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 Malaysia is publicly committed to strong IPR protection and enforcement, but nonetheless has high piracy rates for optical media and is a substantial exporter of counterfeit and pirated products. Malaysia also does not protect pharmaceutical and agricultural chemical test data from unfair commercial use. For these reasons, the United States will keep Malaysia on the Watch List in 2005 to monitor additional progress on improving its IPR regime. The Government of Malaysia increased its enforcement efforts during the past year, including: conducting raids against pirate optical disc production facilities, retail stores, copy shops, and companies suspected of using illegal software; seizing pirate goods; and ensuring that judicial proceedings meted out some severe criminal penalties. However, despite these improvements, the U.S. copyright industry reports that Malaysia has become the most significant producer/exporter of pirated optical disc entertainment software in the world. The U.S. copyright industry estimated its losses in Malaysia at approximately $188 million in 2004. The United States urges Malaysia to continue its enforcement efforts and to focus on the closing of licensed and unlicensed optical disc plants that are producing pirated products, and stopping the export of such pirated goods. In addition, the United States notes that Malaysia should address several deficiencies in its Copyright Law, particularly with respect to allowing copyright owners to enforce their rights in civil or criminal cases. Trademark counterfeiting is rampant in Malaysia due to poor enforcement, including in regard to optical media, apparel and luxury goods, tobacco, mobile phone batteries, and toys. According to the U.S. pharmaceutical industry, drug counterfeiting is a growing problem in Malaysia, but we are concerned about Malaysia's new "solution" that requires pharmaceuticals to carry a mandatory hologram security sticker to curb counterfeits. The stickers themselves are vulnerable to copying and may in fact make it easier for counterfeiters to pass pirated product as genuine. Malaysia has enacted neither protection for confidential test data nor a coordination mechanism between the health authorities and patent office to prevent unauthorized registrations of patent-infringing products. The United States will work with Malaysia to make progress on these pressing IPR issues through the Trade and Investment Framework Agreement (TIFA) discussions, and we hope to see continued progress from the Government of Malaysia in the near future.

MEXICO Mexico will be retained on the Watch List in 2005 due to increasing copyright piracy and trademark counterfeiting rates. Despite an increase in the number of searches and seizures of counterfeit and pirated goods, the scope of IPR violations continues to outpace the Government of Mexico's IPR enforcement efforts, with U.S. copyright industry loss estimates increasing in 2004 to $870 million. Pirated sound recordings and motion pictures are widely available throughout Mexico, crippling legitimate copyright-related businesses. As noted in last year's Special 301 Report, concerns remain over the 2003 amendments to Mexico's copyright law, which failed to address the comprehensive reforms needed by Mexico to implement effectively the obligations of the WIPO Internet Treaties and to erase doubts concerning inconsistencies in Mexico's copyright law with its obligations under NAFTA and the TRIPS Agreement; regulations to implement these amendments still have not been issued. The United States urges Mexico to expand its public education campaigns and take the necessary steps to resolve the current legislative copyright deficiencies. Enforcement in Mexico remains weak, and raids by Mexican authorities infrequently result in convictions of or deterrent penalties against pirates or counterfeiters. To strengthen enforcement, the United States urges Mexico to expand anti-piracy and anti-counterfeiting efforts against commercial distribution, street piracy and counterfeiting;