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ARGENTINA Although there have been some improvements in intellectual property protection in Argentina, significant problems remain that warrant keeping Argentina on the Priority Watch List for 2005. The Government of Argentina amended its patent law to provide, among other things, process patent protection. This new patent law, which has been in effect since January 2004, implements the May 2002 U.S.-Argentina agreement. Argentina has also put in place fast-track procedures for patent applications. However, Argentina's overall copyright, patent, and data protection regimes do not appear to meet international standards. Copyright piracy remains a significant problem in numerous industry sectors, including audiovisual (pirated DVD copies of movies and recordable CDs (CD-Rs)), sound recordings (pirated CD-Rs), entertainment software (pirated videogames), business software, and book publishing. Although the Argentine Government initiated some IPR enforcement actions during 2004, the following enforcement problems still exist: lack of deterrent criminal penalties in commercial piracy cases, delays in bringing and completing criminal and civil infringement cases, ineffective border controls, and lack of deterrent civil damages. In the area of agricultural biotechnology products, unauthorized use of protected seed varieties remains a problem. The May 2002 U.S.-Argentina agreement is a partial settlement of a WTO dispute settlement case initiated by the United States concerning Argentina's implementation of various TRIPS obligations. The important issue of data protection remains unresolved. Argentina still does not provide protection from unfair commercial use for confidential data submitted by research-based pharmaceutical companies. The United States also urges Argentina to implement an effective coordination system between the health agency and patent office to prevent the infringement of patented pharmaceutical products. USTR will continue to monitor Argentina's efforts to address these concerns, as well as its compliance with the commitments made under the May 2002 agreement.

BRAZIL Brazil made some improvements to its intellectual property system in recent months, including the adoption of a National Action Plan by Brazil's National Council to Combat Piracy and Intellectual Property Crimes, as well as successes in enforcement along its border with Paraguay. Despite these improvements, however, high levels of piracy still exist and warrant Brazil's continued placement on the Priority Watch List in 2005. Brazil is one of the largest global markets for legitimate copyright products, but also is one of the world's largest markets for pirated products. Optical media and Internet piracy rates are increasing and the U.S. copyright industry estimates that losses in Brazil exceeded $931 million in 2004. Despite having adopted modern copyright legislation, Brazil has not undertaken adequate enforcement actions against copyright piracy. Criminal enforcement has not been sufficient or effective in deterring these illegal activities. Furthermore, although the Brazilian police conducted a substantial number of raids in 2004, very few resulted in criminal prosecutions and convictions. Ineffective border enforcement has failed to stop an influx of pirate and counterfeit goods, particularly in the MaunausManaus [sic] Free Trade Zone in Brazil. In addition, Brazil has not made significant progress in processing its backlog of pending patent applications, due in part to a requirement that the health regulatory agency issue approval before pharmaceutical patents are granted by the Brazilian patent office. We will continue to monitor Brazil's progress, including through the ongoing GSP review which has been extended to September 30, 2005, in order to allow time for the new