America-Israel Patent Law

Update on Functions on Israel PTO During Corona Shut-Down – We’re Still in Chelm

Today the Government of Israel (the cabinet, in American-speak) allowed most small businesses to reopen. Sadly, according to an announcement sent out today by the Israel PTO, the government is not according the same privilege to the ILPTO, which is being forced to continue to work with a reduced staff.  This, despite the fact that, as previously explained in this blog, many patent examiners were already working at home, and are now forbidden from working at home.  This has downstream effects on the practitioners who analyze and report ILPTO office actions, and of course on the backlog at the ILPTO.

Today’s ILPTO announcement noted a few points and clarifications, however, with regard to adjudicative proceedings before the ILPTO.

1. Deadlines for filing documents or taking other actions in such proceedings that originally fell between March 22 and April 1, 2020, are now extended until May 15, 2020. Such deadlines that originally fell between April 2 and May 1 are now extended until June 15, and deadlines that fell between May 2 and May 15 are now extended to June 30.
2. Hearings scheduled at the ILPTO from May 3, 2020 and onward WILL TAKE PLACE AS SCHEDULED, in the hearing room or the auditorium of the ILPTO building in Jerusalem. Each participant will need to wear a face mask, maintain a distance of two meters from other participants, and observe any other requirements set by the Ministry of Health.  A maximum of eight people will be allowed in the room, three from each side in inter partes proceedings; parties requiring more people present may petition for a postponement of the hearing.  In the event that a party will be unable to appear as a result of corona-related reasons, it may petition for a postponement of the hearing.  To extent that changes in MOH policies affect these rules, the ILPTO will post notices of such on its website and notify parties scheduled to appear in hearings. 

The announcement also notes that, per a decision of the Ethics Committee of the Israel Bar Association, the witnessing of declarations by lawyers may be conducted by video conference instead by personal appearance before the lawyer, and that declarations witnessed abroad must be witnessed in accordance with the practice of the jurisdiction where the document is signed. 

[Comment: I find this last point comical, because the requirements for a declaration are set forth in the Evidence Ordinance, which can only be changed by the Knesset. The Bar Association isn’t empowered to change the Ordinance.  All that the IBA can do is say that it won’t regard a lawyer’s witnessing a declaration via videoconference to be a breach of the rules governing the conduct of lawyers.  Apparently the IBA's announcement is indicative of a nudge-nudge-wink-wink-say-no-more-say-no-more understanding between the IBA and the courts, that declarations witnessed this way won’t be disregarded solely on the basis of how they were witnessed.  And the ILPTO is telling us that it too plans to abide by this understanding.  Of course, the Knesset could amend the ordinance to give such witnessing full legal effect retroactively.]

Finally, the notice notes that the ILPTO will continue to process assignments and name changes in the Patents and Trademark registries, respectively, that examinations and registration of patent practitioners will continue apace, and that the ILPTO will continue to send follow-up notices to parties that receive correspondence electronically to allow them to ensure they received all correspondence.  Which seems kind of superfluous if the ILPTO isn’t conducting substantive work, but at least the woman who sends out those notices gets to keep doing her job.

The bottom line for most patent applicants in Israel is that substantive examination of patent applications remains in limbo; PCT national phase entry deadlines remain in place; and deadlines for paying renewal fees remain in place.

Israel PTO Announces Program to Advance Examination of Patent Applications Dealing with Corona Virus

The Israel PTO announced today that applicants whose applications pertain to the diagnosis, treatment, prevention or other means of defeating the corona virus may have their applications examined out of turn. All that is necessary is a letter explaining how the invention described in the application pertains to the diagnosis, treatment, prevention or defeat of the corona virus.  No fee is required.

The full announcement (in Hebrew) can be found here.  Commissioner’s circular no. 034/2017, referred to in the announcement, can be found here.

In view of the fact that Israel has Patent Prosecution Highway agreements with several jurisdictions, including the United States, obtaining a quick allowance in Israel may be a way for applicants to speed up the prosecution of their corona virus-related patent applications in other jurisdictions.

Alternatively, if applicants are looking for a relatively inexpensive way of getting feedback on their applications at an early stage of the patenting process, filing in Israel (after obtaining a foreign filing license from the local PTO, if necessary) may facilitate such, so that applicants can revise and improve their applications before the end of the priority year.

Although the ILPTO has not announced a resumption of regular work, this announcement may portend such.

On Living in Chelm and The Hiding of Ulterior Motives

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.

USPTO Announces Some Additional Extensions Available; Practitioners Cry, "Oy Vey!"

Yesterday the USPTO announced that, in the wake of Congress granting the Commissioner additional powers as part of its COVID-19 response bill, the PTO would grant extensions of some deadlines. The patent announcement is here and the TM announcement is here.  For a comprehensive discussion, see Don Zuhn's write-up at www.patentdocs.org.  The catch is that in order to get an extension, you need to make a statement saying that the delay was corona-related.  My comment, posted at patentdocs:

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."

 

Israel PTO Issues Clarification About Work During Coronavirus Shut-Down

As if life weren't exciting enough these days, the ILPTO issued a clarification (in both Hebrew and in English) to its earlier announcement about work arrangements during the coronavirus shut-down: since the statute imposes a 90-day limit to record a pledge against a patent, the ILPTO will continue to process the recording of such pledges. And if you're a patent practitioner trainee and you're now on unpaid leave, you should read the announcement.

English Translation of Israel PTO Notice About Work Arrangements Under Coronovirus Shut Now Available

Further to yesterday's blog post, today the ILPTO published an English translation of its notice about work arrangements during the Coronavirus shutdown.

Update March 27: the ILPTO published a further clarification on March 25. English version here. If you're recording a pledge against a patent, the 90-day limit to do so still applies, and the office will record the pledge. If you are a patent practitioner trainee on now unpaid leave, you should read the update.

They're Back: Yosemite Names Revert to National Parks Service

Earlier today, the US National Parks Service announced that it had settled a suit brought by the previous concessionaire at Yosemite National Park, Delaware North (DNC).  Although the announcement didn't mention a dollar amount, other news sources put the figure at $12 million, far less than what DNC had initially sought.  DNC is to transfer all Yosemite-related trademark and service mark registrations to the current concessionaire, Aramark, which will in turn transfer these to the NPS when Aramark's contract expires in 2031.  Aramark will also get some tangible assets.  Neither TESS nor PACER reflect these changes yet, but presumbably they will be updated in the coming days.

Practically, the main effect of the settlement will be that people can once again buy "Yosemite National Park" T-shirts in Yosemite Valley.  By the time I'm done writing this blog post, Curry Village, the Ahwahnee Hotel and the Wawona Hotel will have reverted to those names, as most of the signage with the "new" names was temporary, and even the bus drivers often called the places by the older names. And DNC wasn't trying to corner the market on names like Lembert Dome or Matthes Crest.

We blogged about this case previously here and here.  While the settlement was expected, it's too bad that DNC got as much as it did for trying to hijack place names that never belonged to it.  Sometimes, as Woody Allen noted, crime definitely pays. 

 

T-Cell Targeting of Tumor Cells: The Long Road Between Concept and Commericialization

The hottest story in Israeli biotech in 2017 was the August acquisition of Kite Pharma by Gilead Sciences for 11.9 billion dollars, and the announcement in October of FDA approval of the leading drug candidate that Gilead obtained in the purchase, Axicabtagene Ciloleucel, which is being marketed under the name Yescarta for the treatment of large B-cell lymphoma. 

Almost as hot a story, at least in the Hebrew press, was the ensuing (and still ongoing) legal battle between two of the academic scientists involved in the development of the technology that was the subject of the deal.  And herein lies a tale that illustrates the sometimes huge difference between coming up with a good idea, and translating that idea into a commercial product, particularly in the biotech area.

What Kite developed, and what Gilead was keen on, was T-cell (lymphocyte) therapy for fighting cancer.  The idea is to take a patient’s own T-cells and to genetically modify them so that they produce proteins that cause them to bind specifically to cancer cells and, upon such binding, attack the cancer cells.  The modified T-cells are then reintroduced into the patient.  The T-cells will now target the cancer, ideally without targeting the patient’s other cells, and without eliciting an immune response against the T-cells themselves (since the patient’s immune system recognizes those T-cells as its own).  Videos illustrating the two platforms Kite is developing can be seen here.

The genesis for this theory goes back to the late 1980’s and early 1990’s, when Professor Zelig Eshhar of the Weizmann Institute had the idea if one could modify lymphocytes to produce particular proteins, one could target cancer cells with those T-cells.  The first student who demonstrated proof-of-concept was Gidi Gross, although over the years a number of people in the Eshhar lab, among them my wife, worked on such targeting. 

The work resulted in peer-reviewed articles. It also resulted in several patent applications which, years later, yielded US patents.  In particular, US 5,906,936, (“Endowing lymphocytes with antibody specificity”), US 5,912,172 (“Endowing lymphocytes with antibody specificity”), and US 7,741,465 (“Chimeric receptor genes and cells transformed therewith”) were filed listing Zelig Eshhar, Tova Waks and Gideon Gross as inventors.  A fourth inventor, Daniel Schindler, was listed on the ‘465 patent. All three patents have pre-TRIPS filing dates, but the first two US were granted in 1999 and thus expired no later than 2016.  The ‘465 patent, however, was only granted in 2010, and thus if maintenance fees are paid will only expire in 2027 (assuming it survives the inevitable challenges to its validity).  The first claim of this patent reads,

“1. A chimeric DNA comprising: a first DNA segment encoding a single-chain Fv domain (scFv) comprising a V_L linked to a V_H of a specific antibody by a flexible linker, and a second DNA segment encoding partially or entirely the transmembrane and cytoplasmic, and optionally the extracellular, domains of an endogenous protein, wherein said endogenous protein is expressed on the surface of lymphocytes and triggers the activation and/or proliferation of said lymphocytes, which chimeric DNA, upon transfection to lymphocytes, expresses both said scFv domain and said domains of said endogenous protein in one single, continuous chain on the surface of the transfected lymphocytes such that the transfected lymphocytes are triggered to activate and/or proliferate and have MHC non-restricted antibody-type specificity when said expressed scFv domain binds to its antigen.”

The ownership of the three patents has an interesting history.  As with all patent applications originating at Weizmann, they were originally assigned to Yeda Research & Development Company Ltd., Weizmann’s tech transfer company.  Yeda in turn licensed the patents to Baxter, but after a year or so without positive results, Baxter gave up.  Yeda also assigned a one-third right in two of the applications to the NIH, which ostensibly reverted back to Yeda (although assignment record at the USPTO doesn’t seem to clearly reflect this).  Yeda then offered to sell its rights in the patents to the inventors.  Eshhar, Waks and Gross acted on the offer; Schindler chose to not to buy into the patent on which he was named as an inventor. So in 2004, assignments from Yeda to the three inventors were recorded at the USPTO (including a waiver of interest statement from Schindler).  In August, 2011, the remaining two inventors assigned their rights to Eshhar, and in 2013, he assigned his rights in the patents to Cabaret Biotech Ltd., a company owned by him.  Cabaret then licensed the patents to Kite Pharma.

According to the Hebrew press, Zelig Eshhar made about 71 million dollars as a result of the sale of Kite Pharma, most of it in the form of stock. At which point Gidi Gross filed suit, claiming he is owed 15% of that $71 million.  Last week, Zelig’s lawyers fired back, saying that Dr. Gross was not only fully compensated but given more than his financial due by Zelig. 

As the Israel court system is notoriously slow, I don’t expect a resolution of this matter for several years.  But living in Rehovot and having not only a spouse but friends I see regularly who worked in the Eshhar lab, the case has been a topic of conversation.  And it highlights the disconnect many people between being credited with research and the financial gain that comes with successful commercialization. 

In terms of credit, between 1989 and 1996, Gross and Eshhar were co-authors on at least 10 papers; two more such papers were published more recently, in 2014 and 2016.  Gross was listed as first author on several of those papers.  Additionally, Gross is listed as one of the inventors on the three aforementioned patents.  Hence no one denies that Dr. Gross made contributions to the development T-cell targeting. 

On the other hand, insofar as commercialization goes, it was Professor Eshhar who for nearly 30 years maintained the belief that modification of T-cells could result in therapy.  As my wife put it, when she worked on her PhD, all the mice died.  Not just hers, but those of her fellow students as well.  Additionally, at the time, there were other labs working on the same general idea, and they were actually considered to be farther along in developing the technology.  Yet they didn’t manage to commercialize it.  Baxter tried, but gave up on the project. Yeda, unable to find any suitors, gave up on the project.  But Zelig persisted.  And eventually someone became convinced that despite the previous failures, this technique could work, a belief borne out by the approval of Yescarta.  That’s why Zelig is making over $70 million on the deal.  It’s a point that patent attorneys and entrepreneurs appreciate, but one often lost on people not familiar with the commercialization process.

The terms of the 2011 assignment from Waks and Gross to Eshhar aren’t public.  It’s possible that Zelig orally promised Gidi a percentage of future profits or shares or whatever, but even if that’s so – and Eshhar disputes that such a promise was even made - it seems that the 15% that Gross now claims he is owed wasn’t set forth in a written document, since such a document would presumably have been included in the court filings, and the Hebrew press doesn’t mention such a document.  The Hebrew press has reported that Yeda is entitled to about 0.2% of $71 million; clearly, while Yeda is no doubt smarting right now about having given up on this technology, the agreement setting forth the terms of the 2004 transfer of ownership from Yeda to the inventors was in writing, and Yeda has (thus far) had the good sense not to sue to try to get more than it agreed to. Oral agreements constitute agreements under Israel law, but obviously the evidentiary burden on the party asserting the existence and the contents of an oral agreement is high.

Of course, it’s equally plausible that the lawsuit is the result of seller’s remorse, and that Gross now thinks he should have demanded more back in 2011.  And he may feel that, despite being credited on papers and patents, he feels he hasn’t been given sufficient credit for his role: in 2015, Zelig Eshhar was given the Israel Prize by the State of Israel for his work in the development of chimeric T-cell; Gidi Gross was not so honored.

The unfortunate part of this story is that, by all reports, Gross and Eshhar remained not just colleagues but friends long after a Gross had left the lab.

Buh-bye, DNC: Bad Faith, Sore Loser TM Assertions Will Get You Nowhere

[Update, March 5: on February 26, the Department of the Interior filed a consolidated cancellation action against 7 DNC marks.]

A few years ago I wrote a blog post in which I explained how a family trip provided an opportunity to illustrate various aspects of IP law. A recent trip that included two days in Yosemite National Park, one of my favorite places on the planet, provided a similar opportunity. That’s because Yosemite is now at the center of a legal spat that can only be termed ridiculous, and then only charitably. But the legal machinations are useful for illustrating what’s supposed to be protectable and what’s not. And for illustrating why people hate lawyers.

As has been covered in various media outlets, the National Parks Service contracts with third parties to operate concessions, such as hotels and retail stores, at various parks. Thus while the NPS itself manages the campgrounds at Yosemite, since 1993 it has been a company called Delaware North (DNC) that operated Yosemite Lodge, the Ahwahnee Hotel and Curry Village in Yosemite Valley, as well as the Badger Pass Ski Area and the Wawona Hotel to the south of the valley, and several stores, such as the stores at Yosemite Village, Crane Flat, and Tuolomne Meadows, in the park. But last year the NPS decided to go with a different concessionaire, Aramark, beginning in March 2016, i.e. tomorrow. This wasn’t a small contract: it’s reportedly worth up to two billion dollars over 15 years.

During the contract negotiations, it came out that DNC had itself registered or otherwise acquired trademarks on the names of several of the places it operated, with respect to both the establishments themselves (like The Ahwahnee Hotel), as well as merchandise such as T-shirts bearing the name “Yosemite National Park”. As part of its negotiating strategy, DNC said that it would be a more cost-effective supplier of services, because any other concessionaire would have to pay tens of millions of dollars for the rights to use DNC’s registered trademarks. If you think that sounds like a thinly-veiled threat, you’re right: in September, DNC filed suit against the US government in the Federal Court of Claims, asserting breach of contract since the government didn’t require Aramark to buy DNC’s “other property” associated with its operations in Yosemite, including trademarks, which it claims is worth $61 million. You can read a copy of the complaint here, and a copy of the government’s response, filed in early January, here. DNC filed a revised complaint in late January. For a discussion of the specific legal issues, intertwined with narrative in more journalistic than legalistic style, there’s this piece written by a lawyer who lives near Yosemite.

As a result – so report the stories that came out in the first half of January, and so says the NPS itself on the Yosemite site – the names on the various hotels will change beginning March 1, and the NPS is even changing the signage in the park to reflect the new names. Interestingly, as of last week, the signs in the park still reflected the well-known names of the places. And I’ll be shocked if there’s a single park ranger who will refer to any of these places by a name other than their long-standing, historic names. It’s kind of like changing the spelling of the Sears Tower to “W-i-l-l-i-s”. That may be how it’s spelled, but it’s still pronounced “Sears”.

Now, perhaps DNC has a good legal case and perhaps it doesn’t; I don’t profess particular expertise in US trademark law. But I did learn a little about trademark basics, and you don’t have to be a lawyer to sense, as some non-Jewish friends where I grew up might have said, that “something’s not kosher” here. What’s not quite right with this picture? I can think of at least two things.

First, trademarks are meant to distinguish the source of goods and services. You buy a Coke rather than a generic version because you want The Real Thing, and you know that the Coca-Cola company provides it. You buy a particular make of automobile because you know that company has a reputation for quality. You buy a particular brand of clothing because clothing made by that company signifies (or confers) a particular status.

In the case of Yosemite, though, no one gives a crap who runs the concessions. It could be DNC, it could be Aramark, it could be Ivan the Terrible or his modern counterparts, Donald the Demonic and Hillary the Hideous. Park visitors just care that they when they stay in one of the park’s hotels they have clean sheets and working showers, and that they come home with a “Yosemite National Park” t-shirt that they bought in the park. It’s the location itself that matters, not the company running the business. And consequently, trademark rights shouldn’t apply here, or at least the way in which they are valued needs to account for this crucial distinction from the normal situation. In its reply brief, filed in early January, the US government said precisely that: that DNC’s estimate that the marks it says it “acquired” were worth $61 is fundamentally flawed because in this case the value stems not from the “marks” but from the location.

Second, and even more basically, the names in question don’t belong to DNC, and the USPTO should never have registered these marks in the first place. The Ahwahnee Hotel was so named when it was built in 1937. There’s been a Yosemite Lodge in roughly the same location – near where Yosemite Falls crashes into Yosemite Valley – since 1915. (See this 1956 USGS map.) For years and years, long before DNC was in the picture, people referred to these places by the names that DNC now says are its own. And of course, the park name is the park name. Trademark attorneys may view it differently, but to the rest of us, when you take something that belongs to the public, it’s called stealing. That’s what's got all of us Yosemite fans so vexed: the brazen attempt to steal from the public.

That this is an attempt by DNC to engage in extortion can be seen from its own behavior until now. For example, when we stayed at Yosemite Lodge last week, there was little to suggest that DNC really perceives itself as the rightful owner of the name “Yosemite Lodge”. The notepads next to the telephone in the room, for example, bore the legend “Yosemite Lodge At The Falls”, without even so much as a “TM” on them. The same was true of the legal notice on the back side of the door informing guests of hotel rates, and the binder with information for guests. That binder, in fact, contained a two-page document setting forth the 78-year pre-DNC history of Yosemite Lodge. Likewise, the information sheet handed to hotel guests gave no indication of any proprietary interest on the part of DNC in the name “Yosemite Lodge”. And the plaque  in the reception area of Yosemite Lodge says that the hotel is “Operated by Delaware North Companies Parks and Resorts, Inc.” Not owned by, operated by – because DNC knows darn well that it’s merely a custodian, not an owner. Similarly, the paper prepared and distributed by DNC showing the Badger Pass   ski runs and the cross-country ski trails evinces an intent to protect a stylized bear-paw logo, and contains a copyright notice regarding the text, drawings and layouts of the paper itself, but contains no indication that DNC regards the name “Badger Pass” or “Badger Pass Ski Area” as its own. In fact that copyright notice, like the plaque in the hotel lobby, states that DNC operates the ski area under the auspices of the NPS, once again implicitly acknowledging that it is not the owner of the names of the places.

In short, DNC never acted like it owned the “marks” it now says belong to it: real trademark owners mark their marks. DNC knows full well that it doesn’t own the marks in question. It takes a lot of gall to register a mark on something you don’t even own, then threaten litigation over your ill-gotten registrations. Unfortunately, such dishonesty is par for the course for many lawyers.

If the decision to change the names of the facilities were Aramark’s alone, I could understand Aramark’s caving on this issue, even if I don’t think it should have to: under the screwy US civil litigation model, it’s cheaper to change the names and be done with it than to go court, and there’s a non-zero risk that a court could reach the wrong decision and Aramark would lose in civil litigation (although I personally don’t think there’s a jury in the USA that would side with DNC over the NPS on this matter). But there’s no reason under the sun for the government of the USA in the form of the National Parks Service to give in to an extortionist and change the names on the signs in the park, since the NPS itself won’t be infringing any marks if its signs continue to point visitors in the direction of The Ahwahnee, Yosemite Lodge, Curry Village, Badger Pass and the Wawona Hotel.

Rather than capitulate to DNC and in so doing whitewashing part of the park’s history, I think the government should have agreed to indemnify Aramark on the trademark front. And that it should now bring its full weight down on DNC, with the threat of criminal prosecution. For example, every one of DNC’s trademark applications included a declaration from DNC’s Vice-President and General Counsel that the applicant, DNC, was “properly authorized to execute this application on behalf of the applicant” and that he believed that the applicant, DNC, “to be the owner of the trademark sought be registered”. That declaration also included the admission that willful false statement are punishable and may jeopardize the validity of the trademark registration. Why not charge that person, and DNC, with the willful making of a false statement to the PTO?

Even better, fraud is one of the predicate offenses for a prosecution under the RICO statute. Since DNC obtained the registrations in question by fraud – it never owned the marks in the first place, so it lied when it told the PTO it owned them – and these acts occurred on multiple occasions within a 10-year period, the Justice Department should bring RICO charges against DNC and its officers. Something tells me that even the whiff of such charges would be enough to cause DNC to abandon all of the marks in question.

Perhaps the government is taking a long-term view: by continuing to operate the concessions under new names, within a year or two Aramark will be able to provide evidence showing that the revenues at the concession sites are completely unrelated to the names of those sites, at which point it will be able to revert to the long-standing names, since the damage to DNC by using the names Ahwahnee, Wawona, etc., will demonstrably be zero.

The good news is that none of this smelly business will affect any of Yosemite’s iconic sites: there’s no talk of changing the name of El Capitan to El Capital One, or of renaming the Half Dome cables “Half Dome Cable and Wireless”, or of calling the firefalls (which we were fortunate enough to watch, see photo at left) the Firefox falls. And even if, Heaven forfend, that were to come to pass, the places themselves would continue to entrance, enchant and enthrall.

The “Kosher Lamp” and the Redskins Trademark Saga: Reminding Us that “Patent” and “Successful Business” Are Not Synonyms

If the above title seems to be a non-sequitur, keep reading, because it’s not.

There’s been a lot of writing in the IP world recently about a US federal district court judge upholding the USPTO’s decision to revoke the trademark for “Redskins”, used in connection with the professional football franchise in DC.  The NFL, and Redskins team owner Dan Snyder, share the traits of deep pockets and dense skulls, so it will be shocking if an appeal isn’t filed. But even if sustained, the revocation of federal TM registration won’t stop the league from marketing Redskins apparel and, in all likelihood, profiting nicely in the process.  No less importantly for the league, the revocation won’t necessarily pave the path for knock-off artists to sell Redskins merchandise.  The team has been around for a long time, and it’s reasonable to say that the name “Redskins” and the team logo and colors have at this point in time acquired not only distinctiveness but goodwill.  So the NFL will likely still be able to avail itself of state trademark claims, including claims for infringement of unregistered marks (also known as “passing off”), and perhaps trade dress claims as well.  Whether it should continue to use “Redskins” as a team name is a separate question, as is whether the same arguments that led to revocation of the federal trademark registration would be good defenses against other claims that the NFL might bring.

The critical point is that, because the NFL is a strong, established business, it can use its existing market position to continue to profit from the Redskins mark, and to out-compete most nascent competition. 

This brings me to the connection between the Redskins’ situation and the second half of this blog post title.  A common fallacy among the uninitiated is that merely applying for a patent, let alone actually obtaining a patent, will make one rich.  I’ve lost track of the number of times I’ve had to disabuse potential clients of this notion.  As anyone who’s been in the patent law business long enough knows, a good idea, or even a good patent, isn’t sufficient.  Succeeding with a product in the marketplace depends on many, many factors; the procurement of a patent is just one of them. 

Sometimes, though, obtaining a patent isn’t even necessary. Case in point: the so-called “kosher lamp”.  By way of background, religiously observant Jews will use electric lights on Shabbat, but they’re prohibited by religious law from turning those lights on or off.  A common work-around to this issue is to use a timer to control the operation of the light. Sometimes, however this isn’t optimal: if you wake up in the middle of the night when the lights are off and you want to read until you fall asleep again, you’re out of luck.

Enter the “KosherLamp Max”.  This is a lamp in which the lighting element resides in a compartment having an opening in its side, through which the light can shine.  The twist, pun intended, is that there’s a shade that can be partially or fully rotated into place to cover the opening, thus reducing or completing blocking the light.  Judging from the testimonials, it appears that this product is doing well.  Yet as far I’ve been able to determine, there are no patents on this product.  Nor should there be: I recall a similar lamp in my parents’ in my childhood, and the lamp at right was evidently designed in 1967. 

The usefulness of patent protection doesn’t seem to have been lost on the proprietors of the KosherLamp: about 10 years ago, a US patent application was filed for an earlier version of the product, but was abandoned after the first Office Action. That version of the lamp utilized an incandescent bulb rather than a compact fluorescent bulb (which generates less heat), and the claims focused on the product features incorporated to dissipate the heat generated by the incandescent bulb. The same fate awaited the corresponding Israel patent application.  Nevertheless, the product is now out there, without the benefit of patent protection. 

It will be noted that there is a registered US trademark for a stylized “KosherLamp” logo.  So it’s possible that others may make a similar product and market it under a different name.  But having been first to market, and having now made something of a name for itself, I suspect that the KosherLamp will continue to be the leader in this particular niche market for some time.

In sum, IP can be a useful part of a business plan, but doesn’t sell products, and rarely will IP alone make anyone rich.  And sometimes, it’s not even necessary.

Four Israeli Universities Among Top 100 Patentees in USA in 2012

Today Don Zuhn at PatentDocs posted about a report from the National Academy of Inventors and the Intellectual Property Owners Association, which lists the universities worldwide that received the most U.S. utility patents in 2012.  The University of California tops the list with 357 patents; last on the list is Seoul National University Industry Foundation with 18 patents.  Of the top 100, most of the non-US universities are located in the Far East (27).  There is only one entry for a European university (Ecole Polytechnique, Federale de Lausanne, coming at 94th place with 20 patents) and one entry for the King Fahd University of Petroleum and Minerals in Saudi Arabia with 57 patents.  The tech transfer companies of the Technion, Weizmann Institute, Hebrew University and Tel-Aviv University all made the list, with 30, 35, 30 and 37 patents, respectively. 

While numbers of patents per se aren’t necessarily a measure of the patentee’s successful contributions to commerce, it’s nevertheless impressive that Israel, with a population significantly smaller than those of any of the other countries represented on the list (unless one counts Hong Kong as separate from China), and which has to devote a larger proportion of its budget to defense than the other countries, has four universities on the list (out of seven Israeli universities total).  And according to this slideshow, and this news article, and this publication, Hebrew U. (Yissum), Weizmann (Yeda) and Technion have licensing revenues on par with those of the leading US universities.

Smokey says, Only YOU can prevent passage of patent perversion

With the debacle that’s being touted by its proponents as “patent reform” being set for a vote this week in the House, I thought I’d share with readers a letter that I sent today to various parties in the USA, urging them to contact their congressional representatives to vote no on this monstrosity.  The version shown below was sent to people in Michigan, my last port of call before moving to Israel.  The 19-word statement at the end is courtesy David Boundy from his post this morning on PatentDocs.  I will be calling the office of my U.S. representative (Congressman Dingell) later today to tell him to vote against the bill; if you can vote in the U.S.A., you should do likewise with your representative.  

 

On Wednesday of this week (June 22), the House is set to vote on HR 1249, the deceptively titled “America Invents Act”.  If enacted, the bill will effect numerous amendments in the patent statute; at this stage, none of them are good, and most are bad.  I write now to briefly share two reasons why it is imperative that people who care about the economies of Michigan and Israel call, fax or email their representatives and urge them to vote against the bill, should it reach floor.  The bill is bad for inventors and start-ups, which is bad news for the economies of both Michigan and Israel.  (For readers who want to know more about specifics of the bill, I strongly recommend the posts on this topic at www.patentdocs.org, a blog that has been tracking this legislation.)

Chief among the reasons to vote against HR 1249 is that it will destroy what patentees refer to as “the grace period”.  Outside the USA, if an inventor publishes a description of his invention before filing a patent application, he can no longer get a patent on the invention.  If you’re a start-up company, that’s bad news: without publicizing the invention and disclosing it to others, it’s difficult to get funding; but without that funding, it’s impossible to further develop the invention.  Catch-22.  In contrast, under current U.S. law, an inventor can publish his idea, and still have a year to file a patent application without his own disclosure counting against him. The one-year grace period is unique to U.S. law, but it’s not merely reflective of the traditional American emphasis on entrepreneurship.  It’s an approach to the patent process that closely aligns with the realities of the development process, unlike the “you disclosed, you lose” approach taken in other countries, which favors established interests over start-ups. 

But it’s not just U.S. companies that take advantage of the inventor-friendly grace period.  Israeli companies routinely take advantage of it too.  That’s because, unsurprisingly, Israeli companies tend to be more focused on the U.S. market than the Israeli market, and if they can’t get a foothold in the USA, they’re not going anywhere.

HR 1249 will do away with the grace period, which is reason enough to vote against the bill.

Another main reason to vote against HR 1249 is that it no longer contains what was its best part, namely that it would have ended a practice known as “fee diversion”.  Instead, HR 1249 will allow fee diversion to continue apace.  Fee diversion is the practice of Congress taking monies collected by the U.S. Patent & Trademark Office (USPTO) from the parties that use its services – the applicants for and owners of patents and trademarks – and diverting those funds to other government projects.  With the exception of a few years under the second President Bush, during which the USPTO was allowed to keep all its fees, this practice has persisted for many years.  The problem is that the USPTO’s operating budget is funded entirely by those users fees.  By taking funds from the USPTO, fee diversion effectively acts as both a direct tax on innovation (by charging patent applicants to fund non-patent related government activities) as well as an indirect tax, since it means the USPTO cannot work as efficiently as possible, as it doesn’t get to keep all the funds it should. 

Chronic fee diversion has had deleterious results for the USPTO’s operations.  Among other things, fee diversion resulted in the USPTO’s computer infrastructure becoming antiquated, making it difficult for the USPTO to efficiently examine patent applications.   Moreover, this has occurred as the overall number of patent applications filed at the USPTO has risen dramatically; the USPTO is still hopelessly backlogged in its examination of patent applications.  One consequence of what was effectively fee diversion this year alone (due to the budgetary stalemate in Congress) was that the USPTO will face a $100 million shortfall in its budget; on April 22 USPTO Director David Kappos announced ways in which it would respond to the shortfall, including a hiring freeze, a freeze on the plans to open a satellite patent office in Michigan, and a slowdown in the provision of certain other services. 

Until last week, HR 1249 included provisions to allow the USPTO to not only keep all of its fees, but to set them too, a set of conditions that presumably would have enabled the USPTO to optimize its fees so as to optimize the services it provides.  Unfortunately, some members of the House Appropriations Committee felt that they should continue to have the prerogative to raid the USPTO for their own pet projects.  As a result, HR 1249 contains language that will only allow the USPTO to use up to a certain portion of the monies it collects every year; the rest will be set aside in a fund that will be controlled by the House.  That’s fee diversion, just dressed differently. 

The continuation of fee diversion means that the USPTO will continue to be backlogged, and take longer than it should to issue patents.  That’s bad news for everyone, but especially for small companies looking for funding, since in many cases later-stage investment won’t be forthcoming until after a patent has been granted.  Lengthy delays in patent examination at the USPTO thus means that many young companies won’t be able to survive long enough to develop a commercial product; that translates into loss of potential jobs and tax revenue. 

If you care about your local economy and about Israel’s, please contact your representative today or tomorrow and urge him or her to vote no on HR 1249.  You can find your representative’s phone number at  http://www.house.gov/representatives/; please call today or tomorrow and say, “Please vote no on the rule for the patent bill, H.R. 1249, and vote no on final passage.”  (Voting “no on the rule” means  not allowing the bill to come to the floor for a vote.) 

Daniel Feigelson

Daniel Feigelson is a U.S. and Israel patent attorney who grew up in Ann Arbor and has lived for nearly 20 years in Rehovot, Israel.

[NOTE: after posting, Canadian patent practitioner Ian Goodman reminded me that the USA is not unique in having a grace period: Canada is one of a handful of other countries that also have some form of a grace period.  Nevertheless, it is a rarity, and it one of the great strengths of the US patent system.]