VZCZCXRO2457
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGZ #0320/01 1460748
ZNR UUUUU ZZH
R 260748Z MAY 09
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 0601
INFO RUEHGZ/CHINA POSTS COLLECTIVE 0177
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHIN/AIT TAIPEI 0123
RUEHNE/AMEMBASSY NEW DELHI 0003
RUEHMO/AMEMBASSY MOSCOW 0004
RUEHGV/USMISSION GENEVA 0001
RUEAUSA/DEPT OF HHS WASHINGTON DC 0012
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC 0011
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC 0074
RUEATRS/DEPT OF TREASURY WASHINGTON DC 0095
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC 0009
RUCNFB/FBI WASHINGTON DC 0007
RHEHAAA/NSC WASHINGTON DC 0032
RUEAIIA/CIA WASHDC 0162
RUEKJCS/DIA WASHDC 0158

UNCLAS SECTION 01 OF 04 GUANGZHOU 000320 
 
SENSITIVE 
SIPDIS 
 
State for EAP/CM; EEB/IPE; EEB/TPP; EEB/CIP 
State for INL - JVigil 
USTR for China Office; IPR Office; and OCG 
Commerce for National Coordinator for IPR Enforcement 
Commerce for MAS - RLAYTON, SMATHEWS 
Commerce for MAC - ESzymanski, SWilson 
Commerce for MAC -NMelcher, JWu 
LOC/Copyright Office - STepp 
USPTO for Int'l Affairs - LBoland, EWu 
DOJ for CCIPS - MDuBose, SChembtob 
FTC for Blumenthal 
FBI for LBryant 
DHS/ICE for IPR Center - THipelius, TRandazzo 
DHS/CBP for IPR Rights Branch - GMcCray, PPizzeck 
ITC for LLevine, LSchlitt 
State Pass White House OTP Ambassador Richard Russell 
NSC for JBader, JLoi 
 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR KIND ECON PGOV CH
SUBJECT: IPR: Enforcement Numbers Decline in Guangdong 2008 Annual 
Report 
 
REF: A) BEIJING 1014, B) GUANGZHOU 218, C) BEIJING 570, D) GUANGZHOU 
43, E) 2008 GUANGZHOU 267 
 
(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 and Comment: Intellectual Property Rights (IPR) 
enforcement action in Guangdong Province appeared to decline overall 
in 2008 as shown by case statistics in the province's annual white 
paper.  Despite official pronouncements by Guangdong authorities 
that IPR enforcement continued to improve, enforcement numbers were 
up only for trademark investigations and cases handled by the 
courts.  When questioned about the declining enforcement statistics 
in all other categories at an April 24 press conference, the 
province's senior IPR official said that enforcement was only one 
part of the government's IPR work.  Her comments suggest that 
enforcement has been marginalized by other government priorities 
such as encouragement of local IP development -- where the annual 
white paper showed more success with new records in trademark and 
patent filings. 
 
¶2. (SBU) Comment Continued: U.S. rights holders still face major 
enforcement problems in Guangdong, with some firms calling it 
"ground zero" for counterfeiting and infringing activities.  The 
business community has expressed appreciation for new progress on 
IPR education and awareness programs and joint Guangdong-Hong Kong 
cooperation, but every discussion of IPR in south China still begins 
and ends with the need for sustained, broad-based progress on 
enforcement issues in Guangdong Province.  Without a strong 
commitment from local authorities to tackle the problem, the 
"workshop of the world" will continue to be a global center for the 
manufacture of counterfeit goods.  End summary and comment. 
 
Guangdong's IPR Focus Not Only Enforcement 
------------------------------------------ 
 
¶3. (U) In the face of disappointing case statistics on IPR 
enforcement, Guangdong's senior IPR official emphasized that the 
work of the province's IPR agencies was not only enforcement but 
also overall management of IPR at an April 24 press conference in 
Guangzhou that announced the province's 2008 IPR White Paper.  In 
her prepared remarks and in response to pointed questions from 
Japanese consulate officials and journalists, Guangdong Intellectual 
Property Office Director General Tao Kaiyuan emphasized that the 
four main themes of China's IP Strategy were innovation, 
utilization, protection and administration, of which protection is 
only one part of the government's mandate.  Tao also pointed out 
that this approach was consistent with Premier Wen Jiabao's remarks 
on China's support for intellectual property rights as delivered 
during his annual work report in March. 
 
Disappointing Enforcement Results 
--------------------------------- 
 
¶4. (SBU) The numbers of enforcement actions in 2008 in most major 
 
GUANGZHOU 00000320  002 OF 004 
 
 
IPR categories were down from the previous year, according to the 
annual white paper.  At the press conference, Tao revealed that 
administrative patent disputes numbered 199 (compared to 256 cases 
in 2007), with 198 cases resolved by IPO officials.  The 
Administration for Industry and Commerce (AIC) investigated 4,414 
trademark-related cases (one of the few increases, up from 3,056 in 
2007).  Of these cases, 2,455 involved foreign rights owners. 
Twenty-two cases were transferred from administrative to judicial 
authorities for handling by civil or criminal courts (another 
disappointing drop from 31 case transfers in 2007, and 38 in 2006). 
 
 
¶5. (U) The Guangdong Provincial IPR White Paper said that the 
Administrations of Quality and Technical Supervision (QTS) 
integrated their enforcement resources in 2008, a move highlighted 
as a positive step in IPR enforcement.  However, the white paper's 
published statistics showed another decline in the number of cases 
investigated by the newly combined agency with 1,504 cases of 
counterfeiting in 2008 (down from 1,801 in 2007 and 2,205 in 2006). 
The white paper also said QTS closed 519 counterfeit plants (down 
from 860 in 2007) with counterfeit goods seized worth approximately 
RMB 54 million (USD 7.9 million - also down from 2007). 
 
¶6. (SBU) Criminal investigation numbers showed discouraging declines 
as well.  Provincial and local branches of the Public Security 
Bureau (PSB) investigated 387 cases (a decline from 503 cases in 
2007 and 396 in 2006) and cracked 250 criminal cases of IPR 
infringement and product counterfeiting (also down from 345 cases in 
2007 and 288 in 2006).  It arrested 482 criminal suspects (a decline 
of almost 50 per cent from 894 arrests in 2007 and 806 in 2006). 
Notable cases included a crackdown on counterfeit drug production 
and sales that disrupted a network worth RMB 40 million (USD 5.9 
million) and led to 15 arrests.  Also noted in the 2008 white paper 
were continued successes by Guangdong authorities in disrupting the 
manufacturing, sale and distribution of counterfeit cigarettes and 
other tobacco products. 
 
¶7. (U) IPR enforcement at trade fairs continued to be a focus in 
2008, according to the white paper.  At last year's two sessions of 
the Canton Fair, 1,592 enterprises were involved in IPR complaints 
(compared with 1,621 in 2007 and 1,045 in 2006), with 968 
enterprises identified as infringing other firms' rights.  Guangdong 
IPO cited 1,083 cases of patent-related disputes across the province 
for trade fairs and trade associations in 2008, similar results to 
¶2007. 
 
Increased Guangdong Judicial Action in 2008 
------------------------------------------- 
 
¶8. (SBU) Judicial action was one of the few areas where case 
statistics suggested an increase in enforcement activities. 
Guangdong courts received 4,427 civil cases of first instance (up 
from 3,122 in 2007) and 690 cases of second instance (appeals), 
concluding more than 99 percent of IPR cases received.  The courts 
received 381 criminal IPR cases of first instance (a dramatic 
increase over the previous two years, from 86 cases in 2007, and 116 
 
GUANGZHOU 00000320  003 OF 004 
 
 
in 2006), involving 804 criminal suspects, with all but one criminal 
case concluded before the end of the year. 
 
¶9. (SBU) The white paper also said Guangdong courts continued their 
efforts to resolve civil cases through mediation rather than trial 
in 2008.  The courts have steadily increased the number of settled 
cases in recent years, reaching a record 2,611 mediated cases in 
¶2008.  These cases represented a 52.4 percent increase from 1,627 
mediated cases in 2007 and included cases where plaintiffs withdrew 
their complaints after court-sponsored mediation was initiated. 
Guangdong courts also continued to lead the country by posting a 
total of 4,025 effective IPR verdicts on the internet (increasing 
from 3,155 verdicts in 2007) at http://ipr.chinacourt.org. 
 
14 Years as China's Patent and Trademark Leader 
--------------------------------------------- -- 
 
¶10. (U) Reflecting the emphasis placed on local IP development, the 
Guangdong IPO reported another banner year for patent and trademark 
filings in 2008.  New patent filings in the province totaled 103,883 
with 62,081 patents granted, annual increases of 1.4 percent and 
9.88 percent, respectively.  Invention-patent applications totaled 
28,099, with 7,604 granted, up 5.3 percent and 104.7 percent, 
respectively.  Guangdong Province ranked first in China for patent 
filings and grants for the 14th straight year; it also was first 
among provinces for invention-patent applications for the third 
straight year.  2008 marked the first time the province ranked first 
in China for invention patents granted, which was highlighted as a 
major success by provincial IPR authorities. 
 
¶11. (U) Director General Tao also announced continuing growth in 
Guangdong's trademark filings.  The accumulated number of registered 
trademarks exceeded 480,000 in 2008, an increase of 100,000 
trademarks, or 26.3 percent, from 2007.  According to the white 
paper, the province maintained its top position for trademark 
applications and registrations for the 14th straight year. 
Guangdong continued to rank among the top provinces at promoting 
national and provincial well-known and famous trademarks. 
 
Neighborly Cooperation Continued 
-------------------------------- 
 
¶12. (U) IPR cooperation with Hong Kong, Macau, and other 
jurisdictions in the Pan-Pearl River Delta (Pan-PRD) has continued 
to expand, according to the white paper and official comments at the 
press conference.  Guangdong Customs, in particular, actively 
cooperated with Hong Kong and Macau Customs officials to exchange 
intelligence and investigate smuggling rings and other cases related 
to IPR protection.  The Seventh Guangdong-Hong Kong Expert Group on 
the Protection of IPR convened in mid-2008, and a joint IPR seminar 
was subsequently held in Shantou, a Guangdong area with historically 
weak IPR protection and high levels of infringing activities. 
 
New Efforts: Software Licensing, Education 
------------------------------------------ 
 
 
GUANGZHOU 00000320  004.2 OF 004 
 
 
¶13. (SBU) The white paper claimed that illegal use of software 
products by provincial-level, state-owned enterprises (SOEs) had 
been eliminated.  Nevertheless, the Business Software Alliance and 
major U.S. rights holders still complain that south China government 
offices and SOEs continue using unlicensed software.  Inclusion of 
the issue in this year's white paper may be a positive sign that IPR 
authorities are working to address the problem, but the problem has 
not been resolved as completely as characterized in the annual 
report. 
 
¶14. (U) At the press conference, Tao highlighted the province's work 
to increase IPR awareness and education in 2008 and said the 
government would further expand education plans in 2009.  In 
addition to working with enterprises and the public, the white paper 
said IPR-related primary- and middle-school curricula would be 
expanded beyond the 107 schools where they had been introduced by 
the end of 2008.  However, Tao noted that efforts to introduce 
IPR-related curricula at universities would depend on further 
coordination with the Ministry of Education. 
 
GOLDBERG