USTR - 2004 Special 301 Report Watch List
Office of the United States Trade Representative

 

2004 Special 301 Report Watch List
05/03/2004

WATCH LIST

AZERBAIJAN

Azerbaijan has yet to fully implement the 1995 U.S.-Azerbaijan Trade Agreement and address deficiencies in its IPR laws. For example, copyright law in Azerbaijan does not explicitly provide for the protection of pre-existing works or sounds recordings. The Criminal Code and Customs Code do not appear to provide for ex officio authority to commence criminal copyright cases and suspend the release of suspected infringing material at the border, and there is no explicit provision for civil ex parte search procedures. As a result of these inadequacies, IPR enforcement in Azerbaijan remains weak and ineffective. Furthermore, while Azerbaijani law does provide criminal penalties for IPR violations, U.S. copyright industries report that there have been no convictions for copyright infringement and that damage awards are difficult to obtain. We look to Azerbaijan to meet its obligations under the 1995 U.S.-Azerbaijan Trade Agreement and to improve its enforcement efforts by providing for ex officio raids and seizures as well as civil ex parte searches.

BELARUS

Belarus must take several steps to fulfill its intellectual property commitments under the 1993 U.S.-Belarus Trade Agreement and to address other deficiencies in its IPR regime. With respect to its copyright laws, Belarus has not provided appropriate protection for pre-existing works and sound recordings. In addition, it appears that further amendments are needed to bring Belarusian copyright law into compliance with the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty. Enforcement of intellectual property laws in Belarus also remains weak and ineffective. Piracy levels remain high and the potential for increased piracy remains a concern due to the migration of optical media production facilities from neighboring countries. While Belarus has amended its Criminal Code to provide for deterrent penalties for IPR violations, there are still no provisions authorizing ex officio raids and seizures. Furthermore, Belarus' Civil Code does not provide for ex parte searches. We are also concerned that the Armita optical media plant case has not progressed beyond the initiation of a criminal investigation and that no criminal penalties or deterrent sentences have resulted. We encourage Belarus to aggressively enforce its IPR laws and to take actions to deter future illegal operations. In addition, we urge Belarus to fulfill its obligations under the 1993 Bilateral Trade Agreement and will continue to monitor its progress.

BELIZE

This is the first time Belize has been placed on the Watch List in the past fifteen years. While IPR legislation in Belize is generally in line with international standards, the Government of Belize has made only minimal efforts at enforcement. This has led to the availability of counterfeit goods across many sectors, especially in the pharmaceutical and tobacco sectors. Furthermore, there has been insufficient cooperation between rights holders and government entities and lackluster responses to concerns raised by such rights holders. Another concern is the lack of enforcement of IPR in the Corozal Commercial Free Zone, which has encouraged infringement and related activities, including criminal activities. We urge Belize to improve enforcement efforts by promoting increased cooperation in counterfeiting investigations and implementing enforcement actions in the Corozal Commercial Free Zone.

BOLIVIA
Bolivia's existing legislation for IPR protection is deficient. Bolivia has failed to provide for ex parte civil search orders. In addition, damages are inadequate, enforcement efforts have been sporadic and largely ineffective, and border enforcement remains weak. While the 1992 Copyright Law recognizes copyright infringement as a public offense and the new Bolivian Criminal Procedures Code began to provide for the criminal prosecution of IPR violations, enforcement by Bolivian Courts has been disappointing. Unfortunately, no progress has been made on amending the copyright law to bring it up to international standards. Furthermore, it appears that the Bolivian government agencies use unlicensed software. Piracy rates for videos, sound recordings, and software remain among the highest in Latin America, according to industry sources. Despite these serious deficiencies in enforcement, the Mesa Administration has publicly committed itself to transparency and has demonstrated at multiple levels a desire to work with the United States on institutionalization, combating corruption, and increasing the efficiency of the Bolivian Government. We welcome this commitment and urge the Bolivian Government to continue in its efforts to improve enforcement.

BULGARIA

Bulgaria is being placed on the Watch List for the first time in five years following its inclusion on the Watch List and Priority Watch List from 1996-1999. After a dramatic decline in domestic production and export of pirated optical disc media in the late 1990's, there has been a steady resurgence of piracy, mainly in the sale of pirated optical disc media, in Bulgaria over the past few years. Pirated optical discs, mass imported finished discs, and illegally burned CD-Rs are prevalent in the domestic market. Poor enforcement, including ineffective prosecutions, minimal judicial sentences, shortcomings in current and draft legislation, and lax border measures have contributed to this resurgence. Further amendments to close loopholes are still needed to fix the pending optical disc legislation. In addition, production and smuggling of counterfeiting of U.S. distilled spirits has grown at an alarming rate. Large public amusement centers use images of copyrighted cartoon characters. The Government of Bulgaria should take the necessary administrative actions to stop optical disc piracy and the counterfeiting of spirits and other goods. We commend Bulgaria for providing protection for confidential test data in its new drug law and for its commitment to have government ministries purchase and use only licensed business software. However, we remain concerned over the growing rate of copyright piracy and spirits counterfeiting and will continue to monitor Bulgaria's progress on effectively combating these illegal activities.

CANADA

Canada has again been placed on the Special 301 Watch List. After making significant progress in improving its IPR regime in 2001 and 2002, Canada made little headway in addressing long-standing intellectual property issues related to copyright and patent reform such as ratification of the WIPO Internet treaties, and implementation of legislation on patenting of higher life forms. Progress has stalled 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. Systemic inadequacies in Canadian administrative and judicial procedures continue to allow the early and often infringing entry of generic versions of patented medicines into the marketplace. Enforcement against IP infringement improved through a concerted government and industry effort to address radio signal theft, but these renewed efforts did not carry over into other areas of counterfeiting and piracy. In fact, a recent Canadian court decision has found peer-to-peer file sharing to be legal under the Canadian copyright law, a position that underscores the need for Canada to join nearly all other developed economies in implementation of the WIPO Internet treaties. Canada's border measures continue to be a serious concern for IP owners, who consider Canada's border enforcement measures to be inconsistent with its TRIPS obligations. The United States urges Canada to take effective measures to strengthen border enforcement, including the enactment of legislation that would allow Canada's customs officials to conduct ex officio searches of incoming and outgoing products suspected to be pirate or counterfeit.

CHILE

The U.S.-Chile Free Trade Agreement (FTA) entered into force on January 1, 2004. The intellectual property chapter of the FTA provides high levels of protection 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 obligate Chile to conform its IP laws and enforcement practices to advanced standards. The FTA includes important 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. In late 2003, two sets of amendments were made to the copyright law to implement TRIPS and the FTA. However, some substantive IPR deficiencies remain, and enforcement continues to be irregular. Copyright piracy is still quite high and indeed has increased slightly in recent years, as digital piracy becomes more prevalent. 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 FTA and look forward to following Chile's progress in meeting its commitments. Upon full implementation of the U.S.-Chile Free Trade Agreement, we would expect to re-evaluate Chile's Special 301 status.

COLOMBIA

During 2003, the Government of Colombia continued to demonstrate a commitment to strengthen IPR protection including passing a decree to provide data protection for agricultural chemicals, and increasing enforcement actions. However, high levels of piracy and lack of successful prosecutions for IPR infringement remain a problem. In addition, new IP protections such as Decree 2085, which protects confidential test data for pharmaceutical products remain subject to legal challenge, and enforcement needs to be more effective. Piracy levels in Colombia amount to three-quarters of the market for recorded music and motion pictures, and half of the market for business software; the publishing industry continues to suffer from piracy, especially photocopying piracy. Piracy of music CDs is on the increase, threatening to erode legitimate markets altogether, mostly due to local, cottage-shop CD-R duplication. The recent growth of optical disc piracy also threatens the new, legitimate DVD market. Efforts to combat piracy through raids and other enforcement measures are hindered by a judicial system that fails to actively prosecute cases or issue deterrent penalties. Enforcement of trademark legislation in Colombia is showing some signs of progress, but contraband and counterfeiting are widespread and need to be stemmed by the Government of Colombia. The United States urges Colombia to ensure that its criminal, administrative, civil and border enforcement procedures meet its bilateral and multilateral intellectual property enforcement obligations and are effectively implemented. We look forward to working with Colombia in strengthening IPR protection and enforcement through the upcoming U.S.--Andean FTA negotiations. U.S. FTAs are modern, cutting-edge agreements that contain far-reaching IP provisions and enforcement mechanisms.

COSTA RICA

In January 2004, Costa Rica joined the Central American Free Trade Agreement, a step that will considerably upgrade the level of protection in Costa Rica's intellectual property regime. However, Costa Rica still faces IPR enforcement problems and, as such, shall remain on the Watch List. While the United States notes Costa Rica's efforts to ensure that local legislation conforms with the TRIPS Agreement, Costa Rica still needs to improve its criminal and civil systems of intellectual property enforcement, including establishing a specialized intellectual property prosecutor and by increasing resources to bolster enforcement efforts in the Ministry of Public Safety's Intellectual Property office. Furthermore, the Government of Costa Rica must make significant modifications and clarifications in the area of data protection as the CAFTA commitments come into effect. Also, the Government of Costa Rica must improve protection of new plant varieties and provide for stronger penalties for infringement. We encourage the Government of Costa Rica to take action in 2004 to improve the shortcomings in its criminal and civil systems of intellectual property enforcement by assigning priority and resources to these areas and to continue its work in ensuring that its local legislation conforms with CAFTA obligations.

CROATIA

In February 2004, the Croatian Government ratified the 1998 U.S.-Croatia MOU Concerning Intellectual Property Rights. Croatia currently is drafting implementing regulations that will bring the MOU into force. While the ratification of the MOU is a positive step in improving IPR protection in Croatia, problems still persist. Croatia remains on the Watch List due to concerns with its patent regime, specifically its failure to protect confidential data submitted for marketing authorization as required by TRIPS, lack of coordination between the patent and health authorities to prevent patent infringement by the grant of marketing approval for copycat pharmaceuticals, and failure to provide expeditious and timely judicial remedies to parties seeking to stop infringing activities. Furthermore, companies seeking to register pharmaceutical products with the Ministry of Health encounter a lengthy registration period. We will continue to monitor Croatia's progress in fulfilling its MOU obligations in the near term, including its prompt implementation of new regulations for data protection. We look to Croatia to provide adequate data protection, establish linkage for pharmaceutical products and to improve the registration process for pharmaceuticals, including by reducing the lengthy registration period.

DOMINICAN REPUBLIC

In March 2004, the Dominican Republic concluded an FTA with the United States that will require the Dominican Republic to upgrade considerably the level of intellectual property protection in the Dominican Republic. However, concerns still remain regarding the protection and enforcement of intellectual property, particularly with respect to copyright piracy and patent protection. As such, the Dominican Republic shall remain on the Watch List. We remain concerned by the levels of copyright piracy in the Dominican Republic. While the Telecommunications Authority (Indotel) and the Copyright Office (ONDA) have taken some positive steps to enforce intellectual property, such actions have failed to deter infringements. A key problem has been the delays in obtaining judicial remedies, particularly criminal remedies, against violators. In addition, U.S. concerns regarding the patent provisions of the Industrial Property Law and the subsequent Presidential decrees remain. These concerns include, but are not limited to, issues regarding the issuance of compulsory licenses, subject matter eligibility for patents, and data exclusivity. We encourage the Government of the Dominican Republic to take measures to address these concerns as soon as possible. Furthermore, we look forward to the increased reporting and improved enforcement from the Government of the Dominican Republic to effectively address broadcast piracy and deter other copyright infringements, and its efforts to ensure an expeditious resolution of pending judicial cases. Finally, we urge the Dominican Republic to be vigilant in submitting legislation, enhancing enforcement, providing training, and making other necessary preparations to meet its FTA obligations.

ECUADOR

Ecuador has shown little progress in improving IPR protection over the last year, and although it has a generally adequate IPR law, enforcement of the law remains a significant problem. Lack of effective protection for innovative pharmaceutical products is a serious concern. Ecuador does not provide protection of confidential test data, and the number of copy products granted marketing approval by the health authority continues to increase, due to the lack of any linkage system between the health and patent agencies. The United States urges the Government of Ecuador to protect confidential data from unfair commercial use and to facilitate an effective linkage system between its health and patent agencies. Enforcement of copyrights also remains a significant problem, especially with respect to sound recordings, computer software, and motion pictures, as does enforcement of trademark rights. As a result, there continues to be an active local trade in pirated audio and video recordings, computer software, and counterfeit brand name apparel. Music piracy is rampant in the streets of key cities, yet the local authorities appear to have made no efforts to prevent the sale of pirated music, nor have they investigated the duplication and distribution sources for these products. The Ecuadorian Government has yet to establish the specialized intellectual property courts required by the 1998 IPR law. Even though Ecuador's current substantive copyright legislation appears generally in line with its international obligations, the performance of Ecuador's judiciary remains deficient, in that the courts appear unwilling to enforce the law. The United States urges Ecuador to strengthen enforcement of IPR and will closely monitor Ecuador's efforts to address IP-related concerns. We look forward to working with Ecuador in strengthening IPR protection and enforcement through the upcoming U.S.--Andean FTA negotiations. U.S. FTAs are modern, cutting-edge agreements that contain far-reaching IP provisions and enforcement mechanisms.

GUATEMALA

The United States commends Guatemala for implementing data protection last year for pharmaceutical and agricultural chemical products, which is in line with international standards. However, legislation was introduced in April 2004 to revoke data exclusivity. If revocation were to occur, this would be a major step backwards in terms of fulfilling the TRIPS obligation to protect confidential test data, as well as one of the key intellectual property obligations in the recently concluded CAFTA. The United States urges Guatemala to maintain its current data protection regime and not roll back the progress it has achieved in providing adequate and effective IP protection for innovative pharmaceutical and agricultural chemical products. The United States will monitor this situation very closely.

HUNGARY

In recognition of the ministerial decree providing for protection of confidential test data, Hungary was moved from Priority Watch List to Watch List last year. Nevertheless, we remain concerned about the fact that the decree provides retroactive protection for products that received first marketing authorization in the European Union or Hungary on or after April 12, 2001, rather than January 1, 2000, as required by TRIPs. Hungary needs to address this shortcoming in its data exclusivity law, improve coordination between the regulatory and patent authority to prevent patent infringement, and improve enforcement against intellectual property infringement by the Hungarian police, prosecutors and judiciary. We are encouraged by the advancements that Hungary has made in modernizing its copyright code, but poor enforcement of these laws has led to a high piracy rate of optical and auditory media. We urge the Hungarian Government to address the deficiencies in its data exclusivity law and continue to improve IPR enforcement efforts in all areas of intellectual property.

ISRAEL

Israel is being maintained on the Watch List due to continuing serious U.S. concerns regarding its policies on data protection for proprietary test data and national treatment for U.S. rights holders in sound recordings. In 2003 Israel was moved from the Priority Watch List to the Watch List. Last year's move was based primarily on Israel's improvements in copyrights and trademark enforcement, as well as on senior-level assurances that OECD-level protection would be implemented for confidential test data submitted by innovator pharmaceutical and agricultural chemical producers, i.e., third parties would be prevented from relying on those data to obtain marketing approval ("data exclusivity"). Israel has also offered assurances in the past that it would take no action to affect its policy of national treatment copyright protection for U.S. producers of phonograms. Over the last year, Israel made further headway in copyright and trademark enforcement. We note that Israel recently joined the U.S. and ten other countries in the largest single law enforcement action ever undertaken against Internet piracy. While it remains to be seen whether Israeli prosecutions will result from this action, we view Israel's willingness to participate as a positive indication of Israel's willingness to improve criminal IPR enforcement. However, U.S. industry notes that the persistence of a significant level of piracy suggests that additional enforcement resources may be needed.

On the key issue of data exclusivity, Israel's actions have not met U.S. expectations. In April 2004, the Israeli Government developed a set of recommendations on data exclusivity that recognized for the first time the need to provide a minimum five-year period of protection for confidential test data for innovator firms in Israel. However, several serious shortcomings in the recommendations would severely compromise the data protection afforded by Israel, keeping it far short of OECD-level standards for data exclusivity. The Israeli Government has postponed further action on its data exclusivity recommendations and provided written assurance that it will engage with the United States to address U.S. concerns on data exclusivity. In addition, U.S. biotechnology firms suffer from a lack of adequate protection for their intellectual property, due to an onerous patent system that allows competitors to stall the grant of patent rights through open-ended, pre-grant opposition proceedings, as well as the lack of data exclusivity. Regarding the national treatment issue with respect to copyrights in sound recordings, new provisions in Israel's draft copyright bill, coupled with Israel's failure to provide clarification on the future status of national treatment, run counter to Israel's previous assurances and have reinforced U.S. concerns that it could cease national treatment protection for U.S. rights holders. An out-of-cycle review will be held this summer to assess whether Israel has made sufficient progress in responding to U.S. concerns on confidential test data, in ensuring that Israel will continue to provide national treatment for U.S. rightholders in sound recordings, and to consider whether Israel's Special 301 status should be changed.

ITALY

Despite the continued implementation of the 2000 Copyright Law and increased enforcement actions in 2003, piracy and counterfeiting rates in Italy remain among the highest in Western Europe. Widespread piracy continues in virtually all copyright-based sectors. Furthermore, although the Italian Society for Authors and Editors (SIAE) sticker requirement is waived for business software, a burdensome declaration procedure is necessary. While SIAE does not charge for declaration processing, companies must bear the internal administrative costs of following the procedure. In addition, U.S. industry reports that Italian government actions may adversely affect the prior practice of patent term extension for pharmaceuticals. Despite greater enforcement efforts by Italian law enforcement agencies and growing awareness of the economic and criminal implications of piracy and counterfeiting among some parts of the judicial system, IPR enforcement remains inadequate. We will continue to work with Italy to raise awareness regarding intellectual property issues and to improve IPR protection across all sectors. We urge the Italian Government to address the continued high piracy and counterfeiting rates, inadequate enforcement against these illegal activities by the judiciary, and curtailment of patent term extension for pharmaceuticals.

JAMAICA

In January 2004, the Jamaican Parliament approved a bill to protect geographical indications. The Jamaican Government has also made commendable enforcement efforts over the past year. However, while Jamaica's trademark and copyright laws are generally in line with international standards, we remain concerned over the continued failure to enact the Patents and Designs Act to meet Jamaica's obligations under the TRIPS Agreement and the U.S.-Jamaica bilateral IP Agreement. We urge the Government of Jamaica to reform its patent law as soon as possible to comply fully with international standards for patent protection.

KAZAKHSTAN

Kazakhstan has fulfilled a number of its IPR obligations under the 1992 U.S.-Kazakhstan Trade Agreement. However, some additional steps are required, particularly with respect to copyright protection and enforcement Currently, Kazakhstan's copyright law does not explicitly incorporate protection for pre-existing works or sound recordings. Although searches and seizures increased in volume and thoroughness in 2003, enforcement of IPR in Kazakhstan remains weak, particularly criminal enforcement. Very few defendants are convicted, and those who are convicted receive only minimal penalties. As a result, piracy is still a major problem. Industry estimated that out of a total of 17.4 million cassettes and 5.8 million CDs that were sold in Kazakhstan in 2003, nearly three-quarters of cassettes and CDs (12.2 million cassettes and 4.1 million CDs) were pirated copies. While new Criminal Code provisions on IPR violations have been adopted, these provisions do not serve as an effective deterrent because the burden of proof in criminal cases is very high and the likelihood of conviction is low. We urge the Government of Kazakhstan to consider strengthening these provisions. The Ministry of Justice has developed a plan directed at improving Kazakhstan's IPR regime that includes amending the Copyright Law to protect pre-existing works and sound recordings. The announced plan also aims to increase coordination among law enforcement agencies, public organizations and international organizations in order to fight piracy. The United States supports these efforts and will monitor the implementation and effectiveness of these proposed measures.

LATVIA

Latvia gave high-level attention to IPR enforcement in 2003, but needs to provide more follow-through to IPR enforcement in order to improve the results of anti-piracy actions. Latvia continues to be a significant consumer of and transshipment point for pirated goods, especially from Russia. Piracy levels for motion pictures, records and music and entertainment software, in particular, remain high. Internet piracy is growing, particularly in the areas of music hosting, entertainment software and pirated video games. Although some progress has been made in the area of end-user business software piracy, unlicensed use of business software by government ministries remains a serious concern. The United States urges the Government of Latvia to implement its IPR action plan to both amend current laws and enact new laws that will provide stronger IPR protection and enforcement measures, such as civil ex parte searches. The United States also encourages Latvia to step up the number of police raids and customs ex officio seizures of pirate and counterfeit products, as well as prosecutions, to demonstrate its commitment to improving IPR protection and enforcement.

LITHUANIA

Lithuania continues to make progress toward improving its legislative framework for protecting IPR and in combating software piracy. However, optical media piracy levels remain high and Lithuania is a key transshipment point in the Baltic region for pirated music CDs and audiocassettes, CD-ROMS, DVDs and video games. The United States urges Lithuania to implement optical media rules that effectively regulate the production, distribution, and export of optical media, and to provide for penalties for the illegal reproduction and distribution of sound recordings. In addition, Lithuania needs to implement its regulation on government use of legitimate software. Although the number of customs and police seizures of pirated and counterfeit products increased during the last year, enforcement efforts have not made significant headway in stemming these illegal activities. In particular, Lithuania should step up efforts to counter piracy at the retail level and stem the inflow of illegal products through Lithuania's eastern borders. The United States urges Lithuania to improve coordination among relevant government ministries, police, and customs officials to bolster IPR enforcement.

MALAYSIA

During 2003, the Malaysian Government continued to make progress in curtailing domestic retail piracy while increasing enforcement activities against pirate optical disc production facilities. However, while Malaysia is publicly committed to strong IPR protection and enforcement, it remains the world's largest exporter of pirate entertainment software. Piracy rates remain high for optical media (especially entertainment software) and books, and the substantial export of illegal goods continues. Already high levels of software piracy are increasing due to lax enforcement against infringements that occur in Internet cafes. Trademark infringement continues to be a serious problem as well, affecting a wide range of industries and products. The slow progress of cases through the judicial system and few prosecutions make it difficult to combat counterfeiting and piracy. Counterfeit pharmaceutical products are a particular concern. In addition to strengthening patent protection for pharmaceutical products, Malaysia also needs to protect confidential test data and pharmaceutical products by linking the marketing approval process to the patent registration process.

The United States remains seriously concerned over the continued high rate of production and export of pirated optical disc media, counterfeiting, lack of effective patent and data protection for pharmaceutical products, and lax enforcement. USTR will conduct an out-of-cycle review in the fall to evaluate Malaysia's progress in addressing these concerns.

MEXICO

During the past year, Mexico took significant steps to improve IPR protection. The United States commends Mexico for resolving the "linkage" issue between the Mexican Institute of Industrial Property and the Ministry of Health by implementing in September 2003 a Presidential decree that requires applicants for safety and health registrations to show proof of a patent and proof that test data were obtained in a legitimate manner. In addition, Mexico enacted legislation classifying piracy as an organized crime, and has created a special IPR prosecutor within the Office of the Attorney General (PGR). However, lax enforcement at both the criminal and administrative level, and particularly against copyright piracy and trademark counterfeiting, remains a serious problem. Companies continue to report high rates of counterfeiting of trademarked products. Despite continuing to raise long-standing concerns over these issues, many trademarks owners in Mexico still have problems with enforcement and case administration. When counterfeit items are discovered, injunctive relief measures issued against trademark infringers are often unenforceable.

Copyright piracy remains a major problem in Mexico, with U.S. industry loss estimates growing each year and totaling $712 million in 2003 - the second largest level of losses in the hemisphere Pirated sound recordings and motion pictures are widely available throughout Mexico, crippling legitimate copyright-related businesses. Strong concerns remain over the amendments to Mexico's copyright law passed by the Congress in July 2003 and still in the process of implementation. These amendments failed to address the comprehensive reforms needed by Mexico to (1) effectively implement the obligations of the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty (Mexico is a member of both treaties); and (2) address deficiencies in Mexico's copyright law, such as the failure to provide for national treatment and inadequate provisions regarding the scope of exclusive rights. The United States urges Mexico to take the necessary steps to resolve the current deficiencies.

Enforcement against piracy and counterfeiting in Mexico remains weak, and the few raids by Mexican authorities result in convictions of or deterrent penalties against pirates or counterfeiters. To strengthen enforcement, the United States urges Mexico to expand anti-piracy and anti-counterfeiting efforts against commercial distribution, street piracy and counterfeiting in all major cities; impose strong criminal penalties and destroy seized products, and increase the speed of administrative and judicial actions. In addition, the recently adopted organized crime law should be aggressively used to combat IPR infringements. We hope that previously held bilateral discussions on IPR can be revitalized to provide a constructive and productive forum to address and resolve these IPR concerns in an effective manner.

PERU

There are continuing concerns with respect to Peru's IP regime over the lack of data protection, weakened patent protection, widespread piracy of copyrighted works, and lack of effective IPR enforcement. Both the United States Government and U.S. industry remain concerned with Peru's failure to provide a period of exclusivity for undisclosed test data submitted for marketing approval of pharmaceutical and agricultural chemical products. Given the significant commercial damage caused by this failure, we urge Peru to issue a data protection decree as soon as possible. Due to Andean Community pressure, Peru continues to deny second-use patent protection for pharmaceuticals. On copyright protection, the Peruvian Government issued a software legalization decree in 2003 and took some steps toward improving enforcement, however, it has yet to approve the guidelines for software management. Piracy remains extremely high for sound recordings, textbooks, books, motion pictures, and software. Optical media piracy is on the rise in all sectors. According to industry sources, piracy of sound recordings has been on the increase in the last several years and is so severe now (98% of the market is estimated to be pirated) that it has virtually eliminated any legitimate market, causing the remaining legitimate sound recording businesses to shut down. While the government, in coordination with the private sector, has conducted numerous raids over the last few years on large-scale distributors and users of pirated goods and has increased enforcement activities, piracy continues to be a significant problem for copyright owners. Border enforcement measures also remain inadequate. The United States urges Peru to strengthen IPR protection and enforcement and will continue to monitor Peru's efforts in addressing these concerns. We look forward to working with Peru in strengthening IPR protection and enforcement through the upcoming U.S.--Andean FTA negotiations. U.S. FTAs are modern, cutting-edge agreements that contain far-reaching IP provisions and enforcement mechanisms.

POLAND

Poland was elevated to the Priority Watch List in 2003 for three main reasons: 1) the general level of IPR protection was not improving, in part because of inadequate border controls and the rapid growth of domestic optical disc production capacity; 2) lack of political will to shut down the outdoor market in the Government-owned Warsaw Stadium, where pirated and counterfeit goods were abundant; and 3) Polish law did not provide adequate protection for pharmaceutical test data.

After being elevated to the Priority Watch List, the Polish Government demonstrated its willingness to address U.S. IP-related concerns, especially regarding copyright protection, and has made changes over the past year that have provided the foundation for long-term, sustained improvements. The United States recognizes the steps Poland took to initiate raids to combat high levels of piracy and counterfeiting at the Warsaw Stadium, strengthen its copyright law, pass legislation to regulate optical disc production, and accede to the WIPO Internet Treaties. In recognition of this progress, we are moving Poland from the Priority Watch List to the Watch List, and scheduling an out-of-cycle review in the fall to monitor and ensure Poland's continued efforts.

Given the firm position taken by the Polish Government in its August 2003 IPR enforcement action plan, we look forward to significantly increased efforts to combat piracy and counterfeiting activities at the Warsaw Stadium and elsewhere around the country. At the same time, serious problems, particularly in the areas of patent protection for innovative pharmaceuticals and mechanisms for reducing the supply of pirated and counterfeit goods, require urgent attention.

Measures to ensure effective protection for innovative pharmaceutical products from patent infringement need to be implemented. The commercial availability in Poland of generic versions of patent protected pharmaceutical products is a clear indication of the weak state of patent protection in Poland and its direct effect on U.S. company interests. In March 2004, the Polish Government indicated that it would undertake an initiative to institute formal cooperation between the Polish patent and drug registration offices, which could prevent future cases of improper registration and marketing approval. We welcome this positive signal and are awaiting concrete measures to facilitate linkage between the two relevant agencies and to strengthen the enforcement of existing patents.

While Polish customs enforcement has improved over time, pirated and counterfeit goods still cross Poland's borders far too easily. For example, pirates import large amounts of unauthorized copies of optical media products, principally from Russia and Ukraine. Poland should tighten its border controls in response to its new EU obligations and continuing EU technical assistance, and we will be looking for demonstrable results this year. At the same time, we remain concerned about the potential for a sharp rise in locally-produced pirated optical discs. Optical disc production capacity in Poland is growing rapidly, overshooting local demand. Thus, we welcome changes to the Copyright Act that will impose new regulations on optical disc production and look forward to their swift and effective implementation.

Enforcement efforts are undermined by weaknesses in the judicial system that include the need to train judges and prosecutors on IPR issues, the need for better court information management systems, and the failure to impose penalties severe enough to deter IPR crime. We urge the Polish Government to expedite action on these points, which concern tens of thousands of judges, prosecutors, and judicial and prosecutorial facilities.

The United States will conduct an out-of-cycle review in the fall to ensure that Poland continues and even reinforces its efforts to strengthen IPR protection and enforcement and addresses remaining concerns. Results of the out-of-cycle review will be based on Poland's taking action in all the following areas: 1) strengthening anti-piracy and anti-counterfeiting measures at the Warsaw Stadium and continuing effective raids and prosecutions against piracy and counterfeiting activities across the country; 2) strengthening the protection of test data submitted by innovative pharmaceutical companies; 3) taking substantive steps to implement a coordination mechanism between the Health Ministry and the patent agency; 4) strengthening border enforcement; 5) signing into law and implementing new copyright amendments and optical disc regulations; and 6) taking concrete, effective steps to strengthen domestic enforcement of IPR. Other significant developments related to IPR will also be considered during the review.

ROMANIA

IPR enforcement did not improve in Romania in 2003. High piracy levels continued across all sectors, optical disc piracy grew, and poor border enforcement led to a surge in imports of pirated material. The situation appeared to be further exacerbated by the lack of resources dedicated to enforcement. Prosecutions of IPR violators remain a rare event, and when cases are brought, deterrent penalties are rarely issued. In addition, Romania lacks legislation to protect confidential test data submitted to regulatory authorities for marketing approval. We look to Romania to strengthen enforcement efforts by increasing raids on illegal operations, improving and increasing prosecution of IPR violations, providing penalties that effectively deter criminal behavior, and improving border enforcement by providing government officials with ex officio authority to inspect and seize IPR infringing goods. We also look for the Romanian Government to enact a law to provide protection of confidential test data as required by TRIPS.

SAUDI ARABIA

Although Saudi Arabia is working to improve its legal protections for intellectual property as part of its efforts to join the WTO, a number of issues remain to be resolved. Saudi Arabia's 2003 copyright law fails to provide adequate protection for sound recordings or ex parte civil search orders and fails to include deterrent penalties. Although Saudi officials report increased inspections, raids, and seizures, piracy rates for optical discs, books, and pay television remain high. Piracy of printed materials and the continued use of illegal software by the government further exacerbate the problem. Saudi officials report that enforcement of trademark laws has improved through spot checks and confiscation of counterfeit goods. However, concerns remain about the failure to take action at the borders to seize imported pirated and counterfeit goods and the lack of transparency in Saudi Arabia's enforcement system overall. Saudi Arabia's patent registration system is seriously deficient, with a backlog of thousands of applications. While there have been no major incidences of patent infringement, a recent decision by the Saudi Board of Grievances threatens to undercut protection of intellectual property related to pharmaceutical products by failing to provide exclusive patent rights afforded by the registration of pharmaceutical inventions within a reasonable time. While we commend the progress that Saudi Arabia has made, we also urge continued efforts to improve IPR protection through continued sustained raids on copyright piracy sites, improved border enforcement, improved cooperation between government officials and rights holders, providing reports on enforcement actions and investigations to rights holders, and imposing deterrent sentences on IPR infringers.

SLOVAK REPUBLIC

The Slovak Republic does not provide adequate protection for confidential pharmaceutical test data submitted to obtain marketing approval, and the United States remains concerned about this deficiency. The United States is also concerned about copyright piracy in the Slovak Republic.
Although video piracy has declined, imports of pirated optical media, primarily from the Ukraine and Russia, have increased. We look to the Slovak Republic to implement TRIPS-consistent data protection and to increase and sustain government actions against piracy, particularly at the border.

TAJIKISTAN

While Tajikistan has taken steps to fulfill its IPR obligations under the 1993 U.S.-Tajikistan Trade Agreement, Tajikistan's IPR regime has numerous deficiencies, particularly with respect to copyright protection. Specifically, Tajikistan has not joined the Geneva Phonograms Convention, does not provide IPR protection to foreign sound recordings, and does not explicitly protect pre-existing works or sound recordings under its copyright law. There are also problems with respect to the exclusive economic rights provided to authors under the Tajik Copyright Law. In addition, IPR enforcement in Tajikistan remains weak. Criminal penalties for IPR violations have not yet been adopted, nor is there proper ex officio authority to commence criminal cases. In addition, the Tajik Customs Code fails to provide customs officials with ex officio authority to suspend the release of suspected infringing materials at the border. The United States urges Tajikistan to address deficiencies in its IPR laws and strengthen IPR protection and enforcement.

THAILAND

Thailand has made some efforts to strengthen its IPR regime through the consideration of draft legislation and regulations, and the development of initiatives to improve enforcement, but has achieved only limited progress. The United States continues to have serious concerns about the Thai Government's failure to effectively address the growth in optical media piracy, copyright and trademark infringement, counterfeiting, end user piracy, and cable and signal piracy. We are also concerned about Thailand's failure to date to enact implementing regulations for the Trade Secrets Act to provide effective data protection. We welcomed the stepped-up enforcement efforts that were initiated in the spring and again in the early fall of 2003 and the reduction in the visibility of retail piracy during the October APEC meeting, but are disappointed that these efforts were not sustained and that piracy levels remain high. Enforcement remains uncoordinated and sporadic, and the transfer of some responsibilities from police units to the newly formed Department of Special Investigations has caused some problems in the implementation of enforcement activities. The production, distribution, sale, and export or transshipment of pirate and counterfeit products continues to be a serious concern. Counterfeit and pirated products sold in or exported from Thailand include optical discs video games, clothing/apparel, watches, leather goods, jewelry, lighters, auto parts, mobile phone accessories, batteries, and wine. Thailand also has one of the highest end-user piracy rates in Asia; and book piracy and broadcast piracy are growing problems. On the legislative side, Thailand enacted a law on geographical indications that became effective on April 28, 2004. However, the Thai government has failed to enact an optical disc law, and concerns remain over deficiencies in the current version of the optical disc bill and its draft implementing regulations. In addition, while the draft amendments to the Copyright Act include important improvements, some additional strengthening of the current draft is needed. These draft amendments have not yet been submitted to Parliament. The United States will continue to work with Thailand to address our significant concerns regarding its intellectual property laws and enforcement, and to urge the Thai Government to take swift action to implement specific elements of the IPR Action Plan. The Thai Government's prompt and full implementation of the IPR Action Plan will provide an essential foundation for the successful conclusion of an FTA between our two governments.

TURKMENISTAN

Turkmenistan has not satisfied all of its IPR obligations under the 1993 U.S.-Turkmenistan Trade Agreement. For example, Turkmenistan has not updated its copyright law to reflect international standards and has not signed the Berne Convention for the Protection of Literary and Artistic Works or the Geneva Phonograms Convention. Furthermore, Turkmenistan does not provide explicit protection for sound recordings or pre-existing works. IPR enforcement is inadequate. Turkmenistan has not adopted criminal penalties for IPR violations, and the Turkmen Customs Code does not provide ex officio authority to suspend the release of suspected infringing material at the border. The United States urges Turkmenistan to adopt the needed legal reforms and commence activities to strengthen IPR protection and enforcement.

URUGUAY

The Uruguayan Government has yet to pass the implementing regulations for its 2002 copyright legislation to improve and strengthen Uruguayan copyright protection. IPR enforcement remains ineffective as evidenced by the Uruguayan Supreme Court pardoning of a known trademark infringer. Furthermore, the Uruguayan Government has not ratified the WIPO Performances and Phonograms Treaty and the WIPO Copyright Treaty. Uruguay also fails to provide adequate protection for confidential test data as required by TRIPS We urge the Uruguayan Government to quickly pass implementing regulations for the new copyright legislation, ratify the WIPO Internet Treaties, address its deficiencies in enforcement against piracy and counterfeiting and provide protection for confidential test data.

UZBEKISTAN

Uzbekistan has recently announced a plan to amend its IPR laws, improve its IPR enforcement, and join both the Berne Convention for the Protection of Literary and Artistic Works and the Geneva Phonograms Convention. Nevertheless, Uzbekistan still appears to be out of compliance with its intellectual property commitments under the 1994 U.S.-Uzbekistan Trade Agreement, particularly with respect to copyright protection and enforcement. Uzbekistan does not provide protection for sound recordings or pre-existing works. IPR enforcement remains very weak, and weak criminal penalties for IPR violations do not serve as an effective deterrent. The United States urges Uzbekistan to remedy deficiencies in its IPR laws and to take measures to improve enforcement.

VENEZUELA

The Venezuelan Government continues to show signs of decline in its commitment to IPR protection. In 2003, government policies regarding pharmaceuticals continue to raise concerns because they undermine patent and data protection for pharmaceutical products. The Venezuelan Government continues to grant marketing approval for domestic copies of patented pharmaceutical products and refuses to issue second use patents. Proposed changes to the new Industrial Property Law currently being debated in the National Assembly threaten to worsen the legal framework for protection of intellectual property. Levels of piracy and contraband have grown increasingly problematic while government efforts toward deterrence and prosecution of these illegal activities remain minimal. We urge the Venezuelan Government to improve IPR protection and to take action against the growing problems piracy and counterfeiting.

VIETNAM

IPR violations remain a major problem in Vietnam, and enforcement continues to be ineffective despite improvements in laws and regulations. Judges in Vietnam have been reluctant to impose penalties or fines at a level sufficient to deter future infringements, and ex officio raids are sporadic at best. As a result, piracy remains rampant throughout Vietnam. Nearly 100 percent of sales of music CDs, VCDs and DVDs are pirated copies. Trademark violations are also prevalent, with unlicensed clothing and other items bearing famous trademarks available for purchase in small shops and stands throughout major cities. Patent protection remains inadequate, despite amendments to Vietnam's civil code extending the term of protection from 15 years to 20 years. Counterfeit pharmaceuticals are common in the marketplace. Market access barriers persist, especially with regard to products classified as "cultural products" that are subject to censorship and control regulations. Such barriers impede importation of legitimate products. However, Vietnam has made some efforts to strengthen IPR protection, including enacting stronger regulations in various sectors that require increased inspections and raids against suspected infringers. We will work with Vietnam to ensure full compliance with all of its obligations. We encourage Vietnam to continue to build upon its strong public commitment to IPR protection by translating Vietnam's obligations under the U.S.-Vietnam Bilateral Trade Agreement into strong laws and effective enforcement against piracy and counterfeiting.


 
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