Cablegate: 2008 Pearl River Ip Forum Achieves Breakthrough In

DE RUEHGZ #0438/01 2050601
R 230601Z JUL 08



State for EAP/CM - JYamamoto; EEB - AColeman, JBoger
State for INL - JVigil
USTR for China Office - AWinter; IPR Office - RBae; and OCG -
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 - GMcCray, PPizzeck
ITC for LLevine, LSchlitt

E.O. 12958: N/A
SUBJECT: 2008 Pearl River IP Forum Achieves Breakthrough in


(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: The 2008 Pearl River IP Forum - jointly organized
by the U.S. Consulate's Guangzhou branch of the United States Patent
and Trademark Office (PTO Guangzhou) and Guangdong Intellectual
Property Office (IPO) on July 15 - brought together -- for the first
time in recent memory -- business, government and the legal
community to discuss the challenges of IPR protection in Guangdong.
Visiting U.S. Federal Judges Kent Jordan and Larry McKinney
moderated expert panels at the day-long program; their participation
allowed us to arrange meetings with local judges who had previously
been unwilling to discuss IPR issues. The Guangdong High Court
expressed interest in expanding legal exchanges with U.S. courts.
In a separate meeting, Guangdong government officials representing
agencies that work on IPR issues described significant efforts in
strengthening IPR enforcement in the province; however, lack of
coordination among the various agencies is still a problem. End

Bringing All the Players Together

2. (U) Leading a chorus of voices from U.S. and Chinese rights
holders, the Consul General opened the 2008 Pearl River IP Forum
with a clear message: "Without a comprehensive and effective IP
regime, international investors and domestic innovators will not
remain in China, but will take their ideas and capital elsewhere in
the world. The challenge for you is to keep them here. And I am
confident you will meet the challenge." The day-long program,
co-hosted by PTO Guangzhou and the Guangdong IPO, featured expert
panels and question-answer (Q and A) sessions on the advantages of
innovation and what it takes to cultivate it as well as more
detailed sessions on how to litigate a China-related IP case. The
forum was broke new ground for us: it was the first time the
Consulate was able to gather U.S. and Chinese rights holders,
government officials, lawyers and judges in one room to discuss the
challenges facing IPR enforcement.

Importance of Innovation Not In Question

3. (U) Representatives of leading U.S. and Chinese firms offered
their perspectives on what the Chinese government can do to better
foster and protect local innovation.
-- Procter and Gamble's Brenda Panichi, Associate Director of
IP-Patents-Asia, described how her company has adopted a holistic
view of IP that includes not only product formularies and
trademarks, but also marketing strategies and sales practices.
-- Huawei Patent Department Chief Zhang Zhongqing reviewed his
company's efforts to create new IP and enforce patent rights in
China and other international markets.
-- T.W. Liu, Senior Consultant of the Innovation and IP Division at
the Hong Kong Productivity Council, pointed to the examples of
several Chinese firms that have implemented advanced IP systems,
which create and utilize employees' best ideas and bring them to
market successfully.

GUANGZHOU 00000438 002 OF 004

-- Representatives of IBM, ZTE and Cisco each explained that,
without innovation and protection of their firms' intellectual
property, not only would their business suffer but the entire
industry might wither away.

4. (U) Dr. Su Weiwei, Director of the Guangzhou Quality R&D Center
for Traditional Chinese Medicine at Sun Yat-sen University, grabbed
the audience's attention with her frank assessment of problems in
south China's IP protection for pharmaceuticals. Dr. Su said her
lab had developed several new drugs in the past five years, and
applied for 23 Chinese patents, with 12 patents granted so far.
However, Dr. Su emphatically called on the legal and government
communities to improve their service levels for innovators, simplify
filing and other registration procedures, and reduce filing costs.
Without systemic improvements, Dr. Su said that she and other
researchers would continue wasting valuable energy navigating the
patent process and negotiating with customers about patent-related
issues rather than focusing on their core business of developing new
medical treatments.

5. (U) Guangzhou Vice Secretary General Chen Shaokong and Guangdong
IPO Deputy Director General Zhu Wanchang responded to the call from
rights holders for stronger protection by touting recent IP
initiatives. They also repeated higher-level political statements
about the need for greater attention to domestic innovation and
increased protection of existing IP rights. Chen said Guangzhou led
the province with its March announcement of a three-year municipal
plan to invest RMB 1 billion annually in innovation-related
projects. Zhu told the audience that IP cannot be separated from a
strong economy and emphasized Guangdong Governor Huang Huahua's
recent calls for better IP protection and increased international
cooperation (Note: Party Secretary Wang Yang also made a similar
comment in a meeting with the Ambassador on July 18. End Note.)

Litigating a Chinese IP Case

6. (U) Another first of the forum was the detailed and public
discussion among Chinese and U.S. legal professionals on the process
of litigating a Chinese IP case. Three separate panels were
followed by lively Q and A sessions covering how and why to litigate
in China versus other jurisdictions, how to prepare evidence and
present a case, and considerations to take into account when
deciding whether to appeal a judgment. Visiting U.S. Federal Judge
Kent A. Jordan of the United States Court of Appeals for the Third
Circuit in Wilmington, Delaware and Judge Larry J. McKinney of the
United States District Court for the Southern District of Indiana in
Indianapolis, Indiana participated in the program. Each moderated a
panel that included Chinese attorneys and international lawyers
jointly presenting detailed recommendations on how to choose a
jurisdiction, select the type of complaint that would best be
supported by the facts of a case, and craft a case around the
plaintiff's desired outcomes.

7. (U) One lesson many in the session agreed on was that IP cases in
China are made more difficult by the lack of comprehensive rules of
evidence, which has repercussions throughout the litigation process.
When asked about his biggest challenge litigating in China,
Shanghai-based American attorney Geoffrey Lin said the lack of a
discovery process or unified rules of evidence, and rules that

GUANGZHOU 00000438 003 OF 004

generally preclude reliance on witness testimony make it
particularly challenging to litigate IP cases here. Chinese
attorney Zhang Shaojun elaborated on Lin's comments, describing
trademark cases as the easiest to prove, followed by patent cases in
which the subject matter is not too technical. Zhang concluded that
copyright and trade secret cases are much more difficult to prove,
sometimes even impossible, because plaintiffs lack the power to
compel defendants to testify or produce evidence.

Guangdong High Court Wants More Legal Exchanges
--------------------------------------------- --

8. (SBU) In a separate meeting the day before the conference,
Appellate Judge Jordan and District Judge McKinney met with Judge
Ling Qiman, Vice President of the Guangdong High Court, as well as
three other judges from the intellectual property division of the
Guangdong High Court -- the first time in two years the Consulate
has been able to meet with judges on the court. Judge Ling
concurrently serves as President of the Guangdong Judicial Training
Center. He visited Los Angeles in 2006 to participate in legal
exchange programs and said the experience had been a valuable one.
Judge Ou Xiuping, Deputy Chief of the Guangdong High Court
Intellectual Property Division, said he also learned much during a
June 2007 trip to Washington, D.C., in which he sat on a panel with
Judge Randall R. Rader. (Note: Judge Rader is an Associate Judge of
the United States Court of Appeals for the Federal Circuit in
Washington, D.C. End note.) The judges expressed interest in
expanding exchanges with U.S. counterparts. Judge Ling described
his court's budget for training and exchange programs as larger than
courts in less-developed provinces, suggesting strong potential to
expand our cooperation on exchange programs in both directions.

9. (SBU) Judge Ling said an average of 4,000 IP cases are filed in
Guangdong each year, ranking it first in China. Copyright cases are
most common. There are 15 Guangdong provincial courts designated to
handle IPR cases, of which 8 are certified to hear patent cases.
Judges receive special training when assigned to IP courts and then
receive further training each year. Judge Ling acknowledged
differences between U.S. and Chinese court procedures for handling
IP cases, however, he noted that the Guangdong Provincial Government
is currently discussing the establishment of an experimental IP
court that would cover all three types of Chinese cases -
administrative, civil, and criminal - a departure from the current
system that would make it more consistent with U.S. practices.

Interagency IPR Group Describes Accomplishments
--------------------------------------------- --

10. (SBU) An interagency group of Guangdong provincial IPR officials
in a separate July 14 meeting with the U.S. judges described their
recent accomplishments in strengthening IPR protection.
-- GD IPO Deputy Director General Zhu Wanchang led the group, which
included representatives of the Intellectual Property Office (IPO),
Culture Bureau, Copyright Bureau, Administration for Industry and
Commerce (AIC), Technical Supervision Bureau (TSB), Customs Bureau
and Public Security Bureau (PSB).
-- Wang Yequn of the Culture Bureau said his agency's dedicated
copyright enforcement team had grown from 300 in 2006 to 1,300 in
2008, helping to increase monitoring and enforcement capacity for
cases of traditional and on-line copyright infringement.

GUANGZHOU 00000438 004 OF 004

-- Guo Xiuwen of the Copyright Bureau described the agency's
numerous public-awareness activities.
-- AIC's Wu Lichao said his bureau recently had improved its ability
to track trademark cases and transfer them between offices and other
government agencies.
-- Customs Inspector Wang Jun said his agency increasingly relies on
a risk-management process to identify suspicious shipments,
accounting for 20 percent of recent IP cases.
-- PSB Officer Chen Zhaojian ended the meeting by describing recent
training and collaborative efforts undertaken by the 1,500 officers
involved in Guangdong's IP-related law enforcement activities.

11. (SBU) Comment: Taken together, the list of accomplishments gives
us hope that Guangdong is, in fact, strengthening IPR protection.
However, the fractured nature of the province's IPR program spread
across so many separate agencies underscores the fact that
insufficient coordination and inconsistency remain obstacles to the
creation of a more effective system for IPR protection.
Nevertheless, the willingness of the provincial government to gather
all of the agencies together to meet with us may be a sign of
progress toward a more unified approach.


© Scoop Media

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