America-Israel Patent Law

Proposed Amendments to the Israel Patents Statute 2025, Part 1: The April Ambush

Yesterday (April 23), the Israel PTO notified members of its email distribution list of the publication of a memorandum of proposed new legislation (a tazkir hok) that would change principally the Patents Statute. The deadline for comments (via a link on that same page) is 23:59 on May 1 – fewer than nine days after distribution of the email, of which two days are non-workdays (Saturday and Independence Day (Yom Ha’atsma’ut)), which this year is being celebrated on May 1), and one is Memorial Day (Yom Hazikaron), a day on which many people work shortened hours or don’t work at all, which this year is being commemorated on April 30. 

The memorandum was actually first posted on the (misnamed) “Justice” Ministry’s site at 16:11 on Thursday April 10, viz. at the close of business on the last day the Ministry and the ILPTO were open before the Passover holiday. Although those offices reopened on Sunday April 20, the email from the ILPTO was only sent on April 23.  And very few if any regular users of the patent system in Israel regularly check the Ministry’s site for proposed legislation; to the extent people follow proposed legislation affecting patents, they tend to rely on the ILPTO’s emails. Clearly, someone doesn’t want public comment on these proposals. Oh, those pesky citizens!

It's not clear what the rush is. One of the main proposals – to create an Israeli provisional application – have been kicked around for several years, so a few more weeks’ wait won’t matter.  One disappointing aspect of the memorandum is that the introductory part of the memorandum (translation below) is silent about a few significant proposed changes, which I list after the translation below.  I do not relate here to the memorandum’s “explanations” that follow the proposed changes to wording the statute; I hope to do so in the coming days.

The memorandum follows what I assume is the Ministry’s standard format for such memoranda, with the introductory part constituting a sort of executive summary. I used Google to translate and made some changes thereafter.

Memorandum of Statute

A. Name of the proposed statute

Patents Statute Memorandum (Amendment No. 15) 5785- 2025

B. Purpose of the proposed statute, the need for it, its main provisions and its impact on the existing law

The memorandum includes proposals to change the procedure for examination of a patent [application – DJF] by the Patents Authority, and additional matters. These changes are necessary in view of technological changes, changes in corresponding procedures in foreign countries, and the need to re-examine the desired system of balances between the inventor and his competitors in the [should be “a” – DJF] variety of contexts.

Principal point 1: Examination of patents by demand

It is proposed to adopt a method according to which, before the examination of the application begins, the applicant will be required to request the examination by submitting a request and paying a fee ("Request for examination"), replacing the existing method according to which patent applications are examined in the order in which they are filed with the Authority in accordance with the classification of the scientific field of the subject matter of the application. According to the proposed arrangement, the applicant will have a period of four years during which he will be able to demand that his application be examined, and applications will be examined in the order in which the demands for examination are submitted. If the applicant does not request the examination within four years, the patent application will be refused and the patent will not be registered. The advantage is in making examination more efficient, so that only applications in which the applicants interested will be examined, in contrast to the current situation where sometimes after the examination begins, the applicants abandon the application.

Principal point 2: Provisional patent application

It is proposed to allow the filing of a provisional patent application, which, if the applicant does not convert it into a regular application within a year, will expire as if it had never existed after a year, i.e. before it has been fully published to the public and without the need for active notification of its abandonment, similar to the "Provisional Patent Application" track that exists in the USA. The advantage of this track is that it gives the applicant time to consider his steps with respect to his invention and the filing of the final application.

Principal point 3: Grace Period

As a general rule, an invention that is published before a patent application is filed will not be eligible for registration [in a patent – DJF] due to lack of novelty. There are limited exceptions to this rule, set out in Section 6 of the statute. It is proposed to stipulate that publication by the owner of the invention within a period of one year prior to filing the application will not negate the novelty of his application. This arrangement exists in Israel for designs, and also exists in the US and other countries.

Principal point 4: Possibility of early opening of the patent file for public inspection

Currently, patent application documents are opened for public inspection 18 months after the date of filing the application, and for an international application – within 45 days [of national phase entry – DJF]. It is proposed to allow the applicant to advance the opening of the patent documents for public inspection. Early publication will allow the application to serve as prior knowledge with respect to patent applications that will be filed after the early publication date, and in addition, early publication will advance the date from which the applicant will be entitled to receive reasonable royalties for infringement of the patent during the period that it was pending, provided that the patent is registered at the end of the examination process.

Principal point 5: Divisional applications

It is proposed to authorize the Minister of Justice to determine conditions and limitations on the division of an application. Currently, as long as the patent application is not accepted [viz. published after examination for purposes of opposition – DJF], the applicant is entitled to demand that it be divided into several applications. This arrangement allows the patent applicant to split A patent application that he filed so that he could advance the registration of the patent for the parts of the application that the patent examiner approved as patentable, and continue the discussion with the examiner regarding the remaining parts of the application. However, there arise allegations of abuse of the ability to divide an application, so that applications that are not fit for registration remain pending for a long period. The authorization is intended to enable the Minister of Justice to establish mechanisms to reduce the abuse of divisional applications.

Principal point 6: Right to continue exploiting an invention after reopening the application file

Currently, a person who began to exploit an invention before a patent application was filed on the invention, or after the patent protecting the invention expired, will be entitled to continue exploiting it even if a patent application was filed or if the patent was reinstated, respectively. It is proposed that this arrangement will also apply in the case of a patent application that was refused by the examiner and then the refusal of the application was cancelled and the patent was granted.

Principal point 7: Additional remedies for infringing products

It is proposed to explicitly enshrine in the Patent Statute the authority of the court adjudicating a charge of infringement to order the transfer of ownership of infringing products or their destruction, similar to the authority that exists in most intellectual property legislation and in accordance with Article 46 of the TRIPS Agreement (Agreement on Trade-Related Aspects of Intellectual Property Rights).

Principal change 8: Change in the name of the Patent Authority and granting additional functions

It is proposed to change the name of the Patent Authority to "Intellectual Property Registration Authority" to express all of the authority's areas of activity, which also deals with designs, trademarks and appellations of origin. The functions of the Patent Authority include providing information to the public on patents and maintaining contact with institutions and bodies outside Israel in its areas of activity, and it is proposed to also add to these functions service to the public on the subject of intellectual property registration.

C. The impact of the proposed law on certain population groups

No effect.

D. The impact of the proposed memorandum of law on the budget and administrative standard of the initiating ministry, other ministries and other authorities.

No impact.

As will be discussed in a future post, a reading of the details of the proposed amendments shows that the above summary glosses over some critical details of the points mentioned.  Additionally, there are several significant proposed changes that are not mentioned at all in the introductory section above. Among these:

- it will not be necessary to provide a copy of the priority document, unless asked to do so by the examiner;

-  third parties would be allowed to pay the examination fee;

- in cases in which an application is “accepted” prior to 18 month publication, the Office as a matter of course will conduct a further examination before the end of the opposition period (if no opposition has been filed) and may rescind the ”acceptance” of the application;

- acceptance under section 17(c) would be allowed if both the Israel patent application and the corresponding foreign application are national phase application of the same PCT application;

- the filing of an opposition or other challenge to the foreign patent on which a 17(c) request is based will automatically result in the return of the application to the examination queue;

- once the application is filed, it will not be permissible to broaden claims in any way, even if there is support for such broadening in the application;

- the long-standing practice of being able to add new material to an application, provided that such material is post-dated to the date on which it is added to the application, will be abolished;

- any party will be able to oppose the grant of a patent, or seek its cancellation before the Office, on grounds that the applicant is not the owner of the invention; currently only a party alleging that it is the actual owner may make such an argument before the Office;

- an Israel patent application A having a filing date earlier than application B but a publication date after the filing date of B will constitute prior art for purposes of considering novelty;

- any party will be able to request reexamination of a patent or patent application on grounds of lack of novelty due to an earlier-filed Israel patent application;

- as is already the case for pre-grant oppositions, if a cancellation action is initiated against a patent by a third party that then withdraws from the proceeding, the Office may still cancel the patent;

- the standard for considering a late-presented priority claim and certain other matters will reduced to a “reasonable care” standard instead of an “unavoidable” standard.

Rather a lot to pack into a set of amendments with such a small window to respond.

Why Is the ILPTO Asking for Excess Page Fees That I Already Paid?

Filed a divisional application at the ILPTO. The ILPTO’s electronic filing system populated all the relevant fields with information from the parent case. As the application has more than 100 pages, I told it how many excess pages there were (250) and it calculated the total fees due – NIS 2344 filing fee plus NIS 293 for each group of 50 pages over 100, total NIS 3223.  Which I paid.

A few minutes later, I got the filing receipt. That’s good – USPTO doesn’t do things that quickly.

But at the same time I got a letter saying we still owed NIS 2344 in excess page fees, and that we need to file a “response to defects” on the web site. It included a hyperlink.

So I wrote a response saying, No we don’t, your system calculated exactly what we owed and we paid it, see receipt no. XXX. (Normally I’d pick up the phone to deal with this, but the ILPTO doesn’t take phone calls after 13:30.)

I went to file the letter and found that the system doesn’t have an entry for “response to defects”, and that the hyperlink provided yields a 404 error.

There was, however, an entry for “payment of excess page fees”, which I chose…and it doesn’t let you file a response unless you also pay the fee that the ILPTO says you owe.

So I filed it under “response to defects in national phase entry”, since even though this isn’t national phase entry but a divisional of one, Michael Bart and his team of PCT people at the ILPTO are competent, and will call me about this tomorrow or Sunday and we’ll get it straightened out.

What I want to know is, why did the system issue this letter in the first place?

Bonus: the filing receipt includes the notation in the photo below. The Hebrew is correct, but the English translation is not. It should read “Division from application no.:”, not “Request of division from”.

Israel PTO Fixes Glitch in Issue Notification (Follow-Up to Noah At the ILPTO)

Yesterday I wrote about an issue notification from the Israel PTO that didn't state when notice that the patent application had been accepted would be published in the Patents Journal. 

Subsequently, I contacted the head examiner at the Israel PTO to point out the problem, and made two additional suggestions: that they include a sentence reminding the applicant that a divisional application cannot be filed after acceptance of the application, a reminder not so important for licensed practitioners but possibly important for pro se applicants (h/t to Dan Swirsky); and that they list a contact person.  And voila!  Within a few hours I received a new letter, giving the publication date, as well as a new sentence regarding the deadline for filing a divisional application, and the name, telephone number and email of the contact person. 

So as they say in Hebrew, כל הכבוד to the ILPTO for addressing this in an expeditious manner.

Bill Cosby's Noah At the Israel PTO

Those of us old enough to remember Bill Cosby before he fell from grace will recall his famous bit about Noah. It actually appeared on an LP as three separate sketches, the second of which was "Noah and the Neighbor". Noah's neighbor complains to Noah about the ark-under-construction blocking the neighbor's driveway, and eventually the neighbor asks, "Why do you need to build this ark anyway?"  To which Noah replies, "I can't tell you, haaaa haaaa haaaa haaaa haaaa haaaa".

Last week I paid the "acceptance fee" (the equivalent of the USPTO issue fee) for an allowed Israel patent application. This morning I received the equivalent of a US "issue notification", namely a letter telling me when the application will be published in the Patents Journal for opposition purposes, which is what constitutes "acceptance" of the application.  A picture of the letter appears at the right.

For those who don't read Hebrew, I'll translate the relevant part:

"The date of acceptance of the application is

"The notice of acceptance of the application per section 26 of the statute will be published in the Patents Journal which will be available on the Patent Office web site on ."

Thank you Noah!

My working assumption is that when they switched from publication of the Patents on the last working day of the month to the first working day of the month, someone was supposed to reprogram the software that generates these letters, but screwed up.

While this seems funny, there's actually a serious side to the story: if an applicant wants to file a divisional application, he must do so BEFORE publication of the parent case in the Patents Journal.  So knowing the date of future publication can be important.  Especially since there's no case law in Israel akin to Immersion Corp. v HTC like there is in the USA: if you wake up one morning and find your application published in the Israel Patents Journal, the Israel PTO's e-filing system won't let you file a new divisional, and you'll need to go to court and hope that the court rules that a divisional can be filed on the same day that the parent case published under section 26.

I also like the fact that the letter is signed by "The Patent Office" (or more accurately, "The Patents Authority"), without any particularly individual's name on the bottom to contact about the fact that the letter is wholly uninformative.

 

ILPTO Proposes to Stop Rejecting Divisional Applications for “Overlap” with Parent Cases

We have from time to time blogged about the Israel PTO’s obsession with “overlap” between patent claims, an obsession which in our view is unfounded, being based on a far too-expansive reading of section 2 of the Patent statute (see here, here, here, and here).  The problem with the ILPTO’s view is that it lumps statutory double-patenting with obviousness-type double-patenting, and as a result wastes significant amounts of both examiner and applicant time.  The issue can arise in all fields, but particularly affects patent applications in the life sciences, and is often a thorny issue between parent and divisional applications.

To address the issue, we have proposed implementing a system analogous to terminal practice in the US, which would allow applicants to overcome these “overlap” rejections by promising enforceability only as long as the two patents are owned by the same entity, and as long as they expire the same day (excepting any patent term extension time granted in one of them). 

It now appears that at least partial relief may be on the way.  In a notice published last week regarding proposed revisions to the Examination Guidelines (the ILPTO’s equivalent of the MPEP, albeit – thankfully – far less voluminous than the latter), the ILPTO has proposed foregoing the raising “overlap” rejections in cases of patent applications or a patent application and a patent which are (a) owned by the same entity and (b) have the same filing date, provided that the two documents do not contain claims of “literally or substantively” identical scope.  This means that the ILPTO plans to stop raising such rejections in cases of parent and divisional applications, as long as the claims are of different scopes.  The specific proposed wording can be found here beginning at page 30.

The ILPTO has asked for comments on the proposed revisions to the Guidelines, to be sent to [email protected] by January 29, 2020.

It is interesting, but not surprising, to note that the impetus for this proposed change is to save examiner time: making life easier for itself seems to be the overriding rationale behind many changes implemented by the ILPTO in recent years, even if those changes impose excessive burdens on applicants or their representatives.  In the present case, it is expected that the proposed change will ease life for applicants as well.

One other interesting point is that the proposed wording will not require applicants to promise co-ownership of the two patents as a condition for enforceability; the ILPTO will look at co-ownership at the time of examination.  Perhaps, upon further reflection, the ILPTO will realize that adopting a terminal disclaimer practice for all co-owned applications where there is “overlap” between the claims, irrespective of filing date, would achieve an even better result. 

Even if the ILPTO’s proposed change doesn’t go far enough, it is nevertheless a welcome one.

Better Late Than Never: ILPTO Rescinds "No Second Generation Divisional" Practice

As we predicted last week, the ILPTO Commissioner today published an announcement in which he rescinded the "no second generation divisonal" practice that had been in place since mid-2010.  All's well that ends well, although it would have been nice if had he admitted that the practice was ultra vires.

Muddle, Muddle, Toil and Trouble: Israel PTO Backtracks on “No Divisionals of Divisionals” Policy. Maybe.

We’ve blogged in the past about the ILPTO’s strange, ultra vires policy announcement in early 2010 to forbid the filing of second-generation divisional applications (2GDs) after the grandparent case has been published for opposition purposes.  That announcement, which was based on an absolutely untenable reading of the statute, and which contradicted over 40 years of practice under the statute, came not in the context of a decision in an opposition (where one might have expected to see such a statutory challenge to the grant of a patent raised) but in a circular issued sua sponte by the then-commissioner. 

In a decision (in Hebrew) issued on January 12, 2016 in an ex parte proceeding in IL 234696, the present Commissioner has taken a step back from that view, and may be on his way to returning to the status quo ante in which it was possible to file a chain of divisional applications.  Unfortunately, the Commissioner’s thinking in this matter is muddled, as will be explained below, and the decision does not contain a clear repudiation of the ILPTO’s anti-2GD stance.  We’ll believe that the anti-divisional policy has been killed off when we see an announcement from the ILPTO to that effect.

Background: Statutory Basis for Divisionals in Israel and the 2010 Circular

Section 24(a) of the Israel patent statute says, “As long as the application has not been accepted [i.e. published for opposition purposes – DJF], the applicant is entitled to demand that it be divided into several applications.”  Section 24(b) says, “If the application includes more than one invention, then the Registrar may, as long as he has not accepted the application, direct the applicant to divide his application.” 

From 1967 when the patent statute was enacted until the spring of 2010, 24(a) was understood by all as referring to any given application: any application could be divided, provided it had not yet been published for opposition purposes.  Thus a first divisional could be divided from an original application, which, while the first divisional was pending, could publish for opposition and then issue as a patent.  Thereafter, during the pendency of the first divisional but after the publication of the original case, a second divisional could be filed from the first divisional, notwithstanding the publication of the original application in the interim. Both the first and second divisionals would have an effective filing date of the original case and would enjoy any priority claims made therein.  The process could be repeated ad infinitum, subject to the 20-year term, which for all the applications in the series would run from the filing date of the original application.

In February 2010, in one of many circulars issued during his tenure, the then-commissioner announced that henceforth, the ILPTO would interpret 24(a) as referring only to the original application.  (He subsequently pushed off implementation of the circular by several months.) Thus, once the original application published for opposition purposes, no 2nd- or higher-generation divisionals could be filed from any already-filed, still-pending divisional applications.  The rationale given in the circular for this new “policy” was “the need to conclude examination proceedings in a reasonable time and because of considerations of legal certainty for the general public”. In other words, the ability to file divisionals ad infinitum kept “the public” uninformed about the acts that might be enjoined should a grandchild patent issue many years after the first patent. 

As we noted then, the problem with this view is that statutory interpretation and administrative polices are different creatures.  Administrative policies, like how many months’ extension the Commissioner will grant before a show of cause is required to obtain additional extensions, can only be implemented prospectively, and there may be a delay between an administrative policy being announced and its implementation. Statutory interpretation, by contrast, has immediate effect, both prospectively and retrospectively.  If the statute precludes the filing of 2GDs, then (a) all patents granted in such cases until 2010 time were void, and (b) the ILPTO needed to stop accepting such applications immediately, not several months after the publication of the circular, as the ILPTO stated would be the case. 

Challenge to the ILPTO

Since the new “policy” hinged on statutory interpretation, but without retrospective effect, it was only a matter of time until an applicant with a sufficiently valuable patent application and sufficiently deep pockets would challenge the ILPTO.  This occurred in late 2014, when Genentech sought to file a 2GD, IL 234696, related to the antibody that is the active ingredient in its blockbuster drug Herceptin.  

Aware of the 2010 circular, Genentech asked the ILPTO nevertheless accept the 2GD as a divisional.  Genentech raised several grounds for its request, among them that the circular was based on an untenable reading of 24(a), and as a result was ultra vires; that the policy announced in the circular failed to achieve its stated goal, viz. more certainty for “the public”, and therefore should be withdrawn; and that proper statutory interpretation applies retroactively, thus invalidating many already-granted patents if the interpretation proffered by the ILPTO was correct. Genentech did, however, ask that if the Commissioner disagreed about the proper reading of 24(a), and about the scope of his powers (i.e. if the Commissioner believed that the 2010 circular was not invalid), that he nevertheless grant an exception in this particular case and allow the filing of the 2GD.  In January 2015 Genentech pled its case in an ex parte hearing before the Commissioner.

Commissioner’s Decision

On January 12, 2016 (yes, a full year after the oral hearing), the Commissioner delivered his decision: Genentech’s application 234696 would be accorded the status of a divisional application.

While the decision is being heralded by the firm that represented Genentech as a reversal of policy and a green light for the filing of 2GDs, in this corner we view the decision as moving in that direction, but not quite getting there.  Nowhere does the decision explicitly say that the statutory interpretation expressed in the 2010 circular is wrong, nor does the decision say that that circular is rescinded.  The decision does say that it’s time to reconsider the 2010 circular, in light of changed circumstances.  But the actual holding in the decision is that in this particular case, the 2GD shall be treated as a proper divisional.  Hopefully a rescinding of the 2010 circular is in the works, but until that happens, it’s unclear where the ILPTO stands on the issue of 2GDs generally.

Far more telling is the reasoning, vel non, of the decision. The decision starts out, correctly, saying that this is a matter of statutory interpretation - viz. when S.24(a) refers to “the application” to be divided, does it mean the first application filed in a chain, or does it mean any pending application?  But then, rather than simply state “the correct interpretation of the statute is that “the application” refers to any application”, which was what Genentech asked the Commissioner to do, the decision veers in the direction of administrative law, treating statutory interpretation as if this is a matter for PTO administrative policy.  The Commissioner thus spends pages and pages justifying why he can now, in accordance with Israeli administrative law, consider deviating from the 2010 circular.  This discussion includes statistics on numbers of divisional filings pre- and post-2010 and their percentages among the overall numbers of applications; how the matter of 2GDs is treated in the US, EPO, UK, AU and JP; and public policy concerns about lack of proper notice to “the public” if chains of divisionals are filed.  Such public policy concerns are, of course, not the province of the Commissioner but of the legislature.

After this long-winded discourse, the Commissioner states that perhaps the time has come to reevaluate the 2010 circular, since it doesn’t seem to have achieved its purpose (the number of divisionals filed annually since 2010 is up versus the four-year period preceding the circular), and the ILPTO has significantly reduced examination times as well. The Commissioner also acknowledges that in some cases, such as the present one, the early issuance of patents with narrow claims and the later pendency of other applications divided out from the earlier applications may “serve the aims of the statute and the desired legal certainty for the public at large”.  He also wonders if implementing a progressive fee scale for divisional applications might not be a bad thing.  But his ruling is that, “In view of the foregoing, I find no reason to apply the instructions of Circular MN 81 to the application before me, and I see no reason to prevent further examination of the ‘696 application…. In conclusion, the ‘696 application shall be examined in accordance with the date on which it was filed and in the regular examination queue.”

Analysis

While reaching the correct conclusion – the Genetech ‘696 application should be treated as a divisional of a divisional – there are a number of problems with the Commissioner’s approach in the Genentech decision.  Chief among these is the decision’s implicit assumption that administrative law is controlling in this case.  That’s plainly incorrect: there's only one correct interpretation of the statute, and statutory interpretation is NOT a matter of PTO administrative policy. Consequently, the Commissioner doesn’t need to engage in hand-waving or go looking for reasons to rescind the 2010 circular, because that circular is not the sort of pronouncement that’s due any deference by subsequent commissioners, or for which changed circumstances need to be considered if the circular is to be revised or trashed.  If the view reflected in the circular is correct (and by implication, the practice of the ILPTO for the 43 years before the circular was wrong), then ALL 2GDs are invalid and they always have been, and the ILPTO must continue to refuse to accept them, including in Genentech’s case.  If the view in the circular is wrong (which it is), then the Commissioner needed to say so in the Genentech decision, and to say that the 2010 circular is void, because the statute grants applicants the right to file divisionals from ANY pending application, period.

Remarkably, Genentech made these very arguments in its pleadings, but the Commissioner did not deal with them head-on in the decision.  It appears the Commissioner was reluctant to admit that his predecessor had exceeded his powers, and that the present Commissioner was complicit in this by failing to rescind the circular years ago (a reluctance reinforced by the year between the oral arguments in the case and the issuance of the decision).  One wonders how the Commissioner would have decided this case had Genentech not pled an alternative ground for allowing its application to proceed, viz. that the Commissioner should exercise his discretion and not apply the 2010 circular in this case.

The Commissioner’s accounting for public policy considerations, particularly the “need” of some amorphous “public” for “legal certainty”, viz. to know whether or not that “public” is entitled practice a particular invention or not, is also in error, although entirely typical of Israel Patent Commissioners going back for many years.  To the extent that the needs of an amorphous “public” are to be accounted for, the statute itself does that: it says that applicants can file divisonals of divisonals. End of discussion.  If a particular individual (say, a multinational pharmaceutical company based in Israel) feels harmed by a particular allowed patent application, the statute gives that individual the power to file a pre-grant opposition to the grant of the patent (which is what happened to applications nos. 136201 and 214084, the grandparent and parent, respectively, of the ‘696 application). But it’s not the place of the Commissioner to re-write the statute in accordance with his perceptions of the need to protect some unspecified “public”.

An additional point, less germane to the analysis of the decision per se but nevertheless instructive, is that the statistical analysis provided in the decision posits that the rise in divisionals since 2010 is due to the issuance of the circular.  While that circular certainly played a role, the rise in divisional filings is likely due in part to additional factors, beyond the MN 81 circular. In particular, the adoption of regulations in December 2009 that impose a fee of 500 shekels for each additional claim above 50 probably influenced the increase in divisional filings, since the filing fee for a new application was set at around 2000 shekels.  Additionally, not long before the issuance of the 2010 circular, the ILPTO issued a different circular in which it announced that an examiner’s finding of lack of unity of invention under section 8 of the statute constituted an order under 24(b) to divide the application. Per that earlier circular, the filing of a divisional after the allotted time respond to the disunity requires the payment of extension fees.  This policy likely also contributed to the rise in the filing of divisional applications.  Why neither of these additional factors was mentioned in the Genentech decision is both enigmatic and disconcerting, as it suggests a poor grasp of patent prosecution by the head of the ILPTO. 

Ultimately, one gets the feeling from the Genetech decision that the Commissioner intends to revise or rescind the 2010 circular, but on the grounds that circumstances have changed and the policy expressed in the circular no longer needs to be implemented, not because the circular expressed an incorrect view of the statute ab initio.  We eagerly await the issuance of such a pronouncement.

EPO To End Divisional Dunderheadedness; Will the Israel PTO Persist in its Perfidy or Profess to Penitence?

A recurring theme on this blog is the topic of divisional applications in Israel, specifically the impropriety of the Israel PTO’s decision a few years ago to limit the time frame for the filing of divisionals.  A quick recap: the Israel patent statute allows applicants to divide an application as long notice of the allowance of the application hasn’t been published.  Hence if I have application A, at any time before the ILPTO publishes notice of its acceptance I may file divisional application B.  I may then file divisional application C at any time before the ILPTO publishes notice of the acceptance of application B.  And so on.  The end result is that I can keep an application pending for the entire 20-year term of the original application A, in the same way that continuation practice in the USA can be used to achieve the same result.

For over 40 years following the enactment of the statute in 1967, the ILPTO followed the statute.  And then, sua sponte (or maybe at the behest of someone, like a lobbyist for an industry with a strong patent antipathy), the Commissioner decided that the ability of applicants to keep application pending in perpetuity was bad policy.  So he unilaterally announced that neither his predecessors as Commissioner nor the courts that had adjudicated divisionals of divisionals understood the statute, and that the statute only allows the filing of progeny applications from application A prior to the publication of the allowance of A.  Hence C, a divisional of B which is a divisional of A, can only be filed before notice of the allowance of A is published. 

Lest one think that the filing of late-stage divisionals might be possible in response to a lack-of-unity finding in an earlier divisional application, the ILPTO published a clarification stating that the limitation on the timing of the filing of divisionals applies even if the ILPTO makes a finding of disunity in application B: if publication of the allowance of the parent application A has already taken place, then the applicant has to choose which inventions to continue to prosecute and which to give up on, because the ILPTO won’t allow the applicant to file a divisional of application B. 

To date, it appears no applicant has challenged the ILPTO’s illegal adoption of this policy.

I mention all this – again – because the EPO recently announced that it is retreating from its similarly ill-advised foray into limiting the window for the filing of divisionals.  Once upon a time, an applicant could file divisional applications in Europe ad infinitum, irrespective of the status of the ancestral cases.  Then it changed its tune, and said that a divisional application must be filed from a pending patent application by the later of two years from the issuance of a first Examination Report for a related family, or two years from the issuance of a new lack of unity objection.  As noted by our colleagues at Harrison IP, “The two year period was initially introduced by the EPO to counteract a perceived abuse of filing long series of divisionals to cause uncertainty to third parties.”

Now the EPO has announced that is changing tack once again: effective April 1, 2014, EPC Rule 36 will change so that the only criterion for the filing of a divisional application is that it be a divisional of a pending European patent application.  In order to dissuade the “evergreening” of applications by the serial filing of divisionals, the EPO is simultaneously introducing a progressive fee scale for filing divisional patent applications. A divisional patent application filed from an original European patent application will only be subject to the regular filing fee (and of course the retroactive payment of the EPO’s egregious renewal fees, but we’ll leave that topic for another day).  But a divisional patent application filed from a prior divisional patent application (i.e. a divisional-of-a-divisional) will incur an additional fee (via an amendment to Rule 38 EPC). This additional fee will increase in accordance with the generation of the divisional application. Thus a second generation divisional would cost less to file than a third generation divisional and so on. The actual fees to be charged have yet to be announced; like the permissive policy regarding the timing of the filing divisionals, these additional fees will take apply to divisional patent applications filed on or after April 1, 2014.

Will the ILPTO follow suit?  No predictions here, but it would be well-advised to do so.  Its current untenable position flat-out contradicts the statute and is therefore ultra vires; someday the ILPTO’s position is going to be challenged, and the ILPTO is going to be slapped down by the courts.  If the unelected and unaccountable higher-ups in the ILPTO erroneously think that policy-making is part of their job, then they can try to impose their will via fee setting, just as the EPO has now done.  Fee-setting is done legally via rulemaking, with the Justice Minister promulgating the rules, subject to approval from the Knesset Statute, Constitution and Law Committee.  Given the particular personalities currently involved, it’s not clear that such an attempt at rule making would be successful, if it were to even gain any traction at all.  But that’s how things work in democracies, even that of the People’s Free Democratic Republic of Israel.

Terminal Disclaimers in Israel: A Proposed Mechanism

It’s been a while since I wrote about how the Israel PTO deals with the issue of “overlap” between the claims of applications, but that doesn’t mean the issue has gone away.  It’s still there.  In fact, rumor has it that the higher-ups at the ILPTO will be reconsidering this policy this year.  In light of that, this (admittedly long) post will address the matter again, presenting the issues involved, why I think Israel should implement a terminal disclaimer policy similar to that in the USA, and why I think the legal machinery to implement such a policy is already in place. 

One point of clarification at the outset: this discussion does not pertain to situations in which there is overlap between the claims of a later application and the claims of an earlier application (or patent) which was published before the earliest priority date of the later application.  In that situation, under sections 4 and 5 of the statute, the earlier application is available as prior art against the later application, and the normal assessments of novelty and non-obviousness are made.

Rather, the issue of “overlap” arises in situations in which there are two different patent applications with claims of partly overlapping scope (e.g. “A table comprising a top and at least three legs” and “A table having a top and four legs”), and neither application was published before the earliest priority date to which the claimed subject matter is entitled.  The ILPTO long ago adopted the view that in such cases, the overlapping material must be excised from the later-filed application, even though the earlier application cannot be cited against the novelty or inventiveness of the later application.  (The “why” of this policy will be explained shortly.)  Within this fact pattern there are two possible situations: the two applications are co-owned (same applicant), or they’re not (different applicants).  Although the ILPTO ultimately treats both cases similarly, it uses different legal mechanisms to get there. 

 

Overlapping Claims in Applications Filed by Different Applicants

In the case of applications filed by two different applicants, the ILPTO’s practice of requiring the later applicant to excise overlapping material from its claims is supposedly based on section 9 of the statute:

9. First Comer Wins

If a patent was applied for on one invention by more than one applicant, the patent shall be granted on the invention to the one who first applied for the patent in accordance with the law.

In general, the ILPTO interprets “invention” in this context to mean anything included within the scope of the claims (but see below re: selection inventions).  Thus, by requiring the later applicant to amend its claims to eliminate overlap with the claims of the earlier-filed application, the ILPTO believes it is upholding section 9.  From a strict legal construction standpoint, there is a problem with this interpretation.  Section 13(a) of the statute says that “The specification shall conclude with a claim or claims that define the invention, provided that each such claim shall arise in a reasonable manner from the description in the specification”.  This would seem to mean that claims of differing scope define different inventions, even if those claims overlap, and therefore there is no basis to require limitation of the scope of the claims of the later filed application.  Be that as it may, the rationale for this policy, evidently, is to avoid the situation in which potential infringers will have to contend with more than one patent covering the same aspect of an invention. 

 

Overlapping Claims in Applicant’s Own Applications

Section 9 is limited to situations in which “patent was applied for on one invention by more than one applicant”.   Thus in the case of two applications belonging to the same applicant, section 9 is irrelevant.  Nevertheless, in such situations the ILPTO will require the applicant to eliminate the overlap between the claims of the two applications.  Again, the rationale is that if two patents are granted and there is overlap between the claims, then one of the patents could be assigned to a different entity, leaving potential infringers with two parties to negotiate with, thus raising the transaction costs of the negotiations (in the words of Ronald Coase), which is economically inefficient.  The legal justification for this practice is an alleged violation of section 2 of the statute:

2. Right to apply for a patent

The owner of a patentable invention is entitled to apply, in accordance with the dictates of this statute, that a patent be granted on that invention.

Section 2 says a patent (singular), not patents (plural), and therefore an applicant may not receive two patents for the same invention.  As with its interpretation of section 9, in taking a broad view of section 2, the ILPTO ignores section 13(a)’s statement that it is the claims that define the invention.  Hence, rather than conclude that claims of different scope are not claims to the same invention, the ILPTO interprets “that invention” in section 2 to mean anything falling within the scope of the claims, so that overlap between the claims of an applicant’s different applications is precluded.  It will be appreciated that such rejections are sometimes raised with respect to applications having a parent/divisional relationship, i.e. in which they have the same disclosure, filing date and priority date.

 

Selection Inventions

As we have just seen, the rationale behind the ILPTO’s “no overlap” policy is to reduce transaction costs for parties interested in licensing patents (or considering mounting challenges to those patents).  It will be appreciated that this policy consideration is waived in the case of so-called “selection inventions”, in which the later claims are dominated, at least in part, by the earlier claims, but (a) there is no specific disclosure in the earlier application of what is claimed in the later application (let alone claims that specifically claim what is claimed in the later application), (b) the degree of overlap is small relative to the earlier disclosure, and (c) an inventive step can be demonstrated for what is claimed in the later application that overlaps with the earlier claims.  Apparently here the thinking is that since the later-claimed grouping is inventive over the earlier generic disclosure, the two claimed inventions are not the same, so section 9 (or section 2, in the case of the same applicant) doesn’t apply; but why the “sameness” of the invention should be contingent upon inventive step considerations is unclear.  While the selection invention doctrine is normally applied in the context of published prior art in the obviousness context, applicants may invoke this doctrine to overcome “overlap” rejections, whether between their own applications or their application and that of a third party.

 

The Present “Overlap” Practice is Inefficient

The concern about an applicant effectively multiplying its patent pool so that multiple patents cover the same aspect of the same invention, and the potential for mischief that such multiplication engenders, is not necessary an illegitimate concern.  Indeed, as will be discussed shortly, US courts long ago recognized this as a potential problem.  But in Israel, having adopted the view that, in the name of promoting efficiency in hypothetical negotiations that may or may not take place, “overlap” between co-pending applications must be eliminated at all costs, the ILPTO has adopted policies that themselves promote inefficiency of a different kind. 

Specifically, examiners spend time looking for and identifying overlap in applicants’ co-pending applications.  Applicants and their patent counsel must then spend time – in most cases, significant amounts of time – assessing the veracity of the examiners’ claims, and, where necessary, amending claims to eliminate the overlap.  The examiner who receives such an amended set of claims must then carefully check to ensure that the “overlap” has been removed – another time-consuming task, one that inter alia prevents the examiner from working on other cases.  (The problem is compounded in the not uncommon situation in which an applicant has filed not just two but multiple applications on closely-related subject matter.) 

Alternatively, as noted above, in some cases, applicants may invoke the selection invention doctrine, but this too necessitates adducing (in the lab) proof of unexpected superiority, and presenting the results to the ILPTO. 

In addition, the amendment of claims to eliminate “overlap” may in turn result in a finding of disunity, necessitating the division of an application as a consequence of the claim amendments.  This imposes an additional burden and cost on the applicant. (The burden is further increased under the ILPTO’s incorrect no-divisional-of-a-divisional policy, which has been discussed in earlier posts and hopefully will be revisited in the future.)    

 

US Terminal Disclaimer Policy

As noted above, US courts long ago recognized the problem of claims of overlapping scope in an applicant’s different patent applications, and how the grant of several patents having overlapping claims could lead to “vexatious litigation” if different patents were to be assigned to different entities.  In fact, in the US, the problem was more acute than it is in Israel: under the pre-1995 US statute, in which patents had a term of 17 years from the date on which they were granted, but enjoyed the benefit of the filing date of the earlier application in the continuation chain, a savvy applicant could theoretically obtain a series of patents spaced years apart but having overlapping claims.  Since the claims weren’t identical, they were deemed to be directed to different inventions.  Therefore no section 101 rejection (akin to the Israel section 2 rejection described above – applicant is entitled to a single patent, not multiple patents, on its invention) would arise; and with the continuation priority in place, the earlier patents in the chain could not be cited as prior art.  Hence an applicant could in principle extend his patent rights beyond the initial term by obtaining patents on obvious variations of the same invention, by using continuation practice to ensure that the patents issued at different times.

What resulted from the courts’ sensitivity to this potential problem was the judicially created doctrine of “obviousness-type” double patenting.  If the claims of a pending application are obvious in view of the claims (not the specification or disclosure, but the claims) of an applicant’s earlier-issued patent (or earlier-filed-but-still-pending application), then the pending application will not be allowed, on the grounds that the later claims are an obvious variation of the earlier claims and therefore in principle could have been included in the earlier patent. 

However, this rejection will be waived if the applicant promises two things: first, that the two patents will always be owned by the same entity; second, that the term of the later patent will not extend beyond the term of the earlier patent.  In this way, the possibility of “vexatious litigation” is averted, as is the possibility of receiving an effective time-wise extension of exclusivity.

This dual promise by the applicant is made in the form of a document called a “terminal disclaimer”, and its use is so common that the USPTO even has standard terminal disclaimer forms (here and here) that applicants can use if they wish.  The terminal disclaimer includes the following wording:

“The owner [of the application in which the terminal disclaimer is being filed] hereby agrees that any patent so granted on the instant application shall be enforceable only for and during such period that it and any patent granted on the [earlier] reference application [or prior patent, as the case may be] are commonly owned. This agreement runs with any patent granted on the instant application and is binding upon the grantee, its successors or assigns.”

The terminal disclaimer is part of the patent’s file history, and a notice that a terminal disclaimer was filed is published on the front of the issued patent.  And by its very wording, the terminal disclaimer is binding upon all subsequent owners of the patent. 

Thus the terminal disclaimer addresses the same concerns that underlie the current ILPTO practice for dealing with overlap between the claims of an applicant’s own applications.  The terminal disclaimer model, however, is a more efficient way to address those concerns: it spares the applicant the need to (i) assess the degree of overlap between the claims of co-pending applications, (ii) devise claims that eliminate the overlap, or (iii) possibly file divisional applications as a result of the amended claims.  And it frees examiners from assessing whether or not overlap has been eliminated.  Moreover, since both patents will expire simultaneously, it also allows potential infringers to more easily identify the date on which they may commence activities that, if performed before that date, would constitute infringement.

Of course, under US practice, an applicant reserves the right to challenge the propriety of the obviousness-type double patenting rejection, or to amend its claims to overcome that rejection.  But it’s the applicant’s choice – the applicant isn’t forced to excise the overlap.

 

The Legal Mechanism Behind the “Unenforceable if” Provision of Terminal Disclaimers

The terminal disclaimer effectively allows an applicant to say, “The claims of these two applications/patents really should be kept together in a single patent, because the two inventions claimed are not patentably distinct from one another, and therefore I promise that if the two patents cease to be commonly owned, the later-issuing patent won’t be enforceable.”  But the legal mechanism by which the terminal disclaimer operates may be explained in a number of different ways. 

For example, the terminal disclaimer may be conceived of as a partially conditional dedication of the later patent to the public: if at any time prior to a certain date (viz. the date on which the first patent will expire), the ownership of the two patents is split, then the later patent is dedicated to the public (and is therefore unenforceable).  Even if the ownership of the two patents remains in the same hands, the later patent is dedicated to the public as of the date on which the earlier patent expires. 

Alternatively, the legal mechanism of the terminal disclaimer maybe thought of as the partially conditional granting of a paid-up, royalty-free license to anyone who is interested exploiting the patent: if prior to a certain date, the ownership of the two patents is split, then a license has been granted to anyone who wishes to practice the later patent.  After that date, such a license is granted even both patents remain owned by the same party. 

Other ways to conceive of the mechanism of making the later patent unenforceable include the partially conditioned grant to the public of a covenant not to sue; the patentee’s partially conditional forfeiture of the rights conveyed by the later patent; and the patentee’s acceptance of less than all the rights to which it would otherwise be entitled (i.e. the patentee explicitly accepts a patent term in the later patent of less than 20 years from filing if certain events occur subsequent to the grant of the patent, namely the splitting of ownership).  The latter may be explained in terms of contract law: a patent is often likened to a contract between the state and the patent applicant, in which the state agrees to give the patentee exclusivity for a claimed invention in exchange for adequate disclosure of a way to make and use the invention.  Although the state cannot grant the patentee more rights (e.g. a longer period of exclusivity) than the law allows, the patentee can agree to accept less than maximum that the state is allowed to give.  The terminal disclaimer is an agreement by which the patentee does that.

The terminal disclaimer also states that it is binding on anyone who steps into the shoes of the applicant, either before or after grant of the patent.  This too can be explained in a number of ways. Through the lens of contract law, the patentee can be thought of as agreeing to condition the grant of the patent on the patentee’s other self-imposed conditions being binding on subsequent owners of the patent.  It can also be viewed as analogous to an easement or other encumbrance that runs with the land. 

If this section has seemed pedantic, it’s been for a good cause: to show that the terminal disclaimer operates using legal mechanisms and frameworks that are familiar to American lawyers – and to their Israeli counterparts.   It therefore shouldn’t be too difficult for Israeli lawyers to get their heads around the terminal disclaimer idea – and in the next section, I discuss how Israeli law already contains the legal mechanisms for implementing terminal disclaimer practice.

 

There is a Mechanism in Israel Law for Introducing Terminal Disclaimer Practice

Terminal disclaimer practice in the USA utilizes familiar legal mechanisms, and seeing how the American model works, it doesn’t take a lot of effort to understand how Israel law likewise has mechanisms that can be put to similar use.  For example, sections 82-88 of the Israel patent statute deal with patent assignments and licenses.  As long as such assignments or licenses are in writing and recorded with the ILPTO, they are enforceable against third parties.  If, as suggested above, the terminal disclaimer is conceived of as the granting of a conditional, paid-up, royalty-free license, then these sections of the statute provide a mechanism for the implementation of terminal disclaimer practice in Israel: the terminal disclaimer would be a non-exclusive license (i) granted to everyone (sections 84 and 86), (ii) in writing (section 84), (iii) having effect toward everyone by virtue of its being recorded (section 87), (iv) with the license’s coming into force being conditioned (section 86) on the splitting of the ownership of the particular patent and one or more additional patents listed in the terminal disclaimer.  If the ownership of the patents is split, the license comes into force and effectively dedicates the later patent to the public.  If the ownership remains in the same hands, the license has no effect against anyone until the earlier patent expires. 

Alternatively, Israel patent law provides for the cancellation of a patent by its owner, either actively by informing the Commissioner that he wishes to cancel the patent, or passively by failing to timely pay a maintenance fee.  A terminal disclaimer could thus be viewed as a conditional cancellation of the patent, triggered by the splitting of the ownership or the expiration of the earlier patent.  In a comparable fashion, it could be deemed to be a conditional gift to the public, in accordance with the Gifts statute.

Similarly, Israel law provides for imposing conditions on that are binding upon subsequent owners of property.  The Patents statute in particular specifically provides for patents serving as pledges against obligations, so that ownership can change hands if the obligation is not fulfilled.  The imposition of the conditions of enforceability upon subsequent owners of the patent can thus be viewed, for example, as being the emplacement of a limitation on subsequent owners of the patent, or the pledging of the patent to the benefit of the public, should the ownership thereof and that of the earlier patent ever split. 

Thus the legal tools for implementation of terminal disclaimer practice in Israel already exist.  That being the case, rather than continuing requiring examiners to look for “overlap” between applications (instead of examining substantive patentability issues), and rather than requiring applicants to spend time and money figuring out ways to eliminate such overlap, the Commissioner should offer applicants an easy out: file a terminal disclaimer and make the “overlap” problem between the applicant’s different applications disappear.  This being the Hebrew month of Elul, with Rosh Hashana just around the corner, now would be a good time for the ILPTO to admit the error of its ways and repent by making terminal disclaimer practice available to patent applicants in Israel.

Powwow with the Patent Examiners at the Israel PTO on September 20

In an e-mail message sent out last week by the Association of Patent Attorneys in Israel, a voluntary professional association similar to the National Association of Patent Practitioners in the USA, it was announced that on September 20, a meeting will take place at the Israel PTO between patent practitioners and the examination corps at 14:00.  People wishing to participate to should send an email to [email protected].  A list of topics will be sent to the ILPTO on September 4, although people with questions were asked to submit them to [email protected] by September 2; there was no word in the announcement regarding what kind of a filtering process, if any, the questions would go through prior to be sent to the ILPTO, or who would be doing the filtering and what criteria would be used.  Although there was nothing in the announcment saying that participation is limited to persons having a license to practice before the ILPTO, curiously, the ILPTO didn't announce the meeting through its own email list, which presumably includes many interested parties who are not on the distribution list used by the Association.  A copy of the full annoucement in Hebrew appears below.

 

What Do Diaper Wars and Cottage Cheese Revolts Have To Do With The Israel Patent & Trademark Office?

One of the big local stories in Israel earlier in the summer was the outcry over the price of cottage cheese.  For many Israelis, this is a staple item.  June was when someone noticed that the price of cottage cheese had crept up precipitously over the last few years – and that the same locally-produced cottage cheese sold for less in Europe than it did in Israel.  So this person decided to do something about it: he used Facebook to organize a boycott.  Turns out that not only had the three major dairies (which collective control close to 100% of the market) raised their prices significantly, and almost in lockstep, since the de-regulation of the price of cottage cheese a few years earlier, but one of them had even commissioned McKinsey to tell them how much they could raise prices without losing business.

In the end, the dairies caved and lowered their prices, at least a bit.  (Don’t worry, as of this writing the price of cottage cheese isn’t that much lower than before the protest, the dairies are still gouging consumers on everything else they produce, and like lambs Israeli consumers aren’t complaining.)  But the part of this story that interests me is the notion of price elasticity, or rather inelasticity: the idea that in certain markets, the demand for an item will remain essentially steady no matter what the price, and therefore producers are free to raise prices without fear of loss of sales.  Clearly, with regard to cottage cheese, the dairies felt that the de facto staple status of this commodity, coupled with the lack of local or foreign competition (no one imports cottage cheese into Israel) meant that they could steadily raise the price and make ever-larger profits.  The same is true of the fees charged by banks for doing us the favor of holding on to our money, the fees charged by cellphone companies, and the prices of many other goods and services in Israel.

On the other hand, in early July the price of name-brand diapers in Israel fell - dramatically.  Here it wasn’t the threat of a boycott that caused the price reduction but old-fashioned competition.  Both Pampers and Huggies have arrangements with local manufacturers; until recently those diapers retailed for around 62 shekels a package at all of the large supermarket chains.  Since parallel imports are legal in Israel (no, that’s not the IP angle of this story), one of those chains, Mega, decided to draw customers by importing a large number of Huggies from Turkey, at a price that was lower than what the local Huggies manufacturer charges Mega; Mega then offered the diapers at a much lower retail price.  In mid-July, for example, Mega advertised Huggies for 26 shekels per package for customers who buy 100 shekels’ worth of other products. 

It didn’t take long for the price of locally produced Huggies and Pampers to drop as well.  For example, for a while Supersol Deal, another large chain, sold both brands for 36 shekels per package, i.e. at a price 42% lower than it was a few weeks previously.  The fact that the prices of these diapers could drop so dramatically suggests that hitherto a certain degree of price inelasticity was at work – even though, unlike with cottage cheese, there are also local brands which normally sell for lower prices than Pampers and Huggies.

What does this have to do with patents in Israel?  Well, as far as I can tell, there are some movers and shakers within the patent department of the Israel PTO who think that the price of the services they provide is also inelastic.  Or at least there are several ways in which the ILPTO acts as if it can charge what it wants without repercussion.  Consider:

1. Until relatively recently, if a patent examiner said that an applicant’s claims were directed to more than one invention, that applicant could cancel claims on the second (and third, fourth, etc. inventions), and file them in a divisional application.  The divisional could be filed any time before the parent application was laid open to the public, and the only fee due was the filing fee for the filing of the divisional.  In June 2008 the previous Commissioner issued his circular no. MN 62, which said that a divisional filed in response to an office action containing a finding of disunity had to be filed along with the response to the OA.  A divisional could be filed after that time, but if so, it would have to be accompanied by an extension fee for each month or portion thereof after the deadline for response to the OA in the parent case.

2. Additionally, longstanding practice in Israel was that if one had already filed a first divisional, and one wished to further divide that first divisional by filing a second divisional application, the second divisional could be filed at any time before the first divisional was laid open to the public, even if that event occurred well after the original parent case had itself been laid open for public inspection.  As discussed previously, in February 2010 the previous Commissioner indicated that all divisionals, whether divided directly from the parent case or indirectly from an already-filed divisional, had to be filed before the original parent case was laid open to the public. 

3. Also as discussed previously, under the previous Commissioner, the ILPTO began to charge applicants for suspending the examination of their applications.

4. There used to be no limit on the total number of claims in an application.  In 2010, the ILPTO successfully lobbied the Justice Minister to amend the regulations so that a fee of 500 shekels would be assessed for each claim over 50 (at the time, the filing for a new application was about 1500 shekels).

5. Israel, like England, is a “loser pays” system when it comes to inter partes matters, whether in court or before the PTO.  Whereas traditionally the fee awards granted to the prevailing party in patent oppositions or cancellation actions were largely symbolic, usually not more than a few thousand dollars and often even smaller, in recent years those awards (as well as awards in similar trademark disputes) have just become plain large, in some cases over $100,000.  (A more detailed discussion of this phenomenon will be forthcoming in a future post.)

In the first four cases, the monies collected go the ILPTO, and thus can be viewed as attempts by the ILPTO to squeeze money from applicants, and to squeeze it from them earlier in the process, e.g. by collecting filing fees for all divisionals sooner rather than later.  My speculation is that the impetus for this was the ILPTO’s change in status from a mere branch of the Justice Ministry to a semi-autonomous “Authority” under the general aegis of the ministry.  The change was effected under the previous Commissioner at his behest.  While the new status helped streamline ILPTO operations by giving it more control over its own spending, the new status also meant that the ILPTO became responsible for raising its own funds to cover its budget, including paying the salaries of its staff.  Coupled with the fact that the previous Commissioner went on a hiring spree and significantly increased the number of examiners (which in and of itself was a good thing), the need for revenue became more acute than it was previously. 

The fifth case is a little different, because the funds go to one of the parties to the proceedings, not to the ILPTO.  Nevertheless, when taken together, the five phenomena suggest a view on the part of the ILPTO that no matter how high the expected cost of availing oneself of the Israel patenting process, people and companies will file patent applications at the ILPTO.  After all, the ILPTO has a monopoly on the granting of patents, so do people have a choice? 

That view, of course, is just plain wrong, as is clear from a glance at other, larger jurisdictions.  Take the PCT filing statistics for 2008 and 2009, for example: when the economy tanks, patent filings drop.  Or look at the Dudas administration at the USPTO, which perversely calculated that by making it unattractive for people to file patent applications, in part by making it prohibitively expensive to do so (inter alia via onerous claims-and-continuation rules), fewer applications would be filed, which would have enabled the USPTO to reduce its backlog in patent examination. 

Israel is not a large market; people and companies, particularly those from outside Israel will only continue to file in Israel if they think it’s worth their while.  I don’t know the location of the cut-off point beyond which companies will say it’s no longer worth the expense to file in Israel, but such a cut-off point exists.  Continually raising the cost of patent prosecution brings us closer to that point, and the ultimate end result wherein raising fees nets less money for the ILPTO.

A Few More Words on “Overlap”

During a discussion with a colleague following my last post on “overlap” rejections in the ILPTO, it became apparent that a few additional points regarding such “overlap” rejections – in contrast to US practice - bear mentioning.  The first of these, which pertains to divisional applications, will be discussed in this post.  The second, which pertains to the erroneous basis for the ILPTO’s view on “overlap”, will wait for a subsequent post. 

“Overlap” in Divisional Applications

In both the USA and Israel, the claims of a patent application must be directed to a single invention.  If the claims are directed to more than one invention, the examiner may instruct the applicant to restrict his claims to a single invention.  Although the details of the practices in the two countries differ – U.S. restriction practice remains a source of much confusion for both applicants and examiners alike – the basic contours of the law are the same in both jurisdictions: unless the applicant can convince the examiner that the claims are directed to a single invention, the applicant must choose which invention he wishes to have examined.  He may then file claims on the remaining invention(s) in one or more “divisional” applications, which have the same effective filing date as the earlier application.  I’ll call such applications “involuntary” divisional applications; applicants may also voluntarily divide their applications, even in the absence of a finding that the claims of the parent application are directed to more than one invention.  

Now suppose that an examiner has said that the claims are directed to two inventions, and as a result the applicant has divided his application.  The divisional is still pending, and the parent case has matured into a patent.  (Occasionally, the reverse occurs – the divisional issues first.)  Can the examiner now say that the claims of the still-pending application are obvious in view of the granted patent, i.e. can the examiner make an obviousness-type double-patenting rejection on the basis of the related parent (or child) patent?  In the U.S.A., 35 U.S.C. §121, the relevant part of which is reproduced here, protects applicants in such a case:

If two or more independent and distinct inventions are claimed in one application, the Director may require the application to be restricted to one of the inventions. If the other invention is made the subject of a divisional application which complies with the requirements of section 120 of this title it shall be entitled to the benefit of the filing date of the original application. A patent issuing on an application with respect to which a requirement for restriction under this section has been made, or on an application filed as a result of such a requirement, shall not be used as a reference either in the Patent and Trademark Office or in the courts against a divisional application or against the original application or any patent issued on either of them, if the divisional application is filed before the issuance of the patent on the other application. * * * 

In other words, if you file a divisional as a result of a restriction requirement, the examiner can’t cite the parent patent against you; or vice versa, if the child application matures into a patent first.  That seems fair enough: if the USPTO was of the view that the claims were directed to two patentably distinct inventions, it shouldn’t be allowed to reverse course later and say that they’re not patentably distinct, and that one invention is obvious in view of the other.  Put differently, §121 statutorily creates an estoppel against forcing applicants to divide their applications, then using one of the two applications to impugn the other. 

Unfortunately, there is no similar statutory provision in Israel.  And although logically, for the reasons explained in the previous paragraph, the ILPTO should be estopped from citing a parent case against a divisional or vice versa when it was the ILPTO itself that ordered the division, there is (as yet) no case law saying that such an estoppel exists.  As a result, it’s not unusual for an Israel examiner to tell an applicant to divide its application, and then, after the applicant has filed a divisional along the lines delineated by the examiner, to assert that there is “overlap” between the claims of the two applications. 

Given that significant statutory changes are in the pipeline (which the subject of a post in the not-too-distant future), the Justice Ministry should consider proposing a statutory amendment that would correct this situation as well, and which would explicitly state that if an applicant divides his application in accordance with a finding of disunity issued by the ILPTO, the ILPTO cannot later reject one of the two applications over the over because of “overlap” or double-patenting.

The lack of either a statutory provision or explicit case law (at least as of today) against this sort of “double jeopardy” takes on added significance in view of the position announced by the ILPTO last year that it would no longer permit the filing of divisionals of divisonals once the earliest application in the chain has been published for opposition purposes.  As explained in an earlier post, the ILPTO’s position regarding divisionals of divisionals has no basis whatsoever in the statute.  Not that things like statutory wording ever stopped the now-ex-commissioner from doing whatever he felt like doing.  Which may be why the now-ex-commissioner, in a clarification issued after the moratorium on divisionals of divisionals was announced, stated that if an examiner tells an applicant to divide an application, the applicant does so, the parent case publishes, and then the examiner says the divisional contains two inventions, the applicant has to choose which of the inventions in his divisional he wants to keep and which to jettison, because he has lost the right to file his divisional.  While I’m certain that sooner or later, the ILPTO’s position on this will be litigated, and the ILPTO will lose, repeal of this ill-considered and ultra vires policy would be more efficient and less costly.  It should be one of the incoming Commissioner’s first acts in office.