US embassy cable - 06HONGKONG714

Special 301 Recommendation for Macau

Identifier: 06HONGKONG714
Wikileaks: View 06HONGKONG714 at Wikileaks.org
Origin: Consulate Hong Kong
Created: 2006-02-22 04:14:00
Classification: UNCLASSIFIED//FOR OFFICIAL USE ONLY
Tags: KIPR ETRD EIND MC
Redacted: This cable was not redacted by Wikileaks.
VZCZCXRO4413
OO RUEHCN
DE RUEHHK #0714/01 0530414
ZNR UUUUU ZZH
O 220414Z FEB 06
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5010
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHOO/CHINA POSTS COLLECTIVE
UNCLAS SECTION 01 OF 02 HONG KONG 000714 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB/IPE CLACROSSE, EB/TPP EFELSING, AND EAP/CM 
KBENNETT 
STATE PLS PASS TO USTR JCHOE-GROVES 
COMMERCE FOR JBOGER 
COMMERCE PLS PASS TO USPTO JURBAN AND LOC STEPP 
 
E.O. 12958: N/A 
TAGS: KIPR, ETRD, EIND, MC 
SUBJECT: Special 301 Recommendation for Macau 
 
------------------------------------ 
Summary and Recommendation for Macau 
------------------------------------ 
 
1. (SBU) Summary: Post recommends that Macau not be placed on 
any Special 301 list in the 2006 cycle due to its consistent 
and steady IPR performance.  However, Post remains concerned 
about the rampant and flagrant TV signal piracy in Macau and 
the Government of Macau's (GOM) distinct lack of progress in 
addressing this issue.  Of secondary concern is end-use piracy 
of software.  Aside from these issues, however, our assessment 
is that the GOM maintained an effective IPR regime in 2005. 
The Macau Customs Intellectual Property Department (IPD) was 
awarded a Distinguished Service Medal by Macau Chief Executive 
(CE) Edmund Ho for its efforts to crack down on optical disk 
piracy.  End Summary. 
 
----------------------------------------- 
Strong Enforcement Efforts Bearing Fruit? 
----------------------------------------- 
 
2.  (SBU) The overall number of counterfeit and pirated items 
seized by Macau Customs at SAR borders in 2005 dropped when 
compared to 2004 figures.  Macau Customs asserts that this 
reflects a lower level of infringing activity due to their 
previous enforcement efforts.  In 2005, Macau Customs seized 
4,547 counterfeit items of various types at its borders, a drop 
of 46.4 percent from 2004.  Most of these goods were brought in 
from mainland China. 
 
3. (SBU) Within Macau, however, industry representatives cite 
anecdotal evidence that optical disk manufacturers are once 
again ramping up operations.  GOM figures appear to bolster 
this perception.  In 2004, Macau Customs seized a total of 
15,522 pirated optical disks. In 2005, this number had 
increased to 19,816 disks, an increase of 27.7 percent. The 
government conducted 15 raids and arrested nine people in 
conjunction with optical disk piracy last year.  Four of the 
nine were convicted and given suspended sentences of up to 21 
months in prison and fines of up to 8,000 patacas (USD 1,000), 
both of which represent a trend towards stricter sentencing of 
optical disk counterfeiters. They were given fines and/or 
suspended sentences.  The other cases are still being 
prosecuted. 
 
---------------- 
TV Signal Piracy 
---------------- 
 
4. (SBU) While the GOM has been successful at tackling optical 
disk piracy, theft of TV signals continues with virtual 
impunity. Macau Cable estimates that pirated signals make up 
more than 90 percent of the Macau market, making it one of the 
worst places in Asia for TV signal piracy. 
 
5. (SBU) In 2000, Macau Cable began operations after signing a 
contract with the GOM for the exclusive right to provide pay TV 
cable service in Macau.  Almost immediately, ten to twelve 
small operators, called "antenna companies," began engaging in 
widespread signal piracy, illegally hooking up thousands of 
Macau households and businesses to as many as 50 different 
channels, including many U.S. providers.  These companies can 
charge as little as one US dollar per home, because they pay 
nothing to the content owners or the GOM (taxes, licenses). 
 
6. (SBU) On August 18, 2005, the GOM's Office for the 
Development of Telecommunications and Information Technology 
announced that starting on September 12, 2005 it would send 
staff to check antenna companies, satellite network operators, 
and residential buildings for unlicensed receivers.  Offenders 
were to be fined between 500 to 20,000 patacas (between 63 - 
2,500 USD), with repeat offenders to be fined double those 
amounts.  However, the GOM received a furious backlash from the 
infringing antenna companies when they threatened to cut off 
all service, including legitimate broadcasts of Hong Kong and 
regional television programs, to the 90 percent of the Macau 
households that they service. 
 
7. (SBU) Faced with a growing public uproar about the 
enforcement action, CE Edmund Ho declared on September 3, 2005 
that the issue was still "open for discussion" and delayed the 
enforcement action for two months to give the GOM a chance to 
carry out public outreach on the importance of IP protection. 
As of late February 2006, the GOM had yet to shift from its 
public outreach efforts into actual enforcement actions.  Macau 
 
HONG KONG 00000714  002 OF 002 
 
 
Cable representatives say that the GOM now seems to be 
refocusing its efforts on pushing Macau Cable to purchase the 
infringing antenna companies.  Although Macau Cable is not 
against the idea of purchasing the problem broadcasters, the 
company remains concerned about the GOM's acquiescence to the 
business practices of the antenna companies and the detrimental 
effect this action has on the overall IPR protection regime in 
Macau. 
 
-------------- 
End-Use Piracy 
-------------- 
 
8. (SBU) Of secondary concern is the lack of GOM action on "end- 
user" piracy and "channel" piracy (counterfeit software and pre- 
loaded unlicensed software on new computers).  At the heart of 
the matter is Macau's ambiguous copyright law, which has not 
yet been used in court to address these forms of piracy. 
Software industry representatives have argued that because the 
law is vague, law enforcement authorities are not empowered to 
file criminal charges. In December 2005, Macau Customs 
conducted a software business end-user piracy raid on a small 
company and found several unlicensed copies of business 
software in use.  Although the scale of the action was small, 
the GOM is considering using this action as a "test case" for 
applying the copyright law to end-user piracy violations. 
 
SAKAUE 

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