VZCZCXYZ0016
PP RUEHWEB

DE RUEHJA #1588/01 2621103
ZNR UUUUU ZZH
P 191103Z SEP 06
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC PRIORITY 0210
INFO RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS JAKARTA 011588 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
DEPT PASS TO USTR DKATZ, JGROVES, RBAE, CCOLLEY 
FOR EAP/MTS; EB/TPP/IPE JBOGER 
COMMERCE FOR BERLINGUETTE/4430, CATHERINE PETERS 
COMMERCE PASS USPTO FOR JOELLEN URBAN 
 
 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KIPR ID
SUBJECT: INDONESIA IPR - EMBASSY SPECIAL 301 OUT OF CYCLE 
REVIEW SUBMISSION 
 
REF: A) SECSTATE 149667   B) JAKARTA 10444 
     C) JAKARTA 10200     D) JAKARTA 8114 
 
¶1.  (SBU) Summary: Embassy Jakarta strongly urges that the 
Special 301 Committee upgrade Indonesia to Watch List status 
in its upcoming Special 301 Out-of-Cycle Review (OCR).  With 
a sound legal and regulatory structure in place, the 
Government of Indonesia (GOI) is demonstrating a growing 
commitment to improving intellectual property rights (IPR) 
enforcement and addressing our specific concerns.  The newly 
established National IPR Task Force has held several 
ministerial and working-level strategy sessions and is 
focusing on improving public awareness, interagency 
cooperation and information sharing.  The Ministry of 
Industry (MOI) optical disk (OD) factory monitoring team 
recently completed initial unannounced visits to all 26 
registered OD factories and sent out warning letters 
ordering non-compliant factories to address their 
deficiencies.  Police across the archipelago have conducted 
numerous pirate OD vendor and factory raids in recent 
months, seized and destroyed hundreds of burners and over 4 
million pirated ODs, arrested hundreds of suspects, and 
referred as many as a hundred cases to prosecutors. 
Although data on prosecutions are sketchy and hard to obtain 
(for all types of crime, not just IPR), the OD monitoring 
team has reported that Indonesia courts sentenced a manager 
of a pirate OD factory to two years prison and an 
owner/partner of another to 2 months imprisonment. 
Indonesia's Commercial Courts continue to perform relatively 
well, although a recent trademark ruling against Intel is a 
setback. Indonesia Customs continues to press Parliament to 
accept ex-officio authority contained in a new draft Customs 
Law and accompanying implementing regulations.  With the 
arrival of two Department of State-funded senior IPR 
technical advisors and a Resident Legal Advisor with 
considerable IPR experience, the Mission is extremely well- 
positioned to push the GOI on IPR enforcement in the coming 
year. End Summary. 
 
¶2. (U) This cable supplements Embassy's earlier OCR 
reporting (refs b, c and d) with further updates on the 
GOI's enforcement activities, particularly in key areas 
mentioned in the USG's proposed OCR plan of action.  It also 
identifies key areas of continuing weakness and how a Watch 
List decision would fit into our strategy for addressing 
them and maintaining the GOI's forward momentum on IPR 
enforcement.  We have reviewed recent OCR submissions from 
the International Intellectual Property Alliance (IIPA) and 
the Government of Indonesia (GOI) and agree with their 
general findings and upbeat portrayal of recent GOI IPR 
enforcement efforts.  In our view, the IIPA's recommendation 
to upgrade Indonesia to Watch List status would 
appropriately recognize the GOI's recent accomplishments and 
give senior level GOI officials an incentive to build upon 
Indonesia's more robust IPR enforcement. 
 
National IPR Task Force Ramping Up 
---------------------------------- 
 
¶3. (SBU)  In the past few months, the newly formed National 
IPR Task Force has held one ministerial and several working 
level meetings led by either Minister of Law and Human 
Rights Hamid Awaluddin, Minister of Trade Mari Pangestu or 
Director General of IPR Abdul Bari Azed.  Task Force working- 
level members tell us that most of their initial work has 
focused on establishing national IPR short and medium term 
plans of action, facilitating better interagency cooperation 
and information sharing, and raising public awareness about 
IPR.  They note that, with the Task Force in place, 
coordinating GOI efforts to respond to our current OCR has 
been much easier than last year.  Looking forward, we will 
encourage the GOI to provide the Task Force with its own 
budget (currently it relies on contributions from member 
ministries).  We will also encourage the establishment of 
formal or informal channels of communication between the 
Task Force and key stakeholders, including domestic and 
foreign industry bodies, foreign governments, and non- 
governmental organizations (NGOs). 
 
OD Monitoring Team Begin Unannounced Visit 
------------------------------------------ 
 
¶4. (SBU) The Ministry of Industry reports that over the past 
few weeks, its OD factory monitoring team completed an 
initial round of unannounced visits to all 26 OD factories 
registered in Indonesia and sent out warning letters 
 
ordering non-compliant factories to address their 
deficiencies.  Reports from those visits are mixed, with 
some factories reportedly inactive and empty, a few failing 
to use source identification codes (SIDs), and others in 
apparent compliance.  The local expatriate recording 
industry association (IFPI) representative told us that 
inactive and empty factories may be a sign that OD factory 
monitoring and police raids are paying off or, 
alternatively, that some factories may have been tipped off 
in advance of the visits. 
 
¶5.  (SBU) In general, the OD monitoring team's reports still 
lack detailed data needed to effectively monitor factories' 
operations over time.  The Mission's new senior technical 
advisor from the Department of Justice International 
Criminal Investigative Training and Assistance Program (DOJ- 
ICITAP) has worked closely with the MOI on a training 
program and a blitz of unannounced factory visits scheduled 
for November.  The local IFPI representative has agreed to 
support these training sessioins and join the monitoring 
team during the November factory visits to ensure proper 
data collection.  Those visits will also provide IFPI with 
an opportunity to collect sample disks from all registered 
OD production lines in Indonesia to add to IFPI's worldwide 
database for tracking pirate ODs back to their source 
factories.  Looking forward, one challenge for our police 
and MOI senior technical advisors will be to encourage 
closer cooperation between the OD monitoring team and police 
on factory visits and raids. 
 
Police Enforcement Campaign Continues 
------------------------------------- 
 
¶6.  (SBU) By all accounts, the police continue to conduct 
raids of pirate OD vendors and factories.  The Jakarta and 
Surabaya police have been most active, and industry 
representatives tell us that retail piracy rates have 
dropped in both cities, particularly in some of the most 
notorious malls, like Jakarta's Ratu Plaza.  As on other 
crime issues, the police have yet to establish a central 
system for collecting standardized data on IPR enforcement 
actions.  Still, the Jakarta Police Special Crimes Unit 
continues to eagerly provide us, on an ad hoc basis, with 
summaries of their own enforcement actions. 
 
¶7.  (SBU) Most recently, Jakarta police provided us with a 
report detailing raids since June 20 on ten home industry 
burner factories, two licensed factories, and one unlicensed 
factory.  During these raids they seized over 250 burners 
and hundreds of thousands of blank and recorded ODs, sealed 
at least one replicating machine, and arrested at least 16 
suspects.  Jakarta police also provided us with another 
report indicating that they have referred at least 44 IPR 
criminal cases to prosecutors since April 2006, and another 
32 earlier in 2006. 
 
¶8.  (SBU) It is not clear what happens to most cases after 
they are referred to the Attorney General's Office (AGO). 
Jakarta Police complain that rivalries, suspicions and 
corruption make it difficult for the police to obtain follow- 
up information on cases from the AGO.  AGO officials 
complain that police cases are often incomplete.  While 
Jakarta police tell us they suspect prosecutors are cutting 
deals with suspects, they also insist that there have been a 
significant number of convictions, perhaps as many as 20. 
The OD monitoring team has reported that Indonesia courts 
sentenced a manager of a pirate OD factory to two years 
prison and an owner/partner of another to 2 months 
imprisonment.  We have repeatedly implored the police and DG 
for IPR to press the AGO to provide such data, if it exists, 
but so far none has emerged.  The Mission's police senior 
IPR technical advisor and Resident Legal Advisor will 
jointly press for closer collaboration between the police 
and AGO on IPR cases. 
 
¶9.  (SBU) The Jakarta police continue to work closely with 
local MPA and IFPI representatives on some raids, but 
investigators now also conduct raids on their own.  One 
Special Crimes Unit officer explained that five 
investigative teams each had standing orders to conduct at 
least one major IPR raid a week.  This is a significant 
advancement from a year ago, when the Indonesian police 
party line was that its investigators could not legally 
conduct IPR raids without formal complaints from rights 
holders. 
 
Customs Ex Officio Authority 
---------------------------- 
 
¶10.  (SBU) Indonesia Customs continues to press Parliament 
to accept ex-officio authority contained in a new draft 
Customs Law and accompanying implementing regulations. 
Parliament, however, has been sluggish in moving this and 
other important legislation forward.  One Customs official 
recently told us that Parliament has reviewed and accepted 
80 percent of 600 items under discussion in the new law. 
Unfortunately, any one of the remaining unresolved issues 
could cause significant delay or be a deal breaker.  We also 
note that the Indonesian private sector has already voiced 
strong opposition to elements of the draft Customs Law which 
would appear to provide greater enforcement authority to 
Customs, without requiring a corresponding improvement in 
governance among Customs officials.  Despite these 
obstacles, Indonesia Customs has been working around these 
constraints, particularly when rights holders provide 
specific information on infringing goods coming into 
Indonesia.  One major U.S. cigarette manufacturer praised 
Customs for its close cooperation on seizing containers for 
counterfeit cigarettes originating from China. 
 
Courts Botch Intel Case 
----------------------- 
 
¶11.  (SBU) Over the course of the last year, local 
expatriate IPR lawyers have informed us that Indonesia's 
five Commercial Courts, which have jurisdiction over civil 
IPR cases, are making fair rulings about 90 percent of the 
time.  Unfortunately, that was not the case in last week's 
Jakarta Commercial Court ruling against Intel Corporation. 
Intel lost a protracted legal battle in 2001 when the 
Indonesian Supreme Court upheld a lower court decision that 
"Intel" was not a well known mark and, therefore, local 
electronics producer PT Panggung had the right to register 
the Intel mark in Indonesia. 
 
¶12. (SBU) Intel subsequently filed six separate complaints 
with the Jakarta Commercial Court, noting PT Panggung had 
never used its registered Intel mark in five instances, and 
had not used it for at least three years in a sixth 
instance.  Under Indonesia law, failure to use the mark for 
three years is grounds for its deletion.  Last week the 
Jakarta Commercial Court ruled that while Intel proved that 
PT Panggung was failing to use its mark in all six 
instances, Intel had not sufficiently established from what 
past date PT Panggung stopped using the Intel mark, 
including the five instances in which PT Panggung had never 
used it.  Intel is appealing the case to the Supreme Court. 
 
Other Notable Developments 
-------------------------- 
 
¶13. (SBU) In recent months, the Ministry of Trade and 
Ministry of Justice Directorate General for IPR have 
collaborated with the EU, Japan and us in hosting a variety 
of IPR public awareness and training sessions for GOI 
officials and the broader IP community.  The GOI lists many 
of these seminars, workshops and events in annex 10 of its 
OCR submission.  The Ministry of Justice also recently 
appointed a new Director of Copyrights Ansori Sinungan who 
is well informed, articulate and a good English speaker. 
Previously, he was head of DG IPR's district office in 
Surabaya, and he deserves partial credit for helping 
organize the Surabaya police's recent impressive crackdown 
on OD piracy. 
 
Comment: Time is Right for Watch List 
------------------------------------- 
 
¶14. (SBU) We have leveraged significant progress on IPR 
enforcement in 2006 through two OCRs and the regular Special 
301 review, and IIPA and its member organizations are 
pleased with recent GOI efforts.  While the GOI has not 
fully satisfied all our OCR proposals, in some areas it has 
far exceeded our requests, particularly on police 
enforcement activities.  This shows increasing GOI ownership 
over the IPR issue, a development that is strongly in our 
interests.  It would be unfortunate to fail to reward this 
ownership and lose current momentum, especially when the 
Mission, with assistance from USPTO, is poised to assist the 
GOI in the coming year on difficult issues such as effective 
factory monitoring and prosecutions.  Another consideration 
is that our GOI IPR contacts, who are doing a difficult job 
 
well, badly need the success of an upgrade to show their 
efforts are producing positive results.  Given these 
factors, our strong view is that a Watch List decision would 
be the most effective way forward. 
 
HEFFERN