Cablegate: China Supreme Court Judge Reported -

VZCZCXRO4790
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #4527/01 3471303
ZNR UUUUU ZZH
P 121303Z DEC 08
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 1374
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHIN/AIT TAIPEI 7134
RUEHKO/AMEMBASSY TOKYO 2323
RUEHUL/AMEMBASSY SEOUL 1010
RUEHMO/AMEMBASSY MOSCOW 9153
RUEHGV/USMISSION GENEVA 2315
RUEAHLC/DHS WASHDC
RUCPDOC/USDOC WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RHMCSUU/FBI WASHINGTON DC

UNCLAS SECTION 01 OF 03 BEIJING 004527

SENSITIVE
SIPDIS

State for EAP/CM - PPark and EB/IPE - DBubman
State for EB/TPP - EMagdanz and INL - JVigil
State for EB/CIP - WWitteman and RDaley
USTR for China Office - AWinter; IPR Office - RBae;
and OCG - SMcCoy; and JRagland
Commerce for National Coordinator for IPR
Enforcement
Commerce for MAC ESzymanski
Commerce for MAC SWilson, JYoung
LOC/Copyright Office - STepp
USPTO for Int'l Affairs - LBoland, EWu, STong
DOJ for CCIPS - MDubose and 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
State for White House OTP Ambassador Richard Russell

E.O. 12958: N/A
TAGS: ETRD EIND KIPR ECON CH

SUBJECT: CHINA SUPREME COURT JUDGE REPORTED -
WITHOUT CORROBORATION - TO FAVOR PROTECTIONIST
MEASURES ALLOWING SELECTIVE ENFORCEMENT OF IPR

This cable is sensitive but unclassified and is not
for Internet distribution.

Summary
-------

1. (SBU) According to one local media report, China
Supreme People's Court (SPC) IP Judge Kong Xiangjun
on December 10 said the SPC is studying "how to
adjust patent, trademark and other IP judicial
policies" to mitigate the effect of the global
financial crisis on China's economy, and might
introduce a new "public interest" test that does not
require cessation of infringement as a remedy.
Emboffs contacted Chen Shanzhe, the journalist
originating the story, who admits to being
unfamiliar with IPR issues and said he did not
record his private conversation with Kong that
followed a public press conference, the transcript
of which appears inconsistent with Kong's story and
shows strong statements by Kong favoring stricter
IPR protection in China (though he did note an
interest in protecting economic and social
stability). In our initial contacts with working
level IP officials, none were familiar with the
press report and said they were unfamiliar with such
a change in policy, but we will continue following
up with agencies at higher levels for further
clarification. End Summary.

Judge Reported to Favor Selective Enforcement
---------------------------------------------

2. (SBU) Reporting on a December 10 press conference
at China's Supreme People's Court (SPC) held to
review "monthly action on strengthening judicial
protection for IPR," the 21st Century Business
Herald on December 11 said that the SPC is studying
"how to adjust patent, trademark and other IP
judicial policies" to mitigate the effect of the
global financial crisis on Chinese companies. The
potential adjustments reportedly cited by SPC IP
Court Vice President Kong Xiangjun would introduce a
new "public interest" test in the judiciary's remedy
of IP infringement cases, and would require
cessation of certain infringing activity only if it
involved economic activities that "violated public
interest." If the public interest is not violated,
reports said, the infringer would be allowed to
continue the infringing activity, but be required to
pay damages to the right holder.

3. (SBU) The judge is reported to have used two
examples to illustrate the new policy. In the
first, a company that is building a bridge and is
discovered to be using an infringing design should
be allowed to pay a fine and continue construction.
In the second, shooting of a television drama based
on an infringing screenplay should be allowed to
continue once a fine is paid. In both examples,

BEIJING 00004527 002 OF 003

Kong reportedly suggested that continuing the
economic activities are in the public interest and
should not be ceased.

4. (SBU) The news report said the new policy would
be a departure from current Chinese requirements to
cease all infringing activity, but claimed it would
be consistent with other opinions issued by the SPC
on December 4 that protect the nation's "financial
security". The December 4 document is entitled
"Opinions on the Provision of Judicial Support and
Legal Services for the Safeguard of National
Financial Security and Comprehensive, Coordinated
and Sustainable Economic Growth."

Supreme Court, IP Agency Unaware of Comments
--------------------------------------------

5. (SBU) Officials at China's State Intellectual
Property Office (SIPO) told Emboffs they were
unaware of the article and statements made by Judge
Kong, and that, to their knowledge, China's policy
on the protection of IPR has not changed. SIPO
officials suggested that the journalist's reporting
perhaps did not accurately reflect the judge's
statements. They also requested a copy of the
article for their review and comment. SPC Foreign
Affairs Division Director Liu Ming also told Embassy
he was unaware of the news story or of such a change
in policy, and asked for a copy of it before he
could comment. Liu did say that SPC would be
willing to meet with Embassy officials to discuss
the matter, and suggested a meeting with the SPC IP
Court. (Note: The IP Division, not the Foreign
Affairs Division, would have close involvement in
such a change in policy, but were not reached on
December 12.)

6. (SBU) Emboffs also contacted Chen Shanzhe, the
21st Century Business Herald reporter credited with
the original story. Chen explained that the story
came from his private conversation with Judge Kong
following the December 10 press conference. Chen
admitted being unfamiliar with IP issues, but
reconfirmed that the examples used in the story were
offered by Kong. However, Chen said he did not
record his conversation with the judge, could not
independently verify the information, and asked
Emboffs not to contact the SPC directly.

Contradictory Reports
---------------------

7. (SBU) A separate media report by Xinhua, China's
newswire service, offers a report quite
contradictory to Chen's story and in line with
Embassy's initial review of the event transcript.
Xinhua credits Kong with telling local courts to be
stricter on IPR infringers, and that courts should
implement strict rules that deprive IPR violators of

BEIJING 00004527 003 OF 003

all illegal profits and legal costs of the victim.
The transcript does show that Kong refers to
"protect[ing] the public interest and safeguard[ing]
the survival of enterprises and social stability,"
but he also says the court "should properly apply
the legal obligations of IP infringement cessation
according to the law."

8. (SBU) Emboffs are working to translate in full
the Chinese transcript of the press conference and
related news articles that reference Judge Kong's
December 10 statements. We will also continue to
seek clarification from the Chinese Government.

Comment
-------

9. (SBU) If the 21st Century Business Herald story
is true, the new policy would represent a radical
departure from law and a disturbing setback to
judicial protection of IP rights in China. However,
without any independent corroboration of the
reporter's interview, we will need to get more
clarification on the facts before considering whether
to lodge an official protest with the government.
End Comment.

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