Guangzhou IPR Officials Tout 2005 Achievements,

UNCLAS SECTION 01 OF 04 GUANGZHOU 013563

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SENSITIVE
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E.O. 12958: N/A
TAGS: KIPR KJUS KCRM ETRD CH
SUBJECT: Guangzhou IPR Officials Tout 2005 Achievements,
List Markets of Concern


(U) This document is sensitive but unclassified. Please
protect accordingly.


1. (U) Summary: In the run-up to National IPR Week,
Guangzhou's IP enforcement agencies released a white paper
detailing their 2005 accomplishments and some 2006 goals.
Guangzhou authorities will focus their resources on specific
markets within the city in 2006, and highlighted leather,
auto parts, and cargo terminals as areas of particular
concern. Administrative agencies transferred "over 60" IPR
cases to the police in 2005, and Guangzhou courts completed
16 criminal IPR cases. All of Guangzhou's municipal offices
are now using legitimate software, though district and
country level offices will complete the transition by the
end of 2006. End Summary


2. (U) Guangzhou IP agencies hosted a press conference on
April 18, where they distributed the city's annual report on
IPR protection and development. Econoff also met with
officials from Guangzhou's Market Rectification Office
(MORO) and Technical Supervision Bureau (TSB). Post will
report separately on similar press events by Guangdong and
Shenzhen authorities.

New Efforts
--------------


3. (U) According to the white paper report, Guangzhou became
a "National Pilot IPR City" in 2005, and has since gained
approval from the State IP Office to become one of China's
"National Model IPR Cities." The report claims that inter-
agency coordination and communication with central
authorities have improved as a result of this effort.
Separately, Guangzhou established local IP offices in each
of its districts and county-level jurisdictions in 2004, and
the report claims that local coordination improved in 2005.
Guangzhou's recently released 11th Five-Year Plan
specifically highlights IP enforcement -- reportedly the
first time IPR has been included. The report also notes
that Guangzhou Vice Mayor Wang Xiaoling is the leading
municipal official on IPR strategy and heads Guangzhou's IPR
working group.

Targeted Markets
--------------


4. (U) A Guangzhou IPO official announced at the press
conference that authorities will their focus enforcement
efforts on wholesale and retail markets selling leather
goods and auto parts, as well as cargo terminals in 2006.
The report lauded campaigns in 2005 that targeted auto
parts, trade expositions, and street vendors of fake DVDs
and CDs. Authorities also released a list of specific
markets of concern within the city, which will be targets of
IP enforcement in 2006. The markets are as follows:

Leather: Zi Yuan Gang Market
Watches: Zhan Xi Market
Cosmetics and Beauty Products: Xing Fa Market
Auto Parts: Guang Yuan Road and Heng Fu Road
Audio-Visual Products: Guangdong A.V. City
Cell Phones: Ming Yuan Market
Software: Tian He Computer City
Cargo terminals


5. (SBU) In a separate meeting, the Guangzhou MORO vice
director said enforcement in markets primarily involves
periodic raids by plainclothes officers, who act on
independent investigations and tips. He said authorities
will continue to post public anti-counterfeiting notices at
large markets around the city, including lists of famous
brands that should not be sold. (Note: Following the
meeting, Econoff visited the Zi Yuan Gang leather market and
saw such a notice, which included the brand names and logos
for approximately 20 foreign brands. The sign threatened
criminal prosecution to shop owners and landlords. However,
many of the shops sold fake products anyway, including Louis
Vitton, Chanel, Coach, Dunhill, and Gucci. End note)

GUANGZHOU 00013563 002 OF 004



Criminal Cases
--------------


6. (U) Guangzhou's intermediate and local courts completed
16 criminal IPR cases in 2005, convicting 44 people (a
breakdown of these criminal cases by category was
unavailable). They also handled 23 criminal cases under the
"inferior goods" law and 54 cases under the "illegal
operation" law.

Case Transfers
--------------


7. (U) Guangzhou administrative departments transferred
"over 60" IP cases to the Public Security Bureau (PSB) in
2005 (a breakdown of these cases by category was
unavailable). Among the cases transferred were those
involving Duracell batteries, Sony earphones, brake pads,
ink printer cartridges, auto filters, and athletic shoes.
The report also touted a court victory by Warner Brothers
against the Jia Zhou Hong karaoke club.


8. (U) AIC investigated 945 trademark cases in 2005 and
transferred four cases to PSB. One of the cases involved a
cosmetics counterfeiting operation in Baiyun District, in
which 14 well-known trademarks were found and four suspects
were arrested.


9. (U) The report says that the Guangzhou Copyright Bureau
handled 15 copyright cases, transferred 220 suspects to PSB,
and destroyed 2,000 "warehouse hideouts" (it does not state
how many cases were transferred for criminal prosecution).
Copyright officials handled 45 copyright complaints during
the two Canton Trade Fairs in 2005, of which 39 were
verified. The report also mentions that Copyright Bureau
transferred one internet piracy case, and three suspects, to
PSB.

Civil Cases
--------------


10. (U) Guangzhou courts concluded 1,064 civil IPR cases in
2005, including 712 copyright, 219 patent, 112 trademark, 19
unfair competition, 4 contract, and 3 other cases.
According to the report, forty percent of the civil cases
were resolved through mediation. The report states these
numbers are "far ahead of other intermediate courts of
China."

Customs
--------------


11. (U) The Guangzhou Customs office investigated 44 IPR
cases in 2005. Separately, Huangpu Customs investigated 129
IPR cases. Of the Huangpu cases, 124 were trademark, 3 were
patent, and 1 was copyright.

Public Security Bureau
--------------


12. (U) The report states that Guangzhou PSB solved 497 IPR-
related cases and arrested 869 suspects in 2005. Officers
shut down 20,000 stalls, businesses, and warehouses.
Coordinating with the Copyright Bureau, PSB investigated
3,107 print shops, 692 A.V. stores, 431 bookstores, and 201
ships.

"Less Counterfeiting," More Schemes
--------------


13. (U) The director of Guangzhou TSB said his office has
successfully cracked down on counterfeit production lines in
the city. He admitted Guangzhou markets still sell fake
products, but said fewer fake products are being
manufactured in Guangzhou. Guangzhou TSB's three primary
enforcement strategies are site raids, cooperation with
investigative agencies that work for rights holders, and

GUANGZHOU 00013563 003 OF 004


tips from informants. He described counterfeiters as "more
cunning" than in previous years, as they no longer
centralize their operations, choosing instead to use
different facilities for production, printing, and
packaging. They also continually changes locations and
manufacture in residences. He said Guangzhou authorities
are now more closely monitoring rental properties to
determine how they are being used.

Software Legalization
--------------


14. (U) According to the report, all 41 municipal
departments have installed legitimate computer software.
Guangzhou MORO's vice director said district and county
level offices are still buying legitimate software, and the
process will be completed by the end of 2006.

Education and Training
--------------


15. (U) Officials touted Guangzhou as a base for IPR
education and training in South China. Three universities
in Guangzhou have set up IPR schools: Jinan University,
Zhongshan University, and South China University of
Technology. These IPR schools all offer masters degrees,
and Jinan is considering a doctorate program. In addition,
Guangdong University of Finance set up an IPR research
institute in 2005. The schools all invite guest lecturers
from the private sector.


16. (U) The report highlighted three training seminars
organized by IP agencies in 2005: a May course on patent
enforcement organized by the intellectual Property Office
(IPO),a September forum on trademarks organized by the
Administration of Industry and Commerce (AIC),and an
October seminar on copyright protection organized by the
Copyright Bureau. The report also highlighted ongoing
training with Hong Kong IPR authorities and industry
associations.

Innovation
--------------


17. (U) Echoing their central and provincial counterparts,
Guangzhou officials emphasized the importance of innovation
and scientific development for economic growth. The report
highlighted successful local enterprises and mentioned a
municipal program that encourages the development of pilot
high-tech enterprises. The MORO vice director said IPR
enforcement is rooted above all in the need to improve
China's environment for innovation. Satisfying foreign
governments in regards to IP is important, he said, but is
secondary to China's economic and social development.

Patent and Trademark Applications
--------------


18. (U) Guangzhou saw 11,012 patent applications in 2005, an
increase of 34 percent over 2004. These included 2,029
invention patent applications. The accumulated number of
trademark applications reached 98,000 in 2005, an increase
of 5.6 percent. According to officials, Guangzhou has more
trademark applications than any other provincial capital.
The report stated that Guangzhou has seven national famous
brands and 176 provincial famous brands.

Comment
--------------


19. (SBU) Among the many statistics and pronouncements of
the new report, the list of targeted markets within
Guangzhou stood out as particularly useful. All of the
markets are large and are known to sell fake goods (though
they also sell plenty of legitimate products). Though the
report included some information on criminal cases and
transfers, it did not break them down by category. Post has
submitted a request to Guangdong authorities for a breakdown

GUANGZHOU 00013563 004 OF 004


of criminal cases by code of law for 2004 and 2005. In
addition, Post plans to visit the three IPR schools and one
IPR institute in Guangzhou for outreach and public
diplomacy.

DONG