KUWAIT: COMMENTS FOR 2009 SPECIAL 301 REVIEW

UNCLAS KUWAIT 000185 SIPDIS EEB/IPE FOR TMCGOWAN; STATE PASS TO USTR JENNIFER GROVES E.O. 12958: N/A TAGS: KIPR ECON ETRD KU SUBJECT: KUWAIT: COMMENTS FOR 2009 SPECIAL 301 REVIEW REF: A. STATE 08410 ¶B. 08 KUWAIT 211 ¶1. (U) Kuwaiti government agencies significantly improved the level of IPR enforcement activity in 2008 compared to activities in 2007. Sharp executive legislative tensions, in several areas, will complicate GOK efforts to amend Kuwait's copyright law and bring it into full TRIPS compliance. While Kuwait Customs in particular continued to be the most aggressive agency in impeding the movement of pirated and counterfeit products, the Ministry of Information boosted its efforts in combating optical disk piracy and resulting in a positive net impact on piracy for most industries. Protecting IPR remains a priority at the ministerial level and inspection teams from the Ministries of Commerce and Information, and Kuwait Customs have continued to conduct regular raids and seizures. ¶2. (U) The division of responsibility for IPR protection among the Ministries of Information and Commerce and Kuwait Customs became clearer in 2008, resolving some of the problems with jurisdictional boundaries and inadequate information sharing. In September 2007, the GOK announced that copyright protection responsibility had officially moved out of the Ministry of Information (MOI) and all IPR enforcement functions (other than Customs) had been consolidated into the Ministry of Commerce and Industry (MOCI),which previously held responsibility only for trademarks. An increased cooperation between MOCI, MOI and Customs, has proven the consolidation was a step in the right direction. ¶3. (U) Although Kuwait's copyright law remains TRIPS-non-compliant and weak penalties for violators undermine enforcement efforts, Kuwait's enforcement efforts were significantly improved in 2008. Due to the delays in drafting and passing TRIPS-compliant copyright law, post recommends, somewhat relluctantly, that Kuwait remain on the Special 301 Watchlist. There is a clear commitment on the part of the GOK to improve IPR protection. However, given highly contentious executive legislative relations, and a generally obstructionist parliament, it is not clear whether the GOK will be able to amend this law in the near future. We are encouraged by the commitment, at the ministerial level, to IPR enforcement and by an increased willingness to prosecute violators, but remain frustrated at the slow pace of movement on key legislation. MOCI, MOI and Customs have made enforcement a high priority. As was expected, the consolidation within the Ministry of Commerce lead to further improvements in enforcement. While the GOK is clearly committed to IPR, its inability to bring its National Assembly along means that ipso facto Kuwait's TRIPS compliance remains inadequate by international standards. In the 2009 Special 301 Report, Post encourages USTR to commend Kuwait's enforcement personnel and to focus heavily on the need to pass the relevant legislation. The GOK should also be commended for its efforts in stepping up public efforts to curb the use of illegal software, hardware and pirated CDs/DVDs and to raise public awareness. -------------- Optical Media Piracy -------------- ¶4. (U) The copyright industry claims that Kuwait's optical media piracy rate is around 90 percent, although the Ministry of Information disputes this figure. Pirated optical media are imported into Kuwait in large quantities, but is also produced locally, as evidenced by several busts in which high-speed CD/DVD duplicating equipment was recovered. Post has noticed a significant reduction in the number of vendors selling pirated DVDs, software and video games on the streets or in shops. Due to the increase in the number of raids conducted by MOI and Customs, vendors have been forced to sell from residential locations like apartments and houses. Some shops continue to keep pirated DVDS, CDS and video games in back rooms and offer pirated material only upon request. There was also an increased use of advanced computer technology to acquire pirated material from wireless LAN systems. This is a significant change from previous years. -------------- Use/Procurement of Government Software -------------- ¶5. (U) According to the Business Software Alliance and the ME Computer Software Producers Society, software piracy in Kuwait is around 62 percent. MOI does not have statistics on software piracy and post believes that private sector assessment in this case is accurate. GOK interlocutors assure us that pirated software is not allowed in any government ministry or office. Ministry of Information, Secretariat General of Supreme Council for Planning and Development (former Ministry of Planning) and Ministry of Interior officials affirm that they use only licensed and authenticated software on government computers. MOI claims that its networks are monitored by an IT supervisor center which does not permit any unlicensed software to be installed on its network systems. However, post has received complaints from several U.S. companies including Microsoft Corporation, claiming software infringement by GOK ministries. Ministry of Commerce and Industry officials are surveying government offices in an effort to determine the extent of the problem and have expressed the commitment to address it. -------------- TRIPS Compliance -------------- ¶6. (U) Kuwait's 1999 copyright law is not TRIPS-compliant. The Ministry of Information 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 1999 law and have provided feedback for the Kuwaitis' consideration Most recently in December 2008, USG comments were sent to the GOK based on amendments sent to Washington in August 2007. The draft law sets minimum penalties that include mandatory jail sentences. According to our interlocutors, as in 2007, all raids in 2008 resulted in cases being referred to prosecution. Penalties are still weak, however, and the judiciary has yet to show a consistent willingness to sentence violators to time in jail. Post continues to believe that weak penalties, which usually consist of just a fine (up to $1700) and rarely include jail time, are a major contributing factor to the government's failure to deter vendors of pirated and counterfeit goods. The draft law has recently moved to the Department of Commerce and Industry. Post will continue working with the Ministry of Commerce and Industry to ensure that progress not be lost. -------------- Enforcement -------------- ¶7. (U) Inter-ministerial cooperation which has long been the most limiting factor for enforcing IPR in Kuwait, improved greatly in 2008 due to the consolidation of IPR responsibility within MOCI. The inter-ministerial IPR committee, established in 2006 and chaired by the Ministry of Commerce, has made information sharing more efficient, although some problems still remain. In general, enforcement remains hampered by an unwillingness to prosecute Kuwaiti citizens who run piracy rings, with prosecution usually reserved for foreign nationals who work for Kuwaitis. In most cases dealing with piracy, the penalties usually amount to around 100 KD to 500 KD (350 USD to 1750 USD). Most violators consider such minor penalties to be part of the cost of doing business. Businesses that are closed down for IPR violations often quickly reopen and return to selling the same products. ¶8. (U) Trademark infringement is a growing concern, particularly with the office at the Commerce Ministry responsible for researching and registering trademark applications. Valid Kuwaiti registrations can be obtained for applications that clearly violate an existing trademark, as long as no complaints are received over a 30-day period in which the mark is displayed in a local newspaper. Once a trademark is registered locally, it is difficult to rescind even after a complaint is made as the aggrieved party must go to court to resolve the issue. A secondary effect of this weak registration process is that Kuwait Customs is periodically forced to release products that clearly violate an existing trademark because the importer holds a valid Kuwaiti registration for the infringing mark. On February 19, 2009, Post forwarded a copy of the patent draft law it received from the Director of the Patent and Trademarks Department to USTR. -------------- Kuwait Customs -------------- ¶9. (U) In 2008, Kuwait Customs continued to provide aggressive and effective enforcement of IPR. The U.S. Customs Advisory team, which is now the US Customs and Border Protection Advisory team has been working closely with Kuwait Customs and located with them since 1994. The Kuwait Customs IPR Team was created in April 2004, as a result of efforts by the CBP Advisory team. The CBP Advisory team has developed a productive relationship with the IPR team at Customs, and much of Kuwait Customs' progress over the last few years can be directly attributed to this partnership. Kuwait Customs employs a complex tracking system to catalogue seizures and the disposition of each case; depending on the circumstance, dispositions can be a referral to the prosecutor's office, penalties imposed on the spot, and confiscation and destruction of goods. Customs seizures include a wide variety of pirated and counterfeit goods, including clothing, toys, watches, optical media, and automobile parts. For a first-time seizure, customs allows the re-export of seized counterfeit goods, which violates international customs commitments, although all seized optical media are destroyed. If the same or similar goods are seized a second time, Customs destroys the confiscated products after 90 days so long as the importer does not appeal the seizure to the courts. Some IP rights holders have agreed to absorb the costs of destruction in order to avoid the goods being re-exported. ¶10. (U) Customs officials continue to express their commitment to protecting IPR. According to the 2008 Customs-IPR report provided to Post by Customs officials, seizures by Customs IPR units in 2008 totaled 310 cases with a total value of approximately 30 million USD. This is a significant decrease from 2007 when Kuwait Customs recorded 538 seizures at ports of entry. The decrease in the number of seizures can be attributed to the new approach taken by importers, in which the importers approach Customs with a sample of the products they intend to import and ask for an assessment of the products' legitimacy before placing their orders. According to Customs, the importers submitted 70 examples of products to Customs officials in 2008 and most of them were rejected. Customs officials attribute the increase in the number of raids of local shops/vendors that took place in 2008 to the combined efforts of Customs Intellectual Property Rights Office (IPRO) and the IPR committee that includes members from MOI, MOCI, Ministry of Justice, Ministry of Interior and Customs. The increased raids and inspections on local shops and commercial areas resulted in a dramatic decline in the number of peddlers selling counterfeit or pirated goods on the streets. -------------- Ministry of Commerce and Industry -------------- ¶11. (U) The Ministry of Commerce became more active in IPR protection after the signing of the Trade and Investment Framework Agreement in 2004. The Minister is the head of Kuwait's TIFA delegation and the Ministry is charged with heading the inter-ministerial IPR committee to oversee and coordinate all enforcement efforts. The Under Secretary of Commerce and Industry, Rasheed al-Tabtabaei, led the latest round of TIFA council meetings in Kuwait on February 14, ¶2008. IPR enforcement and legislation was discussed in great detail during this session. The Ministry has made IPR enforcement a high priority. In October, MOCI coordinated the destruction of 64,000 confiscated DVDs and CDs that were collected in raids conducted by inspection teams from the IPR committee. Amending the copyright law has also been made a high priority. With the move of the copyright enforcement unit to MOCI, copyright and trademark inspections and raids saw significant improvements in 2008. Prior to the move, MOCI lacked the statutory authority to seize products that were openly sold as counterfeit. With added enforcement authority and jurisdiction over broad range of IPR issues, the new MOCI IPR units should be more effective and efficient. -------------- Ministry of Information -------------- ¶12. (U) The Ministry of Information's performance in 2008 continued to improve in comparison to previous years. In September 2007, copyright enforcement authority was officially moved from MOI to MOCI. Post sees this as a positive step since MOI enforcement was the weakest link in the GOK enforcement regime. This move not only eliminates problems related to coordination and information sharing between MOCI and MOI, it also allows MOCI to consolidate its trademark and copyright enforcement efforts. MOI increased its enforcement team from 15 members in 2006 to more than 50 in 2007. According to MOI officials, the Ministry had plans to increase its enforcement staff to 250 in the next few years. The copyright office and its inspectors have moved to the Ministry of Commerce and will work in conjunction with Commerce's trademark protection teams under a combined reporting hierarchy. Post was encouraged to learn that the copyright office has transferred largely intact, as the USG has invested considerable resources in training and developing its personnel over the years and plans to continue to do so in 2009. ¶13. (U) In 2006, at Post's urging the inter-ministerial IPR committee began keeping records of enforcement activities for all offices holding IPR responsibility. This move has added a measure of accountability to inspection teams' activities and has resulted in more completed seizure reports from inspectors. In 2008, MOI teamed up with the Business Software Alliance (BSA) in an effort to strengthen anti-piracy enforcement and to raise public awareness. Highlights from 2008 include the seizure of more than 167,991 pirated optical media discs, which include CDs, DVDs, software and video games. -------------- -------------- WIPO Copyright Treaty and Performances and Phonograms Treaty -------------- -------------- ¶14. (U) Although Kuwaiti officials have expressed their interest in the treaties, Kuwait is a party to neither. ********************************************* ********* For more reporting from Embassy Kuwait, visit: visit Kuwait's Classified Website at: http://www.intelink.sgov.gov/wiki/Portal:Kuwa it ********************************************* ********* JONES