[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.