AMBASSADOR'S ROUNDTABLE IDENTIFIES KEY CHALLENGES TO

UNCLAS SECTION 01 OF 03 HANOI 000602 SENSITIVE SIPDIS STATE FOR EAP/MLS AND EEB/TPP/IPE JURBAN STATE ALSO PASS USTR JCHOE-GROVES, DBISBEE AND RBAE STATE ALSO PASS USPTO FOR JCHAMBERS STATE ALSO PASS LIBRARY OF CONGRESS FOR TEPP AMEMBASSY BANGKOK FOR USPTO JNESS USDA FOR FAS/FAA/AO HUETE USDOC FOR ITA/MAC/OIPR CPETERS AND 4430/MAC/AP/OPB/VLC/HPPHO E.O. 12958: N/A TAGS: KIPR ECON ETRD VM SUBJECT: AMBASSADOR'S ROUNDTABLE IDENTIFIES KEY CHALLENGES TO PROTECTING IPR IN VIETNAM ¶1. (U) Summary: The Ambassador hosted a May 16 roundtable discussion on intellectual property rights (IPR) in Vietnam with more than 40 U.S. business community representatives. Participants discussed the ongoing challenges of weak enforcement of Vietnam's laws; low, non-deterrent penalty levels; a lack of expertise throughout the ranks of Vietnamese authorities; poor coordination among the various agencies responsible for IPR protection; and low levels of public IPR awareness. Additionally, attendees highlighted emerging issues such as internet domain name registration, online piracy and the creation of a new IP assessment body which could complicate right holders' efforts to pursue administrative remedies. While recognizing recent progress in Vietnam's IP regime, businesses suggested greater coordination of public and private sector capacity building efforts, increased focus on framing the argument for stronger IP protection and enforcement when engaging the government and local partners, and enhanced efforts to increase market access for U.S. cultural goods. End summary. ¶2. (U) On May 16, the Ambassador was joined by U.S. Patent and Trademark Office (USPTO) Regional IP Attache Jennie Ness, and economic and commercial officers from Hanoi and Ho Chi Minh City to lead a discussion with the U.S. business community on IPR protection and enforcement in Vietnam. The Ambassador outlined current USG efforts to improve IPR protection in Vietnam including bilateral engagement through our regular trade dialogue, capacity building and training efforts in Vietnam and the United States, and public outreach programs. The Ambassador encouraged a frank and open discussion of current issues that business are facing and sought ideas on how right holders and the U.S. Government can better coordinate efforts to improve the IP environment in Vietnam. LEGAL ISSUES -------------- ¶3. (SBU) Vietnam has improved its IP legal regime over the past several years, however, roundtable participants highlighted two key areas where Vietnam's legal system requires additional work in the immediate future to comply with World Trade Organization (WTO) Trade Related Aspects of Intellectual Property Rights (TRIPs) requirements. The first is the provision of criminal remedies for commercial scale IP violations and the second is the adequate protection of data submitted as part of registration dossiers for pharmaceutical and chemical products. Microsoft's Senior Director for Legal and Corporate Affairs for Southeast Asia Antony Cook noted that as the Government of Vietnam (GVN) works to revise its Criminal Code in 2008, stakeholders must engage the drafters to ensure that Vietnam translates its commitments on criminalization of commercial scale violations into a workable process. Noting that the current data protection system Vietnam has put in place is onerous and ineffective, Merck's Vietnam Country Manager revealed that the pharmaceutical industry is planning to deliver critical capacity building and technical expertise on this issue. ENFORCEMENT REMAINS WEAK; PENALTIES TOO LOW -------------- ¶4. (U) U.S. businesses delivered the consistent message that enforcement of Vietnam's laws continues to be a significant challenge. A legal expert who has worked in Vietnam for more than seven years commented, "the issue is not the laws, but how the relevant officials use them; the laws must be applied uniformly, and that simply is not happening here yet." Another expert pointed to a trademark case he filed on behalf of a client in 2001, which is still pending a decision from the National Office of Intellectual Property (NOIP). He bemoaned the fact that relevant authorities lack a key point person to understand and implement the laws, and opined that a dearth of knowledgeable and reliable officials is perhaps the single biggest weakness in Vietnam's IP regime. ¶5. (SBU) Aside from enforcement of the laws, U.S. companies identified the size of penalties for infringement as the single largest hindrance to effective protection of IPR in Vietnam. Over 90 percent of remedies in Vietnam are handled via the administrative system, which currently has a maximum fine of VND 100 million ($7,000). Microsoft's Cook emphasized that violators simply factor this in as "a cost of doing business" which is far too low to deter them from repeat violations. For example, Microsoft recently worked with the Ministry of Science and Technology Inspectorate and the Hanoi Police to conduct end-user hardware raids on two shops in HANOI 00000602 002 OF 003 Hanoi. The authorities seized a total of 63 counterfeit units valued at roughly USD 60,000. The police were limited to fining the violators the maximum amount of $7,000 - or less than 12 percent of the infringed goods. Tom Treutler, a lawyer with the firm Tilleke and Gibbins announced that on May 5, the GVN passed an amendment to its Ordinance on Administrative Penalties raising the maximum fine to VND 500 million ($35,000),although it remains unclear whether enforcement authorities will utilize these increased penalties. ¶6. (U) AmCham Hanoi's Information Technology, Telecommunications and Intellectual Property (ITTI) Committee Chairman Michael Mudd urged the U.S. business community to encourage Vietnam to create a specialized IP Court, as countries in the region (most recently, Malaysia) have done. A cadre of well-trained judges and prosecutors will be necessary for right holders to pursue civil and criminal remedies to protect their intellectual property, he continued. STRUCTURAL ISSUES -------------- ¶7. (U) Vietnam has no fewer than six agencies responsible for enforcing intellectual property - creating significant overlap and opportunities for gaps in protection. U.S. business representatives noted that the diffusion of enforcement authority creates "turf wars" which make inter-ministerial cooperation cumbersome, if not impossible. For example, Microsoft has worked with its GVN counterparts to request clarity from the Prime Minister on which agency has responsibility for the management of software copyrights - the Ministry of Information and Communications or the Copyright Office of Vietnam. Current regulations give this authority to both agencies, making it difficult for companies, and the agencies themselves, to know who has the authority to manage specific software copyright issues. U.S. pharmaceutical representatives commented that data protection will require the buy in from officials in the Ministry of Health's Drug Administration and NOIP, but it is difficult to get the two agencies to sit down together to discuss the issue or to deliver technical assistance jointly. A representative from Eli Lilly opined that in order to overcome this "alphabet soup" of enforcement bodies, Vietnam should create inter-ministerial task forces to improve coordination, much as the United States has done to fight drugs and terrorism. ¶8. (U) An emerging issue which may further complicate efforts to protect intellectual property is the creation of a new agency - known locally as an IP Assessment body - to provide expert guidance on whether suspected goods are infringing. Many administrative enforcement officials are unwilling to take action without the backing of an expert opinion - which the NOIP (or provincial Departments of Science and Technology) used to provide. Under the 2005 IP Law, however, that function is now being "outsourced" to a quasi-independent assessment body. An IPR legal expert involved with the STAR Vietnam project cautioned that right holders should watch this development carefully, as it presents potential problems - i.e., who will staff the new body, how much will it cost right holders, and will it be impartial, among others. CORRUPTION ALSO A PROBLEM -------------- ¶9. (SBU) In a panel discussion on enforcement challenges, one participant noted that corruption "is a systemic issue which inhibits IP enforcement in Vietnam." Many enforcement agents expect payments from right holders to protect their intellectual property, he continued. Target selection is also an issue - while often willing to go after foreign-owned companies suspected of trademark or copyright violations, authorities are much more reluctant to go after smaller, local companies. INCREASED MARKET ACCESS CRITICAL FOR U.S. CULTURAL PRODUCTS -------------- ¶10. (U) TimeWarner's Director for International Relations and Public Policy for the Asia Pacific Region Alvin Lee commented that there is a fundamental lack of understanding among GVN officials of the creative process and why it must be protected. Lee said that many U.S. entertainment companies are interested and willing to invest in Vietnam's market, but are restricted from doing so by Vietnamese laws. Without the ability to develop a "real and sustained business presence in Vietnam, foreign cultural IP right holders lack the HANOI 00000602 003 OF 003 first-mover advantage" when it comes to protecting their property, he continued. Market access will become even more important as more Vietnamese connect to the internet and online piracy of U.S. music, movies and other products becomes a more prevalent challenge. CHANGING MINDSETS -------------- ¶11. (SBU) Following on the discussion of cultural products, one participant raised the question of whether Vietnam's weak enforcement of IP rights is a lack of capacity or a lack of will. He distinguished between GVN willingness to punish makers of suspected counterfeit goods with a potentially harmful impact on human health and its lax treatment of entertainment products (CDs, DVDs, etc.),infringement of which is purely an economic issue. The Business Software Alliance's Vietnam representative agreed, adding that right holders must also overcome the conceptual hurdle that many in the GVN do not see the need to protect strong and prosperous companies at the expense of smaller, local firms. The representative from Merck interjected that these issues underscore why it is important for U.S. firms to craft carefully the message that they deliver to the GVN. She suggested that firms point to the negative effect that Vietnam's deficient IPR regime has on companies' investment decisions, as well as highlight the benefits of a strong IP regime in developing a local market. GOING FORWARD -------------- ¶12. (U) At the conclusion of his remarks, the Ambassador expressed the hope that this would be the first in a more regular series of discussions between the Mission and the business community on how to better coordinate efforts to protect and enforce IPR in Vietnam. This suggestion was received warmly by the business community, with participants calling for more regular dialogue among businesses and between the business community and the USG (and other governments) to avoid repetition and maximize resources. Tilleke and Gibbins' Tom Treutler noted that Vietnam is currently revising its criminal code, planning to develop an Optical Disc Law, and intends to revise its IP Law in 2010 - all opportunities for the U.S. business community and the USG to engage the GVN to ensure that the legal regime here addresses key U.S. concerns and meets Vietnam's TRIPs obligations. SIGNIFICANT PRESS COVERAGE -------------- ¶13. (U) Journalists were invited to attend the Ambassador's opening remarks, and the Embassy issued a press release highlighting the key themes of the roundtable. The resulting press coverage included articles in Vietnam Investment Review, Vietnam Financial Times, Vietnam Economic Times, Law Newspaper (Phap Luat),Youth Newspaper (Thanh Nien),Laborer (Nguoi Lao Dong) and the Vietnam-U.S. Magazine. The articles picked up on the core message that Vietnam must do more to protect IPR, particularly in the area of enforcement, and that the U.S. Government and private sector will continue to engage closely with the GVN to improve the IPR environment. MICHALAK