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Cablegate: Lebanon: 2008 Special 301 Review

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P 050724Z MAR 08
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E.O. 12958: N/A
TAGS: KIPR ETRD ECON PGOV LE
SUBJECT: LEBANON: 2008 SPECIAL 301 REVIEW

1. Summary: In 2007, the Government of Lebanon (GOL) made some
important advances in the protection of intellectual property rights
(IPR). Progress, however, was hindered by continued political
instability, the absence of a functioning parliament that could
approve new IPR legislation and the deterioration of the security
situation in the country. Embassy continued to engage steadily with
the GOL on the need to better protect IPR, but a significant amount
of GOL attention was focused on political and security issues.

2. The cabinet of Prime Minister Fouad Siniora approved several
IPR-related bills and sent them to parliament. However, the
pro-Syrian Speaker has refused to open parliament since November
2006, preventing those bills, along with all other pending
legislation, from being approved and implemented. This action also
prevented the election of a new president following the November 23,
2007 departure of pro-Syrian president Emile Lahoud and Lebanon's
presidency has been vacant since then. The ongoing political
impasse, conflict over the presidency, and need for law enforcement
authorities to concentrate on controlling political violence has
kept the government from giving IPR issues more attention.

3. Post recommends that Lebanon be maintained on the Special 301
Priority Watch list. While progress on improving IPR protection is
not what we had hoped, the government has taken some important steps
to reduce piracy. In 2008, we hope the GOL will better address IPR
concerns, especially relating to enforcement, as a part of its WTO
accession process effort. End Summary.

OVERALL ASSESSMENT
OF IP CLIMATE
-------------

4. In 2007 Lebanon remained on the Priority Watch List of the
Special 301 Review. The government made some progress in terms of
approving new draft laws to present to parliament, including laws on
geographical indications, industrial designs and trademark, and
amendments to the copyright law. These await ratification by the
parliament that is not currently meeting. The business community
has recognized the good efforts of the Lebanese Internal Security
Force's (ISF) Cyber Crime Unit in protecting IPR. Most arrests
resulted in immediate release and minor fines. However, the overall
political and security situation significantly hampered the GOL's
ability to update IPR legislation and enhance enforcement. The
International Intellectual Property Alliance (IIPA) estimated
preliminary 2007 piracy-related losses in Lebanon at $26.8 million,
up from $25.6 million in 2006.

5. In February 2008, the Ministry of Economy and Trade (MOET)
launched an IPR media campaign, in collaboration with the American
Lebanese Chamber of Commerce (Amcham) and partly funded with a USAID
grant. The two-month campaign consists of a series of three
different TV spots (focusing on pharmaceuticals, optical media and
music software) that have been running on all eight local TV
stations, as well as billboards to be displayed across the country.
USAID continues to provide technical assistance for WTO accession
through its WTO Accession Project, which was recently renewed until
April 2008, but progress remains slow. In July 2007, USAID funded a
two-week Economic Dialogue Forum, with an entire week dedicated to
increasing IPR awareness and the economic importance of protecting
IPR.

6. Post organized a one-day IPR Forum in collaboration with the
USPTO in November 2007. Some 200 persons attended, indicating the
interest of the business community and the public sector in IPR
issues. Further, more intensive training is scheduled for May 2008,
focusing on the public and the judicial sector.

7. Cable television piracy remains the GOL's most significant IPR
challenge. According to the U.S. copyright industry, 80 percent of
Lebanon's population uses pirated content, one of the highest rates
in the world. The Motion Picture Association (MPA) estimated the
annual losses to the U.S. motion picture industry due to cable
piracy in Lebanon at $31.8 million in 2006. In Lebanon, the average
monthly fee for pirated cable television service is $10. Legitimate
cable subscriptions cost $15 per month, and the pirated service
offers a much more attractive package of channels, as well as
first-run movies. In the absence of much-needed legislation
regulating the cable industry, no government body has been willing
to bear the political heat of throwing between 600-700 illegal cable
operators out of business (although the 1999 Copyright Law provides
sufficient legal basis for such action). The Telecommunications
Regulatory Authority (TRA), formed in February 2007, considers this
to be a part of its mandate, but is currently fully occupied with
other more pressing issues related to restructuring Lebanon's
telecom structure for eventual privatization in order to meet Paris
III Donor's Conference benchmarks.

8. The GOL in 2006 took concrete actions to address cable piracy at
the onset of the 2006 World Cup television broadcasts. In that case
a deal was brokered between legitimate and pirate cable operators,
allowing pirate operators to legally broadcast the World Cup soccer
games. Since then, however, no further negotiations for a
permanent solution have taken place. In June 2006, a cabinet decree
was drafted to allow an interim solution whereby illegal cable
providers would receive a temporary license to broadcast.
Possession of a copyright license was one of the conditions for
receiving a temporary license. The GOL intended to follow-up on
this by drafting a law on encrypted and subscription TV that would
create a full-fledged regulatory framework for cable providers.
Unfortunately these efforts are still pending. There was admirable
progress until July 2006, when Lebanon suffered through a month-long
war between Isral and Hizballah. One private sector contact noted
that a one-year old Lebanese company is currently buying licenses
from international cable operators to broadcast their
Arabic-language programs, which are later bought by local illegal
operators, therefore making part of the illegal cable operators'
content legal. It is hoped that this licensing will be extended to
English-language and all other programs as well.

NOTORIOUS MARKETS
-----------------

9. The sale and distribution of pirated, counterfeit, and copycat
products continued to take place across Lebanon in 2007, in
commercial establishments or by street vendors. Although most of
these products are imported from Asia, it is alleged that there are
factories producing pirated CDs (mostly for computer software and
entertainment material) in Beirut's southern suburbs in the Dahya
area, a Hizballah stronghold. The GOL has little access to areas
controlled by Hizballah. It is believed that production is on a
small scale, and intended only for the local market. According to
some contacts, other problematic geographic areas include the
surroundings of the city of Tripoli in the north, some Palestinian
refugee camps in Beirut and the Biq'a border area with Syria, where
it is difficult for law enforcement agents to reach large where
pirated material is stored.

OPTICAL MEDIA PIRACY
(CDs, VCDs, DVDs)
--------------------

10. Optical media piracy products -- including pirated copies of
business and entertainment software, sound and film recordings and
published interactive software -- are widely available in the
Lebanese retail market. The sale of computer hardware loaded with
unlicensed software is a common practice. The Cyber Crime Unit at
the ISF has had some success in closing shops that sell pirated
material. Most pirated material is either smuggled in or imported
through legitimate points of entry, namely, the Beirut port and the
land border with Syria. The Cyber Crime Unit seized 90,000
counterfeit CDs and DVDs in 2007 compared to 130,000 in 2006.
However, in light of the current political insecurity in Lebanon,
the Unit's efforts have been commended by the business community.
Anecdotally we have been told that the unit is so successful that
IPR violators have posted a watch at the headquarters of their
operations to be alert to impending raids by the Cyber Crimes Unit.

USE/PROCUREMENT OF
GOVERNMENT SOFTWARE
--------------------

11. The GOL, having successfully eliminated the use of pirated
software in public administration, has been in compliance with
international IPR standards since spring 2004. The Office of the
Minister for Administrative Reform (OMSAR) acts as the central
authority for the procurement of government software and hardware.

TRIPS COMPLIANCE
----------------

12. Lebanon, an original member of the GATT, is eager to accede to
the WTO as soon as possible, and support for accession is widespread
among the business community. However, there has been only marginal
progress toward that objective. In December 2006, the GOL signed a
Trade and Investment Framework Agreement (TIFA) with the U.S., but
the agreement has yet to be ratified by the GOL, and there have been
no TIFA Council meetings. The TIFA cannot be ratified because the
parliament currently does not meet, and there are no prospects that
parliament will meet soon to take up the TIFA or other legislative
matters.

13. USAID continues to supply technical assistance in reviewing and
amending the Copyright law and the draft law on e-commerce for
conformity with TRIPS and with the WIPO Copyright Treaty (WCP) and
the WIPO Performances and Phonograms Treaty (WPPT). Draft laws and
amendments created as a result of this assistance are awaiting
parliamentary action which, again, cannot occur because pro-Syrian
forces in the political opposition prevent the parliament from
meeting in order to counter any moves by the pro-western Lebanese
government. Similarly, amendments to modernize the Copyright Law
were approved by the cabinet but are waiting for approval by the
non-functioning parliament.

DATA PROTECTION
---------------

14. No progress in health-related IPR issues was witnessed in 2007.
Lebanon's Patent Law does not provide adequate protection for
pharmaceutical companies. The law requires the submission and
issuance of a patent in Lebanon to insure exclusive marketing
rights. However, its data exclusivity provisions as they apply to
drug registrations are ambiguous. The MOET is currently working on
introducing amendments to the draft law on unfair competition to
provide adequate data protection to pharmaceutical companies during
the registration process at the Ministry of Health (MOH). The
resigned Minister of Health, who joined five other ministers in
boycotting cabinet meetings since November 2006 in an attempt to
pressure the legitimate government to fall, has been uncooperative
in working on these amendments. Pharmaceutical companies continue
to suffer from the MOH's registration of unauthorized copycat
medicines. The Pharmaceutical Research and Manufacturers of America
(PhRMA) estimate that 19 copycats were registered by the MOH in
2007, up from nine in 2006.

15. The GOL has never established a joint task force to study and
offer recommendations to improve the regulatory environment for
pharmaceutical drugs. The MOH claims that this falls under TRIPS
Plus, and the Minister of Health, allied with the pro-Syrian
political opposition, is not interested in setting up a task force.
Pharmaceutical companies have, however, continued to offer to help
the MOH in a number of areas: providing information on regulatory
environments in neighboring and reference countries; support in
setting up a pharmaco vigilance department; upgrading the website of
the MOH; various health care awareness campaigns; support in
filing/archiving systems; help in combating counterfeiting; and
identifying qualified labs for independent testing.

ENFORCEMENT
-----------

16. The Internal Security Force's Cyber Crime Unit was established
in 2006 to combat both cyber and IP-related crimes. The Unit has
around 25 full-time staff, but must return to regular police work
during times of civil disturbances. The Unit lacks the necessary
equipment, software, and training. Training has been provided by
the Business Software Alliance (BSA), International Intellectual
Property Alliance (IIPA) and Motion Picture Association (MPA),
although in 2007 the MPA stopped funding such projects in Lebanon
due to lack of IPR enforcement. The Lebanese Intellectual Property
Association (LIPA) has applied for a U.S. grant, which will be used
to provide equipment and technical assistance to the Unit.

17. The motivated official who is the leader of the Cyber Crime Unit
has developed a map of around 20 major pirate distributors. He
conducts raids on large-scale distributors at locations that he
alone (for fear of leakage) has identified. According to the Unit,
over 630,000 counterfeit products were seized in 2007, including CDs

and DVDs and their covers, equipment to produce counterfeit CDs and
DVDs, product labels, car parts, cosmetics, computer accessories,
and other miscellaneous products. This is an increase of 87 percent
over the 337,000 counterfeit products seized in 2006, including CDs
and DVDs and their covers, equipment to produce counterfeit CDs and
DVDs, books, product labels, detergents, and aluminum parts. Most
IP-infringing material is either smuggled in or imported through
legitimate points of entry under Customs' jurisdiction. Customs
seized over $480,000 worth of counterfeit CDs and DVDs, watches,
cosmetics, bags, shoes, clothes, car parts, and other miscellaneous
products in 2007, a slight increase in value compared 2006, although
a smaller number of goods were actually seized. However, there is
still a problem with the lack of effort to crack down on the
ubiquitous street vendors who sell pirated CDs and DVDs.

18. There are no specialized IPR courses at the Judiciary Institute
where judges are trained at the beginning of their career, but a
number of seminars on IPR are included in the curriculum. New
judges are increasingly aware of IPR issues. There were no
statistics on the number of IP-related court rulings in 2007,
although LIPA believes they have slightly increased in the past
year. However, business representatives have complained of the
slowness with which the judiciary has acted on IPR-related cases.
Although prosecutors can impose fines of up to $33,000 for IPR
infringements, fines are actually very low and violators appear to
find those an acceptable cost of doing business. There has been no
progress in establishing specialized IPR courts since the issue was
first raised in May 2006. Post will encourage greater progress on
IPR from the judiciary, given the number of judges and prosecutors
trained in the U.S. so far, and will push further for the
establishment of specialized IPR courts.

TREATIES
--------

19. Lebanon has not yet ratified the 1996 WIPO Internet Treaties
(the WIPO Copyright Treaty and the WIPO Performances and Phonograms
Treaty). Nevertheless, the MOET claims that the Copyright Law, with
its focus on Internet and new technologies, was drafted to encompass
the Internet treaties. The law covers the core of these treaties,
including full reproduction rights, distribution rights, and "full
communication to the public" rights. The draft law on e-commerce is
still being revised by the MOET, which would then be sent for
cabinet approval and later for Parliamentary ratification. It
contains provisions of those treaties. In December 2006, Lebanon
signed the Singapore Treaty on Trademarks, which is still awaiting
parliamentary ratification. Within the framework of the Lebanon-EU
Association Agreement, the Council of Ministers approved the
following, which were sent to Parliament in 2007: Paris Convention
on the protection of industrial property, Nice Agreement on
international classification of goods and services, Patent
Cooperation Treaty, Madrid Agreement on deceptive indications of
source on goods, Berne Convention for the protection of literary and
artistic works, and the Madrid Protocol relating to the Madrid
Agreement on international registration of marks.
Again, action on these in the near term is unlikely since the
pro-Syrian Speaker refuses to open parliament.

INTERNET PIRACY
---------------

20. The cost of telecommunications in Lebanon is among the highest
in the world. In May 2007 the Ministry of Telecommunications (MOT)
implemented ADSL internet services, as a way to decrease internet
piracy, and reduce high dialup fees for internet users. Yet ADSL
and wireless internet connection service costs are still high
compared to the region. At the time of the launching of ADSL, local
media estimated that around 30 percent of all internet connections
went through illegal satellite providers. According to the IIPA,
internet piracy was on the rise in 2007. The GOL has not taken any
concrete action against internet pirates to date. Corruption is
reportedly rampant in this sector.

TRAINING
--------

21. Continued training for judges, prosecutors, enforcement
officers, and members of the MOET's IPR Unit will help improve IPR
protection in Lebanon. Over the past year, the USPTO has funded 12
judges and prosecutors, five enforcement officers and ten members of
the MOET's IPR Unit for IPR training in U.S. and the region. In
2008, Post would like to focus on judges and police enforcement
officers through organizing training in-country and continuing to
send Lebanese participants to regional or U.S.-based programs.


POLITICAL CLIMATE
-----------------

22. The political climate in Lebanon deteriorated in 2007. Two
members of parliament, a high ranking army general, and an important
ISF official were assassinated in separate car bomb attacks, with
others killed or injured in each attack. Another car bomb attack
seemed to target an American Embassy vehicle and resulted in the
deaths of three bystanders and injured to two Embassy Lebanese
staff. There were attacks in civilian areas and against UNIFIL
contingents in south Lebanon. From May - September 2007, the
Lebanese Armed Forces was involved in a fierce battle against
militant Islamic fundamentalist group Fatah al-Islam in the
Palestinian refugee camp of Nahr el-Barid, in the north of the
country. Supporters of the opposition continued with their sit-in
in downtown Beirut -- ongoing since December 2006 -- aimed at
toppling the government of PM Siniora. Meanwhile, the political
deadlock that began with the resignation of six opposition members
of the Council of Ministers in November 2006 continued to prevent
the GOL from conducting regular business. The Speaker of the
parliament continued to declare the current government
unconstitutional and refused to open parliament. Former President
Lahoud left office on November 23, 2007. Lebanon has been without a
president since then due to the opposition's obstructionism. All of
this has contributed to a lack of new legislation and to a certain
extent the inability of the GOL to enforce existing legislation.
However, the government has remained firm, and is resolute in
targeting IPR issues and WTO accession as 2008 priorities.

2008 SPECIAL 301 RECOMMENDATION
-------------------------------

23. Post recommends that Lebanon be maintained on the Special 301
Priority Watch list. Although the business community is heartened
by progress in some areas, and continues to commend the performance
of the Cyber Crime Unit, the GOL has been unable to put in place
policies and procedures that would lead to a systematic reduction in
piracy rates. Post remains hopeful that the reform program
developed by the GOL, which contains an IPR component, will gain
traction in 2008.

SISON

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