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C O N F I D E N T I A L SECTION 01 OF 02 COLOMBO 000063 
 
SIPDIS 
 
TREASURY FOR USTR MICHAEL DELANEY; 
COMMERCE FOR USPTO KRISTINE SCHLEGELMILCH 
DEPARTMENT FOR EEB/TPP/IPE JOELLEN URBAN 
 
E.O. 12958: DECL: 01/28/2020 
TAGS: KIPR ECON PGOV CE
SUBJECT: IPR PROTECTION IN SRI LANKA: BAD, BUT IMPROVING 
 
Classified By: Deputy Chief of Mission Valerie Fowler for Reasons 1.4 ( 
B) and (D). 
 
¶1. (SBU) SUMMARY: Sri Lanka's intellectual property rights 
regime is good on paper but lax on enforcement.  Still, since 
the passage of comprehensive legislation in 2003, things have 
slowly been improving.  The Embassy, American Chamber of 
Commerce, Business Software Alliance, a cadre of specialized 
law firms, and a number of government offices have worked 
hard to increase awareness and provide much-needed training 
for judges, police, and investigators.  While much remains to 
be done, new and ongoing initiatives should reduce the amount 
of pirated and fake items available in the marketplace.  END 
SUMMARY. 
 
BACKGROUND 
 
¶2. (U) Sri Lanka's intellectual property rights (IPR) regime 
is, like that of many emerging economies, good on paper but 
lax on enforcement.  The country enacted a comprehensive IPR 
law in 2003 that governs copyrights and related rights, 
industrial designs, patents, trademarks and service marks, 
trade names, layout designs of integrated circuits, 
geographical indications, unfair competition, databases, 
computer programs, and undisclosed information.  Infringement 
of intellectual property rights is a punishable offense under 
the law and falls under both criminal and civil courts of 
jurisdiction in Sri Lanka.  Recourse available to owners 
includes injunctive relief, seizure and destruction of 
infringing goods and plates or implements used for the making 
of copies, and the prohibition of imports and exports. 
Penalties for the first offense include a prison sentence of 
6 months or a fine of up to Rs 500,000 ($4,425).  Penalties 
can be doubled for a second offense. 
 
¶3. (C) Since the passage of the 2003 IPR law Sri Lanka has 
slowly begun enforcing its provisions.  However, counterfeit 
goods continue to be widely available.  Local agents of 
well-known U.S. and other international companies 
representing recording, software, movie, clothing and 
consumer product industries continue to complain that the 
lack of IPR protection is damaging their businesses.  Piracy 
of sound recordings and software is widespread, making it 
difficult for the legitimate industries to protect their 
market and realize their potential in Sri Lanka.  The Police 
occasionally raid stores selling counterfeit goods -- 
especially garments.  However, it is rare for the Police to 
act without a formal complaint and assistance from an 
aggrieved party.  Several offenders have been charged or 
convicted by courts.  A leading anti-piracy lawyer, Sudath 
Perera, told EconOff that his firm has successfully conducted 
several raids in Colombo in 2008-2009.  In January 2010, 
police and the law firm (representing the rights holders) 
recently raided two outlets in Colombo selling counterfeit 
garments and stationary. 
 
SOFTWARE PIRACY 
 
¶4. (SBU) Software companies complain of the lack of IPR 
enforcement within government institutions and even some 
larger corporations, including several banks.  According to a 
survey commissioned by the Business Software Alliance (BSA) 
and conducted by the IDC, a leading global IT market research 
firm, software piracy in Sri Lanka is as high as 90 percent. 
Sri Lanka,s software companies and the Sri Lankan 
Association for Software and Service Companies (SLASSCOM) 
dispute the findings of the study, questioning the sampling 
methodology used by the IDC.  However, both organizations 
have bottom-line reasons to publicly doubt the study.  For 
example, SLASSCOM's members worry the bad publicity could 
cause potential clients to go elsewhere due to the high 
piracy rate.  ICTA, in collaboration with the SLASSCOM, is 
planning to commission an independent IPR survey covering a 
sample of about 5,000 companies. 
 
¶5. (SBU) Sri Lankan government officials in charge of IPR 
protection acknowledge there is a high software piracy rate 
 
COLOMBO 00000063  002.4 OF 002 
 
 
in the government.  The government and industry leaders are 
taking various actions to improve IPR protection in the 
Information and Communication Technology (ICT) sector.  In 
December 2009, the government of Sri Lanka approved a new 
Information Technology (IT) policy for the government sector 
which includes rules on hardware and software procurement. 
When the new policy will be implemented is not known.  Under 
the new policy, the government will issue IT procurement 
guidelines requiring all government agencies to stick to 
licensed software or open-source software.  If the cost of 
licensed software or maintenance and consultancy fees of 
open-source software is higher than proprietary software, the 
government will provide additional funds to purchase 
proprietary software. 
 
¶6. (C) While we see this as a step in the right direction, 
the Business Software Alliance (BSA) is not fully satisfied 
with the policy and accuses the government of "more funny 
business."  Shalini Ratwatte, BSA's local consultant, told 
EconOff that she sees it as a push for open source software. 
However, she acknowledged that pricing is an issue.  For 
instance, global software producers are not willing to offer 
discounted prices to Sri Lanka (as they do in mass markets 
such as India).  They argue that Sri Lanka, although a 
developing country, does not offer economies of scale to 
justify discounts.  Nevertheless, BSA is contemplating 
starting IPR awareness programs for senior Sri Lanka 
government officials covered by the new procurement policy. 
 
OTHER PROGRESS AND PROGRAMS 
 
¶7. (U) Post,s recent efforts focus on IPR protection in the 
ICT sector.  In a bid to support the ICT sector, Post teamed 
up with BSA to hold an IPR awareness program for the Sri 
Lanka Police on January 8.  The U.S. Department of Justice 
Office of Overseas Prosecutorial Development, Assistance and 
Training (USDOJ/OPDAT) and Business Software Alliance 
provided funds for this workshop.  Approximately 45 police 
officers from the Criminal Investigations Division (CID) of 
the Sri Lanka Police participated.  The program focused on 
the importance of IPR to the economy, elements of IPR law, 
and investigating and prosecuting IP cases.  Industry 
representatives from pharmaceutical, software, and electrical 
product industries provided technical information about 
product identification.  At the conclusion of the seminar, 
participants from the CID requested continued training on IPR 
awareness and education and more involvement from the 
industry. 
 
¶8. (U) Demonstrating a positive trend, well-known vendors of 
branded laptops and computer systems now advertize that their 
products come "only with licensed software."  Previously, 
laptop and desktop computers were sold without any reference 
to software and the sellers and users freely copied software. 
 Furthermore, Dr. D.M. Karunaratne, Director of the National 
IP office, informed EconOff that a World Intellectual 
Property Office,s (WIPO) intellectual property academy will 
soon be established in Sri Lanka.  Sri Lanka has been chosen 
for this academy as a pilot project.  Earlier, WIPO carried 
out a successful pilot project on WIPO outreach programs in 
Sri Lanka. 
 
COMMENT 
 
¶9. (SBU) The end of the war gives an opportunity to refocus 
efforts on IPR enforcement.  The Embassy, the USPTO regional 
office in New Delhi, AMCHAM and BSA are working to pursue 
more aggressive enforcement and enhance public awareness, and 
require the active cooperation of the National IP office of 
Sri Lanka.  Upcoming training programs in the first quarter 
of 2010 for law enforcement agencies include USPTO-sponsored 
training programs for the Attorney General,s Office and Sri 
Lanka Customs, and an AMCHAM/BSA sponsored training program 
for magistrates in the Central, North Central, Eastern and 
Northern Provinces, ensuring that magistrates from all nine 
of Sri Lanka's provinces receive training. 
BUTENIS