VZCZCXRO6450
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHHI #0184/01 0610950
ZNR UUUUU ZZH
R 020950Z MAR 09
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 9227
INFO RUEHHM/AMCONSUL HO CHI MINH 5632
RUCNASE/ASEAN MEMBER COLLECTIVE
RHHMUNA/USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 05 HANOI 000184 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS AND EEB/TPP/IPE JURBAN 
STATE FOR EEB/TPP/IPE FOR HALLOCK, WATTS, AND KEAT 
STATE ALSO PASS USTR DBISBEE AND RBAE 
4430/MAC/AP/OPB/VLC/HPPHO 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR ECON VM
SUBJECT: VIETNAM SHOULD REMAIN ON THE 2009 SPECIAL 301 WATCH LIST 
 
REF: (A) STATE 8410 (B) HANOI 032 
 
HANOI 00000184  001.2 OF 005 
 
 
¶1. (SBU) Summary:  The Government of Vietnam (GVN) has continued to 
take significant steps to implement an effective legal regime to 
protect intellectual property rights (IPR), reduce IPR violations 
and raise awareness.  However, enforcement remains weak, piracy and 
counterfeiting  are rampant and several key obligations remain 
unfilled.  Vietnam's goals of participating in the Generalized 
System of Preferences (GSP) program and attracting continued high 
levels of foreign direct investment should motivate the GVN to 
continue to improve its IPR enforcement record.  In the meantime, 
Post recommends Vietnam's continued placement on the Special 301 
Watch List.  End Summary. 
 
IPR PROGRESS 
------------ 
 
¶2. (U) Two years after joining the WTO, Vietnam has continued 
efforts to develop a modern IPR legal regime and meet its 
obligations under the U.S.-Vietnam Bilateral Trade Agreement (BTA) 
and WTO Trade-related Aspects of Intellectual Property Rights 
(TRIPs).  Since the Mission's 2008 Special 301 submission, Vietnam 
has continued to strengthen its IPR legal framework, modestly 
improved IPR enforcement, formed a partnership to protect software 
copyrights and launched a Department of State-funded outreach 
program to raise public awareness of IP in Vietnam.  Stakeholders 
report that Vietnam's overall IPR situation is the same, if slightly 
improved, from 2008. 
 
¶3. (U) Vietnam has undertaken significant efforts in recent years to 
promulgate a legal framework for protection of IP rights.  In 2009, 
the GVN is expected to amend the 2005 Law on Intellectual Property, 
updating areas related to copyrights, trademarks, manufacture and 
distribution of optical discs, and border control measures related 
to infringing goods.  Yet, critical legal documents remain 
outstanding - notably the long-awaited revision to Vietnam's 
criminal code to update its IPR provisions.  In February 2008, the 
GVN issued a stopgap measure, Joint Circular 01, which declares that 
IP infringement merits criminal prosecution if pursued on a 
"commercial scale and for commercial purposes."  The circular moved 
Vietnam a step closer to meeting its TRIPs obligations. 
 
¶4. (U) The National Assembly was expected to ratify the criminal 
code revision in May 2009, codifying in Vietnamese law criminal 
penalties for commercial-scale IP infringement.  The Embassy 
recently learned, however, that the date for ratification could 
slide to late 2009, leaving promulgation for 2010.  While the new 
law would fill an important gap in Vietnam's IPR legal foundation, 
industry observers have expressed concern that the law's proposed 
fines and penalties, revealed in several drafts in 2008, are still 
too weak to deter committed IP infringers. 
 
¶5. (U) In December 2008, Prime Minister Nguyen Tan Dung issued a 
promising new directive (No. 36/2008/CT-TTg) instructing ministers 
and provincial department heads to draft detailed plans to increase 
copyright protection in Vietnam's business and service sectors, 
prevent the import and export of items that violate copyright laws, 
particularly optical discs, and introduce "strict punishment" for 
organizations and individuals that circulate pirated goods.  The 
directive also orders all Vietnamese universities and professional 
schools to introduce lectures on intellectual property rights, which 
  could prove particularly useful in helping to raise IPR awareness 
in Vietnam. 
 
¶6. (U) In August 2008, in an effort to combat software piracy, the 
Ministry of Culture, Sports and Tourism (MOCST) and the Vietnam 
Software Association (VINASA) joined forces with the Business 
Software Alliance (BSA) to create the "Partnership in Protection of 
Software Copyrights."  The collaboration aims to decrease software 
piracy through public awareness campaigns, inspections and stricter 
penalties for violations.  The Partnership has been running public 
service announcements in several of Vietnam's largest print and 
online newspapers warning against software piracy, and authorities 
backed up the campaign with a crackdown on several high-profile 
infringers. 
 
¶7. (U) In December 2008, the Drug Administration of Vietnam (DAV) 
agreed, after urging by the USTR and U.S. industry, to modify its 
internal procedure and grant five years of data exclusivity to new 
pharmaceuticals entering the Vietnamese market, in line with 
Vietnam's BTA and TRIPs obligations.  The Mission is currently 
waiting to learn how the DAV will implement the new rule, including 
whether data exclusivity will be automatic, comprehensive, 
retroactive and, as industry group PhRMA noted, "without procedures 
and formalities." 
 
HANOI 00000184  002.2 OF 005 
 
 
 
VIETNAMESE ASSOCIATIONS INCREASE VISIBILITY 
------------------------------------------- 
 
¶8. (U) In October 2008, the Recording Industry Association of 
Vietnam (RIAV) filed its largest civil lawsuit to date against 
Vietnamese internet service provider FPT and Nokia for music 
copyright violation, seeking compensation of more than VND 50 
billion.  At a press conference, RIAV presented evidence that Nokia 
had offered cell phone buyers a promotional package that directed 
customers to an FPT-run website that offered 1,000 songs and 
ringtones.  RIAV also accused FPT of offering 10,000 unlicensed 
downloadable music files and streaming infringing content.  RIAV 
said Nokia has admitted wrongdoing, but that neither FPT nor Nokia 
have shown sufficient "good will in negotiations," prompting RIAV to 
proceed with civil court proceedings.  While no court date has been 
set, RIAV anticipates the trial will take place in early 2009, and 
serve as a deterrent and means to raise IPR protection public 
awareness. 
 
¶9. (U) Vietnamese Public Television aired a number of IPR-related 
programs, including a game show on IP rights.  IPR agencies 
organized a number of workshops, panels and public forums to help 
increase IP awareness.  The Copy Office of Vietnam (COV) website 
regularly updates information on copyright legislation, including a 
copyright registration database.  The GVN also sponsored a number of 
IPR awareness events on World IP Day, April 26, 2008. 
 
¶10. (U) Due to heightened awareness of IP, individuals and firms in 
Vietnam have become increasingly assertive about protecting their 
rights.  In 2008, the COV reports issuing 4,992 copyright 
certificates, a 55 percent increase over 2007.  NOIP reports it 
received 3,484 patent applications for inventions, a 13 percent 
increase over last year. 
 
¶11. (U) Copyright associations also continued to expand their reach. 
 The Vietnam Literature Copyright Center (VLCC) collected VND 
300,000 million ($17,000) in royalties in 2008, while The Vietnam 
Center for Protection of Music Copyright (VCPMC) collected VND 15 
billion (USD 833,000) worth of fees last year. 
 
¶12. (U) The Vietnam Center for Protection of Music Copyrights 
represents both Vietnamese and foreign songwriters and composers and 
is a member of the International Confederation of Societies of 
Authors and Composers (known by its French acronym CISAC).  The 
branch of VCPMC in southern Vietnam, enabled by support from the 
Departments of Culture, Sports, and Tourism in 24 provinces, 
reported major increases in copyright royalties collected from TV 
and radio stations, live provinces, CDs, karaoke, hotels, 
restaurants, bars, and websites. 
 
IPR CHALLENGES 
-------------- 
 
¶13. (U) Despite these developments, IP enforcement in Vietnam 
remains weak and violations are rampant.  Several factors continue 
to undermine proper IPR enforcement in Vietnam.  First is the 
government's reliance on administrative measures to combat IP 
infringement.  GVN officials tell us just 1 percent of all IP 
infringement cases in Vietnam are prosecuted under existing criminal 
statutes.  A second complicating factor is the sheer number of 
entities involved in IP enforcement, with no less than eight 
ministries and agencies responsible for intellectual property in 
Vietnam.  To help streamline enforcement, the GVN has formed an 
interagency committee (Standing Committee 127) with representatives 
of all agencies involved in IPR protection.  However, despite the 
new committee and the National Office of Intellectual Property 
Rights' (NOIP) stated goal to create a "one-stop shop" for rights 
holders, the task of sorting out overlapping jurisdictions and 
completing the requisite procedural requirements remains confusing 
and time-consuming. 
 
¶14. (U) Industry estimates place rates of pirated optical discs in 
Vietnam at 95 percent and pirated software at 83 percent.  Anecdotal 
evidence supports these estimates.  Hanoi, Ho Chi Minh City (HCMC) 
and most other cities are rife with pirated DVDs, CDs, and VCDs. 
While local media producers in HCMC have recently reported increased 
availability of legitimate, locally-recorded and produced Vietnamese 
music CDs, market access barriers continue to limit the availability 
of legitimate imports, further complicating efforts to combat 
piracy.  In 2007, in an effort to tackle the problem, the COV, an 
agency under the MOCST, initiated the drafting of new optical disc 
legislation that would regulate the domestic production, export, 
import and circulation of all optical discs, but this work remains 
unfinished. 
 
HANOI 00000184  003.2 OF 005 
 
 
 
¶15. (U) The costs of IPR infringement remain high.  The 
International Intellectual Property Alliance (IIPA) pegged 2008 
trade losses from pirated software in Vietnam at $123 million. 
Although software piracy rates decreased by 9 percent from 2004, 
estimated trade losses over the period increased by more than $90 
million due to the rapid proliferation of personal computers in 
Vietnam.  While the GVN issued a directive in 2007 aimed at lowering 
the rate of software infringement to the regional average (Decision 
No. 51), raids have thus far been too infrequent and the fines too 
minimal to reduce piracy significantly. 
 
TECHNICAL ASSISTANCE AND RAISING AWARENESS 
------------------------------------------ 
 
¶16. (U) Vietnam continued to receive IPR-related technical 
assistance from a number of foreign donors in 2008, including the 
Government of France, the European Patent Office (EPO), the World 
Intellectual Property Organization (WIPO), USAID and the U.S. Patent 
and Trademark Office (USPTO). 
 
¶17. (U) In 2009, the GVN will continue to require technical 
assistance to improve its IPR enforcement capacity.  Six GVN members 
will attend a weeklong seminar on IPR enforcement at the ILEA 
Academy in Bangkok in April 2009.  In addition, the Mission hopes to 
collaborate with the Bureau of International Narcotics and Law 
Enforcement (INL) to offer Vietnam a technical capacity-building 
project to enhance IPR enforcement. 
 
¶18. (U) Enforcing IP law in Vietnam is complicated by a lack of 
understanding among retailers of their legal obligations and the 
economic impact upon the IP owners from the sale of pirated or 
counterfeit goods.  This is not necessarily limited to small 
mom-and-pop establishments; GVN officials tell us that some of 
Vietnam's largest retailers routinely peddle infringing goods.  To 
combat this problem, Post is engaging with the Market Management 
Bureau to develop an IPR Outreach booklet for distribution in May 
2009 in areas with high rates of infringing goods.  The booklet, 
funded jointly by the Department of State and Post, will describe 
how to identify a fake or pirated good, explain the legal and 
economic consequences of peddling such wares, suggest locations 
where vendors can obtain legitimate goods for sale, and note why IP 
protection is important to Vietnam and its citizens. 
 
INTERNATIONAL AGREEMENTS 
------------------------ 
 
¶19. (U) In 2006, Vietnam fulfilled its BTA obligations by joining 
five key international IP conventions.  After completing procedures 
to join the Rome Convention for the Protection of Performers, 
Producers of Phonograms and Broadcasting Organizations, Vietnam 
officially joined the Convention on March 1, 2007.  The Mission 
continues to urge Vietnam to join the 1996 WIPO Copyright Treaty 
(WCT) and the WIPO Performances and Phonograms Treaty (WPPT), but 
the GVN has continued to defer action on those agreements. 
 
IPR LEGISLATIVE REFORMS IN 2008 
------------------------------- 
 
¶20. (U) The GVN reported the following IPR-related legislative 
reforms in 2008 and early 2009: 
 
- Joint Circular No. 01/2008/TTLT-TANDTC-VKSNDTC-BCA-BTP guiding 
penalties for infringement of intellectual property rights, February 
2008; 
 
- Ordinance on the Handling of Administrative Violations, which 
revises the fine ceiling to align it with Vietnam's Law on 
Intellectual Property; 
 
- Joint Circular No. 02/2008/ TTLT-TANDTC-VKSNDTC-BVHTTDL-BKHCN-BTP 
guiding regulations for IPR dispute settlement, April 3, 2008; 
 
- Prime Minister's Directive on Strengthening Management and 
Protection of Copyrights and Related Rights (No. 36/2008/CT-TTg), 
December 31, 2008; 
 
- Circular No. 29/2009/TT-BTC, dated February 10, 2009, revising and 
supplementing Circular 166, February 12, 1998; 
 
- Decision No. 515/QD-TCHQ, establishing an IPR Enforcement System 
to streamline procedures and link central and provincial customs 
departments, February 22, 2008; 
 
- Decision 916/QD-TCHQ, establishing procedures for the inspection 
 
HANOI 00000184  004.2 OF 005 
 
 
of exports and imports, March 31, 2008; 
 
- Decision No. 2808/QD-TCHQ, on the operations manual for IPR 
Customs Enforcement, December 31, 2008; 
 
- A joint circular drafted by MOCST, MOST, MOF and MPI regarding 
financial support for the purchase of legitimate software and 
guiding the collection and distribution of royalties; 
 
- Circular 12/2008/TT-BCT, outlining procedures for market 
management bodies to take jurisdiction of, and resolve 
administrative breaches in, the intellectual property sector. 
 
- Prime Ministerial Directive No. 28/2008/CT-TTg ordering "urgent 
action" against counterfeit goods and low quality products, 
September 8, 2008. 
 
2008 ENFORCEMENT EFFORTS 
------------------------ 
 
¶21. (U) The GVN reported the following enforcement efforts in 2008: 
 
- MOST/NOIP: processed 154 cases, including 118 trademark 
infringement cases, 32 industrial design cases, three patent 
infringement cases and one unfair competition case; destroyed 54,969 
trademark-infringing goods and 95 patents infringing goods.  Total 
fines were approximately VND 800 million ($45,000). 
 
- The Market Management Bureau (MMB), Vietnam's largest IPR 
administrative enforcement agency, reported 2,575 IPR infringement 
investigations, including 2,195 trademark cases, 404 industrial 
design cases, six geographical indication cases, four unfair 
competition cases and two trade name cases.  Total fines were nearly 
VND 8 billion ($4.4 million). 
 
- Through February 2009, the Vietnam General Department of Customs 
received 26 requests to inspect exports and imports for IPR 
infringement.  The goods were trademarked Nokia, Nike, Seiko, HP, 
Epson, Smirnoff, Gucci, Casio, Ensure, Oral-B, New Era, Gillette, 
and Proctor & Gamble.  Customs reports seizing goods on ten 
occasions, suspending clearance on five occasions, identifying 
infringing goods worth VND 200 million ($11,500) and imposing fines 
worth VND 400 million ($23,000).  Infringing goods included cell 
phones, cell phone parts and Benson & Hedges cigarettes. 
 
- The Ministry of Public Security's Department of Economic Police 
reports investigating and seizing infringing goods in 76 cases, 
focusing on the following product categories: food, clothing, 
cosmetics, pharmaceuticals and electronic parts. 
 
- On March 29, 2008, MPS arrested a group smuggling counterfeit 
Viagra and Cialis across the Chinese border to Lang Son Province en 
route to Hanoi, HCMC, Bac Ninh and Bac Giang.  Two people were 
sentenced to 40 months in prison. 
 
- In October 2008, MPS initiated criminal proceedings against a 
group producing fake versions of the drug Rovanten; and, in 
September 2008, against suspects producing and distributing fake 
fertilizer. 
 
- In HCMC, MPS investigated 20 IPR infringement cases, initiating 
criminal proceedings in two cases; imposing administrative fines in 
one case, with transfer of 15 cases to district and commune economic 
police. 
 
- The MOCST Inspectorate processed 20 software copyright 
infringement cases; destroyed 2,000 illegal copies of infringing 
software; and seized and destroyed 2,364 infringing books, 953,477 
videocassettes and 236,364 disc cases. 
 
- The MOCST ordered seven internet websites, including 24h.com.vn, 
socbay.cpm.vn, zing.vn, bongdaso.com, vnmedia.vn, clip.vn and 
baobongda.com.vn to remove or cease broadcasting infringing content. 
 National internet service provider FPT paid VND 20 million ($1,150) 
in fines for allegedly allowing an affiliated website to broadcast 
pirated content.  Total fines were VND 255 million ($14,500). 
 
- The Copyright Office of Vietnam (COV) processed 52 copyright 
infringement cases, of which they settled 30, and transferred the 
remainder to MOCST. 
 
- In Dong Nai Province, the Department of Science and Technology 
(DOST) reports investigating several hundred establishments, fining 
58 for industrial property infringements.  Total fines were not 
reported. 
 
HANOI 00000184  005.4 OF 005 
 
 
 
LEGAL UDPATES EXPECTED IN 2009 
------------------------------ 
 
¶22. (U) The GVN expects to issue the following IPR-related 
legislation in 2009: 
 
- Revision of IPR provisions in the Criminal Code; 
 
- Revision of the 2005 Law on Intellectual Property; 
 
- Decree on the Handling of Administrative Violations Related to 
Copyrights and Related Rights to introduce compatibility with the 
revised ordinance on the handling of administrative violations; 
 
- A joint circular drafted by MOCST, MOST, MOF and MPI regarding 
financial support for the purchase of legitimate software; 
 
- Decree to regulate optical disk management and distribution in 
Vietnam (COV); 
 
CONCLUSION AND RECOMMENDATION 
----------------------------- 
 
¶23. (SBU) Despite continuing progress, Vietnam will continue to 
grapple in the near term with the challenge of reducing the massive 
scale of IPR violations.  GVN authorities, including at the highest 
levels, have demonstrated their understanding of the problem and 
expressed their resolve to protect and enforce IP rights.  The GVN, 
moreover, has shown a willingness to cooperate with the United 
States and other trading partners to address its serious IP problems 
and we expect those efforts to continue in 2009.  Vietnam's BTA and 
WTO/TRIPs commitments provide us with strong tools for engaging the 
GVN on IPR enforcement, and the Trade and Investment Framework 
Agreement (TIFA) also provides a useful forum. 
 
¶24. (SBU) On the legislative front, Vietnam's forthcoming criminal 
code revision will fill gaps in Vietnam's IPR legal foundation by 
providing rights holders with multiple remedies for IP infringements 
-- administrative, civil and criminal.  The most significant 
remaining challenge lies in building the capacity and improving the 
efficacy of Vietnam's enforcement and judicial systems.  Vietnam's 
desire to participate in the GSP preference program and attract 
continued high levels of foreign direct investment should motivate 
the GVN to continue to improve its IPR enforcement record.  With 
additional resources and time to implement its IPR legislative 
framework, the Mission expects Vietnam to develop a more consistent 
track record of IPR enforcement.  In the meantime, we recommend 
Vietnam's continued placement on the Special 301 Watch List. 
 
¶25. (U) This message was coordinated with ConGen Ho Chi Minh City. 
 
MICHALAK