America-Israel Patent Law

Has The ILPTO Been Collecting Suspension Fees Illegally? A Proposal For Deferred Examination In Israel and Legal Collection of Fees

Over the course of the past 10 years or so, the ILPTO has been moving in the direction of speeding up examination of patent applications. Most noticeably, the ILPTO has significantly increased the number of examiners, but it has also put procedural mechanisms into place to ensure that the queue of applications keeps moving along.  The most obvious among these procedural mechanisms have been the adoption of limits on the total amount of extension time that may be obtained during substantive prosecution; and the restricting of the time at which suspension of examination may be requested (to a brief window before the commencement of substantive examination), as well as the limitation of the duration of such suspension (now, unofficially, down to one year maximum). 

At a meeting in March 2016 between an AIPLA delegation and Commissioner Asa Kling, he indicated that by the end of 2017 the office was slated to increase the examiner pool by nearly 50%, from about 100 to about 150.  I pointed out that employees cost money, and a less expensive solution to hiring additional examiners would be to facilitate a delayed examination scheme, similar to what exists in Canada, Japan and many other countries.  Under such a scheme, an applicant would be given a period of several years in which to file a request for examination.  If no such request was filed within the period, application would be deemed abandoned.  This way, the ILPTO would only have to examine those cases that were actually of interest to the applicant after the set time period; presumably, a certain percentage of cases would thus fall by the wayside, obviating the need for examination and the examiners to conduct that examination.

Mr. Kling’s response was evasive: Effecting such a change in procedure would require a statutory amendment, he said, adding, rhetorically, Do you know how long it would take to get such a change enacted?

I disagree with that view: I think there’s a way to implement delayed examination under the existing statutory framework. Moreover, I think that the ILPTO’s current practice of collecting a fee for suspending examination has no legal basis; but my proposal would enable the PTO to continue to collect those fees in a legal manner.  Specifically:

As noted, presently the ILPTO will let an applicant request a suspension of examination at one and only one stage of prosecution: after responding to the pre-examination letter (essentially an IDS submission requisitioned by the ILPTO) and before the issuance of a first substantive office action on the merits of the case.  Although it’s not written anywhere, the ILPTO will limit that suspension to one year. And – here’s the kicker – it makes the applicant pay for that suspension. 

I call that a “kicker” because the Commissioner is authorized to charge applicants for extensions. But extensions are needed when an applicant responds to the ILPTO.  Here, the applicant has already responded to the pre-examination letter, so there’s nothing outstanding due from the applicant.  Which means that, even though the ILPTO calls this fee an “extension” fee, in fact there’s no extension whatsoever involved.  Which in turn means that the ILPTO is acting illegally in collecting a fee it’s not allowed to collect.  In view of the fact that the ILPTO was sued a few years ago for collecting fees for actions it didn’t subsequently take, you’d think it would be sensitive about these things, but apparently not.

What I propose is to use the commissioner’s extension power to implement a de facto deferred examination program – and to simultaneously legitimize its collection of fees for suspension.  The procedure is pretty simple: instead of making applicants request suspension after responding to the pre-examination letter, the Commissioner should just say that he’s willing to grant a long period of extension – say somewhere in the 36-44 month range – beyond the statutory four months that applicants have to respond to the pre-examination letter.  This is well within the Commissioner’s power.  The ILPTO could collect extension fees for this period; this is also within the commissioner’s power.  Ta-da!  You now have a deferred examination regime – one that’s legal in all aspects, and that preserves the office’s ability to collect fees.

The effect of this would be to allow applicants to decide when, if at all, they want substantive examination to begin, within a defined window.  If and when they want substantive examination to commence, they would pay the extension fee due and respond to the pre-examination letter, and the office would begin substantive examination.

Mr. Kling reportedly has only a few more months left in office. This is a step he could implement immediately, to good effect.  I urge him to take it.

Comments on Draft “Circular” Notices, Part 5 – Suspension of Examination of Later Application Because of Claims of Earlier Application

This is the fifth installment of our discussion of the first of two recent draft circulars, “Draft Circular 34/2016”.

Part G is directed to the suspension of examination of a later application due to an earlier application.

“30. Section 19 [of the statute] establishes that an examiner may suspend examination of an application if the invention claimed therein is unpatentable due to an application that has not yet published under section 16A [viz. publication 18 months after the earliest priority date]. Section 19 also establishes that the applicant may request suspension of examination until after publication of the earlier application under section 26 [viz. publication for opposition upon the conclusion of ex parte examination – DJF]

“31. In situations in which the examiner finds a defect under sections 2 or 9 of the statute [i.e. double-patenting with an applicant’s own earlier pending application (section 2), or the existence of an earlier still-pending application or application of a third party that claims the same invention (section 9) – DJF], as well as additional defects under chapters B and C of the statute [which deal with the substantive requirements for patentability and the requirements of the patent application itself – DJF], the applicant may respond to the additional defects only and request that his response to the defects under section 2 or 9 be postponed until after the other defects are fixed. If an applicant asks that the order of examination be in accordance with this paragraph, the additional defects will be dealt with first, and the reply will not be deemed unresponsive under section 45 of the statute.

“32. If the applicant’s reply to the additional defects satisfies the examiner but reply to the defects under section 2 or 9 has not yet been submitted, the examiner will revisit the question of whether a rejection under section 2 or 9 is in order.

“33. It will be noted that the foregoing does not derogate from the applicant’s right to request suspension of the application under Regulation 39(b) [which says that an applicant may request suspension of examination of his later application until after publication under S.26 of an earlier application identified by the examiner that ostensibly claims a closely-related invention – DJF].

“34. It will be noted that a request to deal with a rejection under section 2 or 9 after other defects have been address does not entitle an applicant to additional extensions beyond those enumerated in Circular 35/2016 [which sets a maximum of 12 months’ total extensions over the course of substantive prosecution – DJF].”

As I’ve blogged about in the past, the ILPTO has an obsession with “overlap” between the claims of applications. In the case of applications to different applicants, there’s a certain amount of sense in this – section 9 constrains the ILPTO from granting claims on the same invention to more than one party. Although the fact that Israel law allows for the granting of “selection patents”, in which what is claimed in a later patent application falls within the scope of the claims of an earlier patent, shows that cries of “overlap” per se being verboten are overblown. And in the case of the same applicant, this concern has been blown out of all proportion, because there’s an easy solution to what bothers the ILPTO, a point to which I’ll return below.

This part of the proposed circular seeks to enable substantive examination of the claims of a later application to proceed during the pendency of an earlier application having claims of overlapping scope (i.e. to determine patentability with respect to prior art and compliance with disclosure requirements), instead of having to wait for the conclusion of prosecution of the earlier case before proceeding.  Although I suspect this proposed policy is motivated primarily by a desire to keep the ILPTO’s docket moving, nevertheless this proposed policy makes some sense for the later applicant as well, as it will allow the applicant, if it so chooses, to assess its status vis-à-vis the prior art and the earlier claims. Inasmuch as the applicant will still be able to invoke Regulation 39(b) in order to obtain a suspension of prosecution until prosecution of the earlier application concludes the applicant’s rights won’t be impaired.

However, what’s more critical from this proposed section is what’s missing from it, namely something that would obviate the need for such vigilance against “overlap” on the part of the ILPTO in the case of “overlap” with the claims of an applicant’s own earlier application. Section 2 of the statute says that an applicant may only receive a patent on its invention – emphasis on the singular – but section 13 says it’s the claims that define the invention for which exclusivity is granted. Which means that if the claims are not of identical scope, section 2 should not be invoked against an applicant’s own later application, even if there is “overlap” between the claims.  If the earlier application was published before the priority date of the later application, then it can be cited as prior art, and the later claims can be allowed if they meet the criteria for a selectin invention. If, however, as is commonly the case, the later application is a divisional of the earlier application, the statute doesn’t preclude “overlap” between the claims of the two documents, and as the parent application isn’t available as prior art, there’s no basis to reject the latter claims on the basis of overlap with the parent.

What bothers the ILPTO is the potential for mischief should a single patentee be granted two different patents with claims of overlapping scope, as the patentee could assign one of the patents to a third party, forcing potential licensees to negotiate with two entities rather than one entity.  One solution to that difficulty, the one currently employed by the ILPTO, is to take a magnifying glass to the claims and force examiners, applicants and their attorneys to waste time and money attempting to eliminate the “overlap”.  However, a more elegant solution to situations of partial overlap (as opposed to claims of identical scope), is to allow the applicant to put a statement in the application file that the later patent, if granted, will only be enforceable while it is co-owned by the owner of the earlier application.  As I’ve argued elsewhere, the Commissioner does have the power to do this, as it falls within his power to record licenses, liens and the like against patents.  Such an approach would involve far less effort for all parties concerned, and would facilitate licensing negotiations with a single party.

In cases where the later application is not a divisional of the earlier application, but the earlier application is not available as prior art, then the applicant should be able to put an additional statement in the file saying that the term of the later patent will not extend beyond the term of the earlier patent. (Ideally this should also include a statement that any patent term extension granted in the later patent will run from the end of the 20-year term of the earlier patent, but I’m not sure the statute allows for that.)

Given the predilection for issuing “circular” letters shown by the present commissioner and his predecessor, a circular facilitating such a practice is long overdue.