US embassy cable - 03HANOI1559

UNCLAS SECTION 01 OF 04 HANOI 001559 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR E, EB/IPC:DRBEAN, EAP/BCLTV AND EB/ODC 
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 LASHLEY AND 4431/MAC/AP/OKSA/HPPHO 
USDOC ALSO FOR ITA/TD/OTEA/JJANICKE AND ITA/TD/SIF/CMUIR 
 
E.O. 12958: N/A 
TAGS: ETRD, EINV, ECON, KIPR, VM, IPROP 
SUBJECT: VIETNAM: REORGANIZATION OF IPR AGENCIES - FUTURE OF 
TRADEMARK OFFICE IN LIMBO 
 
SENSITIVE BUT UNCLASSIFIED - HANDLE ACCORDINGLY 
 
1.  (SBU) SUMMARY:  In a move that has left Vietnamese IPR 
agencies, foreign donors, and trademark holders/seekers 
stunned and seriously concerned, the Government of Vietnam 
has decided to transfer the trademark function from the 
National Office of Industrial Property (NOIP) in the 
Ministry of Science and Technology (MOST) to the Ministry of 
Trade (MOT).  This move increases the number of Ministries 
involved in IPR from 2 to three and splits trademarks away 
from patents (which remain under NOIP), contrary to 
international trends in IP administration.  In addition, 
copyright issues related to software will be moved from the 
Copyright office (COV) at the Ministry of Culture and 
Information (MOCI) to NOIP.  The decision was made at the 
highest political level via Prime Ministerial Decree and 
against the recommendations of IPR experts and donors. The 
decree effectively strips NOIP of its responsibility for 
trademarks and adds responsibility for copyright (except for 
cultural and art works).  In addition, the decree changes 
NOIP's name to the National Office of Intellectual Property. 
Decree 54 was published in the Official Gazette on June 06 
and will become effective June 21. Therefore, as of Friday 
June 20, 2003, Vietnam's ability to register, adjudicate or 
enforce trademarks will be suspended for an indeterminate 
period of time.  The adjudication of all pending 
applications or complaints is already suspended and no new 
applications are being accepted. 
 
2.  (SBU) While the political decision has been made, it 
appears the GVN has not given much thought to how it will 
implement these changes; as of June 20 no detailed plan has 
been released regarding how this handover will be done - or 
when.  Although there has been no announcement, NOIP 
believes that all its trademark personnel and "movable" 
facilities will be transferred to MOT and that a decree will 
be issued next week. (MOT currently does not have any 
trademark specialists on its staff.)  Even after the change 
is effected, the consensus in the IPR community here is that 
Vietnam is moving toward a more incoherent system of IPR 
management. Although NOIP apparently made a valiant effort 
to argue the merits of the proposed change, their factual 
arguments (and those of other experts) have fallen on deaf 
ears.  The changes put in jeopardy the extensive investment 
international donors (particularly the Japanese and the 
Swiss) have made in enhancing the capacity of NOIP. Vietnam 
has not notified WIPO of the changes and may soon be in 
violation of its international obligations, in particular, 
to accept, process, and enforce trademark applications. 
 
3.  (SBU) Embassy's attempts to clarify the status with MOT 
have been unsuccessful.  No one in the GVN seems to know 
what will happen or why Vietnam has chosen to reverse the 
progress it has made. If there is a greater policy strategy 
out there, no one in the IPR community here has been able to 
discover it.  Although we hesitate to draw the simplest 
conclusion, i.e. follow the money and power, it may be the 
most accurate in this case.  The Minister of Trade's star 
seems to be rising, partly because of his tough stance with 
the U.S on catfish and textiles, as well as the success for 
Vietnam of the BTA.  Few believe that the Prime Minister's 
decision can be reversed but Embassy is working with local 
experts and Embassies to take a concerted approach with the 
GVN, registering our concern about the change, in particular 
the effect on NOIP and Vietnam's ability to manage 
trademarks, and outlining our expectations that Vietnam 
fulfill its international obligations. In addition, 
Embassies discussed recommending to the GVN that they assign 
overall coordinating responsibility for IPR to the Office of 
the Government under the Prime Minister (OOG), in the same 
manner that OOG coordinates BTA implementation. END SUMMARY. 
 
History of a Questionable Decision 
---------------------------------- 
 
4.  (SBU) Last year, the Ministry of Science and 
Technology's  National Office of Industrial Property, other 
international IPR experts and a number of donors proposed a 
strengthening and consolidation of the IPR responsibilities 
in the Vietnamese government (GVN).  Expectations were that 
NOIP would receive more authority, including taking over 
copyright from the Ministry of Culture and Information. 
However, the Ministry of Trade (MOT) has apparently been 
lobbying heavily with the Prime Minister's office to have 
the trademark registration function of the trademark office 
moved to MOT.  The Decree stipulate that trademark office in 
its entirety is not moving, just the registration and 
renewal function.  The remainder of trademark function and 
patents will remain with NOIP, now to be renamed the 
National Office of INTELLECTUAL Property.  The trademark 
office generates revenues of about USD 3 million per year, 
which constitutes 80 percent of NOIP's total revenues. NOIP 
keeps about 20 percent of that total to finance the 
operation of the patent and trademark office. Local IPR 
experts assume that MOT will now keep those funds (and cite 
it as a possible motivation for this move). Officially, the 
GVN has not clarified how much - if any - of those funds 
will be retained at NOIP to finance the rest of its 
operations. 
 
5. (SBU) While the political decision has been made, it 
appears the GVN has not given much thought to how it will 
implement these changes. The change is set to take place on 
June 23, however, no detailed plan has been released 
regarding how this handover will be done - or when.  Neither 
MOT nor MOCI have submitted to the Government the 
legislation describing the parallel changes that need to be 
made to their own organizational structure, although we have 
heard that one on MOT is coming out soon.  No formal 
announcement has been made regarding whether NOIP staff will 
be transferred to MOT. MOT currently does not have trademark 
specialists on its staff and, according to a number of 
contacts, does not want to bring onboard NOIP's trademark 
specialists.  However, we understand from NOIP that they 
expect that personnel and "movable" facilities will be 
transferred to MOT. 
 
6.  (SBU) Additionally, NOIP will apparently continue to be 
in charge of the drafting of laws and provision of 
information to the public related to trademarks. It is not 
clear how the  adjudication and appeal functions will work 
as MOT did not request their transfer.  The only thing that 
is clear at this point is that NOIP won't be doing trademark 
registration and renewals or collecting those fees. 
Additionally, counter to the need to tighten search and 
examination procedures with new registrations, one of MOT's 
"selling points" was their promise to register trademarks in 
15 days or less, which would make adequate search, 
examination, and opposition periods impossible. While 
officials from MOT have been quiet on the issue, officials 
from both COV and MOST have expressed a great deal of 
frustration with the decision. 
 
7. (SBU) Econ Counselor recently met with local IPR lawyers, 
technical assistance experts, visiting experts from IPR 
associations in Bangkok, and other donor Embassies.  All 
are extremely concerned by this turn of events and all of 
whom confirmed that they, like us, had been unable to obtain 
any clarification of the GVN's plans, even though as of 
Friday June 20, 2003, Vietnam will apparently cease to 
issue, adjudicate, enforce, or initiate new trademarks. 
Even after the change is effected, the consensus in the IPR 
community here is that Vietnam is moving toward a more 
incoherent system of IPR management. In the short- to medium 
term  this reorganization will make both registration and 
protection of IPR more complicated and difficult than it 
already is.  Businesses will now need to go NOIP for pirated 
computer software, the COV for pirated music CDs/DVDs and 
movies, and the yet to be established trademark office under 
MOT for counterfeit goods. 
 
8.  (SBU) Most disturbing about this turn of events is that 
NOIP apparently made a valiant effort to argue the merits of 
the proposed change.  However, their factual arguments (and 
those of other experts and donors) have fallen in deaf ears. 
In particular, NOIP clarified for the PM's office that 
registration of IP rights is a legal procedure for 
establishment of IPR, not for administrative management, 
that is, registration is the process of establishment of 
trademark and appellation origin rights. They argued that 
internationally, most countries have a combined office for 
patents and trademarks, primarily because procedures for 
registration of trademark, patent and design tend to be 
uniform; splitting the offices will cause duplication and 
redundancy and is counter to international norms. NOIP 
argued that the move would cause trademark registration 350 
trademark applications/ week) to come to a standstill, as 
the details of the move is sorted out.  Finally, NOIP argued 
that at present, the most serious challenges for Vietnam are 
raising awareness of IPR and enforcement of existing laws. 
They argued that the focus of any change should be to give 
higher priority to protection of IPR and improved service 
quality from GVN agencies.  Specifically, several Ministries 
and agencies (including MOT) already have significant 
responsibility for protecting IPR which they have yet to 
fulfill.  (MOT for example heads the Market Management 
Bureau, which has responsibility for ensuring that IPR 
infringing products are not being sold in stores.) 
 
9.  (SBU) In a highly unusual move, the Director of NOIP 
gave several candid interviews to major newspapers and and 
TV news programs this week, where he was publicly critical 
of the decision. (Note:  We understand that the Director was 
"called in" to speak to his superiors following the 
appearance of the articles.) In both his public statements 
and his private discussions with the Embassy, he was 
distraught over the dismantling of an organization that he 
personally, as well as many others, have worked so hard to 
improve over the last few years. He cited the waste of human 
and infrastructure resources and he despaired over the 
effect on NOIP's modernization project. 
 
10.  (SBU)  The changes put in jeopardy the extensive 
investment international donors (particularly the Japanese 
and the Swiss) have made in enhancing the capacity of NOIP. 
(Note: Both the Swiss and the EU in their donor status 
unsuccessfully attempted to dissuade the GVN from making 
these changes.)  Currently, NOIP handles about 10,000 patent 
and trademark applications every year. Through JICA, Japan 
has been funding the "Modernization of Industrial Property 
Management Project", a 4-year, $4 million project to 
computerize the patent and trademark office.  The JICA 
representative who is seconded to NOIP told Econ Counselor 
that Tokyo has said the project was targeted to NOIP and 
that no resources can be transferred to MOT. When trademark 
registration goes, JICA can no longer provide any technical 
or resource assistance on trademarks. 
 
11.  (SBU) A visiting regional IP lawyer based in Bangkok 
briefed Econ Counselor on his meetings with the GVN, UNDP, 
and other IPR experts in Hanoi.  He noted that the GVN 
seemed oblivious to their international obligations to 
accept, process, and enforce trademark applications and have 
not notified WIPO. (Note: The Bilateral Trade Agreement 
(BTA) also addresses Vietnam's obligation to register and 
protect trademarks in Chapter II, Article 6.)  He 
characterized the GVN plan to separate registration from the 
rest of the trademark function as "insane."  He also 
predicted that breaking out registration and trying to do it 
in 15 days would only result in increased litigation, as 
there is no way to do due diligence in the search, 
examination and opposition requirements.  He also noted his 
concern over the GVN position that plant varieties are "not 
IPR." (Note:  In the BTA, although Vietnam may exclude some 
plants and animal varieties from patentability, it must 
protect them under the UPOV Convention.)  Finally, he noted 
that although this was a problem for all trademark 
holders/seekers, it was a more serious one for Vietnamese 
businesses, who can't easily go abroad to register their 
marks but have only a domestic option. 
 
12.  (SBU) From a different perspective though, one expat IP 
attorney told Econoff he believed the change could be good 
for the processing and enforcement of trademarks in Vietnam. 
The attorney expressed a great deal of frustration with 
NOIP's handling of trademarks and noted that perhaps MOT 
would "take trademarks in a different direction" - something 
that could ultimately be good for Vietnam. 
 
13. (SBU) COMMENT AND NEXT STEPS:  Embassy's attempts to 
clarify the status with MOT have been unsuccessful, with our 
contacts telling us that literally, no one knows. The big 
question is why Vietnam would choose to reverse the progress 
it has made to consolidate, modernize, and professionalize 
its trademark and other IPR functions. And the 
responsibility would be shifted to MOT, which is currently 
unable to carry out the functions it already has as it 
struggles with BTA implementation, WTO accession, and 
implementation of numerous bilateral trade agreements, such 
as textiles. 
 
14. (SBU)  If there is a greater policy strategy out there, 
no one in the IPR community here has been able to discover 
it.  Although we hesitate to draw the simplest conclusion, 
i.e. follow the money and power, it may be the most accurate 
in this case.  The Minister of Trade's star seems to be 
rising, partly because of his tough stance with the U.S on 
catfish and textiles, as well as the success for Vietnam of 
the BTA.  Washington agencies will remember that the current 
Minister of Trade negotiated the BTA and took a lot of 
criticism for "giving away" too much.  Now, he can point to 
the enormous increase in exports and take credit. 
 
15.  (SBU) Econ Counselor met with local IPR experts and 
other embassy reps to discuss possible next steps.  Few 
believe that the Prime Minister's decision can be reversed 
but Embassy believes that it can be modified or at least its 
impact lessened (although it's not easy, we've done it 
before). Embassies agreed to take a concerted approach with 
the GVN, registering our concern about the change, in 
particular the effect on NOIP and Vietnam's ability to 
manage trademarks, and outlining our expectations that 
Vietnam fulfill its international obligations.  In addition, 
we discussed recommending to the GVN in the future that they 
assign overall coordinating responsibility for IPR to the 
Office of the Government under the Prime Minister (OOG), in 
the same manner that OOG coordinates BTA implementation. 
END COMMENT AND NEXT STEPS.