Today is the eve of Passover, making this a short work week here in Israel, for those of us fortunate enough to still be working during this COVID-19 thing – a full 25% of working age Israeli adults sought unemployment compensation in the past week. Nevertheless, for those who have been paying attention, it has been an interesting week in the IP world in Israel. But first a bit of background.
On March 21 the government of Israel (what in the USA would be called the cabinet, except that under Israel’s parliamentary system it’s the entire cabinet and not just the Prime Minister that decides many executive matters) decided to reduce public sector expenditures across the board. The result is that many state employees, including many from the patent office, have effectively been furloughed since then. As we reported earlier, the ILPTO sent out a notice about the steps it was taking to mitigate the effects of this decision.
Now the Knesset is considering adopting emergency legislation that would push off by 90 days the deadlines for many acts in connection with administration of the state – either decisions or actions that the state is supposed to take, or actions that individuals (people or organizations) need to take. And the draft legislation would give the government the option to extend those deadlines by an additional three months.
In combination, for those of us with a narrow focus on IP, these two things have created a perfect storm, not so much for applicants or IP owners, but for IP practitioners and for the ILPTO staff.
Let’s start with the furloughing of ILPTO staff. As a result of the government’s March 21 decision, many patent examiners and other at the ILPTO have been sitting home since then, doing nothing. I suspect many of them are not presently getting paid. Applications going unexamined also contributes to the examination backlog that the ILPTO had for several years hitherto been steadily decreasing, a result that is unfair to all applicants attempting to secure IP rights. And for IP firms for which the reporting of Office Actions from ILPTO examiners is a significant source of income, this means that an important revenue stream has just dried up.
But what’s Chelm-like about the March 21 decision being imposed on the ILPTO is that, unlike most state bodies, the ILPTO is self-supporting. The ILPTO doesn’t run off of taxes paid by Israeli citizens or people transacting business here. It runs off the fees it collects each year from the parties that utilizes its services, fess that more than offset the ILPTO’s operating budget. Furthermore, following a program instituted by previous Commissioner Asa Kling, the ILPTO is set up for examiners to work from home, as many of the examiners already did so prior to the corona outbreak. So by telling examiners they’re not allowed to work, even from home, the government isn’t reducing expenses. It’s reducing revenue – by ensuring a period in which no patent applications will be allowed, thus ensuring no payment of allowance fees, and by not giving patent practitioners work that they can bill to their clients and then pay of portion of to the state in the form of taxes on the payments for that work. At a time when many parts of the economy are tanking, it’s not only foolish, but inexcusable to shut down an office that generates revenue for the state.
Then we have the draft legislation. If all it said was that all deadlines falling between dates X and Y would be extended by three months, across the board, that would be easy to implement. But, of course, some things really shouldn’t be extended. For example, someone who’s been arrested for an alleged crime deserves a prompt arraignment, but that means that the courts need to be at least partly open for business. And as soon as you start making exceptions in one area, others jump in clamoring for an exemption from the legislation, insisting that in their particular sphere of operation, it’s important that deadlines not be extended. In some cases, it may be that deadlines in question really shouldn’t be extended. But in other cases…
Stepping back for a moment from my position as someone whose clientele includes companies that file patent applications in Israel, and therefore who has a personal interest in keeping the ILPTO running as close to normal as possible, it seems to me that certain deadlines in the ILPTO should not be extended: the deadlines to file notices of opposition to the grant of a patent, and deadlines for the payment of renewal fees.
I mention the former because (a) opponents of the grant of patent applications, whether those opponents are based in Israel or outside, have generally been following the progress of the applications they are considering opposing, so they know when the opposition deadline is going to arise, (b) all that’s required is to submit a notice of opposition – a one-line letter – plus a fee, with the substantive arguments being due later and with a deadline that the Commissioner has discretion to extend, and (c) the applicant, conversely, has no vested rights until the opposition procedure is concluded and a patent granted, and since the draft legislation doesn’t talk about extending patent rights another three months, it’s important that the institution of oppositions not be delayed, especially since opposition proceedings anyway tend to take time from the life of the patent.
As to the payment of renewal fees, it seems to me that there’s no reason to extend these deadlines: for the patentee, the deadlines are known years in advance, and the amounts in question are also known; and for competitors who are following the life of a granted patent, it’s important to know if a patentee is no longer interested in protecting a particular technology.
It’s also clear that deadlines for the Israel PTO, acting as PCT receiving office, search authority or examination authority, cannot be unilaterally extended by the Knesset (and any attempt to do so could have adverse consequences for local PCT applicants relying such an extension). Those deadlines can only be extended by amendment of the PCT itself.
But I don’t see any harm to applicants in uniformly granting an extension to enter the national phase in Israel: they can still file at 30 months if they wish to do so, but if as a result of the corona situation there’s some difficulty in making filing decisions or in their cash flow, no real harm will come to those applicants from extending the deadline by a few months.
On the other hand, considering that most patent filings in Israel are national phase filings, granting such an extension might have an impact on the ILPTO’s workflow – in the three months following the statutory extension, there will likely be a higher number of filings to process than usual – and its cash flow, as noted above. The ones who would be most impacted by such a statutory extension would be those practitioners who rely on such filings as a significant part of their business, a point to which I’ll return below.
Another deadline that I think could be extended is the deadline for filing patent term extensions for pharmaceuticals. In such cases, there’s a significant burden on the patentee in terms of the documentation it needs to submit, a burden that could be affected by the corona virus situation. And since normally such requests are submitted several years before the patent is due to expire, a difference of three months in the filing of the PTE request wouldn’t significantly affect the local generic drug manufacturers which might be impacted by the grant of the PTE (and which will retain the opportunity to oppose such PTE grant before it occurs).
Now back to this week. On April 5, the Commissioner of Patents held a Zoom session to discuss the draft legislation, which by that point included exemptions for PCT international phase deadlines and the deadlines for payment of renewal fees (i.e. they would not be extended), but not for PCT national phase deadlines (which therefore would be extended).
From a sociological standpoint the session was interesting. Among other things, after about a 10 minute introduction from the Commissioner, nine people spoke (some more than once), but that discussion (roughly 2/3 of the time, if not more) was dominated by four partners from the same organization, one of the biggest IP offices in Israel. Their view, exactly opposite to my own, was that (a) PCT national phase deadlines shouldn’t be extended and (b) renewal fee deadlines should be extended. They gave various reasons for their positions, e.g. not wanting their offices to deal with a crunch of filings when the extended deadlines expire, and not wanting the ILPTO to be burdened at that point either. But as noted above, that’s not really the situation: deadlines falling with the period in question – between March 10 and June 30, 2020 – would be extended by 90 days. That doesn’t mean that come July 1, there will suddenly be a rush of filings to get 90 days’ worth of national phase applications in. It just means that on July 1, filings that were initially due on both April 1 and July 1 will be due. So while that may amount to twice as many filings as normal for July 1, it’s not something that can’t be dealt with. They also said if the national phase deadline was extended, docketing programs will need to be adjusted to reflect the extended deadline. Considering that many docketing services constantly update their systems to reflect changes in the law in various countries, I don’t think a temporary change in Israel would constitute a significant impediment.
As for renewal fees, the assertion was that companies may need more time to make decisions about whether to renew or not. Yet the possible need for more time to decide whether to file national phase in Israel wasn't mentioned by the four in the discussion of PCT national phase deadlines.
What none of the four explicitly stated was their personal interest in the matter: as partners, they employ many people, and national phase filings are a cash cow for them. If potential PCT national phase filers are given the option of delaying their filings by 90 days, they might exercise that option, which would keep the firm’s revenue stream lower than usual. Which might mean having to reduce the partners’ draw during that period.
As for renewal fees, the office in question has a contract with at least one and possibly more than one of the big renewal fee companies. What I gathered reading between the lines of what was said is that they don’t demand payment up front, and that paying out renewal fees now when they may not get compensated later could be disastrous for the partners…er, the firm. (By comparison, I work with a renewal fee company that demands payment in advance.)
In this respect, for the attuned listener, the Zoom session also highlighted the differences between large firms and small firms. Small firms tend to have little patent prosecution or renewal fee work in Israel, and tend to concentrate on drafting and filing new applications, which is work that has been less affected by COVID-19. They don’t have as many salaries to cover, nor are the proprietors likely to be accustomed to as high a style of living. As Hillel the Elder said, “The more flesh, the more worms.”
We’ll see were things end up. Yesterday, the heads of three trade associations sent a letter to the Justice Minister Download Letter, encouraging him to reopen the ILPTO for full business, as well as presenting views on the draft legislation that align with the view of the four speakers on Sunday. I’m in full agreement about getting the ILPTO back up to full examination speed, if possible. And while I disagree about extending deadlines for PCT national phase entry and renewal fees, ultimately, I don’t feel terribly strongly one way or another about how the matter is resolved. What will stick with me was the concerted effort to mask ulterior motives, ostensibly in the name of the common good. It’s a fair bet the people involved won’t tell their clients that they lobbied to maintain PCT national phase deadlines in place.
They could have just said all deadlines are pushed off by 30 days, or pushed off until a certain date, like other countries have done, but no, this is the USPTO, it knows better, it can't learn from anyone else, it had to make it complicated. And unclear.
I'm looking for the part of the announcement that says, "This material will be incorporated into the next USPTO professional licensing exam. Examinees will now be responsible for three sets of laws, pertaining to three different time periods: pre-AIA, AIA, and corona."
In the words of the late Shel Silverstein, "Some kind of help is the kind of help we all can do without."