America-Israel Patent Law

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.

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.

A Headline I Never Thought I’d See: Raytheon and Rafael Cooperating (Or, If You Can’t Beat ‘Em, Join ‘Em)

Israel isn’t long on natural resources, but it does have considerable brainpower.  Given the sympathetic reception the modern state of Israel received from its neighbors upon it birth, and continues to be lavished with by those neighbors even today, it should come as no surprise that much of that brainpower has been directed to the defense industry, to try to ensure that Israel maintains a qualitative edge over states for whom Israel’s well-being is anathema. 

One of the leaders in the defense industry in Israel is Rafael; the name originally was an acronym for R’shut Pituach Emtza’ei Lehima, which can be translated as the Authority for the Development of Armaments.  Rafael is active in many areas, it’s good at what it does, and it’s interested in selling its products and technologies to others.  That activity sometimes brings it into competition with much larger industry players.  Like Raytheon.

I spent several years dealing with a portfolio of about two dozen oppositions that Rafael had filed against Raytheon patent applications in Israel; eventually we whittled the number of open oppositions down to 3 or 4.  As a patent practitioner, my general feeling was many of those oppositions were filed because at the time Rafael didn’t have in-house patent counsel, but instead had patent committee composed of scientists, engineers and business people, and despite the professional competence of those scientists and engineers in their own fields, they tended to read concern into patent claims where none was warranted.  That, and the fact that it cost relatively little to file an opposition, and that even if you lost the opposition, the amount you’d have to pay to the patentee was a pittance compared to the patentee’s actual costs.

It was also apparent that as a U.S.-based company, Raytheon would always have the upper hand: even if Rafael were to prevail in a patent opposition in Israel, the U.S. armed forces were always going to be more likely to award a contract to Raytheon than to Rafael.  And the U.S. government could stipulate that aid money it provided to Israel be spent on U.S.- rather than Israel-made defense devices.

So it was interesting to read news story earlier this week that Rafael and Raytheon had agreed to cooperate in the marketing of the Iron Dome rocket defense system in the U.S.A.  I saw the story in the Jerusalem Post, but Raytheon had a press release.  (Curiously, Rafael did not.)  Iron Dome was developed by Rafael to deal with the short-range missiles that Hamas likes to send as presents to Israeli civilians.  Its effectiveness was proven earlier this year, although at $100K a pop, I wonder if turning Gaza into a parking lot wouldn’t be whole lot cheaper. 

It’s good to know that Rafael will be able to sell this system, which was developed completely in Israel using Israeli funds, to the U.S. Army.  And from statistics in the Israel PTO’s recently published first-ever Annual Report (in Hebrew), it appears that patent opposition filings by Rafael against Raytheon patent applications are way down.  Isn’t cooperation fun?

The U.S.A. Doesn’t Have a Monopoly on Duplicity When It Comes to Patent Reform

A few hours ago the House of Representatives passed HR 1249.  HR 1249 is disingenuously called the “America Invents Act”; for reasons that have been explicated on other blogs, and may be discussed in more posts in the future here, a better name probably would have been the “America Invents A New Way To Stifle Innovation Act”.  If enacted, the bill will bring sweeping changes to the U.S. patent system, none of them good (except, possibly, the end of universal standing for false marking suits). 

For people who have been following US patent “reform” for a while, a curious aspect of what just passed in the House is that it bears little resemblance to the “reform” efforts of previous years.  That’s probably due to the fact that in the interim, the courts addressed many of the issues raised in earlier “reform” proposals.  For example, the issue of patent damages vexed companies like Microsoft, which were exposed to large damage awards for patents that covered miniscule aspects of their products.  Among other things, those companies sought legislation to require “damage apportionment”, i.e. to force courts to award damages only commensurate with the proportional contribution of the claimed invention to the infringing product.  But then the Federal Circuit, and several district court decisions authored by (now CAFC Chief) Judge Rader sitting by designation, reined in damage awards, in part by raising the quanta of proof required to prove damages.  So this year’s legislation contained no amendments regarding damages.  (See, e.g., IP Innovation LLC v. Red Hat, Inc. (E.D. Tex. 2010), ResQNet.com v Lansa, (Fed. Cir. 2010), Lucent Techs. Inc. v. Gateway, Inc., et al. (Fed. Cir. 2009), Cornell University v. Hewlett Packard (N.D. NY 2009)).

Instead, with the issue of damages out of the way, it appears that the established companies who most benefit from the House bill turned their attention to legislative amendments farther down their wish list, amendments that in the past they could only dream about getting.  Like prior user rights against patentees for companies that choose to keep their processes secret rather than disclose them in a patent.

In this respect, Israel unfortunately seems poised to emulate the USA.  As discussed in an earlier post, Israel is in the process of adopting legislation to facilitate 18-month publication of patent applications.  Plenty of jurisdictions do that, and you’d think it would be a straightforward amendment.  But the local generic drug industry looked at this as an opportunity to slip in some wish-list amendments.  Like making it impossible to broaden the claims of an application after it’s been filed.  The Justice Ministry, which authored the bill, relented on that point, but then considered an equivalent (and equally ridiculous) proposal to allow the broadening of claims but to also grant intervening rights to third parties that rely on things that were disclosed but unclaimed in the published patent application.  That proposal as well wasn’t adopted, and the draft bill in its present form – the one that will be presented to the Knesset for a first reading – will leave unchanged the provisions of the statute regarding amendments. 

Of course, that’s not the end of the story, and it’s certain that after passing the first reading, the generics will lobby the Knesset on the points where their lobbying efforts in the Justice Ministry failed.  One possible proposal: to enable a third party to request commencement of examination of someone else’s application. 

What you won’t see is a proposal to end to pre-grant oppositions, or to end the loser-pays systems in those oppositions (a topic which is going to be the subject of a post in the hopefully near future).

(A side note: one thing I’ve always found interesting is that the law firm that is home to Israeli generic drug industry’s key lobbyist still manages to prosecute patent applications for innovators like Genentech and AstraZeneca.  I wonder if they know that that firm is working against their interests.)

On the other hand, once the 18-month publication amendment passes the first reading and goes into committee for further consideration and revision, it is unclear when if ever it will see the light of day.  That’s because the committee chair is irked at the Justice Ministry over the issue of publication fees that he says should be refunded (the subject of a way-too-long-in-progress post), and has vowed not to let any patent-related legislation move forward until that money is refunded.

Deja Vu All Over Again – Deputy Commissioner’s Reach Exceeds His Grasp

I’ve complained in this blog about the previous Commissioner’s predilection for exceeding his authority.  From a just-published decision of Deputy Commissioner Noah Shlomovitz (released today but dated March 30), we see that the ex-Commissioner isn’t the only person infected with this particular bug.

The decision concerns an opposition to Lilly Icos’ patent application no. 147642, which is a national phase application in Israel of WO 2001/008688.  The corresponding U.S. and European patents are US 6,821,975 and EP 1200092; the U.S. patent is one of seven presently listed in the FDA’s Orange Book for Eli Lilly’s drug Cialis for the treatment of erectile dysfunction.  The claims as originally allowed by the ILPTO correspond to those of the European patent.

After allowance in 2006, a pre-grant opposition was filed by Teva.  Since the ILPTO does not make opposition files available electronically, I assume for the present discussion that the claims remained unchanged during the opposition. 

According to the DC’s decision, after both sides submitted their written evidence-in-chief and hearings were held before the DC at which the sides cross-examined each other’s witnesses and experts, the opposition was withdrawn by agreement of the parties. 

That should have been the end of the story…but if it was I wouldn’t be writing this blog post, would I? 

The rub here is that §34 of the patent statute says that “If an opposition was filed per §30 and cancelled afterward, the Commissioner is allowed to not grant the patent, if as a result of the opposition material was shown to him according to which the patent application should not have been allowed a priori.”  In this case, the DC invoked his power under §34 and determined that the application should not have been allowed a priori.  And that’s where the problems with the decision begin. 

First, Rule 74 says that if the Commissioner exercises his power under §34 of the statute, viz. after cancellation of the opposition he refuses to grant the patent because of material that came to light during the opposition proceedings, he must provide the patent applicant with a detailed explanation of his reasoning.  Rule 74 then goes on to say that within 30 days of service of the Commissioner’s reasoned explanation for refusal under §34, the applicant may respond in writing to explain why the Commissioner should not exercise that power, and that if the applicant so responds, the Commissioner must grant the applicant the opportunity to present oral arguments. 

The difficulty is that in this instance, rather than provide detailed reasons as required, the Deputy Commissioner stated that he would provide a more reasoned explanation for his decision at a later date.  Now, if the DC had said that the 30-day clock would only begin to run upon service of that yet-to-be-delivered detailed explanation, he might be on ok grounds – although since in Israel there’s no mechanism to compensate patentees for time lost off the life of their patents due to oppositions, the DC probably should have either let the patent issue, or provided a detailed explanation of his reasoning.  Or at least waited until the detailed reasons were written before informing the applicant that he was going to refuse the application under §34.

But not only did the DC fail to say that the patentee’s 30 days would run from service of the detailed explanation, he actually went so far as to say that the patentee’s time would run from March 30 and be shortened to April 16 – including any oral arguments to be made.  Why?  Because, it turns out, the DC is leaving office at the end of April, and since he’s the one who’s familiar with the case and presided over the cross-examination of the witnesses and experts, it would be inefficient to turn the case over to another hearing officer who is completely unfamiliar with the matter.  (He didn’t mention that in addition the ILPTO will be closed from April 18 through the 25th and reopen on the 26th for Passover.)

Perhaps the DC thought that in doing this, he was being fair to the applicant.  He’s correct that putting the matter before another hearing officer would slow things down tremendously, and result in the loss of the impressions of the witnesses that the DC formed during the hearings.  But even if he is well-intended, that doesn’t give him the authority to derogate from the procedures and timelines set forth in the rules.  Who is he to prejudice the applicant in that way, by foreshortening its time to respond?

If Mr. Shlomovitz felt so strongly that a patent shouldn’t be granted, he should have delayed his departure from his position for long enough to see the job through properly.  Alternatively, if he was so intent on leaving office by the end of April, a more fair result would have been for him to have let the patent issue, without saying to anyone why he thought it shouldn’t.  I say that because it’s not some amorphous public that would be adversely affected by the grant of an invalid patent, but rather the local competition, viz. the local generic drug companies.  But those companies are adept at protecting their own interests and attacking patents they find problematic; Mr. Shlomovitz need not look out for them.  Of those companies, only Teva thought it worthwhile to file a pre-grant opposition, and since Teva dismissed its opposition, Mr. Shlomovitz should have let the patent issue – if none the other generic drug companies care about this patent, why should the DC?

Moreover, in addition to pre-grant oppositions, Israel has post-grant cancellation proceedings, so if any of the generic drug companies other than Teva were to suddenly find an interest in this patent, they could avail themselves of that route.  The materials from the opposition would be available to them, and the generic drug companies employ chemists and pharmacologists who understand the science involved.  (Mr. Shlomovitz is neither a chemist nor a pharmacologist.)

The second gaffe on the part of the DC is that he said that per §159 of the statute, he would allow the opponent, Teva, to be involved in the proceedings pursuant to rule 74.  §159 says that “The Commissioner shall exercise any power granted him by this statute after an opportunity has been given to any person who, in the Commissioner’s view, might be injured by his decision, to present his arguments before the Commissioner.”  But Teva dismissed the opposition.  That not only indicates that in Teva’s own view, it will not be injured by the grant of the patent.  It means that Teva is now estopped from attacking the validity of the patent, whether in proceedings before the ILPTO or before the courts.  The statute does not give the DC the authority to resurrect the legally dead.

Also, reading between the lines, one suspects that at this point in time Teva is as interested as Lilly in the patent being granted: given the late stage at which Teva withdrew the opposition - after the sides had brought witnesses to the Patent Office and conducted cross-examination - and that the withdrawal was by assent of both parties, it's a fair assumption that Teva and Lilly reached an agreement under which Teva received some sort of inducement not to pursue the opposition to the end - a convenant not to sue, or a reverse payment to keep a Teva version of the drug off the market, or something of that nature.  So the guess here is that right now Teva would be perfectly happy for Lilly to have a patent to keep Teva's competitors at bay, and would be disappointed were the patent to be denied.

Mr. Shlomovitz would have done well to recall the recent incident in which a former minister was convicted of a crime but received no jail time.  Unlike in the USA, in Israel the prosecution may appeal both a finding of not guilty as well as the sentence passed on the convicted.  However, at the time the deadline for appeal came up, the prosecutors were on strike, and an appeal against the lenient sentence was not timely filed.  When shortly afterward the prosecutors returned to work and asked for an extension to appeal, the courts said, too bad.  The guilty ex-minister – whose last name, incidentally, can be scrambled to spell “Hayignov”, which in Hebrew means, appropriately enough, “he who shall steal” – is out free.  If the country can suffer a crooked politician out walking free, surely it can suffer a patent that no one except the DC himself has objection to.

* * *

Although Mr. Shlomovitz didn’t provide detailed reasons for his refusal, as required under Rule 74, he did say that his reasoning in brief was that the essence of the invention pertained to tadalafil, specifically the problem of its solubility; that the invention solved the problem by breaking the solid bulk tadalafil into very small particles, whereby increase the rate of dissolution to enable “rapid onset” of the effects of the drug; but that according to the material before him, it was obvious to any average professional (he didn’t say in what field) that decreasing particle size would increase the dissolution rate, and that even the prior art that Lilly Icos asserted taught away from the invention actually showed that decreasing particle size was always the first thing one would try in order to increase the rate of solubility.

Not having seen either the parties’ submissions, including the prior art relied upon, or the transcripts of the cross-examinations, and not having seen Mr. Shlomovitz’s still non-existent full reasoning, I won’t comment at this stage on the substance of his decision, save for one point: the brief explanation provided in the March 30 decision doesn’t relate to each claim separately, but only relates to the claims as a whole.  But even if one accepts that decreasing particle size is the most obvious way to increase the dissolution rate, that might affect claims 1 and 5 (reproduced below), but how does that necessarily lead one to the specific C_max and AUC recited in claim 8?

1.A free drug particulate of a compound having a formula

  

and pharmaceutically acceptable salts and solvates thereof in which the compound is present as solid particles not intimately embedded in a polymeric co-precipitate, wherein at least 90% of the particles have a particle size of less than about 40 microns.

5.A pharmaceutical composition comprising: (a) a free drug particulate of a compound having a formula

 

and pharmaceutically acceptable salts and solvates thereof in which the compound is present as solid particles not intimately embedded in a polymeric co-precipitate, wherein at least 90% of the particles have a particle size of less than about 40 microns; and (b) one or more pharmaceutically acceptable carriers, diluents or excipients.

8.A pharmaceutical composition comprising: (a) a free drug particulate of a compound having a formula

 

and pharmaceutically acceptable salts and solvates thereof, in which the compound is present as solid particles not intimately embedded in a polymeric co-precipitate; and (b) one or more pharmaceutically acceptable carriers, diluents or excipients, wherein the composition exhibits a C_max of 180 to 280 micrograms/liter or an AUC of 2280 to 3560 microgram hour/liter, measured using a 10 miligram [sic] dose of the compound.

If You Add A Dependent Claim And No One’s There to Hear It, Does it Make Any Noise? Israel PTO Rules That Application Cannot be Amended to Add Only Dependent Claims After Application Has Been Published – Part II

In the previous post I discussed the issue of amending granted US patents to include new dependent claims.  In this post I look at the same question with regard to Israel. 

The question of post-examination amendments was addressed recently during a pre-grant opposition to Schwarz Pharma’s IL 149567.  The corresponding US 6858650 is the sole patent listed in the Orange Book for Pfizer’s Toviaz® (fesoterodine fumarate), used to treat overactive bladder.  Claim 1 as allowed was a typical chemical compound claim, claiming a compound of the following structure:

 

in which R and X- were each defined as being selected from a closed group of choices.  The other independent claims were directed to methods for making such compounds or certain intermediates thereto.  The active ingredient in Toviaz® is such a compound in which R is isopropyl and the counterion X^- is fumarate, and having (R)-stereochemistry at the chiral carbon atom.

After allowance of the claims (the same 17 claims granted in the corresponding EP 1481964 B1, which was granted without opposition) and their ostensible publication for pre-grant opposition, Teva opposed the granting of the patent.  While the opposition was pending, Schwarz Pharma asked to amend the claims by (a) excluding chloride as X^- throughout the claims; (b) restricting R to isopropyl throughout the claims, (c) canceling dependent claim 17 and (d) amending claim 6 – which by virtue of the amendments to claim 1 was now obsolete – with “Compounds in accordance with claims 1 to 5 in crystalline form.”

The amendment of claims in pending Israel patent applications is governed by §22 of the statute; applicants may freely amend their claims, as long as the amended claims are supported by the specification as filed.  The amendment of claims in granted patents is governed by §§65-66 of the statute.  By virtue of §29, the amendment of published but not yet granted applications is also governed by §§65-66.  These two sections read as follows:

65. A patentee may request amendment [alternate translations: “correction” or “fixing”] of the specification of the patent for the sake of clarification or removal of an error that occurred therein or for the sake of reducing [alternate translations: “restricting”, “contracting”, “limiting”, “condensing”] his claims.

66. The Commissioner shall allow the amendment, if he is convinced that there is nothing therein to broaden the scope of the claims in the specification or to add to the specification things which were not in their essence mentioned therein a priori; notice of allowance of the amendment shall be published in Reshumot. 

Teva opposed the amendment of claim 6 on the grounds that this amendment – in effect the addition of a new dependent claim – was not permissible under §65, as it did not fall into any of the three categories enumerated therein: clarification of the specification, correction of an error in the specification (which includes the claims), or for reducing the claims.  Schwarz Pharma argued that since amended claim 6 did not broaden the scope of the claims, thus according with §66, the amendment should be allowed.

The hearing officer who decided the case first ruled that §65 establishes the criteria for potentially permissible amendments; only if a proposed amendment falls within the types of amendments under §65 does the Commissioner then turn to §66 to determine if the amendment is permissible.  Turning to the criteria of §65, she then ruled that the inclusion of a new dependent claim did not constitute a clarification, and (similar to the statement made by the USPTO during the prosecution of Tanaka’s reissue application) that the failure to include dependent claims during ex parte prosecution was not the sort of error contemplated by §65.  This left “reducing [the] claims” as the only possible basis for allowing new dependent claim 6, but, using reasoning very similar to that of the BPAI in Tanaka, the hearing officer concluded that new dependent claim 6 did not constitute a restriction of the claims:

“Restriction of claims” means claiming a smaller portion of the scope of monopoly that was claimed in the context of a claim or set of claims as originally presented.  There is nothing in new claim 6 to limit the scope of the monopoly claimed in claim 1 or in the set of claims 1-5; for when the [substantive] opposition to the grant of the patent is addressed, these claims will be addressed in full (as would also happen in a suit for infringement, if the patent is granted), and the scope of the monopoly claimed therein will be unaffected by the addition of new claim 6.  This implies that there is nothing in new claim 6 to restrict what is claimed in the patent application in accordance with section 65 of the patent statute.

And later:

Section 65 cannot be understood as instructing other than that the applicant must act to restrict his claims, i.e. to reduce the monopoly originally claimed, and not to add alternative lines of defense in the guise of new dependent claims.

Thus, per the hearing officer’s decision, once an application has been published for opposition, there is no way for the applicant/patentee to introduce new dependent claims. 

Although the hearing officer’s take on §65 is not implausible, it is not the only interpretation of the statute possible; that’s why, in translating §65 above, I included several alternate translations of the Hebrew term “tzimtzum”.  The hearing officer understood the phrase to mean “restricting the scope of the patentee’s claims”, but in the context of §65, “tzimtzum” could merely mean reducing the number of the claims.  Support for this view comes from the fact that the word “scope” (“hekef” in Hebrew) doesn’t appear in §65, but it does appear in §66: the Commissioner must ascertain that the amendment won’t broaden the scope of the claims.  To read “scope” into §65 is therefore to render part of §66 redundant; but interpreting statutes to create redundancy therein is generally frowned upon.  If, however, “tzimtzum” in §65 is understood to mean reducing the number of claims, then there is no redundancy between §65 and §66 – and applicants whose applications have been opposed, or patentees, would be free to add a number of new dependent claims commensurate with the number of claims they are willing to cancel.

The absolute bar on the introduction of dependent claims is at odds with the situation in the USA, which, as explained in the previous post, enables the addition of new dependent claims (1) in the context of reissue proceedings, if at the same time (a) the scope of one of the independent claims is also being restricted or broadened or (b) the specification is being corrected, and (2) in the context of reexamination proceedings.  In the present case, had claim 1 been granted in the USA and had Schwarz Pharma sought reissue to limit claim 1 by excluding Cl^- as X^- and limiting R to isopropyl, as it did in Israel, then new claim 6 could have been introduced.

Schwarz Pharma has until roughly the end of December to appeal the decision to one of the District Courts.  In addition to appealing on grounds of statutory construction, Schwarz Pharma could appeal on the grounds that the application was not properly published per §26 of the statute (as discussed here and here), and therefore not only is the opposition to the grant of the patent premature (since the statute says oppositions cannot commence until after §26 publication), but in fact the applicable section governing the requested amendments is §22 rather than §§65-66.  Inasmuch as Schwarz Pharma is represented by one of the larger Israel firms, Schwarz’s attorneys probably don’t want to rock the boat by raising this argument, as it could result in a declaration that thousands of ostensibly granted patents – including many of those held by other clients of those attorneys – weren’t really granted and still need to go through the §26 publication process, followed by the opposition period.  But the argument has no worse a chance than the statutory construction arguments Schwarz Pharma might set forth 

If the hearing officer’s decision is not overturned on appeal, the result will be that in most cases, applicants will only be able to obtain those dependent claims introduced during ex parte prosecution.  To avoid this difficulty, in important cases applicants who can afford to do so should maintain the pendency of a divisional application.  In the corresponding case in Europe, for example, the divisional EP 1690536 B1 claims crystalline fesoterodine fumarate as well as its use.  However, the ILPTO in recent years has been making it difficult for applicants to delay examination of their applications; and as discussed in an earlier post, the Commissioner has (erroneously) taken the view that applicants cannot file divisionals of divisonals, which would be another obvious way to maintain pendency in the absence of an explicit continuation regime as in the USA. 

Moreover, it’s not clear how the ILPTO would respond were an applicant to file a claim in a divisional that properly should have been included as a dependent claim in the parent case: the ILPTO might raise the Israeli equivalent of what in the US would be called a statutory double-patenting rejection.  Although it’s my view that such an assertion would be incorrect, to the best of my knowledge the matter hasn’t yet been adjudicated.

Procedure, Proschmedure

For people who observe both the US and Israeli legal scenes, one striking difference between the two is the emphasis placed on judicial procedure.  Put coarsely, the USA places more emphasis on procedure than does Israel.  While this difference is most visibly reflected in the courtroom itself – from where I sit, it appears that US judges are more likely than their Israeli counterparts to enter default judgments or base other ruling on purely procedural grounds – it shows up elsewhere as well.  For example, civil procedure is deemed sufficiently important in US law that US law schools teach civil procedure as a year-long, required first-year course.  In contrast, in Israel civ pro is taught as a one-semester course, in the in the last semester of law school – almost as an afterthought.

 

Three recent decisions, two from the ILPTO, one from a US court, reminded me of this difference in emphases as it plays out in the patent sphere.  The US case was the Federal Circuit’s December 22, 2009 decision in i4i vs Microsoft, which was reissued by the panel on March 10, 2010.  In that case, a feature in Microsoft Word was alleged to infringe i4i’s patent.  The feature at issue in Microsoft’s program was a minor one that relatively few users utilize - and that Microsoft was ultimately readily able to re-tool to be non-infringing.  Microsoft was found by jury verdict in the district court to have infringed i4i’s patent, was ordered to pay close to $300 million in damages, and was enjoined from selling versions of MS Word that contained the infringing software.

 

Before the case went to the jury, Microsoft motioned for judgment as a matter of law (JMOL) – a request that the court decide the issue right then and there on the basis of the facts as developed – on the grounds that the patent was invalid due prior sale of the invention.  However, Microsoft did not move for JMOL on the basis of obviousness. 

 

After the verdict, Microsoft appealed to the CAFC, in part on the grounds that the patent was obvious over the prior art and that the jury had erred in determining otherwise.  The CAFC ignored this part of Microsoft’s invalidity challenge on grounds that because of a procedural failure on the part of Microsoft, namely Microsoft’s failure to motion for JMOL for obviousness before the case went to the jury, the CAFC could not review the jury’s findings on obviousness:

 

“Microsoft has waived its right to challenge the factual findings underlying the jury’s implicit obviousness verdict because it did not file a pre-verdict JMOL on obviousness for the Rita, DeRose and Kugimiya references. Fed. R. Civ. P. 50(a), (b)…Microsoft’s pre-verdict JMOL on anticipation, based on S4, was insufficient to preserve its right to post-verdict JMOL on a different theory (obviousness), or on different prior art (Rita, DeRose, Kugimiya) … Accordingly, we do not consider whether the evidence presented at trial was legally sufficient to support the jury’s verdict.  Our review is limited to determining whether the district court’s legal conclusion of nonobviousness was correct, based on the presumed factual findings.”

 

A cynic could read that as the CAFC politely saying, “We don’t care if the patent is valid or not, and we don’t care about the size of the award.  Procedurally, your lawyers goofed by failing to preserve your right to JMOL, and if that costs you, so be it.”  Personally I’d characterize the CAFC’s approach a bit more generously: courts have heavy caseloads, and the procedural rules are there to protect the integrity of the process and the efficiency of the system for all litigants, so the procedural rules matter, and litigants choose to flaunt those rules at their own peril. 

 

Contrast that decision with the ILPTO’s decisions in opposition proceedings against patent applications nos. 120382 and 151450, and in a revocation action against Israel Patent No. 168574, where the amounts of money at stake weren’t anywhere close to the $300 million of the i4i case.  (Copies of the decisions can be downloaded here 120382, 151450 and here 168574; due to a mistake on the ILPTO’s web site, no decisions regarding patents from 2009 are presently downloadable there.)  Patent revocation actions in Israel (also sometimes called cancellation actions) are sort of like inter partes reexaminations in the USA, but with teeth: both are conducted before the respective patent offices, but unlike so-called US inter partes reexam, Israel revocations proceedings really are inter partes.  Ditto for opposition proceedings, except that Israel oppositions are conducted pre-grant.  In both types of actions, both sides participate fully throughout, with submission of written direct testimony and cross-examination of witnesses. 

 

A word about the procedure in both types of proceedings.  Opposition proceedings commence with the filing of a notice of opposition (and payment of a fee, of course), which must be filed within three months of publication of the acceptance of the application by the ILPTO.  The opposer then has a month to file its pleadings, and the applicant has three months to file its pleadings in response.  The opposer then has three months to file its written evidence-in-chief; the applicant then has three months to file its written evidence in reply.  The opposer then has three months to file supplemental evidence to rebut points made in the applicant’s evidence.  Thereafter there’s a hearing at which the parties cross-examine each other’s witnesses, followed by written summations.

 

Revocation proceedings follow a similar trajectory, except that in accordance with Regulation 103(a), the party seeking revocation must come out with all guns blazing: the request to revoke the patent must be accompanied not only by the required fee but by the requestor’s pleadings and written evidence.  Thereafter the proceedings are akin to those of an opposition.  The logic behind requiring revocation requestors, but not opposers, to file everything at once would seem to be that whereas the opposer only gets to look at the application file upon publication (as explained here), and therefore may require more time to get its pleadings and evidence in order, the revocation requestor has had time to evaluate the patent and marshall its forces for attacking the patent.  Therefore, for the sake of efficiency, the requestor has to lay all its cards on the table from the get-go. 

 

In both opposition and revocation proceedings, the pleadings (referred to in the regulations as the “statement of arguments”) are supposed to “specify the grounds for the opposition [or revocation]” and “the facts upon which the opposer’s [or requestor’s] pleadings are based”.  In the oppositions to Wyeth’s patent applications nos. 120382 and 151450 (a parent and its divisional), the opposer filed pleadings that evidently included a statement of the prior publications upon which it planned to rely, and then, after the applicant had filed its pleadings, motioned to file written evidence that relied upon additional publications not mentioned in the opposer’s own pleadings.  (I say “evidently” because, as discussed in an earlier post, the ILPTO’s online database doesn’t include file histories or papers filed in oppositions, so my knowledge of what transpired here comes from the ILPTO’s decision itself.)  The applicant opposed the motion, not per se on grounds that the new publications should have been mentioned in the pleadings, but on the related grounds that the applicant would be prejudiced by this late inclusion, and that in any event, since the publications weren’t mentioned earlier, the request for their late inclusion should have been supported by an affidavit.

 

The adjudicator deciding the case agreed that, as set forth in the relevant regulations, publications impacting the patentability of the invention upon which an opposer plans to rely should be mentioned in the pleadings.  Consequently, in order to rely on previously unmentioned publications, the opposer should have filed a motion to amend its pleadings, explaining why such late inclusion was necessary and including an affidavit in support of the motion.  Such motions, wrote the adjudicator, are not granted as a matter of course, as it is the exchange of pleadings that establishes the scope of the disagreement between the parties.  Consequently, allowing an opposer to amend its pleadings after the applicant has filed its own pleadings could be prejudicial to the applicant. 

 

Furthermore, said the adjudicator, the “purity of the patents register” – a phrase commonly invoked by opposers when seeking late introduction of evidence, used by opposers to imply that having an invalid patent on the register would constitute a crime against humanity, and therefore it is imperative that the ILPTO allow that evidence into the record – was not per se reason to allow amendment of the opposer’s pleadings.  The adjudicator even went so far as to say, “As explained supra, there is great importance in the procedural rules pertaining to the deadlines for the submission of the parties’ pleadings and their content, as these establish the bounds of the disagreement between the parties…In view of the foregoing, I must deny the opposer’s motion.”

 

So far, this doesn’t sound different from the US approach.  But then, if you’re a champion of procedure, the adjudicator inexplicably snatched defeat from the jaws of victory:

 

“Nevertheless, since the opposer has repeatedly asserted that there is nothing in the prior publications it now seeks to introduce to expand the scope of the disagreement, and in view of the particular circumstances before me, I accede to the request to allow the opposer’s declarant to rely on publications that were not listed in the pleadings and appended to his declaration, provided that they will be insufficient to tip the scales in the decision in the opposition proper.  For this purpose, I do not find it necessary to order the opposer to submit a declaration in support of its motion.” [emphasis in the original]

 

Talk about paying lip service to procedure.  The adjudicator didn’t explain how the “particular circumstances” here warranted treatment that deviated from the procedures established by the regulations.  And what does it mean that the publications will only be allowed in as long as they’re “insufficient to tip the scales in the decision in the opposition proper”?  If those publications prove critical to the opposer’s case, will the adjudicator really be capable of ignoring the additional publications when deciding the matter? 

 

As to the revocation proceedings, IL 168574 was granted in March 2006.  The request to revoke the patent was filed in February 2009, without any evidence in support of the request.  In April 2009 the patentee asked for summary judgment in view of the lack of evidence supporting the revocation request.  Apparently the SJ request was denied, as the patentee filed its response (including evidence) in July 2009 (presumably after having been granted an extension to file), and in October 2009 the requestor filed (a) evidence in reply, (b) with additional pleadings, and (c) a declaration that was intended to serve as evidence-in-chief – i.e. a declaration that should have been filed with the revocation request itself some eight months earlier. 

 

The patentee objected to both the filing of the supplemental pleadings, as well as the late filing of the evidence-in-chief, and motioned that both documents be stricken from the record.  The ILPTO adjudicator did not hesitate in acceding to the motion regarding the supplemental pleadings: the regulations don’t provide for a requestor to file supplemental pleadings as a matter of right, only supplemental evidence, and the requestor didn’t ask for leave to file the supplemental pleadings.  Hence the supplemental pleadings were out.  Score one for procedure. 

 

The late-filed evidence-in-chief should have received the same treatment, a fact admitted to by the adjudicator herself: not only did the requestor fail to file evidence-in-chief with her revocation request, per the statute and regulations, but she didn’t even seek to file such evidence when responding to the motion for summary judgment for lack of requestor’s evidence.  As the adjudicator wrote, 

 

“I find the requestor’s behavior deficient.  Once the date for submission of her declaration was set, it was not up to her to take the law into her own hands, to not timely file the declaration, and then late in the proceedings to request an extension to file the declaration.”

 

At this point it sounds like the requestor is about to get tossed out on her ear – as according to the regulations she should have been.  But, continued the adjudicator,

 

“Nevertheless, under the circumstances, I believe the request [to file the declaration late] should be granted, and the requestor shouldn’t be denied her day in court just because failed to follow the procedural rules.” 

 

The adjudicator then cited two cases that purportedly supported the proposition that deviation from procedurals rules is ok.  However, the adjudicator conveniently ignored that one of the two cases was a district court case, and therefore of no precedential value; and she also ignored that the other case, a Supreme Court case, was distinguishable, inter alia on grounds that in that case, it was the respondant, not the movant, who was late in filing his declaration, and he missed the deadline by only a week, not eight months.  In other words, in that case, neither party was really prejudiced by the grant of the extension.

 

But the adjudicator’s real reason for not tossing out the requestor’s declaration was that the requestor was acting pro se.  “This is not to say that a different law applies to pro se litigants”, said the adjudicator, but, “Nevertheless, I believe that when the situation warrants it, a certain amount of flexibility in the application of procedural rules is called for when dealing with procedural mistakes by pro se litigants”.  To the extent the other side is prejudiced by the pro se litigant’s behavior, said the adjudicator, that can be compensated for in the award of costs at the end of the proceedings. 

 

Seems like the adjudicator may as well have written, “A different law doesn’t apply to pro se litigants…except when it does”.  By giving the requestor in this case the opportunity to file evidence-in-chief after the patentee had already filed its pleadings and evidence, she turned the entire revocation procedure on its head.  But hey, it’s only procedure, right?  Those procedural rules probably appeared out of thin air.  It’s not like there was any thought that went into them, right?

 

Curiously, in another pro se litigant case, an ex parte matter concerning several design applications, the same adjudicator took a strict view with regard to the pro se party.  But that’s a case for a different post.