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2002 SPECIAL 301 REPORT

Executive Summary

United States Trade Representative Robert B. Zoellick today announced the results of the 2001

“Special 301" annual review, which examined in detail the adequacy and effectiveness of intellectual

property protection in approximately 72 countries. 

USTR notes with disappointment the continued designation of Ukraine as a Priority Foreign Country

due to its persistent failure to take effective action against significant levels of optical media piracy and

to implement intellectual property laws that provide adequate and effective protection. As a result, the

$75 million worth of sanctions imposed on Ukrainian products on January 23, 2002, remain in place. 

This continued failure to adequately protect intellectual property rights could also jeopardize Ukraine’s

efforts to join the World Trade Organization (WTO) and seriously undermine its efforts to attract trade

and investment. The U.S. Government continues to remain actively engaged with Ukraine in

encouraging the nation to combat piracy and to enact the necessary intellectual property rights

legislation and regulations.

The Special 301 report addresses significant concerns in such trading partners as Brazil, Colombia,

India, Hungary, Taiwan, the Dominican Republic, Kuwait, the Philippines, Russia, Egypt, Turkey, Saudi

Arabia, Uruguay, and members of the Andean Community. While not listing Mexico, enforcement

efforts in Mexico continue to need improvement and an out-of-cycle review will be conducted later this

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

limited to, initiation of dispute settlement consultations with countries that do not appear to have

implemented fully their obligations under the WTO Agreement on Trade-Related Aspects of Intellectual

Property Rights (TRIPS Agreement). Such countries include Hungary, members of the Andean

Community, the Dominican Republic, India and Kuwait.

In this year’s review, USTR devoted special attention to the growing issue of Internet piracy, as well as

the ongoing campaign to reduce production of unauthorized copies of “optical media” products such as

CDs, VCDs, DVDs, and CD-ROMs. Optical disk piracy is an increasing problem in many countries,

in particular, Ukraine, Indonesia, Malaysia, the Philippines, Russia, Thailand and Taiwan. In addition,

USTR continued to focus on other critically important issues including proper implementation of the

TRIPS Agreement by developing country WTO Members and full implementation of TRIPS standards

by new WTO Members at the time of their accession. USTR also continued to encourage countries to

ensure that government ministries use only authorized software. 

Over the past year, progress was made by many developing countries and by newly acceding WTO

Members toward implementing TRIPS obligations. Nevertheless, full implementation of TRIPS

obligations has yet to be achieved in certain countries, particularly with respect to the Agreement’s

enforcement provisions. As a result, piracy and counterfeiting of U.S. intellectual property remain
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unacceptably high in these countries.

The United States is committed to a policy of promoting increased intellectual property protection. In

this regard we are making progress in advancing the protection of these rights through a variety of

mechanisms, including through the negotiation of free trade agreements. As part of the negotiations with

Chile and Singapore, as well as in the hemispheric Free Trade Area of the Americas, we are seeking

higher levels of intellectual property protection in a number of areas covered by the TRIPS Agreement. 

These negotiations, as well as any other negotiations that USTR may undertake in the course of this

year, give us the opportunity to build upon the standards in the TRIPS Agreement to reflect the

technological changes that have occurred since the late 1980s and early 1990s.

USTR will continue to use all statutory tools, as appropriate, to improve intellectual property protection

in such countries where it is inadequate, such as Ukraine, Russia, Brazil, the Dominican Republic, and

Turkey including through implementation of the Generalized System of Preferences and other trade

preference programs.

Internet Piracy and the WIPO Copyright Treaties

Throughout the world, countries have begun to recognize the importance of the Internet as a

vehicle for economic expansion. However, despite the promise that the Internet holds for innovative

and creative industries, it is also creates significant challenges, as it serves as an extremely efficient

global distribution network for pirate products. We are currently working with other governments, as

well as consulting with U.S. industry, to develop the best strategy to address Internet piracy. 

An important first step in the fight against Internet piracy was achieved at the World Intellectual

Property Organization (WIPO), when it concluded two copyright treaties in 1996; the WIPO

Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT), referred to

as the WIPO Internet Treaties. These Treaties help raise the minimum standards of intellectual

property protection around the world, particularly with respect to Internet-based delivery of

copyrighted works. 

These Treaties represent the consensus view of the world community that the vital framework

of protection under existing treaties, 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. 

 In order to realize the enormous potential of the Internet, a growing number of countries are

implementing the WIPO Internet Treaties and creating a legal environment conducive to investment and

growth in Internet-related businesses and technologies. In the competition for foreign direct investment,

these countries now hold a decided advantage. We urge other governments to ratify and implement the

two WIPO Internet Treaties, which clarify exclusive rights in the on-line environment and specifically
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prohibit the devices and services intended to circumvent technological protection measures for

copyrighted works. 

We are pleased to report that as of May 20, 2002, both Treaties will be in effect, as the

required number of ratifications have been deposited in Geneva with WIPO. We continue to work

internationally to promote ratification of these Treaties by other trading partners. These Treaties

represent the current state of international copyright law and provide the critical foundation needed to

enable e-commerce to flourish. These treaties provide necessary tools to combat piracy on the

Internet. 

The United States is also pleased to learn that Japan has recognized the need to protect

temporary copies of works and phonograms. This is an important improvement in Japan’s protection

of copyright and related rights. Unfortunately, Japan’s ability to develop a vibrant e-commerce market

in works protected by copyright and related rights is now hampered by the enactment of an Internet

service provider liability law which fails to provide the necessary protections to right holders. The U.S.

encourages Japan best chance to improve this situation by adopting implementing regulations which,

without imposing unfair or unequal burdens, provide the necessary incentives for service providers to

work with right holders to remove infringing material expeditiously without discriminating against

individual right holders, and to provide right holders the ability to learn the identity of accused online

infringers.

Other Initiatives Regarding Internet Piracy

We are seeking to incorporate the highest standards of protection for intellectual property into

appropriate bilateral and regional trade agreements that we negotiate. We have already had our first

success in this effort by incorporating the standards of the WIPO Internet Treaties as substantive

obligations in our FTA with Jordan. The Jordan FTA laid the foundation for pursuing this goal in the

free trade agreements we are negotiating with Chile and Singapore as well as the Free Trade Area of

the Americas (FTAA), and other FTAs yet to be launched. Moreover, our proposals in these

negotiations will further update copyright and enforcement obligations to reflect the technological

challenges we face today as well as those that may exist at the time negotiations are concluded several

years from now.

Implementation of the WTO TRIPS Agreement

One of the most significant achievements of the Uruguay Round was the negotiation of the TRIPS

Agreement, which requires all WTO Members to provide certain minimum standards of protection for

patents, copyrights, trademarks, trade secrets, geographical indications and other forms of intellectual

property. The Agreement also requires countries to provide effective enforcement of these rights. The

TRIPS Agreement is the first broadly-subscribed multilateral intellectual property agreement that is

enforceable between governments, allowing them to resolve disputes through the WTO’s dispute
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settlement mechanism. 

Developed countries were required to fully implement TRIPS as of January 1, 1996, while developing

countries were given a transition period – until January 1, 2000 – to implement the Agreement’s

provisions. Ensuring that developing countries are in full compliance with the Agreement now that this

transition period has come to an end is one of this Administration’s highest priorities with respect to

intellectual property rights. With respect to least developed countries, and with respect to the

protection of pharmaceuticals and agriculture chemicals in certain developing countries, even longer

transitions are provided.

Progress continues to be made by developing countries toward full implementation of their TRIPS

obligations. Nevertheless, certain countries are still in the process of finalizing implementing legislation

and establishing adequate enforcement mechanisms. Every year the U.S. Government provides

extensive technical assistance and training on the implementation of the TRIPS Agreement, as well as

other international intellectual property agreements, 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 State Department and the Justice Department, on a

country-by-country basis, as well as in group seminars, including those co-sponsored with WIPO and

the WTO. Technical assistance involves review of and drafting assistance on laws concerning

intellectual property and enforcement. Training programs usually cover the substantive provisions of the

TRIPS Agreement, as well as enforcement. 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 where additional progress is not achieved in the near term, the

United States will pursue our rights through WTO dispute settlement proceedings. 

Controlling Optical Media Production

To address existing and prevent future piratical activity, over the past year some of our trading partners,

such as Malaysia and Taiwan, have taken important steps toward implementing, or have committed to

adopt, much needed controls on optical media production. We await news of aggressive enforcement

of these laws. However, others that are in urgent need of such controls, including Ukraine, Thailand,

Indonesia, Pakistan, the Philippines, and Russia, and have not made sufficient progress in this regard. 

Governments such as those of China, Hong Kong and Macau that implemented optical media controls

in previous years have clearly demonstrated their commitment to continue to enforce these measures. 

The effectiveness of such measures is underscored by the direct experience of these governments in

successfully reducing pirate production of optical media. We continue to urge our trading partners

facing the challenge of pirate optical media production within their borders, or the threat of such

production developing, to adopt similar controls, or aggressively enforce existing regulations, in the

coming year. USTR is concerned, however, about recent reports of increased piracy and

counterfeiting in Bulgaria, which had been a model in its region for taking the necessary steps to tackle
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optical media piracy, including the enactment of optical media controls. Particularly troubling are

reports that the CD plant licensing laws might be revised in such a manner so as to undermine, not

improve, their effectiveness. We will be closely monitoring the situation and look to the Government of

Bulgaria to maintain strong optical disk (OD) regulations. 

Government Use of Software 

In October 1998, the United States announced a new Executive Order directing U.S. Government

agencies to maintain appropriate, effective procedures to ensure legitimate use of software. In addition, 

USTR was directed to undertake an initiative to work with other governments, particularly those in

need of modernizing their software management systems or about which concerns have been

expressed, regarding inappropriate government use of illegal software. 

The United States has achieved considerable progress under this initiative. Countries that have issued

decrees mandating the use of only authorized software by government ministries include Bolivia, China,

Chile, Colombia, the Czech Republic, Ireland, Israel, Jordan, Paraguay, Thailand, France, the U.K.,

Spain, Greece, Turkey, Hungary, Korea, Hong Kong, Macau, Lebanon, Taiwan and the Philippines. 

Ambassador Zoellick noted his pleasure that these governments have recognized the importance of

setting an example in this area and his expectation that these decrees will be fully implemented. The

United States looks forward to the adoption of similar decrees, with effective and transparent

procedures that ensure legitimate use of software, by additional governments in the coming year.

Intellectual Property and Health Policy

In announcing the results of the 2002 Special 301 review, Ambassador Zoellick reiterated that USTR

would not change the present approach to health-related intellectual property issues. That is to say,

consistent with the United States’ protection of intellectual property, we remain committed to working

with countries to develop workable programs to prevent and treat HIV/AIDS, malaria, tuberculosis

and other epidemics.

We have informed countries that, as they take steps to address a major health crisis, like the

HIV/AIDS crisis in sub-Saharan Africa, they should be able to avail themselves of the flexibilities

afforded by the TRIPS Agreement, provided that any steps they take comply with the provisions of the

Agreement. The Declaration on the TRIPS Agreement and Public Health agreed upon at the WTO

Doha Ministerial in November 2001 is a reflection of this commitment.

The U. S. Government also remains committed to a policy of promoting intellectual property protection,

including for pharmaceutical patents, because of intellectual property rights’ critical role in the 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. 
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WTO Dispute Settlement

In past years, USTR has used the annual Special 301 report as a vehicle to announce the launch of

WTO dispute settlement proceedings against countries that have not met their TRIPS obligations. As

with last year’s report, the focus this year is on resolving the WTO cases that were announced through

previous Special 301 determinations, either through full utilization of the dispute settlement process

(e.g., panel proceedings, Appellate Body review, and reasonable period of time arbitration), or through

consultations, which are more efficient and are therefore the preferred manner of reaching mutually

satisfactory solutions. The following section provides updates of previously announced WTO cases,

highlighting the progress made in the past year. 

ARGENTINA

On May 6, 1999, as a result of the 1999 Special 301 determinations, the United States filed a WTO

dispute settlement case challenging Argentina’s failure to provide a system of exclusive marketing rights

for pharmaceutical products, and to ensure that changes in its laws and regulations during its transition

period do not result in a lesser degree of consistency with the TRIPS Agreement. Subsequently, as

announced in the 2000 Special 301 Report, the United States expanded its claims to include new

concerns that arose due to Argentina’s failure to fully implement its remaining TRIPS obligations that

came into effect on January 1, 2000. These concerns include Argentina’s apparent failure to protect

confidential test data submitted to government regulatory authorities for marketing approval for

pharmaceuticals and agricultural chemicals; denial of certain exclusive rights for patents; failure to

provide such provisional measures as preliminary injunctions to address patent infringement; and

exclusion of certain subject matter from patentability. In all, the United States raised ten distinct claims

with Argentina in this dispute. Consultations were then held on July 17, 2000, November 29, 2000,

April 2, 2001, July 13, 2001, September 21, 2001, and November 5, 2001. Progress was made

during these consultations, and on the week of April 15, 2002, in meetings held in Buenos Aires, the

United States and Argentina agreed to harvest the progress made and finalized the elements of a joint

notification to the WTO, partially settling this dispute.

In the joint notification to the WTO, Argentina clarified how certain aspects of its intellectual property

system, such as those related to its exclusive marketing rights regime, operate so as to conform with the

TRIPS Agreement. In addition, Argentina agreed to amend its patent law to provide protection for

products obtained from a process patent, to ensure that preliminary injunctions are available in

intellectual property court proceedings, and to shift the burden of proof from the plaintiff to the

defendant in civil proceedings involving process patents. Finally, on the two outstanding issues that

remain, that of data protection and the ability of patentees to amend pending applications to claim

certain enhanced protection provided by the TRIPS Agreement, the United States retained its right to

seek resolution under the WTO dispute settlement mechanism.
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EUROPEAN UNION

At the conclusion of the 1999 Special 301 review, the United States initiated a WTO dispute settlement

case against the EU, based on the apparent TRIPS deficiencies in EU Regulation 2081/92, which

governs the protection of geographical indications (GIs) for agricultural products and foodstuffs in the

EU. The Regulation appears to deny national treatment to foreign GIs. According to the plain language

of the Regulation, only EU GIs may be protected. Foreign GIs cannot be registered in the EU, and

thus are not eligible for protection. In addition, although the Regulation permits EU nationals to oppose

or cancel GIs, non-EU nationals are prohibited from raising any objections. With respect to

trademarks, the Regulation permits dilution and even cancellation of trademarks when a GI is created

later in time. The United States requested consultations regarding this matter on June 1, 1999, and

numerous consultations have been held since then. In March of this year, the EU produced proposed

amendments to the Regulation. Although the proposal, as written, would address some of the

deficiencies of the Regulation, it is lacking in several significant respects, including its treatment of

foreign GIs. We are exploring the possibility of addressing these concerns in order to reach a

satisfactory settlement with the EU. If a mutually agreeable solution can not be found, the United States

may have no option but to continue to pursue resolution through WTO dispute settlement procedures.

BRAZIL

The 2000 Special 301 report announced our initiation of a WTO dispute against Brazil over a

longstanding issue between the two countries regarding Article 68 (1) (I) of Brazil's patent law, which

requires all patent owners to manufacture their patented products in Brazil or else be subject to the

compulsory licensing of their patents. This appears to be in violation of TRIPS Article 27.1, which

prohibits Members of the WTO from discriminating on the basis of "...whether the products are

imported or locally produced." The United States continues to question whether such a requirement is

consistent with Brazil's obligations under the TRIPS Agreement. In June 2001 the United States and

Brazil reached an agreement to transfer our dispute to a newly formed U.S.-Brazil Bilateral

Consultative Mechanism. Under the Consultative Mechanism, the United States will receive advance

notice from the Government of Brazil should it decide to use Article 68 (1) (I). The United States has

fully reserved all of its WTO rights in this matter. The establishment of the Consultative Mechanism is a

step forward in resolving this dispute with Brazil.

Potential Dispute Settlement Cases

No new dispute settlement proceedings are being announced at this time. However, the United States

is actively considering the initiation of new WTO cases for later this year or early next year against

certain WTO Members that appear not to be in compliance with their TRIPS obligations.

One area that we continue to monitor closely is the protection of confidential test data. We note, in

particular, that we have serious concerns with Hungary’s failure to adequately protect confidential test
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data associated with applications for marketing approval submitted by pharmaceutical companies, in

apparent violation of Article 39.3 of the TRIPS Agreement. Specifically, Hungary does not provide

protection against the unfair commercial use of test or other data submitted to its regulatory authorities

in order to obtain marketing approval. As a result, generic pharmaceutical companies have been

permitted to rely on data generated and submitted at great cost and effort by innovator companies --

without their consent -- almost immediately after the original applications for marketing approval have

been filed. U.S. industry estimates that it loses between $50 million and $100 million annually due to

the TRIPS Article 39.3 problem and other weaknesses in Hungary’s data protection regime.

Other countries that do not appear to meet their TRIPS obligations include several countries in the

Andean Community, as well as the Dominican Republic, India, Israel and Kuwait. The United States

will consider all options, including but not limited to possible initiation of new WTO dispute settlement

cases, in working with these countries toward full TRIPS implementation. The United States will

continue to consult in the coming months with all of these countries in an effort to encourage them to

resolve outstanding TRIPS compliance concerns as soon as possible. 
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STATUTORY AUTHORITY

The "Special 301" provisions of the Trade Act of 1974, as amended, require USTR to identify foreign

countries that deny adequate and effective protection of intellectual property rights or fair and equitable

market access for U.S. persons that rely on intellectual property protection. Special 301 was amended

in the Uruguay Round Agreements Act to clarify that a country can be found to deny adequate and

effective intellectual property protection even if it is in compliance with its obligations under the TRIPS

Agreement. It was also amended to direct USTR to take into account a country's prior status under

"Special 301," the history of U.S. efforts to achieve stronger intellectual property protection, and the

country’s response to such efforts. 

Once this pool of countries has been determined, the USTR is required to decide which, if any, of these

countries should be designated Priority Foreign Countries. Priority Foreign Countries are those

countries that:

(1) have the most onerous and egregious acts, policies and practices which have the greatest

adverse impact (actual or potential) on the relevant U.S. products; and,

(2) are not engaged in good faith negotiations or making significant progress in negotiations to

address these problems.

If a trading partner is identified as a Priority Foreign Country, USTR must decide within 30 days

whether to initiate an investigation of those acts, policies and practices that were the basis for identifying

the country as a Priority Foreign Country. A Special 301 investigation is similar to an investigation

initiated in response to an industry Section 301 petition, except that the maximum time for an

investigation under Special 301 is shorter in some circumstances.

Today's Special 301 announcement follows a lengthy information gathering and negotiation process. 

The interagency Trade Policy Staff Committee that advises USTR on implementation of Special 301

obtains information from the private sector, American embassies, the United States' trading partners,

and the National Trade Estimates report. 

This Administration is determined to ensure the adequate and effective protection of intellectual

property and fair and equitable market access for U.S. products. The measures announced today

result from close consultations with affected industry groups, other private sector representatives, and

Congressional leaders, and demonstrate the Administration's commitment to utilize all available avenues

to pursue resolution of intellectual property rights issues. In issuing the announcement, Ambassador

Zoellick is expressing the Administration's resolve to take consistently strong actions under the Special

301 provisions of the Trade Act. 
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Developments in Intellectual Property Rights

2001

May

• On May 8, Lithuania became a member of the WTO and obligated itself to fully comply with

the TRIPS Agreement on that date.

• Japan took measures to tighten its border enforcement against counterfeit goods, including the

issuance of new guidelines to address the re-exportation of goods that infringe trademarks.

• The Lithuanian Interior Ministry published an order establishing the guidelines governing the

government’s use of business software by all government entities and contractors, in addition to

establishing a central software purchasing authority. 

June

• On June 5, the Czech Ministry of the Interior, which oversees the police force, adopted a

concept for the battle against computer crimes as part of the overall plan for combating

organized crime. 

• Guatemala created a special IP Prosecutor’s office to assist with rapidly responding to

instances of IP violations.

• Paraguay established the National Council for the Protection of Intellectual Property Rights to

create a more coordinated approach for the enforcement of IP laws among government

ministries, law enforcement authorities, and industry representatives.

July

• The Indonesian Parliament enacted new patent and trademark laws, which increased fines for

infringements, transferred intellectual property disputes to commercial courts, and combined all

previous amendments into a single definitive text. 

• On July 12, amendments to Canada’s patent law entered into force, providing a term of

protection of 20 years for patents granted based on applications filed before October 1, 1989. 
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• On July 26, Moldova became a member of the WTO and obligated itself to fully comply with

the TRIPS Agreement on that date.

• With the entry into force of the new Trademark Law, Nicaragua now has modernized laws on

patents, integrated circuit design, plant variety protection, program signals, copyrights and

trademarks. 

August

• On August 3, Kazakhstan became a party to the Geneva Convention for the Protection of

Producers of Phonograms Against Unauthorized Duplication of Their Phonograms.

• On August 6, the President of the Philippines approved an act providing for the protection of

layout-designs (topographies) of integrated circuits, in an effort to comply with Section 6 of the

TRIPS Agreement. 

• On August 22, the Philippine National Police (PNP) created a unit called the Anti-Fraud and

Commercial Crime Division (AFCCD) that will address IPR violations.

September

• Ukraine’s copyright amendments, passed in July 2001, which included protection for preexisting works and sound recordings, became effective.

• On September 1, amendments to Ukraine’s criminal code, which included criminal liability for

IPR violations, went into force.

• On September 15, Malaysia’s Optical Disc Act came into effect. The law establishes a

licensing and regulatory framework for manufacturing copyrighted works. Violations under the

Act may lead to license revocation, seizure, and forfeiture of manufacturing equipment and

significant fines and jail terms.

• Ukraine ratified the WIPO Copyright Treaty and the WIPO Performances and Phonograms

Treaty. It deposited its instrument of accession in November 2001.

• On September 1, Azerbaijan became a party to the .

• On September 26, the Government of Kazakhstan issued a resolution (#1249) instructing the

appropriate government ministries to draft laws and regulations that would remedy the

acknowledged deficiencies in the Kazakh enforcement regime. 
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October

• The Czech Parliament ratified the WIPO Copyright Treaty and WIPO Performances and

Phonograms Treaty. 

• On October 2, the State of San Paulo in Brazil created a new department of investigations of

organized crime to combat copyright infringement and crimes committed through the Internet.

November

• Taiwan passed the Optical Media Law (OML), which regulates the production of prerecorded optical media, blank optical media, and stampers/masters through a system of permits

and reporting. The OML will be implemented fully on May 14, 2002. Failure to comply with

the OML is punishable by fines, equipment seizures, and possible jail terms. 

December

• The Beirut Court of First Instance issued an encouraging verdict against a pirated software

reseller in the first case brought under the 1999 copyright law. 

• On December 11, China became a member of the WTO, and as part of this process, revised

its intellectual property laws to comply with the provisions of the TRIPS Agreement.

• On December 10, the United States - Vietnam Bilateral Trade Agreement (BTA) entered into

force. The IPR chapter of the BTA commits Vietnam to bring its intellectual property regime

and enforcement practices up to international standards within two years of the BTA’s

implementation. 

• Honduras ratified the WIPO Copyright Treaty and the WIPO Performances and Phonogram

Treaty. 

• On December 30, Russia adopted a new Code on Administrative Misdemeanors which will

come into force on July 1, 2002. The Code will make it possible to initiate administrative cases

against legal entities and to impose fines from US $900-1200 for copyright infringement. 

2002

January

• Mali created a new center aimed at strengthening and enforcing IP laws, which will be funded

by fees collected from the private sector. 
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• On January 1, Taiwan became a member of the WTO and obligated itself to fully comply with

the TRIPS Agreement on that date.

• On January 1, coinciding with Taiwan’s WTO accession, Taiwan lengthened patent protection

from 15 to 20 years for patents granted before January 21, 1994. 

• The Philippine Supreme Court issued new rules giving courts the authority to order the seizure

of pirated material without notice to the suspected infringer, as required by TRIPS Article 50. 

• The Czech government adopted a comprehensive new regulation, effective January 1, on the

use of software in government offices.

• Amendments to Moldova’s Customs Code came into force, providing ex officio authority for

customs officials to seize material at the border as required by the TRIPS Agreement. 

February

• Kazakhstan joined the WIPO Trademark Law Treaty and the Locarno Agreement on

Establishment of International Classification of Industrial Models. 

• The Government of Paraguay impounded 12.6 million blank CDs in early February and

charged the importers with tax evasion. 

• On February 7, Costa Rica’s Public Ministry appointed 12 specialized “Link Prosecutors” to

provide priority handling of IP cases in Costa Rica. 

• The Costa Rican government signed a government software decree on February 21, which

requires all ministries to conduct inventories and audits by December 15, 2002, and to come

into full compliance no later than July 15, 2003. 

• Jamaica formed a new Intellectual Property Office (JIPO), consolidating the administration of

Jamaican copyright, trademark and patent laws. 

March

• Amendments to Qatar's 1995 copyright law, which were approved by the Advisory Council in

February, were brought to the final stages of approval.

• Peru signed and published the WIPO Performances and Phonograms Treaty on March 2.
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• On March 27, the UAE made written commitments to provide comprehensive protection for

U.S. pharmaceuticals including extending data exclusivity protection, providing joint review by

Heath-Finance Ministry officials, and allowing USG review of draft patent law for TRIPS

compliance.

• Japan announced that it will interpret temporary copying as violating copyright laws. 

April

• Israel formally introduced legislation in the Knesset that would increase criminal penalties for

copyright violations. 

• Qatar’s Copyright Office began a new public information campaign, which will include the

distribution of posters and other handouts, to coincide with World IP Day.

• Costa Rica’s National Registry will inaugurate its center for arbitration and reconciliation on

IPR issues. The center will offer free reconciliation and low cost arbitration services for IPR

disputes. All Internet domain names registered in Costa Rica will contain a clause naming the

center as the official arbitrator for domain name disputes. 

• Poland reinstated data exclusivity protection. 

• Slovenia reinstated data exclusivity protection.

• On April 15, Brazil’s Receita Federal initiated the destruction of almost 680 tons of smuggled,

counterfeit and pirated goods.

WIPO Copyright Treaty and Performance and Phonograms Treaty

The following countries deposited their instruments of accession to the World Intellectual Property

Organization (WIPO) Copyright and Performances and Phonograms Treaties (WCT and WPPT)

during the May 2001 - April 2002 time frame:

Albania (deposited WPPT only)

Czech Republic

Gabon

Georgia

Guinea (deposited WCT, WPPT deposited previously)
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Honduras

Jamaica (deposited WCT, WPPT deposited previously)

Mali

Peru

Senegal

Ukraine

The WCT entered into force on March 6, 2002. The WPPT will enter into force on May 20, 2002,

three months after the deposit by thirty States of their instruments of accession or ratification. The

current number of countries which have deposited their instruments of accession is: WCT - 35, WPPT

- 33. 
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PRIORITY FOREIGN COUNTRY

UKRAINE

The U.S. Government withdrew benefits from Ukraine under the Generalized System of Preferences

(GSP) in August 2001, and imposed $75 million worth of sanctions on Ukrainian imports on January

23, 2002, based on the repeated failure of Ukraine to comply with the June 2000 Joint Action Plan. 

Ukraine unfortunately enacted an unsatisfactory optical disk (OD) law in February 2002. The U.S.

Government has worked with industry to develop an approach to improve the actual enforcement of

copyright protection even with this inadequate OD law. To that end, the United States, in cooperation

with Ukraine and industry officials, has developed a set of ten regulations to be implemented to improve

the inadequate OD law. We hope to see Ukraine implement the substance of these regulations soon

and follow up with strict enforcement of the current OD law. At the same time, the United States

remains committed to working with Ukraine to address the remaining deficiencies in the existing OD

law and thereby work toward reestablishing normal trade relations.

SECTION 306

CHINA

The United States and China concluded bilateral agreements in 1992 and 1995 that were the basis for

resolving two investigations under Section 301. The U.S. Government has been monitoring China’s

implementation of these agreements since they were concluded. In addition, China became a member

of the World Trade Organization (WTO) in December 2001 and agreed that it would fully implement

its WTO TRIPS obligations from the date it became a WTO member. 

China has made progress in some aspects of intellectual property rights protection since our agreements

in 1992 and 1995. In connection with its accession to the WTO, China strengthened its legal

framework considerably, amending its patent law in 2000 and its trademark and copyright laws in

2001, as well as issuing judicial interpretations and other administrative regulations to make them more

compliant with the TRIPS Agreement and international standards. While some implementing

regulations for these laws have been issued, China needs to issue all necessary regulations. The United

States has continuing concerns about the consistency of some provisions of the copyright law and

current regulations with international standards. For instance, while we welcome China’s efforts to

address some of the issues in the WIPO Copyright Treaty and the WIPO Performances and

Phonograms Treaty, the U.S. Government concerned that these efforts are not yet complete.

The United States recognizes the enforcement efforts that China has made to date, but the continuing

unacceptably high levels of piracy and counterfeiting require more effective and coordinated action. 

While export of pirated copyrighted products has largely subsided, such products are still being

produced locally and imports of pirated products from other countries continue to flood the Chinese
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market. The levels of optical media piracy (CDs, VCDs and DVDs) in China remain at extremely high

levels in the domestic market, and China remains a center for entertainment software piracy and the

production of pirated cartridge-based video game products. In particular, end-user piracy of business

software within the government remains largely unabated despite issuance of decrees instructing

government ministries to use only legitimate software. In addition, the piracy of journals and books is a

significant problem that has only now begun to show some improvement. The counterfeiting of goods

bearing American trademarks, including well-known marks, by Chinese companies remains a major

problem. Despite some enforcement efforts against such activities, large volumes of counterfeit goods,

often of well-known products, continue to be produced and sold in China and to be exported to many

other countries. 

While industries report improved cooperation with administrative enforcement agencies in regard to

raids, administrative penalties have failed to deter further infringements. Criminal investigations and

sanctions are rare (i.e., administrative fines imposed are nominal), and very few cases are referred to

criminal prosecution. The thresholds for initiating criminal cases for IPR infringements remain very high. 

The United States urges China to ensure that U.S. trademark and copyright holders can enforce their

rights through criminal prosecutions and to ensure that the Supreme People's Court amend its

interpretations of China’s Criminal Code to allow more effective prosecution of cases and the

imposition of deterrent sentences. In addition, the United States has concerns over China’s lack of

protection of foreign well-known marks in a manner that is consistent with international standards. 

Certain U.S. pharmaceutical companies in China continue to experience difficulties in obtaining

administrative protection for their products. The United States will be monitoring closely China’s

implementation of its WTO commitments, including its commitments relating to the protection of data

submitted to obtain regulatory approval of pharmaceuticals and agricultural chemicals. The United

States also urges China to improve communication and coordination between its patent office and

agencies with responsibility for granting marketing approvals so that patent-infringing products cannot

be marketed.

PARAGUAY

The U.S. Government identified Paraguay as a Priority Foreign Country in January 1998. The

subsequent Section 301 investigation terminated with the signing of a comprehensive Memorandum of

Understanding (MOU) on the protection of intellectual property rights in Paraguay. Paraguayan

implementation of the MOU has been uneven. Despite some progress, such as the appointment of

special prosecutors dedicated to IPR cases, Paraguay remains a key entry and distribution point for

pirated goods destined for the Latin American market. The United States is heartened by the seizure

and destruction of millions of blank and pirated CDs, the closure of several multi-million dollar high-tech

pirate CD factories, and a concerted effort in the latter part of 2001 to conduct frequent and repeated

raids in Ciudad del Este and other centers of counterfeiting. However, the U.S. Government is

troubled to learn that pirate optical media production has been dispersed to smaller enterprises, in order
18

to evade law enforcement efforts. Moreover, the United States is discouraged by the lack of initiative

by the Customs Authorities to implement vigorous border enforcement measures, as agreed to in the

MOU. The U.S. Government intends to hold consultations with Paraguay in the coming year to discuss

plans for improving implementation of the MOU. The U.S. Government will use these meetings to

formulate our positions on the future of the MOU, which comes up for renewal in January 2003. 

PRIORITY WATCH LIST

ARGENTINA

Although Argentina has made incremental progress in improving its intellectual property rights (IPR)

regime, such as by enacting some measure of patent protection, much work still remains to be done. 

Significant barriers to the effective enforcement of intellectual property rights remain, including weak

and inconsistently applied penalties for IPR violations. Pirated copies of copyrighted material and

counterfeit brand-name goods are widely available. Illegal decoding, distribution, and resale of satellite

signals continue unabated. The use of unlicensed software remains widespread in businesses and in

some government entities. Industry estimates that copyright piracy resulted in losses of $256 million in

2001. The process of private civil enforcement against copyright infringement has improved, but

criminal charges and convictions are rarely sought or obtained. Although there has been an increase in

police raids and other enforcement actions, these actions usually do not result in prosecutions or in

deterrent sentences if prosecution occurs. 

 

Argentine pharmaceutical firms continue to produce and export unlicensed copies of patented products. 

Industry estimates that the lack of adequate patent protection results in annual losses of $750 million. 

In 1999, the U.S. initiated a WTO dispute settlement case against Argentina on exclusive marketing

rights and confidential test data protection. The U.S. initiated a subsequent WTO case in 2000, which

involved a number of other patent issues. Earlier this month, however, a partial settlement was reached

on a number of these issues. In this settlement, Argentina agreed to clarify how certain aspects of its

IPR system operate in a manner consistent with their TRIPS Agreement obligations. In addition,

Argentina agreed to amend portions of its patent law that were inconsistent with TRIPS. Two

important issues, including data protection, remain unresolved. 

BRAZIL

Brazil is both one of the largest markets globally for legitimate copyrighted products, and one of the

world’s largest pirate markets. Losses suffered by the U.S. copyright industry are the largest in the

hemisphere, with industry estimates exceeding $700 million in the past year. Piracy-driven losses

suffered by the Brazilian music industry are particularly staggering. Despite having adopted modern

copyright legislation that appears largely to be consistent with TRIPS, Brazil has taken no serious

enforcement actions against increasing rates of piracy. 
19

On the national level, Brazil established an Inter-Ministerial Committee (IMC) in March 2001 to

combat piracy, and the income tax authority recently began the destruction of a large amount of seized

pirated goods. The state of Sao Paolo created a new division within the civil police to deal specifically

with piracy and related crimes. Although the United States is encouraged by these actions, Brazil still

has not adopted an action plan against piracy, and no lasting improvement in the enforcement situation

has occurred at the national level. In particular, the IMC has taken very little action on the anti-piracy

front. Intermittent, localized antipiracy and anticounterfeiting campaigns are an inadequate substitute for

a planned, systemic, and consistent approach to domestic and border enforcement activity and the

application by the Brazilian legal system of deterrent penalties.

In the patent area, Brazil has made very minor progress under an April 1998 agreement with the U.S.

to process the backlog of 15,000 pending patent applications for which it has already collected several

million dollars in processing fees. In 2000, the U.S. initiated dispute settlement proceedings against

Brazil on a “local working” requirement in the patent law. In June 2001, the United States and Brazil

agreed to transfer their dispute to a Bilateral Consultative Mechanism created to address this and other

concerns. 

COLOMBIA

U.S. pharmaceutical firms are experiencing significant losses in the Colombian market due to

inadequate protection of confidential test data and the unavailability of “second use” patents. Colombia

is second only to Argentina among Latin American countries in the prevalence of pirated

pharmaceuticals. The U.S. Government is disappointed in actions taken by Colombia, on its own and

through the Andean Community, to weaken data protection and prohibit “second use” patents

throughout the Andean Community. 

There is also a need for stronger enforcement of copyright and trademark laws. Although pirated and

counterfeit goods are occasionally seized by enforcement authorities, prosecutions rarely follow. 

Despite repeated requests by the U.S. Government, Colombia has been slow to shut down illegal cable

television networks so that licensed ones can take their place. The U.S. Government urges Colombia

to take action immediately to remedy the current IPR situation, particularly with regard to patent

protection, both in its national legislation and within the Andean Community institutions.

DOMINICAN REPUBLIC 

Over the past year, the Dominican Republic has taken some steps to strengthen its IPR regime. 

However, there are still significant areas of concern that need to be addressed. The industrial patent

law appears to suffer from several significant shortcomings with respect to international standards,

including in the area of data protection. The U.S. Government also is concerned that the implementing

regulations could worsen some of the existing problems with the industrial property law. 
20

On a positive note, the United States is encouraged by the efforts of the National Copyright Office to

investigate and punish copyright piracy, and to educate the public and judiciary about the importance of

compliance with and enforcement of, the copyright law. However, copyright and trademark owners, as

well as patent holders, continue to have difficulty in enforcing their intellectual property rights. Current

efforts to enforce the copyright law have not prevented the widespread sale of pirated materials. In

addition, we are concerned about the recent apparent increase in television piracy. The U.S.

Government looks forward to further consultations with the Dominican Republic on possible

improvements in its intellectual property rights regime. 

EGYPT

Despite significant ongoing U.S. Government technical IPR assistance, Egypt has not yet enacted

modern intellectual property rights laws to comply with its international obligations. The United States

is encouraged, however, by reports that such laws may be passed by the end of this spring. The United

States continues to strongly urge Egypt to correct the reported deficiencies in the draft copyright and

patent laws before these laws are enacted by the legislature. The United States remains concerned, in

particular, about the possible insertion in the draft patent law of a previously rejected provision calling

for health-related patents to be reviewed by the Ministry of Health, which would appear to contradict

the TRIPS Agreement requirement to provide patent protection without discrimination as to field of

technology. On a positive note, the U.S. Government welcomes improvements that have been made

regarding protection of test data and exclusive marketing rights, which we hope will remain in the final

bill. The United States is also heartened by the steps Egypt has taken to ensure the authorized use of

legitimate business software by government entities. However, enforcement on the whole remains lax

and copyright piracy remains unchecked. The U.S. Government is also seriously concerned about the

continuing problem of granting false licenses to pirates by the Ministry of Culture, a practice that

undermines copyright protection, in particular for entertainment software and music. 

EUROPEAN UNION

At the conclusion of the 1999 Special 301 review, the United States initiated a WTO dispute settlement

case against the EU, based on the apparent TRIPS deficiencies in EU Regulation 2081/92, which

governs the protection of geographical indications (GIs) for agricultural products and foodstuffs in the

EU. The Regulation appears to deny national treatment to foreign GIs. According to the plain language

of the Regulation, only EU GIs may be protected. Foreign GIs cannot be registered in the EU, and

thus are not eligible for protection. In addition, although the Regulation permits EU nationals to oppose

or cancel GIs, non-EU nationals are prohibited from raising any objections. With respect to

trademarks, the Regulation permits dilution and even cancellation of trademarks when a GI is created

later in time. The United States requested consultations regarding this matter on June 1, 1999, and

numerous consultations have been held since then. In March of this year, the EU produced proposed

amendments to the Regulation. Although the proposal, as written, would address some of the

deficiencies of the Regulation, it is lacking in several significant respects, including its treatment of
21

foreign GIs. We are exploring the possibility of addressing these concerns in order to reach a

satisfactory settlement with the EU. If a mutually agreeable solution can not be found, the United States

may have no option but to continue to pursue resolution through WTO dispute settlement procedures.

HUNGARY 

Hungary does not provide adequate protection for confidential test data submitted by pharmaceutical

companies for marketing approval, which appears to violate its obligations under Article 39.3 of the

TRIPS Agreement. While Hungary has repeatedly indicated that it disagrees with this interpretation of

TRIPS, it intends to put very limited data exclusivity into place effective January 1, 2003, in order to

comply with EU directives. U.S. pharmaceutical products remain vulnerable to exploitation by large and

aggressive Hungarian pharmaceutical copiers. On other legislative matters, Hungary seems to have

made substantial progress in bringing its copyright, patent, trademark, customs code, and criminal and

civil codes into conformity with its IPR obligations under the TRIPS Agreement and under the U.S.-

Hungary bilateral IPR agreement. Enforcement, however, remains problematic and piracy remains

moderately high. The U.S. Government urges Hungarian prosecutors and judicial authorities to take a

more proactive approach to the enforcement of intellectual property rights.

INDIA

India’s patent system and protection of exclusive test data appear far from compliant with its obligations

under the TRIPS Agreement. The term of protection for pharmaceutical process patents is only seven

years. India fails to provide patent protection for pharmaceutical and agricultural chemical products

and the compulsory licensing system seems overly broad. Also, pending legislation meant to rectify

India’s TRIPS deficiencies may fall short of that goal. To make matters worse, the inadequate patent

protection currently available is difficult for innovators to obtain: India’s patent office suffers from a

backlog of 30,000 patent applications and a severe shortage of patent examiners. Moreover, India’s

overly-generous opposition procedures often allow competitors to delay patent issuance until the patent

has expired, resulting in a de facto removal of patent protection. In addition, India’s copyright law,

which is generally consistent with international standards, was weakened by amendments enacted in

2000 that undermine protection for computer programs. Enforcement against piracy remains a growing

concern for U.S. copyright industries, especially given that pirated imports are entering the market from

Southeast Asia and that there is growing Internet piracy. We will continue to consult with the Indian

Government to resolve outstanding TRIPS compliance concerns, but if these consultations do not prove

constructive, we will consider all other options available, including WTO dispute settlement, to resolve

these concerns.

INDONESIA

Indonesia demonstrated some improvements to its intellectual property rights regime in 2001. While
22

Indonesia is responsive to private sector requests for enforcement assistance and welcomes input on

draft legislation, overall enforcement of intellectual property rights, including that of trademarks, held by

U.S. companies, remains weak. Industry reports a troubling increase in illegal production lines for

optical media and pirated books far beyond Indonesia's domestic consumption capacity. Indonesia’s

judicial system continues to frustrate right-holders with years of delay and a pronounced lack of

deterrent penalties. However, the U.S. Government is encouraged by several recent developments in

Indonesia that may address some of the deficiencies listed in the action plan the United States provided

Indonesia in January 2001. In particular, Indonesia prepared draft optical media regulations and

established provisions for commercial courts throughout the country to process intellectual property

rights cases within the country’s district court system. The United States urges Indonesia to work with

the U.S. Government to ensure that the draft regulations are adequate and effective prior to their

enactment and to continue to develop specialized legal and judicial expertise for the prosecution of

intellectual property rights violations. Rigorous enforcement in the near term of these regulations and of

the copyright law against illegal optical disk producers is critical. The U.S. Government is providing an

updated action plan to Indonesia that reflects these recent developments and further refines the specific

benchmarks contained in the earlier action plan. The United States will conduct an Out-of-Cycle

Review in the fall to assess progress toward achieving these benchmarks. 

ISRAEL

The United States commends the notable progress Israel achieved in 2001 in copyright enforcement. 

In 2001 Israel significantly increased the budgetary, educational, police and judicial resources it devotes

to such enforcement efforts, with extensive concrete results in terms of raids, abatement of illegal CD

production, and a drop in the piracy level for U.S. repertoire. Knesset approval is expected soon for a

copyright law that would increase penalties and expedite prosecution for copyright violations, a step

which would be a highly positive development. However, Israel maintains its policy of allowing its

generic pharmaceuticals to rely on the confidential test data of U.S. innovator firms to obtain marketing

approval, a policy it contends is TRIPS-consistent. Moreover, the lack of a clear definition for enduser piracy of business software as a crime, court procedural delays, and inadequate compensatory and

deterrent civil damages have weakened some of its enforcement efforts. An opinion by the Ministry of

Justice concluding that payment for the broadcasting and public performance of U.S. sound recordings

is no longer necessary remains a concern, and the U.S. Government continues to seek clarification

regarding the bearing of this opinion on Israel’s bilateral obligations to the United States. The U.S.

Government urges the Knesset to act soon to pass the copyright law and looks forward to continued

improvements in Israel’s intellectual property regime, including sustained efforts to strengthen copyright

enforcement, that can be reflected in the OCR to be conducted later this year. 

LEBANON

The United States is concerned by Lebanon’s severe copyright piracy problem and the lack of a

comprehensive governmental commitment to eliminate piracy and foster legitimate business. Despite
23

the passage of the copyright law, there has been virtually no action by Lebanon against piracy. In

addition, pervasive cable piracy continues to devastate legitimate theatrical, video, and television service

providers. End-user piracy of computer software is pervasive among large companies, banks, trading

companies, and most government ministries. Also troubling is an overly broad software exception for

certain educational uses in the new copyright law that seriously undermines the viability of this market

for legitimate products. The U.S. Government is also concerned by the establishment of an optical

media production facility in Lebanon, which has become an exporter of pirated product. The United

States urges Lebanon to address its severe copyright protection problems.

PHILIPPINES

Significant problems remain in ensuring adequate and effective protection of intellectual property rights

in the Philippines. Legislation to fully implement its TRIPS Agreement commitments has been slow to

develop, and enforcement efforts have had little deterrent effect on the extraordinary level of copyright

piracy. The United States, however, is encouraged by President Macapagal-Arroyo’s strong

commitment to tackling intellectual property rights issues, and the United States welcomes the Supreme

Court’s recent ruling affirmatively establishing the ability of the court to grant ex parte search warrants. 

The United States hopes this ruling initiates a trend to improve the quality of the Philippines IPR-related

laws and regulations. However, there remain many obstacles to the effective enforcement of intellectual

property rights in the Philippines, including the low number of raids, insufficiently trained prosecutors,

and procedural and judicial delays. Meanwhile, optical disk piracy and trademark counterfeiting

continues to increase dramatically. The U.S. Government urges the Philippines to redouble its

enforcement efforts across the board and to enact strong IPR laws and regulations, including a strong

law to regulate the production of optical disks. The U.S. Government will conduct an OCR later in the

year in order to monitor the situation in the Philippines. 

RUSSIA

As part of its efforts to join the WTO, Russia will need to bring its intellectual property rights regime

into full compliance with the TRIPS Agreement by the date of accession. Certain provisions of the

Russian Copyright Law and Russia’s enforcement regime appear to be inconsistent with the TRIPS

Agreement and the intellectual property rights provisions of the 1992 U.S.-Russian Federation Trade

Agreement. Lack of an effective OD law, , enforcement against unauthorized production and export of

CDs and CD-ROMs and concerns about protection for well-known marks are growing problems, and

result in substantial losses to U.S. industry each year. The United States urges Russia to pass the IPR

legislation pending before the Duma (except for Part IV of the Civil Code), to establish an effective

optical media regime, and to increase enforcement efforts across the board for both copyrights and

trademarks.

TAIWAN
24

During the past year, Taiwan passed a number of new laws meant to strengthen the protection of

intellectual property rights and bring the economy into compliance with its obligations under the TRIPS

Agreement. These include certain amendments to its patent and copyright laws as well as new

legislation to license the production of optical media, although the U.S. Government was disappointed

that the optical media legislation was weakened before passage. Despite these positive steps, the lax

protection of IPR in Taiwan remains very serious. U.S. companies report significant problems in being

able to protect and enforce their intellectual property rights. Taiwan is one of the largest sources of

pirated optical media products in the world. Its copyright law needs strengthening in a number of areas

to deal with growing piracy. Corporate end-user piracy remains at a high level. Taiwan also suffers

from trademark counterfeiting, including that of pharmaceuticals. Taiwan has only begun to take the

steps necessary to enforce these new laws, particularly the optical media management statute. 

Nonetheless, the United States remains encouraged by the passage of these laws and the important first

steps that have been taken in terms of implementation. The United States will continue our dialogue

with Taiwan on the protection and enforcement of intellectual property rights during the coming year to

help improve the situation.

URUGUAY

Uruguay's efforts to reform its outdated copyright and patent laws have been dominated by slow and

uneven progress, which has resulted in an intellectual property rights regime that does not appear to be

in compliance with Uruguay’s TRIPS obligations. Specifically, Uruguay needs to update its 1937

copyright law to clarify that software is protected as a literary work, among other deficiencies. 

Movement towards a comprehensive copyright law stalled in 2001, and the U.S. Government is

concerned about a flawed, software-only bill, which is moving forward. The United States is heartened

by the increase in raids and prosecutions against piracy since 2000. However, inadequate civil

remedies and lax border enforcement have caused high piracy rates to persist, and have allowed

Uruguay to become a major transshipment point for pirated products. The United States urges

Uruguay to ratify the WIPO Internet Treaties, enact TRIPS and WIPO-compliant copyright legislation,

and remedy provisions of its patent law that appear to violate its TRIPS obligations.

WATCH LIST

ARMENIA 

Armenia has several remaining steps to take to fulfill its intellectual property rights commitments under

the 1992 U.S.-Armenia Trade Agreement. In addition, the Armenian intellectual property regime does

not appear to be TRIPS-consistent in its current form, so certain changes may have to be made in

preparation for Armenia’s accession to the WTO. At present, Armenia does not provide any

protection or rights to U.S. and other foreign sound recordings or clearly provide retroactive protection

for works or sound recordings under its Copyright Law. In addition, there is weak enforcement of
25

intellectual property rights in Armenia. New criminal penalties for intellectual property rights violations

have been adopted; however, there have been no known convictions under the new law, and it is

unclear whether the Government has the authority to commence criminal copyright cases.

AZERBAIJAN 

Azerbaijan has several remaining steps to take before fulfilling its intellectual property rights

commitments under the 1995 U.S.-Azerbaijan Trade Agreement. Specifically, Azerbaijan is not

providing any protection or rights to U.S. and other foreign sound recordings, and Azerbaijan does not

clearly provide retroactive protection for works or sound recordings under its copyright law. In

addition, there is weak enforcement of intellectual property rights in Azerbaijan. New criminal penalties

for intellectual property rights violations have been adopted. However, the provisions under the

Azerbaijani Criminal Code are minimal and are limited to copyright and patent violations, completely

excluding neighboring rights violations. In addition, it seems the Customs Code may not provide the

proper authority to seize material at the border as required by the TRIPS Agreement.

BAHAMAS

The United States is disappointed that the Bahamas has not yet implemented its commitment to the

United States to enact legislation to correct deficiencies in its copyright law. The key concern remains

the provisions in the law permitting the compulsory licensing to Bahamian cable operators of

retransmission of premium cable television programming. Inadequate remuneration for the compulsory

licensing of free-over-the-air broadcasts is a related concern, particularly with respect to uses by hotels

and other commercial enterprises. The U.S. Government urges the Bahamas to enact swiftly the

necessary amendments to its copyright law. The United States will conduct an out-of-cycle review to

review actions in this regard. At the same time, the U.S. Government continues to encourage U.S.

copyright owners and operators of premium cable services to enter into negotiations with licensed

Bahamian cable companies to provide voluntary licensing on commercial terms for the cable

transmission of copyrighted works in the Bahamas. 

BELARUS

Belarus has several remaining steps to take to fulfill its intellectual property rights commitments under

the 1993 U.S.-Belarus Trade Agreement. Enforcement of intellectual property rights in Belarus is also

very weak and piracy levels are extremely high. In fact, while Belarus has amended its Criminal Code

to adopt deterrent penalties for intellectual property rights violations, the Criminal Code still does not

contain the proper authority for officials to initiate criminal copyright cases. Moreover, Belarus is not

providing any protection or rights to U.S. and other foreign sound recordings, nor does it clearly

provide retroactive protection for works or sound recordings under its Copyright Law. Belarus is not

yet a party to the Geneva Phonograms Convention. Belarus has also become a transshipment point for

pirate materials throughout the region. The United States is very concerned about recent reports that
26

optical disk production capacity has migrated from Ukraine into Belarus due to lax border enforcement. 

We urge Belarus to implement needed legislative reforms, and enact a strong optical disk control

regime before the piracy situation increases further.

BOLIVIA

Despite some early signs of progress, Bolivia made little headway in strengthening its intellectual

property rights regime last year. Bolivian legislation designed to bring its IPR regime up to international

standards continues to be stalled in the legislature. Enforcement activities have decreased, and

allegations of corruption among judges, prosecutors and police have increased. The United States is

heartened by the appointment of a new director to head the intellectual property rights service

(SENAPI), and encourages Bolivia to support the director’s efforts to improve the IPR situation in

Bolivia. The United States looks to Bolivia to increase enforcement efforts and enact its IPR reform

legislation quickly to comply with international standards.

CANADA 

Canada made some progress in improving its IPR regime over the past year, including amending its

patent law to provide at least a 20-year term of protection for patents filed before October 1, 1989. 

However, the problems that originally caused Canada to be placed on the Watch List remain largely

unresolved. For example, Canada does not provide adequate data protection in the pharmaceutical

area, and systematic inadequacies in Canadian administrative and judicial procedures allow early and

often infringing entry of generic versions of patented medicines into the marketplace. Moreover,

progress has stalled on resolving the outstanding issue of national treatment of U.S. artists in the

distribution of proceeds from Canada’s private copying levy and its “neighboring rights” regime. The

United States is also concerned about Canada’s lax, and potentially deteriorating, border measures that

appear to be non-compliant with TRIPS requirements. Finally, the U.S. Government remains

concerned about the potential use of compulsory licenses for Internet retransmission of broadcast

signals. 

CHILE 

Chile’s intellectual property rights laws do not appear to be fully consistent with their international

obligations, and shortcomings remain in copyright and trademark enforcement. Chile has made efforts

to arrest those who infringe copyrights, but attempts to enforce copyrights in Chile have met with

considerable delays in the courts and weak sentences for offenders. In 2000, for instance, the

legislature passed a new criminal procedure law designed to improve the old system. However,

separate legislation intended to bring Chile’s legal framework into compliance with TRIPS is still

pending. Indeed, the bill as it stands now does not appear to provide for the effective use of injunctions

in copyright and trademark infringement cases. 
27

Furthermore, the United States is quite concerned about the November 2001 announcement by the

Ministry of Health that it would issue marketing approval for pharmaceuticals without regard to whether

a patented version already exists. Marketing approvals for many patented drugs have already been

issued, seriously undermining the rights of patent holders. Patent approval also remains slow, with time

for approval averaging over four years. The United States urges Chile to strengthen its enforcement

efforts, and enact legislation to fully comply with TRIPS obligations including by providing adequate

protection of confidential data and an effective linkage between the health and patent authorities. 

COSTA RICA

Costa Rica has taken important steps since late 2001 to develop a concerted government strategy for

improving the enforcement of intellectual property rights. In addition to other positive measures, Costa

Rica has appointed specialized prosecutors, intensified training activities for officials involved in

enforcement, and implemented a decree focused on legitimizing software used by government agencies. 

The United States is recognizing this progress by moving Costa Rica from the Priority Watch List to the

Watch List. Nonetheless, it is essential that the recent initiatives be fully and expeditiously implemented

and that progress continue. Key indications of continuing improvement will be: passage of legislative

proposals to correct remaining deficiencies in the criminal procedures laws and the intellectual property

laws, including deficiencies in the data exclusivity provisions; more prosecutions of IPR offenders,

perhaps facilitated by the establishment of a dedicated IPR unit within the Prosecutor’s Office; and

vigorous enforcement efforts to reduce continuing high piracy levels, such as closure of retail stores that

rent or sell pirated products. In addition, the United States urges Costa Rica to ensure that its new

government software legalization decree is implemented on schedule and in a technologically-neutral

manner. The United States will conduct an out-of-cycle review of these issues to ensure that recent

progress is sustained. 

GREECE

Although Greece resolved the WTO TV broadcasting case with the United States last year, optical

disk piracy and unauthorized book photocopying remain persistent problems. The United States is

encouraged by an increase in police and border enforcement efforts, particularly with respect to

business software. However, among European Union member states, Greece continues to have some

of the highest piracy rates of music CDs, entertainment software, and business software. The lack of

deterrent penalties imposed on pirates and inefficient judicial action hamper Greece’s ability to reduce

its piracy rates. The use of unauthorized computer software in government offices also remains a

problem. Patent protection for pharmaceuticals remains inadequate as data exclusivity is linked directly

to the length of patents, rather than being protected in its own right. The United States urges Greece to

pursue sustained and deterrent enforcement actions, to ensure that government entities use only

authorized software, and to improve its protection of pharmaceuticals as required by international

obligations. 
28

GUATEMALA

The United States welcomes the appointment in June 2001 of a special prosecutor for intellectual

property rights matters, as part of the government’s ongoing efforts to improve enforcement and to

implement intellectual property rights legislation enacted in mid-2000. Nonetheless, continuing high

piracy levels, particularly with respect to business software applications, remain an ongoing concern,

and one that has not been adequately addressed through current enforcement and prosecution activity.

ITALY 

Despite Italy’s enactment of its Anti-Piracy Bill in September 2000 and increased enforcement actions

in 2001, Italy continues to have one of the highest overall piracy and counterfeiting rates in Western

Europe. In particular, the rate of piracy of business software by corporate end-users remains among

the highest levels in Europe, with losses approaching $285 million in 2001. Notwithstanding repeated

assurances, Italy still has not clarified the Anti-Piracy Bill’s implementing regulations for business

software, that exempt copyright owners from a requirement to apply government-approved stickers,

for which a fee would be charged, on their genuine copyrighted works. Without this exemption, Italy

could be in violation of its international obligations, which do not permit conditioning protection on

compliance with a stickering formality. The United States urges Italy to resolve this issue without

further delay.

JAMAICA 

The U.S. Government is heartened by the creation of Jamaica’s Intellectual Property Office, and by

continued progress in enforcing existing intellectual property rights laws, including with respect to the

misuse of well-known marks. We understand that Jamaican officials have categorically denied reports

that Jamaica is considering the compulsory licensing of encrypted broadcasts. The United States is

encouraged that Jamaica is continuing to seek fair, commercial

solutions to this issue. Lack of parliamentary action to bring Jamaica’s patent, industrial design, and

plant variety laws into conformity with international standards remains the primary motivation for the

country’s inclusion on the Watch List. The United States urges Jamaica to complete the process of

enacting the necessary legislation.

KAZAKHSTAN 

Kazakhstan has several remaining steps to take to fulfill its intellectual property rights commitments

under the 1992 U.S.-Kazakhstan Trade Agreement. In particular, Kazakhstan does not clearly

provide full retroactive protection for works or sound recordings under its Copyright Law. In addition,

there is weak enforcement of intellectual property rights in Kazakhstan, and as a result, piracy and

counterfeiting rates are growing problems. New criminal penalties for intellectual property rights

violations, however, have been adopted, but the United States is concerned about the effectiveness of
29

the new Criminal Code provisions in deterring piracy and counterfeiting, due to the high burden of proof

threshold. The dearth of intellectual property rights cases commenced under the new laws may reflect

the impact of this procedural requirement.

KOREA

Korea has taken significant steps to strengthen its IPR enforcement and legislation. On enforcement, it

has created a new special enforcement unit which it intends to provide with “police” authority, to step

up its protection against software piracy. In addition, to address concerns the U.S. Government has

raised about Korea’s failure to implement a transparent, non-discriminatory, and sustained enforcement

regime, Korea has agreed to provide the United States with detailed data on its enforcement efforts. 

Korea has made progress on strengthening its intellectual property legislation, addressing several U.S.

concerns related to its Copyright Act and the Computer Program Protection Act. It also announced

that it is preparing legislation to provide exclusive transmission rights for sound recordings and

performances, which will resolve a longstanding concern. Despite these important developments, U.S.

concerns remain with respect to the protection of temporary copies, technical protection measures, ISP

liability, and ex parte relief, the lack of full retroactive protection for pre-existing copyrighted works,

and continued counterfeiting of consumer products. Regarding issues related to the protection of

pharmaceutical patents, Korea resolved questions related to its commitment to provide full protection

against unfair commercial use of test data submitted for marketing approval, but the lack of

coordination between Korean health and IPR authorities on drug product approvals for marketing

remains problematic.

KUWAIT

The United States recognizes the recent efforts made by Kuwait to increase intellectual property

protection. However, due to continuing problems with copyright piracy, Kuwait will remain on the

Special 301 Watch List. Recognizing the importance of protecting intellectual property in a modern,

knowledge-driven economy and mindful of the incentive that adequate protection provides for

investors, Kuwait and the United States have developed a work plan outlining the initial steps that

Kuwait will take to increase its efforts to reduce the high level of copyright piracy still evident in Kuwait. 

The work plan includes short and medium-term action to, inter alia, increase enforcement of current

intellectual property laws, apply deterrent penalties, revise copyright legislation, and increase

cooperation between the government and private industry. Successful implementation of the work plan

will serve as a basis for future cooperation between the United States and Kuwait. The United States

and Kuwait are in the process of documenting Kuwait’s intention to carry out this work plan. If we are

unable to complete this process satisfactorily by May 31, 2002, Kuwait will be raised to the Priority

Watch List.

LATVIA 
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Although not a producer of pirated optical media products, large volumes of pirated products are

transshipped through Latvia from Russia and Ukraine. The United States urges Latvia to pass

legislation to ensure that customs and police authorities have the tools needed to combat this piracy,

including providing adequate civil ex parte search procedures. In addition, the U.S. Government urges

the police, customs officials, prosecutors, and judicial authorities to place greater emphasis on

combating copyright piracy. 

LITHUANIA 

Weak enforcement undermines Lithuania’s attempts to protect the rights of copyright holders. The

country remains flooded with pirated copyrighted materials, including large volumes of optical media

products. In addition, Lithuania is a major transshipment country for pirate producers to the East who

transport their goods to consumers in the West. Furthermore, Lithuania does not provide protection for

confidential test data submitted by pharmaceutical firms for marketing approval. 

MALAYSIA 

Optical media piracy remains a serious problem in Malaysia. Malaysia’s production capacity of optical

media exceeds local demand plus legitimate exports, and pirated products believed to have originated

in Malaysia have been identified throughout the Asia-Pacific region, North America, South America,

Europe, Africa and the Middle East. Although the first year of implementation of the Optical Disk Act

was hampered by a slow compliance schedule, the United States continues to appreciate the

determined efforts made by agencies within Malaysia to eliminate optical media piracy. The Ministry of

Domestic Trade and Consumer Affairs (MDTCA) has inspected licensed factories and conducted raids

against pirate plants. Over the past two years, the MDTCA has confiscated a significant amount of

pirate product from unlicensed factories and has seized and removed equipment and replication lines. 

These actions are evidence that Malaysia is serious about stamping out piracy. Although progress has

been steady, there is concern that Malaysia has not established a climate of deterrence. Police raids

have only infrequently been followed by criminal prosecutions. Without criminal prosecutions and the

imposition of serious criminal sentences, there is no true deterrence to piracy in Malaysia The United

States urges Malaysia to continue the progress made against illegal optical disk plants and to focus its

attention on the problem of prosecutorial inaction and judicial delays in order to support the

enforcement efforts already underway.

NEW ZEALAND 

In 1999, New Zealand pledged to introduce legislation regarding imports of newly-released

copyrighted products (e.g., music, films, software and books) intended for sale outside New Zealand. 

By the end of 2001, however, the government had not introduced this legislation. Therefore, the U.S.

Government remains concerned about the erosion of the value of copyright protection and the threat of

increased piracy of copyrighted goods in New Zealand. However, the United States is encouraged
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that New Zealand’s parliament is currently considering legislation to strengthen New Zealand’s

enforcement regime with respect to copyright piracy and trademark counterfeiting, which may move

towards addressing our concerns. The United States urges New Zealand to adopt legislation to correct

the erosion of copyrights and improve enforcement against piracy and counterfeiting as soon as

possible. 

PAKISTAN 

Over the past two years, Pakistan has attempted to address most of its deficiencies in its intellectual

property rights regime. The U.S. Government recognizes and appreciates the efforts made by Pakistan

to improve the protection and enforcement of intellectual property rights. However, optical media

piracy remains a growth industry in Pakistan. Pakistan has emerged as one of the world’s largest

exporters of pirate CDs and optical media. Industry estimates eight illegal optical media production

plants are operating, with actual production of approximately 55 million units (or ten times Pakistan’s

legitimate domestic demand). Pirate goods account for 90% of the domestic marketplace. Similarly,

book piracy remains a significant issue, accounting for $44 million in losses for U.S. publishers. At

present, lengthy registration processes for innovative drugs offer ample time for generic copies to reach

the domestic market despite apparent patent infringements. The United States urges Pakistan to

address its serious piracy problems, including, in particular, the rampant optical media piracy situation.

PERU 

Peru has continued to improve intellectual property rights protection, although copyright piracy levels

have remained fairly constant and the criminal enforcement system remains generally weak. Peru has

not yet issued a decree mandating the use of licensed software by government agencies. On a positive

note, during the past year Peru ratified both WIPO Treaties related to the digital environment. Several

patent-related concerns remain outstanding, the most significant of which relates to an Andean Tribunal

decision ordering Peru to stop issuing “second use” patents.

POLAND

Poland has a substantial copyright piracy and trademark counterfeiting problem, the most glaring

symbol of which is the Warsaw Stadium and the unauthorized retail activity that is carried on in those

premises. Although Poland is not a major producer of pirated optical media products, pirates import

unauthorized copies of optical media products, principally from Ukraine, for sale at the Stadium. 

Poland’s enforcement efforts at the Stadium so far have been insufficient to halt the sale of pirated and

counterfeit goods. The U.S. Government intends to conduct an out-of-cycle review (OCR) later this

year in order to focus on this aspect of Poland’s intellectual property rights protection regime. In this

OCR, the United States will specifically look to Poland to commence unannounced raids against

retailers at the Warsaw Stadium. These raids, followed by prosecutions, should be significant enough in

number to stem the sale and distribution of pirated and counterfeit goods at the Stadium. The U.S.
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Government will also look to Poland to sustain an adequate and effective enforcement effort against

IPR violators in order to establish a deterrent effect in Poland, including at the Stadium. 

In addition, despite the Polish Government restoring the provision for three-year confidentiality for data

submitted to the health authorities by pharmaceutical firms, shortcomings in the law remain. 

Specifically, linkage to the patent term is introduced in the law and the period of data protection runs

from the date of first marketing authorization granted anywhere in the world, rather than within Poland. 

Poland agreed to make supplementary protection certificates available for pharmaceuticals registered

since January 1, 2000, as required by EU law. However, pharmaceutical firms remain vulnerable on

certain older products because they are protected only by process patents. 

QATAR

Qatar was removed from the Special 301 Watch List last year in recognition of its enforcement actions

against copyright infringement, as well as its commitment to amend copyright and trademark laws to

comply with its obligations under the TRIPS Agreement. Qatar has drafted amendments to these laws,

but has not yet signed and implemented the necessary legislation. Therefore, Qatar is being placed on

the Watch List this year. In addition, although Qatar has pursued some enforcement actions against

copyright infringement, high levels of end-user piracy of unauthorized computer software continues. 

ROMANIA

Piracy of sound recordings, audiovisual products (videos, broadcast television, and cable television),

and computer software persists at high rates despite reforms to the legal regime. Inconsistent

enforcement and understanding of IPR legislation, the low level of priority given piracy by regional and

local authorities, and the lack of resources dedicated to combating piracy combine to make intellectual

property rights protection a continuing challenge in Romania.

SAUDI ARABIA 

Saudi Arabia has made notable progress in improving the enforcement of intellectual property rights

over the past year. During 2001, the Ministry of Information stepped up investigations, raids and

seizures, in conjunction with U.S. companies and U.S. industry groups, and the Ministry of Commerce

also established a Fraud Control Department, which has conducted thousands of inspections and

seizures. However, the United States remains concerned about continued high losses experienced by

U.S. copyright and trademark-based industries and the absence of long-awaited revised intellectual

property rights legislation. U.S. industry has expressed frustration with the lack of transparency in the

enforcement system, procedural hurdles to judicial enforcement, and the absence of deterrent penalties. 

Saudi Arabia is currently working to revise its IPR laws to bring them into conformity with the TRIPS

Agreement as part of its efforts to join the WTO. The United States looks to Saudi Arabia to

strengthen its intellectual property rights enforcement efforts. In particular, the U.S. urges Saudi Arabia
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to act quickly to revise IPR legislation to provide for, inter alia, penalties sufficiently deterrent to

reduce the level of piracy and counterfeiting (including higher fines and longer prison sentences) and

greater access for litigants to court proceedings at all stages of the judicial process.

SLOVAK REPUBLIC

The Slovak Republic fails to provide adequate and effective protection for confidential pharmaceutical

test data submitted to obtain marketing approval. The six-year period of protection for confidential test

data submitted for marketing approval in the Slovak Republic is reduced to the extent the data was

submitted earlier in an EU member state. This is a shortcoming which greatly diminishes the protection

of confidential test data. 

TAJIKISTAN 

Tajikistan has yet to fulfill all of its intellectual property rights commitments under the 1993 U.S.-

Tajikistan Trade Agreement. Specifically, Tajikistan is not yet a party to the Geneva Phonograms

Convention. In addition, Tajikistan is not providing any protection or rights to U.S. and other foreign

sound recordings, nor does it clearly provide retroactive protection for works or sound recordings

under its Copyright Law. Criminal penalties for intellectual property rights violations have not yet been

adopted as required by the bilateral trade agreement. In general, there is weak enforcement of

intellectual property rights in Tajikistan. 

THAILAND 

Overall, Thailand has made incremental progress on IPR issues. Pirate optical media production,

distribution and export is a significant and growing problem facing U.S. copyright industries. Industry

estimates a 300 percent increase in pirate optical disk plants operating in Thailand from 1999. 

Industry asserts that Thailand has become a primary destination for criminal organizations seeking new

bases of operation as controls on illicit wares tighten around the region. Further complicating the

protection of IPR in Thailand is the fact that end-user piracy of business software is endemic, perhaps

as high as 76 percent, according to industry estimates. Thailand’s Central Intellectual Property Court

remains a bright spot in the country’s efforts to safeguard IPR. The Court’s overall effectiveness,

however, is hampered by judicial delays, limited resources, and a lack of deterrent sentencing. Key

high level Thai Government officials have recently demonstrated a troubling lack of support for the

officers of the court and especially the relevant law enforcement agencies.

While the United States recognizes some progress has been made in the past year, the significant and

growing problems of optical media production and end-user piracy of business software remain largely

unaddressed. For these reasons, the United States will re-evaluate Thailand’s IPR situation during an

out-of-cycle Review to be conducted in the Fall. The OCR will focus on Thailand’s progress in

passing and implementing a satisfactory optical media bill; in implementing the Trade Secrets Act in a
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TRIPS-compliant manner; and most importantly, in launching a sustained enforcement drive against

trademark counterfeiting and copyright piracy, including optical media and illegal end use of business

software. The U.S. Government recognizes the important role played by law enforcement officials in

this process, and encourages Thailand to provide enforcement authorities the resources and political

backing necessary to ensure the successful implementation of a long-term aggressive enforcement

policy.

TURKEY

Lack of effective IPR protection in Turkey is a serious concern for the United States. The

pharmaceutical licensing regulations of the Ministry of Health do not appear to meet Turkey's TRIPS

obligations under Article 39.3. The broadcasting regulations issued last year by the Ministry of Culture

undermine the intent of the 2001 copyright law. Piracy levels remain extremely high and government

efforts to control piracy, specifically the "banderole" system, have failed. The U.S. recognizes,

however, that Turkey's recent economic difficulties have consumed most of the government's attention. 

The United States encourages Turkey to now turn its attention to IPR issues, in the context of efforts to

attract foreign investment. In particular, the U.S. Government encourages the Ministry of Health to

amend its pharmaceutical licensing regulations to make them fully consistent with TRIPS Article 39.3

and encourages the Ministry of Culture to revise its broadcast regulations to comply with the intent of

the 2001 copyright law. The United States also encourages Turkey to increase the number of raids on

sources of piracy, increase control of pirated material at the border, eliminate–or at a minimum

reform–the banderole system, address the issuance of registrations to unauthorized distributors of pirate

products, increase prosecution of IPR violations, and impose deterrent sentences. 

TURKMENISTAN 

Turkmenistan has several remaining steps to take to fulfill its intellectual property rights commitments

under the 1993 U.S.-Turkmenistan Trade Agreement. Specifically, Turkmenistan is not yet a party to

the Berne Convention or the Geneva Phonograms Convention. Turkmenistan is not providing any

protection or rights to U.S. and other foreign sound recordings, nor does it clearly provide retroactive

protection for works or sound recordings under its Copyright Law. In addition, criminal penalties for

intellectual property rights violations have not yet been adopted as required by the U.S.-Turkmenistan

Trade Agreement. Furthermore, the Customs Code does not provide the proper authority to seize

material at the border, as is necessary to conduct effective border enforcement. 

UZBEKISTAN

Uzbekistan has many remaining steps to take to fulfill its intellectual property rights commitments under

the 1994 U.S.-Uzbekistan Trade Agreement. Specifically, Uzbekistan is not yet a party to the Berne

Convention or the Geneva Phonograms Convention. Uzbekistan is not providing any protection or

rights to U.S. and other foreign sound recordings, and it does not clearly provide retroactive protection
35

for works or sound recordings under its Copyright Law. As a result, there is insufficient enforcement of

intellectual property rights in Uzbekistan.

VENEZUELA 

The U.S. is pleased that, during the past year, Venezuela sought to defend its issuance of “second use”

patents before the Andean Tribunal, and the National Intellectual Property Office (SAPI) improved its

enforcement operations. The National Anti-Piracy Brigade (COMANPI) has continued to train and to

provide expertise and enforcement with respect to a variety of IPR violations. However, limited

resources and a lack of IPR enforcement by Venezuela customs have hampered the government's

efforts to lower copyright piracy levels. Venezuelan policies on pharmaceutical data protection need to

be clarified as well so as to make clear that their practices are consistent with international standards. 

VIETNAM 

Enforcement of intellectual property rights (IPR) in Vietnam remains weak, and violations of IPR are

rampant. While Vietnam did conduct considerable administrative and law enforcement actions against

IPR violations over the past year, IPR enforcement remains the exception rather than the norm. 

Market access barriers, especially with regard to “cultural products,” continue to impede the availability

of legitimate product, further complicating efforts to combat piracy. In most cities, according to

industry estimates, up to 100 percent of the music CDs, VCDs, and DVDs on sale are pirated. 

Trademark violations are also prevalent, with all types of clothing and other items carrying unlicensed

versions of famous trademarks available at stands throughout major cities. In spite of this bleak

portrait, Vietnam has taken two steps over the last year to strengthen its IPR regime. First, the U.S.-

Vietnam Bilateral Trade Agreement, which entered into force on December 10, 2001, has major

provisions on IPR that commit Vietnam to make its IPR regime, including enforcement, TRIPSconsistent within two years. Second, Vietnam continued over the past year to make strong progress in

strengthening its IPR legal and enforcement structures, including implementing new regulations: (1)

extending indefinite protection to well-known or famous marks; (2) protecting new plant varieties for

the first time; and (3) providing procedures by which IPR owners can petition Vietnam customs to

postpone temporarily the entry or exit of shipments of suspected pirated goods. The United States

encourages Vietnam to effectively implement and enforce its new laws and regulations to reduce the

pervasive piracy and counterfeiting that continue to exist.