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RUSSIA
Despite some legislative improvements and increased engagement between the United States and Russia on IPR issues, certain aspects of Russia's IPR regime, including enforcement and data protection, appear to be inconsistent with Russia's obligations under the 1992 U.S.-Russian Federation Trade Agreement and thus would not conform to obligations which Russia needs to fulfill in order to join the WTO. For these reasons, Russia remains on the Priority Watch List in 2005. The United States will conduct an out-of-cycle review in 2005 to monitor progress by Russia on numerous IPR issues. As part of its effort to bring Russia's IPR regime into compliance with the obligations of the TRIPS Agreement, Russia amended its Copyright Law in 2004 to provide protection for pre-existing works and sound recordings. Russia has amended a number of other laws as well, including laws on patents, protection of layout designs for integrated circuits, plant varieties, and protection of computer software and databases. Although these amendments demonstrate Russia's commitment to strengthening its IPR regime at the legislative level, further legislative changes and enforcement improvements are necessary. For example, Russian law does not provide TRIPS-consistent protection against unfair commercial use of test data and other data submitted to obtain marketing approval for pharmaceutical and agricultural chemical products. Russian law also provides a reciprocity system for the protection of geographical indications that appears to be inconsistent with the TRIPS Agreement. Russia has not yet ratified the WIPO Internet Treaties and unfortunately has delayed implementation of a key provision (for certain digital transmissions) until September 2006. Enforcement in Russia remains weak and caused substantial losses for the U.S. copyright, trademark, and patent industries in the last year. Piracy in all copyright sectors continues unabated, and the U.S. copyright industry estimated losses of $1.7 billion in 2004. The U.S. copyright industry reports that unauthorized domestic production of optical media has increased in Russia: there are over 30 known optical disc plants now in operation, approximately 21 of which are believed to be engaged at least part-time in the illegal production of pirated goods. The U.S. copyright industry reports the following levels of piracy: 66 percent in the recording industry, 80 percent in the motion picture industry, 87 percent for business software, and 73 percent for entertainment software. While there have been some improvements in anti-piracy actions by Russian law enforcement agencies, including an increased number of raids by police, overall IPR enforcement in Russia remains inadequate and piracy and counterfeiting levels continue to rise. Problematic IPR enforcement issues include the lack of an effective and deterrent criminal enforcement system (including many suspended sentences of major pirates), the lack of effective plant inspection and enforcement mechanisms; the lack of civil ex parte search procedures; an extremely porous border; delays in criminal prosecutions and adjudications; and infrequent destruction of seized pirate goods. Enforcement efforts in 2004 included several raids and seizures, including some at production facilities, but no plant licenses have been permanently suspended, plants have not ceased to operate, and the U.S. copyright industry estimates that 70 percent of seized pirated product was returned to the market. In addition, Internet piracy is increasing (industry reports that a Russian website is now the largest portal for pirate product in the world), and Russia has not taken decisive actions to combat this growing problem. We urge Russia to take immediate and effective steps to properly inspect all plants and to shut down illegal optical media plants and Internet sites, strengthen border enforcement, combat piracy and counterfeiting, and address deficiencies in its IPR laws. We will continue to monitor Russia's progress in bringing its IPR regime in line with international standards through the out-of-cycle