VZCZCXRO2311
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #3417/01 3560358
ZNR UUUUU ZZH
P 220358Z DEC 09
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 7325
RUEHOO/CHINA POSTS COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEAWJA/DEPT OF JUSTICE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 BEIJING 003417 
 
SENSITIVE 
SIPDIS 
 
STATE PASS USTR FOR TIM STRATFORD AND AUDREY WINTER 
STATE PASS FTC FOR RUSSELL DAMTOFT, ANDREW HEIMERT, AND RANDY 
TRITELL 
STATE PASS DOJ FOR STUART CHEMTOB 
DOC FOR LU NING AND JOEL BLANK 
 
E.O. 12958:  N/A 
TAGS: ECON EIND EINV ETRD KIPR CH
 
SUBJECT:  PRC OFFICIALS DISCUSS IPR PROTECTION AND ANTI-MONOPOLY 
COOPERATION WITH FTC COMMISSIONER KOVACIC 
 
REF: A) BEIJING 03115; B) BEIJING 02527 
 
This cable is Sensitive but Unclassified (SBU) and for official use 
only.  Not for transmission outside USG channels. 
 
¶1. (SBU) Summary:  China should counter the trend toward 
"overprotection of IPR" by regulating "IPR transfer" and combating 
IPR "abuse," a Ministry of Commerce (MOFCOM) official said at a 
December 9 seminar on Anti-Monopoly Law (AML) enforcement and IPR. 
Other Chinese officials and judges at the seminar argued for a 
balance between protecting IPR and preventing IPR "abuse."  In 
December 9-10 meetings with Federal Trade Commission (FTC) 
Commissioner William Kovacic and FTC International Affairs Director 
Randy Tritell, officials from MOFCOM, the National Development and 
Reform Commission (NDRC), and the State Administration of Industry 
and Commerce (SAIC) welcomed expanded cooperation between U.S. and 
Chinese antitrust agencies, including regular high-level 
consultations on policy issues, continuation and expansion of 
technical assistance programs, and participation in FTC's 
International Fellows Program.  End Summary. 
 
Protect IPR or Prevent IPR Abuse? 
-------------------------------- 
 
¶2. (SBU) At a December 9 seminar on AML Enforcement and IPR at 
Beijing's University of International Business and Economics, 
Chinese officials and scholars debated the importance of protecting 
IPR versus preventing IPR "abuse."  Chen Fuli, a MOFCOM Treaty and 
Law Department official who was recently appointed IPR Attach to 
the Chinese Embassy in Washington, said that international pressure 
had led to the "overprotection of IPR" in China.  He argued that 
China should counter this trend by regulating "IPR transfer" and by 
using the AML to combat unfair competition and IPR "abuse." 
(Comment:  Although Chen did not elaborate on the meaning of "IPR 
transfer" in this public forum, his comments likely mean that China 
should encourage domestic firms' acquiring foreign firms' IPR. 
China's recently announced Indigenous Innovation Catalogue has 
raised concerns about the possibility of such "IPR transfer."  End 
comment.) 
 
¶3. (SBU) Officials from the Supreme People's Court (SPC), Ministry 
of Science and Technology, MOFCOM Antimonopoly Bureau, and Ministry 
of Industry and Information Technology (MIIT) voiced stronger 
support for IPR protection.  SPC Intellectual Property Department 
Chief Judge Kong Xiangjun argued that IPR protection should take 
precedence over combating IPR abuse, while his fellow SPC Judge He 
Zhonglin commented that judges should "use one hand to protect IPR 
and one hand to fight against IPR abuse."  MIIT IPR Center Director 
Zhao Tianwu argued that China needed stronger IPR protection in 
order to promote innovation.  Speaking at the seminar, FTC 
Commissioner Kovacic stressed the complementary nature of U.S. 
antitrust laws and IPR laws, noting that both sets of laws were 
aimed at promoting consumer welfare and economic development.  He 
also emphasized the importance of continuous discussions between 
antitrust enforcement agencies and IPR stakeholders in order to 
achieve balance between IPR protection and antitrust enforcement. 
 
FTC Discusses MOU with Antitrust Agencies 
----------------------------------------- 
 
¶4. (SBU) During December 9-10 meetings with China's three 
anti-monopoly enforcement agencies, FTC Commissioner William Kovacic 
outlined FTC views on a proposed MOU between U.S. and Chinese 
antitrust agencies.  Kovacic suggested the MOU should include a plan 
for regular, high-level consultations on policy issues and the 
continuation and expansion of training and other forms of technical 
assistance.  He also expressed FTC's interest in enforcement 
cooperation and information-sharing on individual cases.  MOFCOM, 
NDRC and SAIC officials all welcomed the proposed MOU with FTC and 
the Department of Justice (DOJ), although SAIC Department of 
International Cooperation Director General An Qinghu insisted that 
FTC and DOJ sign separate MOUs with China's three antitrust agencies 
rather than a general framework agreement signed by all five 
agencies.  NDRC Price Supervision and Inspection Department DDG Chen 
Zhijiang welcomed FTC's proposal for a framework MOU signed by all 
five Chinese and American antitrust enforcement agencies and 
individual work plans between FTC/DOJ and individual Chinese 
agencies.  MOFCOM Anti-Monopoly Bureau Director General Shang Ming 
expressed hope that the MOU would be signed in the first half of 
¶2010. 
 
 
BEIJING 00003417  002 OF 002 
 
 
FTC to Host MOFCOM Fellow 
------------------------- 
 
¶5. (SBU) Commissioner Kovacic told MOFCOM DG Shang that FTC looked 
forward to hosting a MOFCOM official for a 3-6 month fellowship in 
¶2010.  The official may be able to be part of an FTC investigative 
team that would expose him/her to FTC's investigative procedures and 
best practices.  DG Shang said MOFCOM was in the process of 
selecting an official to take part in FTC's International Fellows 
Program.  NDRC Price Supervision Department DDG Chen Zhijiang also 
expressed interest in sending an NDRC official to FTC to participate 
in the Fellows Program. 
 
NDRC, MOFCOM, SAIC Working on AML Implementing Regs 
--------------------------------------------- ------ 
 
¶6. (SBU) NDRC Antimonopoly and Market Supervision Division Director 
Zhi Shengmin told Commissioner Kovacic December 10 that NDRC hoped 
to finalize anti-price monopoly regulations by the end of December 
¶2009.  Zhi also indicated that AML enforcement agencies and the SPC 
planned to issue judicial interpretations of AML procedural rules 
during the course of implementing the law.  MOFCOM DG Shang 
indicated that his agency was seeking authorization from the State 
Council to amend some existing regulations and work on new ones. 
SAIC Anti-Monopoly Bureau Director General Ning Wanglu reported that 
SAIC was in the process of drafting implementing guidelines on IP, 
monopoly agreements, abuse of market dominance, and abuse of 
administrative power to restrict competition.  Ning welcomed U.S. 
comments on SAIC's draft regulations, although he did not offer to 
share the aforementioned draft guidelines. 
GOLDBERG