America-Israel Patent Law

Patent Practitioners Aren't The Same As Lawyers: Quod Erat Demonstrandum

This afternoon, the Israel PTO and Justice Ministry held a roundtable discussion about in-the-works draft ethics rules for patent practitioners.  I may or may not report more on the meeting in a later post, but while that meeting was going on, this story broke about the head of the Israel Bar Association resigning because he whacked off during a video chat with a female colleague who he'd recommended for a judgeship. The story implies that he admits to the act, but didn't believe he did anything wrong because it was consensual.

Every time the issue of ethics rules for patent practitioners in Israel has come up, I've said that patent practitioners don't have a reputation as sleazebags and don't have the kind of opportunities for abuse of client trust that lawyers do. And usually I've pointed to the existence of canonical lists of lawyer jokes on the internet, but the noticeable absence of the same for patent practitioners. But I think this story proves my point. Especially when one considers that this guy's predecessor as head of the bar association resigned amidst criminal charges of trying to get his mistress through passport control improperly. Or that another former head of the bar association sued a cop for half a million shekels - and lost - after the cop arrested the lawyer when the lawyer refused to pay his cab driver.

Not the same professions. QED.

Pretending They’re Listening? MOJ and Patent Practitioner Ethics Rules

On January 8, the Israel PTO, in conjunction with the Department of Policy Planning and Strategy in the Ministry of Justice, announced a “roundtable” meeting scheduled for January 31 at the Ministry of Justice offices in Tel-Aviv, from 14:30-16:00. The purpose of the meeting is to discuss proposals for new ethics rules for Israel patent practitioners. People wishing to participate must respond by email to [email protected]. It should be noted that no actual rules have been proposed – the notice itself merely lists some topics, without explaining with the MOJ’s position is or why those topics are included (and why others are excluded).

If you didn’t know about this meeting, you’re not alone: although a notice was posted on the Israel PTO web site, no notice was sent via the Israel PTO’s regular email distribution system.  Instead, email invitations were sent to people who responded to an earlier “call for comments” that was posted on October 20 and that had a short response deadline of November 10. 

To the best of my knowledge, the comments that were received in response to that “call for comments” have not been posted anywhere, and my email request to receive a copy of them – sent to the same email address above – hasn’t even elicited a “received with thanks email”.

By way of background, Israel’s patent statute was enacted in 1967. The statute says that the relevant minister has the authority to enact (as regulations) “ethics” rules for patent practitioners. To date, no such rules have been enacted, but the practice doesn’t seem to be any worse for the wear.  Which leads one to wonder what the impetus is for enacting ethics rules for patent practitioners davka now, or even who is pushing for the adoption of such.  (In around 2013 or 2014, there was a push from within the MOJ to adopt such rules, and there was a similar “roundtable” meeting at the PTO, but that project did not result in the adoption of such rules.)

As I have noted in the past in comments to the MOJ/PTO, if you use an online search engine, you’ll find canonical lists of lawyer jokes, but jokes about patent attorneys are few and far between. There’s just far less potential for patent practitioners to engage in mischief of the kind that makes people distrust lawyers generally, and what potential there is would seem to be adequately covered by tort law.  Additionally, the statute includes provisions for discipline of practitioners, with “breach of the [non-existent] ethics rules” being only one of the things for which a practitioner can be disciplined, and as a practical matter, an ad hoc committee of practitioners has from time to time been formed by the Israel PTO when a complaint about a practitioner was received.  In other words, if it ain't broke, don't fix it.

One long-standing point of contention within the community of patent practitioners in Israel has been whether or not a practitioner can list himself as an inventor on an application he’s drafted. To any US-licensed practitioner, the answer to that question is a no-brainer: of course. And the way to regulate such situations is to make the practitioner assign his rights to the clients, at no extra cost, as was done in the case I reported on here, here, here and here.

A point that doesn’t seem to be on the MOJ’s radar, but which should be, is providing notification to clients when a practitioner leaves an office to practice elsewhere. It’s not uncommon for a practitioner to work with a particular client, local or foreign, over the course of years, during which that practitioner will often become familiar with the client’s technologies, personnel, and patent portfolios. In such a situation, the client would be best served by being given the choice of staying with the departing practitioner – thus preserving institutional memory – or staying with the old firm, with the understanding that someone new may need to learn about client’s needs. I am not aware of any firm in Israel that notifies clients when such departures occur and lets the clients know they have the option of staying with the departed practitioner.

Given the lack of transparency in how the current push for practitioner ethics rules has been handled to this point – no broad email distribution; no names of the people in the MOJ who are responsible; no disclosure of the comments received thus far; no explanations of why certain rules are deemed necessary, let alone actual draft rules to which the public can respond; a one-and-a-half hour meeting, when more time than that will probably be required – I am not alone among my colleagues in thinking that this “roundtable” is just a fig leaf to cover a fait accompli, and that the MOJ and PTO are just going through the motions of soliciting public input.

Update, a few minutes after posting: Earlier today I re-sent my email requesting copies of the comments to the email address above, with a cc to a particular person in the Israel PTO.  Shortly after I initially posted this blog post, I received copies of the five (!) submissions received in response to the "call for comments", one of which was my own submission.  Interestingly, the response from a group called "The Israel Patent Attorneys Association" suggested that a "roundtable" be held to discuss issues. I include links to all these documents below, although only my own comments were written in English.

Download Response of small offices

Download Response of association

Download Response of erez gur

Download Response of daniel feigelson

Download Response of small offices

What Were They Thinking In Congress (Assuming They Were Thinking)? Changes In Small and Micro Entity Fees

There was a piece last week in The American Spectator that argues that the 1998 SCOTUS decision Clinton v City of New York is the worst supreme court decision ever. That decision said that the line-item veto was unconstitutional. The author argues that by forcing the president to either approve or veto the Congressional spending bill in its entirety – a veto resulting in a shut-down of the federal government – all sorts of junk that would never get enacted otherwise now gets thrown into the spending bill.  If what happened with patent legislation last week is any indication, the author seems to have a point.

Tucked into the spending bill that Joe Biden signed into law on December 29 were several amendments that change 35 U.S.C., which is where most of the statutory language governing patents is found. (Hat tip to Scott Nielsen for the link; search for the word “unleashing” to find the relevant part.) The amendment with the most immediate effect was the change in fees for small entity and micro entity patent applicants.  If you’re already familiar with small and micro entity fees, skip ahead a few paragraphs. If not, keep reading.

Small entity fees have been around since before I started working in patents in 1995; these were meant to give small companies a break when seeking (or to remove a disincentive to seeking) patent protection, and provided a 50% reduction on certain PTO fees, most notably filing, search, examination, extension of time, and maintenance fees. Micro entity fees are a newer creature, the result of the 2011 “America Invents Act”, and these have hitherto reduced certain fees by 75%, but there are more requirements to qualify for micro entity status than there are to qualify for small entity status. 

Both micro entity and small entity status are asserted by the applicant/patentee at certain times in the lifetime of an application or patent (upon initial filing, upon payment of the issue fee, and upon payment of each maintenance fee), and normally the status is not something the PTO checks or even has the wherewithal to check.  Nevertheless, I’ve never filed an application for someone claiming microentity status, and I know other practitioners who are in the same situation: we think that the cost of verifying entitlement to microentity status (in attorney time) outweighs the additional 25% fee reduction over the 50% small entity reduction.  Micro entity status is thus an example of a nice idea that’s poorly implemented.

Small entity status, on the other hand, is easier to verify, because the way in which “small entity” is defined is fairly straightforward: if the application or patent is owned by an entity that has 500 or more employees, or there’s an obligation to assign to such an entity, then the applicant/patentee isn’t entitled to claim small entity status.

If one makes a good faith mistake in claiming small entity status, hitherto the remedy has been straightforward: you pay the difference in the fees that were due in accordance with the fee schedule in effect on the day you make the correction in entity status.  So if, for example, you paid a $500 fee at the small entity rate, and a week later discover that it should have been $1000, you pay the $500 difference.  If a fee increase or decrease went into effect between when the fee was originally paid and the difference paid, that difference will be in accordance with what the new fee is.

Of course, if the patent is valuable, and at some point the patentee corrects a payment that was mistakenly made at the small entity (or micro entity) rate, then in litigation the defendant will make an issue out of the applicant/patentee’s good faith, thus adding cost to the litigation…which is why practitioners try to avoid making such mistakes in the first place. This is also why, in situations in which the determination of small entity status is more complicated, some applicants may elect to pay full fare, to keep this issue off the table. Nevertheless, if the good faith in making fee payment at the reduced rate is demonstrable, then the mistake per se in claiming small entity status is not fatal, and fee-wise, there’s no penalty.

In contrast, deliberately paying the reduced fee to which one is not entitled is fraud, and, once discovered, it leads to one result: an invalid patent. And yes, there have been cases where people tried to pull a fast one on the PTO and later got caught. Bye bye, patent.

This brings us to last week’s statutory amendments. Among other things, they increase the small entity fee reduction to 60% of the normal fee and the micro entity reduction to 80% of the normal fee (viz. qualifying applicants/patentees now pay only 40% or 20% of the relevant fees).  But now there’s a catch if you incorrectly assert entitlement to fee reduction:

Penalty for False Assertions.--In addition to any other penalty available under law, an entity that is found to have falsely asserted entitlement to a fee reduction under this section shall be subject to a fine, to be determined by the Director, the amount of which shall be not less than 3 times the amount that the entity failed to pay as a result of the false assertion, whether the Director discovers the false assertion before or after the date on which a patent has been issued.

What’s meant here by “false assertions”? Off the top of my head, I can think of at least two ways to read this, one of which definitely is wrong. 

Let’s start with the way it could be read, but shouldn’t: it shouldn’t be read as saying that a willful false assertion of entitlement to fee reduction (viz. small or micro entity status) is subject to a penalty, because such a willful false statement constitutes fraud, and the result of fraud until now has been invalidation of the patent.  What’s the point in the PTO saying to a patentee, “You deliberately paid a fee a reduced rate to which you weren’t entitled, so now your patent is invalid, and please pay us $$$ to keep you invalid patent invalid”?  

So unless the amended statute means to say that fraud is now ok – and I don’t see any court buying into such a statutory construction – the new statutory language must be referring to cases of inadvertent false statements.

That means that now there’s a financial penalty for a mistaken good-faith payment of a small or micro entity fee.  If you paid it incorrectly, then that mistake is going to cost you at least three times the amount that you didn’t pay at the time.  If we’re talking, say, the third maintenance fee, that’s several thousand dollars. 

Since an applicant or patentee only needs to certify small or micro entity status at certain points in the life of a patent, I suspect that as a result of the amendments, more applicants/patentees than before who discover they have inadvertently paid the wrong fee will not immediately seek to pay the correct amount – which will now entail a significant penalty – but will simply wait until the next time they need update their status, and at that time pay the fee at the higher rate. The PTO will be none the wiser.

Which makes me wonder just what the sponsor of this particular bill thought s/he was going to accomplish with it.