VZCZCXYZ0006
RR RUEHWEB

DE RUEHBK #0587/01 0540009
ZNR UUUUU ZZH
R 230009Z FEB 08
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 1927
RUCPDOC/USDOC WASHDC

UNCLAS BANGKOK 000587 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR EB/TPP/IPE JENNIFER BOGER 
STATE PASS USTR FOR JENNIFER CHOE GROVES 
USDOC FOR ITA/MAC/OIPR CASSIE PETERS 
 
E.O. 12958:N/A 
TAGS: ECON ETRD KIPR TH
SUBJECT:  THAILAND 2008 SPECIAL 301 SUBMISSION 
 
 
¶1.  (SBU) Summary and Recommendation:  The elevation of Thailand to 
Priority Watch List in 2007 sparked some improvement in police 
enforcement of intellectual property rights in the past year, but 
such efforts were insufficient to make any noticeable dent in the 
availability of pirated and counterfeit merchandise in Thailand. 
Thailand continues to be a source of and destination for pirated 
movies, music, software, and books, counterfeit drugs, apparel, and 
other counterfeit merchandise.  Although industry welcomed the 
improved police attention to IP enforcement, continuing deficiencies 
in other enforcement units, the courts and the legal infrastructure 
served to negate much of the progress in other areas.  Post 
recommends Thailand's continued placement on the Priority Watch List 
until noticeable improvements can be observed in enforcement efforts 
and declining piracy rates.  End summary. 
 
¶2.  (SBU) Last year's decision to place Thailand on the Special 301 
Priority Watch List (PWL) was a controversial event in Thailand. 
Most observers presumed that the decision was based primarily on 
that year's policy of the Royal Thai Government (RTG) to issue 
compulsory licenses on three patented pharmaceutical drugs. 
However, others in and outside the government capitalized on the PWL 
decision to emphasize the inadequacy of intellectual property 
protection in Thailand and pushed the need to improve enforcement. 
At the same time, Thailand became a focus of international anti-IP 
activists, who counseled the RTG on various IP issues.  Elements of 
the Royal Thai Police and the Department of Intellectual Property 
launched plans to better coordinate enforcement and crack down on 
infringers, but their efforts have yet to result in noticeable 
declines in piracy rates or the availability of pirated merchandise 
on the streets and in the shops of Thailand.  Structural 
deficiencies within the courts, the police and the legislation that 
governs IP protection plague enforcement efforts, as does a lack of 
urgency and will among the government and general public to 
seriously tackle the problem.  Local rights holders have joined 
international rights holders in demanding stronger enforcement 
action, staging a series of protests at local police stations over 
the past few months. 
 
Legal structure improving, but slowly 
------------------------------------- 
 
¶3.  (SBU) Thailand has implemented its obligations under the WTO 
TRIPs Agreement but has not gone substantially further to modernize 
its laws to keep pace with technological development.  Thailand is 
well behind other similarly situated countries in implementing 
treaties and international standards needed to encourage the growth 
of domestic IP-centered industries.  Of the 12 significant IP 
treaties that the U.S. promotes bilaterally, Thailand is a member of 
only one; ASEAN neighbors Indonesia, the Philippines and Vietnam are 
each members of six.  In January 2008, Thailand started the process 
to join the Paris Convention and Patent Cooperation Treaty, but the 
RTG has not moved forward to implement the Madrid Protocol on 
trademarks.  Thailand is currently considering various pieces of 
legislation that would amend its patent, trademark, copyright, 
broadcasting and IP border enforcement laws.  For U.S. industry, the 
most important legislation would be copyright amendments 
implementing some provisions of the WIPO Copyright Treaties.  The 
Department of Intellectual Property (DIP) is not prioritizing these 
amendments, instead focusing on creating an unpopular mandatory 
collective management system, eliminating minimum penalties for 
copyright infringements, and creating exceptions to copyright law 
for people with disabilities. 
 
¶4.  (SBU) In the patent area, industry believes that Thailand fails 
to protect pharmaceutical and agricultural test data from unfair 
commercial use as required by Section 39.3; the RTG reads that 
section as requiring only trade secret protection for such data. 
Introductions of generic competitors to pharmaceuticals still under 
patent are common, and industry bemoans the lack of a patent linkage 
system that would help them avoid costly litigation.  Thailand's 
handling of conflicting trademarks and geographical indications 
(GIs) is also problematic, with GIs being given greater weight. 
 
¶5.  (SBU) In the final legislative session under the previous 
government, the National Legislative Assembly passed a new Film Act 
which would allow for a film quota benefiting local producers, and a 
new Broadcast Act that cable providers believe will do little to 
tackle rampant cable piracy. 
 
Enforcement ticks up, but piracy and counterfeiting abound 
--------------------------------------------- ------ 
 
¶6.  (SBU) Inadequate enforcement remains the Achilles heel of IPR 
protection in Thailand.  Rights holders decry a general lack of 
interest among enforcement authorities in undertaking extensive 
investigations into pirate networks, or sustained enforcement 
pressure against retail and wholesale establishments and 
manufacturers of pirate merchandise.  Although police often 
cooperate effectively with rights holders to carry out raids and 
seize infringing product, little effort is made to follow up on 
information obtained during raids to arrest the "big fish" who run 
the piracy trade.  Too often raids end with the seizure of a small 
amount of product and the arrest of a low-level sales clerk caught 
with a stack of pirated DVDs.  For most pirate operators, absorbing 
the occasional raid is simply a cost of doing business and has 
little impact on business.  Rights holders also complain that a 
substantial amount of pirate and counterfeit product disappears from 
the scene of raids. 
 
¶7.  (SBU) The DIP released statistics in February showing seizures 
of 3,746,036 items of pirated merchandise in 2007, up nearly 
one-third from 2006.  In a meeting with Embassy officers, local 
rights holders agreed that the number of police raids was higher, 
but said the quality of raiding had declined.  Rights holders say 
they are struggling with getting police cooperation for larger raids 
and in obtaining timely search warrants from the courts, and are 
therefore relegated to carrying out smaller raids on retail areas. 
Although these thousands of small raids net large amounts of 
merchandise overall, they do little to dismantle pirate networks. 
 
¶8.  (SBU) In early 2007, Police Major General Visut Vanichbut, the 
new commander of the Royal Thai Police's Economic and Technological 
Crime Suppression Division (dubbed ECOTEC), lit a fire under police 
IP enforcement, publicly declaring it his personal mission to remove 
Thailand from the Priority Watch List.  In a number of high profile 
raids, General Visut led police units to hit pirate optical disc 
operations that resulted in the seizure of an optical disc 
production line, hundreds of CD-R burners, and hundreds of thousands 
of pirated DVDs.  ECOTEC officers undertook some of these raids on 
an ex officio basis, hitting pirate establishments on their own 
initiative rather than waiting for complaints from rights holders as 
the police had always done before.  Industry reported less product 
on the street for some time, though the long-term impact appears to 
have been limited.  General Visut also established four mobile 
enforcement units to tackle piracy outside Bangkok.  Unfortunately, 
ECOTEC has limited manpower and rights holders are not able to 
depend exclusively on this unit to carry out a large number of 
investigations and raids. 
 
¶9.  (SBU) Gen. Visut's efforts to improve enforcement were warmly 
welcomed by industry, but his enthusiasm has not been widely shared 
within the rest of the police force.  District police stations and 
other enforcement authorities are notoriously lax in clamping down 
on piracy in their areas and accusations are frequently leveled that 
corrupt officers protect the practice.  Rights holders organized 
several protests against the commander of the police district 
encompassing many of the so-called "Red Zones" where pirated 
merchandise is most prevalent.  Most investigations are still done 
primarily by rights holders, who hand over complete evidence to the 
police or the Department of Special Investigations to conduct a 
raid.  Police may be willing to carry out the requested raids, 
although rights holders say that they are sometimes turned down. 
When police do conduct a raid, rights holders generally must pay for 
the raid.  Right holders complain that the price of raids increased 
significantly in 2007. 
 
¶10.  (SBU) Rights holders had high hopes for the Department of 
Special Investigations (DSI), a unit established in 2002 to 
investigate large-scale crimes.  DSI had been responsible for a 
number of large IPR cases in 2005 and 2006, but IPR enforcement 
efforts dropped off in 2007.  Rights holders initially praised the 
DSI commander (recently rotated out) as competent, but said he was 
short of resources.  In addition to some internal squabbling, in 
2007 DSI was occupied with a large number of corruption cases and 
simply did not have the staff or resources to devote to IPR 
enforcement. 
 
¶11.  (SBU) Industry has higher praise for Thai Customs, which 
continues to cooperate well with rights holders on enforcement and 
takes frequent ex officio action to seize shipments of pirated 
merchandise.  DIP reported 628 Customs cases in 2007 that resulted 
in 1,332,319 items seized.  Customs officials are diligent on 
keeping records of seized property and ensuring destruction.  The 
bulk of seizures are from imported shipments.  Customs has made 
seizures from exported shipments, but typically opens containers 
being exported only if the shipment is highly suspicious.  Customs 
officials have no authority to inspect transshipments or goods in 
transit, but legislation is in the pipeline to grant that 
authority. 
 
Notorious Markets 
----------------- 
 
¶12.  (SBU) Thai IP authorities have labeled certain areas of Bangkok 
and other parts of Thailand as "red zones" where infringing product 
is most readily available.  In Bangkok the red zones are Klong Thom, 
Saphan Lek and Baan Mor shopping areas, Patpong and Silom shopping 
areas, Mah Boon Krong (MBK) Center, the Sukhumvit Road area (soi 
3-19), and perhaps the most notorious, Panthip Plaza, a five-story 
mall with dozens of pirate stalls selling the latest DVDs and 
software.  In Thailand's second city, Chiang Mai, the Night Market 
shopping area, Computer Plaza, Icon and Rimkam Market are considered 
red zones.  In the rest of Thailand, red zones include four markets 
in Songhkla province, and tourist markets in the beach towns of the 
provinces of Phuket, Surattani, Chonburi and Krabi. 
 
Courts issue few deterrent sentences, and slowly at that 
--------------------------------------------- --- 
 
¶13.  (SBU) Thailand's Intellectual Property Court, once a model for 
the region, is not operating to its full potential.  Rights holders 
frequently complain that few offenders of piracy crimes receive 
sentences more serious than a small fine or community service.  DIP 
reported that 7,118 arrests were made in 2007, but industry says 
only 15-17 actually received prison sentences (and it is not clear 
those sentences were actually served).  For their part, judges say 
that police continue to bring up on charges only low-level offenders 
that the judges feel do not merit harsh punishment, while failing to 
charge large operators that the courts are ready and willing to try. 
 The court also complains that many right holders settle cases out 
of court, and in fact use the court's search warrants to shake down 
infringers as an alternative source of revenue.  Other IP observers 
confirm that some right holders rent out their powers of attorney to 
raid teams that enforce on their behalf.  These teams then conduct 
raids in cooperation with police, but rather than seize infringing 
product simply demand cash on the spot.  Judges have bridled at the 
use of their warrants for what they see as little more than 
extortion.  (Note:  U.S. music and motion picture companies have 
long pledged not to settle retail hard goods piracy cases and push 
for criminal sentences in all cases.)  The court has become more 
reluctant to issue search warrants, partly in reaction to the above 
practice, but also in the belief that industry should take cases 
through the civil, rather than criminal system.  While industry says 
they usually receive the warrants after several attempts, they 
frequently arrive too late to execute the planned enforcement 
action. 
 
¶14.  (SBU) A new case management system in the IP court has also 
slowed down civil cases.  Although a rights holder can obtain a 
preliminary injunction against a pirate operator, the case will 
likely not be heard until the following year.  However, the court 
has taken action to reduce the rapid turnover of judges, who 
typically stayed for only one year and were unable to build up 
sufficient case knowledge.  Judges are now able to stay in position 
for two to three years and move up within the court. 
 
Compulsory licenses continued in 2007, policy faces review 
--------------------------------------------- ----- 
 
¶15.  (SBU) Thailand issued compulsory licenses in late 2006 and 
early 2007, breaking the patents on three pharmaceutical products 
registered in Thailand.  Thai health authorities said their actions 
were legal under WTO rules, but pharmaceutical industry 
representatives complained vociferously about not only the patent 
breaking but what they saw as the lack of transparency in the RTG's 
decision making process and its unwillingness to discuss the matter 
with company representatives before issuing the licenses.  After 
issuing the licenses, officials from Thailand's Ministry of Public 
Health (MoPH) opened up discussions with representatives of the 
companies to negotiate price reductions and improve access to their 
medicines.  However, Ministry officials stuck to their initial 
demand that companies lower their prices to within five percent of 
the generic price, and did not yield from that position.  No 
agreements were reached.  Several times during 2007 the MoPH 
imported a generic version of the patented antiretroviral efavirenz 
under the compulsory license.  The Ministry also announced plans to 
import generic versions of the other two compulsorily licensed 
drugs, Kaletra from Abbott and Plavix from Sanofi-Aventis, but as 
yet no generic copies of those two drugs have been sighted in 
Thailand. 
 
¶16.  (SBU) In the latter half of 2007 the MoPH notified three 
European pharmaceutical manufacturers that it was considering 
compulsory licenses on four additional cancer drugs and invited the 
companies for discussions before making its decision.  Little 
progress was made and in January 2008 the Minister of Public Health 
announced he had signed compulsory licenses on all four drugs. 
However, the Ministry stated that it would not exercise the 
compulsory license on Novartis' Imatinib as the company had agreed 
to expand its access program, but left open the option to use the 
license at a later date if access was impaired. 
 
¶17.  (SBU) In February 2008 a new elected government was sworn in to 
replace the former coup-installed government that had held office 
for 16 months.  In one of his first acts, new Minister of Public 
Health Chaiya Sasomsab declared that the new administration would 
review the compulsory license policy and determine whether the 
licenses had been properly issued.  A review involving officials 
from the Ministries of Foreign Affairs, Commerce and Public Health 
is underway, though the officials are focusing only on the most 
recent round of compulsory licenses rather than the initial three 
issued in late 2006 and early 2007. 
 
¶18.  (SBU) The politics surrounding the compulsory licensing 
situation have made it difficult for industry to get any traction in 
dealing with the significant counterfeit pharmaceutical problem in 
Thailand.  Industry reports that counterfeiting of erectile 
dysfunction drugs is near 100 percent in certain tourist-oriented 
locations, but this is only a small part of the problem.  More 
troubling is a range of counterfeit medicines meant for diseases 
endemic in developing countries, such as infections, hepatitis and 
malaria.  The RTG acknowledges the problem, but is ill-equipped to 
work through the chain of sellers and suppliers of fake drugs.  On 
February 14, DIP signed an MOU with industry, the police, DSI, and 
Customs, to increase efforts to combat counterfeit pharmaceuticals. 
DIP pointed to this effort as a clear indication that Thailand 
should be removed from the Special 301 Priority Watch List. 
Noticeably absent from the signing ceremony was the Food and Drug 
Administration (FDA) which has enforcement authority over 
pharmacies.  The FDA reportedly refused to sign the MOU because the 
definition of "counterfeit" might include locally-produced generic 
drugs that violate patents still in effect in Thailand. 
 
Internet piracy a looming threat 
-------------------------------- 
 
¶19.  (SBU) Movie and music representatives do not consider internet 
piracy to have a dramatic effect on their businesses, but recognize 
that with growing Internet penetration and faster broadband it may 
soon pose a threat.  An estimated 13 million Thais have access to 
the Internet, approximately 20 percent of the population.  Over half 
a million of those have broadband quick enough to download music, 
though movie downloading remains too slow to warrant much activity. 
Internet service providers say they act on rights holders complaints 
and take down infringing sites upon request.  Rights holders claim 
that a number of pirate outfits selling counterfeit apparel and 
handbags via the Internet are based in Thailand, though the websites 
are typically hosted outside the country and are difficult to 
trace. 
 
Comment and Recommendation 
-------------------------- 
 
¶20.  (SBU) Embassy recommends that Thailand remain on the Priority 
Watch List until we have seen more serious measures taken against IP 
violations and a visible decline in piracy.  The active enthusiasm 
of General Visut and his ECOTEC unit was a welcome development in 
2007 and must be recognized as a positive step in improving IPR 
enforcement in Thailand.  However, he and his small team are 
insufficient to root out an entrenched network of pirate 
manufacturing and retailing, or change a culture of permissiveness 
to piracy and counterfeiting. 
 
¶21.  (SBU) The RTG continues work on improving its legal code to 
clear obstacles from better police enforcement.  But, more 
significantly, to begin a serious eradication of IP violations, the 
RTG must summon the political will to demand that its enforcement 
arms elevate intellectual property piracy as a greater concern and 
undertake the intensive, sustained effort necessary to clear out 
networks of pirate manufacturers and retailers.  At the end of 2007, 
national elections ushered in a new government to replace the 
previous coup-installed government.  We are optimistic that the 
newly-elected Ministers will have a more expansive view toward both 
domestic and foreign business and will be more open to recognizing 
the contribution of intellectual property to the development of the 
Thai economy.  Embassy will be working closely with the new economic 
leadership to encourage a higher priority to developing and 
protecting intellectual property, and greater diligence in enforcing 
Thailand's IP laws. 
JOHN