fines and even imprisonment, on IPR violators, and (c)
the lack of transparency of the workings of the Violations
Review Committee (reftel). He also expressed his opinion
that IPR enforcement problems persist in Saudi Arabia because
the working-level officials charged with enforcing IPR do not
consider IPR violations to be crimes. END SUMMARY.

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Legalization, Deterrent Penalties and Transparency
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2. (C) Khaled al-Dhaher, General Manager of Microsoft in
Saudi Arabia, identified three major areas of concern with
the enforcement of intellectual property rights (IPR) in the
Kingdom during a meeting with Emboffs on November 20, 2007.
The first of these areas is the failure of the SAG to license
most of the Microsoft software it uses. Al-Dhaher reports
that Bill Gates raised this issue with King Abdullah when he
visited Saudi Arabia in November 2006. The King agreed to
resolve the problem, and al-Dhaher says that the King
personally contacted the Saudi Arabian General Investment
Authority (SAGIA) to emphasize that legalization should be
accomplished. While al-Dhaher believes that SAGIA has been
Microsoft's "champion" on this issue, the push for
legalization has enjoyed only modest success. Al-Dhaher
estimates that the SAG uses about 500,000 PCs with Microsoft
software, but has licensed only 25,000 of those computers.
The Ministry of Interior recently licensed Microsoft software
for 7,000 of its estimated 50-70,000 PCs, while the Ministry
of Culture and Information (the ministry to which the
Violations Review Committee (VRC) is attached) licensed
software for 3,000 of its PCs several months ago. Al-Dhaher
believes that legalization problems persist for bureaucratic
and budgetary reasons, and suggests that the SAG designate
funds for all ministries to use to legalize rather than
addressing the issue ministry by ministry or pooling the
ministries' technology budgets together.


3. (SBU) Al-Dhaher believes that the imposition of
deterrent penalties would enhance the enforcement of IPR in
the Kingdom. The VRC, which reviews all copyright cases, is
authorized to impose fines up to 100,000 SAR (USD 26,666).
The Board of Grievances, the court of appeal for cases heard
by the VRC, can impose fines up to 250,000 SAR (USD 66,666)
and sentence a defendant to prison. However, the highest
fine al-Dhaher is aware of having been levied against an IPR
violator is 12,000 SAR (USD 3,200),and he is not aware of
any case that has been appealed from the VRC to the Board of
Grievances. Al-Dhaher believes that imposing significant
penalties in just one IPR case would serve as an effective
deterrent example.


4. (SBU) Al-Dhaher echoes long-reported complaints
regarding the lack of transparency of the workings of the
VRC. However, he is encouraged by the initiative and
openness shown by the new head of the VRC, Rafik al-Akeeli.
Al-Dhaher says that the VRC has heard more cases in the two
months since al-Akeeli has been in charge than it heard in
the previous year. Al-Akeeli also recently met with
Microsoft representatives for two hours. Given the general
difficulty industry has consulting with the SAG, al-Akeeli's
willingness to meet with Microsoft was viewed very favorably
by al-Dhaher.

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Persistence of Problems with IPR Enforcement
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5. (C) Emboffs asked al-Dhaher reasons he believes the SAG
is not better addressing these areas of concern. Al-Dhaher
does not think that corruption is significant, and only
partly blames bureaucratic roadblocks and lack of capacity
for insufficient progress. He believes the root cause is
that many officials charged with enforcing IPR do not really
believe that IPR violations are criminal acts. Al-Dhaher
suggests that this might because IPR violations seem like

victimless offenses, or that violations are not viewed as
significant because the stakeholder is a wealthy, non-Muslim
business. He fears that this perception persists despite
industry having secured an official Saudi fatwa (religious
ruling) that IPR violations are violations of Muslim law.
GFOELLER