The Entertainment Software Association (ESA) called on the Malaysian government to increase its level of intellectual property protection after it was included in a "Watch List" of countries announced today by Peter Allgeier, the Acting United States Trade Representative (USTR). The ESA applauded the USTR's action in placing Malaysia and other countries involved in widespread game piracy on the list.

"Malaysia is the primary source of pirated optical disc entertainment software in the world," said Douglas Lowenstein, president of the ESA, the trade association representing U.S. computer and video game publishers. "The prevalence of pirated products and their export from the country hinders the development of legitimate entertainment software markets in target export countries, and makes it extremely difficult for game publishers to establish legitimate markets in those areas. Exports of pirated entertainment software produced in Malaysia have been seized in over 20 countries on five continents. The problem of production and export by optical disc factories in Malaysia must be immediately addressed."

The Special 301 Report identifies countries where piracy is rampant and whose copyright protection and enforcement regimes are inadequate, and singles out barriers that prevent or restrict entry of legitimate U.S. intellectual property exports. Placement on either the "Watch List" or "Priority Watch List" indicates that a country does not provide market access for persons relying on intellectual property and/or an adequate level of protection for, or enforcement of, intellectual property rights.

While Malaysia remains the primary country of concern for the computer and video game industry, large-scale production of pirated entertainment software products also occurs in China, Russia, Thailand, and Ukraine. The prevalence of piracy in these areas hampers the ability of entertainment software publishers to develop a viable legitimate market in those territories and hinders legitimate market development in neighboring, and target export nations.

Russia remains on the Priority Watch List but USTR has also announced an out-of-cycle review (OCR) to be conducted later this year. The ESA urges USTR to continue close monitoring of Russia's efforts in addressing the country's severe piracy problems, to ensure that the country's weak IPR enforcement regime is satisfactorily resolved before finalizing Russia's WTO accession process. China has now been added to the Priority Watch List, signaling USTR's heightened concern over unabated piracy in the country and the lack of enforcement. The ESA is encouraged by USTR's action and will continue to work with USTR to address deficiencies in the country's IPR legal and enforcement regime.

The Special 301 Report continued to list Ukraine as a Priority Foreign Country (PFC), named 14 countries to the Priority Watch List (PWL), 36 to the Watch List (WL), with Paraguay remaining under Section 306 monitoring. Other countries of particular concern to the entertainment software industry identified in the Report include Brazil, Canada, and Mexico.

"Through the efforts of USTR and other US government agencies, the fight to protect America's creative industries from the theft of their products continues, and the Special 301 process aids in this endeavor. The industry will continue to work with USTR and other supporting government agencies to address the piracy problems in key countries, and in particular the unabated production and export of pirated products, much of which appears to be controlled by organized criminal syndicates around the globe," concluded Lowenstein.

The ESA is the U.S. association dedicated to serving the business and public affairs needs of the companies publishing interactive games for video game consoles, handheld devices, personal computers, and the Internet. ESA members collectively account for more than 90 percent of the $7.3 billion in entertainment software sales in the U.S. in 2004, and billions more in export sales of American-made entertainment software. The ESA offers services to interactive entertainment software publishers including a global anti-piracy program, owning the Electronic Entertainment Expo trade show, business and consumer research, government relations and First Amendment and intellectual property protection efforts.