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INTERNATIONAL TRADE : Thai Piracy Likely to Top U.S. Hit List : Property rights: The entertainment industry, among others, is pressing for sanctions to protect copyrights and patents.

April 26, 1993|KEN STIER | SPECIAL TO THE TIMES

BANGKOK, Thailand — For nations that have done little to curb violations of U.S. intellectual property rights, the day of reckoning may come this week.

Cited for the last two years as among the worst offenders in Asia, Thailand may be facing stiff sanctions when the office of the U.S. trade representative Thursday announces the results of its annual compliance review.

The United States may impose 100% duties on Thai exports, including shoes, garments and jewelry--all industries that are big employers in Thailand. Sanctions could have broad implications, forcing such industries to relocate outside the country to avoid penalties and trimming Thailand's economic growth.

In an attempt to avoid similar penalties, Taiwan's legislature last Thursday adopted a set of copyright law revisions, including requirements that the Taiwanese obtain permits from U.S. copyright holders for any imports of copyrighted products.

Thailand has made some progress on patent protection for pharmaceuticals, has implemented a stronger trademark law and has promised to extend copyright protection to computer software. But the U.S. entertainment industry says Thailand is renowned for pirating movies and music, and the industry is pressing American officials to retaliate immediately.

Pirates control 90% of the video market here and reportedly cost the U.S. film industry about $30 million last year. To many in Hollywood, the time for talking has passed. Total U.S. losses due to piracy in Thailand were about $123 million in 1992, including $49 million on computer programs and $20 million on books, according to industry officials.

"There is no point in engaging in the charade that to date has characterized copyright enforcement in Thailand," the Motion Picture Assn. of America said last week in an angry letter to U.S. trade officials.

The International Intellectual Property Alliance, an umbrella organization founded in 1984 that represents the American recording, publishing, computer software and motion picture industries, is also urging Washington to impose sanctions immediately. Last year, U.S. industry sustained losses of $4.6 billion worldwide due to copyright violations, the IIPA said.

U.S. industry representatives are getting a sympathetic hearing from the Clinton Administration. They argue that failure to stem intellectual property piracy will stunt U.S. economic growth as well as the economic development of foreign nations that allow violations.

But in addition to pressing the U.S. government, American industry officials have turned up the heat in discussions with Thai officials.

Michael Schulhof, chairman of Sony Corp. of America, recently told senior Thai officials that the firm might reconsider its investment plans in Thailand if there are no real improvements in protecting intellectual property rights.

These new pressures seem to have sufficiently intimidated Thai officials into taking some unprecedented steps to catch violators. But observers say it is far too early to say that Bangkok's reign as the pirate capital of Southeast Asia is over.

In recent months, Thai officials have launched an impressive spring offensive against pirates, including targeting large operations and seizing equipment used to make illegal duplications of movies and recordings.

Prime Minister Chuan Leekpai has directed government officials to "pull up copyright violators by the roots."

Longtime observers of Thailand's yearly ritual of appearing to be cracking down on pirates say more has probably been accomplished in the last two months than in the previous two years, but plenty of skepticism remains.

"It's all a show," said Dhiraphol Suwanprateep, an attorney with Baker & Mackenize, MPAA's local representative.

Government officials have a number of obstacles to overcome in sustaining effective enforcement action. A well-regarded special police unit--the economic crime suppression division--has only 20 officers to cover the entire country. Skimpy salaries have long left civil servants ripe for bribery, making any enforcement at the foot-soldier level problematic.

Some foreign firms, however, have learned to secure police assistance by honoring the customary (and apparently legal) practice of giving "rewards" to police, even if only for doing their jobs. Police participating in a typical raid expect a reward roughly equivalent to their monthly salary. Generally, police ignore the most blatant offenders, including street trade vendors who do a brisk business selling pirated materials to locals and the 5 million tourists visiting Thailand each year.

Additionally, puny fines--in comparison to the enormous profits from piracy--and minimum jail terms for those guilty of piracy show that "copyright enforcement in Thailand is a farce," said MPAA Executive Director Eric H. Smith. Current law provides for a maximum fine of $4,000 and a jail sentence not exceeding one year, but a typical sentence is an $800 to $1,600 fine, according to lawyers who try such cases.

Draft legislation meant to head off U.S. sanctions will set a minimum fine of $1,600, raise the maximum to $16,000 and impose a possible four-year jail sentence. Few here expect the legislation to be implemented. Even if there were adequate statutes, observers say, Thai judges do not consider copyright violations a serious offense and are unlikely to impose harsh sentences.

"We know of no other way at this point to get the government's real attention short of very painful trade sanctions that penalize Thailand as it has penalized us," the MPAA's Smith said in recent testimony before the U.S. Senate.

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