"The Passion of the Christ" hasn't been shown in Israeli theaters, but it's being seen anyway. Pirated DVDs of Mel Gibson's movie are widely sold in shops along the same Old City streets where Jesus walked.

It's just one of thousands of bootlegged titles easily available to Israeli shoppers who don't mind ignoring copyright law to get a bargain. Prices for illegal CDs and DVDs range from $2 to $5, while legitimate discs cost $10 to $20.

Israeli police and industry executives say the problem is serious but getting better. After severe pressure from the United States in the late 1990s, Israel started going after pirates and has seized some 8 million knockoff CDs and DVDs over the past four years.

In an annual report on intellectual property rights protection released in early May, the Office of the U. S. Trade Representative put Israel on its "watch list" with 33 other nations, meaning there is widespread piracy and violation of royalty rights of U.S. companies.

However, that was an improvement over 2002, when Israel was on the "priority watch list." The worst offenders worldwide remain China, Ukraine and Paraguay, the latest U.S. report said.

Goaded by Washington's criticism, Israeli police created an intellectual property unit in 1999. Today, the unit has 30 officers who investigate copyright and trademark violations, including everything from knockoff toothpaste to unlicensed software.

To combat movie and music piracy, the unit works with industry groups, informants and private investigators to find and raid mobile "factories" that can turn out more than 5,000 CDs or DVDs a day, says the head investigator, Aharon Grundman.

Israel also significantly increased criminal penalties for trafficking in counterfeit goods and, for the first time, some offenders are going to jail, Grundman adds.

The targeting of production and distribution networks is having an impact, says Moti Amitay, anti-piracy coordinator for the Israeli chapter of the International Federation of Phonographic Industry, a group financed by Israeli and American record companies.

"In 2001, about seven out of every 10 CDs sold in Israel was counterfeit. Today it's much less than half," Amitay says.

At his office in a Tel Aviv suburb, Amitay displays photos taken during a May 9 police raid at a warehouse near the town of Ramle. The pictures show long tables laden with computer disc drives capable of copying up to seven discs at a time and many boxes with photocopies of CD and DVD inserts for hundreds of different titles.

The small factories sprang up to supply the market after customs seizures slowed illegal imports from Russia, says Raphael Arie of the Tel Aviv-based ALIS, a movie industry group financed by Israeli, European and American companies. He says two or three major piracy gangs are active.

Despite the crackdown, counterfeit CDs and DVDs are readily available in shops throughout the country, including several at the shopping center inside Tel Aviv's main bus station.

Industry groups estimate Israel's 6.6 million people buy 3.6 million authentic and 1.2 million counterfeit CDs every year. In DVD sales, knockoffs come to about 1.5 million and authentic ones to 3 million.

"We often conduct raids on retail points, but since we can't shut them down, more fake goods are soon back on the shelves," Grundman says.

He says current Israeli law prevents police from shuttering shops whose owners knowingly offer pirated goods.

Arie notes another obstacle to stopping pirates. "Both music and films are very easy to get from the Internet, and we still can't do anything about that," he says.

In April, Israel joined with the United States and 10 other countries in a worldwide sting that netted more than 100 pirates and 200 computers that stored and distributed more than $50 million worth of stolen media.

Amitay concedes that CD and DVD piracy, like the illegal drug trade, can never be completely stopped, but says stepped-up enforcement can drive down profits.

Both Grundman and Amitay say the intellectual property unit needs more money and personnel to become more effective.

"I want the criminals to be looking for us, and when they see us coming, I want them to run away," Amitay says. "Then I can say I have done my job."

Despite efforts of police, pirated discs are available at shops like this one in Jerusalem.