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R 030842Z JUL 06
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 4087
INFO RUEHOO/CHINA POSTS COLLECTIVE
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RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 03 GUANGZHOU 020753 
 
SIPDIS 
 
USDOC FOR 4420/ITA/MAC/MCQUEEN, DAS LEVINE 
STATE FOR EB/TPP MASSINGA, FELSING 
STATE PASS COPYRIGHT FOR TEPP 
STATE PASS USPTO FOR DUDAS, BROWNING, BOLAND, ANTHONY, NESS 
STATE PASS USTR FOR MENDENHALL, MCCOY, ESPINEL, CELICO 
USDOJ FOR SUSSMAN 
DHS/CPP FOR PIZZECK 
USPACOM FOR FPA 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KIPR ECON ETRD WTRO CH
SUBJECT: IPR Conference Highlights Local Issues; Guangdong 
and Fujian Officials Refuse IPR Meetings 
 
REFERENCE: Guangzhou 14710; Guangzhou 13563 
 
(U) This document is sensitive but unclassified.  Please 
protect accordingly. 
 
¶1. (SBU) Summary: Chinese and U.S. officials and companies 
discussed a range of IPR issues and generally agreed on the 
direction Guangdong must take on IPR matters at a recent 
conference co-hosted by the U.S. Chamber of Commerce and the 
Guangdong Provincial IP Office.  The conference was part of 
the U.S. Chamber's effort to engage with local Chinese 
officials in IPR hot-spots such as Guangdong on best 
practices and information sharing.  Separately, Guangdong 
and Fujian IP enforcement authorities denied our requests 
for meetings -- a possible sign that local IP officials are 
becoming less cooperative because of increased political 
sensitivity due to a possible WTO case against China by the 
United States.  End summary. 
 
¶2. (U) The "Guangdong Seminar on IP Protection and 
Encouragement of Innovation" took place on June 28.  It was 
broken into four panels: global trends in trademark 
protection and enforcement, best practices in anti- 
counterfeiting and piracy enforcement, strengthening 
administrative and criminal enforcement of IP rights, and IP 
management and self-innovation by enterprises.  Attendees on 
the Chinese side included representatives from the Guangzhou 
Mayor's office, the Guangdong IP Office, the Guangdong 
Administration of Industry and Commerce (AIC), and the 
Guangdong High Court.  Attendees on the U.S. side included 
Ronald Lew, federal judge from California's central district 
court; Matthew Bassiur, federal prosecutor from the U.S. 
Department of Justice's computer crime and IP section; David 
Eoff, chief of DHS/ICE's commercial fraud and IPR 
investigations unit; and Embassy IPR Attache Mark Cohen. 
Representatives from the Quality Brands Protection Committee 
industry association, P&G, and DaimlerChrysler were also 
present.  Consul General Dong contributed introductory 
remarks. 
 
Companies Say What They See 
--------------------------- 
 
¶3. (SBU) P&G China Brand Protection Manager Shannon Young 
started his presentation with some good news: the central 
and regional governments are becoming more effective at 
fighting counterfeiting and, for the first time in many 
years, P&G has seen a "slight reduction" in overall levels 
of counterfeiting.  However, he added that most other 
companies have seen an increase in counterfeiting.  Young 
had several criticisms of China's enforcement efforts: 
administrative fines are not an effective deterrent; civil 
suits are timely, costly, and relatively unsuccessful; case 
transfers from administrative authorities to police are 
still rare (though increasing); valuation of seized products 
varies widely; and kingpins are not being arrested. 
Nevertheless, he said too many people criticize China for 
poor IP enforcement without understanding the details -- 
potentially poisoning the atmosphere for dialogue. 
 
¶4. (SBU) Baker & McKenzie's Joe Simone said QBPC is 
extending its landlord liability project -- which has 
targeted Beijing's silk market -- into Shanghai, Guangzhou, 
and Shenzhen.  QBPC has already started investigations into 
Guangzhou markets and had plans to meet Shenzhen officials 
the following day.  Hugh Stevens, TimeWarner's senior vice 
president of international relations and public policy for 
Asia Pacific and QBPC committee chair, laid out the 
arguments for strong IP protection in China: infringement 
puts consumers at risk, uses unacceptable labor practices, 
supports organized crime, destroys brands, undermines 
legitimate businesses, and gives China a bad name overseas. 
Li Fushan, IP director for Skyworth, a Chinese company that 
manufactures televisions, said companies should preemptively 
register their IP in China and also to choose their disputes 
wisely.  He also complained that foreign companies sometimes 
take advantage of Chinese companies' lack of understanding 
of international IPR law -- citing a law suit against his 
 
GUANGZHOU 00020753  002 OF 003 
 
 
company filed by a British company with the same name that 
develops TV programming. 
 
Guangdong Officials: We're Trying! 
---------------------------------- 
 
¶5. (SBU) Guangdong officials presented an optimistic picture 
of their IP enforcement efforts and cited improvements. 
They proclaimed the importance of IPR and innovation in 
China's economic development and noted Guangdong companies' 
high rate of IP registration.  Liu Tongjiang, director of 
Guangdong AIC's trademark department, said his office is 
working more collaboratively than in the past, including 
agreements with the Public Security Bureau (PSB), Customs, 
Pan-Pearl River Delta regional governments, and Hong Kong 
authorities.  Li Xiaoping, director of Guangzhou AIC's 
trademark department, said his office has located specific, 
high-volume counterfeit markets where it is focusing its 
efforts (see reftels for more details on Guangzhou and 
Guangdong IP enforcement efforts based on their respective 
IPR white papers).  Zhang Youquan, director of anti-piracy 
for the Guangzhou Copyright Bureau, said he considers public 
education a crucial part of his office's IP efforts.  (Note: 
Econoff recently attended the taping of a Guangzhou TV 
program in which high school students performed oral 
recitations on the theme of protecting IPR.  Judges 
announced a winner and all of the participants received 
copyright registration certificates for their speeches, 
which would be published in book form and distributed to 
local schools. End note.) 
 
Contrasting the Chinese and U.S. Systems 
---------------------------------------- 
 
¶6. (SBU) Participants seemed particularly interested in the 
presentations by federal judge Lew, federal prosecutor 
Bassiur, and ICE officer Eoff.  When asked how U.S. courts 
enforce their judgments, Judge Lew said this is rarely a 
problem because lawyers ensure that relevant actions are 
taken, often by the U.S. Marshall Service, which acts on the 
court's behalf.  He opined that China's record of poor 
enforcement of judgments is not the fault of courts alone 
but rather points to a systemic problem.  Lew also noted 
that U.S. claimants, unlike Chinese, can choose whether to 
pursue a civil or criminal case.  Criminal prosecutors use a 
variety of criteria to determine whether to accept a case, 
with monetary value being only part of the equation.  In his 
presentation, Bassiur said federal and local authorities 
cooperate in a variety of ways to combat counterfeiting: 
intelligence sharing on issues such as money laundering and 
immigration, sharing of resources and specialized equipment, 
and legal interpretation.  ICE officer Eoff cited two recent 
cases in which his office and PRC authorities cooperated to 
arrest DVD and pharmaceutical counterfeiters, and noted that 
ICE plans to set up a liaison office in Guangzhou by the end 
of 2006. 
 
Guangdong and Fujian Authorities Deny Requests for Side 
Meetings on IPR 
--------------------------------------------- ---------- 
 
¶7. (SBU) In contrast to the positive atmosphere prevailing 
in the IPR conference, the Guangdong High Court refused our 
request for a meeting, which would have included Judge Lew 
and IPR Attache Cohen, citing previous commitments.  Our 
requests to meet with Fujian High Court, PSB, AIC, and 
Copyright -- which would have included federal prosecutor 
Bassiur and Cohen -- were also denied.  The Fujian High 
Court and PSB did not give reasons for their denials, but 
AIC and Copyright withdrew their initial confirmations on 
the pretext of the inclusion of Bassiur.  In addition, a 
Guangzhou middle court official chose not to attend the U.S. 
Chamber conference, and a Guangdong PSB official withdrew 
from the event at the last moment. 
 
Comment: Backlash on Possible WTO IPR Case? 
------------------------------------------- 
 
 
GUANGZHOU 00020753  003 OF 003 
 
 
¶8. (SBU) The Guangdong FAO often has been uncooperative in 
arranging our requests for meetings on a variety of issues 
in the past.  However, these particular refusals were 
surprising because we have met most of the offices before 
without any trouble.  Though it is too early to say for 
sure, this could indicate that -- in the wake of USG 
warnings of a possible WTO dispute resolution on IPR and the 
recent Special 301 focus on IPR hot-spots in China -- local 
authorities in South China have decided to avoid engaging us 
because of the sensitivity of the issue and potentially 
negative consequences. 
 
DONG