VZCZCXRO6278
RR RUEHCN RUEHGH RUEHVC
DE RUEHHK #0372/01 0610750
ZNR UUUUU ZZH
R 020750Z MAR 09
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC 6989
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 HONG KONG 000372 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/IPE/TMCGOWAN, JURBAN 
STATE FOR EAP/CM 
DEPT PASS USTR FOR LEE, RAGLAND 
DEPT PASS USPTO FOR BROWNING 
BEIJING FOR COHEN/GUANGZHOU FOR WONG 
 
E.O. 12958: N/A 
TAGS: KIPR ECON EIND EFIN EINV ETRD HK
SUBJECT: 2009 SPECIAL 301 RECOMMENDATION FOR MACAU 
 
REF: A. STATE 8410 
     ¶B. HONG KONG 270 
 
Summary and Recommendation for Macau 
------------------------------------ 
 
¶1. (SBU) Summary: Post recommends that Macau be excluded from 
the 2009 Special 301 list.  The government of Macau (GOM) 
maintained its generally successful IPR protection, education 
and enforcement efforts during 2008.  Post remains concerned, 
however, about flagrant and extensive cable TV signal piracy 
in Macau's residential market, and the GOM's inability to 
resolve this issue.  While Macau's outdated copyright law 
makes it difficult for law enforcement to act against 
software piracy and control digital/internet IPR 
infringement, Macau Customs' enforcement activities deterred 
smugglers of counterfeit goods and reduced the retail 
availability of IPR-infringing products to low levels.  End 
Summary. 
 
Cable TV Signal Piracy 
---------------------- 
 
¶2. (SBU) The most significant intellectual property issue in 
Macau is the theft of cable TV signals.  Industry observers 
estimate over 80 percent of the Macau residential market is 
controlled by local "antenna companies" offering pirated 
programming.  Antenna companies began as community antenna 
television (CATV) providers, but began reselling satellite TV 
programming signals in 2000.  These fifteen companies have 
illegally connected approximately 125,000 of Macau's 150,000 
households to as many as seventy different TV channels from 
the United States, Mainland China and Taiwan (ref B).  The 
antenna companies pay no licensing fees for their 
programming, and charge only three or four USD per month per 
household, compared with monthly charges of twenty-four USD 
per household by the only GOM-licensed provider of cable 
television subscriptions, Macau Cable TV. 
 
Ongoing Battle With Signal Pirates 
---------------------------------- 
 
¶3. (SBU) Previous GOM efforts to force the antenna companies 
to stop offering illicit programming failed.  Early in 2008, 
the GOM Bureau of Telecommunications Regulation (known 
locally by its Portuguese acronym "DSRT") severed newly 
installed fiber optic cables owned by an antenna company. 
The antenna company responded with a service blackout that 
angered its residential customers.  The blackout fizzled and 
was lifted by the antenna company only when affected 
residents began turning to Macau Cable TV for service.  Macau 
Cable TV initiated several civil lawsuits against antenna 
companies, in an effort to force them to cease and desist 
from supplying pirated signals to Macau residents.  Two of 
these lawsuits remain undecided in the courts, but industry 
observers expect the lawsuits to have little effect on the 
antenna companies' operations or their dominant residential 
market share. 
 
¶4. (SBU) U.S. investment in Macau changed the competitive 
landscape for cable television. The new world-class resorts 
and casinos opening in Macau purchased legitimate cable 
television services, enabling Macau Cable TV to monopolize 
the hotel market.  With the assistance of DSRT hotel 
inspections in 2007 and 2008, Macau Cable TV controlled 
almost 100 percent of Macau's hotel market by the end of 
¶2008. 
 
¶5. (SBU) Macau Customs officials acknowledge the signal 
piracy problem and note that Customs has presented evidence 
against illegal antenna operators to the public prosecutor. 
The court has yet to launch any civil proceedings.  Without 
new laws specifically addressing digital piracy, industry 
believes successful prosecutions of signal piracy will remain 
difficult.  Given the GOM's inability or unwillingness to 
significantly impair the antenna companies' operations, many 
industry observers believe one or more foreign producers of 
copyrighted content must file lawsuits in Macau to force the 
antenna companies out of business - or at least disable their 
ability to sell pirated signals to Macau's households.  To 
date, no provider of copyrighted content (e.g. British 
Premier League, HBO, ESPN) has initiated such a lawsuit in 
Macau against an antenna company. 
 
Legal Ambiguity Allows Software Piracy 
 
HONG KONG 00000372  002 OF 002 
 
 
-------------------------------------- 
 
¶6. (SBU) The GOM has not taken action to address software 
piracy complaints.  Macau's statutory framework governing 
copyrights has not been revised since 1999, and has not yet 
been tested in a single software piracy case.  Industry 
representatives complain that ambiguous legal provisions make 
it difficult for law enforcement authorities to file criminal 
charges against allegedly high levels of infringement. 
(Statistics on business software piracy and IPR infringement 
in the digital realm are unavailable.)  Post is aware of no 
current GOM efforts to modernize Macau's statutory framework 
that governs IPR protection. 
 
Enforcement and Education 
------------------------- 
 
¶7. (SBU) Total Seizures: The overall number of counterfeit 
and pirated items seized by Macau Customs at its borders in 
2008 declined from 2007.  In 2008, Macau Customs seized 1,148 
counterfeit items of various types, a decline of 85 percent 
from 2007.  The vast majority of these goods originated in 
mainland China.  Industry observers believe Macau Customs' 
enforcement efforts - including more intense inspections at 
border checkpoints, systematic spot checks at retailers, and 
improved exchanges of information with law enforcement 
entities in Hong Kong and Mainland China - effectively 
dissuade most smugglers from attempts to cross Macau's 
borders with counterfeit goods. 
 
¶8. (SBU) Optical Disks seizures: A total of 113 pirated 
optical disks were seized in 2008, a decline of 99 percent 
compared with 2007.  The 2007 seizure total was substantially 
higher than recent historical figures, due to two unusually 
large transshipment seizures of optical disks moving from 
mainland China to Taiwan.  In 2008, Macau's courts handed 
down twelve copyright and trademark convictions.  All twelve 
individuals were fined up to US$ 1,875 (MOP 15,000), with 
four of them receiving suspended jail sentences.  Macau needs 
to mete out stronger punishments to deter possible future 
increases in the smuggling and sale of counterfeit items. 
 
¶9. (SBU) Over the past several years, Macau Customs raided 
many illicit optical disc factories and closed down dozens of 
retailers selling counterfeit goods.  Only one legal optical 
disk factory remains, and that operation receives regular 
visits from Macau Customs. The GOM has been proactive in 
combating counterfeit drugs, resulting in lower rates of 
pharmaceutical piracy in Macau than in some of its neighbors. 
 
¶10. (SBU) To combat the influx of counterfeit goods crossing 
the border, the GOM has been trying to decrease consumer 
demand for fake products among local residents and visitors 
through public education campaigns.  As part of the GOM's 
licensing program for tour guides, all guides must undergo 
IPR awareness training and are urged to direct their clients 
to legitimate retailers.  Macau Customs and DSRT also conduct 
educational campaigns on the importance of protecting 
intellectual property rights, including campaigns to deter 
cable signal piracy.  With regard to signal piracy, these 
campaigns have had little effect. 
DONOVAN