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 remains problematic and piracy remains high considering Hungary's well-developed legal system.

ISRAEL

In 2002 Israel maintained the momentum it began to build in 2001 in the enforcement of copyrights and trademarks, accordingly, we are moving Israel from the Priority Watch List to the Watch List. Israel has increased its budgetary, educational, police and judicial resources devoted to these enforcement efforts yielding concrete results in terms of raids, prosecutions and convictions, and contributing to a drop in the piracy level with regard to U.S. rightholders. Israel took an additional important step in protecting intellectual property in 2002 with its passage of the Amendment to the Copyright Ordinance, which increased criminal penalties for piracy in general and strengthened the ability of Israeli authorities and courts to prosecute and punish copyright crimes.

Despite these important developments, several key issues still need to be addressed. It is essential that progress continue to be made in copyright and trademark enforcement, such as providing the Israeli police, prosecutors and courts with sufficient resources to fully meet enforcement requirements. While the United States welcomes Israel's passage of the Amendment to the Copyright Ordinance, it is concerned that the new law excludes corporate end-user piracy from criminal liability, a step that may lead to weaker protection for business software. A 2001 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. And, most significantly, although Israel has been obligated since January 1, 2000 to provide data exclusivity, it has failed to do so. This policy places it at odds with other OECD-level economies and many of its neighbors that have met their TRIPS Article 39.3 obligations. The U.S. government urges the Israeli Government and the Knesset to enact quickly TRIPS-consistent legislation that will provide a reasonable period of non-reliance on confidential data similar to that granted in OECD and many neighboring countries. On the outskirts of the recent OECD meeting in Paris, Ambassador Zoellick and Vice Prime Minister and Minister of Industry, Trade and Labor, Ehud Olmert agreed that the two countries would engage in an intensive dialogue to attempt to resolve all outstanding intellectual property issues.

ITALY

Despite continued implementation of its recent Anti-Piracy Law, and increased enforcement actions in 2002, Italy continues to possess one of the highest piracy rates in Western Europe – affecting all copyright-based sectors. Widespread piracy of business applications software remains a particular U.S. concern. Notwithstanding new government procedures to exempt business software that were enacted on January 25, 2003, when the Italian Government changed May 1, 2003