Identifier
Created
Classification
Origin
06GUANGZHOU32092
2006-11-02 09:26:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Guangzhou
Cable title:  

Fighting Copyright Infringement at the Canton Fair

Tags:  KIPR ECON ETRD CH 
pdf how-to read a cable
VZCZCXRO7214
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #2092/01 3060926
ZNR UUUUU ZZH
R 020926Z NOV 06
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 5261
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI
UNCLAS SECTION 01 OF 03 GUANGZHOU 032092 

SIPDIS

USDOC FOR 4420/ITA/MAC/MCQUEEN, DAS LEVINE, RIGOLI
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, WINTER, CELICO
USDOJ FOR SUSSMAN
DHS/CPP FOR PIZZECK
USPACOM FOR FPA

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: KIPR ECON ETRD CH
SUBJECT: Fighting Copyright Infringement at the Canton Fair

REF: A) Guangzhou 29654

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

UNCLAS SECTION 01 OF 03 GUANGZHOU 032092

SIPDIS

USDOC FOR 4420/ITA/MAC/MCQUEEN, DAS LEVINE, RIGOLI
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, WINTER, CELICO
USDOJ FOR SUSSMAN
DHS/CPP FOR PIZZECK
USPACOM FOR FPA

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: KIPR ECON ETRD CH
SUBJECT: Fighting Copyright Infringement at the Canton Fair

REF: A) Guangzhou 29654

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


1. (SBU) Summary and Comment: Representatives from U.S. and Canadian
art publishing companies spotted numerous vendors selling copies of
their products at both the Canton Fair and the Jinhan Fair in
Guangzhou on October 25, 2006. Officials at the Canton Fair IPR
complaint center, after first insisting on frustratingly high
evidentiary requirements, eventually ordered vendors to remove
infringing products from their displays. Organizers from the Jinhan
Fair were more cooperative, accompanying the group throughout the
fair and ordering vendors to remove violating items. Neither fair,
however, imposes penalties that effectively deter piracy, and the
rights-holders expressed doubts that their policing efforts and
expenses are worth the cost. The companies blame China's vast
market of pirated goods for their current financial woes. End
Summary and Comment.

Background on the Art Publishing Industry and IPR Infringement
-------------- --------------


2. (SBU) Econoff accompanied the owners of Art in Motion and Wild
Apple to the China Export Commodities Fair (Canton Fair) and Jinhan
Artwork and Craft Fair (Jinhan Fair) on October 25, 2006. Both
companies are members of the Art Copyright Coalition, an association
of 18 art publishing companies from the United States, Canada, and
Europe. The companies range in size from USD 2 to 50 million in
sales per year.


3. (SBU) According to the company owners, the legitimate art
publishing industry has seen sales and employment figures fall
significantly during the past few years, in large part due to
rampant copyright infringement in China. Sales for Art in Motion,
based in Vancouver, have fallen 40 percent during the last few
years, and the company has trimmed staff from 600 to 300. Wild
Apple, which is based in Vermont, has seen a similar trend. Neither

company sells its products in China because of concerns about
counterfeiting.


4. (SBU) The Canton and Jinhan Fairs are a source of a significant
portion of the world's counterfeit art prints, according to company
owners. Art in Motion calculated that vendors at the Canton and
Jinhan fairs earn between USD 500 million and USD 1 billion in
annual sales - more than the legitimate art publishing industry.
Company representatives have even seen fakes in large U.S. retail
chains such as Wal-Mart and Target. The counterfeiters generally
buy legitimate prints and copy them with high-quality scanners.

The Costs of Investigating in China
--------------


5. (SBU) For most members of the Art Copyright Coalition, hiring
legal representation to investigate infringement in China is
prohibitively expensive. Art in Motion's operational and legal fees
will reach USD 40,000 for this session of the Canton Fair. Wild
Apple did not hire a law firm because the costs were too high.
Several years ago, Art in Motion hired an investigator to track down
an infringing manufacturer, conduct a joint raid with Chinese
authorities, and pursue civil action. Expenses topped USD 100,000
and the operation did not achieve any lasting significance,
according to Garry Peters, owner of Art in Motion. He said his
company may ultimately decide that it cannot afford to continue
funding investigation or enforcement actions in China.

Canton Fair: Burdensome Documentation Requirements
-------------- --------------


6. (SBU) During the spring 2006 session of the Canton fair, the
fair's IPR complaint center did not accept Art in Motion's
documentation showing copyright ownership. To prepare for the fall
session, the company selected 120 of the most commonly counterfeited
images and, following Canton Fair requirements, obtained the
following documents for each: copyright registration, notarized
copyright owner authorization, legalized copyright owner
authorization (by a Chinese Consulate in the United States),power
of attorney for the legal representative, and Chinese translations.
The documents filled a small suitcase. Leon Wang, lawyer for Baker

GUANGZHOU 00032092 002 OF 003


& McKenzie, which was representing Art in Motion, said the complaint
office's documentation requirements are overly burdensome and more
stringent than required by Chinese law.

Infringement at the Canton Fair
--------------


7. (SBU) The group located nine vendors at the Canton Fair selling
artwork that infringed on their copyrights, up from eight vendors in
the spring session. These numbers only include vendors that had at
least four infringing items on display. Some of the vendors had
catalogues that included hundreds of Art in Motion and Wild Apple
images. The company owners said that, generally speaking, every
vendor with art prints at the fair was selling works that infringed
on a copyright.

Canton Fair IPR Complaint Center: Inconsistent But Cooperative
-------------- --------------


8. (SBU) The Canton Fair's IPR complaint center consisted of two
small offices, one for copyrights and the other for trademarks and
patents. The copyright office, which was noticeably less busy than
the trademark/patent office, included six desks staffed by officials
from the Trade Fair, the Guangdong Copyright Bureau, and the
Guangdong Administration for Industry and Commerce. English
instructions describing the complaint process were posted outside
the offices. The offices did not, however, have English versions of
the complaint submission forms. (Note: The Consulate and Embassy
have in the past asked Canton Fair organizers to make translated
documents available. End Note.)


9. (SBU) The complaint office staff accepted Art in Motion's
copyright ownership documents. However, they raised a new hurdle
that potentially stalled further action by insisting on photographs
showing the displayed counterfeit goods. In addition, they would
not accept as evidence vendors' catalogues with infringing images.
However, the following morning, when the group returned to the
complaint office, officials dropped the photographic requirement.
The officials visited the exhibition halls and ordered the vendors
to remove infringing products. In two cases, they detained vendors
for further questioning.


10. (SBU) Despite the eventual cooperation by Canton Fair officials,
company owners expressed frustration at the lack of deterrent
penalties. In all nine cases, the vendors continued to operate for
the duration of the fair. Infringers are only banned from the fair
after three cases of infringement. In addition, according to Wang,
enforcement decisions made by the complaint office are not
applicable in separate administrative or legal cases.

Canton Fair IPR Statistics
--------------


11. (SBU) This session of the Canton Fair, which ended October 30,
saw 573 complaints of IPR violations and 509 enterprises penalized,
according to press reports. These figures are up 21.4 per cent and
21.5 percent, respectively, compared with the spring 2006 session.
Canton Fair officials permanently banned three exhibitors from the
fair. More than 190,000 visitors attended the fair, signing
contracts worth USD 34.06 billion.

The Jinhan Fair: Better But Still Discouraging
-------------- -


12. (SBU) The Jinhan Fair was adjacent to the Canton Fair and had a
comparable volume of art prints for sale. Jinhan organizers
required only basic proof of copyright ownership (e.g., legal proof
of the company and catalogues) and were willing to accompany the
group on a walk-through of all 10 floors of the fair building. The
group located 10 vendors selling art that infringed on their
copyrights, down from 15 vendors in the spring 2006 session. The
company owners noted that the overall amount of artwork on display
was less than the prior session. Almost all of the companies
selling prints were from Fujian's Minghou County, which is located
near Fuzhou. Wang noted that Minghou is a center of legitimate and
illegitimate art printing in China, much as Fujian's Putian is for
shoe manufacturing.


13. (SBU) Jinhan Fair organizers ordered the vendors to remove the

GUANGZHOU 00032092 003 OF 003


infringing items from their booths and from their catalogues. Wang
returned to the booths two days later and found that one of the 10
vendors had placed the items back on display. Despite the
cooperation of Jinhan Fair organizers, the company owners were wary
of their commitment to policing the vendors. Indeed, during the
walk-through, one of the fair organizers was overheard warning
someone on her cell phone to "be careful" because the group was on
its way.

GOLDBERG