LEBANON: 2008 SPECIAL 301 REVIEW

UNCLAS BEIRUT 000333 SIPDIS SIPDIS DEPT FOR EB/IPE CLACROSSE DEPT PLS PASS TO USTR ESAUMS DOC FOR JBOGER DOC PLS PASS TO USPTO JURBAN LOC FOR STEPP E.O. 12958: N/A TAGS: KIPR ETRD ECON PGOV LE SUBJECT: LEBANON: 2008 SPECIAL 301 REVIEW ¶1. Summary: In 2007, the Government of Lebanon (GOL) made some important advances in the protection of intellectual property rights (IPR). Progress, however, was hindered by continued political instability, the absence of a functioning parliament that could approve new IPR legislation and the deterioration of the security situation in the country. Embassy continued to engage steadily with the GOL on the need to better protect IPR, but a significant amount of GOL attention was focused on political and security issues. ¶2. The cabinet of Prime Minister Fouad Siniora approved several IPR-related bills and sent them to parliament. However, the pro-Syrian Speaker has refused to open parliament since November 2006, preventing those bills, along with all other pending legislation, from being approved and implemented. This action also prevented the election of a new president following the November 23, 2007 departure of pro-Syrian president Emile Lahoud and Lebanon's presidency has been vacant since then. The ongoing political impasse, conflict over the presidency, and need for law enforcement authorities to concentrate on controlling political violence has kept the government from giving IPR issues more attention. ¶3. Post recommends that Lebanon be maintained on the Special 301 Priority Watch list. While progress on improving IPR protection is not what we had hoped, the government has taken some important steps to reduce piracy. In 2008, we hope the GOL will better address IPR concerns, especially relating to enforcement, as a part of its WTO accession process effort. End Summary. OVERALL ASSESSMENT OF IP CLIMATE -------------- ¶4. In 2007 Lebanon remained on the Priority Watch List of the Special 301 Review. The government made some progress in terms of approving new draft laws to present to parliament, including laws on geographical indications, industrial designs and trademark, and amendments to the copyright law. These await ratification by the parliament that is not currently meeting. The business community has recognized the good efforts of the Lebanese Internal Security Force's (ISF) Cyber Crime Unit in protecting IPR. Most arrests resulted in immediate release and minor fines. However, the overall political and security situation significantly hampered the GOL's ability to update IPR legislation and enhance enforcement. The International Intellectual Property Alliance (IIPA) estimated preliminary 2007 piracy-related losses in Lebanon at $26.8 million, up from $25.6 million in 2006. ¶5. In February 2008, the Ministry of Economy and Trade (MOET) launched an IPR media campaign, in collaboration with the American Lebanese Chamber of Commerce (Amcham) and partly funded with a USAID grant. The two-month campaign consists of a series of three different TV spots (focusing on pharmaceuticals, optical media and music software) that have been running on all eight local TV stations, as well as billboards to be displayed across the country. USAID continues to provide technical assistance for WTO accession through its WTO Accession Project, which was recently renewed until April 2008, but progress remains slow. In July 2007, USAID funded a two-week Economic Dialogue Forum, with an entire week dedicated to increasing IPR awareness and the economic importance of protecting IPR. ¶6. Post organized a one-day IPR Forum in collaboration with the USPTO in November 2007. Some 200 persons attended, indicating the interest of the business community and the public sector in IPR issues. Further, more intensive training is scheduled for May 2008, focusing on the public and the judicial sector. ¶7. Cable television piracy remains the GOL's most significant IPR challenge. According to the U.S. copyright industry, 80 percent of Lebanon's population uses pirated content, one of the highest rates in the world. The Motion Picture Association (MPA) estimated the annual losses to the U.S. motion picture industry due to cable piracy in Lebanon at $31.8 million in 2006. In Lebanon, the average monthly fee for pirated cable television service is $10. Legitimate cable subscriptions cost $15 per month, and the pirated service offers a much more attractive package of channels, as well as first-run movies. In the absence of much-needed legislation regulating the cable industry, no government body has been willing to bear the political heat of throwing between 600-700 illegal cable operators out of business (although the 1999 Copyright Law provides sufficient legal basis for such action). The Telecommunications Regulatory Authority (TRA),formed in February 2007, considers this to be a part of its mandate, but is currently fully occupied with other more pressing issues related to restructuring Lebanon's telecom structure for eventual privatization in order to meet Paris III Donor's Conference benchmarks. ¶8. The GOL in 2006 took concrete actions to address cable piracy at the onset of the 2006 World Cup television broadcasts. In that case a deal was brokered between legitimate and pirate cable operators, allowing pirate operators to legally broadcast the World Cup soccer games. Since then, however, no further negotiations for a permanent solution have taken place. In June 2006, a cabinet decree was drafted to allow an interim solution whereby illegal cable providers would receive a temporary license to broadcast. Possession of a copyright license was one of the conditions for receiving a temporary license. The GOL intended to follow-up on this by drafting a law on encrypted and subscription TV that would create a full-fledged regulatory framework for cable providers. Unfortunately these efforts are still pending. There was admirable progress until July 2006, when Lebanon suffered through a month-long war between Isral and Hizballah. One private sector contact noted that a one-year old Lebanese company is currently buying licenses from international cable operators to broadcast their Arabic-language programs, which are later bought by local illegal operators, therefore making part of the illegal cable operators' content legal. It is hoped that this licensing will be extended to English-language and all other programs as well. NOTORIOUS MARKETS -------------- ¶9. The sale and distribution of pirated, counterfeit, and copycat products continued to take place across Lebanon in 2007, in commercial establishments or by street vendors. Although most of these products are imported from Asia, it is alleged that there are factories producing pirated CDs (mostly for computer software and entertainment material) in Beirut's southern suburbs in the Dahya area, a Hizballah stronghold. The GOL has little access to areas controlled by Hizballah. It is believed that production is on a small scale, and intended only for the local market. According to some contacts, other problematic geographic areas include the surroundings of the city of Tripoli in the north, some Palestinian refugee camps in Beirut and the Biq'a border area with Syria, where it is difficult for law enforcement agents to reach large where pirated material is stored. OPTICAL MEDIA PIRACY (CDs, VCDs, DVDs) -------------- ¶10. Optical media piracy products -- including pirated copies of business and entertainment software, sound and film recordings and published interactive software -- are widely available in the Lebanese retail market. The sale of computer hardware loaded with unlicensed software is a common practice. The Cyber Crime Unit at the ISF has had some success in closing shops that sell pirated material. Most pirated material is either smuggled in or imported through legitimate points of entry, namely, the Beirut port and the land border with Syria. The Cyber Crime Unit seized 90,000 counterfeit CDs and DVDs in 2007 compared to 130,000 in 2006. However, in light of the current political insecurity in Lebanon, the Unit's efforts have been commended by the business community. Anecdotally we have been told that the unit is so successful that IPR violators have posted a watch at the headquarters of their operations to be alert to impending raids by the Cyber Crimes Unit. USE/PROCUREMENT OF GOVERNMENT SOFTWARE -------------- ¶11. The GOL, having successfully eliminated the use of pirated software in public administration, has been in compliance with international IPR standards since spring 2004. The Office of the Minister for Administrative Reform (OMSAR) acts as the central authority for the procurement of government software and hardware. TRIPS COMPLIANCE -------------- ¶12. Lebanon, an original member of the GATT, is eager to accede to the WTO as soon as possible, and support for accession is widespread among the business community. However, there has been only marginal progress toward that objective. In December 2006, the GOL signed a Trade and Investment Framework Agreement (TIFA) with the U.S., but the agreement has yet to be ratified by the GOL, and there have been no TIFA Council meetings. The TIFA cannot be ratified because the parliament currently does not meet, and there are no prospects that parliament will meet soon to take up the TIFA or other legislative matters. ¶13. USAID continues to supply technical assistance in reviewing and amending the Copyright law and the draft law on e-commerce for conformity with TRIPS and with the WIPO Copyright Treaty (WCP) and the WIPO Performances and Phonograms Treaty (WPPT). Draft laws and amendments created as a result of this assistance are awaiting parliamentary action which, again, cannot occur because pro-Syrian forces in the political opposition prevent the parliament from meeting in order to counter any moves by the pro-western Lebanese government. Similarly, amendments to modernize the Copyright Law were approved by the cabinet but are waiting for approval by the non-functioning parliament. DATA PROTECTION -------------- ¶14. No progress in health-related IPR issues was witnessed in 2007. Lebanon's Patent Law does not provide adequate protection for pharmaceutical companies. The law requires the submission and issuance of a patent in Lebanon to insure exclusive marketing rights. However, its data exclusivity provisions as they apply to drug registrations are ambiguous. The MOET is currently working on introducing amendments to the draft law on unfair competition to provide adequate data protection to pharmaceutical companies during the registration process at the Ministry of Health (MOH). The resigned Minister of Health, who joined five other ministers in boycotting cabinet meetings since November 2006 in an attempt to pressure the legitimate government to fall, has been uncooperative in working on these amendments. Pharmaceutical companies continue to suffer from the MOH's registration of unauthorized copycat medicines. The Pharmaceutical Research and Manufacturers of America (PhRMA) estimate that 19 copycats were registered by the MOH in 2007, up from nine in 2006. ¶15. The GOL has never established a joint task force to study and offer recommendations to improve the regulatory environment for pharmaceutical drugs. The MOH claims that this falls under TRIPS Plus, and the Minister of Health, allied with the pro-Syrian political opposition, is not interested in setting up a task force. Pharmaceutical companies have, however, continued to offer to help the MOH in a number of areas: providing information on regulatory environments in neighboring and reference countries; support in setting up a pharmaco vigilance department; upgrading the website of the MOH; various health care awareness campaigns; support in filing/archiving systems; help in combating counterfeiting; and identifying qualified labs for independent testing. ENFORCEMENT -------------- ¶16. The Internal Security Force's Cyber Crime Unit was established in 2006 to combat both cyber and IP-related crimes. The Unit has around 25 full-time staff, but must return to regular police work during times of civil disturbances. The Unit lacks the necessary equipment, software, and training. Training has been provided by the Business Software Alliance (BSA),International Intellectual Property Alliance (IIPA) and Motion Picture Association (MPA), although in 2007 the MPA stopped funding such projects in Lebanon due to lack of IPR enforcement. The Lebanese Intellectual Property Association (LIPA) has applied for a U.S. grant, which will be used to provide equipment and technical assistance to the Unit. ¶17. The motivated official who is the leader of the Cyber Crime Unit has developed a map of around 20 major pirate distributors. He conducts raids on large-scale distributors at locations that he alone (for fear of leakage) has identified. According to the Unit, over 630,000 counterfeit products were seized in 2007, including CDs and DVDs and their covers, equipment to produce counterfeit CDs and DVDs, product labels, car parts, cosmetics, computer accessories, and other miscellaneous products. This is an increase of 87 percent over the 337,000 counterfeit products seized in 2006, including CDs and DVDs and their covers, equipment to produce counterfeit CDs and DVDs, books, product labels, detergents, and aluminum parts. Most IP-infringing material is either smuggled in or imported through legitimate points of entry under Customs' jurisdiction. Customs seized over $480,000 worth of counterfeit CDs and DVDs, watches, cosmetics, bags, shoes, clothes, car parts, and other miscellaneous products in 2007, a slight increase in value compared 2006, although a smaller number of goods were actually seized. However, there is still a problem with the lack of effort to crack down on the ubiquitous street vendors who sell pirated CDs and DVDs. ¶18. There are no specialized IPR courses at the Judiciary Institute where judges are trained at the beginning of their career, but a number of seminars on IPR are included in the curriculum. New judges are increasingly aware of IPR issues. There were no statistics on the number of IP-related court rulings in 2007, although LIPA believes they have slightly increased in the past year. However, business representatives have complained of the slowness with which the judiciary has acted on IPR-related cases. Although prosecutors can impose fines of up to $33,000 for IPR infringements, fines are actually very low and violators appear to find those an acceptable cost of doing business. There has been no progress in establishing specialized IPR courts since the issue was first raised in May 2006. Post will encourage greater progress on IPR from the judiciary, given the number of judges and prosecutors trained in the U.S. so far, and will push further for the establishment of specialized IPR courts. TREATIES -------------- ¶19. Lebanon has not yet ratified the 1996 WIPO Internet Treaties (the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty). Nevertheless, the MOET claims that the Copyright Law, with its focus on Internet and new technologies, was drafted to encompass the Internet treaties. The law covers the core of these treaties, including full reproduction rights, distribution rights, and "full communication to the public" rights. The draft law on e-commerce is still being revised by the MOET, which would then be sent for cabinet approval and later for Parliamentary ratification. It contains provisions of those treaties. In December 2006, Lebanon signed the Singapore Treaty on Trademarks, which is still awaiting parliamentary ratification. Within the framework of the Lebanon-EU Association Agreement, the Council of Ministers approved the following, which were sent to Parliament in 2007: Paris Convention on the protection of industrial property, Nice Agreement on international classification of goods and services, Patent Cooperation Treaty, Madrid Agreement on deceptive indications of source on goods, Berne Convention for the protection of literary and artistic works, and the Madrid Protocol relating to the Madrid Agreement on international registration of marks. Again, action on these in the near term is unlikely since the pro-Syrian Speaker refuses to open parliament. INTERNET PIRACY -------------- ¶20. The cost of telecommunications in Lebanon is among the highest in the world. In May 2007 the Ministry of Telecommunications (MOT) implemented ADSL internet services, as a way to decrease internet piracy, and reduce high dialup fees for internet users. Yet ADSL and wireless internet connection service costs are still high compared to the region. At the time of the launching of ADSL, local media estimated that around 30 percent of all internet connections went through illegal satellite providers. According to the IIPA, internet piracy was on the rise in 2007. The GOL has not taken any concrete action against internet pirates to date. Corruption is reportedly rampant in this sector. TRAINING -------------- ¶21. Continued training for judges, prosecutors, enforcement officers, and members of the MOET's IPR Unit will help improve IPR protection in Lebanon. Over the past year, the USPTO has funded 12 judges and prosecutors, five enforcement officers and ten members of the MOET's IPR Unit for IPR training in U.S. and the region. In 2008, Post would like to focus on judges and police enforcement officers through organizing training in-country and continuing to send Lebanese participants to regional or U.S.-based programs. POLITICAL CLIMATE -------------- ¶22. The political climate in Lebanon deteriorated in 2007. Two members of parliament, a high ranking army general, and an important ISF official were assassinated in separate car bomb attacks, with others killed or injured in each attack. Another car bomb attack seemed to target an American Embassy vehicle and resulted in the deaths of three bystanders and injured to two Embassy Lebanese staff. There were attacks in civilian areas and against UNIFIL contingents in south Lebanon. From May - September 2007, the Lebanese Armed Forces was involved in a fierce battle against militant Islamic fundamentalist group Fatah al-Islam in the Palestinian refugee camp of Nahr el-Barid, in the north of the country. Supporters of the opposition continued with their sit-in in downtown Beirut -- ongoing since December 2006 -- aimed at toppling the government of PM Siniora. Meanwhile, the political deadlock that began with the resignation of six opposition members of the Council of Ministers in November 2006 continued to prevent the GOL from conducting regular business. The Speaker of the parliament continued to declare the current government unconstitutional and refused to open parliament. Former President Lahoud left office on November 23, 2007. Lebanon has been without a president since then due to the opposition's obstructionism. All of this has contributed to a lack of new legislation and to a certain extent the inability of the GOL to enforce existing legislation. However, the government has remained firm, and is resolute in targeting IPR issues and WTO accession as 2008 priorities. 2008 SPECIAL 301 RECOMMENDATION -------------- ¶23. Post recommends that Lebanon be maintained on the Special 301 Priority Watch list. Although the business community is heartened by progress in some areas, and continues to commend the performance of the Cyber Crime Unit, the GOL has been unable to put in place policies and procedures that would lead to a systematic reduction in piracy rates. Post remains hopeful that the reform program developed by the GOL, which contains an IPR component, will gain traction in 2008. SISON