VZCZCXRO1402
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0716/01 1720621
ZNR UUUUU ZZH
R 210621Z JUN 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 6193
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 02 GUANGZHOU 000716 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
USDOC FOR 4420/ITA/MAC/MCQUEEN, DAS KASOFF, HIJIKATA, GENERAL 
COUNSEL'S OFFICE JOEL BLANK, AND GENERAL COUNSEL SULLIVAN 
STATE FOR EB/TPP MASSINGA, FELSING 
STATE PASS COPYRIGHT FOR POOR 
STATE PASS USPTO FOR BOLAND 
STATE PASS USTR FOR MARUYAMA, WINTER MCCOY, ESPINEL, CELICO 
USDOJ FOR NEWBY 
DHS/CPP FOR MACRAY 
USPACOM FOR FPA 
 
E.O. 12958: N/A 
TAGS: KIPR ECON ETRD CH
SUBJECT: Embassy IPR Attache Cohen Visits Shenzhen, Guangzhou to 
Discuss Local Legislation and Patent Developments 
 
¶1. (SBU) SUMMARY: The Shenzhen People's Congress is revising its 
technical secrets rule and drafting a new IPR code, and the Shenzhen 
and Guangdong Intellectual Property Offices (IPOs) will seek 
meetings with USPTO in the United States this summer, officials told 
Embassy Senior IPR Attache Mark Cohen on June 14-15.  U.S. companies 
told Cohen that they continue to be frustrated with the lack of 
deterrent penalties for IPR infringers, and one company said local 
authorities have been less cooperative since the U.S. brought 
IPR-related WTO consultation requests in April.  Shenzhen and 
Guangdong authorities are willing to assist with a planned U.S. 
staffdel in August, but said national-level authorities need to make 
initial approvals.  END SUMMARY 
 
Shenzhen Congress: Drafting Local IPR Regulations 
--------------------------------------------- ---- 
 
¶2. (U) Liu Shuguang, Vice Chair of the Legislative Affairs Committee 
of the Shenzhen People's Congress, said Shenzhen has used its 
special legislative authority to enact nine local IPR-related 
statutes since 1992, including those covering high-tech zones, 
digital content for library management, and personnel recruitment. 
He said Shenzhen also plans to formulate a comprehensive IPR code of 
its own, notwithstanding its limited legislative competence and 
difficulties adopting a national IPR code, estimating that it will 
require up to five years to complete.  Liu also said that the 
Shenzhen Congress is making significant revisions to a local 
technical secrets regulation including clarifying its relationship 
with employee non-compete agreements (the ambiguities in that rule 
were previously the subject of a U.S. question to China at the WTO's 
TRIPS Council). 
 
¶3. (SBU) When asked about the relationship between local Peoples 
Congress statutes and national laws, regulations adopted by the 
State Council (fagui), and ministerial rules (guizhang) in the 
Chinese system, Liu unambiguously came out on the side of local 
legislatures in the event of a conflict with national regulations 
and rules.  He said that "in theory" local regulations override not 
only ministerial rules, but also national regulations and judicial 
interpretations, because they are statutory in nature.  Judicial 
interpretations only govern the courts or Procuratorate; ministerial 
regulations are adopted by a lower legislative body than a People's 
Congress.  Of course, Liu mentioned, local laws seek to harmonize 
with current or proposed national laws and regulations as well as 
judicial interpretations to minimize such conflicts. (Comment: This 
of course contradicts the interpretation of many central officials 
and illustrates the continuing ambiguities of China's legal system.) 
 
 
¶4. (U) Liu expressed an interest in learning more about U.S. 
negotiated rulemaking, which he studied in graduate school in China 
(focusing on the U.S. Administrative Procedures Act).  Regarding the 
planned August staffdel to Shenzhen, Liu said he would be happy to 
assist but noted that the National People's Congress would need to 
weigh in and would likely defer to the Ministry of Foreign Affairs 
on the initial approval. 
 
Shenzhen IPO: Keen on Foreign Exchanges 
--------------------------------------- 
 
¶5. (U) Wang Youming, Deputy Director General of the Shenzhen 
Intellectual Property Office (IPO), said his office maintains close 
cooperation with a number of foreign experts and governments, 
particularly those in the United States, Europe, and Japan.  Several 
U.S. law firms and judges trained local officials this and last year 
on trial procedures, application filing, and patent infringement, 
including Section 337 actions.  Wang said the Shenzhen IPO helps 
companies such as Huawei and ZTE file their intellectual property 
overseas.  Wang participated previously in a joint USPTO/SAC program 
on standards and IPR last year in Shenzhen.  In addition, the IPO 
offers subsidies of several hundreds of thousands of RMB to firms 
that are interested in participated in international 
standards-setting bodies.  Wang said a delegation from the Shenzhen 
government hopes to meet with USPTO this summer.  He said his office 
would also assist with the planned August staffdel, but noted the 
necessity of approval from the State Intellectual Property Office. 
 
Guangdong IPO: New Patent Protection Rule 
 
GUANGZHOU 00000716  002 OF 002 
 
 
----------------------------------------- 
 
¶6. (SBU) Huang Wenxia, Deputy Director of the Legal Affairs 
Division, said Guangdong's new Patent Protection Rule gives the IPO 
more authority to collect evidence and seize violators' properties. 
It also introduces harsher penalties for repeat infringers.  Xie 
Hong, Director of the Guangdong IPO's Coordination and 
Administration Division, said Guangdong will soon issue its IPR 
Strategic Guideline covering the creation, administration, and 
application of IPR in all fields.  Huang said the Zhuhai IPO has 
begun providing expert opinions regarding infringement to help 
companies respond to patent infringement notices delivered by 
lawyers (Comment: This seems an unrealistic solution considering the 
difficulties in reviewing patent grants and the limitations on 
technical expertise in local IP offices.)  Xie noted that Guangdong 
lacks enough trained professionals or a robust enough service 
industry to support the high level of patent and trademark 
applications originating from Guangdong.  She added that a 
delegation headed by the Guangdong IPO Director General will travel 
to the United States in August and hopes to visit USPTO. 
 
AmCham: Difficulties Old and New 
-------------------------------- 
 
¶7. (SBU) In a discussion with members of AmCham South China, Cohen 
reiterated that the U.S. WTO consultation request is not an attack 
on China's IP system but rather a focused action.  He said the 
bilateral customs agreement reached at the May Strategic Economic 
Dialogue will likely improve cooperation between customs 
authorities.  Cohen encouraged companies to bring civil or criminal 
cases in the jurisdictions of trade fairs as a way to avoid local 
protectionism. 
 
¶8. (SBU) A representative from Proctor & Gamble noted the lack of 
clear statistics on criminal IPR cases in China, particularly those 
involving foreign rights-holders.  He added that suspended sentences 
in IPR judgments are becoming more common.  A representative from 
sporting goods firm Acushnet said his company has seen a decline in 
cooperation from the Chinese government since the U.S. requested WTO 
consultations in April. 
 
¶9. (U) This cable has been cleared by IPR Attache Mark Cohen. 
 
GOLDBERG