VZCZCXRO4235
OO RUEHHM
DE RUEHHI #0308/01 0530634
ZNR UUUUU ZZH
O 220634Z FEB 07
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4647
INFO RUEHBK/AMEMBASSY BANGKOK PRIORITY 5416
RUEHHM/AMCONSUL HO CHI MINH 2573
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS SECTION 01 OF 03 HANOI 000308
SIPDIS
SENSITIVE
SIPDIS
STATE FOR EAP/MLS AND EB/TPP/IPE JBOGER
STATE ALSO PASS USTR JCHOE-GROVES AND DBISBEE
STATE ALSO PASS USPTO FOR JURBAN
STATE ALSO PASS LIBRARY OF CONGRESS FOR TEPP
AMEMBASSY BANGKOK FOR USPTO JNESS
USDA FOR FAS/FAA/AO HUETE
USDOC FOR ITA/MAC/OIPR CPETERS AND 4430/MAC/AP/OPB/VLC/HPPHO
E.O. 12958: N/A
TAGS: ETRD ECON KIPR VM
SUBJECT: MISSION RECOMMENDS THAT VIETNAM REMAIN ON THE 2007 SPECIAL
301 WATCH LIST - PART 1 OF 2
REF: (A) STATE 007944 (B) 06 HANOI 000427
(U) SENSITIVE BUT UNCLASSIFIED, DO NOT POST ON THE INTERNET
1. (SBU) Summary: The Mission recommends continued placement of
Vietnam on the Office of the U.S. Trade Representative's (USTR)
Special 301 Watch List for 2007 because intellectual property rights
(IPR) enforcement is still weak, and piracy and counterfeiting in
many product categories remain pervasive. At the same time, the
Government of Vietnam (GVN) continues to take steps to protect IPR,
including strengthening its legal regime. Vietnam's January 2007
accession to the World Trade Organization (WTO), continued efforts
to integrate into the international economy and goal to improve
trade relations further with the United States have motivated the
GVN to make fulfillment of its international IPR commitments a
priority. With more training, resources, experience and time to
implement its newly-passed legislative framework, Vietnam should be
positioned to develop a better track record on IPR enforcement.
These developments argue against the case for elevating it to the
Priority Watch List. The Mission will continue to place IPR issues
at the forefront of our bilateral trade discussions on WTO and BTA
compliance. End Summary.
IPR Situation in Vietnam - Achievements and Challenges
--------------------------------------------- ---------
2. (SBU) As part of Vietnam's increased integration into the world
economy, including its January 11, 2007 accession to the WTO, the
GVN has made progress in providing adequate and effective protection
to intellectual property rights and providing market access to U.S.
persons who rely on IP protection. Since the Mission's 2006 Special
301 submission (reftel B), Vietnam has: (1) strengthened its IPR
regime through issuing implementing regulations for the Law on
Intellectual Property; (2) committed to implement the Trade Related
Aspects of Intellectual Property Rights (TRIPS) agreement upon WTO
accession; (3) modestly improved IPR enforcement; (4) joined the
five international IPR conventions as required under the 2001
U.S.-Vietnam Bilateral Trade Agreement (BTA); (5) maintained a
high-level public commitment to IPR protection; and (6) cooperated
closely on this issue with international donors, including the
USAID-funded Support for Trade AcceleRation (STAR) project. Because
of these positive developments, we do not recommend changing
Vietnam's current status from Watch List to the Priority Watch List.
3. (SBU) Still, despite this recent progress, many of the problems
identified in the 2006 Special 301 Review remain. IPR enforcement
in Vietnam remains weak and violations are rampant. Piracy and
counterfeiting are particular concerns, with estimated music and
software piracy rates at or above 90 percent. IPR infringement is
also a problem in the pay TV sector, where a state-owned cable
provider is the most egregious violator. Market access barriers,
especially censorship of "cultural products," continue to limit the
availability of legitimate products, further complicating efforts to
combat piracy. Public awareness of intellectual property issues,
while growing, remains very low. Routine and reliable enforcement
of Vietnam's IPR commitments is still lacking. From the police to
the courts, officials in Vietnam's enforcement system, especially at
the local level, are poorly informed about the rights of IPR holders
or how to prosecute, adjudicate and enforce those rights. With
additional resources and more time to implement its newly-passed
legislative framework, however, we expect that Vietnam will develop
a more consistent track record of IPR enforcement. Until that time,
we do not recommend removal of Vietnam from the Watch List.
4. (SBU) The Mission has reviewed industry and public comments
submitted as part of the Special 301 review process. Many of the
issues raised throughout these submissions provide a broadly
accurate portrayal of Vietnam's IPR situation. The GVN is aware of
most, if not all, of these concerns. The Mission will continue to
raise these issues in discussions with GVN officials, and we hope
consistent pressure to resolve these matters will continue to
improve the intellectual property rights environment.
Optical Media and Book Piracy
-----------------------------
5. (U) Despite improvements in Vietnam's legal regime and a growing
understanding of optical media and book piracy among enforcement
HANOI 00000308 002 OF 003
agents, the GVN has made little progress on reducing the amount of
counterfeit and pirated goods available in Vietnam. Hanoi, Ho Chi
Minh City and most other major cities in Vietnam are rife with music
CD, VCD, DVD and video shops. Virtually 100 percent of U.S. and
foreign products (and most domestic products) for sale or for rent
are pirated. Even where legitimate media products and books are
available, they are typically three to five times more expensive
than pirated versions, which are sold throughout the major cities,
mostly at retail outlets. While most pirated discs are still
manufactured in other countries, locally-produced pirated CDs, VCDs
and DVDs are becoming more prevalent.
6. (SBU) IPR infringements continue to be a problem in the
state-owned TV sector for both foreign and domestic content
providers, though there appears to be some progress toward
regularizing this market. The most egregious violator is the
Vietnam Television Technology Investment and Development Company
(VTC), a digital-terrestrial broadcaster operated by the Ministry of
Posts and Telematics (MPT). VTC illegally broadcasts overspill
satellite signals to end-users for a one-time decoder box purchase
fee. MPT officials have called the service "experimental" and
acknowledge the need to transition to a licensed, fee-based system,
but it remains unclear how or when they plan to do so. Despite
repeated urging by both the Mission and U.S. industry, MPT has taken
no serious steps to end VTC's distribution of stolen signals.
Vietnam committed to implement "appropriate legal instruments
mandating that all cable television purveyors provide only fully
licensed products to their customers," by the time of its WTO
accession. Recent conversations with MPT officials confirmed that
the GVN has not yet issued any such regulation.
7. (SBU) VTC has defended its practices by claiming it is difficult
for them to determine the legitimate right holder. Many channels,
however, including HBO, CNN and Discovery, have become legitimately
available through local distributors, and other Vietnamese cable
companies have successfully acquired proper licensing. In October,
VTC illegally broadcast the Miss World Competition, to which the
state-owned cable operator, VCTV, held the rights. After VTC
ignored calls to cease and desist the broadcast, VCTV led a vocal
public campaign to seek remuneration for damages. Although VTC had
to pay a fine for its illegal broadcast which provided monetary
compensation to VCTV, the case has done nothing to change the VTC's
activities. One positive outcome of this case, however, is the
increased public attention to the problem of signal piracy.
Software Piracy
---------------
8. (SBU) Software industry representatives estimate that piracy
rates in Vietnam range between 85 and 92 percent. American software
companies such as Microsoft have cooperated with enforcement
authorities to take action to reduce the incidence of software
piracy, particularly among corporate and government end-users. In
2006, these efforts began to bear fruit as government ministries
(Ministry of Finance and General Department of Statistics), SOEs
(Bao Viet Finance and Vietnam Mobile Telecom Services Company),
state-owned banks (Bank for Foreign Trade of Vietnam) and the Bank
for Investment and Development of Vietnam) and private enterprises
(FPT Telecom) all signed licensing contracts for Microsoft software
covering tens of thousands of computers.
9. (U) In July 2006, the Prime Minister issued Decision No.
169/2006/QD-TTg, which requires that government agencies strictly
comply with laws on copyright protection when procuring and/or using
IT products, especially software and digital contents. Also in
July, the National Assembly passed the Information Technology Law.
Article 12 of the law prohibits IP infringements in IT activities in
both the public and private sectors.
10. (U) Vietnamese authorities also conducted several
highly-publicized raids against software piracy. While few in
number, they represent an important first step. In October,
inspectors and economic police raided Daewoo's Vietnam subsidiary
near Hanoi. The total value of pirated software found on the
computers was more than USD 60,000. In a second raid, authorities
in Ho Chi Minh City raided a ceramics company in December, netting
more than USD 90,000 of illegal software found on confiscated
computers.
HANOI 00000308 003 OF 003
WTO and BTA Compliance - Implementation Still Weak
--------------------------------------------- -----
11. (U) Chapter Two of the BTA, which entered into force on December
10, 2001, codified Vietnam's commitment to bring its IPR legal
regime and enforcement practices up to international standards, to
protect intellectual property consistent with WTO TRIPS standards,
and in some cases, to provide protection stronger than TRIPS. The
BTA covers the fields of copyright and related rights, encrypted
satellite signals, trademarks (including well-known marks), patents,
layout designs of integrated circuits, trade secrets, industrial
designs and plant varieties. Vietnam also agreed to implement the
WTO TRIPS agreement immediately upon its WTO accession, which
occurred January 11, 2007.
12. (U) Under the BTA, Vietnam committed to put into effect the
provisions of five international intellectual property conventions
and to accede to them "promptly." By joining the International
Union for the Protection of New Varieties of Plants (UPOV) and the
Brussels Convention Relating to the Distribution of Program-Carrying
Signal Transmitted by Satellite in 2006, Vietnam has fulfilled its
obligation to accede to all five conventions. (Note: Vietnam
previously joined the Paris Convention, Geneva Convention, and Berne
Convention. End Note.)
13. (U) The BTA obligates Vietnam to provide expeditious remedies to
prevent and deter infringement, to allow prompt and effective
provisional measures and to put in place criminal procedures and
penalties for willful trademark counterfeiting or infringement of
copyrights or related rights on a commercial scale. While Vietnam
has passed regulations to meet many of these commitments, some legal
documents remain outstanding and/or are not yet detailed enough to
implement in practice (see paras. 16-20). One notable example is a
circular which provides for criminal penalties for copyright
infringements on a commercial scale. This circular will serve as a
stop-gap measure until the GVN can complete required revisions to
make its Criminal Code consistent with the new IP Law and Vietnam's
TRIPS commitments. The USG has consistently pushed for passage of
this important circular, and the STAR project has advised the
Supreme People's Court (SPC) drafters. SPC contacts report that the
circular will be completed by the end of March 2007.
ALOISI