Summary: Backlash against the Gates Crusade to brainwash the young minds all around the world

MONOPOLIST extraordinaire Bill Gates wants a monopoly on children’s minds, so in his crusade for control he is trying to buy the agenda (curriculum) and organisation of US schools. It’s a form of privatisation of a $500,000,000,000 per annum system. Lots of money can be made there at the expense of taxpayers, taking away the very little that the middle class has got left.

This problem is well understood by an increasing number of teachers, despite the fact that Gates is bribing some of the education press to spread good wishes on him (we gave some examples in the past). The man who made a living by breaking the law is currently exploiting US poverty and an imbalanced system where Gates and his pals get richer and everyone else goes broke. Here is what happens in Philadelphia schools:

Last week, Philadelphia became the latest in a long list of cities to be courted by Bill Gates, when his “Great Schools Compact” was presented for consideration to the School Reform Commission. Bill Gates has taken on a reputation as a school reformer as well as philanthropist, dispensing money throughout the country for struggling schools in economically distressed cities while imposing changes in policies and procedures in those locales. Sounds like just what the doctor ordered.

[...]

Diane Ravitch, in her recent book, “The Death and Life of the Great American School System: How Testing and Choice are Undermining Education,” describes how Manuel High, one of Denver’s oldest and most prestigious schools, was forced to divide itself into three separate schools because of the “small school” agenda Gates was pushing at the time; the ensuing disruption caused the school board to close it temporarily. Mountlake Terrace High, just outside Seattle, suffered the loss of many teachers and administrators in 2004 after being forced to split into five separate schools in order to receive the Gates funding.

Into the Philadelphia School District’s state of fiscal desperation rides Bill Gates. Who can say “no” to free money when you are so deep in the hole? But the money is not free, and the price is the democratic procedure in the city and the state under which the community and its elected leaders make informed decisions about its schools.

From the same blog we gather more information about more of Gates’ lobbying groups that push this agenda:

We know that LEV is heavily funded by Gates who is all about charter schools. LEV has showcased over the last year all of the “Stars” of the charter school industry as well as Wendy Kopp of Teach for America Inc. who staffs charter schools with teaching temps. LEV is now, by the way, championing the online learning industry, another cash cow for businesses and corporations including Microsoft.

This is helping Mr. Gates sell Microsoft lock-in and train children this way. For shame.

He is hijacking the voices of American parents, simply because money can buy anything. A Parents Across America member speaks out about it in a letter:

I am a parent with two children in Portland Public Schools. I have been a PTA member for five years and recently came onto our PTA board as a legislative co-chair. I am writing to see if there is any possibility of the PTA dropping its affiliation and funding from the Gates Foundation. I know that must sound shocking that a parent wants less funding, but the reason is that the Gates Foundation is supporting and pushing education policies that are NOT good for our schools and children. If you are not already familiar with well-regarded experts like Diane Ravitch, Stephen Krashen, Deborah Meier, and other groups like Parents Across America and the national Save Our Schools movement, please become familiar with them to realize that there is a growing body of people completely alarmed and speaking up against the policies Gates and his front groups like Stand for Children and others are pushing. For lack of a better term, it is the corporate education reform movement and it is NOT good for our kids.

As far as I can tell, our Oregon PTA hasn’t really gotten on-board with advocating for some of the things Gates supports, such as expansion of charters, on-line learning, data-driven models, merit pay, etc. I hear in Washington state, it is quite different. Apparently the PTA there is pushing for charters schools.

I think we have some really wonderful people who are a part of their PTA, and I would love to see PTA grow. A group that is truly genuine and has parents and teachers working together is a worthwhile thing to support. However, the policies of Gates do not do this. I am thinking that PTA accepted or went after this money due to desperately needed funding. When you look at the grant Gates gave to PTA, it says it is to support education reform, and then you see the focus on the Common Core Standards on the National PTA page and it is just so disappointing. Common Core, as it is now, will line the pockets of Microsoft and testing companies, while narrowing the curriculum and lowering engagement levels of our kids.

Sue Peters, writing for the same blog, notes that:

We still have many challenges ahead of us in Seattle, and Washington as a whole, the biggest being the gathering, moneyed forces that are pushing for charters. We still have the Gates Foundation right here in Seattle, so as long as that foundation pushes for and bankrolls discredited, failed reforms, those of us in the parent activist community will have our work cut out for us.

This form of class warfare ought to worry anyone who was in school or sends his/her children to school. While the press is bribed to take the side of the occupiers, children’s minds are being occupied with this ludicrous idea that those who exploit them are in fact looking after them. Meanwhile, profitable monopolies are established on the back of a taxpayers-funded education system. Socialising the cost, privatising the profit. Bill must be a genius.

We previously showed how state-funded laptops [1, 2, 3, 4] which were supposed to run free software turned into taxpayers-funded Microsoft indoctrination instruments. Richard Stallman is being quoted in the Indian press today as saying wise words:

The Tamil Nadu government may be trumpeting its scheme to distribute computers for free to students but it is setting a poor example for what a state should do, says American software freedom activist Richard Stallman.

“It distributes laptops loaded with non-free software to children, teaching them to be dependent on paid products. It creates a system of digital colonisation,” Stallman, who has waged a storied battle against software giants like Bill Gates, said in an e-mail interview to The Times of India. He criticised the state’s ambitious free laptop scheme that hands out computers with the Windows operating system.

Stallman, who will be in Chennai on Monday to deliver a lecture on free software at IIT-Madras, said he is appreciative of the efforts of Kerala and Karnataka, states that have extended support to the free software movement by moving schools to GNU/Linux operating systems and including lessons on them in the syllabus. “Karnataka put the system in place in high schools a couple of years ago,” he said.

“Please keep up the good work,” Stallman said to me last night in an E-mail (regarding this site). As some people may have noticed, the FSF refocused on education last week. Can we save the next generation from greedy sociopaths who buy consent from the press? █

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

–Bill Gates

Summary: A good look at how Microsoft crushes freedom-respecting software in Vietnam

AS ALWAYS EXPECTED, the monopolist from Redmond will never permit competition to exist. Like a tyrant running after potential opposition, Microsoft runs after any signs of Free/open source software adoption and sends its proxies for annihilation, confusion, entryism, or whatever. Cablegate provides some more insight and examples of what Microsoft is doing. The following cable, for instance, gives yet more details on how Microsoft asks US government officials to help derail Vietnam's migration to GNU/Linux.

In ¶6 of the first cable it says: “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.”

It is also reassuring to see that “[t]he Government of Vietnam issued the following IPR-related regulations in 2007: . . . — 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;”

Here is some more lobbying: “Representatives of U.S. IT companies met with Bisbee and Mikalis to voice their concerns about an IT procurement policy announced by Vietnam in late July 2006 (Decision 169). USTR and Embassy Hanoi have worked closely with the Ministry of Post and Telecommunication (MPT) since July to raise USG and industry concerns about the policy, which seeks to provide procurement preferences for localized IT products and open source software. MPT released a draft implementing circular on January 30 for industry comments, and USTR urged the IT industry members to raise their concerns directly with MPT. In response to concerns raised by the USG in July, the MPT has worked to revise the original Decision to limit coverage to only government agencies and explicitly exclude state owned enterprises. USTR and Hanoi Econoff explained to the industry representatives that MPT was open to hearing from industry about global procurement best practices, and industry was urged to engage the GVN directly on this issue. (Note: In meetings in Hanoi, USTR raised industry concerns with MPT directly.”

The those who want to see it in context, here is the first cable:

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 [Intellectual Property Rights], ECON [Economic Conditions], ETRD [Foreign Trade], VM [Vietnam]
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

Here is another cable:

VZCZCXRO7452
RR RUEHHM
DE RUEHHM #0178/01 0571035
ZNR UUUUU ZZH
R 261035Z FEB 07
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC 2151
INFO RUEHHI/AMEMBASSY HANOI 1543
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHBK/AMEMBASSY BANGKOK 0220
RUEHGV/USMISSION GENEVA 0027
RUEHHM/AMCONSUL HO CHI MINH CITY 2323

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000178 

SIPDIS 

USDOC
SENSITIVE
SIPDIS 

STATE FOR EAP/MLS AND EB/TPP/BTA/ANA
STATE PASS USTR DAVID BISBEE
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO AND EMIKALIS
TREASURY FOR OASIA
GENEVA FOR USTR
BANGKOK FOR USPTO JNESS 

E.O. 12958: N/A
TAGS: ETRD [Foreign Trade], ECON [Economic Conditions], WTRO [World Trade Organization], KIPR [Intellectual Property Rights] VM [Vietnam]
SUBJECT: USTR DISCUSSES WTO MEMBERSHIP, IT AND IPR WITH HCMC BUSINESS
COMMUNITY 

REF: HANOI 233  B) HANOI 310 

¶1. (SBU) Summary: Area businesspeople discussed new trading
rules and changes to Vietnam's legal framework as a result
of its WTO membership with representatives of the Office of
the U.S. Trade Representative (USTR) and the U.S.
Department of Commerce, during a February 5-6 visit to Ho
Chi Minh City.  The USG visitors provided American Chamber
of Commerce members with an overview of the U.S. - Vietnam
bilateral trade relations following Vietnam's accession to
the World Trade Organization in January of this year, and
the U.S. proposal to Vietnam to negotiate a Trade and
Investment Framework Agreement.  USTR also explained many
of the important commitments Vietnam has undertaken as part
of its WTO accession agreement including comprehensive
tariff reductions, significant service sector
liberalization and adoption of WTO consistent rules in
areas such as trading rights, IPR, and transparency.   In
turn, AmCham members outlined their plans to form a WTO
implementation committee to monitor implementation, and
asked a broad range of questions relating to specific
service sector commitments, trading rights, and customs
duties.  In separate meetings representatives of U.S.
information technology (IT) companies registered concern
about new regulations that they believe could make it
difficult for U.S. companies to qualify for Vietnamese
government IT contracts.  Legal experts outlined challenges
to adequately protecting intellectual property rights (IPR)
under Vietnam's new IPR law. The visit followed meetings on
February 1-2 in Hanoi and HCMC by Assistant United States
Trade Representative Barbara Weisel. In those meetings USTR
proposed to the GVN to move our bilateral relationship
forward along the path set out under the Enterprise for
ASEAN Initiative by negotiating a Trade and Investment
Framework Agreement (TIFA) (ref A).   End summary. 

AMCHAM
------ 

¶2. (SBU) David Bisbee, Director for Southeast Asia and
Pacific Affairs for USTR, and Elena Mikalis, Director for
ASEAN Affairs for the International Trade Administration at
the Department of Commerce, visited HCMC February 5-6 to
discuss Vietnam's WTO obligations and its legal reform
efforts with members of the U.S. business community here.
In a lengthy session with the American Chamber of Commerce,
USTR fielded questions and provided additional details and
clarifications on the terms and coverage of Vietnam's WTO
accession package. AmCham members admitted that more study
of the agreement was needed by members and that to better
monitor and track implementation of the commitments by
Vietnam, Amcham was considering forming a WTO
Implementation Committee. Bisbee encouraged the formation
of such a group and suggested that AmCham propose a formal
dialogue with the Ministry of Trade as part of the process
to facilitate a better understanding of the many legal and
regulatory developments underway to meet WTO commitments. 

¶3. (SBU) The meeting also included lengthy discussions over
trading rights and distribution services.  Members asked
for clarification of Vietnam's commitments, which include
the ability for all Vietnamese and foreign companies and
individuals to directly import most goods into Vietnam as
of January 1, 2007. Vietnam's commitments also provide for
foreign individuals and enterprises without a physical
presence in Vietnam to act as an importer of record, an
important provision for many U.S. exporters.  Foreign firms
can engage in distribution services of most goods without
going through a Vietnamese intermediary in 2009. In the WTO
accession agreement, Vietnam improved upon the timetable
for granting trading rights established in the U.S.-Vietnam
Bilateral Trade Agreement (BTA) to meet its GATT
obligations, and reduced the range of products subject to
transition periods. For distribution services, Vietnam also
reduced the list of products excluded in Vietnam's WTO
commitments compared to the BTA. 

IT
-- 

HO CHI MIN 00000178  002 OF 002 

¶5. (SBU) Representatives of U.S. IT companies met with
Bisbee and Mikalis to voice their concerns about an IT
procurement policy announced by Vietnam in late July 2006
(Decision 169).  USTR and Embassy Hanoi have worked closely
with the Ministry of Post and Telecommunication (MPT) since
July to raise USG and industry concerns about the policy,
which seeks to provide procurement preferences for
localized IT products and open source software.  MPT
released a draft implementing circular on January 30 for
industry comments, and USTR urged the IT industry members
to raise their concerns directly with MPT.  In response to
concerns raised by the USG in July, the MPT has worked to
revise the original Decision to limit coverage to only
government agencies and explicitly exclude state owned
enterprises.  USTR and Hanoi Econoff explained to the
industry representatives that MPT was open to hearing from
industry about global procurement best practices, and
industry was urged to engage the GVN directly on this
issue. (Note: In meetings in Hanoi, USTR raised industry
concerns with MPT directly. (Ref B) End note.) 

IPR
--- 

¶6. (SBU) Bisbee and Mikalis also met with lawyers and HCMC
government officials to discuss the implementation of
Vietnam's new IPR law, which came into effect in 2006.  An
attorney at a foreign law firm reported that in her opinion
Vietnam's IPR enforcement activities had slowed as
authorities familiarized themselves with the new law and
its regulations.  The attorney and a representative from
HCMC's Department of Science and Technology (DOST) observed
that new rules meant to preserve the impartiality of IPR
enforcement activities (by clearly separating registration
and enforcement activities) have, in the short term,
reduced the ability of experts at DOST and other agencies
to assist enforcement authorities in pursuing IPR
violations.  During a discussion on USTR's Special 301
review of IP protection among major trading partners, DOST
requested USTR's assistance in establishing a dialogue
mechanism specific to HCMC's local efforts, similar to the
301 review but on a semi-annual basis. DOST explained that
provincial level implementation could be supported by
regular dialogue with USTR and other USG agencies on the
problems and bottlenecks experienced by the private sector.
DOST also acknowledged the valuable technical assistance
received from the U.S. Patent and Trademark Office (USPTO)
and the USAID-funded Support for Trade Acceleration (STAR)
program and reiterated the common request among Vietnam's
IP agencies for increased levels of technical assistance. 

¶7. (SBU) The private sector attorney also explained her
understanding that in order for IPR rights-holders to
pursue those who sell counterfeit goods or goods that
violate trademarks, rights-holders must first send "cease
and desist letters" to violators.  While these letters are
meant to be used as evidence that violations have taken
place, they often tip off infringers, who are then able to
evade prosecution. In subsequent meetings in Hanoi with IP
authorities and advisors to the STAR program, it was
clarified that the relevant decree requires 'cease and
desist' letters only in cases of unfair competition, not in
cases of clear trademark infringement. 

¶8. (U) Mr. Bisbee and Ms. Mikalis cleared this cable.
WINNICK

These will be the last cables that we cover this year. We wish to thank James Love for organising some cables in Knowledge Ecology International. █

Summary: US diplomatic cables from Sri Lanka reveal interesting stories about the small country’s flirtations with freedom-respecting software

According to the following Cablegate cables (first one in ¶7): “During a March 22 meeting with members of the American Chamber of Commerce, DAS Patterson outlined USG views on regional developments of the past two years and asked for insights into the current domestic political situation and business climate. IBM Managing Director and former Amcham President, Kavan Ratnayaka described IBM efforts to support open source software development, noting that Sri Lanka has become an internationally recognized “brand” in the open source community.”

IBM is right because here in Techrights we accumulated many examples of Free software in Sri Lanka. But just like in Thailand, there is a fight back from Microsoft proxies. Let us remember that “[w]hen the 2004 Indian Ocean tsunami seriously damaged the coastline of Sri Lanka, Virtusa funded salaries and benefits for its employees as they developed open-source software for disaster relief management. It continues to fund its employees as they travel to disaster-affected countries and assist in implementing the software program.” (see cables below)

The BSA (Business Software Alliance) is not happy with the country’s embrace of Free software. Here is what the BSA says according to cables: “While we see this as a step in the right direction, the Business Software Alliance (BSA) is not fully satisfied with the policy and accuses the government of “more funny business.”"

So when a country seeks digital independence, that is “funny business” in the eyes of the BSA. Good to know. Perhaps the BSA does not speak for FOSS like it claims to. Here are three Cablegate cables from which we extract the evidence:

C O N F I D E N T I A L SECTION 01 OF 03 COLOMBO 000545 

SIPDIS 

DEPARTMENT FOR SA, SA/INS, S/CT
DEPARTMENT PLEASE ALSO PASS TOPEC
NSC FOR E. MILLARD 

E.O. 12958:  DECL:  03-26-14
TAGS: PGOV [Internal Governmental Affairs], PREL [External Political Relations], ECON [Economic Conditions],
PTER [Terrorists and Terrorism], CE [Sri Lanka], LTTE [Liberation Tigers of Tamil Eelam] - Peace Process, Elections, ECONOMICS
SUBJECT:  In visit to Sri Lanka, SA DAS Patterson
discusses April 2 elections, plus peace and economy 

Refs:  Colombo 515, and previous 

(U) Classified by Ambassador Jeffrey J. Lunstead.
Reasons 1.5 (b, d). 

¶1.  (C) SUMMARY:  SA DAS Torkel Patterson visited
Colombo, March 21-23.  Highlights of the visit included
meetings at the MFA, with a key adviser to President
Kumaratunga, with local diplomats, and with local
business leaders, including the American Chamber of
Commerce.  Key issues discussed included the April 2
parliamentary elections, the peace process, and the
economic situation.  The visit served to underscore
continued high-level USG engagement with Sri Lanka
during this sensitive timeframe.  END SUMMARY. 

------------
MFA Meetings
------------ 

¶2.  (C) Deputy Assistant Secretary for South Asian
Affairs Torkel Patterson visited Colombo, March 21-23.
On March 22, DAS Patterson and Ambassador Lunstead held
separate meetings with Foreign Minister Tyronne Fernando
and Foreign Secretary Bernard Goonetilleke.  Patterson
and the Ambassador used both meetings to review CHR
priorities, including the Cuba and China draft
resolutions, and the Iraq situation (see Reftels).  In a
brief discussion regarding Sri Lanka's April 2
parliamentary elections, Goonetilleke remarked that he
felt that voter turnout might be lower this time around
due to voter dissatisfaction with the two major parties.
Foreign Minister Fernando claimed that the campaign of
his United National Party (UNP) was getting a good
response among younger voters, but admitted that
confidence in the UNP on economic issues among "the
average voter" was low. 

-------------------------------------
Meeting with Key Presidential Adviser
------------------------------------- 

¶3.  (C) On March 22, DAS Patterson and Ambassador also
met with Lakshman Kadirgamar, former foreign minister
and a key adviser to President Kumaratunga.  Asked for
his views on the election campaign, Kadirgamar seemed
confident that Kumaratunga's "United People's Freedom
Alliance" (UPFA) would do well.  There had not been much
violence so far in the campaign, he related.  He
thought, however, that there could be some post-election
violence.  President Kumaratunga was prepared to deal
with any such incidents, he said.  Queried re the split
in the Liberation Tigers of Tamil Eelam (LTTE) (see
Reftels), Kadirgamar thought there was some prospect of
reconciliation between breakaway eastern rebel leader
Karuna and Tiger leader V. Prabhakaran.  That said, any
possible reconciliation would likely take place after
the April 2 election, as would any possible armed
conflict between the two sides.  DAS Patterson noted the
degree of control the GSL had over Sri Lanka's media.
Kadirgamar, who is currently the Minister of Media and
Communications, agreed that the state-run media outlets
were quite influential.  There had been attempts to
reform the situation in the past, but they had all
failed.  (Per Reftels, the Ambassador also raised the
issue of the fabrication of results of a poll in
government-controlled newspapers on March 20.  The poll
had been partially financed by USAID.  Kadirgamar said
he would look into the matter.) 

---------------------------
Dinner with Local Diplomats
--------------------------- 

¶4.  (C) DAS Patterson also attended a March 22 dinner at
the Ambassador's residence with local diplomats,
including those from Norway, the UK, the EU,
Netherlands, and Canada.  The natural focus of
conversation was the upcoming parliamentary election.
The overall feeling at the dinner was that it was not
precisely clear how the political situation was playing
out.  That said, most agreed that the President's UPFA
grouping had gotten off to a fast start and was probably
ahead at this point in the race.  Prime Minister
Wickremesinghe's UNP had gotten off to a very slow
start, but its campaign was getting more active.
Norwegian Ambassador Brattskar noted that the anti-peace
process JHU party -- in an unprecedented move -- was
running an all-Buddhist monk candidate slate, and might
pick up between 2-5 seats in Parliament.  It was not
clear whether the JHU's support would come from voters
who might have supported the UPFA, or would come from
voters who were dissatisfied with the two major parties
and were looking for other alternatives.  Regarding the
LTTE split, there was widespread agreement that the main
LTTE organization would probably wait until after the
April 2 election to try to displace Karuna via an armed
attack or by trying to entice Karuna's supporters away
from him. 

-------------------------
Commerce Ministry Meeting
------------------------- 

¶5.  (C) Secretary of Commerce and Consumer Affairs
Harsha Wickramasinghe and Director General of Trade K.J.
Weerasinghe updated DAS Patterson March 22 on current
political activities, GSL positions in the WTO, and
progress in BIMST-EC (Bangladesh, India, Myanmar, Sri
Lanka and Thailand Economic Cooperation) and SAFTA
(South Asia Free Trade Agreement) talks.  Wickramasinghe
discussed UNP election tactics designed to discredit the
JVP's stance that it is a credible political party, by
highlighting its brutal past actions.  He also noted
that the pro-LTTE Tamil National Alliance (TNA) had said
they would not ally with the United People's Freedom
Alliance (UPFA), but would hold out for as much as they
could get from the UNP. 

¶6.  (C) On WTO issues, Weerasinghe promised that the GSL
Representative in Geneva would support USG positions on
UNCTAD and on food aid issues.  The GSL is now busy
finalizing its proposals for accession to the
Information Technology Agreement, fulfilling a
commitment made during the last round of TIFA talks.
Wickramasinghe mentioned that he saw BIMST-EC as an
important bridge between SAARC and ASEAN, and as a tool
to open up Myanmar's trade regime.  Weerasinghe bemoaned
the multiplicity of bi- and multi-lateral trade regimes,
and noted the need for convergence. 

-----------------
AMCHAM Roundtable
----------------- 

¶7.  (U) During a March 22 meeting with members of the
American Chamber of Commerce, DAS Patterson outlined USG
views on regional developments of the past two years and
asked for insights into the current domestic political
situation and business climate.  IBM Managing Director
and former Amcham President, Kavan Ratnayaka described
IBM efforts to support open source software development,
noting that Sri Lanka has become an internationally
recognized "brand" in the open source community. 

¶8.  (SBU) Amcham Director Graetian Gunawardene, whose
company manufactures Samsonite luggage, noted that the
export sector has been driving growth and employment.
He asked specifically for DAS Patterson's support in
pushing for a U.S.-Sri Lanka Free Trade Agreement (FTA)
and in returning U.S. visa validity to 5 years.  (Note:
We are discussing possible changes in our visa
reciprocity schedule with the GSL.)  Noting that Sri
Lanka has a long democratic tradition, even through some
very difficult times, Gunawardene suggested there should
be closer U.S.-Sri Lanka commercial ties to match their
shared democratic ideals.  Patterson promised to review
FTA issues when he got back to  Washington, and urged
the Amcham to consult with the GSL's Ministry of Foreign
Affairs to promote a review of the reciprocity issues
that have led to the limited validity of U.S. visas for
Sri Lankans. 

¶9.  (C) On the current political situation, optimism
about the future mixed with concerns about short-term
political realities.  Ratnayaka (a longtime UNP
supporter whose family is close to the Prime Minister)
raised concerns about the opposition's ability to move
forward on the peace process due to the LTTE's lack of
trust in the President.  Others in the group, including
Citibank CEO Kapila Jayawardena, thought the LTTE would
look closely at who wins the April 2 election and would
be willing to deal with whichever party wins, assuming
that party has the intention of negotiating a workable
solution.  Outgoing Energizer Managing Director Sunil de
Alwis commented that Sri Lanka remains an attractive
place to do business.  He mentioned Energizer's new USD
2 million investment, which upgraded its manufacturing
facility and improved Energizer's ability to meet
increased domestic demand and a potential export market
into India as well.  Citibank and Energizer reps said
their Sri Lankan operations are leading performers in
their respective companies.  Jayawardene noted that
American companies tend to do well in Sri Lanka.
Citibank's own return-on-equity in Sri Lanka is over 50
percent, the best in Asia. 

-------
COMMENT
------- 

¶10.  (C) As the many threads laid out above indicate,
this is a very sensitive timeframe for Sri Lankans, who
have deep worries about the future of the peace process
and the economy.  These overall concerns are fed by
specific worries over the unstable pre- and post-
election period, over what the radical JVP might due in
power if the UPFA wins, over what the LTTE split means
for the peace process, etc.  Given this complex, fluid,
situation, DAS Patterson's visit was reassuring to Sri
Lankans, who deeply appreciate continued high-level USG
engagement in support of the peace process.   END
COMMENT. 

¶11.  (U) DAS Patterson was not able to clear on this
message before departing Post. 

¶12.  (U) Minimize considered. 

LUNSTEAD

Cable II:

UNCLAS SECTION 01 OF 02 COLOMBO 000851 

SIPDIS 

SIPDIS 

STATE FOR EEB/EPPD NSMITH-NISSLEY AND SCA/INS
DOL/ILAB FOR TINA MCCARTER
MCC FOR S. GROFF, D. TETER, D. NASSIRY AND E. BURKE
TREASURY FOR LESLIE HULL
GENEVA PASS USTR 

FOR EEB ASSISTANT SECRETARY SULLIVAN FROM AMBASSADOR BLAKE 

E.O 12958: N/A
TAGS:  ECON [Economic Conditions], BEXP [Trade Expansion and Promotion], ETRD [Foreign Trade],
ELAB [Labor Sector Affairs], KSEP, SENV [Environmental Affairs], AMGT [Management Operations], CE [Sri Lanka]
SUBJECT:  SRI LANKA - NOMINATION OF VIRTUSA FOR CORPORATE EXCELLENCE
AWARD 

REF: STATE 47222 

¶1.  I am pleased to nominate Virtusa for the Secretary's Award for
Corporate Excellence in the small and medium enterprise category.
While meeting all eligibility requirements for this award, Virtusa
has demonstrated outstanding corporate citizenship by assisting
disaster-ridden countries with an open source disaster recovery
management system it developed following the 2004 tsunami which
struck Sri Lanka and other Indian Ocean countries.  Virtusa also
contributed to the advancement of Sri Lanka's scientific and
technology policies by enhancing information and communications
technology (IT) capacity in local universities.  Finally, by
creating an intensive training program which converts unemployed but
motivated graduates without sufficient IT training into IT managers,
Virtusa is directly contributing to Sri Lanka's overall growth and
development. 

OUSTANDING CORPORATE CITIZENSHIP:  VIRTUSA-SPONSORED SYSTEM SPEEDS
RECOVERY FOLLOWING DISASTERS 

¶2.  When the 2004 Indian Ocean tsunami seriously damaged the
coastline of Sri Lanka, Virtusa funded salaries and benefits for its
employees as they developed open-source software for disaster relief
management.  It continues to fund its employees as they travel to
disaster-affected countries and assist in implementing the software
program. 

¶3.  The system, called Sahana, was initially designed for Sri Lanka
to have a good disaster recovery system following the tsunami.  It
has been widely used in recent disasters, including Pakistan
following its 2005 earthquake, the Philippines following its 2006
mudslide in Southern Leyte, and Indonesia following the Yogjakarta
earthquake of 2006.  The software has received several awards,
including the Free Software Foundation's 2006 Award for Social
Benefit, the 2006 Good Samaritan Award from Software 2006. Sahana is
now managed by the non-profit Lanka Software Foundation.  In
addition to Virtusa's continued support through its personnel,
Sahana receives funding from IBM and the U.S. National Science
Foundation. 

CONTRIBUTING TO THE ADVANCEMENT OF SRI LANKA'S SCIENTIFIC AND
TECHNICAL POLICIES:  ENHANCING UNIVERSITIES; ENLIGHTENING STUDENTS
WITH INFORMATION TECHNOLOGY 

¶4.  Sri Lanka has identified IT as a potential growth sector, and is
actively encouraging its development.  Hundreds of "Virtusans" have
volunteered their time and skills over the past few years to create
IT awareness within communities and share best practices with
academia. In 2006, the company introduced information technology to
over 700 students in a southern district of Sri Lanka, donated a
computer lab to a Colombo-based school, provided career guidance and
leadership skills to thousands of undergraduate and advanced level
students, and contributed to fostering free and open software
education in Sri Lanka. 

¶5.  Virtusa supplies staff to universities to serve as
lecturers/trainers.  It shares industry best practices with
university staff and invites them to Virtusa for special seminars.
Through Virtusa's Project Enhancement Initiative, university
undergraduates receive software engineering and management guidance.
 All of these activities promote the importance of IT to Sri
Lankans, furthering Sri Lanka's prospects for growth in the IT
sector. 

CONTRIBUTING TO OVERALL ECONOMIC GROWTH:  TRANSITIONING
PROFESSIONALS FROM OVERSUBSCRIBED PROFESSIONS INTO INFORMATION
TECHNOLOGY THROUGH TRAINING 

¶6.  As Sri Lanka's IT industry continues to grow, the country's
shortage of IT workers becomes increasingly critical.  Universities
still have not adapted sufficiently to meet the demands of the IT
sector.  In 2006, Virtusa implemented a dynamic IT Leadership 

COLOMBO 00000851  002 OF 002 

Conversion Program to help resolve this shortage.  The company
identifies self-driven, high-aptitude graduates who do not have
sufficient IT skills.  It then provides these individuals with a
fast-track career conversion opportunity enabling them to make the
transition into an IT services career. 

¶7.  The company has hired 30 successful Virtusa IT Conversion
Program graduates from the 40 it trained.  It plans to double the
number of Conversion Program candidates this year, enabling Sri
Lanka to meet a greater demand in the growing IT sector. 

BLAKE

Cable III:

C O N F I D E N T I A L SECTION 01 OF 02 COLOMBO 000063 

SIPDIS 

TREASURY FOR USTR MICHAEL DELANEY;
COMMERCE FOR USPTO KRISTINE SCHLEGELMILCH
DEPARTMENT FOR EEB/TPP/IPE JOELLEN URBAN 

E.O. 12958: DECL: 01/28/2020
TAGS: KIPR [Intellectual Property Rights], ECON [Economic Conditions], PGOV [Internal Governmental Affairs], CE [Sri Lanka]
SUBJECT: IPR PROTECTION IN SRI LANKA: BAD, BUT IMPROVING 

Classified By: Deputy Chief of Mission Valerie Fowler for Reasons 1.4 (
B) and (D). 

¶1. (SBU) SUMMARY: Sri Lanka's intellectual property rights
regime is good on paper but lax on enforcement.  Still, since
the passage of comprehensive legislation in 2003, things have
slowly been improving.  The Embassy, American Chamber of
Commerce, Business Software Alliance, a cadre of specialized
law firms, and a number of government offices have worked
hard to increase awareness and provide much-needed training
for judges, police, and investigators.  While much remains to
be done, new and ongoing initiatives should reduce the amount
of pirated and fake items available in the marketplace.  END
SUMMARY. 

BACKGROUND 

¶2. (U) Sri Lanka's intellectual property rights (IPR) regime
is, like that of many emerging economies, good on paper but
lax on enforcement.  The country enacted a comprehensive IPR
law in 2003 that governs copyrights and related rights,
industrial designs, patents, trademarks and service marks,
trade names, layout designs of integrated circuits,
geographical indications, unfair competition, databases,
computer programs, and undisclosed information.  Infringement
of intellectual property rights is a punishable offense under
the law and falls under both criminal and civil courts of
jurisdiction in Sri Lanka.  Recourse available to owners
includes injunctive relief, seizure and destruction of
infringing goods and plates or implements used for the making
of copies, and the prohibition of imports and exports.
Penalties for the first offense include a prison sentence of
6 months or a fine of up to Rs 500,000 ($4,425).  Penalties
can be doubled for a second offense. 

¶3. (C) Since the passage of the 2003 IPR law Sri Lanka has
slowly begun enforcing its provisions.  However, counterfeit
goods continue to be widely available.  Local agents of
well-known U.S. and other international companies
representing recording, software, movie, clothing and
consumer product industries continue to complain that the
lack of IPR protection is damaging their businesses.  Piracy
of sound recordings and software is widespread, making it
difficult for the legitimate industries to protect their
market and realize their potential in Sri Lanka.  The Police
occasionally raid stores selling counterfeit goods --
especially garments.  However, it is rare for the Police to
act without a formal complaint and assistance from an
aggrieved party.  Several offenders have been charged or
convicted by courts.  A leading anti-piracy lawyer, Sudath
Perera, told EconOff that his firm has successfully conducted
several raids in Colombo in 2008-2009.  In January 2010,
police and the law firm (representing the rights holders)
recently raided two outlets in Colombo selling counterfeit
garments and stationary. 

SOFTWARE PIRACY 

¶4. (SBU) Software companies complain of the lack of IPR
enforcement within government institutions and even some
larger corporations, including several banks.  According to a
survey commissioned by the Business Software Alliance (BSA)
and conducted by the IDC, a leading global IT market research
firm, software piracy in Sri Lanka is as high as 90 percent.
Sri Lanka,s software companies and the Sri Lankan
Association for Software and Service Companies (SLASSCOM)
dispute the findings of the study, questioning the sampling
methodology used by the IDC.  However, both organizations
have bottom-line reasons to publicly doubt the study.  For
example, SLASSCOM's members worry the bad publicity could
cause potential clients to go elsewhere due to the high
piracy rate.  ICTA, in collaboration with the SLASSCOM, is
planning to commission an independent IPR survey covering a
sample of about 5,000 companies. 

¶5. (SBU) Sri Lankan government officials in charge of IPR
protection acknowledge there is a high software piracy rate 

COLOMBO 00000063  002.4 OF 002 

in the government.  The government and industry leaders are
taking various actions to improve IPR protection in the
Information and Communication Technology (ICT) sector.  In
December 2009, the government of Sri Lanka approved a new
Information Technology (IT) policy for the government sector
which includes rules on hardware and software procurement.
When the new policy will be implemented is not known.  Under
the new policy, the government will issue IT procurement
guidelines requiring all government agencies to stick to
licensed software or open-source software.  If the cost of
licensed software or maintenance and consultancy fees of
open-source software is higher than proprietary software, the
government will provide additional funds to purchase
proprietary software. 

¶6. (C) While we see this as a step in the right direction,
the Business Software Alliance (BSA) is not fully satisfied
with the policy and accuses the government of "more funny
business."  Shalini Ratwatte, BSA's local consultant, told
EconOff that she sees it as a push for open source software.
However, she acknowledged that pricing is an issue.  For
instance, global software producers are not willing to offer
discounted prices to Sri Lanka (as they do in mass markets
such as India).  They argue that Sri Lanka, although a
developing country, does not offer economies of scale to
justify discounts.  Nevertheless, BSA is contemplating
starting IPR awareness programs for senior Sri Lanka
government officials covered by the new procurement policy. 

OTHER PROGRESS AND PROGRAMS 

¶7. (U) Post,s recent efforts focus on IPR protection in the
ICT sector.  In a bid to support the ICT sector, Post teamed
up with BSA to hold an IPR awareness program for the Sri
Lanka Police on January 8.  The U.S. Department of Justice
Office of Overseas Prosecutorial Development, Assistance and
Training (USDOJ/OPDAT) and Business Software Alliance
provided funds for this workshop.  Approximately 45 police
officers from the Criminal Investigations Division (CID) of
the Sri Lanka Police participated.  The program focused on
the importance of IPR to the economy, elements of IPR law,
and investigating and prosecuting IP cases.  Industry
representatives from pharmaceutical, software, and electrical
product industries provided technical information about
product identification.  At the conclusion of the seminar,
participants from the CID requested continued training on IPR
awareness and education and more involvement from the
industry. 

¶8. (U) Demonstrating a positive trend, well-known vendors of
branded laptops and computer systems now advertize that their
products come "only with licensed software."  Previously,
laptop and desktop computers were sold without any reference
to software and the sellers and users freely copied software.
 Furthermore, Dr. D.M. Karunaratne, Director of the National
IP office, informed EconOff that a World Intellectual
Property Office,s (WIPO) intellectual property academy will
soon be established in Sri Lanka.  Sri Lanka has been chosen
for this academy as a pilot project.  Earlier, WIPO carried
out a successful pilot project on WIPO outreach programs in
Sri Lanka. 

COMMENT 

¶9. (SBU) The end of the war gives an opportunity to refocus
efforts on IPR enforcement.  The Embassy, the USPTO regional
office in New Delhi, AMCHAM and BSA are working to pursue
more aggressive enforcement and enhance public awareness, and
require the active cooperation of the National IP office of
Sri Lanka.  Upcoming training programs in the first quarter
of 2010 for law enforcement agencies include USPTO-sponsored
training programs for the Attorney General,s Office and Sri
Lanka Customs, and an AMCHAM/BSA sponsored training program
for magistrates in the Central, North Central, Eastern and
Northern Provinces, ensuring that magistrates from all nine
of Sri Lanka's provinces receive training.
BUTENIS

Those propaganda workshops are indirectly funded by the likes of Microsoft. To quote, “recent efforts focus on IPR protection in the ICT sector. In a bid to support the ICT sector, Post teamed up with BSA to hold an IPR awareness program for the Sri Lanka Police on January 8. The U.S. Department of Justice Office of Overseas Prosecutorial Development, Assistance and Training (USDOJ/OPDAT) and Business Software Alliance provided funds for this workshop.”

And who provides funds for the BSA? Follow the money. █

Summary: In Malaysia, the ‘IP’ propaganda runs rampant — a lot more rampant than actual ‘piracy’ and a cable shows how it’s done

According to the following cable from the embassy in Kuala Lumpur (Malaysia), not only is Microsoft lobbying to make copyright infringement (even backup) a crime; its proxies do similar things. The following Cablegate cable reveals lobbying for patents not just from ACT but also from the Business Software Alliance (BSA).

Here is the best part: “He also pointed out that BSA supports technology neutral government procurement, given that its membership straddles both sides of the open source software debate.”

Really?

“Here is another priceless example not of pretending to be one’s own opposition but more of the usual lie that tries to tie copyright infringement with terrorism in order to pass new laws.”IBM left the BSA and just about every member is a proprietary software company. Here is another priceless example not of pretending to be one’s own opposition but more of the usual lie that tries to tie copyright infringement together with terrorism in order to pass new laws. “Gane also raised the significant funding through IPR crime of other criminal activity.”

There is another lie trying to imply that if Hollywood does not get a licence to its copyright terrorism regime, then people will die (same propaganda gets used for ACTA these days). Read this piece of propaganda: “Cyril Chua, a Singapore attorney who represents the Entertainment Software Alliance, noted the particularly high rates of piracy in Malaysia in that area of optical media (over 90 percent by some estimates). Like his industry colleagues, he pointed to the weak prosecution of cases as a prime concern, noting that the government has not strengthened prosecution to keep up with its strengthened enforcement efforts. Tom Hart of Aztra Zeneca, who represented Amcham’s pharmaceutical committee, pointed out that, while his industry faces different obstacles from optical media industry, counterfeit pharmaceuticals posed a direct threat to the health of Malaysian consumers, and thus necessitated particularly strong enforcement and prosecution.”

The short version: “pass more draconian laws for our dear Hollywood masters or your people will die.”

Now, that’s how lobbying is done. The full cable follows.

VZCZCXRO0200
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHKL #0794/01 1220415
ZNR UUUUU ZZH
R 020415Z MAY 06
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC 6530
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC

UNCLAS SECTION 01 OF 05 KUALA LUMPUR 000794 

SIPDIS 

SIPDIS 

STATE FOR EB/TPP/MTA/IPC - FELSING
STATE PASS USTR FOR B. WEISEL, J. JENSEN, V.
ESPINEL
USDOC FOR JENNIFER BAKER
COMMERCE PASS USPTO FOR P. FOWLER 

E.O. 12958: N/A
TAGS: ETRD [Foreign Trade], KIPR [Intellectual Property Rights], MY [Malaysia]
SUBJECT: U.S.-MALAYSIA INTELLECTUAL PROPERTY
RIGHTS ROUNDTABLE 

Summary and Introduction
------------------------ 

¶1.  The U.S. and Malaysia held a long-anticipated
IPR Roundtable on April 20 in Kuala Lumpur.
Approximately seventy participants from the
Malaysian and U.S. governments, as well as
industry and civil society, gathered to discuss
IPR enforcement efforts, industry views on
combating piracy, IPR protection within the
context of free trade agreements, and the U.S.
perspective on IPR protection, including the use
of specialized IPR courts.  Participants also
discussed U.S.-Malaysian cooperation efforts,
including the ongoing provision by the U.S. of
capacity building for Malaysian officials.  The
Ambassador and the Minister of Domestic Trade and
Consumer Affairs launched the event and also held
a joint press conference.  The Roundtable was co-
chaired by the DCM and by Deputy Secretary General
Mohamed Nor Hj. Abd Aziz of the Ministry of
Domestic Trade and Consumer Affairs (MDTCA). 

Ambassador LaFleur and Minister Shafie Launch the
--------------------------------------------- ----
Roundtable
---------- 

¶2. Ambassador LaFleur kicked off the event with a
speech that countered common excuses made by
purchasers of stolen IP, such as the cost of
optical media and the alleged lack of harm to IP
producers.  He emphasized the need for the U.S.
and Malaysia to continue to work together to
change the common perception among consumers that
IPR piracy is not a true crime.  The Ambassador
urged Malaysia's leaders to project more public
opposition to IPR piracy.  High-level advocacy was
essential not only to stem retail piracy, but more
broadly to further Malaysia's goal of developing a
knowledge-based economy, which is strongly
influenced by foreign investors' assessments of
whether their IPR would be protected.  The
Ambassador welcomed Minister of Domestic Trade and
Consumer Affairs Shafie Apdal's commitment to
implement a specialized IPR court, as well as his
more recent initiative to obtain legal authority
to act against owners of retail premises that
routinely sell pirated products. 

¶3.  Minister Shafie placed the IPR Roundtable in
the context of the upcoming U.S.-Malaysia FTA
negotiations, expressing his hope that negotiators
of the FTA's IPR chapter would build on the day's
events.  He acknowledged that IPR theft was a
drain on Malaysia's economic growth and would
inhibit its ultimate economic success, and noted
his particular concern about Malaysia's reputation
as one of the leading exporters of pirated optical
disc media.  Shafie listed a range of actions that
Malaysia had undertaken to attack piracy,
including an increasing number of seizures, more
effective prosecution that included higher fines
and longer sentences for convicted IPR pirates,
and the creation of an export enforcement unit to
strengthen controls at international air and sea
gateways.  He noted the ministry's intention to
hire over 700 new enforcement officers this year
and reiterated his plan to implement soon a
specialized IPR court. 

¶4.  The Ambassador and Minister Shafie held a
joint press conference following the opening
session, which received wide coverage from the
media.  They conveyed many of the same themes in
their remarks to the press.  Press questions
focused on a news report that the Recording
Association of Malaysia had brought suit against a
local shopping mall for its failure to stop sales
of pirated CD's on its premises.  Minister Shafie
confirmed that he is seeking administrative
authority to enable his Ministry to independently
pursue such cases. 

KUALA LUMP 00000794  002 OF 005 

U.S. and Malaysian Approaches to Enforcement
-------------------------------------------- 

¶5.  Econoff presented the USG STOP Initiative as
an effort by the United States to improve its
interagency coordination in IPR enforcement.
Although the United States has long led global
efforts to protect intellectual property, enhanced
coordination through STOP was helping U.S.
agencies to improve their effectiveness against
organized IP crime.  Econoff noted that engagement
with U.S. trading partners on IPR protection was a
key component of the initiative; our commitment to
improving IPR enforcement in the region was shown
by the recent posting to Bangkok of an IP attach
and an IP law enforcement coordinator, both with
regional responsibilities. The U.S. would continue
to provide IP training and capacity building
programs for foreign officials, and welcomed
Malaysia's ongoing participation in such
initiatives. 

¶6.  Roslan bin Mahayuddin, MDTCA Acting Director
General for Enforcement, gave an overview of
Malaysia's recent enforcement activity, noting in
particular that 2006 was shaping up to be a record
year in terms of seizures of pirated IPR in
Malaysia.  Roslan reiterated Shafie's statement
that the establishment of the MDTCA's Export Unit
in April 2005 was a key component of Malaysia's
strengthened enforcement efforts.  More than RM 50
million (approximately USD 13.8 million) in
merchandise has been seized so far this year,
compared to seizures worth just over RM 100
million in all of 2005, in part through better
coordination on seizures destined for export.
Roslan noted that the number of licensed optical
media disc factories in Malaysia has been reduced
from 44 to 38 in the last year, and several other
pending license revocations would continue to
bring that number down to a level more
commensurate with the legitimate Malaysian market.
An optical disc forensic laboratory was
established in 2003 in coordination with the
government Chemistry Department; Roslan
acknowledged that no cases have yet been developed
based on forensics evidence corroborated by the
new lab, though he suggested that would soon
change. 

¶7.  USPTO Senior Counsel Peter Fowler provided an
overview of U.S. judicial enforcement of IPR.  The
U.S. has long experience in protecting IPR that
could inform other countries like Malaysia on the
most effective means to enforce IPR.  Fowler
highlighted a number of facets of U.S. IPR
enforcement, including a reliance on civil
litigation, supplemental use of criminal
prosecution, and the predominance of the federal
court system for litigation rather than state or
local courts.  Government must be involved in IPR
enforcement because such protection is in the
public interest, going beyond the interests of
individual piracy victims.  Fowler added that
piracy is often committed without the victim's
knowledge, and the victim usually has no direct
relationship with the infringer; in such
situations a victim might be unable to pursue
civil remedies, leaving criminal penalties as the
only effective recourse.  Criminal sanctions may
also be necessary in cases where fines might be
treated by IPR violators as just a cost of doing
business. 

¶8. Fowler presented a number of models that
Malaysia could consider as it moves toward
implementing a specialized IPR court, including
separate specialized courts or judicial panels,
such as in Thailand and Korea, or designated
existing courts to handle IPR cases, as in Japan,
Singapore, Indonesia, Taiwan and the Philippines.
He noted that the U.S. had no designated IPR
court, though we do have a special appeals court
to handle patent litigation.  Regardless of the 

KUALA LUMP 00000794  003 OF 005 

approach, a specialized IPR judicial regime was
important given technically complicated cases
involving science, technology innovation, patents,
and transnational civil litigation.
Specialization would allow for a better-informed
judiciary, more focused law enforcement, better
case management and dedicated resources to
continuously promote protection. 

IPR Protection in the FTA Context
--------------------------------- 

¶9. Econ Counselor gave a general overview of the
typical provisions of an IPR chapter in a U.S.
free trade agreement, after cautioning that his
presentation should not be seen as pre-judging the
treatment of IPR in the upcoming U.S-Malaysia FTA
negotiations.  He noted that U.S. Trade Promotion
Authority (TPA) sets as an FTA negotiating
objective the promotion of effective IPR
protection through accelerated implementation of
TRIPS, in particular its enforcement aspect; by
ensuring that FTA provisions reflect a standard of
protection similar to U.S. law; and by providing
strong protection for new and emerging
technologies.  Typical IPR chapters in past FTAs
have included provisions on trademarks,
copyrights, patents, Internet domain names,
satellite broadcasts, and enforcement and criminal
procedures. 

Industry Views - Improving Enforcement, Continuing
Concerns
--------------------------------------------- -----
--------- 

¶10. While representatives from a range of IPR
industry associations expressed appreciation for
the Malaysian government's recent enforcement
successes and its commitment to IPR protection,
they were not shy about raising their varied
concerns on the state of IPR protection here.
Jeff Hardee, Regional Vice President of the
Business Software Alliance, noted that an
effective IPR court would necessitate better-
trained prosecutors than exist at present, and he
called on Malaysia to fully implement all WIPO
treaties.  He also pointed out that BSA supports
technology neutral government procurement, given
that its membership straddles both sides of the
open source software debate.  Neil Gane, Senior
Operational Director of the Motion Picture
Association, noted MPA's appreciation for the
government's enforcement efforts, which had
reduced DVD piracy substantially in the last few
years.  Despite reducing the number of licensed OD
factories, however, MPA continues to believe the
country has far too many production lines, and
which keeps it a significant exporter of pirated
products.  Gane also raised the significant
funding through IPR crime of other criminal
activity. 

¶11. Su Siew Ling, a Kuala Lumpur attorney who
represents the Association of American Publishers,
said the AAP's primary concern in Malaysia is the
widespread photocopying of textbooks, particularly
around university campuses.  She pointed out that
illegal photocopiers typically produce on demand,
keeping virtually no stock on hand that would help
authorities prove counterfeit production.
Photocopiers are aided by Malaysia's copyright
law, which allows for possession of up to three
copies of a work for private/personal use.  Siew
Ling said AAP continued to advocate stronger anti-
piracy action by means of increased surveillance
in chronic areas, such as near universities; an
increased willingness by authorities to enforce
actions against photocopiers, and to follow up
with effective prosecution of such cases; an
enhanced public awareness program, especially
among teachers and students; and increased use of
civil action against violators. 

KUALA LUMP 00000794  004 OF 005 

¶12. Cyril Chua, a Singapore attorney who
represents the Entertainment Software Alliance,
noted the particularly high rates of piracy in
Malaysia in that area of optical media (over 90
percent by some estimates).  Like his industry
colleagues, he pointed to the weak prosecution of
cases as a prime concern, noting that the
government has not strengthened prosecution to
keep up with its strengthened enforcement efforts.
Tom Hart of Aztra Zeneca, who represented Amcham's
pharmaceutical committee, pointed out that, while
his industry faces different obstacles from
optical media industry, counterfeit
pharmaceuticals posed a direct threat to the
health of Malaysian consumers, and thus
necessitated particularly strong enforcement and
prosecution. 

Current and Future Cooperation
------------------------------ 

¶13. The U.S. and Malaysia continue to cooperate on
a number of capacity building programs.  Peter
Fowler noted that the most effective training
programs are those that can reach a broad set of
officials, and that can be institutionalized
relatively quickly so that an organization's
improved performance does not depend on the
continued employment of those officials who
initially receive training.  Fowler pointed out
the May 2006 seminar on IP prosecution in KL,
which is an ASEAN-sponsored event with significant
financial and logistical support from USPTO.  He
noted USPTO's active training schedule in
Southeast Asia, where it typically works through
ASEAN to set up capacity building sessions.  He
also pointed out the recent inauguration of the
Global Intellectual Property Academy at USPTO,
which has already trained several Malaysian
participants.  Siti Eaisah of the Malaysian
Intellectual Property Office (MyIPO) noted her
appreciation of the training USPTO has provided to
MyIPO officials, and said her office needed
particular assistance in training patent examiners
in specialized areas like biotechnology and
engineering.  Othman Nawang of the MDTCA's
enforcement division said his officers would
benefit from training in surveillance and
detecting techniques, combating Internet piracy,
criminal profiling, and optical disc forensics. 

¶14. Industry representatives were united about the
need to improve public awareness on the need to
protect intellectual property.  Chua said ESA has
launched an IP initiative in public schools aimed
at young children, viewed as the most persuadable
audience, even if the results from such outreach
may not be apparent until such kids reach their
early teenage years.  MPA likewise sees schools as
a main focus of its outreach efforts.  While
agreeing on the importance of educating consumers,
particularly children and young adults, BSA's Jeff
Hardee pointed out that there are no shortcuts to
strong enforcement measures.  He raised the issue
of piracy in the U.S., which continued to be a
major concern throughout the IP industry despite
extensive public outreach (he noted that, while
U.S. piracy rates are fairly low by Southeast
Asian standards, overall losses there remain very
high).  Strong enforcement is a tool along with
education in deterring IP theft, he added. 

¶15. The DCM wrapped up the Roundtable by
acknowledging our existing and future cooperative
efforts, including the Roundtable itself.  Our
bilateral cooperation had been one factor in
Malaysia's improving ability to fight piracy, and
the U.S was committed to continuing our effective
collaboration.  The U.S. looked forward to
Malaysia's continuing efforts, including the
upcoming establishment of an IPR court.  The FTA
talks would ensure that IPR protection would be a
prime topic of bilateral government discussion in
the coming year, which we hoped would lead to an 

KUALA LUMP 00000794  005 OF 005 

FTA that would continue to advance our
cooperation. 

Comment
------- 

¶16. The IPR Roundtable was a welcome opportunity
for an open discussion of Malaysia's efforts to
protect intellectual property, and was especially
well timed given our imminent launch of
negotiations on an FTA.  MDTCA officials are
understandably proud of the progress they have
made in enhancing enforcement and expressed a
strong commitment to furthering those gains.  They
also recognize that one of the government's
principal goals in the just released Ninth
Malaysia Plan - creating a more knowledge-based
economy - will depend heavily on the government's
ability to protect IPR, both to encourage local
entrepreneurs as well as the foreign investors who
would help support them.  Our industry
representatives acknowledged Malaysia's progress
and commitment, but made clear that the government
had a long way to go in creating an effective
deterrent that would help effect a significant
shift in the average Malaysian's attitude toward
IPR piracy. 

¶17. Embassy was pleased by the large, diverse
turnout at the Roundtable, which included some NGO
participants that have been vocal critics of the
U.S.-Malaysia FTA.  Their comments during the
Roundtable indicated they we didn't change any
minds, but we were pleased to be able to explain
to them our views on the benefits of an FTA to
Malaysia, including through enhanced IPR
protection.  The Roundtable deepened our bilateral
dialogue on IPR, and could lead to the
organization of similar events in the future,
perhaps after the conclusion of our upcoming FTA
negotiations. 

LAFLEUR

This is the only Malaysian cable that we found interesting and relevant thus far. █

Summary: Two cables showing the use of Free software in Indonesia “in order to reduce dependence on proprietary systems.”

IN PREVIOUS posts about Indonesia we showed some good news but also a fair deal of mischief from Microsoft. In reverse-chronological order:

• Cablegate: Microsoft Attacks Free/Open Source Software in Indonesian Government With ‘Piracy’ Claims and a Secret 80% Discount, Breaks 1999 Monopolies Law
• Cablegate: With Microsoft Front Group Taking on Indonesia, a Call for Open Source Software Adoption
• Cablegate: Bill Gates Uses AIDS to Bring Microsoft Windows to Indonesia at Expense of Linux-based OLPC (Updated)
• OpenDocument Format in Indonesia and OOXML in Court
• Indonesia is Moving to OpenDocument Format (ODF)
• Will Microsoft Sign an MOU with Indonesia?

According to the following couple of Cablegate cables, “The Head of the Information and Computer Systems Division of Indonesia’s Agency for Technology Research and Application (BPPT) announced that BPPT is developing several computer applications using Free open source Software (FOSS) in order to reduce dependence on proprietary systems. Applications currently in development include e-office (Kantaya), e-learning (Kutahu), and Local Management Information System (Simda) software. BPPT is assisting several local governments (Jembrana, Pekalongan, Banyuwangi, Kuala Kapuas and Sawah Lunto) to implement FOSS-based applications. By 2014, BPPT plans to develop FOSS-based applications for computer driver and kernel technologies, mining data programs, Indonesian language processing, simulation and computerization.” In another cable (the second one) it says that “the international community has developed GIS applications using free open source software for use by countries such as Indonesia. Around 30 participants with key disaster mitigation responsibilities in the Indonesian government took part in the training.”

UNCLAS SECTION 01 OF 04 JAKARTA 001243 

SIPDIS 

DEPT FOR EAP/MTS, OES/ETC, OES/STC, OES/SAT, OES/PCI 

E.O. 12958: N/A
TAGS: SENV [Environmental Affairs], TPHY [Physical Sciences], TBIO [Biological and Medical Science], TRGY [Energy Technology], ENRG [Energy and Power], ID [Indonesia]
SUBJECT: INDONESIA ESTH HIGHLIGHTS: MAY 2008 

IN THIS ISSUE
------------- 

-- Government Phasing out Large-Scale AC Units
-- Papua Signs USD30 Million Forest Carbon Deal
-- Reclamation for an Integrated New City in Tangerang
-- Oil Palm Threatens Sentarum Lake National Park
-- Orangutans Close to Extinction
-- Rare Javan Rhino Caught on Video
-- Sumatran Tiger Population Critical
-- Legal Reform Initiative Seeks to Protect Habitat for Orangutans
-- Mangrove Planting in Surabaya
-- Lax Enforcement and High Waste Treatment Costs Blamed for
Continued Dumping
-- Mushroom Farmers Switch from Kerosene to Firewood
-- BPPT Developing Open Source Software
-- Nuclear Technology in High School Curriculum
-- Tackling HIV Infection Rates Among Surabaya's Children
-- No Blood Transfusion Facilities in Half of Country 

ENVIRONMENT: 

Government Phasing out Large-Scale AC Units
-------------------------------------------
¶1.  According to Tri Widayati, Director of Ozone Protection of the
State Ministry of Environment (MOE), most operators of
industrial-size chilling/air-conditioning units will have replaced
those units with new ones that use environmentally friendly Freon,
such as hydrochlorofluorocarbon (HCFC) 123 and hydrofluorocarbon
(HFC) 134, by the end of June 2008.  The MOE says that only 400
large-scale AC units remain in operation.  The Government of
Indonesia (GOI) banned the further importation of chlorofluorocarbon
(CFC) 11 and CFC 12 after January 1, 2008 to meet its obligations
under the Montreal Protocol.  This will lead to a gradual phase-out
of older AC units.  The MOE is helping to provide soft loans to
companies to finance the replacement of older units.  The Ministry
is also working with voluntary associations to disseminate
information to the public about the transition process. 

Papua Signs USD30 Million Forest Carbon Deal
--------------------------------------------
¶2.  Papua has signed a carbon deal worth up to USD 30 million for
100,000 hectares of forestland.  On May 13, Governor of Papua
Barnabas Suebu signed a Memorandum of Understanding with New Forests
Asset Management (NFAM) Pty Ltd.  During the following two months,
NFAM and the Papua Provincial Government will do a preliminary
survey to identify three locations for this carbon project.  At the
end of 2008, Papua will receive USD 10 million of guaranteed revenue
for the first five years and receive dividends totaling up to USD 20
million over the same period.  NFAM is collaborating with Generation
Investment Management, owned by former U.S. Vice President Al Gore. 

Tangerang Plans New Integrated City on Reclaimed Land
--------------------------------------------- --------
¶3.  On May 15, Head of Tangerang Land Use Office Didin Samsudin
confirmed that Tangerang Regency would reclaim 9,000 hectares of its
northern coastal areas for a planned new "integrated" city.  The
Tangerang Regent has already issued Local Regulation (Perda) No. 8
of 2007 on Reclamation.  This new development will contain hotels, a
marina, a business center, residential areas, and an integrated
container terminal and port.  The new city will cover approximately
8,000 hectares and cost Rp. 20 trillion or USD 1.3 billion.
Tangerang is about 21 km from Jakarta. 

Oil Palm Threatens Sentarum Lake National Park
--------------------------------------------- -
¶4.  Budi Suriansyah, the Head of Danau Sentarum National Park, says
that the palm oil plantation in the Kapuas Hulu region of West
Kalimantan threaten the 132,000-hectare park's ecosystem, which is
dependent on Betung Kerihun National Park.  The development of palm
oil plantations as well as illegal logging is causing water
pollution, and local fishers are finding it increasingly difficult
to find local endemic fish such as jelawat and arwana.  There are 11
palm oil plantation companies and 9 subsidiaries of PT Sinar Mas,
operating on 160 thousand hectares in areas bordering Betung Kerihun
National Park. 

Orangutans Close to Extinction
------------------------------
¶5.  On May 8, the Executive Director of the Center for Orangutan
Protection (COP) stated that, based on a COP study in Central 

JAKARTA 00001243  002 OF 004 

Kalimantan, orangutans will disappear from the region within 2-3
years.  The investigation found 242 palm oil plantations with
activities that having an impact on orangutans and their habitat.
According to COP, these companies include members of the Roundtable
on Sustainable Palm Oil (RSPO), such as Wilmar, IOI and Agro Group.
In 2004, a Population and Habitat Viability Assessment (PHVA)
reported that there were 58,575 orangutans left in Borneo, with an
annual decrease in population of 9 percent leading to extinction by
2015.  Darori, Director General for Forest Protection and Nature
Conservation, is skeptical of the investigation's projections, and
emphasizes that the government will not allow the conversion of
natural forest to other purposes such as palm oil cultivation. 

Rare Javan Rhino Caught on Video
--------------------------------
¶6. At the end of May, a video recorder installed by Ujung Kulon
National Park and the World Wide Fund for Nature-Indonesia
(WWF-Indonesia) caught footage of the extremely rare Javan
Rhinoceros (Rhinoceros sondaicus).  Speaking about the incident on
May 29, Agus Priambudi, Head of Ujung Kulon National Park, said the
recording would help researchers and conservationists learn more
about the Javan rhino's behavior, as well as assist efforts to
reduce threats to the remaining population.  The Java rhino is the
rarest among five rhino species in the world.  There are only an
estimated 50-60 Java rhinos in Ujung Kulon National Park.  The Java
rhino is on the International Union for Nature Conservation's "Red
List" of endangered species. 

Sumatran Tiger Population Critical
----------------------------------
¶7.  On May 25, the Coalition for Protected Animal Monitoring stated
that there were approximately 250 Sumatran tigers (panthera tigris
Sumatrae) left in the wild.  The decrease in this species'
population is due to hunting, conflict with humans, and illegal
logging and land clearing leading to the fragmentation of its
habitat.  Poachers hunt the animal for its skin, bones, fang/tooth
and claws.  Tiger skins sell for approximately 3-5 million Rupiah
(USD 322-537) apiece in local markets and up to USD 3,300 in
international markets.  Although Law No. 5 of 1990 on Natural
Resources Conservation and Ecosystem protects this species,
enforcement of the law is weak. 

Legal Reform Initiative Seeks to Protect Habitat for Orangutans
----------------------------------------
¶8.  The Orangutan Conservation Services Program (OCSP) and Wildlife
Conservation Society (WCS) launched a media campaign in late May, to
commemorate World Environment Day, in order to draw attention to the
urgency of legal protection for orangutan habitat and to support
survival of orangutans in the wild.  WCS is spearheading a policy
reform effort that seeks to protect habitat of endangered species
from conversion to non-forest land uses.  In Indonesia today, it is
illegal to kill an orangutan but it is still legal to convert the
little remaining orangutan habitat to non-forest uses.  Habitat
conversion effectively eliminates whole populations of orangutans
and other critically endangered species as their habitat becomes
fragmented and deforested. 

Mangrove Planting in Surabaya
-----------------------------
¶9.  On May 11, people from various organizations planted 8,000
mangroves along the seashore at Wonorejo in eastern Surabaya.
Wonorejo is poised to become a center for mangrove research,
cultivation, and tourism.  The Surabaya city government is actively
restoring mangrove forests in eastern Surabaya.  Illegal logging has
destroyed at least 40 percent of a total 6,000 hectares of mangrove
forest near Wonorejo.  According to the head of Wonorejo Mangrove
Farming Association, various groups in eastern Surabaya have planted
at least 25,000 more mangrove trees this year than last year.
Unfortunately, last year's mangroves were poorly protected.  For
example, 4,000 mangroves planted in the Kenjeran beach area in
January had died by the end of May, due to high ocean waves and poor
treatment. 

Lax Enforcement and High Waste Treatment Costs Blamed for Continued
Dumping
------------------------------------
¶10.  At least 16 companies in East Java have disposed of industrial
waste in the Brantas River through underground pipelines or during
the heavy rainy season through open ditches.  The companies have
waste treatment facilities but prefer to cut costs by dumping
untreated waste, according to Purnawan, a lecturer at Brawijaya
University and a member of East Java Walhi, an environmental NGO. 

JAKARTA 00001243  003 OF 004 

The phenol content of industrial waste these companies are dumping
in the Brantas is dangerously high, according to Purnawan.  Just
three hours south of Surabaya in Malang, waste from paper and
cassava-processing plants has reportedly resulted in serious
pollution and a major fish kill in the lake behind the Sutami Dam.
Local media report that Malang's city government is reluctant to
take action as paper factories are a major contributor to regional
revenue. 

Mushroom Farmers Switch from Kerosene to Firewood
--------------------------------------------- ----
¶11.  Mushroom farmers in Karawang, West Java, are switching from
kerosene to firewood because of the high cost and scarcity of
kerosene.  Mushroom farmers use fuel to boil water and use the
evaporated water to regulate the level of humidity required for
mushroom growth.  Kerosene's retail cost has increased from 2,310
Rupiah (USD 0.25) to between 2,500-3,000 Rupiah (USD 0.27-0.32),
making the price of firewood relatively cheaper.  During a planting
period of one month, the farmers require on average 80-120 liters of
kerosene or three cubic meters of firewood.  With the current
kerosene price, the farmers' production costs are between
200,000-300,000 Rupiah, but only 150,000 Rupiah if using firewood.
Besides the shift by many farmers to firewood, others have closed
down their mushroom production houses altogether. 

SCIENCE AND TECHNOLOGY: 

BPPT Developing Open Source Software
------------------------------------
¶12.  The Head of the Information and Computer Systems Division of
Indonesia's Agency for Technology Research and Application (BPPT)
announced that BPPT is developing several computer applications
using Free Open Source Software (FOSS) in order to reduce dependence
on proprietary systems.  Applications currently in development
include e-office (Kantaya), e-learning (Kutahu), and Local
Management Information System (Simda) software.  BPPT is assisting
several local governments (Jembrana, Pekalongan, Banyuwangi, Kuala
Kapuas and Sawah Lunto) to implement FOSS-based applications.  By
2014, BPPT plans to develop FOSS-based applications for computer
driver and kernel technologies, mining data programs, Indonesian
language processing, simulation and computerization. 

Nuclear Education in High School Curriculum
-------------------------------------------
¶13.  On May 2, Dr. Taswanda Taryo, Deputy Chairman for R&D
Productivity and Public Acceptance of Nuclear Science and
Technology, BATAN (National Nuclear Energy Agency), announced plans
for a program to include education on nuclear technology in school
curricula, especially high schools.  Eko Madi, Head of the
Subdivision for Nuclear Energy Science and Technology Dissemination,
BATAN, explained that BATAN and the Ministry of Education would
establish an expert team to begin drafting physics, chemistry, and
biology curricula on nuclear technology.  In addition, BATAN is
conducting outreach to educate teachers, students, and NGOs about
nuclear technology.  BATAN will also establish three Centers for
Nuclear Education and Information, including one in Jepara (Central
Java), which is close to Muria Bay, the location for a proposed
nuclear plant. 

HEALTH: 

Tackling HIV Infection Rates Among Surabaya's Children
--------------------------------------------- ---------
¶14.  The Surabaya City Health Department announced that 37 babies in
Surabaya contracted HIV/AIDS between January and March 2008.  At a
workshop on HIV/AIDS, Surabaya's Vice Mayor, Arief Afandi, confirmed
that HIV/AIDS cases are spreading in all 31 districts in Surabaya.
The Surabaya City government will take a new approach to the problem
by training students to be HIV/AIDS cadre who will provide
information and training to their peers.  The Surabaya City
government will also involve more children and students in future
HIV/AIDS workshops.  So far, it has selected 10 junior high schools
and 10 senior high/vocational schools in Surabaya as HIV/AIDS test
sites for this campaign. 

No Blood Transfusion Facilities in Half of Country
--------------------------------------------- ----
¶15.  During a public hearing before the Jakarta regional parliament
on May 12, Dr. Ratna Rosita, Director of Basic Medical Services and
Nutrition of the Ministry of Health, stated that Indonesia lacks
Blood Transfusion Units (UTDs) in 226 regions.  Ministry of Health
statistics (2006) show that only 231 of 457 regencies/cities in 

JAKARTA 00001243  004 OF 004 

Indonesia have UTDs, including those operated by the Indonesian Red
Cross (PMI), provincial governments and hospitals.  PMI's Chairman
Mari'e Muhammad and Adang Dorodjatun, Chairman of Indonesia Blood
Donors, also attended the public hearing.  PMI currently has 212
UTDs, of which 24 percent are located within hospitals and 76
percent outside of hospitals. 

HUME

Here is the second cable.

UNCLAS SECTION 01 OF 03 JAKARTA 003185 

SIPDIS 

SIPDIS 

DEPT FOR EAP/MTS AND OES/ETC 

E.O. 12958: N/A
TAGS: SENV [Environmental Affairs], TPHY [Physical Sciences], TBIO [Biological and Medical Science], TRGY [Energy Technology], ENRG [Energy and Power], ID [Indonesia]
SUBJECT: INDONESIA ESTH HIGHLIGHTS: AUGUST - OCTOBER 2007 

¶1. Summary: The Indonesian Supreme Court hosted a judiciary workshop
on wildlife crime and prosecution under the ASEAN Wildlife
Enforcement Network (WEN) program in August.  The Vice Governor of
Jakarta announced on September 27 that Jakarta could potentially
receive $2 million in funding from developed countries under the
Kyoto Protocol if it can reduce its CO2 emissions. A 2007 survey
found that despite overall decreases in other parts of the island,
Sumatran rhino populations in Bukit Barisan Selatan National Park
and Way Kambas National Park in Lampung increased by up to 30
animals.  On September 29, Vice President Yusuf Kalla announced that
starting in 2008, Indonesia would increase its reforestation target
from 1 million to 2 million hectares per year.  On September 25, the
Head of Forest Office of West Papua said that the Governors of Papua
and West Papua provinces would release a joint decree to ban log
exports from Papua.  The State Ministry of Environment announced on
September 15 that it aims to phase out imports of ozone-depleting
substances by the end of 2007 as set in the Montreal Protocol. On
October 7, Customs officials successfully foiled efforts to smuggle
70 rare animals through Soekarno-Hatta Airport in Jakarta.  The
State Ministry for Research and Technology and the United Nations
Development Programme conducted a "Train the Trainer" session on
open-source geographic information system software in Jakarta on
October 22-27. On October 3, the Jakarta provincial government
granted Rp 40 billion ($4.4 million) to improve health and education
services in eight of its satellite cities.  At a ceremony to
commemorate World Sight Day, the Ministry of Health (MOH) announced
that it would increase its focus on reducing the numbers of
vision-impaired children. Several residents of Wolotau Village in
the Kota Baru sub-district of the Ende Regency were stricken with
anthrax after eating contaminated buffalo meat in mid-October.  The
Anak Krakatau, or "Child of Krakatau" Volcano, began spitting out
flaming rocks and smoke in late October.  On October 23, the WWF
Program Coordinator for West Kalimantan Hermayani Putera announced
that poachers had smuggled rare plant species including orchids and
nepenthes (also known as tropical pitcher plants) from Kalimantan to
Malaysia. End Summary 

Indonesia Hosts ASEAN WEN Judiciary Training
--------------------------------------------- --- 

¶2.  The Indonesian Supreme Court hosted a judiciary workshop on
wildlife crime and prosecution under the ASEAN WEN program in August
in Jakarta. The two-day workshop brought together representatives
from Indonesia's judicial sector and focused on prosecution,
investigation, Indonesian laws governing protection of wild animals
and plants, local and trans-national cooperation with other
agencies, and ASEAN-wide initiatives on Mutual Legal Assistance.
Judicial officers from Thailand, Malaysia and the United States
joined the event in order to share best practices and increase
international cooperation to fight trans-national criminals involved
in the wildlife trade.  Indonesia plans a follow-up training for the
national police in February 2008. 

Jakarta May Be Eligible for Funding for CO2 Reduction
--------------------------------------------- -------- 

¶3.  On September 27, Vice Governor of Jakarta Fauzi Wibowo announced
that Jakarta could potentially receive $2 million in funding from
developed countries under the Kyoto Protocol if it can reduce its
CO2 emissions. To be eligible for the funding, Jakarta would have to
meet United Nations Environment Program (UNEP) certification
requirements.  Fauzi stated that the Jakarta administration is
implementing a clean air project to try to meet the UNEP standards.
Dollaris R. Suhadi, Project Manager of the Clean Air Project,
explained that achieving UNEP certification will take up to a year
of research and between $500,000 and $1 million in funding.  Jakarta
officials are optimistic that the city will be able to meet UNEP
requirements, citing for example that since the city's bus ways
became operational in 2004-2005, the total number of private
vehicles on the road has decreased by 14%. 

Survey Shows Sumatran Rhino Population on the Rise
--------------------------------------------- ----- 

¶4.  A 2007 survey conducted by the Rhino Protection Unit (RPU) and
Yayasan Badak Indonesia found that despite overall decreases in
other parts of the island, Sumatran rhino populations in Bukit
Barisan Selatan National Park and Way Kambas National Park in
Lampung increased by between 24 and 30 animals (to a total of 60 and
85 in each park, respectively).  Coordinator of the RPU Arief
Rubiyanto stated the increase was unexpected, considering the many
threats to the rare animals from poachers and territorial
encroachment due to illegal logging and forest conversion
activities.  RPU patrolling activities in both parks and the curbing
of poaching contributed to the improved numbers.  In recognition of 

JAKARTA 00003185  002 OF 003 

his efforts, Rubiyanto received the Disney Conservation Award from
the Walt Disney Corporation. 

Indonesia Reforestation Target Raised to 2 Million Hectares Per
Year
--------------------------------------------- ------ 

¶5.  On September 29, Vice President Yusuf Kalla announced that
starting in 2008, Indonesia would increase its reforestation target
from 1 million to 2 million hectares per year.  Kalla added that the
international community could not blame Indonesia for cutting its
forests in the past, since timber consuming countries such as the
U.S., Japan and Korea invested in the concession business. Note:
Although the central government's sets the target, responsibility
for implementation falls to the regional governments, who may face
difficulty meeting the increased level. 

Papua Provincial Government Bans Log Exports
--------------------------------------------- ---- 

¶6.  On September 25, the Head of Forest Office of West Papua
Province said that the Governor of Papua Barnabas Suebu and Governor
of West Papua Abraham O. Atururi would release a joint decree to ban
log exports from Papua.  The Papuan administration wants to push
investors to open wood processing facilities in Papua rather than
shipping logs out from Papua.  There are currently 25 concessions
within a 4.6 million hectare area, while there is only one wood
processing facility, which is located in Sorong.  The Papuan
government will implement the ban incrementally, beginning with a
moratorium on 30 percent of log exports. TIME magazine highlighted
Governor Suebu in October as an environmental hero for his
conservation efforts. 

Government to Halt Ozone-Depleting Imports
------------------------------------------- 

¶7.  The State Ministry of Environment announced on September 15 that
it aims to phase out imports of ozone-depleting substances by the
end of 2007 as set in the Montreal Protocol.  The Ministry said that
as of August, imports of chlorofluorocarbons (CFCs) for the year had
reached 193 metric tons, down from 2,331 metric tons in 2006.
Officials stated that the ministry had phased out the use of 1,209
metric tons of CFCs from several sectors in 2006 and would eliminate
use of CFCs from the industrial sector by June 2008. 

Indonesian Customs Officials Foil Animal Smugglers
--------------------------------------------- ------ 

¶8.  On October 7, Customs officials successfully foiled efforts to
smuggle 70 rare animals through Soekarno-Hatta Airport in Jakarta.
The Ministry of Finance's Investigation and Enforcement Section
reported that Indonesian citizen Jonathan Leo Nardha had tried to
smuggle the rare animals in speaker boxes.  Nardha was transporting
the animals from Malaysia for Indonesian customers in Jakarta. 

Disaster Data Base Training Conducted in Jakarta
--------------------------------------------- ----- 

¶9.  The State Ministry for Research and Technology and the United
Nations Development Programme (UNDP) conducted a "Train the Trainer"
session on open-source geographic information system (GIS) software
in Jakarta on October 22-27.  Francis Sarmiento III, Project Officer
for the UNDP's ASEAN Plus Three Sub-regional Node International Open
Source Network, explained that Indonesia needed good, efficient,
effective and fast local and national databases and information
systems to anticipate and manage natural disasters.  Sarmiento
explained that database and GIS implementation using closed software
sources is difficult for developing countries due budget
limitations.  To address this challenge, the international community
has developed GIS applications using free open source software for
use by countries such as Indonesia.  Around 30 participants with key
disaster mitigation responsibilities in the Indonesian government
took part in the training. 

Jakarta Grants Funding for Health Services
------------------------------------------- 

¶10.  On October 3, the Jakarta provincial government granted Rp 40
billion ($4.4 million) to improve health and education services in
eight of its satellite cities.  The grant would support efforts to
establish community health centers and reduce the number of
outbreaks of communal diseases.  The grant includes the surrounding
cities of Bogor, Depok, Bekasi and Cianjur in West java Province, as
well as Tangerang in Banten. 

JAKARTA 00003185  003 OF 003 

GOI Seeks to Reduce Vision Impaired Numbers
-------------------------------------------- 

¶11.  At a ceremony to commemorate World Sight Day, the Ministry of
Health (MOH) announced that it would increase its focus on reducing
the numbers of visually impaired children. The MOH has conducted
several programs under this initiative, including preventative
measures through early detection of blindness in community health
centers, provision of vitamin A supplements to combat deficiencies
that raise the risk of blindness, and subsidies for regular exams
and eyeglasses for poorer families. The MOH has established a
national commission to tackle blindness and other sight disorders. 

Anthrax attacks villagers in East Nusa Tenggara
--------------------------------------------- --- 

¶12.  The Head of East Nusa Tenggara (NTT) Sub Office of Veterinary
of Livestock Office, Maria Geong, reported on October 30 that
several residents of Wolotau Village in the Kota Baru sub-district
of the Ende Regency were stricken with anthrax after eating
contaminated buffalo meat.  Around 20 villagers were in critical
condition and hospitalized.  Geong instructed the Health and
Livestock Offices to isolate the area, and the Ende Health Office
sent medical teams to the village to support the effort.  Ende
Regency has been an endemic anthrax area since 1994, where anthrax
spores can live up to 60 years. 

Anak Krakatau Volcano Spits Flames
----------------------------------- 

¶13.  The Anak Krakatau, or "Child of Krakatau" Volcano, began
spitting out flaming rocks and smoke in late October. Saut
Simatupang of Indonesia's Center for Vulcanology and Geological
Hazard Mitigation predicted that the volcano would continue to
rumble for some time but posed little danger to the area.  Anak
Krakatau sits in the Sunda Strait between Java and Sumatra. 

"Nepenthes" Flies from Kalimantan
--------------------------------- 

¶14.  On October 23, the WWF Program Coordinator for West Kalimantan
Hermayani Putera announced that poachers had smuggled rare plant
species including orchids and nepenthes (also known as tropical
pitcher plants) from Kalimantan to Malaysia.  They hunted the plants
in the Meratus Mountain area and the Hampangin Forest, located in
the Katingan Ilir Sub-district of Katinan Regency (approximately 40
miles from Palangkaraya, Central Kalimantan).  Demand for these
species has increased in Malaysia, leading to an increase in
poaching in Indonesia.  The Indonesian Orchid Association expressed
worry that these activities are threatening the sustainability of
the species.  Malaysian consumers allegedly pay local people to
collect the rare and protected plants in Kalimantan's forests for
sale.  One pot of Nepenthes is worth Rp 20,000 (approximately
$2.00), and the price for a Black Orchid ranges from Rp 45,000 to Rp
75,000 (approximately $4.80 to $8.10). To minimize the threat of
poaching, the West Kalimantan Natural Resources Conservation Office
has trained local residents to develop nurseries for the endangered
plants. 

HUME

The story of Indonesia is an interesting one especially because of Microsoft’s response to ODF and FOSS adoption. It’s not unique to Indonesia and we have some antitrust material to show how Microsoft systematically identifies and then attacks deployments of FOSS. █

Summary: The abusive monopolist is caught trying to (and perhaps succeeding in) sabotage, using “piracy” for propaganda and blackmail

WHEN writing about Microsoft we typically write about a company of sociopaths who do not care about the law, do not respect the right of choice to exist, and work behind the scenes to engineer loopholes, bribe people, intimidate opposition, and sometimes overthrow or overtake positions of power. According to the following Cablegate cable, the Business Competition Supervisory Commission (KPPU) “said that many computers in the GOI were using open-source software…”

The Microsoft MOU would “hand Microsoft a monopoly,” KPPU argued. The cable also says that Microsoft used the “piracy” propaganda to fight against Free/open source software, quite frankly as usual. Here is another piece of propaganda about ‘savings’: “MS offered an 80% discount to put legitimate software on all GOI computers, estimate at 510,000 units. Total cost would be approximately $45 million, a savings to the GOI of $260 million.”

What a joke. For a country in a poor economic state this is still a high cost and Microsoft is just trying to establish more of a monopoly while expelling Free/open source software (While making a profit, too). For background also see:

• Cablegate: Bill Gates Uses AIDS to Bring Microsoft Windows to Indonesia at Expense of Linux-based OLPC (Updated)
• OpenDocument Format in Indonesia and OOXML in Court
• Indonesia is Moving to OpenDocument Format (ODF)
• Will Microsoft Sign an MOU with Indonesia?
• Cablegate: With Microsoft Front Group Taking on Indonesia, a Call for Open Source Software Adoption

Here is the full cable which also says that “the Ministry of Information and Communications Technology did not put in a request for funds for the MOU in the 2007 budget, and in March 2007, the Business Competition Supervisory Commission (KPPU) urged the GOI to annul the deal in an advisory, stating it violated the 1999 Monopolies Law.”

VZCZCXRO6802
RR RUEHCHI RUEHDT RUEHHM
DE RUEHJA #1388/01 1360856
ZNR UUUUU ZZH
R 160856Z MAY 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 4748
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHKO/AMEMBASSY TOKYO 0519
RUEHBY/AMEMBASSY CANBERRA 0752
RUEHBJ/AMEMBASSY BEIJING 4086

UNCLAS SECTION 01 OF 05 JAKARTA 001388 

SIPDIS 

SIPDIS
SENSITIVE 

DEPT FOR EB/TPP/MTA, EB/TPP/IPE AND EAP/MTS
TREASURY FOR IA-CIORCIARI
SINGAPORE FOR BAKER
USDOC FOR BERLINGETTE/4430
DEPT PASS USTR DKATZ, WEISEL, BAE 

E.O. 12958: N/A
TAGS: ETRD [Foreign Trade], KIPR [Intellectual Property Rights], EINV [Foreign Investments],
ECON [Economic Conditions], EMIN [Minerals and Metals],
KCOR [Corruption and Anti-Corruption], ID [Indonesia]
SUBJECT: USTR FINDS IPR PROGRESS, CHALLENGES IN INDONESIA 

REF: A) Jakarta 1212 - New Investment Law; 

     B) Jakarta 1326 - East Java-China Trade 

¶1. (SBU) Summary.  Visiting USTR officials Barbara Weisel and David
Katz reviewed efforts related to intellectual property rights (IPR)
protection and enforcement in Indonesia during their May 3-4 visit
to Jakarta.  Members of the National IPR Task Force noted that
difficult and ongoing challenges remained to improve policy
coordination by the Task Force, and U.S. business leaders reported
that prosecutions and convictions of IPR pirates remains low, and
dialog with private industry, especially on pharmaceuticals is weak.
 The Chairman of the Investment Coordinating Board (BKPM) Muhammed
Lutfi, in response to concerns that foreign investors will need a
letter of recommendation from BKPM to obtain a work visa (and thus a
"backdoor" approval) under the new investment law, said that the
BKPM will set up an immigration office in its headquarters to
facilitate.  A garment industry buyer said competition and
transshipments from China are hurting Indonesia's textiles and
garments sector, while a mining industry representative said that
mining is "flat on its back" in Indonesia, despite high
prospectivity, due to the unfriendly business climate.  In meetings
with ASEAN, Katz emphasized cooperation between the U.S. Food and
Drug Administration and ASEAN on pharmaceuticals issues.  USTR is
also encouraging ASEAN members to attend a Sanitary and
Phytosanitary workshop in Vietnam in July to learn more about
irradiation of tropical fruits to improve access to the U.S. market.
 End Summary. 

IPR: Progress and Challenges
---------------------------- 

¶2. (SBU) During a May 3-4 visit to Jakarta, visiting Assistant U.S.
Trade Representative (AUSTR) Barbara Weisel and USTR Director for
Southeast Asia and Pacific Affairs David Katz met with the American
business community, the National IPR Task Force, IPR advisors, ASEAN
officials, a member of Parliament's Commission VI, and a prominent
member of the Indonesian Chamber of Commerce.  At a May 3 AmCham
lunch, business representatives gave an update on several issues,
with emphasis on the continuing challenges of intellectual property
rights (IPR) enforcement in Indonesia.  The head of the AmCham IPR
Committee noted several problems in the IPR area: 

-- The National IPR Task Force still does not have a reliable
budget.  It also does not have a forum for dialog and consultation
with the private sector. 

-- Customs Law 10/95 was finally amended in November 2006 and allows
for Customs to take action without having to get court permission in
advance.  It still requires implementing regulations, however.
(Note: Embassy learned from Customs Human Resources Department Head
and former IPR Division Head Okto Irianto, that Minister Mulyani
will review the draft regulations for further inter-ministry
discussion.) 

-- Legal reform overall still lacks transparency, enforcement and
decisions need to be made public.  Judges need more training in IPR.
 More deterrence is needed for IPR piracy. 

National IPR Task Force: Still New
---------------------------------- 

¶3. (SBU) In a meeting with the National IPR Task Force (TF) on May
4, USTR Weisel congratulated Indonesia on remaining on the Watch
List, and noted that the formation of the IPR TF was big news.
Ansori Sunungan, the Director for Copyrights and Industrial Design,
said that the IPR TF has the goal of coordinating among relevant
agencies, show the seriousness of the GOI, and perform public
outreach and education to support IPR development in Indonesia.
Cooperation among law enforcement agencies remains a huge problem.
There is a view here that "piracy creates jobs," Ansori admitted.
"The high U.S. price for genuine DVDs is also challenging for the
market here," he argued.  For Global IP Day on April 26, Indonesia
held a series of seminars and events, including an "integrity
awards" ceremony at which Vice President Kalla was the keynote
speaker.  Kalla praised creativity and innovation in his speech, and
spoke of the importance of legal protections. 

¶4. (SBU) The National IPR TF plans to meet at least once a month,
and report every six months directly to President Yudhoyono.  The
IPR TF has five priorities through 2009, to be carried out by 

JAKARTA 00001388  002 OF 005 

special working groups: 

-- Law enforcement issues (Regulation 2004/29); 

-- Review and analyze applicable regulations; 

-- Outreach and public relations; 

-- Human resources and capacity building; 

-- International Cooperation. 

¶5. (SBU) The IPR TF also plans to set up a Secretariat.  AUSTR
Barbara Weisel asked about the TF's budget.  Ansori responded that
the budget is authorized under Presidential Decree No 4/2006 Article
11 "All costs associated with IPR Task Force activities is levied on
the Ministry of Justice and Human Rights budget."  The IPR TF has
submitted its budget request to the Ministry of Finance, but has not
yet received its own dedicated funding.  The IPR TF is also looking
at other budget sources as well.  There will be a Ministerial level
meeting with the IPR TF at least once a year, and three Ministers
are very actively engaged: Coordinating Minister for the Economy
Boediono, Trade Minister Pangestu, and the Minister of Law and Human
Rights. Ministry of Trade's Ambassador Halida Miljani urged U.S.
assistance in improving data collection on IPR violations, better
case management and training of judges in IPR matters.  Halida said
her goal is for all police, prosecutors and judges to have the same
level of knowledge on IPR. 

Food and Pharmaceuticals IPR Issues
----------------------------------- 

¶6. (SBU) Pharmaceuticals companies continue to face challenges and
complain there is "no level playing field" as domestic companies do
not have to comply with World Health Organization codes and
standards, while foreign companies do.  One AmCham member claimed
there is a nasty pattern of regulatory discrimination against
foreign investors.  Other representatives expressed their concern
that the GOI requirement that all branded pharmaceuticals include
the generic name of the medicine on the label at 80% of the size of
the brand name, and in the same font and color as the brand name,
could have a major impact.  Expert panels on nutrition do not
reflect the greater body of science.  The views of the experts are
often not shared, and industry is not permitted to respond or put
forth a position.  It is not clear how "experts" are selected for
the panel: they seem intended to simply create an artificial trade
barrier.  One drug company representative said there is "no
transparency" on pricing and labeling issues for pharmaceuticals.
"Not only are the GOI's doors closed, they are locked," she noted. 

Halal: Lack of Standards and Certifiers
--------------------------------------- 

¶7. (SBU) There is no standard or guidance for halal certification
and labeling in Indonesia, and a lack of certifiers, which affects
both the food and drug sectors.  The Ministries are not
communicating well with each other. USTR Weisel noted that this is a
global problem, with no agreement between religious groups and no
international halal standard.  Industry currently pays a nominal fee
for certifiers, but may eventually have to pay a much higher fee per
unit.  ASEAN may need to discuss having at least a regional halal
standard.  Currently, there is no consistency across borders.
Weisel noted the importance that the religious standards of halal
are met, but suggested that it would be useful to explore ways to
agree on a regional or international standard of halal to avoid
creating another non-tariff trade barrier. 

Optical Discs: More Enforcement Needed
-------------------------------------- 

¶8. (SBU) One of the Embassy's IPR advisors noted that there are 29
registered Optical Disc (OD) factories in Indonesia with a potential
capacity to produce at least 500 million ODs.  Industry estimates
the annual legal requirement domestically at only around 15 million
ODs.  Despite Customs efforts and a licensing requirement for
imports of optical-grade polycarbonate, large quantities continue to
be smuggled in each year to support illegal manufacture.  When OD
factories were registered and required to engrave Source
Identification Codes (SID) on production line molds, however, many 

JAKARTA 00001388  003 OF 005 

factories have resorted to obscuring the engraved SID codes using
heat resistant resins and they continue to produce illegal ODs.
Factory inspectors are having difficulties.  They have been kept
waiting outside for 30 minutes or more while factories "clean up."
When they finally enter, machines are warm but managers deny they
are active. 

¶9. (SBU) The Ministry of Industry representative said the Ministry
lacks sufficient law enforcement support.  It has the power of
inspection but not the power to enter the factories, which only the
police can do.  The head of the AmCham IPR committee noted that
President Yudhoyono has received the National IPR Task Force report,
but has not yet made any public comment on the report or a statement
on the need for improved IPR enforcement.  In a subsequent meeting
on May 5, the Embassy's two IPR advisors and a regional investigator
for the recording industry association (IFPI) said the lack of
continuity and documentation of raids is an ongoing problem.  There
is no timeline on what raids will occur where, and no follow-up
through prosecution by the courts.  The actions taken thus far by
the GOI have received - deservedly - a lot of recognition and
credit.  But we need to measure results by the actual reduction in
the availability of pirated material. 

¶10. (SBU) AUSTR Weisel noted with regret that Ratu Plaza, a center
for pirated OD vendors, was back up and running after two weeks of
closure, with a pirated copy of the just-released movie "Spiderman
3" available for $0.45.  The IPR advisors said that change to the
high-profile malls must be done incrementally, to gradually change
out pirates with vendors of genuine goods.  Gambling, narcotics and
OD piracy had been three major sources of funding for the police.
Now only OD piracy remains.  The IFPI investigator believes that OD
pirates have invested $400-500 million in pirated OD production in
Indonesia. 

End-User Piracy and Microsoft MOU
--------------------------------- 

¶11. (SBU) Microsoft representatives lamented that Indonesia has the
third worst software piracy in the world after Zimbabwe and Vietnam.
 The Memorandum of Understanding signed in November 2006 had as a
goal for the Government of Indonesia (GOI) to take steps to replace
the estimated 87% pirated software on GOI computers by March 31,
2007.  MS offered an 80% discount to put legitimate software on all
GOI computers, estimate at 510,000 units.  Total cost would be
approximately $45 million, a savings to the GOI of $260 million. 

¶12. (SBU) However, the Ministry of Information and Communications
Technology did not put in a request for funds for the MOU in the
2007 budget, and in March 2007, the Business Competition Supervisory
Commission (KPPU) urged the GOI to annul the deal in an advisory,
stating it violated the 1999 Monopolies Law.  Although not as strong
as a formal KPPU ruling, the advisory has shaken the GOI.    The
KPPU said that many computers in the GOI were using open-source
software, and that the MOU would "hand Microsoft a monopoly."  The
KPPU said the GOI and MS could face sanctions if it pursued the MOU. 

¶13. (SBU) Former MICT Minister Sofyan Djalil has subsequently said
MICT would have to review the estimate of 510,000 computers and
asked if the National Bureau of Statistics (BPS) could do it.
Microsoft has countered that if the estimate of 510,000 computers
was too high, it would adjust its price accordingly at the
discounted rate.  (Comment: The stalled MOU reflects a lack of
ownership in the GOI for solving pirated software use in the
government.  It is unclear which Ministry has the lead.  The GOI
does not currently appear to have any alternative strategy to the
MOU.) 

Textiles and Garments:
China Challenge
---------------------- 

¶14. (SBU) A representative of the garment industry noted that there
is not one brand or manufacturer her that does not understand the
challenge of China.  Indonesia has a window of opportunity to be
number two, but has to deal with the transshipment problem first
(reftel B).  The industry representative reported that growth in
Indonesia-based production of just one international brand was 40%
last year. 

JAKARTA 00001388  004 OF 005 

Mining: "Flat on Its Back"
-------------------------- 

¶15. (SBU) A representative of a major mining company noted that the
mining industry is "flat on its back" in Indonesia.  The Director
General for Mines recently stated at an international conference
that foreign investors may need to partner with a state-owned
company that will have 51% ownership.  The GOI is considering
requiring mining firms to process their ore domestically.  Under
current law, they have the option to export ore or process it
domestically.  In some cases, illegal miners outnumber legal ones.
Indonesia is in the top ten for geologic prospectivity but near the
bottom as an attractive place to invest, according to a widely
respected industry survey.  Data from Chile that poverty has been
alleviated by 40% in areas surrounding mines falls on deaf ears
here.  Significant elements of the legislative and executive
branches of the GOI seem to prefer to deal with Chinese, Korean and
politically well-connected domestic investors such as Bakrie.  They
are not interested in U.S. investment right now.  Mining and other
extractive industries are very concerned about Article 33 of the new
investment law, which criminalizes tax disputes (reftel).  This
article was not in the GOI's original draft, but inserted by
Parliament. 

Investment Issues: Negative List Pending
---------------------------------------- 

¶16. (SBU) In a meeting with the Chairman of the Investment
Coordinating Board (BKPM) Muhammad Lutfi, Lutfi said the new
investment law is not necessarily better than what we had in 1967.
Much of Indonesia's current problems with the business climate are
not related to laws or regulations, but implementation at the local
level.  "The problem is at the bottom of the pyramid," Lutfi noted.
"We can't control the harassing behavior of the Echelon IV and V
officials."  Lutfi said that the new negative list would be very
progressive, but would not give a timeline for its completion.  He
criticized Trade Minister Pangestu for asking line ministries for a
wish list for the negative list, stating this would only open it up
for expansion.  (Note: There is no love lost between Lutfi and Trade
Minister Pangestu.)  On the controversy surrounding the need for a
letter of recommendation for foreign investors to receive employment
visas (reftel A), Lutfi said that there will be an immigration
office in the BKPM itself.  Only foreigners who "misbehave" will
have any difficulty.  Regarding one-stop shops, eventually they will
be in every province that needs one. 

¶17. (SBU) In a meeting with Parliamentary Commission VI (Trade,
Industry, Cooperatives and State-Owned Enterprisses) Chairman Didik
J. Rachbini, he noted that the new investment law will bring three
levels of openness: completely open, open with conditions, and
closed.  The composition of the negative list is now in the hands of
the GOI.  Some national groups have criticized the new investment
law is too liberal.  The issue of natural resources is still under
discussion for implementing regulations.  If a sector is located in
one province only, it will be the decision of the provincial
government.  If an investment crosses two or more sectors, the
central government will be responsible.  However, all FDI will be
managed by the central government.  The BKPM will eventually open
provincial offices. 

¶18. (SBU) The DPR looked at the investment laws of several other
countries while crafting the law.  Rachbini opined that the labor
law amendments were very sensitive, and he was not optimistic about
any near-term progress, though he said there could be some progress
on labor in Special Economic Zones (SEZs) He said that nine or ten
provinces are competing for SEZs.  USTR Weisel asked about local
awareness of these investment issues.  Rachbini said there is not
much awareness about the investment debates in the capital.  When he
travels home, he noted, "There are three things people worry about,
the price of rice, the price of corn and the price of sugar." 

ASEAN Issues: Pharmaceuticals and SPS
------------------------------------- 

¶19. (SBU) In meetings with ASEAN officials, USTR David Katz focused
on the next steps to follow up the initial contact between U.S. Food
and Drug Administration (FDA) and ASEAN on pharmaceuticals issues.
The FDA suggested working through the Global Cooperation Group (GCG)
of the International Conference on Harmonization (ICH).  FDA experts
will participate in a GCG meeting in Japan in the fall and could 

JAKARTA 00001388  005 OF 005 

potentially meet with ASEAN afterwards.  Katz noted that it is rare
for the FDA to engage with international experts outside the ICH
framework, so ASEAN should take advantage of this opportunity.  Ms.
Giang Le Chau, the ASEAN Secretariat's Senior Officer of Standards
and Conformance, appreciated the need to follow up but cautioned
about some ASEAN sensitivity with the ICH, which is supported by
multinational corporations.  She says that even if the initial
pretext for the FDA to come to the region is the ICH, discussions
with ASEAN should be portrayed as "government-to-government,
regulator-to-regulator" talks.  She thought it would be useful to
develop a list of project for which ASEAN needs technical assistance
and provide that to the FDA. 

¶20. (SBU) Katz was not certain that such a list of assistance needs
would be a useful way to proceed, thinking that policy discussion
with the FDA, at least initially, would be useful to lay the
groundwork for more technical talks.  Katz suggested that if the FDA
and ASEAN were to engage in further discussions, this might improve
the prospects for further collaboration in the future.  The initial
key is to get the FDA out to ASEAN.  The ASEAN delegation had a
successful visit to the FDA Center for Drug Analysis and Research
(CDER) Forum in Washington in April.  USTR and the ASEAN
Secretariat, along with members of the ASEAN Consultative Committee 

SIPDIS
for Standards and Quality (ACCSQ) Pharmaceutical Products Working
Group (PPWG), will need to develop next steps for work under the
TIFA on the ASEAN Common Technical Dossier for pharmaceuticals
registration and approvals procedures.  Katz also made a pitch for
multinational corporations to be included in the dialogue sessions
with the ASEAN Working Group on Pharmaceutical Products.  Giang
noted there have been problems in the past resulting in restrictions
that only permitted ASEAN nationals to attend.  However, she thought
the Chairman of the group was showing signs of softening on this
tough position. 

¶21. (SBU) On Sanitary and Phytosanitary (SPS) issues, APHIS is
proceeding with the workshop in Ho Chi Minh City, Vietnam in July on
the irradiation of fruits and has sent invitations to all ASEAN
Member Countries except one.  Mr. Somsak Pippopinyo, Head of Natural
Resources Unit, said that the ASEAN Secretariat was willing to be
helpful to inform member countries of the event, but was not certain
of its role.  They expressed a willingness to inform the ASEAN
Experts on SPS Issues of the seminar, when it meets June 18-19 in
Kuala Lumpur, and asked whether APHIS would like to make a
presentation at the workshop.  Katz said APHIS liked the idea of
working at the regional level to be efficient at explaining the
requirements for access to the US market for fresh fruits.  However,
he doubted if APHIS had a budget to support an extra trip.  He
promised the Secretariat to provide the list of acceptances for the
seminar. 

¶22. (U) USTR contributed to and cleared on this message. 

HEFFERN

Microsoft is abusing its illegally-obtained monopoly, yet not many authorities seem to pay attention and react. This shows a systemic error in regulation. █

Summary: Cables shed light on how Hollywood and a Microsoft front group pressured Indonesian authorities, which had also proposed moving to Free/open source software

We previously covered cables from Indonesia, just shortly after we wrote about ODF there and years after we wrote about a Microsoft MOU. According to the following Cablegate cable, Microsoft’s front group, the BSA, complained about “lack resources to move and properly store cumbersome and sensitive optical disk production machinery seized during raids.” It is in the same cable that we found (in ¶8): “Tanduk provided Katz with an impressive, newly-published handbook titled “Optical Disk Regulation Implementation Guide.” The hard-cover, Indonesian language publication caps a highly successful series of USAID-funded training workshops for the OD factory monitoring team. It includes relevant GOI laws and regulations, color photographs, and detailed technical and procedural guidance for the team. The technical advisor who ran the USAID project, a former Business Software Alliance (BSA) and Motion Picture Association (MPA) local representative, has recently agreed to continue his ODR work with the MOI for another year as a Department of Justice ICITAP senior technical advisor.

Just above that it says: “The heads of several agencies — Trade, Research and Technology, Economic Planning (Bapenas) and the DG for IPR — also pledged to replace pirated software in their agencies computers with open source or legal products.”

As we already know with Cablegate aside, Microsoft used the usual tricks to impede the adoption of FOSS in Indonesia (more on that later). In any event, here is the cable in question:

VZCZCXRO2803
PP RUEHCHI RUEHDT RUEHHM
DE RUEHJA #8114/01 1790836
ZNR UUUUU ZZH
P 280836Z JUN 06
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC PRIORITY 6462
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 05 JAKARTA 008114 

SIPDIS 

SIPDIS
SENSITIVE 

FOR EAP/MTS; EB/IPE/EAP
COMMERCE FOR GOLIKE/4430
COMMERCE PLEASE PASS USPTO FOR JOELLEN URBAN
DEPT PASS TO USTR DKATZ, JGROVES, RBAE, VESPINEL 

E.O. 12598: N/A
TAGS: KIPR [Intellectual Property Rights], ETRD [Foreign Trade],
WTO [World Tourism Organization], ECON [Economic Conditions], ID [Indonesia]
SUBJECT: IPR Update - GOI Making Steady Progress 

¶1. (SBU) Summary: At the first meeting of the Indonesian
Government's (GOI) newly-established National Intellectual
Property Rights (IPR) Task Force on June 7 Indonesia
National Police (INP) Chief General Sutanto and Attorney
General Abdul Rachman Saleh pledged to improve IPR
enforcement and Minister of Trade Mari Pangestu outlined the
importance of IPR to the country's economic development.
The Task Force's senior working level committee is drafting
short and medium term plans of action, as well as
coordinating efforts to collect better IPR enforcement data.
The Ministry of Industry (MOI) optical disk (OD) factory
monitoring team has registered 26 factories,  provided them
with source identification (SID) codes, and established a
schedule of unannounced factory visits.  It is also in the
process of registering the remaining three factories that
have been identified by the intellectual property (IP)
industry.  In response to GOI demands, local OD producers
have voluntarily surrendered over 180 OD stampers without
SID codes.  Local OD producers and distributors have agreed
with the GOI that, after this year, any optical disk sold
without SID code can be considered a pirated copy.  Local IP
industry representatives report that police cooperation has
improved. For the first time, police are conducting vendor
and factory raids on their own initiative.  Jakarta district
and national police have promised to continue raids,
particularly against Jakarta's most notorious malls. Police
and prosecutor collaboration remains weak and there is a
large discrepancy between the number of cases police turn
over to the Attorney General's *~cQnzvh-0`eia and Pacific
Affairs Director Disited Jakarta June 20-22 to discuss Indonesia's
current Special 301 OCR with key GOI officials and IP
industry representatives.  GOI officials expressed general
disappointment with Indonesia's retention on the Special 301
Priority Watch List in May.  They welcomed, though, the U.S.
Government's (USG) decision to conduct a second consecutive
OCR.  Katz informed them that the timing of the OCR would
depend on GOI efforts and that it could take place as early
as the end of August or September.  He also stressed to GOI
officials and IP industry representatives the importance of
providing regular enforcement data and other information in
support of the OCR. 

National IPR Task Force Holds First Meetings
-------------------------------------------- 

¶3. (SBU) Ministry of Justice Director General of IPR Abdul
Bari Azed informed Katz on June 20 that the GOI's newly-
established National IPR Task Force held its first monthly
senior working level meeting in May and quarterly
ministerial-level meeting on June 7.  Bari reported that on
June 7 Indonesian National Police Chief Sutanto and Attorney
General Abdul Rachman Saleh along with other key cabinet
officials pledged to improve IPR enforcement. (Note: Katz
confirmed Bari's account in subsequent meetings with the
MOI, MOT and police. End note.)  Minister of Trade (MOT)
Mari Pangestu, vice chair of the Task Force, explained the
importance of IPR protection and enforcement to Indonesia's
investment climate and economic development.  The heads of
several agencies -- Trade, Research and Technology, Economic
Planning (Bapenas) and the DG for IPR -- also pledged to
replace pirated software in their agencies computers with
open source or legal products. 

¶4. (SBU) According to Bari, General Sutanto promised INP
support for MOI OD factory monitoring team inspections and
continued police raids on pirate OD vendors and factories,
with emphasis on Ratu Plaza and Mangga Dua Mall, two of
Jakarta's most notorious pirate OD markets.  Sutanto pointed
out the challenges inherent in conducting aggressive raids
against Harko-Glodok, Jakarta's primary pirate OD
distribution center, noting that it risked social disorder.
(Note: Harko-Glodok is located in an ethnic Chinese majority
area of Jakarta and is thought to have links to organized
crime.  A police raid on the area several years ago led to
riots, a fire, and several deaths, with police paying
compensation for some of the damage. End note.) 

¶5. (SBU) Bari, who serves as chairman of the Task Force's 

JAKARTA 00008114  002 OF 005 

senior working level committee, said his group would meet
again in July to agree on text of short and medium term
plans of action.  Priorities will include OD Regulation
(ODR) implementation and collecting better data and
information on GOI IPR enforcement efforts, particularly
from Indonesia's major urban centers (greater Jakarta,
Surabaya, Medan, Bandung, Makasar and Denpasar).  Bari noted
that members of the senior working level committee met
recently with officials at the Supreme Court to request data
on civil and criminal IPR cases.  According to Bari, the
committee is also establishing sub-committees to focus on
specific issues.  One subcommittee, led by Ministry of Trade
Senior Advisor Halida Miljani, would liaise with IP industry
representatives and associations, and another with donors
and the diplomatic community.  (Note: Miljani on May 30
briefed American Chamber of Commerce IPR Committee members
on the National Task Force. End note.) 

OD Factory Monitoring Team Sets Schedule
--------------------------------- 

¶6.  (SBU) MOI Directorate General for Chemical, Agriculture
and Forestry Based Industry Director Tony Tanduk on June 21
told Katz that the MOI has registered 26 OD factories  and
distributed SID codes to each of them.  It is also in the
process of registering the remaining three OD factories
identified by the IP industry.  The MOI has allocated Rp 300
million (approximately USD 30,000) per year to the OD
factory monitoring team. The team, which now includes
members of the INP, has set a schedule of six unannounced
factory visits per month.  The first three inspections
occurred on June 13.  While all three factories had SID
codes engraved in their moulds and stampers, none were
producing ODs.  Tanduk remarked, somewhat sheepishly, that
managers at all three factories claimed that they were
waiting to ensure the accuracy of copyright documentation. 

¶7.  (SBU) Under an agreement with the MOI, owners of
stampers without SIDs have agreed to turn them in to MOI by
June 15.  Tanduk showed Katz one surrendered stamper and
said he has collected 186 to date; he expects to receive
another 100 in the coming weeks.  The MOI plans to destroy
the stampers at an IPR public destruction ceremony with the
police sometime in July.  The agreement also stipulates
that, after December 31, 2006, the GOI will consider all ODs
sold without SID codes as illegal pirated copies.  Some
owners of stampers and factories have delayed using SID
codes, as it requires them to send stampers and molds to
Singapore or Hong Kong for engraving.  Katz suggested that
Tanduk send a letter to all registered factories warning
them that all their molds and stampers must include engraved
SIDs codes.  Tanduk agreed. 

¶8.  (SBU) Tanduk provided Katz with an impressive, newly-
published handbook titled "Optical Disk Regulation
Implementation Guide."  The hard-cover, Indonesian language
publication caps a highly successful series of USAID-funded
training workshops for the OD factory monitoring team.  It
includes relevant GOI laws and regulations, color
photographs, and detailed technical and procedural guidance
for the team.  The technical advisor who ran the USAID
project, a former Business Software Alliance (BSA) and
Motion Picture Association (MPA) local representative, has
recently agreed to continue his ODR work with the MOI for
another year as a Department of Justice ICITAP senior
technical advisor. 

Police Continue Raids
--------------------- 

¶9. (SBU) Jakarta Metropolitan Police (Metropolda) Special
Crimes Lieutenant Colonel Police Agus Adriyanto and Chief of
Investigation Umar Surya Fana on June 23 provided Katz with
a spreadsheet detailing 267 IPR raids on pirate OD vendors
that police conducted throughout the greater Jakarta
metropolitan area since the beginning of this year.
According to the report, police seized roughly 1.2 million
pirated ODs, and at least temporarily detained 433.
According to a local MPA representative, these figures do
not include a raid on Ratu Plaza late on June 23, during
which Metropolda police seized roughly 100,000 pirated ODs
and arrested several people.  The 267 raids also do not
include West Jakarta Police's seizure on June 1 of 140 DVD
burners and 55,000 pirated ODs and the arrest of two
persons.  Metropolda also seized 55 burners and 360,000
pirated ODs and arrested two persons in a separate raid on 

JAKARTA 00008114  003 OF 005 

April 27.  Based on leads from this raid, police raided a
small distribution warehouse where they seized 30,000
pirated ODs and arrested another two individuals. 

¶10. (SBU) Umar explained that police had investigated and
referred all 267 cases to the AGO.  He also showed Katz a
wall chart indicating that 16 individuals remained in
Metropolda's temporary detention facilities on IPR-related
charges.  Umar could not say how many of the 433 individuals
arrested in 2006 were transferred to AGO holding facilities
along with their case files.  He complained that once police
sent cases to the AGO, it was very difficult to obtain
information on their outcomes from the AGO or courts.  Katz
suggested that joint workshops with the police, AGO and
courts on IPR evidence collection, investigations and
prosecutions might facilitate greater cooperation between
these groups.  Both Agus and Umar welcomed the idea. 

¶11.  (SBU) Katz congratulated Agus and Umar on their
successes and noted that reports of their actions had been
received in Washington.  He encouraged them to continue
their efforts, and suggested particular attention be paid to
Jakarta's most notorious malls.  Umar said his unit would
remain focused on Ratu Plaza, Mangga Dua and Harko-Glodok,
but added that raids on Harko-Glodok posed risks.  On June
22 some Jakarta police ran into physical resistance when
they attempted to conduct a limited raid on Harko-Glodok's
street vendors, located some distance away from its main
wholesale distribution center. 

¶12.  (SBU) Umar, a son-in-law of Indonesia Anti-Corruption
Chairman Taufikurrahman Ruki, said that support for
Metropolda's efforts came directly to him from General
Sutanto.   He provided Katz with a tour of Metropolda's
halls and warehouse filled with growing sacks of seized
pirated ODs and DVD burners.  Sometime in July, the police
plan to hold a public destruction ceremony with support from
the Motion Pictures Association (MPA).  An investigator for
a local law firm, who works part-time for MPA and supports
Metropolda's raids, has recently accepted a second DOJ
ICITAP one-year senior technical advisor position to support
INP IPR enforcement efforts. 

¶13. (SBU) In a separate meeting on June 23, INP Headquarters
Special Economic Crimes Colonel Police Rycko Amelza Danniel
told Katz that INP Police Chief General Sutanto has ordered
his unit to work with North Jakarta police units to develop
a plan for shutting down Harko-Glodok.  Rycko added that his
unit would also begin collecting data from police raids,
seizures and arrests from major urban centers across
Indonesia. 

AGO Remains Weak But Interested
------------------------------- 

¶14. (SBU) Although he did not provide detailed information,
AGO Acting Deputy Attorney General for Special Crimes Abdul
Hakim Ritonga on June 23 informed Katz that the Jakarta AGO
had prosecuted roughly a dozen IPR cases over the past year.
He admitted that until recently IPR has not been a high
priority.  He suggested the AGO could raise the profile of
IPR by including it under the purview of the AGO's newly
created Transnational Crimes Task Force.  Katz remarked that
detailed data on IPR prosecutions and convictions throughout
Indonesia would be very useful for the Special 301 decision-
making process.  Ritonga said that he could gather such
information, provided the U.S. Embassy formally requested
it. 

¶15.  (SBU) Katz showed the Ritonga Metropolda's data on
raids, arrests and investigations since the beginning of
this year, and asked if the AGO could tell us what happened
with each case.  Ritonga said it was possible, but warned
that, while police have recently referred many IPR-related
case files to the AGO, their cases were often poorly
investigated, lacked sufficient evidence, or were intended
to simply to boost police arrest numbers and impress
superiors.  Ritonga said he would support joint workshops
with the police, AGO and courts on IPR evidence collection,
investigations and prosecutions. 

Draft Customs Law Includes Ex Officio Powers
-------------------------------------------- 

¶16. (SBU) Ministry of Finance Directorate General of Customs
IPR Unit Chief Okto Iranto on June 22 told Katz that the 

JAKARTA 00008114  004 OF 005 

GOI's new draft customs law contained the same ex officio
powers contained in the existing 1995 customs law.  The new
customs law, however, is intended to resolve court
jurisdiction issues that held up the issuance of
implementing regulations for the ex officio power. Okto said
that Indonesia Customs is eager to obtain the new authority,
as it will enable customs officers to detain temporarily
suspected shipments of pirate or counterfeit goods.  He
added that Customs has consulted closely with local IP
industry representatives on the status of ex officio powers
in the draft law, including the  American Chamber of
Commerce IPR Committee on May 2.  The issue was also
discussed throughout a May 16-18 USPTO-Indonesia Customs
workshop in Jakarta that included presentations and
participation by senior Customs officials and IP industry
representatives.  Okto said that the GOI has set a deadline
by the end of this year to enact the new Customs law and
accompanying implementing regulations. 

Other GOI Efforts
----------------- 

¶17. (SBU) During their June 21 meeting, Bari informed Katz
of several other ongoing IPR related efforts within his
office.  The Directorate of IPR is cooperating with the
Japan International Cooperation Agency (JICA) in conducting
15 IPR public awareness seminars throughout Indonesia this
year for officials, academics, students and the press.  DG
IPR also collaborated with the European Commission-ASEAN IPR
Co-operation Program] in holding a May 22-23 workshop in
Jakarta on civil and criminal court proceedings.  Lastly, DG
IPR Abdul Bari Azed on June 6 gave opening remarks at the
opening of a BSA representative office in Jakarta. 

Amcham Members See Improved Enforcement and Cooperation
--------------------------------------------- ---------- 

¶18. (SBU) At a June 22 meeting with Katz, Amcham IPR
Committee members were in agreement that police were
improving IPR enforcement and cooperation.  An MPA
representative said that, for the first time, police were
conducting raids on their own initiative and were no longer
requiring formal complaints to act.  She attributed this to
General Sutanto's December 2005 instruction to district
police chiefs ordering them to step up IPR enforcement
activities, particularly against pirated ODs.  The MPA
representative noted that Jakarta police raids on Ratu Plaza
and Mangga Dua Mall, however, stopped after Indonesia was
retained on the Priority Watch List in May, but that police
continued raids at other locations across the city. 

¶19. (SBU) A representative of a major U.S. cigarette
manufacturer said that he has received very good cooperation
from police and customs over the last year in seizing large
shipments of counterfeit cigarettes.  In these cases,
customs is able to make seizures without ex officio powers
because the counterfeit cigarettes have counterfeit excise
stickers that violate Indonesia's tax laws.  He added that
his company was considering a plan to provide equipment and
training to some police units.  He noted that one unit he
works closely with in the Riau Islands has 70 officers but
severely lacks other resources: it has only two vehicles,
one telephone line, no internet, and a yearly operating
budget of USD 12,000. 

¶20. (SBU) A Business Software Alliance (BSA) representative
added that police also lack resources to move and properly
store cumbersome and sensitive optical disk production
machinery seized during raids.  Police are scared that if
the machinery is damaged while under their custody, the
courts may rule that they pay compensation to the owners.
Consequently, police customarily seal OD machinery with
police tape at factories, and it is often just a matter of
days before pirates break the seals move the machinery or
simply begin operating again. 

Comment
------- 

¶21.  (SBU)  The GOI continues to make steady progress on
IPR, and high level backing from the Police Chief and
Attorney General bodes well.  Closer cooperation between the
MOI, police and AGO will be important for ensuring effective
factory monitoring and greater prosecutions of pirates.  Our
new senior technical advisors at the MOI and police, and a
new Embassy resident legal advisor with considerable IPR 

JAKARTA 00008114  005 OF 005 

experience, should provide valuable new tools for assisting
the GOI with these challenges. 

¶22. (U) USTR Director David Katz has cleared this cable.
SILVER

A separate cable says that “[o]ne of the ICT National Team’s stated objectives is to work towards legalizing all government software, regardless of whether it is open source or licensed.” Here is the full cable:

UNCLAS SECTION 01 OF 03 JAKARTA 000475 

SIPDIS 

SIPDIS
SENSITIVE 

FOR EAP/MTS; EB/TPP/IPE JBOGER
COMMERCE FOR 4430/BERLINGUETTE AND PETERS
COMMERCE PASS USPTO FOR URBAN AND FOWLER
DEPT PASS USTR FOR DKATZ, JGROVES, RBAE, CCOLLEY 

E.O. 12598: N/A
TAGS: ECON [Economic Conditions], ETRD [Foreign Trade], KIPR [Intellectual Property Rights], ID [Indonesia]
SUBJECT: INDONESIA IPR - ANNUAL SPECIAL 301 SUBMISSION 

Ref: a) State 07944; b) Jakarta 00011 

¶1. (SBU) Summary:  Since Indonesia's upgrade to the Special 301
Watch List in November 2006, the Government of Indonesia (GOI) has
continued to make steady progress towards improving its enforcement
and protection of intellectual property rights (IPR).  A National
Intellectual Property (IP) Task Force now holds regular interagency
coordination meetings, and President Yudhoyono (SBY) signed a decree
in November 2006 committing the GOI to legalize all its computer
software.  Parliament passed a new Customs Law on November 15 that,
when fully implemented, will provide ex officio powers for Customs
Officials to seize suspected infringing products.  Jakarta
Metropolitan Police continue to elicit praise from local and
regional International Intellectual Property Association (IIPA)
representatives for raids on notorious malls, vendors, distributors
and factories.  The Ministry of Industry's Optical Disk Factory
Monitoring Team (ODFMT) inspected registered factories in November
2006 and February 2007 and issued initial warning letters to some 12
optical disk (OD) factories.  The Ministry of Industry (MOI) plans
to assign full-time staff to the ODFMT, conduct more regular
inspections (including inspections after hours), and begin
sanctioning non-compliant factories.  A recent Supreme Court ruling
in favor of the company Intel in a trademark infringement case case
bodes well for future cases. 

¶2.  (SBU) Summary, continued. Despite these steps, the GOI needs to
further improve the operations of the ODFMT and involve the police
more closely in the ODFMT's operations.  It also needs to step up
prosecutions and deterrent convictions of IPR violators and combat
book piracy and pharmaceutical counterfeiting.  But the GOI is
steadily taking ownership over the IPR issue, and our interactions
with Indonesia on the issue have grown less confrontational and more
collaborative.  To further encourage this important U.S. policy
success, we recommend that Indonesia remain on the Watch List for
the entire 2007 Special 301 regular cycle.  End Summary. 

¶3.  (SBU) In response to Ref A, we reviewed this year's Special 301
submissions from the GOI, IIPA, Intel, PhRMA, and the Phillip Morris
Company.  In general, we agree with their data, characterizations,
and assessments of the state of IPR protection and enforcement in
Indonesia.  Piracy and counterfeiting rates remain high and,
although improving, enforcement remains weak.  At the same time, GOI
engagement and political will continue to improve and are gaining
their own momentum. 

National IP Task Force Remains Active
------------------------------------- 

¶4. (SBU) According to GOI contacts, The National IP Task Force
continues hold regularly scheduled quarterly working level meetings,
as well less frequent senior and Ministerial-level meetings.  At the
working level, the Task Force has developed a national IP strategy
and strengthened data collection and interagency coordination.
However, the lack of a formal budget continues to hamper the Task
Force, and it must rely on limited funding from the Ministry of
Justice Directorate General for IPR.  Nevertheless, the Task Force's
regular interagency meetings, particularly those of senior and
ministerial level officials, are encouraging greater GOI focus on
IPR.  Following the first Task Force meeting last year, for example,
the Minister of Justice and National Police Chief collaborated in
developing a clever, animated TV spot emphasizing the costs of
piracy on Indonesia's culture and creative arts. 

SBY Leads Efforts to Legalize GOI Software
------------------------------------------ 

¶5.  (SBU) There are other recent examples of growing GOI initiative
and high-level political will to improve IPR protection.  On
November 13, SBY signed a decree establishing an Information
Communication Technology National Team.  The team consists of
academics, business leaders and GOI officials and aims to create an
IT regulatory regime that can contribute to economic growth, job
creation and poverty alleviation.  One of the ICT National Team's
stated objectives is to work towards legalizing all government
software, regardless of whether it is open source or licensed.
Further, the Team will also pursue approaches to cracking down on
the use of pirate software in internet cafes, universities and the
private businesses.  The ICT team will report directly to President
SBY and work out of an office at the Ministry of Communication and
Information Technology. 

¶6.  (SBU) Two months after SBY signed the decree, Minister of
Communication and Information Sofyan Djalil signed an MOU with PT.
Microsoft Indonesia, under which the software maker will help GOI
ministries legalize and upgrade their MS Windows products at a
significantly discounted price.  Although there has been some public 

JAKARTA 00000475  002 OF 003 

criticism of the MOU, including by State Minister for Research and
Technology Kusmayanto Kadiman, SBY has stood behind the agreement.
PT Microsoft Indonesia President Director Tony Chen recently told us
he was "astonished" by the GOI's growing commitment to legalize its
software and recommended we encourage the GOI by maintaining
Indonesia on the Special 301 Watch List. 

Customs Law Enacted with Ex Officio Powers
------------------------------------------ 

¶7.  (SBU) Parliament passed a new Customs Law on November 15, 2006,
that, when fully implemented, will provide ex officio powers for
Indonesian Customs officials to seize suspected infringing products
without a court order.  The new law retains ex officio powers that
existed in the old law, but also clears up court jurisdictional
issues that had blocked their implementation.  Indonesia Customs
expects to promulgate the new law's implementing regulations,
including those pertaining to ex officio powers, by the end of
2007. 

Jakarta Police Sustaining Enforcement
------------------------------------- 

¶8. (SBU) As noted in the GOI's submission, and confirmed by local
IIPA representatives, the Jakarta Metropolitan Police have sustained
enforcement actions against malls, vendors, distributors and
factories of pirated optical discs.  Ratu Plaza, Indonesia's most
notorious modern market for pirated ODs, has been the subject of
repeated raids, and one Motion Pictures Association (MPA) regional
representative told us recently that some of Ratu's vendors have
given up or moved to other, less-centrally located malls.  That same
MPA representative described the Jakarta Police's continuing police
cooperation as "brilliant" and he too recommended Indonesia remain
on the Watch List.  Our EEB-funded senior IPR technical advisor has
been instrumental in training and encouraging the Jakarta Police to
step up their IPR enforcement.  Looking forward, the advisor will
work to encourage greater police collaboration with the ODFMT and
prosecutors, as well as greater police enforcement actions beyond
the boundaries of metropolitan Jakarta. 

Monitoring Team Yielding Some Results
------------------------------------- 

¶9. (SBU) As noted in ref b, the ODFMT, with training and planning
support from our second EEB-funded advisor, conducted monitoring
visits to all registered optical disc factories in November 2006.
The MOI subsequently sent 12 warning letters to factories observed
to have irregularities.  However, the letters highlighted only minor
infractions, and there has been little ODFMT follow-up.  Although
the visits revealed weaknesses in the ODFMT's capacity and security
procedures, they also gleaned useful baseline data on the capacity
and activities of registered optical disc factories.  More
importantly, the visits allowed the ODFMT to collect forensic
exemplars from a majority of the known production machines in
Indonesia's registered factories.  The International Federtion of
the Phonographic" Industry (IFPI) continus to analyze tthese
exemplars in its forensic laboratory in London, and already they are
yielding important information. 

¶10.  (SBU) The ODFMT still requires considerable institution and
capacity building to be fully effective.  The ODFMT does not have
full-time monitors, and relies largely on MOI and Police officials
temporarily seconded from other positions.  t needs direct support
from the police, particulrly if it is tt c"n*duct visits at night
and to wlll guarded factories.  The ODFMT also needs to impe ment a
more credible system of warning and sanctioning factories in
violation of laws and regulations. 

¶11.  (SBU) MOI Director General for Downstream Chemical Industries
Benny Wahyudi told us on February 20 that the ODFMT visited seven
factories on February 17, and inspected the five that were open and
operating.  He promised to provide us with the results of those
visits as soon as they were compiled.  Wahyudi agreed that the
Monitoring Team needs at least one full-time staff member.  He
noted, though, that this person might have to be a contractor, as
the MOI did not have a specific budget and position set aside to
staff the ODFMT.  Wahyudi also agreed that the MOI would need to
work closer with the police and develop a more effective system of
warning and sanctions.  He suggested that the Embassy senior advisor
for the ODFMT would be instrumental in helping the MOI address these
challenges. 

Glimmer of Hope in Intel Case
----------------------------- 

¶12. (SBU) The Supreme Court's February 1 ruling in favor of Intel in 

JAKARTA 00000475  003 OF 003 

the Intel Jeans case is also a favorable development.  In the case,
the court cancelled the trademark of a local brand of jeans, Intel
Jeans, and ruled that Intel is entitled to trademark protection as a
well known brand.  The ruling bodes well for the Supreme Court's
upcoming decision in the appeal of Intel's Panggung case (the
Indonesian firm PT Panggung produces a number of electronics
products under the registered trademark "Intel").  While the
Commercial Court's previous rulings against Intel in the Panggung
case have been setbacks, Intel's legal counsel recently described
the case as an aberration in the Commercial Court's otherwise
respectable record in handling civil IPR cases, particularly those
involving trademarks. 

Significant Concerns Remain
--------------------------- 

¶13. (SBU) Despite the clear momentum on IPR issues, there are
remaining concerns.  Indonesia's record on IPR prosecutions remains
poor.  Frequent prosecutor rotations, lack of transparency, and
corruption make this a daunting task; and high level political will
and support will be critical to making headway on IPR convictions
and prosecutions.  Pharmaceutical counterfeiting and book piracy
also remain largely unchecked.  GOI officials tell us frequently
that they consider pharmaceutical counterfeiting to be a serious
health concern for the country, as well as a potential rallying
point for greater public support for IPR protection and enforcement.
 Key GOI officials have endorsed a University of Indonesia study
revealing alarming pharmaceutical counterfeiting rates and its high
cost to the Indonesian economy.  The GOI, however, has yet to
effectively engage the pharmaceutical industry on these issues.
Book piracy remains rampant in universities and local bookshops.
Indonesia has yet to develop an association or other means through
which publishers and authors can collect and distribute book
royalties.  The GOI would very likely welcome U.S. technical
assistance in this area. 

Watch List is the Best Option
----------------------------- 

¶14. (SBU) Over the past two years, the combination of a
reform-minded government in Indonesia and five regular or
out-of-cycle Special 301 reviews has done much to change our
interactions with the GOI on IPR issues.  GOI leaders are pursuing
initiatives to promote IPR that were a only short time ago beyond
our expectations.  At the same time, our relationships with working
level contacts have become much more collaborative, particularly
following Indonesia's removal from the Priority Watch List last
November.  Four months later, although much work remains, the GOI is
moving forward on IPR issues largely under its own steam.  With the
GOI taking increasing ownership of the issue and steadily improving
its IPR enforcement and protection, we believe a third consecutive
OCR would be counterproductive.  Accordingly, Embassy Jakarta
recommends strongly that Washington agencies retain Indonesia on the
Special 301 Watch List for the 2007 regular Special 301 cycle, with
no OCR. 

HEFFERN

We will cover some more Indonesia cables in a separate post. █

Summary: A diplomatic cable about IBM, Linux and Free/open source software

The following Cablegate cable talks about IBM and Linux. It also states that “[t]he use of an open source code Linux is another area of focus for IBM India. The company formed an IBM Linux Competency Center and Linux Solution Center in Bangalore to establish product standards, further Linux R&D as well as to localize products for an increasingly global customer base with local content requirements. State governments in India are big customers as they prefer open source code that enables development of local language fonts.”

Here is the Cablegate cable in full:

VZCZCXRO6031
RR RUEHBI RUEHCI
DE RUEHCG #2571/01 3260727
ZNR UUUUU ZZH
R 220727Z NOV 06
FM AMCONSUL CHENNAI
TO RUEHC/SECSTATE WASHDC 0443
INFO RUEHNE/AMEMBASSY NEW DELHI 2087
RUEHBI/AMCONSUL MUMBAI 4907
RUEHCI/AMCONSUL CALCUTTA 0647
Hide header
UNCLAS SECTION 01 OF 03 CHENNAI 002571 

SIPDIS 

SIPDIS 

E.O. 12958: N/A
TAGS: ECON [Economic Conditions], EINV [Foreign Investments],
EINT [Economic and Commercial Internet], IN [India; Andaman Islands;
Lakshadweep Islands; Nicobar Islands]
SUBJECT: IBM INVESTS BIG IN INDIA: HUMAN RESOURCES
ARE KEY 

REF: CHENNAI 1187 

¶1. (U) Summary:  Riding the crest of a $6 billion
investment, IBM India plans to expand its Bangalore
research and development (R&D) operations and in
doing so will unleash a new human capital thrust in
already talent-hungry south India.  The company
anticipates its Indian workforce will triple in the
next five years.  An expanding market in India for
U.S. manufactured mainframes and network software
services presents an opportunity the company does not
plan to miss. Increasing demand for remote management
of global client networks is another revenue stream
for IBM India. Simultaneous investments in open
source software protocol and capacity building
spearhead the companyQs effort to market e-governance
solutions in the Indian market.  To meet its expanded
human resource requirements, IBM plans to initiate
in-house staff training programs, marking a notable
shift from its past strategy of hiring employees away
from competitors.  Indian software companies, already
experiencing a human capital crunch, are now
struggling to quickly respond and prevent attrition,
fearful of losing skilled employees to their
competitors.  End summary. 

-----------------
All bets on India
----------------- 

¶2. (U) On June 6 Sam Palmisano, IBMQs Chairman,
announced investment plans in India of $6 billion
over a five year period (reftel).  The company
remains reluctant to disclose the details of its
investment strategy, but during a recent meeting in
Bangalore with visiting New Delhi DCM Pyatt, Inder
Thukral, Director Strategy and Business Development
at IBM India told post that emphasis will be on
research and development of telecommunication and
netware solutions for IBM operations worldwide.  The
desire to leverage even further IndiaQs large highly-
skilled labor force led to this investment move,
Shankar Annasamy, Managing Director IBM India told
us.  The company expects to triple its workforce from
the current 47,000 employees at 25 locations in the
next five years. 

-----------------------------------------
India: IBMQs research and development hub
----------------------------------------- 

¶3. (U) IBM India, with $2 billion in current
investments, is the proverbial Q800-pound gorillaQ of
IT research and development in the country.  The
companyQs India-based teams account for over 30% of
IBMQs global R&D on network and communications
solutions.  With its latest investment, the company
has rapidly diversified to meet its R&D needs:  The
IBM Innovation Center in Bangalore provides an
institutional platform for software service suppliers
and is a critical testing ground for new products in
both the Indian and global market. IBMQs India
Software Lab, with facilities in Bangalore and Pune,
also develops and supports IBM software products for
worldwide operations.  In addition, the high-
performance On Demand Lab develops specialized
software to automate and virtualize the complex
information technology infrastructure of clients
located in the south Asian region.  To further
hardware development, the Engineering and Technology
Services Center designs advanced chips, cards and
systems to meet customer requirements across Asia. 

------------------------------------------
India: A big market for US made mainframes
------------------------------------------ 

¶4. (U) IBMQs U.S. manufactured main frames have
captured the booming Indian main frame market.  The
company holds an 80 percent share of IndiaQs
estimated $250 million market for main frames.  The
market is currently growing at 55 percent, with much
of the growth coming from mid-sized Indian
businesses.  Main frames offered to the Indian market
are pre-positioned at the companyQs Bangalore-based
Innovation Center to enable potential customers to
experience the computing power and capabilities of
the machines.  IBMQs service oriented architecture
that facilitates communication between different
business segments located in various locations has 

CHENNAI 00002571  002 OF 003 

found favor in India and helped IBM secure a $100
million deal with Bharti-Airtel, one of IndiaQs
largest mobile phone service providers. 

-------------------------------------------
Open source products spearhead E-governance
------------------------------------------- 

¶5. (U) The use of an open source code Linux is
another area of focus for IBM India.  The company
formed an IBM Linux Competency Center and Linux
Solution Center in Bangalore to establish product
standards, further Linux R&D as well as to localize
products for an increasingly global customer base
with local content requirements.  State governments
in India are big customers as they prefer open source
code that enables development of local language
fonts. 

--------------------------------
IBMQs BPOs transform outsourcing
-------------------------------- 

¶6. (U) Leveraging IndiaQs large talent pool of
network managers, IBM India services clients around
the world via satellite and fiber optic networks from
its global operations hub in Bangalore.  IBM Daksh, a
back office unit which the company acquired in 2004,
accounts for nearly 50% of the companyQs staff in
India and is expected to contribute over half of the
company revenues in the next five years.  Similar to
other BPO operations such as local giants Infosys and
Wipro, Daksh provides services for clients involved
in retail, technology, banking, mortgage, energy and
life insurance.  The range of services includes
application processing, account maintenance, data
conversion services, logistics management, claims
processing, email support and financial services.
According to IBM executives, this line of business
registered some of the fastest growth rates for IBM
in recent history. 

----------------------------------------
In-house training to meet in-house needs
---------------------------------------- 

¶7. (U) IBMQs recent investment spike comes at a time
when a fiercely competitive hiring climate is forcing
top leadership to rethink its human resource
strategy. In the past the company notoriously
QpoachedQ experienced individuals from local firms.
Looking for new HR capacity building vehicles,
company executives are emphasizing university
recruitment to attract and train new waves of fresh
engineering graduates, or Qfreshers.Q  Yet this may
be a tall order in a time when A-list tech firms are
vying for talent, and freshers with experience under
their belt are job-hopping for bigger and better
packages.  Nonetheless, IBM executives are betting on
a combination of higher salaries and their global
brand equity to ensure a steady talent pool. 

¶8. (U) Strategic partnerships with elite Indian
technology institutions are also enabling IBM India
to further leverage local human capital expertise.
IBMQs Center for Advanced Studies, for example,
maintains a close relationship with prestigious
institutions such as the Indian Institute of
Technology (IIT) Chennai that leads directly into
software R&D.  The company has a similar program with
the Indian Institute of Science in Bangalore and
plans to expand its partnerships with other high-
caliber institutions across India. 

--------------------------------------------- --------
Expansion plans leave Indian software companies
scared
--------------------------------------------- --------
___ 

¶9. (U) Comment:  IBMQs investment announcement sent a
minor wave of anxiety through the Indian software
industry, which is already struggling to control
costs.  InfosysQ Human Resource Director told us his
company is trying to preempt potential attrition by
offering a 30% salary hike.  Mindtree Consulting, a
medium sized software development company, plans to
tap bright talent as early as the secondary school
level.  The company hopes to partner with U.S.-based
universities to offer recruits a degree in 

CHENNAI 00002571  003 OF 003 

engineering at the end of a five year stint.
Whatever strategy adopted, representatives of both
Infosys and Mindtree told us that IBMQs investment
plans will dramatically alter IndiaQs software
business landscape and long-term human capital
strategy. End comment. 

¶10. (U) This message was coordinated with Embassy New
Delhi. 

HOPPER

In later cable we are going to see some more evidence of warming up to FOSS. █

Summary: A roundup of Gates stories and what they teach us about the Gates Foundation

THE WORLD’S top lobbyist might in fact be Bill Gates, who operates under the umbrella of a foundation. He does not run a company per se, but he is making money in other ways without having to pay tax.

The Korean president is visiting him like he is a political figure (which he is, but the public never elected him), leaving the president susceptible to lobbying for patents and for power. As the Korean press put it a few months ago:

President Lee Myung-bak returned home Saturday from a trip to New York and Seattle that included speeches at the U.N. General Assembly and a high-level nuclear safety meeting, bilateral summits and a meeting with Microsoft founder Bill Gates.

And as Gates Keepers put it: “One wonders what Le Myung-bak’s electoral constituents think of him taking ‘global advice’ from a nonKorean college drop out code developer?”

This is “all irrelevant and say nothing,” claims Toby, “what he is, fundamentally, is a criminal sociopath.” Well, behind the scenes he is bullying employees, acts impolitely, and using the F word. Here is another example of it:

BE: I’d have to say they are Planners, top down. And it surprises me because Bill Gates is an entrepreneurial businessman and they tend to be Searchers. The one and only time I met Gates was at Davos several years ago. I figured he’d be friendly to my ideas but he seemed quite hostile. He came up to me and said, “What’s all this searching crap?” (chuckles)

It it is not Bill’s idea, then it is “crap”. This is how and why we see monopolisation in health science, for example. And for those who think that he is giving away his wealth (that’s the PR nonsense), here is a new reminder:

Bill Gates’ wealth increased by $5 billion to bring his net worth to $59 billion

And best of all, he does not pay tax because he is, one would believe, “giving away” money. The above article is very silly by the way and it confused correlation and causation” as Gates Keepers explains. Mr. Gates and his minions keep seeking celebrity endorsements for their campaigns (we provided many examples in the past). This PR effort recently hit a jackpot:

Moonshots and Mandela. Can’t lose with those images. Here is a talking head of Melinda from the Social Good Summit where hundreds of people were put in a room to listen to people talk about how good their programmes were. The audience was expected to tweet about it – manufactured consent for the networked generation.

In summary, the PR operation works. Bill Gates gets richer, the press says he is giving away, and he continues to receive access to the ears of world leaders, to whom he pushes an agenda for his investment. What a cruel trap. The media keeps playing along:

Another example can be found in the ongoing Education Nation series sponsored on a number of platforms by NBC. It’s endorsement of market-driven anti-public education policies are evident in its parading of the likes of Bill and Melinda Gates and their utterly anti-public, charter school, privatized and technocratic vision of education.

Where has the watchdog media gone? Need we rely on blogs for a sobering perspective? NBC should be recalled in the context of MSNBC, where MS is Microsoft. █

Summary: Quality-wise and freedom-wise Apple’s products tend to suck (a lot of battery power) if not explode in people’s faces

THE problems with Apple were discussed here yesterday and also explored here over the years. To replace Microsoft with Apple is to replace proprietary with proprietary. It’s like voting for one of the two dominant political parties in the UK or the US. Despite differentiation, none serves the users or the citizens; they serve power. Richard Stallman makes an additional careful remark about Steve Jobs the aggressor, stating that “Jobs saw how to make these computers stylish and smooth. That would normally be positive, but not in this case, since it has the paradoxical effect of making their controlling nature seem acceptable.

“To replace Microsoft with Apple is to replace proprietary with proprietary.”“Jobs’ death inspired a flood of articles lauding him for these very devices. That further increases their potential for harm, which is why now more than ever we must focus attention on it. We must not let secondary considerations about Apple or Jobs distract us from this threat until we have thwarted it.”

Stallman has also criticised Android for legitimate reasons. There is no hypocrisy there. Android is likely to continue gaining at Apple’s expense, especially because Apple lost its ability to make reliable products. First it was antennagate and now this:

Last week I had the opportunity to spend a lot of time with my new iPhone 4S, as I relied upon it for email, web browsing, and Twitter. It was not a completely satisfactory experience. And it wasn’t because it sucked down the battery like its life depended on it (which, of course, it did). Over the course of an hour when the phone was supposedly idling its charge would drop 20 percent and the thing ran hot.

This one at least does not necessarily explode. Peter Köhlmann writes in USENET that “they’re just using it wrongly. Apple are synonymous with perfection and you have to align your usage with that in mind.”

“This is why Asia-based companies are winning market share share at Apple’s expense, as gradually they become more independent from that American branding company.”“I am certain that someone at apple will tell the world how to hold it correctly to use less power,” remarks another poster sarcastically (referring to the antenna blunder). We wrote about that at the time.

Apple does not make those batteries. Apple buys these and it clearly does not know how to use them (Microsoft has the same type of problem). This is why Asia-based companies are winning market share share at Apple’s expense, as gradually they become more independent from that American branding company. █

Summary: The story of Microsoft’s elimination/overriding of Free software- and GNU/Linux-favouring policies

“THINK ABOUT THE CHILDREN!”

Yes, seriously (the comical use of rhetoric aside). It was only about a week ago that Microsoft exploited Asian children and issued a lot of PR that was essentially a scam.

Finally, after much preparation (and advice from the Techrights crew^*) a good article from Sai Manish, who also used Cablegate to substantiate some of the claims, helps show the EDGI-like tactics in Tamil Nadu. He writes:

With so much at stake, the IT intelligentsia in India is accusing Microsoft of using a mixture of American diplomatic offensive and its ‘embrace, extend and extinguish’ strategy to make 7 million poor students of Tamil Nadu dependent on its products with their free laptops.

ELCOT’s repeated changes in the tender have forced out free software and pushed in Microsoft products, a move that in the words of former ELCOT MD C Umashankar could ‘end up putting unproductive laptops with Windows in the hands of poor students’. This would entrap them in Microsoft’s proprietary web of licences, renewals, updates and upgrades.

There are allegations against ELCOT that it deliberately issued a second tender favouring Microsoft by eliminating open source software from its list of specifications and removing academically useful hardware from the laptop in a bid to balance out the increased cost of using the Windows Operating system and the licensed MS Office.

[...]

ELCOT removed the free OS even though Linux’s Ubuntu operating system comes for free and requires no updates, upgrades or expensive antivirus software to keep the laptop in shape.

Ironically, ELCOT ’s own data centre at Taramani in Chennai uses IBM servers and is powered by the free and open source Linux platform. But when it came to students, it ditched the open source model for Microsoft.

What is more startling is that in 2007, under the DMK government, ELCOT, then headed by a proactive and well-informed IAS officer C Umashankar, had shut the doors on Microsoft by ordering the migration of all government departments, panchayats and schools to Open Source Software after being convinced about its cost benefits and massive collaborative potential.

Over 30,000 government and schoolteachers were to be trained in Linux. Umashankar recounted how he was approached a couple of times by Microsoft staffers who offered to sell the Windows OS for Rs 7,000 a computer. Umashankar quoted a price of Rs 500 saying that for a mere Rs 300 he could not only get an Operating System better than Windows but could also incorporate features like DVD drives, webcams, multimedia editing software, vector map drawing applications and hundreds of other academically helpful software.

[...]

Now put that deal in an Indian context where 68 lakh licences would be required under Jayalalithaa’s ambitious free laptop scheme and the business of diplomacy becomes clear. The Microsoft deal of 3 lakh licences was dubbed in the cable as ‘the most significant agreement Vietnam has ever signed with a US business’.

Microsoft harped on IPR and the fact that Vietnam had the highest software piracy rate in Asia. “The cost of running MS Office is extremely prohibitive. That will only encourage students in Tamil Nadu to download pirated versions. Its own policies will encourage piracy,” says Umashankar. Even Microsoft’s corporate affairs director in Thailand had according to one cable ‘expressed concern over the Thailand government’s policy of promoting open source software model over the commercial source model as a means to curb piracy’.
Another indication of what Microsoft is up to in Tamil Nadu can be understood from what the software giant did in Tunisia where only free software was being used in the government since 2001, which prevented Microsoft from participating in the Tunisian government’s tenders.

Microsoft, like its various charitable acts in India through the Bill and Melinda Gates Foundation, also helped a charity for handicapped people run by the wife of the Tunisian president, Ben Ali. The confidential cable notes, ‘Microsoft has agreed to provide training to handicapped Tunisians to enable them to seek employment. The programme’s affiliation with Leila Ben Ali’s charity is indicative of the backroom manoeuvring sometimes required to finalise a deal. Microsoft’s reticence to fully disclose the details of the agreement shows Tunisia’s emphasis on secrecy over transparency. Ultimately, for Microsoft, the benefits outweigh the costs.’

We wrote about this before [1, 2, 3] and also quite recently we mentioned how Microsoft is sending proxies to attack Free software in government. Know the enemy, avoid losses. █
____
^* Today we also got informed that parts of Techrights will be made available for a print CoursePack in Boston College, which shows we help make a difference.

Summary: A look at Apple’s and Microsoft’s relationship with Samsung (one of the two major Korean companies in this area) and what we can learn from it

SAMSUNG is a hardware giant located at a nation that thrives in production of goods. Samsung is about an order of magnitude larger than Apple, at least in terms of workforce. Not so long ago Samsung surpassed Apple in terms of certain sales and became the largest distributors of Android (even if taxed by Microsoft), amongst other things. It painted a large target on Samsung’s behind, so Microsoft wanted more “royalties” and Apple sought embargoes one country at a time (fortunately there is no global patent system, at least not yet). The strategy has not been particularly useful to Apple; ever since it started suing Android companies using patents (starting with HTC) there has been a great deal of blowback, even from US-based carriers. Apple started alienating too many existing and potential partners, which would be harmful in the long term. At the end of last month we saw Apple taking a small step back (withdrawing patent claims) and now it is complaining about Samsung’s patents. Apple got a little scared and removed patent allegations, so now it seems to be more afraid of Samsung’s own patents. Just remember who started all this confrontation. Apple started it, whereupon pundits said that Apple must have been out of its mind. Some days ago it was reported that Apple significantly reduced its iPad orders; maybe Samsung just won’t help make these. By suing its own producers, Apple made a foolish decision. Microsoft took a different approach with its longtime partner Samsung and to cite Muktware, it did not try to get ridiculous trademarks or manufacture fake 'evidence' to block Samsung’s products. Instead Microsoft tried turning Android/Samsung devices into its own. Here is an article to be aware of:

Apple has been misuing its deep pockets and abusing the legal system to weaken competition. There is good news for competitors, the USPTO has rejected Apple’s trademark claims over ‘multi-touch’. Apple applied for the trademark in 2007 when it launched its iPhone. The USPTO rejected the trademark on the basis that the term is too generic or broad. Apple also holds a trademark on AppStore, a term used for app stores. There is an ongoing legal battle between Apple and Amazon over the use of this genetic term.

Apple is not much of a producing company. It’s a design, marketing, and branding company. This is why it tries so hard to restrict use of vocabulary, product appearance, etc. Apple even hired Viagra experts for this task. The manufacturers of “Apple”-branded products could just do it equally well themselves, a lot more economically too.

“The scenario makes is rather obvious that software patents are a major danger to coders.”Then there is Microsoft, which used to be a monopoly expert (removing choice from the market by crime and underhanded tactics) and has recently become more of a patents aggressor because people fought for choice (more on that in an earlier post). Microsoft is still trying to figure out how to make a profit from other people’s work and in the process it resorts to racketeering, collusion, secret deals, and old partners like Samsung (interesting take), which are all just a convenient way to get around having to face Google. This whole situation is fascinating because, assuming Microsoft can turn patents into its major cash cow, the market for software development will just die a little more. It will become a market of patents, just as Microsoft’s patent troll once envisioned it. Rather than write software (code) people will write words and then extort everyone who writes code implementing an abstract description of it. The scenario makes is rather obvious that software patents are a major danger to coders.

In a truly bizarre article whose headline resembles old propaganda for software patents (“Software Developers Must Be Properly Rewarded”) the case is being made based on the Samsung-Microsoft ‘deal’. If this illustrated anything at all, it is that software patents have absolutely zero value to Korea. It is only secret trade agreements that can somehow make Korea fall on its sword and fall for software patents.

Samsung is now paying Microsoft for something it never made, not even in code, passing the cost to customers, who will in turn reward Microsoft rather than Google. How does that encourage software development? The developers are not being paid.

To use the words of one blogger:

Microsoft has a large advantage in its quest to go after and collect royalties from those that it deems necessary as a direct threat. Microsoft has risen up with full force against Android, just after Windows Phone 7 started to appear. Coincidence? I don’t think so. Most recently it was announced that Microsoft had an “agreement” with Samsung, yet another manufacturer of Android devices. This agreement? It’s been rumoured that Samsung will need to pay close to $5 to Microsoft for each Android phone manufactured and sold. And so this is one side of the blade that Microsoft is swinging all around. Microsoft is using its vast array of patents to frighten phone manufacturers into paying royalties, in order to avoid being sued. Ingenious? Yes, because there’s another side of the blade that didn’t occur to me until recently. Samsung, being a manufacturer of Android devices, could manufacture devices for other operating systems as well, including Windows. Why not? If Microsoft is going to charge Samsung a set fee for each Android phone, yet allow Samsung to manufacture and sell Windows phones with no fees, what incentive would there be for Samsung to continue manufacturing Android devices? Not too many at the rate things are going. The only thing keeping Samsung interested in Android is the market demand for devices that run the Android OS. So Microsoft has two sides to their blade, they swing it to either side and they win. And Google? They seem to be defenseless at the moment while vendors of its software are being bullied by Microsoft.

This is an observation we made over 4 years ago, just after the signing of the Novell deal. The patent deal between Samsung and Microsoft is also over 4 years ago. This is helping non-practising ‘industries’, making developers devalued while “Increas[ing] in demand for Trained Patent Professionals” as this new article puts it:

In India, software is protected under the Copyright Act and not the Patent Act (as in many western countries). However, Indian IT companies have filed patent applications for their software in other parts of the world and these companies continue to seek non-software patents in India. Many of them have also filed business method patents in U.S. As Indian IT companies restructure their operations for high value service offerings, they are focused on innovation and intellectual property generation and protection in India and abroad.

The passage of jobs from engineers to lawyers (who serve a protectionist agenda) is a sad reminder of a society where the rich get richer and smart, honest people get thrown aside. The rise of terms like “Intellectual Property” in the news tells us that there is a strong push to indoctrinate the public all across the world to “respect IP”. Cablegate is full of examples that demonstrate it (we shall dive into more of that later this year). █

Summary: Apple’s strategy against competition that is headquartered in Asia (and Linux based) results in more blowback than Apple must have foreseen

Apple chose to cheat rather than compete. It sought to embargo competition which is based on Android and now comes the blowback because Linux has many friends in Asia (a relationship of convenience).

Several days ago we saw Verizon batting against Apple and now we see T-Mobile. Reportedly, “T-Mobile has joined US comms giant Verizon in backing Samsung’s fight against Apple, which has requested a preliminary injunction against the Korean manufacturer’s products.

“T-Mobile’s argument is essentially the same as that made by Verizon last week, in that the mobile operator does not want a ban on 4G devices in the US during the busy Christmas shopping season.”

It’s actually made worse for Apple because VIA too entered the ring, which complicates matters for Apple and makes the case against Samsung rather multi-dimensional. The Samsung case gets a lot of coverage because two dozen actions have been invoked so far and the ITC starts putting Apple at risk of having its own products embargoed. Quoting IDG: “The U.S. International Trade Commissions said Tuesday that it will open an investigation of Apple based on an earlier complaint it received from handset maker HTC.

“Apple now collaborates with other Linux foes.”“The investigation will cover “certain electronic devices with communication capabilities, components thereof, and related software. The products at issue in this investigation are computers, tablet computers, and smartphones,” with Apple named as the respondent.”

Apple must feel like an unlucky punk as more and more such cases pile up. Meanwhile it loses sight of technical progress and Android keeps gaining. All this litigation sure can be distracting. Apple is not going to win, not overall. The triumph of Linux in mobile seems inevitable. Apple now collaborates with other Linux foes. █

Summary: Via and Samsung launch a defensive assault against the aggressor, Apple, which might have its own phones removed from the market rather than Android phones (although it is merely a deterrence strategy)

THOSE WHO lose the mobile race are trying to transform it into a patent race or a sort of Cold War where each alliance is a form of cartel.

RIM is increasingly being evaluated based on its patents and not its products or loyal customers. It is claimed to be worth just over a couple of billion because there are not many patents in there (RIM is often targeted by patent trolls and using patents against them would not work, not even as a deterrence strategy).

According to this other new article, “Jefferies performed a deep dive on 1,400 patents to determine the firms with essential LTE patents, in consultation with industry experts.”

Nokia/Microsoft is meanwhile planning to use a patent trolls to attack Android [1, 2]. Antitrust authorities do pay attention or were at least notified.

“Just remember who started this.”
      –RonBGoogle’s approach as described in this week’s post would not be effective against patent trolls. The Times of India writes about the Oracle-Google talk falling through, so there too problems exist. The best solution to Google’s headache would be a blanket removal of all software patents. These monopolies were not supposed to be granted in the first place as these impede thought and expression, not physical creation.

From what we can gather based on the past couple of years, these patents breed trolls, cartels, and embargoes, including some of Apple’s that now backfire. Slashdot says that “Via Files Suit Against Apple” after Apple indirectly attacked Via, the company which “owns a number of fundamental technology patents inherited from Centaur…”

“Via also has a vested interest,” notes Slashdot, as “CEO Wenchi Chen is married to the head of HTC, which Apple sued for patent infringement last March.”

RonB writes (in USENET); “Just remember who started this.”

Via is “seeking to ban sales of Apple’s iPad and iPhone,” says the article he cites, “which it says infringe upon three of its U.S. patents. VIA is also seeking damages and has asked for a trial by jury.”

“Death by a million cuts,” RonB calls it. “Apple basically took on the whole industry. Let’s see how well it plays out.”

The more M.A.D. this gets, the less popular the patent system will become.

Meanwhile in Korea, only old companies use patents. Samsung has a whole load of them, even in Europe, so it is likely to try and embargo Apple there, having been attacked by Apple first. Always remember who started it.

The president of the FFII, based in Belgium, writes:

Samsung will try to block iphone with patents, the more mess the better

Indeed.

In Korea, only old iPhones may be sold. The next iPhone might be banned by Samsung. As one author puts it:

Samsung may be planning more aggressive tactics against its number one customer, Apple, after legal setbacks in Germany and The Netherlands. The Korean-based company will move to have Apple’s next-generation iPhone banned from sale in Korea following EU-wide injunctions issued against Samsung’s tablets and smartphones in those countries.

This was covered here the other day. Apple deserves no sympathy as it started this whole mess. █

Summary: A look at cables where Microsoft’s Craig Mundie (one of the very top chiefs) is mentioned as involved

According to the following Cablegate cable, “Microsoft Chief Research and Strategy Officer Craig Mundie to Peking University Guanghua School of Management Dean Zhang Weiying emphasized China’s need to create an environment that would allow innovators to be financially rewarded for the risks they took to innovate. They cited the need for real intellectual property rights…”

In other public talks, Mundie was bashing the GPL. It matters because Mundie is influential [1, 2] and he speaks to influential people (he is also among those attending Bilderberg meetings). The following two cables help us see where he’s making these engagements (see ¶7 in the first cable and 1045-1145 for the middle eastern programme in the second cable).

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UNCLAS SECTION 01 OF 04 SHANGHAI 007085 

SIPDIS 

SENSITIVE
SIPDIS 

USDOC FOR 4420/ITA/MAC/CEA/MCQUEEN
USDOC ALSO PASS TO NIST AND BEA
STATE PASS USTR
USTR FOR STRATFORD/WINTER/MCCARTIN/ALTBACH/READE
TREASURY FOR OFFICE OF INTERNATIONAL INVESTMENT
TREASURY FOR OASIA/ISA -- DOHNER, HAARSAGER AND CUSHMAN
GENEVA PASS USTR
PARIS PASS TO USOECD 

E.O. 12958: N/A
TAGS: ECON [Economic Conditions], EFIN [Financial and Monetary Affairs], EINV [Foreign Investments],
ETRD [Foreign Trade], PGOV [Internal Governmental Affairs],
PREL [External Political Relations], CH [China (Mainland)],
WTO [World Tourism Organization]
SUBJECT: INNOVATION REQUIRED FOR CHINA'S ECONOMIC GROWTH 

REF: BEIJING 23856 

¶1. (SBU) Summary: The National Bureau of Statistics and the
U.S.-based Conference Board hosted a national forum on
Innovation and China Economic Growth October 20- 22 in Suzhou,
Jiangsu Province.  During the conference, PRC officials from the
Chinese People's Political Consultative Conference (CPPCC),
National Bureau of Statistics (NBS), People's Bank of China
(PBOC) and the Shanghai Stock Exchange, as well as
representatives of foreign multinational corporations, discussed
"self-innovation" and identified systemic changes necessary to
foster innovation in China.  The systemic changes included:
increased IPR protection, financial sector liberalization,
openness to the world, and creation of a society in which
failure was acceptable.  End summary. 

--------------------------- 

CHINA:  Big, but not Strong 

--------------------------- 

¶2. (U) CPPCC Vice Chairwoman Zhang Meiying stressed in her
keynote address the importance that China's leadership has
placed on innovation.  Zhang said that while China's total GDP
made it the fourth largest economy in the world, on a per capita
basis, China ranked only 110th in the world.  This showed that
China was a big country, but not a strong country.  According to
Zhang, under President Hu Jintao's leadership, China has decided
that the way to create strength from size is through self
innovation. 

¶3. (U) Zhang said that rapid growth over the past twenty years
had placed strains on national resources that would lead to
decreased economic development.  China needed to rely on
innovation to create a foundation for sustainable growth.  China
had a low proportion of clean, high-technology industries.
China's leadership realized that the environment was not a free
commodity and that environmental damage would devour many of
China's economic gains.  While China manufactured low-technology
items, it was dependent on other countries for its
high-technology needs.  Additionally, China's consumption of
energy and raw materials per unit of production far exceeded
that of developed world and was not sustainable, she said.  If
China did not develop its own human resources, China would
continue to be only the manufacturing base for the rest of the
world. 

¶4. (U) According to Zhang, in major industries, such as the
petroleum and electronics industries, China was dependent on
imported technology for 75-80 percent of its needs.  She said
that China needed to learn to innovate to create its own core
technologies.  She said that China needed to "digest
technologies from other countries" before it could "re-innovate
these technologies for other purposes."  China needed to
generously fund its own scientists to insure its "leap-frog in
development."  She also criticized the "longstanding planned
economy mindset" in China that meant that companies were too
passive -- not taking on risks or investing in the future.  As a
result, she said, these companies were not positioned for
success, and China lagged behind.  Zhang's speech was widely
quoted and referred to by other government speakers during the
course of the weekend conference. 

SHANGHAI 00007085  002 OF 004 

------------------- 

What is Innovation? 

------------------- 

¶5. (SBU) When asked how the Chinese government defined
"self-innovation," National Bureau of Statistics (NBS) China
National Research Association Secretary General Zhang Zhongliang
said: "China is a big country, but it has no power.  China needs
to import 90 percent of its technology.  China needs to develop
its own name-brands and self-proprietary technology so that it
can build a strong economy.  To be a strong country, China needs
to develop its own innovative abilities." 

¶6. (U) In his talk, Development Research Center of the State
Council (DRC) Deputy Director Liu Shijin outlined what was meant
by self-innovation.  He said that the three kinds of innovation
are prime innovation, re-innovation, and the integration of
innovation from abroad into China.  Liu said that foreign
companies with investments or joint ventures in China had
expressed their concern with China's emphasis on self-innovation
and begun to limit their investment in innovative areas.  He
tried to put them at ease by explaining that any innovation done
in China by foreign companies located here was actually "Chinese
self-innovation" because ultimately these companies would
contribute to the building of China and its capabilities.
Ministry of Commerce Vice Minister Shang Ming was more explicit
when he said, "Self-innovation does not rule out the importation
of innovative technologies from abroad." 

--------------------------------------------- ---------- 

Requirements for Innovation - IPR and Financial Reforms 

--------------------------------------------- ---------- 

¶7. (U) Multiple speakers from Microsoft Chief Research and
Strategy Officer Craig Mundie to Peking University Guanghua
School of Management Dean Zhang Weiying emphasized China's need
to create an environment that would allow innovators to be
financially rewarded for the risks they took to innovate.  They
cited the need for real intellectual property rights to protect
innovation and a competitive financial sector that fostered
"innovations" such as venture capital and other mechanisms for
the efficient distribution of financial resources. 

¶8. (U) People's Bank of China Vice Governor Su Ning said that
due to increased global competition, China needed to tear down
restrictions in the financial sector.  He said that Chinese
banks needed to reform and innovate in order to increase their
margins of profitability.  He also said that China needed to
reform its regulatory framework to allow for financial products
such as bonds, funds, options and other ways to diversify
financial risk.  He stressed that China needed a unified credit
database to enable efficient access to financing. 

¶9. (U) Shanghai Stock Exchange (SSE) President Zhu Congjiu noted
that while there was 30 trillion RMB (about USD 3.8 trillion)
worth of capital available in China, Chinese companies had a
"weak capability to engage in venture capital."  He said this 

SHANGHAI 00007085  003 OF 004 

was why quality companies chose to go public abroad, rather than
in China.  It also meant, he added, that 83 percent of all
venture capital in China was from foreign sources.  According to
Zhu, the SSE planned to make the reforms necessary to keep
Chinese companies in China by creating an environment where they
would have access to the capital they needed domestically.  In
response to a question, Zhu admitted that for the financial
sector, "innovation" actually meant reforming the Chinese system
to be more like the international financial market standard. 

--------------------------------------------- --- 

Innovative Translation -- Some Words Left Unsaid 

--------------------------------------------- --- 

¶10. (SBU) The conference theme as translated in English was
"Innovation and China Economic Growth."  In Chinese, however,
the title was "Self-Innovation (Zizhu Chuangxin) and China
Economic Growth."  Chinese government speakers all used the word
"self-innovation," but the translators uniformly translated it
as "innovation."  Conference speaker European Union Economics
and Regional Officer Leila Fernandez-Stembridge noted to Econoff
that this appeared to be an intentional "mistranslation."  Price
Waterhouse Coopers Senior Advisor Kenneth DeWoskin, another
conference speaker, speculated that a political decision had
been made to de-emphasize the Chinese-centric focus on "self" in
an attempt to soften the tone of the conference. 

--------------------------------------- 

When Innovation Means Using an Airbrush 

--------------------------------------- 

¶11. (SBU) DeWoskin noted to Econoff that the "palpable unspoken
undercurrent" had been the sacking of NBS head Qiu Xiaohua eight
days before the conference in connection with the Shanghai
pension corruption scandal.  No mention of Qiu was made
publicly, even when Xie was introduced as only having been on
the job for a week.  An NBS employee who helped organize the
conference materials told Econoff about the "huge amount of
work" that he had to re-do in replacing Qiu Xiaohua's
information and name with that of new leader Xie Fuzhen in all
of the many professionally produced bound conference materials.
An NBS press officer commented that his office had been given no
notice of the sacking and been inundated with "questions we
cannot answer." 

------------------------------------- 

Challenges Facing Innovation in China 

------------------------------------- 

¶12. (SBU) Sixteen non-governmental speakers at the conference,
including Sun Microsystems Vice President Piper Cole, GE China
Technology Center Managing Director Bijan Dorri, and The
Conference Board Executive Vice President Gail Fosler, China
were tasked with outlining how China could create and nurture an
environment that led to innovative people and companies.  These
speakers described several challenges that China faced to its 

SHANGHAI 00007085  004 OF 004 

drive for self-innovation, including: 

- China needed to stay open to the world.  Innovation would be
greatly hampered in a closed system. 

- China needed to avoid "nationalizing" or "branding" its
innovations in a way that would limit its global reach.  By
creating a "China standard" different from global standards,
China would shut itself out of competition. 

- China needed to protect intellectual property rights in order
to protect those who had taken risk. 

- China needed to create the financial market conditions that
would support venture capital in order to reward risk takers. 

- China needed to create a social milieu in which failure was
acceptable.  If the price of failure was too high, no one would
take any risks. 

- China needed to develop educational systems that continued to
foster interest in math and science. 

¶13. (SBU) Chinese government speakers appeared receptive and
largely agreed to the above list of prescriptions.  However,
they tended to stress the importance of Chinese brands and
standards being the mark of Chinese innovation.  As one speaker
commented, "We hope that the day will come when the label does
not read 'Made in China' but 'Created in China.'" 

¶14. (SBU) Comment:  Innovation -- or self-innovation -- has
clearly been identified as the next necessary step in  China's
economic development strategy.  While the mission is clear,
China still faces enormous systemic economic, legal, educational
and social barriers to create an innovation-friendly environment.
JARRETT

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RUEHKU/AMEMBASSY KUWAIT PRIORITY 0000
RUEHMK/AMEMBASSY MANAMA PRIORITY 0000
RUEHMS/AMEMBASSY MUSCAT PRIORITY 0000
RUEHRH/AMEMBASSY RIYADH PRIORITY 0000
RUEHYN/AMEMBASSY SANAA PRIORITY 0000
INFO RHMFISS/JOINT STAFF WASHINGTON DC PRIORITY
RUEAFCC/FCC WASHINGTON DC PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY
RHMFISS/CDR USCENTCOM MACDILL AFB FL PRIORITY
RUEHAM/AMEMBASSY AMMAN 0000

UNCLAS STATE 012095 

SIPDIS 

E.O. 12958: N/A
TAGS: ECIN [Economic Integration and Cooperation],
ECPS [Communications and Postal Systems], EINT [Economic and Commercial Internet], MARR [Military and Defense Arrangements],
MCAP [Military Capabilities], PREL [External Political Relations],
XF [Middle East]
SUBJECT: GULF REGION COMMUNICATIONS CONFERENCE 2010 UPDATE 

REF: 09 STATE 122229 

¶1. This is an action request. See paragraph 6. 

¶2. SUMMARY. Reftel announced a by-invitation-only Gulf Region
Communications Conference (GRCC) in Amman, Jordan, 21-23
February 2010, co-hosted by United States Central Command
(USCENTCOM) and the Jordanian Armed Forces (JAF). Reftel
requested posts deliver a hold-the-date request to regional
civilian and/or government attendees pending release of
formal invitations. A separate notification was distributed
to military attendees through military channels. On 4
February 2010, USCENTCOM forwarded to posts, in care of the
security assistance offices, hard copy and electronic
versions of the formal GRCC invitations, along with RSVP
registration information and conference agenda, for delivery
to attendees.   Invitations are co-signed by Commander,
USCENTCOM and by Chairman of the Joint Chiefs of Staff, JAF.
This cable requests posts deliver invitations and an update
notification to regional civilian and/or government attendees
to further highlight the conference and encourage
participation.  In order to ensure timely delivery of
invitations, please deliver update notifications based on
receipt of, and in conjunction with, the electronic
invitations, and forward hard copy versions when they arrive.
Draft update notification language is provided in paragraph
¶6. END SUMMARY 

¶3. For reference, the following is the text for USCENTCOM's
half of the formal joint invitation. 

Dear Mr. Communications Minister, 

On behalf of United States Central Command, I am pleased to
invite you to attend the 2010 Gulf Region Communications
Conference in Amman, Jordan during 21-23 February 2010. 

The conference follows last year's inaugural conference in
Bahrain.  Again, our intent is to gather regional
communications representatives to collaborate on topics of
mutual interest in a Regional forum.  Ministers of
communications, communications regulatory commissioners, and
senior military communicators from each of eleven Gulf Region
states are invited to participate.  Also, senior United
States communications representatives from the federal,
military, and private sectors are invited.  Regional private
sector representatives will also be invited. 

Conference participants will be able to address regional
communications capabilities and concerns and discuss
opportunities to support regional stability and security
efforts.  The enclosed conference agenda is provided for your
information. 

We would be honored to have you join us.  Mr. John Simpson,
the Central Command point of contact (813-827-3931,
simpsoja@centcom.mil), will accept replies.  A detailed
conference information packet will be sent separately. 

With warm regards, 

DAVID H. PETRAEUS
General, U.S. Army
Commander,
United States Central Command 

¶4.  Also for reference, the following is the text for JAF's
half of the formal joint invitation. 

Dear Honorable Minister, 

On behalf of the Hashemite Kingdom of Jordan, I am pleased to
invite you to attend the 2010 Gulf Region Communications
Conference (GRCC) in Amman, Jordan during 21-23 February 2010. 

We believe last year's conference in Bahrain was a great
success, and we are looking forward to hosting distinguished
communicators within the Kingdom of Jordan. 

This next GRCC will enable us, as partners, to continue our
examination and discussion of the Region's most significant
communications concerns.  We are hopeful that this forum and
its actions will lead to improved capabilities, stability,
and security within the Gulf Nations and across the Region. 

Communications ministers and regulatory commissioners, and
senior military communicators from each of eleven Gulf Region
states are invited to participate. Also, senior United States
communications representatives from the federal, military,
and private sectors are invited.  Representatives of the Gulf
Region's private sector will also be invited.  The enclosed
conference agenda is provided for your information. 

We would be honored to have you join us in the Hashemite
Kingdom of Jordan. 

With utmost respect, 

General
Khaled J. Al-Sarayreh
Chairman Of The Joint Chiefs Of Staff
Jordan Armed Forces 

¶5.  The agenda's structure and content reflect extensive
collaboration with JAF, including integration of
JAF-recommended panel discussions. Each participating nation
will be given one speaking part (seat) on each panel and one
speaking part (five minute presentation) during closing
remarks. All attendees will be invited to participate in
roundtable discussions.  For reference, the GRCC Agenda
follows: 

21-23 February 2010
Grand Hyatt Hotel
Amman, Hashemite Kingdom of Jordan 

Sunday, 21 February 

Arrival of conference participants and registration at Grand
Hyatt Hotel, Amman, Jordan, Telephone: 962-6-456-1234 

1830-2000
RECEPTION (Hotel Location TBD) - For ministers and
distinguished visitors (DVs)
HOST:  U.S. Central Command (USCENTCOM)
ATTIRE/GENTLEMEN: Business/National Dress
ATTIRE/LADIES: Business (dress, pants outfit)/National Dress 

Monday, 22 February 

ATTIRE/GENTLEMEN: Business/National Dress/Class A Uniform
ATTIRE/LADIES: Business (dress, pants outfit)/National
Dress/Class A Uniform 

0800-0850
NO-HOST BREAKFAST 

0900-0905
CONFERENCE WELCOME (Hotel Grand Ballroom) - Brigadier General
Ghazi Salem Salman al-Jobor, Director of the Special
Communications Commission, Jordan Ministry of Defense 

0905-0910
TRANSLATION EQUIPMENT FAMILIARIZATION 

0910-0930
CONFERENCE OPENING REMARKS - USCENTCOM and Kingdom of Jordan
Representatives (TBD) 

0930-1000
PRESENTATION 1 - His Excellency Marwan Juma, Jordan Minister
of Information and Communications Technology
TOPIC:  Sector Policy--Mobile Communications, Fixed Services,
and Regional Connectivity 

1000-1030
PRESENTATION 2 - Jordan Telecommunications Regulatory
Commission
TOPIC:  Regulation of Telecommunications 

1030-1045
BREAK 

1045-1145
PRESENTATION 3 - Mr. Craig Mundie, Chief Research and
Strategy Officer, Microsoft Corporation, United States
TOPIC:   Cloud Computing 

1145-1245
PANEL DISCUSSION 1 - Industry/Government Representatives
TOPIC:   Implementing Cloud Computing Solutions to
Information Exchange Challenges 

1245-1345
LUNCH (Hotel Restaurant TBD) - For ministers and DVs
HOST:  Jordan Ministry of Information and Communications
Technology 

1400-1415
GROUP PHOTO SESSION (Hotel Location TBD) 

1415-1515
ROUNDTABLE 1 - Roundtable Moderator, TBD
TOPIC:  Policy and Regulation Perspective--Improving
Telecommunications across the Region and across the
Commercial, Government, and Military Sectors 

1515-1535
PRESENTATION 4A - Brigadier General Ghazi Salem Salman
al-Jobor, Jordan Ministry of Defense
TOPIC:  Mobile Communications in Support of Relief Operations 

1535-1555
PRESENTATION 4B - Brigadier General Mowafaq Assaf, Royal
Jordanian Air Force
TOPIC:  Fiber Infrastructure in Support of Government and
Civilian Agencies 

1555-1655
PANEL DISCUSSION 2 - Military Communicators
TOPIC:  Mobile, Fixed, and Fiber Communications 

1655-1830
FREE TIME 

1830-1900
COCKTAILS (Hotel Location TBD) - For ministers and DVs
HOST:  USCENTCOM
ATTIRE/GENTLEMEN: Business/National Dress
ATTIRE/LADIES: Business (dress, pants outfit)/National Dress 

1900-2100
DINNER (Hotel Location TBD) - For ministers and DVs
HOST:  Jordan Telecommunications Regulatory Commission
ATTIRE/GENTLEMEN: Business/National Dress
ATTIRE/LADIES: Business (dress, pants outfit)/National Dress 

Tuesday, 23 February 

ATTIRE/GENTLEMEN: Business/National Dress/Class A Uniform
ATTIRE/LADIES: Business (dress, pants outfit)/National
Dress/Class A Uniform 

0800-0850
NO-HOST BREAKFAST 

0900-0915
ADMINISTRATIVE REMARKS (Hotel Grand Ballroom) - Brigadier
General Ghazi 

0915-0945
PRESENTATION 5 - Lieutenant General Carroll F. Pollett,
United States Army, Director, Defense Information Systems
Agency
TOPIC:  Synchronizing Commercial, Government, and Military
Communications Priorities in the United States 

0945-1015
PRESENTATION 6 - Mr Sami Smeirat, Chief Executive Officer,
Orange Company, Jordan
TOPIC:  Regional Reach 

1015-1030
BREAK 

1030-1130
ROUNDTABLE 2 - Roundtable Moderator
TOPIC:  Synchronizing Wireless Challenges and Potential
Solutions 

1130-1200
PRESENTATION 7 - Mr. Nidal Qanadilo, Investment Manager,
Jordan Ministry of Information and Communications Technology
TOPIC:   Fiber Communications in Support of E-learning,
E-government, and Rural Areas 

1200-1300
LUNCH (Hotel Restaurant TBD) - For ministers and DVs
HOST:  USCENTCOM 

1345-1415
ROUNDTABLE 3 - Roundtable Moderator
TOPIC:   Regional Fiber Backbone Solutions to Civilian,
Government and Military Challenges 

1415-1445
ROUNDTABLE 4 - Brigadier General Donahue, Roundtable Moderator
TOPIC:  2010 Conference Action Items and 2011 Conference
Theme and Topics 

1445-1500
BREAK 

COUNTRY REMARKS
1500-1510, Kingdom of Bahrain
1510-1520, Arab Republic of Egypt
1520-1530, Republic of Iraq
1530-1540, State of Kuwait
1540-1550, Republic of Lebanon
1550-1600, Sultanate of Oman
1600-1610, State of Qatar
1610-1620, Kingdom of Saudi Arabia
1620-1630, United Arab Emirates
1630-1640, Republic of Yemen 

1640-1700
CLOSING REMARKS - USCENTCOM and Jordan Representatives TBD 

1700
CONFERENCE CONCLUDES 

¶6. Action Request: Washington agencies request posts ensure
delivery of invitations and deliver the following update
notification regarding GRCC 2010 to the appropriate regional
civilian and/or government attendees by 8 February 2010.
Please notify the USCENTCOM and State POCs in paragraph 7 on
completion of action by 10 February 2010.  Email replies are
acceptable. 

Dear (Embassies, please address invitations to appropriate
individuals listed), 

ABU DHABI:
-- His Excellency Muhammad bin Ahmad Alqamzi, Chairman
Telecommunications Regulatory Authority
-- His Excellency Mohamed Nassar Al Ghanim, Director General
and Board Member Telecommunications Regulatory Authority 

BAGHDAD:
-- His Excellency Farooq Abdulqadir Abdulrahman, Minister of
Communications
-- Barhan Shawi Al-Tamimi, DG, Communications & Media
Commission
-- His Excellency Mazin Hashim Al-Haboubi, CEO Deputy for
Administrative Affairs 

BEIRUT:
-- His Excellency Mr. Charbel Nahas, Minister of
Telecommunications
-- Dr. Kamal S. Shehadi, Chairman & Chief Executive Officer
of Telecommunications Regulatory Agency 

CAIRO:
-- His Excellency Dr. Tarek Kamel, Minister of Communications
and Information Technology
-- Dr. Amr Badawy, Executive President of National
Telecommunications Regulatory Authority 

DOHA:
-- His Excellency Dr. Hessa Al-Jaber, Secretary General
Supreme Council of Information & Communications Technology
-- Mister William Fagan, Director, Supreme Council of
Information & Communications Technology 

KUWAIT:
-- Dr. Mohammed Mohsen Al-Busairi, Minister of Communications 

MANAMA:
-- Dr. Mohammed Al Amer, Chairman and Acting General
Director, Telecommunications Regulatory Authority 

MUSCAT:
-- His Excellency Dr. Khamis bin Mubarak al Alawi, Minister
of Transportation and Communications
-- His Excellency Mohammed Nasser Al-Khusaibi, Chairman,
Telecommunications Regulatory Authority 

RIYADH:
-- Mister Mohammed Jameel bin Ahmed Mulla, Minister of
Communications and Information Technology
-- Dr. Abdulrahman Al-Jafari, Governor Communications and
Information Technology Commission 

SANAA:
-- His Excellency Kamal Al-Jabri, Minister of
Telecommunications & Information Technology 

United States Central Command and the Jordanian Armed Forces
will co-host the by-invitation-only Gulf Region
Communications Conference (GRCC) 2010 in Amman, Jordan on
21-23 February 2010. Formal invitations have been distributed
to you separately along with details regarding RSVPs and
registration and the conference agenda. GRCC 2010 will
continue GRCC 2009 multilateral engagement on regional
telecommunications and information sharing capabilities and
will foster cooperation among our respective entities in
order to overcome challenges, to include crisis response
and/or disaster relief missions. 

GRCC 2010 presentations and discussions support a theme of
Synchronizing Commercial, Government and Military
Communications Priorities. GRCC 2010 adds panel discussions
to the GRCC 2009 conference format of presentations and
roundtables. Each nation attending the conference will be
given one seat for a national representative on each panel.
As with GRCC 2009, roundtable discussions will be open to
participation by all attendees. Each nation attending the
conference will also be given five minutes for one national
representative to present closing remarks. Please identify to
the conference co-hosts as soon as possible those individuals
who will represent (post, please insert here your nation) on
each panel and present closing remarks. 

I encourage you to attend the conference. 

Sincerely,
(DoS originator name)
(DoS originator title)
U.S. Department of State 

¶7. CENTCOM point of contact for the conference: 

Jim Ramirez DAFC
U.S. Central Command
Deputy, Strategic C4 Architecture Programs and Policy
Division
* (813) 827-5816 DSN 651-5816
* ramirejs@centcom.mil
* ramirejs@centcom.smil.mil 

State Department points of contact for the conference: 

COL Dave Huggins
Senior Military Advisor, Near Eastern Affairs Bureau
* (202) 647-3945
* HugginsWD@state.sgov.gov 

Steve Simpson
Communications and Information Policy / Middle East
Energy, Economic, and Business Affairs
* (202) 647-5306
* SimpsonSC@state.gov
* SimpsonSC@state.sgov.gov
CLINTON

Yes, that latter cable is signed by Clinton. Interestingly enough, Mundie is doing politics. █

Summary: How US diplomats view negotiations whose goal is to legitimise monopolies in countries that have no interest in these

According to the following year-old cable, specifically in ¶5, “Member States negotiated informally a compromise work program that ensured balanced and focused work for the SCP [Standing Committee on the Law of Patents]. The proposed work program included: 1. further study on technology transfer concerning the relationship of patent technology transfer and innovation; 2. work on limitations and exceptions that included the external expert study and Brazil’s work program proposal; 3. patent administration issues that included work on patent quality management and further work on dissemination of patent information that looked at digitization issues and access to complete patent information; 4. further work on client-attorney privilege to solicit Member State input on national experiences; 5. future conference on public health and food security issues; and 6. reaffirming that the non-exhaustive list of issues for possible discussion by the SCP remain open for further elaboration at the next meeting, but agreeing that Member States would refrain from adding on to the list at this session, so as to ensure that work on the existing studies could be more focused. These items were truly a compromise text, particularly for Group B, as our primary objective to discuss patent harmonization issues was not part of this list and many of the items had more of a developing country interest/slant. On day one of our conversation concerning future work, we reached agreement among Group B countries, GRULAC, Eastern European countries, Singapore, Korea, the regional coordinator of Africa, Angola.”

They are trying to convince developing countries to give up and accept a system which harms them greatly. With our emphasis on the relevant parts, ¶7 carries on by noting that “While Group B and the U.S. were disappointed that the agreement reached the day before did not satisfy all of the Africa Group and the Asia Group, we were willing to negotiate further from our compromise text. However, it became clear that the Africa Group and some Asian Group countries were not willing to move from their position. Group B in particular was willing to add on to the non exhaustive list with the inclusion of “work sharing” and the “strategic use of IP in business” as proposed by the Group of Eastern European Countries. Despite developing countries’ insistence that the non exhaustive list remain open, Indonesia and India opposed the Group B suggestion of “work sharing”, arguing that it was duplicative of work at the PCT working group and that it was patent harmonization-related and therefore not welcomed by developing countries. Further, even though Group B reminded these countries that their proposed suggestions on the list were duplicative of work occurring in the Committee on Development and IP (CDIP), Egypt’s response was that development agenda work in CDIP was a cross-cutting issue throughout the Organization, and therefore duplication was needed.”

Here is the cable in full:

VZCZCXYZ0005
RR RUEHWEB

DE RUEHGV #0136/01 0491710
ZNR UUUUU ZZH
R 181701Z FEB 10
FM USMISSION GENEVA
TO RUEHC/SECSTATE WASHDC 0238
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHGV/USMISSION GENEVA
RUEHGV/USMISSION USTR GENEVA

UNCLAS GENEVA 000136 

SIPDIS
STATE FOR EEB/IPC, IO/HS, OES
COMMERCE FOR USPTO 

E.O. 12958: N/A
TAGS: ECON [Economic Conditions],
KIPR [Intellectual Property Rights],
WIPO [World Intellectual Property Organization]
SUBJECT: Fourteenth Session of the WIPO Standing Committee on the Law
of Patents 

¶1. The World Intellectual Property Organization's Standing
Committee on the Law of Patents (WIPO SCP) continued to discuss
preliminary studies requested by the SCP in June 2008 and March
2009, and commenced a discussion on Brazil's proposal concerning
exceptions and limitations to patent rights.  However, an impasse
resulted at the SCP on the future work of the committee.  As a
result, the agenda from this session will be used for the next
meeting in October 2010.  During two days worth of negotiations on
the future work topic, it became clear that Member States fail to
see eye to eye on the international patent system itself, as some
view the system to be a threat to development and oppose any global
efforts - whether normative or cooperative technical assistance
work -- in improving the patent system.  END SUMMARY. 

¶2. The WIPO SCP met from January 25-29, 2010.  Delegations from 103
countries, 10 international organizations and 28 non-governmental
organizations participated in the Committee which was chaired by
Mr. Maximiliano Santa Cruz from Chile.  The United States
delegation was represented by USPTO External Affairs Administrator
Arti Rai, Charles Eloshway of USPTO, Janet Speck, Deputy Director,
State Department and Deborah Lashley-Johnson, IP Attach???? at the
U.S. Mission to the UN. 

¶3. Discussions were based on preliminary studies written by the
International Bureau at WIPO concerning the relationship of
standards and patents, client-attorney privilege, dissemination of
patent information, transfer of technology, and opposition systems.
Many delegations stated that these documents constituted a good
basis for discussions, and requested further clarifications on
various issues contained in the documents.  However, certain
statements made by developing countries and NGO were worrisome,
such as: equating work on the client-attorney disclosure problem to
patent law harmonization work; viewing the topic of dissemination
of patent information to include the disclosure of proprietary
information and trade secrets; and stating that a study should
include how the patent system hinders technology transfer. 

¶4. The topic of limitations and exceptions was also discussed,
although the external experts' study was not available for this
meeting.  A proposal in respect of exceptions and limitations to
patent rights was submitted by the Delegation of Brazil, which
received support by many developing countries.  The proposal has
three phases:  discussion on national experiences on patent right
exceptions and limitations; focus work on exceptions and
limitations that help to address developmental concerns; and the
development of an exceptions and limitations manual.  Other
delegations, such as the U.S., Switzerland and other industrialized
countries expressed concern that they had not received the document
in advance of the meeting, and therefore had insufficient time to
consider the proposal, and expressed a wish to consider the
proposal at the following session in October 2010 when the external
expert study would also be presented.  Nonetheless, the U.S. noted
that it was interested in studying the issue more and saw strong
intellectual property rights and enforcement to be consistent with
proper, basic limitations and exceptions. 

¶5.  Gridlock, however, occurred once the committee moved onto the
topic of future work.  Several regional coordinators and interested
Member States negotiated informally a compromise work program that
ensured balanced and focused work for the SCP.  The proposed work
program included:  1. further study on technology transfer
concerning the relationship of patent technology transfer and
innovation; 2. work on limitations and exceptions that included the
external expert study and Brazil's work program proposal; 3. patent
administration issues that included work on patent quality
management and further work on dissemination of patent information
that looked at digitization issues and access to complete patent
information; 4. further work on client-attorney privilege to
solicit Member State input on national experiences; 5. future
conference on public health and food security issues; and 6.
reaffirming that the non-exhaustive list of issues for possible
discussion by the SCP remain open for further elaboration at the
next meeting, but agreeing that Member States would refrain from
adding on to the list at this session, so as to ensure that work on
the existing studies could be more focused.  These items were truly
a compromise text, particularly for Group B, as our primary
objective to discuss patent harmonization issues was not part of
this list and many of the items had more of a developing country
interest/slant.  On day one of our conversation concerning future
work, we reached agreement among Group B countries, GRULAC, Eastern
European countries, Singapore, Korea, the regional coordinator of
Africa, Angola. 

¶6.  However, on day two, Angola, members of the Africa Group, such
as Egypt and South Africa, Pakistan, India, Sri Lanka, Malaysia, 

Yemen, Iran and Indonesia, opposed the compromise text.  Their
amendments suggested future studies on the negative impacts patents
have on technology transfer and standards, and a new study on
patents and public health.  There was also a proposal on the
establishment of a technology transfer commission to focus on the
problems of technology transfer.  Their proposal further lacked
balance in their deletion of the only two issues offered by Group B
in the initial compromise proposal concerning patent quality
management and further work on client-attorney privilege.  The
counter-proposal also included another large conference on patents
and public policy issues as a follow up to the one held in July
2009.  Lastly, they pushed to expand the non-exhaustive list to
include topics such as the impact of the patent system on
developing countries and LDCs, and the relationship of patents and
food security. 

¶7. While Group B and the U.S. were disappointed that the agreement
reached the day before did not satisfy all of the Africa Group and
the Asia Group, we were willing to negotiate further from our
compromise text.  However, it became clear that the Africa Group
and some Asian Group countries were not willing to move from their
position.  Group B in particular was willing to add on to the non
exhaustive list with the inclusion of "work sharing" and the
"strategic use of IP in business" as proposed by the Group of
Eastern European Countries.  Despite developing countries'
insistence that the non exhaustive list remain open, Indonesia and
India opposed the Group B suggestion of "work sharing", arguing
that it was duplicative of work at the PCT working group and that
it was patent harmonization-related and therefore not welcomed by
developing countries.  Further, even though Group B reminded these
countries that their proposed suggestions on the list were
duplicative of work occurring in the Committee on Development and
IP (CDIP), Egypt's response was that development agenda work in
CDIP was a cross-cutting issue throughout the Organization, and
therefore duplication was needed. 

¶8. COMMENT: Group B member states expressed deep concern about the
events that transpired at this meeting.  Several countries refused
to negotiate from their maximalist positions, which has been a
concern in other committees at WIPO.  The inflexibility of
developing country positions will make reaching a compromise on any
SCP work program impossible, particularly when this committee has
had a history of disbanding for three years due to similar
political impasses.  Further, it is clear that the development
agenda is the only work these delegations are interested in at the
expense of issues related to patent law that are important to Group
B and their constituents.   Targeted demarches to the few countries
that are blocking progress and preventing the SCP to function are
being considered.  In addition, Group B will increase its
coordination to advance its agenda on the various issues before the
SCP, such as in the areas of technology transfer, limitation and
exceptions, client-attorney privilege, opposition systems, and
dissemination of patent information. END COMMENT.
GRIFFITHS

Next, we are going to look at some EU positions on the subject. █

Summary: Letters from Japan herald an era of patent colonialism, or at least this ambition

SEVERAL days ago we wrote about the Trilateral Patent Offices in relation to the Global Patent System (set up by authorities of only the richest 10% of the world’s population). That would be the sort of system which mostly inherits its principles from the world’s elite, putting in jeopardy all those without a monopoly.

According to the following cable that we found, “At the annual Trilateral Meeting of the U.S. Patent Office (USPTO), the Japan Patent Office (JPO) and European Patent Office (EPO) in Tokyo on November 16, the three agencies announced several small but significant initiatives that will save time and money for patent applicants, including agreeing to standardize the format for patent applications among all three offices starting in 2007 and electronic exchange of some of the documents needed to file in a second or third patent office.”

They are preparing to have a global system. Right now they just try to centralise everything in Europe and recently the USPTO started sharing information with the EPO. The EPO’s Web site bragged about it only days ago. To quote further from this cable: “The three Patent offices agreed to conduct a comparative study on examination practices, an important step towards the goal of harmonization of patent examinations.

“They recognized the strategic importance of access to Chinese patent documentation and the three agencies agreed to urgently consider how make this access efficient and easy.

“The USPTO and JPO are able to move more quickly than the EPO can, and the two offices are actively working towards the mechanisms that will permit mutual recognition of patent examinations.

“USPTO experts, however, said privately that the Japanese press has consistently misrepresented the U.S. position by wrongly reporting that the USPTO has already agreed to shift from a first to invent to first to file system.

Put that together with the recent ‘reform’ and imagine their vision of imposing patent regime on everyone everywhere.

The cable comes from Japan, which is trying to tame China with patents to assure artificial scarcity.

VZCZCXRO3525
RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #6614/01 3240738
ZNR UUUUU ZZH
R 200738Z NOV 06
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 8436
RHEHAAA/WHITE HOUSE WASHDC
INFO RUEHFR/AMEMBASSY PARIS 5124
RUEHOK/AMCONSUL OSAKA KOBE 2276
RUEHKSO/AMCONSUL SAPPORO 9910
RUEHNAG/AMCONSUL NAGOYA 8465
RUEHFK/AMCONSUL FUKUOKA 8866
RUEHNH/AMCONSUL NAHA 1355
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 07 TOKYO 006614 

SIPDIS 

SIPDIS 

SENSITIVE 

PARIS PLEASE PASS USOECD
STATE PLEASE PASS USTR 

E.O. 12958: N/A
TAGS: ETRD [Foreign Trade], ECON [Economic Conditions],
JA [Japan; Okinawa; Ryukyu Islands], ZO [North Asia],
EAGR [Agriculture and Forestry]
SUBJECT: The Japan Economic Scope Q- Economic News At-
A-Glance. 

Sensitive but unclassified.  Please protect
accordingly. 

¶1. (SBU) Table of Contents 

¶3. METI Minister Calls for Deepening of U.S.-Japan
Economic Relations
¶4. Keidanren Joins Call for a U.S.-Japan FTA
¶5. ACCJ Business White Paper Says Economic Integration
Agreement Is Needed
¶6. Kansai Business Leaders Meet Finance Minister in
Osaka; FTAs, EPAs Stressed
¶7. Indonesia EPA Negotiators Near Agreement "In
Principle, on Major Elements"
¶8. Triangular Merger Issue Still Being Debated
¶9. Toyota To EMIN: Major North American Production
Increase; Focus on Hybrids Not Flex-Fuel
¶10. EMIN Discusses Nagoya's Central Japan
International Airport
¶11. Commercial MC Peters' Nagoya Visit Highlights
Business Aviation and Consumer Products
¶12. Dreamliner Production Takes Off in Central Japan
¶13. Mitsui & Co. Confident Russia Will Allow Sakhalin
2 to Continue
¶14. Union Leader Says Most Labor Legislation Won't Be
Ready for 2007 Diet
¶15. Patent Harmonization Progress
¶16. Foreign Investment in the Regions:  Seattle-Based
Lindal Cedar Homes Establishes Presence in Hokkaido
¶17. Q3 GDP Data Released 

¶2.  (U) The Japan Economic Scope (JES) is a weekly e-
newsletter produced by Embassy Tokyo's ECON section in
collaboration with other sections and constituent
Posts and published every Friday.  It provides a brief
overview of recent economic developments, insights
gleaned from contacts, summaries of the latest cables
and a list of upcoming visitors.  This cable contains
the November 17, 2006, JES, minus the attachments that
accompany many of the individual stories in the e-mail
version.  To be added to the e-mail list, please email
ProgarJ@state.gov. 

¶3. (SBU) METI Minister Calls for Deepening of U.S.-
Japan Economic Relations
------------------------ 

METI Minister Akira Amari highlighted three ways to
deepen U.S.-Japan economic relations at a November 13
lunch held by the U.S.-Japan Business Council. 

First, Amari suggested using APEC as a mechanism for
strengthening ties.  Regarding an APEC-based regional
free trade agreement, he repeated the METI line that
the Ministry's own "ASEAN+6" concept of regional
integration could facilitate the goal of an eventual
APEC-wide agreement. 

Second, Amari pointed out areas of greater direct
bilateral cooperation between the United States and
Japan on promoting common interests in East Asia such
as in energy and intellectual property protection. 

Finally, in response to the Business Council's support
for a "high-level, comprehensive, and commercially
meaningful" free trade agreement between the United
States and Japan, Amari thanked the Council for its
proposal and indicated it was worth further study. 

Ambassador Schieffer, in remarks following the lunch,
stressed that any agreement between the Untied States
and Japan would need to be comprehensive and include
agriculture. 

¶4.(U) Keidanren Joins Call for a U.S.-Japan FTA
--------------------------------------------- -- 

Keidanren, Japan's leading business and industrial
association, said it would formally join the recent 

TOKYO 00006614  002 OF 007 

chorus for a U.S.-Japan bilateral FTA on November 21.
Keikichi Honda, chairman of the Keidanren committee
that handles relations with the United States, told
EMIN November 17 that their announcement will
encourage the two governments to begin work as soon as
possible towards a broad economic partnership
agreement. 

Honda said the scope of Keidanren's vision is
comprehensive, including agriculture and services, but
falls short of his personal hope to also incorporate
mutual recognition of the professional certification
of lawyers, CPAs, and even doctors. 

Keidanren follows the ACCJ and the U.S.-Japan Business
Council among private sector organizations that
publicly are encouraging the USG and GOJ to begin work
towards a comprehensive economic cooperation
agreement. 

¶5. (U) ACCJ Business White Paper Says Economic
Integration Agreement Is Needed
------------------------------- 

The American Chamber of Commerce in Japan (ACCJ)
released its "ACCJ Business White Paper: 'Working
Together, Winning Together'" last week in Tokyo,
calling for further reform and recommending the U.S.
and Japan initiate talks leading to an Economic
Integration Agreement (EIA). 

A first step toward the EIA, the report says, should
be to "restructure and reinvigorate" the Economic
Partnership for Growth by creating a cabinet level
ministerial economic forum to discuss bilateral,
regional, global strategic issues concerning the two
countries and which offer opportunities for
cooperation. 

The report also calls for the U.S. and Japan to
establish a new set of U.S.-Japan Economic Cooperation
Working Groups to address possibilities for further
bilateral economic cooperation, particularly in the
areas covered by the White Paper. 

The White Paper provides analyses and recommendations
on specific reforms in the following areas:
macroeconomic issues; the financial system; the
healthcare system; physical infrastructure and air
transport; information technology and communications;
consumer products and food; the legal system; human
resources; and government reform, procurement, and
privatization; Japan in an integrating Asian economy;
and international systems and bilateral economic
dialogue. 

The last ACCJ white paper on these issues was released
in 2001. 

For more information see the ACCJ's press release.
The full report will be put on the web later. 

¶6. (SBU) Kansai Business Leaders Meet Finance Minister
in Osaka; FTAs, EPAs Stressed
----------------------------- 

Representatives of Kansai's major economic
organizations had their first meeting with new
Financial Minister Koji Omi in Osaka. 

Kansai Economic Federation (Kankeiren) Chairman
Yoshihisa Akiyama emphasized to Omi that the
importance of the economic relationship between Kansai
businesses and the Asian economy, and requested the
Minister to consider FTAs and EPAs with Asian
countries. 

Kansai Association of Corporate Executives (Kansai
Keizai Doyukai) Co-chairman, Shunzo Morishita also 

TOKYO 00006614  003 OF 007 

requested the Minister to promote decentralization
(doshuseido) and tax resource transfer from the
national governments to local governments, important
factors for activating local economies. 

FinMin Omi mentioned that it would be a priority for
GOJ to fix disparities among local governments. 

One Doyukai staffer said that it was meaningful to
bring the GOJ up to speed on the economic situation in
the Kansai and to make requests of the GOJ, but it is
more important for the Kansai economy in the long run
for business people to strengthen day-to-day relations
with the national government to increase central
government bureaucrats' understanding of the needs of
the region. 

Unfortunately, the clout of Kansai business leaders
with the GOJ continues to decrease, according to our
contact. 

¶7.  (SBU) Indonesia EPA Negotiators Near Agreement "In
Principle, on Major Elements"
----------------------------- 

Japan and Indonesia are near agreement "in principle,
on major elements" to an Economic Partnership
Agreement (EPA), Indonesian Embassy officials told us
November 16. 

The Indonesian president's impending November 26
arrival -- PM Abe's first state visit -- have kept
negotiators motivated. 

The officials stated the agreement will include an
unprecedented energy chapter on oil and gas industry
transparency, which they called a priority for Japan,
and added that Indonesia is looking to improve upon
provisions in the Japan-Philippine agreement that
allow entry for some nurses and caregivers. 

Market access continues to be tough for negotiators,
according to the officials, but steady progress has
been realized in areas such as services, investment,
IPR, government procurement, competition policy,
dispute settlement, and improving the business
environment. 

Although the goal had been to wrap up negotiations by
the end of 2006, the officials speculated that the
agreement would not be signed before mid-2007, as the
Indonesian parliament must finalize new investment
legislation before the EPA can be concluded. 

¶8. (SBU) Triangular Merger Issue Still Being Debated
--------------------------------------------- ------- 

The debate over triangular mergers continues to be a
daily topic in the press with the tide beginning to
turn against Keidanren. 

The Nikkei, Japan's leading business daily, in a
November 16 editorial, criticized Keidanren's
proposals as placing "unfair restrictions on use of
the merger formula." 

Nikkei said there were "no reasonable justification
for taking any further steps to protect shareholders",
and rightly noted that cash takeover bids (TOB)
constitute a greater threat of hostile moves against
Japanese companies than triangular mergers. 

The tone of Keidanren public statements has also
shifted in recent days.
Vice Chairman Miyahara on November 13 said the
Federation "basically supports triangular mergers" but
called for "necessary policy measures before the
implementation." 

TOKYO 00006614  004 OF 007 

In our many meetings with ministerial officials and
Diet members on this issue over the last few weeks, we
have detected little sympathy for Keidanren' views.
Descriptions of Keidanren's position within the
bureaucracy range from "unreasonable" to "eccentric"
and Diet members express to us support for increased
FDI. 

European contacts report similar generally positive
reactions to their outreach.
EU Ambassador Richardson wrote to Mitarai and all 15
Keidanren Vice-Chairmen warning them of the damage to
Japan's investment climate if the government adopts
Keidanren's position. 

We will continue to call on members of the LDP
Judicial Affairs Committee in the coming days. 

Meanwhile, the Government's Tax Commission agreed to a
basic framework for introducing tax deferral for
triangular mergers starting May 2007. 

The commission noted that without such deferral these
deals would not occur. 

¶9. (SBU) Toyota To EMIN: Major North American
Production Increase; Focus on Hybrids Not Flex-Fuel
--------------------------------------------- ------ 

EMIN Hans Klemm visited Toyota's Tsutsumi Plant and
met with the Central Japan Economic Federation
(Chukeiren) on November 8. 

Toyota Managing Officer Masayuki Nakai said that the
opening of the San Antonio Tundra pick-up plant this
month, which Amb. Schieffer attended, along with a new
factory in Canada and expansion elsewhere will raise
Toyota's North American production capacity by 700,000
per year.  In 2005, Toyota built 1.55 million vehicles
in North America. 

 Although pursuing flex-fuel vehicle technology,
Toyota continues to stress hybrids, assuming that the
standard level of ethanol in American gasoline will
not rise above 10% in the next decade. 

¶10. (SBU) EMIN Discusses Nagoya's Central Japan
International Airport
--------------------- 

In Nagoya, EMIN also met with the Central Japan
Economic Federation (Chukeiren) on November 8. 

Chukeiren Director General Kiyoh Kinoshita made a
strong pitch for increased passenger service from
Nagoya's Central Japan International Airport to U.S.
destinations and lamented American Airlines' decision
to suspend their Nagoya-Chicago route last fall. 

EMIN explained the USG's efforts in bilateral talks to
gain new Nagoya-U.S. and Nagoya-Asia cargo routes for
two American cargo carriers.  Kinoshita expressed the
Chukeiren's support for that objective. 

¶11. (SBU) Commercial MC Peters' Nagoya Visit
Highlights Business Aviation and Consumer Products
--------------------------------------------- ----- 

 While in Nagoya November 7 to give a speech to the
Central Japan chapter of the American Chamber of
Commerce in Japan, Commercial Minister Counselor John
Peters met with the head of Oaklawn Marketing and
JETRO and Prefectural Officials. 

Oaklawn COO Harry Hill explained how, in just over a
decade, the local American-owned television-marketing
firm had grown from zero to $200 million sales per 

TOKYO 00006614  005 OF 007 

year and the largest purchaser of television time in
Japan. 

Hill expressed enthusiasm for working with the
Commercial Service to find more ways to present
American products, particularly from SMEs, to Japanese
consumers. 

During a call by MC Peters, Nagoya JETRO Chief
Director Hiroki Matsumoto detailed the strong state of
the regional economy and said that, despite JETRO's
current focus on increasing inbound FDI, the
organization continues to promote imports of goods and
services, not least for their positive impact on
investment. 

Peters also met with Aichi Prefecture Vice Governor
Makoto Nishimura to move forward with planning for the
February 9, 2007, National Business Aviation
Association (NBAA) Air Exhibition in Nagoya to be co-
organized by the Commercial Service and Aichi
Prefecture. 

Vice Governor Nishimura, who attended the NBAA
convention in Orlando this month, pledged to work
whole-heartedly to make this joint enterprise a
success and to expand the business aviation market in
Japan. 

¶12. (SBU) Dreamliner Production Takes Off in Central
Japan
----- 

"The biggest industrial project ever undertaken by an
American firm in Japan," is Boeing's description of
787 Dreamliner fuselage section and wing production by
its Japanese partners in the Nagoya area. 

During separate visits, Ambassador Schieffer and EMIN
saw and discussed how production of major 787
components in Central Japan is getting underway using
first-ever processes for carbon composite aircraft. 

Those components will be flown on the world's largest
cargo aircraft to Everett, Washington, where, starting
next year, final assembly of each Dreamliner is to
take place in just three days using an adaptation of
Toyota's just-in-time production system. 

¶13. (SBU) Mitsui & Co. Confident Russia Will Allow
Sakhalin 2 to Continue
---------------------- 

On October 27 Econoff met with Mitsui & Co. General
Manager of Planning Ken Yamaguchi and General Manager
of Sakhalin Development Toru Matsui to discuss Mitsui
& Co.'s investments in the Russian Sakhalin 2 oil and
gas project.
(Note: Sakhalin 2 is owned by Sakhalin Energy, a
consortium consisting of Royal Dutch Shell, which
holds a 55 percent stake, Mitsui & Co. with 25
percent, and Mitsubishi Corp. with 20 percent.
Sakhalin 1's primary shareholder is ExxonMobil.) 

Matsui believes that the Russian Ministry of Natural
Resources and Energy has no intention of nullifying
the Sakhalin 2 project over environmental violations.
He identified the real issues as the huge cost
overruns of the project and Russian gas major
Gazprom's desire to become part of the project. 

Matsui also commented that the term "energy
nationalism" did not apply to Japan, adding that the
Japanese government has very little influence in
Japan's energy market. 

¶14. (SBU) Union Leader Says Most Labor Legislation
Won't Be Ready for 2007 Diet 

TOKYO 00006614  006 OF 007 

---------------------------- 

Of the major pieces of labor legislation the Ministry
of Health, Labor, and Welfare (MHLW) wishes to present
in the regular 2007 Diet session, only the new Labor
Contracts Law is likely to be ready for consideration,
a senior official of one of Japan's largest labor
unions told Econoff November 13. 

The official, who sits on MHLW's Labor Policy Council,
said that differences between union and management
positions remain too large to be resolved in time. 

He singled out two issues as key sticking points in
negotiations to revise the Labor Standards Law: white
collar exemptions and monetary settlements in lieu of
employee re-instatement. 

Both are top priorities of the American Chamber of
Commerce in Japan (ACCJ). 

¶15. (U) Patent Harmonization Progress
------------------------------------- 

At the annual Trilateral Meeting of the U.S. Patent
Office (USPTO), the Japan Patent Office  (JPO) and
European Patent Office (EPO) in Tokyo on November 16,
the three agencies announced several small but
significant initiatives that will save time and money
for patent applicants, including agreeing to
standardize the format for patent applications among
all three offices starting in 2007 and electronic
exchange of some of the documents needed to file in a
second or third patent office. 

The three Patent offices agreed to conduct a
comparative study on examination practices, an
important step towards the goal of harmonization of
patent examinations. 

They recognized the strategic importance of access to
Chinese patent documentation and the three agencies
agreed to urgently consider how make this access
efficient and easy. 

The USPTO and JPO are able to move more quickly than
the EPO can, and the two offices are actively working
towards the mechanisms that will permit mutual
recognition of patent examinations. 

USPTO experts, however, said privately that the
Japanese press has consistently misrepresented the
U.S. position by wrongly reporting that the USPTO has
already agreed to shift from a first to invent to
first to file system. 

¶16. (U) Foreign Investment in the Regions:  Seattle-
Based Lindal Cedar Homes Establishes Presence in
Hokkaido
-------- 

In late October, Robert W. Lindal, CEO of Seattle-
based Lindal Cedar Homes, visited Niseko village,
located about 100km southwest of Sapporo, to survey
the construction of four U.S.-style vacation homes. 

The construction of the homes uses natural materials
imported from North America to help the buildings
blend in with their environment. 

Consul Hillman and EconFSN Baba accompanied Mr.
Lindal, and the Hokkaido Shimbun interviewed Mr.
Lindal and Consul Hillman. 

The newspaper ran an article based on the interviews
that highlighted the homebuilding project as an
example of increased U.S. investment in the region. 

The company plans to build four more homes on 1.6 

TOKYO 00006614  007 OF 007 

hectors of land it has already purchased next to the
current development zone. 

¶17. (U) Q3 GDP Data Released
---------------------------- 

While headline GDP figures were higher than expected,
at two percent annualized, final domestic demand
contributed -0.9 percentage points, due primarily to
weak consumption. 

Significant contributors to growth were net imports
(1.6 percentage points) and inventory accumulation
(1.2 percentage points). 

SCHIEFFER

A global patent system would be an atrocious idea that everyone but a few billionaires and their patent lawyers (or politicians whom they fund) should resist fiercely. █

Summary: IBM is proving yet again that it is working to spread software patents even outside the United States, painting itself part of the problem

IN A CABLE from Beijing we find more evidence of IBM’s lobbying for software patents, which is not surprising. But in this case, IBM joins the Japanese push to put software patents even in China. IBM is a proprietary software giant and increasingly a private bank (loans) that also sells services and patents (e.g. to Google). Here is the Cablegate cable in full:

VZCZCXRO8810
OO RUEHCN RUEHGH
DE RUEHBJ #2101/01 0881202
ZNR UUUUU ZZH
O 291202Z MAR 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6299
INFO RUEHCN/AMCONSUL CHENGDU 8057
RUEHGZ/AMCONSUL GUANGZHOU 2645
RUEHGH/AMCONSUL SHANGHAI 7192
RUEHSH/AMCONSUL SHENYANG 7737
RUEHHK/AMCONSUL HONG KONG 9072
RUEHIN/AIT TAIPEI 6325
RUEHKO/AMEMBASSY TOKYO 1243
RUEHUL/AMEMBASSY SEOUL 9985
RUEHMO/AMEMBASSY MOSCOW 8605
RUEHGV/USMISSION GENEVA 1709
RUEAHLC/DHS WASHDC
RUCPDOC/USDOC WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RHMCSUU/FBI WASHINGTON DC

UNCLAS SECTION 01 OF 16 BEIJING 002101 

SIPDIS 

State for EAP/CM - JYamomoto and EB/IPE - EFelsing 

USTR for China Office - AWinter; IPR Office - RBae; and OCG
- SMcCoy 

Commerce for National Coordinator for IPR Enforcement -
CIsrael 

Commerce for MAC 3204/ACelico, LRigoli, ESzymanski 

Commerce for MAC 3043/McQueen 

LOC/ Copyright Office - MPoor 

USPTO for Int'l Affairs -- LBoland 

DOJ for CCIPS - Asharrin
DOJ for SChembtob
FTC for Blumenthal
FBI for LBryant 

DHS/ ICE for IPR Center - DFaulconer 

DHS/CBP for IPR Rights Branch - PPizzeck 

SENSITIVE
SIPDIS 

E.O. 12958: N/A
TAGS: KIPR [Intellectual Property Rights], ETRD [Foreign Trade],
ECON [Economic Conditions], WTRO [World Trade Organization],
CH [China (Mainland)]
SUBJECT: CHINA MISSION 2007 SPECIAL 301 RECOMMENDATION:
PRIORITY WATCH LIST AND CONTINUED SECTION 306 MONITORING
(PART ONE) 

REF:   (A) 2006 BEIJING 05968 

(B) 2006 BEIJING 10459
(C) 2006 BEIJING 24195
(D) 2006 GUANGZHOU 15230
(E) 2006 GUANGZHOU 21191
(F) 2007 SHANGHAI 1774
(G) 2007 SHANGHAI 1866
(H) 2006 CHENGDU 946
(I) 2006 CHENGDU 1095 

---------------------------
Summary and Recommendation
--------------------------- 

¶1. (SBU) Summary.  This is the first of two cables to
assist Washington, DC agencies in their Section 301
decision making for China.  This cable focuses on non-
enforcement related IPR issues, including policy
developments, legislative developments and patent and
trademark prosecution.  Post recommends that China remain
on the Priority Watch List (PWL) with Section 306
monitoring based on the data in this and subsequent cables.
IPR problems in China continue to outpace enforcement
improvements.  There are increasing concerns over other
areas where the TRIPS Agreement and other bilateral
agreements offer little protection, such as exports of
counterfeit goods, Internet copyright issues, trade secret
protection, antitrust, and technology transfer.  The
benefits of a WTO case should be weighed against any costs
in bilateral cooperation (e.g., through Mutual Legal
Assistance arrangements for internet issues), the delays in
obtaining a final decision and compliance, and the
likelihood any decision might be superseded by other
problems.  Post also continues to encourage and support
stronger interagency coordination as well as coordination
with other concerned trading partners, such as the EC,
Japan and Australia.  End Summary. 

------------------ -------------------------------
Industries Suggest Modest Improvement Has Occurred
------------------ ------------------------------- 

¶2. (SBU) Industry generally reports that the enforcement
and protection of IPR is modestly improving in China, but
that it is still not at a sufficient level to deter
infringing activity.  The improvements, though small enough
to be within a margin of error, are also consistently
revealed across different sectors. 

-- In its 2006 White Paper, AmCham in Beijing advised that 

BEIJING 00002101  002 OF 016 

of 83 companies polled, 55 percent believed that IPR
enforcement had stayed the same in 2005, while seven
percent believed that it had deteriorated and 37 percent
said ithad improved.  Of 76 companies polled, 54 percent
said the level of counterfeiting had stayed the same, seven
percent said it had decreased, and 44 percent said it had
increased. 

-- In its 2007 Section 301 Report, The International
Intellectual Property Alliance showed static piracy levels
of 85 percent for records and music with an increase in
damages from 204 to 206 million USD.  Motion picture piracy
levels had similarly decreased by two percent from 2004 to
2005 from 95 percent to 93 percent.  Numbers for 2006 were
not available.  The problem of keeping pace with ChinaQs
technological growth is also evident in the statistics
presented by the Business Software Alliance, which showed a
drop in piracy levels from 86 percent to 84 percent from
2005 to 2006, while at the same time alleging that losses
increased from USD 1,554 million to USD 2,949 million. 

-- In its Section 301 submission, the International
Anticounterfeiting Coalition (IACC) reports that their
membersQ concerns about IPR enforcement in China remain
Qby-and-large unchangedQ since 2006. 

--In a recent survey commissioned by the Business Alliance
To Stop Counterfeiting and Piracy, China was reported as
the least favorable IPR environment, among 53 countries,
with a weighted ranking of 3.49, against the next highest
country, Russia of 2.25.  China was rated the most
unfavorable country for IPR 37 times.  Russian was rated
the least favorable only 29 times. 

-- A survey in 2006 of members of the China-based
multinational Quality Brands Protection Committee (QBPC)
revealed that 30 percent of reporting members believed that
the counterfeiting/piracy situation had worsened in 2006,
with the majority of respondents describing the worsening
as QmoderateQ to QsignificantQ.  By contrast, 28 percent
reported that the problem had improved during 2006, with
most characterizing the improvement as QslightQ to
QmoderateQ.  Forty percent of the members believed that the
state of counterfeiting and piracy had remained the same in
2006 compared to 2005. 

-- QBPC Members also reported that the proportion of the
market occupied by counterfeit goods in 2006 was about the
same as in previous years.  Among respondents,
approximately 41 percent reported that at least 11 percent 

BEIJING 00002101  003 OF 016 

of their products in the market were fake (19 percent
reported 11 to 25 percent; nine percent reported 26 to 50
percent, and 13 percent reported over 50 percent).  The
remaining 60 percent of members reported that fakes
occupied 10 percent or less of the market for their branded
goods.  Estimates of lost revenue due to IP violations in
China in 2005 decreased slightly compared to 2004.  Among
reporting members, 88 percent advised that their lost
revenue due to IP violations in 2005 was 15 percent or
less, compared with 79 percent in 2004.  However, 10
percent of members estimated revenue losses in excess of 20
percent.  (QBPC Annual Membership Survey - 2006). 

-------------------- ------------------------------
Industries Suggest Immediate Prospects Are Not Rosy
--------------------- ----------------------------- 

¶3. (SBU) Overall, industry is not optimistic about the
future.  QBPC membersQ opinions were roughly split on the
Chinese governmentQs commitments to addressing
counterfeiting/piracy, with 44 percent assessing the
government's commitment as QexcellentQ, "good" or
"satisfactory" while 44 percent rated it as "fair".  Local
protectionism continued to be a major concern for members,
with over 75 percent wanting to see greater efforts made in
this area. 

¶4. (SBU) In his February 15, 2007 testimony before the
House Ways and Means Committee, Dan Glickman of MPAA stated
that 61 percent of motion picture industry respondents
surveyed said they believe movie piracy will continue to
increase, while 39 percent said they believe piracy levels
will hold steady.  No one interviewed believed that the
market for pirated films will shrink. (Statement of Dan
Glickman, Chairman and Chief Executive Officer Motion
Picture Association of America, Before the Subcommittee on
Trade Committee on Ways and Means QThe US-China Trade
AgendaQ, February 15, 2007. )  (Note: The Mission also
hosted a seminar on the future of copyright protection and
market access on March 26 and hopes to report further on
the prognosis for the copyright industries in 2007 and the
next several years.  End Note.) 

¶5. (SBU) Chinese research organizations also conduct
periodic surveys on counterfeiting and piracy.  For
example, the Sample Investigation Report on Reading and
Buying Inclinations of People Across China (2006) (Chinese
Institute of Publishing Science) showed little change from
2001 - 2005 in people's attitudes towards buying pirated
publications.  Between 2003 and 2005, respondentsQ 

BEIJING 00002101  004 OF 016 

inclination to purchase pirated AV products rose from 77.7
percent to 83.3 percent, compared to drops in other
categories.  Common publications dropped from 33.3 to 22.1
percent; textbooks dropped from 13.2 to 9.5 percent; and
software dropped from 12.4 to 10.3 percent. 

¶6. (SBU) In 2006, China Labs released a study on software
piracy which indicated that the general piracy rate of
computer software is 66 percent, in which, system software
is the highest, reaching 75 percent and industry
applications is the lowest, 31 percent.  The software that
is pirated most seriously is: office software (84 percent)
and operating system (81 percent).  Measured by market
value, pirated software was worth about 140 billion Yuan,
in which system software accounts for 47 percent,
applications 43 percent and supporting software 10 percent.
The piracy rate is 57 percent based on computer software
sales, 40 percent based on the sales of software products
(including embedded software) and 26 percent based on the
sales of the whole software industry (including software
service and integration, and software exports). 

----------------------- ------------------------------
2005 Review - Roundtable Identifies Continued Problems
----------------------- ------------------------------ 

¶7. (SBU) In November 2006, Ambassador Randt hosted his
fifth annual AmbassadorQs Roundtable Discussion on
Intellectual Property Rights in China in Beijing (ref C).
Secretary of Commerce Carlos Gutierrez and China's Minister 

SIPDIS
of Commerce Bo Xilai participated in the Roundtable, which
drew about 250 industry representatives.  Secretary
Gutierrez cited three areas to improve IP enforcement: (1)
lowering criminal thresholds, (2) offering greater market
access for audio-visual products, and (3) better
enforcement, particularly in cracking down on criminal
organizations.  Minister Bo Xilai said that China's battle
against IPR infringement has stepped up, including opening
50 IPR complaint centers that have received over 15,000
inquiries.  The China Trademark Office said that the
Trademark Law will simplify and shorten the trademark
examination period, limit opposition filings to cut down on
abuses, and specify different types of infringement. 

¶8. (SBU) Industry representatives at the Roundtable
unanimously emphasized market access and law enforcement as
the most fundamental problems facing industries doing
business in China.  Industry members specifically called
for: (1) increasing manpower and budget to deter copyright
infringement; (2) fostering access to China's government- 

BEIJING 00002101  005 OF 016 

controlled movie business and stronger IPR enforcement in
the film business; (3) promoting legislative reform,
transparency, and public awareness initiatives to protect
trademarks in China; (4) addressing the Internet
distribution of counterfeit medicines; (5) implementing
more rapidly software legalization requirements for State
Owned Enterprises; and (6) improving market access for game
software. 

--------------------------------
High-tech Creates New IPR Issues
-------------------------------- 

¶9. (SBU) IPR concerns are also increasingly migrating to
higher technology areas with greater stakes for U.S.
research and development interests, in line with ChinaQs
increasing focus on Qself-reliant innovation.Q   Among the
40 respondents to an ANSI survey on policy concerns in
China, 78 percent expressed concern about ChinaQs IP and
standardization policies, while 56 percent were Qvery
concernedQ or considered it their Qhighest priority.Q
PhRMAQs members estimate their damages at 34 percent of
sales, the highest in percentage and absolute terms of any
country reported. 

-------------------
The Internet Threat
------------------- 

¶10. (SBU) Although there were positive developments this
year in Internet IPR related legislation and enforcement,
ChinaQs rapid growth in Internet usage, coupled with
persistently weak IPR enforcement, has caused many rights
holders, particularly in copyright and brand sectors, to be
concerned.  These issues were also identified in the
AmbassadorQs IPR Roundtable which focused on Internet-
related IPR issues. 

¶11. (SBU) With approximately 140 million Internet users,
China ranks second in the world.  China also has 843,000
websites and the number of Q.CNQ domain names increased by
64.4 percent over 2005 to 1.8 million.  Broadband users
increased to 90.7 million, to about two thirds of ChinaQs
internet users.  In one survey by ChinaQs Press and
Publications Journal, net users selected the Internet as
their major means for getting information (85 percent).
Seventeen million Internet users use their mobile phone to
access the Internet, while 72 percent use the internet and
send and receive email.  By 2008, China will have the most
Internet users in the world. 

BEIJING 00002101  006 OF 016 

¶12. (SBU) The Internet environment is creating both
challenges for enforcement and market opportunities.
Changes in the entertainment software sector have been
dramatic.  In 2006, the market value of Chinese-created
Internet games was 4.24 billion RMB, 64.5 percent of the
total internet game market value.  It increased 87.4
percent compared to 2005.  The market value of mobile phone
games was 1.48 billion RMB, a 50.2 percent increase over
the previous year.  The market for personal computer (PC)
games in 2006 was almost unchanged.  The sales income was
only 65 million RMB. (Data is prepared by the Electronic &
Internet Phonograms Publishing Department of NCAC,
Committee of China Game Industry and IDC IntQl Data Corp.).
Similar growth is expected in the Qnetwork musicQ market,
which was worth 2.78 billion RMB in 2005 and is expected to
grow by 50% in 2006. 

¶13. (SBU) The challenges of IPR protection in ChinaQs
internet environment are not limited to copyright.  In its
annual survey, the Quality Brands Protection Committee
noted that the sale of counterfeit goods via the Internet
is now a key area of concern for members, with 74 percent
characterizing the problem as either QveryQ (30 percent) or
QsomewhatQ (44 percent) serious.  IACC in its Section 301
report tabulated the number of hits for certain brands on
one of ChinaQs major B2B sites, taobao.com: 737,000 hits
for Nike, 452,000 for Adidas, 171,000 for Puma, and 109,000
for Abercrombie and Fitch, among other brands.  Among non-
fashion brands, there were 6,100 hits each for Zippo and
Cisco.  Of course, not all of these hits may be for
counterfeits, but the large numbers suggest many
counterfeit vendors. 

¶14. (SBU) (Note: Because investigations into parties
offering counterfeits and pirates over the Internet is
time-consuming and rarely achieves the goal of identifying
the vendor, these cases require the active support of local
authorities, especially the police and prosecutors.  End
Note.) 

-------------------- -----------------------
Post Recommendation: Mutual Legal Assistance
-------------------- ----------------------- 

¶15. (SBU) ChinaQs limited enforcement over the Internet
raises Section 301 concerns.  For the time being, however,
the Mission recommends pursuing Internet based cases with
China as both a trade and law enforcement priority under
Mutual Legal Assistance arrangements as well as through 

BEIJING 00002101  007 OF 016 

promoting ChinaQs cooperation with third countries (such as
by accession to the Council of Europe Cybercrime
Convention), in order to make further inroads into this
important area.  If China is unwilling to cooperate in
pursuing cases, this failure should be raised through
higher level channels, such as the JCCT or perhaps the
Strategic Economic Dialogue. 

------------------------
Legislative Developments
------------------------ 

¶16. (SBU) In 2006, China drafted a range of new laws and
regulations.  In addition, several important macro-level
IPR-related policy documents were under consideration: (a)
the National IPR Strategy, which is scheduled to be
promulgated in mid-2007; (b) the 11th Five Year Plan
(2006), which establishes a national goal of Qself reliant
innovationQ; and (c) the 15 year Science and Technology
Plan.  The first two documents were reported in last yearQs
301 cable and other reports.  While ChinaQs goal of
becoming an innovative society is laudable, U.S. industries
have  increasingly expressed concern that these policy
documents appear to support antitrust measures, patent
abuse and patent misuse doctrines, standards policy, all of
which could weaken the value of U.S. rights holders.  These
concerns arise from the above-mentioned policy documents
and other related national and local documents, such as the
National Standards Strategy, Famous Brands Strategy, as
well as proposals for developing ChinaQs cultural markets
and industries. 

¶17. (SBU) The new laws and regulations are ChinaQs most
significant legislative drafting effort in IPR since
joining the WTO in 2001.  In 2006, SIPO posted the draft of
the third revision of ChinaQs Patent Law on its website and
solicited public comments.  A SIPO delegation visited the
United States to discuss the draft.  The State Council
Legislative Affairs Office (SCLAO) is reviewing the draft,
which could be adopted as early as 2008.  Also in 2006, the
Chinese Trademark Office initiated an effort to revise the
Trademark Law.  The draft was also placed on the CTMO
website for public comment.  We understand that another
draft may be made available before the CTMO draft is
transmitted to the SCLAO for its review and retransmission
to the National PeopleQs Congress (NPC).  For the third
straight year, the State Administration for Industry and
Commerce has als been preparing revisions to the Law to
Counter Unfair Competition.  This draft may also be
submitted to the SCLAO for its review in 2007.  The draft 

BEIJING 00002101  008 OF 016 

would likely include consideration of trade secret law
reform - an issue that has been raised at both the SED and
in discussions regarding cooperation in commercial law
reform under the JCCT Commercial Law Working Group.  The
General Administration of Press and Publications has also
advised that early stage research may also be underway by
copyright-related ministries on copyright law reform. 

¶18. (SBU) In 2007 the SCLAO is scheduled to adopt a new
regulation on patent agents, the SAIC is also considering
rules to handle the abusive registration of trademarks.  In
addition a new regulation on company name registration is
under consideration which could also address abusive
registration of company names.  An initial effort has
already been undertaken in this regard on registration of
trademarks by natural persons. 

¶19. (SBU) In 2006 the State Council adopted the Regulations
on the Right of Communication to the Public.  In December
2006, the NPC completed its first reading of the WIPO
Copyright Treaty and WIPO Performances and Phonograms
Treaty with a view towards accession in 2007.  ChinaQs
accession to the WIPO Treaties was part of its JCCT
Commitments and appear on track, albeit with some delay. 

¶20. (SBU) The Supreme PeopleQs Court adopted a number of
new judicial interpretations (JI) in 2006, including civil
JIs on: Unfair Competition (2007), Plant Variety Protection
(2007), and Internet Copyright Protection (2006, revised). 

¶21. (SBU) There are several research projects underway that
could assist in legislative reform.  The Mission is aware
of several efforts to consider revising aspects of the
Criminal Code.  The Supreme PeopleQs Court, criminal
division, is also researching changes to ChinaQs criminal
counterfeit pharmaceutical law and related judicial
interpretations. 

¶22. (SBU) The Mission is unable to thoroughly review all
local laws and regulations.  MOFCOM has collected many
local laws and regulations at the ChinaQs national IPR
website (http: double backslash www.ipr.gov.cn). 

----------------------------
IPR Prosecution Developments
---------------------------- 

¶23. (SBU) ChinaQs Trademark Office (CTMO) remains the
worldQs busiest.  According to preliminary data, the CTMO
received over 700,000 trademark applications in 2006. 

BEIJING 00002101  009 OF 016 

Also, the CTMO registered 260,000 trademarks in 2006, for a
total of 2,760,000 registered trademarks.  If 2006 data
consistent with prior years, one can infer that
approximately one tenth of these applications were from
foreigners.  Chinese companies are also increasingly going
global in their trademark applications.  According to the
World Intellectual Property Organization, China's
international trademark applications occupied 8th place
overall, with 1,328 of 36,471 applications or 3.6%. 

¶24. (SBU) Because of backlogs and appeals, it can take 10
years to fully adjudicate a contested trademark case
through opposition, cancellation and appeal proceedings.
These delays make it especially difficult to challenge
abusive registrations in a timely fashion by companies.
Many companies who seek to QsquatQ on another companyQs
trademark or corporate identity are resorting to new
abusive tactics, such  as setting up overseas shell
companies or domestic corporations with similar sounding
names, entering into false license agreements and even
creating counterfeit operational corporations.  The
narrower issue of abusive trademark registrations and
company name registrations has increasingly caught the
attention of Chinese agencies.  A key step to address those
problems would be to increase resources to the trademark
agencies to improve the efficiency and quality of trademark
registrations, oppositions, cancellations, and appeals. 

¶25. (SBU) ChinaQs system for geographical indications
(GIQs) is similar to the U.S. in its use of certification
and collective marks.  USG enjoys good cooperation with the
Chinese Trademark Office in exchanging views on using
trademarks to protect GIQs, and in promoting the use of the
TM-based GI system to Chinese and U.S. industry. 

¶26. (SBU) ChinaQs Patent Office, the State Intellectual
Property Office, has responded more quickly to the
increasing emand on its services and has experienced
remarkable growth.  In 2006, Chinese inventors filed
122,318 invention patents and were granted 25,077.
Foreigners filed 88,172 invention patent applications and
were granted 32,709 patents.  Chinese utility model
applications totaled 159,997 of which 106,312 were granted.
There were only 1,369 foreign utility model patents applied
for, and 1,343 were granted.  Chinese inventors filed for
188,027 design patents and 92,471 design patents were
granted.  There were 13,295 design patents applied for by
foreigners and 10,090 were granted.  (Source:
http: double back slash www.sipo.gov.cn).  Also of note,
of 145,300 international patents filed through the Patent 

BEIJING 00002101  010 OF 016 

Cooperation
Treaty in 2006, ChinaQs filings increased 56.8 percent to
3,910, allowing it overtake Switzerland and Sweden to reach
eighth place in 2006.  Huawei Technologies was the 13th
largest world-wide corporate filer.  Overall, ChinaQs top
three patented technologies were in natural products and
polymers, digital computers, and telephone and data
transmission industries. 

¶27. (SBU) The rapid increase in IP filings suggests that
Chinese companies have now begun to invest in ChinaQs IP
system.  However, Chinese companies are generally not
filing commercially valuable patents.  Design patents in
particular are not subjected to substantive examination,
and have been asserted for abusive purposes against
foreigners, including U.S. companies.  There is currently
no penalty associated with the willful filing of patents on
anotherQs invention, or with the failure to disclose
relevant prior art upon which the patent is based.  The
nearly 100 to 1 ratio of Chinese applications for utility
model patents, and 10/1 for design patents to foreign
applications, and the higher QgrantQ rate of foreign
invention patents, statistically demonstrates the
challenges China faces in its efforts to become a more
innovative economy, and the continuing paucity of high
quality patents.  Overall currently valid foreign-owned
invention patents with continuing validity are more than
two times the number of Chinese-owned invention patents. We
are especially concerned that current efforts to stimulate
QinnovationQ by mandating that Chinese companies file more
patents could further put pressure on Chinese agencies to
subsidize, reward, grant and enforce patents that are not
innovative or commercially viable.   (QAn Analysis of the
Situation Regarding Patents Currently in Effect in China,Q
China Intellectual Property News, March 14, 2007 at 5). 

¶28. (SBU) The TRIPS Agreement obliges member countries to
provide an opportunity for a judicial authority to review
final administrative decisions.  Currently appeals of final
patent and trademark office decisions are made to the
Beijing Intermediate Court.  Discussions with the Beijing
High Court suggest a reversal rate by the civil division of
the court of final decisions of the State Intellectual
Property Office on the order of 30 percent, while the
Administrative Division of the Court reverses decisions of
the Patent office at a much lower rate (closer to 10
percent).  These reversal rates, if true, may be a welcome
sign of increasing independence of the courts in
considering the validity of administrative decisions.  An
example of such reversals that was welcomed by U.S. 

BEIJING 00002101  011 OF 016 

industry was the June 2, 2006 decision by the Beijing
Number One Intermediate Court to reverse the Patent
Reexamination Board in PfizerQs Viagra patent dispute. 

¶29. (SBU) The Mission, in conjunction with other USG
agencies, is actively encouraging reform of the patent and
trademark systems to support legislative reform, improved
transparency and clarity in examination guidelines, better
management of the patent and trademark offices, higher
quality examinations, and a reduction in abusive practices
that harm foreigners and Chinese alike.  Post is working
with these agencies to improve judicial review of final
office decisions. 

------------
Transparency
------------ 

¶30.  (SBU) Chinese agencies, including the courts, have
increasingly made IPR-related laws, regulations, and rules
available, typically over the Internet.  Increasingly,
rights holders can use the Internet to file complaints, or
apply for patents or trademarks or Customs recordal.  The
Mission, in conjunction with USG agencies, has been pleased
to support these continuing efforts.  Notable efforts have
been made by the CTMO (a searchable trademark database) and
MOFCOMQs Electronics Business Center (which sponsors the
site www.ipr.gov.cn), as well as the Supreme PeopleQs
Court.  These efforts have apparently brought concrete
improvements to our rights holders.  Both the CTMO and
MOFCOM have also reported to the USG that U.S.-based IP
addresses are among the most frequent users of these
electronic information services. 

¶30. (SBU) The Mission also supports efforts to provide
English language complaint forms, English language case
referral advisors, and English language templates for
complaints for IPR-related searching on the Internet.
These English language resources can be especially helpful
to small and medium enterprises that may not have Chinese
speaking staff or a presence in China.  We have been
pleased to see these developments underway in China and to
support their presence throughout the Embassy and consular
districts. 

¶31. (SBU) Many rights holding organizations have also
applauded the increasing transparency of Chinese agencies
in drafting and promulgating new laws, regulations and
rules.  During 2006, the Mission was pleased to provide a
forum for industry to discuss the proposed rules on 

BEIJING 00002101  012 OF 016 

copyright protection over information networks, as well as
to support discussions in Washington and Beijing on
proposed revisions to the Patent and Trademark Laws.  We
have worked with USPTO to help the Chinese Trademark Office
better understand trademark examination rules.  We look
forward to supporting other laws that may be in the earlier
stages of drafting, including the Law to Counter Unfair
Competition, the revised implementing rules to the Patent
Law, and a revised copyright law.  Chinese ministries have
also increasingly expressed an interest in sharing
experience at an early stage in consideration of new laws.
We have also supported providing comments to the Supreme
PeopleQs Court on proposed new Judicial Interpretations. 

¶32. (SBU) There have, however, been shortcomings in these
efforts towards transparency.  The most notable of these
include administrative agencies that refuse to issue
penalty decisions to rights holders and judges who
frequently meet with litigants in private.  Considerable
anecdotal evidence exists for ex-parte communication on
pending cases that might be considered inappropriate in the
U.S. context.  In addition, Chinese agencies have generally
been reluctant to actively share drafts of policies and
judicial interpretations involving criminal IPR matters,
the most notable example of which was the 2004 criminal
judicial interpretation.  Finally, ChinaQs response to the
Article 63 transparency request at the WTO was
disappointing. 

----------------------- -----------------------------------
Standards/Antitrust/Technology Policy of Continuing Concern
----------------------- ----------------------------------- 

¶33. (SBU) Industry remains highly concerned over
intellectual property and standards policies in China.  As
indicated, a recent survey of members of the American
National Standards Institute (ANSI) listed IPR and
standardization policies third among all overarching policy
concerns in China as a "highest priority" area - behind
certification and testing requirements, and transparency.
It remains to be seen how pending legislation in China will
treat intellectual property in standardization,
particularly possible compulsory licensing of patents.  The
Standardization Law is currently being debated in the State
Council and is the source of much contention, according to
a Standardization Administration of China official.
Moreover, as detailed in USTRQs 2006 WTO Compliance Report
and elsewhere, notwithstanding ChinaQs commitment at the
April 2004 JCCT meeting and elsewhere to technology
neutrality on licensing issues, industry complains about 

BEIJING 00002101  013 OF 016 

Chinese interference in licensing discussions.  As one
industry association stated in the context of the 2006
hearings: QTechnology mandates or promotion of unique
national standards are some of the ways China seeks to
foster the domestic development of innovative technologies
and [intellectual property rights].  This policy is also
implemented through direct or indirect interference by
Chinese authorities in licensing negotiations between
Chinese and foreign technology companies.Q 

¶34. (SBU) In September 2006, the NPC conducted its first
reading of the draft Anti-Monopoly Law, legislation which
has been in the works for nearly 20 years.  On February 27,
in its 2007 legislative plan, the NPC committed to
scheduling second and third readings of the draft anti-
monopoly law this year."  There remain significant risks
that overly aggressive use of antimonopoly law could impede
the legitimate and fair protection and licensing of IP
rights in China.  For example, some agencies, including
those tasked with protecting intellectual property rights,
have also held that an intellectual property holderQs
refusal to negotiate a license is an abuse of its Qmonopoly
power.Q  Although Microsoft and Intel in particular are
frequently castigated in the government-run press, the
greatest impediment to competition in certain industrial
sectors, such as business software and Internet music
delivery, may in fact be pirates and infringers.  The
Mission appreciates the continued active support of USDOJ,
USFTC and other agencies on the implications of ChinaQs
Antimonopoly Law on intellectual property rights protection
and enforcement in China and in promoting the guarantee of
intellectual property rights as a critical incentive to
fostering investment and innovation, which promote a
competitive economy.  Post believes that the overall
message that patents and IPR are generally Qpro-
competitionQ has been delivered extremely well,
notwithstanding defects of current law and policy in China
and possible risks for the future. 

¶35. (SBU) However, post notes that the FTC/DOJ hearings and
2003 FTC report on intellectual property and competition
policy continue
to be cited back to USG and others to justify a range of
Chinese policies that may be considered anti-IPR.  For
example, the reportQs critical view towards business method
and software patents, and the need to improve patent
quality in those areas has been understood to be a
criticism of the U.S. having Qtoo liberalQ an attitude
towards granting patents.  However, this criticism has
limited applicability to China, which has reportedly 

BEIJING 00002101  014 OF 016 

granted only three business method patents (probably by
mistake) and restricts granting software patents.  Software
patents may be especially useful in China as some U.S.
companies such as IBM have advocated that high quality
software patents would also have significant value in
providing another enforcement channel to address rampant
end-user piracy.  Concerns over poor quality of examination
of patents also have little relevance to the abusive
assertion of ChinaQs design patents, which are not examined
for substance and which are owned on a 10/1 ratio by
Chinese rights holders.  Lack of deterrence of patent
infringement in China also makes many of the concerns of
the report completely irrelevant to China since the costs
of infringement in China are very low, with damages rarely
exceeding 500,000 RMB.  Looking at patent examination
practice, Chinese applicants also suffer no consequences
for failing to reveal relevant prior art, or for asserting
claims that have a dubious legal basis against third
parties.  A cleared position paper on the report that can
be used in discussions in China would be useful in
advancing the overall competitiveness and IPR agenda. 

¶36. (SBU) The U.S. has recently committed with the EC to
look further at continuing technology transfer restrictions
in China.  Apart from the IT sector, ChinaQs technology
transfer regime has, however, received relatively little
attention in recent years.  As part of ChinaQs WTO
accession, WTO member states requested that the terms of
technology transfer in China Qshould be agreed between the
parties to the investment without government
interferenceQ(Working Party Report, Article 48).  Upon WTO
accession, China issued new technology transfer regulations
(Dec. 10, 2001).  In practice, China agreed to stop
requiring QregistrationQ of technology transfer contracts,
and only require QrecordalQ.  However, registration may
still be necessary according to local practice or to obtain
any necessary licenses or approvals for a transaction, such
as remitting foreign currency.  The U.S. Chamber and others
continue to urge USG to Qprohibit Chinese authorities from
directly or indirectly interfering in the negotiation of
technology transfer and royalty agreements between foreign
technology companies and their Chinese counterparts.Q (US
Chamber submission in advance of April 2006 JCCT). 

¶37. (SBU) Apart from ChinaQs standards and antimonopoly
regime, there are also other restrictions in place that
affect the free transfer of intellectual property and may
need to be considered in fully evaluating ChinaQs
compliance with its bilateral and WTO commitments.  These
include: local Chinese government interference in 

BEIJING 00002101  015 OF 016 

commercial negotiations and supervision of technology
transfer contracts through QregistrationQ rather than
QrecordalQ procedures;  compulsory licensing and other
restrictive regulations in its patent regime; compulsory
licensing under ChinaQs software protection regulations and
copyright law for educational materials; mandatory grants
of improvements to Chinese licensees under the 2001
technology transfer regulations;  current  restrictions
over out-bound licensing of Chinese technology; scope of
confidentiality of clinical data, sample agricultural 

SIPDIS
materials, feasibility studies, or other trade secret
information provided by rights holders to Chinese
regulatory agencies; the relationship between ChinaQs labor
law regarding non-compete agreements and protection of
trade secrets; and the scope of ChinaQs trade secret regime
as it applies to fundamental research. 

--------------------------
What Does the Future Hold?
-------------------------- 

¶38. (SBU) As indicated above, industry generally senses
that the IPR environment in China has not improved
significantly in the past year.  Although there have been
many notable efforts at improving protection, enforcement,
legislation and other areas, the results have been modest.
While there is no Qsilver bulletQ to resolving these
problems, thus far the Chinese government has resisted many
requests for improvements in its IPR system, including
increasing resources for criminal enforcement, copyright
enforcement and trademark examination; strengthening
administrative enforcement; taking more effective
structural measures to address local protectionism and
eyesores such as the Silk Street market in Beijing;
reducing or eliminating criminal thresholds; and
modernizing the criminal IPR law.  These frustrations
undercut ChinaQs argument that it is doing all it can to
address IPR infringement issues.  Consequently, the Mission
strongly supports ChinaQs 306 monitoring, and continued
placement on the PWL at this time, largely because China
has not effectively deterred the problems and not taken the
measures that need to be taken. 

¶39. (SBU) The Mission also supports an appropriate WTO case
on IPR in the near future, as part of a coordinated
approach on IPR issues with China.  These steps should also
include (a) continuing efforts for a negotiated resolution
of the case; (b) a focused request for China to identify
any and all criminal copyright cases it has undertaken
since WTO accession and requesting case-specific assistance 

BEIJING 00002101  016 OF 016 

on criminal cases; (c) a clear plan for public diplomacy
within China once the case is initiated; (d) coordination
with non-stakeholders in the case, including the software
sector, brand owners, and patent owners; (e) continuing to
seek common ground with other trading partners to support
the case; (f) continuing coordinated interagency engagement
on other issues of concern. 

¶40. (SBU) In considering near term strategies, ChinaQs
threats to withhold or deny other forms of engagement on
IPR issues if the U.S. files a WTO case needs to be taken
seriously.  Moreover, there is a significant risk that any
losses from initiating a case may be imposed on industries
other than those actively supporting a case.  A WTO case,
if taken on criminal copyright thresholds, copyright market
access, or the availability of an effective copyright
remedy, would only address one aspect of the problem, even
for the copyright industries.  Certain copyright
industries, such as business and entertainment software,
may not have their issues significantly addressed, while
consumer goods/trademarks and high tech IT industries may
be left out entirely.  ChinaQs engagement on non-WTO
issues, such as control over exports of counterfeit goods,
Internet-copyright protection, cyber IPR crimes, antitrust
doctrine, and patent policy are occupying an increasingly
significant position in overall IPR engagement and need to
be considered as part of an overall strategy. 

¶41. (SBU) Finally, it should be noted that certain U.S.
industries in China oppose a case, since they are either
not affected by IPR issues or  believe that adequate
progress has been made and that a WTO case could impair the
relationships and progress made to date. 

¶42. (U) The next cable will discuss IPR enforcement and
Chinese IPR coordination issues. 

RANDT

IBM has got some more explaining to do. It is clearly part of the patent problem and the USPTO’s head came from IBM. █

Summary: A look at a Jakarta cable and the role Bill Gates played after he had left daytime duties at Microsoft

LAST week we showed diplomatic cables where Bill Gates got named as a participant in Asian leaders conferences/panels. In the following Cablegate cable we see this too. It also ends with: “Bill Gates spoke to 2,000 assembled government officials and students at a Presidential Lecture organized by the Kadin Secretariat. During the event, Gates recognized a student group from Institut Teknologi Bandung (ITB) as the national of a Microsoft sponsored innovation competition and also announced that Universitas Pelita Harapan has been named the fifth Indonesian university that will host a Microsoft innovation center.”

Here is the cable:

VZCZCXRO1610
PP RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #0932 1330854
ZNR UUUUU ZZH
P 120854Z MAY 08
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC PRIORITY 8969
RUEHPH/CDC ATLANTA GA
INFO RUEAUSA/DEPT OF HHS WASHINGTON DC
RUEAWJB/DOJ WASHDC
RUEHRC/USDA FAS WASHDC
RHEHNSC/NSC WASHDC
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHGV/USMISSION GENEVA 7779

UNCLAS JAKARTA 000932 

SIPDIS
SENSITIVE 

DEPT FOR EAP/MTS, G/AIAG, L/DL, EAP/EX, EB/CIP AND OES/IHA
USAID FOR ANE/CLEMENTS AND GH/CARROLL
DEPT ALSO PASS TO HHS/WSTEIGER/MSTLOUIS AND HHS/NIH
GENEVA FOR WHO/HOHMAN
USDA/FAS/OSTA BRANT, ROSENBLUM
USDA/APHIS ANNELLI 

E.O. 12958: N/A
TAGS: TBIO [Biological and Medical Science], EAGR [Agriculture and Forestry],
KFLU [Avian and Pandemic Influenza Activities],
ECPS [Communications and Postal Systems],
AMGT [Management Operations], PGOV [Internal Governmental Affairs], ID [Indonesia]
SUBJECT: Bill Gates Attends Government Leaders Forum Asia 

¶1. (U) During the May 8-9 Microsoft Government Leaders Forum (GLF)
in Jakarta, Bill Gates praised President Yudhoyono for personally
leading Indonesia's national committee on information technology and
for setting ambitious goals.  Gates said that while not all of
Indonesia's goals in information technology will likely be
achievable in current timeframes, having lofty goals in itself is a
best practice as it serves as a driver towards achievement.
Yudhoyono highlighted the USAID/MCC-supported E-Procurement system
as an example of Indonesia's effort to promote electronic governance
in order to streamline processes and improve transparency. Over 200
government leaders and private sector participants from other Asian
countries attended the forum that focused on education, health and
economic development. 

¶2. (SBU) During the forum, Microsoft President Director for
Indonesia Tony Chen told Embassy staff that hosting the GLF
Conference in Jakarta was a boon to both Microsoft Indonesia and to
the Indonesian government.  He thanked Embassy staff for assistance,
emphasizing the important role Ambassador Hume played in allaying
Microsoft leadership's security concerns. Hume's trip to Redmond,
Washington was one of the important factors in Microsoft's decision
to hold the forum in Jakarta. 

¶3.(SBU) On the sides of the forum, a Gates Foundation official
queried Embassy staff on latest developments in avian influenza
sample sharing and on recent Ministry of Health actions barring
NAMRU-2 from receiving samples.  He noted that Indonesian media had
mischaracterized the Gates Foundation's interest in avian influenza
assistance to Indonesia.  The Gates Foundation was interested in
working on new vaccine development technologies that would
ultimately eliminate chronic global vaccine shortages years from
now.  The Foundation was not planning on specific assistance to
Indonesia to develop an avian influenza vaccine. 

¶4. (SBU)  On May 9, Bill Gates spoke to 2,000 assembled government
officials and students at a Presidential Lecture organized by the
Kadin Secretariat.  During the event, Gates recognized a student
group from Institut Teknologi Bandung (ITB) as the national of a
Microsoft sponsored innovation competition and also announced that
Universitas Pelita Harapan has been named the fifth Indonesian
university that will host a Microsoft innovation center. 

HEFFERN

Gotta help Microsoft lock-in while he’s at it. █

Summary: How Bill Gates lobbied for Microsoft in 2008 (when he claimed to have moved on to a charitable foundation)

BACK at the beginning of 2008, "Microsoft 'Bought' Dubai Away from GNU/Linux" following a visit from Bill Gates. Later on we saw this reinforced and then we saw people being sent to court/jail. Over three years after the act we discover that, based on the following Cablegate cable, Bill Gates did some clever lobbying even after his alleged departure from Microsoft. According to this, “Bill Gates would visit Dubai on January 27, 2008 to meet with with Mohammed bin Rashid Al Maktoum (Vice-President and Prime Minister of the UAE and Ruler of Dubai) and members of the MbRF staff to discuss integration between Microsoft and the MbRF [Mohammad Bin Rashid Foundation] Programs.” Here is the cable:

VZCZCXRO5272
PP RUEHBC RUEHDIR RUEHKUK RUEHROV
DE RUEHDE #0614/01 3051111
ZNY CCCCC ZZH
P 011111Z NOV 07
FM AMCONSUL DUBAI
TO RUEHC/SECSTATE WASHDC PRIORITY 5732
INFO RUEHAD/AMEMBASSY ABU DHABI PRIORITY 2751
RUEHEE/ARAB LEAGUE COLLECTIVE
RUEHZM/GCC C COLLECTIVE
RUEHDE/AMCONSUL DUBAI 8877
Hide header
C O N F I D E N T I A L SECTION 01 OF 02 DUBAI 000614 

SIPDIS 

SIPDIS 

DEPT FOR NEA/ARPI BAGWELL AND MASILKO 

E.O. 12958: DECL:  11/1/2017
TAGS: PREL [External Political Relations],
PGOV [Internal Governmental Affairs], PHUM [Human Rights], AE [United Arab Emirates]
SUBJECT: FURTHER DETAILS ON ANNOUNCED  AND UNANNOUNCED, PLANS FOR
MOHAMMED BIN RASHID FOUNDATION 

REF: A) DUBAI 601    B)  DUABI 425    C) ABU DHABI 949     D) DUBAI 363 

DUBAI 00000614  001.2 OF 002 

CLASSIFIED BY: Paul Sutphin, Consul General, Exec, Dept of
State.
REASON: 1.4 (b), (d) 

Classified 1.4 b & d by Consul General Paul Sutphin 

¶1. (U) This is an action cable; see para 12. 

¶2. (SBU) Summary.  During a November 1 meeting in the newly
established offices of the Mohammad Bin Rashid Foundation
(MbRF), Nabil Alyousuf (Director General of the Dubai Executive
Office and defacto managing director of the newly established
MbRF) and Dr. Yasar Jarrar (Executive Dean of the Dubai School
of Government) elaborated on several of the fifteen (Reftel A)
recently announced programs under the auspices of the MbRF, as
well as a number of initiatives in the offing that have not been
publicly discussed, including a number of joint programs with US
universities.  Jarrar will be in Washington, DC, Monday, Nov. 4
and then in Boston Nov. 5-8; Alyousuf will be in Boston November
8 and is unlikely to go to DC beforehand. They asked for USG
assistance in a number of areas (see para 12), most immediately
in contacts for the Washington office of the Gates Foundation.
End Summary. 

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Announced Programs with US Connections 

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¶3. (U) Referencing the US's Teach for America model, Jarrar
elaborated on the MbrF's announced "Pioneers" Program: an
educational initiative focused on providing financial assistance
to the top 10% of graduate students at select Arab universities
in return for their commitment to teach for an as-yet
unspecified period of time in their home country/community.
Jarrar pointed to the nascent "Teach for All" partnership
between the US program and its counterpart UK program (Teach
First) and mentioned that adding the Pioneers Program would be a
logical extension into the Arab world. 

¶4. (U) Continuing on educational programs, the announced
Leadership Program is being modeled after the US's Eisenhower
Fellowships Program.  Under this initiative, two or three
individuals would be selected from each Arab country to go to
the UAE in order to participate in two to three months of
leadership training, likely at the Dubai School of Government.
The program is currently envisioned as a three way partnership
between the Dubai School of Government, the Aspen Institute and
the London School of Business. 

¶5. (SBU) The MbRF has signed an agreement with the Harvard
Business School Press (HBSP) that will allow the MbRF the rights
to translate all HBSP-owned titles into Arabic and then
subsidize printing and distribution of the texts throughout the
Arab world.  Translation rights to other authors' publications
through HBSP will be negotiated on a case-by-case basis. 

¶6. (SBU) Under its announced translation program, the MbRF also
hopes to expand Western awareness of Arab literature and legacy
by translating Arabic texts (both popular press releases, such
as the recently translated "Girls of Riyadh", and more formal
literature) and working with Western publisher's to produce and
promote these works. Jarrar said he would appreciate USG
assistance in identifying likely publishing partners in the US.
(See action request, para 12.) 

¶7. (SBU) Focusing on entrepreneurship, the MbRF's announced
Business Incubator Program will work with the top regional
business schools to develop curriculums focusing on
entrepreneurial skills and creating incubators that allow
students to test out their entrepreneurial concepts.  In a
second tier, the MbRF plans to select the best new ideas, and
bring those innovators to Dubai and provide further resources
for developing and testing the concepts. For concepts that have
passed the second round of screening, the MbRF wants to develop
joint venture relationships with top corporate innovators (3m,
Philips, Google, Microsoft were among those named) that would at
the minimum allow MbRF-sponsored entrepreneur's access to the
corporate labs (on fellowships) or ideally allow for full joint
venture development of the projects. Jarrar requested possible
USG assistance in facilitating corporate contacts.  (See action
request, para 12.) 

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DUBAI 00000614  002.2 OF 002 

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Unannounced, but Ambitious, Plans for Joint Initiatives with US
Universities and Businesses 

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¶8. (C) As yet unannounced, Jarrar revealed an imminent agreement
between the MbRF and Massachusetts Institute of Technology (MIT)
Sloan School of Management establishing a Dubai-based branch of
the renowned MBA program.  The first year would see the launch
of an executive training program, followed the next year by the
matriculation of 40 students in a standard MBA curriculum.
Jarrar envisions the school eventually maintaining around 100
active students.  Farther down the road, the MbRF is also
looking to create a similar, undergraduate, joint venture
between the American University of Dubai and a world class US
journalism school (preliminary discussions are currently
underway with the Columbia School of Journalism in New York). 

¶9. (C) In ongoing discussions with Harvard, Jarrar is hoping to
convince the Harvard Business School (HBS) to place one of its
Research Centers in Dubai (Jarrar noted HBS has research centers
in 5 locations world-wide, including Paris, Hong Kong and Buenos
Aires.  These centers focus on researching local businesses and
developing the case studies that form the core of the HBS
curriculum). 

¶10. (SBU) A firm advocate of development via technology, the
MbRF intends to partner with US hi-tech giants such as Intel,
Microsoft and others to further the utilization of online
programs for teacher training throughout the Arab world (thus
bringing best-practices training directly to instructors without
expensive and lengthy overhead and development issues).  Jarrar
indicated that initial conversations with Intel have commenced
and that Bill Gates would visit Dubai on January 27, 2008 to
meet with with Mohammed bin Rashid Al Maktoum (Vice-President
and Prime Minister of the UAE and Ruler of Dubai) and members of
the MbRF staff to discuss integration between Microsoft and the
MbRF Programs. 

¶11. (SBU) In a similar vein, Alyousuf noted the MbRF has a
longer-term plan to develop a "traveling museum" focused on the
civilizations of the region and their contributions to humanity
through out the ages.  The MbRF would like to work with US
museums in developing the concept and possibly a partnership for
the traveling museum. We agreed to try to facilitate contacts
with the Smithsonian on this initiative. (See action request,
para 12) 

¶12.  (SBU) ACTION REQUESTS: Most immediately, Jarrar asked for
USG assistance in contacting and possibly meeting the leadership
of the Gates Foundation office in Washington DC (both indicated
a senior management meeting with the Gates Foundation in Seattle
would be premature and expressed a desire for a lower level,
preliminary meeting in DC as a precursor to subsequent
Seattle-based conversations).  Jarrar asked for a name and
contact information for the Washington office.  Given the
impending travel by Jarrar, Post (1) requests appropriate
Department contacts pass this information directly to him at
HYPERLINK
"BLOCKED::mailto:yasar.jarrar@dsg.ae"yasar.ja rrar@dsg.ae; or
call him on his mobile phone at 971-50-640-7281. (2) Jarrar
expressed openness to possible further consultations with the
USG during his visit to Washington, noting he was in direct
contact with S/P; he said he would welcome direct outreach from
any of the offices with which he met on his previous visit to
Washington with Minister of Cabinet Affairs (and MbRF Chairman)
Mohammed Gergawi. 

Medium-term action requests: 

-- Possible contacts for English to Arabic publishing partners. 

-- SG assistance in facilitating corporate contacts for the
business incubator program. 

-- Appropriate initial contacts at the Smithsonian for the
Traveling Museum concept.
SUTPHIN

We have more examples of such lobbying. █