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