# Special 301 Report/2010/Section 2

SECTION II. COUNTRY REPORTS
PRIORITY WATCH LIST
China China will remain on the Priority Watch List in 2010 and will remain subject to Section 306 monitoring. China's enforcement of IPR and implementation of its TRIPS Agreement obligations remain top priorities for the United States. The United States is heartened by many positive steps the Chinese government took in 2009 with respect to these issues, including the largest software piracy prosecution in Chinese history, and an increase in the numbers of civil IP cases in the courts. The U.S. Government welcomes the continued and constructive discussions of these matters in the Joint Commission on Commerce and Trade (JCCT) and the JCCT Intellectual Property Rights Working Group. However, the overall level of IPR theft in China remains unacceptable.
The United States is also deeply troubled by the development of policies that may unfairly disadvantage U.S. rights holders by promoting "indigenous innovation" including through, among other things, preferential government procurement and other measures that could severely restrict market access for foreign technology and products.
China's IPR enforcement regime remains largely ineffective and non-deterrent. Widespread IPR infringement continues to affect products, brands and technologies from a wide range of industries, including movies, music, publishing, entertainment software, apparel, athletic footwear, textile fabrics and floor coverings, consumer goods, chemicals, electrical equipment, and information technology, among many others. The share of IPR-infringing product seizures at the U.S. border that were of Chinese origin was 79 percent in 2009, a small decrease from 81 percent in 2008.
The U.S. copyright industries report severe losses due to piracy in China. Trade in pirated optical discs continues to thrive, supplied by both licensed and unlicensed factories as well as by smugglers. These pirated optical discs are exported to markets across the region, impacting legitimate sales outside of China as well. Small retail shops continue to be the major commercial outlets for pirated movies and music. The theft of software, books and journals also remain key concerns. Business software theft by enterprises is particularly troubling as it not only results in lost revenues to software companies but also lowers the business costs of offending enterprises, and may give these firms an unfair advantage against their law-abiding competitors.
Strong action to curb trademark counterfeiting and copyright piracy on the Internet is critical to the future of IPR enforcement in China. China should significantly increase criminal ​prosecutions and other enforcement actions against Internet-based piracy and counterfeiting operations through a sustained national effort backed by appropriate resources. A recent internet enforcement campaign in which 558 cases were investigated and 375 websites were shut down demonstrates that when the Chinese government chooses to utilize its enforcement resources and personnel to deal with an IPR problem, it can produce results. The United States notes that at times particular enforcement actions are directed not only at copyright or trademark infringement, but also include infringement activities that may be considered more serious under the Chinese legal system. There is a concern that such actions lead to the public perception that the enforcement authorities are not focused on enforcing intellectual property specifically. This perception can be reinforced when effective enforcement measures are not taken against well-known infringers. The United States urges the Chinese government to demonstrate consistent resolve when fighting piracy and counterfeiting on the Internet by taking firm action against such infringers, so that they will adjust their business models to respect intellectual property laws, and thereby send a strong signal throughout the country.
Additionally, in October 2009, in response to allegations that some state-run libraries were providing unauthorized electronic copies of scientific and medical journal articles to for-profit entities, the NCAC, the Ministry of Education, the Ministry of Culture, and the National Anti-Pornography Office issued the Notice on Strengthening Library Protection of Copyright, which directs libraries to strictly adhere to the disciplines of the Copyright Law. This was a welcome step, and the United States will monitor implementation of this directive in 2010. In particular, the United States will look to the Chinese authorities to implement this directive through unannounced audits and inspections. Emphasis should be placed on preventing the unauthorized commercial sale of journals, either directly to consumers or through online intermediaries.
Counterfeiting remains pervasive in many retail and wholesale markets. This problem continues in spite of significant attention and resources from brand owners, administrative supervision, civil lawsuits, agreements with landlords, and attention from China's central government and from foreign governments. There have been some improvements, including judicial enforcement related to infringing activities in retail markets in Beijing and Shanghai. Other welcome steps include judicial authorities sentencing wholesalers to prison terms, and holding retail market landlords liable for failing to take appropriate measures to prevent infringement. Unfortunately, outside Beijing and Shanghai, there have been limited efforts to hold landlords liable for infringement that occurs on their premises. Even in Beijing and Shanghai, the relatively minor penalties levied by courts, and examples of landlords and infringers ignoring applicable court rulings, indicate that additional measures, including criminal sanctions, will be necessary to bring this problem under control.
There are a number of other obstacles to effective enforcement. These include high value and volume thresholds that must be met in order to initiate criminal prosecution of IPR infringement. U.S. trademark and copyright industries report that administrative fines are too low, and imposed ​too infrequently, to provide deterrence. Consequently, infringers view administrative seizures and fines merely as a cost of doing business. Civil damages for infringement are likewise inadequate.
Exacerbating its enforcement difficulties, China maintains market access barriers, such as import restrictions and restrictions on wholesale and retail distribution, which can discourage and delay the introduction into China's market of a number of legitimate foreign products that rely on IPR. The United States challenged certain restrictions in connection with a WTO dispute filed in April 2007. (See Section I above for further information.)
China's market access barriers create additional incentives to infringe products such as movies, video games, and books, and lead consumers to the black market, thereby compounding the severe problems already faced by China's enforcement authorities. An example of such a barrier is a Ministry of Culture circular regarding digital music was issued in September 2009. That circular bars providers of imported – but not domestic – digital music from distributing their content online unless they obtain content approval, and meet unrealistic obligations, such as a entering into mandatory exclusive licensing arrangement with a wholly Chinese-owned entity. The United States is also very concerned about a troubling trend whereby China adopts policies that unfairly advantage domestic or "indigenous" innovation over foreign innovation and technologies. In November 2009, Chinese government agencies issued the Circular on Launching the 2009 National Indigenous Innovation Product Accreditation Work, requiring companies to file applications by December 2009 for their products to be considered for accreditation as "indigenous innovation products." This Circular, and revisions to it issued in April 2010, provides for subsequent catalogs to be issued that provide preferential treatment in government procurement to any products that are granted this accreditation. Provinces and municipal governments have also reportedly issued their own "indigenous innovation" catalogs related to government procurement. The Circular, and the April 2010 revisions, contain provisions that allow Chinese authorities to require that R&D on products receiving accreditation be conducted, at least partially, in China. The United States has raised concerns regarding this and other problematic criteria with Chinese authorities.
Draft Regulations for the Administration of the Formulation and Revision of Patent-Involving National Standards, released for public comment in November 2009 by the Standardization Administration of China (SAC), raise concerns regarding their expansive scope, the feasibility of certain patent disclosure requirements, and the possible use of compulsory licensing for essential patents included in national standards. If adopted in their current form, these provisions may have the unintended effect of undermining the incentives for innovation and, by discouraging foreign rights holders from participating in the development of standards in China, depriving the standard setting process of potentially superior technology.
​With respect to patents, on October 1, 2009, the Third Amendment to China's Patent Law, passed in December 2008, went into effect. While many provisions of the Patent Law were clarified and improved, rights holders have raised a number of concerns about the new law and implementing regulations, including the effect of disclosure of origin requirements on patent validity, inventor remuneration, and the scope of and procedures related to compulsory licensing, among other matters. The United States will closely follow the implementation of these measures in 2010.
The United States encourages China to provide an effective system to expeditiously address patent issues in connection with applications to market pharmaceutical products. Additionally, 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.
The United States believes that continued bilateral dialogue and cooperation can lead to further progress in these and other areas. The United States will continue to work with China on IPR enforcement and protection strategies, innovation policies, and the range of other important IPR-related matters in our bilateral economic relationship, including through the Joint Commission on Commerce and Trade (JCCT) and other fora.
Progress, or lack thereof, in protecting and enforcing IPR in China can vary greatly by region. For example, industry stakeholders continue to identify Shanghai municipality as a bright spot in China's IPR landscape. Stakeholders hope that additional improvements may result from Shanghai's hosting of the 2010 World Expo. Neighboring Zhejiang province has also shown progress. Zhejiang courts have set an example of transparency by publishing IPR decisions on the Internet. In 2009, Zhejiang undertook more trademark infringement investigations than any other Chinese province, thereby highlighting both the increasing responsiveness of officials to industry requests for enforcement, and the scale of the problem in the province.
Jiangsu province, with its focus on promoting high technology, has demonstrated its recognition of the importance of IPR protection, including through a Suzhou court's criminal sentences in a high-profile software piracy case. However, right holders continue to express frustration at the level and scale of counterfeit manufacturing in Guangzhou province, one of China's largest manufacturing hubs. Enforcement is undermined by inconsistencies with respect to matters such as the valuation methodologies for calculating damages, fines, and penalties. Moreover, fines and penalties are not deterrent and the numbers of criminal IPR cases that are initiated is too low to bring about measurable improvements in the region.
​Generally, IPR enforcement at the local level is hampered by poor coordination among Chinese government ministries and agencies, local protectionism and corruption, high thresholds for initiating investigations and prosecuting criminal cases, lack of training, and inadequate and non-transparent processes. As in the past, the United States will continue to review the policies and enforcement situation in China at the sub-national levels of government.
Russia Russia will remain on the Priority Watch List in 2010. While Russia has made some progress over the past several years in improving IPR protection and enforcement, concerns remain, particularly with respect to Russia's continued failure to implement fully its commitments in the November 2006 Bilateral Agreement on Protection and Enforcement of Intellectual Property Rights ("IPR Bilateral Agreement").
In the IPR Bilateral Agreement, Russia committed to fight optical disc and Internet piracy, enact legislation to protect against unfair commercial use of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products, deter piracy and counterfeiting through enhanced criminal penalties, strengthen border enforcement, and conform its laws to international IPR norms. Russia's continued delays in fully implementing this Agreement are particularly troubling, since, with respect to several of the obligations, the IPR Bilateral Agreement established an agreed-upon deadline of June 1, 2007. While the amendments to the Civil Code and Customs Code have been introduced into the Duma they have not yet become law. Amendments to the Law on Medicines were enacted in 2010; they did not implement the provisions of the IPR Bilateral Agreement on protection of pharmaceutical test data.
The United States urges Russia to strengthen its enforcement efforts against piracy and counterfeiting, which remain major concerns. The U.S. copyright industries report significant losses due to copyright infringement, especially through online piracy, which has continued to grow. Despite the closing of some illegal websites offering pirated music, many more have sprung up in their place. In 2009, Russian law enforcement agencies conducted raids on optical disc production facilities suspected of engaging in pirate activities; however, many surprise raids are minimally effective because the date and time of pending raids is often leaked to the optical disc plant in advance. While the level of cooperation among Russian agencies in optical disc raids is increasing, the quality of raids, and the level of police expertise, is uneven nationwide. A number of factors limit the effectiveness of raids, including the monetary damages threshold required to initiate criminal actions, and the general reluctance of prosecutors to initiate criminal cases in the field of IPR, even when there is evidence of a violation of criminal code provisions.
In addition, rights holders continue to report counterfeiting of trademarked goods as a problem, especially for consumer goods, distilled spirits, agricultural chemicals, biotechnology, and pharmaceuticals.
​On a positive note, industry reports that legitimate DVD sales in Russia are on the rise, in part due to increased law enforcement action in this area, including a 2008 ban on camcording in movie theaters, and a growing preference for high quality products. While in the past U.S. firms complained about "trademark squatting" by Russian enterprises attempting to appropriate well-known trademarks, rights holders have recently been more successful in countering these schemes through the Russian court system or the Russian Federal Service for Intellectual Property, Patents, and Trademarks (Rospatent). In an effort to advance administrative IPR protection, a specialized higher patent chamber at Rospatent has brought greater expertise and efficiency to the adjudication of patent and trademark disputes. Industry has also reported a decline in the estimated business software piracy rate in Russia. Industry attributed the decrease to software legalization programs, government engagement, user education, and enforcement.
Algeria Algeria will remain on the Priority Watch List in 2010. The United States continues to have serious concerns regarding an Algerian law that bans numerous imported pharmaceutical products and medical devices in favor of local production. Additional concerns remain over the lack of protection against unfair commercial use, as well as unauthorized disclosure, of undisclosed test and other data generated to obtain marketing approval for pharmaceutical products. Industry continues to raise concerns over the weak protection of patents in Algeria. Copyright piracy is also of concern, as is the overall weakness of Algerian enforcement efforts. The United States encourages Algeria to continue its WTO accession efforts and will continue to work with Algeria to address these IPR concerns.
Argentina Argentina will remain on the Priority Watch List in 2010. The United States encourages Argentina to increase its efforts to combat rampant piracy and counterfeiting. Although industry reports continued cooperation with Argentine Customs and other law enforcement authorities in 2009, they also observe continuing enforcement challenges. Copyright piracy continues to present a problem, and industry reports concerns about growing Internet piracy. Positive developments in 2009 included an increase in the term of protection for sound recordings and performances, Argentina's conclusion of an agreement with local universities to curb book piracy, and significant seizures of counterfeit goods by Customs. Problems persist in the civil and criminal enforcement areas, however, including ineffective civil damages, non-deterrent penalties in criminal cases, and delays in the adjudication of IPR infringement cases. Argentina also continues to face a backlog of patent applications. The United States encourages Argentina to provide for protection against unfair commercial use, as well as unauthorized disclosure, of undisclosed test and other data generated to obtain marketing approvals for pharmaceutical products, and to provide an effective system to address patent issues expeditiously in connection ​with applications to market pharmaceutical products. The United States will continue to monitor and assist with Argentina's efforts to address these IPR concerns.
Canada Canada will remain on the Priority Watch List in 2010. The United States looks forward to the government of Canada's implementation of its previous commitments, recently reaffirmed in 2010, to improve IPR protection, and is encouraged by the high level of cooperation between the Canadian and United States governments on IPR matters. However, Canada has not completed the legislative reforms in the copyright area that are necessary to deliver on its commitments. The United States urges Canada to enact legislation in the near term to update its copyright laws and address the challenge of Internet piracy. Canada should fully implement the WIPO Internet Treaties, which Canada signed in 1997. Canada's weak enforcement of intellectual property rights is also of concern, and the United States continues to encourage Canada to improve its IPR enforcement system to provide for deterrent sentences and stronger enforcement powers. In particular, border enforcement continues to be weak. The United States encourages Canada to provide its border officials with the authority to seize suspected infringing materials without the need for a court order. The United States will continue to follow Canada's progress toward implementing an adequate and effective IPR protection and enforcement regime, including its progress on actions to address Internet piracy and improve border enforcement.
Chile Chile will remain on the Priority Watch List in 2010. The United States continues to engage in discussions with Chile concerning the implementation of Chile's IPR commitments under the U.S.-Chile Free Trade Agreement (FTA). The United States notes that Chile took positive steps in 2009 and early 2010, including the creation of the National Institute for Industrial Property to oversee industrial property registration and protection, undertaking law enforcement actions targeting sale of counterfeit and pirated products, and engaging in constructive cooperation between rights holders and enforcement officials. In early 2010, Chile enacted amendments to its intellectual property law, including measures designed to implement a number of commitments under the FTA. However, it appears that the legislation fell short of fully addressing Chile's multilateral and bilateral commitments. For example, the legislation did not include protections against the circumvention of technological protection measures. The United States remains concerned that the relatively low rate of prosecutions and the tendency to apply minimum sentences for counterfeiting and piracy in Chile may not effectively deter future infringement. Chile can take quick action on laws that would ratify the International Convention for the Protection of New Varieties of Plants (UPOV Convention) (1991) and the Trademark Law Treaty. The United States positively notes that the U.S. pharmaceutical industry has indicated that authorities in Chile have signaled a willingness to discuss issues of importance to the industry. However, the United States remains concerned about inadequate protection against unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data ​generated to obtain marketing approvals for pharmaceutical products, and urges Chile to provide an effective system to address patent issues expeditiously in connection with applications to market pharmaceutical products. The United States looks forward to working with Chile's new administration on its implementation of Chile's IPR commitments in the FTA.
India India will remain on the Priority Watch List in 2010. India continues to make gradual progress on efforts to improve its legislative, administrative, and enforcement infrastructure for IPR. India has made incremental improvements on enforcement, and its IP offices continued to pursue promising modernization efforts. Among other steps, the United States is encouraged by the Indian government's consideration of possible trademark law amendments that would facilitate India's accession to the Madrid Protocol. The United States encourages the continuation of efforts to reduce patent application backlogs and streamline patent opposition proceedings. Some industries report improved engagement and commitment from enforcement officials on key enforcement challenges such as optical disc and book piracy. However, concerns remain over India's inadequate legal framework and ineffective enforcement. Piracy and counterfeiting, including the counterfeiting of medicines, remains widespread and India's enforcement regime remains ineffective at addressing this problem. Amendments are needed to bring India's copyright law in line with international standards, including by implementing the provisions of the WIPO Internet Treaties. Additionally, a law designed to address the unauthorized manufacture and distribution of optical discs remains in draft form and should be enacted in the near term. The United States continues to urge India to improve its IPR regime by providing stronger protection for patents. One concern in this regard is a provision in India's Patent Law that prohibits patents on certain chemical forms absent a showing of increased efficacy. While the full import of this provision remains unclear, it appears to limit the patentability of potentially beneficial innovations, such as temperature-stable forms of a drug or new means of drug delivery. The United States also encourages India to provide protection 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. The United States encourages India to improve its criminal enforcement regime by providing for expeditious judicial disposition of IPR infringement cases as well as deterrent sentences, and to change the perception that IPR offenses are low priority crimes. The United States urges India to strengthen its IPR regime and will continue to work with India on these issues in the coming year.
Indonesia Indonesia will remain on the Priority Watch List in 2010. Indonesia was placed on the Priority Watch List in 2009 because of the overall deterioration of the IP protection and enforcement climate, and a lack of follow-through on earlier promising steps. Although enforcement efforts against pirated optical discs continue, the overall level of enforcement remains insufficient to address the country's major piracy and counterfeiting problem, including with respect to the ​counterfeiting of pharmaceutical products. Concerns remain over weaknesses in the IPR enforcement system, including an unreliable judicial system for IPR cases, a low number of criminal prosecutions, and non-deterrent penalties. Regulations intended to implement the Customs law amendments passed more than two years ago are still pending. Indonesia should provide 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. Serious market access barriers remain, including a law imposing requirements that restrict the importation of medicines by foreign pharmaceutical companies. The United States urges Indonesia to strengthen its IPR protection and enforcement regime.
Pakistan Pakistan will remain on the Priority Watch List in 2010. There were various improvements with respect to IPR protection in 2009, including the government's recognition of IPR protection as a key area in its economic reforms, and enhanced coordination of IPR enforcement efforts. Pakistan established IPR investigation and intelligence units within the Federal Investigative Agency and Customs authorities and made progress in enforcement efforts against the manufacture of infringing optical discs. Another positive development was the establishment of an e-filing system for patent applications. However, serious concerns remain about inadequate IPR protection and enforcement. The United States continues to encourage Pakistan to provide effective protection against unfair commercial use, as well as unauthorized disclosure, of pharmaceutical test or other data generated to obtain marketing approvals for pharmaceutical products. Pakistan also lacks an effective system to address patent issues expeditiously in connection with applications to market pharmaceutical products. The United States encourages Pakistan to strengthen enforcement against book and optical disc piracy, to aggressively prosecute IPR crimes, and to seek deterrent sentences for IPR infringers. The United States will continue to monitor Pakistan's efforts to address these and other shortcomings in Pakistan's IPR protection and enforcement regime.
Thailand Thailand will remain on the Priority Watch List in 2010 with an Out-of-Cycle Review (OCR) to be conducted this year. The United States is encouraged by the Royal Thai government's senior level commitment to stronger IPR protection and enforcement through the creation of the National Task Force, and its action plan to improve its IPR regime. Under this action plan, Thailand acceded to the Patent Cooperation Treaty, implementation of which should help to expedite patent application processing. Thailand also proposed legislation to address landlord liability for infringement, to address illegal camcording, and to enhance the authority of Thai Customs to take enforcement actions ex officio. Thailand is also considering possible amendments to its patent law, as well as amendments to its copyright law to implement the WIPO Internet Treaties. The United States looks forward to the passage and implementation of appropriate laws to strengthen IPR protection and enforcement in Thailand. In 2009, Thailand ​increased IP awareness campaigns and enforcement efforts. However, piracy and counterfeiting remain widespread, and industry reports a growing challenge in the areas of Internet, cable, and signal piracy. In the pharmaceutical sector, the United States encourages Thailand to engage in a meaningful and transparent manner with all relevant stakeholders, including owners of intellectual property rights, as it considers ways to address Thailand's public health challenges while maintaining a patent system that promotes investment, research, and innovation. In addition, the United States reiterates its support for the 2001 Doha Declaration on the TRIPS Agreement and Public Health, as described in Section I of this Report. Overall, the United States encourages Thailand to continue its efforts to strengthen its IPR protection and enforcement regime, and looks forward to working with Thailand in the coming year through the OCR.
Venezuela Venezuela will remain on the Priority Watch List in 2010. The protection and enforcement of intellectual property rights in Venezuela continued to deteriorate in 2009 following the trend witnessed in previous years. In 2006, when Venezuela withdrew from the Andean Community, it reinstated the 1955 Industrial Property Law. That version of the law prohibits patents for pharmaceuticals, foodstuffs, and other products. The reinstatement of the 1955 law also creates uncertainty as to whether trademarks previously registered under the Andean Community law will be recognized. In 2009, Venezuela revoked two pharmaceutical patents for antibiotics after a foreign company sued domestic producers of generic copies. The United States urges Venezuela to provide protection against unfair commercial use, as well as unauthorized disclosure, of undisclosed test and other data generated to obtain marketing approval for pharmaceutical products. Additionally, the United States remains concerned about widespread copyright piracy. The United States urges Venezuela to improve its IPR protection and enforcement efforts.
WATCH LIST
Belarus Belarus will remain on the Watch List in 2010. The United States remains concerned about Belarus' delayed implementation of IPR commitments under the United States-Belarus Trade Relations Agreement. Positive steps in 2009 included Belarus' adoption of amendments to its trademark law, including amendments to provide greater protection for well-known trademarks. Amendments to the copyright law are still needed to implement obligations of the WIPO Internet Treaties. In addition, the government should take action to ensure the use of licensed software by government entities. Counterfeit and pirated goods, including pre-release films, continue to be widely available. Enforcement officials continue to lack ex officio authority to investigate, seize infringing goods, and prosecute IPR cases, and Belorussian law does not allow adequate scope for ex parte searches. Reports indicate that IPR enforcement remains largely non-existent. ​The United States plans to monitor the impact of the recently formed Russia-Belarus-Kazakhstan Customs Union on the border enforcement of IPR and on Belarus' WTO accession. The United States continues to urge Belarus to strengthen its IPR laws and to take enforcement actions against piracy and counterfeiting.
Bolivia Bolivia will remain on the Watch List in 2010. Piracy and counterfeiting, including counterfeiting of medicines, continue to be widespread in Bolivia. There continues to be a need for significant improvements to the Bolivian IPR regime. The Bolivian copyright law should be amended to conform to international standards. Despite a notable enforcement action resulting in the seizure of more than 30 tons of counterfeit pharmaceutical products and corresponding prosecutions, substantial additional resources and a commitment by enforcement and judicial authorities are needed to improve enforcement actions against piracy and counterfeiting. The United States continues to urge Bolivia to improve its IPR protection and enforcement regimes, and to further its IPR enforcement efforts.
Brazil Brazil will remain on the Watch List in 2010. Brazil continued to show a commitment to fighting counterfeiting and piracy and to strengthening its enforcement efforts; however, significant levels of piracy and counterfeiting continue. Affected industries report positive cooperation with law enforcement, and the National Council to Combat Piracy has issued a new action plan to combat piracy. Nevertheless, concerns remain over border enforcement and the lack of expeditious and deterrent sentences. The United States encourages Brazil to continue to improve its enforcement actions, as well as strengthen its IPR legislation by acceding to and fully implementing the WIPO Internet Treaties. The planned revision of its copyright law, expected in 2010, is a promising opportunity. Industry reports heightened concerns about Internet piracy, and book piracy also remains a concern. Patent concerns remain, including about the scope of patentability and the uncertain role of ANVISA, Brazil's sanitary regulatory agency, in examination of certain patent applications. Brazil also does not provide for the 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. The United States will continue to engage with Brazil to resolve IPR concerns the U.S.-Brazil Bilateral Consultative Mechanism and other relevant bilateral fora.
Brunei Brunei will remain on the Watch List in 2010. Brunei made notable progress in 2009. Local retailers and recording industry representatives coordinated efforts to remove pirated music from stores. Additionally, retailers and recording industry representatives cooperated in an anti-piracy campaign. There have been some improvements in prosecuting IPR infringers, demonstrated by a recent conviction in a business software case. However, retailers continue to sell pirated ​goods, and many appear to go unpunished by the authorities. Amendments to Brunei's copyright law that would strengthen enforcement authority have been pending for years. Brunei should sustain its recent efforts to enforce against the retail sale of pirated goods through consistent raids, prosecutions, and deterrent penalties, and by passing needed amendments to the copyright law. The United States will continue to engage with Brunei to encourage the continuation of efforts to improve IPR protection and enforcement.
Colombia Colombia will remain on the Watch List in 2010. Colombia continues to improve its efforts to combat IPR infringement though enforcement actions. Coordination of the many agencies responsible for enforcing IPR improved in 2009; however, these agencies need additional training and resources. There are also concerns over the lack of deterrent sentences. Another area of improvement has been the reduction in patent approval times from more than six to less than five years, in keeping with commitments Colombia made during the U.S.-Colombia Trade Promotion Agreement negotiations. The United States encourages Colombia to develop an effective system to address patent issues expeditiously in connection with applications to market pharmaceutical products. The United States also encourages Colombia to develop a mechanism to improve enforcement against IPR infringement on the Internet, and notes that optical disc piracy remains a concern. The United States looks forward to working with Colombia to address these issues in the coming year.
Costa Rica Costa Rica will remain on the Watch List in 2010. To implement IPR commitments in the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), Costa Rica passed legislation providing for stronger IPR protection and enforcement. Technical corrections to this legislation are pending. In addition, Costa Rica recently published regulations to provide for the protection of undisclosed information submitted in support of the registration of new agricultural chemical products in Costa Rica. The United States remains concerned, however, about weak IPR enforcement in Costa Rica, particularly with respect to copyright piracy and trademark counterfeiting. Of particular concern is the lack of willingness by the relevant authority to initiate prosecutions for copyright and other IPR violations. The United States strongly encourages the government of Costa Rica to address the shortcomings in its IPR enforcement system by assigning higher priority and greater resources to combating piracy and counterfeiting, by bringing cases against individuals and organizations engaged in criminal IPR infringements, and by providing deterrent penalties for these crimes. The United States will continue to monitor Costa Rica's implementation of its international obligations and IPR commitments under CAFTA-DR.
​Dominican Republic The Dominican Republic will remain on the Watch List in 2010. The Dominican Republic continued its efforts to implement its commitments under CAFTA-DR, but enforcement remains weak and requires improved coordination, additional resources, and training of enforcement personnel. The United States recognizes and appreciates that there were some improvements in 2009 with respect to the government's use of licensed software and television broadcast piracy, but we remain concerned that pirated goods continue to be widely available. The United States is also concerned about excessive delays in the issuance of patents. The United States will continue to monitor the Dominican Republic's implementation of its bilateral and multilateral obligations 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 approvals for pharmaceutical and agrochemical products, and to provide an effective system to address patent issues expeditiously in connection with applications to market pharmaceutical products. The United States looks forward to future cooperation on IPR matters with the Dominican Republic, and will continue to monitor the Dominican Republic's implementation of its IPR commitments under CAFTA-DR.
Ecuador Ecuador will remain on the Watch List in 2010. Ecuador's Intellectual Property Institute continued to make progress in 2009 by continuing to reduce the processing time of patent applications, and by working to implement an electronic system for patent and trademark applications. The government is also undertaking public awareness and training efforts. However, serious concerns remain about overall IPR enforcement efforts, which decreased in 2009. Industry reported increases in piracy of music, movies, books, and business and entertainment software. Dedicated IPR units created in 2008 appear to lack the level of specialization required to be effective, and Ecuador has not yet established the specialized IPR courts required under its 1998 IPR law. The United States encourages Ecuador to provide 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, as well as to provide an effective system to address patent issues expeditiously in connection with applications to market pharmaceutical products. The United States will continue to monitor recent developments concerning compulsory licensing of pharmaceutical and agricultural chemical products in Ecuador, bearing in mind the discussion of the Doha Declaration on TRIPS and Public Health in Section I of this report. The United States urges Ecuador to continue public awareness campaigns, and to strengthen its IPR protection and enforcement efforts.
Egypt Egypt will remain on the Watch List in 2010. Egypt undertook positive efforts in 2009, including acceding to various international IPR treaties, such as the Patent Cooperation Treaty, ​the Madrid Protocol, and the Nice Classification Agreement. The Egyptian Information Technology Industry Development Agency (ITIDA), which is responsible for the enforcement of IPR in relation to software and databases, reports improved enforcement efforts, including an increase in prosecutions and raids. Authorities also improved enforcement against counterfeit pharmaceuticals. However, piracy rates for books, music, and motion pictures remain high, and the United States encourages the Ministry of Culture and other Egyptian ministries to increase their enforcement efforts. The economic courts established in 2008 have been effective in prosecuting IPR infringement, but judges and prosecutors need additional training. Enforcement agencies, including Customs, are also in need of capacity building. The United States continues to urge the Ministry of Health to clarify its commitment to protect against unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approvals for pharmaceutical products, and to provide an effective system to address patent issues expeditiously in connection with applications to market pharmaceutical products. The United States will continue to engage on these issues through the U.S.-Egypt Strategic Economic Partnership.
Finland Finland will remain on the Watch List in 2010. The United States continues to be concerned about the lack of product patent protection for certain pharmaceutical products. U.S. industry continues to express 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 will continue to work with and encourage Finland to resolve this matter.
Greece Greece will remain on the 2010 Watch List. Greece improved its IPR legal framework in 2009 by ratifying the WIPO Internet Treaties together with other EU Member States. There were also some improvements in enforcement efforts. These included steps to facilitate communication between the police, the Hellenic Copyright Organization, and other IPR-related agencies, and the creation of a department at the Ministry of Citizen's Protections focusing on economic and cyber crimes, including IPR. Greece also took action against Internet piracy by shutting down infringing sites, with one such action resulting in felony charges, and by preparing a Draft Code of Conduct establishing cooperation between Internet service providers and rights holders. Despite these efforts, overall enforcement remained weak and inconsistent. Additionally, Greece did not follow through on initiatives begun in 2008 and 2009. For example, the Inter-Ministerial Coordinating Committee on IPR, which was formed in 2008, was not very active in 2009, and the National Action Plan for IPR was not significantly implemented in the last year. The United States encourages Greece to implement its National Action Plan on IPR, and to improve IPR protection and enforcement.
​Guatemala Guatemala will remain on the Watch List in 2010. Guatemala has been improving its IPR protection and enforcement frameworks in connection with CAFTA-DR. Specific improvements in 2009 included the appointment of a new IPR prosecutor and the establishment of an interagency IPR working group under the leadership of the IPR prosecutor to strengthen enforcement and inter-governmental cooperation. These improvements, fortified by a program of U.S. training for relevant officials, have contributed to an increase in enforcement actions, including raids, seizures, and prosecutions. The United States recognizes and appreciates Guatemala's efforts to date in these areas. The United States encourages Guatemala to ensure that proper resources are available for its enforcement activities, to achieve improved coordination among enforcement agencies, and to focus its enforcement efforts on manufacturers of pirated and counterfeit goods. The United States will continue to monitor Guatemala's implementation of its commitments under CAFTA-DR.
Italy Italy will remain on the Watch List in 2010. In 2009, Italy expressed a renewed commitment to tackling IPR issues, especially with respect to Internet piracy, including by ratifying the WIPO Internet Treaties along with the other EU Member States. Copyright enforcement problems and the growth of Internet piracy remain serious challenges. One notable success was a 2009 Italian Supreme Court ruling that it is lawful to block illegal file-sharing sites. Italy also passed a law increasing criminal penalties against counterfeiters. Overall, much remains to be done to address Italy's IPR protection and enforcement deficiencies. Piracy and counterfeiting remain widespread, and industry reports growing online piracy of books and journals. The lack of an expeditious legal mechanism for right holders to address Internet piracy and a recent Data Protection Agency decision affecting a rights holders' ability to monitor peer-to-peer networks are obstacles to effectively combating this trend. The United States is hopeful that the Inter-Ministerial Committee on Internet Piracy will take prompt and concrete action to address this growing challenge. While the Finance Police and Customs Police carry out investigations and seizures, few cases reach final sentencing and courts still fail to impose deterrent sentences. The United States will continue to work with Italy to encourage a resolution to these issues.
Jamaica Jamaica will remain on the Watch List in 2010. Jamaica's continued delay in enacting the Patents and Designs Act, which is intended to implement certain obligations under the TRIPS Agreement and the United States-Jamaica Bilateral Intellectual Property Agreement, remains an issue of concern. Positive developments in 2009 included increased enforcement activity and public awareness efforts. The United States urges the government of Jamaica to reform its patent law in accordance with international standards for patent protection.
​Kuwait Kuwait will remain on the Watch List in 2010. Kuwaiti officials, particularly Customs authorities, continue to make progress on enforcement against piracy and counterfeiting, and to pursue cases through the judicial process. However, the lack of deterrent criminal penalties limits the effectiveness of these efforts. The United States is concerned that several key pieces of IPR legislation have remained pending for many years. The United States has provided extensive technical assistance on legislative updates. The United States encourages Kuwait to pass the necessary IPR-related legislation and to improve its enforcement efforts.
Lebanon Lebanon will remain on the Watch List in 2010. Lebanon has been moving forward incrementally on fighting piracy and strengthening enforcement of existing IPR laws, and actions by the Cyber Crime and Intellectual Property Rights Bureau of the police department have been responsive to rights holders' concerns. The government has demonstrated a commitment to protecting IPR by expressing its intention to ratify the WIPO Internet Treaties, by reengaging with U.S. technical experts on the update of the 1999 Copyright Law, and through training and public campaigns aimed at raising awareness about the importance of IPR protection. However, concerns remain over weak enforcement against piracy and counterfeiting, including counterfeiting of medicines. The Cyber Crime and Intellectual Property Rights Bureau lacks ex officio authority and requires continued training to deal effectively with infringements on the Internet. There is also a need for deterrent sentencing for IPR crimes. Lebanon also does not provide effective protection against unfair commercial use, as well as unauthorized disclosure, of undisclosed test data or other data generated to obtain marketing approval for pharmaceutical products. The United States encourages Lebanon to pass the pending legislative amendments to strengthen IPR protection, and will continue to engage with Lebanon through its WTO accession process and through an ongoing review under the U.S. Generalized System of Preferences program.
Malaysia Malaysia will remain on the Watch List in 2010. Malaysia continues to express a commitment to protecting and enforcing IPR, and to pursuing needed legislative and regulatory improvements. Enforcement efforts, especially in the business software area, improved last year, and industry reports increased responsiveness from the Ministry of Domestic Trade, Cooperatives, and Consumerism to their requests for enforcement actions. However, piracy and counterfeiting remain widespread, and enforcement efforts continue to decline. The United States encourages Customs officials to initiate IPR investigations ex officio, as authorized under Malaysian law. Enforcement campaigns were successful in targeting pirated business software, but book piracy remains problematic, and industry reports a rise in Internet piracy. The specialized IPR courts continue to face a backlog, and additional resources and training are required to address this problem. The United States encourages Malaysia to accede to the WIPO Internet Treaties and ​the Budapest Treaty, and to consider legislation to address unauthorized camcording. The United States also encourages Malaysia to provide 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, and to provide an effective system to address patent issues expeditiously in connection with applications to market pharmaceutical products. The United States will continue to work with Malaysia to make progress on these IPR issues.
Mexico Mexico will remain on the Watch List in 2010. Mexico's enforcement efforts continue to improve, demonstrated by an increase in the number of raids, arrests, and indictments in 2009, and the imposition of the longest prison sentence on record in Mexico for an IPR violation (six and half years). Bilateral cooperation among agencies charged with intellectual property protection and enforcement is encouraging, especially among those participating in a series of training and exchange programs over the past year. However, the United States urges Mexico to increase resources devoted to protecting intellectual property and improve coordination among enforcement officials at the federal, state, and municipal levels. Concerns also remain over enforcement procedures and the inconsistent issuance of deterrent penalties. The United States welcomes Mexico's recent passage of legislation that would provide the Attorney General's office and certain Mexican enforcement officials with ex officio authority to prosecute IPR infringement. Legislation is still needed to provide ex officio authority to Customs officers. The United States has also been encouraged to learn about the steps that Mexico is taking to establish a voluntary recordation system at the border, coupled with new procedures with respect to detention of seized goods at the border. The United Sates welcomes signs that Mexico may be prepared to move forward with additional legislation to strengthen its IPR regime, including an anti-camcording law and the implementation of the WIPO Internet Treaties. The United States encourages Mexico to provide 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. The United States also welcomes recent efforts by Mexican authorities to improve Mexico's system to address patent issues in connection with applications to market pharmaceutical products; the existing system has generated considerable litigation and uncertainty. The United States will continue to work with Mexico to resolve IPR concerns through bilateral, regional, and other means of engagement.
Norway Norway will remain on the Watch List in 2010. The United States continues to be concerned about the lack of product patent protection for certain pharmaceutical products. U.S. industry has expressed concerns that Norway's regulatory framework for process patents filed prior to 1992, and pending in 1996, denies adequate patent protection for a number of pharmaceutical products currently on the Norwegian market. The United States will continue to work with and encourage Norway to find a solution to this issue.
​Peru Peru will remain on the Watch List in 2010. Peru has enhanced its IPR legal framework by enacting legislation designed to implement its obligations under the United States-Peru Trade Promotion Agreement (PTPA). Additionally, Peru has strengthened its Intellectual Property Office (INDECOPI) and created a National Strategic Plan to combat counterfeiting and piracy. However, several concerns remain, including continued overall weak enforcement resulting in the widespread availability of pirated and counterfeit goods. A further concern is that courts fail to impose deterrent penalties in criminal IPR cases and against businesses found to have engaged in infringing activity. There is a continuing need for measures to prevent government use of unlicensed software. In connection with its obligations under the PTPA, Peru should clarify its system for protecting undisclosed test or other data submitted to obtain approval of agricultural chemical products, particularly in light of recent measures that appear to provide for automatic approval of generic products. The United States will work closely with Peru on these and other issues through the framework provided by the PTPA.
Philippines The Philippines will remain on the Watch List in 2010 with an Out-of-Cycle Review to be conducted this year. Ineffective enforcement of IPR continues to be a concern. Although some agencies continue making progress to increase raid and seizure activity, these efforts have proven insufficient to address widespread piracy and counterfeiting in the country. The United States encourages ongoing efforts to address inefficiencies in the judicial system, and to establish specialized IPR courts so that rights holders have a reliable avenue for recourse and prosecutions move forward effectively and without delay. The United States also encourages the Philippines to complete its work on legislative reforms needed to strengthen IPR protection, including the implementation of the WIPO Internet Treaties, which has been pending in Congress for years, and the final signing of the anti-camcording bill. The United States remains concerned about amendments to the patent law that prohibit patents on certain chemical forms unless the applicant demonstrates increased efficacy. The United States urges the Philippines to address its IPR protection and enforcement challenges, and looks forward to working with the Philippines in the coming year to address these and other issues.
Romania Romania will remain on the Watch List in 2010. Romania took some positive steps in 2009, including increased cooperation between enforcement authorities, such as the National Police and General Prosecutor's Office, the use of a national database to improve interagency coordination on enforcement, and coordination with rights holders on enforcement matters. Although large scale optical disc piracy has been greatly reduced and Romania has made further positive efforts aimed at ensuring the government's use of licensed software, rights holders report an increase in Internet piracy, compounded by coordination problems with Internet service providers. Despite gradual improvements in enforcement, concerns remain over weaknesses in ​the prosecution of IPR infringers, judicial inefficiency, and a failure to impose deterrent sentences. Additionally, some Romanian judges continue to dismiss IPR cases for a "lack of social harm." However, the United States is encouraged by recent convictions against companies for business software piracy, and by the indictment of a company and website administrator for enabling infringement on a peer-to-peer network. The United States will continue to work with Romania to improve its IPR protection and enforcement efforts and encourages Romania to consult with all relevant stakeholders, including rights holders, as it explores reforming its copyright law.
Spain Spain will remain on the Watch List in 2010. The United States remains concerned about particularly significant Internet piracy in Spain, and strongly urges prompt and effective action to address the issue. The Spanish government has not amended portions of a 2006 Prosecutor General Circular that appears to decriminalize illegal peer-to-peer file sharing of infringing materials, contributing to a public misperception in Spain that such activity is lawful. Spain's existing legal and regulatory framework has not led to cooperation between Internet service providers (ISPs) and rights holders to reduce online piracy. On the contrary, rights holders in Spain report an inability to obtain information necessary to prosecute online IPR infringers, further reducing their ability to seek appropriate remedies. Spain's legal system also generally does not result in criminal penalties for intellectual property infringement. The United States is encouraged by some recent positive developments in Spain, including the establishment of an Inter-Ministerial Commission with a mandate to propose changes in Spanish law and policy that will strengthen efforts to reduce Internet piracy. In January 2010, the Commission proposed legislation that would allow a committee based in the Ministry of Culture to request that an ISP block access to infringing materials hosted online. The United States urges Spain to continue taking positive steps to address Internet piracy, and will closely monitor progress in the next year.
Tajikistan Tajikistan will remain on the Watch List in 2010. Tajikistan has yet to fully implement its IPR commitments under the 1993 U.S.-Tajikistan Trade Agreement. Tajikistan made progress in 2009 by acceding to the WIPO Copyright Treaty and by amending its Administrative Code in an effort to implement Article 18 of the Berne Convention to provide protection for certain preexisting works. The United States encourages the Ministry of Culture to continue working towards accession to the WIPO Performances and Phonograms Treaty in 2010. Tajikistan does not provide protection for U.S. and other foreign sound recordings, and concerns remain over the lack of proper ex officio authority for criminal and border enforcement, and over insufficient criminal penalties for IPR infringement. The United States will continue to work with Tajikistan on these matters.
​Turkey Turkey will remain on the Watch List in 2010. Turkey increased enforcement actions and conducted successful public awareness and training campaigns in 2009. However, piracy and counterfeiting remain serious problems, and Turkey has not yet completed many of the legislative reforms needed to ensure effective IPR protection and enforcement throughout the country. Industry reports an increase in business software and online music piracy, and book and entertainment software piracy remain a concern. Turkey is also becoming a major exporter, as well as a transshipment point, for counterfeit and pirated products. Undue delays in the judicial process contribute to deficiencies in the overall IPR protection and enforcement regime, and the 2008 dismissal of several trademark-related cases continues to cause uncertainty about the status of protection for trademarks at issue in those cases. The United States encourages Turkey to maintain deterrent penalties for all categories of IPR infringements. The United States also encourages Turkey to clarify its protection against unfair commercial use, as well as unauthorized disclosure, of pharmaceutical test data or other data generated to obtain marketing approvals for pharmaceutical products. The United States urges Turkey to increase its efforts to enhance IPR protection and enforcement.
Turkmenistan Turkmenistan will remain on the Watch List in 2010. Turkmenistan has yet to implement the IPR provisions of the 1993 U.S.-Turkmenistan Trade Agreement (Bilateral Trade Agreement). Turkmenistan has not joined the treaties identified in the Bilateral Trade Agreement, including the Berne Convention, Geneva Phonograms Convention, and the WIPO Internet Treaties. The Civil and Criminal Codes provide some degree of protection against IPR infringement; however, Turkmenistan still must adopt explicit and comprehensive administrative and civil procedures and criminal penalties for IPR infringement. Turkmenistan has not adopted a separate copyright law and does not provide protection for foreign sound recordings and preexisting works. IPR enforcement is inadequate in part because Customs officials do not have ex officio authority to interdict suspected infringing material at the border. The United States urges Turkmenistan to adopt the necessary legal reforms to implement its obligations under the Bilateral Trade Agreement, and to improve its IPR regime.
Ukraine Ukraine will remain on the Watch List in 2010. Ukraine continued to make progress in 2009, including by updating its IPR laws, but enforcement efforts remain weak and piracy and counterfeiting are widespread. Ukraine has taken some positive steps to address its Internet piracy problem by creating a Cyber-Crime Unit under the Interior Ministry's Economic Crimes Division, and by enforcing against websites offering illegal content. These efforts have resulted in investigations and criminal charges. However, more needs to be done to ensure that government entities use only licensed software. Additional action is also needed to address Internet piracy, including providing law enforcement with the authority to shut down infringing ​websites. In general, Ukraine increased enforcement actions in 2009, and the Enforcement Cooperation Group, which coordinates all IPR enforcement efforts in Ukraine, continued to meet throughout 2009. However, serious concerns remain regarding the transshipment of counterfeit and pirated goods through Ukraine and that Customs officials lack ex officio authority to effectively address such transshipment. Concerns also remain about the judicial system, which suffers from a lack of deterrent sentencing, a lack of IPR expertise, and overall inefficiencies. The United States encourages Ukraine to address its IPR protection and enforcement deficiencies.
Uzbekistan Uzbekistan will remain on the Watch List in 2010. Uzbekistan has yet to fully implement its commitments under the 1994 U.S.-Uzbekistan Trade Agreement. Uzbekistan's copyright law does not provide protection for preexisting works for U.S. and other foreign sound recordings. Uzbekistan has not joined the Geneva Phonograms Convention. Enforcement remains weak and criminal penalties for IPR violations are not sufficient to provide a deterrent effect. Additionally, amendments are needed to provide enforcement officials, including Customs officials, with ex officio authority to initiate enforcement actions and investigations. The United States will continue to work with Uzbekistan through its WTO accession process and the ongoing review under the U.S. Generalized System of Preferences program.
Vietnam Vietnam will remain on the Watch List in 2010. However, the United States is encouraged by recent steps that the government has taken to improve IPR protection and enforcement, including recent amendments to the IP Law, an increase in administrative fines for copyright infringement, and a continuation of efforts to address Internet piracy. An amendment to the Criminal Code was also a positive step, although some questions remain about the scope of criminal penalties, particularly for copyright infringement. Enforcement efforts appear to have been better targeted and coordinated over the past year. Of particular note were efforts that led to a large seizure of optical discs and related equipment, as well as raids of a bookstore and a printing facility suspected of producing infringing goods. However, overall enforcement efforts remain insufficient to address rampant piracy and counterfeiting. Additionally, industry reports growth in Internet piracy. There is also a need for deterrent penalties to be imposed more regularly, and enforcement agencies should consider initiating more criminal prosecutions. Positive progress made in the area of cable and satellite broadcasting over the past several years is threatened by recent sporadic pirating of content by cable providers. The United States encourages Vietnam to continue considering regulations to protect against unfair commercial use, as well as unauthorized disclosure, of undisclosed test and other data generated to obtain marketing approval for pharmaceutical products. The United States will continue to engage with Vietnam under the U.S.-Vietnam Trade and Investment Framework Agreement working group and ​through cooperative IPR capacity-building programs to support the improvement of IP enforcement efforts in the country.
SECTION 306 MONITORING
Paraguay Paraguay will remain under Section 306 monitoring in 2010, specifically with respect to its implementation of the bilateral agreement regarding IPR protection and enforcement. In 2009, the United States and Paraguay signed an extension and revision of the previous Memorandum of Understanding on Intellectual Property Rights, which will remain in effect through 2011. While Paraguay has offered assurances of continued commitment to IPR enforcement in keeping with its obligations under the revised Memorandum of Understanding, the country experienced a marked decline in IPR enforcement actions during 2009 and early 2010. Turnover in personnel and limited resources contributed to unfavorable enforcement trends, as did longstanding problems with porous borders, ineffective prosecutions of IPR infringers, and a lack of deterrent sentences. Disappointing enforcement results contrasted with progress made in the area of public awareness and the adoption of a new penal code that increased penalties for IPR offenses. To date, however, industry reports that there have been no deterrent sentences and no criminal convictions for copyright piracy. The United States has concerns about inadequate protection against unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products, as well as shortcomings in Paraguay's patent regime. The United States will continue to work with Paraguay to address these IPR concerns during the coming year, including through the Joint Commission on Trade and Investment.
STATUS PENDING
Israel On February 18, 2010, in connection with the Special 301 Out-of-Cycle Review that was extended in 2009, the United States and Israel reached an understanding on several longstanding issues concerning Israel's IPR regime for pharmaceutical products. Israel's commitments pursuant to the understanding more closely align key aspects of Israel's IPR system for pharmaceutical products with the levels of protection afforded by other countries at Israel's advanced level of development.
As part of the understanding with the United States, Israel has committed to strengthen its laws on protection of pharmaceutical test data and patent term extension, and to publish patent applications before they are granted. These developments are significant to U.S. companies, ​which will benefit from stronger IPR protection in Israel. Additionally, Israel confirmed that it has taken steps to expedite approvals of new pharmaceutical drugs by the Ministry of Health, which means that Israeli citizens will get access to both innovative and generic medicines sooner. A copy of the understanding is available at www.ustr.gov.
In recognition of Israel's commitment to move forward on legislation to amend its IPR laws, and once the appropriate legislation is submitted to the Knesset, Israel will be moved from the Special 301 Priority Watch List to the Watch List. When that legislation is fully implemented (through passage by the Knesset of the agreed-upon amendments to Israeli law), Israel will be moved off the Special 301 list altogether.
Separately from the understanding discussed above, and in connection with its bid to join the OECD, Israel has signaled a new willingness to make progress on other IPR issues of concern. In particular, Israel announced plans to issue a draft copyright-related "exposure bill" (an early step in the legislative process) in one year. Israel has stated that the purpose of this step will be to solicit public comments on specific proposals pertaining to enacting core requirements of the WIPO Internet Treaties. The United States welcomes this step, and encourages Israel to proceed with full accession to, and implementation of, the WIPO Internet Treaties.