VZCZCXRO4238
OO RUEHHM
DE RUEHHI #0309/01 0530634
ZNR UUUUU ZZH
O 220634Z FEB 07
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4650
INFO RUEHBK/AMEMBASSY BANGKOK PRIORITY 5419
RUEHHM/AMCONSUL HO CHI MINH 2576
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 06 HANOI 000309 
 
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 2 OF 2 
 
REF:  (A) STATE 007944 (B) 06 HANOI 000427 
 
(U) SENSITIVE BUT UNCLASSIFIED, DO NOT POST ON THE INTERNET 
 
Implementation of the New Law on Intellectual Property 
--------------------------------------------- --------- 
 
¶14. (U) In January 2006, six months before the IP Law officially 
entered into force, the Ministry of Culture and Information (MOCI), 
Ministry of Science and Technology (MOST), Ministry of Agriculture 
and Rural Development (MARD), Ministry of Finance (MOF), Ministry of 
Trade (MOT), and Ministry of Public Security (MPS) jointly signed a 
"Plan of Action on Cooperation in Preventing and Fighting against 
IPR Violation during the period of 2006-2010," commonly referred to 
as Program 168.  The program has helped to correct one of Vietnam's 
glaring shortfalls -- poor coordination among the country's varied 
enforcement agencies.  Agencies in Ho Chi Minh City report they are 
using Program 168 to facilitate inter-agency cooperation at the city 
level. 
 
¶15. (U) Some key highlights of Program 168 include: 
 
-- Information dissemination: Under MOCI's lead, the participating 
ministries, in coordination with local People's Committees, are 
responsible for developing a concrete plan to disseminate 
information on Vietnam's IPR commitments, legislation and 
enforcement activities.  This information is to form the basis of an 
annual report to the Prime Minister on nationwide IPR enforcement. 
 
-- Strengthened Enforcement: The ministries shall provide guidelines 
on IPR enforcement to their functional departments and local 
People's Committees.  Inspection, supervision and sanctions shall be 
strictly implemented at the national level by GVN ministries and by 
the People's Committees at the local level. 
 
-- Capacity building for enforcement officials: The ministries shall 
provide more training to officials of enforcement agencies, with a 
special focus on international cooperation.  Notably, the ministries 
will coordinate with the Ministry of Education and Training to 
develop a specialized curriculum on IPR for undergraduate and 
graduate students. 
¶16. (U) Other legal and regulatory IPR-related reforms in 2006: 
 
-- Decree No. 56 of June 2006 stipulates administrative offenses in 
the culture and information field.  Decree 56 introduces various new 
copyright offenses and provides for higher fines (in most cases) on 
copyright infringements committed for commercial purposes, such as 
copying TV or radio programs, film, tapes or discs; trading in 
pirated software (new offense); or importing/exporting pirated 
films, tapes, discs, TV or radio programs, written works, computer 
software and fine art (new offense). 
 
-- Decree No. 100 of September 2006, details the copyright 
provisions of the Civil Code and the IP law. Decree 100 governs 
author's rights and related rights held by performers, sound/video 
recording producers, and broadcasting organizations.  Foreign 
individuals and organizations whose works are covered by copyright 
and related rights protection may directly file applications for 
copyright and related rights registration at the Copyright Office of 
Vietnam (COV) or provincial Culture and Information Services where 
they are based. This Decree further clarifies terms related to 
copyright and related rights, specifies provisions of copyright 
protection term, copyright and related rights registration 
procedures and certificates, and settlement of copyright-related 
complaints and disputes. 
-- Decree No. 103 of September 2006 on industrial property contains 
general provisions on the establishment and scope of IPR, including 
patents, trademarks, industrial designs, integrated circuit layouts, 
well-known marks, business secrets and trade names. Key provisions 
on appeal procedures, required documents and regulations on 
ownership assignment and IP rights licensing are also clearly 
regulated; 
-- Decree No. 105 of September 2006 provides details on IPR 
enforcement and state administration of IPR.  Decree 105 governs all 
IP enforcement matters (civil, criminal and administrative remedies, 
import-export controls and unfair competition).  This includes 
copyright infringement and infringements of IP subject matter such 
as trademarks and patents.  Other key provisions govern the 
determination of infringing acts, damages for compensation, and the 
 
HANOI 00000309  002 OF 006 
 
 
procedures and required documents for the enforcement of IP rights. 
Infringement tests, provisions on calculating damages, the disposal 
of infringing goods and border enforcement measures are set out. 
Notably, Vietnam asserts jurisdiction over cyber crimes occurring 
abroad that are directed at consumers or information users in 
Vietnam. 
-- Decree No. 106 of September 2006 on administrative sanctions in 
industrial property details administrative authority competence and 
procedures for handling administrative breaches of industrial 
property (IP) rights. Beyond the penalties of warnings and fines 
defined in previous regulations, Decree 106 provides penalties such 
as confiscation of evidence, suspension of an infringer's business 
activities and compulsory remedial measures including removal of 
infringing elements from the infringing goods, destruction or 
distribution for non commercial purposes of infringing goods and 
publication of corrective notices. For the first time, this Decree 
permits penalties to be calculated based on the actual value of 
infringing goods. Fine levels of up to five times the value of 
infringing goods may be imposed.  A fine of USD 625 to USD 940 may 
be imposed if a trademark is placed on business instruments, and 
infringes trademark rights. 
-- On December 25, 2006, the National Assembly passed the Law on 
Cinematography, which came into effect as of January 1, 2007. The 
law provides protection for all cinematographic works under the 
Civil Code and IP Law.  The law contains various provisions related 
to copyright, such as requiring that proper copyright be evidenced 
for imported films. Film producers and television stations may 
import and export films, but the quantity of films imported may not 
exceed the quantity of films they produce annually by a ratio of 
more than 2:1. 
 
Implementing Regulations to be adopted in 2007 
--------------------------------------------- - 
 
¶17.  (U) Relevant GVN agencies continue to draft circulars to guide 
implementation of these new IPR decrees.  The National Office of 
Intellectual Property (NOIP) is responsible for drafting 
implementing regulations concerning industrial property.  Those 
regulations include: 
 
-- A joint circular on settling IP violations, drafted by the 
Supreme People's Court (SPC) and  Supreme People's Procuracy (SPP); 
-- A joint circular guiding the trial of IP related criminal cases, 
drafted with SPC, SPP, MPS and Ministry of Justice (MOJ); 
-- A circular guiding implementation of Decree 103 on industrial 
property, drafted by MOST; 
-- A circular on IP expert witnesses drafted by MOST; and 
-- Guidelines for examiners processing applications on all IP 
subjects. 
 
¶18. (U) The following copyright regulations are expected to be 
issued in 2007: 
-- Decree on administrative fines in the copyright field drafted by 
MOCI; 
-- Prime Minister's Instructions on software protection drafted by 
MOCI; 
-- Decree on protection of optical disks drafted by COV; and 
-- Joint Circular on settling copyright infringement in the court 
drafted by PSC, PSP, MOJ and MOCI. 
 
¶19. (U) MARD is responsible for drafting guiding regulations on 
plant varieties in 2007, specifically: 
 
-- A Decision on collection of charges and fees on protection of 
plant varieties (to be issued by MOF); 
-- Decree to amend Decree 57/2002 on sanctioning administrative 
violations in the plant varieties field; and 
-- Decisions on supplementing the types of protected plant 
varieties. 
 
International Agreements 
------------------------ 
 
¶20. (SBU) Apart from the international IPR agreements that Vietnam 
is required to accede to under the BTA, NOIP contacts report that 
the GVN is finalizing procedures to accede to the Hague Agreement 
Concerning the International Registration of Industrial Designs. 
Vietnam expects to join this agreement in 2007.  In 2006, Vietnam 
officially completed its procedures to join the Rome Convention for 
 
HANOI 00000309  003 OF 006 
 
 
the Protection of Performers, Producers of Phonograms and 
Broadcasting Organizations (effective March 1, 2007), the 
International Union for the Protection of New Varieties of Plants 
(UPOV) (December 24, 2006), the Madrid Protocol Relating to the 
Madrid Agreement Concerning the International Registration of Marks 
(July 11, 2006) and the Brussels Convention relating to Distribution 
of Program-Carrying Signals Transmitted by Satellite (January 12, 
2006).  COV claims that the new IPR Law adopted most provisions of 
the 1996 WIPO Copyright Treaty (WCT) and WIPO Performances and 
Phonograms Treaty (WPPT).  The GVN does not currently plan to accede 
to the WCT and the WPPT, but officials told the Embassy that the GVN 
may consider doing so eventually. 
 
Enforcement Mechanisms Remain Weak 
---------------------------------- 
 
¶21. (U) According to the new Decree 105, the current organizational 
structure for state administration of IPR will remain in place. 
This structure is overly complicated and bureaucratic, with no less 
than five ministries involved.  Multiple agencies are tasked with 
overlapping functions, but there are also gaps in coverage. 
 
¶22.  (SBU) Institutional experience on IPR enforcement is extremely 
limited, and local law enforcement personnel remain uninformed on 
Vietnam's IP laws and procedures.  Government IPR agencies rely 
heavily on "administrative" enforcement of IPR laws and typically 
only issue administrative findings or warnings either by letter or 
orally to small retailers of pirated material.  The lack of 
experience with IP issues among Vietnam's judges is another concern. 
Recently, Vietnam's Chief Justice admitted before the National 
Assembly that the court system is facing a shortage of judges, so 
the GVN's plan to develop a specialized IPR court seems unlikely in 
the near term.  Under the new IPR regulations, to provide 
impartiality, experts at NOIP, MOST and the provincial Departments 
of Science and Technology (DOST) no longer have the ability to 
assist enforcement agencies in pursing trademark and other 
infringements.  Removing this body of expertise from the process 
will likely delay dispute resolution. 
 
¶23. (U) In addition to the inter-agency coordination mechanisms set 
up under Program 168 (paras 14-15), the GVN will establish a special 
task force empowered with the right to use police or military force 
to fight IPR violations.  Under the direction of the Ministry of 
Trade's (MOT) Market Management Bureau (MMB), the task force will 
include representatives from the Economic Police, Ministry of 
Defense, Customs, the MOST inspectorate, the MOCI inspectorate and 
the Ministry of Health. 
Enforcement Efforts in 2006 
--------------------------- 
¶24. (U) MOCI:  According to national data, MOCI officials inspected 
20,414 businesses in 2006.  (Note: While Hanoi agencies say their 
numbers are nationwide, it is difficult to determine if they are 
comprehensive.  HCMC numbers are also included in paras 24-29, where 
possible, to give perspective.  End Note.)  MOCI inspectors 
collected fines of 11 billion Vietnamese Dong (VND) (USD 680,000) in 
2006 (down from 12 billion in 2005) and forwarded documents for 
criminal prosecution in nine cases (down from 22 cases in 2005). 
Last year, cultural inspectors issued warnings to 519 business (down 
from 1,001 businesses in 2005), suspended the operations of 289 
businesses (up from 116 businesses in 2005), and revoked the 
business licenses of 160 businesses (up from 25 businesses in 2005). 
 They also confiscated more than 930,000 pirated optical disks. 
Cultural inspectors also participated in several software raids (see 
paragraph 10). 
 
¶25. (U) MOST/NOIP:  MOST issued fines in 88 IP infringement cases 
(up from 51 in 2005) and three unfair competition cases, with a 
monetary penalty of VND 170.2 million (about USD 10,640)(compared to 
a fine of VND 115 million or USD 7,100 in 2005). NOIP assisted in 
addressing 601 industrial property violations and 31 unfair 
competition cases related to IP. 
 
¶26. (U) Market Management Bureau (MMB):  According to incomplete 
figures on IPR enforcement efforts of the MMB in 2006, the agency 
handled a total of 2,172 cases and imposed fines of VND 4.387 
billion (USD 287,000), of which there were 448 industrial design 
violations, 1,715 trademark infringements, 2 commercial names 
violations, 1 patent infringement and 6 unfair competition cases. 
The MMB also seized 30,000 pirated disks, imposing fines of USD 
 
HANOI 00000309  004 OF 006 
 
 
1,750. In HCMC, the city's MMB reported it handled 87 IPR-related 
cases in 2006, most of which were settled with administrative fines 
and confiscation or destruction of products determined to be fake or 
an infringement on trademarks.  A handful of cases were forwarded to 
the police for prosecution.  The cases involved products from such 
companies as Nike, Adidas, Honda, Toyota, Yamaha, Hewlett Packard, 
Rolex and Omega. 
 
¶27. (U) Customs: In 2006, Customs acted on a number of trademark and 
origin infringements.  Most IPR violations included electronic 
products, mobile phone accessories and other consumer commodities. 
For example, Haiphong Customs seized and destroyed counterfeit Nokia 
cell phone accessories and fake Casio calculators.  Customs also 
discovered a shipment of cigarettes that was in violation of "Camel 
Filters" trademark.  The national Customs Department worked closely 
with local customs officials to implement the new IPR regulations 
and monitor counterfeit goods notified by the rights holders.  The 
HCMC Customs department reported it handled 20 IPR complaints in 
¶2006.  Fourteen of those complaints were determined to be 
legitimate; Customs found in the remaining six cases that the 
complainants could not prove they were the authorized 
representatives of the rights-holders.  In only two of the 14 cases 
were violations discovered; in the remaining 12 cases, Customs 
officials reportedly have yet to identify any shipments that could 
be considered violations.  The cases include leather goods, Wilson 
tennis racquets, Winston cigarettes and Louis Vuitton products. 
HCMC Customs told ConGen EconOff that Customs officials can only 
take action against products where the rights-holder has filed a 
complaint.  Customs officials are not authorized to stop shipments 
they suspect to be in violation of IPR laws and regulations. 
 
¶28. (U) Courts: According to data provided by NOIP, the court system 
settled 11 of the 14 civil IPR-related cases it received.  In the 51 
criminal cases submitted to the courts (involving a total of 110 
defendants), 41 cases were brought to trial. Of the 91 defendants in 
these trials, 47 were given jail terms.  The head of HCMC's Economic 
Court told us the court heard 10 to 15 IPR cases in 2006, out of a 
total of 1,200 cases that came before the Economic Court last year. 
Violators in most of these cases were required to pay administrative 
fines. 
 
¶29. (U) Economic Police: In 2006, MPS reports discovering and 
investigating 156 IPR violations, 12 more cases than 2005.  The most 
commonly infringed products were foodstuffs, clothing, cosmetics, 
medicine, software and electronic accessories.  For instance, on 
December 7, the economic police halted an alcohol-making ring in 
Hoang Mai district of Hanoi. The police seized 500 counterfeit 
liquor bottles with fake labels, empty bottles and production 
machinery.  The case was prosecuted under the criminal law and three 
defendants were sent to prison. Several other cases were handled 
through civil penalties.  Recently, Ho Chi Minh City police raided 
an establishment that produced counterfeit perfume. The police 
seized and destroyed 3,790 perfume bottles with imitation trademarks 
of Hugo Boss, Valentino, and Gucci.  The offender was convicted 
under the criminal law. 
 
Growing Costs of IPR Infringement 
--------------------------------- 
 
¶30. (U) Despite Vietnam's relatively low average per capita GDP of 
around 713 dollars (2006), incomes across the country are rising, 
particularly in the larger cities.  With these rising incomes, a 
culture of consumerism is increasingly taking hold - increasing the 
losses to U.S. firms from piracy and counterfeiting.  Industry 
estimates show that the cost of signal piracy in the television 
sector alone was USD 37 million.  Although the dollar value remains 
a fraction of losses faced by U.S. IPR-related companies in other 
parts of the region, damages from IPR infringement are rising 
steadily.  In addition, some items deemed "cultural products" (i.e., 
music, movies, books) are still subject to censorship and control 
regulations that impede market access. 
 
Public Awareness 
---------------- 
¶31. (U) Public and private awareness of the value of IPR protection 
is low but continues to grow.  According to COV, Vietnamese media 
carried over 1,000 news articles on copyright, more than double the 
2005 figure of 450.  Vietnamese IPR agencies organized a number of 
workshops, panels and public forums to help increase public 
 
HANOI 00000309  005 OF 006 
 
 
awareness of IPR.  The COV website regularly updates information on 
copyright legislation and news, as well as provides a database on 
copyright registration. 
 
¶32. (U) With growing awareness of their rights, individuals and 
businesses are becoming increasingly active in self-protection.  COV 
issued 3,147 copyright certificates in 2006, a 55 percent increase 
over 2005.  NOIP received more than 2,400 applications for 
registration of inventions (11 percent higher than 2005), 1,600 
applications for registration of industrial designs (12 percent 
higher than 2005), over 23,000 applications for registration of 
trademarks (13 percent higher than 2005), five applications for 
registration of geographical indications and one application for 
registration of layout designs of integrated circuits.  In November 
2006, MMB organized an exhibition on "Authentic vs. Counterfeiting 
Goods" in Ho Chi Minh City with the display of more than 450 goods, 
including Nike, in order to help consumers identify fake goods. 
 
¶33. (U) Copyright associations continue to expand their operations. 
The Vietnam Literature Copyright Centre (VLCC) increased its 
membership to 500 from 350 in 2005.  Total royalties of VLCC members 
in 2006 were VND 200 million (USD 12,500).  The Vietnam Center for 
Protection of Music Copyright (VCPMC) has also grown; it now 
represents 1,000 members (up from 700 last year).  The total 
revenues of association members reached VND 3 billion (USD 187,500) 
in 2006, up 35 percent from 2005.  The Vietnam Anti-Counterfeit and 
Intellectual Property Protection Association (VACIP), which 
represents companies with foreign investment, continues to actively 
promote IPR protection and hold public discussions. 
 
Technical Assistance helps Build Enforcement Capacity 
--------------------------------------------- -------- 
 
¶34. (U) In 2006, Vietnam continued to receive considerable 
IPR-related technical assistance from a number of foreign donors and 
NGOs as well as multiple USG agencies, such as USAID, Customs, ILEA, 
USPTO and USDOJ.  This assistance included conferences, seminars, 
training and review of draft pieces of legislation.  For example, 
the USG provided IPR training in Hong Kong, Bangkok and Washington 
for 27 GVN officials from NOIP, COV, the SPC, MMB, Customs and the 
Police. 
 
¶35. (U) Some examples of IPR technical assistance conducted in 2006 
include: 
 
-- COV organized a workshop on "Management of Copyright and Related 
Right" with assistance from the EC-ASEAN Intellectual Property 
Rights Cooperation Program (ECAP II) 
 
-- HCMC Department of Science and Technology conducted 10 seminars 
to educate government officials on the new IP Law. 
 
-- COV, in cooperation with the Business Software Alliance and 
Microsoft organized a workshop on "Copyright for software" in Hanoi 
and Ho Chi Minh City 
 
-- PSC in coordination with STAR, USPTO and DANIDA's Business Sector 
Programme Support (BSPS) hosted 5 training courses for 349 judges 
-- NOIP received assistance from US, EU, Switzerland, Japan and WIPO 
for training activities 
-- Customs worked with ECAPII and French Embassy on providing 
training for its officials 
-- Police cooperated with French Police, Australian Police, 
Microsoft, British American Tobacco company, and Pfizer 
Pharmaceutical Company 
 
Training needs 
--------------- 
 
¶36.  (U) In 2007, the GVN will continue to require detailed legal 
consultations and technical assistance as it finishes drafting 
implementing regulations for the new IP Law.  Training for the 
various enforcement agencies will be essential to take advantage of 
Vietnam's strengthened enforcement provisions.  Many of these 
agencies are concerned that they often have difficulty finding 
English-speaking IPR officials to send to training programs. 
Vietnam would greatly benefit from increased in-country training 
activities conducted in Vietnamese. 
 
 
HANOI 00000309  006 OF 006 
 
 
----------------------------- 
Conclusion and Recommendation 
----------------------------- 
 
¶37.  (SBU) IPR violations in Vietnam will continue to be a concern 
for the foreseeable future.  While the GVN has demonstrated more 
resolve to uphold its IPR obligations on several fronts, it will 
take time to educate government officials and the public and to 
instill a more widespread respect for intellectual property rights. 
Vietnam's commitments under the BTA and WTO accession provide us 
with strong tools for engaging the GVN on IPR enforcement.  Vietnam 
has also expressed interest in being considered for the U.S. 
Generalized System of Preferences (GSP) program and seems favorably 
disposed to the U.S. proposal to enter into a Trade and Investment 
Framework Agreement (TIFA).  Vietnam's GSP aspirations provide 
additional incentive for improved IPR enforcement, while a TIFA 
presents a mechanism to engage the GVN on specific steps to fulfill 
its IPR-related BTA and WTO commitments.  The USG should continue to 
provide funding for technical assistance on IPR, particularly 
building the capacity of Vietnam's law enforcement and judicial 
agencies.  At the same time, the Mission will continue to press GVN 
officials at every level to address IPR piracy and counterfeiting 
problems throughout Vietnam. 
 
Recommendation 
-------------- 
 
¶38. (SBU):  Because of the remaining IPR issues noted above, the USG 
will have to continue to push Vietnam to protect IPR effectively. 
Therefore, we recommend USTR maintain Vietnam on the Special 301 
Watch List in 2007. 
 
ALOISI