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Vietnam: VIETNAM SHOULD REMAIN ON THE 2008 SPECIAL 301 WATCH LIST

     
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Reference ID: 08HANOI194
Created: 2008-02-20 09:49
Released: 2011-08-30 01:44
Classification: UNCLASSIFIED//FOR OFFICIAL USE ONLY
Origin: Embassy Hanoi     

VZCZCXRO2279
OO RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHHI #0194/01 0510949
ZNR UUUUU ZZH
O 200949Z FEB 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7201
INFO RUEHBK/AMEMBASSY BANGKOK PRIORITY 6191
RUEHHM/AMCONSUL HO CHI MINH 4317
RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 08 HANOI 000194
 
SIPDIS
 
SENSITIVE
SIPDIS
 
STATE FOR EAP/MLS AND EEB/TPP/IPE JBOGER
STATE ALSO PASS USTR JCHOE-GROVES, DBISBEE AND RBAE
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: KIPR ECON ETRD VM
SUBJECT: VIETNAM SHOULD REMAIN ON THE 2008 SPECIAL 301 WATCH LIST
 
REF: (A) STATE 009475; (B) 07 HANOI 308; (C) 07 HANOI 309; (D) HANOI
090; (E) 07 HANOI 945; (F) 07 HANOI 1752
 
HANOI 00000194  001.2 OF 008
 
 
(U) SENSITIVE BUT UNCLASSIFIED, DO NOT POST ON THE INTERNET
 
1. (SBU) Summary:  Mission Vietnam recommends continued placement of
Vietnam on the Office of the U.S. Trade Representative's (USTR)
Special 301 Watch List for 2008.  One year after acceding to the
World Trade Organization, Vietnam has continued efforts to put in
place an effective legal regime to protect intellectual property
rights (IPR), taken some positive steps to reduce IPR violations and
worked to raise awareness of this issue.  Despite these efforts,
however, enforcement remains weak, piracy and counterfeiting
rampant, and several key obligations unfilled -- most notably the
failure to provide criminal remedies for commercial scale copyright
and trademark violations.  With additional time to improve its human
resource capacity, joined by strong incentives such as Vietnam's
expressed goal of participating in the Generalized System of
Preferences (GSP) program and desire to continue to attract record
levels of foreign direct investment, Vietnam should improve its
enforcement record.  In the meantime, Vietnam should remain on the
Special 301 "Watch List".  End Summary.
 
IPR Situation in Vietnam - Achievements and Challenges
--------------------------- --------------------------
 
2. (U) Vietnam's rapid economic development and integration into the
world economy continued in 2007, highlighted by its January 11, 2007
accession to the World Trade Organization (WTO).  The Government of
Vietnam (GVN) also took noticeable strides in 2007 to provide
adequate and effective protection for intellectual property rights
and provide market access to U.S. persons who rely on IP protection.
 Since the Mission's 2007 Special 301 submission (reftels B and C),
Vietnam has: (1) continued to strengthen its IPR legal regime; (2)
largely met its commitment to implement the Trade Related Aspects of
Intellectual Property Rights (TRIPS) agreement upon its January 2007
WTO accession; (3) modestly improved IPR enforcement and
coordination of enforcement efforts; (4)signed a landmark agreement
for GVN agencies to use only licensed software; (5) stopped the
broadcast of unlicensed content by VTC, the state-owned digital
terrestrial cable company; (6) stepped up training, public awareness
and capacity building efforts for GVN officials and the general
public; (7) joined the Rome Convention for the Protection of
Performers, Producers of Phonograms and Broadcasting Organizations;
and (8) enhanced IPR cooperation with the United States and other
international donors.
 
3. (SBU) Despite this recent progress, many of the problems
identified in the 2007 Special 301 Review persist.  The Mission has
reviewed industry and public comments submitted as part of the 2008
Special 301 review process, and finds that they portray a broadly
accurate picture of Vietnam's IPR situation.  Enforcement in Vietnam
remains weak, inconsistent and unreliable, while IPR violations are
rampant.  Piracy and counterfeiting are of particular concern, with
industry estimates placing music, software and book piracy rates
around 90 percent.  Anecdotal evidence supports these estimates.
Market access barriers, including censorship of "cultural products,"
continue to limit the availability of legitimate products, further
complicating efforts to combat piracy.  Although the GVN conducted a
commendable public outreach campaign in 2007, including public
television programs focused on IPR issues, awareness remains low.
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 relatively new legislative framework, we expect that Vietnam
will develop a more consistent track record of IPR enforcement.  In
the meantime, we do not recommend a change in Vietnam's "Watch List"
status.
 
Optical Media and Book Piracy
-----------------------------
 
4. (U) Despite improvements in Vietnam's legal regime and a growing
understanding of optical media and book piracy among enforcement
agents, the GVN has made little progress at reducing the amount of
counterfeit and pirated goods available in Vietnam.  Hanoi, Ho Chi
 
HANOI 00000194  002.2 OF 008
 
 
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.  Where legitimate media products and books are
available, they are typically up to five times more expensive than
pirated versions.  While most pirated goods are still manufactured
in other countries, locally-produced pirated CDs, VCDs and DVDs are
becoming more prevalent, and present a growing problem.
 
5. (U) The Ministry of Culture, Sport and Tourism's (MOCST)
Copyright Office of Vietnam (COV) has commenced drafting new
legislation on optical disks.  In 2007, COV officials attended a
seminar organized by IFPI and USAID's Support for Trade AcceleRation
(STAR) program to review model optical disk laws and best practices
adopted by other countries.  COV reports that it continues to
discuss this regulation with other GVN agencies, and hopes to submit
a draft for government approval in 2008.
 
Software Piracy
---------------
 
6. (SBU) Software industry members estimate that nearly 90 percent
of software in Vietnam is pirated.  Several events in 2007 indicate
that this situation could improve in the near future, however.
Following the Prime Minister's July 2006 Decision 169 requiring
government agencies to strictly comply with copyright laws, a
February 2007 Prime Minister's Instruction laid out the functions,
tasks and budgetary means to meet this goal.  In May 2007, the GVN
signed a landmark software copyright agreement with Microsoft, under
which Vietnam will purchase an estimated 300,000 licensed copies of
Microsoft Office for government workers, provincial officials and
many university faculty and staff (reftel E).  In a recent meeting,
Microsoft officials informed the Embassy that they are pleased with
the GVN's compliance with this agreement, although "implementation
could be faster."  Reportedly in an attempt to avoid copyright
infringements, the Communist Party of Vietnam announced in October
2007 that it would switch its 20,000 computers nationwide to open
source software.  In December 2007 the Ministry of Information and
Communication (MIC) issued a list of open-source software products
that it recommended other GVN agencies use to avoid copyright
violations.
 
7. (SBU) American software companies report growing cooperation with
enforcement authorities to reduce the incidence of software piracy.
In 2007, for example, Microsoft cooperated with the Economic Police
to conduct five end-user raids (up from only two in 2006), three of
which were Vietnamese-owned firms.  Microsoft credits this growing
cooperation to its capacity-building work with MOCST Inspectorate
and Economic Police staff.  Software companies continue, however, to
bemoan enforcement authorities' lack of resources and the low level
of fines, which do not serve as an effective deterrent.  Microsoft
reported that several penalties from the 2007 end-user raids are
still pending, but the infringers from these five cases have only
been forced to pay USD 15,000 in compensation, "a fraction" of the
value of the infringed software.
 
Signal Piracy
-------------
 
8. (SBU) In a significant sign of Vietnam's growing will to meet
international IPR commitments, continued industry and USG engagement
finally convinced the state-owned digital terrestrial provider
Vietnam Multimedia Company (VTC), formerly known as the Vietnam
Television Technology Investment and Development Corporation, to
cease its unauthorized re-broadcast of U.S.-owned content in
September 2007 (reftel F).  Consequently, industry members estimate
that losses to rights holders due to signal piracy in Vietnam
reduced from $38 million in 2006 to $10 million in 2007.  Despite
VTC's shift to a more legitimate business model, copyright
violations continue in Vietnam's television industry.  Smaller
provincial cable operators are the most common violators.  The
Mission continues to hear occasional complaints of national cable
operators airing DVDs and U.S. movies without authorization.
 
Data Protection
---------------
 
 
HANOI 00000194  003.2 OF 008
 
 
9. (U) In compliance with its U.S.-Vietnam Bilateral Trade Agreement
(BTA) and WTO TRIPS commitments, Vietnam included a provision
(Article 128) in its 2005 Intellectual Property Law and the Ministry
of Health issued a 2006 Regulation on Data Protection Applied to
Drug Registration Dossiers, providing data protection and
non-reliance.  To date, Post is not aware of any cases of U.S. firms
attempting to avail themselves of data exclusivity as provided in
these regulations.  We understand that industry members are working
to engage and build capacity for GVN officials on how other
countries approach this topic.
 
WTO and BTA Compliance - Lack of Criminal Remedies
------------------------ -------------------------
 
10. (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 January 2007 WTO accession.
 
 
11. (SBU) In recent years, Vietnam has undertaken significant
efforts to promulgate a legal framework to provide for adequate and
effective protection of IP rights.  As reported in recent years'
Special 301 submissions, the 2005 Intellectual Property Law, its
implementing decrees and circulars, as well as a number of other
related laws and guidance have largely brought Vietnam's legal
system into compliance with its BTA and TRIPS obligations.  Some
legal documents, however, remain outstanding or are not yet
adequately detailed to implement in practice.  Most notably, Vietnam
has not yet issued provisions for criminal remedies for willful
trademark counterfeiting or infringement of copyrights or related
rights on a commercial scale.  Vietnam agreed to issue this circular
by the time of its WTO accession as a stop-gap measure until it can
complete required revisions to make its Criminal Code consistent
with the new IP Law and Vietnam's BTA and TRIPS commitments.
Despite continued U.S. engagement with the GVN, this commitment
remains unfulfilled.  While Vietnam reports that it will begin to
revise its Criminal Code in 2008, Post and USTR continue to press
urgently for the GVN to meet its commitment on this important
circular.
 
IPR-Related Legislative Reforms in 2007
---------------------------------------
 
12. (U) The Government of Vietnam issued the following IPR-related
regulations in 2007:
 
-- Instruction 04/2007/CT-TTg, dated 22 February 2007, on
strengthening copyright protection for software.  The Prime Minister
required government officials and agencies to provide adequate
protection of software copyrights and to gradually cease the use of
illegitimate software;
-- Decision 51/2007/QD, dated 12 April 2007, on the Development Plan
for Vietnam's Software Industry, 2007-2010;
-- Decision 08/2007/QD-BTTTT, dated 24 December 2007, on the List of
Open Source Software That Meets the Requirements for Usage by State
Agencies and Organizations;
-- Circular 01/2007/TT-BKHCN, dated 14 February 2007, guiding the
implementation of Decree 103/2006/ND-CP detailing the procedures for
registering rights of intellectual property;
-- Decree 172/2007/ND-CP, dated 28 November 2007, concerning the
revision and supplementing some Articles of Decree 57/2005/ND-CP on
Administrative Penalties for the Violations in the Field of Plant
Varieties;
-- Decision 56/2007/QD-BNN, dated 12 June 2007, from MARD
supplementing the list of protected plant species;
-- Decision 103/2007/QD-BNN, dated 24 December 2007, from MARD
supplementing the list of protected plant species
-- Decision 3957/QD-BNN-TT, dated 13 December 2007, on use of
guidelines to conduct tests for Distinctness, Uniformity and
Stability of Plant Varieties.
 
HANOI 00000194  004.2 OF 008
 
 
 
Legal Updates Expected in 2008
------------------------------
 
13. (U) Relevant GVN agencies continue to draft circulars and
implementing documents for Vietnam's IPR Legal framework.  These
agencies report the following expected updates in 2008:
 
-- A Government Decree on Administrative Remedies for copyright and
related rights infringement;
-- A joint circular drafted by the Supreme People's Court, Supreme
People's Procuracy, Ministry of Justice and Ministry of Public
Security guiding the criminal prosecution for IPR infringement under
the Criminal Code (see para. 11);
-- A joint circular drafted by the Supreme People's Court, Supreme
People's Procuracy and other concerned agencies guiding civil
prosecution for IPR infringement;
-- A COV Decree on Management of Optical Disks;
-- A circular issued by MOST concerning administrative remedies for
industrial property infringement;
--  A joint circular drafted by MOCST, MOST, MOF and the Ministry of
Planning and Investment concerning financial support for the
purchase of legitimate software as well as guiding the collection
and distribution of royalties;
-- A circular issued by MOST guiding the issuance and revocation of
certificates for examiners and qualified industrial property
assessment organizations.
 
14. (U) Agencies also report the following expected amendments and
revisions in 2008:
 
-- Revision of the Criminal Code;
-- Revision of Article 8.2 of Decree 154/2005/ND-CP detailing some
provisions of the Customs Law concerning customs procedures, customs
investigations and supervision which require applicants to specify
trademarks of declared goods;
-- Amendment of Decree 106/2006/ND-CP on administrative remedies for
IP infringement (The amendment reportedly will note that for
Customs-related issues, the General Department of Customs'
Department of Anti-Smuggling will have responsibility for applying
remedies);
-- Amendment of the IP Law assigning ex-officio powers to Customs
officials in the enforcement of intellectual property rights;
-- Revision of Article 214.3.b of the IP Law concerning
allowance/disallowance of re-export of IPR infringing goods;
 
International Agreements
------------------------
 
15. (SBU) As reported in reftels B and C, in 2006 Vietnam fulfilled
its BTA obligation to join five key international IP conventions.
After completing procedures to join the Rome Convention for the
Protection of Performers, Producers of Phonograms and Broadcasting
Organizations in 2006, Vietnam officially joined the Convention on
March 1, 2007.  National Office of Intellectual Property (NOIP)
contacts report that the GVN is working on procedures to accede to
the Hague Agreement Concerning the International Registration of
Industrial Designs.  COV also claims that it hopes to join the 1996
WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms
Treaty (WPPT) once it has met all requirements for these agreements,
but no specific target date has been set.
 
Growing Coordination on IPR Enforcement...
------------------------------------------
 
16. (U) As outlined in reftels B and C, in 2006 six GVN Ministries -
MOCST (then the Ministry of Culture and Information), the Ministry
of Science and Technology (MOST), the Ministry of Agriculture and
Rural Development (MARD), the Ministry of Finance (MOF), the
Ministry of Industry and Trade (MOIT), the Ministry of Public
Security (MPS) and the Ministry of Information and Communications
(MIC) - jointly signed a "Plan of Action on Cooperation in
Preventing and Fighting against IPR Violations during the period of
2006-2010," commonly referred to as Program 168.  The program has
helped to address one of Vietnam's glaring shortfalls - poor
coordination among the country's varied enforcement agencies - by
codifying information sharing, enforcement cooperation and joint
 
HANOI 00000194  005.2 OF 008
 
 
training.  Agencies in Ho Chi Minh City report they are using
Program 168 to facilitate inter-agency cooperation at the city
level.  There are also signs of growing enforcement coordination at
the provincial level, including in the infringement-rich China
border province of Lang Son (reftel D).
 
... But Enforcement Mechanisms Remain Weak
------------------------------------------
 
17. (SBU) Vietnam's IPR enforcement structure, however, remains
overly complicated and bureaucratic, with no less than seven
ministries involved.  Multiple agencies are tasked with overlapping
functions, but there are also gaps in coverage.  Institutional
experience on IPR enforcement is extremely limited across the board,
and local law enforcement personnel in particular remain uninformed
on Vietnam's IP laws and procedures.  Government agencies rely
heavily on administrative enforcement of IPR laws and typically only
issue administrative findings or warnings either by letter or orally
to small retailers of pirated material.  Very few cases have been
referred for civil or criminal prosecution.  Some rights holders
have told the Embassy that they often pursue only administrative
remedies due to the uncertainty over the outcome of civil or
criminal proceedings, given the lack of experience with IP issues
among Vietnam's judges and prosecutors.
 
18. (SBU) Under the new IPR regulations, to provide impartiality,
experts at NOIP, MOST and the provincial Departments of Science and
Technology (DOST) no longer have the lead in assisting enforcement
agencies to assess trademark and other infringements (although in
practice they are still consulted regularly).  Instead, Vietnam
created in 2007 an Intellectual Property Research Institute, which
among other tasks, is to provide expert consultations and
independent assessments on suspected infringement cases.  The
Institute is headed by former NOIP Director General Dr. Pham Dinh
Chuong, but it is unclear who will comprise the rest of the staff of
experts.  The creation of this new body of expertise will likely
delay dispute resolution.  Since its creation in May 2007, The IP
Research Institute has not yet provided any independent assessments.
 The Director of the HCMC Market Management
Bureau described the curtailment of technical advice from HCMC DOST
as the primary reason fewer violations were processed in HCMC in
2007 than in 2006.
 
Enforcement Efforts in 2007
---------------------------
 
19. (U) MOCST:  According to GVN data, MOCST officials fined 4,952
businesses for infringing upon IP rights in 2007. Of that total,
cultural inspectors issued warnings to 267 business (down from 519
businesses in 2006), suspended the operations of 148 businesses
(down from 289 in 2006), and revoked the business licenses of 43
businesses (down from 169 in 2006).  Additionally, MOCST officials
suspended two websites, ordered companies to cease broadcasting
three movies due to copyright infringement and revoked three
copyright certificates in the field of applied arts.  MOCST also
confiscated more than 3.8 million pirated tapes and disks, 1.8 tons
of semi-final pirated books, 28 VCD and DVD readers and 13 computers
used to burn illicit disks.  MOCST inspectors collected fines of
12.3 billion VND (USD 766,000) in 2007 (approximately equal to 2006
totals), and forwarded one case for criminal prosecution.
 
20. (U) MOST/NOIP:  In 2007, MOST reported it investigated 600
businesses, settled 136 industrial design infringement cases, 606
trademark infringement cases, 16 patent infringement cases and three
geographical indication infringement cases and imposed fines
totaling VND 2 billion (USD 125,000), up from VND 170.2 million (USD
10,640) in 2006.  NOIP also provided expert consultation for
enforcement bodies, local and overseas organizations and individuals
when requested.
 
21. (U) Market Management Bureau (MMB):  According to the MMB, in
2007 the agency handled a total of 2,423 cases (over 10 percent more
than 2006), of which there were 256 industrial design violations,
2,156 trademark infringements, three commercial name violations, two
patent infringement cases and six unfair competition cases.  MMB
imposed fines totaling VND 3.514 billion (USD 220,000), 20 percent
below 2006 totals.
 
HANOI 00000194  006.2 OF 008
 
 
 
22. (SBU) Customs: In 2007, Customs received 27 requests to monitor
potential IPR infringing goods at Vietnam's borders, including from
companies such as Honda, Nokia, Gucci, Nike, Chanel, Louis Vuitton
and Wilson.  (Note: Customs officials have claimed they can only
take action against products where the rights-holder has filed a
monitoring request.  End Note.)  Customs confiscated infringing
goods in 13 cases with fines totaling VND 970 million (USD 60,625).
Confiscated goods included cell phone batteries, cell phone
chargers, cell phone headsets, laptops, calculators, USB drives, and
computer parts.  Customs provided the following examples:
 
-- Haiphong Customs confiscated counterfeit CASIO and NOKIA cell
phone batteries, chargers, headsets and calculators in a shipment
from Hong Kong. The total value of the infringing goods is VND 10
million (USD 625). Officials destroyed the goods and applied
administrative remedies.
 
-- Quang Ninh Customs confiscated goods from a customs-bonded
warehouse including 2,109 KG of cell phone batteries, chargers,
headsets and calculators.  Authorities destroyed the goods and
applied administrative remedies.
 
-- Ho Chi Minh City: Customs confiscated 98 motorbikes that
infringed the industrial design of SAPPHIRE motorbikes with the
total value of USD 47,481.
 
23. (U) Courts: According to data provided by NOIP, the court system
settled 15 of 16 civil IPR-related cases it received (14 cases
concerned disputes over copyrights, one related to contractual use
of artistic works and one related to technology transfer).  The
courts also settled eight of ten criminal cases with six offenders
sentenced to less than three years prison time and two sentenced to
three-to- seven years in prison.
 
24. (U) The Economic Police: MPS reports receiving 128 IPR
infringement cases (down from 156 last year), including: 18
trademark counterfeiting cases, 67 cases of geographical indication
infringement, 11 trade name infringement related cases, five
industrial design related cases and 27 unfair competition cases.
The Economic Police have settled 86 of these cases.  Confiscated
goods include 9000 bottles of wine, 10 tons of cosmetics and 3790
bottles of perfume.
 
25. (U) MIC: MIC settled 1 case related to copyright infringement
over the broadcast of SEAGAME soccer matches, warned three press
organizations for not referencing copyrighted source material, cited
35 press organizations for the unauthorized use of copyrighted
information, and fined 22 organizations for domain name use without
MIC's permission (the domain names were reportedly similar or
identical to registered domain names).  Fines totaled VND 230
million (USD 14,375).
 
Growing Costs of IPR Infringement
---------------------------------
 
26. (U) Vietnam's average per capita GDP, while still relatively low
(approximately 840 dollars in 2007 according to the General
Statistics Office of Vietnam), continues to rise rapidly,
particularly in the larger cities.  Vietnam's middle class is
growing and a culture of consumerism is taking hold - increasing the
losses to U.S. firms from piracy and counterfeiting.  Industry
estimates show that the cost of pirated business software to U.S.
firms in 2007 was more than USD 80 million, while pirated books cost
U.S. companies an additional USD 17 million.  In addition, some
items deemed "cultural products," (e.g., music, movies, books) are
still subject to censorship and control regulations that impede
access to this growing market.
 
Public Awareness
----------------
 
27. (U) Public and private awareness of the value of IPR protection
is low but continues to grow.  Public television aired a number of
IPR-related programs, including a game show on IP rights.  According
to COV, Vietnamese media carried over 1,000 news articles on
copyright in printed newspapers and a significantly higher number of
 
HANOI 00000194  007.2 OF 008
 
 
copyright related articles in online newspapers.  Vietnamese IPR
agencies, the Vietnam Chamber of Commerce and Industry (VCCI) and
other business associations organized workshops, panels and public
forums to help increase awareness of IPR.  The COV website regularly
updates information on copyright legislation and news, as well as
provides a database on copyright registration.  The GVN also
designated November 29 as "Anti-Counterfeit Day," and held IPR
related activities in conjunction with the event.
 
28. (U) With growing awareness of their rights, individuals and
businesses are becoming increasingly active in self-protection.  COV
issued 3,231 copyright certificates in 2006, a slight increase over
2006.  NOIP received more than 3,080 applications for registration
of inventions (28 percent higher than 2006), 1,908 applications for
registration of industrial designs (19 percent higher than 2006),
almost 32,000 applications for registration of trademarks (39
percent higher than 2006), four applications for registration of
geographical indications and one application for registration of
layout designs of integrated circuits.
 
29. (U) Copyright associations continue to expand their operations.
The Vietnam Literature Copyright Centre (VLCC) increased its
membership to more than 500, up from only 350 two years ago.  Total
royalties of VLCC members in its first three years were VND 500
million (USD 31,250).  The Vietnam Center for Protection of Music
Copyright (VCPMC) has also grown; it now represents 1,200 members
(up 20 percent from last year).  VCPMC members' total revenues
reached VND 10 billion (USD 625,000) in 2007, up 233 percent from
2006.  In 2004, the Record Industry Association of Vietnam was
established and its membership has now grown to 45.
 
Technical Assistance helps Build Enforcement Capacity
--------------------------- -------------------------
 
30. (U) (U) In 2007, Vietnam continued to receive considerable
IPR-related technical assistance from a number of NGOs and foreign
donors, including multiple U.S. Government agencies such as USAID,
Customs, the International Law Enforcement Academy (ILEA), the U.S.
Patent and Trademark Office (USPTO) and the Department of Justice.
This assistance included conferences, seminars, study tours and
review of draft legislation.  For example, the USG funded a two-week
study tour for 20 senior prosecutors, judges and IP officials to
understand better how law enforcement agencies and the courts in the
United States protect intellectual property.
 
31. (U) Other examples of IPR technical assistance conducted in 2007
include:
 
-- COV worked with the Cable and Satellite Broadcasting Association
of Asia (CASBAA) to organize a workshop on "Regularizing Vietnam's
Pay TV Market" in Ho Chi Minh City.  The U.S. Embassy also
participated in the seminar;
-- Together with IFPI and STAR, COV held a workshop on "Optical disk
regulation and enforcement";
-- NOIP worked with USPTO to organize a workshop on "Trademark and
Domain Name Registration";
--NOIP held workshops on "The Role of Automation in Management and
Service Provision in IPR Organizations" and "IP Strategy for
Universities, Research and Development" with the assistance of WIPO;
 
--Vietnam hosted an APEC Seminar on "IP in the Digital Era" and a
seminar on well-known trademarks and brands with the assistance of
the Government of Japan;
-- NOIP reported also receiving other training from the United
States, the EU, Switzerland, Japan and WIPO;
-- The Supreme People's Court, in coordination with STAR, USPTO and
DANIDA's Business Sector Programme Support (BSPS) hosted 2 training
courses for 175 judges;
-- Customs receiving training from organizations and governments
from the United States, the EU, the UN, Japan, China, Belgium,
France, the UK and Indonesia.
 
Training needs
---------------
 
32. (U) In 2008, the GVN will continue to require detailed legal
consultations and technical assistance as it completes and "fine
 
HANOI 00000194  008.2 OF 008
 
 
tunes" its IPR legal framework.  Two specific areas for further
engagement are with the Ministry of Justice as it begins revisions
to the IP-related portions of the Criminal Code and working with COV
as it works to draft an Optical Disk regulation.  Continued
cooperation with the various enforcement agencies will be essential
to raise awareness and build enforcement capacity as these
organizations seek to take advantage of Vietnam's strengthened
enforcement provisions.  English language abilities are an oft-cited
concern among the IPR enforcement agencies, and in-country training
activities conducted in Vietnamese, when possible, would greatly
benefit these organizations.
 
-----------------------------
Conclusion and Recommendation
-----------------------------
 
33. (SBU) Vietnam will continue to grapple in the near future with
the challenge of reducing the massive scale of IPR violations.  GVN
authorities, including at the highest levels, have publicly
demonstrated their understanding of the problem and expressed their
resolve to protect and enforce IP rights.  With a strong legal
foundation already in place, it will be important to work closely
with the GVN on its Criminal Code revisions in 2008 to provide
rights holders with the full cadre of remedies for IPR violations -
administrative, civil and criminal.  The real challenge, however,
lies in building the capacity and improving the efficacy of
Vietnam's enforcement and judicial systems.  While training of
judges and enforcement officials will be a longer-term fix,
increasing fines to a level which would deter future violations and
reversal of the GVN's decision no longer to empower NOIP, MOST and
provincial DOSTs to provide technical advice to enforcement agencies
could immediately and visibly reduce IPR violations.
 
34. (SBU) Vietnam's BTA and WTO/TRIPS commitments provide us with
strong tools for engaging the GVN on IPR enforcement, and the
recently-signed Trade and Investment Framework Agreement (TIFA)
provides a useful forum under which to do so.  Vietnam's expressed
aspirations to be considered for the U.S. Generalized System of
Preferences (GSP) program and its strong desire to continue as a
popular destination for foreign direct investment will help
strengthen our push for the GVN to fulfill its IPR-related BTA and
WTO commitments.
 
Recommendation
--------------
 
35. (SBU) The Mission believes it is important to maintain
consistent engagement with Vietnam to enhance the protection and
enforcement of IPR.  Vietnam has shown a willingness to cooperate
with the United States and other trading partners to address its
serious problems with IP violations.  It must now take demonstrable
and concrete steps to follow through on that commitment.  Given the
great number of tools available, including the Special 301 process,
continued pressure from the USG and industry members, and
capacity-building and training, we expect that Vietnam should
improve its ability to enforce IP rights.  For 2008, we recommend
USTR maintain Vietnam on the Special 301 "Watch List."
 
36.  (SBU) This message was coordinated with ConGen Ho Chi Minh
City.
 
MICHALAK

 
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