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 manufacturers. Compounding U.S. concerns, the Israeli Government drafted separate legislation that would curtail existing pharmaceutical patent term adjustments granted to compensate for delays in obtaining regulatory approval of a drug. Industry also has raised concerns that the administrative requirements in the current draft legislation would make it very difficult for U.S. companies to obtain any patent term extension. Based on Israel's implementation of an inadequate data protection regime, as well as its apparent intention to pass legislation to weaken patent term adjustments, Israel is being elevated to the Priority Watch List. The United States is also concerned about the continuing problems experienced by U.S. biotechnology firms in Israel. These firms suffer from a lack of adequate protection for their intellectual property in Israel, due to an onerous patent system that allows competitors to delay the granting of patent rights through open-ended, pre-grant opposition proceedings, as well as weak protection of proprietary data against unfair commercial use.

Israel made progress by giving written assurances that it will continue to provide national treatment for U.S. rights holders in sound recordings. In addition, the U.S. copyright and trademark industries report a more serious treatment of IPR violations by Israeli courts and continuing efforts by Israeli authorities to improve enforcement of copyrights and trademarks. However, the U.S. copyright industry notes that the persistence of a significant level of piracy, such as the "burning" of copyright-infringing content onto CD-Rs and DVD-Rs, suggests that additional IPR enforcement resources are needed. The United States hopes to see continued progress on copyright and trademark enforcement in Israel and will continue to urge Israel to improve its data protection regime in order to promote increased bilateral trade and investment in the field of pharmaceuticals and other knowledge-based sectors.

KUWAIT Kuwait is being maintained on the Priority Watch List this year due to its high rates of copyright piracy and its lack of progress in amending its copyright law to meet international obligations. Furthermore, Kuwait has not yet fully implemented the 2002 work plan that outlined the steps it would take to increase IPR enforcement. In 2004, IPR enforcement efforts remained insufficient and penalties for infringement remained inadequate to deter potential offenders. Kuwait proposed a draft copyright law in 2004, which has not yet been passed by Kuwait's legislature. The U.S. copyright industry reports that Kuwait continues to have high levels of retail optical disc piracy, as well as problems with corporate end-user software piracy, cable piracy, and Internet piracy. We urge Kuwait to improve the situation by making public declarations at the highest level that piracy in Kuwait will not be tolerated, increasing the frequency of raids on suspected infringers, prosecuting offenders, imposing deterrent sentences, publishing the outcomes of inspection raids in order to deter others, and amending its copyright law in the near future to correct its deficiencies. Kuwait has made some progress, such as Kuwait Customs' creation of a special IPR unit in April 2004 that began taking some enforcement actions. The Ministry of Commerce also stepped up enforcement efforts in late 2004. Although these are positive steps, we hope that key ministries with IPR enforcement responsibilities, including the Ministry of Information, will take further measures to combat IPR infringement over the long term. We will continue to address these issues under the U.S.-Kuwait Trade and Investment Framework Agreement signed in February 2004.

LEBANON