America-Israel Patent Law

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.

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.

Bad Moon Rising: Poor Policy Emplaced in Israel 18-Month Patent Publication Bill

In January 2010 I reported about the circulation of a draft bill to enable 18-month publication of Israel patent applications.  As straightforward as such legislation might have seemed, apparently no piece of legislation is straightforward (witness the recent patent “reform” debacle in the USA), and several sets of written comments on that draft bill were submitted.  Those written comments can be viewed somewhere (I don’t have the link at hand at present), although only yours truly’s were submitted in English.  It’s also safe to assume that other comments were conveyed orally to the legislation section of the Justice Ministry, which is responsible for drafting legislation that the Government plans to submit to the Knesset.  (Note to Americans unfamiliar with parliamentary systems of governance such as Israel’s: “government” is a term of art that refers not to the state apparatus in general, as it does in American parlance, but specifically to the cabinet made up of members of the ruling coalition.) 

After being revised by the Justice Ministry and approved by the relevant ministers, this summer the bill was formally published and approved in a first reading by the Knesset.  It now goes back to the relevant committee, the Constitution, Statute and Law Committee, which is due to discuss this bill on December 7.

One of my principal criticisms of the 2010 draft bill was that it would have precluded applicants for patents from amending their applications in any way after the 18-month publication of the application, by re-wording sections 22 and 23 of the patent statute.  Fortunately, the published bill leaves these sections untouched, and thus, if adopted in its present form, will enable applicants to amend their applications (and most importantly, their claims) during prosecution – although, as will be discussed in a follow-on post, the local generic drug industry hasn’t given up and is apparently lobbying to have the bill changed so as to restrict applicants’ ability to amend their application, as well as to include several other undesirable changes to the statute.

In terms of substantive amendments that appear in the published bill, beyond 18-month publication itself, the amendments with the most dramatic effect, should they be enacted, are the following:

Submission of Prior Art by Third Parties, But Maintaining Pre-Grant Oppositions: At present, section 18 of the statute says that in examining patent applications, examiners must rely on at least one of (a) publications cited against corresponding applications in other jurisdictions; (b) prior art publications that are known to the applicant and are relevant to the invention; and (c) publications mentioned in the first two types of publications.  Furthermore, section 18 empowers examiners to ask applicants to provide (1) copies of such prior art, or to (2) farm out the application to a third-party search service (a power which, to the best of my knowledge, the ILPTO does not generally exercise).  The bill presently under consideration would add a clause that says that examiners may consider publications as mentioned in (a), (b) and (c), “even if [those publications] were provided to the examiner by a person other than the applicant”.  In other words, if amended as proposed, the statute will formally sanction third party submissions of prior art. 

Now, third party submissions per se are something with which repeat players in patent world are familiar.  The most obvious example is in the EPO, where during the pendency of a patent application third parties may anonymously cite prior art, complete with comments thereupon.  And although the USA has until now frowned upon third-party submissions during patent prosecution, even there it has been possible to force U.S. patent applicants to submit third-party-provided prior art, by providing an applicant’s U.S. patent attorney with a copy of publication, or by making a third party submission in the corresponding European case.  In either case, the applicant in the USA will more likely than not feel compelled to disclose to the USPTO, for fear of being found later to have engaged in inequitable conduct by not disclosing the publication.

So it might seem that allowing third parties to submit art in Israel would be no big deal.  But there’s a fundamental difference between Israel and the EPO or the USA: Israel has pre-grant oppositions; the latter two do not.  Allowing both third-party observations and pre-grant oppositions would apparently be a uniquely Israeli invention. 

I find two principal difficulties with the idea of allowing anonymous third-party submissions of prior art, with comments, while at the same time maintaining pre-grant oppositions.  The first is that it gives adverse parties a chance to prolong prosecution, by continually submitting additional art to be considered, even if that art is irrelevant, and then by subsequently filing an opposition.  Since a patent is not enforceable until after it is granted, this will amount to an effective foreshortening of patent lifetime, in a way that can benefit the adverse party.  (See discussion in the section below re: reasonable royalties.) 

More fundamentally, though, is that the coupling of third party observations with pre-grant oppositions gives adverse parties two chances to attack an applicant’s patent application.  That goes against fundamental notions of fair play that are inherent in an adversarial system such as Israel’s.  Those notions dictate that when A is adverse to B, A gets one shot to make his case against B, so he’d better put on his best case; A doesn’t get two bites at the apple.  Those notions also dictate that in attacking B, A doesn’t get to hide behind a mask of anonymity, something that the bill would facilitate.

This isn’t to say I’m necessarily against third party observations.  Like all reputable patent practitioners, I’m in favor of the most relevant prior art being before an examiner, so if a third party has found something more relevant that what an applicant or the examiner is aware of, it’s best for that publication to be brought to the examiner’s attention - the better the examination, the stronger the patent that results.  But a third party should have a single chance to make arguments against an applicant’s claims, and it shouldn’t have tools to prolong examination and thus shorten the enforceable patent life.  If Israel is going to allow anonymous third party observations, then it’s time to do away with pre-grant oppositions.  Post-grant revocation proceedings will still be available, but at least at that stage the patentee will have a patent to enforce.

An alternative would be to allow third party observations  during prosecution, but to preclude any publications provided by a third party from being relied upon by an opponent or the Commissioner in an opposition or revocation proceeding.  The obvious difficulty with that proposal is that unscrupulous applicants would then anonymously dump damaging publications on the ILPTO to remove them from consideration in the context of subsequent inter partes proceedings.

So here’s a third suggestion: if the Knesset isn’t going to do away with pre-grant oppositions, and it’s going to insist on allowing third party involvement even before the opposition stage, then third parties should be limited being able to submit prior art, without commenting thereupon, and without providing comments from foreign patent offices, if such exist.  Or as Joe Friday might have said, “Just the publications, ma’am.”  

Patentee Only Entitled to Reasonable Royalty Damages For Post-Publication, Pre-Grant Infringement:  Presently, a patentee can only bring a suit for infringement after the patent has issued, and is only entitled to sue for damages that occurred after the grant of the patent.  Since pre-grant oppositions can be used to delay the grant of a patent, the result can be significant erosion of the patentee’s rights – a party can infringe throughout the opposition, and the patentee will have no recourse.  The bill would still make grant of the patent a prerequisite for enforcement of rights.  However, it takes a step in the right direction, in that it will create section 179(a)(1), which will entitle a patentee to reasonable royalties for infringement that occurs after publication and before grant, provided that the infringed claims are in fact among the published claims.  In this sense, the bill mirrors the provisions of U.S. law – see 35 U.S.C. §154(d). 

Unfortunately, I don’t believe the bill goes far enough (just as I believe U.S. law doesn’t go far enough in this regard).  Reasonable royalties should be the baseline, but the patentee should be given the chance to prove and collect actual damages (lost profits).  I say this both because lost profits will generally be larger than a reasonable royalties, and because it may prove difficult to establish what a reasonable royalty should be, which can lead to a damages determination that is arbitrary.  Under the scheme proposed in the bill, in those cases in which reasonable royalty damages are likely to be lower than lost profits, infringers will be able to infringe pre-grant, and to lengthen that pre-grant period by submitting irrelevant prior art during prosecution and by filing a pre-grant opposition, during which time they will net more than they will have to pay out in reasonable royalties.   They will thereby profit from their infringement. 

An even more progressive approach would be to enable applicants to obtain injunctions while their applications are being opposed, subject to the posting of a bond to cover the potential infringer’s losses should the allegedly infringed claims be found unpatentable.

Retroactive Applicability: As worded, the bill will apply not only to applications filed after its enactment, but also retroactively, resulting in the publication of already-filed applications, with no means for opting out other than abandoning an application.  But hitherto the quid quo pro in Israel has been publication only upon the completion of examination.  To now force early publication upon all applicants is a breach of that understanding, a breach that will undoubtedly work to the detriment of some applicants who based their decision to file in Israel on this late publication practice (for example if they also filed in the USA with a non-publication request).  There’s an easier solution: give existing applicants an opt-in period, during which they may request that their pending applications be published in accordance with the newly amended statute.  At the very least they should be given a reasonable period in which to opt-out of such early publication, should they so choose. 

Submission of computer-readable version of the application: the published bill would amend section 11 of the statute to require applicants to submit a computer-readable copy of the application, e.g. on a CD-ROM, as part of their filing.  I find this proposal lacking in several respects.  First, applicants will still be required to submit a paper copy of the application.  What’s the point of requiring applicants to submit both paper AND electronic copies of the application?  Either form should be sufficient.  If the ILPTO can accept and process applicants’ electronic files, then applicants should be able to submit in electronic format, period.  If it’s desired to encourage electronic filing, the filing fee could be discounted for electronic filers, as is the case with PCT filings and with USPTO filings.  But if you’re going to amend this section, then dammit, allow applicants to file purely electronically. 

Second, if you’re going to insist on remaining pre-21st century, then at least do so in a way that doesn’t require applicants to provide a copy of the application on a CD that has to be physically delivered to the PTO.  Enable the transmission of the paper copy of the application by fax, and the transmission of the computer-readable copy of the application via email, or via a designated site for uploading such files. 

Another issue I have is that, for national phase applications, requiring applicants to submit an electronic of the application is redundant, since an electronic version is already on file with WIPO and downloadable for everyone.  Indeed, the ILPTO is proud of the fact that its own public database links to the WIPO publication, and WIPO’s database links to the ILPTO’s.  So why demand that applicants file a separate copy of the application on CD or flash disk?  It’s just another trap for the unwary. 

Submission of an abstract: The present wording of the statute places the onus on the ILPTO to publish an abstract after substantive examination has concluded and the application file is to be laid open to the public.  In the past, the ILPTO simply published claim 1, and a possibly relevant figure, as the abstract.  More recently, the ILPTO has required applicants to submit such abstracts, although I have argued that this requirement is ultra vires.  The bill would amend the statute to require the applicant to submit an abstract.  While such a requirement doesn’t faze people used to practicing before the EPO, where an applicant is expected to say what his invention is, for U.S.-based practitioners the idea of actually identifying the invention is anathema.  But don’t break into a cold sweat, Americans: the bill also includes an amendment (to section 27 of the statute) that explicitly says that the abstract submitted by the applicant will not be used by a court or the Commissioner in construing the description (which includes the claims) in any juridical proceeding.

What Do Diaper Wars and Cottage Cheese Revolts Have To Do With The Israel Patent & Trademark Office?

One of the big local stories in Israel earlier in the summer was the outcry over the price of cottage cheese.  For many Israelis, this is a staple item.  June was when someone noticed that the price of cottage cheese had crept up precipitously over the last few years – and that the same locally-produced cottage cheese sold for less in Europe than it did in Israel.  So this person decided to do something about it: he used Facebook to organize a boycott.  Turns out that not only had the three major dairies (which collective control close to 100% of the market) raised their prices significantly, and almost in lockstep, since the de-regulation of the price of cottage cheese a few years earlier, but one of them had even commissioned McKinsey to tell them how much they could raise prices without losing business.

In the end, the dairies caved and lowered their prices, at least a bit.  (Don’t worry, as of this writing the price of cottage cheese isn’t that much lower than before the protest, the dairies are still gouging consumers on everything else they produce, and like lambs Israeli consumers aren’t complaining.)  But the part of this story that interests me is the notion of price elasticity, or rather inelasticity: the idea that in certain markets, the demand for an item will remain essentially steady no matter what the price, and therefore producers are free to raise prices without fear of loss of sales.  Clearly, with regard to cottage cheese, the dairies felt that the de facto staple status of this commodity, coupled with the lack of local or foreign competition (no one imports cottage cheese into Israel) meant that they could steadily raise the price and make ever-larger profits.  The same is true of the fees charged by banks for doing us the favor of holding on to our money, the fees charged by cellphone companies, and the prices of many other goods and services in Israel.

On the other hand, in early July the price of name-brand diapers in Israel fell - dramatically.  Here it wasn’t the threat of a boycott that caused the price reduction but old-fashioned competition.  Both Pampers and Huggies have arrangements with local manufacturers; until recently those diapers retailed for around 62 shekels a package at all of the large supermarket chains.  Since parallel imports are legal in Israel (no, that’s not the IP angle of this story), one of those chains, Mega, decided to draw customers by importing a large number of Huggies from Turkey, at a price that was lower than what the local Huggies manufacturer charges Mega; Mega then offered the diapers at a much lower retail price.  In mid-July, for example, Mega advertised Huggies for 26 shekels per package for customers who buy 100 shekels’ worth of other products. 

It didn’t take long for the price of locally produced Huggies and Pampers to drop as well.  For example, for a while Supersol Deal, another large chain, sold both brands for 36 shekels per package, i.e. at a price 42% lower than it was a few weeks previously.  The fact that the prices of these diapers could drop so dramatically suggests that hitherto a certain degree of price inelasticity was at work – even though, unlike with cottage cheese, there are also local brands which normally sell for lower prices than Pampers and Huggies.

What does this have to do with patents in Israel?  Well, as far as I can tell, there are some movers and shakers within the patent department of the Israel PTO who think that the price of the services they provide is also inelastic.  Or at least there are several ways in which the ILPTO acts as if it can charge what it wants without repercussion.  Consider:

1. Until relatively recently, if a patent examiner said that an applicant’s claims were directed to more than one invention, that applicant could cancel claims on the second (and third, fourth, etc. inventions), and file them in a divisional application.  The divisional could be filed any time before the parent application was laid open to the public, and the only fee due was the filing fee for the filing of the divisional.  In June 2008 the previous Commissioner issued his circular no. MN 62, which said that a divisional filed in response to an office action containing a finding of disunity had to be filed along with the response to the OA.  A divisional could be filed after that time, but if so, it would have to be accompanied by an extension fee for each month or portion thereof after the deadline for response to the OA in the parent case.

2. Additionally, longstanding practice in Israel was that if one had already filed a first divisional, and one wished to further divide that first divisional by filing a second divisional application, the second divisional could be filed at any time before the first divisional was laid open to the public, even if that event occurred well after the original parent case had itself been laid open for public inspection.  As discussed previously, in February 2010 the previous Commissioner indicated that all divisionals, whether divided directly from the parent case or indirectly from an already-filed divisional, had to be filed before the original parent case was laid open to the public. 

3. Also as discussed previously, under the previous Commissioner, the ILPTO began to charge applicants for suspending the examination of their applications.

4. There used to be no limit on the total number of claims in an application.  In 2010, the ILPTO successfully lobbied the Justice Minister to amend the regulations so that a fee of 500 shekels would be assessed for each claim over 50 (at the time, the filing for a new application was about 1500 shekels).

5. Israel, like England, is a “loser pays” system when it comes to inter partes matters, whether in court or before the PTO.  Whereas traditionally the fee awards granted to the prevailing party in patent oppositions or cancellation actions were largely symbolic, usually not more than a few thousand dollars and often even smaller, in recent years those awards (as well as awards in similar trademark disputes) have just become plain large, in some cases over $100,000.  (A more detailed discussion of this phenomenon will be forthcoming in a future post.)

In the first four cases, the monies collected go the ILPTO, and thus can be viewed as attempts by the ILPTO to squeeze money from applicants, and to squeeze it from them earlier in the process, e.g. by collecting filing fees for all divisionals sooner rather than later.  My speculation is that the impetus for this was the ILPTO’s change in status from a mere branch of the Justice Ministry to a semi-autonomous “Authority” under the general aegis of the ministry.  The change was effected under the previous Commissioner at his behest.  While the new status helped streamline ILPTO operations by giving it more control over its own spending, the new status also meant that the ILPTO became responsible for raising its own funds to cover its budget, including paying the salaries of its staff.  Coupled with the fact that the previous Commissioner went on a hiring spree and significantly increased the number of examiners (which in and of itself was a good thing), the need for revenue became more acute than it was previously. 

The fifth case is a little different, because the funds go to one of the parties to the proceedings, not to the ILPTO.  Nevertheless, when taken together, the five phenomena suggest a view on the part of the ILPTO that no matter how high the expected cost of availing oneself of the Israel patenting process, people and companies will file patent applications at the ILPTO.  After all, the ILPTO has a monopoly on the granting of patents, so do people have a choice? 

That view, of course, is just plain wrong, as is clear from a glance at other, larger jurisdictions.  Take the PCT filing statistics for 2008 and 2009, for example: when the economy tanks, patent filings drop.  Or look at the Dudas administration at the USPTO, which perversely calculated that by making it unattractive for people to file patent applications, in part by making it prohibitively expensive to do so (inter alia via onerous claims-and-continuation rules), fewer applications would be filed, which would have enabled the USPTO to reduce its backlog in patent examination. 

Israel is not a large market; people and companies, particularly those from outside Israel will only continue to file in Israel if they think it’s worth their while.  I don’t know the location of the cut-off point beyond which companies will say it’s no longer worth the expense to file in Israel, but such a cut-off point exists.  Continually raising the cost of patent prosecution brings us closer to that point, and the ultimate end result wherein raising fees nets less money for the ILPTO.

Good News: USPTO, ILPTO announce Bilateral Patent Prosecution Highway (PPH) Program

On June 20, the USPTO announced on its web site that it had agreed with the Israel PTO to undertake a pilot Patent Prosecution Highway (PPH) project, beginning July 1, 2011 and continuing until June 30, 2012.  Under the project, a patent applicant whose application was first filed in one of the two countries, and for which at least one claim has been found allowable, may request that the other office fast-track a corresponding application in the other country.  

As of this writing, the link posted on the USPTO’s site for more information on this project does not contain any country-specific information regarding the program with Israel.  However, the Israel PTO site does contain information in English (an explanation of how PPH works in Israel and a form to be filed when making the request), and although this writer wasn’t able to find comparable information in Hebrew from the Hebrew web site’s home page, the Hebrew PPH site is up (as noted in a press release in Hebrew that was sent out via the ILPTO’s email distribution list earlier today). 

Some noteworthy points about utilization of the PPH before the ILPTO:

First, according to the information on the ILPTO web site, the claims of the Israel application must be of a scope which is identical to or narrower than that of the claims allowed by the USPTO.  (This is the same requirement in place today under section 17(c) of the IL patent statute for acceptance of an application on the basis of allowance of a corresponding application in certain other countries.  Note that the English instructions use the word “similar” rather than the word “identical”, which appears in the Hebrew explanation; presumably the Hebrew is in this case more reflective of the ILPTO’s intention.)  Presumably, if one’s IL application doesn’t meet this requirement, an amendment may be filed concomitantly with the PPH request in order for the application to comply. 

Second, a fee will be required; this is in contrast to applications utilizing the PPH in the USA, where no fee is required.  And one may only request PPH status before examination of the Israel application has commenced.  It’s not clear if the pre-examination request for additional information that the ILPTO sends before beginning substantive examination counts in this regard; the sensible thing would be for it not to count.  Certain documentation will also need to be provided.

Thus, for applicants for whom Israel is the country of second filing, the present PPH program effectively amounts to a speeded-up version of the existing provisions under section 17(c) of the statute; the PPH merely provides an additional way to accelerate examination in Israel, beyond the currently accepted reasons for accelerating examination (e.g. potential infringement, imminent commercialization of the invention, etc.).  It therefore appears that applicants for whom the USA is the country of second filing (i.e. who file first in the ILPTO) get the better end of the deal: as has mentioned in a previous post, as of January 1, 2011, an applicant who first files in Israel can have his application examined in accelerated fashion without paying an extra fee, and obtain a substantive office action within three months.  Assuming allowance can be gained quickly in Israel, that applicant can use the quick allowance in Israel to obtain PPH status – at no extra cost – for a corresponding application in the much larger and more commercially significant U.S. market.

Although bilateral PPH is not as significant as PCT-PPH, it is a step in the right direction for the ILPTO, and new Commissioner Asa Kling and his staff are to be commended for completing this arrangement less than two months into his term.  If Israel succeeds in becoming a PCT search and examination authority, it would stand to reason that Israel will also conclude a PCT-PPH agreement with the USPTO, which would truly be a boon for Israel-based applicants.

The form used for requesting PPH in the ILPTO does raise at least one important question, however: it’s sufficient for PPH applicants to direct the ILPTO to the allowed claims on the USPTO’s public PAIR, instead of supplying a hard copy themselves.  That means the ILPTO staff is competent enough to make its way through public PAIR.  If that’s the case, why are patent applicants in Israel still required to provide copies of prior art patent publications that can be downloaded from various sites on the internet just as easily as allowed US claims can be downloaded by the ILPTO staff from PAIR? 

A Few More Words on “Overlap”

During a discussion with a colleague following my last post on “overlap” rejections in the ILPTO, it became apparent that a few additional points regarding such “overlap” rejections – in contrast to US practice - bear mentioning.  The first of these, which pertains to divisional applications, will be discussed in this post.  The second, which pertains to the erroneous basis for the ILPTO’s view on “overlap”, will wait for a subsequent post. 

“Overlap” in Divisional Applications

In both the USA and Israel, the claims of a patent application must be directed to a single invention.  If the claims are directed to more than one invention, the examiner may instruct the applicant to restrict his claims to a single invention.  Although the details of the practices in the two countries differ – U.S. restriction practice remains a source of much confusion for both applicants and examiners alike – the basic contours of the law are the same in both jurisdictions: unless the applicant can convince the examiner that the claims are directed to a single invention, the applicant must choose which invention he wishes to have examined.  He may then file claims on the remaining invention(s) in one or more “divisional” applications, which have the same effective filing date as the earlier application.  I’ll call such applications “involuntary” divisional applications; applicants may also voluntarily divide their applications, even in the absence of a finding that the claims of the parent application are directed to more than one invention.  

Now suppose that an examiner has said that the claims are directed to two inventions, and as a result the applicant has divided his application.  The divisional is still pending, and the parent case has matured into a patent.  (Occasionally, the reverse occurs – the divisional issues first.)  Can the examiner now say that the claims of the still-pending application are obvious in view of the granted patent, i.e. can the examiner make an obviousness-type double-patenting rejection on the basis of the related parent (or child) patent?  In the U.S.A., 35 U.S.C. §121, the relevant part of which is reproduced here, protects applicants in such a case:

If two or more independent and distinct inventions are claimed in one application, the Director may require the application to be restricted to one of the inventions. If the other invention is made the subject of a divisional application which complies with the requirements of section 120 of this title it shall be entitled to the benefit of the filing date of the original application. A patent issuing on an application with respect to which a requirement for restriction under this section has been made, or on an application filed as a result of such a requirement, shall not be used as a reference either in the Patent and Trademark Office or in the courts against a divisional application or against the original application or any patent issued on either of them, if the divisional application is filed before the issuance of the patent on the other application. * * * 

In other words, if you file a divisional as a result of a restriction requirement, the examiner can’t cite the parent patent against you; or vice versa, if the child application matures into a patent first.  That seems fair enough: if the USPTO was of the view that the claims were directed to two patentably distinct inventions, it shouldn’t be allowed to reverse course later and say that they’re not patentably distinct, and that one invention is obvious in view of the other.  Put differently, §121 statutorily creates an estoppel against forcing applicants to divide their applications, then using one of the two applications to impugn the other. 

Unfortunately, there is no similar statutory provision in Israel.  And although logically, for the reasons explained in the previous paragraph, the ILPTO should be estopped from citing a parent case against a divisional or vice versa when it was the ILPTO itself that ordered the division, there is (as yet) no case law saying that such an estoppel exists.  As a result, it’s not unusual for an Israel examiner to tell an applicant to divide its application, and then, after the applicant has filed a divisional along the lines delineated by the examiner, to assert that there is “overlap” between the claims of the two applications. 

Given that significant statutory changes are in the pipeline (which the subject of a post in the not-too-distant future), the Justice Ministry should consider proposing a statutory amendment that would correct this situation as well, and which would explicitly state that if an applicant divides his application in accordance with a finding of disunity issued by the ILPTO, the ILPTO cannot later reject one of the two applications over the over because of “overlap” or double-patenting.

The lack of either a statutory provision or explicit case law (at least as of today) against this sort of “double jeopardy” takes on added significance in view of the position announced by the ILPTO last year that it would no longer permit the filing of divisionals of divisonals once the earliest application in the chain has been published for opposition purposes.  As explained in an earlier post, the ILPTO’s position regarding divisionals of divisionals has no basis whatsoever in the statute.  Not that things like statutory wording ever stopped the now-ex-commissioner from doing whatever he felt like doing.  Which may be why the now-ex-commissioner, in a clarification issued after the moratorium on divisionals of divisionals was announced, stated that if an examiner tells an applicant to divide an application, the applicant does so, the parent case publishes, and then the examiner says the divisional contains two inventions, the applicant has to choose which of the inventions in his divisional he wants to keep and which to jettison, because he has lost the right to file his divisional.  While I’m certain that sooner or later, the ILPTO’s position on this will be litigated, and the ILPTO will lose, repeal of this ill-considered and ultra vires policy would be more efficient and less costly.  It should be one of the incoming Commissioner’s first acts in office.

Overdoing It With “Overlap”: An Obvious Way the Israel PTO Could Learn from U.S. “Obviousness-type” Double Patenting Practice

35 U.S.C. §101 reads as follows:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

§101 has received much attention in recent years in the context of litigation over what kinds of inventions are and aren’t eligible for patent protection, last June’s Supreme Court Bilski decision and the CAFC’s Myriad Genetics case later this term being the most prominent examples.  But there’s another aspect to §101 that, fortunately, hasn’t been the object of attention for quite a while: the limitation that a person may only receive a single patent on his invention.  In U.S. parlance, the statutorily prohibited practice of getting two patents on the same invention is called “double patenting”.  The logic of the case law in this regard is that the statute says an inventor may receive “a patent”, in the singular, not “patents” in the plural.   

In some ways, though, that statement is specious.  The fact is that through the filing of continuations and divisionals, applicants routinely get more than one patent for what any reasonable person would regard as the same invention, or at least part of the same invention.  But here the case law make a neat distinction that only a lawyer (as opposed to a reasonable person) could love: “invention” in this context means “claimed invention”, as in the invention as defined by the claims of the patent.  So if two claims in an inventor’s two patent applications are close to each other but don’t claim quite the same thing, he doesn’t run afoul of §101’s prohibition on double patenting. 

To illustrate – and if you’re a U.S. practitioner, you can skip down to the discussion of Israel – suppose you’ve got a patent with two claims,

“1. A table comprising four legs and a square tabletop” and

“2. A table comprising four legs and a triangular tabletop.” 

If in addition you have a still-pending application that claims, “3. A table comprising four legs and a tabletop having a shape selected from the group consisting of square and triangular”, that last claim might be shot down for a host of reasons, but the double-patenting prohibition of §101 isn’t one of them.  Even though the scope of claim 3 is the same as the scope of the two granted claims when taken together, the scope of claim 3 when compared to either of the granted claims individually is different.  Consequently, there’s no double-patenting issue under §101.

But wait, the non-practitioner cries in shock and amazement, how can that be?!  Claim 3 is so close to the first two, how can it be allowed in the face of them?  The answer is, under U.S. law it can’t, but not because of §101’s double-patenting prohibition.  There’s a second double-patenting prohibition that has its basis in case law rather than the statute.  That prohibition is called obviousness-type double patenting, and it has its origins in a time when U.S. patents were issued for 17 years from the date of grant.  Referring back to the example above, if claim 3 issued in a patent on a later date than the patent containing the first two claims, the later expiration date of the later-issued patent would effectively give the patentee an extension of his period of exclusivity for what is an obvious variation of claims 1 and 2 in the first patent.  Put differently, inasmuch as claim 3 is an obvious variation of claims 1 and 2, there was no reason the patentee couldn’t have included claim 3 in the same patent as claims 1 and 2.  To now grant him claim 3 in a later-expiring patent wouldn’t be fair to the public. 

An additional problem with granting claim 3 in a separate patent is that the patentee could in principle sell the first patent but not the second patent, or vice versa.  This would make it difficult for potential licensees to negotiate a license, since they would now have to negotiate with two parties instead of one.  (In law school-speak that’s called raising transaction costs, and it’s considered to be a bad thing because higher transaction costs lead to sub-optimal allocations of resources.)  Even if a competitor designed a work-around to avoid infringement of either patent, he might still need to defend against infringement suits from two parties instead of one, with concomitantly higher legal expenses – what the case law calls “vexatious litigation”. 

To avoid these twin problems, over the years U.S. courts developed the doctrine of obviousness-type double patenting: an applicant can’t get claims in a later patent that are obvious in view of the claims in an earlier-granted patent of that same applicant.  However, unlike statutory double-patenting, which can only be remedied by amendment or cancellation of the offending claims, an applicant or patentee can overcome o.t.d.p. without amending or canceling his claims.  He does this by filing a notice at the USPTO that says (a) the applicant or patentee disclaims the term of the later-granted patent which extends beyond the term of the earlier-granted patent [thus obviating the patent term-extension aspect of the later-granted patent], and (b) in order for either patent to be enforceable, the two patents must be owned by the same entity [thus obviating the threat of “vexatious litigation” that concerned the courts].  This statement, called a “terminal disclaimer”, is so common that the USPTO even has a standard form that can be used for it.  (Although the U.S. moved to a 20-years-from-earliest-filing system in 1995, which has eviscerated the first reason for o.t.d.p., the case law has not caught up in this respect, perhaps because the second reason for o.t.d.p. remains.) 

Turning to my local environs, Israel too has a statutory prohibition on double-patenting: §2 of the statute says that the owner a patentable invention may apply for a patent on that invention.  As in the USA, the courts in Israel have said “a patent” means one, not two or more.  However, when it comes to obviousness-type double patenting, Israel still lags behind.  Again taking the example from above, whereas in the U.S.A. claim 3 would be rejected for obviousness-type double patenting, here in Israel the patent office would say, “Claim 3 overlaps with claims 1 and 2 of your earlier patent/application.”  At which point the applicant would scratch his head and say, “Yeah, so what?  There’s nothing in the statute against overlap.  What do you want from me?”, because indeed nowhere in the statute does it say that “overlap” between claims is verboten. 

So what does the ILPTO mean when it says there’s “overlap” between the claims of one’s later application and one’s earlier application?  There are a few possibilities.  It could be trying to say, you’re claiming the same invention in two different applications, which is prohibited by section 2 of the statute, and thus we can’t allow the claims.  The problem with that explanation is that since it’s the claims that define the invention – section 13 of the statute say so – then claims that merely overlap in their scope aren’t really prohibited under section 2.  And besides, if it was a section 2 issue, then why not just say so, instead of saying “there’s overlap”? 

Or the ILPTO could be trying to say that the later claimed invention is anticipated by, or obvious in view of, the earlier claimed invention.  But here too, if that’s the case why not just say that the later claims are anticipated or obvious?  Moreover, the ILPTO will reject the claims of a divisional application for “overlap” with the claims of the parent application; but since a divisional and its parent share the same priority and filing dates, the parent can’t be cited against the divisional as a basis for anticipation or obviousness. 

So by deduction, if “overlap” isn’t shorthand for rejections under sections 2 (statutory double patenting), 4 (novelty) or 5 (inventive step) of the statute, then what the ILPTO is trying to get at in its clumsy, communication-challenged way when it issues an “overlap” rejection are the same two factors that gave rise to the obviousness-type double patenting doctrine in the USA – the possible extension of the period of exclusivity for some of what is claimed in the first application, and the ability to split ownership of the patents, making life unnecessarily difficult for competitors.  

If “overlap” is meant to be shorthand for “obviousness-type double patenting”, then it follows that the ILPTO has adopted a terminal disclaimer practice like that in the USA, right?  Silly you.  Why be so sensible?  Under current Israel practice, the only way for an applicant to overcome an “overlap” rejection is to convince the examiner there is no overlap, or to excise the offending material from the claims of the later application.  In chemical cases in which large genera of compounds are claimed in both applications, that can involve significant analysis on the part of the applicant or its attorney – i.e. it can both be a pain and cost a lot – and it can lead to the introduction of multiple provisos, which makes ascertaining the scope the claim so amended somewhat difficult.  The introduction of such carve-outs also necessitates significant examiner time checking to make sure that all of the “overlap” has been eliminated.  (I once sat with an examiner for three hours painstakingly going over a proposed amendment to be sure he was satisfied that all "overlap" between two applications had been removed.)  Filing a terminal disclaimer would be a much simpler, less costly and more efficient route to achieve the same end.

Moreover, unlike many of the policies that the (mercifully, now ex-) Commissioner instituted over the past few years, with which he clearly overstepped his authority, the implementation of a terminal disclaimer program is something that is within his purview.  And it’s fairly in keeping with other aspects of Israel patent law: assignments and liens on patents, for example, are recorded at the ILPTO; there’s no reason a stipulation of joint ownership between two patents as a condition for their enforceability couldn’t also be recorded at the ILPTO.

Hopefully the next Commissioner (we’re still waiting for an announcement) will be someone with enough patent experience to appreciate how useful terminal disclaimers can be, and who will be willing to allow their use before the ILPTO.

I Know A Dependent Claim When I See It! (What Does a Dependent Claim Look Like Again?)

One of the first things any patent practitioner (or inventor filing a patent application) learns is the difference between independent and dependent claims.  The former read something like,

 

“1. A device comprising an X, a Y and a Z connecting the X to the Y”, or

 

“2. A method for doing/making A comprising doing X, Y and then Z”. 

 

The hallmark of a dependent claim is that it necessarily incorporates all the limitations of the claim from which it depends, and further specifies some additional limitation(s).  In the U.S., this is codified in 35 U.S.C. §112, fourth paragraph, which reads,

 

Subject to the following paragraph, a claim in dependent form shall contain a reference to a claim previously set forth and then specify a further limita­tion of the subject matter claimed. A claim in depen­dent form shall be construed to incorporate by reference all the limitations of the claim to which it refers.

 

Thus dependent claims usually read something like,

 

“3. The device of claim 1 wherein the X is shaped like a doughnut”, or

 

“4. A method according to claim 2 wherein X is conducted at a temperature above 60ºC.”  

 

Sometimes, though, a claim will be worded, e.g.,

 

“6. A method for treating cancer, comprising administering to a patient in need thereof a compound as recited in claim 5.” 

 

Is that an independent or dependent claim?  I don’t know any practitioners who would say it’s a dependent claim: although claim 6 has incorporated the limitations of claim 5, it has done so simply as a form of shorthand.  Claim 6 hasn’t added any further limitations regarding the compound recited claim 5.  And most importantly, whereas claim 5 is directed to a compound, claim 6 is directed to a different statutory class of patent-eligible subject matter, a method of treatment.  So claim 6 must be independent. 

 

Curiously, under US practice, there is at least one situation in which claim 6 would be regarded as dependent.  When counting the number of independent claims for purposes of calculating the filing fee due (each independent claim beyond the first 3 costing the applicant big bucks), the USPTO regards a claim like claim 6 above as dependent, thus saving applicants filing fees.  At least, that’s been my experience and the experience of other practitioners with whom I’ve spoken.  However, for purposes of unity of invention, it’s possible that an examiner would regard claims 5 and 6 as being directed to different inventions that necessitate separate searches, and thus force an applicant to choose between the two, in so doing implicitly finding that claim 6 is an independent claim.  In Israel, claim 6 would be regarded as an independent claim (although in Israel, there are no excess fees for excess independent claims per se, only for the 51st claim and up, period).

 

Why discuss such a basic notion as the difference between independent and dependent claims?  Because it arose two weeks ago in a decision from the Board of Patent Appeals and Interferences (BPAI) at the USPTO.  The decision was handed down in an old interference (declared in October 1996!) between Abbott GMBH & Co. KG and Yeda Research and Development Co. Ltd., the tech transfer arm of the Weizmann Institute.  At issue was the ownership of patent rights over proteins that bind another protein known as tumor necrosis factor alpha (TNFα).  The crux of the dispute between the two parties was whether or not Abbott’s US 5,344,915 was entitled to the benefit of Paris Convention priority to a German application filed in 1989.  The BPAI ruled it was, hence Abbott had rights in the one count over Yeda’s USSN 07/930,443. 

 

The interesting part of the decision, however, concerns Yeda’s contention that claim 2 of the ‘915 patent was in improper form for a dependent claim, as set forth in 35 U.S.C. §112, ¶4.  These claims read as follows:

 

1.     A purified and isolated TNFα-binding protein which has a molecular weight of about 42,000 daltons and has at the N terminus the amino acid sequence

 

Xaa Thr Pro Tyr Ala Pro Glu Pro Gly Set Thr Cys Arg Leu Arg Glu

 

where Xaa is hydrogen, a phenylalanine residue (Phe) or the amino acid sequences Ala Phe, Val Ala Phe, Gln Val Ala Phe, Ala Gln Val Ala Phe, Pro Ala Gln Val Ala Phe or Leu Pro Ala Gln Val Ala Phe.

 

2.     A protein as claimed in claim 1 in deglycosylated form.

 

Yeda argued that since the deglycosylated protein recited in claim 2 had molecular weight that, according to Example 6 of the ‘915 patent, was about 3000 Daltons less than that of the claimed TNFα-binding protein, claim 2 did not include all of the limitations of claim 1, and did not contain a further limitation on the protein of claim 1.  Hence, said Yeda, claim 2 was in improper dependent form.  In support of its argument, Yeda cited to MPEP ¶ 608.01(n), which sets forth an infringement test for determining compliance with 35 U.S.C. §112, paragraph 4:

 

The test as to whether a claim is a proper dependent claim is that it shall include every limitation of the claim from which it depends (35 USC 112, fourth paragraph) or in other words that it shall not conceivably be infringed by anything which would not also infringe the basic claim.

 

Argued Yeda, since the lower molecular weight deglycosylated protein of claim 2 could not conceivably infringe Claim 1, the recitation therein was not a “further limitation” on the subject matter of that claim.

 

The BPAI majority disposed of this argument by saying that Yeda bore the burden of proof, and had failed to show that a person of ordinary skill in the art would not regard the deglycosylated protein of claim 2 as being “about 42,000 Daltons” as recited in claim 1, and therefore

 

Yeda has failed to show that the deglycosylated protein of Claim 2 is completely outside the scope of the “about 42,000 dalton” requirement of Claim 1 (Pfizer, 457 F.3d at 1292) or that the deglycosylated form would not be understood to infringe Claim 1. Yeda has not established, prima facie, that Abbott’s Claim 2 does not provide a “further limitation” of the Claim 1 subject matter.

 

Yeda’s argument was a creative and intriguing one, and the majority’s disposing of it on grounds that 39,000 Daltons is close enough to 42,000 Daltons isn’t really satisfying.  Suppose that claim 2 had instead read, “2. The protein of claim 1 having a molecular weight of 39,000 Daltons”.  In that case, Yeda’s argument might have been stronger – if a claim specifies a molecular weight if 42 kDa, and the patent itself doesn’t explicitly that 39 kDa is to be considered as 42 kDa, it’s not clear that a 3000 Dalton difference is minor.

 

One Administrative Patent Judge, however, while concurring in this part of the judgment, did so on different grounds.  The first paragraph of his two paragraph concurrence is unremarkable:

 

While I join the majority in its denial of Yeda’s motion for unpatentability based on 35 U.S.C. 112(4), I do so for a different reason.  Paragraph 4 of §112 requires an express reference to the claim from which it depends and an incorporation by reference of the limitations of that claim.  It does not follow, however, that the converse is true: reference to another claim does not mean that the claim is intended to be dependent. For at least a generation the Office has permitted such cross references in claims that cannot possibly be dependent.  For example, “A widget made by the method of claim 3.” The widget cannot be within the scope of the method. The cross reference simply incorporates the limitations of the cited claim without creating a dependency. Under this practice, the principal effect is that the non-dependent, cross-referencing claim is itself independent and thus the applicant might owe an additional fee if there are more than three independent claims. 35 U.S.C. 41(a)(2)(A).  In an age of word processors, one could question whether the convenience of cross referencing is outweighed by the confusion it causes.  The question, however, is beyond our purview.

 

That’s just as discussed above: different statutory classes = no dependency, even if another claim is referenced.  Having (in baseball terms) set up the non-dependence of claim 2, the concurrence closes:

 

I conclude that Abbott's claim 2 is an independent claim. The claim states in its entirety “A protein as claimed in claim 1 in deglycosylated form.”  Significantly, the claim does not use the typical dependent form of “The protein of claim 1, wherein the protein is deglycosylated.” The use of “A protein” rather than “The protein” is telling since it deliberately avoids making the protein of Abbott claim 1 a literal antecedent.  Since the patent has only three claims, we cannot infer anything from the fees paid.  Abbott claim 2 is an independent claim and thus cannot be unpatentable for failing to comply with the statute governing claim dependency. 

 

It’s hard to argue with this APJ’s logic, which also explains why the majority’s view doesn’t sit quite right: claim 2 is not an improperly dependent claim because 42,000 can mean 39,000.  It’s not an improperly dependent claim because it’s not a dependent claim at all! 

 

Interestingly, most practitioners I know don’t really care how one begins a dependent claim, “A thing according to claim 1…” or “The thing according to claim 1…”; the particular wording usually comes down to personal preference.  It may be that the person who drafted claim 2 intended it to be an independent claim, but it may also be that in this case they got lucky.   

Let’s Confuse Everyone - Update On Excess Claims Fees for Israel Patent Applications: New Regulations Published; Unclear if Excess Claims May be Cancelled Prior to Examination to Avoid Fees, or if Excess Claims Fees are Due in National Phase Application

As noted in an earlier posting, on December 1, 2009, the Knesset’s Constitution, Statute and Law Committee approved the imposition of a fee of 500 shekels (approximately $130 at present exchange rates) for each claim in excess of 50.  Now, you’d think that even the Knesset and the Justice Ministry (which drafted the actual wording of the update) could get something as simple as this right, but noooooo – they had to word it in a way that sows confusion.  To wit:

 

Notice of the amended regulations was published in the official state publication journal (the equivalent of the Federal Register in the USA) on December 24, 2009; the new regulations will take effect 30 days from publication, viz. on January 23, 2010.  The amended regulations (namely the Second Schedule), in relevant part, read as follows:

 

Second Schedule

(A) 1. Upon submission of an application for patent per §11(a) of the statute, 1021 NIS

   1A.   Fee for submission of each claim in a patent application beginning with the 51st claim, 500 NIS * * *

 

This brings us to our first problem: while the revised regulations say that the fee for the first 50 claims for an application filed under §11(a) of the Patents Law is due upon filing of the application (a position necessitated by §15 of the statute, which says that an application will not be accorded a filing date until the filing fee has been paid), and that the fee for each claim in excess of 50 is 500 shekels, the amended regulations do not say when the fee for each excess claim is due.  If the excess claims fees are due upon filing, then applicants will need to carefully consider how many claims to file.  But if the payment of excess claims fees can be deferred until later, why not file a gazillion claims and then decide how to proceed once you’ve seen how things are progressing in the corresponding cases in Europe and the USA?

 

In a letter sent out on January 7, 2010, the Commissioner apparently tried to clarify this point: “The obligation to pay the fee [for excess claims] commences at the time of the filing of the patent application or at the time the specification is amended to include more than 50 claims.  Such an amendment is predicated upon payment of the appropriate fee.”  This implies that as soon as an application is filed with excess claims, the excess claims fees are due, even though the amended regulation does not state this. 

 

However, the Commissioner’s letter goes on to state that “failure to pay the fee for claims 51 and up will result in delay of examination of the application until the fee is paid”, implying that the excess claims fees themselves are not due upon filing, but only when the applicant actually wants examination to proceed.  Hence, writes the Commissioner, the language of the pre-examination letter that is sent to applicants shortly before substantive examination commences “will be updated…to remind the patent applicant community to pay the entirety of the fee due before the application comes up for examination.” 

 

Thus, the Commissioner’s latter statements imply that applicants who file applications with more than 50 claims but do not pay the excess claims fees at the time of filing, then cancel the excess claims prior to the commencement of substantive examination, will not be required to pay the excess claims fees, ever (unless they re-insert the excess claims later). 

 

Nothing like taking what should be a straightforward amendment and making it unnecessarily complicated.  Presumably this matter will be clarified in the near future; personally, it seems to me that if the excess claims are cancelled prior to examination, an applicant shouldn’t have to pay for them, as the ILPTO hasn’t had to expend any extra resources examining the extra claims.  (By the same token, if the excess claims were already allow by the USA or the EPO, and the applicant request allowance under §17(c), I don’t see why the applicant should have to pay excess claims fees, as the Israel examiner isn’t going to have to do any real work anyway.)

 

Now for the second bit of confusion: it is unclear if the new regulations apply to the national phase of PCT applications filed in Israel.  How’s that?  Well, amended part (A)1 of the Second Schedule, which refers to the filing fee for the first fifty claims, refers to applications filed under §11(a) of the statute.  But national phase applications are filed under §48(d), not §11(a).  Thus part (A)(1) clearly does not apply to national phase applications. 

 

Moreover, part (A)7 of the Second Schedule, which sets the fee for the filing of national phase applications filed under §48(d), was not amended accordingly to refer to the first fifty claims.  The failure to amend part (A)7 could thus be taken as indicating that excess claims fees are not to be imposed on national phase applications. 

 

On the other hand, new part (A)1A does not refer to a particular section of the statute, and simply sets a “Fee for submission of each claim in a patent application beginning with the 51st claim”.  Part (A)1A could thus be viewed as setting excess claims fees for national phase applications as well – although if that’s the case, why amend (A)1 at all?  And why number this statement (A)1A rather than place it elsewhere, where it will be clear it’s applicable to both regular and national phase applications? 

 

I have no doubt the ILPTO will adopt the view that excess claims fees are due for national phase applications.  Any national phase applicants who would like to test this by filing an application with 51 claims and then fight the ILPTO over the charge for the 51st claim are invited to contact me – I would be willing to fight the ILPTO on this point pro bono.

 

On the bright side, there’s one point that doesn’t seem to be confusing: it appears from the Commissioner’s letter that the ILPTO will allow applicants who originally paid for excess claims to cancel some of those excess claims and substitute them with others.  Thank goodness for small favors.