PRIORITY WATCH LIST
ARGENTINA
Argentina will remain on the
Priority Watch List as its copyright, patent, and data protection regimes do not
appear to comply with its international obligations. There is lax and
ineffective enforcement against piracy (including rampant CD-R and videogame
piracy) and counterfeiting; in addition, unauthorized use of protected seed
varieties remains a problem. Enforcement fo copyrights on recorded music,
videos, books and computer software remains inconsistent and inadequate
resources and border controls and slow court procedures have hampered the
effectiveness of enforcement efforts. In April 2002, the United States and
Argentina reached an agreement with respect to most claims in a WTO dispute
brought by the United States with respect to Argentina's implementation of its
TRIPS obligations. Two important issues, including data protection, remain
unresolved. Argentina is in the process of passing legislation to implement the
terms of the April 2002 settlement, although industry has expressed concerns
regarding the inadequacy of the injunctive relief provisions in the pending
legislation. The USTR will monitor Argentina's compliance with the commitments
made under the Bilateral Council on Trade and Investment with respect to the
agreement on patents.
BAHAMAS
The United States remains
concerned that The Bahamas has not implemented its commitment to the United
States in 2000 to enact legislation to correct deficiencies in its copyright
law. Particularly problematic are provisions in the law permitting the
compulsory licensing to Bahamian cable operators of retransmission of premium
cable television programming. Inadequate remuneration for the compulsory
licensing of free-over-the-air broadcasts is an additional concern, particularly
with respect to uses by hotels and other commercial enterprises. The U.S.
Government has urged The Bahamas to enact the necessary amendments to its
copyright law and will closely engage The Bahamas in the coming months to review
actions in this regard. At the same time, the U.S. Government continues to
encourage U.S. copyright owners and operators of premium cable services to enter
into negotiations with licensed Bahamian cable companies to provide for the
legitimate cable transmission of copyrighted works in the Bahamas.
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 $771
million in the 2002 due in large part to growing optical disk piracy. Problems
have been particularly acute with respect to sound recordings and
videocassettes, and virtually all audio cassettes sold are pirated copies.
Despite having adopted modern copyright legislation that appears largely to be
consistent with TRIPS, Brazil simply has not undertaken adequate enforcement
actions against increasing rates of piracy. In particular, very few prosecutions
and deterrent convictions result from raids. There have been recent efforts to
move towards enforcing copyright protection in the tri-border area. We look
forward to stepped up enforcement actions by the Brazilian Government in the
near term. In addition, we encourage the incoming Brazilian administration to:
initiate legislation that strengthens the Brazilian enforcement framework
against copyright and trademark infringement; commit resources to a broad
enforcement action plan that effectively coordinates the work performed by
several federal and state authorities, including the police, customs
authorities, tax authorities and the judiciary; and investigate and raid illegal
domestic manufacturing sources, distribution channels and key distributors. We
also look to Brazil to improve greatly the processing of patent applications in
a manner that is consistent with its international obligations. We will continue
to monitor Brazil's progress in these areas, including through the ongoing GSP
review that was initiated by USTR in 2001.
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 registered. With respect to trademarks, the
regulation permits dilution and even cancellation of trademarks when a GI is
created later in time. Our initial WTO consultation request alleged that this
regulation denies national treatment to foreign geographical indications, and
does not provide sufficient protection to trademarks that are similar or
identical to a GI and is, therefore, in violation of the TRIPS Agreement. The
United States requested consultations regarding this matter on June 1, 1999, and
numerous consultations have been held since then. However, to date, we have not
reached a mutually agreeable solution. While the EU has recently issued some
amendments to its regulation, these amendments do not address our principal
concerns with respect to full national treatment and appropriate protection for
trademarks. Finally, lack of full implementation of the EU Biotech Directive by
EU member states is also of concern.
INDIA
Indian intellectual property
protection continues to be weak. There are some tenuous first signs that the
situation may be changing, as witnessed by the passage of long-awaited patent
law amendments in May 2002. However, this law still appears to contain several
TRIPS inconsistencies. In addition, piracy of copyrighted works remains a
problem, particularly popular fiction works and certain textbooks, and
protection of foreign trademarks remains difficult. India should adopt
immediately amendments to its copyright law fully and correctly implementing the
WIPO Internet Treaties and correcting TRIPS deficiencies in its protection of
computer software. Counterfeiting is rife in the Indian marketplace, for example
in the auto, pharmaceutical, consumer goods and apparel industries. Particularly
troubling are extensive public health and safety risks posed by counterfeit
medicines and auto parts. To make matters worse, a major problem is India's
export of counterfeit goods to the Middle East, southern Africa and Europe.
While the United States is encouraged by the Indian Government's recent
statements, especially concerning the implementation of data exclusivity
regulations, action has yet to be been taken. We urge the Indian Government to
issue data protection regulations that reflect the internationally recognized
standard of protection for undisclosed test data and to ratify and implement the
two WIPO Internet Treaties.
INDONESIA
Indonesia took some
noteworthy steps to strengthen its IPR regime over the past year, but
significant problems remain. The Indonesian Government enacted an extensive
revision of its copyright law in July 2002, that addressed a number of concerns
of the United States. It initiated public awareness campaigns and began
addressing problems of interagency coordination. However, overall protection of
intellectual property rights remains weak. The Indonesian Government has been
drafting regulations governing optical media production for over a year, and
they are now scheduled to be issued in July 2003, but has not firmly committed
to seizing and destroying machinery and materials used in piracy. Meanwhile,
U.S. industry continues to report increases in illegal optical media production
lines for both domestic consumption and export. U.S. copyright industries
estimate $253 million in losses in 2002, an increase of more than one-third
since 2001. U.S. industry also has raised serious concerns about trademark
violations of a wide range of products. While the number of raids against retail
outlets for pirate optical media products has increased, long delays remain in
prosecuting intellectual property cases and the Indonesian Government has not
promulgated sentencing guidelines with deterrent penalties. The United States
provided Indonesia with a new IPR action plan in May 2002, which contains
specific recommendations for improving the legal and enforcement system, and
urges Indonesia to continue working with the United States under the Trade and
Investment Framework Agreement to implement the recommendations in the work
plan.
LEBANON
The United States remains
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 entry into force in 1999 of a new copyright law, there has
been little action by Lebanon against piracy. Some raids of pirate stores and
operations occurred in 2002, leading to the first sentencing of a software
pirate and financial penalties in other cases. However, pervasive cable piracy
continues to undermine legitimate theatrical, video, and television service
providers. Overall Lebanon had made little progress in 2002 in addressing its
significant IPR deficiencies. The United States urges the Lebanese Government to
press forward with its recent proposal to draft a law regulating the cable
television industry and to mount an aggressive campaign against pirates.
End-user piracy of computer software is widespread 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.
Book piracy also remains a serious problem. A 2001 petition by U.S. industry to
suspend Lebanon's benefits under the GSP trade program is under review by the
U.S. Government. A committed and vigorous program to enforce intellectual
property rights, particularly copyright protection, is essential to the success
of the Lebanese Government's efforts to reform its economy, increase trade and
foreign direct investment and prepare for accession to the WTO.
PHILIPPINES
The Philippines has taken
some steps to strengthen IPR legislation and enforcement, including providing
patent protection to plant varieties; enhancing the ability of the Customs
Bureau to stop IPR violations at ports of entry, and increasing the number of
raids on suspected counterfeiters. Nonetheless, U.S. industry continues to
report wide-ranging concerns. Optical media piracy has exploded in the past year
and the Philippines has gone from being a net importer to being a net exporter
of pirated optical media. Counterfeit products produced, marketed in, or
exported from the Philippines include clothing, medicines, consumer electronics,
automotive products, cosmetics and toys. Piracy of books, cable television, and
software, especially by end-users, remains significant. The pharmaceutical
industry has raised concerns about data exclusivity and enforcement issues.
Evidence suggests the Philippines has become a "safe haven" for organized piracy
and counterfeiting as neighboring economies improve their IPR enforcement. U.S.
industry reports that counterfeit pharmaceutical products account for 30 percent
of the market, increasingly threatening legitimate distribution channels and
raising serious public health resources. The U.S. Government provided the
Philippines with an IPR action plan in August 2002 with specific recommendations
on judicial, legislative/regulatory, and enforcement issues, but the Philippines
has yet to respond effectively to this plan. A key recommendation was to enact
optical media legislation, but an optical media bill languishes in a Senate
committee, and the Government of the Philippines has not made its passage a
priority. The U.S. Government urges the Philippines to pass the optical media
bill, criminally prosecute IPR violators, expedite pending IPR cases, establish
deterrent penalties for IPR violators, and implement the WIPO digital treaties.
POLAND
Despite intensified USG
engagement with the Polish government, the IPR situation in Poland has not
improved since the 2002 review. The main concern substantively with Poland is
the lack of political will by the Polish Government to shut down the open air
market inside the Government owned Warsaw Stadium, which is awash in pirated
optical media products and counterfeit goods. Although police raids at the
stadium occur, the penalties imposed after prosecutions are light, if imposed at
all, and do not act as a deterrent to continued illegal trade. In addition to
the Stadium problem, optical disc piracy in Poland is on the rise and becoming a
greater problem. While Poland has nine operating optical disc plants that
produce legitimate products, we are concerned that pirated product may be
produced at some of these plants as well. Pirate optical media product is
entering Poland via its porous borders, and there are reports of exported
pirated product to other Eastern and Western European countries. Given the
growing problem of optical disc piracy, legislation is needed to control optical
media production in Poland. We urge the Polish Government to swiftly enact an
optical disk licensing regime and significantly improve enforcement in the major
cities and border towns.
In addition, despite a new
pharmaceutical law that came into effect on October 1, 2002, there are still
significant shortcomings with the protection of confidential test data submitted
for marketing approval. Specifically, the fact that data protection is linked to
the existence of a patent is troubling, since these two types of rights, patent
protection and data protection are independent of each other. Also problematic
is the fact that the period of protection is calculated based on first
registration globally, which significantly diminishes the period of protection
in Poland, since most pharmaceuticals are first registered outside of Poland.
RUSSIA
Although Russia has made
considerable progress in revising several of its intellectual property laws over
the past year, Russia still needs to enact amendments to its copyright law to
bring it into conformity with TRIPS Agreement requirements. In addition,
ineffective enforcement of its laws, in particular, copyright and trademark
laws, remains a serious concern. While Russia took some actions in 2002 to
improve coordination on IPR enforcement, piracy of works on optical media is a
large and growing problem. The number of optical media facilities has doubled
since 2001. Further enforcement action, such as the recent Russian Anti-Piracy
Program (RAPO) raid on a DVD plant in Russia responsible for up to 30% of the
pirated DVDs on the Russian market, will be necessary to continue to combat this
problem. Weak protection of intellectual property rights, results in substantial
losses to U.S. industry annually. We urge the Russian Government to close
immediately the plants producing illegal optical disks; adopt a comprehensive
optical media regulatory and enforcement scheme; combat organized crime
involvement through specialized enforcement units and the enactment of tough
penalties for organized crimes; enact and enforce effective border measures to
stop the export and import of counterfeit and pirated products; significantly
improve criminal investigations and raids against pirates engaged in commercial
distribution of counterfeit and pirated products; and make the necessary legal
reforms to the copyright law, and facilitate stronger and more effective IPR
enforcement compatible with international standards including those in the TRIPS
Agreement and the WIPO internet treaties.
TAIWAN
Taiwan declared 2002 an
"Action Year for IPR" and considered new initiatives to improve legislation,
strengthen enforcement, encourage speedy trials, and promote deterrent-level
sentencing. In 2003 Taiwan took some concrete positive steps to bolster its
enforcement capability, including expanding an interagency IPR task force to 220
people, and opening warehouses to store seized pirated goods and manufacturing
equipment. The administration also introduced for consideration by its
legislature an amended copyright law meant to strengthen protection of IPR and
bring Taiwan into compliance with its obligations under the TRIPS Agreement and
other international IPR standards. However, these positive steps have not
produced results, and piracy and counterfeiting levels remain unacceptably high.
Taiwan is one of the largest sources of pirated optical media products in the
world and corporate end-user piracy and trademark counterfeiting are at high
levels. U.S. companies continue to report significant problems in protecting and
enforcing their IPR. Official raids are hampered by lack of expertise and poor
interagency coordination; resulting penalties are neither timely nor strong
enough to deter infringement. The lax protection of IPR, including lack of
enforcement against piracy and trademark counterfeiting in Taiwan therefore
remains a serious concern for the U.S. Government. The United States will
continue our dialogue with Taiwan on the protection and enforcement of IPR
during the coming year to help improve the situation.