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Cablegate: Guangdong Highlights Ipr Efforts in 2007

VZCZCXRO9362
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0267/01 1300922
ZNR UUUUU ZZH
R 090922Z MAY 08
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 7149
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHIN/AIT TAIPEI 9481
RUEAUSA/DEPT OF HHS WASHDC
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC
RHMCSUU/FBI WASHINGTON DC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC

UNCLAS SECTION 01 OF 03 GUANGZHOU 000267

SENSITIVE
SIPDIS

State for EAP/CM - JYamomoto; EEB - AColeman, JBoger
State for INL - JVigil
USTR for China Office - AWinter; IPR Office - RBae, JRagland; and
OCG - SMcCoy
Commerce for National Coordinator for IPR Enforcement
Commerce for CIsrael
Commerce for MAC 3204/ESzymanski
Commerce for MAC 3043/McQueen
Commerce for MAC 3042/SWilson, JYoung
Commerce for NWinetke
LOC/Copyright Office - MPoor
USPTO for Int'l Affairs - LBoland, EWu
DOJ for CCIPS - MDubose
DOJ for SChembtob
FTC for Blumenthal
FBI for LBryant
DHS/ICE for IPR Center - Dfaulconer, TRandazzo
DHS/CBP for IPR Rights Branch - GMacray, PPizzeck
ITC for LLevine, LSchlitt


E.O. 12958: N/A
TAGS: ETRD KIPR ECON PGOV CH
SUBJECT: Guangdong Highlights IPR Efforts in 2007

REF: A) GUANGZHOU 244, B) GUANGZHOU 132

(U) This document is sensitive but unclassified. Please protect
accordingly. Not for release outside U.S. government channels. Not
for internet publication.

1. (SBU) Summary: Reviewing Guangdong Province's progress on
intellectual property rights (IPR) enforcement at an April 24 press
conference, Intellectual Property Office Director General Tao
Kaiyuan announced a new strategic plan aimed at improving IPR
conditions. One omission: no plan details. Enforcement statistics
for the province - part of the 2007 Provincial Report on IPR - were
also released, showing only modest changes from the previous year.
IPO officials also highlighted regional cooperation efforts,
increased enforcement of internet-based sales of infringing goods
and enforcement at trade fairs. New statistics on enforcement gave
no indication that protection for U.S. rights holders in Guangdong
has substantially improved. End summary.

Guangdong's New IPR Strategic Plan
----------------------------------

2. (U) At her first press conference since taking office on April 1,
Director General Tao Kaiyuan of the Guangdong Provincial
Intellectual Property Office (IPO) briefed the press on the
provincial government's 2007 Report on Intellectual Property Rights
(IPR). Tao also announced the Province's 2007-2020 IPR Strategic
Plan but provided few details on what measures the plan would
include. Tao said the IPO and other provincial agencies were still
working on drafting the implementing rules for the plan.

Enforcement Results
-------------------

3. (SBU) Enforcement actions for each major IPR category were
announced at the press conference. Tao revealed that administrative
patent disputes numbered 256 (compared to 236 cases in 2006), with
214 cases resolved by branches of the provincial or local IPO. The
Administration for Industry and Commerce (AIC) investigated 3,056
trademark-related cases (up from 2,358 in 2006), of which 1,833
involved foreign rights owners, and 31 cases were transferred from
administrative to judicial authorities (a disappointing drop from 38
in 2006) for handling in civil or criminal courts. Provincial and
local branches of the Quality Supervision Bureau (QSB) investigated
1,801 cases of counterfeiting (down from 2,205 in 2006), claiming
the closure of 860 (up substantially from 498 in 2006) counterfeit
plants with a value of goods involved worth more than RMB 84 million
(USD 12 million.)

4. (U) Criminal prosecution numbers were also released. Provincial
and local branches of the Public Security Bureau (PSB) investigated
503 cases (up from 396 in 2006) and cracked 345 criminal cases of
IPR infringement and product counterfeiting (compared to 288 in
2006), arresting 894 criminal suspects (806 arrests in 2006).
Notable cases included:
-- cooperation with the FBI and Microsoft to breakup a major
counterfeit software ring (ref A), and
-- a large operation to disrupt fake domestic cigarette networks.

5. (SBU) Guangdong courts received 3,122 civil cases of first
instance (up from 2,640 in 2006) and 576 cases of second instance

GUANGZHOU 00000267 002 OF 003


(appeals), concluding more than 99 percent of IPR cases received.
However, courts only received 86 criminal IPR cases of first
instance (a disappointing decline from 116 in 2006), involving 157
criminal suspects, with all 2007 criminal cases concluded before the
end of the year. The IPR report also said 1,627, or 52.4 percent,
of the court's IPR cases of first instance were settled via
court-sponsored mediation (compared to 1,331 cases or 47.9 percent
in 2006), including cases where plaintiffs withdrew their
complaints. As a possible sign of increased transparency in 2007,
Guangdong Province led the country by posting a total of 3,155
effective IPR verdicts on the internet (increasing from 1,418
verdicts in 2006) at http://ipr.chinacourt.org, in a section called
China IPR Judgments and Decisions.

China's Patent and Trademark Leader for 13 Years
--------------------------------------------- ---

6. (U) It was another banner year for Guangdong's patent and
trademark filings in 2007. New patent filings in the province
totaled 102,449 with 56,451 patents granted during the year, annual
increases of 12.7 percent and 29.7 percent, respectively. Invention
patents totaled 26,692, with 3,714 granted, representing annual
increases of 25 percent and 52.2 percent, respectively. Guangdong
Province ranked first in China for patent filings and grants for the
13th straight year; it was also first among provinces for invention
patents for the third straight year.

7. (U) Tao proudly announced continuing growth in Guangdong's
trademark filings with the accumulated number of registered
trademarks exceeding 380,000 in 2007. According to the White Paper,
the province has ranked first in China for trademark applications
and registrations for 13 straight years. In addition, Tao said
Guangdong's efforts to promote national and provincial well-known
and famous trademarks continued to produce results with Guangdong
ranking among the leading provinces in China when comparing the
number of nationally recognized brands.

Continuing Cooperation with Neighbors
-------------------------------------

8. (U) Tao highlighted IPR cooperation with Hong Kong, Macau, other
provinces and among local governments throughout the Pan-Pearl River
Delta (Pan-PRD). She noted that Guangdong and Hong Kong have held
six IPR task force meetings since 2003, conducted over 20 joint
projects and signed a cooperation agreement for additional projects
and seminars to be held in 2007-08. Tao mentioned that a seventh
task force meeting is scheduled for July 2008, but the details have
not been finalized. In addition, the Guangdong branch of China
Customs, working with Hong Kong and Macau Customs, shared over 100
pieces of intelligence concerning IPR protection in 2007.

Increased Discussion of Key U.S. Enforcement Concerns
--------------------------------------------- --------

9. (U) Responding to a journalist's question during the press
conference about emerging IPR infringement trends in Guangdong, Li
Shanxiong, Director of the Guangdong PSB Economic Crimes
Investigation Division (ECID), emphasized his division's increasing
attention to internet-related IPR infringement issues, including the
sale of infringing goods on internet retail websites. IPO Director
General Tao also commented that the Guangdong government had

GUANGZHOU 00000267 003 OF 003


increased efforts to enforce IPR at trade fairs in 2007. At last
year's two sessions of the Canton Fair, 1,621 enterprises were
involved in IPR complaints (compared with 1,045 in 2006), with 991
enterprises identified as infringing others' rights. Guangdong IPO
cited 1,077 cases of patent-related disputes across the province for
trade fairs and trade associations in 2007, demonstrating increased
attention to this category of IPR issues.

Comment
-------

10. (SBU) Although a few of the Guangdong government's 2007
statistics show improvement in IPR enforcement, such as the
increased number of factories reportedly closed for producing
counterfeit goods, other changes from the previous year were
disappointing, including the decline in number of cases referred by
AIC to judicial authorities and the drop in criminal IPR cases of
first instance handled by Guangdong courts. Overall, changes from
the previous year were modest, and there is little sign that the
business environment for IP rights holders has substantially
improved.

11. (SBU) U.S. rights holders continue to complain about specific
aspects of Guangdong Province's IP enforcement regime, including
bureaucratic and sometimes intransigent administrative agencies,
non-deterrent civil and criminal penalties for IP infringers, and
uneven application of relevant laws and regulations when handling
complaints (reftels A and B). Another concern is whether the number
and quality of Guangdong's IPR enforcement actions have kept pace
with even faster growth in patent and trademark registrations.
Despite this, possible improvements for transparency in IPR verdicts
and action on key U.S. enforcement concerns might contribute to a
more positive environment if the provincial government can sustain
these efforts over time.

GOLDBERG

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