IPR Conference Highlights Local Issues; Guangdong

UNCLAS SECTION 01 OF 03 GUANGZHOU 020753 SIPDIS USDOC FOR 4420/ITA/MAC/MCQUEEN, DAS LEVINE STATE FOR EB/TPP MASSINGA, FELSING STATE PASS COPYRIGHT FOR TEPP STATE PASS USPTO FOR DUDAS, BROWNING, BOLAND, ANTHONY, NESS STATE PASS USTR FOR MENDENHALL, MCCOY, ESPINEL, CELICO USDOJ FOR SUSSMAN DHS/CPP FOR PIZZECK USPACOM FOR FPA SENSITIVE SIPDIS E.O. 12958: N/A TAGS: KIPR ECON ETRD WTRO CH SUBJECT: IPR Conference Highlights Local Issues; Guangdong and Fujian Officials Refuse IPR Meetings REFERENCE: Guangzhou 14710; Guangzhou 13563 (U) This document is sensitive but unclassified. Please protect accordingly. ¶1. (SBU) Summary: Chinese and U.S. officials and companies discussed a range of IPR issues and generally agreed on the direction Guangdong must take on IPR matters at a recent conference co-hosted by the U.S. Chamber of Commerce and the Guangdong Provincial IP Office. The conference was part of the U.S. Chamber's effort to engage with local Chinese officials in IPR hot-spots such as Guangdong on best practices and information sharing. Separately, Guangdong and Fujian IP enforcement authorities denied our requests for meetings -- a possible sign that local IP officials are becoming less cooperative because of increased political sensitivity due to a possible WTO case against China by the United States. End summary. ¶2. (U) The "Guangdong Seminar on IP Protection and Encouragement of Innovation" took place on June 28. It was broken into four panels: global trends in trademark protection and enforcement, best practices in anti- counterfeiting and piracy enforcement, strengthening administrative and criminal enforcement of IP rights, and IP management and self-innovation by enterprises. Attendees on the Chinese side included representatives from the Guangzhou Mayor's office, the Guangdong IP Office, the Guangdong Administration of Industry and Commerce (AIC),and the Guangdong High Court. Attendees on the U.S. side included Ronald Lew, federal judge from California's central district court; Matthew Bassiur, federal prosecutor from the U.S. Department of Justice's computer crime and IP section; David Eoff, chief of DHS/ICE's commercial fraud and IPR investigations unit; and Embassy IPR Attache Mark Cohen. Representatives from the Quality Brands Protection Committee industry association, P&G, and DaimlerChrysler were also present. Consul General Dong contributed introductory remarks. Companies Say What They See -------------- ¶3. (SBU) P&G China Brand Protection Manager Shannon Young started his presentation with some good news: the central and regional governments are becoming more effective at fighting counterfeiting and, for the first time in many years, P&G has seen a "slight reduction" in overall levels of counterfeiting. However, he added that most other companies have seen an increase in counterfeiting. Young had several criticisms of China's enforcement efforts: administrative fines are not an effective deterrent; civil suits are timely, costly, and relatively unsuccessful; case transfers from administrative authorities to police are still rare (though increasing); valuation of seized products varies widely; and kingpins are not being arrested. Nevertheless, he said too many people criticize China for poor IP enforcement without understanding the details -- potentially poisoning the atmosphere for dialogue. ¶4. (SBU) Baker & McKenzie's Joe Simone said QBPC is extending its landlord liability project -- which has targeted Beijing's silk market -- into Shanghai, Guangzhou, and Shenzhen. QBPC has already started investigations into Guangzhou markets and had plans to meet Shenzhen officials the following day. Hugh Stevens, TimeWarner's senior vice president of international relations and public policy for Asia Pacific and QBPC committee chair, laid out the arguments for strong IP protection in China: infringement puts consumers at risk, uses unacceptable labor practices, supports organized crime, destroys brands, undermines legitimate businesses, and gives China a bad name overseas. Li Fushan, IP director for Skyworth, a Chinese company that manufactures televisions, said companies should preemptively register their IP in China and also to choose their disputes wisely. He also complained that foreign companies sometimes take advantage of Chinese companies' lack of understanding of international IPR law -- citing a law suit against his GUANGZHOU 00020753 002 OF 003 company filed by a British company with the same name that develops TV programming. Guangdong Officials: We're Trying! -------------- ¶5. (SBU) Guangdong officials presented an optimistic picture of their IP enforcement efforts and cited improvements. They proclaimed the importance of IPR and innovation in China's economic development and noted Guangdong companies' high rate of IP registration. Liu Tongjiang, director of Guangdong AIC's trademark department, said his office is working more collaboratively than in the past, including agreements with the Public Security Bureau (PSB),Customs, Pan-Pearl River Delta regional governments, and Hong Kong authorities. Li Xiaoping, director of Guangzhou AIC's trademark department, said his office has located specific, high-volume counterfeit markets where it is focusing its efforts (see reftels for more details on Guangzhou and Guangdong IP enforcement efforts based on their respective IPR white papers). Zhang Youquan, director of anti-piracy for the Guangzhou Copyright Bureau, said he considers public education a crucial part of his office's IP efforts. (Note: Econoff recently attended the taping of a Guangzhou TV program in which high school students performed oral recitations on the theme of protecting IPR. Judges announced a winner and all of the participants received copyright registration certificates for their speeches, which would be published in book form and distributed to local schools. End note.) Contrasting the Chinese and U.S. Systems -------------- ¶6. (SBU) Participants seemed particularly interested in the presentations by federal judge Lew, federal prosecutor Bassiur, and ICE officer Eoff. When asked how U.S. courts enforce their judgments, Judge Lew said this is rarely a problem because lawyers ensure that relevant actions are taken, often by the U.S. Marshall Service, which acts on the court's behalf. He opined that China's record of poor enforcement of judgments is not the fault of courts alone but rather points to a systemic problem. Lew also noted that U.S. claimants, unlike Chinese, can choose whether to pursue a civil or criminal case. Criminal prosecutors use a variety of criteria to determine whether to accept a case, with monetary value being only part of the equation. In his presentation, Bassiur said federal and local authorities cooperate in a variety of ways to combat counterfeiting: intelligence sharing on issues such as money laundering and immigration, sharing of resources and specialized equipment, and legal interpretation. ICE officer Eoff cited two recent cases in which his office and PRC authorities cooperated to arrest DVD and pharmaceutical counterfeiters, and noted that ICE plans to set up a liaison office in Guangzhou by the end of 2006. Guangdong and Fujian Authorities Deny Requests for Side Meetings on IPR -------------- -------------- ¶7. (SBU) In contrast to the positive atmosphere prevailing in the IPR conference, the Guangdong High Court refused our request for a meeting, which would have included Judge Lew and IPR Attache Cohen, citing previous commitments. Our requests to meet with Fujian High Court, PSB, AIC, and Copyright -- which would have included federal prosecutor Bassiur and Cohen -- were also denied. The Fujian High Court and PSB did not give reasons for their denials, but AIC and Copyright withdrew their initial confirmations on the pretext of the inclusion of Bassiur. In addition, a Guangzhou middle court official chose not to attend the U.S. Chamber conference, and a Guangdong PSB official withdrew from the event at the last moment. Comment: Backlash on Possible WTO IPR Case? -------------- GUANGZHOU 00020753 003 OF 003 ¶8. (SBU) The Guangdong FAO often has been uncooperative in arranging our requests for meetings on a variety of issues in the past. However, these particular refusals were surprising because we have met most of the offices before without any trouble. Though it is too early to say for sure, this could indicate that -- in the wake of USG warnings of a possible WTO dispute resolution on IPR and the recent Special 301 focus on IPR hot-spots in China -- local authorities in South China have decided to avoid engaging us because of the sensitivity of the issue and potentially negative consequences. DONG