Search

 

Cablegate: China/Ipr: Ambassador's Sixth Ipr Roundtable

VZCZCXRO1868
OO RUEHCN RUEHGH
DE RUEHBJ #7192/01 3250642
ZNR UUUUU ZZH
O 210642Z NOV 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3567
INFO RUEHCN/AMCONSUL CHENGDU 8816
RUEHGZ/AMCONSUL GUANGZHOU 3649
RUEHGH/AMCONSUL SHANGHAI 8678
RUEHSH/AMCONSUL SHENYANG 8469
RUEHHK/AMCONSUL HONG KONG 9839
RUEHIN/AIT TAIPEI 6734
RUEHKO/AMEMBASSY TOKYO 1674
RUEHUL/AMEMBASSY SEOUL 0423
RUEHMO/AMEMBASSY MOSCOW 8852
RUEHGV/USMISSION GENEVA 2030
RUEAHLC/DHS WASHDC
RUCPDOC/USDOC WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RHMCSUU/FBI WASHINGTON DC

UNCLAS SECTION 01 OF 14 BEIJING 007192

SIPDIS

State for EAP/CM - JYamomoto and EB/IPE - EFelsing
State for INL - JVigil
USTR for China Office - AWinter; IPR Office - RBae;
and OCG - SMcCoy
Commerce for National Coordinator for IPR Enforcement
Commerce for CIsrael
Commerce for MAC 3204/LRigoli, 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

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ETRD KIPR ECON WTRO PGOV CH
SUBJECT: CHINA/IPR: AMBASSADOR'S SIXTH IPR ROUNDTABLE

Summary
-------

1. (SBU) On October 23-24, the China Mission held
Ambassador Clark T. Randt, Jr.'s Sixth Annual
Roundtable Discussion on Intellectual Property Rights
(IPR) in China, with the theme "IPR Protection on the
Ground - What the United States Embassy is Doing to
Support Rights Holders in China, and What Can we be
Doing Better?" The event focused on how, in the
context of a chilly post-WTO case filing environment
for bilateral engagement on IPR, the United States
Mission to China and DC-based agencies can provide
practical support for intellectual property rights
protection and enforcement efforts and can more
closely align priorities with industry. The theme was
selected in order to address practically the
challenges posed by China's complex IPR environment,
to line up increased United States Government
resources with industry needs, and to find new ways to
engage China at a time when many avenues for formal
dialogue are blocked. Keynote speakers included
Ambassador Randt, Commerce Undersecretary Jon Dudas,
and Commerce General Counsel John Sullivan. Attendees
included more than 250 lawyers, trade association
representatives, company representatives, academics,
and United States Government officials. Each panel
offered specific recommendations, focused primarily on
China's legislative reforms, capacity building in the
judiciary, and increasing enforcement resources. End
Summary.

China-based Industry Actively Engaged on IPR
--------------------------------------------

3. (SBU) In the first panel, "China-Based Industry
Overview And Directions The Embassy Should Take on
Intellectual Property Rights," major industry
associations provided overviews of their initiatives
in China and recommended to Embassy officials how to
engage with the Chinese government on intellectual
property rights issues. First, Senior Director of the
Greater China United States Chamber of Commerce,
Jeremie Waterman, summarized current Chamber efforts
to cultivate national and local level IPR
interlocutors in China to support members' industrial
policy concerns. He highlighted recent submissions on
patent and trademark law revisions, and cooperation
agreements with provincial governments in Jiangsu and
Guangdong, adding that IPR-related WTO cases filed in
April appeared to have little impact on these
activities.

4. (SBU) Next, Caterpillar (China) Investment Company
Chairman Richard Lavin spoke on behalf of the American
Chamber of Commerce. He outlined AmCham's business
outreach and government advocacy efforts on IPR issues,

BEIJING 00007192 002 OF 014


including nearly a dozen events in 2007. Among them
were a successful Embassy/AmCham series of practical
"how to" programs, an annual white paper, and the
Chaoyang Initiative, initiated with Embassy support,
aimed at establishing a model anti-copyright,
infringement- and piracy-free zone in Beijing's
eastern Chaoyang District. Finally, Senior IPR
Counsel for General Electric Company Asia and Chairman
of the Quality Brands Protection Committee, Jack Chang,
described efforts to disrupt criminal networks as
important "firefighting" work, but said that there
should be greater focus on more fundamental "fire
prevention:" raising public awareness and improving
infrastructure and internal business processes in
China.

Recommendations from China-Based Industry
-----------------------------------------

5. (SBU) Waterman articulated several recommendations
for the Embassy: appoint a Minister Counselor-level
representative for IPR efforts; increase coordination
of government and industry input on legislative
reforms; increase involvement in coordination of
judicial and other training projects; expand outreach
efforts to Washington, DC officials, including
Congres; increase cultivation of upand-coming
Chinese officials and academics; increase support for
small- and medium-sized enterprises; engage Chinese
IPR owners; collect and disseminate statistics on IPR
protection, enforcement, and licensing; strategically
use consulates in creative IPR programming; and
provide support for licensing and enforcement on the
Internet. Waterman also raised recommendations for
the broader United States Government, including
increased public-private partnerships; a more robust
and direct private sector role in the Joint Commission
on Commerce and Trade (JCCT) IPR Working Group; long-
term budgeting for sustained, multi-year engagement on
IPR issues; increased coordination of technical
assistance (particularly with police and customs);
stronger incentives for interagency cooperation within
the United States Government; mobilization of
international organizations such as the World
Intellectual Property Organization (WIPO) and World
Customs Organization (WCO) for training assistance and
funding; an increased role for law enforcement in
coordinating with rights holders; and an increased
level of dialogue with like-minded partners, including
the EU and Japan.

6. (SBU) Chang said the Embassy should encourage China
to set up cross-functional research offices that
involve public and private stakeholders; provide data
on the implementation of the "Shanghai Initiative" to
authorize initiation of criminal investigations based
on a probable cause standard rather evidence of actual

BEIJING 00007192 003 OF 014


criminal activity; share seizure information of
exporting ports and free trade zones; prosecute
importers and distributors of IPR infringing goods;
and share best practices with China. He also urged
the United States to list counterfeit and pirated
goods as prohibited items on United States Customs
entry and exit forms, and to encourage China to do the
same. Chang also requested Embassy support for
Article 80 of the draft trademark law, requiring OEMs
for branded goods to verify trademark ownership, and
holding them liable for infringement. He also
encouraged China to translate critical information on
its trade websites into English, and to set up a
mechanism to measure progress on IPR issues. He
concluded by saying that the United States should give
China credit for improvements it has achieved, but to
remain focused on problem areas.

Pharmaceutical Industry Concerned about Bulk Chemicals
--------------------------------------------- ---------

7. (SBU) To conclude the first session, Research and
Development-based Pharmaceutical Association Committee
(RDPAC) Managing Director, Jeffrey Schultz, and
GlaxoSmithKline representative Dr. Bill Tyrrell
discussed issues of concern to the pharmaceutical
industry, including data exclusivity, patent linkage,
and the counterfeiting and sale of bulk active
pharmaceutical ingredients (API). Chinese regulations,
Schultz said, protect undisclosed data against "unfair
commercial use" for six years; however, regulatory
loopholes in the drug registration process make data
indirectly accessible to domestic generic companies.
On counterfeiting and sale of API, he said RDPAC has
partnered with MOFCOM and MORO to form a multi-
ministerial task force to enhance regulatory control
and enforcement of the problem. Tyrrell noted that a
patent linkage system and the ability to get
preliminary injunctions are imperative to protecting
the company's investments against competing generic
producers. (Note: Tyrell's comments were made in the
aftermath of a significant recent loss at the courts
for a Japanese pharmaceutical company involving patent
linkage. End Note.)

Recommendations from Pharmaceutical Industry
--------------------------------------------

8. (SBU) Schultz encouraged the Embassy to ensure that
data exclusivity and patent linkage remain on the
agenda for discussion with the Chinese; to develop
multiple constructive channels for dialogue not
limited to the IPR elements of the JCCT and SED,
including the pharmaceuticals working group under the
JCCT; and to position IPR in such a way that the
United States appears "more engaged and less
critical." He added that the United States Food and

BEIJING 00007192 004 OF 014


Drug Administration should increase cooperation with
China's State Food and Drug Administration, and that
China should be trained and encouraged to use the
Orange Book system as a model for the development of a
self-regulated patent linkage system. Schultz added
that the patent law should be changed to empower
courts to hear infringement cases even before drugs
are on sale ("patent linkage") and to enable
innovators to challenge drug applicants engaged in
registering infringing products with the SFDA at an
early stage.

High Piracy Rates in IT and Copyright Industries
--------------------------------------------- ---

9. (SBU) In the second part of the first panel, United
States Information Technology Office (USITO) Managing
Director Greg Shea and International Intellectual
Property Alliance (IIPA) President Eric Smith led
panel discussions and offered their suggestions on how
the Embassy might improve engagement on IPR issues in
China. Panelists raised concerns including the poor
quality of Chinese patents and inadequate patent
examination mechanisms; increasing Internet piracy;
lack of reliable statistics on administrative
compliance; and the lack of adequate criminal
enforcement. Copyright industry representatives said
there has been little improvement in combating piracy,
with the exception of business software. They
credited the lack of an effective enforcement model
with piracy rates that he said continue to hover
between 80 and 90 percent.

Recommendations from IT and Copyright Industries
--------------------------------------------- ---

10. (SBU) Information technology and copyright
industry panelists agreed unanimously that effective
enforcement and increased awareness are both critical
to improving China's IPR environment. They said the
Embassy should continue to engage the Chinese
government at all levels to raise awareness, improve
IPR protection education, and remind visiting United
States Government officials from additional agencies,
such as the Department of Labor, Department of
Education, and Congress to raise IPR issues with their
Chinese counterparts on such matters as non-
competition and trade secret protection, textbook
piracy, and legislative reform, respectively.
Panelists also encouraged the China Mission to engage
provincial governments on IPR. Specific suggestions
included maintaining an expert on criminal enforcement
at the Embassy; raising the Embassy IPR Attache
position to the rank of Minister Counselor; funding
programs to motivate Chinese authorities to track
cases and outcomes; creating specialized Internet task
forces within local governments; and engaging

BEIJING 00007192 005 OF 014


academics and university students on the need for
increased IPR protection.

Enforcement Remains Greatest Weakness
-------------------------------------

11. (SBU) The second panel, "Trends In Intellectual
Property Enforcement and Suggestions for United States
Government Support or Involvement" included reviews by
copyright, pharmaceutical, and agriculture industry
representatives of specific infringement cases, and
also provided suggestions for increased Embassy
engagement. Participants were unanimous in their view
that, ultimately, enforcement remains the most
important barrier to an improved IPR environment in
China, as evidenced by rules and regulations that are
frequently issued without any effect. Motion Picture
Association (MPA) Senior Vice President Mike Ellis and
International Federation of Phonographic Industries
(IFPI) Regional Counsel Benjamin Ng both detailed the
increasing threat their industries face from the
Internet, especially peer-to-peer (P2P) networks and
Internet cafes, which they described as hubs of IPR
infringement in China. They identified as a central
problem a lack of sufficient resources to monitor the
huge and growing number of infringing websites.

Industry Recommends Increased Manpower, Litigation
--------------------------------------------- -----

12. (SBU) Ellis suggested the Embassy continue to
encourage the National Copyright Administration of
China (NCAC) and the Public Security Bureau (PSB) to
increase their manpower, and to create professional
exchanges to develop the technical capacity of Chinese
law enforcement officers and judges. Ng recommended
that NCAC guidelines for cease and desist notices for
Internet infringements be streamlined, and that
notices should be followed by civil litigation. He
added that Embassy financial assistance and training
would both be effective tools.

Eli Lilly Sees Progress, but Challenges Remain
--------------------------------------------- -

13. (SBU) Eli Lilly and Company Patent Counsel Soonhee
Jang agreed that, despite progress in promulgation of
rules and regulations and increased transparency, gaps
remain in enforcement statutes and procedures, and due
process and judicial independence ae important
impediments to IPR protection. Se noted that China
ranked fourth globally in the total number of patent
litigation from 1997 to 2006, and that only 10 to 20
percent of those cases involved foreign companies.

Technical Assistance Recommended for Judiciary
--------------------------------------------- -

BEIJING 00007192 006 OF 014

14. (SBU) Jang recommended that the Embassy support
public outreach on IPR, and specifically supported the
Embassy's ongoing outreach to the media to improve
public relations for United States rights holders on
IPR as well as public diplomacy in this area. She
also encouraged programs to address China's systemic
impediments to IPR enforcement, including a lack of
experience and capability in judges; preliminary
injunctions in patent infringement cases; the lack of
a national specialized appellate IPR court; lack of an
evidence code; corruption and local protectionism;
legislative issues affecting civil procedures; and
local protectionism. Jang specifically identified a
case where a preliminary injunction had been granted
to a United States company, but thereafter the court
made a finding of no infringement, and Jang said that
compensation is now being sought against the United
States company on the basis of a vaguely worded
statute. She said such cases, if lost, may suggest a
slackening in China's efforts to protect IPR.

Concern over Shipments of Harmful Fertilizers
---------------------------------------------

15. (SBU) Representing Crop Life China, DuPont's
Elizabeth Lam addressed the concerns of the
agricultural industry, and said that products sold may
differ from their labeling, and generic brands may be
mislabeled and falsely sold as name-brand products.
In addition, Lam mentioned that confiscated
agricultural products are often channeled back to
dealers for resale; there is a high rate of repeat
offenders; a general lack of respect and coordination
among Chinese government agencies; promotion of patent
infringing products; and an increase in the number of
hidden and mobile counterfeit producers. Crop Life's
D'Arcy Quinn discussed a case involving several tons
of bulk counterfeit product that was delivered to the
Ukraine from China and suggested that a possible
solution to this problem involved regulations
regarding international shipments of hazardous goods
that would require the goods be returned to their
sender.

16. (SBU) As a solution, Lam suggested that the
Embassy engage more frequently with relevant Chinese
government ministries; emphasize personal safety;
increase education efforts; participate in joint
training of customs agents; and enhance penalties for
piracy and counterfeiting. (Note: Crop Life has
separately distributed a position paper on its issues
in Washington, DC and in China. End Note).

Case Studies: IPR Protection Successes in China
--------------------------------------------- --


BEIJING 00007192 007 OF 014


17. (SBU) The Roundtable's third panel, "Illustrative
Cases - Ways to Protect and Enforce IPR in China,"
featured case studies presented by Nike, the EU
Mission to China, Anheuser-Busch, and the Business
Software Alliance. Each described how local
conditions have impacted their ability to protect IPR.
For example, panelists cited the inability of
landlords of Chinese markets to enforce lease
agreement provisions that assess penalties for tenants
who violate IPR laws on the landlords' premises. In
addition, they described loopholes in commercial
regulations that prevent authorities from revoking
business licenses of IPR infringers and prevent
authorities from shutting down websites that deal in
counterfeit and infringing products.

Recommendations for More IPR Enforcement Success
--------------------------------------------- ---

18. (SBU) Common recommendations from panelists
included continued engagement on basic legal reform in
China so that commercial laws and regulations are
enacted with fewer loopholes and are more consistently
enforced across the country. For example, they
suggested that the United States continue to press
China for a law or regulation that provides a standard
for law enforcement or court authorities to assess the
value of counterfeit and infringing products. This
type of system, they explained, is critical to
prosecuting IPR infringement cases uniformly across
legal jurisdictions. Panelists also recommended
increased Embassy coordination with China's law
enforcement and customs authorities to help encourage
more consistent enforcement of IPR standards,
including affirming positive steps the Chinese
government takes. They noted that sharing more
detailed United States Customs information on seizures
would help companies and origin countries like China
better target infringing shipments before they arrive
at United States borders.

Legislative Reform and the Future of IPR in China
--------------------------------------------- ----

19. (SBU) Department of Commerce General Counsel John
Sullivan began the fourth panel, "IPR Directions for
the Future - Legislation and National IPR Strategies
and United States Government Support," with remarks
highlighting the connection between the rule of law
and a strong IPR protection and enforcement regime.
The theme was elaborated within the panel discussion,
which included representatives from Rohm and Haas, the
International Trademark Association, GE/NBC Universal,
the International Anti-Counterfeiting Coalition, the
American Seed Trade Association, and Acushnet.
Panelists provided insight into the status of China-s
current legislative reforms in the area of patent,

BEIJING 00007192 008 OF 014


trademark, copyright, plant variety protection,
criminal law, and civil law reform.

20. (SBU) In introducing the panel, Mission Senior IPR
Attache noted that, among the various areas of IPR law
currently under revision, China-s patent law is the
most ripe -- it is currently under examination at the
State Council for Legislative Affairs Office (SC/LAO),
and a new draft is expected to be passed to the
Standing Committee of the People-s Congress and issued
in early 2008. With regard to trademark law reform,
China-s Trademark Office has reviewed a second draft,
which has been submitted to the State Administration
for Industry and Commerce (SAIC). The public comment
period ended on October 31, 2007, after which it will
be submitted to the SC/LAO around the end of 2007.
Following review by the SC/LAO, the trademark law is
likely to be submitted to the Standing Committee of
the People-s Congress by the end of 2008. Finally,
China-s copyright law is also under review, and a
group of academic experts will prioritize issues and
conduct a preliminary study of needed reforms; however,
no draft has yet been released.

21. (SBU) Panelists raised several concerns on patent
issues, including: procedures for infringement and
invalidation; patent quality for design patents; first
filing and foreign filing license requirements;
service inventions and remuneration; the scope of
patentability -- software, "bolar" exemptions, and
patent linkage; biodiversity and genetic resource
disclosures; and compulsory licensing. On trademark
issues, concerns included: cancellation of relative
ground examination; conflict between trademark system
and conflicts with China's sui generic geographic
indication (GI) regulations; protection of well-known
mark and famous mark; compulsory destruction of
infringing/counterfeit goods; definitive removal of
infringing/counterfeit goods; and continuing pending
problems.

22. (SBU) On the topic of plant variety protection, a
panelist representing the American Seed Trade
Association said there is currently discussion within
the Chinese legislative structure on the need for
patent protection for plant varieties. While there
are no immediate indications that such legislation
will be introduced, there have been some informal
indications that China may consider accession to
International Union for the Protection of New
Varieties of Plants '91 (UPOV). Paul Schmidt,
appearing on behalf of the International
Anticountefeiting Coalition, and Jason Yao
representing QBPC discussed criminal law reform and
civil procedure law reform. With regard to the former,
they said there were recently open discussions on the
amendment of Articles 217 & 218 (relating to

BEIJING 00007192 009.2 OF 014


copyright); however, discussions of a formal amendment
have not materialized. Further, while the civil
procedure law has been revised, panelists reported
that the People's Congress recently rejected a second
revision of the legislation, calling for an expanded
scope of existing provisions. The third draft has not
yet been released.

How to Engage on Legislative Reform in China
--------------------------------------------

23. (SBU) Panelists welcomed United States Government
efforts to date to provide official comments on
Chinese legislation under reform. Many encouraged
more direct dialogue between China's National People's
Congress and the Hill. They also offered suggestions
for Embassy officials to continue supporting their IPR
concerns in China, including: support for legislative
reform and efforts to strengthen the rule of law in
China; further engagement with relevant Chinese
government entities to provide input and support on
legislative reforms. ASTA specifically recommended
more robust inclusion of life sciences technology
issues in discussions on innovation in the Strategic
Economic Dialogue. QBPC advocated addressing civil
procedure law reform more aggressively in the near
future and supported a proposed visit of the Court of
Appeals for the Federal Circuit to China, as well as
other initiatives for greater judge-to-judge
interaction on procedural issues. They also said more
focused engagement with academics would be useful for
certain earlier stage legislative issues, such as
copyright law reform. Other suggestions included:
encouraging engagement with other countries that have
sound IPR regimes; coordination with EU IPR programs;
cooperation with local industries; interfacing with
media; and engaging WIPO.


Innovation, Antitrust, and Market Access in China
--------------------------------------------- ----

24. (SBU) The fifth panel, "China's Industrial and
Intellectual Property Policy: How This Affects United
States Companies and How the Embassy Should Respond,"
included panelists from law firms Covington & Burling
and O'Melveney & Meyers, Motorola, the International
Intellectual Property Alliance (IIPA), the Motion
Picture Association (MPA), and the International
Federation of Phonographic Industries (IFPI). First,
in a discussion of self-reliant innovation and IPR
protection in China, Martin Hansen of Covington &
Burling said that there has been some progress in the
area of innovation, including China's recognition of
the linkage between R&D and innovation; recognition
(to some degree) of the linkage between IPR and
innovation; and recognition of the need to provide

BEIJING 00007192 010 OF 014


incentives to invest in R&D. However, he said that
challenges remain because China generally fails to
fully appreciate the importance of market-based
incentives.

25. (SBU) Next, Nathan Bush of O'Melveney & Meyers
discussed the relationship between IPR and antitrust,
focusing on the recently promulgated anti-monopoly law,
expected to take effect August 1, 2008. Bush said the
legislation allows room for either convergence or
collision with international best practices, and that
successful convergence will depend on the resources,
competence, motives, and clout of enforcement agencies.
While the anti-monopoly law does not fully address IPR,
Bush said the Chinese government has announced plans
to issue IPR guidelines for enforcement officials,
which should be a focus of USG efforts. Motorola
representative Kirk Dailey then addressed China's
technology transfer policy, and spoke extensively on
patent licensing. He said that Motorola has been
licensing GSM and CDMA IPR since the early 1990s, but
that progress has been slow in licensing discussions
with several Chinese government entities and companies.
He said many licensing activities are only undertaken
following litigation.

26. (SBU) Finally, MPA and IFPI discussed market
access issues in China, particularly China's
problematic protracted content review process, which
they said prevents the development of a strong,
legitimate market. For example, they noted that the
review process of a single video game title can take
up to 18 months, during which time pirated software
copies and domestic competitors gain market share.
Copyright industry speakers also raised problems
relevant to print publishing, where restrictions
currently exist on publishing, printing, importing,
and distributing books and journals into China. They
said such restrictions increase costs (and prices) and
keep foreign publishers from serving customers
efficiently.

How to Address Chinese Industrial Policy
----------------------------------------

27. (SBU) Hansen suggested the United States assist
Chinese authorities to recognize that market-based
approaches to innovation are in China's own self-
interest, and that the Embassy should urge consistent
support for key innovation principles, such as non-
discrimination, standards, and transparency. Motorola
requested better Embassy advocacy in IPR negotiations
over issues such as licensing, as well as assistance
in facilitating industry discussions with the Chinese
government on improved IPR remedies such as
enforceable injunctions and extended statute of
limitations periods. (Note: The China Mission

BEIJING 00007192 011 OF 014


responded that it was already extensively engaged on
issues involving statutes of limitations, estoppel,
and laches, and that an official in the Foreign
Commercial Service supported intellectual property
licensing from the United States. End Note.) The
copyright industries recommended that the Embassy
engage China's General Administration of Press and
Publication (GAPP) and Ministry of Culture (MOC) to
unify, simplify, and speed up the censorship approval
process. They also requested support for direct
engagement with Chinese universities and the Ministry
of Education regarding textbook procurement.

View from Washington: IPR Challenges in China
---------------------------------------------

28. (SBU) In the final panel of the Roundtable, "The
View from Washington: IPR Policy and the Role of
Rights Holders in Dealing with Challenges in China,"
United States Government representatives working on
IPR issues shared their views of the current
environment in China. Deputy Assistant United States
Trade Representative Audrey Winter gave an update on
the status of the two WTO cases filed against China in
April, emphasizing that the United States Government
does not believe the WTO dispute process precludes
continuing cooperation with China on IPR protection.
Susan Tong from the United States Patent and Trademark
Office (USPTO) briefed the audience on USPTO's current
China initiatives, including examiner exchanges, a
work sharing pilot, and an exchange of automation
experts with the State Intellectual Property Office
(SIPO) include. She said that, following successes
with SIPO, USPTO has more recently begun similar
initiatives with China's Trademark Office.

29. (SBU) Panelists held a uniformly positive view of
cooperation trends in law enforcement, both between
the United States and Chinese agencies and within the
United States law enforcement community. For instance,
Department of Justice IPR Task Force Executive
Director Mark Grider highlighted the success of
Operation Summer Solstice, which resulted in the
arrest of 25 suspects, closure of six manufacturing
and distribution facilities, and seizure of USD 7
million in assets. He also noted a Department of
Justice-sponsored conference in Bangkok aimed at
forming an IPR enforcement network with other law
enforcement agencies in the Asia-Pacific region. Raul
Roldan, the Federal Bureau of Investigation's (FBI)
Chief of Cyber Crime Investigation, explained how the
Fusion Center, a non-profit subject matter expert
research center with members from over 400 companies,
provides a mechanism for United States authorities and
the business sector to share information at a level
normally impossible when dealing directly with private
companies. He added that aggressive multi-lateral

BEIJING 00007192 012 OF 014


cooperation throughout the region is the key to IPR
enforcement success.

30. (SBU) Tom Hipelius from the Department of Homeland
Security (DHS) Immigration and Customs Enforcement IPR
Coordination Center noted substantial improvement in
cooperation with Chinese law enforcement agencies. He
pointed out that, whereas written requests for
meetings with Chinese counterparts went unanswered in
2001, by 2004 the two governments were carrying out
joint undercover operations. He noted particular
successes in the case of Vincent Ku, who was selling
counterfeit Microsoft products, as well as a
pharmaceutical case codenamed Ocean Crossing. DHS
Customs and Border Patrol's (CBP) Steve Thomas
reported 14,675 IPR seizures in 2006, noting that 81
percent of IPR border seizures were from shipments
originating in China. He underscored CBP's positive
working relationship with the General Administration
of Customs of China (GACC) and other Chinese agencies.
Thomas added that CBP and GACC had signed an IPR
memorandum of understanding that became effective in
June, allowing for more information sharing on IPR
seizures.

Initial Feedback from Attendees
-------------------------------

31. (SBU) Direct and indirect feedback via surveys,
blogs, and web postings give a fairly comprehensive
account of the success of this year's Roundtable and
ongoing challenges in protecting IPR. Attendees
generally ranked the roundtable as "highly valuable"
to them, noting in particular the utility of a forum
to educate the United States Mission on how to better
support industry. Attendees also offered that
recommending practical steps to support rights holders
was a challenging, useful exercise that prompted
follow-up in their own organizations. One association
has reportedly already suggested to the Ministry of
Public Security how to coordinate more closely on
criminal copyright enforcement cases -- in effect, a
first practical consequence of the IPR Roundtable.

34. (SBU) The Mission's initial analysis shows a
consistent message from industry: there continues to
be a compelling need for increased interagency
cooperation and coordination in IPR issues, including
cooperation with legislative and judicial branches.
Also, many industry participants openly criticized the
United States Government's WTO case, suggesting that
it undercuts their efforts to improve enforcement by
working with IPR officials. One trade association
representative said they saw "little purpose" in
visiting Beijing because of the WTO case, while others
explained that their China budgets had been cut, thus
precluding their attendance. This new dynamic on IPR

BEIJING 00007192 013 OF 014


engagement in China places additional stress on
existing China Mission resources as we seek new ways
to support industry. It also suggests that DC
agencies should similarly begin to seek creative new
avenues of engagement on IPR in China, such as working
more closely with Capitol Hill, the courts, and
international organizations, as appropriate.

Planned Follow-Up Actions
-------------------------

35. (SBU) In coordination with the Office of the
Coordinator for International IPR Enforcement, Embassy
is preparing a separate white paper detailing the
status of IPR enforcement in China and industry
recommendations presented to the Ambassador at the
Roundtable. This document could be a useful tool to
coordinate the Mission's approach to prioritizing and
acting on these recommendations with Washington
agencies. Additionally, the document could be useful
for reporting to Capitol Hill.

35. (SBU) Many industry participants declined to make
their presentations available for wider dissemination.
Those approved for publication are available online at
http://www.signup4.net/public/ap.aspx?EID=AMB A16E&OID=
147.

Comment
-------

36. (SBU) There was no Chinese Government
participation at this year's Ambassador's IPR
Roundtable, likely a further impact of April's WTO
filings. The resulting atmosphere may have been more
conducive for panelists to provide candid,
constructive recommendations to the China Mission.
Speakers also appeared to value the opportunity to
directly address the Ambassador, who attended the
entire day's events. Despite the usual raft of
problems, however, several attendees also noted the
success of recent and ongoing programs. Senior IPR
Attache has also recently noted what appear to be
early signs of a thawing in the previously frozen
bilateral relationship on IPR issues, at least on
technical levels. In a string of meetings preceding
the Roundtable, Senior IPR Attache attended programs
and sat with the Vice President of China's Supreme
People's Court, the deputy chair of the National
People's Congress Standing Committee, a Vice Minister
of the National Copyright Administration, a Vice
Minister of the State Adminitration for Industry and
Commerce, a Vice Comissioner of SIPO, and others.
Also, a senior Ministry of Public Security official
expressed his interest in deepening cooperation on
domestic enforcement of IPR. Moreover, Supreme
People's Court judges attended the Roundtable

BEIJING 00007192 014 OF 014


reception and, on the margins of the Roundtable, U/S
Dudas from USPTO had successful meetings with SIPO
Commisioner Tian, as well as SAIC Vice Minsiter Li
Dongsheng. The situation continues to remain fluid.
However, generally speaking, the more technical the
discussion, the less it involves WTO issues, the less
it involved MOFCOM, and the more it involves local
governments away from Beijing or trade association
sponsorship, the more likely it is to take place. End
Comment.

© Scoop Media

 
 
 
World Headlines

 

UN: As COVID Deaths Pass Two Million Worldwide, Guterres Warns Against Self-Defeating ‘Vaccinationalism'

With more than two million lives now lost worldwide to COVID-19, the UN Secretary-General appealed on Friday for countries to work together and help each other to end the pandemic and save lives. In a video statement , Secretary-General António Guterres ... More>>

Gordon Campbell: On The Washington Riot And The Georgia Results

Hong Kong and Washington DC. On the same morning, the tyrants in power in Beijing and their counterpart in the White House have shown how they refuse to accept the legitimacy of any different points of view, and the prospect of losing power… More>>

UN: Violent Attempt At US Capitol To ‘overturn’ Election, Shocking And Incendiary

Unsplash/ElevenPhotographs The US Capitol building in Washington D.C. A group of independent UN rights experts released ... More>>

UN: Guterres To Seek Second Five-year Term
António Guterres will be seeking a second five-year term as UN Secretary-General, which would begin in January 2022.... More>>