The US has put Israel back on its priority watch list of countries violating intellectual property rights. On Friday, the Office of the US Trade Representative (USTR) published its "Special 301 Report" priority watch list for 2005; 14 other countries were also included in the list.
Since 2003, and until now, Israel was not on the priority watch list, after promising to enact legislation for protecting intellectual property. Only Ukraine is included in the more severe "Priority Foreign Country" list (immediate sanction have been imposed against Ukraine).
Inclusion on the priority watch list means that the US administration is signaling to US companies and businesses its position regarding the protection of intellectual property in Israel, and the degree of caution that should therefore be taken in doing business with Israel. Regarding US pharmaceutical companies, reports in the US have previously said that Israeli law was inadequate, and would cause a reduction in clinical trials for innovative drugs conducted in Israel, including life-saving and cancer drugs.
China heads the priority watch list
China heads the priority watch list, as the leading violator of intellectual property. The USTR said China was given the most prominent place on the priority watch list. Besides Israel and China, the other countries on the watch list are Argentina, Brazil, Egypt, India, Indonesia, Kuwait, Lebanon, Pakistan, the Philippines, Russia, Turkey, and Venezuela.
Sources close to the USTR said the US was likely to impose sanctions against the countrieson the priority watch list if they do not act energetically against intellectual property infringement within their borders.
The main reason Israel was put back on the priority watch list was the dispute between Israel and the US over protection of pharmaceutical intellectual property in Israel.
The USTR said that while progress had been made in negotiations over the past year, Israel failed to meet US demands. The USTR stated that the Knesset had approved legislation on data protection in March 2005, that failed to meet OECD standards. The USTR also expressed concern about continuing problems facing US biotechnology companies in Israel.
The USTR said that Israel had made progress and given the US written assurances that it would continue to protect US rights holders in sound recordings. The USTR notes efforts by Israeli authorities to improvement enforcement of copyrights and trademarks, but notes the persistent significant levels of piracy, such as the burning of copyrighted material onto CDs and DVDs.
Minister of Industry Trade and Labor Ehud Olmert, who led the negotiations on intellectual property protection with the US, recently said he did not expect that the US would put Israel back on the priority watch list, on the basis of promises made to him. He said yesterday, "The decision by the USTR to put Israel back on the priority watch list was the result of brutal pressure by US pharmaceutical companies competing against Israeli companies, which the US companies perceive as threatening their markets."
Olmert added, "After lengthy negotiations and after consulting with all relevant ministry, and as a special gesture to the US administration, the Israeli government decided to propose special legislation for protecting intellectual property of foreign pharmaceutical companies, even beyond the usual standard in the US itself." (Israel proposed five years data exclusivity, without an extension, which the US declined to accept (H.M.).
Olmert said, "US companies want Israel to make further concessions, without any justification, which would harm the international competitiveness of Israeli companies, among other things. With the consent of all ministries, I refused to capitulate to these pressures, with the foreknowledge that US drug companies would seek to harm Israeli companies by having Israel included on the priority watch list."
Olmert said Israel was not surprised by the decision. "We're disappointed that the USTR acted under the influence of US drug companies, even though under new Israeli legislation, intellectual property protection in Israel is as good as in the US, and in some cases even stricter."
The US, as noted above, disagrees.
Olmert concluded by commenting on the damages from the US decision. "Despite all the inconvenience arising from the USTR announcement, which is liable to affect Israel's joining the OECD, the Ministry of Industry, Trade and Labor's foreign trade administration believes that had Israel acceded to the demands of US drug companies, we would have delivered a lethal and unjustified blow to Israeli pharmaceutical companies, raising the cost of the health services basket by hundred's of millions of shekels."
Published by Globes [online], Israel business news - www.globes.co.il - on May 1, 2005