US embassy cable - 05HANOI1074

UNCLAS SECTION 01 OF 03 HANOI 001074 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/IPE AND EAP/BCLTV 
STATE ALSO PASS USTR BURCKY/ALVAREZ AND BRYAN 
STATE ALSO PASS USPTO FOR URBAN 
STATE ALSO PASS LIBRARY OF CONGRESS FOR TEPP 
USDA FOR FAS/FAA/AO HUETE 
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO 
 
E.O. 12958: N/A 
TAGS: KIPR, ETRD, ECON, EINV, VM, IPROP 
SUBJECT: VIETNAM:  AMBASSADOR HOSTS IPR ROUNDTABLE WITH U.S. 
INDUSTRY 
 
1. (U) Summary.  Borrowing a good idea from colleagues in 
Beijing, on April 28, the Ambassador hosted Mission 
Vietnam's first-ever Roundtable on Intellectual Property 
Rights (IPR) Issues in Vietnam.  In both formal 
presentations and during open discussion, U.S. companies and 
industry representatives provided insights on their specific 
experiences, both successes and problems, with IPR 
protection, enforcement and market access in Vietnam. 
Participants highlighted the need for: improved market 
access and distribution rights, changes to key aspects of 
Vietnam's draft IPR Law, a single authoritative point of 
contact for IPR enforcement, deterrent-level criminal and 
civil penalties, more public awareness and education on IPR, 
and promulgation of optical disk regulations in Vietnam. 
The Ambassador encouraged participants to keep the U.S. 
Mission informed about their activities, problems and the 
message they are conveying to the GVN on IPR issues.  The 
Ambassador advised the representative of the newly 
established Vietnam Anti-Counterfeiting and Intellectual 
Property Protection Association (VACIP) to report regularly 
to senior level GVN officials on the business sector's 
perspective on IP in Vietnam.  At the conclusion of the 
Roundtable, the Ambassador hosted a lunch for Roundtable 
participants, Vietnamese private sector representatives and 
GVN officials, focused on the theme of public/private 
partnerships in IP enforcement.  End Summary. 
 
2. (SBU) On April 28, The Ambassador hosted a Roundtable on 
Intellectual Property Rights Issues, with the participation 
of nineteen companies and industry associations active in 
Vietnam.  Representatives of Proctor and Gamble, Nike, Time 
Warner and Baker and McKenzie presented on their companies' 
experiences, successes and problems with IPR enforcement and 
market access in Vietnam.  Representatives of the USAID- 
funded Support for Trade AcceleRation (STAR) Project and the 
U.S. Vietnam Trade Council (USVTC) summarized U.S. 
Government-supported IPR-related technical assistance in 
Vietnam.  Robert Stoll, Director of Enforcement at the U.S. 
Patent and Trademark Office (USPTO), Econoffs from Hanoi and 
HCMC, Commercial Officer, and the USAID Country Manager also 
participated in the event. 
 
Lengthy Process Inhibits Enforcement 
------------------------------------ 
 
3. (SBU) Companies cited the "time-consuming" nature of the 
enforcement process as a serious impediment to effective 
enforcement in Vietnam.  Nike and Proctor and Gamble (P&G), 
which have worked with provincial enforcement agencies on 
multiple counterfeiting cases, both highlighted that it 
takes months to obtain decisions in enforcement cases. 
Nike's representative explained that there are too many 
steps and too many actors involved in reaching a decision. 
After receiving a complaint, enforcement agencies have to 
check facts, report to superiors, and obtain approval both 
internally and from the National Office of Intellectual 
Property (NOIP) before they can take action.  In several of 
P&G's trademark infringement cases, the company waited from 
three to six months for enforcement agencies to issue 
penalty decisions and destroy counterfeit products.  This 
delay in resolution gives counterfeiters time to destroy 
and/or sell the infringed products, change locations and 
restart their business. 
 
4. (SBU) Companies cited numerous additional problems 
contributing to the slow resolution of intellectual property 
cases, including:  overlapping responsibilities of 
enforcement agencies, lack of cooperation among enforcers, 
inconsistent enforcement actions, and lack of provisions to 
implement existing laws.  Both Nike and P&G emphasized the 
need for the GVN to establish a single, authoritative point 
of contact for enforcement cases and to make the enforcement 
process more transparent.  These steps would help shorten 
the time it takes to enforce companies' IPR. 
 
Penalties Too Low to Deter Infringement 
--------------------------------------- 
 
5. (SBU) Participating companies voiced strong concerns 
about the lack of penalties significant enough to deter IPR 
infringement.  Civil and administrative penalties are very 
low.   According to Nike, the maximum statutory penalty for 
trademark infringement is only VND 100 million (about USD 
6,329), and authorities rarely assess infringers the maximum 
amount.  Counterfeiters pay the fine and continue to produce 
knock-offs.  An attorney with Baker and McKenzie noted the 
draft of Vietnam's new IPR law includes a provision for 
penalties up to VND 200 million (USD 12,658), but added this 
would still be too low.  DVD shops, for example, have the 
potential to earn USD 10,000 a month, making a USD 12,000 to 
USD 13,000 penalty a "drop in the bucket."  Additionally, he 
noted that the GVN has only applied criminal penalties in 
industrial property cases involving the production of 
"dangerous products" and has never applied criminal 
penalties in any copyright piracy cases.  He suggested that 
the GVN should include provisions for landlord liability in 
the IPR law.  Many shops selling counterfeit or pirated 
goods are rented; holding real estate owners liable for 
tenants' actions could reduce the number of shops rented to 
illegitimate businesses. 
 
Market Access Issues Impede Expansion 
------------------------------------- 
 
6. (SBU) Companies in the entertainment industry emphasized 
that improvements in market access are as important as anti- 
piracy efforts to facilitate their entry into Vietnam's 
market.  Movies, music and other entertainment products are 
labeled "cultural products" by the GVN and are therefore 
subject to regulation and censorship.  Film distributors are 
required to notify the GVN of the products they want to 
market in Vietnam a year in advance.  These products then 
undergo a lengthy review before being allowed into the 
Vietnamese market; some products are banned altogether. 
Time Warner's representative emphasized that this review 
process is seemingly arbitrary and lacks transparency and a 
clear timeline for decisions.  There is also a complete lack 
of legitimate distribution channels in Vietnam, which 
severely limits market penetration of legitimate products. 
(Note:  Representatives of consumer product and 
pharmaceutical companies also cited limitations on 
distribution and retail sales as problematic for their 
industries in Vietnam.  End Note.) 
 
7. (SBU) While the GVN's market access limitations and 
censorship keep out legitimate products, pirates are able to 
supply unmet local market demand with pirated goods.  The 
combination of market access barriers and the very high rate 
of optical disk piracy have left the entertainment industry 
pessimistic about short-term prospects for doing business in 
Vietnam.  (Note:  Representatives of both the movie and the 
recording industries estimated 100 percent piracy for 
American products in Vietnam.  End Note.)  To facilitate 
entry, companies advocated loosening restrictions on 
investment in production and distribution of cultural 
products, reducing tariffs, eliminating quantitative 
restrictions on imports, and making censorship, licensing 
and registration processes for cultural products more 
transparent.  They also cited the promulgation of optical 
disk regulations as a top priority to address weak copyright 
enforcement.  Optical disk regulations help identify 
legitimate factories and products through the use of source 
identification (SID) codes.  These codes make it easier to 
pursue both criminal and criminal action against pirates. 
 
Public outreach 
--------------- 
 
8. (SBU) Several companies highlighted the need for more 
public awareness on IPR issues in Vietnam.  Pepsi's 
representative cited the need to create public consensus for 
IP protection in Vietnam, noting that he believes the 
general public does not view counterfeiting and piracy as 
criminal acts.  Pepsi suggested it would be useful to 
persuade the GVN to include IP issues in school curriculum. 
Robert Stoll, Director of the Office of Enforcement at USPTO 
noted that companies can wage effective public awareness 
campaigns, including recognition of officials who act 
effectively to enforce IPR.  Microsoft's representative 
added that a key part of the message the U.S. Government and 
companies need to send out is that IPR protection also 
benefits the companies and people of Vietnam. 
 
Industry input on IP Law 
------------------------ 
 
9. (SBU) Baker and McKenzie briefed participants on the 
recent establishment of the Vietnam Anti-Counterfeiting and 
Intellectual Property Protection Association (VACIP) for 
foreign-invested enterprises in Vietnam.  Modeled on the 
Quality Goods Brand Protection Committee (QBPC) in China, 
VACIP will serve as a collective voice for industry on IP 
issues and work with the GVN to improve IPR enforcement. 
VACIP plans to send the GVN a position paper with 
recommendations for changes to the draft law on IPR and is 
likely to highlight the need for: more effective criminal, 
civil and administrative penalties; provisions for Internet 
service providers (ISPs) and corporate liability for 
copyright piracy; a shortening of cancellation and 
opposition procedures for trademarks; improved handling of 
well-known marks; stricter border measures; and regulations 
for assessing damages in trademark cases involving unfair 
competition. The GVN plans to promulgate the new IPR law 
later this year. 
 
Next Steps 
---------- 
 
10. (U) At the conclusion of the Roundtable, the Ambassador 
emphasized that the Mission will continue to act as a strong 
advocate for companies' market access and IP concerns.  He 
committed to sending a letter to Deputy Prime Minister Vu 
Khoan highlighting key points raised during the Roundtable 
and requesting that the DPM open a dialogue on IP issues. 
He encouraged companies to support VACIP and suggested VACIP 
report regularly on the business sectors' IP priorities to 
the most senior officials in the GVN. 
 
Lunch with GVN Public and Private Sector 
---------------------------------------- 
 
11. (U) Following the Roundtable, the Ambassador hosted a 
lunch for participants, Vietnamese private sector 
representatives, and GVN officials active on IPR issues. 
Robert Stoll from the USPTO and Timothy Trainer, President 
of the Washington-based Global Intellectual Property 
Strategy Center, spoke about the benefits of public/private 
partnerships in IPR enforcement. 
 
MARINE