VZCZCXRO0200
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHKL #0794/01 1220415
ZNR UUUUU ZZH
R 020415Z MAY 06
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC 6530
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC

UNCLAS SECTION 01 OF 05 KUALA LUMPUR 000794 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB/TPP/MTA/IPC - FELSING 
STATE PASS USTR FOR B. WEISEL, J. JENSEN, V. 
ESPINEL 
USDOC FOR JENNIFER BAKER 
COMMERCE PASS USPTO FOR P. FOWLER 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR MY
SUBJECT: U.S.-MALAYSIA INTELLECTUAL PROPERTY 
RIGHTS ROUNDTABLE 
 
Summary and Introduction 
------------------------ 
 
¶1.  The U.S. and Malaysia held a long-anticipated 
IPR Roundtable on April 20 in Kuala Lumpur. 
Approximately seventy participants from the 
Malaysian and U.S. governments, as well as 
industry and civil society, gathered to discuss 
IPR enforcement efforts, industry views on 
combating piracy, IPR protection within the 
context of free trade agreements, and the U.S. 
perspective on IPR protection, including the use 
of specialized IPR courts.  Participants also 
discussed U.S.-Malaysian cooperation efforts, 
including the ongoing provision by the U.S. of 
capacity building for Malaysian officials.  The 
Ambassador and the Minister of Domestic Trade and 
Consumer Affairs launched the event and also held 
a joint press conference.  The Roundtable was co- 
chaired by the DCM and by Deputy Secretary General 
Mohamed Nor Hj. Abd Aziz of the Ministry of 
Domestic Trade and Consumer Affairs (MDTCA). 
 
Ambassador LaFleur and Minister Shafie Launch the 
--------------------------------------------- ---- 
Roundtable 
---------- 
 
¶2. Ambassador LaFleur kicked off the event with a 
speech that countered common excuses made by 
purchasers of stolen IP, such as the cost of 
optical media and the alleged lack of harm to IP 
producers.  He emphasized the need for the U.S. 
and Malaysia to continue to work together to 
change the common perception among consumers that 
IPR piracy is not a true crime.  The Ambassador 
urged Malaysia's leaders to project more public 
opposition to IPR piracy.  High-level advocacy was 
essential not only to stem retail piracy, but more 
broadly to further Malaysia's goal of developing a 
knowledge-based economy, which is strongly 
influenced by foreign investors' assessments of 
whether their IPR would be protected.  The 
Ambassador welcomed Minister of Domestic Trade and 
Consumer Affairs Shafie Apdal's commitment to 
implement a specialized IPR court, as well as his 
more recent initiative to obtain legal authority 
to act against owners of retail premises that 
routinely sell pirated products. 
 
¶3.  Minister Shafie placed the IPR Roundtable in 
the context of the upcoming U.S.-Malaysia FTA 
negotiations, expressing his hope that negotiators 
of the FTA's IPR chapter would build on the day's 
events.  He acknowledged that IPR theft was a 
drain on Malaysia's economic growth and would 
inhibit its ultimate economic success, and noted 
his particular concern about Malaysia's reputation 
as one of the leading exporters of pirated optical 
disc media.  Shafie listed a range of actions that 
Malaysia had undertaken to attack piracy, 
including an increasing number of seizures, more 
effective prosecution that included higher fines 
and longer sentences for convicted IPR pirates, 
and the creation of an export enforcement unit to 
strengthen controls at international air and sea 
gateways.  He noted the ministry's intention to 
hire over 700 new enforcement officers this year 
and reiterated his plan to implement soon a 
specialized IPR court. 
 
¶4.  The Ambassador and Minister Shafie held a 
joint press conference following the opening 
session, which received wide coverage from the 
media.  They conveyed many of the same themes in 
their remarks to the press.  Press questions 
focused on a news report that the Recording 
Association of Malaysia had brought suit against a 
local shopping mall for its failure to stop sales 
of pirated CD's on its premises.  Minister Shafie 
confirmed that he is seeking administrative 
authority to enable his Ministry to independently 
pursue such cases. 
 
 
KUALA LUMP 00000794  002 OF 005 
 
 
U.S. and Malaysian Approaches to Enforcement 
-------------------------------------------- 
 
¶5.  Econoff presented the USG STOP Initiative as 
an effort by the United States to improve its 
interagency coordination in IPR enforcement. 
Although the United States has long led global 
efforts to protect intellectual property, enhanced 
coordination through STOP was helping U.S. 
agencies to improve their effectiveness against 
organized IP crime.  Econoff noted that engagement 
with U.S. trading partners on IPR protection was a 
key component of the initiative; our commitment to 
improving IPR enforcement in the region was shown 
by the recent posting to Bangkok of an IP attach 
and an IP law enforcement coordinator, both with 
regional responsibilities. The U.S. would continue 
to provide IP training and capacity building 
programs for foreign officials, and welcomed 
Malaysia's ongoing participation in such 
initiatives. 
 
¶6.  Roslan bin Mahayuddin, MDTCA Acting Director 
General for Enforcement, gave an overview of 
Malaysia's recent enforcement activity, noting in 
particular that 2006 was shaping up to be a record 
year in terms of seizures of pirated IPR in 
Malaysia.  Roslan reiterated Shafie's statement 
that the establishment of the MDTCA's Export Unit 
in April 2005 was a key component of Malaysia's 
strengthened enforcement efforts.  More than RM 50 
million (approximately USD 13.8 million) in 
merchandise has been seized so far this year, 
compared to seizures worth just over RM 100 
million in all of 2005, in part through better 
coordination on seizures destined for export. 
Roslan noted that the number of licensed optical 
media disc factories in Malaysia has been reduced 
from 44 to 38 in the last year, and several other 
pending license revocations would continue to 
bring that number down to a level more 
commensurate with the legitimate Malaysian market. 
An optical disc forensic laboratory was 
established in 2003 in coordination with the 
government Chemistry Department; Roslan 
acknowledged that no cases have yet been developed 
based on forensics evidence corroborated by the 
new lab, though he suggested that would soon 
change. 
 
¶7.  USPTO Senior Counsel Peter Fowler provided an 
overview of U.S. judicial enforcement of IPR.  The 
U.S. has long experience in protecting IPR that 
could inform other countries like Malaysia on the 
most effective means to enforce IPR.  Fowler 
highlighted a number of facets of U.S. IPR 
enforcement, including a reliance on civil 
litigation, supplemental use of criminal 
prosecution, and the predominance of the federal 
court system for litigation rather than state or 
local courts.  Government must be involved in IPR 
enforcement because such protection is in the 
public interest, going beyond the interests of 
individual piracy victims.  Fowler added that 
piracy is often committed without the victim's 
knowledge, and the victim usually has no direct 
relationship with the infringer; in such 
situations a victim might be unable to pursue 
civil remedies, leaving criminal penalties as the 
only effective recourse.  Criminal sanctions may 
also be necessary in cases where fines might be 
treated by IPR violators as just a cost of doing 
business. 
 
¶8. Fowler presented a number of models that 
Malaysia could consider as it moves toward 
implementing a specialized IPR court, including 
separate specialized courts or judicial panels, 
such as in Thailand and Korea, or designated 
existing courts to handle IPR cases, as in Japan, 
Singapore, Indonesia, Taiwan and the Philippines. 
He noted that the U.S. had no designated IPR 
court, though we do have a special appeals court 
to handle patent litigation.  Regardless of the 
 
KUALA LUMP 00000794  003 OF 005 
 
 
approach, a specialized IPR judicial regime was 
important given technically complicated cases 
involving science, technology innovation, patents, 
and transnational civil litigation. 
Specialization would allow for a better-informed 
judiciary, more focused law enforcement, better 
case management and dedicated resources to 
continuously promote protection. 
 
IPR Protection in the FTA Context 
--------------------------------- 
 
¶9. Econ Counselor gave a general overview of the 
typical provisions of an IPR chapter in a U.S. 
free trade agreement, after cautioning that his 
presentation should not be seen as pre-judging the 
treatment of IPR in the upcoming U.S-Malaysia FTA 
negotiations.  He noted that U.S. Trade Promotion 
Authority (TPA) sets as an FTA negotiating 
objective the promotion of effective IPR 
protection through accelerated implementation of 
TRIPS, in particular its enforcement aspect; by 
ensuring that FTA provisions reflect a standard of 
protection similar to U.S. law; and by providing 
strong protection for new and emerging 
technologies.  Typical IPR chapters in past FTAs 
have included provisions on trademarks, 
copyrights, patents, Internet domain names, 
satellite broadcasts, and enforcement and criminal 
procedures. 
 
Industry Views - Improving Enforcement, Continuing 
Concerns 
--------------------------------------------- ----- 
--------- 
 
¶10. While representatives from a range of IPR 
industry associations expressed appreciation for 
the Malaysian government's recent enforcement 
successes and its commitment to IPR protection, 
they were not shy about raising their varied 
concerns on the state of IPR protection here. 
Jeff Hardee, Regional Vice President of the 
Business Software Alliance, noted that an 
effective IPR court would necessitate better- 
trained prosecutors than exist at present, and he 
called on Malaysia to fully implement all WIPO 
treaties.  He also pointed out that BSA supports 
technology neutral government procurement, given 
that its membership straddles both sides of the 
open source software debate.  Neil Gane, Senior 
Operational Director of the Motion Picture 
Association, noted MPA's appreciation for the 
government's enforcement efforts, which had 
reduced DVD piracy substantially in the last few 
years.  Despite reducing the number of licensed OD 
factories, however, MPA continues to believe the 
country has far too many production lines, and 
which keeps it a significant exporter of pirated 
products.  Gane also raised the significant 
funding through IPR crime of other criminal 
activity. 
 
¶11. Su Siew Ling, a Kuala Lumpur attorney who 
represents the Association of American Publishers, 
said the AAP's primary concern in Malaysia is the 
widespread photocopying of textbooks, particularly 
around university campuses.  She pointed out that 
illegal photocopiers typically produce on demand, 
keeping virtually no stock on hand that would help 
authorities prove counterfeit production. 
Photocopiers are aided by Malaysia's copyright 
law, which allows for possession of up to three 
copies of a work for private/personal use.  Siew 
Ling said AAP continued to advocate stronger anti- 
piracy action by means of increased surveillance 
in chronic areas, such as near universities; an 
increased willingness by authorities to enforce 
actions against photocopiers, and to follow up 
with effective prosecution of such cases; an 
enhanced public awareness program, especially 
among teachers and students; and increased use of 
civil action against violators. 
 
 
KUALA LUMP 00000794  004 OF 005 
 
 
¶12. Cyril Chua, a Singapore attorney who 
represents the Entertainment Software Alliance, 
noted the particularly high rates of piracy in 
Malaysia in that area of optical media (over 90 
percent by some estimates).  Like his industry 
colleagues, he pointed to the weak prosecution of 
cases as a prime concern, noting that the 
government has not strengthened prosecution to 
keep up with its strengthened enforcement efforts. 
Tom Hart of Aztra Zeneca, who represented Amcham's 
pharmaceutical committee, pointed out that, while 
his industry faces different obstacles from 
optical media industry, counterfeit 
pharmaceuticals posed a direct threat to the 
health of Malaysian consumers, and thus 
necessitated particularly strong enforcement and 
prosecution. 
 
Current and Future Cooperation 
------------------------------ 
 
¶13. The U.S. and Malaysia continue to cooperate on 
a number of capacity building programs.  Peter 
Fowler noted that the most effective training 
programs are those that can reach a broad set of 
officials, and that can be institutionalized 
relatively quickly so that an organization's 
improved performance does not depend on the 
continued employment of those officials who 
initially receive training.  Fowler pointed out 
the May 2006 seminar on IP prosecution in KL, 
which is an ASEAN-sponsored event with significant 
financial and logistical support from USPTO.  He 
noted USPTO's active training schedule in 
Southeast Asia, where it typically works through 
ASEAN to set up capacity building sessions.  He 
also pointed out the recent inauguration of the 
Global Intellectual Property Academy at USPTO, 
which has already trained several Malaysian 
participants.  Siti Eaisah of the Malaysian 
Intellectual Property Office (MyIPO) noted her 
appreciation of the training USPTO has provided to 
MyIPO officials, and said her office needed 
particular assistance in training patent examiners 
in specialized areas like biotechnology and 
engineering.  Othman Nawang of the MDTCA's 
enforcement division said his officers would 
benefit from training in surveillance and 
detecting techniques, combating Internet piracy, 
criminal profiling, and optical disc forensics. 
 
¶14. Industry representatives were united about the 
need to improve public awareness on the need to 
protect intellectual property.  Chua said ESA has 
launched an IP initiative in public schools aimed 
at young children, viewed as the most persuadable 
audience, even if the results from such outreach 
may not be apparent until such kids reach their 
early teenage years.  MPA likewise sees schools as 
a main focus of its outreach efforts.  While 
agreeing on the importance of educating consumers, 
particularly children and young adults, BSA's Jeff 
Hardee pointed out that there are no shortcuts to 
strong enforcement measures.  He raised the issue 
of piracy in the U.S., which continued to be a 
major concern throughout the IP industry despite 
extensive public outreach (he noted that, while 
U.S. piracy rates are fairly low by Southeast 
Asian standards, overall losses there remain very 
high).  Strong enforcement is a tool along with 
education in deterring IP theft, he added. 
 
¶15. The DCM wrapped up the Roundtable by 
acknowledging our existing and future cooperative 
efforts, including the Roundtable itself.  Our 
bilateral cooperation had been one factor in 
Malaysia's improving ability to fight piracy, and 
the U.S was committed to continuing our effective 
collaboration.  The U.S. looked forward to 
Malaysia's continuing efforts, including the 
upcoming establishment of an IPR court.  The FTA 
talks would ensure that IPR protection would be a 
prime topic of bilateral government discussion in 
the coming year, which we hoped would lead to an 
 
KUALA LUMP 00000794  005 OF 005 
 
 
FTA that would continue to advance our 
cooperation. 
 
Comment 
------- 
 
¶16. The IPR Roundtable was a welcome opportunity 
for an open discussion of Malaysia's efforts to 
protect intellectual property, and was especially 
well timed given our imminent launch of 
negotiations on an FTA.  MDTCA officials are 
understandably proud of the progress they have 
made in enhancing enforcement and expressed a 
strong commitment to furthering those gains.  They 
also recognize that one of the government's 
principal goals in the just released Ninth 
Malaysia Plan - creating a more knowledge-based 
economy - will depend heavily on the government's 
ability to protect IPR, both to encourage local 
entrepreneurs as well as the foreign investors who 
would help support them.  Our industry 
representatives acknowledged Malaysia's progress 
and commitment, but made clear that the government 
had a long way to go in creating an effective 
deterrent that would help effect a significant 
shift in the average Malaysian's attitude toward 
IPR piracy. 
 
¶17. Embassy was pleased by the large, diverse 
turnout at the Roundtable, which included some NGO 
participants that have been vocal critics of the 
U.S.-Malaysia FTA.  Their comments during the 
Roundtable indicated they we didn't change any 
minds, but we were pleased to be able to explain 
to them our views on the benefits of an FTA to 
Malaysia, including through enhanced IPR 
protection.  The Roundtable deepened our bilateral 
dialogue on IPR, and could lead to the 
organization of similar events in the future, 
perhaps after the conclusion of our upcoming FTA 
negotiations. 
 
LAFLEUR