US embassy cable - 05KUWAIT1965

UNCLAS SECTION 01 OF 05 KUWAIT 001965 
 
SIPDIS 
 
SENSITIVE 
 
STATE PLEASE PASS USTR JFENNERTY 
 
E.O. 12958: N/A 
TAGS: ETRD, ECON, PREL, KIPR, KU 
SUBJECT: KUWAIT:  THREE IPR SEMINARS IN THREE WEEKS 
 
REF: A. KUWAIT 36 
 
     B. KUWAIT 790 
     C. 04 KUWAIT 4217 
     D. 04 KUWAIT 3828 
 
This cable is sensitive but unclassified; please protect 
accordingly.  Not for internet distribution. 
 
1.  (SBU) Summary and Comment.  After their country was 
strongly criticized this past year for its poor intellectual 
property rights (IPR) record, Kuwaitis from inside and 
outside the government organized three different IPR seminars 
in late April and early May.  The first event, an April 25 
roundtable organized by the Kuwait Bar Association, brought 
together four discussants to debate the International 
Intellectual Property Alliance's (IIPA) 2005 Special 301 
submission on Kuwait.  Most participants agreed that Kuwait's 
1999 copyright law is inadequate and that the penalties for 
convicted pirates are insufficient.  They also spoke about 
losses the Kuwaiti economy sustains as a result of 
infringement.  One speaker, however, defended Kuwait's 
copyright law and penalty regime, and claimed that Kuwait 
does not need to join the Berne or Rome Conventions because 
they are subsumed within TRIPs (which, as an obligatory 
international protocol, is automatically considered part of 
Kuwaiti domestic law, he contended). 
 
2.  (SBU) On May 2-4, Kuwait Customs held an internal, 
three-day IPR training session for 60 of its employees. 
(Note.  This was training not in direct response to the 
Special 301 decision for 2005, but was as part of the 
agency's ongoing, regular program to combat IPR crimes.  End 
Note.)  The seminar featured presentations by representatives 
of international companies, who educated Customs employees 
about how to detect counterfeits of their products.  As a 
result of the training Customs received from General Motors 
(GM), they determined that an entire recent shipment of auto 
parts from Saudi Arabia were fakes, and GM learned about a 
previously unknown factory counterfeiting its products. 
 
3.  (SBU) Finally, the Ministry of Information and Kuwait 
Chamber of Commerce and Industry organized a two-day seminar 
on IPR on May 9-10 that included speakers from the 
government, private sector and academia.  Again, most 
participants agreed that Kuwait's IP laws are inadequate, and 
that more training and interministerial cooperation are 
necessary.  Of special note, however, was a speaker from the 
Ministry of Commerce and Industry's Patents and Trademarks 
Department, who asserted that intellectual property rights 
holders share some of the blame for Kuwait's lousy IP record 
because their products are too expensive, "forcing" consumers 
to buy cheaper knock-offs. 
 
4.  (SBU) During the conference's second day, which was 
devoted to the private sector's role in upholding IPR, a 
speaker from the Kuwait Bar Association's IPR committee was 
highly critical of the Information Ministry's Experts 
Department, which she said has no IP experts and no standards 
for determining piracy.  As a result, she said, the courts do 
not trust the experts' opinions when assessing an IP case. 
She also scolded the GOK for arguing with the veracity of 
international reports about Kuwait's IP shortfalls and 
failing to enact their recommendations.  A representative 
from the Ministry of Information's Artistic Works Department 
concluded the seminar with a somewhat defensive presentation 
on the ministry's achievements.  Of note, however, were the 
statistics that she presented showing that within a 20 day 
period starting in mid-April, the ministry conducted raids 
that led to the confiscation of more pirated goods than the 
ministry had seized in all of 2004. 
 
5.  (SBU) Comment.  The negative fall-out from the Special 
301 process has evidently gotten the Kuwaitis' attention, and 
raised the profile of IPR.  Although the audience at the 
Ministry of Information's seminar was tiny, the conference 
was not well organized, and at times it seemed as though 
Information was simply going through the motions to prove 
that it is doing something about IPR, it did provide an 
interesting range of opinion from government, academia and 
the private sector.  The Bar Association, in translating the 
IIPA Special 301 submission into Arabic, distributing it 
widely, and openly criticizing the GOK for rebuffing its 
offer to cooperate on IPR, has ratcheted up the pressure 
significantly.  We are hopeful that this, combined with the 
need for IP improvement to advance the TIFA process, will 
convince the GOK to launch a coordinated, sustained and 
serious campaign (following on Kuwait Customs' lead) to 
better its IP record in 2005.  End Summary and Comment. 
 
Kuwait Bar Association Discusses Special 301 
-------------------------------------------- 
 
6.  (SBU) After being strongly criticized this past year for 
Kuwait's poor intellectual property rights (IPR) record, 
Kuwaitis from inside and outside the government organized 
three different IPR seminars in late April and early May. 
The first event, an April 25 roundtable organized by the 
Kuwait Bar Association, brought together four discussants to 
debate the International Intellectual Property Alliance's 
(IIPA) 2005 Special 301 submission on Kuwait.  The Bar, which 
paid to have the report translated in full into Arabic, had 
distributed the report widely to its membership in advance of 
the seminar.  Several members commented to econoff that they 
were "shocked" to read how poorly Kuwait had fared in this 
"harsh" report; they did not, however, disagree with its 
substance. 
 
7.  (SBU) The forum brought together Ahmad Al-Mulaifi, a 
liberal nationalist member of Parliament (MP); the Ministry 
of Information,s outgoing Legal Adviser and IPR Committee 
Chief Judge Khaled Al-Hendi; Dr Fayez Al-Kanderi, a civil law 
professor at Kuwait University,s law school (Al-Kanderi will 
soon be replacing Al-Hendi, who is being recalled to the 
bench, at the Ministry of Information); and Sami Al-Anzy, 
Microsoft,s compliance manager for Kuwait.  The participants 
spoke to a full house of about 40 audience members; the 
seminar was covered widely by the print and broadcast media. 
 
8.  (SBU) MP Al-Mulaifi began by offering an overview of 
Kuwait,s 1999 copyright law, which he readily admitted is 
inadequate and does not protect new, innovative technologies 
(particularly in the information technology sector). 
Al-Mulaifi strongly advocated increasing the low maximum 
penalties for convicted pirates (a fine of 500 Kuwaiti dinar, 
or about $1700, and up to one year in jail; the courts have 
never, however, imposed a jail sentence).  He also noted that 
while IP crimes are extremely profitable to pirates, they are 
equally destructive to the Kuwaiti economy and potentially 
harmful to consumers' health and safety. 
 
9.  (SBU) During his presentation, Al-Hendi offered a neutral 
reading of the history of the Special 301 process, and 
described its importance to the U.S.-Kuwait Trade and 
Investment Framework Agreement (TIFA) discussions.  Al-Hendi, 
who is a member of Kuwait,s TIFA team, did not argue with 
Kuwait,s placement on the Priority Watchlist, which he said 
IIPA had recommended based on (among other things) Kuwait,s 
insufficient legal protection for IPR.  Like Al-Mulaifi, 
Al-Hendi commented on the economic harm that rampant piracy 
inflicts, and noted that this must be rectified for Kuwait to 
attract serious investment. Al-Anzy's presentation likewise 
focused on Kuwait's economic losses that stem from IP 
infringement.  Yet rather than dwell on what Kuwait is doing 
wrong, Al-Anzy reframed the argument to show how Kuwait would 
benefit from greater IP protection. 
 
10. (SBU) Unlike the other three speakers, Al-Kandari 
defended Kuwait,s copyright law (which the U.S. considers to 
be inconsistent with TRIPs requirements).  According to him, 
the law has provisions that can be adapted to guard against 
new types of IP crimes.  He also contended that the copyright 
law should not be seen in isolation from other Kuwaiti laws, 
and he criticized IIPA for, in his view, not being familiar 
with the legal system in Kuwait.  He said that while he is 
amenable to increasing the financial penalty for piracy, he 
does not agree with increasing the maximum one-year prison 
sentence.   Furthermore, he claimed that Kuwait does not need 
to join the Berne or Rome Conventions, which he said are 
subsumed within TRIPs.  Since Kuwait is a member of the WTO 
and therefore obliged to uphold TRIPs, he contended, these 
conventions' provisions are considered part of Kuwaiti 
domestic law.  (Note.  This interpretation is at odds with 
that of the current Ministry of Information Legal Advisor, 
who was actively pushing for Kuwait to join Berne and Rome. 
End Note.) 
 
11. (SBU) Following the seminar, Microsoft's Al-Anzy (please 
protect) commented to econoff that because Al-Kandari is an 
academic who is outside the government, he (Al-Kandari) looks 
at piracy from a theoretical perspective and does not 
recognize the extent of Kuwait's problem.  Al-Azny also 
believes that Al-Kandari does not yet grasp the larger 
implications of poor IP protection, namely that Kuwait will 
not be able to liberalize its market until it increases IP 
protection.  Still, he is hopeful that once Al-Kandari 
assumes his position as the Minister of Information's legal 
adviser, he will come around. 
 
Kuwait Customs: Leading the Way in the GOK 
------------------------------------------ 
 
12. (SBU) On May 2-4, Kuwait Customs held an internal, 
three-day IPR training session for 60 of its employees. 
(Note.  This was training not in direct response to the 
Special 301 decision for 2005, but was as part of the 
agency's ongoing, regular program to combat IP crimes.  End 
Note.)  Customs has been the pioneer agency within the GOK on 
IP enforcement, and continues to be the cornerstone of the 
GOK's IPR program.  (Note.  The U.S. Customs Liaison Officer 
has played an active, key role in pushing Kuwait Customs to 
fight IP violations.  End Note.)  The Kuwait Customs IPR team 
opened the conference by outlining the team's role and 
discussing the ways in which they can assist Customs 
inspectors in determining whether goods are infringing. 
Customs then turned the conference over to representatives of 
international companies,  who educated Customs employees 
about how to detect counterfeits of their products.  Chanel 
and Louis Vuitton officials, whose high-end merchandise is 
frequently copied, conducted an extensive training session on 
their goods' distinguishing features.  They also spoke about 
possible concealment methods that pirates use to export 
fradulent goods. 
 
13. (SBU) Several presenters spoke about the threat that 
counterfeit products pose to consumers.  For example, the 
French company Schneider Electric offered information about 
the danger of counterfeit electronics.  General Motors (GM) 
and Toyota flew trainers into Kuwait to teach Customs how to 
detect counterfeit auto parts.  (Note.  This has become a 
high-profile issue lately, with the Ministry of Commerce and 
Industry recently carrying out large raids on shops selling 
fake auto parts.  End Note.)   The session also demonstrated 
the benefits that can accrue to both the trainers and the 
trainees.  Upon learning about the auto parts that GM 
manufactures legitimately in Saudi Arabia, one Kuwait Customs 
inspector commented that Customs had just cleared a shipment 
of a different GM car part that had been manufactured in 
Saudi Arabia.   Because of what they learned from GM, Customs 
now knows that those items were counterfeits.  At the same 
time, GM now can trace (and hopefully shut down) a new source 
of fake auto parts, based on what they learned from the 
seminar participants. 
 
14. (SBU) According to the IPR team members, most of the 
audience was very attentive and had good questions and 
comments throughout.  Customs plans to hold similar training 
sessions every 2-3 months. 
 
Ministry of Information Organizes 1st IP Seminar 
--------------------------------------------- --- 
 
15. (SBU) At a two-day seminar organized by the Ministry of 
Information and the Kuwait Chamber of Commerce and Industry 
on May 9-10, speakers from the government, private sector and 
academia spoke about different aspects of intellectual 
property rights.   Although the new Minister of Information 
was scheduled to open the two-day conference, his deputy came 
in his stead and delivered the Minister's speech for him. 
 
16. (SBU) Manal Al-Baghdadi, the Ministry of Information,s 
Legal Controller within the Intellectual Property Department, 
opened the May 9 session, which was centered on the 
government's role in protecting IPR.  She noted that the 
Undersecretary has begun requiring her department to submit 
quarterly reports on its IPR actions, and said that the 
number of inspectors has been increased from 24 to 30. 
Al-Baghdadi contended that protecting IP is critical to 
encouraging local inventors to continue innovating, so that 
they can be assured that their discoveries will remain 
proprietary.  She also noted that piracy results in job 
losses in the local economy, and can lead to increased crime. 
 
17. (SBU) Al-Baghdadi was frank in admitting that Kuwait,s 
1999 copyright law is inadequate.  She also acknowledged that 
the maximum penalty of 500 Kuwaiti dinar (about $1700) for 
convicted IPR violators is too low.  According to 
Al-Baghdadi, the Ministry is drafting a new law that will 
increase the penalties for violators and address the 
copyright law,s weaknesses.  (Note.  Al-Baghdadi's comments 
at the seminar contrasted with remarks she made the previous 
week to a local newspaper, in which she complained vigorously 
about the unfairness of IIPA's Special 301 submission, and 
particularly its targeted criticisms of the Ministry of 
Information.  She was quoted by the newspaper as saying, "We 
are not Superman, but we are doing our best."   End Note.) 
 
18. (SBU) Other government presenters spoke about shortfalls 
in Kuwait's IP program that are often raised by the USG and 
the IP industry.  For example, the Ministry of Interior,s 
Col. Adel Al-Khazam lamented the lack of coordination among 
GOK ministries, and said that an interministerial committee 
was necessary so that different agencies could benefit from 
each other's experiences and expertise.  (Note.  According to 
Microsoft,s enforcement manager, the Council of Ministers 
this week approved the creation of such a committee.  End 
Note.) 
 
19. (SBU) Rania Al-Essa from Kuwait Customs spoke about the 
benefits of training, especially that offered by rights 
holders.  She noted that the rights holders can also learn 
from the experiences of enforcement (as illustrated by 
Customs' and GM's exchange on counterfeit auto parts, 
described in para 13).  Like Al-Khazam, Al-Essa underscored 
the importance of cooperation among agencies, saying that 
Customs works regularly with the Ministries of Health, 
Information and Commerce. 
 
Do Rights Holders Share Blame for Piracy? 
---------------------------------------- 
 
20. (SBU) Other government speakers were less willing to 
accept blame for Kuwait's IP record.  Mansour Al-Mutairi from 
the Ministry of Commerce and Industry's Patents and 
Trademarks Department admitted that piracy is a problem in 
Kuwait, and while he cited evidence of his Ministry,s 
commitment to upholding IPR - referring 63 piracy cases to 
the public prosecutor,s office and seizing 680,000 pirated 
CDs and games in the first quarter of 2005 - he cautioned 
that better IP protection will take time.  Al-Mutairi then 
asserted that intellectual property rights holders share some 
of the blame for Kuwait's lousy record.  In his view, rights 
holders are charging too much for proprietary products, and 
should be willing to sell their products for less if they 
want to make a dent in counterfeit sales.  Al-Mutairi cited 
the case of a businessman who was looking to purchase 
software for his company, but who claimed he could not afford 
to buy original software and was therefore "forced" to buy 
pirated copies.  (Note.  Microsoft, for one, sells discounted 
software in the Kuwaiti market.  For example, all ministry 
employees are eligible to purchase Microsoft Office for 5 
Kuwaiti dinar, or $17; university students and faculty are 
also given a discount.  End Note.) 
 
21. (SBU) Professor Ahmad Mouneer Al-Najjar from Kuwait 
University took strong issue with Al-Mutairi's contention 
that rights holders should bear the burden of upholding IPR. 
Al-Najjar emphatically stressed that compliance with TRIPs 
provisions is mandatory for all WTO members, including 
Kuwait, and noted that the Government of Kuwait is obliged to 
enforce IPR as part of the government's international 
commitments.  He also refuted the notion that companies are 
pricing their products irrationally.  According to him, 
product pricing reflects certain sunk costs (such as research 
and development) that decrease over time, particularly as 
legitimate competition emerges.  For this reason, he said, 
countries need to focus on developing competitive industries 
rather than allowing pirate markets to flourish.  He also 
noted that better IP protection will yield greater foreign 
direct investment and enhance consumer protection. 
 
22. (SBU) Al-Najjar emphasized the importance of public 
education, saying that if young people (and students 
particularly) do not understand the importance of IPR, they 
will not abide by regulations protecting it.  While 
advocating the use of the "stick" to enforce IP laws, he also 
called for using education to convince people that they 
should be self-motivated to obey IP regulations.  He noted 
that to this end, the university hopes to offer an elective 
course on intellectual property rights, which would be 
sponsored by an international corporation. 
 
Day Two:  Role of the Private Sector 
------------------------------------ 
 
23. (SBU) On day two, which was devoted to the private 
sector's role in upholding IPR, the audience thinned 
considerably from about 40 on the first day to no more than a 
dozen.  Representatives from Microsoft and Rotana, an Arabic 
music production and distribution company, spoke about their 
companies' methods of combatting piracy and about the 
economic harm that they suffer as a result of piracy in the 
Kuwaiti market.  The Rotana representative called on the 
public to ensure that the products they are buying are 
genuine, and urged the GOK to enforce IP laws and impose 
suitable penalties on violators. 
 
24. (SBU) Bader Al-Mubarak from Enhanced Engineering and 
Multi-Technologies Company, an international information 
technology group, said that the private sector should offer 
seminars and training to educate the public about the 
importance of IP protection.  At the same time, he said, the 
private sector should press hard on the government to carry 
out its IPR laws.  Al-Mubarak was critical of the Kuwait 
Chamber of Commerce and Industry for not taking IPR more 
seriously, and called on it to set up an IPR program.  He 
also lamented the fact that no Kuwaiti companies had agreed 
to participate as speakers in the seminar (all of the 
conference's private sector participants were representatives 
of international companies), and precious few had sent 
representatives to observe. 
 
An Experts Department without Expertise 
--------------------------------------- 
 
25. (SBU) A particularly blunt speaker was Nidal Al-Hamaydan 
from the Kuwait Bar Association's IPR committee.  She called 
for greater collaboration between the ministries and the Bar 
(which has significant expertise on IP matters), and 
expressed her disappointment that the Ministries of 
Information and Interior have thus far rebuffed the Bar's 
formal requests for cooperation.  As had previous speakers, 
Al-Hamaydan agreed that Kuwait's IP laws are inadequate, 
especially with regard to prescribing punishments.  She also 
criticized the Ministry of Information for its inspection 
regime, saying that the ministry does not take seriously its 
legal responsibility to close stores selling pirated goods. 
 
26. (SBU) According to Al-Hamaydan, the individuals working 
in the Information Ministry's Experts Department are not IP 
experts, and have no specialized training.  As a result, she 
said, the courts do not trust the experts' opinions when 
assessing an IP case. (Note.  We have heard this same 
criticism from Judge Khaled Al-Hendi, the Ministry of 
Information's departing legal advisor.  End Note.) 
Al-Hamaydan also decried the lack of standards within the 
department, claiming that each employee interprets the law 
differently from the other.  Al-Hamaydan called for the 
ministry to implement a clear policy on how the law should be 
interpreted, and then enforce that policy. 
 
27. (SBU) Al-Hamaydan called the 2005 Special 301 report 
"alarming," and said that it clearly demonstrates that 
Kuwait's IP problem is worsening.  She criticized the GOK for 
arguing with the veracity of reports coming from embassies 
and international organizations about Kuwait,s IP 
shortfalls.  "These are facts," she said, and she advocated 
that the government begin implementing the recommendations 
contained in these reports.  Finally, she noted that there 
was a seminar in Jordan recently on e-commerce and piracy 
that had high-level participation from other Arab countries, 
including a juror from Saudi Arabia.  There was no such 
attendance by the GOK. 
 
28. (SBU) Rasha Al-Mulla from the Ministry of Information's 
Artistic Works Department concluded the seminar with a 
somewhat defensive presentation on the ministry's 
achievements.  Of note, however, were the statistics that she 
presented.  According to her, within a 20 day period starting 
in mid-April, the new Assistant Undersecretary for IP 
Enforcement, Brahim Al-Nouh, ordered raids on 94 targets that 
led to the confiscation of more pirated goods than the 
ministry had seized in all of 2004.  She claimed that this 
should be enough to refute international criticism of 
Kuwait's IP record. 
LEBARON