America-Israel Patent Law

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. 

Proposed Statutory Amendment: Early Publication of Israel Patent Applications

Although in the past I’ve suggested that Israel move to an early publication system, I’m neither the first nor the only person to make this suggestion.  It seems that the great minds at the Justice Ministry (which would better be called the Law Ministry, but that’s for a different post) have been thinking about this for a few years as well, and have now circulated proposed amendments to the statute to deal with the matter; the proposed amendments (in Hebrew) can be downloaded here.  (Most legislation in Israel emanates from the bureaucrats at the Justice Ministry, and while at some point formal publication of proposed legislation occurs, earlier drafts are often circulated before such publication – sort of like pre-prints of scientific papers.) 

 

In addition to establishing publication 18 months from the earliest priority date for all currently pending and future filed patent applications, the proposed amendments would:

-   allow patentees to retroactively recover reasonable royalty damages back to the publication date;

-   result in a single, combined filing-examination-publication fee, instead of separate fees at different stages of the examination;

-     eliminate the possibility of a separate claim for unjust enrichment;

-   preclude certain types of amendments to the application, and

-   force applicants to file an abstract identifying the “essence of the invention” as part of the application. 

 

As will be explained below, I think that certain aspects of the proposed legislation constitute a good start, but on the whole the proposal is in need of more than a little tweaking.  I also think that in some respects it doesn’t go far enough, and without some significant additions will result in a patent system that is biased toward infringers.

 

The MOJ has requested comments on the proposed amendments by January 31, 2010.  Comments may be sent by email, in Hebrew or English, to howardpoliner@justice.gov.il or shirleya@justice.gov.il; please refer to proposal no. 803-10-2009-000813 in your email.

 

 

18-Month Publication; Reasonable Royalty Damages for Infringement Prior to Grant

The most dramatic effect of the draft legislation would be the publication of all patent applications filed in Israel 18 months from the earliest priority date or, in the case of PCT national phase applications, within 3 months from national phase entry, at which point the application files would be open to the public.  In exchange for this early publication, upon grant of the patent patentees would be able to sue, retroactively, for infringement of the patent during the period between publication and grant; the remedy for such infringement would be limited to reasonable royalties. 

 

The ability to retroactively obtain damages for infringement during the period of application pendency wouldn’t be complete departure from the current law.  Currently, applications are kept secret until notice of their acceptance has been published.  This is followed by an opposition period; the patent isn’t granted until the opposition period passes without incident or, if an opposition has been filed, when the opposition is rejected.  Applicants have no standing to bring suit for infringement prior to grant, and thus are powerless to collect damages, let alone stop infringement, that occurs during examination.  However, once the patent is granted, patentees can sue retroactively for damages to the date of publication, to the extent that the claims ultimately granted were published prior to the opposition period. 

 

Thus under the proposed amendment, the major changes from the current system would be (a) earlier publication of the application, giving the (eventual) patentee a longer retroactive window in which to collect damages for infringement, but (b) limitation of damages for such pre-grant infringement to a reasonable royalty.   As is currently the case, suit could only be brought once the patent is granted, but thereafter patentees would still be able to obtain prospective enforcement of the patent in the form of injunctions, and would still be able to obtain full damages for infringement that occurred after grant. 

 

 

Reasonable Royalty As Only Remedy = Compulsory License

The reasonable royalty provision of the draft legislation strikes me as a thinly-veiled form of a compulsory license.  If I’m a generic drug manufacturer, it’s worth my while to infringe still-pending claims, even if I think they’re likely to eventually be granted – there’s a significant difference between what I can make selling to the four major Sickness Funds (the Israeli equivalent of HMO’s; by law everyone pays a health tax and must belong to one of the Sickness Funds) and what I would be forced to pay under a reasonable royalty scheme.  Under such circumstances, if I’m a drug innovator, the way for me to ensure that my drug not be sold without my permission would be to delay the grant of marketing approval of the drug until after grant of the patent (because approval of the generic version is contingent upon grant of marketing approval to the innovator).  But as a consumer, I’d prefer that new medicines enter the Israeli market sooner rather than later.  Thus the draft legislation would seem to work at cross-purposes with good public policy.

 

Then again, in the pharma sector at least, this may be a red herring.  It may be that in general, the first Israel patents covering a new drug product have already issued by the time the drug is approved for use in Israel, and that it’s more likely that follow-on applications covering formulations, new uses and the like would be the ones affected by a possible reasonable royalties scheme that operates prior to grant.  If that’s so – and I don’t have statistics to confirm whether or not this is the case – then if an earlier patent was still in force, the possibility of an injunction or full damages for infringement of that patent would give copyists proper pause to consider whether or not to infringe (or to work around the earlier patent; as it is, Israel law gives third parties the right to infringe provided such infringement is done for the sake of “improving” the patented invention or “developing a new invention”, and is not done on a commercial scale).

 

It should be noted that on its face, the reasonable royalty provision is substantially the same as the corresponding provision in the USA, as set forth in 35 U.S.C. §154(d).  However, with respect to the pharma sector, one can’t draw a clean comparison between the situation in Israel and that in the USA: 

(a)     Pharma patents tend to issue more quickly in the USA than in Israel. 

(b)     The USA has the Waxman-Hatch scheme, which compels innovators to list certain patents in the Orange Book and compels generic manufacturers to give notice when they’re going to challenge a listed patent, giving innovators an opportunity to sue and obtain an injunction or, in many cases, an automatic 30-month stay of FDA review of the generic company’s NDA.  Thus as long as the innovator has at least one Orange-Book listed patent, which is invariably the case early in a product’s lifetime, there is no way for a generic manufacturer to sneak a product through the FDA without the innovator’s knowledge.  In contrast, Israel has no comparable scheme.  

(c)     The USA has actual data exclusivity: generic manufacturers can’t even submit ANDAs within the first five years of FDA approval for a new chemical entity.  Israel’s data exclusivity provisions tilt much more in favor of generic manufacturers:

(i) generic drug manufacturers may submit their generic drug applications within the first five of approval of the innovator’s product in Israel;

(ii) it is the Health Ministry (MOH) that is precluded from approving that the generic drug application during those first five years, or during the first five-and-a-half years from the first marketing approval in any WTO-member country;

(iii) MOH is only precluded from granting approval for marketing in Israel during this period; it may nevertheless grant approval for exporting during this time.

(d)     The USA does not have pre-grant patent oppositions (see discussion below).

 

Taken together, these factors mean there is a higher likelihood that a new drug product may be approved in Israel before patent protection has been obtained than there is in the USA – if not for the local market, then for the export market.  Under such circumstances, reasonable royalty damages may be insufficient to compensate the patentee.  As mentioned above, I don’t know if there are statistics that attest to whether or not most new drugs approved in Israel have some form of patent protection at the time of their approval.  What is clear is that the fact that the reasonable royalty remedy is good enough for the USA does not necessarily mean it is good enough for Israel.

 

In the high-tech arena, I suspect the difficulty would run in the opposite direction: under the proposed reasonable royalty scheme, individuals or small businesses having patentable but easily copied ideas would be at the mercy of bigger, established players.  If the goal of the smaller fry is to license the technology, then without the prospect of full retroactive damages, they will have lost some leverage in their ability to negotiate a good royalty rate.  Also, there is no guarantee that the “reasonable royalty” set by the court would be what the parties would actually have negotiated with the threat of full damages hanging overhead.  If the goal of the small patentees is to make and sell a product, or to sell the technology, their likely recourse would be to forego patent protection altogether, since the statute would now give the big players a compulsory license.  (Open question: if a big player steps in and sells infringing goods in Israel while the application is pending, then is forced to pay a reasonable royalty after the patent issues, are the downstream consumers who bought the infringing goods now immune from suit?  See discussion below re: unjust enrichment.)

 

Foregoing patent protection, however, would only work if the small companies’ products couldn’t be reversed-engineered – assuming small companies actually got as far as manufacturing something.  And without the prospect of patent protection, their leverage in negotiations with more powerful players to whom they might wish to sell the technology would tend toward zero.

 

It’s for the latter reason that I think it might be worthwhile to take a page from the U.S. playbook, and to allow applicants to retain the option of keeping their applications secret, if they haven’t filed corresponding applications (or more broadly, haven’t filed applications directed to substantially the same invention) in other 18-month publication jurisdictions. 

 

Alternatively, imposing the prospect of full damages that would be retroactive to the date of publication, assuming one of the infringed claims was in the published application, would give competitors more reason to carefully consider whether or not to infringe.  Ostensibly, the difficulty with such a scheme is that competitors would be left in legal limbo – which claims, if any, will issue?  In practice, however, this is already what goes on in other countries, evidently without detrimental effect.  In any event, sophisticated copyists are able to make reasonable assessments as to what is and is not patentable in a pending, published application. 

 

A twist on this last idea would be to allow infringers to file a notice with the ILPTO that they are infringing while the application is still being examined, including a detailed explanation of how they are infringing the patent.  This would be coupled with a bank guarantee or other surety to cover the expected reasonable royalties.  Such a notice would preclude the eventual patentee from retroactively collecting full damages after grant of the patent; but the admission by the infringer would preclude the infringer from asserting non-infringement after grant of the patent with respect to the product or process specified in the notice.

 

 

Early Publication of Already-Filed Applications

The proposed amendments would apply retroactively to all still-pending applications, with the goal being publication of all pending-but-as-yet-unpublished within two months of the amendments’ coming into force.  That’s not fair to those applicants who filed in Israel knowing that it does not publish applications early, and who relied on that fact in deciding to file in Israel.  Yes, disclosure is the quid quo pro for the exclusivity conferred by a patent, but the timing of that disclosure is also part of the bargain; publishing already-filed applications against the wishes of the applicants amounts to changing the rules in the middle of the game.  (Publishing such applications now may also create a headache for applicants who filed in Israel and in the USA with a non-publication request, knowing that Israel is a not an 18-month publication country.) 

 

A more prudent approach would be an opt-in for applications filed before the amendments come into force: those applicants with pending applications who want their applications to publish early could request such early publication, otherwise already-filed applications would not publish early.

 

 

Precluding Claims for Unjust Enrichment

Unlike most countries, Israel has a separate statute that enables plaintiffs to recover from third parties who were unjustly enriched at plaintiffs’ expense.  In principle, with respect to intellectual property, the various IP statutes themselves set the types of protections and remedies available for different types of IP, and recourse to a general unjust enrichment statute should not be available.  However, during the 1990’s a trend took hold in Israeli jurisprudence whereby courts applied the general unjust enrichment statute in situations in which parties had chosen not to avail themselves of IP protection, in which such protection was actually precluded by statute (e.g. for unpatentable inventions that were already known), or in which such protection had been obtained (e.g. in the form of a patent) but had since expired. 

 

The potential for a remedy for patent infringement apart from the patent statute has created uncertainty when it comes to assessing one’s rights to exploit another’s invention, and led in one instance to Merck suing for unjust enrichment for infringement that occurred while its patent application was being opposed.  The Merck case was in fact part of the impetus for the presently proposed amendments. 

 

Thus, hand-in-hand with providing applicants with some sort of protection during the period patent pendency, the proposed amendments would bar remedies under any other statutes for the exploitation of inventions (a) which are patentable but which are not protected by a patent in Israel, (b) for which a patent had been granted but had since lapsed or expired, or (c) which are not patentable.  The preclusion would not apply to violations of fiduciary duties arising from other statutes.

 

This proposed change is a welcome one.  It’s pity that the judiciary, which created this particular monster, did not see the error of its ways and see fit to bury its own creation without the need for a legislative fix.

 

Regarding the “open question” from above (viz. if a big player steps in and sells infringing goods in Israel while the application is pending, then is forced to pay a reasonable royalty after the patent issues, are the downstream consumers who bought the infringing goods now immune from suit?), this proposed amendment would evidently bar such recovery.

 

 

Let’s Use This Opportunity to Do Away With Pre-Grant Oppositions

It’s laudable that the proposed amendments would still only vest patentees with the power to bring suit once the patent has issued.  But the proposed amendments don’t go far enough in that they still maintain Israel’s outdated and flawed pre-grant opposition system.  Under this system, any third party can oppose the grant of the patent (without the need to identify the real party in interest).  Under current rules, the mere filing of an opposition will guarantee delay of the grant of the patent by at least two years, unless the opponent withdraws the opposition, and no patent term adjustment is available for this lost time should the applicant prevail and the patent be granted.  Furthermore, the fee for filing an opposition is relatively small, as are the costs imposed by the Commissioner on losing opponents.  Not surprisingly, as a result there are several local companies that serially oppose their competitors’ patent applications. 

 

Notwithstanding the ease of initiating opposition proceedings, in general opponents avoid infringing during those proceedings, as they currently face the prospect of full damages for infringement occurring during the proceedings should the application be upheld and the patent granted.  Removing the prospect of full damages, and replacing it with the proposed compulsory licensing scheme, would not only increase the likelihood of infringement during opposition proceedings, it would actually encourage both the filing of additional oppositions, and the protraction of those opposition proceedings: the longer an opponent can delay the grant of the patent, the longer it can benefit from the low-cost compulsory license at reasonable royalty rates.   

 

One option to avoid this problem, and the one that appears to me to make the most sense, would be to scrap oppositions altogether, and have patents issue upon publication of notice of their allowance.  Israel adopted pre-grant oppositions from the 1949 British Patents Act, but the British abandoned the practice when they revised their statute in 1977, and it’s about time Israel did the same.  (An exception could be made, perhaps, in cases of applications that weren’t published until their allowance, should the ability to maintain an application in secret be preserved under certain conditions.) 

 

Although under my proposal, opposition proceedings would be abolished, cancellation proceedings before the Commissioner would still be available to parties who think a patent has been erroneously granted.  Moreover, given the fact that applications would now be published early, interested parties would have plenty of time to track the progress of applications and decide if cancellation proceedings are warranted.  Furthermore, unlike the post-grant opposition under EPO practice, which must be filed within nine months of grant, cancellation proceedings in Israel can be instituted at any time.

 

(I note that there is some case law from the ILPTO itself suggesting that the burden of proof is somehow different, or even rests on different shoulders, during opposition versus cancellation proceedings, but this notion is specious: in either case, the party opposing the application/patent must put forward a prima facie showing of unpatentability, and once such a showing is made, the applicant/patentee must rebut it.  As there is no statutory presumption of validity under Israel law, and the only presumption of validity is the usual presumption of validity accorded to administrative action, there really is no difference between opposition and cancellation proceedings in this regard.)

 

Should the powers-that-be prove too wimpy to follow the lead of the British, at the very least they could amend the procedural rules for oppositions to make them more streamlined.  Currently, an opponent has three months from the publication of the allowance of the application to file a Notice of Opposition, then another month thereafter to file its Statement of Arguments, and yet more time later to file written evidence; it is in no small part the time periods set forth in these rules that result in the long delay in patent grant effected by opposition proceedings.  Under a system in which the substance of an application is only made public at the end of examination, there is some sense to such a time frame. But in the situation where the application file is open to the public for most of the application’s pendency, as is now proposed, there is no reason why all these steps can’t be combined, e.g. by requiring opponents to file an opposition, including arguments and written evidence, within a few months of the grant of the patent.  In fact, this is just the system in place currently for cancellation actions: the party moving to cancel a patent must file its arguments and written evidence at the time it requests cancellation of the patent.

 

 

Single Fee: Bad Idea

Another feature of the proposed amendments is the introduction of a single fee for patent applications that would cover filing, examination and publication.  This seems to be unwarranted.  Not all applications will be examined, and those that are examined will not necessarily be allowed; why should applicants pay for steps that their applications may never undergo?  The combining of the application and initial publication fee makes some sense, and in practice is what happens today; the only difference under the proposed regimen is that the initial publication would include additional details.  But the separation of application and examination fees, which does not presently occur, also makes sense, as this would allow applicants to decide if they really want to pursue examination.  (Of course, it would deprive the ILPTO of revenue, which is why my proposal is unlikely to be adopted.) 

 

 

Limiting the Ability to Correct Applications?  Limiting the ILPTO’s Ability to Request Marking of Applications?

An interesting feature of Israel patent practice follows from §§ 22 and 23 of the statute, which read as follows (my translation):

 

22.    Any time before the acceptance of the application, the applicant may amend the specification of his application, whether in response to a notice per section 20 [i.e. an office action – DJF] or of his own volition.

 

23.    If amendments of a substantive nature were entered in the application, the Commissioner may conclude that for purposes of sections 4, 5 and 9 [which deal respectively with novelty, inventive step and right of first filer - DJF] (1) if it is possible to distinguish between the amendments and the existing specification, that the date of the amendments is the date on which they were submitted to the ILPTO; (2) if it is not possible to distinguish between the amendments and the existing specification, that the date of the entire application is the date on which the amendments were submitted to the ILPTO.

 

Together, these sections give applicants the right to introduce new matter into their applications by way of amendment after the application has been filed.  To the extent the new matter is distinguishable from the originally filed application, the new matter alone receives the date on which it was filed (and consequently may not be entitled to priority); to the extent the new matter is indistinguishable from the rest of the application, the entire application is accorded the later filing date. 

 

As a result of §23, ILPTO examiners often ask applicants to label portions of their applications with the later filing date.  In practice, such requests are usually made not in situations in which new matter was added after the filing date, but rather in national phase applications where new matter was added at the time the PCT application was filed, and is thus not entitled to the claimed priority date.  Although imposing something of an administrative burden on applicants, the practice is quite useful for third parties parsing the patent, as it readily lets them know what material is entitled to what date.  (Compare this to the situation in the USA where significant effort can go into determining what part of a CIP at the end of a long chain of CIPs is entitled to what filing date.)

 

The proposed amendments would do away with §23.  This in itself seems unremarkable.  As the explanation of the proposed amendment notes, if an applicant wishes to introduce new matter, he is free to file a new application (which will be accorded the later filing date).

 

 

Limiting Applicants’ Ability to Amend or Add Claims?

Presently, an applicant may amend a pending application for any reason, and may amend inter alia by expanding the scope of the claims and by adding claims.  Under the proposed amendment, §22 of the statute would be amended to read,

 

22.    Any time before the acceptance of the application, the applicant may amend the specification of his application, whether in response to a notice per section 20 or of his own volition, for the sake of clarification, removal of a mistake that fell in the specification or for the sake of reducing [the number of] its claims.

 

Several interesting points arise from this proposed amendment.  The first is, just what would be considered “clarification” or “removal of a mistake”.  In particular, would expansion of a previously filed claim to include disclosed but previously unclaimed subject matter be considered “clarification” or “removal of a mistake”?  Or would applicants be stuck with the breadth of the claims they initially filed? 

 

While the proposed additional wording is identical to wording that already appears in §65, which governs the amendment of the specification of an issued patent, recourse to §65 is not helpful in construing proposed amended §22, because §66 states that when amending a granted patent, the scope of the claims may not be expanded.  Thus hitherto, there hasn’t been need to determine if “clarification” or “removal of a mistake” includes expansion of the scope of a previously filed claim, because such expansion was precluded by virtue of §66.  Of course, the argument can be made that if §66 is necessary to tell us that expansion of the scope of the claims in a granted patent is verboten, then such expansion of scope not forbidden under §65.  Nevertheless, the point hasn’t been decided before, and the possibility exists that the Commissioner or the courts could take a restrictive view regarding permissible claim amendments under the proposed amended §22.

 

Another point is that applicants would be statutorily barred from adding claims to their applications.  But barring applicants from expanding the scope of their claims or adding claims, is both shortsighted and impractical.  Anyone with any prosecution experience knows the addition or expansion of claims during prosecution happens all the time, for example to cover disclosed embodiments that weren’t previously specifically claimed, or in order to add dependent claims that cover species previously only covered by a genus claim.  In order to avoid such a draconian limitation on their freedom of action, applicants with the money to so will simply front-load their applications with many claims in order to preserve for themselves the right to in essence file new claims later by “amending” earlier-filed claims.  For such applicants, such front-loading will merely entail a waste of resources.  Applicants with more limited resources will be forced to make choices early in prosecution about which embodiments to protect, in the process possibly foregoing protection for commercially important embodiments. 

 

The question would also arise if under the proposed amendment, national phase applications could be amended at the time of national phase entry to include more claims than were filed in the PCT application.  Indeed, since the effective filing date for national phase applications is the PCT filing date, it would seem the proposed amendment could be construed as prohibiting PCT applicants from amending their claims under PCT Articles 19 or 34 so as to include more claims than originally filed – in contravention of Israel’s obligations under the PCT.

 

So the proposed change to §22 impractical and unwise.  But mostly, it is unwarranted.  §§ 12 and 13 of the statute already provide that the specification must contain an enabling disclosure of the invention, and that the claims must reasonably arise from the description.  Inasmuch as under the proposed amendment package, patent prosecution will now be transparent, there is no reason to force applicants to front-load their applications with every conceivable claim they might want later on.  Applicants should be able to claim anything for which there is support in the specification; interested third parties will be able to follow the progress of the application and assess their infringement and (in)validity positions vis-à-vis those claims long before the claims are granted.

 

 

Third party observations and estoppel provisions?

Since under the proposed amendments third parties will be able to follow the progress of patent applications, the question arises if third parties should be able to comment on those applications while they are still being examined.  U.S. law makes it virtually impossible for third parties to participate in the examination process once an application has been published; in contrast, the EPC allows for anonymous third party comments on pending applications. 

 

Presently there is nothing in the Israel patent statute that explicitly permits or prohibits the participation of third parties, so a third party could assert that in the absence of a prohibition, it is allowed to file observations.  However, since applications are not presently open to the public, practically speaking third parties can’t participate in the ex parte examination process. 

 

This practical consideration will change once it becomes possible to follow the progress of applications through the ILPTO.  When that happens, I can conceive of situations in which I would advise clients to anonymously file observations with the ILPTO, even in the absence of statutory provisions governing the filing of such observations.  Given the ILPTO’s hyper-sensitivity to “the purity of the patents register”, it’s entirely possible that the ILPTO would pay attention to such arguments.  If the ILPTO ignored those arguments, the client could have alternative arguments waiting in the wings for use in inter partes opposition or cancellation proceedings; and because the first set of arguments would have been filed anonymously, no form of estoppel would attach to the client’s ability to present the second set of arguments during the inter partes proceedings.

 

Which is why it would be good to include provisions in the statute that explicitly govern the participation of third parties in the examination process, and that would create estoppel so as to prevent third parties from having more than one bite at the apple.  There are essentially six grounds on which a third party can challenge a patent or pending application: lack of novelty; lack of inventive step; insufficient disclosure; claims which are unclear or do not reasonable arise from the specification; failure of the applicant to comply with its duty of disclosure; and lack of applicant’s standing to apply for the patent (i.e. it was someone else, not the applicant, who was entitled to apply for the patent.)  If a third party wants to challenge a pending application on any of those grounds, it should be allowed to do so, but it should then be estopped from later challenging the application or issued patent on a ground earlier raised (provided that the applicant did not amend its claims in response in order to moot the objection).  So during prosecution if a third party wants to assert that a pending claim lacks novelty or inventive step, and the ILPTO determines that the claim is novel and inventive, that third party should be statutorily estopped from raising a lack of novelty of lack of inventive step challenge later, even on the basis of different prior art.

 

 

Requirement to Include an Abstract – “Essence of the Invention”

Presently applicants are not required by statute or regulation to provide an abstract of the invention. Rather, at present §26(b)(5) says that when the Commissioner publishes notice of acceptance of the application, he shall include “A description of the essence of the invention, in the view of the Commissioner”.  As discussed here a few months ago, the Commissioner recently tried to shift to applicants the onus of providing an abstract; at the time, I posited that the Commissioner was not empowered to impose such a requirement.

 

The proposed amendments would enshrine the Commissioner’s requirement in the statute by adding §13(c), which would read,

 

13(c).    The applicant shall attach to the specification a brief description of the essence of the invention in his application. 

 

As explained in my earlier post, unwary applicants could find themselves sacrificing claim scope by complying with such a requirement, since the term “essence of the invention” is the same term used in §49 of the statute, which is the section that establishes that the patentee has the right to prevent others from exploiting an invention for which a patent has been granted, “whether in the manner defined in the claims or in a similar manner that includes, in view of what is defined in the claims, the essence of the invention that is the subject of the patent”.  Thus, in cases where literal infringement cannot be shown, the patentee needs to demonstrate infringement of “the essence of the invention”.  Applicants would therefore be remiss to put statements into the record that could be used to restrict the scope of this “essence of the invention”.  Unfortunately, proposed §13(c) would force applicants to do just this.  As with the restrictions on the number and amendments of claims, such a requirement would thus unfairly force applicants ab initio to potentially limit the scope of the protection to which they are entitled.

 

The addition of §13(c) need not undermine §49.  For example, at the same time §13(c) is added, §27 could be amended to read as follows:

 

The description of the essence of the invention as published under §16A(a)(5) or §26(b)(5) shall not be used by a court or the Commissioner as evidentiary material when they come to interpret the specification or in any other way establish the scope of the protection conferred by the patent in any legal proceeding.

 

Alternatively, the words “essence of the invention” could simply be removed from proposed §13(c), so that it would instead read, for example, The applicant shall attach to the specification a brief description of the invention disclosed in his application.

 

Not even sublime, just ridiculous - part 1

Israel has both pre-grant patent oppositions as well as post-grant revocation proceedings.  Sometimes the PTO’s decisions in these proceedings make sense.  Sometimes they don’t.  A recent opposition decision, Unipharm v SmithKline Beecham (opposition to patent application no. 117035) falls squarely into the latter category.  In fact, it’s so egregiously bad it’s going to provide fodder for several posts.  I will leave a full discussion of the facts, and my criticisms of the PTO’s reasoning (or lack thereof) for another day. 

 

Today I provide a brief synopsis of the facts and two practical implications for practice before the Israel PTO.  For those who don’t have time or patience to read all the way through even this brief presentation, the practical implications are as follows:

 

(1)

If you have a particularly valuable application pending in Israel that has claims to different types of statutory subject matter, you should consider dividing the application, even if the ILPTO doesn’t tell you to do so.  This is because if the application is opposed, and claims directed to one class are found to be unallowable, the claims to the other class(es) may go down as well, solely on the grounds that they are grouped with the unallowable claims.

(2)

When citing your own earlier application as prior art to the Israel PTO, be sure to cite all the priority applications for that earlier application, unless you’re sure your earlier application contains all the statements that appeared in the priority application.  Failure to do so can be deemed to be the Israel equivalent of inequitable conduct.

  

In a decision given April 16, 2009, the Deputy Commissioner (DC) sustained an opposition to an SKB application that claimed crystalline paroxetine hydrochloride anhydrate (PHA) and a method for making this material.  The DC ruled that the material per se was not novel, because SKB had earlier produced the material.  SKB had argued that since the (published) method by which the material had originally been made stopped working a few years later, and at the time the subject application was filed, that known method yielded the hemi-hydrate, not the anhydrate, there was no enabling description in the prior art at the time the subject application was filed.  Therefore, said SKB, the anhydrate per se was novel at the time the application was filed.  The DC rejected this argument and said that the crystalline anhydrate per se existed, and therefore the claims on this material were anticipated.

 

There were two unfortunate parts of the decision.  The first was that although the DC acknowledged that the newly-claimed process for making the anhydrate was novel and non-obvious (it took several years for SKB to develop the new process, and the process itself involved crystallizing the anhydrous material from an aqueous solution!), he nevertheless refused to allow the method claims, saying that since they were grouped in the same application as the unallowable crystalline form claims, the method claims too had to fall - even though he could have exercised his discretion and allowed the method claims, or ordered their division from the unallowable crystalline form claims. 

 

The second unfortunate part was the DC’s determination that the entire application should also be rejected for failure to disclose prior art.  This part of the decision stemmed from the fact that although SKB mentioned in the application itself the earlier patent, EP 223403B1, which disclosed PHA, SKB did not disclose the existence of an earlier British application from which the ‘403 patent claimed priority.  As will be discussed in a later post, there were slight differences between the priority document and the patent, and apparently the DC felt that these differences were sufficient to warrant non-issuance of the patent – the Israeli equivalent of inequitable conduct in the U.S.A.

 

This is the first opposition of which I am aware in which the ILPTO refused otherwise allowable claims on the grounds that they were grouped with unallowable claims.  Had GSK divided the application and filed the method-of-making claims in a divisional, the DC could not have invoked these grounds for rejecting the claims.  And while it is not the first opposition in which an application has been shot down for failure to disclose prior art, it is the first of which I am aware in which the non-disclosed prior art was a priority application for a patent that the applicant did disclose.

 

It is unclear if this case will remain an isolated instance with regard to the grouping of non-allowable claims with allowable claims, or heralds a new approach from the ILPTO.  It could just be an isolated case, as the rejection of the method claims may have been the DC's way of punishing the applicant for attempting to obtain claims on a material that the applicant acknowledged had at one time been known; this particular fact pattern is unlikely to repeat itself, and thus the PTO may be unlikely to invoke such punitive measures again.  It could also be an isolated instance because this part of the decision may be deemed on appeal to be dictum: since DC also ruled that the entire application was unallowable for failure to disclose prior art, it may be that the DC's statements about the grouping of the claims isn't part of the holding.

 

If, however, the DC's statements indicate a new approach on the part of the ILPTO (even if in this case are they are deemed to be dicta), this new approach places applicants in a tenuous position: once an application has been accepted (i.e. published for opposition), an applicant may cancel claims from the application, but he cannot expand the scope of the claims and he can no longer file divisionals (although, as mentioned above, the Commissioner can order division during an opposition).  Thus applicants in Israel may now be facing the choice of (possibly unnecessarily) dividing the application during ex parte prosecution, or not dividing but then losing otherwise valid claims because the applicants weren't prescient enough to know that some of the other claims would be found invalid during opposition, thus dragging the rest of the application down with them.

 

Because of this decision, its uncertain impact (GSK still has time to appeal the decision, and it cannot be predicted when a decision will be given in the appeal if filed), and the fact if adopted as policy by the ILPTO, applicants' hands will be tied once their applications are published, it appears that in cases of important applications having claims directed to different statutory classes (composition of matter, method for making, pharmaceutical composition and use), applicants should consider voluntarily dividing the application before acceptance.

 

As to the failure to disclose the priority document, if the DC’s determination stands, then it would seem incumbent upon applicants, at least when citing their own prior patents or published applications, to also cite the corresponding priority applications.