was introduced in April 2004 to revoke data exclusivity. If revocation were to occur, this would be a major step backwards in terms of fulfilling the TRIPS obligation to protect confidential test data, as well as one of the key intellectual property obligations in the recently concluded CAFTA. The United States urges Guatemala to maintain its current data protection regime and not roll back the progress it has achieved in providing adequate and effective IP protection for innovative pharmaceutical and agricultural chemical products. The United States will monitor this situation very closely.
HUNGARY
In recognition of the ministerial decree providing for protection of confidential test data, Hungary was moved from Priority Watch List to Watch List last year. Nevertheless, we remain concerned about the fact that the decree provides retroactive protection for products that received first marketing authorization in the European Union or Hungary on or after April 12, 2001, rather than January 1, 2000, as required by TRIPs. Hungary needs to address this shortcoming in its data exclusivity law, improve coordination between the regulatory and patent authority to prevent patent infringement, and improve enforcement against intellectual property infringement by the Hungarian police, prosecutors and judiciary. We are encouraged by the advancements that Hungary has made in modernizing its copyright code, but poor enforcement of these laws has led to a high piracy rate of optical and auditory media. We urge the Hungarian Government to address the deficiencies in its data exclusivity law and continue to improve IPR enforcement efforts in all areas of intellectual property.
ISRAEL
Israel is being maintained on the Watch List due to continuing serious U.S. concerns regarding its policies on data protection for proprietary test data and national treatment for U.S. rights holders in sound recordings. In 2003 Israel was moved from the Priority Watch List to the Watch List. Last year's move was based primarily on Israel's improvements in copyrights and trademark enforcement, as well as on senior-level assurances that OECD-Ievel protection would be implemented for confidential test data submitted by innovator pharmaceutical and agricultural chemical producers, i.e., third parties would be prevented from relying on those data to obtain marketing approval ("data exclusivity"). Israel has also offered assurances in the past that it would take no action to affect its policy of national treatment copyright protection for U.S. producers of phonograms. Over the last year, Israel made further headway in copyright and trademark enforcement. We note that Israel recently joined the U.S. and ten other countries in the largest single law enforcement action ever undertaken against Internet piracy. While it remains to be seen whether Israeli prosecutions will result from this action, we view Israel's willingness to participate as a positive indication of Israel's willingness to improve criminal IPR enforcement. However, U.S. industry notes that the persistence of a significant level of piracy suggests that additional enforcement resources may be needed.
On the key issue of data exclusivity, Israel's actions have not met U.S. expectations. In April 2004, the Israeli Government developed a set of recommendations on data exclusivity that recognized for the first time the need to provide a minimum five-year period of protection for confidential test data for innovator firms in Israel. However, several serious shortcomings in the recommendations would severely compromise the data protection afforded by Israel, keeping it far short of OECD-Ievel standards for data exclusivity. The Israeli Government has postponed further action on its data exclusivity recommendations and provided written assurance that it will engage with the United States to address U.S. concerns on data exclusivity. In addition, U.S. biotechnology firms suffer from a lack of adequate protection for their intellectual property, due to an onerous patent system that allows competitors to stall the grant of patent rights through open-ended, pre-grant opposition proceedings, as well as the lack of
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