VZCZCXRO4235
OO RUEHHM
DE RUEHHI #0308/01 0530634
ZNR UUUUU ZZH
O 220634Z FEB 07
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4647
INFO RUEHBK/AMEMBASSY BANGKOK PRIORITY 5416
RUEHHM/AMCONSUL HO CHI MINH 2573
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 03 HANOI 000308 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS AND EB/TPP/IPE JBOGER 
STATE ALSO PASS USTR JCHOE-GROVES AND DBISBEE 
STATE ALSO PASS USPTO FOR JURBAN 
STATE ALSO PASS LIBRARY OF CONGRESS FOR TEPP 
AMEMBASSY BANGKOK FOR USPTO JNESS 
USDA FOR FAS/FAA/AO HUETE 
USDOC FOR ITA/MAC/OIPR CPETERS AND 4430/MAC/AP/OPB/VLC/HPPHO 
 
E.O. 12958: N/A 
TAGS: ETRD ECON KIPR VM
SUBJECT: MISSION RECOMMENDS THAT VIETNAM REMAIN ON THE 2007 SPECIAL 
301 WATCH LIST - PART 1 OF 2 
 
REF:  (A) STATE 007944 (B) 06 HANOI 000427 
 
(U) SENSITIVE BUT UNCLASSIFIED, DO NOT POST ON THE INTERNET 
 
¶1. (SBU) Summary:  The Mission recommends continued placement of 
Vietnam on the Office of the U.S. Trade Representative's (USTR) 
Special 301 Watch List for 2007 because intellectual property rights 
(IPR) enforcement is still weak, and piracy and counterfeiting in 
many product categories remain pervasive.  At the same time, the 
Government of Vietnam (GVN) continues to take steps to protect IPR, 
including strengthening its legal regime.  Vietnam's January 2007 
accession to the World Trade Organization (WTO), continued efforts 
to integrate into the international economy and goal to improve 
trade relations further with the United States have motivated the 
GVN to make fulfillment of its international IPR commitments a 
priority.  With more training, resources, experience and time to 
implement its newly-passed legislative framework, Vietnam should be 
positioned to develop a better track record on IPR enforcement. 
These developments argue against the case for elevating it to the 
Priority Watch List.  The Mission will continue to place IPR issues 
at the forefront of our bilateral trade discussions on WTO and BTA 
compliance.  End Summary. 
 
IPR Situation in Vietnam - Achievements and Challenges 
--------------------------------------------- --------- 
 
¶2. (SBU) As part of Vietnam's increased integration into the world 
economy, including its January 11, 2007 accession to the WTO, the 
GVN has made progress in providing adequate and effective protection 
to intellectual property rights and providing market access to U.S. 
persons who rely on IP protection.  Since the Mission's 2006 Special 
301 submission (reftel B), Vietnam has: (1) strengthened its IPR 
regime through issuing implementing regulations for the Law on 
Intellectual Property; (2) committed to implement the Trade Related 
Aspects of Intellectual Property Rights (TRIPS) agreement upon WTO 
accession; (3) modestly improved IPR enforcement; (4) joined the 
five international IPR conventions as required under the 2001 
U.S.-Vietnam Bilateral Trade Agreement (BTA); (5) maintained a 
high-level public commitment to IPR protection; and (6) cooperated 
closely on this issue with international donors, including the 
USAID-funded Support for Trade AcceleRation (STAR) project.  Because 
of these positive developments, we do not recommend changing 
Vietnam's current status from Watch List to the Priority Watch List. 
 
 
¶3. (SBU) Still, despite this recent progress, many of the problems 
identified in the 2006 Special 301 Review remain.  IPR enforcement 
in Vietnam remains weak and violations are rampant.  Piracy and 
counterfeiting are particular concerns, with estimated music and 
software piracy rates at or above 90 percent.  IPR infringement is 
also a problem in the pay TV sector, where a state-owned cable 
provider is the most egregious violator.  Market access barriers, 
especially censorship of "cultural products," continue to limit the 
availability of legitimate products, further complicating efforts to 
combat piracy.  Public awareness of intellectual property issues, 
while growing, remains very low.  Routine and reliable enforcement 
of Vietnam's IPR   commitments is still lacking.  From the police to 
the courts, officials in Vietnam's enforcement system, especially at 
the local level, are poorly informed about the rights of IPR holders 
or how to prosecute, adjudicate and enforce those rights.  With 
additional resources and more time to implement its newly-passed 
legislative framework, however, we expect that Vietnam will develop 
a more consistent track record of IPR enforcement.  Until that time, 
we do not recommend removal of Vietnam from the Watch List. 
 
¶4. (SBU) The Mission has reviewed industry and public comments 
submitted as part of the Special 301 review process.  Many of the 
issues raised throughout these submissions provide a broadly 
accurate portrayal of Vietnam's IPR situation.  The GVN is aware of 
most, if not all, of these concerns.  The Mission will continue to 
raise these issues in discussions with GVN officials, and we hope 
consistent pressure to resolve these matters will continue to 
improve the intellectual property rights environment. 
 
Optical Media and Book Piracy 
----------------------------- 
 
¶5. (U) Despite improvements in Vietnam's legal regime and a growing 
understanding of optical media and book piracy among enforcement 
 
HANOI 00000308  002 OF 003 
 
 
agents, the GVN has made little progress on reducing the amount of 
counterfeit and pirated goods available in Vietnam.  Hanoi, Ho Chi 
Minh City and most other major cities in Vietnam are rife with music 
CD, VCD, DVD and video shops.  Virtually 100 percent of U.S. and 
foreign products (and most domestic products) for sale or for rent 
are pirated.  Even where legitimate media products and books are 
available, they are typically three to five times more expensive 
than pirated versions, which are sold throughout the major cities, 
mostly at retail outlets.  While most pirated discs are still 
manufactured in other countries, locally-produced pirated CDs, VCDs 
and DVDs are becoming more prevalent. 
 
¶6. (SBU) IPR infringements continue to be a problem in the 
state-owned TV sector for both foreign and domestic content 
providers, though there appears to be some progress toward 
regularizing this market.  The most egregious violator is the 
Vietnam Television Technology Investment and Development Company 
(VTC), a digital-terrestrial broadcaster operated by the Ministry of 
Posts and Telematics (MPT).  VTC illegally broadcasts overspill 
satellite signals to end-users for a one-time decoder box purchase 
fee.  MPT officials have called the service "experimental" and 
acknowledge the need to transition to a licensed, fee-based system, 
but it remains unclear how or when they plan to do so.  Despite 
repeated urging by both the Mission and U.S. industry, MPT has taken 
no serious steps to end VTC's distribution of stolen signals. 
Vietnam committed to implement "appropriate legal instruments 
mandating that all cable television purveyors provide only fully 
licensed products to their customers," by the time of its WTO 
accession.  Recent conversations with MPT officials confirmed that 
the GVN has not yet issued any such regulation. 
 
¶7. (SBU) VTC has defended its practices by claiming it is difficult 
for them to determine the legitimate right holder.  Many channels, 
however, including HBO, CNN and Discovery, have become legitimately 
available through local distributors, and other Vietnamese cable 
companies have successfully acquired proper licensing.  In October, 
VTC illegally broadcast the Miss World Competition, to which the 
state-owned cable operator, VCTV, held the rights.  After VTC 
ignored calls to cease and desist the broadcast, VCTV led a vocal 
public campaign to seek remuneration for damages.  Although VTC had 
to pay a fine for its illegal broadcast which provided monetary 
compensation to VCTV, the case has done nothing to change the VTC's 
activities.  One positive outcome of this case, however, is the 
increased public attention to the problem of signal piracy. 
 
Software Piracy 
--------------- 
 
¶8.  (SBU) Software industry representatives estimate that piracy 
rates in Vietnam range between 85 and 92 percent.  American software 
companies such as Microsoft have cooperated with enforcement 
authorities to take action to reduce the incidence of software 
piracy, particularly among corporate and government end-users.  In 
2006, these efforts began to bear fruit as government ministries 
(Ministry of Finance and General Department of Statistics), SOEs 
(Bao Viet Finance and Vietnam Mobile Telecom Services Company), 
state-owned banks (Bank for Foreign Trade of Vietnam) and the Bank 
for Investment and Development of Vietnam) and private enterprises 
(FPT Telecom) all signed licensing contracts for Microsoft software 
covering tens of thousands of computers. 
 
¶9. (U) In July 2006, the Prime Minister issued Decision No. 
169/2006/QD-TTg, which requires that government agencies strictly 
comply with laws on copyright protection when procuring and/or using 
IT products, especially software and digital contents.  Also in 
July, the National Assembly passed the Information Technology Law. 
Article 12 of the law prohibits IP infringements in IT activities in 
both the public and private sectors. 
 
¶10. (U) Vietnamese authorities also conducted several 
highly-publicized raids against software piracy.  While few in 
number, they represent an important first step.  In October, 
inspectors and economic police raided Daewoo's Vietnam subsidiary 
near Hanoi.  The total value of pirated software found on the 
computers was more than USD 60,000.  In a second raid, authorities 
in Ho Chi Minh City raided a ceramics company in December, netting 
more than USD 90,000 of illegal software found on confiscated 
computers. 
 
 
HANOI 00000308  003 OF 003 
 
 
WTO and BTA Compliance - Implementation Still Weak 
--------------------------------------------- ----- 
 
¶11. (U) Chapter Two of the BTA, which entered into force on December 
10, 2001, codified Vietnam's commitment to bring its IPR legal 
regime and enforcement practices up to international standards, to 
protect intellectual property consistent with WTO TRIPS standards, 
and in some cases, to provide protection stronger than TRIPS.  The 
BTA covers the fields of copyright and related rights, encrypted 
satellite signals, trademarks (including well-known marks), patents, 
layout designs of integrated circuits, trade secrets, industrial 
designs and plant varieties.  Vietnam also agreed to implement the 
WTO TRIPS agreement immediately upon its WTO accession, which 
occurred January 11, 2007. 
 
¶12. (U) Under the BTA, Vietnam committed to put into effect the 
provisions of five international intellectual property conventions 
and to accede to them "promptly."  By joining the International 
Union for the Protection of New Varieties of Plants (UPOV) and the 
Brussels Convention Relating to the Distribution of Program-Carrying 
Signal Transmitted by Satellite in 2006, Vietnam has fulfilled its 
obligation to accede to all five conventions.  (Note: Vietnam 
previously joined the Paris Convention, Geneva Convention, and Berne 
Convention.  End Note.) 
 
¶13. (U) The BTA obligates Vietnam to provide expeditious remedies to 
prevent and deter infringement, to allow prompt and effective 
provisional measures and to put in place criminal procedures and 
penalties for willful trademark counterfeiting or infringement of 
copyrights or related rights on a commercial scale.  While Vietnam 
has passed regulations to meet many of these commitments, some legal 
documents remain outstanding and/or are not yet detailed enough to 
implement in practice (see paras. 16-20).  One notable example is a 
circular which provides for criminal penalties for copyright 
infringements on a commercial scale.  This circular will serve as a 
stop-gap measure until the GVN can complete required revisions to 
make its Criminal Code consistent with the new IP Law and Vietnam's 
TRIPS commitments.  The USG has consistently pushed for passage of 
this important circular, and the STAR project has advised the 
Supreme People's Court (SPC) drafters.  SPC contacts report that the 
circular will be completed by the end of March 2007. 
 
ALOISI