# Special 301 Report/2013/Section 2

SECTION II. COUNTRY REPORTS
PRIORITY FOREIGN COUNTRY
Ukraine
As a result of the 2013 Special 301 Review, the U.S. Trade Representative (USTR) designates Ukraine as a priority foreign country (PFC). This designation is the culmination of several years of growing concern over widespread IP theft, including the growing entrenchment of IPR infringement that is facilitated by government actors.
During intensive bilateral engagement, Ukraine has made a series of commitments to make specific improvements in the areas of government use of pirated software, nontransparent administration of royalty collecting societies, and online piracy. Notably, Ukraine and the United States agreed to an IPR Action Plan in 2010, which Ukraine publicized in 2011. Implementation of this plan was the subject of intensive bilateral engagement in 2012, including through the Trade and Investment Council meeting. Unfortunately, the situation has continued to deteriorate on each of the issues identified below. Recent efforts on the side of the Government of Ukraine have not gone far enough to demonstrate a commitment to resolving long-standing problems.
Background
Unfair, nontransparent administration of the system governing collecting societies.
The United States is deeply concerned by the deterioration of the entire system for collecting and disbursing music royalties in Ukraine. Ukraine has recognized that it has a significant problem with the operation of illegal or "rogue" collecting societies, i.e., organizations that collect royalties by falsely claiming they are authorized to do so. Such organizations tend to operate without adequate transparency and rarely disburse sufficient funds that they collect to the rights holders entitled to the royalties. The government has not prosecuted several rogue collecting societies -- even societies that the Government of Ukraine determined were collecting money without the necessary authorization.
Furthermore, in 2012, the State Intellectual Property Service of Ukraine revoked the authorization of the Ukrainian Music Rights League, a collecting society that producers report had fairly disbursed royalties. This action has been credibly characterized as an attempt to empower rogue collecting societies, including a rogue collecting society that reportedly has strong ties to government officials. Moreover, in August 2012, Ukrainian courts issued a ruling that eliminated the current procedure for accrediting all collecting societies. Currently there are no authorized collecting societies for producers' or performers' rights in Ukraine.
Moreover, despite committing to promoting legislation to improve the collecting society system, the only legislative amendment proposed to change the collecting society system was an amendment proposed by the government in January 2013 which appeared to empower the ​aforementioned rogue collecting society that has ties to government officials. That amendment has been withdrawn, but no alternative has been proposed.
The current system of collecting societies in Ukraine institutionalizes misappropriation of royalties. Ukraine must implement a fair and transparent system for authorizing collecting societies as soon as possible and must provide rights holders with a fair and transparent mechanism for enforcing their rights.
Widespread and admitted use of infringing software by the Ukrainian Government.
The United States has repeatedly conveyed its concern about software piracy in Ukraine. The Government of Ukraine acknowledges that a significant percentage of the software used by the government itself is unlicensed. The most recent industry data identify Ukraine as having a higher software piracy rate than almost all other countries on the Priority Watch List. Ukraine has acknowledged the need for the government to use legal software, and has issued repeated official documents calling for such legalization as far back as 2002, and most recently, in April 2013.
However, these statements have not produced results. In the past, the Government of Ukraine has stated that it will allocate funds that are "necessary to transition government ministries to licensed software, to include training for inspectors, as well as ongoing technical assistance to each Ministry in setting up an internal monitoring and compliance system," but has failed to do so. While the Government of Ukraine budgeted 100 million UAH ($12.3 million) for 2013 software legalization in state institutions (which the Government of Ukraine admits does not reflect the value of the illegal software being used), the government has not spent this money or taken other steps toward legalization, and disbursement of the funds is uncertain. Ukraine must adopt a transparent and effective system to transition to the use of legal software by the government and ensure that legal software is used on an ongoing basis.
Persistent failure to implement any effective and transparent system to combat online piracy.
The United States has repeatedly raised its strong concerns about the significant and growing piracy of copyrighted content. Optical disc piracy was one of the principal reasons underlying the U.S. decision to add Ukraine to the Watch List in 1998, the Priority Watch List in 1999 and 2000 and to designate Ukraine a PFC from 2001 through 2005. Online piracy now has significant and growing consequences for both the Ukrainian market and for international trade. For example, ExtraTorrent.com, which is based in Ukraine, professes to be "The World's Largest BitTorrent System." This site is the 76th most visited site in India, and among the top 200 sites in six other countries (including the United Kingdom and Australia), illustrating how Ukraine has become perceived as a safe haven for online piracy enterprises serving other markets.
There was not a single online piracy-related conviction in Ukraine in 2012. In late January 2012, the Government of Ukraine seized servers as part of a criminal investigation into EX.UA, which is both the country's twelfth most visited website and a prolific source of infringing international music, software, and video. (It also appears on USTR's Notorious Markets list.) Following intense negative public reaction, and public statements in support of the website by influential figures, the site reopened shortly thereafter and continues to monetize infringing content today.
​The United States views the few ad hoc and nontransparent government actions against online piracy as underscoring the need for Ukraine to establish a predictable and transparent system to combat online piracy. Enhanced interagency coordination, consultation with all affected stakeholders and targeted legal reforms to provide clarity and predictability are necessary to creating an adequate and effective strategy to combat online piracy.
Other IPR Concerns
In addition to the acts, policies, and practices that are the grounds for this PFC designation, the United States remains concerned about other IPR matters discussed in previous Special 301 Reports. Industry has reported that criminal prosecution for counterfeiting crimes are stalled and ineffective, and that seized goods are not disposed of or released in a timely manner. Additionally, large amounts of counterfeit products, as well as pirated goods, are openly sold in physical market in Ukraine. The United States will continue to engage Ukraine bilaterally on these and other matters, outside of the Section 301 investigation.
The acts, policies, and practices described as the grounds for PFC have cumulatively resulted in significant financial damage to U.S. copyright-related industries, including the foregone market opportunities and the impact on the markets in other countries. Intensive bilateral engagement by the United States has not resulted in meaningful change, and the situation in Ukraine appears to have worsened rather than improved in 2012.
As a consequence of this PFC designation, the USTR will determine pursuant to section 302 of the Trade Act of 1974 whether to initiate an investigation of Ukraine's acts, policies, and practices that are the basis for its designation as a PFC.
PRIORITY WATCH LIST
Algeria
Algeria remains on the Priority Watch List in 2013. The United States continues to urge Algeria to address the ban on an increasing number of imported pharmaceutical products and medical devices in favor of local products. Among other problems, this ban has caused shortages of critical medications as local manufacturers have been unable to meet demand. The United States is particularly concerned that Algeria has suspended processing of applications for drug registrations by foreign manufacturers. The United States remains concerned about the lack of protection against the unfair commercial use, as well as unauthorized disclosure, of test and other data generated to obtain marketing approval for pharmaceutical products. A notable positive step in in late 2012 and early 2013 was Algeria's counterfeit awareness campaign, which resulted in the seizure and destruction of counterfeited goods. If sustained, such a campaign could help to curb the increase over the past two years in the number of physical markets for pirated goods operating in Algeria. The United States looks forward to continuing to work with Algeria to address these and other issues.
​Argentina
Argentina remains on the Priority Watch List in 2013. Argentina continued to improve IPR enforcement by increasing the number of enforcement raids in 2012 and improving cooperation between enforcement officials and industry. Argentina's judicial authorities also initiated civil and criminal actions against the unauthorized distribution of pirated content over the Internet. Despite these actions, significant concerns remain with respect to rampant piracy and counterfeiting, including in the digital environment. The United States urges Argentina to take additional steps to curb growing piracy over the Internet. Argentina's judicial system remains inefficient and there is a need for more deterrent-level sentences. The United States also encourages Argentina to provide for protection against unfair commercial use, as well as unauthorized disclosure, of test and other data generated to obtain marketing approval for pharmaceutical products, and to provide an effective system to address patent issues expeditiously in connection with applications to market pharmaceutical products, and eliminate the longstanding backlog of patent applications. The United States looks forward to continuing to work with Argentina to address these and other issues.
Chile
Chile remains on the Priority Watch List in 2013. The United States continues to have serious concerns regarding outstanding IPR issues under the United States-Chile Free Trade Agreement. Although Chile took some steps in 2012 to propose legislation, the United States continues to urge Chile to implement an effective system for addressing patent issues expeditiously in connection with applications to market pharmaceutical products. The United States also continues to urge Chile to implement both protections against the unlawful circumvention of technological protection measures, and protections for encrypted program-carrying satellite signals. It is also important for Chile to ensure that effective administrative and judicial procedures, as well as deterrent remedies are made available to rights holders and satellite and cable service providers. In addition, the United States urges Chile to provide adequate protection against unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products, and to amend its Internet service provider (ISP) liability regime to permit effective action against piracy over the Internet. The United States looks forward to continuing to work with Chile to resolve these and other issues, including through the TPP negotiations.
China
China remains on the Priority Watch List and subject to section 306 monitoring.
In the past year, the climate for IPR protection and enforcement continued to reflect efforts toward and opportunities for improvement, as well as challenges for U.S. rights holders. Obtaining effective enforcement of IPR in China remains a central challenge, as it has been for many years. This situation has been made worse by cybertheft, as information suggests that ​actors located in China have been engaged in sophisticated, targeted efforts to steal IP from U.S. corporate systems.
On a potentially more positive note, China is currently engaged in sustained legal reform efforts, which have resulted in the revision of laws, rules, guidelines, and judicial interpretations across the range of IPR disciplines. This large scale revision of the IPR legal regime presents an opportunity to improve IPR protection and enforcement, and the United States is hopeful that a legal reform effort on this scale signals China's commitment to achieving major improvements. The United States urges China to continue to give due consideration to concerns expressed by the U.S. Government as well as by private sector stakeholders as these revisions proceed through the system.
At the same time, real world conditions for rights holders have overall seen little significant improvement. As in past years, a wide range of U.S. stakeholders in China report serious obstacles to effective protection of IPR in all forms, including patents, copyrights, trademarks, and protection of pharmaceutical test data. As a result, sales of IPR-intensive goods and services in China remain disproportionately low when compared to sales in similar markets that provide a stronger environment for IPR protection and market access. Given the size of China's consumer marketplace and its global importance as a producer of a broad range of products, China's protection and enforcement of IPR will continue to be a focus of U.S. trade policy.
The theft of trade secrets is an escalating concern. Not only are repeated thefts occurring inside China, but also outside of China for the benefit of Chinese entities. Conditions are likely to deteriorate as long as those committing the thefts and those benefitting continue to operate with relative impunity, frequently entering into unfair competitive relationships with their victims. Too often, Chinese authorities view trade secrets cases as routine commercial disputes, rather than as serious violations of law. Particularly troubling are public reports by independent security firms that actors affiliated with the Chinese military and Chinese Government have systematically infiltrated the computer systems of a significant number of U.S. companies and stolen hundreds of terabytes of data, including IP, from these companies. The United States strongly urges the Chinese Government take serious steps to put an end to these activities and to deter further activity by rigorously investigating and prosecuting thefts of trade secrets by both cyber and conventional means.
A further significant concern surrounds the fact that in some cases, central, provincial and local level Chinese agencies inappropriately require or pressure rights holders to transfer IPR from foreign to domestic entities. Sometimes guided by government measures or policy statements intended to promote indigenous innovation and the development of strategic industries, government authorities deny or delay market access or otherwise condition government procurement, permissions, subsidies, tax treatment and other actions on IPR being owned or developed in China, or licensed to a Chinese entity. China has made commitments to the United States on these matters in various contexts; the United States will continue pressing China to comply with those commitments.
The United States takes note of several positive developments. Rights holders report a significant increase in administrative and criminal enforcement against trademark counterfeiting in China. They indicate that the number of administrative enforcement actions more than ​doubled in 2012 compared to the prior year, and that the number of criminal convictions appears to have doubled as well. However, while rights holders report some impact on counterfeiting activity in China, the problem remains widespread.
Trade Secrets
As noted above, trade secret theft is a serious and growing problem in China. Thefts may arise in a variety of circumstances, including those involving departing employees, failed joint ventures, cyber intrusion and hacking, and misuse of information submitted to government entities for purposes of complying with regulatory obligations. In February 2013, the independent information security firm Mandiant released a report that detailed efforts by an arm of the People's Liberation Army starting in 2006 to systematically infiltrate 141 companies in over 20 major industries, including 115 U.S. companies. Information reportedly stolen by this entity included "technology blueprints, proprietary manufacturing processes, test results, business plans, pricing documents, partnership agreements and emails and contact lists from victim organizations' leadership." The industries targeted have been listed as "strategic," emerging industries that need to be fostered and encouraged as part of China's 12th Five Year Plan.
Available remedies under Chinese law are difficult to obtain, given that civil, administrative, and criminal enforcement of trade secrets theft remains severely constrained. Enforcement obstacles include various deficiencies in China's Anti Unfair Competition Law, constraints on gathering evidence for use in litigation, difficulties in meeting the criteria for establishing that information constitutes a trade secret, and criminal threshold requirements that are unclear. As noted above, rights holders identify deficiencies in China's Anti-Unfair Competition Law (AUCL). Unlike other Chinese IP laws, the AUCL does not expressly authorize judges to issue certain provisional orders that are critical to the successful pursuit of a civil enforcement action. While China's new Civil Procedure Law may address, or partially address, that problem, there has been insufficient time to ascertain whether this new law is facilitating access to civil remedies in practice. Additionally, the AUCL only applies to commercial undertakings and requires that a trade secret have "practical applicability," which can limit the scope of protection for early stage research. There are other important weaknesses in China's civil enforcement system, including insufficient evidence-gathering, difficulties in obtaining preliminary injunctions, problems in obtaining procedures and the weight afforded certain kinds of evidence, such as the overreliance of original documentary evidence over oral testimony. Without changes to address these weaknesses, effective enforcement against misappropriation of trade secrets in China will remain illusory. The United States will continue engaging with China on these matters.
Legal Reform
Despite serious reservations regarding certain measures, the United States welcomes China's sweeping legal reform effort overall. In 2012 and early 2013, China invited comment on draft revisions to the existing laws on patents, copyrights, and trademarks. On January 1, 2013, a new Civil Procedure Law came into effect, which it is hoped will address some obstacles encountered by U.S. rights holders attempting to enforce their rights in civil court actions. Also effective January 1, 2013 was a judicial interpretation (JI) issued by the Supreme People's Court on the liability of Internet intermediaries ("Rules of Supreme Court on Several Issues Concerning the ​Application of Law in Adjudication of Civil Disputes Related to Infringement of Right of Communication over Information Networks.") This JI builds on a JCCT commitment to make clear that those who facilitate online infringement will be held jointly liable for that conduct. The US urges that this JI continue to bind judges after the amended copyright law takes effect or be reflected to the same degree of specificity in the amended law.
China also invited comment on draft rules and guidelines on proposed regulations for the remuneration of "service inventions" (i.e., inventions created by an employee as part of his or her employment), national standards involving patents, rules for antimonopoly enforcement in the field of intellectual property rights, and patent examination guidelines for utility model and design patents. Some proposed measures raise serious concerns, while others represent a marked improvement over prior drafts. The United States applauds China's openness to receiving comments and looks forward to continuing engagement as future drafts are developed and evaluated and as the drafts move through the State Council Legislative Affairs Office and National Peoples' Congress.
National Leading Group
Following the completion of China's 2010-11 Special IPR Campaign, the State Council established a permanent national leading group office (Leading Group) to better coordinate and improve China's efforts to combat IPR infringement and the manufacture and sale of counterfeit and shoddy goods. Under the Leading Group, eleven special campaigns concentrating on key IPR concerns were completed in 2012. The United States encourages China to work with foreign governments and rights holders to share information and demonstrate the concrete role the Leading Group can play to improve the protection and enforcement of IPR.
Software Legalization
The United States will continue to urge all levels of the Chinese Government, as well as state-owned enterprises (SOEs), to use only legitimate, licensed copies of software. In May 2011, China's Government reported that software legalization in central government offices was complete. At the provincial level, a similar effort was originally targeted for completion by October 2011, but the government extended the effort into 2012, and it was completed in June 2012 and December 2012, respectively. However, U.S. software companies have seen only a modest increase in sales to the government.
Software legalization efforts have more recently extended to China's SOE sector. Losses by software companies due to piracy at SOEs and other enterprises are very high. To the degree that Chinese firms do not pay for the software that runs many of their operations, they reap a cost advantage relative to competitors who pay for legally acquired software. Although these problems remain, the United States applauds China's confirmation at the 2012 JCCT that it requires SOEs "to purchase and use legitimate software, including but not limited to operating system and office suite software."
Online Piracy
Despite bilateral commitments to increase IPR enforcement in China, online piracy in that country continues on a large scale. The Supreme People's Court, in December 2012, issued a JI ​entitled, "Rules of Supreme Court on Several Issues Concerning the Application of Law in Adjudication of Civil Disputes Related to Infringement of Right of Communication Over Information Networks," which, according to industry, has led to an unexplained drop in online infringement lawsuits. As of mid-2012, there were more than 500 million Internet users in China. Despite national campaigns and the leadership of the Leading Group, widespread piracy affects industries involved in the distribution of legitimate music, motion pictures, books and journals, video games, and software. For example, industry reports that in 2010 the value of digital music sales in China was $48.8 million, compared to $178.4 million in South Korea, and $68.9 million in Thailand, which is a country with less than five percent of China's population and a roughly equivalent per capita GDP. Similarly, over 90 percent of the revenue generated by U.S. films in China comes in the form of box office revenues, compared to 25-30 percent in the United States. This difference is partly due to widespread piracy of motion pictures over the Internet and on optical discs. Online piracy extends to scientific, technical, and medical publications as well.
Parties in China are also facilitating online infringement, in China and third countries, through media box piracy. Manufactured in China and exported abroad, media boxes can be plugged directly into televisions. They enable the user to stream and download infringing online audio and visual content. The vast majority of the infringing websites to which media box users connect are reportedly located in China. The United States urges China to continue efforts to improve IPR protection and enforcement in this area.
Counterfeit Goods
Despite increased enforcement efforts, problems with counterfeiting in China remain widespread. A partial list of commonly counterfeited goods includes food and beverages; apparel, footwear, and accessories; consumer electronics, computers and networking equipment; entertainment and business software; batteries; chemicals; appliances; and auto parts. Impacts are not limited to lost sales volumes and damage to the reputation of the trademark owner. For example, higher defect and failure rates among counterfeit semiconductors may cause malfunctions in the equipment in which they are incorporated, which may include medical devices, vehicle safety and braking systems, and other critical applications. As one measure of the scale of the problem, products from China accounted for 72 percent of the value of the IPR infringing products seized by U.S. Customs in fiscal year 2012.
Rights holders report increased enforcement activities, mostly but not exclusively on behalf of local brands. Rights holders also report a limited, although noticeable, reduction in counterfeiting, demonstrated in part by the reduced visibility of counterfeit products in some major retail and wholesale markets. Enforcement efforts have not, however, slowed the sale of counterfeits online. Rights holders report that local Administrations for Industry and Commerce (AICs) typically confine their efforts to physical markets. While both the State Administration for Industry and Commerce and local AICs have called on online trading websites to improve notice-and-takedown procedures, these measures have not significantly deterred repeat and large-scale offenders who, after postings are removed because of a takedown notice, quickly place new postings offering the same infringing goods. It is reported that, shortly after the Trademark Law is revised, the Supreme People's Court may issue a judicial interpretation to address these concerns.
​Innovation, IPR Localization, and Technology Transfer
Rights holders in China face challenges not only as a result of difficulties in protecting and enforcing their rights against unscrupulous actors, but also as a result of government measures, policies and practices that systematically disadvantage foreign rights holders. Chinese government agencies, including at national, provincial, and local levels, frequently release documents, including regulations, rules, and other measures (e.g., opinions, notices and circulars) that seek to promote China's development into an innovative, IPR-intensive economy. The United States recognizes the critical role of innovation in development and in improving living standards in the United States and China. However, the United States reiterates its concerns regarding China's innovation-related policies and other industrial policies, such as strategic emerging industry policies, that may discriminate against or otherwise disadvantage U.S. exports or U.S. investors and their investments, or may otherwise hamper the ability of IPR rights holders to obtain full and effective protection for their rights, including the ability to monetize products using their rights. Chinese regulations, rules, and other measures frequently call for technology transfer and, in certain cases, require, or propose to require, that eligibility for government benefits or preferences be contingent upon IPR being developed in China, or being owned by or licensed, in some cases exclusively, to a Chinese party. Such government imposed conditions or incentives may distort licensing and other private business arrangements, resulting in commercial outcomes that are not optimal for the firms involved or for promoting innovation. Government intervention in the commercial decisions that enterprises make regarding the ownership, development, registration, or licensing of IPR is not consistent with international practice, and may raise concerns relative to China's implementation of its WTO commitments.
Sustained U.S.-China engagement through the JCCT, the U.S.-China Strategic and Economic Dialogue (S&ED), and high-level visits has resulted in important Chinese commitments, including "that technology transfer and technological cooperation shall be decided by businesses independently and will not be used by the Chinese Government as a pre-condition for market access," and "to treat and protect intellectual property rights (IPR) owned or developed in other countries the same as domestically owned or developed IPR." In addition, at the 2012 JCCT, China "reaffirmed that technology transfer and technology cooperation are the autonomous decisions of enterprises" and pledged further that "[i]f departmental or local documents contain language inconsistent with the above commitment, China will correct them in a timely manner." The United States looks forward to China's full implementation of these commitments.
Patent-Related and Other Policies
Patents Used in Chinese National Standards
China has prioritized the development of Chinese national standards, as evidenced by its Outline for the National Medium to Long-Term Science and Technology Development Plan (2006-2020), issued by the State Council in February 2006, and amplified shortly thereafter in the 11th Five Year Plan (2006-2010) for Standardization Development, issued by the Standardization Administration of China (SAC) under the Administration for Quality Supervision, Inspection and Quarantine. In 2009, SAC welcomed comments on draft interim regulations on national standards involving patents. Of serious concern were provisions indicating that China would rely, during the standards development process, either on non-patented technology or on patented ​technology licensed at a price significantly lower than normal royalties. The draft would also have empowered government authorities to grant a compulsory license if the authorities and patent holders were unable to reach agreement on licensing terms. These provisions and others raised significant concerns from several countries, including in the United States, as reported in depth in previous editions of this Report and in USTR's 2012 Report on Technical Barriers to Trade (TBT Report). In late 2012, China issued new draft interim rule for public comment. The United States welcomes the deletion from the new draft rule of provisions on below-normal royalties and compulsory licenses. The United States hopes that SAC will also revise other provisions in the draft about which the United States raised concerns.
IPR Protection for Pharmaceutical Products
The United States is very concerned about barriers in China to IPR protection for pharmaceutical products. In the patent area, China's revised implementation of Article 26.3 of its patent law has led the State Intellectual Property Office (SIPO) to refuse to consider post-filing supplementary test data supporting previously filed patent applications, contrary to the practice of the major patent offices around the world. This has led Chinese authorities not only to reject pending patent applications but also retroactively to revoke previously granted patents. These revisions make obtaining protection of patents of a reasonable scope very difficult in China when compared to other major markets. In addition, the United States continues to encourage China to provide an effective system for expeditiously addressing patent issues in connection with applications to market pharmaceutical products.
In addition, the United States continues to have concerns about the extent to which China provides effective protection against unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products. China's law and its WTO accession commitments require China to ensure that no subsequent applicant may rely on the undisclosed test or other data submitted in support of an application for marketing approval of new pharmaceutical products for a period of at least six years from the date of marketing approval in China. However, there is evidence that generic manufacturers have, in fact, been granted marketing approvals by the State Food and Drug Administration (SFDA) prior to the expiration of this period, and in some cases, even before the originator's product has been approved. The United States was encouraged by China's 2012 JCCT commitment to define "new chemical entity," a term that is central to the marketing approval process, in a manner consistent with international research and development practice. The United States looks forward to China's implementation of this commitment without undue delay.
Utility Model/Design Patents
U.S. rights holders have become increasingly concerned about China's utility model and design patent system. Through a combination of subsidies and other benchmarks to incentivize the filing of utility model and design patents, Chinese applicants have been filing large numbers of utility model and design patent applications (507,538 design patent applications and 581,303 utility model applications in 2011, according to SIPO). SIPO does not provide substantive examination for utility model and design patents. This, combined with the large numbers of utility model/design patents granted by SIPO, has led to a flood of low quality patents that fuels ​abusive litigation, and burdens legitimate applicants seeking to make patentability or freedom to operate determinations.
The United States looks forward to continuing to work with China to resolve these and other issues.
India
India remains on the Priority Watch List in 2013. In 2012, India made limited progress in improving its weak IPR legal framework and enforcement system. India enacted copyright amendments and published for comment draft rules to implement the Madrid Protocol and a draft National Intellectual Property Strategy, which proposes to create an enhanced IPR management system. In many areas, however, IPR protection and enforcement challenges are growing, and there are serious questions regarding the future condition of the innovation climate in India across multiple sectors and disciplines. The United States continues to urge India to reconsider how it can meet legitimate domestic policy objectives by fostering rather than undermining that innovation climate.
Patents & Regulatory Data Protection
The United States continues to encourage India to promote a stable and predictable patent system that can nurture innovation. As leading economies with a strong tradition of innovation, India and the United States can and should ensure supportive environments for innovators to achieve success and make significant contributions to economic growth in both countries. In that connection, the United States urges India to continue its recent efforts to address its patent application backlog and to streamline its patent opposition proceedings.
Recent actions by the Indian Government, however, have raised serious questions about the innovation climate in India and risk hindering the country's progress towards an innovation-focused economy. In the pharmaceutical sector, some innovators are facing serious challenges in securing and enforcing patents in India. The United States urges India instead to adopt policies that support both cutting-edge innovation to address important health challenges and a robust generic market.
For example, a patent system must encourage the development of inventions that meet the well-established international criteria of being new, involving an inventive step, and being capable of industrial application. The United States is concerned that the recent decision by India's Supreme Court with respect to India's prohibition on patents for certain chemical forms absent a showing of "enhanced efficacy" may have the effect of limiting the patentability of potentially beneficial innovations. Such innovations would include drugs with fewer side effects, decreased toxicity, or improved delivery systems. Moreover, the decision appears to confirm that India's law creates a special, additional criterion for select technologies, like pharmaceuticals, which could preclude issuance of a patent even if the applicant demonstrates that the invention is new, involves an inventive step, and is capable of industrial application.
​The United States will also continue to monitor closely developments concerning compulsory licensing of patents in India, particularly following the broad interpretation of Indian law in a recent decision by the Indian Intellectual Property Appellate Board (IPAB), while also bearing in mind the Doha Declaration on TRIPS and Public Health, discussed in the Intellectual Property and Health Policy section of this Report. In particular, India's decision in this case to restrict patent rights of an innovator based, in part, on the innovator's decision to import its products, rather than manufacture them in India, establishes a troubling precedent. Unless overturned, the decision could potentially compel innovators outside India – including those in sectors well beyond pharmaceuticals, such as green technology and information and communications technology – to manufacture in India in order to avoid being forced to license an invention to third parties.
The United States also urges India to provide an effective system for protecting against unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products, and to ensure that a system applies to all pharmaceutical products and not just traditional Indian medicines.
Copyright
India boasts a vibrant domestic creative industry, but the challenge of piracy – particularly over the Internet – continues to grow. While the Copyright (Amendment) Bill 2012 provided limited improvements to India's copyright regime, the amendments raise a number of questions regarding the scope of exclusive rights under Indian law and the ability of rights holders to properly exercise those rights. Additional legislative changes are needed in order to ensure that content-based industries can effectively combat physical and online piracy and develop new models for the delivery of content. As part of this reform, India should enact anti-camcording legislation and provide further protections against online copyright piracy, signal theft, and circumvention of technological protection measures.
Enforcement
The United States notes limited improvements with respect to IPR enforcement, including reports that enforcement officials cooperate with music industry rights holders in conducting complaint-based raids, and increased use of judicial orders that have strengthened enforcement against pirated movies and music online. The United States encourages India to take additional steps to improve coordination with enforcement officials of certain state governments within India. The United States also continues to encourage India to address its judicial inefficiencies and to strengthen criminal enforcement efforts, including by imposing deterrent level sentences and giving IPR prosecutions greater priority. Finally, the United States recommends that India more fully address the challenges posed by online copyight piracy by clarifying the procedures for notice and takedown of infringing materials.
Localization Trends
The United States commends India's recognition of the importance of innovation as part of its efforts to promote manufacturing, but urges India to resist imposing discriminatory policies or other counterproductive measures in pursuit of that objective at the expense of adequate and ​effective protection of IPR. Recent measures that raise such concerns include India's Preferential Market Access (PMA) policy for electronic products and a proposed drug pricing policy, both of which appear to condition certain preferential treatment on the indigenous development of IPR.
The United States looks forward to continuing to work with India to address these and other issues.
Indonesia
Indonesia remains on the Priority Watch List in 2013. Indonesian authorities continued educational efforts to encourage IPR awareness among the public, and some rights holders reported good cooperation with enforcement authorities. The United States welcomes Indonesia's efforts in the IPR Working Group under the Trade and Investment Framework Agreement and collaboration on an action plan to improve IPR protection and enforcement against high levels of IPR infringement in Indonesia. While the United States welcomes these steps, it remains concerned about gaps in Indonesia's laws relating to the protection and enforcement of IPR, including laws relating to copyright. The United States urges Indonesia to address these issues through appropriate revisions to its law. The United States is also concerned that Indonesia's IPR enforcement efforts have not been effective in addressing challenges such as rampant piracy and counterfeiting, including growing piracy over the Internet, and the widespread availability of counterfeit pharmaceutical products. The United States urges Indonesia to take steps to address inefficiencies in its judicial and prosecutorial systems which include a lack of transparency and deterrent-level sentences. In regard to cable piracy, rights holders report some enforcement activity, and report that authorities have stated an intention to require cable operators, during the cable operator licensing process, to specify the source of the programming they transmit. While the cable licensing process should discourage cable piracy, rights holders report that the licensing process is not transparent and is proceeding at a slow pace. The United States encourages Indonesia to provide an effective system for protecting against the unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products. The United States also remains concerned about market access barriers in Indonesia, which include measures imposing requirements that restrict the importation of medicines and measures that could restrict market access for motion pictures. The United States notes with concern statements in Indonesia's Special 301 submission indicating that Indonesia failed to abide by its procedures in issuing a compulsory license decree in 2012, and that its patent law does not require individual merit review in connection with the grant of compulsory licenses. The United States further encourages Indonesia to provide for judicial or other independent review of any compulsory license authorizations. The United States looks forward to working with Indonesia on these and other matters.
​Pakistan
Pakistan remains on the Priority Watch List in 2013. Pakistan continued its efforts on IPR enforcement, including through raids, seizures, and arrests by various enforcement authorities. Notably, the government enacted the Intellectual Property Organization of Pakistan Act, 2012 (IPO Act), which establishes a permanent coordinating structure for IPR protection and enforcement. The IPO Act provides national authorities with greater IPR enforcement powers, and provides for the establishment of specialized IP tribunals. However, Pakistan has yet to improve IPR protection, despite the new IPO Act. Widespread counterfeiting and piracy, particularly book and optical disc piracy, continue to present serious concerns for U.S. industry. Pakistan should ensure that its enforcement officials can exercise ex officio authority without the need for a formal complaint by a rights holder, and should provide for deterrent-level penalties for criminal IPR infringement. Pakistan should also take the necessary steps to reform its copyright law to address the piracy challenges of the digital age. The United States continues to encourage Pakistan to provide an effective system for protecting against unfair commercial use, as well as unauthorized disclosure, of test and other data generated to obtain marketing approval for pharmaceutical products. The United States looks forward to continuing to work with Pakistan as Pakistan begins to implement the IPO Act, and to address these and other issues.
Russia
Russia remains on the Priority Watch List in 2013 as a result of continued significant challenges to IPR protection, notably inadequate enforcement against the growing problem of online piracy. However, the United States is encouraged by Russia's agreement to the United States-Russian Federation Intellectual Property Rights Action Plan (Action Plan) in December 2012, which identifies objectives for IPR protection and expresses a shared belief that "strong IPR protection and enforcement are vital to promoting innovation and creativity by securing the rights of innovators and the creative community, attracting high-technology investment, and fostering the jobs necessary for long-term sustainable growth."
After an 18-year negotiation process, Russia became a member of the WTO on August 22, 2012. The United States welcomes the improvements Russia has made to its protection of IPR during the accession process, including the adoption of legislation consistent with Russia's commitments in the 2006 United States-Russia Bilateral Agreement on IPR. Russia has established a new unified fee system for issuing patents and registering trademarks, licenses, and assignments. Russia enacted amendments to the Law on Circulation of Medicines, which addresses protection of undisclosed test data. Russia has also revoked its reservation to Article 18 of the Berne Convention for the Protection of Literary and Artistic Works, which commits Russia to providing protection for works that existed prior to 1995 that were still under copyright protection in the United States and all other Berne member countries.
The United States also welcomes the trends described in the most recent data available on the usage of pirated software in Russia, which is reported to have dropped during the last six years, although software piracy remains a significant problem despite this progress. The United States awaits with interest the operation of the IPR civil court that Russia is establishing this year, and ​hopes that this court will be an effective tool for adjudicating civil IPR cases. The United States encourages Russia to harmonize its IPR regime with the regulatory principles adopted under the Customs Union established with Kazakhstan and Belarus, and to work with those countries to both ensure that those principles are executed in a manner that most effectively protects IPR and to create the required unified trademark registry.
The United States is concerned, however, by the data Russia provided on its overall enforcement of IPR. The information available indicates that enforcement has decreased in the last year, specifically that the number of criminal raids declined significantly in 2012, the number of resources devoted to IPR economic crime enforcement sharply declined over the past two years, and the initiation of criminal IPR cases also declined. While Russia notes that it has changed its methodology for reporting enforcement statistics, and that this change may exaggerate the difference over time, there remain significant obstacles to enforcement of IPR. The United States is particularly troubled by the fact that online piracy is growing in Russia and that no effective enforcement strategy has yet been launched to combat this problem.
For these reasons, the United States welcomes the fact that the Action Plan endorses action on these important issues, including increased enforcement actions against counterfeit goods, effective prosecution of persons responsible for IPR crimes including online crimes, establishment of a mechanism for appropriate ISP liability for copyright infringement, and dedication of resources and personnel to law enforcement agencies to investigate and prosecute online IPR crimes. The Action Plan also reflects a commitment to support legislation addressing online piracy. The United States is encouraged that several legislative proposals are currently being considered, and urges Russia to enact an adequate and effective ISP liability system for copyright infringement to facilitate cooperation between rights holders and ISPs and combat the growth of illegal online markets for infringing goods.
The Action Plan and joint efforts through the IPR Working Group reflect significant commitments by Russia to IPR. Effective implementation of these commitments will advance Russia's IPR protection and enforcement. The United States looks forward to its continued work with Russia on these and other matters.
Thailand
Thailand remains on the Priority Watch List in 2013. The United States is prepared to review that status if Thailand makes significant progress in passing key legislative initiatives mentioned below, and improves its overall enforcement efforts. The United States remains encouraged by Thailand's commitment to improving IPR protection and enforcement. The United States is also encouraged by the passage of the Anti-Money Laundering Act, which includes IPR offenses as a predicate crime, and the launch of the National IPR Center of Enforcement, and it is hopeful that this center will lead to improved coordination and more effective enforcement actions among enforcement agencies. U.S. rights holders continue to report good cooperation with Thai enforcement authorities, including the Royal Thai Police and Royal Thai Customs. The United States urges Thailand to complete many of the legislative initiatives begun in past years, including legislation to address landlord liability, to address unauthorized camcording of motion ​pictures in theaters, to provide Thai Customs with ex officio authority, to fully implement the provisions of the WIPO Internet Treaties, and to establish improved legal mechanisms to address the rapidly growing problem of copyright piracy and trademark counterfeiting on the Internet. The United States also urges Thailand to take enforcement action against widespread piracy and counterfeiting in the country, and to impose deterrent-level sentences. The United States urgesThailand to effectively address its longstanding problem of piracy of cable and satellite signals. The United States encourages Thailand to provide an effective system for protecting against the unfair commercial use, as well as unauthorized disclosure, of test or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products. The United States continues to encourage Thailand to engage in a meaningful and transparent manner with all relevant stakeholders, including IPR owners, as it considers ways to address Thailand's public health challenges, while maintaining a patent system that promotes innovation. The United States looks forward to continuing to work with Thailand to address these and other issues.
Venezuela
Venezuela remains on the Priority Watch List in 2013. The United States encourages Venezuela to update its 1955 Industrial Property Law, which was reinstated in 2008, to create a strong IPR law that covers a wide range of patentable inventions and that brings its system into conformity with international norms. Venezuela should also clarify the status of trademarks that were registered under the Andean Community law, prior to Venezuela's withdrawal from the Andean Community. Venezuela took limited enforcement actions in 2012. Venezuela should more effectively enforce the 2010 Law on Crimes and Contraband to issue stronger penalties for IPR violations. The United States remains concerned about rampant piracy and counterfeiting, including piracy over the Internet. The United States encourages Venezuela to provide an effective system for protecting against the unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products. The United States will continue to monitor Venezuela's progress on these and other issues.
WATCH LIST
Barbados
USTR is placing Barbados on the Watch List in 2013. The United States is concerned about local TV and radio broadcasters' refusal to pay for public performances of music. United States rights holders complain that both private and government-owned broadcasters in Barbados either fail to obtain licenses from the Copyright Society of Composers, Authors & Publishers Inc. (COSCAP) or fail to pay for all of the applicable rights even if they are licensed by COSCAP. In addition, even though the Barbados Copyright Tribunal was finally convened in 2012, it has not yet acted to determine the amount due to COSCAP pursuant to a 2007 judgment of the Barbados Supreme Court that found copyright infringement violations. The United States urges the ​Government of Barbados to take all administrative action necessary to ensure that United States composers and songwriters receive compensation owed, without undue delay, for the public performance of their musical works. In addition, the United States is concerned that section 82 of the Copyright Act of 1988 creates a compulsory licensing scheme allowing for the interception and retransmission of United States cable programming by local cable operators without the consent of, and without adequately compensating, United States rights holders. The United States urges the Government of Barbados to repeal this provision. The United States looks forward to working with Barbados to resolve these and other issues.
Belarus
Belarus remains on the Watch List in 2013. In 2012, Belarus acceded to the Singapore Treaty on the Law of Trademarks, and improved the patent application process. However, Belarus should take further steps to implement an effective IPR enforcement regime. The United States remains concerned about Belarus' implementation of the IPR commitments made under the United States-Belarus Trade Relations Agreement of 1993. Piracy and counterfeiting remain widespread in Belarus, and IPR enforcement efforts continue to be weak and ineffective. The United States continues to urge Belarus to enact all regulations necessary to implement the amendments to the Belarusian Criminal and Administrative Codes related to IPR that have been pending since 2011, and to implement fully the WIPO Internet Treaties. The United States also encourages Belarus to harmonize its IPR regime with the regulatory principles adopted under the Customs Union established with Kazakhstan and Russia. Belarus should work with these countries to ensure that the Customs Union principles are executed in a manner that most effectively protects IPR and create the required unified trademark registry. For example, Belarus should implement and exercise the Customs Union Customs Code provisions on ex officio authority for customs officials in order to improve the investigation of suspected infringement cases, seizure of infringing goods, and prosecution of IPR violations. The United States will continue to monitor Belarus' progress on these and other matters.
Bolivia
Bolivia remains on the Watch List in 2013. In 2012, Bolivia's Intellectual Property Office continued its IPR public awareness efforts and Bolivia's police conducted two successful raids against manufacturers of counterfeit products. However, rampant piracy and counterfeiting persist. The United States is concerned about the alleged increase in the production of infringing goods in Bolivia. Bolivia should take steps to improve its enforcement of IPR, including by providing for more efficient prosecutions, by improving coordination among Bolivian enforcement authorities, and by allocating additional resources to enforcement officials. The United States will continue to monitor Bolivia's progress on these and other matters.
​Brazil
Brazil remains on the Watch List in 2013. Brazil continued to make progress in 2012 by conducting notable enforcement efforts across the country under the coordination of the National Council to Combat Piracy. However, the United States is concerned about recent regulations that provide Brazil's sanitary regulatory agency, ANVISA, with the authority to review pharmaceutical patent applications for meeting patentability requirements. These regulations appear to contravene an earlier opinion by the Federal Attorney General that clarified that ANVISA did not have this authority. The United States urges Brazil to continue to work with stakeholders to ensure that its patent examination process is transparent and predictable. Brazil continues to experience widespread piracy and counterfeiting, and the availability of pirated books is a particular concern to the United States. The United States urges Brazil to take steps to address the growing challenge of piracy over the Internet, and to strengthen pending amendments to its copyright law to better protect against IPR violations in the digital environment. The United States also encourages Brazil to strengthen its border enforcement efforts, and strengthen enforcement generally by more consistently arresting and prosecuting IPR violators, and by imposing deterrent-level penalties for those who are convicted. The United States encourages Brazil to clarify and strengthen its system for protecting against unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products. The United States also encourages Brazil to address its backlog of pending patent applications. The United States looks forward to continuing to work with Brazil to address these and other matters.
Bulgaria
Bulgaria is on the Watch List in 2013. Bulgaria has taken only limited steps to address persistant U.S. concerns regarding IPR infringement. Piracy over the Internet in Bulgaria remains a serious and growing concern. Numerous online infringing services operate in the market and enforcement actions have seldom resulted in convictions. Collecting societies continue to report serious challenges in collecting royalties and in enforcing their rights through administrative or judicial action. Bad faith trademark registrations have also become increasingly common and are often registered due to constraints of the Bulgarian Patent Office, which is responsible for trademark registrations. These and other concerns are compounded by inadequacies in the Bulgarian judicial system. Generally, rights holders face significant delays in the adjudication of IPR disputes, many of which do not reach final sentencing, and when they do, remedies are non-deterrent. Bulgaria's Government should coordinate with rights holders, and other interested parties, such as ISP, to develop recommendations for reducing Internet piracy. Notwithstanding these continuing issues, the United States recognizes the positive steps Bulgaria has taken to address IPR infringement in its market. For example, Bulgaria has engaged in enforcement actions, including by the Ministry of Culture as well as the Ministry of the Interior's Cybercrime Unit, and has cooperated with rights holders on campaigns to address software piracy. Bulgaria also undertook a software legalization initiative in 2012. The United States encourages Bulgaria to continue to enhance its IPR protection and enforcement efforts, and to work with the United States to devise strategies to resolve these issues. The United States looks forward to continuing to work with Bulgaria to address these and other issues.
​Canada
USTR is moving Canada to the Watch List in 2013. In June 2012, the United States welcomed the passage of the Copyright Modernization Act, which, among other things, is designed to implement Canada's obligations under the WIPO Internet Treaties and to address the challenges of copyright piracy in the digital age. In March 2013, Canada also introduced the Combating Counterfeit Products Act to strengthen IPR enforcement, which included provisions that would provide ex officio authority to Canadian customs officials to seize pirated and counterfeit goods at the border. The United States supports Canada's commitment to address the serious problem of pirated and counterfeit goods entering our highly integrated supply chains and urges Canada to expand the legislation to also provide authority for its customs officials to take action against goods in-transit. With respect to pharmaceuticals, the United States continues to have serious concerns about the availability of rights of appeal in Canada's administrative process for reviewing regulatory approval of pharmaceutical products and also has serious concerns about the impact of the heightened utility requirements for patents that Canadian courts have been adopting recently. The United States looks forward to continuing its close cooperation with Canada on IPR issues, including through the TPP negotiations.
Colombia
Colombia remains on the Watch List in 2013. The United States continues to engage extensively with Colombia as it implements the United States-Colombia Trade Promotion Agreement (TPA). The United States applauds Colombia on its accession to the Madrid Protocol and the Trademark Law Treaty in 2012. Colombia also strengthened its enforcement operations through improved internal coordination of enforcement agencies. Colombia has taken significant steps to reduce its backlog of pending patent applications. The United States urges Colombia to swiftly pass key pieces of currently pending IPR legislation in connection with the implementation of that agreement. Concerns remain with an overall lack of adequate resources and training for enforcement officials. The United States will continue to work with Colombia on the implementation of TPA obligations regarding protections against piracy over the Internet, which is a growing problem in Colombia. Colombia should also take steps to address its continuing problem with optical disc piracy. The United States looks forward to continuing its engagement with Colombia to address these and other matters.
Costa Rica
Costa Rica remains on the Watch List in 2013. Costa Rica made initial progress in processing patent applications by adding examiners and achieving a reduction in the average time required to review patent applications. Nevertheless, significant concerns remain on IPR matters. Despite the need to implement a CAFTA-DR obligation to ensure that the software used by the government is legitimate, substantial progress on that front has not yet been realized. While the United States is aware of a recent measure intended to address this issue, it looks forward to confirming effective and timely implementation of the new measure later this year. Costa Rica ​should also take steps to grant ex officio powers to law enforcement and customs officials. An additional concern is the failure to create a specialized IPR crime unit, despite the government's announced intention to do so in 2011. Costa Rica should take concrete steps to improve its overall IPR enforcement efforts by making IPR violations a higher priority, concluding prosecutions, and imposing deterrent penalties. The United States encourages Costa Rica to take concerted efforts to resolve these longstanding issues. The United States looks forward to continuing to work with Costa Rica to address these and other issues.
Dominican Republic
The Dominican Republic remains on the Watch List in 2013. Although the United States notes some progress in enforcement against pirated goods, and participation in technical assistance activities relating to IPR protection and enforcement, substantial concerns remain, especially with respect to the widespread availability of pirated and counterfeit products. IPR enforcement agencies in the Dominican Republic continue to experience a lack of coordination, resources, and training. The United States encourages the Dominican Republic to implement its obligations with respect to providing an effective system for protecting against the unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products. It also urges the Dominican Republic to address a growing backlog of pending patent applications. The growing delays in the patent application and examination process highlight the need to fully implement CAFTA-DR obligations with respect to patent term adjustment. The United States also urges the Dominican Republic to provide an effective system to address patent issues expeditiously in connection with applications to market pharmaceutical products. The United States looks forward to continuing to work with the Dominican Republic to address these and other issues.
Ecuador
Ecuador remains on the Watch List in 2013. The United States is very concerned about a recent increase in the fees charged for applying for and maintaining patent rights and plant variety protection in Ecuador; these exorbitantly high fees create a disincentive for rights holders and negatively impact the operation of the Ecuadorian patent system. The United States is somewhat encouraged by recent enforcement efforts that led to temporary closures of stores selling pirated music and movies and to a decline in the piracy of satellite television signals. Ecuador continues to face widespread piracy and counterfeiting. The United States urges Ecuador to continue to improve its IPR enforcement efforts and to establish the specialized IPR courts required under Ecuador's 1998 IPR law. Ecuador should also further clarify its system for protecting against unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products, and to provide such protection for agricultural chemical products, and provide an effective system to address patent issues expeditiously in connection with applications to market pharmaceutical products. The United States looks forward to continuing to work with Ecuador to address these and other issues.
​Egypt
Egypt remains on the Watch List in 2013. IPR challenges for Egypt include the failure to issue deterrent-level sentences for IPR violations when offenders are convicted and the need for additional training for enforcement officials. However, the United States is encouraged by positive reports about recent improvements in efficiency and effectiveness of the Economic Courts in IPR cases and the Information Technology Industry Development Agency's increase in raids and investigations against distributors and producers of pirated or counterfeit merchandise. The United States encourages Egypt to finalize long-awaited regulations to clarify border procedures for the destruction of counterfeit products and to provide customs officials with the authority to take ex officio action. Although Egypt is working to upgrade its trademark registration system, rights holders have expressed concerns that Egypt has issued certain registrations improperly. Rights holders continue to express significant concerns that businesses offering pirated television content are impairing the ability of legitimate distribution outlets to operate in the market, and that print piracy continues to harm domestic and foreign publishers. The United States urges Egypt to amend its copyright law to clarify translation requirements for copyright protection, appropriate presumption of ownership in copyright works, and other concerns. The United States looks forward to continuing to work with Egypt on these and other issues.
Finland
Finland remains on the Watch List in 2013. The United States continues to be concerned about the lack of product patent protection for certain pharmaceutical products. U.S. industry also has expressed concern that the regulatory framework in Finland regarding process patents filed before 1995, and pending in 1996, denies adequate protection to many of the top-selling U.S. pharmaceutical products currently on the Finnish market. The United States looks forward to continuing to work with Finland to address these and other issues.
Greece
Greece remains on the Watch List in 2013. While Greece made some improvements to its IPR protection and enforcement regime in 2012, including adopting amendments to its Trademark Law and taking enforcement actions to combat infringement, numerous and notable problems persist. The 2009 IPR Action Plan addresses many of these issues, and the United States continues to urge Greece to implement the plan. Greece should fully implement legislation and regulations that provide administrative fines for software infringement. Greece should also take steps to ensure that it has effective legal mechanisms to address piracy over the Internet, including by implementing existing measures that allow civil actions by rights holders concerning piracy over the Internet, as well as by providing ISPs with clear incentives to cooperate with rights holders in removing unauthorized content. The current lack of adequate authority to combat piracy over the Internet has exacerbated this growing problem. In addition, ​Greece should expand on recent enforcement efforts to address the continuing widespread availability of pirated and counterfeit goods. The United States also continues to encourage Greece to improve its judicial system, which suffers from significant delays and few infringement convictions. The United States looks forward to continuing to work with Greece to address these and other issues.
Guatemala
Guatemala remains on the Watch List in 2013. The United States remains optimistic about the coordination of IPR enforcement efforts in Guatemala. However, enforcement efforts weakened in 2012, and overall prosecutions were significantly down compared to the previous year. While the United States was encouraged by the 2011 enactment of legislation to strengthen penalties against the production and distribution of counterfeit medicines, the United States is not aware of any successful prosecutions under the law in 2012. Additional problems include a severe lack of resources. Trademark squatting is a significant and growing concern, and government use of unlicensed software remains problematic. In addition, pirated and counterfeit goods continue to be widely available in Guatemala, and enforcement efforts are hampered by limited resources and the need for better coordination among all enforcement agencies. The United States encourages Guatemala to continue its enforcement efforts against the manufacture of pirated and counterfeit goods, and to take steps to improve the operation of its judicial system. The United States looks forward to continuing to work with Guatemala to address these and other matters.
Israel
USTR moved Israel to the Watch List in September 2012 because Israel implemented the first portion of the Understanding on IPR that it concluded with the United States in 2010.
The United States and Israel reached the Understanding, which concerns several longstanding issues regarding Israel's regime for pharmaceutical products, on February 18, 2010. As part of the Understanding, Israel committed to strengthen its laws on protection of pharmaceutical test data and patent term extension, and to publish patent applications promptly after the expiration of a period of eighteen months from the time an application is filed. The Understanding provided, among other things, that the Government of Israel would submit legislation regarding these three matters to the Knesset. Israel has submitted legislation to the Knesset regarding all three issues, and the bills concerning pharmaceutical test data and patent publication have been enacted. The United States urges Israel to pass the final bill so that, pursuant to the Understanding, Israel will be removed from the Watch List.
Separately, the United States encourages Israel to ratify and implement the WIPO Internet Treaties. Doing so would strengthen Israel's IPR regime, and would afford rights holders with additional effective enforcement remedies against copyright infringement that occurs over the Internet. The United States also encourages Israel to amend its copyright law to provide for statutory damages.
​Additionally, there remain challenges to enforcement of IPR in Israel. Stakeholders report that the Special Police Units designed to enforce IPR are under-funded and do not undertake ex officio action. The United States is concerned by a recent increase in websites selling counterfeit pharmaceuticals, but commends Israel for its efforts to cooperate with other countries, including the United States, to prosecute those who operate these enterprises. The United States looks forward to continuing to work with Israel to resolve these and other matters.
Italy
Italy remains on the Watch List in 2013. Piracy over the Internet remains high in Italy, with several content industries reporting that Italy has among the highest rates of online piracy in the world. While the Italian Communications Authority (AGCOM) made progress in 2011 and early 2012 on draft regulations to combat piracy over the Internet, that process has since stalled. As a result, rights holders continue to face serious challenges in combating piracy over the Internet in Italy. The United States underscores the importance of taking action to finalize and implement the AGCOM regulations to create an effective mechanism against all types of copyright piracy over the Internet. The United States also continues to have concerns about a Data Protection Agency opinion concerning the monitoring of peer-to-peer networks. The United States encourages to take further measures to significantly reduce delays in the adjudication of IPR disputes in Italian courts and ensure that cases reach final sentencing. The United States also looks forward to the report of the Parliamentary Committee of Inquiry on Counterfeiting and Piracy in the Commercial Field, which is an important opportunity to state the importance of strong IPR protection and enforcement in Italy and to identify solutions to address persistent concerns. The United States looks forward to continuing to work with Italy to address these and other matters.
Jamaica
Jamaica remains on the Watch List in 2013. In 2012, Jamaica continued to participate in the IPR training programs offered by the USPTO, and also conducted its own IPR training initiatives, including a workshop for Jamaican customs officials. Jamaica also continued its efforts to educate the public about IPR protection and enforcement, and launched a voluntary copyright registration system. However, the United States remains seriously concerned about the need to enact the draft Patents and Designs Act, which is intended to implement certain provisions of the TRIPS Agreement and the United States-Jamaica Bilateral Intellectual Property Agreement. In addition, Jamaica's largest cable operator has not yet compensated performing rights organizations for the public performances of music, and the United States urges Jamaica to resolve that problem. The United States looks forward to continuing to work with Jamaica to address these and other issues.
​Kuwait
Kuwait remains on the Watch List in 2013. The United States is seriously concerned that key IPR legislation remains pending in Kuwait, including amendments to the 1999 copyright law that have been drafted for several years but have not yet been submitted to Parliament. Although Kuwaiti officials continued enforcement efforts in the past year, there remains an ongoing lack of deterrent-level sentences for IPR crimes as well as insufficient resources allocated to enforcement at the border. The United States urges Kuwait to amend its copyright law to provide adequate and effective protection, and looks forward to continuing to work with Kuwait to address these and other IPR concerns.
Lebanon
Lebanon remains on the Watch List in 2013. The United States is concerned that there has not been any progress on any of the pending IPR legislative reforms, including amendments to Lebanon's patent and copyright laws. Lebanon also has not completed its accession to the WIPO Internet Treaties, despite ratification of these treaties by Parliament in 2010, and several IPR treaties that have been approved by the Cabinet still await parliamentary approval, including the Paris Convention for the Protection of Industrial Property, the Berne Convention for the Protection of Literary and Artistic Works, the Singapore Treaty on the Law of Trademarks, and the Patent Cooperation Treaty. Additionally, Lebanon should provide its enforcement authorities with ex officio authority. The United States encourages Lebanon to clarify its protection against the unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval of pharmaceutical products. Further, the manufacture and sale of counterfeit drugs remain a concern in Lebanon. A lack of transparency in the pharmaceutical registration process reportedly has enabled the registration of counterfeit products. However, the United States commends Lebanese enforcement officials for successfully conducting raids targeting sellers of counterfeit goods, including counterfeit pharmaceuticals. The United States is also encouraged that Lebanon has launched an online registration service for copyrights and trademarks. The United States looks forward to continuing to work with Lebanon to address these and other issues.
Mexico
Mexico remains on the Watch List in 2013. Positive developments in 2012 included Mexico's accession to the Madrid Protocol, the adoption of guidelines for protection of pharmaceutical test data, and clarification of the scope of its system for addressing patent issues expeditiously in connection with applications to market pharmaceutical products. However, serious concerns remain, particularly with respect to the widespread availability of pirated and counterfeit goods in Mexico and inadequate IPR enforcement. Criminal enforcement suffers from increased but inefficient coordination among federal and subfederal officials. In addition, to combat high levels of IPR infringement, Mexico needs to devote additional resources, bring more IPR prosecutions, and impose deterrent penalties against infringers. The United States continues to ​urge Mexico to provide its customs officials with ex officio authority and to enact legislation to strengthen its copyright regime, including by implementing the WIPO Internet Treaties and providing stronger protection against the unauthorized camcording of motion pictures in theaters. Prior to 2011, Mexican customs authorities and the Attorney General's Office worked jointly to intercept and prosecute transshipments of counterfeit and pirated goods. Following a shift in policy, however, Mexican authorities now only take action against transshipments of suspected infringing goods if there is evidence of "intent for commercial gain" in Mexican territory, which is very difficult to prove. The United States strongly urges Mexico to revert to the previous policy that allowed for the interception of potentially dangerous counterfeit goods in transit to the United States and other countries. The United States also looks forward to the Mexican Senate's ratification of the Anti-Counterfeiting Trade Agreement. The United States looks forward to continuing to work with Mexico to address these and other issues, including through the TPP negotiations.
Paraguay
USTR is moving Paraguay to the Watch List in 2013. In addition, the United States continues to monitor Paraguay under Section 306. Although Paraguay failed to complete negotiations to renew the expired Memorandum of Understanding on Intellectual Property Rights (MOU) with the United States, the United States is encouraged by Paraguayan officials' recent interest to finalize the MOU, and by Paraguay's creation of the National Directorate of Intellectual Property. The new, autonomous Directorate has the potential to better ensure that law enforcement has sufficient resources and the necessary powers to effectively carry out its mission. Paraguay should also take steps to address its inefficient judicial system. Paraguay still faces rampant piracy and counterfeiting, and should take additional steps to improve enforcement efforts internally and at the border, including by strengthening its customs actions and improving its cooperation with neighboring countries Brazil and Argentina on cross-border enforcement of IPR. The United States continues to urge Paraguay to improve its patent protections and to provide an effective system for protecting against the unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval of pharmaceutical and agricultural chemical products. The United States looks forward to continuing to work with Paraguay to address these and other matters.
Peru
Peru remains on the Watch List in 2013. The United States remains concerned about the widespread availability of counterfeit and pirated products in Peru. The United States urges Peru to devote additional resources for IPR enforcement, improve coordination among enforcement agencies, enhance its border controls, and strengthen its judicial system. The United States encourages Peru to coordinate enforcement and pursue prosecutions under the law that criminalizes the sale of counterfeit medicines. In addition, the United States urges Peru to take steps to implement its obligations under the United States-Peru Trade Promotion Agreement regarding the prevention of government use of unlicensed software, and likewise urges steps to ​implement obligations with respect to protections against piracy over the Internet, which continues to be a growing problem. Peru also needs to clarify its protections for biotechnologically-derived pharmaceutical products. The United States looks forward to continuing to work with Peru to address these and other issues, including through the TPP negotiations.
Philippines
The Philippines remains on the Watch List in 2013, subject to further review if the Philippines continues to make progress in key areas. The United States recognizes the efforts and achievements of high level IPR officials and legislators in strengthening the protection and enforcement of IPR in the Philippines. The United States looks forward to continued engagement in the coming year. In early 2013, the Philippines brought to a close a longstanding legislative effort to modernize its copyright and IPR enforcement regimes consistent with the WIPO Internet Treaties. That legislation also took the important step of providing ex officio authority to customs officers. The United States looks forward to the adoption of implementing regulations that will further strengthen and clarify the law, especially as to the circumvention of technological protection measures. The United States looks to the Philippines to take important steps to address piracy over the Internet, in particular with respect to notorious online markets. The United States applauds the Philippines on its accession to the Madrid Protocol. The United States is encouraged by IPR enforcement efforts generally in the Philippines and by the continuing drop in the incidence of unauthorized camcording of motion pictures in theaters. While the United States is hopeful that implementation of the 2011 Supreme Court IPR procedural rules will lead to a more efficient judicial process for IPR cases, the United States remains concerned about the need to strengthen criminal enforcement of IPR and to improve predictability with respect to search and seizure orders. The United States also remains concerned about amendments to the Patent Law that limit the patentability of certain chemical forms unless the applicant demonstrates increased efficacy. The United States encourages the Philippines to provide an effective system for protecting against the unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products. The United States looks forward to continuing to work with the Philippines to address these and other issues.
Romania
Romania remains on the Watch List in 2013. The United States is encouraged by the continuing positive cooperation between Romanian enforcement officials and industry representatives and the increase in cases brought against IPR violators. However, Romania should devote the necessary resources and training for authorities to effectively address the continuing problems of piracy and counterfeiting. The United States continues to urge Romania to prioritize IPR protection and enforcement, and to take steps to address concerns over judicial delays and a lack of deterrent-level sentencing. Piracy over the Internet remains a serious concern, and more ​enforcement efforts are needed to address the problem. The United States looks forward to continuing to work with Romania to address these and other issues.
Tajikistan
Tajikistan remains on the Watch List in 2013. The United States commends Tajikistan on its recent accession to the WTO in March 2013. Additionally, Tajikistan has taken the further positive step of adopting amendments to its laws relating to pharmaceutical products and agricultural chemical products to provide a system for protecting against the unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for these products. Further, as part of its WTO accession process, Tajikistan committed to an amendment of its Customs Code to provide ex officio authority for border and criminal enforcement officials. However, Tajikistan has yet to fully implement its commitments under the 1993 United States-Tajikistan Trade Agreement. In particular, Tajikistan needs to increase prosecutions of criminal IPR infringement. The United States looks forward to continuing to work with Tajikistan to increase its enforcement capacity in general, and to implement the commitments that Tajikistan made as part of its WTO accession process.
Trinidad and Tobago
USTR is placing Trinidad and Tobago on the Watch List in 2013. The United States is concerned that the local cable operator refuses to negotiate with the Copyright Music Organization of Trinidad and Tobago ("COTT"), the local performing rights organization, for compensation for public performance of music, including for music written by American composers. Particularly troubling in this case is the fact that a court in 2011 found that the local cable operator was required to obtain a public performance license and nearly two years later judicial authorities have not completed the appeal hearing nor assessed royalties owed to COTT. Furthermore, notwithstanding this decision, the local cable operator failed to obtain this license. The United States is also concerned by ongoing delays in the resolution of the long-standing litigation over the collection of unpaid performance royalties from the same cable operator. The United States urges the Government of Trinidad and Tobago to take all necessary actions to ensure that cable operators in Trinidad and Tobago operate in compliance with the provisions of their cable license agreements related to IPR and that, more generally, IPR is protected in its territory. The United States looks forward to continuing to work with Trinidad and Tobago to address these and other issues
Turkey
Turkey remains on the Watch List in 2013. U.S. rights holders continue to raise serious concerns regarding the export from, and transshipment through, Turkey of counterfeit and pirated products. In particular, industry has expressed concern about the manufacture of counterfeited luxury goods. Currently, the Government of Turkey does not have an effective mechanism for ​ensuring legal use of software, and government software piracy is a concern. Stakeholders report that judicial delay is a significant obstacle to enforcement of IPR in Turkey. Additional resources and training, including for customs officials and judges, are needed to allow for more effective IPR enforcement efforts. The United States understands that Turkey is considering legislative reforms in the areas of industrial property and copyright law, and hopes that this process will result in the amelioration of some of the persistent IPR problems. In particular, the copyright law should be amended to provide an effective mechanism to address piracy in the digital environment, including full implementation of the WIPO Internet Treaties, and the industrial property law should be amended to resolve the uncertainty about trademark-related cases stemming from a 2008 Constitutional Court decision that annulled certain trademark infringement penalties. Legislative reforms should provide for penalties for IPR infringement in order to deter such conduct, including deterrence against those who aid and abet those who manufacture and sell counterfeit goods. Royalty collecting societies should have fair and transparent procedures. Police should be given the ex officio authority they currently lack, which impedes police from acting on obvious infringement cases. The United States continues to encourage Turkey to clarify its protection against the unfair commercial use, as well as unauthorized disclosure, of test and other data generated to obtain marketing approval for pharmaceutical products. The United States was encouraged by constructive bilateral engagement with Turkey over the past year and looks forward to continuing to work with Turkey to address these and other issues.
Turkmenistan
Turkmenistan remains on the Watch List in 2013. In 2012, Turkmenistan adopted a Law on Copyright and Allied Rights and amended its Civil Code to enhance IPR protection. However, Turkmenistan should also provide for administrative and civil procedures for IPR enforcement, as well as criminal penalties against IPR infringement, and should provide ex officio authority to its customs officials. The United States urges Turkmenistan to implement its commitments under the 1993 United States-Turkmenistan Trade Agreement. In addition, the United States continues to encourage Turkmenistan to join the Berne Convention on the Protection of Literary and Artistic Works and the Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of their Phonographs (Geneva Phonograms Convention). The United States looks forward to continuing to work with Turkmenistan on these and other issues.
Uzbekistan
Uzbekistan remains on the Watch List in 2013. Uzbekistan's Agency for Intellectual Property has expressed a commitment to improve the protection of IPR. To that end, Uzbekistan should increase penalties for IPR violations and ensure that its law enforcement authorities have ex officio authority to initiate investigations and enforcement actions. Uzbekistan also needs to allocate more resources to IPR enforcement at its borders to stem the flow of pirated films and recordings as well as counterfeit goods into Uzbekistan. The Uzbek Parliament should immediately take several legislative steps to move forward to address longstanding deficiencies ​in IPR protection. Specifically, it should: (1) approve Uzbekistan joining the Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of their Phonographs (Geneva Phonograms Convention); (2) approve Uzbekistan joining the WIPO Internet Treaties; (3) remove Uzbekistan's Article 18 reservation to the Berne Convention to ensure copyright protection for preexisting works; and (4) take legislative action to provide adequate copyright protection for foreign sound recordings The United States looks forward to continuing to work with Uzbekistan to address these and other issues.
Vietnam
Vietnam remains on the Watch List in 2013. Although Vietnam took certain steps to improve its regulatory framework in the last two years by passing decrees and issuing circulars to strengthen copyright protection and enforcement, significant areas of concern remain. Piracy and sales of counterfeit goods over the Internet is a growing concern, and counterfeit goods remain widely available in physical markets as well. In addition, book piracy, software piracy (including on government computer systems), and cable and satellite signal theft continue to be widespread. Although Vietnam took further steps on public awareness efforts, enforcement actions have showed little progress in 2012, with only a few criminal cases involving safety concerns prosecuted or pursued on non-IPR legal grounds, and enforcement agencies continue to have capacity constraints, due in part to a lack of resources and IPR expertise. Vietnam should clarify its system for protecting against the unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products. While Vietnam has broad laws criminalizing IPR crimes, the government has yet to draft the implementing guidelines that are necessary for law enforcement agencies and the courts to levy deterrent criminal penalties against IPR violators. The United States looks forward to continuing to work with Vietnam to address these and other issues, including in the TPP negotiations.