VZCZCXRO3867
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0438/01 2050601
ZNR UUUUU ZZH
R 230601Z JUL 08
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 7436
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHIN/AIT TAIPEI 9501
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 04 GUANGZHOU 000438 
 
SENSITIVE 
SIPDIS 
 
State for EAP/CM - JYamamoto; EEB - AColeman, JBoger 
State for INL - JVigil 
USTR for China Office - AWinter; IPR Office - RBae; 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 - GMcCray, PPizzeck 
ITC for LLevine, LSchlitt 
 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR ECON PGOV CH
SUBJECT: 2008 Pearl River IP Forum Achieves Breakthrough in 
Cooperation 
 
REF: A) GUANGZHOU 267, B) GUANGZHOU 244 
 
(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: The 2008 Pearl River IP Forum - jointly organized 
by the U.S. Consulate's Guangzhou branch of the United States Patent 
and Trademark Office (PTO Guangzhou) and Guangdong Intellectual 
Property Office (IPO) on July 15 - brought together -- for the first 
time in recent memory -- business, government and the legal 
community to discuss the challenges of IPR protection in Guangdong. 
Visiting U.S. Federal Judges Kent Jordan and Larry McKinney 
moderated expert panels at the day-long program; their participation 
allowed us to arrange meetings with local judges who had previously 
been unwilling to discuss IPR issues.  The Guangdong High Court 
expressed interest in expanding legal exchanges with U.S. courts. 
In a separate meeting, Guangdong government officials representing 
agencies that work on IPR issues described significant efforts in 
strengthening IPR enforcement in the province; however, lack of 
coordination among the various agencies is still a problem.  End 
summary. 
 
Bringing All the Players Together 
--------------------------------- 
 
¶2. (U) Leading a chorus of voices from U.S. and Chinese rights 
holders, the Consul General opened the 2008 Pearl River IP Forum 
with a clear message: "Without a comprehensive and effective IP 
regime, international investors and domestic innovators will not 
remain in China, but will take their ideas and capital elsewhere in 
the world.  The challenge for you is to keep them here.  And I am 
confident you will meet the challenge."  The day-long program, 
co-hosted by PTO Guangzhou and the Guangdong IPO, featured expert 
panels and question-answer (Q and A) sessions on the advantages of 
innovation and what it takes to cultivate it as well as more 
detailed sessions on how to litigate a China-related IP case.  The 
forum was broke new ground for us: it was the first time the 
Consulate was able to gather U.S. and Chinese rights holders, 
government officials, lawyers and judges in one room to discuss the 
challenges facing IPR enforcement. 
 
Importance of Innovation Not In Question 
---------------------------------------- 
 
¶3. (U) Representatives of leading U.S. and Chinese firms offered 
their perspectives on what the Chinese government can do to better 
foster and protect local innovation. 
-- Procter and Gamble's Brenda Panichi, Associate Director of 
IP-Patents-Asia, described how her company has adopted a holistic 
view of IP that includes not only product formularies and 
trademarks, but also marketing strategies and sales practices. 
-- Huawei Patent Department Chief Zhang Zhongqing reviewed his 
company's efforts to create new IP and enforce patent rights in 
China and other international markets. 
-- T.W. Liu, Senior Consultant of the Innovation and IP Division at 
the Hong Kong Productivity Council, pointed to the examples of 
several Chinese firms that have implemented advanced IP systems, 
which create and utilize employees' best ideas and bring them to 
market successfully. 
 
GUANGZHOU 00000438  002 OF 004 
 
 
-- Representatives of IBM, ZTE and Cisco each explained that, 
without innovation and protection of their firms' intellectual 
property, not only would their business suffer but the entire 
industry might wither away. 
 
¶4. (U) Dr. Su Weiwei, Director of the Guangzhou Quality R&D Center 
for Traditional Chinese Medicine at Sun Yat-sen University, grabbed 
the audience's attention with her frank assessment of problems in 
south China's IP protection for pharmaceuticals.  Dr. Su said her 
lab had developed several new drugs in the past five years, and 
applied for 23 Chinese patents, with 12 patents granted so far. 
However, Dr. Su emphatically called on the legal and government 
communities to improve their service levels for innovators, simplify 
filing and other registration procedures, and reduce filing costs. 
Without systemic improvements, Dr. Su said that she and other 
researchers would continue wasting valuable energy navigating the 
patent process and negotiating with customers about patent-related 
issues rather than focusing on their core business of developing new 
medical treatments. 
 
¶5. (U) Guangzhou Vice Secretary General Chen Shaokong and Guangdong 
IPO Deputy Director General Zhu Wanchang responded to the call from 
rights holders for stronger protection by touting recent IP 
initiatives.  They also repeated higher-level political statements 
about the need for greater attention to domestic innovation and 
increased protection of existing IP rights.  Chen said Guangzhou led 
the province with its March announcement of a three-year municipal 
plan to invest RMB 1 billion annually in innovation-related 
projects.  Zhu told the audience that IP cannot be separated from a 
strong economy and emphasized Guangdong Governor Huang Huahua's 
recent calls for better IP protection and increased international 
cooperation (Note: Party Secretary Wang Yang also made a similar 
comment in a meeting with the Ambassador on July 18. End Note.) 
 
Litigating a Chinese IP Case 
---------------------------- 
 
¶6. (U) Another first of the forum was the detailed and public 
discussion among Chinese and U.S. legal professionals on the process 
of litigating a Chinese IP case.  Three separate panels were 
followed by lively Q and A sessions covering how and why to litigate 
in China versus other jurisdictions, how to prepare evidence and 
present a case, and considerations to take into account when 
deciding whether to appeal a judgment.  Visiting U.S. Federal Judge 
Kent A. Jordan of the United States Court of Appeals for the Third 
Circuit in Wilmington, Delaware and Judge Larry J. McKinney of the 
United States District Court for the Southern District of Indiana in 
Indianapolis, Indiana participated in the program.  Each moderated a 
panel that included Chinese attorneys and international lawyers 
jointly presenting detailed recommendations on how to choose a 
jurisdiction, select the type of complaint that would best be 
supported by the facts of a case, and craft a case around the 
plaintiff's desired outcomes. 
 
¶7. (U) One lesson many in the session agreed on was that IP cases in 
China are made more difficult by the lack of comprehensive rules of 
evidence, which has repercussions throughout the litigation process. 
 When asked about his biggest challenge litigating in China, 
Shanghai-based American attorney Geoffrey Lin said the lack of a 
discovery process or unified rules of evidence, and rules that 
 
GUANGZHOU 00000438  003 OF 004 
 
 
generally preclude reliance on witness testimony make it 
particularly challenging to litigate IP cases here.  Chinese 
attorney Zhang Shaojun elaborated on Lin's comments, describing 
trademark cases as the easiest to prove, followed by patent cases in 
which the subject matter is not too technical.  Zhang concluded that 
copyright and trade secret cases are much more difficult to prove, 
sometimes even impossible, because plaintiffs lack the power to 
compel defendants to testify or produce evidence. 
 
Guangdong High Court Wants More Legal Exchanges 
--------------------------------------------- -- 
 
¶8. (SBU) In a separate meeting the day before the conference, 
Appellate Judge Jordan and District Judge McKinney met with Judge 
Ling Qiman, Vice President of the Guangdong High Court, as well as 
three other judges from the intellectual property division of the 
Guangdong High Court -- the first time in two years the Consulate 
has been able to meet with judges on the court.  Judge Ling 
concurrently serves as President of the Guangdong Judicial Training 
Center.  He visited Los Angeles in 2006 to participate in legal 
exchange programs and said the experience had been a valuable one. 
Judge Ou Xiuping, Deputy Chief of the Guangdong High Court 
Intellectual Property Division, said he also learned much during a 
June 2007 trip to Washington, D.C., in which he sat on a panel with 
Judge Randall R. Rader.  (Note: Judge Rader is an Associate Judge of 
the United States Court of Appeals for the Federal Circuit in 
Washington, D.C.  End note.)  The judges expressed interest in 
expanding exchanges with U.S. counterparts.  Judge Ling described 
his court's budget for training and exchange programs as larger than 
courts in less-developed provinces, suggesting strong potential to 
expand our cooperation on exchange programs in both directions. 
 
¶9. (SBU) Judge Ling said an average of 4,000 IP cases are filed in 
Guangdong each year, ranking it first in China.  Copyright cases are 
most common.  There are 15 Guangdong provincial courts designated to 
handle IPR cases, of which 8 are certified to hear patent cases. 
Judges receive special training when assigned to IP courts and then 
receive further training each year.  Judge Ling acknowledged 
differences between U.S. and Chinese court procedures for handling 
IP cases, however, he noted that the Guangdong Provincial Government 
is currently discussing the establishment of an experimental IP 
court that would cover all three types of Chinese cases - 
administrative, civil, and criminal - a departure from the current 
system that would make it more consistent with U.S. practices. 
 
Interagency IPR Group Describes Accomplishments 
--------------------------------------------- -- 
 
¶10. (SBU) An interagency group of Guangdong provincial IPR officials 
in a separate July 14 meeting with the U.S. judges described their 
recent accomplishments in strengthening IPR protection. 
-- GD IPO Deputy Director General Zhu Wanchang led the group, which 
included representatives of the Intellectual Property Office (IPO), 
Culture Bureau, Copyright Bureau, Administration for Industry and 
Commerce (AIC), Technical Supervision Bureau (TSB), Customs Bureau 
and Public Security Bureau (PSB). 
-- Wang Yequn of the Culture Bureau said his agency's dedicated 
copyright enforcement team had grown from 300 in 2006 to 1,300 in 
2008, helping to increase monitoring and enforcement capacity for 
cases of traditional and on-line copyright infringement. 
 
GUANGZHOU 00000438  004 OF 004 
 
 
-- Guo Xiuwen of the Copyright Bureau described the agency's 
numerous public-awareness activities. 
-- AIC's Wu Lichao said his bureau recently had improved its ability 
to track trademark cases and transfer them between offices and other 
government agencies. 
-- Customs Inspector Wang Jun said his agency increasingly relies on 
a risk-management process to identify suspicious shipments, 
accounting for 20 percent of recent IP cases. 
-- PSB Officer Chen Zhaojian ended the meeting by describing recent 
training and collaborative efforts undertaken by the 1,500 officers 
involved in Guangdong's IP-related law enforcement activities. 
 
¶11. (SBU) Comment: Taken together, the list of accomplishments gives 
us hope that Guangdong is, in fact, strengthening IPR protection. 
However, the fractured nature of the province's IPR program spread 
across so many separate agencies underscores the fact that 
insufficient coordination and inconsistency remain obstacles to the 
creation of a more effective system for IPR protection. 
Nevertheless, the willingness of the provincial government to gather 
all of the agencies together to meet with us may be a sign of 
progress toward a more unified approach. 
 
GOLDBERG