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RR RUEHWEB

DE RUEHLB #0239/01 0581632
ZNR UUUUU ZZH
R 271632Z FEB 09
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 4323
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RHEHAAA/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS BEIRUT 000239 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR NEA/ELA, 
STATE PASS USTR FRANCESCKI/ GRYNIEWICZ 
STATE PASS USAID BEVER/LAUDATO/SCOTT 
TREASURY FOR PARODI/BLEIWEISS/CORREA 
USDOC FOR 4520/ITA/MAC/ONE 
NSC FOR MCDERMOTT 
 
E.O. 12958: N/A 
TAGS: ECON EFIN KIPR PGOV LE
SUBJECT: LEBANON: 2009 SPECIAL 301 REVIEW 
 
REF: BEIRUT 99 
 
SUMMARY 
------- 
 
¶1. (SBU) In 2008, political and security instability in Lebanon 
continued to stand in the way of the ratification of pending 
IPR-related legislation.  Most of Lebanon's IP legislation is 
TRIPS-compliant, with the exception of what relates to 
pharmaceuticals and undisclosed information.  However, a new decree 
by the Ministry of Public Health (MOPH) is expected to prevent 
copycat drugs from being approved and prohibit parallel imports. 
 
¶2. (SBU) The private sector continued to recognize the efforts of 
the Lebanese Internal Security Force's Cyber Crime and IP Unit in 
enforcing IPR.  Customs, which controls the ports of entry, still 
needs training and resources to improve its enforcement 
capabilities.  Cable TV operators that operated illegally have 
started paying for the rights to broadcast and distribute television 
content.  Meanwhile, judges and lawyers have expressed mixed 
opinions on the capability of Lebanon's judiciary in enforcing IPR. 
They believe that the number of IPR cases filed in Lebanon per year 
justify the establishment of specialized IPR courts. 
 
¶3. (SBU) Post recommends that Lebanon remain on the 301 Watch list. 
Although progress to enhance IPR enforcement continues to be slow, 
Lebanon has witnessed progress in areas such as cable piracy and 
pharmaceutical data protection, despite political and security 
instability.  Parliamentary elections are scheduled for June 7.  The 
focus of the political class on the elections, and time spent 
campaigning, will make it difficult for the GOL to mobilize the 
necessary political will to enhance IPR protection and enforcement. 
End Summary. 
 
OVERALL ASSESSMENT 
OF IP CLIMATE 
------------------ 
 
¶4. (SBU) In 2008 Lebanon was upgraded to Watch List from Priority 
Watch List in the Special 301 Review.  New laws and amendments are 
still awaiting ratification.  Parliament reopened in May 2008 after 
it had been kept closed for 18 months during a political impasse. 
Copyright infringements continue to be a problem.  Piracy-related 
losses in Lebanese copyright-based industries were valued at $31 
million in 2008, compared to $26.8 million in 2007, according to the 
International Intellectual Property Alliance (IIPA).  However, there 
was some progress in the area of data protection of pharmaceuticals 
and the prohibition of parallel imports, as well as IPR enforcement 
by the police.  Although cable piracy remains a major challenge, 
illegal operators have begun paying for the rights to broadcast and 
distribute content, and the police have improved enforcement. 
Customs remains in need of greater resources and training to better 
enforce IPR.  Although the GOL has grown increasingly aware of the 
importance of IPR, increased focus on the upcoming June 7 
parliamentary elections likely will distract political leaders and 
prevent progress towards implementing policies to enhance IPR 
protection. 
 
¶5. (U) a number of IPR awareness campaigns took place to educate the 
public on the importance of IP protection in 2008.  In February, the 
Ministry of Economy and Trade (MOET) launched a three-month 
campaign, funded by USAID and the American Lebanese Chamber of 
Commerce, advertising the importance of protecting IP.  In August, 
the Ministry of Public Health (MOPH) launched a campaign to combat 
counterfeit drugs.  Also, the locally-based Brand Protection Group 
(BPG - an NGO grouping over 20 leading local and international 
companies aimed at raising awareness on counterfeits) re-launched 
its awareness campaign. 
 
¶6. (U) In December 2008, the Ministry of Education (MOE) announced 
that IPR would be the theme for its 2009 School Net Project. (Note: 
The School Net Project is a MOE scheme, initiated in 2002, that 
seeks to connect all private and public schools and libraries in a 
single network to facilitate teaching and learning.  End note.)  The 
initiative -- which will teach students about the consequences of 
IPR violation by Lebanese consumers and businesses -- is being 
implemented in partnership with Microsoft Lebanon, the Educational 
Association for IT Development (EAID), and the International 
Education Association (IEA) - Lebanon. 
TRIPS IMPLEMENTATION 
-------------------- 
 
¶7. (SBU) Lebanon, an original member of the GATT, has been working 
towards WTO accession since 1999, and support for accession is 
widespread among the business community.  Progress on accession 
continues, as the sixth working party meeting took place February 
27, 2009. 
 
¶8. (SBU) In its current form, Lebanese IPR legislation is generally 
adequate for WTO accession and TRIPS compliant, according to various 
experts we have consulted.  Three new IPR laws -- on trademarks, 
geographical indications, and industrial design -- currently 
awaiting parliamentary approval are merely improvements and 
clarifications to existing laws, not requirements to fill gaps in 
current legislation, according to  the head of the MEPI-funded Booz 
Allen Hamilton WTO Accession Project at the Ministry of Economy and 
Trade (MOET), Zouha Sakr.  Draft amendments to the copyright law, 
which Sakr says are only minor changes, are also awaiting 
parliamentary approval. 
 
¶9. (U) Other IPR-related treaties that have been approved by cabinet 
and await parliamentary approval (most since 2007)  include the 
Paris Convention for the protection of industrial property; Madrid 
Agreement on false or deceptive indications of source on goods; 
Berne convention for the protection of literary and artistic works; 
Singapore trademark treaty; Nice Agreement on the international 
classification of goods and services for the registration of marks; 
Patent Cooperation Treaty and the Madrid Protocol on the 
registration of marks. 
 
DATA PROTECTION 
--------------- 
 
¶10. (SBU) Legislative reform mainly related to dealing with trade 
secrets and undisclosed information, or UI, is still necessary to 
bring about Lebanon's full compliance with TRIPS standards.  Current 
UI provisions in the patent law as they apply to drug registration 
are ambiguous.  According to members of the Pharmaceutical Research 
and Manufacturers of America (PhRMA), this has lead the Ministry of 
Public Health (MOPH) to consider as UI summaries of UI or other 
publicly available information in the registration process of drugs, 
leading to the registration of a number of copycat drugs.  The 
fastest way to deal with this problem would be to amend the UI 
portion of the existing patent law.  However, the MOPH is pushing 
for clarifications on UI to be included in a new unfair competition 
law that is still in the drafting stages.  The MOPH is currently 
waiting for comments from the WHO on the issue of UI.  Passing a new 
law would require cabinet and parliamentary approval, as well as an 
implementation decree (which can take years, even after a law passes 
parliament) before any of the law can take effect.  Private and 
public sector contacts have told us that the Minister of Health and 
pesons close to him may have been delaying reform inthis area, 
claiming they favor the ambiguity regarding UI in the current patent 
law. 
 
¶11. (SBU) Nevertheless, the process of drug registration is expected 
to improve, according to Director General of the Ministry of Public 
Health (MOPH) Walid Ammar, with recent approval of Decree No. 571, 
on the conditions of registering, importing, marketing, and 
classifying pharmaceuticals.  Although the decree still leaves some 
room for interpretation of what is or is not UI, it theoretically 
could stop drugs with incomplete data from being registered.  The 
decree also prohibits (beginning in April 2009) parallel imports (or 
importing of goods that are produced genuinely under IP protection, 
but imported from a market without the authorization of the holder 
of the IP right), which had been allowed in Lebanon since 2002. 
Meanwhile, generic drugs are often registered in Lebanon and allowed 
in the market, with patents still pending, if they comply with 
Lebanese standards. 
 
ENFORCEMENT 
----------- 
 
¶12. (SBU) The Internal Security Force's (ISF) Cyber Crime and IP 
Unit were established in 2006 under the Judicial Police branch.  In 
2008, the unit's staff increased from 33 to 43.  The local NGO 
Lebanese Intellectual Property Association (LIPA), with a $143,000 
Department of State International Narcotics and Law Enforcement 
(INL) grant, is currently working on training and providing 
 
equipment for the unit.  The head of the unit, Major Elie Bitar, 
noted that there is increased public awareness of the unit's 
existence, and complaints have doubled in the past year.  In 2008, 
46 people were arrested for IP crimes, compared to 39 arrested for 
both IP and cyber crimes combined in 2007.  Private and public 
sector contacts have expressed their general satisfaction with the 
ISF's efforts against IP infringers, given the unit's limited 
resources and the general political and security situation in the 
country.  According to the unit, 100,000 pirated CDs/DVDs were 
seized in 2008, as well as 9000 books, 3500 pharmaceuticals, 3000 
bottles of alcohol, 8000 cosmetics, 40 channel receivers, and three 
automatic industrial machines used to seal bottles of alcohol. 
 
¶13. (SBU) Most IP infringing material is smuggled in or imported 
through the legitimate points of entry -- airport, seaport and land 
border.  Seizure of counterfeit goods by customs officials takes 
place following a request from the respective right holders. 
According to Senior Customs Officer Colonel Walid Habra, counterfeit 
goods such as clothing, designer bags and leather items, shoes, and 
pharmaceuticals enter via the port, whereas smalleritems such as 
watches are more easily smuggled trough the airport.  All these 
goods, most of which come from China, enter Lebanon using false 
declarations -- taking advantage of Customs' lack of sufficient 
scanners and manpower to search all containers at the port -- and 
the "nothing to declare" lane at the airport. 
 
¶14. (SBU) As for goods entering via the land border with Syria, 
their easy passage is facilitated by the fact that they are given 
less scrutiny because they are labeled as Syrian goods,  regardless 
of their initial country of origin, and because of the low duties 
imposed on Syrian goods entering Lebanon.  These include counterfeit 
drugs from China and goods from the UAE's Jebel Ali Free Zone, a hub 
for counterfeits from all over Asia, according to Habra.  Habr noted 
that in recent years tobacco counterfeits have decreased 
substantially. 
 
¶15. (SBU) The Ministry of Economy and Trade's (MOET) IP Unit 
enforces IPR by acting upon the request of right holders or ex 
officio.  Out of a staff of 14 full-time employees, there are no 
full-time inspectors, and the IP Unit must call on the assistance of 
the MOET's Consumer Protection inspectors to enforce IP.  Observers 
tell us the IP Unit is understaffed, hurting its effectiveness. 
 
¶16. (SBU)  There are no specialized IPR courses at the Judiciary 
Institute where judges are trained at the beginning of their career, 
but a number of general seminars on IPR are included in the 
curriculum.  According to a senior judge who deals with IP cases, 
around 382 cases were filed in Lebanon, dealing mainly with 
trademark issues, in 2008.  This has led some judges to believe that 
there are enough cases to justify the establishment of specialized 
IPR courts, and believe that such courts would encourage people to 
file cases, as specialized courts would ensure faster settlement. 
Nonetheless, the State Prosecutor of the Cassation Court recently 
disagreed that specialized courts would be justified. 
 
¶17. (SBU) Most IP cases are tried in civil commercial courts, as 
opposed to criminal courts where infringers could be imprisoned. 
Although this leads to less severe punishment for infringers, some 
judges believe that plaintiffs are more concerned with fines (up to 
$33,000) and compensation that they could receive as reparation for 
the crime than they are with punishing infringers.  Still, prominent 
IP Lawyer Walid Nasser notes that in practice, fines are mostly 
symbolic, courts do not usually order the destruction of counterfeit 
goods, and decisions in civil courts take a minimum of two years to 
settle.  This sometimes leads lawyers to file two different 
lawsuits, one in a criminal and another in a civil court.  Nasser 
noted that in 2008, a pharmacist was imprisoned for selling 
counterfeit products in the Bekaa region.  Generally speaking, 
however, when it comes to IP cases, courts are slow, not all judges 
are well versed in IP, and political pressure on judges affects the 
result of some cases, Nasser said. 
 
¶18. (SBU) The issue of cable piracy has always been linked to 
political interests in Lebanon, with government officials reluctant 
to enforce regulations and operators relying on political 
connections to keep them in business.  However, the ISF has told us 
that following a series of lawsuits from major cable TV operators 
(including ART, Orbit, Showtime, MBC, and FTV), 90 percent of the 
estimated 700 local illegal cable providers in Lebanon have started 
paying cable TV operators for the rights to broadcast and distribute 
programs since 2007-2008.  According to Major Bitar, this has led to 
an increase in monthly subscription fees to illegal cable providers. 
 The ISF conducts raids on a daily basis to make sure local cable 
providers are paying their fees and have the necessary equipment for 
legal distribution. 
 
NOTORIOUS MARKETS 
----------------- 
 
¶19. (SBU) The sale and distribution of pirated, counterfeit, and 
copycat products continued to take place across Lebanon in 2008, in 
commercial establishments or by ubiquitous street vendors.  Although 
most of these products are imported from Asia, notorious markets 
include: Beirut's southern suburbs in the Dahiya area, a Hizballah 
stronghold; areas in an around Tripoli in the north; some 
Palestinian refugee camps in Beirut, and the Bekaa border area with 
Syria, which is difficult for law enforcement agents to reach. 
 
INTERNET PIRACY 
--------------- 
 
¶20. (U) The cost of telecommunications in Lebanon is among the 
highest in the world.  In May 2007 the Ministry of 
Telecommunications (MOT) launched ADSL internet services as a way to 
decrease internet piracy, and reduce high dialup fees for internet 
users.  Yet ADSL and wireless internet connection service costs are 
still high compared to the region.  At the time of the launching of 
ADSL, local media estimated that around 30 percent of all internet 
connections went through illegal satellite providers.  According to 
the IIPA, internet piracy was on the rise in 2008 with increased 
internet penetration in Lebanon.  The GOL has not taken any concrete 
action against internet pirates to date. 
 
OPTICAL MEDIA PIRACY 
-------------------- 
 
¶21. (SBU) According to the ISF, pirated CDs and DVDs are either 
produced locally or imported mainly from Asia.  Products are widely 
available in Tripoli, in the surroundings of Palestinian refugee 
camps (especially the Sabra camp in southern Beirut) that are 
off-limits to GOL security authorities, and the Bekaa Valley. 
Counterfeits are widely available in the Hizballah-dominated Dahiya 
area in southern Beirut.  According to Major Bitar, Hizballah 
officials have been cooperating with the police in facilitating 
IPR-related investigations.  However, as the ISF informs Hizballah 
beforehand -- and information may leak while in the process of 
reaching the pertinent Hizballah officials -- this often makes the 
raid less productive. 
 
USE/PROCUREMENT OF 
GOVERNMENT SOFTWARE 
------------------- 
 
¶22. (U) The Office of the Minister for Administrative Reform (OMSAR) 
acts as the central authority for the procurement of government 
software and hardware.  In 2004, the GOL signed an agreement with 
Microsoft to provide 6000 public administration computers with 
licensed Microsoft software at discounted prices.  The three-year 
agreement was recently renewed for an additional three years to 
cover additional government computers and software. 
 
TREATIES 
-------- 
 
¶23. (U) In November 2008, cabinet approved Lebanon's adherence to 
the WIPO Copyright Treaty (WCT) and the WIPO Performances and 
Phonograms Treaty (WPPT) and sent them to parliament, where they 
await ratification. 
 
TRAINING 
-------- 
 
¶24. (SBU) Since 2007, post has sent over 40 judges, prosecutors, and 
members of various ministries to USPTO IPR training programs in the 
U.S. and the region.  Post is currently working on securing INL 
funding for a training program for customs officials at the Lebanese 
Institute of Finance. 
 
POLITICAL CLIMATE 
----------------- 
 
¶25. (SBU) The political climate in Lebanon deteriorated from the 
beginning of the year until May 2008.  In January 2008, riots broke 
out in Beirut's southern suburbs following protests against power 
cuts.  The riots led to the death of seven civilians, with more than 
19 wounded.  On May 7, 2008, opposition fighters led by Hizballah 
blocked the road leading to Beirut International Airport and several 
West Beirut neighborhoods in protest over government decisions.  Air 
traffic was suspended for approximately one week.  During this time, 
clashes erupted between Hizballah and the Sunni and Druze forces. 
Some 84 people were killed and approximately 200 people were wounded 
before political leaders reached a deal on May 21 to end the 
violence and the 18-month political stalemate.  Clashes later in the 
year between Druze and Hizballah fighters across the country and 
between Sunnis and Alawites in the northern part of the country led 
to the deaths of approximately 70 people, with 275 wounded. 
 
¶26. (SBU) Relative political and security stability has prevailed 
since the Doha Agreement of May.  The most important results of this 
were the election of a new president, the end of the 18-month sit-in 
by the opposition in downtown Beirut, and the opening of parliament 
for regular business.  Nonetheless, pending legislation has been 
held up by the opposition speaker of parliament, who has refused to 
accept draft legislation sent by the previous cabinet, which the 
opposition considers unconstitutional.  With parliamentary elections 
approaching in June 2009, it is unclear that IPR-related issues will 
be on the GOL's radar screen before the elections or the appointment 
of a new cabinet, not likely before late-summer. 
 
2009 SPECIAL 301 
RECOMMENDATION 
---------------- 
 
¶27. (SBU) Post recommends that Lebanon remain on the Special 301 
Watch List.  The ISF's slow but steady work to beef up enforcement, 
particularly in cable piracy, as well as the cabinet's attempt to 
improve data protection of pharmaceuticals, demonstrate the GOL's 
progress on IPR in a difficult political environment.  Keeping 
Lebanon on the Watch List will maintain pressure on the GOL to 
mobilize the necessary political will to push for IPR legislation in 
parliament and improve enforcement. 
 
SISON