US embassy cable - 05COLOMBO816

UNCLAS SECTION 01 OF 03 COLOMBO 000816 
 
SIPDIS 
 
DEPT PASS USTR FOR G. BLUE AND JROSENBAUM 
 
STATE FOR SA/INS 
 
GENEVA PASS USTR 
 
E.O 12958: N/A 
TAGS: ECON, EFIN, KIPR, OTRA, CE, ECONOMICS 
SUBJECT: GSL IPR Enforcement Continues, Expands; 
Opportunities for Continued Advocacy and Training 
 
REF:  (a) 04 Colombo 001971   (b) 04 Colombo 42798 
 
1. Summary:  Sri Lankan courts recently convicted three 
stores in Colombo for IPR violations, following a major 
police crackdown on illegal music and video stores.  The 
raids were carried out as a result of complaints made by a 
leading local agent of international movie and video 
recordings.  Sri Lanka Customs has also detected several 
suspected consignments of VCD/DVDs.  There have been other 
moves to enforce the newly-enacted IPR law.  End Summary. 
 
Police raid 
----------- 
 
2.  On February 17, three magistrates issued a total of 16 
search warrants to the Police Criminal Investigation 
Department (CID) ordering them to raid 16 different illegal 
vendors of CDs, VCDs and DVDs.  The warrants were issued in 
response to an application made by MEntertainment, the 
local representative of several internationally-recognized 
movie and song producers including Sony Music, Columbia 
Pictures, Epic Records, Universal Music, Mercury, Virgin, 
Capitol, EMI, RPG, Warner Bros. and Miramax.  The police 
raids found 14 stores selling pirated products, while two 
closed before the arrival of police.  So far, three vendors 
have pleaded guilty and have come to a settlement by 
agreeing to stop the sale of counterfeit products.  These 
vendors represent some of the big names in the music trade 
in Colombo and their promise to end the sale of pirated 
music/movies could help boost the legal market 
substantially.  The counterfeit products were confiscated 
and are to be destroyed.  The court cases against other 
vendors will come up for hearing in the next few weeks. 
 
3.  During the past six months, Sri Lanka Customs' Special 
Investigation Bureau has also detained three shipments of 
suspected pirated VCD/DVDs, which came as passenger baggage 
on a commercial flight.  The detained goods consist of 
Tamil music and English/Tamil/Hindi movies.  Sri Lanka 
Customs has recently contacted MEntertainment seeking their 
assistance in identifying these products.  MEntertainment 
told EconFSN that this is a commendable step as it is the 
first time the company has been contacted by the Sri Lanka 
Customs regarding the possible violation of their rights. 
 
4.  The first major copyright infringement case in Sri 
Lanka, involving a Malaysian owned illegal CD production 
facility is still pending in courts (Ref A).  The copyright 
owners are waiting for the Police to file indictment.  In 
another case, a Colombo police station raided a CD 
duplication operation, which illegally copied a range of 
local and international music and movies.  This operator 
had used multiple CD burners for copying.  According to 
MEntertainment, Warner, Universal, and Walt Disney were 
some of the labels duplicated in this operation. 
Investigations are continuing. 
 
Counterfeit Goods Abound 
------------------------ 
 
5.  Piracy and counterfeit trade are also found in several 
other consumer good areas, although to a lesser extent, 
except for software piracy, which is rampant.  For 
instance, recently Polo/Ralph Lauren successfully sued a 
local company for copyright infringement and selling 
counterfeit products over the internet.  Victoria's Secret 
(VS) is also working with local Police and Customs to 
prevent the shipment of fake VS products from Sri Lanka. 
Agents for US manufacturers such as Procter and Gamble, 
Energizer batteries, and Gillete have also complained of 
piracy. 
 
Pirates form an association 
--------------------------- 
 
6.  In response to the recent police crackdown, counterfeit 
music and movie vendors have formed a society to fight for 
their rights.  They argue that over 50,000 families are 
dependent on the pirate music industry and they will lose 
their livelihoods due to IPR enforcement.  The association 
called for a meeting in February and decided to appoint a 
lawyer to fight for their rights.  Meanwhile, following the 
raids, newspapers carried a few articles on IPR protection. 
While some of the writers supported IPR protection, at 
least one article argued against the protection of rights 
of international companies.  The writer argued that Sri 
Lanka, as a developing country, could not afford to protect 
the rights of international companies. 
 
Right Owners are proactive 
-------------------------- 
7.  Following the recent raids, representatives of the 
International Federation of Phonographic Industry (IFPI) 
and the IFPI affiliated Indian Music Industry Association 
(IMI) visited Sri Lanka.  Their visit was significant as 
together they represent all imported music to Sri Lanka 
(English and Hindi).  According to IFPI, the levels of 
piracy of international and local artists are growing at an 
alarming rate in Sri Lanka.  Most pirated goods originate 
from Pakistan.  IFPI met with Police and the National 
Intellectual Property Office and congratulated them on 
recent enforcement actions and urged them to continue with 
these efforts.  Further, they highlighted benefits of IPR 
protection to promote investment and trade and urged the 
authorities to investigate and prosecute violators in a 
timely manner.  The two music industry representatives also 
held a press conference to highlight the importance of IPR 
protection for investment and business success.  The raids 
and the IFPI/IMI press conference received wide publicity 
both in the print media and T.V. 
 
Police Commercial Crimes Unit 
----------------------------- 
 
8.  Much of the credit for recent actions to protect 
copyrights and trade marks should go to the Commercial 
Crimes Unit (CCU) of the CID.  The recently-established CCU 
is responsible for combating all forms of commercial crimes 
including internet crime, IPR violations, bank and credit 
card frauds.  The unit is understaffed, but has taken firm 
steps against pirates.  The IFPI and US Customs have 
provided training on IPR law enforcement to this unit. 
 
US Embassy IPR Agenda 
--------------------- 
 
9.  The Embassy, along with key industry players including 
the IFPI, continues to lobby the government to improve Sri 
Lanka's IPR regime.  During the past year, the Embassy has 
been lobbying key government ministries and agency heads, 
at meetings and in writing, to bring to their attention the 
need to resolve IPR cases in a timely manner.  The Embassy 
assisted visiting industry representatives including IFPI 
and Microsoft to meet with Police, Customs, and National 
Intellectual Property Office to discuss enforcement.  IFPI 
and Microsoft have offered advice regarding investigation 
methodologies especially with regard to the case involving 
the CD production facility.  The Embassy also facilitated 
an International visitor program for six Sri Lankan IPR 
legal specialists from the attorney general's office, 
judiciary and private bar.  The Embassy also works with the 
Amcham-convened IPR working group representing US right- 
holders. The Embassy and the working group are hoping to 
prepare a manual of product and right holders information 
to help customs and police to identify illegal products. 
The group is also exploring the possibility of setting up a 
help desk to facilitate Customs and Police detections. 
USPTO/IIPI have also offered to conduct an enforcement- 
training program. 
 
10.  While the Government agencies, especially the Police, 
have taken commendable steps to enforce the new IPR law, 
the police and customs need further assistance to improve 
their expertise in identification, enforcement, and 
prosecution.  The Judiciary, especially judges in the 
magistrate courts of Colombo, also needs improved IPR 
awareness.  Some of the investigations have slowed due to 
lack of expertise in these different institutions. 
Therefore, a consistent push for enforcement will be needed 
as well as more training of enforcement agencies in the 
sophisticated methodologies used for piracy. 
 
Entwistle