IPR PROTECTION IN SRI LANKA: BAD, BUT IMPROVING

C O N F I D E N T I A L SECTION 01 OF 02 COLOMBO 000063 SIPDIS TREASURY FOR USTR MICHAEL DELANEY; COMMERCE FOR USPTO KRISTINE SCHLEGELMILCH DEPARTMENT FOR EEB/TPP/IPE JOELLEN URBAN E.O. 12958: DECL: 01/28/2020 TAGS: KIPR ECON PGOV CE SUBJECT: IPR PROTECTION IN SRI LANKA: BAD, BUT IMPROVING Classified By: Deputy Chief of Mission Valerie Fowler for Reasons 1.4 ( B) and (D). ¶1. (SBU) SUMMARY: Sri Lanka's intellectual property rights regime is good on paper but lax on enforcement. Still, since the passage of comprehensive legislation in 2003, things have slowly been improving. The Embassy, American Chamber of Commerce, Business Software Alliance, a cadre of specialized law firms, and a number of government offices have worked hard to increase awareness and provide much-needed training for judges, police, and investigators. While much remains to be done, new and ongoing initiatives should reduce the amount of pirated and fake items available in the marketplace. END SUMMARY. BACKGROUND ¶2. (U) Sri Lanka's intellectual property rights (IPR) regime is, like that of many emerging economies, good on paper but lax on enforcement. The country enacted a comprehensive IPR law in 2003 that governs copyrights and related rights, industrial designs, patents, trademarks and service marks, trade names, layout designs of integrated circuits, geographical indications, unfair competition, databases, computer programs, and undisclosed information. Infringement of intellectual property rights is a punishable offense under the law and falls under both criminal and civil courts of jurisdiction in Sri Lanka. Recourse available to owners includes injunctive relief, seizure and destruction of infringing goods and plates or implements used for the making of copies, and the prohibition of imports and exports. Penalties for the first offense include a prison sentence of 6 months or a fine of up to Rs 500,000 ($4,425). Penalties can be doubled for a second offense. ¶3. (C) Since the passage of the 2003 IPR law Sri Lanka has slowly begun enforcing its provisions. However, counterfeit goods continue to be widely available. Local agents of well-known U.S. and other international companies representing recording, software, movie, clothing and consumer product industries continue to complain that the lack of IPR protection is damaging their businesses. Piracy of sound recordings and software is widespread, making it difficult for the legitimate industries to protect their market and realize their potential in Sri Lanka. The Police occasionally raid stores selling counterfeit goods -- especially garments. However, it is rare for the Police to act without a formal complaint and assistance from an aggrieved party. Several offenders have been charged or convicted by courts. A leading anti-piracy lawyer, Sudath Perera, told EconOff that his firm has successfully conducted several raids in Colombo in 2008-2009. In January 2010, police and the law firm (representing the rights holders) recently raided two outlets in Colombo selling counterfeit garments and stationary. SOFTWARE PIRACY ¶4. (SBU) Software companies complain of the lack of IPR enforcement within government institutions and even some larger corporations, including several banks. According to a survey commissioned by the Business Software Alliance (BSA) and conducted by the IDC, a leading global IT market research firm, software piracy in Sri Lanka is as high as 90 percent. Sri Lanka,s software companies and the Sri Lankan Association for Software and Service Companies (SLASSCOM) dispute the findings of the study, questioning the sampling methodology used by the IDC. However, both organizations have bottom-line reasons to publicly doubt the study. For example, SLASSCOM's members worry the bad publicity could cause potential clients to go elsewhere due to the high piracy rate. ICTA, in collaboration with the SLASSCOM, is planning to commission an independent IPR survey covering a sample of about 5,000 companies. ¶5. (SBU) Sri Lankan government officials in charge of IPR protection acknowledge there is a high software piracy rate COLOMBO 00000063 002.4 OF 002 in the government. The government and industry leaders are taking various actions to improve IPR protection in the Information and Communication Technology (ICT) sector. In December 2009, the government of Sri Lanka approved a new Information Technology (IT) policy for the government sector which includes rules on hardware and software procurement. When the new policy will be implemented is not known. Under the new policy, the government will issue IT procurement guidelines requiring all government agencies to stick to licensed software or open-source software. If the cost of licensed software or maintenance and consultancy fees of open-source software is higher than proprietary software, the government will provide additional funds to purchase proprietary software. ¶6. (C) While we see this as a step in the right direction, the Business Software Alliance (BSA) is not fully satisfied with the policy and accuses the government of "more funny business." Shalini Ratwatte, BSA's local consultant, told EconOff that she sees it as a push for open source software. However, she acknowledged that pricing is an issue. For instance, global software producers are not willing to offer discounted prices to Sri Lanka (as they do in mass markets such as India). They argue that Sri Lanka, although a developing country, does not offer economies of scale to justify discounts. Nevertheless, BSA is contemplating starting IPR awareness programs for senior Sri Lanka government officials covered by the new procurement policy. OTHER PROGRESS AND PROGRAMS ¶7. (U) Post,s recent efforts focus on IPR protection in the ICT sector. In a bid to support the ICT sector, Post teamed up with BSA to hold an IPR awareness program for the Sri Lanka Police on January 8. The U.S. Department of Justice Office of Overseas Prosecutorial Development, Assistance and Training (USDOJ/OPDAT) and Business Software Alliance provided funds for this workshop. Approximately 45 police officers from the Criminal Investigations Division (CID) of the Sri Lanka Police participated. The program focused on the importance of IPR to the economy, elements of IPR law, and investigating and prosecuting IP cases. Industry representatives from pharmaceutical, software, and electrical product industries provided technical information about product identification. At the conclusion of the seminar, participants from the CID requested continued training on IPR awareness and education and more involvement from the industry. ¶8. (U) Demonstrating a positive trend, well-known vendors of branded laptops and computer systems now advertize that their products come "only with licensed software." Previously, laptop and desktop computers were sold without any reference to software and the sellers and users freely copied software. Furthermore, Dr. D.M. Karunaratne, Director of the National IP office, informed EconOff that a World Intellectual Property Office,s (WIPO) intellectual property academy will soon be established in Sri Lanka. Sri Lanka has been chosen for this academy as a pilot project. Earlier, WIPO carried out a successful pilot project on WIPO outreach programs in Sri Lanka. COMMENT ¶9. (SBU) The end of the war gives an opportunity to refocus efforts on IPR enforcement. The Embassy, the USPTO regional office in New Delhi, AMCHAM and BSA are working to pursue more aggressive enforcement and enhance public awareness, and require the active cooperation of the National IP office of Sri Lanka. Upcoming training programs in the first quarter of 2010 for law enforcement agencies include USPTO-sponsored training programs for the Attorney General,s Office and Sri Lanka Customs, and an AMCHAM/BSA sponsored training program for magistrates in the Central, North Central, Eastern and Northern Provinces, ensuring that magistrates from all nine of Sri Lanka's provinces receive training. BUTENIS