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 LITHUANIA Lithuania will remain on the Watch List in 2007. Lithuania increased its engagement with the United States during 2006 and made progress by closing down the notorious pirate website. Despite these and other IPR improvements this past year, IPR issues remain, including the need for sustained IPR enforcement actions and improved border enforcement to curb the transshipment of pirated optical media through Lithuania. Because Lithuania serves as a transshipment point in the Baltic region for mostly Russian-produced optical media, the United States urges Lithuanian customs officials to make more frequent use of their ex officio authority to inspect and seize infringing goods at the border. The United States encourages Lithuania to continue its cooperative enforcement efforts with the private sector in the monitoring of optical disc production in Lithuania. The United States also encourages Lithuania to increase its efforts to coordinate IPR enforcement actions among relevant government ministries, police, and customs officials. The United States will continue to work with Lithuania to strengthen its IPR regime.

MALAYSIA Malaysia will remain on the Watch List in 2007. Malaysia showed a solid commitment to strengthening IPR protection and enforcement this past year, but still has some serious deficiencies that need attention. In 2006, Malaysia continued to take IPR enforcement actions, including: conducting raids against pirate optical disc production facilities; seizing pirate goods and machinery used to produce pirate materials; arresting IPR infringers; and revoking or declining to renew licenses for pirate optical disc facilities, resulting in the reported movement or closure of at least eleven optical plants in 2006. In addition, Malaysia's enforcement actions against retail pirate outlets have reportedly driven much retail piracy underground in 2006. The United States appreciates these improvements, as well as the Malaysian Government's statement that it is in the process of establishing a specialized IP court to more effectively handle civil and criminal copyright cases. The United States urges Malaysia to continue its IPR enforcement efforts and to ratify and fully implement the WIPO Internet Treaties. The United States also encourages Malaysia to provide effective protection against unfair commercial use for data generated to obtain marketing approval, and create a coordination mechanism between the health authorities and the patent office to prevent the issuance of marketing approvals for patent-infringing pharmaceutical products. The United States will continue to work with Malaysia to make progress on these pressing IPR issues through the ongoing U.S.-Malaysia Free Trade Agreement negotiations.

MEXICO Mexico will remain on the Watch List in 2007. Mexico made some improvements in IPR enforcement during the past year, including increased raids, arrests, and seizures of counterfeit and pirated goods by federal enforcement authorities, as well as increased cooperation between federal enforcement authorities and the private sector. Despite these improvements, however, courts have not imposed convictions and deterrent sentences for pirates and counterfeiters. The United States encourages Mexico to follow its commendable raids with aggressive prosecutions and deterrent penalties, including prison terms, improve domestic cooperation efforts between federal, state, and local enforcement authorities, and increase IPR enforcement efforts by