PRIORITY WATCH LIST
ARGENTINA
Protection of intellectual
property in Argentina has not improved significantly, therefore Argentina will
remain on the Priority Watch List. The Government of Argentina did amend its
patent law to provide protection for products obtained from a process patent,
implementing the May 2002 U.S.-Argentina agreement, and put in place fast-track
procedures for patent applications. However, Argentina's overall copyright,
patent, and data protection regimes do not appear to comply with its
international obligations. Copyright piracy for all industry sectors remains at
high levels including recordable CDs (CD-Rs) and other optical media,
entertainment software, sound recordings, books, and films. Although the
willingness of the Argentine Government to initiate some enforcement actions
during 2003 was encouraging, enforcement against piracy and counterfeiting
remains lax and ineffective. Enforcement of copyrights on recorded music,
videos, books, and computer software remains inconsistent, and inadequate
resources, border controls and slow court procedures have hampered the
effectiveness of enforcement efforts. In addition, unauthorized use of protected
seed varieties remains a problem. In April 2002, the United States and Argentina
reached an agreement with respect to most claims in a WTO dispute brought by the
United States concerning Argentina's implementation of its TRIPS patent
obligations. The important issue of data protection remains unresolved.
Argentina still does not provide protection for confidential data submitted by
research-based pharmaceutical companies and does not have a linkage system
between the health agency and patent office, which results in the continued
approval of copy products. The United States urges Argentina to implement its
TRIPS obligation to provide data protection and an effective linkage system to
protect patented pharmaceutical products. USTR will continue to monitor
Argentina's efforts to effectively address these concerns, as well as its
compliance with the commitments made under the May 2002 agreement.
BAHAMAS
The United States remains
concerned over the lack of progress made by the Government of the Commonwealth
of the Bahamas in fulfilling its obligations to address serious copyright
concerns under an agreement reached between our two countries in 2000. Problems
persist in the area of copyright protection for U.S. cable programs and motion
picture copyrighted works. In particular, the compulsory licensing plan contains
provisions that allow Bahamian cable operators to retransmit any
copyrighted-television programming, including for-pay programming, whether or
not transmitted from the Bahamas or outside of the Bahamas, and whether or not
encrypted. Furthermore, the remuneration system for copyrighted works under the
compulsory licensing program remains inadequate and arbitrarily includes even
lower, special rates for hotels and other commercial enterprises. We understand
that draft legislation for amendments to correct deficiencies in the copyright
law has passed in the Parliament's House of Assembly and is now in the Senate
for consideration. The United States urges The Bahamas to work to fulfill its
obligations under the agreement and promptly enact these necessary amendments to
the copyright law. In addition, the United States continues to encourage U.S.
cable operators and copyright holders to enter into negotiations with licensed
Bahamian cable operators to provide for the legitimate cable transmission of
copyrighted works in the Bahamas.
BRAZIL
Brazil continues to fall
short in providing adequate and effective protection of IPR. Despite some
positive developments, most notably with respect to the formation and activities
of the Brazilian Congress' Chamber of Deputies' Commission of Parliamentary
Inquiry on piracy and amendments to the criminal code, protection has not
significantly improved. Brazil is one of the largest markets globally for
legitimate copyrighted products, but also one of the world's largest pirate
markets. Optical media piracy and Internet piracy are increasing. The U.S.
copyright industry estimates that losses in Brazil are the largest in the
hemisphere, with industry-estimated losses exceeding $785 million in 2003.
Despite having adopted modern copyright legislation, Brazil has not undertaken
adequate enforcement actions against piracy. Criminal enforcement has not been
sufficient or effective in deterring piracy. Furthermore, although a substantial
number of raids are conducted by Brazilian police, very few result in
prosecutions and convictions. Ineffective border enforcement that fails to stop
an influx of pirated goods continues to plague trademark and copyright owners.
Brazil has not made significant progress processing the backlog of pending
patent applications, which industry estimates to be at 47,000 and for which
industry has already paid substantial upfront processing fees. Unauthorized
copies of pharmaceutical products continue to receive sanitary registrations
that rely on undisclosed tests and other confidential data, although no
unauthorized copies have been marketed yet. We will continue to monitor Brazil's
progress in these areas, including through the ongoing GSP review that was
initiated by USTR in 2001.
EGYPT
Egypt was moved from the
Priority Watch List to the Watch List in 2003, based in large part on the
passage of a comprehensive new IPR law. The United States notes the Government
of Egypt's passage of implementing regulations for three of the four chapters of
the IPR law, and continuing efforts in enforcement. However, recent marketing
approvals for locally produced copies of patented pharmaceutical products, as
well as deficiencies in Egypt's copyright enforcement regime, judicial system
and trademark enforcement necessitate the elevation of Egypt to the Priority
Watch List. The United States is seriously concerned by the Egyptian Health
Ministry's marketing approval of four copies of U.S. innovator drugs and
approval of four additional applications to register and market innovator drugs
on the basis of the U.S. firms' confidential test data. These approvals run
counter to Egypt's own domestic laws and raise serious concerns about Egypt's
commitment to protect confidential test data. Egypt's copyright enforcement
remains weak with continued high losses to the book publishing industry, high
corporate end-user piracy levels and lax enforcement against extensive commerce
in pirated books, CDs, DVDs and VCDs.
Copyright enforcement is
further impaired by the lack of implementing regulations for the copyright
portion of Egypt's new IPR law, as well as a court system in which copyright
cases continue to move slowly, collection of judgments is difficult and
transparency is lacking. Companies continue to experience difficulties with
Egypt's Trademark Law, which makes trademark enforcement very difficult. In
addition, implementing regulations for the new IPR law's sections for patents,
trademarks and botanical varieties do not appear to fully address the
deficiencies and ambiguities in the law. Efforts by Egypt to address these
problems and improve its IPR regime will continue to play an important role in
the expansion of trade and investment ties with the United States.
EUROPEAN UNION
The European Union (EU) will
remain on the Priority Watch List because it has not demonstrated any
willingness to address certain IP-related concerns in a sufficient manner,
despite encouragement by the United States including through the U.S.-EU Trans
Atlantic Economic Partnership. At the conclusion of the 1999 Special 301 review,
the United States initiated a WTO dispute settlement case against the EU, based
on the apparent TRIPS deficiencies in EU Regulation 2081/92 ("GI Regulation"),
which governs the protection of geographical indications (GIs) for agricultural
products and foodstuffs in the EU. The regulation appears to discriminate
against non-EC nationals and products, thereby violating WTO obligations to
provide national treatment and most-favored-nation treatment. Further, the GI
Regulation appears to deny trademark rights to owners of registered trademarks,
rights that the EC is obliged to provide under the TRIPS Agreement. Despite over
four years of consultations since June 1999, we were unable to resolve this
matter, and so, in August 2003, we requested the establishment of a WTO dispute
settlement panel to review the consistency of the EC's GI Regulation with WTO
rules. That proceeding is on-going. In addition, lack of full implementation of
the EU Biotechnology Directive, which obligates EU Member States to reform
national laws and practices to affirmatively provide patent protection for a
broad range of biotechnology inventions, by several EU member states continues
to be a concern.
INDIA
While India has improved its
IPR regime, protection of intellectual property in some areas remains weak due
to inadequate laws and ineffective enforcement. India's 2002 patent law
amendments (which became effective in May 2003) exempt subject matter such as
biotechnological inventions, methods for agriculture and horticulture, processes
for the treatment of humans, animals, or plants, and substances prepared by
chemical processes from patent protection. Under the TRIPS Agreement, India has
until January 1, 2005 to provide product patent protection, including for
pharmaceuticals and agricultural chemicals. While the United States is
encouraged by the Indian Government's recent statements concerning
implementation of data exclusivity regulations, India has yet to implement the
TRIPS obligation to protect confidential test data submitted by innovative
pharmaceutical companies for market approval. India's Copyright Act has three
overly broad exceptions, which together weaken protection of software. India is
also in the process of revising its copyright law to implement the WIPO Internet
treaties; we expect India to fully implement its obligations in this regard.
Protection of foreign trademarks remains difficult due to procedural barriers
and delays. Trademark owners must prove they have used their mark to avoid a
counterclaim for registration cancellation due to non-use. Such proof can be
difficult, given India's policy of discouraging foreign trademark use. Companies
denied the right to import and sell products in India often are unable to
demonstrate use of registered trademarks through local sale.
Piracy of copyrighted
materials (particularly software, films, popular fiction and certain textbooks)
remains a problem for U.S. and Indian rightholders. India has not adopted an
optical disc law to deal with optical media piracy. Cable television piracy
continues to be a significant problem, with estimates of tens of thousands of
illegal systems in operation. The United States also has serious concerns about
high levels of counterfeiting, particularly for medicines and auto parts.
India's criminal IPR enforcement regime remains weak, and India needs sustained,
centralized, coordinated enforcement of intellectual property rights, especially
trademarks and copyrights. Its court system is extremely slow, and there are
only a few reported convictions for copyright infringements resulting from
raids. Industry reports significant weaknesses in India's border protection
against counterfeit and pirated goods. India also needs to address the high
volume of exports of domestically produced counterfeit goods.
INDONESIA
Indonesia took steps in 2003
to strengthen its IPR regime, but progress, particularly in the area of
enforcement against piracy and counterfeiting, has been inconsistent. Serious
concerns remain over lack of enforcement; the production, distribution, and
export of pirated optical media products; trademark infringement; and
deficiencies in Indonesia's judicial system. Stern warnings of strong
enforcement made by the Directorate General for IPR to mall owners in July 2003
led to a near-complete shutdown of pirate vendors for 30 days, demonstrating
that effective enforcement can stop pirates. However, lack of follow-through
resulted in a return to high levels of activity by retail pirate vendors.
Indonesia carried out some raids against retail outlets for pirate optical media
products in 2003, but enforcement and prosecution of IPR violations remained
insufficient. Pirate optical media products, including CDs, VCDs, DVDs and
CD-ROMs, still dominate Indonesia's market. At least 27 plants in Indonesia
produce optical media products. With a total annual disc capacity of 108.5
million, domestic production of pirated products continues to increase. The
pharmaceutical industry has estimated that counterfeit drugs account for 30-40
percent of Indonesia's market, and there are serious concerns about imports of
pirated pharmaceuticals from other countries into Indonesia. A number of
companies continue to report trademark counterfeiting and infringement involving
a wide range of products, including IT products, clothing and soft drinks. In
July 2003, Indonesia's new copyright law came into effect. This law, first
adopted in July 2002, addresses some concerns about Indonesia's compliance with
its TRIPS obligations. But Indonesia still needs effective optical disc
regulations that include a strong licensing requirement, sentencing guidelines
that provide a strong deterrent, and other improvements. The United States will
continue to use our bilateral TIFA to work with Indonesia to take the additional
measures necessary to implement the IPR Work Plan submitted by the United States
in May 2002.
KOREA
Korea was elevated from the
Special 301 Watch List to the Priority Watch List in January 2004 as the result
of an out-of-cycle review conducted in late 2003. Korea has taken several
positive steps over the last year, such as granting police authority to the
Standing Inspection Team responsible for investigating software piracy;
increasing efforts to report cases of infringement to U.S. right holders; and
stepping up efforts to combat piracy on university campuses. In addition, the
U.S. Government has been encouraged by the Korean Government's commitment to
redraft regulations to clearly authorize the Korea Media Rating Board to
identify and stop the fraudulent rating of videos, DVDs, and video games.
Accordingly, we are optimistic that this legal loophole will be finally and
permanently closed in the near future. The U.S. Government is also greatly
encouraged by recent statements by President Roh recognizing the importance of
protection of intellectual property and his instruction to the relevant
ministries to devise ways to improve Korea's system of IPR enforcement. We hope
that this new effort will produce tangible systemic improvements which will, in
turn, reduce piracy in Korea.
Despite such progress, the
U.S. Government remains seriously concerned that modern copyright protection
continues to be lacking in important areas. Key among these is Korea's failure
to adequately update its laws to protect sound recordings against digital
piracy. Statements by the Korean Government indicating an unwillingness to
provide national treatment to U.S. sound recording producers are also a source
of concern, and further exacerbate this problem. As a result, online music
piracy has continued to grow, causing serious economic damage to U.S. companies.
Other important flaws in
Korea's legal regime for the protection of IPRs relate to temporary copies,
technological protection measures, Internet Service Providers liability,
reciprocity provisions regarding database protection, ex parte relief, the lack
of full retroactive protection for pre-existing copyrighted works, and copyright
term extension. In addition, serious concerns have arisen over continuing book
piracy in universities, street vendor sales of illegally copied DVDs,
counterfeiting of consumer products, protection of pharmaceutical patents, and
lack of coordination between Korean health and IPR authorities on pharmaceutical
marketing approvals. Addressing these issues will continue to be a priority in
bilateral discussions, including the U.S.-Korea Quarterly Trade
Meetings.
KUWAIT
Kuwait has been elevated to
the Priority Watch List this year due to its failure to address serious and
rampant copyright infringement and failure to amend its copyright law.
Furthermore, Kuwait has failed to implement the 2002 work plan that outlined the
steps it would take to increase IPR enforcement. In fact, in 2003, enforcement
efforts remained insufficient and penalties for infringement remained inadequate
to deter offenders. Kuwait continues to have the worst retail optical disc
piracy rate in the region as well as problems with corporate end-user piracy,
hard-disc loading piracy, and cable piracy. We urge Kuwait to improve the
situation by making public declarations at the highest level that piracy in
Kuwait will not be tolerated, increasing the frequency of raids on suspected
infringers, prosecuting offenders and amending its copyright and other
intellectual property law to correct its deficiencies. Kuwait Customs created a
special IPR unit in April 2004 and began taking some enforcement actions. This
is a positive sign but measures to combat infringement need to continue over the
long term. We will continue to address these issues under the U.S.-Kuwait Trade
and Investment Framework Agreement signed in February 2004.
LEBANON
We commend the Lebanese
government for some recent steps that it has taken to begin to address
longstanding IPR problems. These measures include a crackdown on illegal cable
operators, a large-scale raid on pirated DVDs, movement toward full legalization
of government software, and increased ex officio inspections along the borders.
In addition, the Lebanese Government in April issued new requirements for
registration of pharmaceutical products that, if implemented, should help
prevent the registration of unauthorized copies of patented U.S.
pharmaceuticals. It is too early, however, to evaluate the effectiveness of
these measures. At the present time, Lebanon continues to face problems in
providing adequate and effective protection of intellectual property rights.
Problems persist with the widespread availability of pirated optical discs and
rampant cable piracy. Registration of copycat pharmaceuticals has remained a
serious issue, and ambiguous and unenforceable data exclusivity provisions
remain causes for concern. Counterfeiting of trademarked goods including
pharmaceutical products continues with little effort at deterrence. Furthermore,
the judiciary remains slow and inefficient, and until recently there has been a
general lack of sustained will in the government to improve IPR enforcement.
Lebanon has also not yet joined the latest text of the Berne Convention or
ratified the WIPO Copyright Treaty or the WIPO Performances and Phonograms
Treaty. We urge the Lebanese Government to continue its efforts to address these
problems and to ratify the WIPO Internet Treaties. The Lebanese Government's
recent steps constitute its most serious efforts in some time to strengthen IPR
protection. The United States will closely monitor these efforts in hopes that
they will continue to the benefit of Lebanon's economy and our bilateral trade
relationship.
PAKISTAN
Pakistan is one of the
world's leading producers/exporters of pirated optical media of copyrighted
sound recordings, motion pictures, business software, and published materials.
In 2003, Pakistan remained the fourth largest source of counterfeit and
piratical goods seized by the U.S. Customs and Border Protection. The vast
majority of these goods were either apparel and pharmaceuticals with counterfeit
trademarks or, optical media products. We recognize that Pakistan has taken some
initial steps to address these problems, however, we are disappointed that
Pakistan has taken minimal action to address these serious and long-standing
concerns. The Government of Pakistan must conduct immediate, vigorous and
sustained enforcement against the plants involved in piracy and counterfeiting.
Additional concerns include lack of protection against the unfair commercial use
of data submitted for marketing approval of pharmaceutical products, widespread
trademark counterfeiting and copyright piracy beyond optical media (e.g., book
piracy), and lax enforcement overall. The United States also remains concerned
over a 2002 ordinance that seriously undermined improvements Pakistan made to
its patent law in 2000. We do note that some positive developments were made in
the past year including the issuance of new trademark regulations, Cabinet
approval of legislation for creation of the Pakistan Intellectual Property
Rights Organization (PIPRO) and formation of an IPR Advisory Group involving the
private sector. However, despite these developments, the overall piracy and
counterfeiting problems are worsening rather than improving. As a result, we are
elevating Pakistan to the Priority Watch List. The United States urges Pakistan
to intensify its IPR protection and enforcement efforts, including finding
effective means to address the issues highlighted in the "IPR Roadmap" presented
to Pakistan in July 2003. Further, we hope for expeditious passage by Parliament
and the devotion of meaningful funding and resources for PIPRO. We will use the
future Trade and Investment Framework Agreement discussions to continue pressing
for improvements to address our IP-related concerns.
REPUBLIC OF THE
PHILIPPINES
Serious concerns remain
regarding the lack of consistent, effective, and sustained IPR protection in the
Philippines. U.S. distributors report high levels of pirated optical discs of
cinematographic and musical works, computer games, business software, as well as
widespread unauthorized transmissions of motion pictures and other programming
on cable television systems. Trademark infringement in a variety of product
lines also is widespread, with counterfeit or pirated merchandise openly
available in both legitimate and illegitimate venues. The levels of illegal
production and consumption of optical media remain consistently high. Although
the estimated domestic demand for optical media is about seven million discs
annually, industry and enforcement sources believe that there are at least 20
illegal production lines in the Philippines producing more than 70 million
illegal DVDs, VCDs and CD-ROMs per year. We remain concerned over the Philippine
Government's failure to implement data protection measures for innovative
pharmaceutical and agricultural chemical products, and copyright provisions
consistent with its obligations under the WIPO treaties. Many enforcement
agencies suffer from a lack of resources while IPR issues remain a relatively
low priority. Enforcement efforts such as raids and seizures often have only a
temporary effect due to ineffective post-raid enforcement. Counterfeit goods
from China, Malaysia, Hong Kong, Taiwan, and Thailand continue to enter the
Philippines in large quantities. In response, the Bureau of Customs created a
permanent IPR unit in September 2003 to investigate all shipments of counterfeit
and pirated goods. Domestic enforcement suffers from lack of training and
interagency coordination, which hinder raids, and there is a growing backlog of
cases in the judicial system. The signing of the Optical Media Law in 2004 was a
welcome step toward better protection of IP, and is intended to regulate the
import, export and production of optical discs, including the tools and
materials involved in the replication of optical discs. Full implementation of
this law, including prosecution of IPR violators, is critical. Implementing
regulations and the transformation of the Videogram Regulatory Board into the
Optical Media Board have yet to be completed and will be a key factor in the
effectiveness of the new law. The United States appreciates the Government of
Philippines' efforts to address these concerns, and will continue to use the
bilateral TIFA to address specific elements included in the IPR Action Plan
concerning judicial, legislative and enforcement issues.
RUSSIA
Certain aspects of Russia's
IPR regime, including its copyright law and enforcement measures, are deficient
and appear to be inconsistent with the 1992 U.S.-Russian Federation Trade
Agreement (Bilateral Trade Agreement) and below the standards set in the TRIPS
Agreement. While Russia recognizes that it must revise its IPR laws and
enforcement measures to meet TRIPS requirements, key legislation is still
pending. Russia has amended its laws on trademark, appellations of origins,
patents, designs for integrated circuits, plant varieties, computer software,
and databases. However, Russia's Copyright Law still does not provide protection
for pre-existing works and sound recordings, although on April 21, 2004, the
State Duma adopted, in a second reading, a set of amendments to the Russian
Copyright Law that would, among other things, provide protection for
pre-existing works and sound recordings. The Russian Government is working to
enact amendments to its laws on protection of undisclosed information, in
particular protection for undisclosed test data submitted to obtain marketing
approval for pharmaceuticals and agricultural chemicals. Serious concerns also
remain about Russia's reciprocity-based system for protection of geographical
indications. Russia also needs to give its courts the authority in criminal
cases to order forfeiture and destruction of machinery and materials used to
make pirated and counterfeit products.
Border enforcement in Russia
is particularly weak. Unauthorized production and export of pirated optical
media products has become a significant problem, with the number and capacity of
optical media facilities rising dramatically. U.S. industry believes that many
of 32 optical disc facilities are producing illegal optical discs. Industry
estimates losses of over $1 billion annually as a result of this illegal
activity. In addition, trademark counterfeiting remains significant and
widespread, resulting in substantial losses for U.S. industry. We urge Russia to
take immediate and effective steps to shut down illegal optical media plants,
strengthen border enforcement, combat piracy and counterfeiting, and address
deficiencies in its IPR laws. We will continue to monitor Russia's progress in
these areas, including through the ongoing GSP review that was initiated by USTR
in 2001.
TAIWAN
Taiwan extended its 2002
"Action Year for IPR Protection" until 2005 and has moved to strengthen
enforcement, particularly against pirated optical media. The United States
commends the Taiwan authorities and in particular, its enforcement authorities,
for increasing the frequency and effectiveness of raids against night markets
and inspections of optical media factories, which have significantly reduced the
number of pirated optical media products for retail sale. These are important
and praiseworthy steps. However, the IP piracy community in Taiwan appears to
have adjusted to increased pressure from authorities in ways that maintain
business losses due to IPR infringement at unacceptably high levels. For
example, production appears to be shifting from large optical media plants to
small, custom optical media burning operations. There is evidence that
infringers are using non-traditional retail channels, including catalogue sales
to anonymous customers for home delivery and marketing pirated products over the
Internet. Serious concerns also remain over counterfeiting and border
enforcement. U.S. companies report that trade in counterfeit goods continues,
including increased reports of counterfeit pharmaceutical products. The United
States hopes that successful implementation of recently approved laws to
increase penalties for the production and importation of counterfeit
pharmaceuticals will lead to the elimination of this public health threat.
Taiwan needs to make the
necessary changes to its relevant laws to prevent unfair commercial use of
pharmaceutical and agricultural chemical test data and to strengthen its
copyright law. Although Taiwan amended its copyright law in June 2003, several
provisions remain deficient. As recently as February 2004, Taiwan's Intellectual
Property Office promised to work with legislators to seek further improvements
to the copyright law, but improvements have not been enacted. The United States
appreciates the efforts and steps that Taiwan has taken to strengthen its IP
situation, and will continue to work with Taiwan officials on legislation and to
achieve measurably improved enforcement results; including, if necessary,
through higher-level engagement between USTR and Taiwan authorities. USTR has
decided to conduct an out-of-cycle review in the fall to evaluate Taiwan's
progress in achieving these objectives.
TURKEY
Long-standing concerns over
the lack protection for confidential test data were noted in the 2003 Special
301 Report. Unfortunately, Turkey has not implemented data exclusivity. The
Turkish Government has indicated that it may soon announce implementation of
this protection, however, actual implementation may be delayed - possibly until
2007. Under TRIPS, Turkey was obligated to have this protection in place as of
2000. Due to this continued and now possibly extended delay in implementation of
data exclusivity, lack of interim protection for pharmaceuticals in the research
and development "pipeline," and with other serious concerns outlined below,
Turkey has been elevated to the Priority Watch List. With regard to piracy, book
piracy is the chief problem in Turkey, while piracy of optical media, mainly in
the form of "burned" CD-Rs, has proliferated. IPR enforcement is also impeded by
the judicial system. Although Turkey's 2001 copyright law improved the legal
regime by providing deterrent penalties for copyright infringement, the courts
fail to impose deterrent penalties against pirates. Amendments to the law in
early 2004 banned street sales and allow for ex officio enforcement actions,
which should provide additional tools to the government, but also lowered
criminal penalties. In addition, counterfeiting, especially in apparel and
designer brands, continues with little deterrence by the court system. The
United States urges the Government of Turkey to enact data exclusivity for
pharmaceuticals immediately, and to take more aggressive domestic and border
enforcement actions such as criminal convictions and deterrent penalties to
decrease counterfeiting and piracy.