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Cablegate: Ipr Update - Goi Making Steady Progress

DE RUEHJA #8114/01 1790836
P 280836Z JUN 06





E.O. 12598: N/A
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.

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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

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

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

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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.


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.

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