As a result of last fall’s amendment of U.S. patent law, during January the USPTO began publishing proposed rules at a torrid pace. (Since there are other blogs, like Patentdocs, that are providing good coverage of those proposed rules, we won’t go into them here.) Not to be outdone, though, Israel has also been active in the IP law amendment area over the past year, and as a result must now implement various corresponding rule changes.
One of the recent statutory amendments moves official publication of ILPTO notices from paper publication by the Government Press Office to the ILPTO web site. Part of the political trade-off (between the Justice Ministry and the chairman of the Knesset’s Constitution, Statute and Law (CSL) committee) for that amendment was the elimination of the expression “publication fee” from most places in the statute. The relevant rules must now be amended correspondingly (and other fees, which are set by rule rather than by statute, must be raised to compensate for the loss of fees termed “publication fees”; if the chairman’s thinking reminds you of Nigel Tufnel saying, “These go to eleven”, you’re not alone.) A draft version of those revised rules, which in order to come into force must receive the approval of the CSL committee and will be considered by the committee at a still undetermined date, was recently circulated.
Interestingly, tucked away in the draft revised rules is a change not necessitated by recent statutory amendment, but which would be a game-changer for Israel’s pre-grant oppositions.
Specifically, the proposed rule change would require parties filing pre-grant oppositions to submit both their statements of arguments and written evidence within 4 months of filing their notice of opposition. For those unfamiliar with Israel’s pre-grant opposition regime, it won’t be readily apparent that this is a big deal, but it is. In order to understand why, we need to look at the current procedural rules governing those pre-grant oppositions, which are as follows:
1. Within 3 months of publication of the fact that the application has been allowed, third parties may file a notice of opposition. The current fee for doing so is 719 shekels – under $200.
2. Within 4 months of the filing of the notice of opposition, the opponent must file its statement of arguments, “in which it shall specify its grounds of opposition, the facts upon which it bases its arguments and the requested remedy”. The opponent may also file its written evidence at that time, or it may do so later, see below.
3. The applicant then has four months to file its own statement of case; if the opponent filed evidence, the applicant must file its evidence at that time.
4. If the opponent didn’t file evidence at step 2, it has three months from the filing of the applicant’s statement of arguments to file its written evidence.
5. The applicant then has three months to file its own written evidence.
6. The opponent then has three months from the filing of the applicant’s written evidence to file limited, written evidence-in-reply.
Only after those steps have taken place does the ILPTO set a hearing date for live cross-examination of the parties’ expert and fact witnesses before one of the three persons authorized to adjudicate the opposition (the Commissioner, the Deputy Commissioner and the Hearing Officer). Even then, the matter isn’t closed: under current rules, either party can introduce new evidence up to ten days before the hearing.
One difficulty with this arrangement is that typically, the process of submitting the written documents takes longer than the minimum time period set forth in the rules, as sides often ask for and are granted extensions; and oppositions that are carried to conclusion can last five years or more. There have even been cases in which opposition proceedings extended beyond 20 years from the filing date.
In addition, under the current rules, the cost of entry into an opposition is low. Although the current rules say that the statement of arguments must “specify [the] grounds of opposition, the facts upon which [the opponent] bases its arguments and the requested remedy” – wording which suggests that an opponent must map out its case in its statement of arguments – it’s common for statements of arguments to run only one or two pages, perfunctorily stating that “The invention lacks novelty and/or is obvious in view of one or more of the following publications”, and to then provide a list of publications, without providing any detailed analysis of how each publication, or combination of publications, applies to each claim. In addition, most statements of arguments laconically state that the specification isn’t enabling and that the claims aren’t supported by the specification, again without providing any detailed explanation; they often state the applicant failed to disclose some piece of prior art that was cited in a corresponding case elsewhere, again without explaining why that matters.
Even if preparing such a document entails a few thousand dollars for prior art searching and analysis, that’s a pittance for the most active infringers. Despite occasional protestations from applicants, the ILPTO has until now been willing to accept such statements of arguments as meeting the requirements of the rules, generally analogizing to civil actions before the courts, in which the courts are extremely reluctant to dismiss any suit at its earliest stages.
Thus, under the current procedure, it’s generally not until some time after an opposition is filed that an opponent needs to spend a significant amount of money preparing affidavits and expert reports. Moreover, the rule allowing late filing of evidence effectively enables opponents to delay even further the expenditure associated with the preparation of evidence.
The result of this is that merely by filing an opposition, a third party can delay the grant of a patent by several years. As (i) the applicant has no enforceable rights until the patent is granted, (ii) no extension of the patent term is given to compensate for the delay in the grant, (iii) the cost for filing the opposition is low and (iv) the assessment of costs against losing opponents is traditionally small (especially when compared to the potential economic benefit the opponent can gain during the opposition period, for example by producing a product and then exporting or otherwise disposing of that product before the opposition concludes, thus escaping liability for infringement), pre-grant oppositions feature prominently in the business models of some local companies.
The proposed rules would combine steps 2 and 4, and steps 3 and 5, respectively, so that opponents would effectively have seven months from publication of the allowance of the application to put their cases together, including written evidence. (As will be discussed below, once Israel moves to 18-month publication, the effective time for opponents to prepare will be longer.) The proposed rules would also do away with the potential for the late filing of evidence.
One need not be a genius to appreciate that these changes would significantly alter the calculus of opposition filing. Instead of shooting first and asking questions later, under the proposed rules potential opponents would have to make an early assessment of whether or not an opposition is necessary in order to meet their business objectives, since a more significant expenditure of resources than is presently required will have to be made soon after the opposition is filed: potential arguments, including documentation and testimony supporting those arguments, would have to be identified much earlier on in the process. The draft rules would cause potential opponents to weigh the merits of their cases very carefully, and to do a cost-benefit analysis prior to filing their oppositions, thereby increasing the likelihood that only parties with skin in the game oppose patent applications or proceed beyond the filing of a notice of opposition.
Presumably, the overall result would be a reduction in the number of oppositions filed, as well as the streamlining of those oppositions that are filed, leading to faster dispositions of those oppositions. Aside from forcing earlier filing of complete arguments and supporting evidence, the proposed procedure would reduce the number of opportunities for parties to request extensions, requests to which the other side usually accedes in the expectation of reciprocity when the tables are turned.
I have no doubt that the companies that have traditionally filed many oppositions (or at least the lawyers who represent those companies and the lawyers who defend the oppositions) will scream, howl, whine, moan, gripe and b--ch about the proposed changes, bandying about phrases like “the purity of the patents register” and telling all who are in earshot that oppositions are a necessary tool because the ILPTO examiners allow far too many invalid patents, and that foreshortening the time they have to put their cases together will hinder their ability to keep the patents register pure. They will no doubt point to their successes in having the claims of allowed patent applications amended during the opposition proceedings, or in having oppositions sustained in toto, as evidence of the success of the present opposition procedure. But that’s specious. The fact is the proposed changes will present a system that’s more efficient than the present system, because unlike the present system it won’t encourage frivolous oppositions. And it seems that until now, while the frequent users of the opposition system have touted the cost to society of bad patents, no one has taken into account the cost to society of failing to timely grant worthy patents, a problem that occurs too often even without oppositions, and which the present opposition system exacerbates. Adverse parties that feel they need more time to prepare will still be able to avail themselves of revocation proceedings before the ILPTO and proceedings before the courts in order to invalidate bad patents. There’s no reason to continue to give those parties a free ride that encourages frivolous oppositions.
Moreover, the new rules, if adopted, will come into force after Israel has already moved to an 18-months-from-priority-date publication regime. This will give potential opponents years to prepare for pre-grant oppositions. (Also, as reported in an earlier post, it appears that Israel is headed toward a situation in which potential opponents will be to file comments with examiners prior to allowance of patent applications, further strengthening their hand.) Under such circumstances, raising the cost of entry into the opposition game, so that only those parties with a real financial interest in doing so will file oppositions, can hardly be seen as being prejudicial to anyone.
Because the proposed rules are sure to be lobbied against heavily, there’s no assurance they’ll be adopted. If they are not adopted, and the ILPTO is concerned about the length of oppositions – and the rumor is that these particular changes were added to the draft rules at the behest of the ILPTO – perhaps the Commissioner will stop granting extensions for opponents to file their statements of case, and will begin to require opponents to adhere to the rules in their present wording, demanding that they provide detailed statements of arguments setting forth exactly which prior art or combinations of prior art apply to which claims and how. While not as effective as the proposed change, such an approach would at least partly raise the cost of filing an opposition to the point where some baseless oppositions will no longer be filed.