VZCZCXRO3510
OO RUEHCN RUEHGH
DE RUEHBJ #2455/01 1030331
ZNR UUUUU ZZH
O 130331Z APR 07
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6806
INFO RUEHCN/AMCONSUL CHENGDU 8164
RUEHGZ/AMCONSUL GUANGZHOU 2762
RUEHGH/AMCONSUL SHANGHAI 7361
RUEHSH/AMCONSUL SHENYANG 7844
RUEHHK/AMCONSUL HONG KONG 9204
RUEHIN/AIT TAIPEI 6395
RUEHKO/AMEMBASSY TOKYO 1327
RUEHUL/AMEMBASSY SEOUL 0070
RUEHMO/AMEMBASSY MOSCOW 8653
RUEHGV/USMISSION GENEVA 1773
RUEAHLC/DHS WASHDC
RUCPDOC/USDOC WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RHMCSUU/FBI WASHINGTON DC

UNCLAS SECTION 01 OF 05 BEIJING 002455 
 
SIPDIS 
 
State for EAP/CM - JYamomoto and EB/IPE - EFelsing 
 
USTR for China Office - AWinter; IPR Office - RBae; and OCG 
- SMcCoy, ACelico 
 
Commerce for National Coordinator for IPR Enforcement - 
CIsrael 
 
Commerce for MAC 3204/LRigoli, ESzymanski 
 
Commerce for MAC 3043/McQueen 
 
LOC/Copyright Office - MPoor 
 
USPTO for Int'l Affairs - LBoland, EWu 
 
DOJ for CCIPS - Asharrin 
DOJ for SChembtob 
FTC for Blumenthal 
FBI for LBryant 
 
DHS/ICE for IPR Center - DFaulconer 
 
DHS/CBP for IPR Rights Branch - Pizzeck 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD ECON WTRO PGOV CH
SUBJECT: USPTO U/S DUDAS AND SUPREMEPEOPLE'S COURT DISCUSS 
DEEPER COOPERATION ON PR PROTECTION AND INNOVATION 
 
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Summay 
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¶1. (SBU) Commerce Under Secretary and Director of the 
United States Patent and Trademark Office Jon Dudas met 
with Supreme People's Court (SPC) Deputy President Zhang 
Jun on March 28 to discuss intellectual property rights 
(IPR) protection and innovation in China.  The two 
discussed China's criminal law, judicial interpretation 
(JI), statistics exchange, and technical assistance 
programs.  Zhang also made reference to a new agenda for 
IPR protection in China, offering only that the details 
will soon be forthcoming.  End Summary. 
 
¶2. (SBU) Zhang opened by saying that China's focus on 
building an innovation-based society is a recent 
development in the country's history.  As a result, while 
legislation to protect IPR and innovation has improved, 
China's foundation of economic and technological 
development, and judicial practices, remains relatively 
weak.  He added his view that progress on IPR, including 
early measures to penalize infringement, have to date been 
satisfactory, but that the courts must continue to study 
judicial best practices to improve IPR protection. 
 
----------------------- 
Judicial Interpretation 
----------------------- 
 
¶3. (SBU) U/S Dudas expressed his admiration for 
improvements in China's IPR enforcement, which he credited 
in part to a judicial interpretation issued by the SPC in 
¶2004.  He added that the United States nevertheless remains 
concerned over criminal threshold levels, valuations, and 
the courts' use of probation in lieu of imprisonment.  U/S 
Dudas stated that further review and revisions of the 2004 
judicial interpretation might be necessary.  Zhang 
responded that, compared with the 1998 JI that preceded it, 
the 2004 JI intensified crackdowns on IPR crimes by 
reducing criminal thresholds and better addressing China's 
IPR situation.  He explained that the effectiveness of the 
measures - and of increased law enforcement efforts - was 
evidenced by a 30 percent increase in the number of IPR 
crimes prosecuted from 2004 to 2005.  Zhang admitted, 
though, that China should increase the penalties for such 
crimes.  (Note: On April 5, the SPC and SPP released a 
supplement to the 2004 judicial interpretation related to 
criminal intellectual property infringement.  The 
JI(II)lowered criminal thresholds of copyright materials by 
50 percent, from 1,000 to 500 illegal copies of copyrighted 
works. The JI (II) also clarified the definitions 
 
BEIJING 00002455  002 OF 005 
 
 
"reproduction and distribution" reference in Article 217 of 
the Criminal Law.  According to the new interpretation, 
"reproduction and distribution" include the acts of 
reproducing OR distributing, or both reproducing AND 
distributing. End Note.) 
 
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Probation 
--------- 
 
¶4. (SBU) Zhang continued that the use of probation in IPR 
cases is in accordance with China's existing criminal code 
and the principle of Chinese law to allow criminals the 
opportunity to repent and reform rather than serving jail 
time.  He said probation is often used for misdemeanors, 
first time criminals, and criminals who show remorse, and 
that the option is used carefully and has a strong 
deterrent effect.  U/S Dudas agreed that maximum deterrence 
should be a key goal, and that the United States generally 
seeks to achieve this by lowering criminal thresholds and 
increasing penalties, particularly on IPR crimes.  U/S 
Dudas requested that the SPC provide statistics that might 
more clearly demonstrate China's recent progress in 
improving IPR enforcement, and offered to provide United 
States data that might be useful to those efforts.  Both 
parties agreed to coordinate the sharing of statistics 
between Mission Senior IPR Attache and Chief Judge Jiang 
Zhipei of China's IPR Tribunal. 
 
------------------ 
Internet Copyright 
------------------ 
 
¶5. (SBU) U/S Dudas explained that United States law changes 
regularly to address the rapid advance of Internet 
technologies, and questioned how China is preparing to deal 
with online copyright infringement.  Zhang admitted that 
Internet-related IPR crimes are occurring with increasing 
frequency, including infringements of the right to 
personality, reputation, and property.  He lamented that 
legislation always lags behind the situation on the ground, 
and described the SPC's greatest challenge as anticipating 
problems that will arise as a result of future 
technological developments.  Zhang added that China is not 
experienced in investigating Internet crimes, collecting 
evidence in such cases, or meting out penalties, but that 
laws will eventually be changed to address new concerns. 
Citing an example, Zhang wondered whether the online theft 
of virtual property should be handled in the same way as 
theft of tangible property, with similar punishment.  He 
said that, although such issues are not yet included in 
judicial interpretation, some investigators and 
 
BEIJING 00002455  003 OF 005 
 
 
"grassroots" judges have handled such cases in progressive 
ways with controversial judgments.  In that way, he pointed 
out, judicial practices - and not necessarily legislation - 
are moving lawmaking forward in China.  At the suggestion 
of U/S Dudas, both parties agreed to address such emerging 
issues, and both parties agreed to explore a cybercrime 
program to share experiences among judges and experts from 
both countries. 
 
------------------------------ 
Universal IPR Court for China? 
------------------------------ 
 
¶6. (SBU) Judge Randall Rader of the United States Court of 
Appeals for the Federal Circuit offered that the United 
States has greatly benefited from a uniform, national 
policy on IP administered by a unified court, and that 
several other countries have adopted a similar model.  He 
explained that such specialized courts allow judges to 
develop the technical expertise to more effectively 
administer IP law, and suggested that China might benefit 
from such a system.  Zhang acknowledged that an IP court 
would raise the professionalism of the SPC by increasing 
technical understanding and competence and that - 
"generally speaking" - he supports the idea and its many 
benefits.  However, he added that such a court will not be 
established in China until after a broad-based reform of 
the judicial system as a whole, at which point the 
judiciary will be "up to a specific standard."  He joked 
that Judge Jiang in particular strongly supports the 
establishment of such a court, as he would serve as its 
presiding judge. 
 
¶7. (SBU) Short of establishing a unified IP court, Zhang 
explained that the SPC works hard to improve its IPR 
chambers through increased staffing, stability, and 
expertise.  He added that China's IPR judges are some of 
its most qualified and educated.  Zhang welcomed Judge 
Rader's offer to bring his entire IPR court to China in the 
future for a dialogue and information exchange. 
 
-------------------- 
Technical Assistance 
-------------------- 
 
¶8. (SBU) U/S Dudas suggested that petitioners and 
applicants in the United States would benefit from a better 
understanding of China's judicial system, and that a 
program to invite speakers from China to the United States 
also would be useful.  Zhang agreed, and also responded 
favorably to U/S Dudas' offer to bring Chinese officials to 
Washington to attend the Patent and Trademark Office's 
 
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Global IPR Academy. 
 
----------------------------- 
China's National IPR Strategy 
----------------------------- 
 
¶9. (SBU) In closing, Zhang emphasized that the protection 
of IPR is in line with China's national interests and a 
common ground between the United States and China.  He said 
that the SPC issued a "judicial document" in January 2007 
that will comprehensively improve IPR protection and lead 
to more crackdowns against infringers.  Zhang said the 
details of the plan will soon be forthcoming (Note: Zhang 
may have been referring to China's national strategy on IPR 
protection, which the State Intellectual Property Office on 
March 27 announced will be released in the first half of 
¶2007.  End Note.), but offered that it will include three 
principles:  equity and fairness; uniformity of standards 
of judicial administration; and equal protection to 
domestic and foreign rights holders.  He further suggested 
that, under the new plan, civil and administrative law (not 
criminal law) will bear first responsibility to deal with 
IPR.  Zhang went further to say that judicial protection is 
not the most important element in fighting IPR crimes, but 
that a more integrated approach, including the general 
strengthening of the rule of law and the harmonious and 
socially equitable development of China's economy, will 
serve to reduce the incidence of all crimes. 
 
-------------------- 
Meeting Participants 
-------------------- 
 
¶10. (U) U.S. Participants: 
 
Commerce Under Secretary for Intellectual Property and 
USPTO Director Jon Dudas 
U.S. International Intellectual Property Enforcement 
Coordinator Chris Israel 
USPTO Director of the Office of International Relations 
Lois Boland 
Embassy Senior IPR Attache Mark Cohen 
Embassy IPR Attache Todd Thurwacther 
USPTO Attorney-Advisors: Elaine Wu, Jasemine Chambers, Tim 
Browning, Conrad Wong; and Trade Policy Analyst Susan Tong 
Embassy Economic Affairs Second Secretary Geoff 
Siebengartner (notetaker) 
Interpreter 
U.S. Court of Appeals for the Federal Circuit Judge Randall 
Rader 
 
¶11. (U) Chinese Participants: 
 
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SPC Vice President Justice Zhang Jun 
SPC IPR Tribunal Chief Judge Jiang Zhipei 
SPC IPR Tribunal Deputy Judge Kong Jiangjun 
SPC Research Center Judge Li Hongjiang 
SPC Administrative Tribunal Judge Gan Wen 
SPC Second Criminal Tribunal Judge Liu Miaoxiang 
Interpreter 
 
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Comment 
------- 
 
¶12. (SBU) Following USTR's April 9 announcement to bring 
two WTO cases against China, the extent of future bilateral 
cooperation on IPR and related issues remains uncertain. 
As anticipated, some Chinese officials who in the past have 
supported cooperation with the United States on IPR 
protection and enforcement have expressed dissatisfaction 
at the announcement.  Further, it is likely that officials 
who may be willing to continue to work together may face 
internal pressure to limit such efforts.  End Comment. 
 
¶13. (U) U/S Dudas' delegation has cleared this report.