US embassy cable - 05BANGKOK1425

UNCLAS SECTION 01 OF 05 BANGKOK 001425 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR EB/IPC SWILSON 
DEPT PLS PASS TO USTR JCHOE-GROVES, DOC JBOGER, 
USPTO JURBAN, AND LOC STEPP 
 
E.O. 12958: N/A 
TAGS: ETRD, PREL, ECON, KIPR, TH, Special 301 Review 
SUBJECT: SPECIAL 301 REVIEW -- EMBASSY RECOMMENDS WATCH 
LIST FOR THAILAND 
 
REF: A. 2004 BANGKOK 06501 
 
     B. 2004 BANGKOK 04885 
 
1. (U) Sensitive but Unclassified. Please handle accordingly. 
 
2. (SBU) Overall IPR protection in Thailand remains woefully 
inadequate by any measure.  During the past year, however, 
the RTG has modestly improved upon its commitments to improve 
IPR protection. Minister of Commerce Wattana Muangsuk 
initiated an extended anti-piracy campaign in June, and, in 
November and December 2004, the Royal Thai Police conducted 
dozens of factory and warehouse raids, seizing millions of 
pirate ODs and decommissioning several replication machines 
used for copyright infringement. The most significant item of 
IPR legislation ) the Optical Disk Manufacturing Law ) was 
passed by the Parliament in October 2004. Because of these 
successes, local industry representatives agree that the 
overall IPR enforcement environment has improved slightly 
since the beginning of the year ) but much work remains to 
be done. The RTG has put other legislative items, such as 
Amendments to the Copyright Act and the implementing 
regulations for the Trade Secrets Act, on hold pending the 
outcome of U.S.-Thai Free Trade Agreement (FTA) negotiations. 
Enforcement campaigns are still often linked to timely 
political events  ) such as the start of FTA talks ) rather 
than focused on gradual, sustained reductions. The 
proliferation of cable piracy continues to be a major concern 
for US rights holders. Nevertheless, most local rights 
holders recognize that the IPR situation ) which is, by all 
accounts, deplorable ) is no worse than it was last year, 
and slightly improved in some areas. Furthermore, urgent 
tsunami recovery efforts have diverted some of the RTG's IPR 
 
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protection resources.  For these reasons, the Embassy 
recommends that Thailand remain on the Watch List. 
 
RTG Enforcement Campaign Shows Some Results 
 
3. (SBU) Under the leadership of Minister of Commerce Wattana 
Muangsuk, the RTG initiated a major IPR enforcement campaign 
in June 2004. This campaign was sparked by the signing of yet 
another Memorandum of Understanding (MOU) between Thai 
agencies involved in enforcement efforts, and rights holders 
and their representatives. (Note: This MOU, forged between 
rights holders and RTG enforcement agencies, is similar to 
previous agreements, but details specific obligations to 
rights holders, who pledge to cooperate with enforcement 
agencies and not to use out of court settlements, and to the 
police, who are charged with keeping 36 specified areas free 
of pirated goods. The 36 areas are divided into &red8 and 
&yellow8 zones, depending on the severity of pirate and 
counterfeit retail operations.) The timing of this campaign 
was noteworthy, coming just before the opening round of 
Thai-U.S. Free Trade Agreement (FTA) talks, and several weeks 
before the International AIDS Conference, held in Bangkok, 
which brought thousands of government officials, activists, 
scientists, and journalists to Thailand. 
 
4. (SBU) Rights holders acknowledge that IPR enforcement has 
improved slightly, and that these enforcement campaigns have 
shown long-term progress in some key areas. The focus on the 
red and yellow zones has reduced ) though certainly not 
eliminated ) retail piracy in many of those areas. Trademark 
brand owners and their representatives report increased 
cooperation with the police and other enforcement agencies; 
as is usually the rule, those brand owners that are most 
proactive in protecting their trademarks achieve the greatest 
results. In September, Econoff toured four local police 
stations with the Secretary to the Commerce Minister, Oratai 
Thanajaro, to evaluate progress in improving enforcement in 
the red and yellow areas in their jurisdiction. While two of 
the four police chiefs were clearly uninterested in cleaning 
up retail piracy ) provoking an uncharacteristically heated 
argument between Oratai and the police ) the two other 
police officials were able to point to measurable successes 
in reducing piracy in their jurisdiction. Six months after 
this visit, Sukhimvit Road, a major thoroughfare popular with 
foreign tourists just a few blocks from the Embassy, is still 
largely clear of pirate retailers where before it was the 
home of dozens. 
 
&Operation Eradicate:8 Major Enforcement Operations 
Initiated in Late 2004 
 
5. (SBU) In October 2004, Royal Thai Police (RTP) Lt. Gen. 
Noppadol Somboonsup, currently the Deputy Police Commander 
for Legal Affairs, was reappointed head of IPR suppression 
operations. Soon after taking on this assignment, Gen. 
Noppadol and police enforcement teams launched &Operation 
Eradicate,8 an initiative directed at factories and large 
warehouses. He conducted a raid on a factory in the Eastern 
Seabord Industrial Zone, in Rayong Province, seizing one 
optical disk replicating line, one printing machine, one ton 
or polycarbonate, and 6000 pirated VCDs and CDs. In addition, 
the police arrested two Taiwanese nationals, two Burmese, and 
one Thai. At the same time, the police raided a warehouse 
owned by a connected company in Bangkok and seized 100,000 
pirated DVD/VCD/CDs. This combined factory/warehouse raid ) 
the first since Gen. Noppadol ended his last tenure as IPR 
enforcement czar in 2002 ) netted ODs and equipment 
estimated at 70 million THB (almost 2 million USD). In 
December 2004, Gen. Noppadol and his team again raided a 
production facility in a province near Bangkok, seizing 100 
CD-R burners, each with a capacity of burning 8000 CD-R disk 
per day, and 5000 pirated music CDs. Gen. Noppadol has 
invited Embassy officers to accompany him and his officers on 
future raids, and we intend to take him up on his offer.  (A 
note on organized crime:  Multinational organized crime has 
always been present in the vice trade in Thailand, and since 
IPR violations are treated less harshly than drug smuggling, 
it is no surprise that foreign criminal gangs appear to be 
involved.) 
 
6. (SBU) Another police Special Task Force appointed by Prime 
Minister Thaksin, led by Col. Adul Narongsak, conducted 
several raids in and around Bangkok in late 2004. Two major 
raids on November 30 netted over 1,000,000 pirated CDs and 
DVDs, two replicating lines, and three printing machines. Two 
weeks later, these teams raided 17 spots in Bangkok, netting 
over 1 million pirated ODs, one replicating line, and two 
printing machines. A coordinated raid on the notorious pirate 
retailing center, Panthip Plaza, yielded no pirated goods 
after a complete search of the premises. (Note: This last 
raid underscores the unusual difficulties ) even when raids 
are coordinated by motivated authorities ) in shutting down 
piracy at Panthip.) The police and other law enforcement 
teams ) including teams from the border control police ) 
conducted further raids throughout the month. According to 
Department of Intellectual Property statistics, the RTG 
seized over 800,000 ODs in 2004, and arrested 5179 persons. 
The Central Investigation Division, under the leadership of 
Maj. General Jurumporn Suramani, has also initiated a number 
of anti-piracy raids on copyright infringers, earning the 
praise of rights holders. 
 
7. (SBU) Disappointing to rights holders, however, is the 
Department of Special Investigations (DSI), which was to take 
over responsibility for fighting IP crime from the Economic 
Crimes Investigation Division (ECID) and other branches of 
the Royal Thai Police (RTP). Although it has been up and 
running for over a year, the DSI still lacks significant 
personnel, resources, and direction to take on this task. In 
addition, a recent administrative decision to divide IPR 
crime investigative responsibilities between the ECID and the 
DSI ) which gives DSI the right to investigate crimes valued 
upwards of 5 million THB ($125,000) ) has created some 
confusion in IPR circles. Still not clear is how this amount 
will be valued ) street value? retail value? ) or, if even 
this division of labor truly exists, since DSI seems to be 
doing little in the way of IPR enforcement. 
 
Tsunami Tragedy Will Put Some Enforcement Operations on Hold 
 
SIPDIS 
 
8. (SBU) The December 26, 2004 tsunami devastated large 
swaths of Thailand's western coastline and caused over 9000 
fatalities. In the days following the tsunami, Thailand's 
security and police forces and government agencies focused 
all of their attention in assisting those in need, restoring 
a degree of normalcy, and launching reconstruction 
initiatives. In Phuket and other places hard hit by the 
tsunami, police are still devoted to efforts supporting 
 
SIPDIS 
reconstruction work, leaving few personnel able to return to 
IPR enforcement. Most significantly, Gen. Noppadol was tapped 
to oversee the multinational Thailand Tsunami Victim 
Identification effort, which is now striving to locate, 
identify and repatriate, where necessary, the thousands of 
victims. This immense and unprecedented ) and extremely 
sensitive -- task will take many months to sort out, making 
it unlikely that Gen. Noppadol and some of his staff will 
return to IPR enforcement activities in the near term. 
 
IP Court and RTP Not Working Together 
 
9. (SBU) Rights holders ) and the RTP ) have both expressed 
concern with the search warrant application procedures of the 
International Trade and Intellectual Property Court (IP 
Court), reporting that some judges have set arbitrary 
guidelines and standards for the issuance of search warrants. 
In addition, rights holders remain unsatisfied with IP Court 
judgments, which they claim are too lenient and do not 
provide a sufficient deterrent. IP Court judges have 
acknowledged the problems with search warrants, and are in 
the process of designing guidelines for the approval of 
search warrant applications. Court judges have reported to 
Econoff that the police often do not follow proper procedures 
in requesting, and carrying out, search warrants (a complaint 
echoed by rights holders). Court judges have also said that 
police sometimes are not familiar enough with the cases they 
bring forward to answer basic questions about the warrant 
request, and do not report the results of the search to the 
Court afterwards, as required. (This last point is 
significant because police are often suspected to use search 
warrants to extort money from violators instead of executing 
the warrant.) No matter who is at fault, this kind of basic 
conflict hinders rights holders in their efforts to quickly 
pursue enforcement actions. 
 
Legislation: OD Law Passes, but FTA Intervenes 
 
10. (SBU) The RTG has moved forward to pass legislation 
crucial to IP protection efforts. Introduced to the 
Parliament in August 2003, the Optical Disk Manufacturing Law 
passed both houses on Parliament in October 2004. While this 
legislation is not as strong as many rights holders would 
have liked ) this draft does not provide for a licensing 
system for replication machines, introduce SID codes, or 
incorporate &sufficiently deterrent8 penalties ) it will 
still enhance the powers of the Department of Intellectual 
Property (DIP) and the RTP to monitor and enforce IPR 
violations. In late January 2005, a group of Senators 
petitioned the Constitutional Court to review a provision 
that allowed for the seizure of a replication machine when 
manufacturers fail to notify the DIP about the acquisition, 
transfer, or movement of a machine. These Senators were 
concerned that the penalties for violating an administrative 
provision ) making it a criminal offense subject to 
forfeiture of the equipment -- were too extreme. Arguing that 
these penalties violate constitutional rights to the use of 
private property, the Constitutional Court removed these 
provisions from the legislation. Violators of these 
provisions still face fines, however, and proven copyright 
violators will, under this law, have their machines seized. 
In a February 25 meeting with Econoffs, DIP DG Kanissorn 
Navanugraha said that this act, which he believes will 
bolster their enforcement powers considerably, will be signed 
into law within two months. 
 
11. (SBU) Amendments to the Copyright Act, which have 
undergone several reviews by a government-led committee -- 
which includes an IP industry representative ) have passed 
the juridical council and the Cabinet. However, RTG officials 
have said that further revisions and legislative reviews of 
this Amendment will await the outcome of the ongoing FTA 
negotiations. The Thai Food and Drug Administration (FDA) has 
finished drafting implementing regulations for the Trade 
Secrets Act, and, in December 2004, invited stakeholder 
 
SIPDIS 
groups ) such as local and foreign pharmaceutical companies 
-- to comment on the proposed draft. Multinational 
pharmaceutical companies have objected to the proposed 2-year 
data exclusivity provisions, but FDA officials and 
scientists, some local pharmaceutical manufacturing 
companies, and many vocal NGOs oppose extending the 
protection period. However, the Secretary-General of the FDA, 
Dr. Phakdee Photsiri, has said that these provisions will 
also be subject to negotiation in the FTA talks. On April 28, 
2004, the Geographical Indications Act came into effect, 
completing Thailand's adherence to TRIPS legal obligations. 
 
Cable Piracy: Still a Problem 
 
12. (SBU) The past year has seen very little movement towards 
establishing some kind of order in the cable television 
industry. Pirate cable operations continue to proliferate, 
mounting a significant challenge to U.S. content providers. 
One of the major hurdles in correcting this problem is the 
lingering controversy over the selection of the National 
Broadcasting Commission (NBC), which, as outlined in the 
Telecommunications Business Act of 2001, would regulate the 
cable industry. (Note: Civil society activists and industry 
representatives have clashed over the qualifications of the 
selection committee members; a similar conflict over its 
counterpart body, the National Telecommunications Commission, 
ended in late 2003.) Currently, neither the Public Relations 
Department (PRD), which currently has responsibility for 
overseeing the cable industry, nor the DIP, which has 
authority over copyright matters, has been willing ) or able 
-- to take on this issue until the NBC is formed. 
 
13. (SBU) In the meantime, Prime Minister Thaksin appointed 
his Deputy Secretary-General, Squadron Leader Sita Divari, to 
organize the various licensed and unlicensed cable providers 
into the Channel 11 framework that was originally proposed in 
November 2003. (This plan would put all cable providers under 
the supervision of state-owned Channel 11, which would hold 
and administer licenses with content providers on behalf of 
the providers as a stopgap measure.).  Several deadlines for 
implementing this plan have come and gone ) the most recent 
was October 15 ) and it is not at all clear when or if RTG 
officials will take on this formidable problem. 
 
The Bright Side: Thai Customs 
 
14. (SBU) Rights holders and representatives report that Thai 
Customs has been especially proactive in seizing infringing 
goods at Thai ports of entry. Although no statistics are 
available, rights holders report that Thai Customs agents 
call with increasing frequency to examine suspect shipments 
containing a wide array of products ) brand name clothes, 
car parts, shoes, cell phones and parts, and other items. 
Rights holders note that while these interdictions have 
focused mostly on imports, Thai Customs has begun to inspect 
outgoing shipments as well, where specific information on 
infringing goods is available. 
 
Training, Technical Assistance, and Public Education 
 
15. (SBU) Over the past year, the USG has provided technical 
assistance and capacity building training for a number of RTG 
departments and agencies. In October 2004, Econoff and Legatt 
Adviser arranged a digital video conference between a U.S. 
federal judge in Hawaii and 15 judges from the IP Court to 
discuss sentencing options in IPR convictions. The Embassy is 
currently in the process of administering a $265,000 grant 
from NAS directed at improving IPR enforcement in the Thai 
Customs Department. USG Customs and Border Protection 
officials have already conducted the first phase of this 
program ) a thorough needs assessment ) in November 2004, 
and will begin to implement the training, technical 
assistance, and capacity building elements of the plan in 
mid-2005. In addition, the Embassy plans to purchase an 
optical disk forensic testing kit for the Thai police, which 
will be under the supervision of Gen. Noppadol and the police 
forensic labs. This forensic kit was developed by the 
International Federation of Phonographic Industries (IFPI) in 
London, and works on the same principles as ballistic 
testing: each OD mould leaves unique errors and 
characteristic marks which can be used to trace the 
manufacturing origins of pirated ODs around the world. This 
technology will be extremely useful for producing evidence 
leading to increased factory raids. While the USG, through 
the Bangkok NAS office, will provide the funds (an estimated 
$80,000), IFPI has agreed to set up and install this kit, and 
provide all necessary training. This technology has already 
been used successfully by the Malaysian and Hong Kong police 
to locate and raid factories producing pirated ODs. 
 
16. (SBU) In addition to organizing two major IP Thailand 
exhibitions -- which serve to promote the idea of IP to 
investors, inventors, manufactures and others -- DG Kanissorn 
plans to initiate a "No Fakes" certification campaign modeled 
on a similar initiative in Hong Kong. In coordination with 
retailers and rights holders, this campaign would promote 
outlets that sell only genuine items and, at the same time, 
build public awareness about IPR protection. 
 
The Panthip Plaza Accords 
 
17. (SBU) The owner of the notorious Panthip Plaza, the 
Sirivadhanabhakdi Group (SG) is also the owner of a number of 
high-end hotels in Thailand often used by US Embassy 
personnel and agencies for TDY visits and events. In February 
2003, Panthip Plaza,s resilience as the center of pirate 
retailing in Bangkok led the Embassy to take the unusual step 
of initiating a commercial boycott of these hotels for all 
official purposes. In the following months, Econoffs used 
this leverage to engage with SG and the Panthip management on 
reducing infringement at their property, with few results. 
The Panthip management claimed that they inherited several 
dozen tenants with 30-year leases from the previous owners, 
preventing them from ejecting shopowners selling pirated 
products. In November 2004, the new management of one of 
SG,s premier hotels, the Plaza Athenee, sought to end this 
impasse and compete again for US Embassy business at their 
property. At the suggestion of the Embassy, the management 
offered to install closed circuit security cameras throughout 
the property in order to discourage overt illegal activity 
and to provide rights holders with concrete evidence to be 
used in law enforcement actions. As a result of this offer, 
and with the cooperation of SG and the Panthip management, 
the Embassy agreed to rescind the boycott. We expect the 
cameras to be operational by March 2005.  While we don't see 
the cameras as a panacea, they are a modest step forward in 
that they serve as a deterrent -- some customers will think 
twice about being recorded on film performing an illegal act, 
so transactions will have to be done surreptitiously, e.g., 
in bathrooms, making pirated DVD sales more akin to drug 
deals.  The hope is that, given these conditions, many 
potential customers will choose to stay away. 
 
Comment 
 
18. (SBU) Comment: Despite the ups and downs throughout the 
year, overall, IP enforcement is somewhat better now that it 
was a year ago. The RTG,s efforts to target enforcement 
actions on the most visible and profitable pirate retailing 
centers have largely reduced the most egregious markets for 
pirated and counterfeited goods. Enforcement actions in the 
last few months of 2004 have yielded impressive numbers of 
infringing goods and replicating machinery. Similarly, on the 
legislative side, the OD manufacturing bill will soon become 
law. While weaker than the IP industry wants, it is still the 
most effective tool the RTG has at its disposal to address OD 
infringement. In addition, FTA negotiations are soon to be 
our best forum to take up USG concerns over the Trade Secrets 
Act regulations and the Copyright Amendment; we believe the 
RTG can make concessions in the FTA context that would be 
otherwise difficult. The IIPA 2005 Special 301 Report for 
Thailand is accurate in many of its details, and provides an 
excellent inventory of the problems rights holders face here. 
However, the evidence, as evinced in the IIPA report and 
elsewhere, does not in our view support the call to upgrade 
Thailand to the Priority Watch List. All local rights holders 
agree that IPR protection has improved in one way or the 
other, and in no area has the situation deteriorated from 
where it was this time last year. We are also mindful of the 
fact that significant IPR protection resources have been 
diverted to urgent tsunami recovery efforts, something we are 
reluctant to criticize, even implicitly.  In view of these 
considerations, Embassy recommends that Thailand be kept on 
the Watch List. 
BOYCE