VZCZCXRO9362
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0267/01 1300922
ZNR UUUUU ZZH
R 090922Z MAY 08
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 7149
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHIN/AIT TAIPEI 9481
RUEAUSA/DEPT OF HHS WASHDC
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC
RHMCSUU/FBI WASHINGTON DC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC

UNCLAS SECTION 01 OF 03 GUANGZHOU 000267 
 
SENSITIVE 
SIPDIS 
 
State for EAP/CM - JYamomoto; EEB - AColeman, JBoger 
State for INL - JVigil 
USTR for China Office - AWinter; IPR Office - RBae, JRagland; and 
OCG - SMcCoy 
Commerce for National Coordinator for IPR Enforcement 
Commerce for CIsrael 
Commerce for MAC 3204/ESzymanski 
Commerce for MAC 3043/McQueen 
Commerce for MAC 3042/SWilson, JYoung 
Commerce for NWinetke 
LOC/Copyright Office - MPoor 
USPTO for Int'l Affairs - LBoland, EWu 
DOJ for CCIPS - MDubose 
DOJ for SChembtob 
FTC for Blumenthal 
FBI for LBryant 
DHS/ICE for IPR Center - Dfaulconer, TRandazzo 
DHS/CBP for IPR Rights Branch - GMacray, PPizzeck 
ITC for LLevine, LSchlitt 
 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR ECON PGOV CH
SUBJECT: Guangdong Highlights IPR Efforts in 2007 
 
REF: A) GUANGZHOU 244, B) GUANGZHOU 132 
 
(U) This document is sensitive but unclassified.  Please protect 
accordingly. Not for release outside U.S. government channels. Not 
for internet publication. 
 
¶1. (SBU) Summary: Reviewing Guangdong Province's progress on 
intellectual property rights (IPR) enforcement at an April 24 press 
conference, Intellectual Property Office Director General Tao 
Kaiyuan announced a new strategic plan aimed at improving IPR 
conditions.  One omission: no plan details.  Enforcement statistics 
for the province - part of the 2007 Provincial Report on IPR - were 
also released, showing only modest changes from the previous year. 
IPO officials also highlighted regional cooperation efforts, 
increased enforcement of internet-based sales of infringing goods 
and enforcement at trade fairs.  New statistics on enforcement gave 
no indication that protection for U.S. rights holders in Guangdong 
has substantially improved.  End summary. 
 
Guangdong's New IPR Strategic Plan 
---------------------------------- 
 
¶2. (U) At her first press conference since taking office on April 1, 
Director General Tao Kaiyuan of the Guangdong Provincial 
Intellectual Property Office (IPO) briefed the press on the 
provincial government's 2007 Report on Intellectual Property Rights 
(IPR).  Tao also announced the Province's 2007-2020 IPR Strategic 
Plan but provided few details on what measures the plan would 
include.  Tao said the IPO and other provincial agencies were still 
working on drafting the implementing rules for the plan. 
 
Enforcement Results 
------------------- 
 
¶3. (SBU) Enforcement actions for each major IPR category were 
announced at the press conference.  Tao revealed that administrative 
patent disputes numbered 256 (compared to 236 cases in 2006), with 
214 cases resolved by branches of the provincial or local IPO.  The 
Administration for Industry and Commerce (AIC) investigated 3,056 
trademark-related cases (up from 2,358 in 2006), of which 1,833 
involved foreign rights owners, and 31 cases were transferred from 
administrative to judicial authorities (a disappointing drop from 38 
in 2006) for handling in civil or criminal courts.  Provincial and 
local branches of the Quality Supervision Bureau (QSB) investigated 
1,801 cases of counterfeiting (down from 2,205 in 2006), claiming 
the closure of 860 (up substantially from 498 in 2006) counterfeit 
plants with a value of goods involved worth more than RMB 84 million 
(USD 12 million.) 
 
¶4. (U) Criminal prosecution numbers were also released.  Provincial 
and local branches of the Public Security Bureau (PSB) investigated 
503 cases (up from 396 in 2006) and cracked 345 criminal cases of 
IPR infringement and product counterfeiting (compared to 288 in 
2006), arresting 894 criminal suspects (806 arrests in 2006). 
Notable cases included: 
-- cooperation with the FBI and Microsoft to breakup a major 
counterfeit software ring (ref A), and 
-- a large operation to disrupt fake domestic cigarette networks. 
 
¶5. (SBU) Guangdong courts received 3,122 civil cases of first 
instance (up from 2,640 in 2006) and 576 cases of second instance 
 
GUANGZHOU 00000267  002 OF 003 
 
 
(appeals), concluding more than 99 percent of IPR cases received. 
However, courts only received 86 criminal IPR cases of first 
instance (a disappointing decline from 116 in 2006), involving 157 
criminal suspects, with all 2007 criminal cases concluded before the 
end of the year.  The IPR report also said 1,627, or 52.4 percent, 
of the court's IPR cases of first instance were settled via 
court-sponsored mediation (compared to 1,331 cases or 47.9 percent 
in 2006), including cases where plaintiffs withdrew their 
complaints.  As a possible sign of increased transparency in 2007, 
Guangdong Province led the country by posting a total of 3,155 
effective IPR verdicts on the internet (increasing from 1,418 
verdicts in 2006) at http://ipr.chinacourt.org, in a section called 
China IPR Judgments and Decisions. 
 
China's Patent and Trademark Leader for 13 Years 
--------------------------------------------- --- 
 
¶6. (U) It was another banner year for Guangdong's patent and 
trademark filings in 2007.  New patent filings in the province 
totaled 102,449 with 56,451 patents granted during the year, annual 
increases of 12.7 percent and 29.7 percent, respectively.  Invention 
patents totaled 26,692, with 3,714 granted, representing annual 
increases of 25 percent and 52.2 percent, respectively.  Guangdong 
Province ranked first in China for patent filings and grants for the 
13th straight year; it was also first among provinces for invention 
patents for the third straight year. 
 
¶7. (U) Tao proudly announced continuing growth in Guangdong's 
trademark filings with the accumulated number of registered 
trademarks exceeding 380,000 in 2007.  According to the White Paper, 
the province has ranked first in China for trademark applications 
and registrations for 13 straight years.  In addition, Tao said 
Guangdong's efforts to promote national and provincial well-known 
and famous trademarks continued to produce results with Guangdong 
ranking among the leading provinces in China when comparing the 
number of nationally recognized brands. 
 
Continuing Cooperation with Neighbors 
------------------------------------- 
 
¶8. (U) Tao highlighted IPR cooperation with Hong Kong, Macau, other 
provinces and among local governments throughout the Pan-Pearl River 
Delta (Pan-PRD).  She noted that Guangdong and Hong Kong have held 
six IPR task force meetings since 2003, conducted over 20 joint 
projects and signed a cooperation agreement for additional projects 
and seminars to be held in 2007-08.  Tao mentioned that a seventh 
task force meeting is scheduled for July 2008, but the details have 
not been finalized.  In addition, the Guangdong branch of China 
Customs, working with Hong Kong and Macau Customs, shared over 100 
pieces of intelligence concerning IPR protection in 2007. 
 
Increased Discussion of Key U.S. Enforcement Concerns 
--------------------------------------------- -------- 
 
¶9. (U) Responding to a journalist's question during the press 
conference about emerging IPR infringement trends in Guangdong, Li 
Shanxiong, Director of the Guangdong PSB Economic Crimes 
Investigation Division (ECID), emphasized his division's increasing 
attention to internet-related IPR infringement issues, including the 
sale of infringing goods on internet retail websites.  IPO Director 
General Tao also commented that the Guangdong government had 
 
GUANGZHOU 00000267  003 OF 003 
 
 
increased efforts to enforce IPR at trade fairs in 2007.  At last 
year's two sessions of the Canton Fair, 1,621 enterprises were 
involved in IPR complaints (compared with 1,045 in 2006), with 991 
enterprises identified as infringing others' rights.  Guangdong IPO 
cited 1,077 cases of patent-related disputes across the province for 
trade fairs and trade associations in 2007, demonstrating increased 
attention to this category of IPR issues. 
 
Comment 
------- 
 
¶10. (SBU) Although a few of the Guangdong government's 2007 
statistics show improvement in IPR enforcement, such as the 
increased number of factories reportedly closed for producing 
counterfeit goods, other changes from the previous year were 
disappointing, including the decline in number of cases referred by 
AIC to judicial authorities and the drop in criminal IPR cases of 
first instance handled by Guangdong courts.  Overall, changes from 
the previous year were modest, and there is little sign that the 
business environment for IP rights holders has substantially 
improved. 
 
¶11.  (SBU) U.S. rights holders continue to complain about specific 
aspects of Guangdong Province's IP enforcement regime, including 
bureaucratic and sometimes intransigent administrative agencies, 
non-deterrent civil and criminal penalties for IP infringers, and 
uneven application of relevant laws and regulations when handling 
complaints (reftels A and B).  Another concern is whether the number 
and quality of Guangdong's IPR enforcement actions have kept pace 
with even faster growth in patent and trademark registrations. 
Despite this, possible improvements for transparency in IPR verdicts 
and action on key U.S. enforcement concerns might contribute to a 
more positive environment if the provincial government can sustain 
these efforts over time. 
 
GOLDBERG