America-Israel Patent Law

Justices Take Note: The First Step Toward Recovery Is Admitting You Have a Problem

Judges are people, including the ones called “justices”.  This fact wasn’t lost on the rabbis of Mishnaic and Talmudic period when they laid the groundwork for Jewish law as we know it today.  An interesting way in which this awareness is reflected is in rules about what happens if a judge makes a mistake: in some circumstances, the judge may be liable for damage he causes to a litigant with his ruling (see Tosafot on Gittin 53a).  And there’s a tractate, Horayot, the first part of which deals with the repercussions of the Sanhedrin (the highest court in Jewish law) making a mistake in law and a majority of the public erroneously relying on that mistake; the discussion in that tractate is predicated on the assumption that the Sanhedrin will not only eventually realize its error, but that it will admit to that error.

While the American legal system in principle recognizes that judges, even at the highest courts, can err (which is why it allows for motions for reconsideration, for relief from judgment and the like), on the whole it is less sympathetic to the concept of judicial error, and places more of a premium on procedure.  The notions of stare decisis and precedent mean that within an appellate court, once a panel has ruled on a legal question of first impression, subsequent panels are bound by that ruling, unless the panel is overruled by the or the Supreme Court – see the CAFC’s decision in Allergan v Alcon, 324 F.3d 1322 (2003) for a case in which the judges were bound to follow the earlier panel ruling (in Warner-Lambert v Apotex, 316 F.3d 1348 (2003)), despite the latter panel’s disagreement with the rule of law announced in the earlier decision.  If an individual judge or a panel of a court wants to overturn a legal rule that it established in an earlier case, it has to resort to slight-of-hand, i.e. it must “distinguish” the case before it from the earlier, precedential case(s).  And while an en banc appellate court, or the Supreme Court, is not beholden to its own earlier decisions, rarely do those courts toss out their own earlier decisions in toto.

Which brings me to something of a breath of fresh air: a case of a judge who changed his mind and had the guts to follow through on that change when the time came.  The judge is Chief Judge Rader of the CAFC, and the issue is whether or not in making an obviousness-type double-patenting rejection, it is permissible to rely on the teaching of the cited patent rather than just the claims. 

The doctrine of obviousness-type double patenting (OTDP) arose in the USA at a time when patents were granted for 17 years from their date of issue, rather than 20 years from their earliest filing date.  This gave rise to concern that a party might effectively extend the lifetime of his patent by obtaining allowance of one set of claims, then filing a continuation with a slightly different set of claims directed to obvious variations of what was claimed in the allowed claims.  To avoid such situations, the courts only allowed the issuance of the later claims if the applicant filed a statement, called a terminal disclaimer, that ensured that the later patent would expire at the same time as the earlier patent, thus obviating concerns about an unwarranted time-wise extension of patent protection. 

Given that rationale, it should come as no surprise that the settled rule used to be that to make a determination of OTDP, the claims of the pending application or later-issued patent are compared to the claims of the earlier-issued patent.  If the latter are obvious in view of the former, i.e. if they are not patentably distinct, then there’s an OTDP issue.  That rule changed in 2003, when Judge Rader penned a decision, Geneva Pharmaceuticals v GlaxoSmithKline (349 F.3d 1373), in which a CAFC panel held that later claims on the use of compound were not patentably distinct from the claims of an earlier patent that claimed the compound per se but merely disclosed, without claiming, the use of the compound.  Although not always followed – it represented a departure from precedent – the Geneva decision has nevertheless spawned several offspring in the intervening years; for a discussion of these and the Geneva panel’s error in deciding as it did, you can read this article by Charles Gholz and J. Randy Hibshman. 

Being the author of the Geneva decision, you’d think Judge Rader would toe the line and continue to hold to the erroneous logic of that decision in subsequent cases.  Interestingly, though, that’s not the case: Judge Rader joined a dissent written by Judge Newman in a 5-4 decision denying rehearing en banc in one of the Geneva offshoots, Sun Pharmaceuticals v Eli Lilly (625 F.3d 719 (2010)), in which Judge Newman argued (forcefully, as is her wont in dissents) that the Geneva decision doesn’t comport with the logic behind OTDP jurisprudence.

Earlier this year Judge Rader was in Israel, and courtesy of Professor Miriam Bitton and Bar-Ilan University, I was fortunate enough to be included in small group of people invited to dinner with him.  I took the opportunity to ask him about the apparent discrepancy in his views in the Geneva and Sun cases.  He confirmed that his views had changed since he wrote the Geneva decision.  Ask we say in Hebrew, yeasher kokhacha for being willing to publicly reverse himself.

If kudos are due to Judge Rader, a Bronx cheer is due by comparison for Justice Breyer and his colleagues at the U.S. Supreme Court for their handling of the Prometheus v Mayo case a few months ago.  As many blogs (e.g. Patentdocs, IPWatchdog and Pharmapatentsblog, as well as Greg Aharonian’s newsletter) have already set forth the numerous faults with this decision, I won’t reiterate them here.  Suffice it to say, however, that the SCOTUS would have done well to admit that its Benson/Flook line of cases concerning patent eligibility are garbage and to toss them out, rather than continuing to propagate bad law regarding patent eligibility.

 

Israel PTO To Be PCT Search and Examination Authority as of June 2012

This morning the Israel PTO (officially the Israel Patents, Design and Trademarks Authority) released an announcement by email that as of June 2012, it will offer services as a PCT search and examination authority.  (As of this writing, the announcement does not appear on the ILPTO's website, but presumably it will be posted there soon.  UPDATE: on April 5 this link to the announcement appeared on the ILPTO's site; no English version seems to have been prepared.)  This follows the announcement in September 2009 that Israel had been selected, along with Egypt, as a candidate to become such an authority - although, as today's announcement notes, it is unknown when (if ever) Egypt might actually become a PCT search authority; one suspects that this isn't the Muslim Brotherhood's highest priority.  (The announcement also took a dig at India, noting that India has had the opportunity since 2007 to become a PCT search authority but still hasn't become one.  Score one for the little guys.)  

The fees for PCT searches and examinations at the ILPTO are not mentioned in the announcement, but that doesn't stop the announcement from stating that initially the search fee for Israeli PCT applicants will be reduced.  Presumably even without the reduction for local applicants, the fees will be less than the search fees at the EPO or the USPTO, the two ISAs that PCT filers at the Israel Receiving Office must presently use.  Also, although the announcement does not explictly say so, in other contexts the powers-that-be at the ILPTO have made it clear that initially these services will be available only to filers using the Israel RO.

Comments: First, congratulations are in order.  The administration at the ILPTO is proud, and rightly so, that it has achieved PCT ISA status in just over two-and-half years from the initial announcement, which is about the time initially predicted; rarely are projects of this sort in Israel executed in a timely fashion.  Nevertheless, there are at least two mildly concerning aspects to today's announcement.  

The first is the statement of the Commissioner in the announcement that "The operation of the [search] service will obligate Patents Authority to upgrade its work practices in all fields and to adapt them to the highest standards in everything related to the search and examination of patents, both with regard to international applications and Israel applications."  One can't disagree with that sentiment, and there are certainly examiners in Israel who already work at that level, but there are many who aren't there yet, and one would have hoped that the upgrade in standards would have occurred BEFORE going online as a PCT search authority, as a predicate thereto rather than as a consequence thereof - especially since there's no guarantee that search quality and reporting will improve as a result of this change in status.  On the other hand, there are many Israeli applicants for whom the quality of the PCT search is not of great importance, and who will welcome the option for a lower-cost alternative to the search fees charged by the EPO (which are generally a worthwhile investment) or the USPTO (which often are not), an option that hitherto has not been available to them.

The second issue is that the announcement is silent as to whether or not filers using the Israel RO will now be precluded from using the EPO or USPTO as a search authority.  For applicants for whom the search is important, such as applicants who value patent protection in those jurisdictions and who are willing to pay high search fees now in exchange for reduced search fees upon national phase entry, it would be a pity to lose the opportunity to have the PCT search conducted at these patent offices.

Do As I Say, Not As I Do: More Hypocrisy From The USA Regarding Israel’s IP Regime; Death Knell for a Bad Supreme Court Decision?

To the extent I’ve had time to post over the last few months, most of the posts have been devoted to the adoption of legislation enabling 18-month publication of patent applications in Israel, and in particular to the ongoing deliberations in the Knesset’s Constitution, Statute and Law Committee in this regard.  Today’s post is no different, since today and tomorrow, the committee will meet again to consider this bill.  

Early Publication

At present it appears likely that the bill will pass in a form that requires publication of all patent applications, including those that are presently pending.  As I’ve argued before, I think this is unfair to applicants who filed their patent applications under the current, no-publication-until-acceptance-of-the-application system.  I have no doubt that the vast majority of applicants have no objection to their presently pending applications publishing, particularly since, in most cases, corresponding applications have published abroad.  Nevertheless, I am equally certain that there are a handful of applications that were filed because their owners knew that the contents of the applications would stay secret until the conclusion of substantive examination, and/or whose owners have made business plans in reliance on such secrecy.  It’s not fair to change the rules for those applicants in the middle of the game.  If one conceives of the patenting process as a contract between the state and the applicant, forcing early publication of an application after telling the applicant that his application will remain secret constitutes a breach of the contract on the part of the state.  (For that reason, one wonders if a clause forcing publication of all pending applications would hold up to so-called constitutional scrutiny before the so-called High Court of Justice.)

Rather than requiring publication of all pending applications, the statute should provide an opt-in clause: those applicants who want their pending applications to publish now should be allowed to tell the ILPTO to publish such applications.  This would largely achieve the goals of early publication, without adversely affecting those applicants who have relied on the non-publication in making their businesses decisions until this point.

There is, however, another aspect of this legislation that I haven’t previously discussed: the hypocrisy that lies behind this amendment.  It’s no secret that the USA, in particular the Department of Commerce and the U.S. Trade Representative, been pressuring Israel for some time to adopt an 18-month publication regime.  To this end, the U.S. Commerce Secretary and Israel’s Minister of Trade signed an agreement two years ago that stipulated, inter alia, that Israel would adopt such regime (in exchange for the USA calling Israel a good guy and taking off the USTR’s list of bad guys who don’t honor IP, like China; I’ve written before about the ludicrousness of that comparison).  

Now, there are good arguments in favor 18-month publication regimes, which explains why they are the standard in the developed world.  Indeed, Israel likely would eventually have adopted such a regime even without prodding from the USA, as there’s no real opposition in Israel to 18-month publication.  But in negotiating with the USA, apparently no one on either side checked to the situation regarding 18-month publication in the USA itself before proposing what Israel should do.  That, or the Americans feel free to be hypocrites.  I say that because, as anyone familiar with US patent law knows, when the USA adopted early publication in 1999, it didn’t make publication compulsory for all applications.  Publication only applied for applications filed after a certain date, and even then, applicants could opt out of publication, by signing a statement that no corresponding application had been filed in an early-publication country.  The penalties for falsely making such a statement are draconian – you lose your patent – but in principle your application need not be published before it is granted.  

That being the case, why on earth has Israel agreed not only to publish all applications in the future, but even to publish currently pending applications?  The USA did neither of these things.  In this case, what’s good for Uncle Sam should be good enough for Uncle Moshe.  I doubt that today and tomorrow, the Knesset committee is going to tell the Americans where can they put their “early publication for all” demands, but it would sure be sweet if it did.  

Rescinding A Wrongly-Decided Supreme Court Decision

Israel’s Supreme Court has a reputation as the world’s most activist court.  This reputation has been earned primarily in its role as the so-called High Court of Justice, which hears claims against state activity, but the Court’s activism extends to the civil sphere too, including the IP arena.  To illustrate:

Imagine you’re a manufacturer of air conditioning vents.  You see that a competitor has a very successful model of vent.  After doing some research you discover that his vent is a copy of a vent that was invented abroad by someone else many years ago.   Or you find that although your competitor developed the vent himself, he never sought to protect it via a patent or registered design, even though such protections are available by statute in Israel.  Or that in fact, he patented it, but the patent expired last year.  Being a logical person, you would conclude that under the circumstances, not only are you free to manufacture and sell your own version of the vent, but that you can market for a lower price, thus benefitting consumer. 

Unfortunately, you’ve overlooked the fact that you’re in Israel, where marriages between logic and public policy are infrequent and purely coincidental.  In the present case, we have a flawed 1998 Supreme Court decision, popularly known as the AShI”R decision, that gums up the works.   In AShI”R, various parties who produced articles which were not protected by patent or other intellectual property laws – either because the parties hadn’t sought IP protection, or because IP protection wasn’t available (e.g. because the article was already known and therefore not patentable), or because the parties had availed themselves of statutory IP protection but it had expired – sought relief against competitors who copied their products.  The Supreme Court ruled that they were entitled to protection.  In so doing, the Court turned logic, and the rationale behind the country’s patent and design legislation, on its head.  How so? (If you’re an IP practitioner, the next paragraph will be clear to you, so skip ahead.)

Modern patent regimes are based on a quid quo pro: in exchange for disclosing a new and non-obvious invention, in a manner that enables competitors to copy the invention, the state grants the inventor a limited period of exclusivity – currently 20 years from the date of filing the patent application – during which the inventor can prevent others from making, using, selling, or offering to sell the invention.  The expected receipt of such a period of exclusivity encourages investment in R&D, particularly in areas where high outlays of capital are necessary to bring a product to market.  The grant of the exclusivity, which is a matter of public record, encourages others to develop new, non-infringing ways to compete, which usually leads to more efficient technologies and lower prices.  The temporal limitation of the exclusivity ensures that even if no non-infringing alternatives are developed, competition will eventually be possible, along with concomitantly lower prices; it also allows competitors to make business decisions on the basis of predictable dates, viz. the expiration date of the patent.  The logic behind design protection is similar, although the investment involved is usually smaller, and the scope and duration of protection more limited.

In AShI”R, the Supreme Court ignored the patent and design statutes and the public policy considerations underlying them, and in effect said that copying per se is bad, even though the Knesset, in accordance with sound economic policy, had already determined that copying per se isn’t bad.  As the Aramaic expression goes, kulei alma lo pligei (everyone agrees – except, apparently, Israel’s Supreme Court) that a party that chooses not avail itself of the protection afforded by IP statutes should not be entitled to such protection through the backdoor of the courts; among other things, to provide protection in such cases undermines the predictability that the patent statute seeks to provide, and discourages the public disclosure that the patent statute seeks to obtain. 

The egregiousness of the Court’s decision is all the more true in cases in which patent protection isn’t available, either because the article in question isn’t substantively patentable (it was known or is obvious over what was known) – society has no interest in granting exclusivity on something that’s already known – or because patent protection for the article being copied has already been exhausted, in which case the Court’s decision effectively amounts to an extension of the patent term for an indeterminate length of time, and an abrogation of the contract between the state and inventor when the state agreed to give the inventor a 20-year term of protection.  (Indeed, the patent statute includes provisions for the extension of patent term, but they apply to a narrow set of circumstances that do not include any of the situations under consideration in AShI”R.)

More than 13 years after the AShI”R decision was handed down, the Knesset may finally be poised to lay this bit of judicial folly to rest.  The 18-month publication to be discussed in committee today and tomorrow also contains language that would effectively rescind AShI”R with respect to patents, in so doing reinforcing the patent regime in Israel.  According to the bill, a court would be precluded from hearing a claim based on the manufacture, use, sale or offer for sale of an invention that is unpatented, irrespective of the reason why that invention is unpatented. 

Of course, it ain’t over till it’s over, so it’s possible that despite unusual consensus in the legal, business and academic communities about the need to rescind AShI”R, political machinations may do their worst, and this provision of the bill may be buried in committee in order to placate the whims of certain individuals with their own agendas.   Here’s cautious optimism that the MKs on this committee will do the right thing and restore the patent statute’s primacy in governing the protection of new and non-obvious inventions.

 

Refunding Publication Fees for Published Applications - Only at the Chelm, er, Israel PTO

As has been discussed here before, under the leadership of the previous Israel Patents Commissioner, Meir Noam, in 2008 the ILPTO announced that – contrary to what was required at the time by statute – it would no longer publish its notices in paper format, and instead would publish only via its website.  Among other things, this resulted in the validity of thousands of patents being left in limbo, since by statute paper publication of certain notices was a prerequisite for patent grant.

Although the problem was solved early last year by a statutory amendment that retroactively approved the online-only publication, the shenanigans of Dr. Noam and the senior PTO staff who supported his moves aroused the ire of Knesset Member David Rotem, the chairman of the committee through which patent-related legislation must past.  As a quid quo pro for fixing the mistake of Meir Noam et al., Mr. Rotem required the Justice Ministry to agree to refund the publication fees of patentees and applicants whose applications published during the period in question.  The substantive need for such refunds is dubious – the amount of work involved in publishing online was nearly the same as publishing paper copies, and the retroactive legislative amendment dispensed with any uncertainty about the status of any patents otherwise affected by the online publication – but demanding refunds of this nature makes for good political posturing.

After much wrangling and untold wasted man-hours figuring out how the ILPTO would refund the fees, the ILPTO has now announced (in Hebrew only) that refunds of fees for publications and other announcements in the Patents Journal that were published exclusively online between March 20, 2008 and June 30, 2010 will be made available.  Affected parties must fill out a form (also only available in Hebrew, and only useful if you have an Israeli bank account), which must be returned to the ILPTO by September 5, 2012. 

It’s unclear just how many refunds will be requested.  The attorney time involved in notifying clients, requesting refunds and disbursing the money (or even just crediting clients’ account) will likely surpass the amounts in issue, which are only several hundred shekels per instance.  Moreover, in what appears to be an obvious effort to reduce the number of refund requests to be filed, the ILPTO has indicated that separate forms must be submitted for each refund requested; each form also requires three different signatures from the requesting party.  Given the superfluousness of the refund program, this may be one instance where bureaucratic red tape is welcome – there are better things the clerical staff at the ILPTO could be doing with its time than processing unwarranted refund requests.

Hey Yankees, We Sabras Want to Play Too! – Proposed New Israel PTO Rules (Or, Will A Measure of Sanity be Injected Into Israel Pre-Grant Patent Oppositions by Rule Changes?)

As a result of last fall’s amendment of U.S. patent law, during January the USPTO began publishing proposed rules at a torrid pace.  (Since there are other blogs, like Patentdocs, that are providing good coverage of those proposed rules, we won’t go into them here.)  Not to be outdone, though, Israel has also been active in the IP law amendment area over the past year, and as a result must now implement various corresponding rule changes.

One of the recent statutory amendments moves official publication of ILPTO notices from paper publication by the Government Press Office to the ILPTO web site.  Part of the political trade-off (between the Justice Ministry and the chairman of the Knesset’s Constitution, Statute and Law (CSL) committee) for that amendment was the elimination of the expression “publication fee” from most places in the statute.  The relevant rules must now be amended correspondingly (and other fees, which are set by rule rather than by statute, must be raised to compensate for the loss of fees termed “publication fees”; if the chairman’s thinking reminds you of Nigel Tufnel saying, “These go to eleven”, you’re not alone.)  A draft version of those revised rules, which in order to come into force must receive the approval of the CSL committee and will be considered by the committee at a still undetermined date, was recently circulated.

Interestingly, tucked away in the draft revised rules is a change not necessitated by recent statutory amendment, but which would be a game-changer for Israel’s pre-grant oppositions. 

Specifically, the proposed rule change would require parties filing pre-grant oppositions to submit both their statements of arguments and written evidence within 4 months of filing their notice of opposition.  For those unfamiliar with Israel’s pre-grant opposition regime, it won’t be readily apparent that this is a big deal, but it is.  In order to understand why, we need to look at the current procedural rules governing those pre-grant oppositions, which are as follows:

1.         Within 3 months of publication of the fact that the application has been allowed, third parties may file a notice of opposition.  The current fee for doing so is 719 shekels – under $200.

2.         Within 4 months of the filing of the notice of opposition, the opponent must file its statement of arguments, “in which it shall specify its grounds of opposition, the facts upon which it bases its arguments and the requested remedy”.  The opponent may also file its written evidence at that time, or it may do so later, see below.

3.         The applicant then has four months to file its own statement of case; if the opponent filed evidence, the applicant must file its evidence at that time.

4.         If the opponent didn’t file evidence at step 2, it has three months from the filing of the applicant’s statement of arguments to file its written evidence.

5.         The applicant then has three months to file its own written evidence. 

6.         The opponent then has three months from the filing of the applicant’s written evidence to file limited, written evidence-in-reply.

Only after those steps have taken place does the ILPTO set a hearing date for live cross-examination of the parties’ expert and fact witnesses before one of the three persons authorized to adjudicate the opposition (the Commissioner, the Deputy Commissioner and the Hearing Officer).  Even then, the matter isn’t closed: under current rules, either party can introduce new evidence up to ten days before the hearing. 

One difficulty with this arrangement is that typically, the process of submitting the written documents takes longer than the minimum time period set forth in the rules, as sides often ask for and are granted extensions; and oppositions that are carried to conclusion can last five years or more.  There have even been cases in which opposition proceedings extended beyond 20 years from the filing date.

In addition, under the current rules, the cost of entry into an opposition is low.  Although the current rules say that the statement of arguments must “specify [the] grounds of opposition, the facts upon which [the opponent] bases its arguments and the requested remedy” – wording which suggests that an opponent must map out its case in its statement of arguments – it’s common for statements of arguments to run only one or two pages, perfunctorily stating that “The invention lacks novelty and/or is obvious in view of one or more of the following publications”, and to then provide a list of publications, without providing any detailed analysis of how each publication, or combination of publications, applies to each claim.  In addition, most statements of arguments laconically state that the specification isn’t enabling and that the claims aren’t supported by the specification, again without providing any detailed explanation; they often state the applicant failed to disclose some piece of prior art that was cited in a corresponding case elsewhere, again without explaining why that matters. 

Even if preparing such a document entails a few thousand dollars for prior art searching and analysis, that’s a pittance for the most active infringers.  Despite occasional protestations from applicants, the ILPTO has until now been willing to accept such statements of arguments as meeting the requirements of the rules, generally analogizing to civil actions before the courts, in which the courts are extremely reluctant to dismiss any suit at its earliest stages.

Thus, under the current procedure, it’s generally not until some time after an opposition is filed that an opponent needs to spend a significant amount of money preparing affidavits and expert reports.  Moreover, the rule allowing late filing of evidence effectively enables opponents to delay even further the expenditure associated with the preparation of evidence.

The result of this is that merely by filing an opposition, a third party can delay the grant of a patent by several years.  As (i) the applicant has no enforceable rights until the patent is granted, (ii) no extension of the patent term is given to compensate for the delay in the grant, (iii) the cost for filing the opposition is low and (iv) the assessment of costs against losing opponents is traditionally small (especially when compared to the potential economic benefit the opponent can gain during the opposition period, for example by producing a product and then exporting or otherwise disposing of that product before the opposition concludes, thus escaping liability for infringement), pre-grant oppositions feature prominently in the business models of some local companies. 

The proposed rules would combine steps 2 and 4, and steps 3 and 5, respectively, so that opponents would effectively have seven months from publication of the allowance of the application to put their cases together, including written evidence.  (As will be discussed below, once Israel moves to 18-month publication, the effective time for opponents to prepare will be longer.)  The proposed rules would also do away with the potential for the late filing of evidence. 

One need not be a genius to appreciate that these changes would significantly alter the calculus of opposition filing.  Instead of shooting first and asking questions later, under the proposed rules potential opponents would have to make an early assessment of whether or not an opposition is necessary in order to meet their business objectives, since a more significant expenditure of resources than is presently required will have to be made soon after the opposition is filed: potential arguments, including documentation and testimony supporting those arguments, would have to be identified much earlier on in the process.  The draft rules would cause potential opponents to weigh the merits of their cases very carefully, and to do a cost-benefit analysis prior to filing their oppositions, thereby increasing the likelihood that only parties with skin in the game oppose patent applications or proceed beyond the filing of a notice of opposition.

Presumably, the overall result would be a reduction in the number of oppositions filed, as well as the streamlining of those oppositions that are filed, leading to faster dispositions of those oppositions.  Aside from forcing earlier filing of complete arguments and supporting evidence, the proposed procedure would reduce the number of opportunities for parties to request extensions, requests to which the other side usually accedes in the expectation of reciprocity when the tables are turned.

I have no doubt that the companies that have traditionally filed many oppositions (or at least the lawyers who represent those companies and the lawyers who defend the oppositions) will scream, howl, whine, moan, gripe and b--ch about the proposed changes, bandying about phrases like “the purity of the patents register” and telling all who are in earshot that oppositions are a necessary tool because the ILPTO examiners allow far too many invalid patents, and that foreshortening the time they have to put their cases together will hinder their ability to keep the patents register pure.  They will no doubt point to their successes in having the claims of allowed patent applications amended during the opposition proceedings, or in having oppositions sustained in toto, as evidence of the success of the present opposition procedure.  But that’s specious.  The fact is the proposed changes will present a system that’s more efficient than the present system, because unlike the present system it won’t encourage frivolous oppositions.  And it seems that until now, while the frequent users of the opposition system have touted the cost to society of bad patents, no one has taken into account the cost to society of failing to timely grant worthy patents, a problem that occurs too often even without oppositions, and which the present opposition system exacerbates.  Adverse parties that feel they need more time to prepare will still be able to avail themselves of revocation proceedings before the ILPTO and proceedings before the courts in order to invalidate bad patents.  There’s no reason to continue to give those parties a free ride that encourages frivolous oppositions. 

Moreover, the new rules, if adopted, will come into force after Israel has already moved to an 18-months-from-priority-date publication regime.  This will give potential opponents years to prepare for pre-grant oppositions.  (Also, as reported in an earlier post, it appears that Israel is headed toward a situation in which potential opponents will be to file comments with examiners prior to allowance of patent applications, further strengthening their hand.)  Under such circumstances, raising the cost of entry into the opposition game, so that only those parties with a real financial interest in doing so will file oppositions, can hardly be seen as being prejudicial to anyone.

Because the proposed rules are sure to be lobbied against heavily, there’s no assurance they’ll be adopted.  If they are not adopted, and the ILPTO is concerned about the length of oppositions – and the rumor is that these particular changes were added to the draft rules at the behest of the ILPTO – perhaps the Commissioner will stop granting extensions for opponents to file their statements of case, and will begin to require opponents to adhere to the rules in their present wording, demanding that they provide detailed statements of arguments setting forth exactly which prior art or combinations of prior art apply to which claims and how.  While not as effective as the proposed change, such an approach would at least partly raise the cost of filing an opposition to the point where some baseless oppositions will no longer be filed.

That’s Not Kosher: A Tale of a Treif Trademark Renewal Request

I wrote some time ago about an offer I received to pay a fly-by-night outfit $1700 so that a client’s published PCT application could be included in a private database that contained information already freely available from WIPO.   While IP professionals can readily recognize such ruses, it seems that enough non-professionals fail to ferret out such fakery that it continues to be worthwhile for fraudsters to foment their forgeries: WIPO has a page on its website listing about two dozen names under which such scam artists have been seen to operate in the PCT sphere.

It should perhaps come as no surprise that such trickery is tried in trademark territory too, although WIPO’s warning regarding analogous activities with respect to the Madrid System is considerably shorter than the warning regarding PCT applications.  An example: the “Triangle-K” appears on many food items in the United States, and is the subject of European Community Mark No. 02899144.  The mark is due to be renewed by the end of October this year; the mark holder was recently sent the letter below (click on the pictures for larger images).  Unlike the faux PCT database letter, this letter offers an actual service, namely renewal of the subject mark.  Not that that mitigates the sliminess of the organization, which calls itself "Intellectual Property Agency Ltd.": the price quoted for the renewal, 2900 Euros, is nearly double the actual renewal fee (and more than double if the fee is paid electronically); the mark holder is already represented by counsel before the OHIM; and the best reason I can surmise for listing the company’s address on the front page of the letter as a Brussels address but listing the address in the fine print on the back as being in Seychelles is to lure the unsuspecting into thinking that this is a legitimate organization associated with the EU.  The terms of the agreement are also fairly draconian.  What saved the mark holder from agreeing to pay was the fact that the person who received the correspondence was a lawyer who had enough sense to ask an IP attorney if the letter meant anything, but presumably there are enough unwary mark holders out there to make this venture a profitable one for its proponents.

 

Update: I just saw a post on the IPWatchdog site about a similar notice sent to Gene Quinn, the proprietor of that site and the owner of the IPWatchdog mark.

 

Snatching Defeat From the Jaws of Victory

As reported in the previous post, the Knesset’s Constitution, Statute and Law Committee met on January 22 to discuss the bill to enable 18-month publication of Israel patent applications.  Reports from someone in attendance (sadly, yours truly couldn’t be there, although that didn’t stop the official minutes from stating that I was in attendance) were that progress continued to be slow, with discussion focusing on what information and documents would become publicly available at 18 months and how that information would be accessible – would the entire file history become available online, as in the USA and Europe, or would only certain pieces of information be available online, with persons interested in the contents of the files needing to either come to the ILPTO to inspect the files or ordering copies of their contents? 

However, the most entertaining (or, depending on your point of view, sad) part was apparently one trade group’s approach backfiring with respect to the question of third party submissions.  In particular, while the wording of the draft legislation isn’t absolutely clear about what kinds of communications third parties would be allowed to have with examiners concerning pending applications, the Justice Ministry’s view is that the amendment would permit third parties to bring to the attention of examiners information that the applicant already had an obligation to disclose, without additional comments from the third party itself.  

According to both the minutes and eyewitness account, the issue was brought up by one of the trade groups opposed to broad third-party involvement, despite the fact that the proceedings had not yet reached the point of discussing this issue.  Not only did this this approach fail to convince the committee chairman of the correctness of the narrow-involvement position, but it actually piqued the chairman’s interest in allowing broader third-party submissions, while effectively precluding the Justice Ministry from arguing the case for narrow involvement.  The issue has not yet been settled, but it seems that in this case, the group’s hired guns scored what the British would call an own goal (or, in Yankee-speak, shot themselves in the foot).

According to the committee’s web page, the committee is scheduled to resume its deliberations on this bill on February 13 and 26.

Salvador Dali Visits the Knesset

A few minutes from now, the Knesset’s Constitution, Statute and Law Committee will continue its consideration of the bill to enable 18-month publication of patent applications. The Committee’s first hearing on this bill took place on December 7, and consisted primarily of grandiose, grandstanding statements by socialist-leaning members of Knesset (who generally made statements about “social justice” which weren’t germane to the issue of 18-month publication) and lawyers for innovator and generic pharmaceutical companies (who also included irrelevant statements), although there were also a few statements from ostensibly neutral people, viz. representatives of the Israel Bar Association (an organization to which all lawyers in Israel must belong) and a volunteer group called the Association of Patent Attorneys in Israel. A colleague who works in-house for the local branch of a global innovator drug company characterized the proceedings as “surreal”.

Very little headway on the substantive provisions was made at the first meeting; presumably such headway will be made today, accompanied by fireworks as the local generic drug industry (which has been lobbying heavily to amend this bill so as to strip the statute of teeth) attempts to impose its will. If the past is any indication, no other industries or even individuals are interested in the goings-on regarding this bill, which is a shame, since, as a law school professor of mine put it, politics is played by those who show up.

A fuller accounting of the bill and the proceedings will follow in future post. However, there is one subtle aspect in which the December 7 proceedings were more surreal than my colleague may have appreciated. That has to with the way in which Supreme Court decisions are used in political discourse in Israel. Specifically, it’s not unusual for politicians to point to statements by the Israel Supreme Court as providing moral grounding for their proposals. (Perhaps in a future post I’ll go into what I see as the sociology of this phenomenon, but in a nutshell it related in part to the fact that the same court sits as the land’s highest appellate court as well as a court of first instance in certain administrative or constitutional law proceedings.) This was certainly the case at the December 7 hearings, in which several of the speakers pointed to statements by the ILSC regarding the need to balance incentives to innovate with the public’s need for cheap drugs.

What I found ironic was that one of the recent Supreme Court cases that contains language to similar effect (Unipharm v Smithkline Beecham, Civil Appeal No. 8802/06) itself support its position by quoting an earlier Supreme Court decision (Civil Appeal By Leave 5768/94, the so-called “AShIR decision”) that the present bill seeks to overturn. AShIR is a 1998 decision in which, under a theory of unjust enrichment based in Israel’s Unjust Enrichment statute, the Court recognized intellectual property rights in certain manufactured goods for which statutory IP rights (patent or design) were not available, either because the manufacturers did not seek such rights, such rights had been obtained but expired, or the items were already known and therefore not susceptible of patent or design protection. The bill currently under consideration would preclude suits such as AShIR from being brought again in the future.

If you’re going to quote someone in support of your position, you probably shouldn’t simultaneously be trying to undermine that person with the very legislation for which you seek support. But memories in the Knesset don’t seem to be very persistent.

Update: Israel as PCT Search Authority, Filing of PCT Applications At Israel Receiving Office

As discussed previously here and here, in November the relevant Knesset Committee considered and approved amendments to the Israel patent statute that would enable Israel to become a PCT search authority.  As expected, those amendments were approved by the Knesset in second and third readings and published in Reshumot (the Israeli version of the Federal Register) on December 8, 2011.  Tellingly, the transitional provision of the amendments provides for their coming into force 30 days after publication, unless the Justice Minister issues an order delaying their coming into force.  On December 26, 2011, Justice Minister Yaakov Neeman issued such an order, pushing the relevant date back to April 1, 2012.  It’s a fair bet that if the ILPTO isn’t ready to act as a PCT search authority by then, a similar order will be issued sometime in March. 

Also on December 26, regulations were published regarding the filing of PCT applications at the Israel Receiving Office.  Applicants wishing to file in Hebrew will still need to file at the IB, as applications filed at the ILRO will still need to be filed in English.  However, applicants at the ILRO will now be able to file on electronic media, e.g. CD-ROM, which is good news for everyone.  The new Regulations will also facilitate the filing of applications over the internet…once the ILPTO has a mechanism in place for doing so (may it be His will, speedily in our day, etc.).  On December 29, the ILPTO published an update regarding the implementation of the new regulations.

A welcome piece of news for applicants filing national phase applications in Israel is that the December 26 regulations did away with initial publication fees for national phase applications – a savings of 170 shekels.  Curiously, although the cancellation of this fee came into force on December 26, as of this writing the ILPTO’s online fee payment system still includes this fee for national phase applications.  Even more curiously, on December 29 the ILPTO published a notice of new fees that will take effect from January 1, 2012, as well as a letter announcing the change; that notice also shows a publication fee for national phase applications.  Presumably this is an oversight that will be remedied soon.  [UPDATE - January 4: the online payment system now allows national phase applicants to pay the filing fee only, without paying a publication fee.]

Download (in Hebrew): the statutory amendments, and the order and regulations of December 26 (along with the ILPTO’s update regarding PCT filings).

If Pigs Had Wings or, Is The Israeli Generic Drug Industry About to Ambush the Patent Statute? Proposals Waiting in the Wings of the 18-Month Publication Bill

The previous post analyzed the bill for 18-month publication that will be discussed in committee at the Knesset on December 7, and explained how one of the provisions in the bill, which would enable third-party comments on pending application, is problematic. One point I didn’t mention is that in the USA, third parties are statutorily barred from communicating with the USPTO about pending applications. See MPEP 1134 and 1134.01.

The inclusion in the bill of a provision explicitly allowing third party comments on pending applications, while maintaining pre-grant oppositions, is consistent with behind-the-scenes lobbying by the local generic drug industry. But it may just be the tip of iceberg: rumor has it that that industry wants to use the 18-month publication bill to make a host of other changes in local practice, all of which would work to the detriment of patent applicants – i.e., those parties that actually invent things, instead of free-riding on others’ investments, which is the generics’ modus operandi. The changes would adversely affect not only the innovator pharma companies that develop new life-saving medicines, but patent applicants in all fields of endeavor. [Update: the relevant Knesset Committee's web site now contains a marked-up version of the bill, including comments from the committee's legal advisor regarding the generics' wish list.]

Specifically, the generics want to (a) preclude applicants from amending their applications once those applications have published; (b) be granted rights to practice inventions that are disclosed but not claimed in the published application, and only claimed after publication (and eventually granted in the patent); and (c) be able to force early examination of others’ patent applications. I will discuss each of these in turn.

No Amendment After Publication: as discussed in an earlier post, the draft version of the bill included such an amendment, but it was removed in the bill that passed a first reading in the Knesset. To anyone who has ever engaged in patent drafting and/or prosecution, the idea that one should be precluded from amending one’s claims during prosecution is ludicrous. If you’re a reader who doesn’t fall into that category – and unfortunately, no members of Knesset, to the best of my knowledge, have ever applied for a patent, which is why the generics can try to get away with something like this – I’ll try to explain.

The patent system is meant to encourage innovation, but even when an inventor has perfect knowledge and is a soothsayer, a patent is one of the most difficult legal documents to draft properly. Not only does the invention itself have to meet the substantive requirements that it be useful, novel and non-obvious, but the patent application must meet the procedural requirement of enabling others in the field of endeavor to practice the invention. The application has to provide support for whatever is eventually claimed. And the application is frozen in time, as the addition of new matter is after filing is prohibited. In short, the deck is stacked against the applicant from the outset – here in Israel even more so than elsewhere, due to the existence of pre-grant oppositions.

And because inventors do not have perfect knowledge and are not oracles, drafting a patent application is a lot like driving down the highway with a blindfold on: you may have some idea where you want to go but you don’t what curves lie ahead. Usually, at the time a company has to file a patent application, it has incomplete information regarding what the marketplace will look or what embodiments of the invention it plans to commercialize. Often, the applicant does not have in hand all the data it needs to establish why its invention is non-obvious in view of the prior art. Or it may have tried its best to find relevant prior art but still missed something. And budgetary limitations may cause an applicant to restrict the number of claims it initially includes in its patent application, either because of constraints on attorney time or because of fees for excess claims (such as Israel’s imposition two years ago of a 500 shekel fee for each claim over 50).

So the applicant does its best to prepare and file a patent application that describes as many aspects and variations of its invention that it can, while excluding from the scope of the invention the prior art of which the applicant is aware. But the applicant may (and usually does) nevertheless find it necessary to amend its claims after filing, for example in order to overcome previously unknown prior art found by the examiner, or to better claim an embodiment that in view of clinical test results or market research obtained after filing appears more likely to be the commercial embodiment than the one that was considered the most likely commercial embodiment when the application was filed.

To prevent an applicant from amending claims once the application has been published is the epitome of putting form over substance. In most cases, such a stricture would deprive patent applicants of the ability to obtain meaningful protection for their inventions. In some cases, it would result in inventions being maintained as trade secrets, rather than risk disclosing the invention only to be denied commercially meaningful patent claims due to formal strictures on claim amendments. And in the case of medicines, the inability to amend claims would undoubtedly lead to potentially useful medicines never being developed, because without adequate patent protection, no one will invest the hundreds of millions of dollars necessary to obtain FDA or EMA approval.

Intervening Rights: if they don’t succeed in preventing claim amendments, the generic manufacturers want the right to practice any invention that is disclosed but unclaimed in the published patent application, should the unclaimed material eventually be claimed in the patent. That would apparently work in two ways:

(a) Suppose that I file a patent application disclosing an invention that contains elements A, B and C, and optionally D and E. My published claims recite ABCD. If the generic drug companies have their way, a competitor will be able to begin work on ABC, since I haven’t claimed it. When I then broaden my claims during prosecution, so that my issued patent includes a claim on ABC, my competitor will still be free to practice ABC, even if my claim on ABC is valid.

(b) Conversely, the competitor starts to work on ABCDE. During prosecution I amend the claims so that the patent issues with claims on ABCD and ABCDE. I sue for infringement. It’s found that ABCD is invalid over the prior art, but ABCDE is valid. I still lose: since ABCDE wasn’t among my originally published claims, my competitor now has an intervening right to practice ABCD.

Like the proposal to limit claim amendments, this proposal would put form over substance, punishing an inventor for a set of claims that he didn’t realize at the time claimed more or less than he was entitled to claim. Creating intervening rights based on published patent applications would undermine the public policy behind the patent system, which says that an inventor is entitled to a patent on anything useful, new and non-obvious that he’s invented and adequately described in his patent application.

The generic companies apparently assert that they need these intervening rights because otherwise they’ll be stuck on the sidelines, waiting to see what claims the application eventually gets. But that’s specious. Aside from the stupidity inherent in making patent policy for everyone based on the interests of one narrowly-focused industry – and in Israel’s case, an industry that is based entirely on the idea of reaping the rewards of others’ efforts – the fact (to which any veteran patent attorney can attest) is that third parties, including generic drug companies, can make reasonable determinations as to what valid claims can and can’t arise from a particular patent application. But don’t take my word for it. As Unipharm, one of the local generic companies, proudly says on its web site:

“In the current pharmaceutical-IP environment where major pharmaceutical companies are protecting their product with multiple patents, Unipharm has the capabilities of accurately evaluating a product's patent protection suit [sic] and to act accordingly: either to stay off the market until the patents expire, to try to go around the still valid patents or to try to invalidate the patent and launch a generic version as soon as legally possible.”

The world’s leading patent systems allow an applicant to amend his claims during prosecution to include anything supported by the specification, whether or not that claim was present in the application as originally filed or published. They recognize that allowing such amendment is imperative if the patent system is to serve the ends to which it was created, and that there’s no good public policy reason to restrict an inventor’s protection to that which he claimed in a published application. There’s no reason for Israel to deviate from this. Unless it wants to be in the same category as such invention powerhouses as Venezuela.

Third Party Requesting of Examination: The generics also want to amend the law to allow third party requests for expedited examination of others’ patent applications. In U.S. terms, they want to be able to file requests to make special in others’ patent applications. Their argument is that the indeterminacy inherent in the delay between publication and patent grant leaves them in an untenable legal limbo, and that the big, bad innovative drug companies game the system, using multiple patent filings and prolongation of ex parte patent prosecution to keep a sword hanging over the generics’ heads.

Now, I’m the first to agree that in an ideal world, inventors would at the outset be able to conceive of the exact commercial embodiments of their inventions. They’d be able to write perfect patent applications that describe and claim exactly the inventions to which they’re entitled over the prior art – not an inch more and not an inch less. The day that patent applications were filed, they would immediately be allowed, because there would be no backlogs at any of the world’s patent offices. Competitors would know exactly what they can and can’t do in view of the immediately-granted patent, because there would be no ambiguity in any claim language.

And if pigs had wings they could fly.

In other words, the generics’ tale is a good yarn, but it doesn’t stand up to scrutiny. Ours is not an ideal world. Patent applications are rarely perfectly written, and they’re never examined on the day they’re filed. Inventors and their associated small businesses usually need time and money to develop and commercialize their inventions, but they have to file patent applications before they can seek funds. In the pharmaceutical industry, patent applications have to be filed years before clinical testing begins, let alone a new drug is approved for use, and this is true regardless of whether the company is one of the industry giants or a start-up.

In short, both patent applicants and their competitors are inconvenienced by the fact that the patent system is designed and operated by people, not omniscient beings. But that’s life. What entitles generic drug companies to now receive special treatment so that they won’t be inconvenienced? Indeed, as shown by the quote from Unipharm’s web site, they’re not really inconvenienced, since they can assess what claims their competitors can validly obtain and what claims they can’t.

Moreover, Israel is a country in which private property is respected. We don’t allow one individual to tell another how and when to spend his money. But that’s just what the generic companies’ proposal would do: since patent prosecution involves an expenditure of an applicant’s resources, the proposal would allow party A to force B into spending his resources, at A’s convenience.

In fact, inventors often rely on the fact that there will be a delay between filing and examination of patent applications: as mentioned above, the post-filing, pre-examination period provides additional time to develop results demonstrating non-obviousness or to hone in on a commercially significant embodiment of the invention.

To illustrate how ridiculous, and how self-serving, the third party request proposal is, let’s look at some numbers. According to ILPTO database, in 2007 and 2008 respectively, Pfizer filed 104 and 62 patent applications in Israel; Eli Lilly’s figures for the same years were 49 and 37, respectively. (The numbers are significantly lower, and likely incomplete, for 2009 and 2010.) Now suppose that the fee for filing a third-party request is set at 1500 shekels (presently about $400), which is a relatively high fee by ILPTO standards – it’s higher than the patent filing fee as well as the fees for opposing or seeking to revoke a patent. What’s to stop one of the local generic drug companies from filing such a request against every application filed by a particular innovator drug company? According to these numbers, even in a year with lots of patent filings, it would only take about $60,000 to force early examination of every Pfizer and every Lilly application. Moreover, were all the generics band together, they would easily have the resources to force early examination of every patent application filed by an innovator company. But those companies will certainly have prioritized their research efforts differently, and no doubt are relying in part on the natural delay in the examination queue to develop results necessary to either support some of those applications or to allow them to decide to discontinue prosecution.

There’s also the problem that by forcing the unnatural allocation of examination resources on a large scale toward the applications of certain large companies, the examination corps will spend most of its time examining those companies’ applications, at the expense of examination of the applications of smaller companies (who are not yet known and won’t necessarily attract others’ attention) for whom patent grants are critical in securing funding.

Bad Ideas From Self-Serving Players: As I’ve said previously in this blog, I’m a fan of generic drugs. But I’m also a fan of new drug development. And I’m a fan of the development of new technology generally. Those new developments rely on patents. The proposals put forward by the generic drug industry and discussed in this and the previous post are the sorts of things that could only be raised by parties that don’t rely on patents for their livelihoods. Which should come as no surprise, since according to the ILPTO database, those generic drug companies whose primary or exclusive business base is Israel have negligible patent portfolios. For instance, according to the database, in its 36 years of existence Unipharm has filed four patent applications. Two of those were abandoned during prosecution and one of the granted ones was abandoned before its 20-year term. Another company, Trima, has in its nearly 50-year history filed one application.

The generics’ proposals are hyprocritical and self-serving. For years these companies have been whining because Israel doesn’t have early publication of patent applications. Now that the state seems poised to adopt early publication, the generics say they’ll somehow prejudiced because they don’t know what claims will issue, and therefore applicants should be limited in their ability to amend, and the generics should get intervening rights based on the published application, and they should be able to request that someone else’s application be examined out of turn.

The EPO has been doing early publication since its inception, yet the EPO neither precludes applicants from broadening their claims, nor grants intervening rights to third parties on the basis of the published application (although some EPO countries do grant provisional rights to the applicant based on the published application), nor allows third parties to request examination of a competitor’s patent application. The USA has been publishing applications for over 10 years now, it lets applicant broaden claims during prosecution, it doesn't grant intervening rights on the basis of the non-claimed material in published applications, and it doesn’t let third parties even communicate about pending applications, let alone request examination of another’s application.

The Israeli generic drug companies have thrived under the present patent regime. They have nothing to complain about. They don’t need 18-month publication, nor do they need any of the additional changes they would now to like to see wrought in the system. If the generics don’t like the idea of early publication, they should lobby against it. But it’s disingenuous for them to lobby for early publication, then argue that they will somehow be prejudiced by the very thing they asked for, and to demand additional entitlements. What did they do to deserve such a windfall? These proposals are greed, pure and simple, that will serve no one but the generic companies themselves, at the expense of all the others (including players far afield from the pharmaceutical industry) who do the hard work of inventing and developing new technologies.