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December 14th, 2011 WW Staff | NikeLeaks Cables: Asia
 

Vietnam: IPR CONCERNS CONTINUE TO WORRY HCMC BUSINESSES

     
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Reference ID: 07HOCHIMINHCITY681
Created: 2007-06-27 12:20
Released: 2011-08-30 01:44
Classification: UNCLASSIFIED
Origin: Consulate Ho Chi Minh City

VZCZCXRO7092
RR RUEHDT RUEHLN RUEHMA RUEHPB RUEHPOD
DE RUEHHM #0681/01 1781220
ZNR UUUUU ZZH
R 271220Z JUN 07
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC 2801
INFO RUEHHI/AMEMBASSY HANOI 1996
RUEHBK/AMEMBASSY BANGKOK 0286
RUCNARF/ASEAN REGIONAL FORUM COLLECTIVE
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHHM/AMCONSUL HO CHI MINH CITY 3002

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000681
 
SIPDIS
 
SIPDIS
 
STATE FOR EAP/MLS AND EB/TPP/IPE JBOGER
STATE ALSO PASS USTR DBISBEE AND RBAE
STATE ALSO PASS USPTO FOR JURBAN
USDOC FOR 4430/MAC/AP/OPB/VLC/HPPHO
AMEMBASSY BANGKOK FOR USPTO JNESS
 
E.O. 12958: N/A
TAGS: ETRD ECON KIPR BEXP PGOV VM
SUBJECT: IPR CONCERNS CONTINUE TO WORRY HCMC BUSINESSES
 
 
HO CHI MIN 00000681  001.2 OF 002
 
 
1. (SBU) Summary: HCMC-based business representatives and
lawyers told visiting USTR Director for Intellectual Property
and Innovation Rachel Bae and USPTO Regional IP Officer Jennie
Ness that local authorities are not sufficiently proactive in
investigating and prosecuting copyright and trademark
infringement cases, usually taking action only when provided
with specific information by the companies about violators.  The
lack of enforcement is compounded by confusion among GVN
agencies as to who takes the lead on investigation and
infringement determination.  Our contacts say that the GVN is
not completely fulfilling its WTO obligations on IPR
enforcement, namely in the confiscation of pirated and
counterfeit goods, increased fines for infringers, and the
revocation of business licenses from violators.  That said,
there have been some positive experiences by companies that have
invested time and resources in developing relationships with
enforcement agencies.  End Summary.
 
2. (SBU) In June 18 meetings with HCMC-based business
representatives and lawyers, USTR Director for Intellectual
Property and Innovation Rachel Bae and USPTO Regional IP Attachi
Jennie Ness discussed the current state of IPR enforcement in
Vietnam.  Our contacts expressed frustration that authorities
are unwilling to investigate and take action against IP
violators without precise intelligence provided by IP owners.
Representatives from Diageo -- liquor distributor of several
international brands including Johnnie Walker, Smirnoff, and
Guinness -- told us they have to expend "tremendous resources"
to investigate suspected violators themselves and then to press
authorities to act.  In one case, Diageo had to investigate and
provide local police with the location, participants and exact
times of counterfeit whiskey production before they would
conduct a raid.   Phan Minh Nhut, Nike Vietnam's Brand
Protection Specialist, reported that while Nike has seen the IPR
environment improve over the last seven years, authorities still
will only act when prompted by brand holders.  Alycia Draper,
Director for Policy and External Affairs at Merck Sharp and
Dohme, added that the investigative burden on Western
pharmaceutical companies is huge, particularly those with
minimal staff on the ground.  In part due to market access
restrictions, most brand and copyright holders whose goods are
present on the Vietnamese market do not have the presence and
in-country resources to devote to this level of brand violation
investigation.
 
3. (SBU) Currently, five GVN agencies in HCMC can investigate
and fine IP infringers, including the People's Committee,
Customs, The Market Management Board (MMB), the Department of
Science and Technology (the parent agency of the National Office
of Intellectual Property) and the Economic Police.  Nike
representatives reported that agencies are often confused over
which has the authority and obligation to take the lead on IP
investigations.   Chris Mcnabb of Diageo told us that even when
authorities go on raids, they are often reluctant to define
seized goods as counterfeit items, declaring the merchandise to
be copyright infringements, which carry less harsh penalties.
The GVN defines counterfeiting narrowly and is thus unwilling to
declare items that are confusingly similar to trademarked goods
but have minor changes made (subtle changes in font type on
package labeling, for example) as counterfeit.  There is also
confusion over which government agency has the authority to make
infringement determinations.  Before the new Intellectual
Property Code took effect, the NOIP or DOST would assist other
agencies in determining whether a particular good was
infringing.  Under the new IP Code, a body of specialized IP
agents should play this role.  However, our contacts told us
that this new group has yet to be formed.  In the case of a
criminal raid, police send the confiscated merchandise to a
criminal assessment division that determines if the goods in
question are in fact IPR violations.  Rightsholders in HCMC told
us that, under current practices, the aggrieved company has no
input into a determination of infringement.  Last year, law
enforcement authorities investigated four cases of counterfeit
Nike products, all of which were thrown out, even though Nike
believes it had provided clear and convincing evidence of IPR
violations.
 
4. (SBU) In cases of civil lawsuits brought by trademark owners,
local courts are often unwilling to rule against local
Vietnamese on behalf of a foreign plaintiff.  Even in successful
rulings, damages awarded are often low and do not cover the
legal and investigative costs a company has to incur.  Nike
 
HO CHI MIN 00000681  002.2 OF 002
 
 
representatives reported that even successful court cases did
not lead to post-ruling enforcement of trademark infringement.
Moreover, our contacts told of several instances of counterfeit
goods being returned to the violating enterprise, even following
administrative fines.
 
5. (SBU) Vietnam's new IPR law sets the maximum penalty for the
production of counterfeit or pirated goods at five times the
market value of the infringing goods.  While these fines are
much higher than the previous maximum fine of 100 million dong
(6,250 USD), implementing decrees and circulars have yet to be
promulgated to bring this law fully into force.  Circulars for
Decree 106, which contains IPR violation penalty guidelines, are
currently being developed, according to Tran Thi Thanh Ha, an IP
lawyer a Baker & McKenzie in HCMC.  In the interim, GVN
authorities are operating under administrative circulars from
the old IPR laws, which limit fines to 20 million dong (1,250
USD) for most IP agencies and 100 million dong for the Chairman
of the local People's Committee.  USTR Director Bae pointed out
that the use of old circulars contradicts pledges made by
Vietnamese WTO negotiators that following accession, a
completely new IPR enforcement regime would come into effect.
This included a pledge to revoke the business licenses of IP
violators, an action that local business representatives told us
has yet to occur.
 
6. (SBU) Tran Thi Thanh Ha from Baker & McKenzie believes that,
even with new circulars for Decree 106, Vietnamese authorities
will be unable to impose higher penalties for IP violations.
Ms. Ha explained that, under Vietnamese law, the GVN cannot
amend the Vietnamese Criminal Code through the issuance of a
judicial circular, even though Vietnamese negotiators made such
a claim during WTO negotiations.  Ultimately, the National
Assembly will have to pass changes to the Criminal Code to
criminalize IPR violations, she said.  Ms. Ha also believes that
the IPR Law is subject to interpretation of various GVN
agencies, raising the possibility that inconsistencies in old IP
legislation will continue.
 
7. (SBU) In separate meetings with the Market Management Board
and Department of Science and Technology, local authorities
agreed that there was room for improvement in HCMC's IPR
enforcement track record.  Authorities cited incomplete legal
reform and lack of training for enforcement officials as the
primary reasons for this less than ideal situation.  Market
Management Board officials were fast to point out the successful
cooperation they have had in investigating IP cases along side
large multinational companies such as Nike, Triumph, Honda and
Cisco.  They added that right holders who are not very active in
Vietnam and work through law firms are not helpful.  USTR
Director Bae responded to Market Management Board officials that
not just companies with a presence in HCMC have to be protected.
 It is the duty of GVN IPR enforcement agencies to protect all
rights holders, regardless of whether they have a corporate
presence in HCMC.  Science and Technology Department officials
appeared to be forward leaning, noting that they had developed
an action plan which they were happy to share with USG and
welcomed USG comments.
 
8. (SBU) Comment:  While the new IPR Law was supposed to
simplify enforcement and provide greater protection to rights
holders, there has been no real change on the ground in HCMC.
In fact, delays in the releases of administrative circulars has
further compounded official confusion over what actions can be
taken, resulting in reluctance to investigate and enforce IPR
violations.  Inexperience in the field of IPR exacerbates this
situation.  However, there have been some successes, although
small, and interest on the part of Vietnamese officials to do
more provides an opening for improvement.
 
9. (U) USTR Director for Intellectual Property and Innovation
Rachel Bae and USPTO Regional IP Attachi Jennie Ness cleared on
this cable.
 
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