SAUDI PROGRESS ON IPR AND TRADE ISSUES

UNCLAS SECTION 01 OF 02 RIYADH 001366 SENSITIVE SIPDIS STATE PASS TO USTR FOR JASON BUNTIN, CHRIS WILSON USDOC FOR STEVEN GARRETT DEPT FOR NEA/ARP E.O. 12958: N/A TAGS: ECON EINV ETRD KIPR PREL SA SUBJECT: SAUDI PROGRESS ON IPR AND TRADE ISSUES REF: A. 09 RIYADH 524 ¶B. 09 RIYADH 575 ¶C. 09 RIYADH 789 ¶D. 09 RIYADH 793 ¶E. 09 RIYADH 982 ¶F. 09 JEDDAH 297 ¶G. 09 RIYADH 1202 Summary -------------- ¶1. (SBU) Saudi government officials and industry representatives have recently reported that the Saudi Government has made significant progress on outstanding trade and intellectual property rights (IPR) enforcement issues since the U.S.-Saudi Arabia IPR Working Group held its first meeting March 4-6 in Washington, DC. On patents, the Saudi Food and Drug Authority is now up and running, and has assumed the pharmaceutical market oversight functions from the Ministry of Health. The King recently approved a Royal Decree to implement the exclusive marketing rights proposal for pharmaceutical products (septel). On copyright issues, Saudi authorities continue to conduct raids and levy fines. They are looking for industry assistance to increase seizures and expand transparency on legal actions. On trade, the Saudis submitted a new notification of the Gulf Cooperation Council (GCC) customs union to the World Trade Organization (WTO) in fulfillment of its WTO obligations. Copyright and data exclusivity protection issues remain, although Saudi Government authorities remain committed to expanding protections and improving the investment climate. Industry lauds Saudi progress on copyright enforcement... -------------- -------------- ¶2. (SBU) Local industry representatives, including Microsoft and the Arab Anti-Piracy Alliance (AAA),lauded the developments in copyright protection over the past year. They singled out for praise the "outstanding" efforts of Deputy Minister of Culture and Information Al-Hazzaa, thanks to which, AAA investigators can "raid at will." They highlighted several positive developments at the Ministry of Commerce and Industry (MOCI),including: setting up the MOCI website, which gives the public more information about seizures and investigations than before; establishing a committee within the Riyadh Police which has raided pirates; blocking web sites that distribute pirated material; MOCI sending warning letters to four selected compounds, directing them to cease broadcasting pirated cable programs; MOCI sending a letter to the Customs authority requesting that they block decoder boxes that circumvent / encryption technologies; and conducting a massive crackdown against street vendor piracy. ...And suggested areas for improvement -------------- ¶3. (SBU) Industry representatives outlined copyright holders' priority areas for improvement, which AAA also provided in a January 8 letter to Al-Hazzaa. AAA emphasized that the largest single issue affecting all stakeholders is the absence of fear of prosecution in the market. Industry thinks an important part of the problem is the lack of deterrent sentencing, namely imprisonment. Saudi Arabia has yet to sentence a single pirate to prison, although industry has cited some examples of multiple offenders that could serve as good examples for punishment. Al-Hazzaa told EconCouns on October 13 that the Violations Review Committee had imposed the maximum allowed fine (SR 100,000, or $26,700) on two repeat offenders. The Business Software Alliance and Microsoft believe that greater transparency on the MOCI website would also help illustrate the dangers of getting caught. Industry would also like to see more progress on the processing of internet piracy cases; the illegal use of encrypted satellite signals; and greater police support for raids in Jeddah and Dammam. Microsoft would like Saudi ministers to be more active in conducting audits to ensure they are not using illegal software. Al-Hazzaa is open to cooperation with industry, but in some cases needs material assistance to address specific concerns (e.g., improving the web site). Saudi IPR Committee Progress -------------- ¶4. (SBU) Mohammad Al-Aiyash, the head of the Saudi IPR Committee at the Ministry of Commerce and Industry, told EconCouns October 12 that the Committee continued to meet RIYADH 00001366 002 OF 002 regularly and make progress on IPR enforcement in the Kingdom. Deputy Minister of Culture and Information Al-Hazzaa told EconCouns recently that he had set a goal to clear the backlog of cases in the Violations Review Committee (VRC) by the end of September, while continuing to raid suspected pirates (ref G). Al-Hazzaa reported on October 13 that the VRC has reviewed hundreds of cases, and posted information on the web site about their disposition. Between February and August, MOCI conducted 3,433 raids, a number he promised to update during the upcoming visit of A/USTR Wilson. The Ministry of Commerce also continues to hold weekly copyright seminars with the private sector. ¶5. (SBU) Al-Aiyash said that the Ministry of Commerce and Industry had selected a firm, and begun an audit of the Ministry,s software to assess how much was properly licensed or purchased. He said the Ministry would evaluate the report when it was complete. In the likely event it was useful, the Ministry will encourage other Saudi Government agencies to follow its example. Exclusive Marketing Rights and Data Exclusivity -------------- -- ¶6. (SBU) IPR Committee chair Mohammad Al-Aiyash stated that King Abdullah approved the Royal Decree concerning the Exclusive Marketing Rights (EMR) Proposal first put forth by the USTR in 2007. The EMR agreement is formally in effect now that the Royal Decree has been issued, which directs the Directorate of Industrial Property at the King Abdulaziz City for Science and Technology (KACST) to provide protection to those drugs registered before the implementation of the new Saudi patent systems. ¶7. (SBU) In a meeting with EconCouns, the Vice President of Saudi Food and Drug Authority's (SFDA) Drug Affairs Professor Saleh Bawazir said it was SFDA's responsibility to uphold data exclusivity laws (Note: The SAG successfully moved pharmaceutical licensing from the Ministry of Health to the Saudi Food and Drug Administration in August. End note). Bawazir said that license applicants would be able to file for registration online, emphasizing that the SFDA wants to make it easier for companies to submit their data files. Drugs are now registered within 24 hours, he said, a dramatic improvement over once lengthy registration times. To address outstanding data protection issues, PhRMA is organizing a second workshop on November 10 (tentative) during the visit of the U.S. IP working group. This event builds on the June 16-17 workshop on Data Exclusivity, which was organized by the Commerce Ministry and PhRMA to clarify for Saudi officials the meaning and enforcement requirements of data exclusivity rights. The initial seminar was very useful in explaining the difference between patent rights and data exclusivity rights. Saudi officials expect the follow on seminar will be equally useful in sharpening Saudi officials understanding, and ability to enforce the regulations. GCC Customs Union Notification -------------- ¶8. (SBU) Saudi Arabia sent a new notification of the GCC Customs Union to the WTO on October 12 at the WTO Committee on Trade and Development meeting in Geneva. Saudi Arabia, as a GCC member state, made explicit commitments in their WTO accession to comply with the notification requirements under GATT Article XXIV. Saudi Arabia correctly notified the Customs Union in 2006, but subsequently changed the notification without explanation in March 2008. Saudi Arabia is now upholding its WTO commitments with the new notification. ZIADEH