VZCZCXRO0303
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0986 2780524
ZNR UUUUU ZZH
R 050524Z OCT 06
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 4230
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI

UNCLAS GUANGZHOU 030986 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: CASC CJAN ECON EINV KJUS CH
SUBJECT: Chinese Authorities Ban AMCIT from Leaving China Pending 
Civil Contract/IPR Dispute 
 
¶1. (SBU) Summary: PRC immigration authorities detained AMCIT Robert 
Jonathan Carr for 12 hours at the Zhongshan port of entry on October 
3 and ordered him to remain in China until the resolution of a civil 
case brought against him by a manufacturing company in Changsha, 
Hunan.  The Hunan company claims that Carr's company, which designs 
remote-controlled airplanes and unmanned aerial vehicles, is in 
breach of contract.  Moreover, the Hunan firm is acting to block 
Carr from further utilizing his US patents in China.  Carr's Chinese 
attorney plans to send letters of protest to the PRC Supreme 
People's Court and Hunan Supreme People's Court.  Consulate General 
Guangzhou and Embassy Beijing, in whose consular district this court 
matter will unfold, have coordinated on Mr. Carr's situation.  End 
summary 
 
Background on AMCIT's Company 
----------------------------- 
 
¶2. (SBU) On October 4, Admin Officer, ACS Chief, and Econoff met 
with AMCIT Robert Jonathan Carr (DPOB: 5/29/1954, Oklahoma), Carr's 
attorney Luka Lu, and Carr's assistant, Suzie Li.  Carr is president 
of IWA Toy Co., a 10-employee enterprise based in Oklahoma City, OK, 
that designs model UAVs (unmanned aerial vehicles).  Several large 
retail chains have signed purchasing agreements with IWA, and the 
U.S. Navy and DHS have expressed interest in one of Carr's designs. 
IWA has manufacturing contracts with three firms in Guangdong 
province (two others are planned) as well as with Xicheng Co., a 
manufacturer in Changsha, Hunan. 
 
The Business Dispute 
-------------------- 
 
¶3. (SBU) IWA and Xicheng began discussions in 2004 and signed a 
manufacturing contract in July 2005.  Carr said Xicheng was late in 
delivering the UAV and then produced a substandard and dangerous 
product.  Carr also alleges that Xicheng managers lied to him about 
the company's prior experience and manufacturing capabilities.  In 
July 2006, the two sides agreed by correspondence to terminate their 
contract.  However, in June 2006, unbeknownst to IWA, Xicheng filed 
a civil suit with the Changsha Intermediate Court, claiming that IWA 
did not own the UAV patent and was in breach of contract.  (Note: 
Carr has not registered the UAV patent in China, although he has 
done so in other countries, including the US.)  Xicheng is currently 
selling the UAV under its own brand (model: Swift, website 
http://www.hnxcmodel.com/eng/paomoeng.htm). 
 
Detained at Port of Entry; Passport Confiscated 
--------------------------------------------- -- 
 
¶4. (SBU) On October 3, as Carr was clearing passport control prior 
to departing for Hong Kong where he planned to catch a flight to 
return to the United States, immigration authorities at the 
Zhongshan, Guangdong port of entry confiscated Carr's U.S. passport 
and detained him for 12 hours.  The presiding judge in the case took 
the unusual step of flying from Changsha to Zhongshan that day 
(i.e., during the Chinese national holiday week) and formally served 
Carr with a court order.  The judge requested that Carr pay RMB 4.7 
million (USD 590,000) - the amount of damages alleged in the 
lawsuit.  Carr did not sign the order or pay the fine.  Immigration 
authorities told Carr that he could not leave China until the case 
was resolved.  Carr's lawyer said such an action is highly unusual, 
particularly in a civil case, and believes Xicheng has used its 
political connections to influence the court. 
 
Next Steps 
---------- 
 
¶5. (SBU) Carr is currently residing at a hotel in Zhongshan, a city 
adjacent via ferry to both Shenzhen and Hong Kong.  Chinese 
authorities continue to hold Carr's U.S. passport.  Carr's attorney 
said they plan to send a letter of protest to the PRC Supreme 
People's Court and the Changsha Supreme People's Court.  The 
attorney said PRC authorities did not follow standard procedures for 
serving court orders and have overstepped their legal bounds by 
barring Carr from leaving China. 
 
¶6. (SBU) Consulate Guangzhou has coordinated with Embassy Beijing on 
this case and will continue to monitor developments insofar as Carr 
remains within our Consular district.  Embassy Beijing normally 
follows court proceedings in Hunan province. 
 
GOLDBERG