America-Israel Patent Law

Getting the Best Medicines to Market, Not Just the Medicines with the Best Patents

Yesterday the latest copy of my college alumni magazine arrived.  The magazine included an article on the campus’ new chemistry building, built at a cost of about 280 million dollars, and funded entirely by royalties from U.S. patent no. 5,344,932.   That patent covers pemetrexed, the active ingredient in Eli Lilly’s Alimta^® anti-lung cancer drug, which first received FDA approval in 2004.  

Aside from making me wistful for my college years – it turns out that youth really is wasted on the young – and envious of the students who will have the opportunity to do labwork in this stunning new edifice (instead of toiling in the bowels of a 1930’s-era labyrinth, as did yours truly), what struck me was the accompanying article on the litigation around the ‘932 patent.  Or rather, my nonchalance with respect thereto.  

Specifically, my wife thought it interesting that my alma mater is suing Israel-based Teva, its subsidiary Barr and APP Pharmaceuticals for infringing the ‘932 patent.  I was unperturbed.  “Hon, this kind of litigation is routine with drug patents.  I’d be shocked if the generic drug manufacturers didn’t challenge the validity of the patent and there wasn’t a lawsuit.”  Only after making the remark did it strike me how utterly bizarre it is not only that Orange Book listings, paragraph IV certifications and the resulting lawsuits, and reverse payment settlements are the norm, but just how inured those of us who practice in this area of the legal world have become to this situation. 

The incident drove home, not for the first time, the picture painted by Robert Armitage in a presentation he gave last May at the American Intellectual Property Law Association’s spring meeting in New York.  Mr. Armitage is Senior Vice President and Chief General Counsel of Eli Lilly, and his talk focused on the fact that under the Waxman-Hatch system, the new drugs that get developed are those with the best patent protection; these are not necessarily the drugs for which there is the greatest need.  The following summary is my own restatement of Mr. Armitage’s talk, but I strongly urge readers to read his entire paper, which may be downloaded here, with the gracious permission of Mr. Armitage.

The talk began by looking at the motivations and goals surrounding the enactment of the Hatch-Waxman amendment in 1984.  New drug development, including the requisite clinical testing and the physician education and marketing necessary to get new drugs prescribed, is inherently a high-risk investment.  Consequently, new drugs are priced to provide a return commensurate with that high risk.  Waxman-Hatch was designed to create a generic drug industry that would sell copied versions of new medicines for roughly the cost required to manufacture those medicines.  It was anticipated that because generics would in effect be government-certified substitutes for the new medicines, which could be prescribed and dispensed to patients in lieu of the new medicines, generics would be able to take over the market for the new medicine, without the need to brand the copied versions, to otherwise promote them, or to educate physicians regarding their use.  Unburdened of these needs and the costs of new drug development, the entry of generic competitors to a particular drug would cause the price of that drug to drop.  In this regard, the legislation was right on the mark: in the United States, the entry of generic competition causes drug prices to plummet.

Nevertheless, Hatch-Waxman appreciated that the originators of new drugs would need to be able to recoup their investments and produce profits, or else those investments wouldn’t be made in the first place and the new drugs would never see the light of day.  The legislation chose to protect the innovators’ interests in a patent-centric manner: 

●             On the one hand, under Waxman-Hatch innovators were required to list relevant patents with the FDA, and the entry of generic drugs into the market was to await the expiration of those FDA-listed patents that would be infringed if the generic version were to be marketed.  Generic drug manufacturers, on the other hand, were provided with a vehicle to seek approval for their copies of the innovator drug prior to patent expiration, and were provided a mechanism to challenge the validity, and to defend against a prospective charge of infringement, of any of the originator’s FDA-listed patents, in order to determine the actual timing for generic drug entry. 

●                Furthermore, to encourage prompt challenges of questionable patents, generic companies were given an incentive to challenge the validity or the infringement of the FDA-listed patents: successful challengers were given the right to be the exclusive generic drug entrant into the market for a 180-day period.  This generic exclusivity period was justified on the basis that, absent the successful challenge, there would have been no generic drug entry until a later patent expiration date.

●                Additionally, recognizing that the time taken to prove the safety and efficacy of a new drug might eat into the patent lifetime, Hatch-Waxman provided a means for innovators to obtain up to five years of extension for a patent covering a new drug whose entry into the market had been delayed by the FDA approval process. 

This patent-centric regime does a poor job of ensuring that important new drugs reach the public.  The principal problem with Hatch-Waxman in creating this patent-centric regime was that, even when originally enacted, the legislation didn’t take into account the fact that patent life doesn’t correspond to the realities of pre-market drug development, let alone post-market drug development.  There is a time lag between patent filing and FDA approval; since the enactment of Hatch-Waxman, that time delay has only gotten worse. 

Thus under the no-publication-until-grant, 17-years from patent grant system in place at the time Hatch-Waxman was enacted, the scheme envisioned by the legislation wasn’t perfect, although it wasn’t necessarily unreasonable either.  Innovators with still-pending patent applications on new active ingredients that were likely to mature into drugs could delay the grant of the patents until around the time of FDA approval by making appropriate use of continuation applications.  And innovators with granted patents could still obtain an extension of patent term to compensate for time lost from the effective patent life due to regulatory review.  Nevertheless, it was possible for innovators to lose effective patent life due to the lag between patent grant and FDA approval of the new drug.

Subsequent to Hatch-Waxman, as part of its obligations under GATT-TRIPS, the United States moved to a 20-years-from-earliest filing regime.  This change in the law, without a commensurate change in the Hatch-Waxman provisions, meant that the effective lifetime of patents on new active ingredients was significantly foreshortened.  Under the post-TRIPs regime, patent applications still need to be filed early in the development process, but if FDA approval takes more than five years – which is routinely the case – the innovator isn’t compensated for the lost effective patent lifetime. 

Moreover, as part of the Medicare amendments of 2003, the 180-exclusivity for first generic filers was spread around to all generic drug companies that were the first to file abbreviated new drug applications (ANDA) on the same day, rather than the one company that was first to file in absolute terms, even if that was by a matter of minutes.  This has resulted in more generic challenges to listed patents.

As a result of this situation, companies that develop new drugs are reluctant to do so for any particular drug candidate if the drug approval process will be too long, because their period of market exclusivity – the period in which they will realize a return on their investment and generate profits for shareholders and, more importantly, for re-investment in the development of newer drugs – will simply be too short to justify the investment.  That’s the case even for drug candidates for which patent protection is available.  If there is no patent protection, forget about it: there will be no new drug, because no one will invest the hundreds of millions of dollars necessary to bring the drug to market.  (Although in the USA an innovator receives 5 years of FDA data package exclusivity protection independent of the existence of any patent protection, that five-year period is insufficient to warrant the necessary development in new drugs.)

Perversely, it is precisely the potential drugs that require the most testing, such as drugs for cancer or chronic diseases, that are the victims of this situation.  A case in point from Israel: there’s a research group here that in the early 1990’s synthesized and identified some potential anti-Alzheimer’s drugs, and file a patent application at that time.  Sometime after June 1995, the group filed a new application on some new compounds synthesized as part of their ongoing research.   Unfortunately for the group – and, possibly, for people with Alzheimer’s and their families – the group’s patent attorney made the mistake of filing the new application in the USA as a continuation-in-part of the first application, even though the new compounds could have been filed in a stand-alone application.  As a result, the new compounds lost several years of patent protection, and no one wanted to make the investment necessary to develop a commercially available drug from the group’s research.  The compounds are still sitting on the shelf today.  Maybe one of those compounds will make a good medicine for Alzheimer’s, but unde the current Hatch-Waxman scheme, we’ll never know, since at present, good patent protection is a necessary component of new drug development.

Mr. Armitage’s proposed solution for this problem is to de-couple protection for innovators from patent portfolios, by granting innovators 14 years of data exclusivity for their newly-approved drugs.  (The 14-year figure is taken from the article by Henry Grabowski published in 2008 in Nature Reviews Drug Discovery, Vol. 7, pp. 479-488.) 

This would elegantly address several issues: 

●             First, it would establish for all parties when generic competition may enter the market, rather than leaving that determination in limbo as courts deal with multiple Hatch-Waxman challenges to an innovator’s FDA-listed patents.  This in turn would enable innovators to properly assess the economics of proceeding with drug development.  It would also liberate resources within both innovator and generic companies that currently are directed to patent litigation.

●             Second, it would enable innovators to conduct after-launch testing and monitoring of the drug, including the development of new indications for the drug.  Such after-launch monitoring has become a matter of increasing concern in recent years, as the public has come to understand that the FDA does little in the way of after-launch monitoring. 

●             Third, it would not preclude others from conducting their own clinical trials and bringing their own copies of the approved drugs to market before the end of the 14-year period.   

●             Fourth, and most importantly, it would facilitate the development of drugs for cancer and chronic diseases, as the innovator would not have to concern itself with a ticking patent clock while it conducts the clinical trials necessary for drug approval.  In other words, it would enable development of the best medicines, not just the medicines with the best patents.

Mr. Armitage’s proposal makes awfully good sense.  Which is why I don’t hold out hope of it being adopted by legislators any time soon…although occasionally politicians do get things right…

Civil Servant Gone Wild 2: Israel Commissioner of Patents Admits to Flouting the Law; Status of Thousands of Patents Questionable

[revised October 20, 2010]

In earlier posts, I’ve reported on a number of policies adopted by Dr. Meir Noam, the current Israel Commissioner of Patents, that represent departures from previous practice.  Thus, for example, the Commissioner unilaterally decided that a divisional of a divisional application must be filed before allowance of the grandparent case is published, despite clear wording of the statute and forty years of practice to the contrary.  Similarly, he has begun charging for suspension of examination, although strictly speaking imposing this charge was within his discretion.  He also has sought to impose draconian prior art reporting requirements.  Furthermore, also as reported earlier, the present Commissioner has been pushing for Israel to become a PCT search authority.

My take on these moves as a whole is that they are a response to a need to increase ILPTO revenues (or decrease expenditures).  Several years ago, the ILPTO was made a state “authority”, a state organ that operates under the aegis of the Justice Ministry but which operates independently insofar as budget and revenues is concerned (although the fees charged by the ILPTO are still set jointly by the legislative and executive branches).  No fee diversion here, as used to be the case in the USA, but it’s very much “eat what you kill”.  Thus Dr. Noam has overseen a massive increase in the number of patent examiners, something that unsurprisingly has resulted in a marked decrease in the backlog in patent examination; but this same expansion has also fueled the need for new revenue sources.

Thus, by forcing applicants to file divisional applications earlier in the game, the Commissioner may think he will increase revenues from application filing fees.  Ditto for fees for suspensions.  And being a PCT search authority could provide an additional revenue stream.  Forcing applicants to provide office actions and search results from other jurisdictions could similarly decrease the time required for examiners to do their jobs, thus increasing examiner productivity.

Now it comes out that the need to increase revenues may have driven Dr. Noam to violate the law.  In testimony given this week before the Knesset, Dr. Noam admitted that for several years the ILPTO has been collecting publication fees but not actually publishing applications.  The testimony was given in the context of committee hearings regarding a bill to do away with paper publication of applications.

To explain, currently applications filed in Israel are not open to the public until they have been allowed by the ILPTO.  At that point the applicant pays a publication fee, after which the state publishes a notice concerning the allowance of the application.  That notice contains details of the application and an abstract.  The application file also is opened to the public at that time, and third parties have three months to oppose the grant of the application.  The notices regarding allowance of patent applications, as well notices concerning patents granted, lapsed, opposed, extended, and applications filed (the latter containing only limited information) are published together in The Patents Journal (the ILPTO equivalent of the USPTO Gazette), which is published approximately 12 times each year.  The Patents Journal is not published by the ILPTO but by the Government Press Office (GPO), which publishes most state publications; it considered part of “Reshumot”, the official state publication in which most official notices must be published.

Up until a few years ago, the Patents Journal was published in paper form.  Beginning in January 2007, the ILPTO decided to stop publishing paper copies of the Patents Journal, and to only publish the Patents Journal electronically on its website.  Interested parties could pay to receive a copy of the Patents Journal on CD-ROM.  Recently a bill was introduced into the Knesset to do away with publication in Reshumot altogether, the proposal being that publication would occur only on the ILPTO web site.  In essence, the bill would change the law to enshrine what has been the de facto practice of the ILPTO for the past several years.  (Such legislation in Israel is not unique to the patents context.) 

Testifying in hearings this week at the Knesset regarding the bill, Dr. Noam admitted that the ILPTO continued to collect publication fees even after it had stopped paper publication, despite the fact that the statute did not authorize the ILPTO to collect fees but not publish physical, paper notices regarding allowance in the Patents Journal.  “Yes, we stopped providing the service [of physically publishing notice of allowance of applications], but we did so in good faith and because the Government Press Office did not meet publication deadlines”.  Furthermore, explained Dr. Noam, “Nowhere in the statute does it state that the publication must be on paper – from our perspective the publication can equally be on a computer disk, and this is what we did.”

Funny that last remark, on several counts.  First, as I’ve mentioned before, the ILPTO currently requires applicants to file paper copies of their applications; only recently did the Commissioner say that long applications would have to be filed in electronic format.  Hypocrisy?  Second, there are problems with the ILPTO’s web site.  On more than one occasion, I have been unable to access copies of the Patents Journal.  Third, even when accessible, the website does not include copies of the Patents Journal from before approximately 2005.  Ironically, the ILPTO’s own physical library no longer contains copies of those older Patents Journals either – some genius decided that they could throw out those copies.  (I suppose copies of the older journals can be found in some of the university law libraries.  Maybe.  Or maybe at the National Library.)  

MK David Rotem, the chairman of the committee, was none-too-pleased: “You simply flout the law!  Acting on your own authority, without any legal advice and without oversight, you decided to stop [the practice] of [physical] publication.  Not only did people pay for a publication that you decided to do away with, no one can find the publication, because you decided the publication would occur only on the internet.”  Then came the zinger: “This is an illegal situation and you must return to those individuals the monies you collected for a publication that never occurred.  If there’s no publication, there’s no fee!”

In response Dr. Noam claimed that the publication fees were necessary to cover the search and examination costs of the examiners.  Really?  So why do applicants for patents in Israel pay filing fees? 

Maybe Dr. Noam should have lobbied the Knesset to change the statutorily-established fee structure, for example to increase the filing fee or impose a search and/or examination fee.  But as he’s demonstrated several times now during his tenure as Commissioner, niceties like democratic processes for changing policies aren’t his style.

It’s also interesting that Mr. Rotem was so upset about the payment of fees for publication that only occurs online.  At present, the Patents Journal is still typeset, by the ILPTO itself.  That takes time and money.  The one difference between the practice since 2007 and prior practice is that paper copies are no longer printed, thus enabling the ILPTO to immediately post the electronically typeset documents on its website, rather than waiting an additional period of time for the paper copies to be printed.  Clearly, the move to electronic publication resulted in both publication efficiency in terms of time, as well as cost savings, with the ILPTO pocketing the latter.  But, contrary to what Mr. Rotem implied, at least some of the publication fee monies were spent on publication (albeit publication that did not occur in Reshumot), even if most of the funds were being funneled to other ILPTO activities. 

More importantly, the bill under consideration by Mr. Rotem’s committee, at least as published, would retain the various publication fees that currently appear in the statute, thus perpetuating the existing de facto situation.  It’s not clear if Mr. Rotem appreciated that fact, although you’d think that as a holder of a law degree from Hebrew University he did.  Could it be that his excoriating of the Commissioner was grandstanding?  Nah.  Who ever heard of a politician doing something like that?

It’s also interesting to note that hitherto no one in the Israel patent community, including yours truly, picked up on the fact that the Commissioner’s decision to move to online-only publication was ultra vires, or that if they did, they were silent about it. 

In any event, the fact that since 2007 no notices of the allowance of patent applications have been published in Reshumot in accordance with statutory requirements raises some interesting questions.  Under sections 26, 30 and 35 of the statute taken collectively, publication in Reshumot is a prerequisite for grant of the patent.  Does the Commissioner’s unilateral decision to stop publishing the notices in Reshumot mean that the validity of every patent granted since 2007 is questionable?  At this stage, I would advise any client accused of patent infringement to assert invalidity (or rather, non-issuance) as a defense: the Commissioner wasn’t authorized to grant the patent, because notice of the application’s acceptance was never published per section 26, so the patent is invalid (or never issued).  An analogous argument can be made for patent term extensions, which likewise have to go through a publication process. 

Even if today the GPO were to publish three-and-a-half years’ worth of patent notices, that would open up a three-month pre-grant opposition period for every single application so published.  Competitors and potential competitors are in a better position now than they were three years ago to assess the effect of a patent that should have been granted three years ago.  So maybe those competitors will take the opportunity to oppose patent applications that they wouldn’t have opposed three years ago.  Given that it normally takes at least three years for any opposition to be resolved, and there’s no mechanism in the statute to compensate patentees for time lost off their patent because of oppositions (remember, it’s a pre-grant opposition, no patent is granted until the opposition is dismissed), the Commissioner has now potentially taken from deserving patentees six years or more their 20-year patent term.

It may be that when all is said and done, the Knesset will need to retroactively fix this mess, by saying that publication on the ILPTO web site was sufficient retroactively to 2007, rather than prospectively from enactment of the legislation.  (Some readers will recall how a few years ago Congress did the same thing when Professor John Duffy noticed that many of the BPAI judges who had been sitting for some time and had participated in decisions been improperly appointed.)  This would appear to be the only way to preserve certainty for those innocent patentees and applicants who dutifully paid their publication fees, only to have the ILPTO not publish the applications in the manner mandated by law.

It’s unfortunate that such legislative action would also in effect reward Dr. Noam for his rogue behavior.  So maybe the Knesset can at the same time require the ILPTO to refund to the applicants, with interest, that portion of the publication fees paid during the period in question that would have been allocated to the physical printing of Patents Journal.  And the Knesset can prospectively lower the publication fee, since electronic-only publication will incur significantly lower costs than paper publication. 

Solvay v Honeywell: Even in the World's Only First-To-Invent Jurisdiction, You Don't Have to be First to Invent

I usually leave it to other blogs to comment on recent U.S. court decisions.  However, I thought that CAFC’s decision in Solvay v Honeywell International earlier this week nicely highlights some of the differences between U.S. and Israel patent practice, as well as at least one idiosyncrasy of U.S. patent law.

Solvay’s US 6,730,817 has an earliest priority date of October 23, 1995.  The patent claims a process for making 1,1,1,3,3-pentafluoropropane (HFC-245fa).  In 1994, Honeywell’s predecessor-in-interest, Allied Signal, entered into a research agreement with a Russian research center to develop a process for making this same compound.  Research results from Russia were sent to Allied Signal in the USA in July 1994, in a report that both sides agreed disclosed the invention claimed by Solvay.  In 1995, prior to Solvay’s priority date, Honeywell personnel in the USA repeated the Russian experiments, and throughout 1995 and 1996 continued to develop improvements to the Russian process (which eventually led to the issuance of a patent for Honeywell, although Honeywell’s patent was filed after Solvay’s). 

Honeywell eventually began to practice its process in the USA, and Solvay sued for infringement.  Given the facts above, one would think that Honeywell had an iron-clad invalidity defense: 35 U.S.C. §102(a) says in pertinent part that, “A person shall be entitled to a patent unless: (a) the invention was known or used by others in this country . . . before the invention thereof by the applicant for patent”.  The Russian research report which disclosed the invention was in the possession of Allied Signal employees well before Solvay’s priority date, and those employees also practiced the invention in the USA before that date.  That would seem to constitute knowledge or use in the USA (or both) by someone other than Allied Signal before Allied Signal invented its process. 

Unfortunately for Honeywell, until the filing of its own patent application on its improved version of the Russian-developed process, Allied Signal had kept its knowledge and use secret.  It is well-established caselaw that the “known or used” clause of  §102(a) means public knowledge or use.  See e.g. Rosaire v. Baroid Sales Division, National Lead Co., 218 F.2d 72 (5^th Circuit 1955).  Consequently, Honeywell couldn’t bring a defense under §102(a).    

Lacking recourse to §102(a), Honeywell turned to 35 U.S.C. §102(g)(2), which states that a person is not entitled to a patent if “before the applicant’s invention thereof the invention was made in this country by another inventor who had not abandoned, suppressed or concealed it.”  Honeywell argued that by practicing the Russian invention before Solvay’s priority date, Honeywell qualified as “another inventor” for purposes of §102(g)(2).  (Prior to 1999, the statute read “the invention was made in this country by another . . . .”;  as noted in footnote 3 of the Solvay decision, in Dow Chemical Co. v. Astro-Valcour, Inc., 267 F.3d 1334 (Fed. Cir. 2001), the CAFC held that, under both the pre-1999 version of § 102(g)(2) and the current version of the statute . . . it must be shown that an “inventor” made the claimed invention in order to establish a first-inventor defense.)  

The CAFC rejected this assertion: as it was the Russian scientists and engineers, not Allied Signal’s, who had conceived of the invention practiced by Allied Signal in 1995, Allied Signal’s employees were not inventors for purposes of §102(g)(2).  

As a result, Honeywell was unable to invalidate the ‘817 patent on grounds of prior use.

Sitting in Rehovot, there are two aspects of this case that strike me as interesting.  The first is that under the same fact pattern in Israel, the patent may have been invalidated for lack of novelty, and even if not, Honeywell likely would still have had a prior use defense.  In terms of validity, public use of a claimed invention anywhere in the world (not just in Israel) before an applicant/patentee’s priority date is a bar to patentability in Israel.  Clearly the question of whether or not the practice of the invention, in both Russia and the U.S.A., constituted a prior public use under Israel law, would have been litigated, and I won’t speculate on how a court here would rule.  But even if the patent wasn’t invalidated on those grounds, section 53 of the patent statute creates prior user rights:

53. Right by virtue of prior exploitation

Whoever on the determinative date was exploiting in good faith in Israel the invention for which a patent is requested, or who on that date made in good faith substantial preparations for its exploitation, is entitled to exploit the same invention himself and in the course of his business [operations] without consideration; for purposes of this matter, “the determinative date” [means] the date on which the patent application was applied for in Israel, and if a [Paris Convention] priority claim is made for that application under section 10 [of the statute], the date on which the priority application was filed.

On the priority date, Allied Signal had both practiced the invention and was making substantial preparations for its exploitation.  Allied Signal would therefore presumably have benefited from section 53.  Section 54 says that the rights under section 53 may only be transferred along with the business that uses the invention; as Honeywell took over Allied Signal’s HFC-245fa production business, presumably Honeywell would have been lawfully entitled to Allied Signal’s prior user rights in Israel.

The second point is that it is somewhat ironic that in the United States, for purposes of novelty-defeating prior use under §102(a), the prior use must be public, whereas under §102(e) the filing of a patent application can defeat both the novelty and the non-obvious of a later-filed application, even if the earlier application was not published at the time of the later filing.  See e.g. In re Giacomini.  Put differently, to be effective prior art in the U.S.A., prior use must be public, unless it has the hechsher of an earlier-filed U.S. patent application.  Thus, had Allied-Signal applied for a patent in July 1995 – a time at which U.S. patent applications remained secret until their grant, and not long after provisional patent applications became an option – on the Russian process, then this application would have been invalidating “secret” prior art to Solvay’s patent application, and Honeywell would never have had to contend with Solvay’s patent.

More on the ILPTO's Notice re PCT Priority Claims in the USA

Earlier today I posted about a notice circulated by the ILPTO in response to the USPTO’s decision not to recognize the priority claim of a PCT application filed at the Israel Receiving Office more than a year after the priority US provisional application was filed.  An interesting aspect of that notice that I didn’t discuss in the earlier post was the apparent failure of the ILPTO to grasp the limited scope of the USPTO’s position.  Although the notice can be downloaded here, for those who don’t read Hebrew the following is a translation of the notice; pay careful attention to the second paragraph:

 

1.             Recently a decision was given by the U.S. Patent Office on July 28, 2010 regarding a PCT application filed in Israel.  Attached is the decision for your review, following redaction of the detils that identify the applicant. 

2.             According to the decision, the USPTO will not recognize the priority claim if a PCT application is filed at the receiving office more than 12 months after the priority date, even if the “lateness” in filing the application was due days of rest, holidays and holy days on which the receiving office was closed.

3.             This decision is based on section 119(e) and 363 of the U.S. patent statute (35 U.S.C. 119(e), 35 U.S.C. 363) and Article 8 of the PCT treaty [redundancy in the original – DJF]. 

4.             I wish to clarify, that mail be submitted to our office until 24:00 of any work day of the [Israel Patent] Office.  It is not possible to submit any documents to our Office on days on which the Office is closed, including Fridays, Shabbat [Saturday] eves of holidays and holidays and days on which an appropriate notice is given to the public.

Dr. Meir Noam, Commissioner

The notice implies that the USPTO will never grant a priority claim when the PCT application was filed more than year after the priority date.  That’s not what the decision says.  The decision says that the USPTO will not accord priority when (a) the priority application is a U.S. application, and (b) the PCT was filed more than year after the priority application was filed (c) on a day when the USPTO itself was open for business – although as noted in the previous post, it appears that not everyone at the USPTO who processes applications is aware of this. 

Where the ILPTO got it wrong is that if the priority application is a non-U.S. application, and the RO was closed on the one-year anniversary, the USPTO may recognize the priority claim.  Thus, in the present case, had the priority application been an Israel patent application filed on October 11, 2005, then the USPTO probably would have recognized the priority claim for the PCT filed at the ILRO on October 15, 2006, the first day after October 11, 2006 that the ILPTO was open.   This is what happened in the case of US 7,700,057, which was filed as a national phase application of PCT/IL2006/001185, which itself was filed on October 15, 2006 claiming priority, inter alia, from two Israel patent applications filed on October 11, 2005.  USSN 12/083,371, although since abandoned, was filed under similar circumstances and likewise accorded the priority date of the Israel application.

It’s not clear if the ILPTO understood this subtle distinction or not.  It may be that the distinction was understood, and that paragraph 2 of the notice is just another example of the Commissioner’s lack of command of the written word (the earlier examples being the numerous times he sent out Circulars, only to have to subsequently send out one or more “clarifications” because he didn’t express himself clearly the first time).  Or it may be that the ILPTO really misunderstood the USPTO’s decision, a sobering thought considering how often reference is made to U.S. case law during proceedings before the ILPTO. 

Although in my original post on this topic, I suggested that the USPTO’s position runs contrary to the spirit of the PCT – a view I still hold – it has to be admitted that there’s a certain logic to the USPTO’s position: a PCT application is meant to replace a spate of national filings within the one-year Paris Convention priority deadline.  Here, if instead of filing a PCT, the applicant had chosen to file only in the USA, then clearly the U.S non-provisional application would have to have been filed by the one-year anniversary of the U.S. provisional application (or the next day on which the USPTO was open), in accordance with U.S. law.  PCT Article 8 addresses this situation in a straightforward manner: insofar as a priority claim is concerned, the effect of that priority claim in the jurisdiction in which the priority application was filed is governed by the local law of that jurisdiction.

What’s frustrating for non-U.S. applicants is that because of both the low cost of filing a provisional, and the fact that a provisional obtains a §102(e) date (as both a sword and a shield, see the recent In re Giacomini decision on this point), many non-U.S. applicants use provisionals as their priority applications.  Since those same applicants cannot avail themselves of the USPTO as PCT RO (although as the petition decision point out, under PCT Rule 19.4, they could also file at the USRO which would transmit the application to the IB), they’re stuck with using their local office or the IB for filing their PCT application.  And lulled into a false sense of security by PCT Rule 80.5, they get bitten when they discover that the USPTO won’t recognize their priority claim. 

I wouldn’t go so far to say that Israeli PCT applicants who file their priority applications in Israel can sleep tight when the one-year deadline for filing their PCT application falls on a date when the ILPTO is closed.  While it would make sense for the USPTO and other national patent offices to honor such ostensibly late priority claims – in order for an international treaty like the PCT to work, some accommodation for local differences in workweeks, holidays and the like needs to be made – prudence dictates that the one-year Paris convention deadline be treated as fixed, so that if the deadline falls when the ILPTO is closed, the PCT should be filed at the ILRO before that date (or at the IB).  Perhaps this is what the Commissioner was trying to say in yesterday’s notice.

The USPTO's Consistent Inconsistency

[Revised October 5, 2010, about 12 hours after the initial posting.  Thanks to Dr. Richard Korn of Potter Clarkson in the UK for catching the obvious - the provisional application number that wasn't redacted from the document sent out by the ILPTO.  That's what I get for blogging after midnight.]

At the end of last year I posted about the plight of an Israeli PCT applicant for whom the USPTO refused to accord priority from his earlier US provisional application.  The provisional was filed on October 11, 2005, but the one-year anniversary this date fell on a day on which the Israel PTO was closed, so the applicant filed its PCT at the ILPTO/RO on the next day that the ILPTO was open, viz. October 15, 2006.  The catch was that the USPTO was open on October 11, 2006, as was the PCT International Bureau.  So upon entry into the national phase in the USA, the USPTO adopted the view that the provisional had expired on the one-year anniversary, and therefore the applicant lost the benefit of that US provisional application.

Subsequent to that post, in February of this year the applicant petitioned the USPTO to accord priority from the provisional.  In August the USPTO issued a decision on the petition, in which it again said, “Sorry, Charlie”.  That’s not the interesting part of the story.  What’s interesting is that this tale has been making the rounds in the community of Israel patent practitioners for some time, but only yesterday did the ILPTO send out the attached notice warning practitioners about this potential problem, along with a copy of the petition decision in which identifying information was redacted.  (Click here to download a copy of the redacted petition decision; click here here for the unredacted petition decision.)   So while the Commissioner is to be commended for publicizing this issue, one wonders what took him so long to notice there’s a problem and/or to only now see fit to warn Israel practitioners of this potential pitfall. 

Even more interesting is the fact that the USPTO itself is inconsistent in its application of the U.S. patent statute and the PCT.  The application in question, Yissum’s PCT/IL2006/001187 (published as WO 2007/043057; the US national phase application is USSN 12/078,317 - see the filing receipt - and the provisional application number is 60/724,904) isn’t the only one having a provisional filing date of October 11, 2005 and a PCT filing date in the ILRO of October 15, 2006.  There are three others that fit that bill.  But this is the only one of the four in which the USPTO refused to recognize the priority claim. 

Thus, for example, PCT/IL2006/001179, published as WO 2007/043051, also claims priority to a US provisional filed on October 11, 2005, and was filed at the ILRO on October 15, 2006.  But in this case, the USPTO accorded the priority claim for that national phase application, USSN 12/089,421: the filing receipt reflects the priority claim to USSN 60/724,875, and the published patent, US 7,795,887, even shows the priority claim on its front page.  Similarly, the filing receipt for USSN 12/088,896, the national phase application of PCT/IL2006/001176 (published as WO 2007/043049), which was filed at the ILRO on October 15, 2006, shows the priority claim to USSN 60/724,794, which was filed on October 11, 2005.  And the same is true of PCT/IL2006/001174 (published as WO 2007/043048), filed at the ILRO on October 15, 2006: the filing receipt for the national phase USSN 12/083,222 shows the priority claim to USSN 60/724,790, filed October 11, 2005. 

I don’t know if Yissum plans to request reconsideration of its petition and to eventually appeal to the courts.  If the USPTO’s position with regard to Yissum’s application is ultimately upheld as being correct, then the putative granting of the priority claims in the other three cases is erroneous, and those applications are not entitled to the priority claims.  Conversely, if the USPTO’s position is wrong – a distinct possibility, given its recognition of the priority claims in three other applications in identical circumstances – why is the USPTO hassling Yissum?