agricultural chemical products. Given the significant commercial damage caused by this failure, we urge Peru to issue a data protection decree as soon as possible. Due to Andean Community pressure, Peru continues to deny second-use patent protection for pharmaceuticals. On copyright protection, the Peruvian Government issued a software legalization decree in 2003 and took some steps toward improving enforcement, however, it has yet to approve the guidelines for software management. Piracy remains extremely high for sound recordings, textbooks, books, motion pictures, and software. Optical media piracy is on the rise in all sectors. According to industry sources, piracy of sound recordings has been on the increase in the last several years and is so severe now (98% of the market is estimated to be pirated) that it has virtually eliminated any legitimate market, causing the remaining legitimate sound recording businesses to shut down. While the government, in coordination with the private sector, has conducted numerous raids over the last few years on large-scale distributors and users of pirated goods and has increased enforcement activities, piracy continues to be a significant problem for copyright owners. Border enforcement measures also remain inadequate. The United States urges Peru to strengthen IPR protection and enforcement and will continue to monitor Peru's efforts in addressing these concerns.
POLAND
Poland was elevated to the Priority Watch List in 2003 for three main reasons: 1) the general level of IPR protection was not improving, in part because of inadequate border controls and the rapid growth of domestic optical disc production capacity; 2) lack of political will to shut down the outdoor market in the Government-owned Warsaw Stadium, where pirated and counterfeit goods were abundant; and 3) Polish law did not provide adequate protection for pharmaceutical test data.
After being elevated to the Priority Watch List, the Polish Government demonstrated its willingness to address U.S. IP-related concerns, especially regarding copyright protection, and has made changes over the past year that have provided the foundation for long-term, sustained improvements. The United States recognizes the steps Poland took to initiate raids to combat high levels of piracy and counterfeiting at the Warsaw Stadium, strengthen its copyright law, pass legislation to regulate optical disc production, and accede to the WIPO Internet Treaties. In recognition of this progress, we are moving Poland from the Priority Watch List to the Watch List, and scheduling an out-of-cycle review in the fall to monitor and ensure Poland's continued efforts.
Given the firm position taken by the Polish Government in its August 2003 IPR enforcement action plan, we look forward to significantly increased efforts to combat piracy and counterfeiting activities at the Warsaw Stadium and elsewhere around the country. At the same time, serious problems, particularly in the areas of patent protection for innovative pharmaceuticals and mechanisms for reducing the supply of pirated and counterfeit goods, require urgent attention.
Measures to ensure effective protection for innovative pharmaceutical products from patent infringement need to be implemented. The commercial availability in Poland of generic versions of patent protected pharmaceutical products is a clear indication of the weak state of patent protection in Poland and its direct effect on U.S. company interests. In March 2004, the Polish Government indicated that it would undertake an initiative to institute formal cooperation between the Polish patent and drug registration offices, which could prevent future cases of improper registration and marketing approval. We welcome this positive signal and are awaiting concrete measures to facilitate linkage between the two relevant agencies and to strengthen the enforcement of existing patents.
While Polish customs enforcement has improved over time, pirated and counterfeit goods still cross
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