VZCZCXRO7750
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0625/01 3030851
ZNR UUUUU ZZH
R 290851Z OCT 08
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 7657
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHIN/AIT TAIPEI 9517
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 000625 
 
SIPDIS 
 
State for EAP/CM - SFlatt; EEB - JUrban 
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: South China IPR: Visiting US Federal Judge and Prosecutor 
Help Open Doors 
 
REF: A) GUANGZHOU 438, B) 2007 GUANGZHOU 1241 
 
(U) This document is sensitive but unclassified.  Please protect 
accordingly. Not for release outside U.S. government channels. Not 
for internet publication. 
 
¶1. (U) Summary: Conventional wisdom says that judges can talk with 
judges, police can talk with police.  During a PTO-sponsored two-day 
program in south China, a Senior U.S. District Judge and a 
Department of Justice (DOJ) Prosecutor talked with both, and 
students too, sharing ideas on how to protect intellectual property 
rights and building on previous exchanges.  Appellate courts for 
Guangdong Province and Shenzhen City and the U.S. visitors discussed 
common challenges as well as specific concerns of U.S. rights 
holders, such as the valuation of infringing goods.  The visiting 
U.S. officials were impressed by the strong understanding of U.S. 
copyright law and recent cases of students majoring in IPR at the 
South China University of Technology.  In addition, the Director of 
the Shenzhen Economic Crimes Investigation Division (ECID) called 
for increased bilateral law enforcement cooperation, especially in 
cases of Chinese economic crimes where defendants flee to other 
countries like the U.S. and Canada.  End summary. 
 
Guangdong High Court Welcomes Visit 
----------------------------------- 
 
¶2. (U) Senior U.S. District Judge Ronald Lew and DOJ Prosecutor 
Matthew Bassiur held productive exchanges during their two-day 
program sponsored by the Guangzhou branch of the U.S. Patent and 
Trademark Office (PTO). (Note:  Mr. Bassiur serves in a specialized 
IPR prosecution unit of the Department of Justice, the Computer 
Crime and Intellectual Property Section or "CCIPS."  End note.)  The 
visit to the Guangdong High Court built on the July visit by other 
U.S. jurists (ref A).  Participants on both sides learned that Judge 
Lew's Central California Federal District faces similar challenges 
to those faced by the Guangdong High Court, as each handles their 
respective country's largest IPR caseloads.  Guangdong High Court 
Chief IPR Judge Lin Guanghai said that the 4,000 IP cases filed each 
year in Guangdong represent 20 percent of the total IP cases filed 
annually in all of China. 
 
Students Show Understanding of U.S. IPR Law 
------------------------------------------- 
 
¶3. (U) In a presentation to students majoring in Intellectual 
Property Rights at South China University of Technology's (SCUT) 
School of Law, DOJ Prosecutor Bassiur emphasized the value of having 
prosecutors play an integral part at every stage of a police 
investigation, as is the practice in the United States.  China's 
system currently gives police almost sole discretion for 
investigating a case and gathering evidence before transferring 
everything to prosecutors, who make a final decision about whether 
to take it to court.  U.S. rights holders frequently complain that 
the current law enforcement/prosecutor divide means that completed 
investigations often are not tried because prosecutors have no 
personal stake in a case when it is submitted to them for trial.  In 
addition, rights holders say they cannot communicate with 
prosecutors to learn why specific cases are not tried, leaving them 
with no recourse when trying to seek legal remedies for infringement 
of their intellectual property. 
 
 
GUANGZHOU 00000625  002 OF 003 
 
 
¶4. (U) Note: Judge Lew commented afterwards that he was impressed 
with the students' familiarity and understanding of applicable U.S. 
law and recent decisions.  Thirty graduate and undergraduate 
students participated in the joint seminar program.  SCUT Party 
Secretary, Professor Sun Guozhong, as well as several prominent IP 
professors also participated in the event, and joined in the 
question-and-answer session.  The school currently enrolls 100 
students in its IPR program, with approximately 80 undergraduate 
students and 20 students in graduate and post-graduate programs. 
End Note. 
 
Shenzhen Courts Discuss Valuation of Infringing Goods 
--------------------------------------------- -- 
 
¶5. (U) In a broad discussion of the differences between the handling 
of U.S. and Chinese IPR cases with Judge Huang Guoxin, President of 
Shenzhen Intermediate People's Court and some of his colleagues, the 
officials explored key differences in the valuation of counterfeit 
and infringing goods in Chinese IPR cases.  The Shenzhen judges 
described a system that initially sounded very similar to U.S. 
procedures.  However, further discussion revealed what many U.S. 
rights holders have found most troubling: China's courts and 
enforcement agencies enjoy wide latitude when deciding how to value 
the infringing goods.  The Shenzhen judges said that proof of 
illegal sales volume and illegal income are the most important basis 
for valuations in Shenzhen.  U.S. rights holders find this 
troublesome because the Chinese courts' lack of a formal evidence 
discovery process means that U.S. firms often fail to find 
sufficient evidence of illegal income to meet civil and criminal 
thresholds in many IPR cases (ref B). 
 
¶6. Note: (U) The specialized IPR tribunal of the Shenzhen 
Intermediate People's Court was established in 1994. It represents 
one of China's earliest moves towards specialized IPR courts.  The 
Shenzhen court system currently employs 756 staff -- including 7 
"grassroots" courts reporting to the Intermediate Court.  The entire 
caseload totals 140,000 per year, of which 27,000 cases are handled 
by the Intermediate Court.  The Intermediate Court's IPR Tribunal is 
composed of 10 judges and 11 clerks who are divided among 
specifically designated civil and criminal courts.  Judge Ye Ruosi, 
Chief Judge of the IPR Court, said 1,005 IP cases were heard in 
2007, which is above the average of 800 to 900 cases in recent 
years.  Patent cases accounted for the largest share.  End Note. 
 
Shenzhen ECID Wants Increased International Cooperation 
--------------------------------------------- -- 
 
¶7. (U) Li Hong, Deputy Director General of the Shenzhen Public 
Security Bureau, said the Shenzhen government is working hard to 
improve IPR protection.  Li described several cases from the last 
few years in which his division cracked major counterfeiting 
operations that involved international rights holders like 
Microsoft, IBM, Louis Vuitton and Cisco.  Li said Shenzhen leaders 
and law enforcement personnel are convinced that without effective 
IP protection, foreign investors will leave, which would be 
detrimental to the city's efforts to establish an identity as 
"Shenzhen, capital of investment."  ECID has implemented several 
community outreach and education programs in order to help reduce 
demand for infringing products, while continuing to investigate and 
prosecute individual cases.  Li also expressed hope for increased 
bilateral law enforcement cooperation, especially in cases where 
 
GUANGZHOU 00000625  003 OF 003 
 
 
fugitives have fled to the United States, Canada and other 
countries.  Li said Shenzhen ECID has 42 cases in which criminals 
have fled to other countries and the Chinese public does not 
understand why local authorities cannot bring these criminals to 
justice. 
 
¶8. (U) Li has been head of Shenzhen ECID for almost four years, 
after previously serving as a prosecutor for 14 years.  Shenzhen 
ECID was formed in 2002 and currently employs 300 officers, with 182 
at headquarters and 120 officers spread among the city's six 
districts.  In addition to investigating IPR-related cases, the 
division also handles tax crime, corporate crime, money laundering 
and financial crimes. 
 
GOLDBERG