KUWAIT: SPECIAL 301 REPORT 2010

UNCLAS KUWAIT 000165

SENSITIVE, SIPDIS

STATE FOR NEA/ARP, EEB/TPP/IPE, DEPT PASS TO USTR JGROVES, TMCGOWAN

E.O. 12958: DECL: NA
TAGS: PGOV ETRD SENV ECON KU

SUBJECT: KUWAIT: SPECIAL 301 REPORT 2010

REFTEL: STATE 3361, KUWAIT 09 1060, KUWAIT 09 897


1. (SBU) SUMMARY: In a meeting on February 10th, Econcouns informed
Ahmed Al-Haroun, the Minister of Commerce and Industry (MOCI),and
Sheikha Rasha Naief Al-Sabah, the Director for IPR in the MOCI,
about the 2010 301 Special Report review process. Due to the delays
in passing a TRIPS-compliant Copyright Law, Post recommends that
Kuwait remain on the Special 301 Watchlist. Protecting IPR remains
a priority in Kuwait: inspection teams from the Ministries of
Information (MoI),Commerce and Industry (MOCI) and Kuwaiti Customs
continue to conduct regular raids and seizures. Kuwait maintains a
strong spirit of enforcement, but the Kuwaiti Copyright Law and its
TRIPS non-compliance hampers the government's enforcement capacity.
END SUMMARY.


2. (SBU) Kuwait's 1999 Copyright Law was revised by the Minister of
Commerce and Industry and is currently under review with the
Ministry of Justice. Critics of the pending Copyright Law
amendments say that the law is already obsolete because it does not
address internet piracy protection. Post is encouraged by Kuwait's
commitment to IPR enforcement and by an increased willingness to
prosecute violators, but remains frustrated at the slow pace of
movement on key legislation. MOCI, MOI and Customs have made IPR
enforcement a high priority, but the delay in finalizing IPR
legislation and forwarding it to the Parliament indicates that IPR
protection is not a high priority for the GOK as a whole. In a
recent meeting with Econoff, Tarek Al-Ajmi, the Assistant
Undersecretary for the Ministry of Information, stated that the
inter-ministerial National Committee for IPR, which was formed in
2005, has not met or done anything of substance since 2007.


3. (SBU) In September 2007, the GOK announced that copyright
protection responsibility officially merged with the Ministry of
Commerce and Industry (MOCI) and all IPR enforcement functions
(other than Customs) had been consolidated into the MOCI, which
previously held responsibility only for trademarks. The move has
not been smooth or easy and several elements of enforcement have yet
to make their final move into the Ministry of Commerce, including
the office of the Director for IPR, Sheikha Rasha Naief Al-Sabah.

Optical Media Piracy
--------------

4. (SBU) In a recent phone conversation, Khaled Al-Abduljaleel
Al-Jassem, the Assistant Manager for Kuwait's Arabian Anti-piracy
Alliance (AAA) described to Econoff the pay TV decoder box
phenomenon, which has emerged in Kuwait since 2007. For a fee of
40KD (about 160 USD),Kuwaitis can purchase a "DreamBox" receiver
which provides access to multi-satellite channels, free of charge,
for about six months. While Al-Jassem describes the "DreamBox"
phenomenon as rampant in Kuwait, the International Intellectual
Property Alliance (IIPA),claims that enforcement has resumed after
a brief stoppage in 2009. Al-Jassem also asserted that Kuwait's
optical media piracy rate is still around 90 percent, although the
Ministry of Information disputes this figure. The Ministry of
Information, however, does not compile its own statistics on optical
media piracy. Pirated optical media is 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 backrooms and
offer pirated material only upon request, or use advanced computer
technology by acquiring pirated material from wireless LAN.
Nonetheless, pirated material continues to be readily available in
Kuwait.

Domestic and International IPR Agreements

5. (SBU) The United States and Kuwait entered into a Trade and
Investment Framework Agreement (TIFA) in 2004, which established a
formal dialogue to promote increased bilateral trade and
investments. TIFA also emphasizes the importance of providing
effective protection and enforcement of intellectual property rights
and of membership adherence to intellectual property rights
conventions. Kuwait has yet to join the WIPO Copyright Treaty or
the WIPO Performances and Phonograms Treaty (WPPT),as other GCC
countries have done.

6. (SBU) On December 10, 2006, the GCC Supreme Council enacted the
GCC Unified Trademark Law with the intent of homogenizing brand
protection practices in the GCC states. The law seeks to replace
local provisions with a single set of general directives governing
assignment and cancellation, trademark registration, renewal and
enforcement systems. Each country will retain and manage an
independent register, and applications must be made separately in
each country. Kuwait must draft and enact implementing regulations
before the Trademark Law will become operative. These regulations
are in the process of finalization.

TRIPS Compliance
--------------


7. (SBU) The Ministry of Information has drafted extensive
amendments to the 1999 non-compliant Copyright 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 provided feedback for the Kuwaitis' consideration.
Since February 2009, the draft Copyright Law has been under the
jurisdiction of the IPR Department at the Ministry of Commerce and
Industry. Sheikha Rasha Naief Al-Sabah, the Director of IPR and
Ahmed Al-Haroun, the Minister of Commerce and Industry, informed
Econcouns in a February 2010 meeting that the revised Copyright Law
had passed the Ministry of Justice review and is currently with the
Executive Cabinet's Legislative Committee and pending submission to
Parliament.


8. (SBU) In 2004, the Ministry of Information submitted draft
legislation to increase penalties for IPR violators. This law is
still pending at the Cabinet Council and awaiting submission to the
Parliament. The new law sets minimum penalties that include
mandatory jail sentences. According to our interlocutors, all raids
in 2009 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 a
fine (up to $1,735) and rarely include jail time, are a major
contributing factor to the GoK's failure to deter vendors of pirated
and counterfeit goods.

Training Opportunities

9. (SBU) In 2009, Post presented Kuwaiti officials with two
invitations for IPR training opportunities with USPTO. Both of
these invitations were declined due to language barriers, budget
constraints and other bureaucratic issues. In October 2009, Kuwaiti
Customs, in collaboration with the Ministry of Commerce and the
Brand Owners Protection Group, conducted its first-ever training
sessions for 150 customs inspectors on how to identify imitation
products, effectively communicate intelligence updates, and how to
profile counterfeit product shipments. American-based companies
such as Philip Morris, Nike and Ford sent materials and
representatives to talk about brand integrity and
anti-counterfeiting techniques. In February 2010, Sheikha Rasha
Naief Al-Sabah participated in an IPR training session at the Kuwait
Lawyers' Union, along with customs inspectors, lawyers and customs
administrators.
Use and Procurement of Government Software
--------------


10. (SBU) In a December 2009 meeting, Jawad Al-Redha, Microsoft's
regional office director told Econoff that software piracy in Kuwait
is around 61 percent. The Ministry of Information does not have
statistics on software piracy, however Post believes that private
sector assessment in this case is accurate. Post's GOK
interlocutors assure us that pirated software is not allowed in any
government ministry or office. Ministry of Information, the
Secretariat General of Supreme Council for Planning and Development
(formerly the Ministry of Planning) and Ministry of Interior
officials affirm that they use only licensed and authenticated
software on government computers. However, Microsoft claims that
the number of end-users exceeds the quantity of purchased and
licensed software. MOI claims that its networks are monitored by an
IT supervision center which does not permit any unlicensed software
to be installed on its network systems. (Comment: MOI assertions
in this regard are not highly credible. Emboffs have personally
witnessed MoD laptop power-point presentations for high-level VIPs
fail because the presentation was running pirated software. End
comment.)

Enforcement
--------------


11. (SBU) In general, enforcement remains hampered by an
unwillingness to prosecute Kuwaiti citizens who run piracy rings,
with prosecution reserved for foreign nationals who work for
Kuwaitis. In most cases, piracy fines are around 100 KD to 500 KD
(350 USD to 1750 USD). 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.


12. (SBU) Trademark infringement is a growing concern, particularly
with the office at the Ministry of Commerce of Industry responsible
for researching and registering trademark applications. Valid
Kuwaiti registrations can be obtained for applications that clearly
violate an existing trademark or trade dress, 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 Kuwaiti
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.

Kuwaiti Customs
--------------


13. (SBU) The U.S. Customs advisory team, which has worked closely
with Kuwaiti Customs since its creation in 2003-2004 and is
physically located within Kuwaiti Customs offices, has developed a
close and productive relationship with the IPR team at Customs, and
much of Kuwaiti Customs' progress over the last few years can be
directly attributed to this partnership. Kuwaiti 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 and penalties imposed on the
spot, including the 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 IPR holders have agreed
to absorb the costs of destruction in order to avoid the goods being
re-exported.


14. (SBU) Kuwaiti Customs continues to be the most aggressive and
competent agency in impeding the movement of pirated and counterfeit
products. In 2009 Osama Al-Shami, the Assistant Director for the
IPR Office in Kuwaiti Customs reported 394 seizures, valuing KD
615,738, with a 22% increase in comparison to 2008's 308 seizures.
Such a decrease is attributed to the newly applied procedure, where
importers approach Customs with sample products they intend to
import, and ask for an assessment of the products' legitimacy before
placing orders. Al-Shami stated that importers submitted 120
examples in 2009, with roughly 60% of the samples rejected. In
2009, Kuwait's Northern Ports were the primary point of entry for
counterfeit products, valuing more than 400,000 KD; the primary
products were electrical appliances, textiles and computer
accessories.

Ministry of Commerce and Industry
--------------


15. (SBU) The Ministry of Commerce and Industry 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 National Committee for IPR which oversees and
coordinates all enforcement efforts. However, as stated earlier,
this Committee has been inactive since 2007. As a result of the
TIFA process, the Ministry has made IPR enforcement a higher
priority in the Ministry. MOCI blames parliamentary politics for
lack of movement or slow movement on the Copyright Law amendments.
Although the copyright office has moved to MOCI, bureaucratic
details like budget, office space and personnel still remain to be
worked out before the office can be fully functional with MOCI.
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 a broad range of IPR
issues, the new MOCI IPR units should be more effective and
efficient.

Ministry of Information
--------------


16. (SBU) According to MOI officials, the Ministry had plans to
increase its enforcement staff to 250 in the next few years. The
Ministry of Information now has 19 team leaders with the legal
authorization to conduct search and seizures, bringing the
Ministry's number of inspectors to 120. According to statistics
provided by Abdulaziz Bu-Dastour, the recently named Supervisor in
MOI's newly formed Inspection Department the Ministry seized 675,283
items in 2009. MOI shut down 46 stores and 427 cases were referred
to prosecution.


17. (SBU) 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 2010.

Kuwaiti Municipality - Destruction of Seized Pirated Materials


18. (SBU) In October 2009, the Ministry of Information and the
Kuwaiti Municipality undertook a massive destruction operation,
transferring to the destruction site an estimated 16 million
counterfeit items accumulated by the MOI in the last ten years. It
took the Municipality more than two weeks to destroy the materials
confiscated by customs inspectors.