VZCZCXRO7799
RR RUEHCN RUEHGH
DE RUEHGZ #3563/01 1180905
ZNR UUUUU ZZH
R 280905Z APR 06
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 6851
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 04 GUANGZHOU 013563 
 
SIPDIS 
 
USDOC FOR 4420/ITA/MAC/MCQUEEN, DAS LEVINE 
STATE FOR EB/TPP AREIAS, ACETO, MASSINGA 
STATE PASS COPYRIGHT FOR TEPP 
STATE PASS USPTO FOR DUDAS, BROWNING, SCHIFFMAN, BOLAND, 
ANTHONY, NESS 
STATE PASS USTR - MENDENHALL, MCCOY, ESPINEL, CELICO 
USDOJ FOR SUSSMAN 
DHS/CPP FOR PIZZECK 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KIPR KJUS KCRM ETRD CH
SUBJECT: Guangzhou IPR Officials Tout 2005 Achievements, 
List Markets of Concern 
 
 
(U) This document is sensitive but unclassified.  Please 
protect accordingly. 
 
¶1. (U) Summary: In the run-up to National IPR Week, 
Guangzhou's IP enforcement agencies released a white paper 
detailing their 2005 accomplishments and some 2006 goals. 
Guangzhou authorities will focus their resources on specific 
markets within the city in 2006, and highlighted leather, 
auto parts, and cargo terminals as areas of particular 
concern.  Administrative agencies transferred "over 60" IPR 
cases to the police in 2005, and Guangzhou courts completed 
16 criminal IPR cases.  All of Guangzhou's municipal offices 
are now using legitimate software, though district and 
country level offices will complete the transition by the 
end of 2006.  End Summary 
 
¶2. (U) Guangzhou IP agencies hosted a press conference on 
April 18, where they distributed the city's annual report on 
IPR protection and development.  Econoff also met with 
officials from Guangzhou's Market Rectification Office 
(MORO) and Technical Supervision Bureau (TSB).  Post will 
report separately on similar press events by Guangdong and 
Shenzhen authorities. 
 
New Efforts 
----------- 
 
¶3. (U) According to the white paper report, Guangzhou became 
a "National Pilot IPR City" in 2005, and has since gained 
approval from the State IP Office to become one of China's 
"National Model IPR Cities."  The report claims that inter- 
agency coordination and communication with central 
authorities have improved as a result of this effort. 
Separately, Guangzhou established local IP offices in each 
of its districts and county-level jurisdictions in 2004, and 
the report claims that local coordination improved in 2005. 
Guangzhou's recently released 11th Five-Year Plan 
specifically highlights IP enforcement -- reportedly the 
first time IPR has been included.  The report also notes 
that Guangzhou Vice Mayor Wang Xiaoling is the leading 
municipal official on IPR strategy and heads Guangzhou's IPR 
working group. 
 
Targeted Markets 
---------------- 
 
¶4. (U) A Guangzhou IPO official announced at the press 
conference that authorities will their focus enforcement 
efforts on wholesale and retail markets selling leather 
goods and auto parts, as well as cargo terminals in 2006. 
The report lauded campaigns in 2005 that targeted auto 
parts, trade expositions, and street vendors of fake DVDs 
and CDs.  Authorities also released a list of specific 
markets of concern within the city, which will be targets of 
IP enforcement in 2006.  The markets are as follows: 
 
Leather: Zi Yuan Gang Market 
Watches: Zhan Xi Market 
Cosmetics and Beauty Products: Xing Fa Market 
Auto Parts: Guang Yuan Road and Heng Fu Road 
Audio-Visual Products: Guangdong A.V. City 
Cell Phones: Ming Yuan Market 
Software: Tian He Computer City 
Cargo terminals 
 
¶5. (SBU) In a separate meeting, the Guangzhou MORO vice 
director said enforcement in markets primarily involves 
periodic raids by plainclothes officers, who act on 
independent investigations and tips.  He said authorities 
will continue to post public anti-counterfeiting notices at 
large markets around the city, including lists of famous 
brands that should not be sold.  (Note: Following the 
meeting, Econoff visited the Zi Yuan Gang leather market and 
saw such a notice, which included the brand names and logos 
for approximately 20 foreign brands.  The sign threatened 
criminal prosecution to shop owners and landlords.  However, 
many of the shops sold fake products anyway, including Louis 
Vitton, Chanel, Coach, Dunhill, and Gucci. End note) 
 
GUANGZHOU 00013563  002 OF 004 
 
 
 
Criminal Cases 
-------------- 
 
¶6. (U) Guangzhou's intermediate and local courts completed 
16 criminal IPR cases in 2005, convicting 44 people (a 
breakdown of these criminal cases by category was 
unavailable).  They also handled 23 criminal cases under the 
"inferior goods" law and 54 cases under the "illegal 
operation" law. 
 
Case Transfers 
-------------- 
 
¶7. (U) Guangzhou administrative departments transferred 
"over 60" IP cases to the Public Security Bureau (PSB) in 
2005 (a breakdown of these cases by category was 
unavailable).  Among the cases transferred were those 
involving Duracell batteries, Sony earphones, brake pads, 
ink printer cartridges, auto filters, and athletic shoes. 
The report also touted a court victory by Warner Brothers 
against the Jia Zhou Hong karaoke club. 
 
¶8. (U) AIC investigated 945 trademark cases in 2005 and 
transferred four cases to PSB.  One of the cases involved a 
cosmetics counterfeiting operation in Baiyun District, in 
which 14 well-known trademarks were found and four suspects 
were arrested. 
 
¶9. (U) The report says that the Guangzhou Copyright Bureau 
handled 15 copyright cases, transferred 220 suspects to PSB, 
and destroyed 2,000 "warehouse hideouts" (it does not state 
how many cases were transferred for criminal prosecution). 
Copyright officials handled 45 copyright complaints during 
the two Canton Trade Fairs in 2005, of which 39 were 
verified.  The report also mentions that Copyright Bureau 
transferred one internet piracy case, and three suspects, to 
PSB. 
 
Civil Cases 
----------- 
 
¶10. (U) Guangzhou courts concluded 1,064 civil IPR cases in 
2005, including 712 copyright, 219 patent, 112 trademark, 19 
unfair competition, 4 contract, and 3 other cases. 
According to the report, forty percent of the civil cases 
were resolved through mediation.  The report states these 
numbers are "far ahead of other intermediate courts of 
China." 
 
Customs 
------- 
 
¶11. (U) The Guangzhou Customs office investigated 44 IPR 
cases in 2005.  Separately, Huangpu Customs investigated 129 
IPR cases.  Of the Huangpu cases, 124 were trademark, 3 were 
patent, and 1 was copyright. 
 
Public Security Bureau 
---------------------- 
 
¶12. (U) The report states that Guangzhou PSB solved 497 IPR- 
related cases and arrested 869 suspects in 2005.  Officers 
shut down 20,000 stalls, businesses, and warehouses. 
Coordinating with the Copyright Bureau, PSB investigated 
3,107 print shops, 692 A.V. stores, 431 bookstores, and 201 
ships. 
 
"Less Counterfeiting," More Schemes 
----------------------------------- 
 
¶13. (U) The director of Guangzhou TSB said his office has 
successfully cracked down on counterfeit production lines in 
the city.  He admitted Guangzhou markets still sell fake 
products, but said fewer fake products are being 
manufactured in Guangzhou.  Guangzhou TSB's three primary 
enforcement strategies are site raids, cooperation with 
investigative agencies that work for rights holders, and 
 
GUANGZHOU 00013563  003 OF 004 
 
 
tips from informants.  He described counterfeiters as "more 
cunning" than in previous years, as they no longer 
centralize their operations, choosing instead to use 
different facilities for production, printing, and 
packaging.  They also continually changes locations and 
manufacture in residences.  He said Guangzhou authorities 
are now more closely monitoring rental properties to 
determine how they are being used. 
 
Software Legalization 
--------------------- 
 
¶14. (U) According to the report, all 41 municipal 
departments have installed legitimate computer software. 
Guangzhou MORO's vice director said district and county 
level offices are still buying legitimate software, and the 
process will be completed by the end of 2006. 
 
Education and Training 
---------------------- 
 
¶15. (U) Officials touted Guangzhou as a base for IPR 
education and training in South China.  Three universities 
in Guangzhou have set up IPR schools: Jinan University, 
Zhongshan University, and South China University of 
Technology.  These IPR schools all offer masters degrees, 
and Jinan is considering a doctorate program.  In addition, 
Guangdong University of Finance set up an IPR research 
institute in 2005.  The schools all invite guest lecturers 
from the private sector. 
 
¶16. (U) The report highlighted three training seminars 
organized by IP agencies in 2005: a May course on patent 
enforcement organized by the intellectual Property Office 
(IPO), a September forum on trademarks organized by the 
Administration of Industry and Commerce (AIC), and an 
October seminar on copyright protection organized by the 
Copyright Bureau.  The report also highlighted ongoing 
training with Hong Kong IPR authorities and industry 
associations. 
 
Innovation 
---------- 
 
¶17. (U) Echoing their central and provincial counterparts, 
Guangzhou officials emphasized the importance of innovation 
and scientific development for economic growth.  The report 
highlighted successful local enterprises and mentioned a 
municipal program that encourages the development of pilot 
high-tech enterprises.  The MORO vice director said IPR 
enforcement is rooted above all in the need to improve 
China's environment for innovation.  Satisfying foreign 
governments in regards to IP is important, he said, but is 
secondary to China's economic and social development. 
 
Patent and Trademark Applications 
--------------------------------- 
 
¶18. (U) Guangzhou saw 11,012 patent applications in 2005, an 
increase of 34 percent over 2004.  These included 2,029 
invention patent applications.  The accumulated number of 
trademark applications reached 98,000 in 2005, an increase 
of 5.6 percent.  According to officials, Guangzhou has more 
trademark applications than any other provincial capital. 
The report stated that Guangzhou has seven national famous 
brands and 176 provincial famous brands. 
 
Comment 
------- 
 
¶19. (SBU) Among the many statistics and pronouncements of 
the new report, the list of targeted markets within 
Guangzhou stood out as particularly useful.  All of the 
markets are large and are known to sell fake goods (though 
they also sell plenty of legitimate products).  Though the 
report included some information on criminal cases and 
transfers, it did not break them down by category.  Post has 
submitted a request to Guangdong authorities for a breakdown 
 
GUANGZHOU 00013563  004 OF 004 
 
 
of criminal cases by code of law for 2004 and 2005.  In 
addition, Post plans to visit the three IPR schools and one 
IPR institute in Guangzhou for outreach and public 
diplomacy. 
 
DONG