VZCZCXRO6701
RR RUEHGH
DE RUEHGH #0132/01 0790841
ZNR UUUUU ZZH
R 200841Z MAR 09 ZDK
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 7763
INFO RUEHBJ/AMEMBASSY BEIJING 2633
RUEHCN/AMCONSUL CHENGDU 1849
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHGZ/AMCONSUL GUANGZHOU 0305
RUEHHK/AMCONSUL HONG KONG 2016
RHEHAAA/NSC WASHINGTON DC
RUEHSH/AMCONSUL SHENYANG 1840
RUEHIN/AIT TAIPEI 1637
RUEHKO/AMEMBASSY TOKYO 0606
RUEHGH/AMCONSUL SHANGHAI 8398

UNCLAS SECTION 01 OF 04 SHANGHAI 000132 
 
SENSITIVE 
SIPDIS 
 
EMBASSY ALSO PASS WUHAN 
USTR FOR CHINA OFFICE - AWINTER, TWINELAND; IPR OFFICE - RBAE; OCG - TPOSNER 
 
DOC FOR NATIONAL COORDINATOR FOR IPR ENFORCEMENT - WPAUGH 
DOC FOR ITA/MAC: SZYMANSKI 
LOC/COPYRIGHT OFFICE - STEPP 
USPTO FOR INT'L AFFAIRS - LBOLAND 
DOJ FOR CCIPS - TNEWBY 
FBI FOR LBRYANT 
DHS/ICE FOR IPR CENTER - DFAULCONER 
DHC/CBP FOR IPR RIGHTS BRANCH - GMCCRAY 
TREASURY FOR OASIA - HAARSAGER, WINSHIP 
NSC FOR LOI, SHRIER 
 
E.O. 12958: N/A 
TAGS: EFIN EINV ETRD KIPR PREL CH
SUBJECT: ANHUI OPENS THE DOOR TO COOPERATION ON IPR 
 
SHANGHAI 00000132  001.2 OF 004 
 
 
¶1.  (SBU) Summary:  On February 10, Anhui Province opened the 
door to cooperation on intellectual property rights (IPR) with 
the United State by holding a roundtable at the Consulate's 
request.  The meeting was a breakthrough for the Consulate, 
representing the first engagement on IP issues with the province 
after numerous requests in recent years.  Although IP protection 
in the province appears to be at a beginning stage, Anhui's 
effort will become increasingly important as U.S. companies 
increase investment in Anhui and counterfeiters driven from 
neighboring provinces search for new places to establish 
operations.  The roundtable included representatives from the 
Anhui IP Administration, Copyright Bureau, Administration of 
Industry and Commerce (AIC), Public Security Bureau (PSB) and 
High Court, who outlined their efforts to strengthen IPR 
protection in the province.  Anhui IP officials warmly welcomed 
the idea of cooperating on more IP-related programs and 
exchanges.  IP Administration officials noted their efforts 
boost people's IP awareness and encouraged more patent filing. 
AIC officials said that over 90 percent of trademark cases were 
ex officio and urged U.S. rights holders to be more proactive in 
filing complaints.  The Copyright Bureau emphasized their 
achievements on software protection and clamping down on 
internet-related IP infringement.  PSB noted that IPR criminal 
cases have decreased in recent years and attributed this to 
"increased IP awareness in the population."  On civil cases, an 
Anhui High Court judge noted there has been a steady increase in 
IPR-related civil cases, but most were relatively small in 
scale.  End Summary. 
 
Further Cooperation with the United States Welcome 
--------------------------------------------- ----- 
 
¶2.  (SBU) Anhui IP Administration (AIPA) Director General Dong 
Rong regretted that the province had not been as actively 
involved in international cooperation on intellectual property 
rights issues as Shanghai and neighboring Jiangsu Province.  He 
welcomed increased engagement on IP issues and expressed his 
desire for more regular communication with U.S. IPR officials. 
He noted that the province is planning to hold an IPR roundtable 
for foreign-invested companies.  After hearing of U.S. Patent 
and Trademark Office (USPTO)-sponsored "how-to-file" trademark 
and patent programs that are being planned for other provinces 
in China, Anhui AIC Trademark Office Director Liu Guojian 
expressed a strong interest, saying that Anhui would highly 
benefit from such programs.  (Note:  The two programs are aimed 
at boosting the understanding of local rights holders on how to 
file patents and trademarks both in China and in the United 
States.  End note.)  Other Anhui officials attending the 
February roundtable also added to the call for further 
cooperation and exchanges with the United States on IP issues 
and offered suggestions, including more roundtables and meetings 
with visiting Washington officials or other U.S. IPR experts. 
 
Promoting IPR Awareness and Encouraging Patent Filing 
--------------------------------------------- -------- 
 
¶3.  (SBU) Director General Dong said that AIPA placed great 
emphasis on disseminating IP knowledge and promoting IP 
awareness, including providing training courses for university 
students and organizing promotion activities on World IP Day. 
The province expanded its patent subsidy policy from the city 
level to the county level to encourage more patent applications. 
 As a result, the number of patent applications increased 71.5 
percent from 2007 to 10,409 in 2008.  The rate of increase in 
patent applications ranked second among all provinces in China, 
Dong added.  AIPA opened a patent application receiving office 
under the auspices of the State IP Office (SIPO) on December 17, 
2008 for the convenience of applicants.  (SIPO in Beijing is the 
only government unit that can officially examine patent 
 
SHANGHAI 00000132  002.2 OF 004 
 
 
application in China.  However, currently there are 25 patent 
application receiving offices in different provinces to receive 
patent applications and fees for the convenience of local 
applicants.)  To facilitate the commercialization of patents, 
the province established three patent "trade and exhibition 
centers."  Dong added that AIPA is drafting implementing 
regulations for the National IP Strategy for use by Anhui 
administrative agencies. 
 
¶4.  (SBU) DG Dong further explained that AIPA has a close 
working relationship with other IPR authorities in Anhui.  From 
January 2006 to December 2008, AIPA organized 21 joint 
enforcement actions with the Anhui AIC and the Anhui Copyright 
Bureau.  With the support of the PSB, patent offices in Anhui 
conducted several special enforcement actions and handled 76 
patent transfers from January 2006 through December 2008 (patent 
transfers:  the company who sold goods without patent granted 
claimed that their goods were patented).  Patent officers in 
Anhui handled 7 patent infringement cases in 2008.  Dong said 
that AIPA also participates in two inter-provincial IP 
cooperation systems.  One is the East China IP Cooperation 
System including Anhui, Shanghai, Zhejiang, Jiangsu and Fujian. 
The other is the mid-China IP Cooperation System, including 
Anhui, Jiangxi, Henan, Hubei, Hunan and Shanxi. 
 
IP Complaint Centers Find a New Home 
------------------------------------ 
 
¶5.  (SBU) Dong also noted that the national telephone IPR hot 
line number might change from 12312 to 12330 because the 
responsibility has been changed from the Ministry of Commerce to 
the State Intellectual Property Office (SIPO).   Currently, 
callers can dial 12312 anywhere in China to file an IP-related 
complaint with IPR Complaint Centers located throughout the 
country.  To mirror the change at the national level, AIPA will 
take charge of the Anhui Complaint Center, which is currently 
under the supervision of the Anhui Market Order Rectification 
Office. 
 
Trademarks - High Percentage of Ex-Officio Cases 
--------------------------------------------- --- 
 
¶6.  (SBU) Anhui Administration of Industry and Commerce (AIC) 
Trademark Department Director Liu Guojian pointed out that less 
than 10 percent of total trademark cases were filed by right 
holders - the remainder of the cases were ex-officio.  The 
province handled 1,903 trademark cases in 2008, most of which 
were low value cases.  Among these cases, only 105 (5.5 percent) 
were foreign-related.  He emphasized that the province attaches 
special importance to foreign-related cases and wants to 
actively work with foreign rights holders to ensure their rights 
are protected.  He noted that U.S. rights holders generally do 
not file cases with Anhui AIC offices and asked the Consulate to 
encourage U.S. companies to more actively use Anhui's 
administrative enforcement system.  He also recommended that 
U.S. companies follow Japanese companies' example of holding 
seminars for Anhui IP enforcement officials on how to 
differentiate counterfeit goods from legitimate goods.  He said 
that this practice greatly helps administrative and enforcement 
agencies detect counterfeits and raises the awareness of foreign 
brands. 
 
¶7.  (SBU) On IP protection at trade fairs, Director Liu 
explained that the local AICs are responsible for ensuring the 
trade fairs within their jurisdictions are free of counterfeit 
goods.  To combat infringement, Liu explained that Anhui 
initiated the "trademark authorization system" at wholesale 
markets in 17 cities in 2008.  Under the system, vendors must 
show trademark registration certificates or authorization 
 
SHANGHAI 00000132  003.2 OF 004 
 
 
certificates prior to market entrance.  AICs in Anhui will 
expand this experimental system to all markets of the province 
in 2009. 
 
Proud of Anhui's Software Copyright Protection 
--------------------------------------------- - 
 
¶8.  (SBU) Anhui Copyright Bureau Copyright Department Director 
Wu Anming outlined the province's efforts to protect copyrights, 
highlighting the department's achievements in software copyright 
protection and cracking down on internet-related infringement. 
All "upper level" government offices in Anhui now use legitimate 
software.  In addition, the province is now focusing on urging 
companies, particularly state-owned enterprises, to follow suit. 
 The province requires the pre-installation of software before 
any computer can be sold to the public.  To facilitate this 
work, enforcement agencies have signed contracts with management 
departments of big shopping malls.  Shopping malls have in turn 
signed contracts with lessees.  In total, Anhui copyright 
bureaus confiscated over 80,000 pirated optical discs in 2008. 
Wu said that representatives from Microsoft recently sent a 
banner to the Anhui Copyright Bureau in recognition of Anhui's 
"effective enforcement," which increased the use of legitimate 
software in Anhui. 
 
¶9.  (SBU) Director Wu noted that in 2008 Anhui copyright bureaus 
handled a total of 11 internet infringement cases and 
transferred one case for criminal enforcement.  In June 2008, 
Anhui held a seminar on IP protection on the internet with the 
National Copyright Administration.  The International Federation 
of Phonographic Industry (IFPI) and the Motion Picture 
Association of America (MPAA) attended the seminar.  In July 
2008, the Anhui Copyright Bureau started to "supervise" local 
well-known websites and reach out to companies if violations 
were found. 
 
¶10.  (SBU) According to Wu, textbook piracy in Anhui has 
decreased markedly in recent years.  Anhui copyright bureaus 
strengthened management and held courses to train textbook 
providers and university staff on copyright protection.  Wu 
underscored that the province has also spent a great deal of 
effort on protecting its own folklore, such as Huanmei Opera. 
 
Criminal Enforcement - A Slowdown in Cases 
------------------------------------------ 
 
¶11.  (SBU) The Anhui Public Security Bureau Economic Crime 
Investigation Division (ECID) Political Commissioner Chen 
Xunzhang said that in 2008, the province investigated 82 
IP-related criminal cases worth 12 million RMB (USD 1.8 
million).  Of the 2008 cases, 55 cases had been closed (as of 
our discussion on February 10) and 40 suspects had been 
detained.  There were about 300 IP-related criminal cases 
investigated in 2006 and 130 cases in 2007.  Chen attributed the 
decrease in criminal cases to the "increased IP awareness" among 
the general population in Anhui. 
 
¶12.  (SBU) Anhui PSB ECID officer Fei Guangdong discussed about 
the "Shanghai Initiative, " which allows PSB to begin 
investigations based on credible evidence, rather than waiting 
for a rights holder to first prove a criminal threshold has been 
met.  Fei was dubious that such an initiative would be 
effective, saying that if the case has not met the criminal 
threshold, the investigation by PSB would be restricted.  For 
example, the PSB could not freeze accounts before the case was 
established. 
 
Civil Cases on the Rise 
----------------------- 
 
SHANGHAI 00000132  004.2 OF 004 
 
 
 
¶13.  (SBU) Anhui High Court Third Civil Division Deputy Director 
Zhang Kun said Anhui had 430 first instance civil IP cases in 
¶2008.  There were a total of 545 civil IPR cases in 2006 and 
2007 combined.  Although the number of civil cases per year was 
on the rise, most cases were relatively small in value, 
according to Zhang.  Patent cases took the lion's share, 
accounting for one third of all cases, followed by copyright 
cases.  In 2008, there were eight cases involving foreigners, 
representing an increase of 60 percent over 2007 (five cases). 
From 1999 through 2008, the province handled 1935 civil IP cases 
in total.  Zhang said some new types of cases had emerged in 
recent years, including cases on new plant varieties and 
copyright infringement on the internet.  Cases filed in Hefei 
courts (Hefei is the provincial capital) accounted for 52 
percent of Anhui Province's case load.  Zhang assured that the 
province has a strong record of enforcing verdicts in IP civil 
cases.  He attributed this to the fact that 70 percent of cases 
were handled through mediation.  According to Zhang, there have 
been no IP case retrials in the province. 
 
¶14.  (SBU) Deputy Director Zhang said that Anhui has no special 
IP tribunal combining the adjudication of civil, criminal and 
administrative cases.  However, the province is researching the 
possibility of establishing a special IP tribunal.  Zhang said 
there are currently 112 IPR judges in Anhui.  More than 95 
percent of them hold a bachelors degree, and 20 percent of them 
hold a masters degree.  The Anhui High Court regularly holds 
courses to train IPR judges and published several guidance 
regulations on IP case adjudication, including the Implementing 
Regulation on the National IP Strategy for use by Anhui courts 
published in December 2008.  Zhang pointed out that Anhui was 
the first province to establish a system of hiring outside 
experts as consultants for technical issues in IP case trials. 
Anhui courts are also boosting transparency through several 
measures such as holding media conferences and publishing IP 
case decisions on the internet.  The province has published 90 
percent of recent IP civil case judgments on the internet, said 
Zhang. 
 
Comment 
------- 
 
¶15.  (SBU) Although Anhui, with a per capita GDP of USD 2,085, 
is the poor step-sister of Zhejiang and Jiangsu (per capita GDPs 
of USD 6,078 and USD 5,700 respectively), Anhui's efforts to 
boost IP protection are increasingly important.  Growing numbers 
of major companies are setting up operations in the province; 
currently more than 40 Fortune 500 companies have facilities in 
Anhui.  Leading U.S. presences include FedEx, Wal-Mart and 
Johnson Controls.  At the same time, U.S. rights holders and 
investigative companies have said that counterfeiters are 
increasingly moving to more rural areas such as Anhui and 
northern parts of Jiangsu Province as more affluent 
jurisdictions in the Yangtze River Delta become more effective 
in shutting down counterfeiting operations.  While Anhui's 
capacity and experience in IP protection seem to be in nascent 
stages, the province is beginning to move in the right 
direction.  Moreover, the recent willingness of Anhui to engage 
with the United States on IP protection is a good sign that the 
province is beginning to understand the global nature of the IP 
problem. 
CAMP