To the extent I’ve had time to post over the last few months, most of the posts have been devoted to the adoption of legislation enabling 18-month publication of patent applications in Israel, and in particular to the ongoing deliberations in the Knesset’s Constitution, Statute and Law Committee in this regard. Today’s post is no different, since today and tomorrow, the committee will meet again to consider this bill.
Early Publication
At present it appears likely that the bill will pass in a form that requires publication of all patent applications, including those that are presently pending. As I’ve argued before, I think this is unfair to applicants who filed their patent applications under the current, no-publication-until-acceptance-of-the-application system. I have no doubt that the vast majority of applicants have no objection to their presently pending applications publishing, particularly since, in most cases, corresponding applications have published abroad. Nevertheless, I am equally certain that there are a handful of applications that were filed because their owners knew that the contents of the applications would stay secret until the conclusion of substantive examination, and/or whose owners have made business plans in reliance on such secrecy. It’s not fair to change the rules for those applicants in the middle of the game. If one conceives of the patenting process as a contract between the state and the applicant, forcing early publication of an application after telling the applicant that his application will remain secret constitutes a breach of the contract on the part of the state. (For that reason, one wonders if a clause forcing publication of all pending applications would hold up to so-called constitutional scrutiny before the so-called High Court of Justice.)
Rather than requiring publication of all pending applications, the statute should provide an opt-in clause: those applicants who want their pending applications to publish now should be allowed to tell the ILPTO to publish such applications. This would largely achieve the goals of early publication, without adversely affecting those applicants who have relied on the non-publication in making their businesses decisions until this point.
There is, however, another aspect of this legislation that I haven’t previously discussed: the hypocrisy that lies behind this amendment. It’s no secret that the USA, in particular the Department of Commerce and the U.S. Trade Representative, been pressuring Israel for some time to adopt an 18-month publication regime. To this end, the U.S. Commerce Secretary and Israel’s Minister of Trade signed an agreement two years ago that stipulated, inter alia, that Israel would adopt such regime (in exchange for the USA calling Israel a good guy and taking off the USTR’s list of bad guys who don’t honor IP, like China; I’ve written before about the ludicrousness of that comparison).
Now, there are good arguments in favor 18-month publication regimes, which explains why they are the standard in the developed world. Indeed, Israel likely would eventually have adopted such a regime even without prodding from the USA, as there’s no real opposition in Israel to 18-month publication. But in negotiating with the USA, apparently no one on either side checked to the situation regarding 18-month publication in the USA itself before proposing what Israel should do. That, or the Americans feel free to be hypocrites. I say that because, as anyone familiar with US patent law knows, when the USA adopted early publication in 1999, it didn’t make publication compulsory for all applications. Publication only applied for applications filed after a certain date, and even then, applicants could opt out of publication, by signing a statement that no corresponding application had been filed in an early-publication country. The penalties for falsely making such a statement are draconian – you lose your patent – but in principle your application need not be published before it is granted.
That being the case, why on earth has Israel agreed not only to publish all applications in the future, but even to publish currently pending applications? The USA did neither of these things. In this case, what’s good for Uncle Sam should be good enough for Uncle Moshe. I doubt that today and tomorrow, the Knesset committee is going to tell the Americans where can they put their “early publication for all” demands, but it would sure be sweet if it did.
Rescinding A Wrongly-Decided Supreme Court Decision
Israel’s Supreme Court has a reputation as the world’s most activist court. This reputation has been earned primarily in its role as the so-called High Court of Justice, which hears claims against state activity, but the Court’s activism extends to the civil sphere too, including the IP arena. To illustrate:
Imagine you’re a manufacturer of air conditioning vents. You see that a competitor has a very successful model of vent. After doing some research you discover that his vent is a copy of a vent that was invented abroad by someone else many years ago. Or you find that although your competitor developed the vent himself, he never sought to protect it via a patent or registered design, even though such protections are available by statute in Israel. Or that in fact, he patented it, but the patent expired last year. Being a logical person, you would conclude that under the circumstances, not only are you free to manufacture and sell your own version of the vent, but that you can market for a lower price, thus benefitting consumer.
Unfortunately, you’ve overlooked the fact that you’re in Israel, where marriages between logic and public policy are infrequent and purely coincidental. In the present case, we have a flawed 1998 Supreme Court decision, popularly known as the AShI”R decision, that gums up the works. In AShI”R, various parties who produced articles which were not protected by patent or other intellectual property laws – either because the parties hadn’t sought IP protection, or because IP protection wasn’t available (e.g. because the article was already known and therefore not patentable), or because the parties had availed themselves of statutory IP protection but it had expired – sought relief against competitors who copied their products. The Supreme Court ruled that they were entitled to protection. In so doing, the Court turned logic, and the rationale behind the country’s patent and design legislation, on its head. How so? (If you’re an IP practitioner, the next paragraph will be clear to you, so skip ahead.)
Modern patent regimes are based on a quid quo pro: in exchange for disclosing a new and non-obvious invention, in a manner that enables competitors to copy the invention, the state grants the inventor a limited period of exclusivity – currently 20 years from the date of filing the patent application – during which the inventor can prevent others from making, using, selling, or offering to sell the invention. The expected receipt of such a period of exclusivity encourages investment in R&D, particularly in areas where high outlays of capital are necessary to bring a product to market. The grant of the exclusivity, which is a matter of public record, encourages others to develop new, non-infringing ways to compete, which usually leads to more efficient technologies and lower prices. The temporal limitation of the exclusivity ensures that even if no non-infringing alternatives are developed, competition will eventually be possible, along with concomitantly lower prices; it also allows competitors to make business decisions on the basis of predictable dates, viz. the expiration date of the patent. The logic behind design protection is similar, although the investment involved is usually smaller, and the scope and duration of protection more limited.
In AShI”R, the Supreme Court ignored the patent and design statutes and the public policy considerations underlying them, and in effect said that copying per se is bad, even though the Knesset, in accordance with sound economic policy, had already determined that copying per se isn’t bad. As the Aramaic expression goes, kulei alma lo pligei (everyone agrees – except, apparently, Israel’s Supreme Court) that a party that chooses not avail itself of the protection afforded by IP statutes should not be entitled to such protection through the backdoor of the courts; among other things, to provide protection in such cases undermines the predictability that the patent statute seeks to provide, and discourages the public disclosure that the patent statute seeks to obtain.
The egregiousness of the Court’s decision is all the more true in cases in which patent protection isn’t available, either because the article in question isn’t substantively patentable (it was known or is obvious over what was known) – society has no interest in granting exclusivity on something that’s already known – or because patent protection for the article being copied has already been exhausted, in which case the Court’s decision effectively amounts to an extension of the patent term for an indeterminate length of time, and an abrogation of the contract between the state and inventor when the state agreed to give the inventor a 20-year term of protection. (Indeed, the patent statute includes provisions for the extension of patent term, but they apply to a narrow set of circumstances that do not include any of the situations under consideration in AShI”R.)
More than 13 years after the AShI”R decision was handed down, the Knesset may finally be poised to lay this bit of judicial folly to rest. The 18-month publication to be discussed in committee today and tomorrow also contains language that would effectively rescind AShI”R with respect to patents, in so doing reinforcing the patent regime in Israel. According to the bill, a court would be precluded from hearing a claim based on the manufacture, use, sale or offer for sale of an invention that is unpatented, irrespective of the reason why that invention is unpatented.
Of course, it ain’t over till it’s over, so it’s possible that despite unusual consensus in the legal, business and academic communities about the need to rescind AShI”R, political machinations may do their worst, and this provision of the bill may be buried in committee in order to placate the whims of certain individuals with their own agendas. Here’s cautious optimism that the MKs on this committee will do the right thing and restore the patent statute’s primacy in governing the protection of new and non-obvious inventions.