2008 SPECIAL 301 REPORT

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
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EXECUTIVE SUMMARY

Introduction 

The “Special 301” Report is an annual review of the global state of intellectual property rights 

(IPR) protection and enforcement, conducted by the Office of the United States Trade 

Representative (USTR) pursuant to Special 301 provisions of the Trade Act of 1974 (Trade Act). 

The 2008 Special 301 review process examined IPR protection and enforcement in 78 countries. 

Following extensive research and analysis, USTR designates 46 countries in this year’s Special 

301 Report in the categories of Priority Watch List, Watch List, and/or Section 306 Monitoring 

status. This report reflects the Administration’s resolve to encourage and maintain effective IPR 

protection and enforcement worldwide. 

The Special 301 designations and actions announced in this report are the result of close 

consultations with affected industry groups and other private sector representatives, foreign 

governments, Congressional leaders, and interagency coordination within the United States 

Government. This Administration is committed to using all available methods to resolve IPRrelated issues and ensure that market access is fair and equitable for U.S. products of IPRintensive industries. 

The Administration’s top priorities this year continue to be addressing weak IPR protection and 

enforcement, particularly in China and Russia. Although this year’s Special 301 Report shows 

positive progress in many countries, rampant counterfeiting and piracy problems have continued 

to plague China and Russia, indicating a need for stronger IPR regimes and enforcement in those 

countries. 

In addition to China and Russia, the Special 301 Report sets out significant concerns with respect 

to such trading partners as Argentina, Chile, India, Israel, Pakistan, Thailand, and Venezuela. In 

addition, the report notes that the United States will consider all options, including, but not 

limited to, initiation of dispute settlement consultations in cases where countries do not appear to 

have implemented fully their obligations under the World Trade Organization (WTO) 

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). 

In this year’s review, USTR highlights the need for significantly improved enforcement against 

counterfeiting and piracy, Internet piracy, counterfeit pharmaceuticals, transshipment of pirated 

and counterfeit goods, requirements for authorized use of legal software by government 

ministries, proper implementation of the TRIPS Agreement by developed and developing 

country WTO members, and full implementation of TRIPS Agreement standards by new WTO 

members at the time of their accession. 

Positive Developments 

Several countries made significant positive progress on IPR protection and enforcement in 2007. 

For example, Russia has increased penalties for copyright crimes and stepped up action against 

unlicensed optical disc plants. China has made progress on implementation of measures to 
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reduce end-user software piracy and agreed to strengthen enforcement against company name 

misuse. In Taiwan, prosecutions for business software piracy have increased, and Taiwan passed 

legislation making illegal and subjecting to civil and criminal liability services that intentionally 

facilitate peer-to peer file sharing. Seizures of counterfeit pharmaceuticals have increased in 

Indonesia and Nigeria. India has approved initiating action for accession to the Madrid Protocol. 

China and Australia joined the two key World Intellectual Property Organization (WIPO) treaties 

for copyright protection. Malaysia launched a new intellectual property (IP) Court, consisting of 

15 sessions courts and 6 high courts. Vietnam has taken actions to address the problem of signal 

piracy. The country sections of this Report describe numerous other positive developments. 

In 2007, the United States worked to strengthen IPR laws and enforcement around the globe. 

The three pending free trade agreements (FTAs) all contain world-class IPR provisions, and FTA 

partner countries such as the Dominican Republic and Oman overhauled their IPR laws as part of 

the FTA implementation process. 

In addition, USTR is pleased to announce that the following countries are having their status 

improved in the Special 301 Report or are being removed entirely because of progress on IPR 

issues this past year: 

• Belize is being removed from the Watch List due to improvements in IPR 

enforcement efforts following heightened engagement with the United States. 

• Egypt is being moved from the Priority Watch List to the Watch List due to 

improvements in pharmaceutical IPR protection. The United States urges Egypt to 

make further improvements, however, in its IPR enforcement efforts and to further 

clarify its practices with respect to data protection. 

• Lebanon is being moved from the Priority Watch List to the Watch List due to 

improvements in IPR enforcement efforts. Despite this progress, the United States 

urges Lebanon to pass long-awaited IPR amendments. 

• Lithuania is being removed from the Watch List due to improvements in IPR 

enforcement and passage of IPR legislation following heightened engagement with 

the United States. 

• Turkey is being moved from the Priority Watch List to the Watch List due to 

improvements in IPR protection. The United States encourages Turkey to make 

further improvements to its IPR protection and enforcement regimes. 

• Ukraine is being moved from the Priority Watch List to the Watch List due to 

improvements in IPR protection following close engagement with the United States 

during WTO accession negotiations. The United States urges Ukraine to continue, 

however, to make improvements in IPR enforcement and to effectively implement its 

recently passed IPR laws. 

The United States commends this positive progress by our trading partners. The United States 

will continue to work with these and other countries to achieve further improvements in IPR 

protection and enforcement during the coming year. 
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Free Trade Agreements and Implementation 

The United States is committed to promoting strong intellectual property rights through a variety 

of mechanisms, including the negotiation of FTAs, which contain intellectual property chapters 

that establish strong protections for copyrights, patents, and trademarks, as well as rules for 

enforcement. 

The United States is pleased to have worked together with many countries to strengthen IPR 

protection and enforcement through bilateral and multilateral FTAs. Agreements concluded in 

recent years include the Republic of Korea FTA (KORUS FTA), Panama Trade Promotion 

Agreement, Bahrain FTA, Oman FTA, the Peru Trade Promotion Agreement, the Colombia 

Trade Promotion Agreement, and the Central America-Dominican Republic Free Trade 

Agreement (CAFTA-DR) which covers Costa Rica, El Salvador, Guatemala, Honduras, 

Nicaragua, and the Dominican Republic. Each of these FTAs has resulted in commitments to 

strengthen IPR protection and enforcement in those countries. In regions such as the Middle 

East and Asia, the United States has used an increasing number of trade and investment 

framework agreement (TIFA) negotiations to enhance intellectual property protection and 

enforcement. 

Following the conclusion of these agreements, the United States continues to work closely with 

our trading partners to ensure proper implementation of FTA obligations under domestic law and 

strengthen bilateral cooperation. 

Generalized System of Preferences (GSP) Reviews 

As another mechanism for promoting strong intellectual property regimes around the world, 

USTR reviews IPR practices in connection with the implementation of trade preference 

programs such as the Generalized System of Preferences (GSP). USTR will continue to review 

IPR practices in Russia, Lebanon, and Uzbekistan under ongoing GSP reviews. 

Anti-Counterfeiting Trade Agreement (ACTA) 

On October 23, 2007, U.S. Trade Representative Susan C. Schwab announced that the United 

States will seek to negotiate an Anti-Counterfeiting Trade Agreement (ACTA). ACTA will 

bring together countries that recognize the critical importance of strong IPR enforcement for a 

prosperous economy. The ACTA is envisioned as a leadership effort among countries that will 

raise the international standard for IPR enforcement to address today’s challenges of 

counterfeiting and piracy. ACTA will build upon the Administration’s prior bilateral and 

regional cooperation successes. 

STOP! Initiative 

USTR is actively engaged in implementing the Administration’s Strategy Targeting Organized 

Piracy (STOP!) initiative. Announced in October 2004, STOP! brings together all the major 

players – the federal government, private sector, and trading partners – to take concerted action 

to crack down on piracy and counterfeiting. The initiative is part of an effort to enhance 
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coordination among all relevant U.S. Government agencies and U.S. trading partners to tackle 

this global problem. As part of STOP!, USTR continues to advocate the adoption of best 

practices guidelines for IPR enforcement. 

As part of this effort, USTR, in coordination with other agencies, is introducing new initiatives in 

multilateral fora to improve the global intellectual property environment that will aid in 

disrupting the operations of pirates and counterfeiters. In addition to the ACTA effort described 

above, key initiatives have gained endorsement and are undergoing implementation in the G-8, 

the U.S.-EU Summit, the Security and Prosperity Partnership (SPP) with Canada and Mexico, 

the Organization for Economic Cooperation and Development (OECD), and the Asia-Pacific 

Economic Cooperation (APEC) forum. 

Implementation of the U.S.-EU Action Strategy for IPR Enforcement has focused on addressing 

concerns in key countries such as China and Russia through closer coordination and information 

exchange, in addition to increasing customs cooperation and providing technical assistance to 

third countries. Through a bilateral working group, the two sides have established regular 

information exchanges on efforts to improve China’s intellectual property climate, and have 

deepened their IPR-related cooperation in the context of Russia’s WTO accession. The Parties 

have expanded this cooperative dynamic to other regions of the world including Southeast Asia 

and Latin America. 

The Leaders of Canada, Mexico, and the United States launched the Security and Prosperity 

Partnership of North America (SPP) in 2005 to address issues related to economic competition 

resulting from shifting patterns of trade and investment worldwide. The governments 

subsequently established an Intellectual Property Working Group under the SPP. USTR, 

together with the Department of Commerce, jointly leads the U.S. delegation to the SPP IP 

Working Group. The SPP IP Working Group developed a trilateral Intellectual Property Rights 

Action Plan, which leaders announced at the SPP Summit in Montebello, Canada, in August 

2007. The Action Plan constitutes a strategy for governments and the private sector to combat 

piracy and counterfeiting in North America. The governments of Canada, Mexico, and the 

United States have agreed to take action in three areas: (1) detecting and deterring trade in 

counterfeit and pirated goods; (2) increasing consumer awareness of the adverse effects of 

counterfeiting and piracy; and (3) measuring the depth and scope of counterfeiting and piracy. 

Through efforts by the United States, APEC endorsed the “Anti-Counterfeiting and Piracy 

Initiative” in 2005, which paved the way for the adoption of a number of U.S. led proposals. 

Some of these initiatives include Model Guidelines on reducing trade in counterfeit and pirated 

goods by protecting against unauthorized copies, preventing the sale of counterfeit goods over 

the Internet, raising public awareness on IP protection and enforcement efforts, and securing 

supply chains. Other initiatives include a paper on innovative techniques for IPR border 

enforcement and commitments made by the APEC leadership on combating signal theft, and 

addressing markets that knowingly sell counterfeit and pirated goods. The United States will 

continue to introduce initiatives that build on past accomplishments. 
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Global Scope of Counterfeiting and Piracy 

The continuing growth of IPR theft and trade in fakes and pirated materials threatens innovative 

and creative economies worldwide. Counterfeiting has evolved in recent years from a localized 

industry concentrated on copying high-end designer goods to a sophisticated global business 

involving the mass production and sale of a vast array of fake goods, including items such as 

soaps, shampoos, razors, electronics, batteries, cigarettes, alcoholic beverages, sporting goods, 

automobile parts, motorcycles, medicines, and health care products, among others. Not only is 

there greater diversification in the types of goods that are being counterfeited, but industry 

reports a growing trend in the production of labels and components for these fake products. 

Exploiting free trade zones, counterfeiters are establishing a global trade in these items, shipping 

them separately to be assembled and distributed in another country. 

Counterfeiting not only affects the profits of legitimate producers, but also impacts consumers 

who waste money and sometimes risk their safety by purchasing fake goods. It also damages 

the economies of the countries in which it occurs by decreasing tax revenue and deterring 

investment. Counterfeiters generally pay no taxes or duties, and they often disregard basic 

standards for worker health and safety, and product quality and performance. Piracy of 

copyrighted products in virtually all formats, as well as counterfeiting of trademarked goods, has 

grown rapidly because these criminal enterprises offer enormous profits and little risk. 

Counterfeiters and pirates require little up-front capital investment, and even if caught and 

charged with a crime, the penalties imposed on convictions in many countries are so low that 

they offer little or no deterrence. 

Stronger and more effective criminal and border enforcement is required to stop the manufacture, 

import, export, transit, and distribution of pirated and counterfeit goods. Through bilateral 

consultations, FTAs, and international organizations, USTR is working to maximize the deterrent 

effects of remedies, including stronger penalties and requirements for the seizure and destruction 

of pirated and counterfeit goods, and the equipment used in their production. 

Counterfeit Pharmaceuticals 

The manufacture and distribution of counterfeit pharmaceuticals is a growing problem that poses 

special concerns for consumer health and safety. The United States notes its concern with the 

proliferation of the manufacture of counterfeit pharmaceuticals in Brazil, China, India, Mexico,

and Russia, and the sale and distribution of counterfeit pharmaceuticals in many countries. A 

significant contributing factor in this problem is the unauthorized use of bulk active 

pharmaceutical ingredients (APIs) to manufacture counterfeit pharmaceuticals. Countries must 

do more to provide their relevant agencies with the authority to regulate and enforce against the 

unauthorized use of APIs domestically and to ensure that they are not exported for unauthorized 

use abroad. Also, countries must do more to enforce vigilantly against the manufacture and 

distribution of counterfeit pharmaceuticals. 
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Consumer Safety 

While counterfeit pharmaceuticals and medical devices pose the most obvious health and safety 

hazards to consumers, many industries are affected by counterfeit goods that can put consumers 

at risk. Substandard products in the automotive, chemical, wine and spirits, tobacco, food, and 

consumer goods/personal care product sectors could have considerable adverse effects on 

consumer health and safety. This issue is of particular concern in China and Russia, but also 

affects consumers in the United States. Weaknesses in the distribution and supply chains must 

be addressed in order to prevent injury to consumers who believe that they are purchasing or 

using a legitimate product. 

Notorious Markets 

Global piracy and counterfeiting continue to thrive, due in part to large marketplaces that deal in 

infringing goods. This year’s Special 301 Report notes the following virtual and physical 

markets as examples of marketplaces that have been the subject of enforcement action, or may 

merit further investigation for possible IPR infringements, or both. The list represents a selective 

summary of information reviewed during the Special 301 process; it is not a finding of violations 

of law. The United States encourages the responsible authorities to step up efforts to combat 

piracy and counterfeiting in these and similar markets. 

Virtual Markets 

Allofmp3 (Russia). Industry reports that allofmp3 was formerly the world’s largest serverbased pirate music website. Although the site’s commercial operations appear to have been 

disabled in 2007 and a criminal prosecution is pending, other Russian-based websites are 

reportedly continuing operations with similar infringing content. 

Baidu (China). Industry has identified Baidu as the largest China-based “MP3 search engine” 

offering deep links to copyright-protected music files for unauthorized downloads or streaming. 

Baidu is the target of ongoing infringement actions. 

Business-to-business (B2B) and business-to-consumer (B2C) websites (China). A large 

number of these Chinese websites, such as Alibaba and Taobao, have been cited by industry as 

offering infringing products to consumers and businesses. The Internet traders who use these 

online markets to offer counterfeit goods are difficult to investigate, and contribute to the growth 

of global counterfeiting. 

PirateBay (Sweden). Industry reports that PirateBay is one of the world’s largest BitTorrent 

tracker sites and a major global conduit for the unauthorized exchange of copyright-protected 

film and music files. PirateBay was raided by Swedish police in 2006, and the government 

initiated the prosecution of four Swedes associated with the site in January 2008, but the site has 

continued to operate, reportedly relying on servers located outside of Sweden. 
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Physical Markets 

Silk Street Market (Beijing, China). Industry has cited Beijing’s Silk Street Market as 

“perhaps the single biggest symbol of China’s IP enforcement problems.” In 2005, authorities 

began to pressure the landlords of Silk Street Market and other major retail and wholesale 

markets in Beijing to improve compliance with IPR laws. In 2006, right holders prevailed in 

several court actions related to the market, and executed a Memorandum of Understanding with 

the landlords in June 2006. A January 2007 industry survey of the market reportedly showed 

that counterfeiting has worsened, with apparent violations in 65 percent of all outlets. More 

recent industry reports indicate that counterfeiting at Silk Street Market remains at critical levels. 

China Small Commodities Market (Yiwu, China). The China Small Commodities Market in 

Yiwu reportedly sells approximately 410,000 different items, mostly small consumer goods. 

Industry has cited the market as a center for wholesaling of infringing goods. Officials in Yiwu 

have met repeatedly with U.S. Government officials and stressed their work to improve IPR 

enforcement. Industry confirms that enforcement in Yiwu has improved. Continued 

improvement is needed, particularly in the area of criminal enforcement. 

Gorbushka, Rubin Trade Center, and Tsaritsino Markets (Moscow, Russia). Industry 

representatives report that piracy problems persist in these markets, though the situation has 

improved at the Gorbushka and Rubin Trade Center. 

Tri-Border Region (Paraguay, Argentina, and Brazil). The Tri-Border Region of Paraguay, 

Argentina, and Brazil has a longstanding reputation as a hotbed of piracy and counterfeiting of 

many products. The U.S. Government is funding a training project through which U.S. 

Department of Justice and U.S. Department of Homeland Security officials will train 

prosecutors, police, and customs officials from the Tri-Border Region to combat intellectual 

property crime. Although Ciudad del Este remains the hub for pirate activities in Paraguay, 

industry reports that trade there has declined and that commercial concentrations are shifting to 

other cities. Through a revised Memorandum of Understanding between the United States and 

Paraguay on IPR enforcement, the United States will be encouraging Paraguay to increase 

enforcement action with respect to a number of specifically-identified markets in that country. 

Tepito, Plaza Meave, Eje Central, Lomas Verdes, and Pericoapa Bazaar (Mexico City); 

Simitrio-La Cuchilla (Puebla, Mexico); San Juan de Dios (Guadalajara, Mexico); and 

Pulgas Mitras and La Ranita (Monterrey). An estimated 50,000 vendors sell IPR products in 

Mexico’s ubiquitous, unregulated street markets. Past police raids on such markets have 

sometimes been met with violent resistance, requiring large contingents of security personnel. 

Czech Border Markets (Czech Republic). Hundreds of open air market stalls are notorious for 

selling pirated and counterfeit products near the Czech border, including at the notorious Asia 

Dragon Bazaar in Cheb City. Many of these markets are highly organized, and even advertise on 

the Internet. 

La Salada (Buenos Aires, Argentina). This is the largest of more than 40 large, wellestablished markets in Buenos Aires that have been cited as being heavily involved in the sale of 
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counterfeit goods. An estimated 6,000 vendors sell to 20,000 customers daily. The market is 

reputed to be a haven for organized criminal gangs that operate from within it, resulting in little 

to no IPR enforcement. 

Neighborhood of Quiapo (Manila, Philippines). Street stalls in this neighborhood are 

notorious for selling counterfeit and pirated merchandise. Other notorious markets in Manila 

include Binondo, Greenhills, Makati Cinema Square, and Metrowalk. 

Harco Glodok (Jakarta, Indonesia). This is reported to be one of the largest markets for 

counterfeit and pirated goods in Indonesia, particularly well-known for pirated optical discs. 

Enforcement officials are reportedly reluctant to conduct regular enforcement actions because of 

the presence of organized criminal gangs. 

Panthip Plaza, Mah Boon Krong (MBK) Center, Klong Thom, Patpong, and Sukhumvit 

Road (Bangkok, Thailand). These locations are notorious for openly selling pirated and 

counterfeit goods. They are all designated as “red zones” by Thai authorities, which indicates 

that they are places where infringing products are most readily available. 

Destruction of Seized Counterfeit Goods and Manufacturing Equipment

The destruction of seized counterfeit goods, materials, and related manufacturing equipment is a 

reliable way to ensure that these goods do not wind up in the hands of consumers. Many 

countries resort to less effective, alternative measures, such as auctioning off the goods and 

manufacturing equipment without the right holder’s consent, or removing the trademarks on the 

goods and then reselling them. These methods do not effectively keep these goods out of the 

hands of consumers, and frequently put them back into the hands of counterfeiters. Industry 

reports highlight China, Egypt, the Philippines, Russia, Ukraine, and Uruguay as countries that 

do not sufficiently enable the destruction of goods or equipment. 

In-Transit Goods 

In-transit goods pose continuing IPR problems. “In-transit goods” means goods under “Customs 

transit” and “transshipped” goods as defined in the International Convention on Simplification 

and Harmonization of Customs Procedures (Kyoto Convention). These are goods that enter one 

customs territory but are intended for another destination. They pose a high risk for 

counterfeiting and piracy because customs procedures may be used to disguise the true country 

of origin of the goods or to enter goods into customs territories where border enforcement is 

known to be weak. In-transit goods are significant problems in Hong Kong, Paraguay, the 

Philippines, Ukraine, and Thailand, among others. In addition, U.S. industries report significant 

problems in free trade zones in Belize, Chile, Egypt, Paraguay, the Philippines, United Arab 

Emirates, and Vietnam, among others. The United States urges these countries to improve their 

IPR border enforcement systems. 
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Internet Piracy and the WIPO Internet Treaties

The increased availability of broadband Internet connections around the world has made the 

Internet an extremely efficient vehicle for disseminating pirated products. Internet piracy is a 

significant concern in a number of countries, including Canada, China, Sweden, Spain, and 

Russia, among others. In addition, unauthorized retransmission of live sports telecasts over the 

Internet is reportedly becoming an increasing problem internationally, particularly in China. 

The United States is continuing to work with other governments, in consultation with U.S. 

copyright industries and other affected sectors, to develop strategies to address these global 

problems. An important first step was achieved in 1996 when WIPO concluded two copyright 

treaties, the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms 

Treaty (WPPT) (collectively, the “WIPO Internet Treaties”). Following their entry into force in 

2002, these treaties have raised minimum standards of intellectual property protection around the 

world, particularly with regard to Internet-based delivery of copyrighted works. The WIPO 

Internet Treaties have clarified exclusive rights and prohibit the circumvention of certain 

technological measures that protect copyrighted works in on-line environments. 

A growing number of countries are implementing the WIPO Internet Treaties to create a legal 

environment conducive to investment and growth in Internet-related businesses and 

technologies. As of April 2008, there are 64 members of the WCT and 62 members of the 

WPPT. China and Australia acceded to these treaties in 2007. Membership will rise 

significantly when the various EU Member States join. Other countries have implemented key 

provisions of the treaties in their national laws without formally ratifying them. As a new part of 

the international IPR legal regime, the WIPO Internet Treaties represent a majority world 

community view that the vital framework of protection under existing agreements, including the 

TRIPS Agreement, should be supplemented to eliminate any remaining gaps in copyright 

protection on the Internet that could impede the development of electronic commerce. The 

United States urges other governments to ratify and implement the WIPO Internet Treaties. 

Other Initiatives Regarding Internet Piracy 

The United States is committed to a policy of promoting higher standards of intellectual property 

protection by incorporating standards from the WIPO Internet Treaties as substantive obligations 

in our bilateral and regional trade agreements, and by seeking accession to those treaties as a 

substantive obligation under these agreements. 

Piracy Using New Technologies

Piracy using new technologies is an emerging problem internationally. For example, the U.S. 

copyright industries report growing problems with piracy not only on the Internet, but also using 

cellular telephones, palm devices, flash drives, and other mobile technologies. In some countries 

these devices are being pre-loaded with illegal content before they are sold. In addition to piracy 

of music and films using these new technologies, piracy of ring tones, games, telecasts, and 

scanned books also occurs. Countries with significant problems of piracy using new 
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technologies include China, India, Indonesia, and Malaysia, among others. The United States 

will work with these governments to combat these increasing problems. 

IPR and Interoperability 

During recent years, a number of countries, mostly in Western Europe, have devoted increasing 

attention to the relationship between intellectual property rights, digital rights management 

technologies, and interoperability of consumer products and other devices. This emerging set of 

issues represents potential new challenges in the area of effective protection of IPR. In France, 

for example, copyright legislation enacted in August 2006 contains provisions enabling a 

government entity to mandate the disclosure of IP-protected digital rights management 

information in the interest of promoting interoperability. The United States has expressed 

concern that this legislation may, depending on its implementation, impinge upon IPR of both 

the creators of the digital rights management technologies and of creative works protected by 

those technologies. Similar approaches reportedly are being considered in other European 

countries, including Belgium, Germany, Norway, and Sweden. In addition, these issues are 

receiving attention within the European Commission. In some cases, consumer protection laws 

and regulatory authorities have been engaged to pursue interoperability at the potential expense 

of IP right holders. This complex intersection of issues will continue to receive U.S. policy 

attention in the coming year. 

Controlling Optical Media Production

In recent years, some countries, such as Brazil, Indonesia, Malaysia, Nigeria, Pakistan, the 

Philippines, and Ukraine, have made progress toward implementing controls on optical media 

production. Other countries still need to adopt and implement legislation or improve existing 

measures to combat pirate optical disc production, including Bangladesh, China, India, Russia, 

and Thailand, which have not made sufficient progress in this area. The United States continues 

to urge its trading partners who face pirate optical media production within their borders to pass 

effective legislation and aggressively enforce existing laws and regulations. 

Government Use of Software 

Under an Executive Order issued in October 1998, United States Government agencies maintain 

appropriate and effective procedures to ensure the authorized and legitimate use of business 

software. Pursuant to the same directive, USTR has undertaken an initiative to work with other 

governments, particularly in countries that are modernizing their software management systems 

or where concerns have been raised, to stop governmental use of unauthorized or illegal 

software. 

Considerable progress has been made under this initiative. In 2006, APEC economies agreed 

that central government agencies should use only legal software and other copyrighted materials 

and should implement effective policies intended to prevent copyright infringement on their 

computer systems and via the Internet. Numerous countries and territories have mandated that 

only authorized, legitimate software may be used by government ministries. Some countries that 

have enacted such decrees or are in the process of implementing them include Bolivia, Chile, 
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China, Colombia, Costa Rica, the Czech Republic, France, Greece, Hong Kong, Hungary, 

Ireland, Israel, Jordan, Korea, Lebanon, Macau, Paraguay, Peru, the Philippines, Spain, Taiwan, 

Thailand, Turkey, the United Kingdom, and Vietnam, among others. The United States 

commends these governments for setting a positive example and expects these measures to be 

fully implemented. The United States looks forward to the adoption by other governments of 

effective and transparent procedures to ensure legitimate use of software. 

Implementation of the WTO TRIPS Agreement 

The TRIPS Agreement requires all WTO members to provide certain minimum standards of IPR 

protection and enforcement, and was one of the most significant achievements of the Uruguay 

Round General Agreement on Tariffs and Trade (GATT). The TRIPS Agreement is the first 

broadly-subscribed multilateral intellectual property agreement that is subject to mandatory 

dispute settlement provisions. 

Developed country members were required to implement the TRIPS Agreement fully as of 

January 1, 1996. Developing countries were given a transition period for many obligations until 

January 1, 2000. Recognizing the particular challenges faced by least-developed countries, in 

2005 the United States worked closely with them and other WTO members to extend the 

implementation date for these countries from January 2006 to July 2013. The least developed 

country members in turn pledged to preserve the progress that some have already made toward 

TRIPS compliance. In addition, the least developed country members have until 2016 to 

implement their TRIPS obligations for patent and data protection for pharmaceutical products, as 

proposed by the United States at the Doha Ministerial conference of the WTO. The United 

States looks forward to the successful completion of this transition. The United States 

participates actively in the WTO TRIPS Council’s scheduled reviews of WTO Members’ 

implementation of the TRIPS Agreement, and also uses the WTO’s Trade Policy Review 

mechanism to pose questions and seek constructive engagement on issues related to TRIPS 

implementation. 

Developing country members continue to make progress toward full implementation of their 

TRIPS obligations. Nevertheless, certain members are still in the process of finalizing 

implementing legislation and many are still engaged in establishing adequate IPR enforcement 

mechanisms. Every year, the U.S. Government provides extensive technical assistance and 

training on the implementation of the TRIPS Agreement to a large number of U.S. trading 

partners. Such assistance is provided by a number of U.S. Government agencies, including the 

U.S. Patent and Trademark Office, the U.S. Copyright Office, the Department of State, the U.S. 

Agency for International Development, U.S. Customs and Border Protection, the Department of 

Justice, and the Department of Commerce. In addition, U.S. industry is actively involved in 

providing specific enforcement-oriented training in key markets around the world. The United 

States will continue to work with WTO members and expects further progress in the near term to 

complete the TRIPS implementation process. However, in those instances in which additional 

progress is not achieved, the United States will consider other means of encouraging 

implementation, including the possibility of recourse to dispute settlement consultations. 
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The United States continues to work with other WTO Members, including the European 

Communities, Japan, and Switzerland, to encourage a discussion within the WTO TRIPS 

Council on implementation of the enforcement-related provisions of the TRIPS Agreement. The 

United States hopes that the TRIPS Council can generate a useful sharing of experiences related 

to IPR enforcement, in the interest of ensuring effective implementation of enforcement 

obligations. 

Intellectual Property and Health Policy 

The Administration is dedicated to addressing the serious health problems, such as HIV/AIDS, 

afflicting developing and least-developed countries in Africa and elsewhere. The United States 

believes firmly that intellectual property protection, including for pharmaceutical patents, is 

critical to the long term viability of a health care system capable of developing new and 

innovative lifesaving medicines. Intellectual property rights are necessary to encourage rapid 

innovation, development, and commercialization of effective and safe drug therapies. Financial 

incentives are needed to develop new medications; no one benefits if research on such products 

is discouraged. 

At the same time, the United States is also firmly of the view that international obligations such 

as those in the TRIPS Agreement have sufficient flexibility to allow countries, particularly 

developing and least-developed countries, to address the serious public health problems that they 

face. In this context, the United States strongly supports the 2001 Doha Declaration on the 

TRIPS Agreement and Public Health. The Declaration acknowledged the serious public health 

problems afflicting African and other developing and least-developed country members, 

especially those relating to HIV/AIDS, malaria, tuberculosis, and other epidemics. Ministers 

agreed that WTO intellectual property rules contain flexibilities to meet the dual objectives of, 

on the one hand, meeting the needs of poor countries without the resources to pay for cutting 

edge pharmaceuticals and, on the other hand, ensuring that the patent system continues to 

promote the development and creation of new lifesaving drugs. 

In addition, Ministers recognized that WTO Members with “insufficient or no manufacturing 

capacities in the pharmaceutical sector” could have difficulty using the compulsory licensing 

provisions of the TRIPS Agreement and directed the TRIPS Council to find an expeditious 

solution to this problem. Under the TRIPS/health solution concluded in August 2003, Members 

are permitted, in accordance with specified procedures, to issue compulsory licenses to export 

pharmaceutical products to countries that cannot produce drugs for themselves. The General 

Council adopted a Decision in December 2005 that incorporated this solution into an amendment 

to the TRIPS Agreement, and later that month the United States became the first WTO Member 

to formally accept this amendment. Other WTO Members now have until December 31, 2009 to 

accept the amendment. It will go into effect, for those Members that accept it, once two-thirds of 

the membership has accepted it. The August 2003 waiver will remain in place and available 

until the amendment takes effect. 

In recent free trade agreements with the parties to the U.S. – Central America – Dominican 

Republic FTA (CAFTA-DR), and with Korea, Morocco, Bahrain, Oman, Peru, Colombia, and 

Panama, the United States has clarified that the intellectual property provisions in the FTAs do 
14

not impede the taking of measures necessary to protect public health. Specifically, the United 

States has confirmed that the intellectual property chapters of the FTAs do not affect the ability 

of the United States or our FTA partners to take necessary measures to protect public health by 

promoting access to medicines for all, in particularly concerning cases such as HIV/AIDS, 

tuberculosis, malaria, and other epidemics as well as circumstances of extreme urgency or 

national emergency. The United States has also made clear that the intellectual property chapter 

of the FTAs will not prevent effective utilization of the TRIPS/health solution. 

Supporting Pharmaceutical Innovation 

USTR has sought to eliminate market access barriers faced by U.S. pharmaceutical companies in 

many countries and to both provide for affordable health care today and support the innovation 

that assures improved health care tomorrow. In addition to direct and indirect government 

funding, a strong and effective intellectual property system is crucial to achieving these goals as 

are other policies that encourage innovation in the health technology sector. 

In the United States, government action has focused on creating an environment that encourages 

innovation and yields a constant flow of new and innovative medicines to the market. The goal 

has been to ensure that consumers benefit from both technological breakthroughs as well as the 

competition that further innovation generates. The United States also relies on a strong generic 

pharmaceutical industry to increase competitive pressure to lower drug prices. 

Historically, the Special 301 process has focused on the strength of intellectual property 

protection and enforcement by our trading partners. However, even where a country’s IPR 

regime is adequate, price controls and regulatory and other market access barriers can discourage 

the development of new drugs. These barriers may include unreasonable regulatory approval 

delays, linkages between dispensing and prescribing, and reference pricing and other potentially 

unfair reimbursement policies. The criteria, rationale, and operation of such measures are often 

nontransparent, not fully disclosed to patients or the pharmaceutical companies seeking to 

market their drugs. A 2004 U.S. Government study, led by the Department of Commerce, found 

that price controls and regulatory and other barriers diminish returns on pharmaceutical products, 

and reduce the amount of global pharmaceutical research and development below what it would 

otherwise be under market conditions, inhibiting the development of the next generation of lifesaving drugs. 

To address these issues, USTR and the Departments of Health and Human Services, Commerce, 

and State, formed a task force that is working to engage our OECD trading partners on the most 

effective way to promote continued innovation in the pharmaceutical sector and enhanced access 

to innovative pharmaceuticals now and in the future. This task force is working to achieve these 

goals through FTA negotiations and the establishment of bilateral dialogues with key countries. 

The United States addressed transparency and accountability of the Australian pharmaceutical 

reimbursement system in the United States-Australia FTA, which went into effect in 2005. The 

FTA also created a United States-Australia Medicines Working Group for continued discussion 

of emerging bilateral concerns and health policy issues. The United States and Australia will 

hold the second meeting of this Working Group in the first half of 2008 to review 
15

implementation of the pharmaceutical provisions of the FTA and to discuss ongoing issues of 

mutual concern 

On April 1, 2007, the United States concluded negotiations on the United States-Korea Free 

Trade Agreement (KORUS FTA). The KORUS FTA includes provisions on market access for 

pharmaceutical and medical devices that go beyond those in any other U.S. FTA. Specifically, 

the FTA includes commitments to improve access to innovative products and to ensure the 

transparent, predictable, and non-discriminatory pricing and reimbursement of innovative and 

generic pharmaceutical products, medical devices, and biologics. In addition, the Agreement 

contains provisions to promote ethical business practices, establish a Medicines and Medical 

Devices Committee to monitor implementation of commitments in this area, and create an 

independent mechanism to review pricing and reimbursement decisions. 

The United States also is seeking to establish or continue dialogues with OECD and other 

countries to address concerns and encourage a common understanding between developed 

countries on questions related to innovation in the pharmaceutical sector. The United States 

already has had such dialogues with Japan and Germany, and is seeking to establish ones with 

other countries. It also has established a dialogue on pharmaceutical issues with China. With 

respect to Japan, pharmaceutical and medical device issues are an integral part of the 

Administration’s regulatory reform work. The United States has made steady progress in 

helping to improve transparency in this sector, ensuring that foreign pharmaceutical and medical 

device manufacturers have meaningful opportunities to provide input into important regulatory, 

reimbursement, and pricing matters, facilitating the introduction of innovative new 

pharmaceuticals and medical devices into Japan’s market. 

The United States also has held constructive discussions with Germany on policy goals and 

concerns related to health care. During these discussions, the two sides have exchanged views 

on how best to deal with challenges of balancing health care spending with other priorities and of 

providing affordable health care today while supporting the innovation that assures improved 

health care is available in the future. The United States also raised specific concerns related to 

Germany’s reference pricing system for determining product reimbursement and the 

transparency of the German Government’s decision-making process regarding pharmaceutical 

pricing. The two governments plan to continue this dialogue. 

The United States remains concerned about Poland’s enactment in 2006 of a regulation 

establishing wholesale and retail processes for drugs, which appears to reduce the official 

maximum wholesale and retail prices for imported drugs by 13 percent while generally leaving 

unchanged the prices for drugs of Polish origin. The U.S. pharmaceutical industry reports that 

this regulation has had a significant impact by causing reduced prices for numerous products 

manufactured outside Poland. The European Commission is currently conducting an 

investigation which may lead to an infringement action against Poland based on this 13 percent 

price cut. The United States shares the European Commission’s concerns over this regulation, 

and will continue to monitor closely the situation in Poland throughout the coming year. 

The United States continues to urge China to price drugs in a manner that appropriately values 

innovations and to add new drugs to its national formulary, which controls access to medicines 
16

for China. The United States also urges China to adopt regulatory and reimbursement policies 

for medical devices that support innovation and increase the transparency and predictability in 

that market. 

The United States shares policy goals and concerns related to health care with other 

industrialized countries, including challenges surrounding aging populations and rising health 

care costs. The United States also shares the objective of continued improvement in the health 

and quality of life of its citizens and delivering care in the most efficient and responsive way 

possible. The United States hopes these dialogues will help to address specific concerns related 

to price controls and regulatory and transparency issues, as well as to develop a constructive 

dialogue with these countries on health policy issues of mutual concern. 

During the coming year, the U.S. Government will continue to engage in dialogue with 

industrialized country trading partners, including Italy, Germany, Canada, and France, on issues 

related to innovation in the pharmaceutical sector and other aspects of health care goods and 

services. In addition to continuing to advocate for pricing and reimbursement policies that 

appropriately value innovation and which are administered in a transparent and open manner, the 

United States will devote additional attention to trends in the area of health technology 

assessment (HTA) and the relationship of such assessments to pricing policies. The United 

States believes it important that HTA policies be implemented in a transparent manner and in 

keeping with international standards of science-based evaluation. In addition, issues surrounding 

the ability of health care consumers to obtain information about pharmaceutical and other 

medical products merits additional attention and dialogue. 

WTO Dispute Settlement 

The United States will continue pursuing the resolution of WTO-related disputes announced in 

previous Special 301 reviews and determinations. The most efficient and therefore preferred 

manner of dispute resolution is through informal consultation and settlement, but where this is 

unsuccessful, the United States will consider fully utilizing the dispute settlement process. 

In April 2007, the United States requested WTO dispute settlement consultations with China 

over deficiencies in China’s legal regime for protecting and enforcing copyrights and trademarks 

on a wide range of products. After those consultations failed to resolve the matter, on August 13, 

2007, the United States requested the establishment of a WTO panel. The panel request 

expresses United States concerns that certain Chinese measures are inconsistent with China’s 

obligations under the TRIPS Agreement. The panel request focuses on three main issues: 

quantitative thresholds in Chinese law that must be met in order to start criminal prosecutions of 

copyright piracy and trademark counterfeiting and that appear to create a substantial safe harbor 

for those who manufacture, distribute, or sell pirated and counterfeit products in China; rules for 

disposal of IPR infringing goods seized by Chinese customs authorities; and the apparent denial 

of copyright protection to works poised to enter the Chinese market but awaiting Chinese 

censorship approval. A WTO panel was established to examine this matter on September 25, 

2007, and panelists were appointed on December 13, 2007. 
17

In addition, the United States requested WTO dispute settlement consultations with China 

concerning certain other Chinese measures that appear to be inconsistent with various WTO 

obligations of China. This consultation request focuses on a Chinese legal structure that denies 

foreign companies the right to import publications, movies, music, and videos, that severely 

impedes the efficient and effective distribution of publications, music and videos within China, 

and that disadvantages imported publications, movies and music vis-à-vis their domestic 

counterparts in their distribution. As the United States and China were unable to resolve this 

dispute in these consultations, the United States filed on October 10, 2007, a request for the 

establishment of a WTO panel. A WTO panel was established to examine this matter on 

November 27, 2007, and was composed on March 27, 2008. 

Following the 1999 Special 301 review, the United States initiated dispute settlement 

consultations concerning the European Union’s (EU) regulation on food-related geographical 

indications (GIs), based on concerns that the regulation was inconsistent with the EU’s TRIPS 

Agreement obligations. These consultations resulted from the United States’ long-standing 

complaint that the EU GI system discriminates against foreign products and persons – notably by 

requiring that EU trading partners adopt an “EU-style” system of GI protection – and provides 

insufficient protections to trademark owners. After those consultations failed to resolve the 

matter, on August 18, 2003, the United States requested the establishment of a panel, and 

panelists were appointed on February 23, 2004. 

 

On April 20, 2005, the WTO Dispute Settlement Body (“DSB”) adopted a panel report ruling in 

favor of the United States that the EU GI regulation is inconsistent with the EU’s obligations 

under the TRIPS Agreement and the General Agreement on Tariffs and Trade 1994. In the panel 

report adopted by the DSB, the panel agreed that the EU’s GI regulation impermissibly 

discriminates against non-EU products and persons. The panel also agreed with the United 

States that Europe could not, consistent with WTO rules, deny U.S. trademark owners their 

rights; it found that, under the regulation, any exceptions to trademark rights for the use of 

registered GIs were narrow, and limited to the actual GI name as registered. The DSB 

recommended that the EU amend its GI regulation to come into compliance with its WTO 

obligations, and the EC was given until April 3, 2006 to do so. On March 31, 2006, the EC 

published a revised GI Regulation that is intended to comply with the DSB recommendations 

and rulings. There remain some concerns, however, with respect to this revised GI Regulation, 

which the United States has asked the EC to address, and the United States intends to continue 

monitoring this situation. 
18

BACKGROUND ON SPECIAL 301

Pursuant to Section 182 of the Trade Act of 1974, as amended by the Omnibus Trade and 

Competitiveness Act of 1988 and the Uruguay Round Agreements Act (enacted in 1994) 

(“Special 301”), under Special 301 provisions, USTR must identify those countries that deny 

adequate and effective protection for IPR or deny fair and equitable market access for persons 

that rely on intellectual property protection. Countries that have the most onerous or egregious 

acts, policies, or practices and whose acts, policies, or practices have the greatest adverse impact 

(actual or potential) on the relevant U.S. products must be designated as “Priority Foreign 

Countries.” 

Priority Foreign Countries are potentially subject to an investigation under the Section 301 

provisions of the Trade Act of 1974. USTR may not designate a country as a Priority Foreign 

Country if it is entering into good faith negotiations or making significant progress in bilateral or 

multilateral negotiations to provide adequate and effective protection of IPR. 

USTR must decide whether to identify countries within 30 days after issuance of the annual 

National Trade Estimate Report. In addition, USTR may identify a trading partner as a Priority 

Foreign Country or remove such identification whenever warranted. 

USTR has created a “Priority Watch List” and “Watch List” under Special 301 provisions. 

Placement of a trading partner on the Priority Watch List or Watch List indicates that particular 

problems exist in that country with respect to IPR protection, enforcement, or market access for 

persons relying on intellectual property. Countries placed on the Priority Watch List are the 

focus of increased bilateral attention concerning the problem areas. 

Additionally, under Section 306, USTR monitors a country’s compliance with bilateral 

intellectual property agreements that are the basis for resolving an investigation under Section 

301. USTR may apply sanctions if a country fails to satisfactorily implement an agreement. 

The interagency Trade Policy Staff Committee, in advising USTR on the implementation of 

Special 301, obtains information from and holds consultations with the private sector, U.S. 

embassies, foreign governments, and the U.S. Congress, among other sources. 

 
19

PRIORITY WATCH LIST

CHINA 

China remains a top intellectual property enforcement and TRIPS compliance priority for the 

United States. China will remain on the Priority Watch List, and remain subject to Section 306 

monitoring. The United States is seeking to resolve its concerns with respect to three IPR 

protection and enforcement issues through WTO dispute settlement with China. (See the 

“Dispute Settlement” section above). 

The United States recognizes and appreciates the efforts of the many officials in China who 

continue to give voice to China’s commitment to protecting intellectual property rights and are 

working hard to make it a reality. In spite of these efforts, the shared goal of significantly 

reducing IPR infringement throughout China has not yet been achieved. 

China has made welcome progress in some areas. Notable IPR improvements included 

completion of China’s accession to the WIPO Internet Treaties and its ongoing implementation 

of rules that require computers to be pre-installed with licensed operating system software. 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 put serious efforts into its 

joint work with China on intellectual property enforcement and protection strategies, innovation 

policies, and the range of other important IPR-related matters in our bilateral economic 

relationship, including through the U.S. – China Strategic Economic Dialogue (SED), the Joint 

Commission on Commerce and Trade (JCCT), and other fora. 

At the December 2007 JCCT meeting, China reported on steps it has taken since the previous 

JCCT meeting in April 2006 to improve protection of IPR in China, including accession to the 

World Intellectual Property Organization (WIPO) Internet Treaties, a crackdown on the sale of 

computers not pre-loaded with legitimate software, enforcement efforts against counterfeit 

textbooks and teaching materials, and joint enforcement raids conducted by the U.S. Federal 

Bureau of Investigation (FBI) and Chinese security agencies. China and the United States 

agreed to exchange information on customs seizures of counterfeit goods in order to further 

focus China’s enforcement resources on companies exporting such goods. China agreed to 

strengthen enforcement of laws against company name misuse, a practice in which some Chinese 

companies have registered legitimate U.S. trademarks and trade names without legal authority to 

do so. The two sides also agreed to cooperate on case-by-case enforcement against such 

company name misuse. In addition, China agreed to eliminate the requirement to submit viable 

biotech seeds for testing, a policy change which reduces the possibility of illegal copying of 

patented agricultural materials. 

At the SED meeting in May 2007, the United States and China agreed to Principles and 

Outcomes for Strengthening Innovation Cooperation (SED Principles and Outcomes), including 

a decision to “jointly host a seminar on the innovation ecosystem in 2007 that would gather 

experts to discuss and share experiences on both sides regarding the critical elements of 

developing an environment conducive to technological innovation.” To realize this commitment, 

the two governments co-hosted an Innovation Conference on December 10, 2007 in Beijing. At 

this meeting, both sides reaffirmed that innovation is best fostered where there is effective rule of 
20

law, and where governments pursue market-oriented policies that encourage merit-based 

competition, entrepreneurship, commercialization of new technologies, and flexibility for users 

and producers in choosing among competing technologies. Both sides also confirmed the 

essential role of a robust intellectual property protection and enforcement regime in supporting 

an innovation ecosystem. 

Despite anti-piracy campaigns in China and an increasing number of IPR cases in Chinese 

courts, overall piracy and counterfeiting levels in China remained unacceptably high in 2007. 

The U.S. copyright industries estimate that 85 percent to 95 percent of all of their members’ 

copyrighted works sold in China was pirated, indicating no improvement over 2006. Internet 

piracy is increasing, as is piracy over closed networks such as those of universities, in addition to 

concerns over webcasting of various kinds. The rapid increase in the Internet to over 210 million 

users suggests that this challenge is likely to continue to grow, with many industry groups 

focused predominantly on Internet piracy. Notwithstanding these new challenges, trade in 

pirated optical discs continues to thrive, supplied by both licensed and unlicensed factories and 

by smugglers. A crackdown in Beijing and certain other cities by municipal management 

authorities appears to have reduced the incidence of “backpack” vendors. However, small retail 

shops continue to be the major commercial outlets for pirated movies and music and a wide 

variety of counterfeit goods. Piracy of books and journals and end-user piracy of business 

software also remain key concerns. In addition, the share of IPR infringing product seizures of 

Chinese origin at the U.S. border was 80 percent in 2007, virtually unchanged from 81 percent in 

2006. Chinese counterfeits include many products, such as pharmaceuticals, electronics, 

batteries, auto parts, industrial equipment, toys, and many other products, that pose a direct threat 

to the health and safety of consumers in the United States, China and elsewhere. 

Inadequate IPR enforcement is a key factor contributing to these shortcomings, with high 

criminal thresholds as well as difficulties in initiating or transferring cases for criminal 

prosecution resulting in limited deterrence. Civil damages are also low. 

There have been some successful enforcement actions, most notably the joint “Summer Solstice” 

investigation between the FBI and China’s Ministry of Public Security (MPS). In 2007, MPS 

engaged with U.S. law enforcement on IP law enforcement initiatives as part of the Intellectual 

Property Criminal Enforcement Working Group (IPCEWG) of the U.S.-China Joint Liaison 

Group for Law Enforcement Cooperation (JLG). The IPCEWG includes participation by 

Chinese law enforcement officials from the MPS as well as officials from the Justice 

Department, the FBI, and U.S. Immigration and Customs Enforcement. The IPCEWG focuses 

on the development of more U.S.-China joint operations to combat transnational IP crime, in 

particular crimes committed by organized criminal groups and crimes that threaten public health 

and safety. In July 2007, this collaboration resulted in the largest ever joint FBI-MPS piracy 

investigation and prosecution, code-named “Operation Summer Solstice,” which involved 

seizures of more that 290,000 counterfeit software discs worth more than a half billion dollars 

and arrests of over 25 Chinese nationals, and eliminated numerous manufacturing plants in 

China. This joint operation is believed to have dismantled the largest piracy syndicate of its kind 

in the world, estimated to have distributed more than 2 billion copies of counterfeit Microsoft 

software. U.S. law enforcement authorities look forward to continuing this cooperative 

relationship as this and other investigations continue.
21

However, right holders report that enforcement efforts, particularly at the local level, are 

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. 

Several factors contribute to China’s poor IPR enforcement record. One major factor is China’s 

chronic underutilization of deterrent criminal remedies. China channels the vast majority of 

enforcement to administrative authorities. The trademark and copyright industries continue to 

point out that administrative fines are too low to provide a deterrent, and as a result, infringers 

continue to consider administrative seizures and fines as a cost of doing business. Rules 

designed to promote transfer of cases to criminal authorities do not appear to have solved the 

problem. 

At the 2005 JCCT, China agreed to increase the number of criminal prosecutions for IPR 

violations relative to the total number of IPR administrative cases. Unfortunately, there has been 

no sign yet of a significant shift in emphasis toward criminal enforcement. The safe harbors 

from criminal liability created by China’s high thresholds for criminal liability (i.e., minimum 

values or volumes required to initiate criminal prosecution, normally calculated on the basis of 

the infringer’s actual or marked price) continue to be a major reason for the lack of an effective 

criminal deterrent. These safe harbors are among the matters for which the United States has 

requested WTO dispute settlement with China. 

In April 2007, China issued a new Judicial Interpretation that appears to clarify certain aspects of 

China’s criminal thresholds. Although the 2007 Judicial Interpretation appears to have resolved 

the problem in China’s Criminal Law that required unauthorized distribution in order to 

prosecute unauthorized reproduction, other legal obstacles in the area of criminal enforcement 

remain. They include, for example, the lack of criminal liability for certain acts of copyright 

infringement; the profit motive requirement in copyright cases, which hampers efforts to fight 

Internet piracy where there is no clear motive of financial gain; the requirement of identical 

trademarks in counterfeiting cases; and the absence of minimum, proportionate sentences and 

clear standards for initiation of police investigations in cases where there is a reasonable 

suspicion of criminal activity. The United States remains willing to work with China to achieve 

further progress in the area of criminal remedies. 

At the same time, the United States has also been encouraging China to consider a variety of 

changes to its administrative and civil enforcement regimes, such as the restoration of minimum 

(and deterrent) fines in administrative trademark enforcement cases, increased referral of 

administrative enforcement actions for criminal prosecution, elimination of the need for 

legalization and consularization of foreign evidence, implementation of a discovery process with 

compulsory measures for evidence protection, provision of meaningful injunctive relief, and 

enforcement of judicial orders. 

In addition, the United States calls upon China to take more aggressive action to prosecute 

manufacturers of counterfeit goods, producers of pirated optical discs, and entities engaged in 

commercial reproduction of pirated books, journals, and periodicals. Authorities should 
22

investigate when right holders present evidence supporting a reasonable suspicion of illegal 

production, and should permanently close down, revoke the business licenses, and confiscate and 

destroy the machinery and materials of commercial pirates and counterfeiters, as well as 

criminally prosecute the persons responsible. 

Trade in pirated optical discs continues to thrive, supplied by smugglers and by both licensed and 

unlicensed factories. China needs to do more to criminally prosecute the manufacturers of 

pirated optical discs. The United States also encourages China to facilitate cooperation in 

fighting optical disc piracy by sharing exemplar discs from Chinese factories with the 

international library and forensic facility maintained by right holder organizations. 

Right holders report only moderate success in reducing piracy of pre-release titles. Lack of 

copyright protection for titles undergoing content review is another issue of concern. The United 

States has included this issue in its WTO dispute challenging apparent deficiencies in China’s 

IPR enforcement regime. The United States also urges China to adopt and apply deterrent 

penalties for piracy of any title not yet authorized for distribution. 

Strong action to curb counterfeiting and piracy on the Internet is critical to the future of IPR 

protection in China. China should significantly increase criminal prosecutions and other 

enforcement actions against Internet-based piracy and counterfeiting operations through a 

coordinated, national effort backed by appropriate resources. 

The United States welcomes China’s recent accession to the WIPO Internet Treaties. A number 

of gaps remain to be filled for China to meet the challenges of Internet piracy and fully 

implement the WIPO Internet Treaties. In May 2006, the State Council adopted an important 

Internet-related measure, the Regulations on the Protection of Copyright Over Information 

Networks, which went into effect in July 2006. Although it does not appear to fully implement 

the WIPO Internet Treaties, this measure represents a welcome step, demonstrating China’s 

determination to improve protection of the Internet-based right of communication to the public. 

Several aspects still require further clarification. For example, China could benefit from further 

clarification that certain Internet “deep linking” and other services that effectively encourage or 

induce infringement are unlawful. 

China should also provide strong administrative supervision, backed by penalties, to ensure that 

Internet service providers take down infringing content and/or links immediately upon receipt of 

a notice from internationally recognized right holders’ representatives; take steps to suspend or 

terminate the accounts of serious or repeat infringers when they become aware of such 

infringers; and provide information about the identity of direct infringers to right holders (or to 

groups representing right holders) when requested. 

China also maintains market access barriers, such as import restrictions and restrictions on 

wholesale and retail distribution, which discourage and delay the introduction of a number of 

legitimate foreign products into China’s market. These barriers create additional incentives for 

infringement of products like movies, video games, and books, and inevitably lead consumers to 

the black market, again compounding the severe problems already faced by China’s enforcement 
23

authorities. The United States has requested WTO dispute settlement on several market access 

barriers affecting U.S. copyright industries. 

Right holders report that in the seven years since China's current Copyright Law was adopted, 

China has yet to set a rate under Article 42 of that law for the remuneration of right holders for 

the use of their works by radio or television broadcasters. This has resulted in the unauthorized 

and, thus far, uncompensated broadcasting of musical works, prejudicing right holders in China 

and the United States. The United States urges China to set a fair rate for compensation under 

Article 42 of its Copyright Law without further delay, and to apply that rate to all of the 

broadcasts of works that have occurred since 2001. 

Retail and wholesale counterfeiting in China is a major source of frustration for international 

brand owners. 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 foreign governments, counterfeiting remains pervasive in many retail and 

wholesale markets. It appears that further measures, including criminal sanctions, will be 

necessary to bring this problem under control. 

In addition to stepping up administrative and criminal action against trademark counterfeiting at 

the manufacturing, wholesale, and retail levels, the United States calls on China to launch and 

publicize significant administrative and criminal enforcement actions against optical media 

piracy, Internet piracy, software end-user piracy, and other forms of piracy affecting U.S. 

copyright owners. 

The United States recognizes that China recently announced a 2008 Action Plan laying out 

detailed strategies for improving IPR protection. China has the opportunity to achieve real and 

transparent results for U.S. right holders through implementation of the Action Plan. The United 

States has worked with China in the past few years on many legislative and policy efforts, 

including the National IPR Strategy, Internet Regulations, antimonopoly law and patent and 

trademark law reform. We welcome continued engagement on these issues including 

transparency and fair opportunities for the public and foreign governments to comment on 

proposed laws and policies. 

The United States also looks forward to working with China to examine a variety of other 

reforms that would contribute to improving IPR enforcement. In addition to reforming China’s 

criminal laws as discussed above, other areas that China should explore include the positive 

results that could be achieved through specialized national IPR courts and prosecutors 

(expanding a practice that already exists in some areas); reducing pendency and backlog in 

trademark opposition and cancellation proceedings; introducing regulatory mechanisms to ensure 

that active pharmaceutical ingredients produced in China are not used in counterfeit medicines; 

implementing effective, detailed plans and strategies for reducing the use of infringing materials 

by students, staff, and lecturers on school and university campuses; and ensuring that the 

resources available to local administrative, police, and judicial authorities charged with 

protecting and enforcing IPR are adequate to the task. 
24

Customs Enforcement: The export of infringing products from China is of grave concern 

worldwide. Right holders have praised the achievements of China Customs over the past year in 

increasing seizures, starting to refer criminal cases to police and prosecutors, and cooperating 

with U.S. right holders. The United States is encouraged by the 2007 Memorandum of 

Agreement between China’s Customs Administration and U.S. customs authorities to cooperate 

on preventing the exportation of counterfeit and pirated goods. Nonetheless, the statistics on 

seizures of Chinese-origin goods at the U.S. border, cited above, indicate that additional efforts 

are needed to stop outbound infringing products at China’s borders. The United States calls on 

China to begin an aggressive campaign to prosecute exporters of infringing products and to 

expand enforcement cooperation as agreed at successive JCCT meetings. Also, the United States 

remains concerned about China’s rules for disposal of IPR-infringing goods, seized by Chinese 

customs authorities, which among other things, appear in some circumstances to mandate auction 

of seized goods following removal of infringing features, rather than destruction or disposal 

outside of the channels of commerce. The United States has included these customs border 

enforcement measures as part of its WTO dispute challenging apparent deficiencies in China’s 

IPR enforcement regime. 

Civil Enforcement: U.S. right holders won several victories in civil IPR litigation in China in 

2007. However, the United States continues to hear complaints of a lack of consistent, uniform, 

and fair enforcement of China’s IPR laws and regulations in the civil courts. Litigants have 

found that most judges lack necessary technical training; that court rules regarding evidence, 

expert witnesses, and protection of confidential information are vague or ineffective; and that 

costs of investigation and bringing cases are prohibitively high. In the patent area, where civil 

enforcement is of particular importance, the process is inefficient and unpredictable. Concerns 

have also been raised that some Chinese companies may be inviting local protectionism, for 

example by bringing civil cases in their home areas against foreign companies in order to obtain 

disproportionately high damages, compelling detention of foreign nationals, and obtaining 

litigation or patent filing subsidies, among other things. 

Patents and Data Protection: While China’s patent laws are largely compliant with the TRIPS 

Agreement, right holders have noted that the narrow scope of patentable subject matter under 

Chinese law makes patents for transgenic plants and animals and methods of treatment or 

diagnosis virtually unobtainable. Concerns have been raised regarding draft amendments to the 

Patent Law that were recently made available for public comment on issues such as: the role of 

compulsory licensing; introduction of a two-year period of “laches” after the expiration of the 

two year statute of limitation; continuing challenges with low quality utility model and design 

patents; the introduction of disclosure of origins of genetic resources used in the completion of 

an invention and the concern that that claims in a patent application may be rejected on the basis 

that this disclosure requirement is not met. A lack of clarity in laws involving generic drug 

patent infringement is contributing to the continued growth of drug counterfeiting, with 

corresponding health and safety problems. In that regard, the United States welcomes proposals 

in the 2008 Action Plan to more closely link patent grants to pharmaceutical marketing approval. 

In addition, the United States has concerns about the extent to which China provides adequate 

protection against unfair commercial use for data generated to obtain marketing approval. 
25

Emerging Developments: Apart from longstanding concerns over IPR enforcement, the United 

States is alert to U.S. industry concerns about the possibility that laws or policies in a variety of 

fields might be used or misused to favor domestic over foreign IPR. Such concerns are 

especially acute in light of Chinese government policies establishing a procurement preference 

for domestically innovated products, statements and consideration of legal and/or policy changes 

regarding such areas as the scope of compulsory licensing, the use of IPR in setting standards, 

and other emerging developments that have the potential to affect IPR protection and market 

access for IPR-bearing goods and services. The United States will monitor these developments 

closely to ensure fair treatment for U.S. right holders. 

The treatment of intellectual property in standards-setting processes has garnered recent attention 

in China and elsewhere. In China, standards for third generation (3G) wireless technology are an 

example. China has committed to accord technology-neutral treatment to different 3G standards. 

To date, China has not licensed any 3G wireless technology. However, Chinese operators have 

taken steps to procure equipment and services for the installation of a network that appears will 

be dedicated to support wireless communications based on the TD-SCDMA standard. China 

Mobile, the world’s largest mobile operator, began rolling out a massive “test” TD-SCDMA 

network in nine coastal cities in late 2007. As China Mobile's webpage attested in mid-April 

2008, this service is now commercially available. No other operator has been permitted to 

deploy alternative 3G technology, even on the kind of “test” basis authorized to China Mobile. 

Such steps to advance the standard containing Chinese technology raise questions about China’s 

commitment to accord technology neutrality to the different 3G standards. 

More generally, the Chinese Electronics Standardization Institute (CESI) is in the process of 

drafting IPR rules for standards-setting organizations (SSOs). These draft rules provide for 

SSOs to report to government authorities on the possible relevance of patent claims in draft 

standards submitted for examination and approval by the authorities. It is unclear what purpose 

is envisaged for this governmental review, including whether such a review of the possible 

relevance of patent claims could involve governmental authorities in the determination of the 

terms and conditions for licensing essential patents. 

Provincial and Local Issues

Regional Coordination of IPR protection and enforcement. To promote greater coordination, 

most municipal authorities in China have established a working group on IPR, appointed a vice 

mayor, adopted action plans, and opened IPR complaint centers. The widespread use of 

databases by provincial and local authorities, as well as information provided through 

www.ipr.gov.cn, has provided greater access to information regarding regional IPR protection 

and enforcement activities. The United States encourages coordinating authorities to regularly 

publish white papers, summaries of regional enforcement cooperation, and English language 

complaint forms, and establish English language complaint call centers. We also encourage 

publication of information on relevant local laws and regulations 

Beijing City is both the nation’s capital and one of its most visible centers for retail 

counterfeiting and piracy. IPR enforcement in Beijing varies between different districts and 
26

authorities. Beijing courts enjoy a generally good reputation, which contributes to Beijing 

having the nation’s highest number of civil IPR cases. 

Hot spots. According to industry reports: 

• Retail and wholesale markets such as the Silk Market, Tianyi Market, and Yaxiu Market 

are associated with trade in counterfeit fashion, jewelry, sports, and apparel products. 

• Chaoyang District authorities have agreed to enhance their cooperation with copyright 

owners. 

• Local protectionism remains strong in Chaoyang District. 

• Much of this counterfeiting and piracy is occurring notwithstanding an apparent lower 

incidence in the infringement of Olympic-related merchandise. We look forward to 

China addressing these additional areas at the time of the Olympics, as mentioned in the 

Action Plan, and on an ongoing basis thereafter. 

Retail and wholesale markets. Retail piracy and counterfeiting remain widespread in Beijing; 

progress in getting the problem under control has been very limited. 

• In spite of increasing attention from foreign governments, the media, and China’s central 

and local governments, the Silk Market in Beijing remains possibly the world’s most 

notorious market for counterfeit goods. Landlords at the market have signed agreements 

to oust counterfeiters, and Chaoyang District officials believe the situation at the market 

has improved. 

• In September 2007, the Silk Street Market was found to bear civil liability for 

infringement based on the failure to provide evidence that it had implemented the 

required “trademark authorization systems” established by the Beijing City and 

Chaoyang District Administrations in March 2006. However, right holders’ surveys 

show no real change in the level of sales of counterfeit goods. 

Internet. Beijing authorities have been among the most proactive in China in recognizing and 

moving to address the serious challenges of Internet piracy that are emerging throughout China. 

• Internet cases have successfully been transferred from the copyright bureau to the Public 

Security Bureau (PSB), and suspects have been tried and convicted. However, suspects 

who violate copyrights are often convicted for illegal business operations rather than 

copyright infringement. 

• Beijing authorities have been proactive in looking for ways to make Internet enforcement 

procedures more effective and to address new technological challenges, such as 

retransmission via the Internet of sporting events. 

• Beijing’s courts are considering significant copyright cases regarding provision by 

Internet service providers of “deep links” directly to unlicensed music downloads. 

Universities. Beijing’s university campuses have also been cited by right holders as magnets for 

textbook piracy, and they offer a broadband environment that can support copyright 

infringement. Beijing authorities state that universities receive no safe harbor from IPR laws. 

Industry praised authorities for enforcement actions involving a Tsinghua University textbook 

center, and called for investigations to be repeated at the beginning of the school term and at 

other peak copying times. 
27

Fujian Province is home to large-scale manufacturing, including athletic footwear companies 

that have repeatedly been the target of infringement allegations by U.S. right holders. 

 

Hot spots. According to industry reports the cities of Jinjiang, Putian, and Quanzhou are 

particularly associated with counterfeiting in the footwear sector. Local protectionism appears to 

be a problem. 

Criminal enforcement. Right holders in the footwear sector praised the willingness of provincial 

public security authorities to take the lead in a number of cases where other approaches proved 

ineffective. However, there is a continuing need for more criminal enforcement in other sectors, 

including copyright cases. 

Administrative enforcement. Right holders in both trademark and copyright industries have 

noted that in Fujian, like other parts of China, low administrative penalties often have little or no 

deterrent effect. 

Export. Xiamen is one of China’s major ports of lading for infringing goods seized at U.S. 

borders. Xiamen Customs has jurisdiction over approximately half of Fujian province, including 

the port cities of Quanzhou and Zhangzhou, and has a special division that handles IPR 

enforcement. Xiamen Customs has worked closely with foreign right holders, and has won 

praise for its work. Reports in early 2008 indicate that due to better enforcement of IPR by 

Customs authorities in Xiamen, shippers of pirated and counterfeit goods now seek to avoid 

using the port of Xiamen. 

Guangdong Province is the center of large-scale counterfeit and pirate manufacturing in China 

for a variety of goods, ranging from low-cost consumer goods, such as household items, clothing 

and optical media, to high-technology products, such as computer equipment, video game 

consoles (and game discs/cartridges), and other electronics. A leading industry group calls 

Guangdong “the biggest problem spot for counterfeiting in China.” Right holders have also 

complained of patent infringement by Guangdong-based companies. 

Last year, Provincial officials in Guangdong acknowledged the need to improve deterrence 

against IPR violations, and expressed a welcome openness to closer engagement with U.S. and 

other foreign right holders. However, law enforcement cooperation with U.S. right holders 

appears to have deteriorated since last year’s Special 301 Report. 

Hot spots. Provincial officials stated that specific cities targeted for enforcement during the past 

five years included Guangzhou, Shenzhen, Shantou, Jieyang, and Chaozhou. According to 

industry reports: 

• The cities of Guangzhou and Dongguan are particularly associated with counterfeiting in 

the fashion and sports equipment sectors. 

• Internet based vendors trafficking in counterfeit apparel are increasing at alarming rates. 

• Guangzhou and Shantou are associated with counterfeiting of health, beauty, and 

household care products. 

• Shenzhen is associated with counterfeiting in the information technology, fashion, and 

cosmetics sectors, as well as e-commerce in all products. 
28

• Chaozhou and Jieyang are associated with counterfeiting of pharmaceuticals and 

cigarettes. 

• Local protectionism remains strong in the Baiyun and Huadu Districts of Guangzhou. 

Criminal enforcement. Availability of criminal remedies is a continuing problem in Guangdong. 

Statistics for 2006 showed that Guangdong referred only 36 copyright infringement cases for 

criminal prosecution. Viewed in light of the size of Guangdong’s economy and its role as a 

center of manufacturing, this number was surprisingly low. 

In the sector of health, beauty, and household care products, Guangdong has been identified as a 

relatively difficult place to criminally prosecute counterfeiters. Industry has called for particular 

attention to intensifying criminal enforcement in hot spots, such as Shenzhen, Guangzhou, and 

Dongguan. Guangdong Province reported that police handled 396 cases of criminal IPR 

infringement in 2006, solving 288 cases. Criminal fines and prison sentences were criticized by 

right holders as being relatively light in Guangdong province. 

Administrative enforcement. According to official statistics, trademark infringement cases in 

Guangdong Province increased by about 30% in 2007, and 31 cases were transferred for criminal 

investigation, down from 38 in 2006. Guangdong IP officials report that since 2004 they have 

participated in a Pan-Pearl River Delta group to improve regional cooperation on IPR protection 

and enforcement. 

In spite of being a manufacturing hub and center for counterfeiting, Guangdong in 2006 had 

fewer copyright infringement cases, relative to its economic size, than other jurisdictions. 

Provincial authorities recognize that administrative enforcement at trade fairs is especially 

important given Guangdong’s role as host of the Canton Trade Fair and other major fairs; the 

U.S. Government looks forward to continuing to work closely with local officials and trade fair 

organizers to improve enforcement at these fairs. 

Export. Guangdong’s role as an export engine creates a need for more deterrent customs 

remedies. Despite Guangdong Customs reportedly solving 636 IPR cases in 2006, its ports 

remain significant sources for infringing goods seized at U.S. borders. Reports in early 2008 

indicate that shippers of pirated and counterfeit are seeking to avoid using the port of Shenzhen 

due to better enforcement of IPR by its Customs authorities. 

Optical disc production. The 2007 Special 301 Report highlighted the need for criminal 

prosecutions to address optical media piracy in Guangdong. The use of online distribution and 

on-site OD burning facilities is increasing the challenges of addressing OD piracy. 

Retail and wholesale markets. Local authorities in Guangdong have achieved mixed results in 

their efforts to address piracy and counterfeiting in retail and wholesale markets. 

• Among other problem areas, right holders cited Ziyuangang Market in Guangzhou and 

Lowu market in Shenzhen. 

Internet. Guangdong is increasingly a center for Internet piracy. It has taken some positive 

actions in this area, but, like the rest of China, faces serious challenges. 
29

• In 2006, Guangdong ranked in the top five in China in the number of notices for alleged 

Internet infringement sent by a recording industry group. 

• Industry commended Guangdong authorities for taking action in some cases, but awaited 

action on other sites that had been the subject of complaints. 

• Trademark owners are increasingly concerned about use of the Internet, in connection 

with express delivery services, for direct marketing of counterfeit products to foreign 

consumers. 

Universities. Right holders have expressed concern regarding a lack of transparency in the 

process of inspection and punishment decisions against university textbook centers. 

Jiangsu Province is another large-scale manufacturing center in China. Jiangsu has been 

recognized for innovative and proactive IPR protection and enforcement efforts, including 

promulgation of local regulations and policies, and engagement with domestic and foreign 

institutions on IPR training and cooperation. In early 2007, Jiangsu officially entered into a 

cooperative IPR program with the U.S. Chamber of Commerce. 

Despite high-level attention to IPR issues, industry reports local level discrepancies in IPR 

enforcement efforts with respect to case transfer practices, trade secret protection, and seized 

good valuations. As in many other Chinese provinces, Jiangsu IPR enforcement efforts continue 

to focus on administrative remedies, resulting in fewer criminal referrals. 

Hot spots. According to industry reports: 

• IP infringers are moving their operations to the less-developed northern part of Jiangsu 

province to escape raids and other IPR enforcement activities. 

• The southern Jiangsu city of Wuxi is particularly associated with the manufacture of 

counterfeit auto parts. 

• In 2006, Jiangsu was home to the largest share of China’s Internet Service Providers 

(ISPs) receiving cease and desist notices for alleged Internet infringement by a recording 

industry group. The northern city of Yancheng has been referred to as the “home of pirate 

servers.” 

Administrative enforcement. In 2006, Jiangsu Administration of Industry and Commerce (AIC) 

reportedly handled 1,543 trademark cases. 

• The Nanjing IPR Complaint Center reported that it handles mostly administrative cases 

but reported transferring one case to the PSB in 2007, which resulted in a 10 year prison 

term and a RMB 100,000 fine. 

• Nanjing Customs reportedly investigated 92 cases of suspected IP infringement in 2006. 

• Nanjing issued a rule that reverts the burden of proof in administrative copyright cases to 

the suspect to prove that the source of seized goods is legitimate. 

• The Nanjing Copyright Bureau has also enlisted local computer repair shops to refuse to 

service computers that contain pirated software. 

• Jiangsu IP administrative authorities report actively participating in the Yangtze River 

Delta Protection Network to coordinate with other administrative and enforcement 

officials on cases where right holders and infringers are located in different provinces. 
30

Criminal enforcement. Increasing criminal prosecutions and case transfers should remain a 

priority for Jiangsu authorities. 

• Distinctions in methodologies for valuation of infringing goods continue to impede 

criminal prosecutions for trademark and copyright infringement in Jiangsu. The courts 

should accept criminal cases based on thresholds met by combined sales volume and 

seized inventory. 

• Despite positive steps, criminal fines and prison sentences in Jiangsu remain relatively 

light, as in many other Chinese localities. 

Retail and wholesale markets. Local authorities in Jiangsu continue to expand efforts to prevent 

the sale of infringing goods in retail and wholesale markets. 

• Local Nanjing officials reported that, after recognizing Nanjing was becoming a transit 

center for retailers and wholesalers of counterfeit optical discs, they formed an 

interagency anti-piracy task force to better monitor areas known for selling pirated audiovisual (AV) products. 

• Jiangsu promulgated Provincial Rules on AV Market Management, which require that 

AV business operators carry proof of relevant licenses of the publishers and distributors 

of the AV product and proof of the legality of the AV product. 

• Jiangsu has established landlord liability rules, but IP authorities report difficulty pursing 

cases because of the need to establish proof that the landlord is aware of IP-infringing 

business. 

Internet. Piracy on the Internet remains a problem for Jiangsu province, along with many other 

localities around China. Officials in Jiangsu and elsewhere noted the difficulty for enforcement 

officials to collect evidence and establish a profit motive, in accordance with Chinese law. A 

recording industry survey found Jiangsu as the top Chinese location of ISPs allegedly hosting 

infringing products in March 2007. 

Shanghai City has been praised by industry observers as a relatively bright spot in China’s IPR 

protection environment. Shanghai IPR officials are generally well-trained and responsive to 

industry requests for IPR actions, welcome cooperation with foreign industry and governments, 

and have instituted creative programs to improve coordination among relevant IPR agencies. 

Shanghai is also increasingly becoming the venue of choice for foreign companies filing IPrelated cases because of the expertise and competency of Shanghai judicial officials. However, 

the continued widespread availability of counterfeit and pirated products through retail venues in 

Shanghai demonstrates the limited effectiveness of administrative remedies and need for 

Shanghai to pursue more deterrent criminal enforcement. 

Hot spots. According to industry reports: 

• Despite the welcome July 1, 2006 closing of the notorious Xiangyang Market, infringing 

products in retail markets and through mobile vendors remain widely available in 

Shanghai. 

• Industry reported that most vendors from Xiangyang relocated to other markets, 

including nearby Yatai, Fengxiang, Longhua, and Qipu Road markets. 
31

Retail and wholesale markets. Government officials have responded to concerns over 

widespread retail piracy and counterfeiting rates through increased actions. 

• Shanghai administrative authorities have devised a strategy to proactively visit retail 

outlets (conducting 20,000 visits in the first half of 2006). 

• Throughout anti-piracy and anti-counterfeiting campaigns, industry surveys show that 

infringing goods remain widely available in Shanghai. 

Administrative Enforcement. 

• In 2006, Shanghai reportedly handled 2,217 trademark cases, among which, foreign 

related cases accounted for 75.6 percent. In 2007, Shanghai handled 2,946 trademark 

cases, among which, foreign related cases accounted for 72.5 percent. 

• In 2006, Shanghai Culture Task Force launched a special action on audio-video markets 

and in total handled 2,232 cases. 

• In 2007, the Shanghai IP Administration set up IPR information desks in 16 exhibitions 

and handled over 80 IPR infringement cases involving exhibitions. 

• In early 2008, Shanghai established an IPR Aid Center to give legal advice and 

counseling to both foreign and Chinese businesses with IPR-related issues. 

• From January to November 2007, Shanghai Customs reportedly investigated 241 IPR 

cases, increasing by 91.1% over the same period in 2006. 

• Shanghai has drafted special regulations and plans regarding IPR protection during the 

World Expo in 2010. According to Shanghai IP officials an “experts group” will be 

established to handle complex IPR issues. 

• The Shanghai IP Coordinating Office created the Yangtze River Delta Protection 

Network in 2003, which includes 26 cities in the area, to facilitate communication among 

administrative and enforcement officials on cases where right holders and infringers are 

located in different provinces. The IP Coordinating Office reports that cooperation is 

increasing under this network and plans to expand its coverage to other areas. The IPR 

Complaint Centers throughout the region also cooperate by transferring cases. 

 

Internet. 

• In 2007, Shanghai courts reportedly handled 207 cases involving infringement on the 

Internet, an increase of 91.7% compared with 2006. 

• In 2007, Shanghai reportedly referred one Internet piracy case for criminal prosecution. 

• Local authorities have worked closely with the telecommunications industry to close 

down over 1,000 Internet sites to date that facilitated illegal downloads. 

• In 2007, Shanghai established the Leading Group of Anti-Infringement on Internet, a 

working group of Internet and IP officials and experts working on ways to combat 

Internet piracy. 

Criminal Enforcement. The number of IPR criminal case transfers in Shanghai remains much 

too low relative to the size of the local economy. The Shanghai government should be 

commended for initiating a number of pilot programs to assist in better administrative-criminal 

coordination on IPR. 

• Shanghai PSB launched a pilot program whereby it initiates criminal investigations based 

on “suspicious leads” rather than evidence of illegal activity. Industry continues to 
32

commend Shanghai for this initiative and would like to see it copied in other 

jurisdictions. 

• Shanghai has also instituted a cross-agency, horizontal Case Monitoring System digital 

database that tracks IPR cases from initial raids to the transfer of information to the 

police and prosecutors, to judicial adjudication of a case. 

Courts. 

• Industry commends the efficiency of many Shanghai courts. Cases there typically move 

quickly, usually within 6 months for the first trial, with the courts awarding statutory 

damages if they find infringement. 

Universities. Shanghai authorities recognize that illegal copying of textbooks is an issue at 

Shanghai universities, particularly in small-scale student-run facilities. 

• Well-known Shanghai universities have reportedly allowed wholesale book copying in 

on-campus textbook centers. Shanghai authorities should proactively continue to monitor 

campuses to prevent continuation of this illegal activity. 

• The Shanghai Copyright Bureau reports coordinating with universities to train students 

on IPR awareness. 

Zhejiang Province, a manufacturing hub in eastern China with a large proportion of privately 

owned production facilities and the major Ningbo port, has been identified over the years as a 

major distribution center for infringing goods to overseas markets. Right holders have 

repeatedly drawn attention to the city of Yiwu as an important distribution center for small 

commercial goods. 

Hot Spots. According to industry reports: 

• The cities of Ningbo, Cixi, Yiwu and Wenzhou have been particularly associated with 

counterfeiting manufacturing and distribution (including export). 

• Industry representatives have noted that counterfeiters have been moving to the smaller 

cities of Yuhuan and Taizhou in response to increased enforcement efforts in Yiwu, Cixi 

and Ningbo. 

Retail and Wholesale Markets. Zhejiang is home of the China Small Commodities Market in 

Yiwu, reportedly the world’s largest wholesale market. 

• Yiwu officials have set up a coordination body to improve enforcement. They are 

pursuing closer coordination between industries and the Yiwu government, training for 

officials on IPR issues, a policy of revoking business licenses for repeat IPR offenders, 

and employment of undercover Consumer Protection Office investigators to root out 

underground sales of pirated and counterfeit goods. 

• Industry reports that local enforcement authorities are increasingly responsive to right 

holders’ complaints. 

Administrative Enforcement. 

• Industry reports that Zhejiang AIC is one of the most active in helping right holders 

investigate trademark infringement. 

• The Zhejiang AIC handled 8,403 trademark cases in 2006. 
33

• In comparison to trademark issues, the Copyright Bureau handled 61 copyright cases in 

2006. 

• To improve coordination and oversight of cultural product markets, Zhejiang State 

Administration of Radio Film and Television, Culture and Copyright Bureau offices are 

now co-located. 

Criminal Enforcement. 

• In 2006, Zhejiang transferred 119 cases of trademark infringement for criminal 

investigation. There were no reported transfers of copyright cases. 

• Criminal remedies continue to be largely non-deterrent, as in other parts of China. 

• Zhejiang authorities have confirmed that facilitating more criminal transfers of copyright, 

patent and trademark cases remains a top priority. 

• Local court officials in Yiwu and Ningbo described efforts to increase IPR training for 

judges and expedite the handling of IPR cases, and industry sources have reported that, in 

recent years, it has become easier to file criminal IPR complaints in Yiwu. 

• Valuation of seized goods remains a key problem.. 

• Industry reports continued resistance by local administrative officials to transfer cases for 

criminal investigation and prosecution, a problem in many localities around China. 

Exports. The Ningbo port is a significant port of lading for infringing goods seized at U.S. 

borders. In 2006, Ningbo Customs handled 235 IPR infringement cases valued at RMB 27.51 

million, and Hangzhou Customs investigated 123 cases valued at RMB 12 million.
34

RUSSIA 

Russia will remain on the Priority Watch List in 2008. The United States will continue to 

monitor closely Russia’s progress on IPR protection and enforcement and to assess 

implementation of the November 19, 2006 bilateral agreement on intellectual property rights 

(“IPR Bilateral Agreement”). 

Piracy and counterfeiting remain major concerns in Russia. The U.S. copyright industries 

estimate that they lost in excess of $1.4 billion in 2007 due to copyright piracy in Russia. The 

U.S. copyright industries continued to report that in 2007, Russia’s optical disc production 

capacity was far in excess of domestic demand, with pirated products being produced both for 

domestic consumption and export. Due to growing broadband penetration and the continued 

proliferation of pirate websites, the United States remains concerned about Internet piracy in 

Russia. 

In spite of some improvements, weak enforcement against piracy and counterfeiting in Russia 

remains a serious problem. In 2007, Russian law enforcement authorities initiated raids on 

optical disc production facilities and retail sites, and investigations of Internet sites. However, 

prosecutions and adjudications of IP cases remain sporadic and inadequate; there is also a lack of 

transparency and a failure by courts to impose deterrent penalties for IPR violators. 

The United States conducted an Out-of-Cycle Review in 2007 to encourage Russia to implement 

its commitments in the IPR Bilateral Agreement and evaluate further actions that Russia needs to 

take to improve protection and enforcement of intellectual property rights. As part of the IPR 

Bilateral Agreement, Russia has committed to fight optical disc and Internet piracy, protect 

against unfair commercial use of undisclosed test or other data generated to obtain marketing 

approval for pharmaceutical products, deter piracy and counterfeiting through criminal penalties, 

strengthen border enforcement, and bring Russian laws into compliance with WTO and 

international IPR norms. Russia’s implementation of those IPR commitments will be essential to 

completing the final WTO accession process. While Russia has made some progress in 

implementation, additional work remains for Russia to fully implement its commitments under 

the IPR Bilateral Agreement. 

Part IV of Russia’s Civil Code, which covers IPR, went into effect on January 1, 2008. Russia 

has pledged in the IPR Bilateral Agreement to ensure that Part IV and its other IPR measures 

will be fully consistent with the TRIPS Agreement upon Russia’s accession to the WTO. Russia 

has also committed to introduce legislation in the Duma to implement its TRIPS Agreement 

obligations that will take effect upon Russia’s accession. The United States is awaiting 

additional efforts by Russia in this area. 

In addition to the multilateral work to ensure Russia’s compliance with the TRIPS Agreement 

and Russia’s other international IPR obligations, the United States continues to work with Russia 

on the enforcement of IPR and Russia’s compliance with its bilateral obligations through the 

United States – Russia Bilateral Working Group on Intellectual Property Rights. In addition, the 

United States is reviewing Russia’s status as a beneficiary country under the U.S. Generalized 

System of Preferences (GSP) Program. 
35

ARGENTINA 

Argentina will remain on the Priority Watch List in 2008. Although cooperation has improved 

between Argentina’s enforcement authorities and U.S. copyright industries, and the Argentine 

Customs authority has taken steps to improve enforcement, the United States encourages 

stronger IPR enforcement actions to combat the widespread availability of pirated and 

counterfeit products. Copyright piracy remains a significant problem in numerous industry 

sectors. Civil damages are ineffective and in criminal cases the judiciary is apparently reluctant 

to impose deterrent-level penalties. The United States notes that Argentina continues to make 

progress in decreasing its backlog of patent applications. However, Argentina still does not 

provide adequate protection against unfair commercial use of undisclosed test and other data 

generated to obtain marketing approval for pharmaceutical products. The United States also 

urges Argentina to implement an effective coordination system between its health and patent 

authorities to prevent the issuance of marketing approvals for unauthorized copies of patented 

pharmaceutical products. The United States will continue to monitor Argentina’s efforts to 

address these IPR concerns. 

 

CHILE 

Chile will remain on the Priority Watch List in 2008. Chile’s IPR performance continues to fall 

well below expectations for a U.S. free trade agreement partner. The United States remains 

concerned about inadequate protection against unfair commercial use of undisclosed test and 

other data generated to obtain marketing approval for pharmaceutical products and insufficient 

coordination between Chile’s health and patent authorities to prevent the issuance of marketing 

approvals for unauthorized copies of patented pharmaceutical products. While some U.S. 

pharmaceutical companies have reported positive outcomes in patent infringement cases, the 

underlying weaknesses in Chile’s legal regime require resolution in order for Chile to fully 

implement its obligations under the U.S.-Chile FTA Free Trade Agreement (FTA). The United 

States also remains concerned about continuing copyright piracy and trademark counterfeiting. 

Chile’s Congress is continuing to consider legislation to implement various provisions of the 

FTA regarding Internet service provider liability, limitations and exceptions to copyright 

protection, and enforcement and penalties against copyright infringement. Further amendments 

to Chile’s IPR legislation are needed to bring Chile’s IPR regime into line with its multilateral 

and bilateral commitments. The United States will continue to work together with Chile on the 

implementation of its IPR commitments in the FTA. 

INDIA 

India will remain on the Priority Watch List in 2008. The United States remains concerned 

about inadequate IPR protection and enforcement in India. The United States continues to urge 

India to improve its IPR regime by providing stronger protection for copyrights, trademarks, and 

patents, as well as protection against unfair commercial use of undisclosed test and other data 

generated to obtain marketing approval for pharmaceutical products. The United States 

encourages India to implement the WIPO Internet Treaties by strengthening its copyright laws, 

and to improve its IPR enforcement system by enacting and implementing an effective optical 

disc licensing scheme to combat optical disc piracy. Piracy remains a serious problem in India, 

as does trademark counterfeiting, including of pharmaceuticals and distilled spirits. India’s 

criminal IPR enforcement regime remains weak, with improvements needed in the areas of 

police action against pirates and counterfeiters, expeditious judicial dispositions for copyright 
36

and trademark infringement with imposition of deterrent-level sentences for IPR infringers, and 

stronger border enforcement against counterfeit and pirated goods. The United States urges 

India to strengthen its IPR regime and stands ready to work with India on these issues during the 

coming year through the Trade Policy Forum and other bilateral mechanisms. 

ISRAEL 

Israel will remain on the Priority Watch List in 2008 and the United States will conduct an Outof-Cycle Review as a positive step to encourage progress in Israel on IPR issues. The United 

States is encouraged by recent progress on certain IPR issues in Israel, including: the passage of 

copyright legislation and issuance of a decree in 2007 that ensures national treatment for U.S. 

rights holders in accordance with the 1950 exchange of letters between the United States and 

Israel; the issuance of regulations in 2007 and policy clarifications in 2008 on the manufacturing 

of pharmaceutical products for export; and increased positive engagement between the United 

States and Israel on IPR issues. The United States remains seriously concerned, however, with 

Israel’s inadequate level of protection against unfair commercial use of undisclosed test and 

other data generated to obtain marketing approval for pharmaceutical products, and Israel’s laws 

that adversely affect the term of pharmaceutical patent protection by effectively reducing the 

time granted to compensate for delays in obtaining regulatory approval of a drug. The United 

States hopes to see Israel accede to and implement the WIPO Internet Treaties in order to address 

the growing problem of Internet piracy in Israel. As noted in last year’s report, the United States 

expects Israel to provide an appropriately high level of IP protection that reflects its status as a 

partner in the U.S. – Israel FTA and its objective of becoming a member of the Organization for 

Economic Co-operation and Development (OECD). The United States will continue to work 

together with Israel during the Out-of-Cycle Review to ensure the strengthening of Israel’s IPR 

regime. 

PAKISTAN 

Pakistan will be elevated to the Priority Watch List in 2008. In 2007, the United States 

conducted an Out-of-Cycle Review to monitor Pakistan’s progress on enacting legislation to 

provide effective protection against unfair commercial use of undisclosed test and other data 

generated to obtain marketing approval for pharmaceutical products, as well as a system of 

coordination between its health and patent authorities to prevent the issuance of marketing 

approvals for unauthorized copies of patented pharmaceutical products. Due to a lack of 

progress this year in either of these areas, Pakistan is being elevated to the Priority Watch List. 

The United States and Pakistan will remain closely engaged on these issues during the coming 

year. The United States commends Pakistan for continuing to take enforcement actions against 

large-scale illegal optical disc production and retail sales of pirated and counterfeit products, but 

encourages Pakistan to take enforcement actions against book piracy, aggressively prosecute IPR 

crimes, and ensure that its courts issue deterrent-level sentences for IPR infringers, especially 

against those connected with the optical disc pirate plants that were shut down in 2005. The 

United States will continue to monitor closely the IPR situation, and will work together with 

Pakistan to achieve further improvements in its IPR protection and enforcement regimes. 

THAILAND 

Thailand will remain on the Priority Watch List in 2008 due to a broad range of concerns 

surrounding IPR protection and enforcement. Elections in December 2007 re-established 
37

democratic governance in Thailand, and the United States looks forward to working with the 

new Thai government to seek resolution of these concerns. The United States recognizes that in 

2007, Thai law enforcement officials continued to conduct actions against infringing activity at 

the retail and distribution levels. Despite these efforts, however, piracy and counterfeiting rates 

remained high. The United States strongly urges Thailand’s authorities to take additional 

concrete actions to strengthen its IPR regime that include continuous and sustained enforcement 

actions that get to the source of the infringing activity and issuance of deterrent penalties to IPR 

infringers, specific steps to improve interagency coordination, and to combat optical disc piracy, 

large-scale organized book piracy, cable and signal theft, and entertainment and business 

software piracy. Thai authorities should also take steps to address production and distribution of 

counterfeit products, as well as delays in the granting of patents. While the United States 

recognizes the importance of Thailand’s public health challenges, Thailand’s recent policies and 

actions regarding the compulsory licensing of patented medicines have contributed to continuing 

concerns regarding the adequate and effective protection of IPR in Thailand. The United States 

is awaiting further information on the new Thai government’s approach in this area and hopes to 

work constructively on this and other IPR issues in order to strengthen Thailand’s IPR regime. 

VENEZUELA 

Venezuela will remain on the Priority Watch List in 2008. Venezuela made no effort to improve 

its weak IPR regime in 2007. Copyright piracy continues to worsen, while proposed copyright 

legislation, if re-introduced, would severely undercut the existing Venezuelan copyright law, as 

well as bilateral and international standards of IP protection. The U.S. pharmaceutical industry 

reports that Venezuela has not issued a patent to a foreign pharmaceutical product since 2003, 

and has not issued any patents at all since 2005. Venezuela also does not provide protection 

against unfair commercial use of undisclosed test and other data generated to obtain marketing 

approval for pharmaceutical products. In April 2006, Venezuela withdrew from the Andean 

Community, raising questions about Venezuela’s ability to fulfill its international IPR 

obligations and whether it will provide for the effective administration of its IPR system. The 

United States urges the Venezuelan government to take immediate action to improve IPR 

protection, particularly by addressing piracy and counterfeiting, amending inadequate legislative 

proposals or laws, protecting against unfair commercial use of undisclosed test and other data 

generated to obtain marketing approval for pharmaceutical products, and improving IPR 

enforcement. 
38

WATCH LIST

ALGERIA 

Algeria will be added to the Watch List in 2008. The United States is concerned about the lack 

of protection in Algeria against unfair commercial use of undisclosed test and other data 

generated to obtain marketing approval for pharmaceutical products, as well as insufficient 

coordination between Algeria’s health and patent authorities to prevent the issuance of marketing 

approvals for unauthorized copies of patented pharmaceutical products. For example, industry 

has noted concern over Algeria’s lack of data protection legislation, Algeria’s granting of 

marketing approval in 2007 to generic copies of drugs protected by Algerian patents, and the 

lack of effective judicial remedies to enable a right holder to challenge in court the granting of 

marketing approval for generic pharmaceutical products that infringe Algerian patents. The 

United States also has concerns about weak enforcement against piracy and counterfeiting in 

Algeria. The United States will work together with Algeria to address these IPR concerns, 

including through Algeria’s bid for accession to the WTO and the bilateral Trade and Investment 

Framework Agreement. 

BELARUS 

Belarus will remain on the Watch List in 2008. The United States remains concerned about 

Belarus’ delayed implementation of its intellectual property commitments under the U.S.-Belarus 

Trade Agreement. The United States encourages Belarus to strengthen its IPR laws, reduce 

piracy and counterfeiting levels, and increase its IPR enforcement efforts. Belarus reportedly 

plans to amend its copyright law in 2008, and the United States will continue to monitor Belarus’ 

progress to ensure that it provides adequate protection for sound recordings and pre-existing 

works and properly implements the WIPO Internet Treaties, which Belarus ratified in 1998. 

Belarus’ IP laws neither provide ex officio authority to allow police officials to initiate criminal 

copyright cases or for customs officials to seize illegal products at the border, nor provide for 

civil ex parte search procedures necessary to protect against end-user software piracy. The 

United States will work together with Belarus to strengthen its IPR laws. 

BOLIVIA 

Bolivia will remain on the Watch List in 2008. Piracy and counterfeiting persist in Bolivia, and 

there were no notable improvements to Bolivia’s IPR regime during 2007. As a WTO member, 

Bolivia committed to increase its levels of IPR protection substantially. The United States 

encourages Bolivia to accede to and implement the WIPO Internet Treaties. In addition to 

rampant piracy and counterfeiting in Bolivia, concerns remain about the erosion of IP protection 

for pharmaceutical products in Bolivia. The United States encourages Bolivia to improve its IPR 

protection regime in 2008, as well as increase its IPR enforcement efforts to combat piracy and 

counterfeiting. 

BRAZIL 

Brazil will remain on the Watch List in 2008. The United States conducted an Out-of-Cycle 

Review in 2007, which resulted in Brazil being maintained on the Watch List in February 2008. 

This decision recognizes Brazil’s continued positive momentum on IPR enforcement that led to 

the decision to improve Brazil’s ranking from the Priority Watch List to the Watch List in the 
39

2007 Special 301 review. The United States will continue to pursue bilateral dialogue on IPR 

enforcement and other IPR issues. In particular, the United States encourages Brazil to 

strengthen its IPR enforcement legislation, take more vigorous action to address book and 

Internet piracy, and consider acceding to and implementing the WIPO Internet Treaties. With 

regard to patent, trademark, and data protection matters, Brazil’s posture of hindering IP 

protection in these areas remains a matter of concern, although capacity improvements at the 

Brazilian Industrial Property Institute do hold the prospect of streamlined processing and a 

reduction in the patent and trademark application backlogs. The United States will continue to 

engage with Brazil bilaterally on these IPR protection and enforcement issues, including through 

the U.S.-Brazil Bilateral Consultative Mechanism and other means. 

CANADA 

Canada will remain on the Watch List, subject to essential progress on key issues in the coming 

months. Canada embraced improving IPR protection and enforcement as a priority in the Speech 

from the Throne in October 2007. The United States looks to the Government of Canada to 

deliver on these priorities through prompt and effective action on key issues, such as copyright 

reform and enhanced border enforcement of intellectual property rights. The United States 

welcomes Canada’s continued cooperation on bilateral and multilateral IPR initiatives, and notes 

progress in the form of Canada’s issuance of measures in 2007 to criminalize camcording of 

copyrighted films in movie theaters. The United States notes its continuing serious concerns, 

however, with Canada’s failure to accede to and implement the WIPO Internet Treaties. The 

United States also continues to urge Canada to improve its IPR enforcement system to enable 

authorities to take effective action against the trade in counterfeit and pirated products within 

Canada, as well as curb the volume of infringing products transshipped and transiting through 

Canada. Canada’s weak border measures continue to be a serious concern for IP owners. The 

United States hopes that Canada will implement legislative changes to provide a stronger border 

enforcement system by giving its customs officers ex officio authority to seize products 

suspected of being pirated or counterfeit without the need for a court order. The provision of 

additional resources and training to customs officers and domestic law enforcement personnel 

would enhance IPR enforcement. The United States will continue to monitor Canada’s progress 

in providing an adequate and effective IPR protection and enforcement regime, including 

improved border enforcement and near term accession to and implementation of the WIPO 

Internet Treaties. 

CZECH REPUBLIC 

The Czech Republic will remain on the Watch List, where it was placed as the result of an Outof-Cycle Review in January 2008. The United States remains concerned about the significant 

amount of pirated and counterfeit goods sold in retail markets on the border between the Czech 

Republic and Germany and Austria, reported by the U.S. recording industry to be “the highest 

concentration and largest number of pirate outdoor markets in the world.” Some of these 

markets are reportedly located on government-owned property. The United States urges the 

Czech Republic to implement its IPR Action Plan and to take concrete enforcement actions, 

including prosecutions and deterrent-level sentencing of IPR infringers to reduce substantially 

the sale of pirated and counterfeit goods at these border markets. The United States will 

continue to monitor this situation and work with the Czech Republic to make significant IPR 

improvements before it assumes the Presidency of the European Union in 2009. 
40

ECUADOR 

Ecuador will remain on the Watch List in 2008. Ecuador made some progress in 2007 towards 

eliminating its backlog of pending patent applications. Overall IPR enforcement in Ecuador 

remains problematic, however, and Ecuador has not yet established the specialized IPR courts 

required by its 1998 IPR law. Concerns also remain over Ecuador’s lack of effective protection 

against unfair commercial use of undisclosed test or other data generated to obtain marketing 

approval for pharmaceutical products, as well as Ecuador’s lack of an effective coordination 

system between its health and patent authorities to prevent the issuance of marketing approvals 

for unauthorized copies of patented pharmaceutical products. The United States urges Ecuador 

to strengthen its IPR regime and to enhance its IPR enforcement efforts, and will monitor 

Ecuador’s efforts to address these IPR concerns. 

EGYPT 

Egypt will be moved in 2008 to the Watch List from the Priority Watch List, in recognition of 

improvements in pharmaceutical IPR protection, notably the Ministry of Health’s progress in 

streamlining applications for marketing approval of pharmaceutical products, Egypt’s attention 

to its backlog of pending patent applications, and the renewed dialogue between the U.S. and 

Egypt on IPR issues. Serious concerns remain, however, about continuing deficiencies in 

Egypt’s IPR enforcement regime, particularly related to copyright enforcement against book 

piracy and entertainment software piracy. Egypt needs to improve its court system by increasing 

its efficiency and transparency, as well as encouraging judges to impose deterrent-level 

sentences in copyright and trademark infringement cases. The United States is concerned with 

the transshipment of counterfeit and pirated goods through Egypt, including in the Damietta Port 

and Port Said Free Trade Zones. The United States urges the Ministry of Health to further 

clarify its commitment to protection against unfair commercial use of undisclosed test or other 

data generated to obtain marketing approval for pharmaceutical products, and to continue its 

efforts to provide coordination between its health and patent authorities to prevent the issuance 

of marketing approvals for unauthorized copies of patented pharmaceutical products. The 

United States will continue to work closely with Egypt on improving its IPR regime. 

GREECE 

Greece will be added to the Watch List in 2008. IPR enforcement in Greece is weak and uneven, 

and efforts to improve enforcement generally lack effective coordination. The U.S. copyright 

industries estimate that Greece has one of the highest levels of piracy in the European Union. 

The United States recognizes that in 2007, Greece increased cooperation with industry, executed 

an extensive education and outreach plan, provided IPR training to police and customs officers, 

and conducted a Christmas season raid/seizure campaign, and recently established a formal 

interagency coordinating IPR committee. However, the United States urges improvements in 

IPR enforcement, including sustained implementation of enforcement measures against street 

vendors, more effective raids and seizures, increased prosecutions, encouragement of judges to 

impose deterrent-level penalties, strengthened border enforcement, and establishment of a 

national action plan to combat IPR infringement. The United States will continue to work with 

Greece, with the goal of improving IPR protection and enforcement. 
41

HUNGARY 

Hungary will remain on the Watch List in 2008. Hungary has made some IPR improvements, 

including the establishment in January 2008 of a National Board Against Counterfeiting. The 

United States will monitor the progress of Hungary’s efforts to combat piracy and counterfeiting. 

Further improvements are needed to ensure that prosecutors follow through with cases against IP 

infringers, and that judges are encouraged to impose deterrent-level sentences for civil and 

criminal IP infringement. U.S. copyright industries also report that Internet piracy in Hungary is 

a growing problem. The United States will continue to work with the Hungarian Government to 

address these IPR concerns. 

INDONESIA 

Indonesia will remain on the Watch List in 2008. Indonesia took some positive steps toward 

combating piracy and counterfeiting in 2007, including several major raids of optical disc 

manufacturing plants as well as actions against distributors of counterfeit pharmaceuticals. 

However, on the whole, there has been little improvement in Indonesia’s IPR climate, nor any 

signs that the government is taking significant steps to address the weaknesses in its system. The 

United States urges Indonesia to take a comprehensive approach to enforcing IPRs that includes 

proper application of IPR laws by the courts; effective interagency coordination to ensure that 

enforcement actions are continuous and sustained; enforcement actions resulting in prosecutions 

where appropriate; and where there are convictions, the issuance of deterrent penalties. The 

United States urges Indonesia to improve examination of trademark applications, and to provide 

an expeditious and effective avenue to challenge questionable registrations. In addition, 

Indonesia should provide effective protection against unfair commercial use of undisclosed test 

or other data generated to obtain marketing approval for pharmaceutical products and improve 

coordination between Indonesia’s health and patent authorities to prevent the issuance of 

marketing approvals for unauthorized copies of patented pharmaceutical products. Also, despite 

some enforcement actions taken by Indonesia against distributors of counterfeit pharmaceuticals, 

the U.S. pharmaceutical industry estimates that approximately 25 percent of drugs in Indonesia 

are counterfeit; this dangerous situation requires greater attention by Indonesia. The United 

States will continue to use the bilateral Trade and Investment Framework Agreement process to 

work with Indonesia to improve its IPR protection and enforcement regimes.

ITALY 

Italy will remain on the Watch List in 2008. Italy made progress in 2007, including through 

increased senior-level support for IPR enforcement, and some enforcement actions by the 

Guardia di Finanza. U.S. copyright industries continue to report, however, that Italy maintains 

one of the highest overall piracy rates in Western Europe. The United States is particularly 

concerned about the lack of judicial imposition of deterrent-level penalties for criminal copyright 

and trademark infringers. The United States urges Italy to make IPR enforcement a top priority, 

including encouraging judges to impose deterrent-level sentences and establishing a national 

action plan to address commercial-scale piracy, with a particular focus on Internet piracy. The 

United States will continue to work with Italy, with the goal of improving IPR protection and 

enforcement. 
42

JAMAICA 

Jamaica will remain on the Watch List in 2008. The United States remains concerned over 

Jamaica’s continued delay in enacting the Patents and Designs Act, which is intended to 

implement Jamaica’s obligations under the TRIPS Agreement and to comply with the United 

States-Jamaica Bilateral Intellectual Property Agreement. The United States urges the 

Government of Jamaica to reform its patent law as soon as possible to comply fully with 

international standards for patent protection. 

KUWAIT 

Kuwait will remain on the Watch List in 2008. Although Kuwait customs, police, and Ministry 

of Interior officials continued to make progress on IPR enforcement in 2007, Kuwait failed to 

make similar progress on amending its outdated IPR laws. The United States remains concerned 

that several key pieces of IPR legislation have been pending for many years, including 

legislation regarding copyrights, data protection, geographical indications, trademarks, patents, 

and customs, and urges Kuwait to enact and implement this legislation in the near term. The 

United States will continue to work with Kuwait on the passage of this IPR legislation and 

improved IPR enforcement through the United States-Kuwait Trade and Investment Framework 

Agreement in order to ensure that Kuwait meets its international IPR commitments. 

LEBANON 

Lebanon will be moved to the Watch List in 2008 from the Priority Watch List. Lebanon took 

some IPR enforcement actions in 2007, especially in the form of the Cyber Crime and 

Intellectual Property Rights Bureau within Lebanon’s police department. The United States 

remains concerned, however, about copyright piracy in Lebanon, particularly in the sectors of 

cable and book piracy. The United States is also concerned about inadequate protection against 

unfair commercial use of undisclosed test or other data generated to obtain marketing approval 

for pharmaceutical products, as well as a growing problem with counterfeit pharmaceutical 

products in Lebanon. The United States urges Lebanon to improve IPR protection and 

enforcement in the coming year, particularly in light of Lebanon’s bid for accession to the WTO. 

MALAYSIA 

Malaysia will remain on the Watch List in 2008. Malaysia continued to show a strong 

commitment to strengthening IPR protection and enforcement this past year, but still needs to 

make further IPR improvements. In 2007, Malaysia continued to take positive actions against 

piracy and counterfeiting. Notably, the Malaysian Government established a specialized IP 

court, which began to adjudicate IPR cases in 2007. The United States urges Malaysia to 

continue its IPR enforcement efforts and to accede to and fully implement the WIPO Internet 

Treaties. The United States also encourages Malaysia to provide effective protection against 

unfair commercial use of undisclosed test or other data generated to obtain marketing approval 

for pharmaceutical products, and create a coordination mechanism between its health and patent 

authorities to prevent the issuance of marketing approvals for unauthorized copies of patented 

pharmaceutical products. The United States will continue to work with Malaysia to make 

progress on these pressing IPR issues through the ongoing U.S.-Malaysia Free Trade Agreement 

negotiations. 
43

MEXICO 

Mexico will remain on the Watch List in 2008. Overall IPR enforcement efforts remained weak 

in Mexico in 2007, although there were notable improvements during the year in the State of 

Mexico and the Municipality of Toluca. The United States encourages Mexico to take the 

following actions to strengthen its IPR regime: continue to build a consistent record of 

aggressive prosecutions and deterrent-level penalties imposed by courts; improve domestic 

cooperation efforts between federal, state, and local enforcement authorities; increase IPR 

enforcement efforts by customs authorities; pass legislation to provide ex officio authority to law 

enforcement and customs authorities; criminalize camcording in theaters; and implement fully 

the WIPO Internet Treaties. The United States also encourages Mexico to provide adequate 

protection against unfair commercial use for test or other data generated to obtain marketing 

approval for pharmaceutical products, and improve coordination between its health and patent 

authorities to prevent the issuance of marketing approvals for unauthorized copies of patented 

pharmaceutical products. Counterfeit pharmaceuticals also appear to be a growing problem in 

Mexico. The United States will continue to work with Mexico to address and resolve these IPR 

concerns in an effective manner. 

NORWAY 

Norway will be added to the Watch List in 2008. The United States is concerned about the lack 

of product patent protection for certain pharmaceutical products. The regulatory framework in 

Norway regarding process patents filed prior to 1992 denies adequate protection to nearly 75 

percent of the pharmaceutical products currently on the Norwegian market, according to U.S. 

industry reports. The United States will continue to encourage Norway to resolve this issue. 

PHILIPPINES 

The Philippines will remain on the Watch List in 2008. The United States is concerned about 

U.S. industry reports of an apparent increase in piracy in the Philippines, particularly in the areas 

of book piracy, illegal downloads using mobile devices, piracy on the Internet, and the illegal 

camcording of films in theaters. The United States urges the Philippines to take steps to reverse 

these trends and strengthen its enforcement regime against piracy and counterfeiting. 

Specifically, the Philippines should pursue final determinations in outstanding IPR cases, 

including those related to cable piracy, with imposition and implementation of deterrent-level 

penalties. The Philippines also should strengthen the Optical Media Board and provide it with 

adequate resources to expand and improve the effectiveness of its activities; strengthen the 

Customs IP unit; ensure that its patent regime complies with the World Trade Organization 

Agreement on Trade-Related Aspects of Intellectual Property Rights; enforce copyright 

protection of printed material; and seek to obtain amendments to the Copyright Act to implement 

the WIPO Internet treaties. The United States will continue to work with the Philippine 

Government under the bilateral Trade and Investment Framework Agreement to strengthen the 

Philippines IPR regime. 

POLAND 

Poland will remain on the Watch List in 2008. Poland made some IPR improvements in 2007, 

including the closure of the Warsaw Stadium that was notorious for selling counterfeit and 

pirated goods, amendments to its IP laws to strengthen criminal penalties, and closer cooperation 

between law enforcement authorities and the private sector. Numerous IPR concerns remain, 
44

however, such as increasing Internet piracy, trade in pirated goods at markets on Poland’s border 

with Germany, weak border enforcement, inefficient prosecutions, and lack of deterrent-level 

sentences imposed by courts. The United States is also concerned by Poland’s lack of 

coordination between its health and patent authorities to prevent the issuance of marketing 

approvals for unauthorized copies of patented pharmaceutical products, as well as a reported lack 

of adequate enforcement remedies when generic pharmaceutical products are launched during 

the term of an innovator’s patent. The United States encourages Poland to commit its resources 

and attention to addressing these IPR protection and enforcement issues over the next year. 

ROMANIA 

Romania will remain on the Watch List in 2008. Though there was a decrease in pirated optical 

discs sold by street vendors, Internet piracy grew significantly in 2007. Prosecutors in Romania 

often fail to pursue IPR cases and judges often dismiss IPR cases due to a perceived “lack of 

social harm.” The United States urges Romania to encourage its prosecutors to vigorously 

prosecute IPR cases and its judges to impose deterrent-level sentences against IPR infringers, 

and to remove delays and obstacles in criminal investigations. The United States will work with 

Romania to improve its IPR enforcement efforts. 

SAUDI ARABIA 

Saudi Arabia will remain on the Watch List in 2008. The United States has been working 

closely with Saudi Arabia on IPR issues during 2007. Saudi Arabia has made some progress in 

IPR enforcement, including an increased number of IPR raids and the reported disposition of 

numerous cases by the copyright enforcement Violations Review Committee. The United States 

recognizes that Saudi Arabia is pursuing IPR improvements, especially with regard to increasing 

transparency of its copyright enforcement administrative processes within the Ministry of 

Culture and Information and the Violations Review Committee. The United States welcomes 

preliminary reports in late April that the long-awaited Ministry of Culture and Information 

website became operational, and we expect that transparency will increase as more information 

is added to this website. Saudi Arabia also has reportedly increased its cooperation with private 

right holders. Saudi Arabia needs to make further IPR improvements by continuing sustained 

raids and inspections to combat piracy and counterfeiting; encouraging courts to impose 

deterrent-level sentences, including jail sentences for serious offenses against IPR infringers; and 

improving border enforcement. The United States welcomes Saudi Arabia’s agreement to 

establish a United States – Saudi Arabia IPR Working Group, and will work closely with Saudi 

Arabia to address the outstanding IPR issues during the coming year through this IPR Working 

Group and the Trade and Investment Framework Agreement. 

SPAIN 

Spain will be added to the Watch List in 2008. The United States is concerned by the Spanish 

government’s inadequate efforts to address the growing problem of Internet piracy, described by 

U.S. copyright industries as one of the worst in Europe. There is also a widespread 

misperception in Spain that peer-to-peer file sharing is legal. While Spanish law enforcement 

authorities have taken some positive measures against pirate Internet websites, prosecutors have 

failed to pursue IPR cases, judges have failed to impose deterrent-level sentences against IPR 

infringers, and right holders do not have access to important legal tools needed to bring 
45

meaningful civil infringement suits. The United States will continue to work closely with Spain 

to address these IPR enforcement issues during the next year. 

TAIWAN 

An Out-of-Cycle Review will be initiated in the immediate future and completed this summer to 

monitor progress on selected outstanding issues to consider whether Taiwan should be removed 

from the Watch List. Progress by Taiwan on improving its IPR regime this past year includes 

the June passage by the Legislative Yuan (LY) of a new law aimed at ending illegal file-sharing 

over peer-to-peer (P2P) platforms, which enabled officials to shut down some of the worst 

violators; continued efforts to establish an IP section at the Special Prosecutor’s Office; and 

creation and issuance in October 2007 of the Action Plan for Protecting IP Rights on School 

Campuses. The United States urges Taiwan to make the specialized IPR Court operational as 

soon as possible. The United States urges Taiwan to continue to implement the 2007 Campus 

Action Plan, continue its efforts to combat counterfeiting and Internet piracy, and to work closely 

with the LY to pass pending IPR legislation regarding liability of Internet service providers for 

copyright infringements. The United States asks that Taiwan continue to take effective action 

against piracy on the Internet, especially on TANet, the Internet service provider administered by 

Taiwan’s Ministry of Education, and against the unauthorized use of copyrighted material on or 

near universities. 

TAJIKISTAN 

Tajikistan will remain on the Watch List in 2008. Tajikistan made progress passing IPR 

legislation this past year. The United States remains concerned, however, that Tajikistan has not 

yet fulfilled its IPR obligations under the U.S.-Tajikistan Bilateral Agreement, and encourages 

Tajikistan to take the necessary steps to fully implement the TRIPS Agreement as part of its 

ongoing efforts to join the WTO. In addition, Tajikistan continues to have a weak enforcement 

regime that lacks criminal penalties for IPR violations, ex officio authority to commence criminal 

cases, and civil ex parte search procedures necessary for effective enforcement against end-user 

pirates, among other important enforcement measures. The Tajik Customs Code also fails to 

provide customs officials with ex officio authority to suspend the release of suspected infringing 

materials at the border. Legal reforms are also needed, for example, in Tajikistan’s copyright 

law, which does not provide protection for sound recordings or pre-existing works. The United 

States also encourages Tajikistan to accede to and implement the WIPO Internet Treaties. The 

United States will continue to work with Tajikistan through the Trade and Investment 

Framework Agreement and the ongoing WTO accession negotiations to address deficiencies in 

its IPR laws and strengthen IPR protection and enforcement. 

TURKEY

Turkey will be lowered to the Watch List in 2008, due to notable progress on copyright 

enforcement, including an increased number of raids against copyright pirates and seizures of 

pirated goods, impositions of deterrent-level penalties by the courts, improved pharmaceutical 

protection, and increased cooperation between law enforcement authorities and the private 

sector. U.S. copyright industries note that Turkey’s enforcement actions are “beginning to reap 

benefits in the market in terms of decreased piracy.” The United States encourages Turkey to 

build upon this positive momentum, including addressing end-user software piracy more 

vigorously. The United States also encourages Turkey to consider strengthening its protection 
46

against unfair commercial use of undisclosed test or other data generated to obtain marketing 

approval for pharmaceutical products, particularly with respect to the start date of the period of 

protection and the inappropriate linkage of the term of data protection to the remaining term of 

the patent, as well as ensuring coordination between Turkey’s health and patent authorities to 

prevent the issuance of marketing approvals for unauthorized copies of patented pharmaceutical 

products. The United States hopes to see Turkey’s continued progress on these issues during the 

coming year, and will continue to monitor Turkey’s progress in strengthening its IPR regime. 

 

TURKMENISTAN 

Turkmenistan will remain on the Watch List in 2008. The United States remains concerned 

about Turkmenistan’s lack of progress on IPR issues and its lack of fulfillment of its IPR 

obligations under the United States-Turkmenistan Trade Agreement. For example, 

Turkmenistan has neither acceded to nor implemented the Berne Convention for the Protection 

of Artistic and Literary Works (Berne Convention), the Geneva Convention for the Protection of 

Producers of Phonograms Against Unauthorized Duplication of Their Phonograms (Geneva 

Phonograms Convention), or the WIPO Internet Treaties. Turkmenistan does not have a 

copyright law and does not provide clear criminal procedures or penalties for IPR infringement 

as required by the U.S.-Turkmenistan Trade Agreement. Its Customs Code does not provide ex 

officio authority to seize suspected infringing material at the border, and there are no known civil 

ex parte search procedures. The United States urges Turkmenistan to adopt the legal reforms 

that will bring Turkmenistan into compliance with its obligations under the bilateral United 

States-Turkmenistan Trade Agreement and to undertake enforcement activities that will help to 

strengthen its IPR regime. 

UKRAINE 

Ukraine will be lowered to the Watch List in 2008. Ukraine made significant progress in 2006 

and 2007 by passing IP legislation and regulations as part of its bid for accession to the WTO 

(the WTO approved Ukraine’s terms of accession in February 2008, and the deadline for 

parliamentary approval of the accession is July 4, 2008). Since adopting amendments to its 

optical disc law in 2005, Ukraine has continued to enforce against pirate optical disc 

manufacturing, and no evidence of pirate manufacturing has been detected in several years. The 

Government of Ukraine has continued to participate regularly in an Enforcement Cooperation 

Group with the U.S. Embassy in Ukraine and U.S. industry representatives. Despite these 

improvements, however, Ukraine needs to address numerous important IP issues, including full 

implementation of its new IP legislation; continuation of enforcement actions against optical disc 

factories; stronger border enforcement to address transshipment of illegal optical media produced 

in Russia and elsewhere; continued raids and arrests of IPR infringers, as well as follow through 

with vigorous prosecutions and imposition of deterrent-level sentences by courts; concrete 

actions to combat the growing problem of Internet piracy in Ukraine; ensuring that government 

ministries use only legal software; and curbing the production and distribution of pirated and 

counterfeit products throughout Ukraine, including in notorious markets in Ukraine. The United 

States will monitor Ukraine’s implementation of its 2006 Law on Medicines that provides 

protection against unfair commercial use of undisclosed test or other data generated to obtain 

marketing approval for pharmaceutical products to ensure that it fulfills its WTO obligations. 

The United States recognizes Ukraine’s improvements in 2006 and 2007 in IPR protection, while 

also recognizing that significant efforts need to be made to achieve further progress on IPR 
47

protection and enforcement. The United States will continue to work with Ukraine to ensure 

sustained progress on these IPR issues in a number of fora, including a new Trade and 

Investment Cooperation Agreement, the IPR Enforcement Cooperation Group, and the WTO. 

UZBEKISTAN 

Uzbekistan will remain on the Watch List in 2008. The United States remains concerned about 

Uzbekistan’s lack of progress on IPR issues. Although Uzbekistan passed a revised copyright 

law in 2006 and recently has started to close down shops that sell pirated products, numerous 

IPR deficiencies remain. Uzbekistan has acceded to the Berne Convention, but the United States 

notes its concern with Uzbekistan’s continuing reservation to Article 18 of the Convention, 

which requires that signatory countries provide copyright protection to pre-existing works. 

Uzbekistan does not provide protection for sound recordings or pre-existing works, and has not 

acceded to the Geneva Phonograms Convention or the WIPO Internet Treaties. In addition, IPR 

enforcement in Uzbekistan remains weak due to a lack of ex officio authority that would allow 

customs officials to seize infringing goods at the border, a lack of civil ex parte search 

procedures, and inadequate criminal penalties for IPR violations. The United States urges 

Uzbekistan to address these deficiencies in its IPR legal regime and to take immediate and 

effective measures to improve IPR enforcement. The United States will continue to work 

together with Uzbekistan on these outstanding IPR issues through discussions related to 

Uzbekistan’s bid for WTO accession and in the on-going review of Uzbekistan’s status as a 

beneficiary country under the U.S. Generalized System of Preferences (GSP) Program. 

VIETNAM 

Vietnam will remain on the Watch List in 2008. Vietnam made progress in 2007 by continuing 

to build its legal framework for IP protection, strengthening enforcement capacity, and 

improving interagency coordination. Vietnamese agencies have taken steps to increase 

enforcement efforts including initiatives to improve IP coordination between enforcement 

ministries, signing an agreement for government procurement of legal software, taking actions 

against cable piracy, and raising public awareness of IPR. Nevertheless, significant weaknesses 

remain, particularly with respect to its criminal regime, administrative regime, and its border 

enforcement regime. In addition, there is a lack of enforcement against Internet piracy and 

optical media containing unauthorized content. Vietnam has indicated it is taking steps to put in 

place more deterrent fines and penalties for copyright infringement and is in the early stages of 

drafting legislation to control optical media. However, concern is rising among right holders that 

Vietnam’s IP enforcement system has not yet developed sufficiently to control the rapid growth 

of piracy and counterfeiting despite the substantial legislative work completed over the past 

several years. The United States has strongly urged Vietnam to address weaknesses in its 

criminal law relating to trademark infringement and copyright piracy. The United States will 

continue to work closely with Vietnamese authorities to strengthen capacity on IPR and to 

support Vietnam’s efforts to implement fully its WTO TRIPS commitments. 
48

WATCH LIST – RECENTLY COMPLETED FREE TRADE AGREEMENTS

COLOMBIA 

Colombia will remain on the Watch List in 2008. The United States commends Colombia for its 

continued actions to combat IPR violations through launching public awareness campaigns, 

conducting raids, prosecuting IP infringers, and designating special IP judges. The United States 

remains concerned, however, that further IPR improvements are needed, including efficient 

prosecutions of IP infringers, issuance of deterrent-level criminal sentences by courts, and 

stronger IPR border enforcement. The United States will continue to monitor Colombia’s 

compliance with its bilateral and multilateral obligations to protect against unfair commercial use 

of undisclosed test or other data generated to obtain marketing approval for pharmaceutical 

products, and encourages Colombia to develop procedures and remedies to prevent the issuance 

of marketing approvals for patent-infringing pharmaceutical products. The United States will 

work with Colombia to achieve progress on these pressing IPR issues through the 

implementation of its IPR commitments under the United States – Colombia Trade Promotion 

Agreement (CTPA), in which Colombia has committed to implement high standards of IPR 

protection through its legal structures and enforcement practices. 

COSTA RICA 

Costa Rica will remain on the Watch List in 2008. The United States remains concerned about 

weak IPR enforcement in Costa Rica, particularly with respect to copyright piracy and trademark 

counterfeiting. The United States encourages the Government of Costa Rica to address the 

shortcomings in its IPR enforcement system by assigning high priority and resources to 

combating piracy and counterfeiting and providing deterrent penalties. Additional IPR areas of 

concern include inadequate protection against unfair commercial use of undisclosed test or other 

data generated to obtain marketing approval for pharmaceutical products, and inadequate 

protection for patents, copyrights, and trademarks. Costa Rica ratified the United States – 

Central America – Dominican Republic Free Trade Agreement (CAFTA–DR) in October 2007. 

The United States will continue to work closely with Costa Rica to ensure implementation of its 

IPR commitments under CAFTA–DR in the near term. 

DOMINICAN REPUBLIC 

The Dominican Republic will remain on the Watch List in 2008. The Dominican Republic 

passed IPR laws in 2006 and 2007 to implement its commitments under CAFTA–DR. These 

legislative reforms have enhanced the Dominican Republic’s protections for patents, copyrights, 

and trademarks, as well as strengthened its IPR enforcement regime. The United States will 

continue to monitor the Dominican Republic’s compliance with its bilateral and multilateral 

obligations to protect against unfair commercial use of undisclosed test or other data generated to 

obtain marketing approval for pharmaceutical products, and encourages the Dominican Republic 

to provide coordination between its health and patent authorities to prevent the issuance of 

marketing approvals for unauthorized copies of patented pharmaceutical products. The United 

States encourages the Dominican Republic to enforce its new IPR laws and hopes to see a 

resulting decline in the high levels of piracy and counterfeiting in the Dominican Republic. 
49

GUATEMALA 

Guatemala will remain on the Watch List in 2008. Through the implementation of Guatemala’s 

IPR obligations under the CAFTA–DR, Guatemala’s laws provide for stronger IPR protection 

and enforcement. Nevertheless, IPR enforcement remains a problem. The United States notes 

that Guatemala’s new administration has expressed support for improving IPR protection and 

enforcement. The United States will continue to monitor Guatemala’s compliance with its IPR 

obligations under CAFTA–DR. 

PERU 

Peru will remain on the Watch List in 2008. The United States remains concerned with the IPR 

situation in Peru. The U.S. copyright industries report that piracy levels remain high. The 

United States encourages the Government of Peru to continue its efforts to combat IPR piracy 

by: conducting more raids and seizures; ensuring that arrests of IPR infringers result in 

convictions and the imposition of deterrent-level sentences that include imprisonment; applying 

effective civil remedies; and giving increasing attention to IPR enforcement measures at its 

borders. Additional IPR areas of concern include inadequate protection against unfair 

commercial use of undisclosed test or other data generated to obtain marketing approval for 

pharmaceutical products, and inadequate protection for patents, copyrights, and trademarks. The 

United States will work closely with Peru to ensure implementation of Peru’s IPR commitments 

under the United States – Peru Trade Promotion Agreement (PTPA), in which Peru has 

committed to implement high standards of IPR protection through its legal structures and 

enforcement practices. The United States urges Peru to strengthen IPR protection and 

enforcement to ensure that it will meet its international and PTPA commitments. 

REPUBLIC OF KOREA 

The Republic of Korea (Korea) will remain on the Watch List in 2008. The United States 

welcomes the strong and far-reaching IPR commitments that Korea agreed to undertake under 

the U.S. – Korea Free Trade Agreement (KORUS FTA) concluded in 2007. In the areas of 

patents, trademarks, copyrights, protection against unfair commercial use of undisclosed test or 

other data generated to obtain marketing approval for pharmaceutical products, and enforcement, 

Korea has agreed to strengthen considerably its IPR protection and enforcement regimes. The 

United States believes that adherence to these commitments will lead to a significant 

improvement in IPR protection as well as a reduction in piracy and counterfeiting in the Korean 

market. The United States will continue to work closely with Korea as it implements its IPR 

commitments in the KORUS FTA. 
50

SECTION 306

PARAGUAY 

In 2008, the United States will continue to monitor Paraguay under Section 306, specifically 

related to Paraguay’s implementation of bilateral understandings regarding IPR protection and 

enforcement. During the meeting of the Joint Commission on Trade and Investment in 

December 2007, the United States and Paraguay negotiated an extension and revision of a 

previous Memorandum of Understanding (MOU). Formal signature of the revised MOU is 

expected soon, and the agreement will remain in effect through 2009. While there have been 

continued strong efforts by Paraguay to improve IPR enforcement, particularly by increasing the 

number of raids and seizures of pirated and counterfeit goods (by the IPR investigative unit in 

particular), Paraguay continues to have problems providing effective IPR protection due to 

porous borders, ineffective prosecutions of IPR infringers, and the lack of deterrent-level 

sentences in court cases. The United States has concerns about the inadequate protection against 

unfair commercial use 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. 
51

WIPO Internet Treaties: 

WIPO Performance and Phonograms Treaty (WPPT) 

and the WIPO Copyright Treaty (WCT) 

The following two countries became parties to the World Intellectual Property Organization 

(WIPO) Performances and Phonograms Treaties (WPPT) during May 2007-April 2008. The 

WPPT entered into force on May 20, 2002, and now has 62 contracting parties. 

Country Date of Entry Into Force

Australia July 26, 2007 

China June 9, 2007 

The following two countries became parties to the World Intellectual Property Organization 

(WIPO) Copyright Treaty (WCT) during May 2007-April 2008. The WCT entered into effect on 

March 6, 2002, and now has 64 contracting parties. 

Country Date of Entry Into Force

Australia July 26, 2007 

China June 9, 2007