America-Israel Patent Law

Addedum to "Another Example of How To Fleece Clients Without Them Knowing (Part 3)"

In response to January 17's post, an alert reader who wishes to remain anonymous pointed out that part of 8(d) of the APAI's "code of ethics" would seem to preclude an Israeli patent practitioner from listing himself an a "applicant of convenience" on a PCT application. 

For the uninitiated, an "applicant of convenience" is most commonly used when either (a) none of the actual applicants are from a PCT member state, and therefore there's no way to get the PCT application filed, or (b) there's at least one applicant from a PCT member state, but not from a member state that will facilitate using the PCT Search Authority of interest. 

Prior to 1996, when Israel joined the PCT, situation (a) was quite common in Israel: Israeli applicants wishing to avail themselves of the PCT would assign their rights in some irrelevant jurisdiction to their foreign patent counsel in the USA or Europe, who would then file the PCT listing themselves as the applicant for the irrelevant jurisdiction only, and listing the Israeli applicant as applicant for everywhere else.  See, e.g. WO 1997/002439. 

Situtation (b) still sometimes arises, for example if an Israeli entity wants its search done by ROSPAT or KIPO, which costs less than having the search done by the Israel PTO, the EPO or in the USA, the three PCT Search Authorities available to Israelis. If the Israeli entity's agent is a US citizen, for example, then the Israeli entity will make the agent the applicant for an irrelevant jurisdiction, thus obtaining the ability have ROSPAT or KIPO do the search.

Apparently members of the APAI who engage in this practice would be considered persona non grata by the association. Which is why it's a good thing that that organization's "code of ethics" doesn't have the force of law. 

Another Example of How To Fleece Clients Without Them Knowing (Part 3)

This is the third installment discussing a situation in which patent practitioner X listed himself as an inventor on an application he drafted and filed on behalf of Z, assigned all his rights to Z, and was then asked by by Y, the practitioner to whom the case was subsequently transferred, to (a) confirm in writing that X was not an inventor with respect to a new set of claims that Y planned to file in the USA (discussed here), and (b) confirm that X had no "demands" against Z (discussed here).  Today we'll look another aspect of Y's letter to X.

The third part of Y’s letter said the following; I have inserted my own translation of the Hebrew text:

"You may also want to refer to paragraph 8(d) of the Code of Ethics of the Association of Patent Attorneys in Israel:

(d) It is forbidden for an orech patentim who dealt with a patent application, design or trademark of his client, or who participated in the dealing with them, to include himself in any way as the owner, in Israel or abroad, or to demand property rights in the subject of the application, directly or indirectly. [translated from Hebrew text; “orech patentim” is often translated as “patent attorney”, although an orech patentim is not a lawyer, and might better be translated as “patent agent” or “patent editor”]

as well as to paragraph 12A(b) thereof:

(b) in any event, an orech patentim shall not record or request to be listed as a joint inventor with his client regarding an invention with which he deals, if the client did not agree to this in writing before the filing of the patent application, and there is an absolute prohibition against an orech patentim to be listed as a joint inventor against the will of his client [translated from the Hebrew text]"

Ignoring for the moment the substance of these two specific clauses, the reference to this “Ethics Code” is baffling, because it has no legal force.  The Association of Patent Attorneys In Israel is a non-profit association of the same sort as the Association of Americans and Canadians in Israel, the National Geographic Society, and the Boy Scouts of America.  The APAI is not established by statute, Israeli patent practitioners are not required to be members of the APAI, and the APAI’s rules apply only to APAI members.  Which, it should be mentioned, X is not.  The maximum penalty for violating one of those rules is expulsion from the association; violation of an APAI rule per se carries no civil or criminal penalties.

The cited “rules” are also substantively unwise, for at least two reasons.  First, as discussed in the first post in this series, getting inventorship right matters for US patents. And, being the single most important market for the vast majority of Israeli entities that do business outside of Israel, the US remains the single most important patent jurisdiction for such entities.  But it’s not hard to picture situations in which adherence to the cited rule 12A(b) could potentially jeopardize a client’s US patent application.  A better default rule would be that, absent an agreement to the contrary, if a practitioner finds he’s an inventor, his client automatically owns the practitioner’s portion of the invention and the right to patent it, and the practitioner isn’t entitled to additional remuneration beyond his already agreed-upon fee.  In other words, exactly what X did in the situation he encountered.

Second, association rule 8(d) would seem to preclude practitioners taking an ownership stake in their clients’ businesses.  But services-for-equity is a well-established, if risky, way for practitioners to assist clients who are short on cash but have potentially winning ideas.  Indeed, the AIPLA will be including a session at its spring meeting in May on the topic of “Startup Stock Ownership: How to Contribute IP for Equity”. Rule 8(d) doesn’t appear to be in the interest of clients. Or risk-taking patent practitioners.

So given all that, why would Y refer to irrelevant rules – particularly when he himself even professed to be aware of the requirements of US law regarding the listing of inventors, writing to X, “As I'm sure you know, US law requires the mention of the inventors of the claims on record…”? 

I can only speculate, but a few possibilities come to mind.  One is that Y assumed that Z (the applicant) doesn’t know that the “Code of Ethics” to which Y referred is as binding on X as are the Rules of Major League Baseball, and therefore Y figured he could impress Z by referencing these rules.  A corollary to this is maybe Y figured that X doesn’t know that that “Code of Ethics” is irrelevant, and thus could be bullied into saying he’s not an inventor.  (No one who knows X would think such a tactic could work, but Y doesn’t know X.)

Another possibility is this: for more than 20 years, there’s been a push by some patent practitioners in Israel to forbid all patent practitioners from listing themselves as inventors on applications they draft for clients, or from holding an ownership interest in patents they draft for others.  That still hasn’t come to fruition, but maybe Y is one of those in favor of such a change, and Y confused his aspirations with reality.

And then there’s the prosaic reason, common to all three parts of Y’s letter: he could bill for it.

 

Another Example of How To Fleece Clients Without Them Knowing (Part 2)

Yesterday I wrote about an interesting situation: patent practitioner X listed himself as an inventor on an application he drafted and filed on behalf of Z, and assigned all his rights to Z. X was asked by Y, the practitioner to whom the case was subsequently transferred, to confirm in writing that X was not an inventor, at least with respect to a new set of claims that Y planned to file in the USA.  In this post I discuss another statement that Y asked X to make.

Y wrote, “My client further notes that while you point out that you have assigned your rights, you have not confirmed as requested that you have no demands of any kind toward my client in respect of the above-identified patent application. My client requires your positive confirmation of this fact.”

This is a bizarre statement, and it took me a while to puzzle it out, but as best as I can determine, Y has confused two different situations.  But before continuing, some background on Israel law is in order.

Under Israel law, the inventor of an invention is the owner of that invention and the right to patent it.  However, if the inventor was employed by someone else, and he developed the invention during the period of his employment and as a result of that employment, then the default setting under the statute is that the employer owns the invention and the right to patent it; the employer and employee can contract around this provision.  Usually, in cases where there’s no explicit contractual provision about ownership of employee-developed IP, the contract is also silent about compensation to the employee-inventor for inventing things, so the statute establishes an ad hoc committee that the Patents Commissioner assembles as needed to determine how much, if any, compensation the employee-inventor is entitled to, in the event the employer and employee-inventor can’t reach an agreement on that question on their own.

Typical employment agreements in Israel in companies where things are being invented explicitly stipulate that the company owns all IP developed by the employee as a result of his employment, including inventions and patents on those inventions.  Until a few years ago it was assumed that the general compensation provisions of the employment agreement also covered compensation for IP developed in this setting.  But then the ad hoc committee got involved in a few cases and decided that in these situations, employees may be entitled to compensation beyond their normal compensation.  Needless to say, this threw a wrench into the works, as companies that thought they had paid everything they needed to pay for their IP were now faced with the possibility of further, unanticipated payouts to employees of valuable inventions.  Most companies have, presumably, addressed this by modifying the language of their employment contracts.

In the context of an employer-employee relationship, Y’s statement makes sense: notwithstanding the assignment from X to Z, which assures Z ownership of the invention and the patents on it, Z wants to be sure that X won’t approach the ad hoc committee seeking additional compensation.  Or at least, Y told Z that Z wants to be sure of that. Because, you know, he’s a senior guy at a Big Office, so he must know what he’s doing.  And he can bill time, and look great in front his new client, for giving this advice, and for writing a letter to X about it.

The problem here is that X is not an employee of Z.  The relationship between X and Z is that of outside contractor – he’s a third party supplier just like the parties that provide Z with printer ink or toilet paper or hot lunches to Z’s employees.  And therefore the question of the ad hoc committee never arises: X assigned his rights to Z, he sent Z his bill and Z paid, and X can’t have any claims against Z before the ad hoc committee, because that provision of the statute only applies in the context of an employer-employee relationship.

But Y still gets to bill Z for giving this advice and writing to X about it.

 

 

Another Example of How To Fleece Clients Without Them Knowing (Part 1)

This is the first of several posts about an interesting situation.

X is a patent practitioner here in Israel. He’s a very smart guy, and he’s one of the straightest arrows I know. 

Y is also a patent practitioner here in Israel.  Y holds a senior position in a Big Office, so he must be good. Right?

I’ve seen X at work with inventors/clients, and he’s absolutely first-rate at helping inventors think about what they’ve invented, how they might characterize it, and what additional lab or field work they should before filing do to help bolster their patent applications.  In X’s discussions with his clients, he often makes suggestions that ultimately result in claims that, for purposes of US law, require X to be listed as an inventor. 

Now, in those situations, X could just leave himself off the inventorship list a priori, and probably no one would be the wiser.  But, shockingly, X cares that his client’s US patents be valid and enforceable.  So when X finds that’s he’s an inventor, he (a) lists himself as an inventor, and (b) assigns to his client all of his current and downstream rights in the invention and the patent application.  X does not request additional remuneration for (b). 

X prepared and filed a first patent application for client Z, a relatively large organization.  X found he was an inventor, so he informed the other inventors and Z accordingly, listed himself as an inventor, and assigned all his rights to Z.  Then, as sometimes happens in large organizations, after the application was filed, there was a change in the gatekeeper/dispatcher at Z who decides where to dole out the work for patent applications (yes, “dole out” is the correct term to use here, but that’s a subject for a different blog post).  New gatekeeper/dispatcher (“NGD”) decided that the case that X had worked on with the other inventors needed to be transferred to a Big Office.  So he transferred responsibility of the case away from X to a Big Office, specifically to the Big Office with which Y is associated.  The fact that NGD did so just shows that’s he’s not subject to oversight, but that’s also a discussion for a different blog post.

Now here’s where the fun begins.  NGD’s office contacted X, writing, “As you are aware, this case has been transferred to [Y’s office]’s handling.  They are asking that we provide in writing that you agree to no longer be an inventor in this case.”  To which X essentially replied – and these are my words, not his – “To the best of my professional judgment I am an inventor, so beyond it being a lie to say I’m not an inventor, saying I’m not an inventor could harm Z; and Z has an assignment from me giving it all my rights in the invention and in the patent application and its progeny, so what do you want from my life?”

X never got an answer to his very logical question.  Instead, Y contacted X directly – on Big Office stationery, no less! – provided a set of claims that Y said were to be used for a filing in the USA, and asked X to (1) review the claims and confirm that X isn’t an inventor, and (2) confirm that X had “no demands of any kind toward my client [i.e., Z] regarding the above-identified patent application”.

As one might expect, X is a busy person, and doesn’t have time for b.s. like this. Especially when no one’s offering to compensate him for time spent on a superfluous project.  So he politely replied in a manner in which he reiterated his first reply.  In response to that, Y sent X the following missive:

“Dear X,

Thank you for your email dated December 25, 2018. Unfortunately, my client is not satisfied with your answer, since no ambiguity should be left regarding this matter. Accordingly, my client again requests that you:

1.Review the claims I sent you and confirm that you are not an inventor therein. Since you are familiar with the technology, this should not take you more than a few minutes and my client feels that it is your duty to provide a definite answer;

2.My client further notes that while you point out that you have assigned your rights, you have not confirmed as requested that you have no demands of any kind toward my client in respect of the above-identified patent application. My client requires your positive confirmation of this fact.

You may also want to refer to paragraph 8(d) of the Code of Ethics of the Association of Patent Attorneys in Israel:

    [Hebrew text pasted into letter; translation will follow in a subsequent post]

as well as to paragraph 12A(b) thereof:

    [more Hebrew text pasted into letter; translation will follow in a subsequent post]

Since a delay in putting the record straight may damage my client that is exploring its future activities in respect of this patent application, I look forward to receiving your prompt response.

    Yours sincerely,

    Y”

There are several things worth commenting on here.  Today we'll discuss one of them.

Changing of Claims and Assertion of non-inventorship

As noted, X assigned all his rights to Z.  So his being listed as an inventor has no bearing on Z’s rights.  That being the case, why is Y insistent not only that X be removed from the list of inventors, but that X agree that his name be removed?  If X is an inventor of at least one of the claims, then he needs to be listed as such in order to comply with US law, and if he’s not an inventor, then he shouldn’t be listed.  But either he is or he isn’t – it’s an objective inquiry.  Thus, if in Y’s professional opinion, X is not an inventor of any of the claims, then as the now-agent for this application, it’s Y’s duty to take X’s name off the list of inventors, and X’s own view doesn’t figure into the calculus.  Similarly, if Y thinks X is an inventor of some of the claims, then it’s necessary to leave X’s name among the inventors, and X’s view is irrelevant.  Either way, why bother asking X about whether or not he himself thinks he’s an inventor? 

Moreover, the patent application in question has been published and X’s name appears among the listed inventors (though Z is listed as the applicant).  Removing X’s name at this point in time will therefore be a flag later on that there’s a question about the inventorship.  So if a US patent is eventually obtained, an attempt is made to enforce or license that patent, and X isn’t listed as an inventor, someone’s likely to start asking about X’s role as an inventor.  If it turns out that X’s name was deliberately removed, notwithstanding his being an inventor, that doesn’t bode well for Z.  At the very least, it’s additional litigation costs or a lower licensing value.  On the other hand, if X’s name is retained, who’s going to know?  The lower risk for Z at this point is to leave things as they are. 

Furthermore, if Y believes X is an inventor on some claims but not others, he can easily solve his “dilemma” by cancelling those claims on which X is an inventor.  That will provide a legitimate reason to remove X’s name, and the reason for removal of X’s name can even be made part of the record.  (Of course, if any of those claims are later re-inserted, X will have to be added back to the inventorship list, but again, with an assignment to Z in place, this won’t affect Z’s rights).  That, in fact, sounds like it’s the case here. But it doesn’t explain Y’s insistence that X confirm he’s not an inventor on those claims.

Bottom line: it appears that Y has convinced Z that X’s being listed as an inventor is an issue, when it’s not an issue, and when putting inventorship into play could prove deleterious to Z’s interests; and that it's critical that X provide his opinion that he is not an inventor, when that opinion is irrelevant. 

But convincing Z of this gives Y additional billing. And if Y is the type who needs ego-stroking, it does that too.