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 raid in Riyadh in March 2005 that led to the seizure of 1.2 million audio-visual materials and the arrests of more than 250 individuals. Despite improvements made by Saudi Arabia on IPR legislation, the U.S. copyright industry reports that piracy rates remain high due to the absence of deterrent penalties and the lack of transparency in Saudi Arabia's enforcement system. We urge Saudi Arabia to improve its enforcement efforts by continuing to conduct raids, introducing a robust customs enforcement program, allow rights holders to send experts to cooperate with customs authorities, provide reports to rights holders, impose deterrent sentences, continue to enforce the software usage directive, continue sustained raids to prevent unauthorized redistribution of pay television services, and work with universities to use legal textbooks and stop illegal copying of books. With respect to the pharmaceutical industry, Saudi Arabia has protected IPR related to pharmaceutical products, and there have not been major incidences of patent infringement. We note, however, that Saudi Arabia has a continued backlog of pending patent applications, which it intends to clear by the end of 2006. The United States will continue to work with Saudi Arabia on these IPR issues through the Trade and Investment Agreement (TIFA) and WTO accession process, as well as the out-of-cycle review.

SLOVAKIA Slovakia remains on the Watch List in 2005 to monitor progress on IPR issues. The situation has not improved over the past year, although Slovakia has expressed its interest in taking steps to address inadequacies in its IPR regime. Slovakia currently does not provide a coordination mechanism between its health regulatory agency and its patent authority to prevent the registration of unauthorized patent-infringing products, and the U.S. pharmaceutical industry reports that Slovakia continues to store sensitive registration data on the premises of a generic drug manufacturer. We urge Slovakia to provide coordination between its health and patent authorities and to resolve these related issues.

TAIWAN The United States lowered Taiwan at the end of 2004 from the Priority Watch List (where it had been since 2001) to the Watch List as part of the out-of-cycle review, in recognition of Taiwan's successful passage of strengthened copyright legislation and improved IPR enforcement. However, Taiwan will remain on the Watch List in 2005 as we continue to monitor Taiwan's efforts to combat Internet piracy, enact judicial reforms, implement the new data protection law, prevent illegal copying of textbooks, abolish the Export Monitoring System (EMS), and prevent unauthorized cable operations in South and Central Taiwan. In August 2004, Taiwan's legislature approved a number of amendments to its copyright law that provide greater protection for copyrighted works and increase penalties for infringers. In addition, Taiwan authorities made permanent an IPR-specific task force that has increased the frequency and effectiveness of raids against manufacturers, distributors, and sellers of pirated product. In January 2005, Taiwan's legislature amended its pharmaceutical law to provide a five-year term of protection for pharmaceutical test data. Implementing regulations are currently being drafted in consultation with rights holders and the law is scheduled to go into effect by July 2005. With respect to the judicial process, Taiwan authorities continue to conduct regular training seminars for judges and prosecutors on IPR matters and plan to establish a specialized IPR court. During the past year, Taiwan's IPR task force increased inspections of optical media factories and retail distribution centers, and the number of raids and inspections conducted by the National Police also increased sharply. The U.S. copyright industry reports that Taiwan's increased enforcement efforts