Embassy IPR Attache Cohen Visits Shenzhen, Guangzhou to

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E.O. 12958: N/A
TAGS: KIPR ECON ETRD CH
SUBJECT: Embassy IPR Attache Cohen Visits Shenzhen, Guangzhou to
Discuss Local Legislation and Patent Developments


1. (SBU) SUMMARY: The Shenzhen People's Congress is revising its
technical secrets rule and drafting a new IPR code, and the Shenzhen
and Guangdong Intellectual Property Offices (IPOs) will seek
meetings with USPTO in the United States this summer, officials told
Embassy Senior IPR Attache Mark Cohen on June 14-15. U.S. companies
told Cohen that they continue to be frustrated with the lack of
deterrent penalties for IPR infringers, and one company said local
authorities have been less cooperative since the U.S. brought
IPR-related WTO consultation requests in April. Shenzhen and
Guangdong authorities are willing to assist with a planned U.S.
staffdel in August, but said national-level authorities need to make
initial approvals. END SUMMARY

Shenzhen Congress: Drafting Local IPR Regulations
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2. (U) Liu Shuguang, Vice Chair of the Legislative Affairs Committee
of the Shenzhen People's Congress, said Shenzhen has used its
special legislative authority to enact nine local IPR-related
statutes since 1992, including those covering high-tech zones,
digital content for library management, and personnel recruitment.
He said Shenzhen also plans to formulate a comprehensive IPR code of
its own, notwithstanding its limited legislative competence and
difficulties adopting a national IPR code, estimating that it will
require up to five years to complete. Liu also said that the
Shenzhen Congress is making significant revisions to a local
technical secrets regulation including clarifying its relationship
with employee non-compete agreements (the ambiguities in that rule
were previously the subject of a U.S. question to China at the WTO's
TRIPS Council).


3. (SBU) When asked about the relationship between local Peoples
Congress statutes and national laws, regulations adopted by the
State Council (fagui),and ministerial rules (guizhang) in the
Chinese system, Liu unambiguously came out on the side of local
legislatures in the event of a conflict with national regulations
and rules. He said that "in theory" local regulations override not
only ministerial rules, but also national regulations and judicial
interpretations, because they are statutory in nature. Judicial
interpretations only govern the courts or Procuratorate; ministerial
regulations are adopted by a lower legislative body than a People's
Congress. Of course, Liu mentioned, local laws seek to harmonize
with current or proposed national laws and regulations as well as
judicial interpretations to minimize such conflicts. (Comment: This
of course contradicts the interpretation of many central officials
and illustrates the continuing ambiguities of China's legal system.)



4. (U) Liu expressed an interest in learning more about U.S.
negotiated rulemaking, which he studied in graduate school in China
(focusing on the U.S. Administrative Procedures Act). Regarding the
planned August staffdel to Shenzhen, Liu said he would be happy to
assist but noted that the National People's Congress would need to
weigh in and would likely defer to the Ministry of Foreign Affairs
on the initial approval.

Shenzhen IPO: Keen on Foreign Exchanges
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5. (U) Wang Youming, Deputy Director General of the Shenzhen
Intellectual Property Office (IPO),said his office maintains close
cooperation with a number of foreign experts and governments,
particularly those in the United States, Europe, and Japan. Several
U.S. law firms and judges trained local officials this and last year
on trial procedures, application filing, and patent infringement,
including Section 337 actions. Wang said the Shenzhen IPO helps
companies such as Huawei and ZTE file their intellectual property
overseas. Wang participated previously in a joint USPTO/SAC program
on standards and IPR last year in Shenzhen. In addition, the IPO
offers subsidies of several hundreds of thousands of RMB to firms
that are interested in participated in international
standards-setting bodies. Wang said a delegation from the Shenzhen
government hopes to meet with USPTO this summer. He said his office
would also assist with the planned August staffdel, but noted the
necessity of approval from the State Intellectual Property Office.

Guangdong IPO: New Patent Protection Rule

GUANGZHOU 00000716 002 OF 002


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6. (SBU) Huang Wenxia, Deputy Director of the Legal Affairs
Division, said Guangdong's new Patent Protection Rule gives the IPO
more authority to collect evidence and seize violators' properties.
It also introduces harsher penalties for repeat infringers. Xie
Hong, Director of the Guangdong IPO's Coordination and
Administration Division, said Guangdong will soon issue its IPR
Strategic Guideline covering the creation, administration, and
application of IPR in all fields. Huang said the Zhuhai IPO has
begun providing expert opinions regarding infringement to help
companies respond to patent infringement notices delivered by
lawyers (Comment: This seems an unrealistic solution considering the
difficulties in reviewing patent grants and the limitations on
technical expertise in local IP offices.) Xie noted that Guangdong
lacks enough trained professionals or a robust enough service
industry to support the high level of patent and trademark
applications originating from Guangdong. She added that a
delegation headed by the Guangdong IPO Director General will travel
to the United States in August and hopes to visit USPTO.

AmCham: Difficulties Old and New
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7. (SBU) In a discussion with members of AmCham South China, Cohen
reiterated that the U.S. WTO consultation request is not an attack
on China's IP system but rather a focused action. He said the
bilateral customs agreement reached at the May Strategic Economic
Dialogue will likely improve cooperation between customs
authorities. Cohen encouraged companies to bring civil or criminal
cases in the jurisdictions of trade fairs as a way to avoid local
protectionism.


8. (SBU) A representative from Proctor & Gamble noted the lack of
clear statistics on criminal IPR cases in China, particularly those
involving foreign rights-holders. He added that suspended sentences
in IPR judgments are becoming more common. A representative from
sporting goods firm Acushnet said his company has seen a decline in
cooperation from the Chinese government since the U.S. requested WTO
consultations in April.


9. (U) This cable has been cleared by IPR Attache Mark Cohen.

GOLDBERG