This record is a partial extract of the original cable. The full text of the original cable is not available.


 2002HOCHI00538 - UNCLASSIFIED
 
 
 
                           UNCLASSIFIED     PTQ4607

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INFO  LOG-00   AGRE-00  AID-00   CEA-01   CIAE-00  CTME-00  DINT-00  
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      FAAE-00  FBIE-00  UTED-00  VC-00    FRB-00   H-01     TEDE-00  
      INR-00   ITC-01   LAB-01   LOC-01   L-00     VCE-00   AC-01    
      NSAE-00  NSCE-00  OES-01   OMB-01   OPIC-01  PA-00    PRS-00   
      ACE-00   SP-00    SSO-00   SS-00    STR-00   TEST-00  TRSE-00  
      USIE-00  EPAE-00  DRL-02   G-00     NFAT-00  SAS-00     /011W
                  ------------------B177F4  211149Z /38    
FM AMCONSUL HO CHI MINH CITY
TO SECSTATE WASHDC PRIORITY 6374
INFO AMEMBASSY HANOI PRIORITY 
USDOC WASHDC

UNCLAS SECTION 01 OF 03 HO CHI MINH CITY 000538 
 
SIPDIS 
 
STATE PASS TO USTR FOR EBRYAN 
USDOC FOR 3132/OIO/EAP/KELLEHER 
USDOC FOR 1431/MAC/AP/HPPHO 
 
E.O. 12958:    N/A 
TAGS: ECON ETRD KIPR VM IPROP
SUBJECT:  HCMC FACES REGIONAL IPR WOES 
 
SUMMARY 
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¶1.  AFTER THE BILATERAL TRADE AGREEMENT JOINT COMMITTEE 
                       UNCLASSIFIED 
 
PAGE 02        HO CHI  00538  01 OF 03  211143Z 
MEETING IN HANOI, MEMBERS OF THE US DELEGATION SPENT A DAY 
IN HCMC FOCUSING ON INTELLECTUAL PROPERTY RIGHTS (IPR) IN 
THE COUNTRY'S ECONOMIC HUB.  LOCAL OFFICIALS INDICATED THEY 
ARE AWARE OF IPR PROBLEMS AND ARE TRYING TO FIND WAYS TO 
ADDRESS THEM.  VIETNAMESE BUSINESSPEOPLE COMPLAIN THAT 
RAMPANT IPR VIOLATIONS ARE HURTING THEIR BOTTOM LINE. 
HOWEVER, PIRATED PRODUCTS, PARTICULARLY OPTICAL DISCS 
PRODUCED IN CHINA, ARE WIDELY AVAILABLE THROUGHOUT HCMC. 
ENFORCEMENT, SPLIT AMONG SEVERAL DIFFERENT AGENCIES, IS 
UNCOORDINATED AND INEFFECTUAL.  THE DELEGATION STRESSED TO 
LOCAL OFFICIALS THAT IPR ENFORCEMENT WAS A KEY COMMITMENT IN 
THE BTA, AND IMPORTANT TO ECONOMIC DEVELOPMENT, A SENTIMENT 
WITH WHICH HCMC OFFICIALS EXPRESSED AGREEMENT.  THE DAY 
ENDED WITH A VISIT TO HCMC'S "HARD ROCK CAF" WHICH US 
RIGHTS-HOLDERS HAVE BEEN TRYING - UNSUCCESSFULLY - TO CLOSE 
DOWN FOR MORE THAN A YEAR.  END SUMMARY. 
 
DELEGATION STRESSES NEED TO PROTECT IPR 
--------------------------------------- 
¶2.  AT THE CONCLUSION OF THE FIRST MEETING OF THE JOINT 
COMMITTEE OF THE BILATERAL TRADE AGREEMENT (BTA), MEMBERS OF 
THE US DELEGATION FROM USTR, STATE, COMMERCE, AND THE 
COPYRIGHT OFFICE JOINED CONGEN ECONOFFS IN HO CHI MINH CITY 
TO REVIEW THE IPR SITUATION IN THE CITY.  THE DELEGATION 
REINFORCED THE MESSAGE DELIVERED IN HANOI: IMPROVING IPR 
PROTECTION WAS A KEY BTA COMMITMENT, INTEGRAL TO THE WTO 
ACCESSION PROCESS, AND VITAL TO VIETNAM'S ECONOMIC 
DEVELOPMENT.  NOT SURPRISINGLY, VIETNAMESE OFFICIALS - AT 
THE DEPARTMENT OF TRADE, THE MARKET MANAGEMENT BOARD, AND 
THE DEPARTMENT OF SCIENCE, TECHNOLOGY, AND THE ENVIRONMENT 
(DOSTE - WHICH REGULATES PATENTS AND TRADEMARKS) AGREED. 
                       UNCLASSIFIED 
 
PAGE 03        HO CHI  00538  01 OF 03  211143Z 
ALL SAID THEY WERE DOING THEIR BEST TO STOP INFRINGEMENTS, 
BUT THE PROCESS WAS COMPLICATED BY THE LARGE NUMBER OF 
DIFFERENT AGENCIES CHARGED WITH IMPLEMENTING AND ENFORCING 
IPR LAWS.  THEY ALSO OPERATE WITH INADEQUATE RESOURCES AND 
UNDER CONSTRAINTS TO THEIR LEGAL AUTHORITY.  FINES ARE 
NOMINAL AND LIMITS ON THEIR AUTHORITY MAKE IT DIFFICULT TO 
CATCH OFFENDERS AND ENFORCE THE LAW, THEY CLAIMED. 
 
IPR IS IMPORTANT - IN THEORY 
------------------------- 
¶3.  AT DOSTE, THE CHIEF OF THE INDUSTRIAL PROPERTY 
MANAGEMENT SECTION, MS. TRUONG THUY TRANG, EXPLAINED THAT 
FIVE AGENCIES WERE RESPONSIBLE FOR IPR ENFORCEMENT.  HER 
OFFICE HANDLES THE REGULATION OF TRADEMARK AND PATENTS.  A 
SEPARATE DOSTE INSPECTORATE IS RESPONSIBLE FOR ACCURATE 
PRODUCT LABELING.  SHE ALSO CITED THE MARKET MANAGEMENT 
BOARD, THE ECONOMIC POLICE, CUSTOMS, AND THE CIVIL COURTS. 
SHE LEFT OUT THE DEPARTMENT OF CULTURE AND INFORMATION, 
WHICH REVIEWS AND CENSORS "SENSITIVE" MATERIAL, BUT IS ALSO 
RESPONSIBLE FOR COPYRIGHT PROTECTION. 
 
¶4.  MS. TRANG ACKNOWLEDGED THAT THE ENFORCEMENT MECHANISMS 
WERE MORE THEORY THAN REALITY, BUT CLAIMED HCMC HAD THE BEST 
IPR ENFORCEMENT IN THE COUNTRY.  ALTHOUGH HER AGENCY HAD NO 
DIRECT ENFORCEMENT ROLE, IT OFTEN TRIED TO MEDIATE BETWEEN 
RIGHTS-HOLDERS AND INFRINGERS.  DOSTE COULD ALSO ADVISE 
ENFORCEMENT AGENCIES OF IPR VIOLATIONS, SHE SAID, BUT COULD 
NOT COMPEL THEM TO ACT.  SHE STATED THAT WHILE THE MARKET 
MANAGEMENT BOARD "HAD ALL OF THE POWER," THEY WERE OFTEN 
LESS EFFECTIVE THAN DOSTE'S MEDIATION EFFORTS.  SHE OFFERED 
TO LOOK INTO ANY SPECIFIC CASES OF CONCERN. 
                       UNCLASSIFIED 
 
PAGE 04        HO CHI  00538  01 OF 03  211143Z 
 
¶5.  THE DELEGATION TOOK THE BAIT AND ASKED ABOUT THE CASE OF 
HCMC'S "HARD ROCK CAF," RUN BY SOMEONE WHO DID NOT HAVE THE 
RIGHT TO THE TRADEMARK.  THE US RIGHTS-HOLDER HAD FILED A 
COMPLAINT LAST YEAR TO TRY TO SHUT THE PLACE DOWN.  MS. 
TRANG STATED THAT SHE WAS AWARE OF THE CASE AND HAD MET WITH 
THE OWNER IN A MEDIATION EFFORT.  HE HAD PROMISED IN WRITING 
TO REMOVE THE OUTDOOR SIGNATURE "HARD ROCK CAF" SIGN FROM 
HIS ESTABLISHMENT.  WHEN THE DELEGATION REMARKED IT WOULD BE 
VISITING THE SITE LATER THAT AFTERNOON, SHE BACKTRACKED AND 
STATED THAT THE LAW FIRM REPRESENTING THE RIGHTS-HOLDER HAD 
NOT ADVISED HER AS TO WHETHER THE SIGN HAD ACTUALLY BEEN 
REMOVED.  SHE ALSO NOTED THAT DOSTE DID NOT HAVE AUTHORITY 
TO ENTER THE RESTAURANT TO SEE IF THE TRADEMARK WAS BEING 
USED IMPROPERLY INSIDE. 
 
¶6.  AT THE MARKET MANAGEMENT BOARD, WHICH IS RESPONSIBLE FOR 
ENFORCING ALL LAWS RELATING TO DOMESTIC TRADE IN THE CITY, 
DIRECTOR HUYNH TAN PHONG POINTED OUT THAT HIS OFFICE HAD 
WORKED WELL WITH A NUMBER OF FOREIGN COMPANIES WHO HAD IPR 
PROBLEMS, NAMING PHILIPS, PROCTER & GAMBLE, AND RICOH.  (THE 
ATTORNEY WHO HAD REPRESENTED RICOH - WHICH WAS TRYING TO 
STOP THE SALE OF COUNTERFEIT TONER CARTRIDGES - HAD EARLIER 
TOLD THE DELEGATION THAT THE MMB WERE SO UNDER-RESOURCED 
THAT THE DIRECTOR HIMSELF VISITED A SHOP PRETENDING TO BE A 
BUYER, IN ORDER TO ID THE COUNTERFEITS.)  MR. PHONG 
ACKNOWLEDGED THAT HCMC AND THE COUNTRY STILL FACED HUGE IPR 
PROBLEMS, BUT PLEDGED TO ASSIST WITH ANY IPR-RELATED 
                       UNCLASSIFIED 
 
PAGE 02        HO CHI  00538  02 OF 03  211143Z 
REQUEST.  WHEN ASKED ABOUT THE "HARD ROCK CAF" CASE, HE 
SAID THE FILE WAS STILL WITH DOSTE, SO HIS AGENCY DID NOT 
YET HAVE THE AUTHORITY TO TAKE ACTION. 
 
¶7.  OFFICIALS AT THE LOCAL DEPARTMENT OF TRADE ALSO 
REITERATED THE IMPORTANCE OF IPR ISSUES FOR HO CHI MINH 
CITY.  DIRECTOR PHAM THI KIM HONG NOTED THAT ONE OF THE 
CITY'S MAJOR ECONOMIC DEVELOPMENT GOALS WAS TO ESTABLISH A 
LOCAL INFORMATION TECHNOLOGY INDUSTRY.  THIS COULD ONLY 
HAPPEN IF INTELLECTUAL PROPERTY RIGHTS WERE TRULY PROTECTED. 
AT THE SAME TIME, HOWEVER, SHE DISAVOWED ANY ENFORCEMENT 
ROLE FOR THE DEPARTMENT OF TRADE.  WHEN THE DELEGATION 
POINTED OUT THAT THE MARKET MANAGEMENT BOARD FELL UNDER HER 
DEPARTMENT'S JURISDICTION, SHE STATED IT WAS ONLY NOMINALLY 
SO, AND THAT THE MMB OPERATED AUTONOMOUSLY.  DEPUTY DIRECTOR 
NGUYEN DINH MAI, WHO ALSO ATTENDED THE MEETING, STATED 
INFORMALLY TO ONE DELEGATION MEMBER THAT IPR CONCERNS NEEDED 
TO BE RAISED WITH THE HCMC PEOPLE'S COMMITTEE IN ORDER TO 
MAKE PROGRESS. 
 
IPR VIOLATIONS HURT LOCAL BUSINESS 
---------------------------------- 
¶8.  LOCAL VIETNAMESE BUSINESSPEOPLE WHO MET THE DELEGATION 
STRESSED THAT IPR INFRINGERS HAD AFFECTED THEIR BUSINESSES. 
MR. LE HONG THANH, DIRECTOR OF SAIGON AUDIO, A LOCAL 
RECORDING COMPANY, STATED THAT BECAUSE ALL OF HIS PRODUCTS 
WERE COPIED, IT WAS EXTREMELY DIFFICULT TO GENERATE PROFITS 
ON NEW MUSIC.  IT WAS DIFFICULT TO SELL LEGITIMATE COPIES 
AND RECOUP COSTS, LET ALONE GENERATE PROFITS IN A MARKET 
WHERE PIRATED COPIES OUTNUMBERED LEGITIMATES BY ABOUT 20/30 
TO ONE.  TO GENERATE REVENUE, SAIGON AUDIO HAD TAKEN TO RE- 
                       UNCLASSIFIED 
 
PAGE 03        HO CHI  00538  02 OF 03  211143Z 
RELEASING "OLDIES," WHICH COULD BE SOLD MORE CHEAPLY.  THEY 
ALSO REDUCED THE NUMBER OF NEW RECORDINGS BY VIETNAMESE 
ARTISTS FROM 100 TO 40 PER YEAR.  HIS COMPANY, ALONG WITH 
OTHERS IN THE LOCAL AUDIO AND VIDEO INDUSTRY, HAD SUBMITTED 
A PETITION TO THE CENTRAL GOVERNMENT ASKING FOR MORE 
COPYRIGHT PROTECTION.  HE BELIEVES SOME PIRATED PRODUCTION 
IS OCCURRING IN VIETNAM, PARTICULARLY FOR LOCAL FILMS AND 
TAPES.  THIS IS IN CONTRAST TO PIRATED COPIES OF AMERICAN 
AND OTHER FOREIGN FILMS/RECORDINGS, MOST OF WHICH ARE 
BELIEVED TO COME FROM CHINA. 
 
¶9.  MR. NGUYEN VINH LOC, THE LOCAL DISTRIBUTOR OF BOSE 
SPEAKERS, ALSO COMPLAINED THAT HIS COMPANIES HAVE TO COMPETE 
WITH FAKES.  HE SAID SHODDY COPIES ARE IMPORTED FROM CHINA 
AND BETTER QUALITY COUNTERFEITS COME OUT OF TAIWAN.  FALSE 
BOSE LABELS ARE ATTACHED ONCE THE PRODUCT ENTERS THE 
COUNTRY.   MR. LOC STATED THAT A COUPLE OF YEARS AGO, BOSE 
HAD TRIED WORK WITH LOCAL ENFORCEMENT AGENCIES AND AN 
ATTORNEY TO STOP THE SALE OF THE FAKES.  HE CLAIMED THIS WAS 
COMPLETELY INEFFECTUAL.  HE SUGGESTED THAT FOR IPR 
ENFORCEMENT TO WORK THERE MUST BE POLITICAL WILL AT A 
RELATIVELY HIGH LEVEL.  HE FELT "THE VIETNAMESE WAY" WOULD 
BE TO GO THROUGH THE PEOPLE'S COMMITTEE AND URGE THEM TO 
SEND THE ORDER DOWN TO THE ENFORCEMENT AGENCIES.  ONLY 
WORKING WITH THE AGENCIES DID NOT BRING RESULTS. 
 
CDS, DVDS, AND EXPENSIVE T-SHIRTS 
--------------------------------- 
¶10.  AT THE END OF THE DAY, THE DELEGATION VISITED A 
DOWNTOWN STREET LINED WITH SMALL SHOPS SELLING CDS AND DVDS, 
NONE OF WHICH APPEARED TO BE LICENSED COPIES.  DVDS SELL FOR 
                       UNCLASSIFIED 
 
PAGE 04        HO CHI  00538  02 OF 03  211143Z 
ABOUT 20,000 VND (ABOUTUSD1.20).  MOSTLY LOCAL PRODUCT WAS 
DISPLAYED IN THE SHOPS, BUT FOREIGN FILMS AND AUDIO 
RECORDINGS WERE ALSO AVAILABLE.  THE GROUP ALSO STROLLED 
OVER TO THE "HARD ROCK CAF" A FEW BLOCKS AWAY, WHERE THE 
SIGN WAS STILL OVER THE FRONT ENTRANCE.  INSIDE, THE WALLS 
AND CEILING DRIPPED WITH ROCK N' ROLL EPHEMERA AND, 
STRANGELY, AUTO AND MOTORCYCLE PARTS.  THE INTERIOR MIGHT 
NOT BE CONFUSED WITH ITS LICENSED COUNTERPARTS ELSEWHERE IN 
THE WORLD, BUT THIS PLACE DID HAVE A BOOTH BY THE DOOR 
SELLING EXPENSIVE "HARD ROCK CAF SAIGON" T-SHIRTS AND 
TRINKETS.  EVEN WITH ALL OF THE EFFORTS BY A LOCAL LAW FIRM 
AND LOCAL AUTHORITIES, IT APPEARS THIS PLACE IS DOING 
BUSINESS AS USUAL. 
 
COMMENT 
------- 
¶11.  ALL OF THE LOCAL OFFICIALS WHO MET THE DELEGATION SPOKE 
STRONGLY ABOUT THE NEED TO ATTACK VIETNAM'S IPR PROBLEMS AND 
ACKNOWLEDGED THAT WEAK IPR ENFORCEMENT WOULD ACT AS A BRAKE 
ON HCMC'S ECONOMIC DEVELOPMENT.  THIS OFFERS SOME HOPE THAT, 
EVEN IN THIS DIFFICULT ENVIRONMENT, LOCAL OFFICIALS AND 
BUSINESS REALIZE THERE ARE CLEAR BENEFITS TO IPR PROTECTION. 
AT THE SAME TIME, IN THE SAMPLE CASE WE RAISED AT EVERY 
MEETING - THAT OF THE "HARD ROCK CAF" - OFFICIALS SEEMED 
READY TO PASS THE BUCK - TO OTHER AGENCIES OR EVEN TO THE 
LAW FIRM REPRESENTING THE RIGHTS-HOLDER.  AND WHILE 
SPIDERMAN IS UNLIKELY TO DESCEND AND ROUND UP ALL OF THE 
SPECIAL INTERESTS PROFITING ON THE PIRATED GOODS AVAILABLE 
                       UNCLASSIFIED 
 
PAGE 02        HO CHI  00538  03 OF 03  211143Z 
IN THE LOCAL MARKET, GOOD QUALITY COPIES OF SPIDERMAN ARE 
ALREADY AVAILABLE HERE ON DVD. 
 
¶12.  THE DELEGATION DID NOT HAVE AN OPPORTUNITY TO CLEAR 
THIS CABLE. 
 
YAMAUCHI 
 
                       UNCLASSIFIED