VZCZCXRO6980
RR RUEHMA RUEHPA
DE RUEHOS #0116/01 0880640
ZNR UUUUU ZZH
R 280640Z MAR 08 ZDK
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 9832
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 9553
RUEHYD/AMEMBASSY YAOUNDE 0123
RHEHNSC/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC
RUEOMFD/HQ USEUCOM VAIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK

UNCLAS SECTION 01 OF 02 LAGOS 000116 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR AF/W, 
COMMERCE FOR KBURRESS 
USDOC FOR USPTA PAUL SALMON 
STATE PASS USTR FOR LISER, AGAMA 
USDOJ FOR MARIE-FLORE KOUAME 
 
E.O. 12958: N/A 
TAGS: KIPR ECON PGOV NI
SUBJECT: NIGERIA: WIDESPREAD IPR VIOLATIONS INCREASE COSTS 
IN NIGERIA 
 
LAGOS 00000116  001.3 OF 002 
 
 
Sensitive but Unclassified; Handle Accordingly 
 
¶1. (SBU) Summary: The prevalence of software piracy in large, 
established Nigerian companies and in the movie industry 
hinders Microsoft in identifying domestic partners in the 
fight to enforce intellectual property rights.  U.S. company 
Schlumberger faces theft of proprietary information required 
for bids submitted via Nigeria's electronic petroleum 
exchange.  Pfizer claims the government could control 
fraudulent pharmaceuticals by requiring distribution from 
monitored facilities, but lacks the political will to do so. 
IPR violations raise costs for businesses, discourage foreign 
investment, and ultimately hinder Nigeria's economic 
development.  End Summary. 
 
¶2. (SBU) During a March 10 meeting with representatives of 
Microsoft, Schlumberger, and Pfizer, Nigeria Desk Officer 
Andrew Silski shared information regarding benchmarks under 
the Special 301 Watch List process.  Company representatives 
described Nigeria's challenging environment for protection of 
intellectual property rights (IPR). 
 
-------------------------------------------- 
Microsoft Seeks Partners, Finds Many Lacking 
-------------------------------------------- 
 
¶3. (SBU) John Okereke of Microsoft and of the Business 
Sofware Alliance (BSA) told Deskoff that a BSA worldwide 
study of intellectual property rights (IPR) violation rates 
indicate globally 80 percent of IPR are violated and a 
forthcoming study on Nigeria demonstrates a similar high 
rate.  (Note: The U.S. rate is approximately 21 percent. End 
note.).  Piracy goes far beyond small business and retail 
users and extends to large, respected businesses, such as a 
large Nigerian commercial bank running 4,500 unregistered 
software packages.  Even after meetings to address the 
problem, the bank is dragging its feet both in admitting the 
scale of the problem, and in rectifying the situation, though 
they have begun uninstalling several hundred of the illegal 
packages. 
 
¶4. (SBU) Microsoft's Memorandum of Understanding (MOU) with 
the Economic and Financial Crimes Commission (EFCC) several 
years ago formalizes the agreement between the EFCC and 
Microsoft to work together in addressing IPR software 
violations, now most often conducted through the Cyber Crime 
unit of the EFCC.  Okereke described the working relationship 
between the two entities as "good." The actions by the EFCC 
in February 2008 to close down a pirated software market in 
Lagos showed its effectiveness at one-off enforcement 
actions; generally, however, the software pirates continue to 
operate unimpeded, said Okereke.  Working with the Nigerian 
Copyright Commission (NCC) has potential, however, the NCC is 
hampered by financial constraints and the lack of political 
will.  When asked by the Deskoff if Nollywood, Nigeria's 
movie industry, was a potential partner on IPR issues, 
Okereke replied it would be in theory; but, most Nigerian 
movie production companies pirate the Adobe software used in 
film editing. 
 
---------------------------------------- 
Schlumberger Wary of Weaknesses in 
Electronic, Physical Monitoring Systems 
---------------------------------------- 
 
¶5. (SBU) Steve Fulgham, Managing Director of Schlumberger, 
told DeskOff his company is concerned about the Nigerian 
Petroleum Exchange (NIPEX) and its ability to protect 
proprietary data.  NIPEX is an electronic on-line exchange 
through which oil field service companies submit bids for 
work in Nigerian oilfields.  Fulgham described the lack of 
transparency in the exchange rules, particularly the 
requirement that bidders upload technical drawings and 
specifications as part of the bid.  NIPEX does not offer 
sufficient guarantees that the company's proprietary and 
sensitive information will not be shared with competitors, 
 
LAGOS 00000116  002 OF 002 
 
 
Fulgham said.  Technical abilities and standards, commercial 
capabilities, and technical drawings are all routinely 
submitted via the exchange.  In one recent case, NIPEX 
officials held bidding open past the published deadline to 
allow a Nigerian company to submit a late bid; in Fulgham's 
view, the exchange may prove similarly incapable of 
protecting proprietary information. 
 
¶6. (SBU) Fulgham noted that IPR violations have serious 
safety consequences for the oil industry.  Pirated oilfield 
equipment, often imported from China, is sub-standard, 
untraceable to a production batch for quality assurance, and 
made of non-approved materials that cannot withstand the 
extreme conditions to which they are subjected to in the 
oilfield, said Fulgham.  To avoid problems with pirated 
pharmaceuticals, Schlumberger imports medications for its 
staff rather than trust drugs procured locally. 
--------------------------------------------- ------ 
Pfizer Sees Little Political Will to Change 
--------------------------------------------- ------ 
 
¶7. (SBU) Bunmi Femi-Oyekan of Pfizer described the current 
registration process implemented by the National Agency for 
Food, Drug Administration and Control (NAFDAC) as 
"challenging" at best and "chaotic" at worst.  Pfizer finds 
the Customs Service to be the company's largest hurdle in 
combating fake drugs, describing Customs enforcement as 
ineffective.  Pfizer supports training for Customs and 
advocates that the industry send a strong, consistent, 
unified message to Customs and other law enforcement agencies 
about the high costs of IPR violations and the necessity of 
combating them at all levels.  She also suggested that the 
government knows one important way to solve the fraudulent 
pharmaceuticals problem, i.e. pharmaceutical distribution 
from monitored facilities only, but lacks the will to 
implement it. 
 
¶5. (SBU) Weaknesses throughout the distribution process allow 
IPR violations to flourish, the group contended.  Customs 
officials are easily bribed to allow pirated or sub-standard 
products into the country. Once in country, even legitimate 
goods can be exchanged for fake goods at any point between 
the warehouse and the retail distribution point, Fulgham and 
others pointed out.  In addition, import bans and local 
content laws drive up the price of legitimate foreign and 
domestic goods, fueling the demand for fakes. 
 
¶7. (SBU) Comment:  Combating piracy in Nigeria requires a 
broad approach across many sectors; not just the software and 
pharmaceutical industries.  IPR violations raise costs for 
business consumers, making Nigeria an increasingly expensive 
place to do business, discourages U.S. investment, and 
hinders the country's economic development.  We are in a 
continuing dialogue with GON agencies and at the April Trade 
Investment Framework Agreement quarterly meeting, Post will 
again push for increased engagement and results from the NCC, 
Customs and the Ministry of Commerce and Industry.  End 
Comment. 
 
¶8.  This cable has been cleared by Embassy Abuja. 
BLAIR