VZCZCXRO0641
OO RUEHHM
DE RUEHHI #0602/01 1430857
ZNR UUUUU ZZH
O 220857Z MAY 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7871
INFO RUEHBK/AMEMBASSY BANGKOK PRIORITY 6356
RUEHHM/AMCONSUL HO CHI MINH 4752
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS SECTION 01 OF 03 HANOI 000602
SENSITIVE
SIPDIS
STATE FOR EAP/MLS AND EEB/TPP/IPE JURBAN
STATE ALSO PASS USTR JCHOE-GROVES, DBISBEE AND RBAE
STATE ALSO PASS USPTO FOR JCHAMBERS
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: KIPR ECON ETRD VM
SUBJECT: AMBASSADOR'S ROUNDTABLE IDENTIFIES KEY CHALLENGES TO
PROTECTING IPR IN VIETNAM
1. (U) Summary: The Ambassador hosted a May 16 roundtable discussion
on intellectual property rights (IPR) in Vietnam with more than 40
U.S. business community representatives. Participants discussed the
ongoing challenges of weak enforcement of Vietnam's laws; low,
non-deterrent penalty levels; a lack of expertise throughout the
ranks of Vietnamese authorities; poor coordination among the various
agencies responsible for IPR protection; and low levels of public
IPR awareness. Additionally, attendees highlighted emerging issues
such as internet domain name registration, online piracy and the
creation of a new IP assessment body which could complicate right
holders' efforts to pursue administrative remedies. While
recognizing recent progress in Vietnam's IP regime, businesses
suggested greater coordination of public and private sector capacity
building efforts, increased focus on framing the argument for
stronger IP protection and enforcement when engaging the government
and local partners, and enhanced efforts to increase market access
for U.S. cultural goods. End summary.
2. (U) On May 16, the Ambassador was joined by U.S. Patent and
Trademark Office (USPTO) Regional IP Attache Jennie Ness, and
economic and commercial officers from Hanoi and Ho Chi Minh City to
lead a discussion with the U.S. business community on IPR protection
and enforcement in Vietnam. The Ambassador outlined current USG
efforts to improve IPR protection in Vietnam including bilateral
engagement through our regular trade dialogue, capacity building and
training efforts in Vietnam and the United States, and public
outreach programs. The Ambassador encouraged a frank and open
discussion of current issues that business are facing and sought
ideas on how right holders and the U.S. Government can better
coordinate efforts to improve the IP environment in Vietnam.
LEGAL ISSUES
------------
3. (SBU) Vietnam has improved its IP legal regime over the past
several years, however, roundtable participants highlighted two key
areas where Vietnam's legal system requires additional work in the
immediate future to comply with World Trade Organization (WTO) Trade
Related Aspects of Intellectual Property Rights (TRIPs)
requirements. The first is the provision of criminal remedies for
commercial scale IP violations and the second is the adequate
protection of data submitted as part of registration dossiers for
pharmaceutical and chemical products. Microsoft's Senior Director
for Legal and Corporate Affairs for Southeast Asia Antony Cook noted
that as the Government of Vietnam (GVN) works to revise its Criminal
Code in 2008, stakeholders must engage the drafters to ensure that
Vietnam translates its commitments on criminalization of commercial
scale violations into a workable process. Noting that the current
data protection system Vietnam has put in place is onerous and
ineffective, Merck's Vietnam Country Manager revealed that the
pharmaceutical industry is planning to deliver critical capacity
building and technical expertise on this issue.
ENFORCEMENT REMAINS WEAK; PENALTIES TOO LOW
-------------------------------------
4. (U) U.S. businesses delivered the consistent message that
enforcement of Vietnam's laws continues to be a significant
challenge. A legal expert who has worked in Vietnam for more than
seven years commented, "the issue is not the laws, but how the
relevant officials use them; the laws must be applied uniformly, and
that simply is not happening here yet." Another expert pointed to a
trademark case he filed on behalf of a client in 2001, which is
still pending a decision from the National Office of Intellectual
Property (NOIP). He bemoaned the fact that relevant authorities
lack a key point person to understand and implement the laws, and
opined that a dearth of knowledgeable and reliable officials is
perhaps the single biggest weakness in Vietnam's IP regime.
5. (SBU) Aside from enforcement of the laws, U.S. companies
identified the size of penalties for infringement as the single
largest hindrance to effective protection of IPR in Vietnam. Over
90 percent of remedies in Vietnam are handled via the administrative
system, which currently has a maximum fine of VND 100 million
($7,000). Microsoft's Cook emphasized that violators simply factor
this in as "a cost of doing business" which is far too low to deter
them from repeat violations. For example, Microsoft recently worked
with the Ministry of Science and Technology Inspectorate and the
Hanoi Police to conduct end-user hardware raids on two shops in
HANOI 00000602 002 OF 003
Hanoi. The authorities seized a total of 63 counterfeit units
valued at roughly USD 60,000. The police were limited to fining the
violators the maximum amount of $7,000 - or less than 12 percent of
the infringed goods. Tom Treutler, a lawyer with the firm Tilleke
and Gibbins announced that on May 5, the GVN passed an amendment to
its Ordinance on Administrative Penalties raising the maximum fine
to VND 500 million ($35,000), although it remains unclear whether
enforcement authorities will utilize these increased penalties.
6. (U) AmCham Hanoi's Information Technology, Telecommunications and
Intellectual Property (ITTI) Committee Chairman Michael Mudd urged
the U.S. business community to encourage Vietnam to create a
specialized IP Court, as countries in the region (most recently,
Malaysia) have done. A cadre of well-trained judges and prosecutors
will be necessary for right holders to pursue civil and criminal
remedies to protect their intellectual property, he continued.
STRUCTURAL ISSUES
-----------------
7. (U) Vietnam has no fewer than six agencies responsible for
enforcing intellectual property - creating significant overlap and
opportunities for gaps in protection. U.S. business representatives
noted that the diffusion of enforcement authority creates "turf
wars" which make inter-ministerial cooperation cumbersome, if not
impossible. For example, Microsoft has worked with its GVN
counterparts to request clarity from the Prime Minister on which
agency has responsibility for the management of software copyrights
- the Ministry of Information and Communications or the Copyright
Office of Vietnam. Current regulations give this authority to both
agencies, making it difficult for companies, and the agencies
themselves, to know who has the authority to manage specific
software copyright issues. U.S. pharmaceutical representatives
commented that data protection will require the buy in from
officials in the Ministry of Health's Drug Administration and NOIP,
but it is difficult to get the two agencies to sit down together to
discuss the issue or to deliver technical assistance jointly. A
representative from Eli Lilly opined that in order to overcome this
"alphabet soup" of enforcement bodies, Vietnam should create
inter-ministerial task forces to improve coordination, much as the
United States has done to fight drugs and terrorism.
8. (U) An emerging issue which may further complicate efforts to
protect intellectual property is the creation of a new agency -
known locally as an IP Assessment body - to provide expert guidance
on whether suspected goods are infringing. Many administrative
enforcement officials are unwilling to take action without the
backing of an expert opinion - which the NOIP (or provincial
Departments of Science and Technology) used to provide. Under the
2005 IP Law, however, that function is now being "outsourced" to a
quasi-independent assessment body. An IPR legal expert involved
with the STAR Vietnam project cautioned that right holders should
watch this development carefully, as it presents potential problems
- i.e., who will staff the new body, how much will it cost right
holders, and will it be impartial, among others.
CORRUPTION ALSO A PROBLEM
-------------------------
9. (SBU) In a panel discussion on enforcement challenges, one
participant noted that corruption "is a systemic issue which
inhibits IP enforcement in Vietnam." Many enforcement agents expect
payments from right holders to protect their intellectual property,
he continued. Target selection is also an issue - while often
willing to go after foreign-owned companies suspected of trademark
or copyright violations, authorities are much more reluctant to go
after smaller, local companies.
INCREASED MARKET ACCESS CRITICAL FOR U.S. CULTURAL PRODUCTS
---------------------------------------------
10. (U) TimeWarner's Director for International Relations and Public
Policy for the Asia Pacific Region Alvin Lee commented that there is
a fundamental lack of understanding among GVN officials of the
creative process and why it must be protected. Lee said that many
U.S. entertainment companies are interested and willing to invest in
Vietnam's market, but are restricted from doing so by Vietnamese
laws. Without the ability to develop a "real and sustained business
presence in Vietnam, foreign cultural IP right holders lack the
HANOI 00000602 003 OF 003
first-mover advantage" when it comes to protecting their property,
he continued. Market access will become even more important as more
Vietnamese connect to the internet and online piracy of U.S. music,
movies and other products becomes a more prevalent challenge.
CHANGING MINDSETS
-----------------
11. (SBU) Following on the discussion of cultural products, one
participant raised the question of whether Vietnam's weak
enforcement of IP rights is a lack of capacity or a lack of will.
He distinguished between GVN willingness to punish makers of
suspected counterfeit goods with a potentially harmful impact on
human health and its lax treatment of entertainment products (CDs,
DVDs, etc.), infringement of which is purely an economic issue. The
Business Software Alliance's Vietnam representative agreed, adding
that right holders must also overcome the conceptual hurdle that
many in the GVN do not see the need to protect strong and prosperous
companies at the expense of smaller, local firms. The
representative from Merck interjected that these issues underscore
why it is important for U.S. firms to craft carefully the message
that they deliver to the GVN. She suggested that firms point to the
negative effect that Vietnam's deficient IPR regime has on
companies' investment decisions, as well as highlight the benefits
of a strong IP regime in developing a local market.
GOING FORWARD
-------------
12. (U) At the conclusion of his remarks, the Ambassador expressed
the hope that this would be the first in a more regular series of
discussions between the Mission and the business community on how to
better coordinate efforts to protect and enforce IPR in Vietnam.
This suggestion was received warmly by the business community, with
participants calling for more regular dialogue among businesses and
between the business community and the USG (and other governments)
to avoid repetition and maximize resources. Tilleke and Gibbins'
Tom Treutler noted that Vietnam is currently revising its criminal
code, planning to develop an Optical Disc Law, and intends to revise
its IP Law in 2010 - all opportunities for the U.S. business
community and the USG to engage the GVN to ensure that the legal
regime here addresses key U.S. concerns and meets Vietnam's TRIPs
obligations.
SIGNIFICANT PRESS COVERAGE
--------------------------
13. (U) Journalists were invited to attend the Ambassador's opening
remarks, and the Embassy issued a press release highlighting the key
themes of the roundtable. The resulting press coverage included
articles in Vietnam Investment Review, Vietnam Financial Times,
Vietnam Economic Times, Law Newspaper (Phap Luat), Youth Newspaper
(Thanh Nien), Laborer (Nguoi Lao Dong) and the Vietnam-U.S.
Magazine. The articles picked up on the core message that Vietnam
must do more to protect IPR, particularly in the area of
enforcement, and that the U.S. Government and private sector will
continue to engage closely with the GVN to improve the IPR
environment.
MICHALAK