USTR - Special 301 Watch List
Office of the United States Trade Representative

 

Special 301 Watch List
05/01/2003

WATCH LIST

AZERBAIJAN

Azerbaijan needs to take several remaining steps in order to fulfill its intellectual property rights commitments under the 1995 U.S.-Azerbaijan Trade Agreement. Specifically, Azerbaijan is not providing any protection to U.S. and other foreign sound recordings, and Azerbaijan does not clearly provide retroactive protection for works or sound recordings under its copyright law. In addition, there is weak enforcement of intellectual property rights in Azerbaijan. While criminal penalties for intellectual property rights violations have been adopted, there are still major shortcomings in Azerbaijan's legal regime. For instance, the provisions under the Azerbaijani Criminal Code are minimal and contain a high threshold for the imposition of criminal penalties and they do not provide ex officio authority. Moreover, they are limited to copyright and patent violations, completely excluding neighboring rights violations. The Customs Code does not appear to provide the proper authority for Customs to seize material at the border as required by the TRIPS Agreement. Lastly, it is not clear that Azerbaijan has civil ex parte search provisions as required by TRIPS.

BELARUS

Belarus needs to take several remaining steps in order to fulfill its intellectual property rights commitments under the 1993 U.S.-Belarus Trade Agreement. Enforcement of intellectual property rights in Belarus also is very weak and sales of pirated material are extremely high. In fact, while Belarus has amended its Criminal Code to adopt deterrent penalties for intellectual property rights violations, the Criminal Code still does not contain the proper authority for officials to initiate criminal copyright cases. Although the government of Belarus recently announced that the Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of their Phonograms (Geneva Phonograms Convention) has now entered into force in Belarus, there still is no retroactive protection for works or sound recordings under Belarus' copyright law. Moreover, the Interior Ministry has made very discouraging statements that it does not intend to take action to end retail piracy of optical media. Belarus also has become a transshipment point for pirate materials throughout the region. The United States, however, is gratified to see that Belarus has made some progress this year, in particular, shutting down the large Armita optical media plant. It remains important that the criminal investigation involving Armita proceed to a successful conclusion, and that positive enforcement actions be taken to prevent the relocation of other optical media facilities to Belarus. The United States believes that Belarus' application for WTO membership offers an important opportunity to address these legal and enforcement deficiencies.

BOLIVIA

The Bolivian Government has taken several positive administrative steps with respect to enforcement of intellectual property rights, such as the creation of a special prosecutor for intellectual property rights. However, enforcement continues to be sporadic and ineffective in reining in rampant piracy, especially that of CDs, videos, and software. Also, the government has not taken significant steps toward legalizing the use of its own software. The Government of Bolivia is long overdue in enacting intellectual property legislation to implement its TRIPS obligations. In fact, efforts to amend its copyright law have languished. Significantly, Bolivia also does not adequately protect against the improper use of undisclosed proprietary data that is submitted for marketing approval, as required under Article 39.3 of the TRIPS Agreement. We urge Bolivia to take strong actions to protect intellectual property rights, including by issuing a data protection decree. We will monitor Bolivia's actions in this respect, and will review any progress in the Fall.

CANADA

Canada continues to make progress in improving its IPR regime. In December 2002, the Government of Canada (GOC) revised its Copyright Act (Bill C-11) so that internet retransmission is, in effect, excluded from its compulsory licensing regime -- that is, unless licensed by the Canadian Radio-television & Telecommunications Commission (the "CRTC") and the CRTC has determined not to so license internet retransmissions. This follows amendments made to Canada's patent law in 2001 to provide 20 year patents that were filed before October 1, 1989. Despite these positive developments, the problems that originally caused Canada to be placed on the Watch List in 1995 remain largely unresolved. For example, although Canada continues to make some limited progress on resolving the outstanding issue of national treatment of U.S. artists in the distribution of proceeds from Canada's private copying levy and its "neighboring rights" regime, it still does not provide full national treatment. In addition, Canada does not provide effective data exclusivity protections, and systematic inadequacies in Canadian administrative and judicial procedures allow entry of infringing generic versions of patented medicines into the marketplace. Further, this is the third consecutive year that Canada's border measures have been the target of severe criticism by IP owners, who consider Canada's border enforcement measures to be inconsistent with its TRIPS obligations.

CHILE

We look forward to seeing Chile implement the provisions of the recently negotiated intellectual property chapter of the U.S. Chile Free Trade Agreement, which provides high levels of protection of appropriate for the digital age, including non-discriminatory treatment for U.S. software, music, text, and motion pictures. Protections for U.S. patents, trademarks and undisclosed information exceed past trade agreements (e.g. NAFTA and the U.S.-Jordan FTA), and obligate Chile to make its IP laws and enforcement practices conform to the most advanced standards. This is a good agreement for both the United States and Chile. The protection of intellectual property is important for economic development because it promotes the creation of knowledge industries and provides incentives for increased investment. The agreement includes important new protections for Chilean writers, singers, and software developers, specifically ensuring that they will continue to reap the rewards of their creativity in the digital realm. The Agreement also will make Chile an attractive location for clinical trials for pharmaceuticals.

However, to date, Chile's IPR laws are not yet fully TRIPS-consistent. Shortcomings with respect to enforcement remain and we are concerned with Chile's large backlog of pending patent applications. In addition, the United States was very disappointed with the registration of several pharmaceutical products that appear to infringe validly issued Chilean patents. We expect these issues to be resolved through Chile's implementation of the U.S.-Chile FTA and look forward to following Chile's progress with respect to meeting its commitments under this and the TRIPS agreement. Upon full implementation of the U.S. – Chile Free Trade Agreement, we would expect to re-evaluate Chile's status in the Special 301 review.

COLOMBIA

In 2002, Colombia took an important step by passing Decree 2085 to implement fully Article 39.3 of the TRIPS Agreement. The U.S. Government is monitoring implementation of this decree closely in the context of Colombia's ATPA eligibility. Piracy levels in Colombia continue to be high. The home video market is 90 percent pirate, and the U.S. industry is working hard to keep cable piracy from escalating. Pirated sound recordings can be found easily in flea markets and on streets in major cities, and the growth of illegitimate CD-R replication continues to undermine what is left of the legitimate music market. Illegal use of business software in small and medium-sized businesses is widespread, with rates higher in areas outside the major cities. Pirating of video game software on all platforms and illegal photocopying of books are widespread. However, Colombia's progress on the data protection issue is exemplary. Therefore, we are moving Colombia from the Priority Watch List to the Watch List and will monitor further progress in the copyright area.

COSTA RICA

At the beginning of 2002, the Costa Rican Government (GOCR) announced steps to improve intellectual property protection through a government strategy for improving the enforcement of intellectual property rights it began in 2001. The United States recognized progress under this strategy by moving Costa Rica from the Priority Watch List to the Watch List in 2002. However, there remain deficiencies in Costa Rican intellectual property law that have not been addressed. In addition, significant barriers to effective enforcement remain. Two amendments to improve penalties and enforcement infrastructures in Costa Rica's intellectual property laws are pending and an executive decree on data exclusivity has yet to be signed. Additionally, significant delays in judicial proceedings and a lack of official investigators, public prosecutors and criminal and civil judges specializing in intellectual property continue to hamper effective enforcement. We look to the GOCR to enact necessary IP legislation and decrees and to improve enforcement in the near term.

CROATIA

Croatia's otherwise strong protection and enforcement of intellectual property rights – particularly concerning copyright and trademarks – is undermined by inadequate protections in the patent area and delayed judicial decision-making. The absence of confidential data protection; the lack of linkage between the national patent authority and the central health regulatory authority; and the failure of Croatian courts to rule on intellectual property cases in a timely manner prevent rights holders from effectively protecting their intellectual property against infringement. Long delays in granting of health registration further erode the benefits of intellectual property protection. We look to the Croatian Government to ratify and implement the 1998 bilateral Memorandum of Understanding Concerning Intellectual Property Rights in the near term, and to bring provisions such as those on data protection fully into force. In addition, we encourage Croatia to maintain criminal copyright enforcement.

DOMINICAN REPUBLIC

Levels of copyright piracy in the Dominican Republic remain high, over 60 percent in almost all copyright sectors. The Government of the Dominican Republic (GODR) has taken some commendable steps in 2002, however, to improve copyright protection and enforcement. Enforcement of the 2000 copyright law remains critical to continued success. During 2002, television piracy worsened. Recently, the GODR has taken important and encouraging steps where there had been no previous action against violators of broadcast piracy. The GODR initiated inspections of two television stations and submitted evidence of piracy to the Attorney General for prosecution, and initiated action against a third station. It is imperative that the Dominican Republic sustain effective enforcement against broadcast piracy.

Under the auspices of the United States-Dominican Republic Trade and Investment Council (TIC), the GODR has demonstrated renewed commitment to addressing U.S. concerns. Between October 2002 and March 2003 meetings of the TIC, the GODR appointed an intellectual property rights committee to complete a review of the patent law to bring it into compliance with TRIPS. The changes to the patent law recommended by the committee now are reflected in an executive decree. We look to the Dominican Government to implement a decree that is fully consistent with international standards in the near term. In 2002, ONDA, the Dominican Copyright Office, continued its aggressive campaign of inspections, raids and seizures against pirates, but requires further GODR support and resources to sustain this campaign.

ECUADOR

In 2002, there was a lessening of intellectual property protection in Ecuador, with a decrease in enforcement efforts. The Ecuadorian Institute for Intellectual Property (IEPI) canceled a patent for a major U.S. pharmaceutical product. Copycat manufacturers succeeded in obtaining sanitary registrations for medicines protected by patent. Industry concerns about a poorly worded provision in the Education Law (which has been interpreted as guaranteeing free software to educational institutions) were not addressed fully. For all of these reasons, we are placing Ecuador back on the Watch List this year. In addition, we will monitor Ecuador's progress on the protection of intellectual property, especially with respect to the data protection issue, and will review progress on these issues in the Fall.

EGYPT

Egypt made significant progress in strengthening its IPR protections through improvements in its domestic legal and enforcement regimes in 2002. The major development in 2002 was Egypt's passage of a new comprehensive IPR law which represents an improvement in all major facets of Egypt's IPR regime, although apparent TRIPS-inconsistencies are found throughout. Egypt did meet certain key TRIPS requirements, including providing data exclusivity (Article 39.3) and exclusive marketing rights, and enacting a patent mailbox. The Egyptian Government continues to advance its effort to ensure the use of legitimate software in all government offices. In addition, Egypt's parliament ratified the WIPO Patent Cooperation Treaty, a step that the Egyptian Government intends to follow up with changes in its domestic regulations necessary to come into compliance with the treaty. Egypt also made some progress in combating piracy of records and music, books, and business software applications.

In order to maintain forward movement in IPR protection in the coming year, it is essential that Egypt address the TRIPS-inconsistencies in its IPR law, particularly in the areas of copyrights, trademarks, and patents, as well as take steps to further strengthen protection of confidential test data. Egypt has acknowledged that its IPR law is not fully TRIPS-consistent, and the U.S. Government welcomes Egypt's commitment to address deficiencies in its IPR law, in large part through implementing regulations. Improved enforcement must also be a priority. Much work remains to be done in countering photocopy and reprint piracy, retail piracy, corporate end-user software piracy, piracy of console-based and PC- based video game platforms and increasing efforts to end pirate distribution on the basis of false licenses. Continuing improvements in IPR protection will be a key factor in advancing Egypt's efforts to further expand its trade and investment ties with the United States.

GUATEMALA

Although intellectual property rights enforcement has improved since the creation of the Special Prosecutor=s Office for intellectual property crimes last year, Guatemala continues to experience high piracy levels. In November 2002, the Guatemalan Congress effectively suspended the processing of pharmaceutical and chemical patents through 2004 and eliminated the protection of test data provided in support of applications to introduce these products in the local market. The executive branch of the Government of Guatemala worked to submit a new bill to the Guatemalan Congress to reinitiate immediately the processing of pharmaceutical and chemical patents. This legislation, which recently passed, also will provide a term of protection of five years of data protection for pharmaceuticals and ten years of data protection for agrochemicals for data provided in support of the application to bring these products to market.

Other problems in Guatemala include substantially decreased criminal penalties as a result of the amendments to the copyright law passed in 2001; lack of a statutory damages provision for civil copyright infringement; and ineffective legal remedies in civil actions. We are encouraged that Guatemala recently deposited its instruments of accession to the WIPO Copyright Treaty and the WIPO Performances and Phonogram Treaty.

HUNGARY

Hungary has undertaken some positive steps towards more complete implementation of its international obligations by putting into effect a ministerial decree providing for data exclusivity protection on January 1, 2003. However, unfortunately, the decree provides retroactive protection for products that received first marketing authorization in the EU or Hungary on or after April 12, 2001, rather than January 1, 2000, as required by TRIPS. We are concerned by this, as well as by the fact that the data protection term is linked to the existence of a patent. We urge Hungary to resolve these issues in an expeditious manner. At the same time, we recognize that Hungary has made important strides in modernizing its legal regime for copyright over the past several years, including extensive revisions to its criminal code. Enforcement, however, remains problematic and piracy remains high considering Hungary's well-developed legal system.

ISRAEL

In 2002 Israel maintained the momentum it began to build in 2001 in the enforcement of copyrights and trademarks, accordingly, we are moving Israel from the Priority Watch List to the Watch List. Israel has increased its budgetary, educational, police and judicial resources devoted to these enforcement efforts yielding concrete results in terms of raids, prosecutions and convictions, and contributing to a drop in the piracy level with regard to U.S. rightholders. Israel took an additional important step in protecting intellectual property in 2002 with its passage of the Amendment to the Copyright Ordinance, which increased criminal penalties for piracy in general and strengthened the ability of Israeli authorities and courts to prosecute and punish copyright crimes.

Despite these important developments, several key issues still need to be addressed. It is essential that progress continue to be made in copyright and trademark enforcement, such as providing the Israeli police, prosecutors and courts with sufficient resources to fully meet enforcement requirements. While the United States welcomes Israel's passage of the Amendment to the Copyright Ordinance, it is concerned that the new law excludes corporate end-user piracy from criminal liability, a step that may lead to weaker protection for business software. A 2001 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. And, most significantly, although Israel has been obligated since January 1, 2000 to provide data exclusivity, it has failed to do so. This policy places it at odds with other OECD-level economies and many of its neighbors that have met their TRIPS Article 39.3 obligations. The U.S. government urges the Israeli Government and the Knesset to enact quickly TRIPS-consistent legislation that will provide a reasonable period of non-reliance on confidential data similar to that granted in OECD and many neighboring countries. On the outskirts of the recent OECD meeting in Paris, Ambassador Zoellick and Vice Prime Minister and Minister of Industry, Trade and Labor, Ehud Olmert agreed that the two countries would engage in an intensive dialogue to attempt to resolve all outstanding intellectual property issues.

ITALY

Despite continued implementation of its recent Anti-Piracy Law, and increased enforcement actions in 2002, Italy continues to possess one of the highest piracy rates in Western Europe – affecting all copyright-based sectors. Widespread piracy of business applications software remains a particular U.S. concern. Notwithstanding new government procedures to exempt business software that were enacted on January 25,2003, when the Italian Government changed the implementing regulations to the 2000 Copyright Law to permit exemptions from the SIAE sticker for business software, Italy continues to enforce a problematic program requiring copyright owners to pay for and apply a government-approved sticker on genuine copyrighted works. In addition, U.S. pharmaceutical manufacturers assert that Italian government actions in 2002 may unfairly curtail patent protection for drugs by changing the criteria relating to patent term restoration.

JAMAICA

Jamaica's trademark and copyright regimes are generally consistent with international standards and enforcement efforts over the past year have been commendable. However, lack of parliamentary action to bring Jamaica's patent, industrial design, and plant variety laws into conformity with its international obligations remains the primary motivation for Jamaica remaining on the Watch List. The United States urges Jamaica to complete the process of enacting the necessary legislation and intends to engage the Government of Jamaica over the coming months to assess the status of that effort.

KAZAKHSTAN

Kazakhstan needs to take several remaining steps in order to fulfill its intellectual property rights commitments under the 1992 U.S.-Kazakhstan Trade Agreement. In particular, Kazakhstan does not clearly provide full retroactive protection for works or sound recordings under its Copyright Law. In addition, there is weak enforcement of intellectual property rights in Kazakhstan, and as a result, piracy and counterfeiting rates are growing problems. Criminal penalties for intellectual property rights violations were adopted in 2001, but the United States remains concerned about the effectiveness of these Criminal Code provisions in deterring piracy and counterfeiting, due to the high burden of proof. It remains unclear whether new criminal penalties for IPR violations will be effectively enforced and deter piracy.

KOREA

The United States continues to have serious concerns regarding adequate protection and enforcement of intellectual property in Korea. In 2002, in reliance on Korea fulfilling specific pledges the Korean Government made to the U.S. Government to improve IPR protection and enforcement, Korea was moved from the Priority Watch List to the Watch List. While Korea has taken some steps to fulfill its spring 2002 commitments, such as drafting legislation to provide the Standing Inspection Team with police powers, these steps fall far short of what Korea pledged to do. In addition, since the last Special 301 report, new and significant IPR issues emerged that have required strenuous efforts by the U.S. Government to resolve: one related to alleged infringement of a U.S. industry's IP in the creation/promulgation of a new telecommunications standard ("WIPI") and the other concerning pirates' ability to obtain rights to register and distribute U.S. films in the Korean market. The U.S. Government appreciates the efforts of the Korean government in resolving the intellectual property issues regarding the WIPI standard and will carefully monitor the situation to ensure the agreement with US industry is being implemented fully. Regarding film registration, while the U.S. Government recognizes Korea's cooperation in devising and implementing an interim resolution of this problem, a permanent solution has not yet been implemented. This issue is of serious concern to U.S. rights holders who already have lost millions of dollars in revenues as a result of this lack of adequate IP protection.

The U.S. Government also notes that Korea has not taken sufficient new steps since last year to address U.S. concerns, outlined in the 2002 Special 301 Report, related to the protection of temporary copies, reciprocity provisions regarding database protection, ex parte relief and the lack of full retroactive protection for pre-existing copyrighted works.

As a result of incomplete follow through on key April 2002 commitments, the emergence of serious new IP issues, and the failure by Korea to make progress on other issues of priority raises concerns about adequate and effective protection for intellectual property rights in Korea. As a result, USTR has decided to conduct an out-of-cycle review in the fall.

The United States' decision on whether Korea should remain on the Watch List or be moved to Priority Watch List will be based on Korea's taking action in all of the following areas. As it agreed in 2002, the Government of Korea should: 1) Take all actions necessary to ensure that the Standing Inspection Team (SIT) is granted police powers at the earliest opportunity; 2) Draft and submit legislation to the National Assembly that establishes the exclusive right of transmission for sound recordings, including both the full right of making available and the full right of communication to the public, and seek its enactment by the end of 2003; 3) Provide additional, new data on the ROKG's enforcement efforts that is sufficient to more fully evaluate the full range of its enforcement activities, including the imposition of deterrent penalties, and sufficient to allow right holders to have the opportunity to take action against infringers who are not convicted. In addition, in order to resolve the film distribution issues, the Government of Korea should: 4) Draft and submit legislation to the National Assembly to grant the Korea Media Review Board (KMRB) all authority necessary to stop film piracy. This legislation and/or the implementing regulations must: a) clearly provide the KMRB the authority to reject false applications; b) clearly provide the KMRB the authority to cancel existing ratings which were approved on the basis of a false application; and c) not place undue burdens on legitimate rights holders to prove their rightful ownership; 5) Fully and faithfully implement its agreement on the "WIPI" intellectual property issue.

KUWAIT

The United States supports the steps Kuwait has taken to improve enforcement and protection of intellectual property rights over the past year. However, copyright violations continue to pose a serious problem, and the piracy rate in Kuwait remains the highest in the region. The United States looks to Kuwait to intensify the depth and breadth of its efforts. Recognizing that Kuwait stands at a critical juncture in its fight against piracy, we will continue to work with the Kuwait to meet its international obligations and commitments. Steps that are needed include working with the National Assembly to pass long-promised amendments to Kuwait's 1999 copyright law, increasing the effectiveness of enforcement procedures, strengthening an existing interagency process, and improving judicial capacity to penalize present offenders and deter future ones.

LATVIA

While there were some positive developments in 2002, with some major raids on sellers of pirated optical media and while Latvia has improved its intellectual property rights regime in order to meet the obligations under the TRIPS Agreement, there remains concern over its weak enforcement regime. Large volumes of pirated products, including pirate optical media products are transshipped through Latvia from Russia and Ukraine. Latvia's record on combating transshipment of pirate goods has been mixed. The police, customs officials, prosecutors and judicial authorities have not placed sufficient emphasis on combating piracy. Industry and government efforts are underway to educate these authorities and improve enforcement.

LITHUANIA

The most persistent problem in Lithuania regarding copyright protection is a lack of adequate and effective enforcement, which undermines legislative progress that Lithuania has made in recent years. Lithuania appears to remain a major transshipment country for pirated optical media products in the East and consumers in the West. An important development in the last year was the Lithuania's enactment of regulations to provide protection for confidential test data submitted by pharmaceutical firms.

MALAYSIA

The Malaysian government intensified its efforts to eliminate the use, sale and production of pirated products over the past year. It effectively has used the Optical Disk Act of 2000 (enacted in September 2001), which established a licensing and regulatory framework for manufacturing copyrighted works, and has increased the number of enforcement officers to implement this Act. These enforcement officers have energetically raided vendors, users and manufacturers of pirated goods and sealed licensed optical disc factories for violating the Optical Disk Act. These stepped up enforcement efforts have led some unlicensed manufacturers to cease operations in Malaysia. Despite this noteworthy progress, optical media piracy, including of music, entertainment, and business software remains widespread and the products of sophisticated Malaysian pirates are marketed worldwide. In addition, U.S. industry has raised concerns about trademark counterfeiting of such products as office machines, apparel, and other goods. Prosecution is a weak link in the enforcement chain, and the judicial process remains slow. We urge the Malaysian government to address these concerns, to step up the prosecution of IPR cases and follow through with plans to provide deterrent sentencing for IPR violators.

MEXICO

This is the first time that Mexico has been placed on the Watch List since 1999. Despite some sings of progress, the United States remains concerned that several TRIPS and NAFTA issues, including lax enforcement against copyright piracy and trademark counterfeiting, remain serious problems. In addition, a new matter that arose over the last year that generated concerns by U.S. pharmaceutical companies: the lack of coordination between Mexican health officials and the Mexican Institute of Industrial Property (IMPI) with regard to the granting of marketing approval for their products. The Ministry of Health have allowed Mexican companies to rely on the confidential test data submitted by U.S. companies without authorization from the U.S. companies. Therefore the Government of Mexico (GOM) has improperly granted marketing approval to Mexican companies copies of U.S. products. More importantly, the Ministry of Health's actions have undermined validly granted patents that were issued by IMPI. We are aware of GOM efforts to remedy this situation and will await the outcome of these efforts. If those efforts are not successful, we will analyze the situation to determine what recourse may be available under international agreements, including NAFTA. We also remain concerned that many firms complain about the difficulty they face in enforcing their trademark rights in Mexico. We note that the complaints seem almost uniformly to involve issues of process or administration, resulting, for example, some companies failing to secure their rights in well-known marks in Mexico for as many as 14 years. We hope that this situation will be properly resolved in the near term and that Mexico will provide a systematic and effective means for right holders to protect their well-known marks.

In addition, the United States has longstanding concerns that raids rarely lead to prosecutions and convictions. While we are encouraged that in the last few months Mexico has been developing legislation to classify piracy as an organized crime, and has created a special IPR prosecutor within the Mexican Department of Justice (Procuraduria General de la Republica - PGR), we are still concerned by the lack of progress in making effective use of such provisions. The copyright industries estimate losses of $731 million in 2002. We are also concerned about recent copyright amendments which were proposed which did not appear to meet international obligations, nor address implementation of the WIPO Internet Treaties. We urge the Mexican Government to: ensure that marketing approvals are not granted to infringing copies of patented products; expand its anti-piracy program to all major cities; improve investigations and raids against pirates at both levels of commercial distribution and street piracy; and encourage prosecutors to bring cases swiftly and press for deterrent sentences. We will monitor Mexico's progress on these issues in the coming months.

PAKISTAN

In 2002, Pakistan was the fourth largest source of counterfeit and piratical goods seized by the U.S. Customs Service as they were entering the United States. The vast majority of these goods were either apparel items with counterfeit trademarks or optical media products. Moreover, production of pirated optical media has grown substantially in 2002. With respect to patents, Pakistan's 2002 ordinance undermines improvements that the Government of Pakistan made to its patent law in 2000 to comply with its TRIPS obligations. In addition, there is no protection for confidential test data. The United States calls on the Government of Pakistan to improve its civil and criminal enforcement of intellectual property rights, including judicial and prosecutorial measures to address counterfeiting and piracy, expeditiously close pirate optical media production facilities and enact an optical media licensing regime to impede the growth of pirate enterprises and deter future potential pirates. We also call on the government of Pakistan to reinstate patent protection, and implement the protection of undisclosed test data in the near term.

PERU

The Government of Peru issued a software legalization decree and recently took some steps to destroy pirated and counterfeit products. However, piracy rates for all copyright industries remained high, in particular for sound recordings, where, according to industry, piracy has devastated the legitimate market. Of concern specifically is the fact that few prosecutions and deterrent sentences are issued. In the patent area, Peru recently rescinded second-use patent protection for pharmaceuticals in the face of Andean Community pressure. In addition, Peru is failing to protect confidential proprietary test data that is submitted for marketing approval of pharmaceutical and agricultural chemical products. This is a growing, and glaring problem and U.S. industry reported that it has caused significant commercial damage. The industry is particularly concerned that infringing copies take market share away while rights holders are forced to expend resources and time seeking redress in local courts. We urge Peru to take strong actions to protect intellectual property rights, including by issuing a data protection decree. We will monitor Peru's actions in this respect, and will review any progress in the Fall.

ROMANIA

Ongoing piracy problems overshadow the real progress Romania has made in developing its intellectual property regime. Although Romania increased raids and seizures of infringing materials in 2002, poor border enforcement, the low priority level given to piracy by regional and local authorities, prosecutors and courts, and the lack of resources dedicated to the issue, all combine to make intellectual property protection a continuing challenge in Romania. We urge the Romanian government to make enforcement against piracy a priority and set goals for tough anti-piracy sanctions; encourage the police to increase the number of anti-piracy raids; encourage the prosecutors to actively pursue more cases; provide a clear basis for civil ex parte searches; and improve border enforcement by providing customs officials with ex officio authority to make inspections and seizures.

SAUDI ARABIA

Saudi Arabia has made great strides in fighting copyright piracy and trademark counterfeiting over the past year. Patent protection also received a boost when the recently established judicial Patent Committee, issued its first decision, found in favor of the patent holder against an infringer. Saudi Arabia is also working to revise its intellectual property laws, issuing amendments to the trademark law last August and working to issue new copyright and patent legislation. However, the United States remains concerned about continued high losses experienced by U.S. copyright and trademark-based industries. The lack of deterrent penalties and lack of transparency in the enforcement, prosecutorial, and judicial processes severely undermine the protection of intellectual property rights in Saudi Arabia. We look to Saudi Arabia to continue its enforcement efforts; ensure that the judicial system reinforces these actions with serious and consistent sentencing, including deterrent fines and penalties; and to improve transparency in the enforcement, prosecutorial, and judicial processes.

SLOVAK REPUBLIC

The Slovak Republic was added to the Watch List in 2001 because it lacks protection for confidential pharmaceutical test data submitted to obtain marketing approval. There is no evidence that the situation has improved. The United States remains concerned about the lack of this important protection, which is a TRIPS requirement. In the area of copyright piracy, home CD-burning is on the rise and pirate CDs continue to be available on the public market in Eastern Slovakia.

TAJIKISTAN

Tajikistan has yet to fulfill all of its intellectual property rights commitments under the 1993 U.S.-Tajikistan Trade Agreement. Specifically, Tajikistan is not yet a party to the Geneva Phonograms Convention, nor does it provide any protection to U.S. and other foreign sound recordings, or retroactive protection for works or sound recordings under its Copyright Law. Criminal penalties for intellectual property rights violations have not yet been adopted as required by the bilateral trade agreement. In addition, Tajikistan also does not provide ex officio authority to commence criminal cases. We call on Tajikistan to make improvements and enforcement of its existing laws an immediate priority.

THAILAND

A public education campaign, and a recent coordination of its IPR agencies provide some hope for the coming year with respect to the protection of intellectual property in Thailand. It passed a Trade Secrets law, which it is preparing to implement. The Royal Thai Government organized the 13 agencies responsible for IPR issues to develop a more coordinated campaign against piracy, which began in early April 2003. However, we are concerned with the explosion of copyright piracy within its borders. U.S. industry continues to raise concerns about the overall environment for production, sale, and export of a wide range of infringing products and the impunity accorded well-connected figures involved in infringement. Optical media piracy, including business and entertainment software, and increasing production and export of pirate CDs remains a particularly acute problem. Signal theft/cable piracy continues to be widespread. The United States urges Thailand to continue to strengthen its IPR regime and will provide Thailand with specific recommendations on judicial, legislative/regulatory, and enforcement issues. Key among these will be swift enactment of a strong optical media bill in the near term, which will help ensure the effectiveness of Thailand's stepped-up enforcement efforts concerning piracy counterfeiting.

TURKEY

Although there has been some positive movement concerning protection of copyrights in Turkey, the situation regarding data exclusivity shows little sign of improvement. Turkey still has not adopted any administrative or legal mechanism to protect proprietary commercial data and lags far behind other EU aspirant countries in its protection of commercially valuable data for pharmaceuticals. With respect to trademarks, U.S. companies complain that Turkey has become a source of significant counterfeit production for the domestic market and export to Western Europe. On the copyright front, the judiciary's failure to treat piracy as a serious criminal matter and continued procedural hurdles in enforcing copyright owners' rights make for a mixed record overall. Although the Ministry of Culture has taken some positive steps to thwart copyright infringement regarding DVDs and other optical media products, serious problems still remain. In order to facilitate adequate protection of copyrighted materials, Turkey's judiciary needs to hand down deterrent penalties for intellectual property infringement, and customs needs to make greater efforts to tighten border controls.

TURKMENISTAN

Turkmenistan needs to take several remaining steps in order to fulfill its intellectual property rights commitments under the 1993 U.S.-Turkmenistan Trade Agreement. Specifically, Turkmenistan is not yet a party to the Berne Convention for the Protection of Literary and Artistics Works (Berne Convention) or the Geneva Phonograms Convention. Turkmenistan is not providing any protection to U.S. and other foreign sound recordings, nor does it clearly provide retroactive protection for works or sound recordings under its Copyright Law. In addition, criminal penalties for intellectual property rights violations have yet to be adopted as required by the U.S.-Turkmenistan Trade Agreement. Furthermore, the Customs Code does not provide the proper authority to seize material at the border, as is necessary to conduct effective border enforcement.

URUGUAY

In 2002 Uruguay amended its 65-year old copyright law. The new amendments entered into effect in January 2003 and represent an improvement over the prior 1937 Law and contain many provisions that upgrade the prior Uruguayan copyright scheme. In recent years, however, the major obstacle to copyright owners in Uruguay has been lack of effective enforcement against widespread piracy. Enforcement at the borders needs to be improved significantly, especially given the growth of optical media piracy throughout the Mercosur region and Uruguay's role in the transshipment of pirate and counterfeit goods into other countries in Latin America. While we are pleased with progress on copyright protection, we remain concerned about the inadequacies of Uruguay's patent law. We will continue to discuss intellectual property issues in the context of the U.S. - Uruguay Joint Commission on Trade and Investment. In addition, we urge Uruguay to ratify the two WIPO Internet Treaties.

UZBEKISTAN

Uzbekistan needs to take numerous remaining steps in order to fulfill its intellectual property commitments under the 1994 U.S.-Uzbekistan Trade Agreement. Specifically, Uzbekistan is not yet a member of the Berne Convention or the Geneva Phonograms Convention; is not providing any protection or rights to U.S. and other foreign sound recordings; and does not clearly provide protection for pre-existing works or sound recordings under its copyright law. In addition, criminal penalties for IPR violations have yet to be adopted as required by the bilateral agreement. Furthermore, the Customs Code does not appear to provide the proper authority to seize material at the border, as is necessary to conduct effective border enforcement, we are encouraged that a new draft customs law is due for consideration in Uzbekistan's parliament on August 28, 2003. We urge the Government of Uzbekistan to enact this legislation expeditiously.

VENEZUELA

In 2002, Venezuela's commitment to the protection of intellectual property rights appeared to be decreasing. Venezuela began issuing approval for drugs by relying on confidential test data of bio-equivalents that were already on the market, and reversed course on the issuance of second use patents to U.S. interests and revoking several which were already issued. Piracy and counterfeiting were increasingly problematic, and deterrence and prosecution levels remain low. We urge the Government of Venezuela to take strong actions to protect intellectual property rights, including by issuing a data protection decree. We will monitor Venezuela's actions in this respect, and will review any progress in the Fall.

VIETNAM

Enforcement of intellectual property in Vietnam remains weak, and violations are rampant. While Vietnam has increased the number of administrative and law enforcement actions against IPR violations over the past year, effective enforcement remains the exception rather than the norm. Market access barriers, especially with regard to "cultural products," continue to impede the availability of legitimate product, further complicating efforts to combat piracy. In most cities, according to industry estimates, up to 100 percent of the music CDs, VCDs, and DVDs on sale are pirated. Trademark violations also are prevalent, with all types of clothing and other items carrying unlicensed versions of famous trademarks available throughout major cities. In spite of this continuing bleak portrait, progress is being made to implement the major IPR provisions of the U.S. - Vietnam Bilateral Trade Agreement (BTA), which entered into force on December 10, 2001. As part of the BTA, Vietnam committed to make its IPR regime, including enforcement, TRIPS-consistent by December 10, 2003. In 2002 and early 2003 Vietnam improved its IPR legal and enforcement structures, including implementing new regulations; mandating increased inspections and raids; making further progress on acceding to several WIPO conventions; and establishing penalties for violating rules for the protection of plant species. The United States encourages Vietnam to build upon its strong public commitment to IPR protection by effectively implementing and enforcing its new laws and regulations to reduce the pervasive piracy and counterfeiting that continue to exist.

 
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