VZCZCXRO7092
RR RUEHDT RUEHLN RUEHMA RUEHPB RUEHPOD
DE RUEHHM #0681/01 1781220
ZNR UUUUU ZZH
R 271220Z JUN 07
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC 2801
INFO RUEHHI/AMEMBASSY HANOI 1996
RUEHBK/AMEMBASSY BANGKOK 0286
RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHHM/AMCONSUL HO CHI MINH CITY 3002

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000681 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP/MLS AND EB/TPP/IPE JBOGER 
STATE ALSO PASS USTR DBISBEE AND RBAE 
STATE ALSO PASS USPTO FOR JURBAN 
USDOC FOR 4430/MAC/AP/OPB/VLC/HPPHO 
AMEMBASSY BANGKOK FOR USPTO JNESS 
 
E.O. 12958: N/A 
TAGS: ETRD ECON KIPR BEXP PGOV VM
SUBJECT: IPR CONCERNS CONTINUE TO WORRY HCMC BUSINESSES 
 
 
HO CHI MIN 00000681  001.2 OF 002 
 
 
¶1. (SBU) Summary: HCMC-based business representatives and 
lawyers told visiting USTR Director for Intellectual Property 
and Innovation Rachel Bae and USPTO Regional IP Officer Jennie 
Ness that local authorities are not sufficiently proactive in 
investigating and prosecuting copyright and trademark 
infringement cases, usually taking action only when provided 
with specific information by the companies about violators.  The 
lack of enforcement is compounded by confusion among GVN 
agencies as to who takes the lead on investigation and 
infringement determination.  Our contacts say that the GVN is 
not completely fulfilling its WTO obligations on IPR 
enforcement, namely in the confiscation of pirated and 
counterfeit goods, increased fines for infringers, and the 
revocation of business licenses from violators.  That said, 
there have been some positive experiences by companies that have 
invested time and resources in developing relationships with 
enforcement agencies.  End Summary. 
 
¶2. (SBU) In June 18 meetings with HCMC-based business 
representatives and lawyers, USTR Director for Intellectual 
Property and Innovation Rachel Bae and USPTO Regional IP Attachi 
Jennie Ness discussed the current state of IPR enforcement in 
Vietnam.  Our contacts expressed frustration that authorities 
are unwilling to investigate and take action against IP 
violators without precise intelligence provided by IP owners. 
Representatives from Diageo -- liquor distributor of several 
international brands including Johnnie Walker, Smirnoff, and 
Guinness -- told us they have to expend "tremendous resources" 
to investigate suspected violators themselves and then to press 
authorities to act.  In one case, Diageo had to investigate and 
provide local police with the location, participants and exact 
times of counterfeit whiskey production before they would 
conduct a raid.   Phan Minh Nhut, Nike Vietnam's Brand 
Protection Specialist, reported that while Nike has seen the IPR 
environment improve over the last seven years, authorities still 
will only act when prompted by brand holders.  Alycia Draper, 
Director for Policy and External Affairs at Merck Sharp and 
Dohme, added that the investigative burden on Western 
pharmaceutical companies is huge, particularly those with 
minimal staff on the ground.  In part due to market access 
restrictions, most brand and copyright holders whose goods are 
present on the Vietnamese market do not have the presence and 
in-country resources to devote to this level of brand violation 
investigation. 
 
¶3. (SBU) Currently, five GVN agencies in HCMC can investigate 
and fine IP infringers, including the People's Committee, 
Customs, The Market Management Board (MMB), the Department of 
Science and Technology (the parent agency of the National Office 
of Intellectual Property) and the Economic Police.  Nike 
representatives reported that agencies are often confused over 
which has the authority and obligation to take the lead on IP 
investigations.   Chris Mcnabb of Diageo told us that even when 
authorities go on raids, they are often reluctant to define 
seized goods as counterfeit items, declaring the merchandise to 
be copyright infringements, which carry less harsh penalties. 
The GVN defines counterfeiting narrowly and is thus unwilling to 
declare items that are confusingly similar to trademarked goods 
but have minor changes made (subtle changes in font type on 
package labeling, for example) as counterfeit.  There is also 
confusion over which government agency has the authority to make 
infringement determinations.  Before the new Intellectual 
Property Code took effect, the NOIP or DOST would assist other 
agencies in determining whether a particular good was 
infringing.  Under the new IP Code, a body of specialized IP 
agents should play this role.  However, our contacts told us 
that this new group has yet to be formed.  In the case of a 
criminal raid, police send the confiscated merchandise to a 
criminal assessment division that determines if the goods in 
question are in fact IPR violations.  Rightsholders in HCMC told 
us that, under current practices, the aggrieved company has no 
input into a determination of infringement.  Last year, law 
enforcement authorities investigated four cases of counterfeit 
Nike products, all of which were thrown out, even though Nike 
believes it had provided clear and convincing evidence of IPR 
violations. 
 
¶4. (SBU) In cases of civil lawsuits brought by trademark owners, 
local courts are often unwilling to rule against local 
Vietnamese on behalf of a foreign plaintiff.  Even in successful 
rulings, damages awarded are often low and do not cover the 
legal and investigative costs a company has to incur.  Nike 
 
HO CHI MIN 00000681  002.2 OF 002 
 
 
representatives reported that even successful court cases did 
not lead to post-ruling enforcement of trademark infringement. 
Moreover, our contacts told of several instances of counterfeit 
goods being returned to the violating enterprise, even following 
administrative fines. 
 
¶5. (SBU) Vietnam's new IPR law sets the maximum penalty for the 
production of counterfeit or pirated goods at five times the 
market value of the infringing goods.  While these fines are 
much higher than the previous maximum fine of 100 million dong 
(6,250 USD), implementing decrees and circulars have yet to be 
promulgated to bring this law fully into force.  Circulars for 
Decree 106, which contains IPR violation penalty guidelines, are 
currently being developed, according to Tran Thi Thanh Ha, an IP 
lawyer a Baker & McKenzie in HCMC.  In the interim, GVN 
authorities are operating under administrative circulars from 
the old IPR laws, which limit fines to 20 million dong (1,250 
USD) for most IP agencies and 100 million dong for the Chairman 
of the local People's Committee.  USTR Director Bae pointed out 
that the use of old circulars contradicts pledges made by 
Vietnamese WTO negotiators that following accession, a 
completely new IPR enforcement regime would come into effect. 
This included a pledge to revoke the business licenses of IP 
violators, an action that local business representatives told us 
has yet to occur. 
 
¶6. (SBU) Tran Thi Thanh Ha from Baker & McKenzie believes that, 
even with new circulars for Decree 106, Vietnamese authorities 
will be unable to impose higher penalties for IP violations. 
Ms. Ha explained that, under Vietnamese law, the GVN cannot 
amend the Vietnamese Criminal Code through the issuance of a 
judicial circular, even though Vietnamese negotiators made such 
a claim during WTO negotiations.  Ultimately, the National 
Assembly will have to pass changes to the Criminal Code to 
criminalize IPR violations, she said.  Ms. Ha also believes that 
the IPR Law is subject to interpretation of various GVN 
agencies, raising the possibility that inconsistencies in old IP 
legislation will continue. 
 
¶7. (SBU) In separate meetings with the Market Management Board 
and Department of Science and Technology, local authorities 
agreed that there was room for improvement in HCMC's IPR 
enforcement track record.  Authorities cited incomplete legal 
reform and lack of training for enforcement officials as the 
primary reasons for this less than ideal situation.  Market 
Management Board officials were fast to point out the successful 
cooperation they have had in investigating IP cases along side 
large multinational companies such as Nike, Triumph, Honda and 
Cisco.  They added that right holders who are not very active in 
Vietnam and work through law firms are not helpful.  USTR 
Director Bae responded to Market Management Board officials that 
not just companies with a presence in HCMC have to be protected. 
 It is the duty of GVN IPR enforcement agencies to protect all 
rights holders, regardless of whether they have a corporate 
presence in HCMC.  Science and Technology Department officials 
appeared to be forward leaning, noting that they had developed 
an action plan which they were happy to share with USG and 
welcomed USG comments. 
 
¶8. (SBU) Comment:  While the new IPR Law was supposed to 
simplify enforcement and provide greater protection to rights 
holders, there has been no real change on the ground in HCMC. 
In fact, delays in the releases of administrative circulars has 
further compounded official confusion over what actions can be 
taken, resulting in reluctance to investigate and enforce IPR 
violations.  Inexperience in the field of IPR exacerbates this 
situation.  However, there have been some successes, although 
small, and interest on the part of Vietnamese officials to do 
more provides an opening for improvement. 
 
¶9. (U) USTR Director for Intellectual Property and Innovation 
Rachel Bae and USPTO Regional IP Attachi Jennie Ness cleared on 
this cable. 
 
WINNICK