VZCZCXRO4633
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHKL #0177/01 0690107
ZNR UUUUU ZZH
R 100107Z MAR 09
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC 2441
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEHGV/USMISSION GENEVA 1677

UNCLAS SECTION 01 OF 03 KUALA LUMPUR 000177 
 
SIPDIS 
 
DEPT FOR EB/TPP/IPE: T McGowan AND EAP/MTS: D Bischof 
DEPT PASS USTR FOR B. WEISEL, D. BELL 
USDOC FOR ITA/MAC/OIPR 
USDOC ALSO FOR USPTO 
GENEVA FOR USTR 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KIPR MY
SUBJECT: SPECIAL 301 REVIEW: MALAYSIA 
 
REF: STATE 8410 
 
Summary and Recommendation 
-------------------------- 
 
¶1. In 2008 Malaysian IPR enforcement authorities continued to make 
progress in fighting IPR piracy.  The most promising development of 
the year was the continued progress and expansion of the specialized 
intellectual property courts. The United States and Malaysia 
continued to cooperate closely, in particular through IPR training 
programs and ongoing negotiations on IPR issues within the framework 
of a free trade agreement.  The overall piracy rates remain high for 
most types of IP, and the government will need to continue to 
strengthen its enforcement and prosecution efforts, and to seek 
certain legislative changes to strengthen Malaysian authorities. 
 
¶2. Recommendation: The Malaysian Government's record in 2008 showed 
a commitment to strengthening IPR protection with improvements in 
training, prosecution, and IPR courts.  Continued training and 
negotiations either in the context of the U.S. - Malaysia Free Trade 
Agreement (FTA) or other forum will provide a way to discuss best 
practices and obtain stronger commitment from GOM especially in 
enforcement issues.  Despite the many positive trends, however, 
industry estimates on current IPR piracy levels indicate that it 
remains a serious problem. Piracy will require sustained government 
attention in many areas for the foreseeable future, and improved 
government attention in some areas that are currently deficient. 
Embassy therefore recommends that Malaysia remain on the Special 301 
Watch List.  End Summary and Recommendation. 
 
Enforcement Slows Down 
---------------------- 
 
¶3. The new Minister of Domestic Trade and Consumer Affairs (MDTCA) 
Shahrir Abdul Samad has instructed the enforcement division to only 
act on the basis of right holder complaints.  Thus, MDTCA officials 
can not proactively conduct raids without a specific request from a 
right holder.  This is contrary to Trade Marks Act of 1976 and 
Copyrights Act of 1987, which allow enforcement officials to act if 
the officer suspects the goods to be counterfeit or infringed.  As a 
result, the number of enforcement actions has reportedly dropped 
down significantly during the tenure of the new Minister.  According 
to industry statistics, the number of cases launched by MDTCA 
dropped from 2,333 raids in 2007 to 668 in 2008.  The official 
number of raids, arrests, and prosecuted cases in 2008 is not 
available from MDTCA at this time, but Post will report septel when 
the statistics are available. 
 
¶4. Besides the IPR enforcement unit of MDTCA, the Royal Malaysian 
Customs (RMC) also has authority to enforce IPR under ex-officio 
capacity under the Trade Marks Act of 1976.  RMC detains goods on 
suspicion of infringing or counterfeit only if the rights holder 
files a complaint with the Register of Trade Marks under MDTCA. 
(NOTE: Since the rights holder seldom would have prior knowledge of 
infringed goods, RMC usually does not get involved with interception 
counterfeit goods at the ports of entry.) 
 
Optical Media 
------------- 
 
¶5. In 2008 Malaysian IPR enforcement officers continued to exert 
some pressure on the producers and exporters of counterfeit optical 
disc media.  While the number of enforcement actions slowed down, 
the IPR courts established in 2007 were able to more effectively 
hear complex cases involving IPR infringement issues. 
 
¶6. Statistics compiled by the industry indicate increase in 
estimated level of piracy in records and music, but no significant 
change in business software.  The estimated piracy level of records 
and music increased from 45 percent to 60 percent, but the business 
software piracy rate was unchanged, at 60 percent. 
 
¶7. MDTCA works with the Business Software Alliance to target 
students, company directors, and employees, and include both 
educational efforts as well as targeted enforcement.  The program 
was launched in 2007 and targets the use of pirated software, with 
focus on business software. 
 
Book Publishing 
--------------- 
 
¶8. The book publishing industry reports that the situation worsened 
in Malaysia in 2008, especially due to commercial, large-scale 
illegal photocopying in and around university campuses.  Reportedly, 
photocopy pirates now also save soft copy scans of books onto 
 
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portable hard drives or computers, and can either transfer the 
illegal copy electronically or print directly from the computer. 
These new technologies can make detection of infringement more 
difficult. 
 
¶9. Illegal copying of text books is widespread especially in Klang 
Valley university campuses, where some lecturers are actively 
involved and sometimes provide sample copies of textbooks to 
infringers.  Pirated books are often delivered by vans directly to 
students.  Some websites also offer scanned copies of books for 
download. 
 
Internet Piracy 
--------------- 
 
¶10. Music piracy from the Internet remains the most significant form 
of Internet piracy in 2008.  Recording Industry Association of 
Malaysia (RIM) has claimed a significant increase in demand for 
digitized music in Malaysia, which has eroded the sales of compact 
discs (including pirated discs).  According to industry statistics, 
legal compact disc sales dropped 20 to 25 percent in 2008.  Much of 
the demand is being met by foreign websites offering free music 
downloads.  Despite industry demands, the Malaysian Communications 
and Multimedia Commission (MCMC), Malaysia's regulatory body for 
telecommunications, has not blocked internet users from accessing 
illegal song download sites. 
 
¶11. Illegal use of gaming software over the Internet and at Internet 
cafes remains a significant problem.  Some of the "business models" 
used by the infringers are becoming more complex and more difficult 
to track down.  For example, the game software may be installed on 
servers off-site, sometimes off-shore, and used in the caf's 
premises or by access codes issued by the infringers. 
 
¶12. Industry is pushing legislation that would address the liability 
of landlords who allow their premises to be used for copyright 
infringement.  RIM has been pushing Malaysian authorities to take 
stronger enforcement action against landlords who allow pirating 
operations at their premises. RIM has also taken direct action 
against such landlords by filing a number of lawsuits seeking 
damages as well as the closure of such operations.  RIM has also 
sent out warnings of imminent lawsuits to hundreds of landlords, 
many of whom have complied with the warning by expelling the 
pirates. 
 
Motion Picture Piracy 
--------------------- 
 
¶13. Malaysian authorities successfully attacked the problem of 
pirate recordings in Malaysian cinemas detecting eight illegal 
recording cases in 2008.  However, camcorder piracy remains a 
significant problem, especially with the proliferation of advanced 
cell phone technology allowing less detectable recording. 
 
¶14. Malaysian authorities currently use existing Malaysian statutes 
to arrest and prosecute those caught recording movies in cinemas. 
However, such arrestees can be charged only with theft, not piracy. 
The Motion Picture Association continues to push for the 
implementation of standalone anti-camcording legislation, both to 
strengthen the authorities' hands (by broadening the scope of 
illegal activity and by increasing fines) as well as to promote the 
problem among the Malaysian public. 
 
¶15. The export of pirated discs, in particular those purchased over 
the Internet, remains a significant problem, although most industry 
sectors report fewer exports of pirated material from Malaysia than 
in previous years (with the one exception being the entertainment 
software industry).  Increased access to broadband Internet may 
contribute this trend reduced exports of physical pirated materials. 
 
 
¶16. Based on the positive publicity from the seizure assisted by two 
sniffer dogs resulting in confiscation of more than 1.6 million 
illegal hidden discs in 2007, MDTCA has decided to establish a 
permanent canine enforcement unit. 
 
Prosecution Improved 
-------------------- 
 
¶17. Special intellectual property courts now operate in Kuala 
Lumpur, Penang, and Johor Bahru.  The first branch was launched in 
Kuala Lumpur in July 2007.  The plan is to expand the IPR courts to 
Malaysia's all 14 states and the administrative capital region of 
Putrajaya.  Six high courts, holding both civil and appellate 
jurisdiction, will be established in Kuala Lumpur, Selangor, Johor, 
 
KUALA LUMP 00000177  003 OF 003 
 
 
Perak, Sabah and Sarawak.  The IP courts are organized to operate 
independently of the rest of the court system, with both judges and 
prosecutors assigned exclusively to the IP courts. 
 
¶18. The industry associations hope that the new courts will increase 
efficiency of the judicial system in processing IPR related cases. 
The MDTCA has also taken steps to build capacity of its enforcement 
officers to handle complex evidence in order to build strong 
criminal cases against IP pirates.  Local industry associations 
continue providing this training, although they report that number 
of training opportunities went down in 2008 due to lack of interest 
from MDTCA. 
 
¶19.  According to industry reports, sixteen prosecutors will be 
permanently assigned to prosecute IPR cases.  The combination of 
special prosecutors and IPR courts should lead to a more effective 
prosecution of infringers.  The combined efforts of investigation 
and prosecution should be targeted to detecting the source of the 
pirated copies and not just raids to the retail sales outlets. 
While retail raids may generate a lot of publicity, the confiscated 
goods often are stolen before they are destroyed, and make their way 
back to the market. 
 
U.S.-Malaysia IPR Cooperation 
----------------------------- 
 
¶20. In 2008 the U.S. government continued close cooperation with the 
Malaysian government to promote increased IPR protection.  23 
Malaysian officials attended USG-funded IP training programs that 
were offered in 2008 by the U.S Patent and Trademark Office (USPTO). 
 Among the programs attended by Malaysian officials were USPTO 
Global Intellectual Property Academy programs on enforcement, 
patents, and trademarks.  Malaysian officials were from MyIPO 
(Malaysian Intellectual Property Organization), MDTCA, IPR Courts, 
Attorney General's office, and Ministry of Science, Technology, and 
Innovation (MOSTI). 
 
¶21. During 2008 U.S. and Malaysian officials continued to negotiate 
the IPR chapter of the proposed U.S.-Malaysia Free Trade Agreement. 
These negotiations provided an unprecedented opportunity for both 
sides to learn the details about each other's enforcement regimes. 
 
Malaysia's International IP Obligations 
--------------------------------------- 
 
¶22. Malaysia has made progress towards ratifying multilateral IP 
treaties. Malaysian government officials hope to secure 
parliamentary ratification of Malaysia's accession to the WIPO 
Copyright Treaty and the WIPO Performances and Phonograms Treaty by 
the end of 2009.  The GOM also foresees Malaysian accession to 
several other IP treaties, including the Convention Relating to the 
Distribution of Program-Carrying Signals Transmitted by Satellite; 
the Protocol Relating to the Madrid Agreement Concerning the 
International Registration of Marks; the Budapest Treaty on the 
International Recognition of the Deposit of Microorganisms for the 
Purposes of Patent Procedure; and the Trademark Law Treaty. 
Malaysia has not committed yet to joining the International 
Convention for the Protection of New Varieties of Plants (aka the 
UPOV Convention), preferring to wait until it can evaluate the 
effect of its newly-implemented domestic plant protection 
legislation. 
 
¶23. The Ministry of Health announced in 2007 that the government 
would implement a legal framework to protect pharmaceutical data in 
order to meet the data protection obligations under TRIPS Article 
39.3.  The announcement indicated that such protection would be 
extended for 5 years for new products, and 3 years for new 
indications of existing products.  The time period in both cases 
would begin from the date that such protection was extended in the 
product's country of origin.  Extensive discussions of the issue 
have taken place at each round of the U.S.-Malaysia FTA 
negotiations. 
 
RAPSON