VZCZCXRO4531
PP RUEHGH RUEHVC
DE RUEHCN #0300/01 3462255
ZNR UUUUU ZZH
P 122255Z DEC 09
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC PRIORITY 3625
INFO RUCPDOC/USDOC WASHDC PRIORITY 0030
RUEHOO/CHINA POSTS COLLECTIVE
RUEHCN/AMCONSUL CHENGDU 4338

UNCLAS SECTION 01 OF 02 CHENGDU 000300 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/CM 
 
E.O. 12958: N/A 
TAGS: ECON EINV EIND ETRD PGOV KIPR CH
SUBJECT: SW CHINA CONFERENCE RAISES QUESTIONS ABOUT PROGRESS ON 
INTELLECTUAL PROPERTY RIGHTS 
 
CHENGDU 00000300  001.2 OF 002 
 
 
¶1. (U) This cable contains sensitive but unclassified 
information - not for distribution on the Internet. 
 
 
 
¶2. (SBU) Summary.  Notwithstanding official optimism, serious 
doubts about PRC intellectual property rights protection 
progress were voiced by foreign-invested Chinese companies 
participating in annual national IPR conference held recently in 
Chongqing.  One foreign-invested company representative asserted 
that organized criminal gangs and possibly officials were 
involved in the production of counterfeit goods, noting that 
criminals have attacked intellectual property investigators, 
causing hospitalization and death.  One company representative 
asked government officials to allow greater participation by 
private enterprises in the legal processes to protect 
intellectual property.  End Summary. 
 
 
 
Government Organizations Emphasize Progress on IPR ... 
 
--------------------------------------------- --------- 
 
 
 
¶3. (SBU) Government officials and industry representatives 
gathered November 18 in the southwest Chinese city of Chongqing 
for the 2009 National Symposium on Intellectual Property 
Protection for Foreign Invested Enterprises.  The State 
Intellectual Property Office (SIPO), the Chongqing Municipal 
Science Commission, and the Chongqing Municipal Intellectual 
Property Bureau sponsored the one-day conference.  SIPO Deputy 
Director Gan Shaoning opened the meeting by emphasizing that 
China was making progress on intellectual property (IP) rights 
protection, but still had a long way to go.  He likened the IP 
protection delays China had encountered to a delayed plane 
flight to Shanghai; you arrive in Shanghai, but somewhat later 
than planned.  As evidence that China was making progress on IP 
protection, he noted that all related bureaus had increased 
their manpower. 
 
 
 
¶4. (SBU) Liu Guanglei, Chongqing Municipal Party Committee 
member and Secretary of the Politics and Law Committee, 
emphasized the local aspects of IP protection.  He said that 
Municipal Party Secretary Bo Xilai aimed to make the city a 
"model city" for IP protection, which will encourage foreign 
investment and encourage rapid economic development.  Liu said 
that Chongqing seeks to become a base for scientific research 
and noted the authorities would continue their crackdown on 
counterfeit products.  The themes highlighted by Gan at the 
national level, and Liu at the local level, were generally 
echoed by officials from the General Administration of Customs, 
the Supreme People's Procuratorate, and the Public Security 
Bureau. 
 
 
 
... But Businesses Voice Skepticism of IP Success 
 
--------------------------------------------- ---- 
 
 
 
¶5. (SBU) Zhang Weian, the Senior Intellectual Property Lawyer 
for General Electric's China operations and the Chairman of the 
China Association of Enterprises with Foreign Investment's 
(CAEFI) Quality Brands Protection Committee (QBPC), said that 
QBPC members believe that counterfeiting is a greater problem 
this year than last.  Zhang said that some provinces, which he 
did not name, refused to receive QBPC's reports on IP.  (Note: 
QBPC claims to have over 180 multinational member companies 
including Texas Instruments, Caterpillar, Tyco Electronics, 
Dell, and the National Football League.  CAEFI is affiliated 
with the Ministry of Commerce.  End Note.) 
 
 
 
¶6. (SBU) Zhang said that China's current IP efforts focused too 
heavily on patent registration, which does not necessarily boost 
innovation or IP protection.  He asserted that the focus on 
patents may encourage local governments to produce junk patents, 
and cited the example of a Shanghai man who filed over 1,000 
patents.  Zhang stated that, at present, China is not 
innovating, but merely accumulating patents.  He argued that 
China should learn from the Japanese patent and trademark model 
 
CHENGDU 00000300  002.2 OF 002 
 
 
in order to improve its IP protection. 
 
 
 
Gangsters and Possibly Officials Involved in Counterfeiting 
 
--------------------------------------------- -------------- 
 
 
 
¶7. (SBU) A QBPC member from Johnson and Johnson claimed that 
organized criminal groups participated in the production of 
counterfeit goods in China.  He said these groups operated from 
factories in smaller towns and villages, and that some officials 
might also be involved in the production of counterfeits.  He 
stated that QBPC members had been attacked while attempting to 
investigate claims of counterfeit production.  Some of the 
injuries suffered during the attacks led to hospitalization and, 
in one case, death.  Some counterfeiters masquerading as police 
officers asked investigators to delete video recordings of 
counterfeiting operations.  (Note: The member provided one 
general example of an attack in Hubei province, but did not give 
more specifics on other cases.  End Note.) 
 
 
 
Companies Encourage Improved Intellectual Property Protection 
 
--------------------------------------------- ---------------- 
 
 
 
¶8. (SBU) An official from Tyco Electronics said that firms 
needed China's help to protect IP, and this protection could 
help make China a more innovative center of commerce.  The 
official said that better IP protection could help businesses 
transition from stamping "made in China" on their products, to 
boasting that goods were "created in China." 
 
 
 
¶9. (SBU) Another company went further in its recommendations to 
government officials.  The representative from a golf company 
asserted that enterprises should be allowed to participate in 
legal proceedings to protect IP.  He said that the punishment 
for IP infringement is not strong enough, and the legal standard 
to prove infringement in court varied across China.  The 
official said that the courts in some areas required the company 
claiming IP violations to supply samples of the allegedly 
infringing product.  Some penalties and violations depend on the 
total weight of the infringed goods, as opposed to the value of 
the goods.  Moreover, criminal punishment for producers of 
pirated goods could be reduced if the infringer paid larger 
amount of restitution.  The official claimed that an offender 
who received a three-year prison sentence for IP violations 
could pay larger amounts of restitution to reduce his sentence 
to a total of 1-2 years. 
 
 
 
Officials Staring Off into Space or Taking Message to Heart? 
 
--------------------------------------------- --------------- 
 
 
 
¶10. (SBU) Government officials involved in the conference read 
their prepared opening and closing remarks and appeared only 
moderately engaged when QBPC representatives spoke.  Liu left 
well before all ministry officials had a chance to give their 
opening remarks, and did not return for the statements from 
private companies.  The official from the Ministry of Commerce 
appeared particularly disengaged during companies' 
presentations, starring off into an opposite corner of the 
meeting hall.  Gan read what appeared to be his pre-prepared 
closing remarks, saying that he had taken note of the comments 
made during the different presentations.  He then said that the 
international community should look at China's IP problems from 
a holistic perspective.  He said that China is still a 
developing country and the international standard for IP 
protection is a relatively high bar for China at this time. 
BROWN