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Cablegate: Microsoft Rushes Vietnam to Get Rid of Open Source, Including FOSS Policy

Cablegate



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 ۦ6 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

ۦ1. (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 --------------------------- --------------------------

ۦ2. (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.

ۦ3. (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 -----------------------------

ۦ4. (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

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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.

ۦ5. (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 ---------------

ۦ6. (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.

ۦ7. (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 -------------

ۦ8. (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 ---------------

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ۦ9. (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 ------------------------ -------------------------

ۦ10. (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.

ۦ11. (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 ---------------------------------------

ۦ12. (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.

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Legal Updates Expected in 2008 ------------------------------

ۦ13. (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.

ۦ14. (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 ------------------------

ۦ15. (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... ------------------------------------------

ۦ16. (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 ------------------------------------------

ۦ17. (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.

ۦ18. (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 ---------------------------

ۦ19. (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.

ۦ20. (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.

ۦ21. (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.

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ۦ22. (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.

ۦ23. (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.

ۦ24. (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.

ۦ25. (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 ---------------------------------

ۦ26. (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 ----------------

ۦ27. (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

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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.

ۦ28. (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.

ۦ29. (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 --------------------------- -------------------------

ۦ30. (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.

ۦ31. (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 ---------------

ۦ32. (U) In 2008, the GVN will continue to require detailed legal consultations and technical assistance as it completes and "fine

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

ۦ33. (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.

ۦ34. (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 --------------

ۦ35. (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."

ۦ36. (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

ۦ1. (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 ------

ۦ2. (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.

ۦ3. (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

ۦ5. (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 ---

ۦ6. (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.

ۦ7. (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.

ۦ8. (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.

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