VZCZCXYZ0000
RR RUEHWEB

DE RUEHBK #1035/01 0522327
ZNR UUUUU ZZH
R 212327Z FEB 07
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 4953
RUCPDOC/USDOC WASHDC

UNCLAS BANGKOK 001035 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB/TPP/IPE JENNIFER BOGER 
STATE PASS USTR FOR JENNIFER CHOE GROVES 
USDOC FOR CASSIE PETERS 
 
E.O. 12958:N/A 
TAGS: ECON ETRD KIPR TH
SUBJECT:  THAILAND 2007 SPECIAL 301 SUBMISSION 
 
 
¶1.  Summary and Recommendation:  Rights holders are in general 
agreement that protection of IP in Thailand has made little progress 
in the past year and in some areas has declined.  Many of the 
problems they cite are long-standing, but some have worsened over 
the past year.  The number of raids and seizures has steadily 
increased year by year, but courts are not handing down deterrent 
sentences, and becoming less generous with search warrants. 
Although the level of cooperation with police and other government 
agencies remains acceptable, little political will exists in the 
current government to seriously tackle enforcement.  RTG initiatives 
in 2006 to better coordinate enforcement were largely unsuccessful. 
Political instability prevented passage of improved IP legislation 
for much of 2006, though some long-awaited legislation and 
regulations are now filtering their way to the cabinet and National 
Legislative Assembly for approval. 
 
¶2.  Although the IP situation in Thailand appears to have stagnated 
over the past year, we consider the political instability to be a 
key reason.  Thailand's previous and current governments have been 
distracted by political crisis and the measures necessary to reform 
the political system, and have not focused attention on IP. 
Enforcement agencies continue their day-to-day work, but high-level 
interest necessary for sustained progress is unlikely for the coming 
year.  However, we remain cautiously optimistic that a new 
government by the end of the year may be able to put Thailand back 
on track.  Embassy recommends continuing Thailand in its position on 
the Watch List.  End Summary and Recommendation. 
 
¶3.  2006 contained minimal positive news to buoy the spirits of IP 
rights holders in Thailand.  Although enforcement actions continued 
throughout the year, political instability reduced intellectual 
property right protection to some degree.  Progress under the 
previous government had been slow, but was steadily advancing. 
However, in April, under political pressure then-Prime Minister 
Thaksin dissolved the government and Thailand began preparations for 
new elections scheduled for October.  IP legislation in the works 
was put on hold pending a newly elected government, and the 
administration's attention was diverted to keeping itself intact and 
preparing for the upcoming elections.  However, before elections 
could be held a military coup swept the civilian government from 
power in mid-September.  Despite the law and order positions of the 
new government, rights holders see the new leadership as having 
little political will to actively pursue IP activities.  The current 
government is temporary and has a short-term outlook, and IPR 
protection has not been a priority.  An elected government expected 
toward the end of the year would likely have a more balanced view of 
IPR protection and its importance to investment and the overall 
economic picture. 
 
Raids and seizures up, but so are piracy rates 
--------------------------------------------- - 
 
¶4.  The Department of Intellectual Property (DIP) recorded record 
numbers of seizures and arrests in 2006. DIP reported 9,575 arrests 
in 2006, up from 7,689 the previous year, and seizures of 2,823,588 
infringing items, up from 2,261,567 in 2005.  However, rights 
holders say the uptick in statistics is negated by the lack of 
deterrent sentences handed down from courts.  One right holder 
claimed that in 9 out of 10 cases in which he was involved the 
suspect was convicted but did not receive so much as a fine.  A 
typical punishment is community service such as sweeping temples for 
a few days, but rights holders suspect even these light sentences 
are often not fulfilled.  Several years ago fines were typically 
higher and more prevalent.  A reduction in penalties has made 
enforcement actions to be even more just another cost of doing 
business for IP pirates.  There has been no noticeable reduction in 
the amount of infringing material sold on the streets and retail 
establishments and no decline in the number of places where 
infringing material is available for sale. 
 
¶5.  Although rights holders reported a drop off in availability of 
police to execute raids immediately after the coup, cooperation with 
enforcement agencies remains acceptable and enforcement activities 
have returned to normal.  Police respond quickly to right holders 
complaints and make sizable seizures.  But police rarely follow up 
raids with investigations into suppliers and networks of infringing 
material.  For their part, police claim that Section 66 of the 
Copyright Act restricts them from undertaking ex officio enforcement 
actions.  Police are unable to take action without a complaint from 
a right holder.  They also claim shortages of available officers, in 
part because increasing violence by IP pirates against officers 
necessitates larger raiding teams.  Indeed, rights holders say 
violence is on the upswing and two private IP investigators were 
killed in the last six months. 
 
¶6.  The Department of Special Investigations (DSI), formed as an 
FBI-like agency to focus on large-scale crime, significantly 
increased their IPR investigations in 2006 as hoped.  In early 2006, 
DSI's threshold for undertaking IPR investigations was lowered from 
five million Baht (USD 125,000) worth of counterfeit merchandise 
down to 500,000 baht (USD 12,500), allowing DSI to take on more 
cases.  In addition, the value thresholds were set at the value of 
genuine product, rather than the street value of the pirated goods. 
DSI took on 53 investigations in 2006, up from seven in 2005, and 
seized 513,017 infringing goods through November, 2006.  Rights 
holders are generally happy with DSI's performance, noting that they 
are able to pursue the "bigger fish" and are better at controlling 
evidence than are the police. 
 
¶7.  In recent years rights holders have viewed Thai Customs as one 
of the few bright lights compared to otherwise lackluster 
performance by other enforcement agencies.  Customs regularly 
undertakes ex officio investigations and in 2006 opened 373 cases 
that resulted in seizures of 1,646,272 infringing items.  Customs 
admits, however, that the vast majority of their seizures are on 
inbound, rather than outbound shipments, despite the substantial 
amount of material being exported or transshipped through Thailand. 
Customs believes much of the infringing material believed to be 
sourced from Thailand is actually transshipped from China, but Thai 
law is unclear on inspecting transshipments and Customs refrains 
from doing so.  Customs also has no authority to refer cases 
directly to prosecutors and laments that many cases they refer to 
the police are not acted on.  Customs' Director General said he had 
not seen a criminal case on IP in ten years resulting from a Customs 
seizure.  Customs utilizes X-ray equipment to inspect cargo 
shipments coming through major ports, but inspection is more 
haphazard at porous border crossings with Burma, Laos and Cambodia. 
 
¶8.  Thailand has long had a well-regarded IP court with judges 
specifically trained in how to handle IP cases.  However, an 
unending stream of low-level cases has left many judges jaded. 
Non-deterrent sentences have become the norm.  Judges are also 
displeased by rights holders (typically local rather than 
international rights holders) who use the search warrants the judges 
issue to shake down retail sellers of infringing material rather 
than making arrests.  Rights holders report warrants are harder to 
obtain and often have strict restrictions on time and place that an 
enforcement action can be taken. 
 
A shot at enforcement bounces off the rim 
----------------------------------------- 
 
¶9.  The RTG attempted a couple high profile enforcement efforts in 
2006, to little effect.  In June the RTG announced that in honor of 
the King's 60th anniversary on the throne, for two months the 
streets would be swept clean of infringing goods in a concerted 
effort by all relative branches of the government.  Little of the 
sort happened.  During one week of royal celebrations, police kept 
major thoroughfares clear of street sellers and hawkers, including 
but not exclusively sellers of pirated goods.  After the 
celebrations ended, merchandise returned in full force with no 
apparent impact on sales. 
 
¶10.  In August the RTG signed a MOU along with rights holders and 
retail shopping centers that set out responsibilities for IPR 
owners, law enforcement, local authorities and the DIP and for the 
first time owners of noted retail establishments where pirated 
products are sold.  The inclusion of mall owners was notable, 
bringing this group for the first time into cooperation on IP 
protection.  The MOU requires mall owners to terminate leases of 
stores that have been convicted of selling infringing material. 
However, little action has been taken under the MOU and piracy 
remains rampant at the usual malls.  Malls party to the agreement 
included Tawanna Plaza, Nom Chit Store, Zeer Rangsit, The Mall 
Department Store, Pratunam Center, Panthip Plaza, Future Park 
Rangsit, Fortune Town, Seri Center and Seacon Square.  MBK was a 
notable absence but has reportedly recently asked to be included on 
the list of MOU signatories. 
 
¶11.  In August, 2005, the RTG finally entered into force a 
long-awaited optical disc law that promised improved oversight of 
optical disc plants and production lines.  DIP has used its powers 
under the OD law to regularly inspect the 38 registered OD plants 
and collect exemplars from each manufacturing line.  To support 
enforcement actions against OD plants, Embassy purchased an optical 
disc forensics microscope in August 2006 and installed it in police 
headquarters.  Using the microscope, forensics police can match 
seized infringing material to the exemplars from the original 
manufacturing plant as evidence for prosecution of pirate plant 
owners.  However, we are not aware police or DIP have used the 
improved enforcement capacity with the OD Law to undertake any 
enforcement actions or permanently shutter any OD plant. 
 
Legislation slow, but in the works 
---------------------------------- 
 
¶12.  DIP had expected to see approval of long-awaited amendments to 
the Copyright Act in 2006, but political instability served to delay 
that process.  The amendments are still under review by the Council 
of State which reviews all legislation.  However, DIP is optimistic 
that the National Legislative Assembly will be able to review and 
approve the amendments before it begins full-time consideration of a 
new constitution in July.  Amendments to the Patent and Trademark 
Act are with the Cabinet and may reach the NLA by July as well. 
 
¶13.  The RTG has made progress on ratifying the Patent Cooperation 
Treaty and the Paris Convention.  DIP plans to send the proposal to 
the Cabinet soon and later to the Council of State for review.  If 
approved, the Minister of Commerce will sign the ministerial 
regulations on the PCT and enter it into force. 
 
¶14.  On January 30, the Ministry of Public Health issued 
implementing regulations for the 2002 Trade Secrets Act.  The 
regulations restrict the government from releasing protected data 
for a period of five years, but do not provide data exclusivity that 
would prevent unfair commercial use.  DIP is planning a review of 
the entire Trade Secrets Act for 2007 to determine if any further 
changes are necessary, and will be reviewing laws regarding 
protection of traditional knowledge as well. 
 
¶15.  Thailand's 1999 Plant Variety Protection Act has finally seen 
registrations of new plant varieties.  Since September 2006, 14 new 
varieties of orchids have been registered.  Two more orchid 
varieties and another two or three new varieties of rice should be 
approved within the next few months. 
 
Compulsory licenses 
------------------- 
 
¶16.  At the end of November 2006, the RTG announced a compulsory 
license on efavirenz, a patented antiretroviral distributed by the 
local subsidiary of U.S.-based pharmaceutical Merck & Co.  The RTG 
claimed its action was compatible with Thai law and WTO rules as the 
license would be taken under "public non-commercial use".  However, 
the RTG faced criticism for failing to attempt negotiations with 
Merck beforehand.  In January, 2007, the RTG announced compulsory 
licenses on two more drugs:  Kaletra, another antiretroviral 
distributed by Abbott Labs, and Plavix, an anti-platelet agent 
patented by Sanofi-Aventis.  The Ministry again declined to attempt 
to discuss the issue with industry or negotiate a reduction in 
prices before issuing the licenses.  The activist Minister of Public 
Health has pledged to continue issuing compulsory licenses on 
medicines it deems essential if drug companies do not substantially 
reduce their prices. 
 
Post recommendation:  Watch List 
-------------------------------- 
 
¶17.  Last year's lack of measurable gains in IPR enforcement was 
discouraging after recent years of slow but steady improvements in 
IP enforcement and legislation.  The continuing political 
uncertainty has been a substantial factor and will likely remain so 
for the remainder of 2007 as the government drafts a new 
constitution and prepares for new elections.  A sustained 
enforcement effort would require high-level interest and pressure 
that is simply not among their priorities given the other matters of 
great political import that face the current government.  Stronger 
IP enforcement for the remainder of the year is unlikely. 
 
¶18.  Embassy recommends maintaining Thailand on the Watch List. 
Although Embassy gave strong consideration to downgrading Thailand 
to the Priority Watch List, we do not believe that designation would 
produce desired results.  At best, the designation may be ignored; 
at worst, it could provoke a nationalist reaction that could set IP 
efforts back.  The current military-installed government has 
consistently staked out controversial economic positions that favor 
the Thai nation over what it considers foreign interests, including 
IP protection.  After the recent controversy over the issuance of 
compulsory licenses on three pharmaceutical products, placement on 
the Priority Watch List would be widely seen as retribution for that 
decision, and the message on the necessity to improve enforcement 
efforts and move IP legislation forward would be lost.  RTG 
leadership may even consider PWL a badge of honor, proof that the 
government has put Thai interests ahead of those of foreigners.  The 
current government is temporary.  We expect elections toward the end 
of the year and are cautiously optimistic that a new government will 
have a stronger sense of Thailand's economic situation, a longer 
term view, and a more favorable outlook toward IP protection. 
BOYCE