PRIORITY WATCH LIST
ARGENTINA
Although Argentina has made
incremental progress in improving its intellectual property rights (IPR) regime,
such as by enacting some measure of patent protection, much work still remains
to be done. Significant barriers to the effective enforcement of intellectual
property rights remain, including weak and inconsistently applied penalties for
IPR violations. Pirated copies of copyrighted material and counterfeit
brand-name goods are widely available. Illegal decoding, distribution, and
resale of satellite signals continue unabated. The use of unlicensed software
remains widespread in businesses and in some government entities. Industry
estimates that copyright piracy resulted in losses of $256 million in 2001. The
process of private civil enforcement against copyright infringement has
improved, but criminal charges and convictions are rarely sought or obtained.
Although there has been an increase in police raids and other enforcement
actions, these actions usually do not result in prosecutions or in deterrent
sentences if prosecution occurs.
Argentine pharmaceutical firms continue
to produce and export unlicensed copies of patented products. Industry estimates
that the lack of adequate patent protection results in annual losses of $750
million. In 1999, the U.S. initiated a WTO dispute settlement case against
Argentina on exclusive marketing rights and confidential test data protection.
The U.S. initiated a subsequent WTO case in 2000, which involved a number of
other patent issues. Earlier this month, however, a partial settlement was
reached on a number of these issues. In this settlement, Argentina agreed to
clarify how certain aspects of its IPR system operate in a manner consistent
with their TRIPS Agreement obligations. In addition, Argentina agreed to amend
portions of its patent law that were inconsistent with TRIPS. Two important
issues, including data protection, remain unresolved.
BRAZIL
Brazil is both one of the
largest markets globally for legitimate copyrighted products, and one of the
world's largest pirate markets. Losses suffered by the U.S. copyright industry
are the largest in the hemisphere, with industry estimates exceeding $700
million in the past year. Piracy-driven losses suffered by the Brazilian music
industry are particularly staggering. Despite having adopted modern copyright
legislation that appears largely to be consistent with TRIPS, Brazil has taken
no serious enforcement actions against increasing rates of piracy.
On the national level,
Brazil established an Inter-Ministerial Committee (IMC) in March 2001 to combat
piracy, and the income tax authority recently began the destruction of a large
amount of seized pirated goods. The state of Sao Paolo created a new division
within the civil police to deal specifically with piracy and related crimes.
Although the United States is encouraged by these actions, Brazil still has not
adopted an action plan against piracy, and no lasting improvement in the
enforcement situation has occurred at the national level. In particular, the IMC
has taken very little action on the anti-piracy front. Intermittent, localized
antipiracy and anticounterfeiting campaigns are an inadequate substitute for a
planned, systemic, and consistent approach to domestic and border enforcement
activity and the application by the Brazilian legal system of deterrent
penalties.
In the patent area, Brazil
has made very minor progress under an April 1998 agreement with the U.S. to
process the backlog of 15,000 pending patent applications for which it has
already collected several million dollars in processing fees. In 2000, the U.S.
initiated dispute settlement proceedings against Brazil on a "local working"
requirement in the patent law. In June 2001, the United States and Brazil agreed
to transfer their dispute to a Bilateral Consultative Mechanism created to
address this and other concerns.
COLOMBIA
U.S. pharmaceutical firms
are experiencing significant losses in the Colombian market due to inadequate
protection of confidential test data and the unavailability of "second use"
patents. Colombia is second only to Argentina among Latin American countries in
the prevalence of pirated pharmaceuticals. The U.S. Government is disappointed
in actions taken by Colombia, on its own and through the Andean Community, to
weaken data protection and prohibit "second use" patents throughout the Andean
Community.
There is also a need for
stronger enforcement of copyright and trademark laws. Although pirated and
counterfeit goods are occasionally seized by enforcement authorities,
prosecutions rarely follow. Despite repeated requests by the U.S. Government,
Colombia has been slow to shut down illegal cable television networks so that
licensed ones can take their place. The U.S. Government urges Colombia to take
action immediately to remedy the current IPR situation, particularly with regard
to patent protection, both in its national legislation and within the Andean
Community institutions.
DOMINICAN REPUBLIC
Over the past year, the
Dominican Republic has taken some steps to strengthen its IPR regime. However,
there are still significant areas of concern that need to be addressed. The
industrial patent law appears to suffer from several significant shortcomings
with respect to international standards, including in the area of data
protection. The U.S. Government also is concerned that the implementing
regulations could worsen some of the existing problems with the industrial
property law.
On a positive note, the
United States is encouraged by the efforts of the National Copyright Office to
investigate and punish copyright piracy, and to educate the public and judiciary
about the importance of compliance with and enforcement of, the copyright law.
However, copyright and trademark owners, as well as patent holders, continue to
have difficulty in enforcing their intellectual property rights. Current efforts
to enforce the copyright law have not prevented the widespread sale of pirated
materials. In addition, we are concerned about the recent apparent increase in
television piracy. The U.S. Government looks forward to further consultations
with the Dominican Republic on possible improvements in its intellectual
property rights regime.
EGYPT
Despite significant ongoing
U.S. Government technical IPR assistance, Egypt has not yet enacted modern
intellectual property rights laws to comply with its international obligations.
The United States is encouraged, however, by reports that such laws may be
passed by the end of this spring. The United States continues to strongly urge
Egypt to correct the reported deficiencies in the draft copyright and patent
laws before these laws are enacted by the legislature. The United States remains
concerned, in particular, about the possible insertion in the draft patent law
of a previously rejected provision calling for health-related patents to be
reviewed by the Ministry of Health, which would appear to contradict the TRIPS
Agreement requirement to provide patent protection without discrimination as to
field of technology. On a positive note, the U.S. Government welcomes
improvements that have been made regarding protection of test data and exclusive
marketing rights, which we hope will remain in the final bill. The United States
is also heartened by the steps Egypt has taken to ensure the authorized use of
legitimate business software by government entities. However, enforcement on the
whole remains lax and copyright piracy remains unchecked. The U.S. Government is
also seriously concerned about the continuing problem of granting false licenses
to pirates by the Ministry of Culture, a practice that undermines copyright
protection, in particular for entertainment software and music.
EUROPEAN UNION
At the conclusion of the
1999 Special 301 review, the United States initiated a WTO dispute settlement
case against the EU, based on the apparent TRIPS deficiencies in EU Regulation
2081/92, which governs the protection of geographical indications (GIs) for
agricultural products and foodstuffs in the EU. The Regulation appears to deny
national treatment to foreign GIs. According to the plain language of the
Regulation, only EU GIs may be protected. Foreign GIs cannot be registered in
the EU, and thus are not eligible for protection. In addition, although the
Regulation permits EU nationals to oppose or cancel GIs, non-EU nationals are
prohibited from raising any objections. With respect to trademarks, the
Regulation permits dilution and even cancellation of trademarks when a GI is
created later in time. The United States requested consultations regarding this
matter on June 1, 1999, and numerous consultations have been held since then. In
March of this year, the EU produced proposed amendments to the Regulation.
Although the proposal, as written, would address some of the deficiencies of the
Regulation, it is lacking in several significant respects, including its
treatment of foreign GIs. We are exploring the possibility of addressing these
concerns in order to reach a satisfactory settlement with the EU. If a mutually
agreeable solution can not be found, the United States may have no option but to
continue to pursue resolution through WTO dispute settlement
procedures.
HUNGARY
Hungary does not provide
adequate protection for confidential test data submitted by pharmaceutical
companies for marketing approval, which appears to violate its obligations under
Article 39.3 of the TRIPS Agreement. While Hungary has repeatedly indicated that
it disagrees with this interpretation of TRIPS, it intends to put very limited
data exclusivity into place effective January 1, 2003, in order to comply with
EU directives. U.S. pharmaceutical products remain vulnerable to exploitation by
large and aggressive Hungarian pharmaceutical copiers. On other legislative
matters, Hungary seems to have made substantial progress in bringing its
copyright, patent, trademark, customs code, and criminal and civil codes into
conformity with its IPR obligations under the TRIPS Agreement and under the
U.S.-Hungary bilateral IPR agreement. Enforcement, however, remains problematic
and piracy remains moderately high. The U.S. Government urges Hungarian
prosecutors and judicial authorities to take a more proactive approach to the
enforcement of intellectual property rights.
INDIA
India's patent system and
protection of exclusive test data appear far from compliant with its obligations
under the TRIPS Agreement. The term of protection for pharmaceutical process
patents is only seven years. India fails to provide patent protection for
pharmaceutical and agricultural chemical products and the compulsory licensing
system seems overly broad. Also, pending legislation meant to rectify India's
TRIPS deficiencies may fall short of that goal. To make matters worse, the
inadequate patent protection currently available is difficult for innovators to
obtain: India's patent office suffers from a backlog of 30,000 patent
applications and a severe shortage of patent examiners. Moreover, India's
overly-generous opposition procedures often allow competitors to delay patent
issuance until the patent has expired, resulting in a de facto removal of patent
protection. In addition, India's copyright law, which is generally consistent
with international standards, was weakened by amendments enacted in 2000 that
undermine protection for computer programs. Enforcement against piracy remains a
growing concern for U.S. copyright industries, especially given that pirated
imports are entering the market from Southeast Asia and that there is growing
Internet piracy. We will continue to consult with the Indian Government to
resolve outstanding TRIPS compliance concerns, but if these consultations do not
prove constructive, we will consider all other options available, including WTO
dispute settlement, to resolve these concerns.
INDONESIA
Indonesia demonstrated some
improvements to its intellectual property rights regime in 2001. While Indonesia
is responsive to private sector requests for enforcement assistance and welcomes
input on draft legislation, overall enforcement of intellectual property rights,
including that of trademarks, held by U.S. companies, remains weak. Industry
reports a troubling increase in illegal production lines for optical media and
pirated books far beyond Indonesia's domestic consumption capacity. Indonesia's
judicial system continues to frustrate right-holders with years of delay and a
pronounced lack of deterrent penalties. However, the U.S. Government is
encouraged by several recent developments in Indonesia that may address some of
the deficiencies listed in the action plan the United States provided Indonesia
in January 2001. In particular, Indonesia prepared draft optical media
regulations and established provisions for commercial courts throughout the
country to process intellectual property rights cases within the country's
district court system. The United States urges Indonesia to work with the U.S.
Government to ensure that the draft regulations are adequate and effective prior
to their enactment and to continue to develop specialized legal and judicial
expertise for the prosecution of intellectual property rights violations.
Rigorous enforcement in the near term of these regulations and of the copyright
law against illegal optical disk producers is critical. The U.S. Government is
providing an updated action plan to Indonesia that reflects these recent
developments and further refines the specific benchmarks contained in the
earlier action plan. The United States will conduct an Out-of-Cycle Review in
the fall to assess progress toward achieving these benchmarks.
ISRAEL
The United States commends
the notable progress Israel achieved in 2001 in copyright enforcement. In 2001
Israel significantly increased the budgetary, educational, police and judicial
resources it devotes to such enforcement efforts, with extensive concrete
results in terms of raids, abatement of illegal CD production, and a drop in the
piracy level for U.S. repertoire. Knesset approval is expected soon for a
copyright law that would increase penalties and expedite prosecution for
copyright violations, a step which would be a highly positive development.
However, Israel maintains its policy of allowing its generic pharmaceuticals to
rely on the confidential test data of U.S. innovator firms to obtain marketing
approval, a policy it contends is TRIPS-consistent. Moreover, the lack of a
clear definition for end-user piracy of business software as a crime, court
procedural delays, and inadequate compensatory and deterrent civil damages have
weakened some of its enforcement efforts. An opinion by the Ministry of Justice
concluding that payment for the broadcasting and public performance of U.S.
sound recordings is no longer necessary remains a concern, and the U.S.
Government continues to seek clarification regarding the bearing of this opinion
on Israel's bilateral obligations to the United States. The U.S. Government
urges the Knesset to act soon to pass the copyright law and looks forward to
continued improvements in Israel's intellectual property regime, including
sustained efforts to strengthen copyright enforcement, that can be reflected in
the OCR to be conducted later this year.
LEBANON
The United States is
concerned by Lebanon's severe copyright piracy problem and the lack of a
comprehensive governmental commitment to eliminate piracy and foster legitimate
business. Despite the passage of the copyright law, there has been virtually no
action by Lebanon against piracy. In addition, pervasive cable piracy continues
to devastate legitimate theatrical, video, and television service providers.
End-user piracy of computer software is pervasive among large companies, banks,
trading companies, and most government ministries. Also troubling is an overly
broad software exception for certain educational uses in the new copyright law
that seriously undermines the viability of this market for legitimate products.
The U.S. Government is also concerned by the establishment of an optical media
production facility in Lebanon, which has become an exporter of pirated product.
The United States urges Lebanon to address its severe copyright protection
problems.
PHILIPPINES
Significant problems remain
in ensuring adequate and effective protection of intellectual property rights in
the Philippines. Legislation to fully implement its TRIPS Agreement commitments
has been slow to develop, and enforcement efforts have had little deterrent
effect on the extraordinary level of copyright piracy. The United States,
however, is encouraged by President Macapagal-Arroyo's strong commitment to
tackling intellectual property rights issues, and the United States welcomes the
Supreme Court's recent ruling affirmatively establishing the ability of the
court to grant ex parte search warrants. The United States hopes this ruling
initiates a trend to improve the quality of the Philippines IPR-related laws and
regulations. However, there remain many obstacles to the effective enforcement
of intellectual property rights in the Philippines, including the low number of
raids, insufficiently trained prosecutors, and procedural and judicial delays.
Meanwhile, optical disk piracy and trademark counterfeiting continues to
increase dramatically. The U.S. Government urges the Philippines to redouble its
enforcement efforts across the board and to enact strong IPR laws and
regulations, including a strong law to regulate the production of optical disks.
The U.S. Government will conduct an OCR later in the year in order to monitor
the situation in the Philippines.
RUSSIA
As part of its efforts to
join the WTO, Russia will need to bring its intellectual property rights regime
into full compliance with the TRIPS Agreement by the date of accession. Certain
provisions of the Russian Copyright Law and Russia's enforcement regime appear
to be inconsistent with the TRIPS Agreement and the intellectual property rights
provisions of the 1992 U.S.-Russian Federation Trade Agreement. Lack of an
effective OD law, , enforcement against unauthorized production and export of
CDs and CD-ROMs and concerns about protection for well-known marks are growing
problems, and result in substantial losses to U.S. industry each year. The
United States urges Russia to pass the IPR legislation pending before the Duma
(except for Part IV of the Civil Code), to establish an effective optical media
regime, and to increase enforcement efforts across the board for both copyrights
and trademarks.
TAIWAN
During the past year, Taiwan
passed a number of new laws meant to strengthen the protection of intellectual
property rights and bring the economy into compliance with its obligations under
the TRIPS Agreement. These include certain amendments to its patent and
copyright laws as well as new legislation to license the production of optical
media, although the U.S. Government was disappointed that the optical media
legislation was weakened before passage. Despite these positive steps, the lax
protection of IPR in Taiwan remains very serious. U.S. companies report
significant problems in being able to protect and enforce their intellectual
property rights. Taiwan is one of the largest sources of pirated optical media
products in the world. Its copyright law needs strengthening in a number of
areas to deal with growing piracy. Corporate end-user piracy remains at a high
level. Taiwan also suffers from trademark counterfeiting, including that of
pharmaceuticals. Taiwan has only begun to take the steps necessary to enforce
these new laws, particularly the optical media management statute. Nonetheless,
the United States remains encouraged by the passage of these laws and the
important first steps that have been taken in terms of implementation. The
United States will continue our dialogue with Taiwan on the protection and
enforcement of intellectual property rights during the coming year to help
improve the situation.
URUGUAY
Uruguay's efforts to reform
its outdated copyright and patent laws have been dominated by slow and uneven
progress, which has resulted in an intellectual property rights regime that does
not appear to be in compliance with Uruguay's TRIPS obligations. Specifically,
Uruguay needs to update its 1937 copyright law to clarify that software is
protected as a literary work, among other deficiencies. Movement towards a
comprehensive copyright law stalled in 2001, and the U.S. Government is
concerned about a flawed, software-only bill, which is moving forward. The
United States is heartened by the increase in raids and prosecutions against
piracy since 2000. However, inadequate civil remedies and lax border enforcement
have caused high piracy rates to persist, and have allowed Uruguay to become a
major transshipment point for pirated products. The United States urges Uruguay
to ratify the WIPO Internet Treaties, enact TRIPS and WIPO-compliant copyright
legislation, and remedy provisions of its patent law that appear to violate its
TRIPS obligations.