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Cablegate: Uspto U/S Dudas and Supremepeople's Court Discuss

VZCZCXRO3510
OO RUEHCN RUEHGH
DE RUEHBJ #2455/01 1030331
ZNR UUUUU ZZH
O 130331Z APR 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6806
INFO RUEHCN/AMCONSUL CHENGDU 8164
RUEHGZ/AMCONSUL GUANGZHOU 2762
RUEHGH/AMCONSUL SHANGHAI 7361
RUEHSH/AMCONSUL SHENYANG 7844
RUEHHK/AMCONSUL HONG KONG 9204
RUEHIN/AIT TAIPEI 6395
RUEHKO/AMEMBASSY TOKYO 1327
RUEHUL/AMEMBASSY SEOUL 0070
RUEHMO/AMEMBASSY MOSCOW 8653
RUEHGV/USMISSION GENEVA 1773
RUEAHLC/DHS WASHDC
RUCPDOC/USDOC WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RHMCSUU/FBI WASHINGTON DC

UNCLAS SECTION 01 OF 05 BEIJING 002455

SIPDIS

State for EAP/CM - JYamomoto and EB/IPE - EFelsing

USTR for China Office - AWinter; IPR Office - RBae; and OCG
- SMcCoy, ACelico

Commerce for National Coordinator for IPR Enforcement -
CIsrael

Commerce for MAC 3204/LRigoli, ESzymanski

Commerce for MAC 3043/McQueen

LOC/Copyright Office - MPoor

USPTO for Int'l Affairs - LBoland, EWu

DOJ for CCIPS - Asharrin
DOJ for SChembtob
FTC for Blumenthal
FBI for LBryant

DHS/ICE for IPR Center - DFaulconer

DHS/CBP for IPR Rights Branch - Pizzeck
SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: KIPR ETRD ECON WTRO PGOV CH
SUBJECT: USPTO U/S DUDAS AND SUPREMEPEOPLE'S COURT DISCUSS
DEEPER COOPERATION ON PR PROTECTION AND INNOVATION

-------
Summay
-------

1. (SBU) Commerce Under Secretary and Director of the
United States Patent and Trademark Office Jon Dudas met
with Supreme People's Court (SPC) Deputy President Zhang
Jun on March 28 to discuss intellectual property rights
(IPR) protection and innovation in China. The two
discussed China's criminal law, judicial interpretation
(JI), statistics exchange, and technical assistance
programs. Zhang also made reference to a new agenda for
IPR protection in China, offering only that the details
will soon be forthcoming. End Summary.

2. (SBU) Zhang opened by saying that China's focus on
building an innovation-based society is a recent
development in the country's history. As a result, while
legislation to protect IPR and innovation has improved,
China's foundation of economic and technological
development, and judicial practices, remains relatively
weak. He added his view that progress on IPR, including
early measures to penalize infringement, have to date been
satisfactory, but that the courts must continue to study
judicial best practices to improve IPR protection.

-----------------------
Judicial Interpretation
-----------------------

3. (SBU) U/S Dudas expressed his admiration for
improvements in China's IPR enforcement, which he credited
in part to a judicial interpretation issued by the SPC in
2004. He added that the United States nevertheless remains
concerned over criminal threshold levels, valuations, and
the courts' use of probation in lieu of imprisonment. U/S
Dudas stated that further review and revisions of the 2004
judicial interpretation might be necessary. Zhang
responded that, compared with the 1998 JI that preceded it,
the 2004 JI intensified crackdowns on IPR crimes by
reducing criminal thresholds and better addressing China's
IPR situation. He explained that the effectiveness of the
measures - and of increased law enforcement efforts - was
evidenced by a 30 percent increase in the number of IPR
crimes prosecuted from 2004 to 2005. Zhang admitted,
though, that China should increase the penalties for such
crimes. (Note: On April 5, the SPC and SPP released a
supplement to the 2004 judicial interpretation related to
criminal intellectual property infringement. The
JI(II)lowered criminal thresholds of copyright materials by
50 percent, from 1,000 to 500 illegal copies of copyrighted
works. The JI (II) also clarified the definitions

BEIJING 00002455 002 OF 005


"reproduction and distribution" reference in Article 217 of
the Criminal Law. According to the new interpretation,
"reproduction and distribution" include the acts of
reproducing OR distributing, or both reproducing AND
distributing. End Note.)

---------
Probation
---------

4. (SBU) Zhang continued that the use of probation in IPR
cases is in accordance with China's existing criminal code
and the principle of Chinese law to allow criminals the
opportunity to repent and reform rather than serving jail
time. He said probation is often used for misdemeanors,
first time criminals, and criminals who show remorse, and
that the option is used carefully and has a strong
deterrent effect. U/S Dudas agreed that maximum deterrence
should be a key goal, and that the United States generally
seeks to achieve this by lowering criminal thresholds and
increasing penalties, particularly on IPR crimes. U/S
Dudas requested that the SPC provide statistics that might
more clearly demonstrate China's recent progress in
improving IPR enforcement, and offered to provide United
States data that might be useful to those efforts. Both
parties agreed to coordinate the sharing of statistics
between Mission Senior IPR Attache and Chief Judge Jiang
Zhipei of China's IPR Tribunal.

------------------
Internet Copyright
------------------

5. (SBU) U/S Dudas explained that United States law changes
regularly to address the rapid advance of Internet
technologies, and questioned how China is preparing to deal
with online copyright infringement. Zhang admitted that
Internet-related IPR crimes are occurring with increasing
frequency, including infringements of the right to
personality, reputation, and property. He lamented that
legislation always lags behind the situation on the ground,
and described the SPC's greatest challenge as anticipating
problems that will arise as a result of future
technological developments. Zhang added that China is not
experienced in investigating Internet crimes, collecting
evidence in such cases, or meting out penalties, but that
laws will eventually be changed to address new concerns.
Citing an example, Zhang wondered whether the online theft
of virtual property should be handled in the same way as
theft of tangible property, with similar punishment. He
said that, although such issues are not yet included in
judicial interpretation, some investigators and

BEIJING 00002455 003 OF 005


"grassroots" judges have handled such cases in progressive
ways with controversial judgments. In that way, he pointed
out, judicial practices - and not necessarily legislation -
are moving lawmaking forward in China. At the suggestion
of U/S Dudas, both parties agreed to address such emerging
issues, and both parties agreed to explore a cybercrime
program to share experiences among judges and experts from
both countries.

------------------------------
Universal IPR Court for China?
------------------------------

6. (SBU) Judge Randall Rader of the United States Court of
Appeals for the Federal Circuit offered that the United
States has greatly benefited from a uniform, national
policy on IP administered by a unified court, and that
several other countries have adopted a similar model. He
explained that such specialized courts allow judges to
develop the technical expertise to more effectively
administer IP law, and suggested that China might benefit
from such a system. Zhang acknowledged that an IP court
would raise the professionalism of the SPC by increasing
technical understanding and competence and that -
"generally speaking" - he supports the idea and its many
benefits. However, he added that such a court will not be
established in China until after a broad-based reform of
the judicial system as a whole, at which point the
judiciary will be "up to a specific standard." He joked
that Judge Jiang in particular strongly supports the
establishment of such a court, as he would serve as its
presiding judge.

7. (SBU) Short of establishing a unified IP court, Zhang
explained that the SPC works hard to improve its IPR
chambers through increased staffing, stability, and
expertise. He added that China's IPR judges are some of
its most qualified and educated. Zhang welcomed Judge
Rader's offer to bring his entire IPR court to China in the
future for a dialogue and information exchange.

--------------------
Technical Assistance
--------------------

8. (SBU) U/S Dudas suggested that petitioners and
applicants in the United States would benefit from a better
understanding of China's judicial system, and that a
program to invite speakers from China to the United States
also would be useful. Zhang agreed, and also responded
favorably to U/S Dudas' offer to bring Chinese officials to
Washington to attend the Patent and Trademark Office's

BEIJING 00002455 004 OF 005


Global IPR Academy.

-----------------------------
China's National IPR Strategy
-----------------------------

9. (SBU) In closing, Zhang emphasized that the protection
of IPR is in line with China's national interests and a
common ground between the United States and China. He said
that the SPC issued a "judicial document" in January 2007
that will comprehensively improve IPR protection and lead
to more crackdowns against infringers. Zhang said the
details of the plan will soon be forthcoming (Note: Zhang
may have been referring to China's national strategy on IPR
protection, which the State Intellectual Property Office on
March 27 announced will be released in the first half of
2007. End Note.), but offered that it will include three
principles: equity and fairness; uniformity of standards
of judicial administration; and equal protection to
domestic and foreign rights holders. He further suggested
that, under the new plan, civil and administrative law (not
criminal law) will bear first responsibility to deal with
IPR. Zhang went further to say that judicial protection is
not the most important element in fighting IPR crimes, but
that a more integrated approach, including the general
strengthening of the rule of law and the harmonious and
socially equitable development of China's economy, will
serve to reduce the incidence of all crimes.

--------------------
Meeting Participants
--------------------

10. (U) U.S. Participants:

Commerce Under Secretary for Intellectual Property and
USPTO Director Jon Dudas
U.S. International Intellectual Property Enforcement
Coordinator Chris Israel
USPTO Director of the Office of International Relations
Lois Boland
Embassy Senior IPR Attache Mark Cohen
Embassy IPR Attache Todd Thurwacther
USPTO Attorney-Advisors: Elaine Wu, Jasemine Chambers, Tim
Browning, Conrad Wong; and Trade Policy Analyst Susan Tong
Embassy Economic Affairs Second Secretary Geoff
Siebengartner (notetaker)
Interpreter
U.S. Court of Appeals for the Federal Circuit Judge Randall
Rader

11. (U) Chinese Participants:

BEIJING 00002455 005 OF 005

SPC Vice President Justice Zhang Jun
SPC IPR Tribunal Chief Judge Jiang Zhipei
SPC IPR Tribunal Deputy Judge Kong Jiangjun
SPC Research Center Judge Li Hongjiang
SPC Administrative Tribunal Judge Gan Wen
SPC Second Criminal Tribunal Judge Liu Miaoxiang
Interpreter

-------
Comment
-------

12. (SBU) Following USTR's April 9 announcement to bring
two WTO cases against China, the extent of future bilateral
cooperation on IPR and related issues remains uncertain.
As anticipated, some Chinese officials who in the past have
supported cooperation with the United States on IPR
protection and enforcement have expressed dissatisfaction
at the announcement. Further, it is likely that officials
who may be willing to continue to work together may face
internal pressure to limit such efforts. End Comment.

13. (U) U/S Dudas' delegation has cleared this report.

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