VZCZCXRO0266
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGZ #0514/01 2370743
ZNR UUUUU ZZH
R 250743Z AUG 09
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 0882
INFO RUEHGZ/CHINA POSTS COLLECTIVE 0243
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0690
RUEHCN/AMCONSUL CHENGDU 0183
RUEHHK/AMCONSUL HONG KONG 0250
RUEHGH/AMCONSUL SHANGHAI 0184
RUEHSH/AMCONSUL SHENYANG 0194
RUEHIN/AIT TAIPEI 0187
RUEHNE/AMEMBASSY NEW DELHI 0007
RUEHMO/AMEMBASSY MOSCOW 0008
RUEHGV/USMISSION GENEVA 0005
RUEAUSA/DEPT OF HHS WASHINGTON DC 0020
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC 0025
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC 0141
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC 0020
RUCNFB/FBI WASHINGTON DC 0019
RHEHAAA/NSC WASHINGTON DC 0055
RUEAIIA/CIA WASHDC 0234
RUEKJCS/DIA WASHDC 0230

UNCLAS SECTION 01 OF 03 GUANGZHOU 000514 
 
SENSITIVE 
SIPDIS 
 
State for EAP/CM; EEB/IPE; EEB/TPP; EEB/CIP 
State for INL - JVigil 
USTR for China Office; IPR Office; and OCG 
Commerce for National Coordinator for IPR Enforcement 
Commerce for MAS - RLAYTON, SMATHEWS 
Commerce for MAC - ESzymanski, SWilson 
Commerce for MAC - NMelcher, JWu 
LOC/Copyright Office - STepp 
USPTO for Int'l Affairs - LBoland, EWu 
DOJ for CCIPS - MDuBose, SChembtob 
FTC for Blumenthal 
FBI for LBryant 
DHS/ICE for IPR Center - THipelius, TRandazzo 
DHS/CBP for IPR Rights Branch - GMcCray, PPizzeck 
ITC for LLevine, LSchlitt 
State Pass White House OSTP Ambassador Richard Russell 
NSC for JBader, JLoi 
 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR KIND ECON EINV PGOV CH
SUBJECT: South China IPR: Cooperation with Fujian Authorities 
Gradually Improving 
 
REF: A) GUANGZHOU 505, B) GUANGZHOU 503, C) BEIJING 1463, D) 
GUANGZHOU 320, E) BEIJING 1014, F) BEIJING 570 
 
GUANGZHOU 00000514  001.2 OF 003 
 
 
(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 and comment: The willingness of Fujian Provincial 
Intellectual Property Office (IPO) and Fuzhou Customs officials to 
meet and share information with the Consul General on August 12 and 
13 was an important step after a two-year freeze that began when the 
United States filed intellectual property related cases against 
China in 2007.  Fuzhou Customs told us they had broken several 
landmark IP-related cases in recent years.  However, figures on 
enforcement cases appear to show a troubling decline in enforcement 
action for the first half of 2009.  Fujian IPO officials highlighted 
their expanded role promoting intellectual property rights (IPR) 
protection as part of the West [Taiwan] Strait Economic Development 
Plan announced by China's State Council in May, 2009.  Customs 
officials also said they were taking part in a nationwide campaign 
targeting IP infringers and counterfeiters who use express delivery 
services to smuggle illegal products to customers, an area of 
particular concern for several major American brand owners in south 
China. 
 
¶2. (SBU) Comment continued: As only the second set of meetings since 
the Fujian government resumed IPR discussion with us after the U.S. 
filed IP-focused WTO cases in 2007, the Consul General's visits to 
Fujian IPO and Fuzhou Customs delivered an unmistakable message to 
local authorities that improved IPR cooperation is a top priority 
for the U.S. government in south China.  Relations with IPO 
officials were polite but will require continued confidence building 
efforts, and the warmer reception by Fuzhou Customs may represent an 
opportunity for increased cooperation that might eventually serve as 
a model for other Fujian-based government agencies.  During his 
meetings, the CG noted that China hopes to move up the technology 
ladder; he stressed that IPR protection is critical to investor 
decisions regarding sharing advanced technologies.  For example, IPR 
protection is needed if China hopes to gain access to U.S. cutting 
edge clean energy and environmental protection technologies, 
technologies China desperately needs.  End summary and comment. 
 
Numbers Incomplete, Might Indicate Enforcement Decline 
--------------------------------------------- --------- 
 
¶3. (SBU) In conjunction with the Consul General's first official 
visit to Fujian August 12-14 (ref A), the CG, Econoff, TDoff, and 
Conoff met August 12 with Fujian IPO Legal Affairs Department Chief 
Chen Xiaojing.  This was only the second USG meeting with Fujian 
intellectual property officials, who for more than two years had 
refused to cooperate with us after the United States filed two WTO 
 
GUANGZHOU 00000514  002.2 OF 003 
 
 
cases regarding China's IPR protection in 2007.  Chen offered a more 
extensive and detailed work report on the province's IP efforts than 
that provided at a previous meeting with Congenoffs in February 
¶2009.  She described how those efforts have expanded in the last 
year despite challenging economic conditions.  However, the Fujian 
IPO still stopped short of releasing detailed enforcement numbers 
like those provided annually by the Guangdong provincial government 
(ref D).  Chen instead told the Consul General that Fujian's patent 
applications increased by 16.2% in 2008, to 13,185 applications, 
ranking 13th among China's 26 provinces.  More importantly, 7,933 
patents were granted in 2008, an increase of 2.27% that ranked 
Fujian 11th in China.  Chen said the majority of patents granted, 
57.7%, were classified as invention patents, as opposed to the 
generally weaker utility patents also granted by China's patent 
office. 
 
¶4. (SBU) In a separate meeting with Fuzhou Customs on August 13, 
Deputy Commissioner Zhao Jianzhong told the Consul General his 
agency would welcome more cooperation and exchange with the United 
States, but joint efforts would be smoothest by including Beijing's 
General Administration of Customs in discussions at an early stage. 
Zhao said Fuzhou Customs handled 537 IPR cases in 2007, more than 
doubling to 1095 cases in 2008.  However, the first half of 2009 
suggests a dramatic decline this year with only 168 cases in the 
first six months.  Zhao declined to explain the reason for the drop 
(ref F).  He said that among the 2009 cases handled so far, 67 
related to U.S. rights holders, with a value of 2.56 million RMB 
(USD 375,000), or 47% of the total case value this year.  Several 
major U.S. brands were involved in prominent Fuzhou Customs cases, 
and Zhao said his agency was recognized by Beijing for its work on 
major shoe infringement cases in 2005 and 2007, and counterfeit 
pharmaceuticals in March 2008. 
 
IP Protection and West Strait Economic Development 
--------------------------------------------- - 
 
¶5. (SBU) Fujian IPO Legal Affairs Department Chief Chen Xiaojing 
told the Consul General her office would take the lead in promoting 
IP protection throughout Fujian Province as part of the State 
Council's West [Taiwan] Strait Economic Development Plan that was 
announced in May, 2009.  Prior to releasing the new comprehensive 
economic plan, Chen said an interagency provincial leaders group was 
formed to help coordinate IPR efforts within the province and a 
memorandum of understanding on IPR protection and coordination was 
signed with China's State Intellectual Property Office.  Over the 
past 18 months, Fujian has shown renewed effort to attract 
international investment and stimulate high-value-added 
manufacturing and service industries in the province, according to 
Chen.  Fujian Provincial IPO also organized the second cross-strait 
IP forum in 2008 and sponsored several other exchanges including a 
China-EU discussion on IP protection in March 2009. 
 
GUANGZHOU 00000514  003.2 OF 003 
 
 
 
Fujian IPO Proudest of Public Outreach Activities 
--------------------------------------------- - 
 
¶6. (SBU) In an effort to show the Fujian IPO's more open attitude 
towards cooperation with the U.S. government, Legal Affairs 
Department Chief Chen Xiaojing single-mindedly read her work report 
to us focusing on a litany of outreach programs and initiatives from 
2008 and 2009.  Highlights included the IPO's establishment of 
complaint centers at major trade fairs and investment seminars 
throughout Fujian and campaigns to identify and reduce the number of 
patent infringers in retail and wholesale markets across the 
province.  Chen said public information campaigns had focused on a 
range of target audiences.  An IPR week campaign targets the public 
each April; while efforts to target industry include providing 
how-to-file information on the Internet and at trade fairs; and 
major media coverage heralding the conclusion of important IPR 
cases.  Chen also said that over 60% of Fujian's new patent 
applications were filed by licensed patent agents, which the IPO has 
been trying to cultivate as a channel for promoting stronger IP 
protection in the business community. 
 
Fuzhou Customs Welcomes Increased Cooperation 
--------------------------------------------- 
 
¶7. (SBU) Fuzhou Customs' jurisdiction covers Fuzhou, Putian, 
Sanming, Nanping, Ningde and 40 counties and towns with a land area 
of 65,000 square kilometers and almost 2,300 kilometers of 
coastline, but with fewer than 1,200 customs officials.  Of 
particular interest to U.S. brand owners is the area around Putian, 
which is home to the highest concentration of top-tier athletic 
shoes, sportswear and sports equipment factories in the world.  In a 
detailed and professional presentation, Deputy Commissioner Zhao and 
his staff thanked the U.S. for our recent efforts to send local 
officials for training in the United States, which eventually led to 
an official from Xiamen Customs participating in a USPTO-APEC 
meeting in Hawaii last month.  Customs officials also said they were 
taking part in a nationwide campaign targeting IP infringers and 
counterfeiters who use express delivery services to smuggle illegal 
products to customers, an area of particular concern for several 
major American brand owners in south China.  Zhao welcomed increased 
cooperation with both the U.S. government and with U.S. rights 
holders, whom he said had regularly been invited to train customs 
inspectors to identify counterfeit products.  Zhao commented that 
his agency is best able to work with U.S. officials if Beijing's 
General Administration of Customs is included at an early stage of 
planning. 
 
GOLDBECK