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Cablegate: Ustr Pushes for Progress On Ip Protection

VZCZCXRO5009
RR RUEHCHI RUEHDT RUEHHM
DE RUEHBD #0276/01 2550507
ZNR UUUUU ZZH
R 120507Z SEP 07
FM AMEMBASSY BANDAR SERI BEGAWAN
TO RUEHC/SECSTATE WASHDC 3948
RUCPDOC/USDOC WASHDC
RUEATRS/TREASURY WASHDC
RUEHZS/ASEAN COLLECTIVE

UNCLAS SECTION 01 OF 03 BANDAR SERI BEGAWAN 000276

SIPDIS

SIPDIS
SENSITIVE

DEPARTMENT FOR EAP/MTS, USTR
USTR FOR WEISEL AND KATZ
SINGAPORE FOR FCS
BANGKOK FOR FCS:NESS

E.O. 12958: N/A
TAGS: ETRD KIPR PREL BX
SUBJECT: USTR PUSHES FOR PROGRESS ON IP PROTECTION

Ref: A) Bandar 165 B) 06 Bandar 12

BANDAR SER 00000276 001.2 OF 003


-------
SUMMARY
-------

1. (SBU) In a visit to follow up on issues discussed under the
U.S.-Brunei Trade and Investment Framework Agreement (TIFA) (ref A)
USTR Director David Katz pressed Brunei to take more active measures
against intellectual property rights violations. GoB officials
welcomed USG training at ILEA and the U.S. Patent and Trademark
Office's Global Intellectual Property Academy and asked for further
capacity building training, particularly for law enforcement
officers. Although still bitter about what they viewed as a lack of
industry patience in a failed raid on IPR violators in December 2005
(ref B), Brunei police and prosecutors expressed a willingness to
work with us and industry to improve enforcement efforts and adopt
some U.S.-style legal measures in a new IPR law under development.
Post has reached out to industry and regional USG experts to follow
up on the GoB training requests. END SUMMARY.

-------------------
Brunei Must Do More
-------------------

2. (SBU) In a two-day visit August 31-September 1 to follow up on a
broad range of issues raised at the 3RD U.S.-Brunei Trade and
Investment Council meeting in May (ref A), USTR Director for
Southeast Asia David Katz, accompanied by DCM, pressed a broad range
of GoB officials to improve efforts to protect intellectual
property. In meetings with officials from the Ministry of Foreign
Affairs and Trade, Police, and Attorney General's Chambers, Katz
emphasized that IP protection is not just about stopping optical
disc (OD) piracy. A climate of lax IPR enforcement can lead to the
proliferation of counterfeit medicines, food products and auto parts
behind China's current trade troubles. These trade problems also
have a direct, measurable impact on the health and safety of the
public. Katz noted that Brunei was not currently on any of the
Special 301 lists, but the GoB would need to take a more proactive
stance on IPR protection to stay ahead of the curve.

3. (SBU) Katz and DCM also noted that as Brunei seeks to diversify
its economy away from oil and gas, it will never be able to compete
in low wage, high labor content industries in the ASEAN region and
will have to focus on high value products. This will require good
IPR enforcement not just for foreign IP rights holders, but also to
ensure that IP developed by Brunei firms is protected. A good
example of this is the investment the GoB is making to develop a
specific pathogen-free, jumbo-sized strain of Asian tiger prawn for
export to the U.S. and other high-end markets. As the value of this
product will be in its unique genetic make up, Brunei will have to
ensure that this IP is protected from unlicensed use by lower-cost
shrimp producing countries.

--------------------
Scope of the Problem
--------------------

4. (SBU) Brunei authorities acknowledge that despite their efforts
to combat video piracy, counterfeit DVDs are routinely available in
local stores. In a random sampling of video/music stores within two
blocks of the embassy, DCM and Katz routinely found multiple copies
of movies currently only in theatrical release - the Bourne
Ultimatum, and Harry Potter and the Order of the Phoenix. These and
other titles in regular DVD release are sold in hard-sided plastic
packaging resembling legitimate DVDs, but the packages lack shrink
wrap, holographic security stickers, or other authentication
indicators and the cover art is easily recognizable as color Xeroxes
of the original or photoshop combinations of movie poster art and
DVD labeling information from North American or Asian DVDs.

5. (SBU) Brunei police have not found any illegal production
facilities in Brunei and believe that most pirated optical discs are
imported from Malaysia, Indonesia, and Hong Kong. Under current law
and regulations, the Police asserted that customs officials are
powerless to stop counterfeit goods if the importer has declared the
goods on customs documentation and paid any fees or duties.
Prosecutors told us that they were able to stop a shipment of the
movie Batman Returns because the rights holder had provided an
affidavit in advance that the importer did not have distribution
rights in Brunei. In response to our questions, Brunei authorities
said that they had no information that would indicate any organized
crime involvement in the pirate OD or software trade. In fact, in
past public education efforts, GoB officials came to believe that
most retailers would prefer to sell legitimate ODs and software but

BANDAR SER 00000276 002.2 OF 003


are pulled into selling pirated goods because of competitive
pressures.

6. (SBU) Microsoft's local representative told us that software
piracy is rampant, but conducted on a small scale by local
businesses. Customers can leaf through catalogues of software
titles and have a disc burned on the spot with the titles they seek.
We note that in the last year, DCM attempted to purchase Microsoft
software for personal use and had to visit three different stores
before finding a vendor with a legal copy in stock. All three
stores openly offered to sell acknowledged illegal copies of the
software in question.

------------------------------------
GoB Wants Partnerships with Industry
------------------------------------

7. (SBU) Police and prosecutors told us that their hands are tied by
Brunei's current law which requires the copyright holder to file a
complaint in order to initiate enforcement action. This requires
close cooperation with rights-holders throughout the investigation
and prosecution of suspected violations. GoB officials emphasized
that their track record of working with rights holders has been
mixed, but often negative. In a summary of IPR cases investigated
by the police over the past 10 years, a significant number of
investigations were dropped because the complainant either did not
have or could not prove that they had distribution rights for Brunei
for the articles in question (which were found to have been
legitimate and legally imported) or the rights holder failed to
respond to requests for documentation to bring a case to trail.
According to this police data, Brunei successfully arrested,
prosecuted and convicted 14 vendors in 1996 and one in 1997 for
selling fake Levi's jeans. Vendors were also convicted in 2000 and
2003 for selling fake Hindu and Indonesian DVDs.

8. (SBU) In the December 2005 case of the failed raids conducted on
behalf of the Motion Picture Association (ref B), the police officer
who ran the investigation was up front in admitting that mistakes
were made on the Brunei side with the search warrant (part of the
shop raided was located in an adjacent building not covered by the
warrant, so the shop staff moved all the pirated material out of the
covered location before police arrived). However, police and
prosecutors were both adamant that if the MPA had shown more
patience and stayed in Brunei longer, a follow up raid would have
been conducted and likely have caught the offending materials.

9. (SBU) Despite this track record, GoB authorities were ready to
work with rights holders to combat piracy under the current law.
While they understood the cost-benefit trade off for the rights
holders, they urged that rights holders establish a presence in
Brunei either by opening an office or through regular visits. This
was necessary to help rights holders understand how to work within
the Brunei legal system and to build confidence on the Brunei side
that the rights holder would follow up with required documentation
to bring a case to trial to justify the investment in manpower to
investigate and prosecute a violator.

-------------------------
Possible Law Improvements
-------------------------

11. (SBU) GoB officials across the board agreed that Brunei needs to
strengthen its IPR protections. Katz suggested that granting police
and customs officers ex officio authority to seize suspected
materials and then follow up with rights holders to verify the
authenticity of faked goods was an international best practice that
Brunei should consider adopting. The Attorney General's Chambers
(AGC) officials responded that they are in the process of drafting a
Copyright Law to supersede the existing Copyright Order. The
officer drafting the legislation told us that elements of U.S. model
copyright and IPR protection guidelines are being considered for
inclusion in the new law and associated procedural guidance. Work
is expected to be completed on the draft by the end of the year.
Katz suggested that the GoB provide a draft of the law for expert
review by the USG. AGC officials welcomed the offer and would
consider taking advantage of the expertise.

----------------------
Need Capacity Building
----------------------

12. (SBU) Police and prosecutors welcomed USG-supported IPR
enforcement training they had received at the International Law
Enforcement Academy (ILEA) in Bangkok and at the U.S. Patent and
Trademark Office's Global Intellectual Property Academy (GIPA) in

BANDAR SER 00000276 003.2 OF 003


Virginia. All GoB officials we met with indicated that customs
officials in particular, but police as well needed training in how
to identify fraudulent goods. Such training, AGC officials
explained, would ease concerns about wrongly identifying goods as
counterfeit. This would be essential if the AGC were to take Katz's
suggestion of using probable cause to justify seizing suspect goods
absent a complaint from a rights holder under current law. However,
GoB officials would also want to have built a relationship with the
rights holder to ensure timely response to requests to authenticate
suspect goods. AGC officials also indicated that training for
judges would also be welcome.

13. (SBU) In response to these requests, post is working with
regional industry representatives to find opportunities to restart
their enforcement cooperation with the GoB. In addition, we are
working with our regional USG law enforcement and IP protection
officials to find additional training opportunities outside of
regularly scheduled ILEA and GIPA courses.

SKODON

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