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Cablegate: Guangdong Ipr White Paper: Criminal Cases, Case Transfers,

VZCZCXRO7728
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0494/01 1160854
ZNR UUUUU ZZH
R 260854Z APR 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 6000
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 03 GUANGZHOU 000494

SIPDIS

USDOC FOR 4420/ITA/MAC/MCQUEEN, DAS LEVINE
STATE FOR EB/TPP MASSINGA, FELSING
STATE PASS COPYRIGHT FOR TEPP
STATE PASS USPTO FOR DUDAS, BROWNING, ANTHONY, WONG
STATE PASS USTR FOR MENDENHALL, MCCOY, ESPINEL, CELICO
USDOJ FOR SUSSMAN
DHS/CPP FOR PIZZECK
USPACOM FOR FPA

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: KIPR ECON ETRD WTRO CH
SUBJECT: Guangdong IPR White Paper: Criminal Cases, Case Transfers,
and Audio-Visual Campaigns

REFERENCE: Guangzhou 376

(U) This document is sensitive but unclassified. Please protect
accordingly.

1. (U) SUMMARY: Guangdong's 2006 intellectual property rights (IPR)
white paper cites specific efforts against infringement in the
audio-visual industry, improved coordination between Customs and
PSB, and four new IPR complaint centers for the public. Guangdong
courts concluded 113 IPR-related criminal cases and 2,778 civil
cases in 2006 (compared with 94 and 3,316, respectively, in 2005).
Guangdong authorities transferred 38 trademark cases to the police
in 2006 (up from 17 in 2005). Guangdong granted more patent and
trademarks than any other province for the 12th consecutive year.
END SUMMARY.

Criminal and Civil Cases
------------------------

2. (U) According to the 2006 IPR white paper, Guangdong courts
concluded 113 criminal cases involving 221 individuals in 2005
(compared with 94 cases and 232 individuals in 2005). Guangdong
courts concluded 2,778 IPR-related civil cases in 2006, more than
any other province (down from 3,316 IPR-related civil cases in
2005). The report notes that 48 percent of IPR cases were settled
through mediation.

3. (U) In a pilot program begun in June 2006, the provincial
government designated three courts to integrate criminal, civil, and
administrative IPR cases. Guangdong has also designated eight
county-level courts to handle IPR civil cases in an effort to
alleviate the workload of intermediate courts. Guangdong has done
more in both of these areas than any other province, according to
the report.

Administrative Cases and Case Transfers
---------------------------------------

4. (SBU) The report states that Guangdong Intellectual Property
Office (IPO) and Public Security Bureau (PSB) established an IPR
Enforcement Liaison Office in 2006 to improve the transfer of cases
from administrative to judicial authorities.

-- The Guangdong Administration of Industry and Commerce (AIC) and
Technical Supervision Bureau (TSB) investigated 2,358 trademark
cases and transferred 38 cases to the PSB in 2006, up from 17 case
transfers in 2005. (In a March 14 meeting with a USTR-led
delegation, a Guangdong TSB representative said case transfers have
increased in part because local offices can receive monetary awards
of up to RMB 2 million [USD 260,000] for doing so.)

-- The Guangdong Cultural Bureau investigated 5,033 IPR cases in
2006, transferring 541 to "other authorities" (it is unclear if
"other authorities" include the PSB).

-- The Guangdong Copyright Bureau investigated 1,907 IPR cases (47
of which involved internet piracy) and transferred 36 cases to
"other authorities" in 2006, down from 51 in 2005. (In a separate
report issued by the Guangdong IPO on April 25, one of the "Top Ten
IPR cases of 2006" was brought by the Association of American
Publishers against a website that illegally distributed one of its
members' publications. Guangdong Copyright closed the website and
assessed an administrative penalty. This was the only case
involving a foreign company to be included in Guangdong's "Top Ten"
list.)

-- Guangdong IPO investigated 57 cases of patent infringement in
2006.

-- The Guangdong Quality Supervision Bureau investigated 2,205 IPR
cases and transferred 41 to the PSB in 2006, up from 23 in 2005.

-- The Guangdong Food and Drug Administration investigated 8,105
cases and transferred 29 to the PSB in 2006.

-- The Guangdong Department of Agriculture investigated 139 IPR
cases in 2006.


GUANGZHOU 00000494 002 OF 003


Police Investigations
---------------------

5. (SBU) The Guangdong PSB investigated 396 criminal IPR cases in
2006, concluding 288 and arresting 806 suspects (the 2005 numbers
were 426, 331, and 1,207, respectively). Most of these cases were
generated by the Mountain Eagle II campaign, which lasted from March
to December 2006. The report takes special note of cases in the
cigarette, pharmaceutical, audio-visual, and cosmetics industries.
(During the March 14 meeting with USTR, a Guangdong PSB
representative noted cooperation with Pfizer and Proctor & Gamble in
2006.)

Audio-Visual and Software
-------------------------

6. (U) The report highlighted two campaigns targeting pirated CDs
and DVDs in 2006: "Operation Sunshine" and the "100 Day Campaign."
The PSB seized 11 illegal optical disc production lines in 2006
(down from 15 in 2005) and arrested more than 40 people. The
Guangdong Cultural Bureau investigated 5,033 A/V-related cases and
seized nearly 49 million pieces of pirated goods in 2006, including
optical discs. The Guangdong Cultural Bureau targeted its
enforcement efforts on computer markets and electronics markets.
Copyright and Cultural bureaus together investigated 7,888 cases,
involving more than 75 million A/V products.

7. (U) The report also notes a special campaign that took place from
March to April 2006, led by local Cultural bureaus, which targeted
A/V products that infringed on U.S. films. The operation, which was
coordinated with the Motion Picture Association, led to actions
against more than 1,000 stores in Guangzhou and Shenzhen, according
to the white paper. Authorities fined 42 stores and revoked the
licenses of nine others.

8. (U) Regarding software legalization, the report states that all
levels of government offices in Guangdong were using legal software
by the end of 2006. Copyright authorities focused legalization
efforts on private enterprises in 2006, including SMEs.

Customs
-------

9. (U) Guangdong Customs officials conducted 636 IPR-related
seizures in 2006 (up from 521 in 2005), according to the white
paper. Five regional Customs offices set up special IPR divisions.
During a six-month campaign targeting express-mail providers,
Guangdong Customs made 130 seizures, including fake Nike, Chanel,
and Nokia products. Guangdong Customs improved coordination with
the Guangdong PSB as a result of new national regulations; the first
joint Customs-PSB case in Guangdong took place in March 2006 and
four infringers were sent to prison for copying Motorola products.
Guangdong and Hong Kong customs authorities conducted six joint
enforcement operations in 2006 (down from nine in 2005) and jointly
investigated more than 30 IPR cases.

Trade Fairs
-----------

10. (U) According to the white paper, trade fairs were a priority
area for IPR enforcement in 2006. Guangdong IPO, AIC, and Copyright
authorities staffed IPR complaint centers at a number of fairs.
Authorities at the two sessions of the Canton Trade Fair in 2006
handled 1,045 IPR complaints, up from 882 in 2005. (In addition to
Guangdong IPO, AIC, and Copyright, an official from the Guangzhou
IPR Complaint Center [see below] was present at the April 2007
Canton Fair, see septel.) Other prominent trade fairs with IPR
complaint centers highlighted in the report include those featuring
lighting equipment, home decorations, automobiles, and furniture.

IPR Complaint Centers
---------------------

11. (U) Following on a national program, in 2006 Guangdong
established IPR Complaint Centers in Guangzhou, Shenzhen, Shantou,
and Zhanjiang to handle phone and e-mail inquiries from the public.
The provincial-level Guangzhou center handled 18 IPR complaints in
2006. (During an April 17 visit to the center, staff said they had

GUANGZHOU 00000494 003 OF 003


handled 29 complaints from summer 2006 to April 2007, transferring
all of them to relevant authorities, and answered an additional 70
IPR-related inquiries.) The hotline phone number is 12312.

Patent and Trademark Applications
---------------------------------

12. (U) The white paper states that Guangdong received more patent
and trademark grants than any other province in 2006 for the 12th
consecutive year. It noted that Guangdong accounts for 10 percent
of the country's invention patent granted. For the sixth
consecutive year, Guangdong companies received more "China Famous
Brand" awards in 2006 than any other province. Eight Guangdong
products, including bacon, oranges, and black tea, were given
geographic indication trademarks in 2006 (the same as in 2005),
bringing the total to 22.

GOLDBERG

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