09.02.11

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Microsoft Strikes Back In Vietnam (Leaked)

Posted in Asia, Cablegate, Microsoft at 10:55 am by Dr. Roy Schestowitz

Ho Chi Minh

Summary: Microsoft co-opts diplomats that the US public pays for to lobby for changes in law overseas and “MICROSOFT CHOSE TO USE ITS SINGAPORE LEGAL OFFICE AS THE “BAD COP” IN ORDER TO KEEP MR. CUONG OUT OF THE LIMELIGHT AND PRESERVE HIS “GOOD COP” ROLE WITH LOCAL COMPANIES,” reveals a secret diplomatic cable

In a record labelled “VIETNAM’S IPR ENFORCEMENT: MICROSOFT STRIKES BACK UNCLASSIFIED”, information is revealed regarding Microsoft’s operations in Vietnam, which we recently covered in this post. Also see:

Let’s go through he cable very quickly and highlight some bits of interest:


060441Z Nov 02

2002HOCHI01123 - UNCLASSIFIED
 
 
 
                           UNCLASSIFIED     PTQ0090

PAGE 01        HO CHI  01123  01 OF 02  060451Z 
ACTION STR-00   

INFO  LOG-00   AGRE-00  AID-00   AMAD-00  CEA-01   CIAE-00  COME-00  
      CTME-00  DINT-00  DODE-00  ITCE-00  DOTE-00  SRPP-00  EAP-00   
      EB-00    EXME-00  E-00     UTED-00  VC-00    FRB-00   H-01     
      TEDE-00  INR-00   ITC-01   LAB-01   LOC-01   L-00     VCE-00   
      AC-01    NSAE-00  NSCE-00  OES-00   OMB-01   OPIC-01  PA-00    
      PRS-00   ACE-00   SP-00    SSO-00   SS-00    TEST-00  TRSE-00  
      USIE-00  DRL-02   G-00     NFAT-00  SAS-00     /010W
                  ------------------040D37  060550Z /38    
FM AMCONSUL HO CHI MINH CITY
TO SECSTATE WASHDC 7037
INFO AMEMBASSY HANOI 
AMEMBASSY BANGKOK 
AMEMBASSY BEIJING 
AMEMBASSY SINGAPORE 

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 001123 
 
SIPDIS 
 
SENSITIVE 
 
STATE PLS PASS TO USTR EBRYAN AND KALVAREZ 
 
E.O. 12958: N/A 
TAGS: VM, ECON, ETRD, KIPR, IPROP 
SUBJECT: VIETNAM\'S IPR ENFORCEMENT: MICROSOFT STRIKES BACK 
                       UNCLASSIFIED 
 
 
PAGE 02        HO CHI  01123  01 OF 02  060451Z 
 
1. (SBU) SUMMARY:  INTELLECTUAL PROPERTY RIGHTS (IPR) ENFORCEMENT 
AUTHORITIES IN HO CHI MINH CITY, VIETNAM RAIDED LOCAL COMPUTER 
SHOPS ON OCTOBER 17, SEIZING APPROXIMATELY 7000 PIRATED DISKS. 
THIS ACTION MARKS THE FIRST ILLEGAL SOFTWARE RAID IN VIETNAM. 
ALTHOUGH MICROSOFT CLAIMED VICTORY, THE RAID IN FACT HAD LIMITED 
SUCCESS DUE TO INADEQUATE TRAINING AND MICROSOFT\'S OWN INTERNAL 
DILEMMA - WHETHER TO PUSH FOR STRONG IPR ENFORCEMENT OR GOOD 
RELATIONS WITH RETAIL DISTRIBUTORS.  END SUMMARY. 
 
2. (SBU) MICROSOFT ESTABLISHED A REPRESENTATIVE OFFICE IN HANOI IN 
1996 AND A BRANCH IN HCMC TWO MONTHS AGO.  IT IS THE FIRST 
SOFTWARE COMPANY TO TRY TO ENFORCE THE 1997 U.S-VIETNAM COPYRIGHT 
AGREEMENT.  WHEN MICROSOFT\'S CHIEF REPRESENTATIVE IN VIETNAM, MR. 
NGO P 
HUC CUONG, OPENED THE HCMC OFFICE, HE TOLD CONSUL GENERAL AND 
ECONOFF THAT MICROSOFT PLANNED TO RAID ILLEGAL SOFTWARE SHOPS AND 
CRACK DOWN ON VIETNAM\'S RAMPANT PIRACY RATE.  MR. CUONG ESTIMATED 
THIS RATE AT 94 PERCENT, DOWN FROM THE PREVIOUS YEAR\'S 97 PERCENT. 
 
3. (SBU) PLANNING FOR THE ACTUAL RAID REACHED HIGH LEVELS OF 
INTRIGUE, AND ILLUSTRATES WHY IPR ENFORCEMENT IS SO DIFFICULT IN 
VIETNAM.  MICROSOFT CHOSE TO USE ITS SINGAPORE LEGAL OFFICE AS THE 
\"BAD COP\" IN ORDER TO KEEP MR. CUONG OUT OF THE LIMELIGHT AND 
PRESERVE HIS \"GOOD COP\" ROLE WITH LOCAL COMPANIES.  THE SINGAPORE 
REPRESENTATIVE WORKED CLOSELY WITH AN EXPATRIATE LAW FIRM IN HCMC, 
AS WELL AS MR. HUYNH TAN PHONG, THE HEAD OF THE MARKET MANAGEMENT 
BOARD (MMB).  (NOTE:  SOURCES SAY THAT MICROSOFT\'S DECISION TO USE 
ITS SINGAPORE OFFICE MAY HAVE BACKFIRED.  THE SINGAPORE OFFICE, 
FAMILIAR WITH THAILAND AND INDIA, FAILED TO APPRECIATE THE 
DIFFICULTY OF WORKING IN A COMMUNIST COUNTRY WHERE IPR ENFORCEMENT 
                       UNCLASSIFIED 
 
PAGE 03        HO CHI  01123  01 OF 02  060451Z 
IS A BRAND-NEW AND SUSPECT CONCEPT.  MISUNDERSTANDINGS AND MUTUAL 
FRUSTRATION WERE FREQUENT.  CONGEN NOMINATED MR. PHONG FOR AN IPR 
INTERNATIONAL VISITORS GRANT LAST SUMMER AND WILL CONTINUE TO 
FOCUS ON BUILDING IPR ENFORCEMENT CAPACITY AS PART OF THE 
MISSIONWIDE STRATEGY.  END NOTE.) 
 
4.  (SBU) THE MMB IS THE RELEVANT IPR INSPECTION AUTHORITY ON 
SOFTWARE PIRACY.   MICROSOFT HELD A ONE-DAY TRAINING FOR 40 MMB 
INSPECTORS ON HOW TO IDENTIFY COUNTERFEIT DISKS, WHICH ARE EASILY 
DISTINGUISHABLE FROM GENUINE PRODUCTS.  HOWEVER, MR. PHONG WAS 
RELUCTANT TO PROCEED WITHOUT SPECIFIC AUTHORITY FROM THE HCMC 
PEOPLE\'S COMMITTEE.  MICROSOFT ACCORDINGLY SOUGHT AND OBTAINED 
STRONG ENDORSEMENT FOR THE RAID FROM DR. NGUYEN THIEN NHAN, THE 
COMMITTEE\'S FIRST VICE CHAIRMAN AND AN ACTIVE IT SUPPORTER.  BUT 
AT THE LAST MINUTE, MR. PHONG POSTPONED THE RAID - WITHOUT 
EXPLANATION - POSSIBLY TO ASSERT HIS INDEPENDENCE. 
 
5. (U) ON THE APPOINTED DAY, MMB INSPECTION TEAMS, WITH 
REPRESENTATIVES FROM MICROSOFT AND THE EXPAT LAW FIRM IN TOW, 
SIMULTANEOUSLY RAIDED SEVEN RETAIL OUTLETS AND SEIZED 
APPROXIMATELY 7000 DISKS.  THE STORES RANGED FROM SMALL \"MOM AND 
POP\" SHOPS TO LARGE SOPHISTICATED OPERATIONS.  ONE STORE WAS EVEN 
SELLING PIRATED SOFTWARE ON ITS WEBSITE, WWW.PCLEHOAN.COM.  MMB 
TEAMS CONFISCATED THE DISKS AND WILL EVENTUALLY DESTROY THEM. 
SOME OF THE SHOP OWNERS COMPLAINED, \"HOW CAN YOU DO THIS WHEN THE 
GOVERNMENT ITSELF IS USING OUR (COUNTERFEIT) STUFF?\"  THE MMB, 
ALSO RESPONSIBLE FOR SETTING THE FINES, HAS NOT YET ANNOUNCED THE 
CHARGES OR THE AMOUNTS.  FINES COULD REACH VND 20-40 MILLION 
(USD1300-2600) FOR THE FIRST VIOLATION AND VND 50-70 MILLION 
(USD3300-4600) FOR EACH ADDITIONAL VIOLATION.  EACH PIRATED DISK 
COULD BE CONSIDERED A SEPARATE VIOLATION. 
                       UNCLASSIFIED 
 
PAGE 04        HO CHI  01123  01 OF 02  060451Z 
 
6. (SBU) THE EXPATRIATE LAWYER WORKING WITH MICROSOFT CALLED THE 
RAID A SUCCESS, BUT POINTED OUT VARIOUS WEAKNESSES IN THE 
ENFORCEMENT CHAIN.  FIRST, THE MMB TEAMS FOCUSED ONLY ON THE 
MICROSOFT TRADEMARK VIOLATION.  TEAMS SEIZED MICROSOFT SOFTWARE 
AND LEFT BEHIND BLANK DISKS OR BLATANTLY PIRATED SOFTWARE OF NON- 
MICROSOFT ORIGIN.  SECOND, EACH MMB TEAM HAD A DIFFERENT APPROACH. 
SOME TEAMS LEFT BEHIND DISKS LABELED ONLY AS \"MS WORD,\" WHILE 
OTHERS SEIZED ANY MICROSOFT PRODUCT, REGARDLESS OF LABELING. 
THIRD, THE TEAMS SEIZED ONLY A SMALL NUMBER OF DISKS, ALTHOUGH 
MICROSOFT\'S PRE-RAID SURVEY SHOWED THAT EACH STORE STOCKED 5000- 
10,000 PIRATED DISKS.  THE LAW FIRM REPRESENTATIVE WHO ACCOMPANIED 
MMB ON THE RAID URGED MICROSOFT TO INSTRUCT MMB TO SEIZE GREATER 
QUANTITIES OF PIRATED MATERIAL, BUT THE MICROSOFT REPRESENTATIVE 
BACKED DOWN IN THE FACE OF ANGRY PROTESTS FROM SHOP OWNERS. 
FINALLY, THE TEAMS SEIZED A DISPROPORTIONATE AMOUNT OF DISKS FROM 
SMALL OPERATORS, WHOSE SALES HAVE LITTLE IMPACT ON THE MARKET. 
THE MMB SEIZED ONLY APPROXIMATELY 500 DISKS FROM EACH OF THE BIG 
OPERATORS, AND LESS THAN 100 FROM THE STORE SELLING PIRATED 
SOFTWARE ON THE INTERNET (AFTER SHOP MANAGERS AGAIN DISPUTED 
MICROSOFT\'S RIGHT TO SEIZE NON-MICROSOFT PRODUCT).  THE TEAM 
SEIZED ONLY 40 DISKS FROM THE BIGGEST KNOWN COMMERCIAL DEALER. 
 
7. (SBU) MICROSOFT ANNOUNCED ITS SATISFACTION WITH THE RAID AND 
PLANS TO CONDUCT MORE IN COMING MONTHS.  MR. CUONG WANTS FUTURE 
RAIDS TO FOCUS ON THE REAL PROBLEMS IN VIETNAM: COMPUTER STORES 
LOADING SOFTWARE DIRECTLY ONTO HARD DRIVES AND MULTIPLE COPIES 
DISTRIBUTED THROUGH AN ORGANIZATION WITH ONLY ONE LICENSED DISK. 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ0096 
 
PAGE 01        HO CHI  01123  02 OF 02  060451Z 
ACTION STR-00 
 
INFO  LOG-00   AGRE-00  AID-00   AMAD-00  CEA-01   CIAE-00  COME-00 
      CTME-00  DINT-00  DODE-00  ITCE-00  DOTE-00  SRPP-00  EAP-00 
      EB-00    EXME-00  E-00     UTED-00  VC-00    FRB-00   H-01 
      TEDE-00  INR-00   ITC-01   LAB-01   LOC-01   L-00     VCE-00 
      AC-01    NSAE-00  NSCE-00  OES-00   OMB-01   OPIC-01  PA-00 
      PRS-00   ACE-00   SP-00    SSO-00   SS-00    TEST-00  TRSE-00 
      USIE-00  DRL-02   G-00     NFAT-00  SAS-00     /010W 
                  ------------------040D60  060552Z /38 
R 060441Z NOV 02 
FM AMCONSUL HO CHI MINH CITY 
TO SECSTATE WASHDC 7038 
INFO AMEMBASSY HANOI 
AMEMBASSY BANGKOK 
AMEMBASSY BEIJING 
AMEMBASSY SINGAPORE 
 
UNCLAS SECTION 02 OF 02 HO CHI MINH CITY 001123 
 
SIPDIS 
 
SENSITIVE 
 
STATE PLS PASS TO USTR EBRYAN AND KALVAREZ 
 
 
THE LAW FIRM, HOWEVER, BELIEVES MMB FEELS IT HAS DONE ENOUGH FOR 
MICROSOFT THIS YEAR AND WILL BE RELUCTANT TO EMBARK UPON ANOTHER 
RAID SOON. 
 
8. (SBU) COMMENT: MICROSOFT\'S ENFORCEMENT EFFORT DEMONSTRATES SOME 
OF THE COMPLEXITY IN TRYING TO DEFEND IPR RIGHTS IN VIETNAM\'S 
OVERWHELMINGLY COUNTERFEIT SOFTWARE MARKET. POST HAS LEARNED THAT 
AS MANY AS HALF OF THE SEIZED DISKS WILL BE RETURNED TO THE SHOPS 
BECAUSE THEY ARE BLANK OR CONTAIN NON-MICROSOFT SOFTWARE.  WITHOUT 
ADEQUATE TRAINING AND CLEAR UNDERSTANDING OF TRADEMARK AND 
COPYRIGHT LAW, THESE RAIDS CAN ONLY BE HALF-MEASURES.  MICROSOFT 
REPRESENTATIVES EXPRESSED FRUSTRATION THAT OTHER SOFTWARE 
COMPANIES ARE NOT ACTIVELY ENFORCING THEIR IPR RIGHTS IN VIETNAM. 
THESE OTHER COMPANIES ARE CONTENT TO LET MICROSOFT CARRY THE WATER 
-- AND ALSO INCUR THE WRATH OF POTENTIAL RETAIL DISTRIBUTORS. 
WHILE THE CONFLICT BETWEEN STRONG IPR ENFORCEMENT AND GOOD RETAIL 
RELATIONS REFLECTS THE ALMOST TOTAL LACK OF PURE, LEGITIMATE 
DISTRIBUTORS IN VIETNAM, MICROSOFT AND OTHER COMPANIES WILL HAVE 
TO ADDRESS THESE COMPETING GOALS MORE EFFECTIVELY BEFORE THEY CAN 
EXPECT STRONG ENFORCEMENT OR SALES.  MEANWHILE, IPR ISSUES WILL 
CONTINUE TO UNDERMINE VIETNAM\'S OWN AMBITIONS TO BECOME AN IT 
CENTER.     YAMAUCHI 
 
                       UNCLASSIFIED 
 


So taxpayers in Vietnam pay their police/authorities in order to serve as extended Microsoft staff (who are used as a proxy like the BSA). They then attack the Vietnamese population. Why? Because the US says it needs to be done. Those who think outside the box can easily see what’s wrong with this picture.

“They’ll get sort of addicted, and then we’ll somehow figure out how to collect sometime in the next decade.”

Bill Gates

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