Cablegate: Ipr in Vietnam - Strong Gvn Will but Weak Enforcement

DE RUEHHI #1212/01 1860745
R 050745Z JUL 07





E.O. 12958: N/A

HANOI 00001212 001.2 OF 004

(U) This cable is sensitive but unclassified, not for Internet.

REF: A) HCMC 681 B) 06 HANOI 2602

1. (SBU) Summary: During a June 19-20 visit, USTR Director for
Intellectual Property and Innovation Rachel Bae met with Government
of Vietnam (GVN) officials to discuss IPR issues relating to
Vietnam's commitments under the U.S.-Vietnam Bilateral Trade
Agreement (BTA) and Vietnam's accession to the World Trade
Organization (WTO). She pressed the Supreme People's Court to
complete its draft circular providing criminal remedies for
commercial scale piracy - a more than five-month overdue requirement
to meet Vietnam's WTO commitments. In a roundtable with government
IPR agencies, officials reported progress on enforcement efforts,
while noting that additional training and capacity building is
needed for officials to understand fully Vietnam's new laws and
obligations. In separate meetings, IP right holders expressed
optimism that the IPR environment is improving, and several detailed
positively their cooperation with enforcement bodies. Right holders
did stress, however, that more IPR training is needed for all
elements of the enforcement system, with some identifying training
for court officials as a top priority. GVN officials were
enthusiastic about continuing to work with the United States to
address enforcement concerns and are drafting an IPR action plan
that they will share with the United States for input. Enhanced
bilateral engagement in the near future could yield significant
improvements as Vietnam grapples with the challenges of implementing
its many new IPR commitments. End summary.

2. (U) In conjunction with the June 19 Annual BTA Review in
Washington, Office of the U.S. Trade Representative (USTR) Director
for Intellectual Property and Innovation Rachel Bae met with GVN
officials in Hanoi on June 19-20 to review and assess Vietnam's
efforts to implement effectively its BTA and WTO Trade-Related
Aspects of Intellectual Property Rights (TRIPS) obligations. These
discussions supplemented the talks in Washington, and were designed
to engage directly the relevant GVN agencies responsible for
implementing these commitments. In addition to seeking a general
assessment of the effectiveness of Vietnam's enforcement regime, Bae
focused specifically on urging Vietnam to expedite its efforts to
draft regulations providing for the availability of criminal
remedies for cases of willful copyright and trademark infringement
on a commercial scale, as well as to express U.S. concerns over
ongoing piracy of U.S.-owned broadcast content.

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

3. (U) During a two hour discussion, Bae urged Supreme People's
Court (SPC) Deputy Chief Justice Dang Quang Phuong, as the chief
drafter, to act quickly to finalize a draft circular providing
criminal remedies for commercial scale copyright and trademark
infringement consistent with Vietnam's BTA and TRIPS obligations.
Vietnam's criminal code currently lacks the legal provisions to
cover the scope of copyright and trademark infringement included in
Article 61 of the TRIPS Agreement, and both sides acknowledge that
Vietnam must ultimately revise its criminal code. In the short
term, however, Bae pointed to commitments Vietnam's negotiators made
during the WTO accession process which bound Vietnam to issue an
Inter-Ministerial Circular instituting the necessary provisions in
order to be TRIPS consistent upon WTO accession. Despite extensive
dialogue between USTR and the SPC, including multiple exchanges of
specific draft language to include in the circular over the past
year, it is now more than five months outstanding, Bae continued.

4. (U) Expressing hope that the two sides can quickly resolve the
outstanding issues, Bae raised several critical changes that Vietnam
must make in the current draft circular's language to be TRIPS
consistent. First, the definition of piracy must be expanded to
cover, at a minimum, preparing derivative works, broadcast of
protected works and the use of public performances without
authorization. On the second key issue of defining commercial
scale, Bae provided Deputy Chief Justice (DCJ) Phuong examples of
how the United States and other countries in the region define this
term. Specifically, the definition of commercial scale used in the
circular must in some way address the right holders' perspective and
not be limited to the violators' perspective as it is in the current
version. Finally, Bae noted that the current draft does not clearly
provide for the seizure and destruction of infringing elements.

5. (U) DCJ Phuong thanked Bae for the examples of how other
countries have met this important TRIPS requirement, and echoed her

HANOI 00001212 002.2 OF 004

interest in quickly making the necessary adjustments to make the
circular BTA and TRIPS consistent. Phuong highlighted the
difficulties he has had in drafting this circular given the
constraints of the current criminal code, but his comments clearly
indicated he understood USTR's concerns and requirement that the GVN
meet its obligations as soon as possible. Moving to Bae's specific
points, the Deputy Chief Justice noted that seizure and destruction
of infringing elements is covered through a provision in the IP Law
referring to articles in the civil and administrative codes covering
this issue. On the definition of commercial scale, he agreed to
study the language other countries have used, and mentioned that
Vietnam is considering revising the language from "for profit-making
purpose" to for "economic gains." On the issue of expanding the
definition for piracy, Phuong maintained that it would be difficult
to expand the definition of Article 131 of the Criminal Code for
Copyright Infringement, but thought he might be able to resolve the
issue through another part of the Code. Ultimately, Phuong
committed to rework the current draft (without specifying a
timeframe) and sharing the new version with USTR for comment. In
conclusion, Bae thanked him, and encouraged him to fulfill this
commitment as soon as possible.

6. (SBU) In a later meeting with officials from the Ministry of
Trade's Multilateral Trade Policy Department, negotiators involved
with Vietnam's WTO accession explained that per Deputy USTR's June 4
letter, the Ministry of Trade attempted to participate in Bae's
meeting with DCJ Phuong, but their request was waved off. Deputy
Director General Luong Hoang Thai did report, however, that MOT
requested the Prime Minister's office send a letter to the Supreme
People's Court urging them to complete the criminal circular as soon
as possible. Additionally, Thai agreed that his office would follow
up with the SPC again to request that they expedite the drafting
process in accordance with the agreed terms.

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

7. (U) In a session chaired by National Office of Intellectual
Property (NOIP) Director General Tran Viet Hung, more than thirty
representatives from seven ministries, including five of the six key
enforcement bodies (the Economic Police were not present), updated
Bae on Vietnam's progress in implementing its new IP legal
framework, recently expanded through a spate of new guiding
regulations for the 2005 IP Law. DG Hung, in his opening review of
recent and upcoming activities, noted that Vietnam is still in the
process of developing an independent assessment body to rule on
alleged cases of IP infringement. He also listed a number of
regulations that Vietnam is currently drafting to complete its BTA
and TRIPS requirements, including a new circular by the Ministry of
Justice on administrative penalties and the SPC criminal circular on
trademark and copyright infringement. The GVN agencies assessed
that, notwithstanding a few outstanding regulations, Vietnam has
largely met its BTA and WTO commitments. In a discussion on the
criminal, civil and administrative systems, the GVN representatives
acknowledged that more work was required on the criminal legal
framework, including redrafting the criminal code. While right
holders still predominantly rely on administrative measures to seek
redress for IP violations, Vietnam issued new guiding documents on
civil remedies designed to make that a more user-friendly system.

8. (U) Bae registered her appreciation for the GVN's hard work and
cooperation on IP issues, including the extensive data provided as
part of the Special 301 process. She continued by saying that the
draft criminal circular must be finished soon, as it is important
that the criminal, civil and administrative systems all be strong
independently. On the administrative system, Bae flagged as an
issue a new requirement that right holders must issue a cease and
desist letter to infringers before enforcement agencies will take
action (see Reftel A). Based on feedback from right holders, this
system is not working and serves to "tip off" violators, Bae
continued. She also noted that the existence of six enforcement
agencies is both a strength and a weakness in the Vietnamese system,
as it can be confusing for right holders to determine which agency
is responsible for a specific issue. Director General Hung
responded to this point by stating that the Ministry of Trade's
(MOT) Market Management Board now chairs an inter-agency "Committee
127" to coordinate enforcement efforts among the various agencies.

9. (U) In response to Bae's query, DG Hung noted that Vietnam does
not yet plan to join the WIPO Internet Treaties. He continued by
noting that Vietnam may consider this in future, but they are now
focused on increasing knowledge and awareness of IP in the Internet
environment. Hung also pointed out that U.S. right holders are

HANOI 00001212 003.2 OF 004

protected under Vietnam's IP Law (as, under the WTO, they are
accorded national treatment).

10. (SBU) MOT's Market Management Board Deputy Director Nguyen Manh
Hung noted the acute training needs for his agency, which has more
than 5000 employees nationwide. He noted his interest in further
cooperation with the United States on IP enforcement technical
assistance. In response to these requests, Bae noted U.S. interest
in working with Vietnam to develop and implement an action plan for
the two sides to further cooperate with an aim of ultimately
removing Vietnam from the Special 301 Watch list. NOIP agreed to
take the lead on behalf of the GVN and will draft a list of items
they would like to include in such an action plan.


11. (SBU) As part of the IPR roundtable, Bae raised continuing U.S.
concerns that the GVN has not taken sufficient enforcement actions
to stop the serious problem of signal piracy by the State-owned
digital terrestrial broadcaster, the Vietnam Television Technology
Investment and Development Company (VTC). Despite frequent requests
over the past several years by U.S. industry and Post, VTC has
continued its egregious use of U.S.-owned broadcast content without
a license (see reftel B for additional background on VTC and signal
piracy in Vietnam). Following increased pressure in recent months,
VTC removed HBO and CNN from its channel lineup in early June.
Following the roundtable, a Ministry of Posts and Telematics
official reported that the remaining (four) U.S. channels were also
removed. Recent audits confirm that three of the four remaining
channels have indeed been removed, but VTC continues to pirate MTV
Asia. USTR and Post will continue to work with U.S. industry to
ensure a complete cessation of pirating activities.

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

12. (SBU) In a series of separate meetings, U.S. and Vietnamese
right holders and right holders' representatives described with some
optimism their experiences with IP enforcement in Vietnam. Unilever
Vietnam's Vice President of Corporate Relations Mr. Tran Vu Hoai
noted his firm's positive cooperation with enforcement agencies,
with the caveat that Unilever has adopted a very proactive approach
to reduce counterfeit goods in the market, including educating local
police and enforcement officials. He speculated, however, that
small companies without the resources to dedicate to such efforts
may have a different experience. The Vietnam Intellectual Property
Association (VIPA), a collection of firms and individuals interested
in promoting IP enforcement in Vietnam, opined that judges and court
officials, in particular, need additional training on IP
regulations, characterizing them as "ineffective due to a shortage
of expertise." Ideally, VIPA would like for Vietnam to create an
IP-focused court.

13. (U) Several law firms representing right holders here raised
concerns over the administrative requirement for a cease and desist
letter. One lawyer noted that the Decree only requires the letter
for trademark infringement cases (and not for trademark
counterfeiting), but GVN authorities have misinterpreted this and
are demanding a letter for all cases of accused infringement. While
one firm was optimistic that recent changes to the civil system
would lead to an increased use of civil remedies, another noted that
right holders continue to be hesitant to use this system due to the
potentially costly proceedings and the uncertain outcome from
inexperienced courts. Each of the law firms agreed that enforcement
here is improving, but much more training is needed to address the
dearth of expertise and experience among IP enforcement agents.


14. (SBU) All of the government agencies present were clearly
engaged and dedicated to improving IP enforcement in Vietnam. One
consistent message from all of them was the need for more training
to improve their officials' capacity and understanding of the new
laws. GVN officials also consistently expressed a commitment and
desire to improve IPR enforcement here. They openly recognized that
a lack of experience and expertise among their personnel constitutes
a major hindrance to creating a better environment for foreign and
domestic right holders. With that in mind, there is strong interest
on the part of the GVN to enhance and expand bilateral cooperation
and technical assistance. This is a critical time as Vietnam
finalizes its legal regime and increasingly focuses on

HANOI 00001212 004.2 OF 004

implementation. Enhanced engagement by the United States, through
the action plan that NOIP has agreed to draft and under the Trade
and Investment Framework Agreement (TIFA), stands to yield
significant improvements.

15. (U) USTR Director for Intellectual Property and Innovation
Rachel Bae cleared this cable.


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