VZCZCXRO3882
RR RUEHCHI RUEHDT RUEHNH
DE RUEHHM #0039/01 0330945
ZNR UUUUU ZZH
R 020945Z FEB 10
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC 6281
INFO RUEHHI/AMEMBASSY HANOI 4165
RUEHHM/AMCONSUL HO CHI MINH CITY 6524
RUCNASE/ASEAN MEMBER COLLECTIVE

UNCLAS SECTION 01 OF 03 HO CHI MINH CITY 000039 
 
SENSITIVE 
SIPDIS 
 
STATE FOR USTR DBISBEE AND RBAE 
STATE FOR USPTO JNESS 
 
E.O. 12958: N/A 
TAGS: ECON KIPR EAID ETRD VM
SUBJECT: HCMC IPR BUSTS DEMONSTRATE IMPACT OF MISSION EFFORTS 
 
REF: A) HCMC 584 B) HANOI 32 
 
HO CHI MIN 00000039  001.2 OF 003 
 
 
¶1. (SBU) Summary: Ho Chi Minh City police recently raided the 
largest illegal disc production operation to date, seizing 
millions of CDs and DVDs and disrupting a ring that is believed 
to stock up to 60% of the shops selling illegal discs to the 
HCMC market.  This bust comes close on the heels of a separate 
raid, in which authorities seized thousands of illegally 
reproduced English books on behalf of American rights holder 
McGraw Hill.  Although weak deterrents and complex 
implementation of Vietnam's IPR laws will mitigate the overall 
impact on the market for infringed goods, the raids do represent 
an increase in overall enforcement activities in HCMC over the 
last year and steady progress on the IPR front.  They also 
reflect sustained Mission efforts to raise GVN awareness and 
capacity about IPR, which should continue to broaden with 
further USG engagement.  End Summary. 
 
 
 
HCMC IPR Enforcers on a Roll 
 
---------------------------- 
 
¶2. (U) IPR enforcement agencies in HCMC have engaged in a number 
of significant crackdowns over the last few months.  On January 
5, local media reported that district police had raided the 
largest CD/DVD making production in the city's history.  In 
three different locations, police confiscated disc making 
machines, labeling equipment and millions of discs, including 
about 300,000 discs with pirated content, and thousands of 
blanks made in China.  According to reports, the ring leaders 
belong to a private company licensed to produce blank discs who 
authorities believe supply up to 60% of the shops selling 
illegal discs on the HCMC market, the Mekong Delta and southern 
provinces. 
 
 
 
¶3. (SBU) Just one month earlier a major U.S. book publisher 
triumphed when authorities busted a major copyright violator 
that was selling thousands of illegal copies of McGraw Hill's 
top selling English learning books.  The owner of Quynh Mai 
books had been illegally reprinting McGraw's products for 
months, defending his actions in the name of "helping the poor 
access education," and directly flouting cease and desist orders 
from the National Copyright Office.  However, in early December 
last year, Department of Information and Communication enforcers 
and the economic police raided the infringing bookstore, seizing 
thousands of unauthorized copies of the McGraw Hill publications 
before seizing hundreds more from the owner's warehouse and 
printing facility. 
 
 
 
¶4. (SBU) Finally, in a separate major IPR action last November, 
GVN customs officials confiscated more than 800 counterfeit 
Nokia mobile phones at HCMC's Tan Son Nhat international 
airport.  The phones were purported to have been manufactured in 
Hungary but the associated documents and mismatching serial 
numbers showed they were made in China.  Both Nokia Vietnam 
representatives and the importer of the imposter goods verified 
that the phones were fakes. 
 
 
 
Two Steps Forward, One Step Back? 
 
--------------------------------- 
 
¶5. (SBU) Each of the crackdowns on violated goods represents a 
solid step forward, yet the actions also highlight some of the 
challenges that still exist in Vietnam's IPR regime.  First, 
while the busts were a temporary victory for the rights holders 
who were directly affected, it is unlikely to impact HCMC's 
overall market for pirated DVDs, counterfeit phones or illegally 
printed books in a meaningful way.  The fact that violations are 
common, rampant, and profitable means that even when a huge 
player is knocked out, it merely opens the playing field for 
other violators to jump in or expand their reach.  Without 
stronger penalties, such as criminal convictions and larger 
fines, there is little incentive for infringers to stay on the 
sidelines. 
 
 
 
¶6. (SBU) Although the revisions to the IPR law last year were 
designed to provide for stronger penalties for IP violations, 
administrative fines are still applied to the vast majority of 
 
HO CHI MIN 00000039  002.2 OF 003 
 
 
IPR violations, and fines remain too low to be a consequential 
deterrent.  The revised 2009 criminal code provides criminal 
penalties for commercial scale IP infringement; however, IP 
cases that have been pursued in the criminal courts to date have 
also involved either politically offensive content or consumer 
safety issues; GVN authorities could not cite any that have been 
pursued in criminal courts based exclusively on IP violations. 
Tran Xuan Minh, criminal judge for the People's Court, told 
EconOff he did not know what sorts of penalties were likely to 
be applied in the latest DVD bust since the case is still under 
investigation, but criminal prosecution would likely only occur 
if there is politically sensitive content.  In the case of the 
Nokia phones, customs officials said that the offense was not 
serious enough to be handled criminally and violators were given 
a monetary administrative fine.  Such administrative fines often 
amount to no more than a light slap on the wrist, when compared 
with potential profits from the sale of infringing goods. 
 
 
 
¶7. (SBU) Further complicating IPR enforcement is the 
bureaucratic residue of overlapping jurisdiction and unclear 
regulations.  Steering Committee 168, an interagency IPR group, 
was designed to be the clearing house for all IPR-related 
enforcement.  However, Ms. Trang, Vice Chairman of the 
committee, said that the agency that conducted the bust, a HCMC 
urban district police department, acted alone and that she does 
not have details, indicating that interagency cooperation on IPR 
enforcement is not as tight as promulgated.  According to 
Customs officials, implementation is also complicated by 
regulations requiring enforcers to have rights holder's 
permission prior to making a bust.  For example, Customs 
Director Mr. Le Kien Thanh told EconOff that even when his 
agency has a strong suspicion that goods are pirated, they 
cannot take action unless it involves a rights holder that has 
"registered" with Customs.  However, there are only 35 rights 
holders active on that list - Nokia just happened to be one of 
the lucky ones registered with HCMC Customs.  This may explain 
why, though this bust was important, it was the only IPR action 
Customs has taken all year. 
 
 
 
US Efforts Helping Raise Awareness 
 
---------------------------------- 
 
¶8. (SBU) In the McGraw Hill case, it took IP enforcers more than 
eight months to crack down after the cease and desist order had 
been issued from Hanoi.  McGraw had appealed to USPTO, FCS and 
EconOffs for assistance in the case but had not yet tried to 
engage with any local authorities.  At an IPR training in late 
October, HCMC ConGenOffs told the Market Management Bureau 
director Nguyen The Thong during a coffee break about the IPR 
infringement issues McGraw was facing.  Mr. Thong said it 
sounded like a case on which they could take action; about six 
weeks later the Department of Information and Communications led 
the team that busted the violating bookstore. 
 
 
 
¶9. (SBU) Whether or not direct U.S. efforts prompted the GVN 
authorities' decision to crack down in the McGraw case, indirect 
U.S. efforts also may be raising awareness among GVN enforcement 
agencies about IPR issues.  The USPTO regional representative 
has spoken regularly at local trademark and copyright 
conferences, and U.S. Mission Vietnam has organized IPR training 
and workshops over the last year for hundreds of enforcers, 
judges, prosecutors and customs authorities.  The basic message 
about IPR is starting to spread into local enforcement offices, 
even when it doesn't translate into clear action against 
infringers.  Chief Judge Tran Van Su at the HCMC People's Court 
lauded the impact of U.S.-sponsored study tours, saying to 
EconOff that he and other judges had gained great insight about 
how IPR laws are implemented on a prior trip to the U.S. 
Similarly, Mr. Thanh emphasized several times the lack of 
understanding about IPR issues among GVN agencies and the value 
his staff gains from participating in training. 
 
 
 
Comment: 
 
------- 
 
¶10. (SBU) Greater IPR efforts in HCMC are occurring at a time 
when, somewhat ironically, it is more difficult to meet with 
agencies and get information about their activities.  Several 
 
HO CHI MIN 00000039  003.2 OF 003 
 
 
enforcement agencies declined to meet with EconOff, citing 
"continuing investigation" or "busy until after Tet," and it has 
been difficult to get concrete details about the latest bust 
concerning the nature of the goods, rights holders or potential 
punishment.  Yet agencies do appear to be taking more action 
against infringers, even if they are reluctant to talk to USG 
about it.  Some offices have even gone above and beyond, such as 
the HCMC People's Court, which invited EconOff to attend a 
criminal trial for infringed goods.  Although enforcement 
appears to be making headway in HCMC, there has not been 
parallel action in other provinces of northern, central, and 
southern Vietnam, reflecting market realities as well as local 
capacity and training.  End Comment. 
 
 
 
¶11. (U) This cable was coordinated with Embassy Hanoi. 
FAIRFAX