VZCZCXRO0641
OO RUEHHM
DE RUEHHI #0602/01 1430857
ZNR UUUUU ZZH
O 220857Z MAY 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7871
INFO RUEHBK/AMEMBASSY BANGKOK PRIORITY 6356
RUEHHM/AMCONSUL HO CHI MINH 4752
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 03 HANOI 000602 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS AND EEB/TPP/IPE JURBAN 
STATE ALSO PASS USTR JCHOE-GROVES, DBISBEE AND RBAE 
STATE ALSO PASS USPTO FOR JCHAMBERS 
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: KIPR ECON ETRD VM
SUBJECT: AMBASSADOR'S ROUNDTABLE IDENTIFIES KEY CHALLENGES TO 
PROTECTING IPR IN VIETNAM 
 
 
¶1. (U) Summary: The Ambassador hosted a May 16 roundtable discussion 
on intellectual property rights (IPR) in Vietnam with more than 40 
U.S. business community representatives.  Participants discussed the 
ongoing challenges of weak enforcement of Vietnam's laws; low, 
non-deterrent penalty levels; a lack of expertise throughout the 
ranks of Vietnamese authorities; poor coordination among the various 
agencies responsible for IPR protection; and low levels of public 
IPR awareness.  Additionally, attendees highlighted emerging issues 
such as internet domain name registration, online piracy and the 
creation of a new IP assessment body which could complicate right 
holders' efforts to pursue administrative remedies.  While 
recognizing recent progress in Vietnam's IP regime, businesses 
suggested greater coordination of public and private sector capacity 
building efforts, increased focus on framing the argument for 
stronger IP protection and enforcement when engaging the government 
and local partners, and enhanced efforts to increase market access 
for U.S. cultural goods.  End summary. 
 
¶2. (U) On May 16, the Ambassador was joined by U.S. Patent and 
Trademark Office (USPTO) Regional IP Attache Jennie Ness, and 
economic and commercial officers from Hanoi and Ho Chi Minh City to 
lead a discussion with the U.S. business community on IPR protection 
and enforcement in Vietnam.  The Ambassador outlined current USG 
efforts to improve IPR protection in Vietnam including bilateral 
engagement through our regular trade dialogue, capacity building and 
training efforts in Vietnam and the United States, and public 
outreach programs.  The Ambassador encouraged a frank and open 
discussion of current issues that business are facing and sought 
ideas on how right holders and the U.S. Government can better 
coordinate efforts to improve the IP environment in Vietnam. 
 
LEGAL ISSUES 
------------ 
 
¶3. (SBU) Vietnam has improved its IP legal regime over the past 
several years, however, roundtable participants highlighted two key 
areas where Vietnam's legal system requires additional work in the 
immediate future to comply with World Trade Organization (WTO) Trade 
Related Aspects of Intellectual Property Rights (TRIPs) 
requirements.  The first is the provision of criminal remedies for 
commercial scale IP violations and the second is the adequate 
protection of data submitted as part of registration dossiers for 
pharmaceutical and chemical products.  Microsoft's Senior Director 
for Legal and Corporate Affairs for Southeast Asia Antony Cook noted 
that as the Government of Vietnam (GVN) works to revise its Criminal 
Code in 2008, stakeholders must engage the drafters to ensure that 
Vietnam translates its commitments on criminalization of commercial 
scale violations into a workable process.  Noting that the current 
data protection system Vietnam has put in place is onerous and 
ineffective, Merck's Vietnam Country Manager revealed that the 
pharmaceutical industry is planning to deliver critical capacity 
building and technical expertise on this issue. 
 
ENFORCEMENT REMAINS WEAK; PENALTIES TOO LOW 
------------------------------------- 
 
¶4. (U) U.S. businesses delivered the consistent message that 
enforcement of Vietnam's laws continues to be a significant 
challenge.  A legal expert who has worked in Vietnam for more than 
seven years commented, "the issue is not the laws, but how the 
relevant officials use them; the laws must be applied uniformly, and 
that simply is not happening here yet."  Another expert pointed to a 
trademark case he filed on behalf of a client in 2001, which is 
still pending a decision from the National Office of Intellectual 
Property (NOIP).  He bemoaned the fact that relevant authorities 
lack a key point person to understand and implement the laws, and 
opined that a dearth of knowledgeable and reliable officials is 
perhaps the single biggest weakness in Vietnam's IP regime. 
 
¶5. (SBU) Aside from enforcement of the laws, U.S. companies 
identified the size of penalties for infringement as the single 
largest hindrance to effective protection of IPR in Vietnam.  Over 
90 percent of remedies in Vietnam are handled via the administrative 
system, which currently has a maximum fine of VND 100 million 
($7,000).  Microsoft's Cook emphasized that violators simply factor 
this in as "a cost of doing business" which is far too low to deter 
them from repeat violations.  For example, Microsoft recently worked 
with the Ministry of Science and Technology Inspectorate and the 
Hanoi Police to conduct end-user hardware raids on two shops in 
 
HANOI 00000602  002 OF 003 
 
 
Hanoi.  The authorities seized a total of 63 counterfeit units 
valued at roughly USD 60,000.  The police were limited to fining the 
violators the maximum amount of $7,000 - or less than 12 percent of 
the infringed goods.  Tom Treutler, a lawyer with the firm Tilleke 
and Gibbins announced that on May 5, the GVN passed an amendment to 
its Ordinance on Administrative Penalties raising the maximum fine 
to VND 500 million ($35,000), although it remains unclear whether 
enforcement authorities will utilize these increased penalties. 
 
¶6. (U) AmCham Hanoi's Information Technology, Telecommunications and 
Intellectual Property (ITTI) Committee Chairman Michael Mudd urged 
the U.S. business community to encourage Vietnam to create a 
specialized IP Court, as countries in the region (most recently, 
Malaysia) have done.  A cadre of well-trained judges and prosecutors 
will be necessary for right holders to pursue civil and criminal 
remedies to protect their intellectual property, he continued. 
 
STRUCTURAL ISSUES 
----------------- 
 
¶7. (U) Vietnam has no fewer than six agencies responsible for 
enforcing intellectual property - creating significant overlap and 
opportunities for gaps in protection.  U.S. business representatives 
noted that the diffusion of enforcement authority creates "turf 
wars" which make inter-ministerial cooperation cumbersome, if not 
impossible.  For example, Microsoft has worked with its GVN 
counterparts to request clarity from the Prime Minister on which 
agency has responsibility for the management of software copyrights 
- the Ministry of Information and Communications or the Copyright 
Office of Vietnam.  Current regulations give this authority to both 
agencies, making it difficult for companies, and the agencies 
themselves, to know who has the authority to manage specific 
software copyright issues.  U.S. pharmaceutical representatives 
commented that data protection will require the buy in from 
officials in the Ministry of Health's Drug Administration and NOIP, 
but it is difficult to get the two agencies to sit down together to 
discuss the issue or to deliver technical assistance jointly.  A 
representative from Eli Lilly opined that in order to overcome this 
"alphabet soup" of enforcement bodies, Vietnam should create 
inter-ministerial task forces to improve coordination, much as the 
United States has done to fight drugs and terrorism. 
 
¶8. (U) An emerging issue which may further complicate efforts to 
protect intellectual property is the creation of a new agency - 
known locally as an IP Assessment body - to provide expert guidance 
on whether suspected goods are infringing.  Many administrative 
enforcement officials are unwilling to take action without the 
backing of an expert opinion - which the NOIP (or provincial 
Departments of Science and Technology) used to provide.  Under the 
2005 IP Law, however, that function is now being "outsourced" to a 
quasi-independent assessment body.  An IPR legal expert involved 
with the STAR Vietnam project cautioned that right holders should 
watch this development carefully, as it presents potential problems 
- i.e., who will staff the new body, how much will it cost right 
holders, and will it be impartial, among others. 
 
CORRUPTION ALSO A PROBLEM 
------------------------- 
 
¶9. (SBU) In a panel discussion on enforcement challenges, one 
participant noted that corruption "is a systemic issue which 
inhibits IP enforcement in Vietnam."  Many enforcement agents expect 
payments from right holders to protect their intellectual property, 
he continued.  Target selection is also an issue - while often 
willing to go after foreign-owned companies suspected of trademark 
or copyright violations, authorities are much more reluctant to go 
after smaller, local companies. 
 
INCREASED MARKET ACCESS CRITICAL FOR U.S. CULTURAL PRODUCTS 
--------------------------------------------- 
 
¶10. (U) TimeWarner's Director for International Relations and Public 
Policy for the Asia Pacific Region Alvin Lee commented that there is 
a fundamental lack of understanding among GVN officials of the 
creative process and why it must be protected.  Lee said that many 
U.S. entertainment companies are interested and willing to invest in 
Vietnam's market, but are restricted from doing so by Vietnamese 
laws.  Without the ability to develop a "real and sustained business 
presence in Vietnam, foreign cultural IP right holders lack the 
 
HANOI 00000602  003 OF 003 
 
 
first-mover advantage" when it comes to protecting their property, 
he continued.  Market access will become even more important as more 
Vietnamese connect to the internet and online piracy of U.S. music, 
movies and other products becomes a more prevalent challenge. 
 
CHANGING MINDSETS 
----------------- 
 
¶11. (SBU) Following on the discussion of cultural products, one 
participant raised the question of whether Vietnam's weak 
enforcement of IP rights is a lack of capacity or a lack of will. 
He distinguished between GVN willingness to punish makers of 
suspected counterfeit goods with a potentially harmful impact on 
human health and its lax treatment of entertainment products (CDs, 
DVDs, etc.), infringement of which is purely an economic issue.  The 
Business Software Alliance's Vietnam representative agreed, adding 
that right holders must also overcome the conceptual hurdle that 
many in the GVN do not see the need to protect strong and prosperous 
companies at the expense of smaller, local firms.  The 
representative from Merck interjected that these issues underscore 
why it is important for U.S. firms to craft carefully the message 
that they deliver to the GVN.  She suggested that firms point to the 
negative effect that Vietnam's deficient IPR regime has on 
companies' investment decisions, as well as highlight the benefits 
of a strong IP regime in developing a local market. 
 
GOING FORWARD 
------------- 
 
¶12. (U) At the conclusion of his remarks, the Ambassador expressed 
the hope that this would be the first in a more regular series of 
discussions between the Mission and the business community on how to 
better coordinate efforts to protect and enforce IPR in Vietnam. 
This suggestion was received warmly by the business community, with 
participants calling for more regular dialogue among businesses and 
between the business community and the USG (and other governments) 
to avoid repetition and maximize resources.  Tilleke and Gibbins' 
Tom Treutler noted that Vietnam is currently revising its criminal 
code, planning to develop an Optical Disc Law, and intends to revise 
its IP Law in 2010 - all opportunities for the U.S. business 
community and the USG to engage the GVN to ensure that the legal 
regime here addresses key U.S. concerns and meets Vietnam's TRIPs 
obligations. 
 
SIGNIFICANT PRESS COVERAGE 
-------------------------- 
 
¶13. (U) Journalists were invited to attend the Ambassador's opening 
remarks, and the Embassy issued a press release highlighting the key 
themes of the roundtable.  The resulting press coverage included 
articles in Vietnam Investment Review, Vietnam Financial Times, 
Vietnam Economic Times, Law Newspaper (Phap Luat), Youth Newspaper 
(Thanh Nien), Laborer (Nguoi Lao Dong) and the Vietnam-U.S. 
Magazine.  The articles picked up on the core message that Vietnam 
must do more to protect IPR, particularly in the area of 
enforcement, and that the U.S. Government and private sector will 
continue to engage closely with the GVN to improve the IPR 
environment. 
 
MICHALAK