By Ora Coren

To the chagrin of the Israeli Ministry of Industry and Trade, the United States Trade Department is keeping Israel on its "watch list" of countries that fail to meet copyright protection standards. Moreover, U.S. trade officials hinted that if Israel fails to curb data piracy, harsher measures might be taken. The Trade Department cited several reasons for not removing Israel from the list. One is the continued counterfeiting of music tapes, videos and computer software. Another is Israel's role in the network for pirate versions of Russian language software. Also, Israel allows drug companies to develop generic drugs while the originals are still protected by patents.

Staffers at the ministry had hoped that Israel would be erased from the list after two years due to the concerted efforts of Israeli law-enforcement agencies in combating counterfeiting.

Though U.S. Trade Representative Robert B. Zoellick noted in his report yesterday that Israel had increased its policing of copyright infringements, nevertheless, "convictions are rare and do not result in deterrent penalties".

Zoellick added that Israel's patent protection is "inadequate." His report noted that the Israeli government allowed the parallel import of pharmaceuticals protected by patents in May 2000 and, contrary to the obligations laid down in the Trade Related Intellectual Property Rights agreement, the government also allows the generic drug firms to conduct tests using data submitted by the innovator pharmaceutical firms.

The report noted that the two parties continue to consult with each other on intellectual property rights. but added that if there is no progress in the data protection area, "the United States will need to consider other options ... to encourage Israel to remedy this situation."