VZCZCXRO1291
RR RUEHCN RUEHVC
DE RUEHGH #0330/01 2280254
ZNR UUUUU ZZH
R 150254Z AUG 08
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 7070
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 7644

UNCLAS SECTION 01 OF 02 SHANGHAI 000330 
 
SENSITIVE 
SIPDIS 
 
USTR FOR CHINA OFFICE - TSTRATFORD, AWINTER, TWINELAND, DKATZ; 
IPR OFFICE - RBAE; AND OCG - TPOSNER 
DOC FOR NATIONAL COORDINATOR FOR IPR ENFORCEMENT - WPAUGH 
DOC FOR ITA/MAC: SZYMANSKI, YOUNG 
LOC/ COPYRIGHT OFFICE - STEPP 
USPTO FOR INT'L AFFAIRS - LBOLAND 
DOJ FOR CCIPS - TNEWBY 
FBI FOR LBRYANT 
DHS/ICE FOR IPR CENTER - DFAULCONER 
DHS/CBP FOR IPR RIGHTS BRANCH - GMACRAY 
TREASURY FOR OASIA - DOHNER/CUSHMAN 
NSC FOR KURT TONG 
 
E.O. 12958: N/A 
TAGS: KIPR ECON EINV PGOV CH
SUBJECT: SHANGHAI IP ADMINISTRATIVE OFFICES MOVE FORWARD 
 
SHANGHAI 00000330  001.2 OF 002 
 
 
¶1.  (SBU) Summary:  During an August 8 farewell visit to 
Shanghai, Senior IPR Attachi Mark Cohen engaged Shanghai IP 
Administration (SIPA), Shanghai IPR Complaint Center, and 
Shanghai Administration of Industry and Commerce (SAIC) 
officials on current initiatives and opportunities for 
cooperation.  SIPA Director General Chen Zhixing said USTR's 
2008 Special 301 Report on Shanghai is "impartial and 
objective."  He also welcomed comments from the USG on how 
Shanghai should implement the Outline of the National IP 
Strategy.  The Shanghai IP Complaint Center emphasized that 
foreigners are increasingly making use of the complaint center 
as they are becoming familiar with its services.  SAIC Deputy 
Director said that as a result of efforts on landlord liability, 
over 100 tenants have been evicted from markets around Shanghai. 
 However, foreigners frequenting counterfeit markets continue to 
be a problem.  End Summary. 
 
SIPA Welcomes 301 Language and Further Cooperation 
--------------------------------------------- ----- 
 
¶2.  (SBU) DG Chen relayed his appreciation for Cohen's support 
of Shanghai and welcomed further collaboration with the U.S. 
Mission in China.  Regarding the 2007 Special 301 Report on 
China, Chen welcomed the report's language about Shanghai, 
saying it is "impartial and objective."  He noted his 
appreciation for recognizing Shanghai as "a relatively bright 
spot in China's IPR protection environment" and for pointing out 
Shanghai's accomplishments in the judicial arena.  Chen also 
acknowledged that the report's criticism of Shanghai retail 
counterfeit markets is an "accurate assessment of the 
situation." 
 
¶3.  (SBU) According to Chen, Shanghai is striving to implement 
the National IP Strategy that was released in early June.  Soon 
after its release, the Shanghai IP Administration established a 
website welcoming public comment on the city's implementation of 
the strategy.  According to Chen, Shanghai is the first city in 
China to welcome such public comment.  Although the deadline of 
July 25 had passed to submit comments, Chen agreed to still 
accept comments from the U.S. Mission.  In addition to 
implementing the strategy, Shanghai continues to focus on 
counterfeit markets, Internet-related infringement, and trade 
fairs. 
 
Complaint Center - Trademarks are Biggest Issue 
--------------------------------------------- -- 
 
¶4.  (SBU) During a meeting at Shanghai's IPR Complaint Center, 
Director Yang Hui briefed Cohen on the division of the office: 
the Shanghai Service Center for IP Protection and the Shanghai 
Consumer Complaint and Report Center.  The former deals strictly 
with IPR-related complaints and the latter handles complaints of 
poor quality products and services.  Although the Consumer 
Complaint Center was established several years prior to the IPR 
Protection Center, Shanghai decided to combine the two 
components to help with information sharing.  Yang noted that 
Shanghai was one of the first cities in China to establish an 
IPR Complaint Center in July 2006 and has since added 7 district 
level IPR complaint centers, mostly located in high-tech 
industrial parks. 
 
¶5.  (SBU) Since its establishment, the Center has fielded 3,273 
complaints and inquiries.  Of these, the Center has opened and 
referred 151 IPR cases.  The cases included 71 trademark cases, 
66 copyright cases, 13 patent cases, and 1 case related to the 
Olympics.  Domestic Chinese companies had initiated 136 of the 
cases, U.S. companies - 10 cases, and European companies - 5 
cases.  Yang added that complaints from foreign rights holders 
are increasing as foreigners become more familiar with the 
Center.  The U.S. Motion Picture Association had also filed 
several cases at the Shanghai Complaint Center upon Cohen's 
suggestion, a development similar to what MPAA had done in 
Beijing where a large percentage of foreign related cases 
originate from MPAA.   Note: The IPR complaint center was 
co-located with the consumer complaint center run by SAIC.  The 
consumer complaint centers generally are more deeply staffed and 
 
SHANGHAI 00000330  002.2 OF 002 
 
 
receive more complaints than the IPR complaint centers.  The IPR 
complaint centers and consumer complaint centers also can refer 
cases to each other.  End note. 
 
Counterfeit Markets and Landlord Liability 
------------------------------------------ 
 
¶6.  (SBU) At the Shanghai Administration of Industry and 
Commerce (AIC), Deputy Director Chen Xuejun outlined Shanghai's 
efforts to fight retail counterfeit markets and encouraged U.S. 
right holders to be more proactive in working with AIC to 
protect their rights.  Shanghai recently began using landlord 
liability as a means to crack down on offending vendors.  AIC 
encourages market owners to sign contracts with tenants and 
provides landlords with sample contracts that can be followed. 
According to Chen, if a tenant continues selling counterfeits 
after the second warning, the owner should evict the tenant from 
the market.  (Comment: The problem with the initiative is that 
it is non-compulsory in nature.  End comment.)  Within the past 
year, over 100 tenants have been evicted under this new 
guideline.  (Note:  One U.S. company already notified the 
Consulate that it plans to file a law suit against a Shanghai 
market owner under the new landlord liability provisions.  End 
note.) 
 
¶7.  (SBU) Chen expressed that part of Shanghai's counterfeit 
market problem is due to the propensity of foreigners to buy 
fakes.  As an example, he noted a media report about singer, 
Celine Dion buying fake goods in Shanghai.  He added that NBA 
basketball players also visited counterfeit markets during their 
stay in the city. (Comment:  Blaming foreigners for counterfeit 
market demand is a common refrain among Shanghai IP officials. 
However, Shanghai's counterfeit markets are equally full of 
local shoppers.) 
 
¶8.  (SBU) Comment:  In many respects, Shanghai's determination 
to protect IP is admirable.  The courts are some of the top IP 
case litigation venues in the country and have a relatively high 
percentage of foreign related cases as well as cases involving 
Chinese litigants from outside of Shanghai; Shanghai Customs is 
an active proponent of IP protection; and the city's 
administrative offices actively reach out to partner with the 
Chinese and foreign business communities.  Shanghai has been 
attracting a foreign R&D community, particularly in the biotech 
sector.  Yet, the purveyors of infringing goods, both on the 
streets and with small retail establishments, remain largely 
unchecked.  Although Shanghai and the Central Government have 
touted the closure of the city's premier counterfeit market, 
Xiangyang, for over two years, they have allowed several other 
markets to spring up and thrive in its place.  In this case, 
inaction speaks louder than words. 
 
¶9.  (U) This cable was cleared by Mark Cohen. 
JARRETT