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OO RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHBK #0529/01 0621009
ZNR UUUUU ZZH
O 031009Z MAR 09
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6248
INFO RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHINGTON DC IMMEDIATE
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RUEHCHI/AMCONSUL CHIANG MAI IMMEDIATE 6264
RUEAIIA/CIA WASHINGTON DC IMMEDIATE

UNCLAS SECTION 01 OF 05 BANGKOK 000529 
 
STATE FOR EAP/MLS, EEB/TPP/IPE 
STATE PASS TO USTR FOR GROVES, BAE, WEISEL AND BISBEE 
TREASURY FOR SCHUN AND MNUGENT 
COMMERCE FOR EAP/MAC/OKSA 
COMMERCE PASS TO USPTO 
SINGAPORE FOR FINATT BAKER 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:N/A 
TAGS: ECON ETRD KIPR TH
SUBJECT: SPECIAL 301 FOR THAILAND: PRIORITY WATCH LIST WITH 
OUT-OF-CYCLE REVIEW LATER IN YEAR 
 
REF: A. BANGKOK 379 (RIGHT MOVES ON IPR) 
¶B. STATE 8410 (SPECIAL 301 PROCESS) 
¶C. BANGKOK 173 (NEW PM TACKLES ECONOMIC CHALLENGES) 
¶D. 08 BANGKOK 3774 (NEW COMMERCE MINISTER) 
¶E. 08 BANGKOK 3757 (NEW FOREIGN MINISTER) 
¶F. 08 BANGKOK 3746 (NEW ECONOMIC TEAM) 
¶G. 08 CHIANG MAI 86 (PIRATED GOODS IN NORTHERN MARKETS) 
¶H. 08 BANGKOK 1475 (TOP IPR COP TRANSFERRED) 
¶I. 08 BANGKOK 1282 (REACTION TO PWL DECISION) 
 
BANGKOK 00000529  001.2 OF 005 
 
 
¶1. (SBU) Summary: Political turmoil throughout 2008 effectively 
prevented any significant policy shifts in respect for intellectual 
property rights (IPR).  On the enforcement level, government efforts 
continued as they have in recent years with thousands of low-level 
raids and arrests, lackluster actions by the IPR courts, and limited 
anti-piracy campaigns that proved largely ineffectual in creating 
meaningful protections for rights-holders.  Thailand remained a 
major source of and destination for pirated movies, music, software, 
and books, counterfeit drugs, apparel, and other counterfeit 
merchandise.  Piracy and theft of IPR was not limited to foreign 
rights holders.  Local rights holders were seriously affected as 
well. The local motion picture and music industries, for example, 
have faced cutbacks and company closures which if not fully 
attributable to IPR piracy, certainly have not been helped by it. 
 
¶2. (SBU) The new government that came into power at the end of 2008, 
however, has significantly raised the profile of IPR protection and 
followed up with credible enforcement action.  Prime Minister 
Abhisit Vejjajiva has organized a national IPR committee which he 
chairs himself, and has directed his Cabinet to do whatever it takes 
to improve Thailand's IPR record.  Prime Minister Abhisit and other 
top government leaders have gone to great lengths to promote an 
improved investment climate to boost the economy and have publicly 
pledged to make IPR enforcement a key part of that effort.  The 
top-down mandates have resulted in increased police raids, including 
several that resulted in the arrest of some "big fish" IPR 
offenders, and actions against police suspected of corruption.  End 
Summary. 
 
¶3. (SBU) Comment and Recommendation: There have been times in the 
past when Thai governments, for various reasons, have pumped-up IPR 
enforcement temporarily, only to have it wane.  Nevertheless, we 
would like to take advantage of the Special 301 process to encourage 
the current positive momentum to the extent we can.  Taking the past 
year as a whole, there has not been sufficient change to warrant 
taking Thailand off the Priority Watch List (PWL), and that is where 
we recommend that it remain after this year's review.   We further 
recommend that the U.S. Trade Representative and the interagency 
Special 301 committee grant Thailand an out-of-cycle review (OCR) in 
six months to provide the new government the opportunity to show 
that it is committed to a sustained, significant improvement in the 
protection of IPR.  End Comment and Recommendation. 
 
Enforcement efforts remain inadequate 
------------------------------------- 
 
¶4. (SBU) Overall, inadequate enforcement remains the Achilles heel 
of IPR protection in Thailand.  Rights holders have decried 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 employee.  For 
most pirate operators, absorbing the occasional raid is simply a 
cost of doing business and has little impact on the bottom line. 
Rights holders also complain that a substantial amount of pirate and 
counterfeit product disappears from the scene of raids and that 
police permit low-level employees to be prosecuted in place of their 
bosses.  These patterns seemed to be broken, however, in a 
widely-publicized raid after the new government came to power.  In 
 
BANGKOK 00000529  002.2 OF 005 
 
 
that operation, a large-scale illegal DVD production facility was 
taken down.  A special police team confiscated lists of customers 
and accounting records and arrested company officials and others who 
attempted to bribe the police to dispense with the raid.  The local 
police chief was also suspended pending an investigation of his 
relationship to the pirating operation. The Deputy Police 
Commissioner later told 50 senior police officers that, unlike in 
the past, this IPR piracy suppression campaign would be continuous, 
without an end date.  Later, the co-chair of the national IPR 
committee announced a list of 41 police officers, whom Commerce 
Ministry IPR staff believe are corrupt, and forwarded the list to 
the police internal investigation division.  He promised that this 
will not be the last. 
 
¶5. (SBU) The Department of Intellectual Property (DIP) released 
statistics in February 2009 showing seizures of 4.5 million 
infringing goods and 5,849 arrests of IPR offenders in 2008.  While 
the numbers may seem impressive, rights holders say they have 
generally struggled to get police cooperation for larger, higher 
value raids and to obtain timely search warrants from the courts, 
and are therefore relegated to carrying out smaller raids on retail 
areas. These thousands of small raids have done little to dismantle 
pirate networks and may have a perverse effect of frustrating the 
IP/IT Court by the high volume of small cases. 
 
¶6. (SBU) The Royal Thai Police's Economic and Cyber-Crime Crime 
Division (dubbed ECD now, but formerly known as ECOTEC) continues to 
be the lead police agency investigating IPR violations.  Most 
investigations are still conducted primarily by rights holders, who 
hand over complete sets of evidence to ECD or the Department of 
Special Investigations to conduct a raid.  Police are generally 
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 the expenses, making it 
cost-prohibitive to venture too far from Bangkok.  Rights holders 
report they have been pleased by the even-keeled approach of the new 
commander of ECD, Police Major General Kowit Vongrungrot, who took 
over in May 2008. 
 
¶7. (SBU) The Department of Special Investigations' (DSI's) IPR 
enforcement efforts remained low in 2008.  Weighing many competing 
priorities, DSI continued to focus on political corruption cases and 
provided few resources to IPR enforcement.  In Post's most recent 
discussions with DSI management, DSI complained that U.S. companies 
rarely dedicate enforcement resources in Thailand, and that DSI 
prefers not to work with the lawyers and raid teams who serve as 
their proxies.  Post pledged assistance in identifying appropriate 
U.S. contacts, but most rights holders manage their IP enforcement 
either regionally or globally. 
 
¶8. (SBU) Thai Customs continues to cooperate well with rights 
holders on enforcement and takes ex officio action to seize 
shipments of pirated and counterfeit merchandise.  From January 
through November 2008, DIP reported 521 Customs cases with 1,299,024 
items seized.  This represents an 18 percent drop in the number of 
cases from 2007.  The bulk of seizures are from imported shipments. 
Customs sometimes inspects exports, but typically opens containers 
being exported only if the shipment is highly suspicious.  Customs 
officials do not have authority to inspect transshipments or goods 
in transit, but legislation has been proposed to grant that 
authority.  Even if Customs were to have such authority, the expense 
and time involved in inspecting containers that remain on-board 
ships make it unlikely for this legislation to have any meaningful 
effect. 
 
¶9. (SBU) Thai IP authorities have initiated anti-piracy campaigns 
directed at textbook copying and IPR theft in general.  These 
efforts have included the distribution of signs, lapel buttons and 
stickers.  In a media event at the airport, DIP officials 
highlighted new signs which warned tourists against taking pirated 
goods back to their home countries.  (Unfortunately, the signs are 
only visible to tourists on departure, not on arrival.)  Thai IPR 
authorities have also labeled certain areas of Bangkok and other 
parts of Thailand as "red zones" where infringing product is most 
 
BANGKOK 00000529  003.2 OF 005 
 
 
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.  These are well-known 
markets, but even since their listing as hot spots, there has yet to 
be a long-term effort to rid them of piracy and counterfeiting. 
Moreover, no one has been able to find suitable legal basis in 
Thailand to penalize landlords for tenants conducting infringement 
activities, so there is little incentive for landlords in the red 
zones to cooperate in terminating the leases of infringing tenants. 
 
Court Actions Stagnant 
---------------------- 
 
¶10. (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.  For 
their part, judges have said that police 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.  DIP reported that there were a total 
of 4979 criminal IP cases before the court in 2008, and 15 
defendants received prison sentences (Note: We have been unable to 
determine whether those sentences were actually served).  Judges 
also note that some defendants end up serving time when they cannot 
afford to pay the fines levied by the court. 
 
¶11. (SBU) Over the past three years, the court has reportedly become 
more reluctant to issue search warrants.  According to industry 
sources, judges will refuse requests on any number of bases having 
little to do with the quality of the evidence before them.  The 
software industry has particular difficulty pursuing warrants for 
end-user piracy cases.  The court complains that many right holders 
settle cases out of court and 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 
conduct raids in cooperation with police, but rather than making 
seizures and arrests, raid teams 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, software, and 
motion picture companies have long pledged not to settle retail hard 
goods piracy cases and push for criminal sentences in all cases.)  A 
new chief judge is reportedly considering guidelines on the court's 
standards for issuing warrants. 
 
Legal Improvements Pending 
-------------------------- 
 
¶12. (SBU) Thailand implemented its obligations under the WTO TRIPs 
Agreement but has not moved further to modernize its laws to keep 
pace with technological or international developments. Thailand 
remains 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 took 
preliminary steps to join the Paris Convention and Patent 
Cooperation Treaty, but the process stalled.  The Thai government 
has not moved forward to implement the Madrid Protocol on trademarks 
but will need to do so as a part of its ASEAN Economic Blueprint 
commitments.  Thailand has also not taken the necessary actions to 
join the WIPO Copyright and Performances and Phonograms Treaties, 
but the new government has yet to address the subject. 
 
¶13. (SBU) In early 2008, Thailand considered various pieces of 
 
BANGKOK 00000529  004.2 OF 005 
 
 
legislation that would amend its patent, trademark, copyright, 
broadcasting and IP border enforcement laws. None of these saw the 
light of day amid the ensuing political turmoil. For U.S. industry, 
the most important legislative drafts are copyright amendments to 
implement provisions of the WIPO Copyright Treaties.  However, the 
Department of Intellectual Property has not made these amendments a 
priority and has instead proposed another set of copyright 
amendments that call for the creation of a mandatory collective 
management system and the elimination of minimum penalties for 
copyright infringements. 
 
¶14. (SBU) In the patent area, Thailand's laws do not prevent a 
generic manufacturer from relying on innovator data as the basis for 
its drug or agricultural chemical regulatory approval. There is not 
a formal system to deny regulatory approval to generic producers 
while pharmaceutical originals are still under patent.  Because the 
IP Court rarely issues preliminary injunctions, even patent owners 
who succeed in costly litigation often find themselves unable to 
reestablish their market position against the infringing generic 
producer.  Thailand's handling of conflicting trademarks and 
geographical indications (GIs) is also problematic, with GIs being 
given greater weight. 
 
¶15. (SBU) Although motion picture studios and cinemas have been 
vocal in fighting a potential film quota under the 2007 Film Act, 
the RTG has yet to make legislative changes necessary to allay 
industry's fears.   Similarly, although the cable industry has 
demonstrated to the RTG that the 2007 Broadcast Act was a missed 
opportunity to ensure that cable pirates lost their broadcast 
licenses, over the past year Thai authorities have not been open to 
the idea of amending the act.  The motion picture industry has 
lobbied heavily for a law to prohibit the camcording of motion 
pictures, largely because of evidence of a sharp rise in camcording 
in Thailand.  The Thai government has rebuffed industry's concerns 
and claimed that the current copyright law is sufficient to deal 
with the problem. 
 
Compulsory licenses still in place 
---------------------------------- 
 
¶16. (SBU) Thailand issued compulsory licenses (CLs) in late 2006, 
early 2007, and early 2008, breaking the patents on seven 
pharmaceutical products registered in Thailand.  No new licenses 
have been issued by the past three governments. 
 
¶17. (SBU) The Thai health authorities who issued the licenses 
claimed authority under WTO rules, but pharmaceutical industry 
representatives complained of a lack of transparency in the 
government's decision making process and an unwillingness to engage 
in good-faith negotiations before issuing the licenses.  Rights 
holders also saw the 2008 expansion of the compulsory licensing to 
cancer drugs as evidence that the government then was using CLs as a 
solution for budget problems rather than focusing on access for poor 
patients.  Over the past year, government officials have sought to 
distribute products under all but one of the CLs, and Post believes 
that products have been distributed under five out of the seven 
licenses.  The two remaining products have not been imported because 
the patent owner provides one of them free to any Thai patient upon 
request, and the other is not available in generic form. 
 
¶18. (SBU) The new Prime Minister has made a number of statements to 
the foreign industry that pharmaceutical companies view as positive, 
including that Thailand should not sacrifice long term healthcare 
access for short term solutions and that his government is committed 
to full consultation in advance of any action. The Foreign Minister 
has gone further, telling a large group of visiting U.S. business 
executives that this government will not issue any new CLs. 
 
¶19. (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 counterfeit erectile dysfunction 
drugs are widely sold in certain tourist-oriented locations, but 
this is only a small part of the problem.  More troubling is a range 
 
BANGKOK 00000529  005.2 OF 005 
 
 
of counterfeit medicines meant for diseases endemic in developing 
countries, such as infectious hepatitis and malaria.  The RTG is 
ill-equipped to work through the chain of sellers and suppliers of 
fake drugs.  On February 14, 2008, DIP signed an MOU with industry, 
the police, DSI, and Customs, to increase efforts to combat 
counterfeit pharmaceuticals. Noticeably absent from the signing 
ceremony was the Food and Drug Administration (FDA), which has 
enforcement authority over pharmacies.  DIP had reported that FDA 
would later join the MOU, but there has been no progress as of this 
report. 
 
Internet piracy a looming threat 
-------------------------------- 
 
¶20. (SBU) In 2008, movie and music representatives remarked on the 
growing threat of internet-based piracy in Thailand.  Thailand's 
telecommunications environment is slowly being upgraded and 
increased bandwidth and access will likely result in increased 
internet piracy.  The sharp rise in movie camcording in 2008 is a 
potential indicator of this increasing threat; every Thai language 
film screened in 2008 was camcorded and posted on the Internet 
within the first week of its release. Although Internet service 
providers say they act on rights holders complaints and take down 
infringing sites upon request, such cooperation is voluntary and 
often depends on personal relationships.  Trademark rights holders 
believe 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.  The new government under Prime Minister Abhisit recently 
conducted the first major internet piracy and counterfeiting 
operation against an online retailer selling counterfeit goods. 
 
JOHN