In January 2010 I reported about the circulation of a draft bill to enable 18-month publication of Israel patent applications. As straightforward as such legislation might have seemed, apparently no piece of legislation is straightforward (witness the recent patent “reform” debacle in the USA), and several sets of written comments on that draft bill were submitted. Those written comments can be viewed somewhere (I don’t have the link at hand at present), although only yours truly’s were submitted in English. It’s also safe to assume that other comments were conveyed orally to the legislation section of the Justice Ministry, which is responsible for drafting legislation that the Government plans to submit to the Knesset. (Note to Americans unfamiliar with parliamentary systems of governance such as Israel’s: “government” is a term of art that refers not to the state apparatus in general, as it does in American parlance, but specifically to the cabinet made up of members of the ruling coalition.)
After being revised by the Justice Ministry and approved by the relevant ministers, this summer the bill was formally published and approved in a first reading by the Knesset. It now goes back to the relevant committee, the Constitution, Statute and Law Committee, which is due to discuss this bill on December 7.
One of my principal criticisms of the 2010 draft bill was that it would have precluded applicants for patents from amending their applications in any way after the 18-month publication of the application, by re-wording sections 22 and 23 of the patent statute. Fortunately, the published bill leaves these sections untouched, and thus, if adopted in its present form, will enable applicants to amend their applications (and most importantly, their claims) during prosecution – although, as will be discussed in a follow-on post, the local generic drug industry hasn’t given up and is apparently lobbying to have the bill changed so as to restrict applicants’ ability to amend their application, as well as to include several other undesirable changes to the statute.
In terms of substantive amendments that appear in the published bill, beyond 18-month publication itself, the amendments with the most dramatic effect, should they be enacted, are the following:
Submission of Prior Art by Third Parties, But Maintaining Pre-Grant Oppositions: At present, section 18 of the statute says that in examining patent applications, examiners must rely on at least one of (a) publications cited against corresponding applications in other jurisdictions; (b) prior art publications that are known to the applicant and are relevant to the invention; and (c) publications mentioned in the first two types of publications. Furthermore, section 18 empowers examiners to ask applicants to provide (1) copies of such prior art, or to (2) farm out the application to a third-party search service (a power which, to the best of my knowledge, the ILPTO does not generally exercise). The bill presently under consideration would add a clause that says that examiners may consider publications as mentioned in (a), (b) and (c), “even if [those publications] were provided to the examiner by a person other than the applicant”. In other words, if amended as proposed, the statute will formally sanction third party submissions of prior art.
Now, third party submissions per se are something with which repeat players in patent world are familiar. The most obvious example is in the EPO, where during the pendency of a patent application third parties may anonymously cite prior art, complete with comments thereupon. And although the USA has until now frowned upon third-party submissions during patent prosecution, even there it has been possible to force U.S. patent applicants to submit third-party-provided prior art, by providing an applicant’s U.S. patent attorney with a copy of publication, or by making a third party submission in the corresponding European case. In either case, the applicant in the USA will more likely than not feel compelled to disclose to the USPTO, for fear of being found later to have engaged in inequitable conduct by not disclosing the publication.
So it might seem that allowing third parties to submit art in Israel would be no big deal. But there’s a fundamental difference between Israel and the EPO or the USA: Israel has pre-grant oppositions; the latter two do not. Allowing both third-party observations and pre-grant oppositions would apparently be a uniquely Israeli invention.
I find two principal difficulties with the idea of allowing anonymous third-party submissions of prior art, with comments, while at the same time maintaining pre-grant oppositions. The first is that it gives adverse parties a chance to prolong prosecution, by continually submitting additional art to be considered, even if that art is irrelevant, and then by subsequently filing an opposition. Since a patent is not enforceable until after it is granted, this will amount to an effective foreshortening of patent lifetime, in a way that can benefit the adverse party. (See discussion in the section below re: reasonable royalties.)
More fundamentally, though, is that the coupling of third party observations with pre-grant oppositions gives adverse parties two chances to attack an applicant’s patent application. That goes against fundamental notions of fair play that are inherent in an adversarial system such as Israel’s. Those notions dictate that when A is adverse to B, A gets one shot to make his case against B, so he’d better put on his best case; A doesn’t get two bites at the apple. Those notions also dictate that in attacking B, A doesn’t get to hide behind a mask of anonymity, something that the bill would facilitate.
This isn’t to say I’m necessarily against third party observations. Like all reputable patent practitioners, I’m in favor of the most relevant prior art being before an examiner, so if a third party has found something more relevant that what an applicant or the examiner is aware of, it’s best for that publication to be brought to the examiner’s attention - the better the examination, the stronger the patent that results. But a third party should have a single chance to make arguments against an applicant’s claims, and it shouldn’t have tools to prolong examination and thus shorten the enforceable patent life. If Israel is going to allow anonymous third party observations, then it’s time to do away with pre-grant oppositions. Post-grant revocation proceedings will still be available, but at least at that stage the patentee will have a patent to enforce.
An alternative would be to allow third party observations during prosecution, but to preclude any publications provided by a third party from being relied upon by an opponent or the Commissioner in an opposition or revocation proceeding. The obvious difficulty with that proposal is that unscrupulous applicants would then anonymously dump damaging publications on the ILPTO to remove them from consideration in the context of subsequent inter partes proceedings.
So here’s a third suggestion: if the Knesset isn’t going to do away with pre-grant oppositions, and it’s going to insist on allowing third party involvement even before the opposition stage, then third parties should be limited being able to submit prior art, without commenting thereupon, and without providing comments from foreign patent offices, if such exist. Or as Joe Friday might have said, “Just the publications, ma’am.”
Patentee Only Entitled to Reasonable Royalty Damages For Post-Publication, Pre-Grant Infringement: Presently, a patentee can only bring a suit for infringement after the patent has issued, and is only entitled to sue for damages that occurred after the grant of the patent. Since pre-grant oppositions can be used to delay the grant of a patent, the result can be significant erosion of the patentee’s rights – a party can infringe throughout the opposition, and the patentee will have no recourse. The bill would still make grant of the patent a prerequisite for enforcement of rights. However, it takes a step in the right direction, in that it will create section 179(a)(1), which will entitle a patentee to reasonable royalties for infringement that occurs after publication and before grant, provided that the infringed claims are in fact among the published claims. In this sense, the bill mirrors the provisions of U.S. law – see 35 U.S.C. §154(d).
Unfortunately, I don’t believe the bill goes far enough (just as I believe U.S. law doesn’t go far enough in this regard). Reasonable royalties should be the baseline, but the patentee should be given the chance to prove and collect actual damages (lost profits). I say this both because lost profits will generally be larger than a reasonable royalties, and because it may prove difficult to establish what a reasonable royalty should be, which can lead to a damages determination that is arbitrary. Under the scheme proposed in the bill, in those cases in which reasonable royalty damages are likely to be lower than lost profits, infringers will be able to infringe pre-grant, and to lengthen that pre-grant period by submitting irrelevant prior art during prosecution and by filing a pre-grant opposition, during which time they will net more than they will have to pay out in reasonable royalties. They will thereby profit from their infringement.
An even more progressive approach would be to enable applicants to obtain injunctions while their applications are being opposed, subject to the posting of a bond to cover the potential infringer’s losses should the allegedly infringed claims be found unpatentable.
Retroactive Applicability: As worded, the bill will apply not only to applications filed after its enactment, but also retroactively, resulting in the publication of already-filed applications, with no means for opting out other than abandoning an application. But hitherto the quid quo pro in Israel has been publication only upon the completion of examination. To now force early publication upon all applicants is a breach of that understanding, a breach that will undoubtedly work to the detriment of some applicants who based their decision to file in Israel on this late publication practice (for example if they also filed in the USA with a non-publication request). There’s an easier solution: give existing applicants an opt-in period, during which they may request that their pending applications be published in accordance with the newly amended statute. At the very least they should be given a reasonable period in which to opt-out of such early publication, should they so choose.
Submission of computer-readable version of the application: the published bill would amend section 11 of the statute to require applicants to submit a computer-readable copy of the application, e.g. on a CD-ROM, as part of their filing. I find this proposal lacking in several respects. First, applicants will still be required to submit a paper copy of the application. What’s the point of requiring applicants to submit both paper AND electronic copies of the application? Either form should be sufficient. If the ILPTO can accept and process applicants’ electronic files, then applicants should be able to submit in electronic format, period. If it’s desired to encourage electronic filing, the filing fee could be discounted for electronic filers, as is the case with PCT filings and with USPTO filings. But if you’re going to amend this section, then dammit, allow applicants to file purely electronically.
Second, if you’re going to insist on remaining pre-21st century, then at least do so in a way that doesn’t require applicants to provide a copy of the application on a CD that has to be physically delivered to the PTO. Enable the transmission of the paper copy of the application by fax, and the transmission of the computer-readable copy of the application via email, or via a designated site for uploading such files.
Another issue I have is that, for national phase applications, requiring applicants to submit an electronic of the application is redundant, since an electronic version is already on file with WIPO and downloadable for everyone. Indeed, the ILPTO is proud of the fact that its own public database links to the WIPO publication, and WIPO’s database links to the ILPTO’s. So why demand that applicants file a separate copy of the application on CD or flash disk? It’s just another trap for the unwary.
Submission of an abstract: The present wording of the statute places the onus on the ILPTO to publish an abstract after substantive examination has concluded and the application file is to be laid open to the public. In the past, the ILPTO simply published claim 1, and a possibly relevant figure, as the abstract. More recently, the ILPTO has required applicants to submit such abstracts, although I have argued that this requirement is ultra vires. The bill would amend the statute to require the applicant to submit an abstract. While such a requirement doesn’t faze people used to practicing before the EPO, where an applicant is expected to say what his invention is, for U.S.-based practitioners the idea of actually identifying the invention is anathema. But don’t break into a cold sweat, Americans: the bill also includes an amendment (to section 27 of the statute) that explicitly says that the abstract submitted by the applicant will not be used by a court or the Commissioner in construing the description (which includes the claims) in any juridical proceeding.