America-Israel Patent Law

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.

Overdoing It With “Overlap”: An Obvious Way the Israel PTO Could Learn from U.S. “Obviousness-type” Double Patenting Practice

35 U.S.C. §101 reads as follows:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

§101 has received much attention in recent years in the context of litigation over what kinds of inventions are and aren’t eligible for patent protection, last June’s Supreme Court Bilski decision and the CAFC’s Myriad Genetics case later this term being the most prominent examples.  But there’s another aspect to §101 that, fortunately, hasn’t been the object of attention for quite a while: the limitation that a person may only receive a single patent on his invention.  In U.S. parlance, the statutorily prohibited practice of getting two patents on the same invention is called “double patenting”.  The logic of the case law in this regard is that the statute says an inventor may receive “a patent”, in the singular, not “patents” in the plural.   

In some ways, though, that statement is specious.  The fact is that through the filing of continuations and divisionals, applicants routinely get more than one patent for what any reasonable person would regard as the same invention, or at least part of the same invention.  But here the case law make a neat distinction that only a lawyer (as opposed to a reasonable person) could love: “invention” in this context means “claimed invention”, as in the invention as defined by the claims of the patent.  So if two claims in an inventor’s two patent applications are close to each other but don’t claim quite the same thing, he doesn’t run afoul of §101’s prohibition on double patenting. 

To illustrate – and if you’re a U.S. practitioner, you can skip down to the discussion of Israel – suppose you’ve got a patent with two claims,

“1. A table comprising four legs and a square tabletop” and

“2. A table comprising four legs and a triangular tabletop.” 

If in addition you have a still-pending application that claims, “3. A table comprising four legs and a tabletop having a shape selected from the group consisting of square and triangular”, that last claim might be shot down for a host of reasons, but the double-patenting prohibition of §101 isn’t one of them.  Even though the scope of claim 3 is the same as the scope of the two granted claims when taken together, the scope of claim 3 when compared to either of the granted claims individually is different.  Consequently, there’s no double-patenting issue under §101.

But wait, the non-practitioner cries in shock and amazement, how can that be?!  Claim 3 is so close to the first two, how can it be allowed in the face of them?  The answer is, under U.S. law it can’t, but not because of §101’s double-patenting prohibition.  There’s a second double-patenting prohibition that has its basis in case law rather than the statute.  That prohibition is called obviousness-type double patenting, and it has its origins in a time when U.S. patents were issued for 17 years from the date of grant.  Referring back to the example above, if claim 3 issued in a patent on a later date than the patent containing the first two claims, the later expiration date of the later-issued patent would effectively give the patentee an extension of his period of exclusivity for what is an obvious variation of claims 1 and 2 in the first patent.  Put differently, inasmuch as claim 3 is an obvious variation of claims 1 and 2, there was no reason the patentee couldn’t have included claim 3 in the same patent as claims 1 and 2.  To now grant him claim 3 in a later-expiring patent wouldn’t be fair to the public. 

An additional problem with granting claim 3 in a separate patent is that the patentee could in principle sell the first patent but not the second patent, or vice versa.  This would make it difficult for potential licensees to negotiate a license, since they would now have to negotiate with two parties instead of one.  (In law school-speak that’s called raising transaction costs, and it’s considered to be a bad thing because higher transaction costs lead to sub-optimal allocations of resources.)  Even if a competitor designed a work-around to avoid infringement of either patent, he might still need to defend against infringement suits from two parties instead of one, with concomitantly higher legal expenses – what the case law calls “vexatious litigation”. 

To avoid these twin problems, over the years U.S. courts developed the doctrine of obviousness-type double patenting: an applicant can’t get claims in a later patent that are obvious in view of the claims in an earlier-granted patent of that same applicant.  However, unlike statutory double-patenting, which can only be remedied by amendment or cancellation of the offending claims, an applicant or patentee can overcome o.t.d.p. without amending or canceling his claims.  He does this by filing a notice at the USPTO that says (a) the applicant or patentee disclaims the term of the later-granted patent which extends beyond the term of the earlier-granted patent [thus obviating the patent term-extension aspect of the later-granted patent], and (b) in order for either patent to be enforceable, the two patents must be owned by the same entity [thus obviating the threat of “vexatious litigation” that concerned the courts].  This statement, called a “terminal disclaimer”, is so common that the USPTO even has a standard form that can be used for it.  (Although the U.S. moved to a 20-years-from-earliest-filing system in 1995, which has eviscerated the first reason for o.t.d.p., the case law has not caught up in this respect, perhaps because the second reason for o.t.d.p. remains.) 

Turning to my local environs, Israel too has a statutory prohibition on double-patenting: §2 of the statute says that the owner a patentable invention may apply for a patent on that invention.  As in the USA, the courts in Israel have said “a patent” means one, not two or more.  However, when it comes to obviousness-type double patenting, Israel still lags behind.  Again taking the example from above, whereas in the U.S.A. claim 3 would be rejected for obviousness-type double patenting, here in Israel the patent office would say, “Claim 3 overlaps with claims 1 and 2 of your earlier patent/application.”  At which point the applicant would scratch his head and say, “Yeah, so what?  There’s nothing in the statute against overlap.  What do you want from me?”, because indeed nowhere in the statute does it say that “overlap” between claims is verboten. 

So what does the ILPTO mean when it says there’s “overlap” between the claims of one’s later application and one’s earlier application?  There are a few possibilities.  It could be trying to say, you’re claiming the same invention in two different applications, which is prohibited by section 2 of the statute, and thus we can’t allow the claims.  The problem with that explanation is that since it’s the claims that define the invention – section 13 of the statute say so – then claims that merely overlap in their scope aren’t really prohibited under section 2.  And besides, if it was a section 2 issue, then why not just say so, instead of saying “there’s overlap”? 

Or the ILPTO could be trying to say that the later claimed invention is anticipated by, or obvious in view of, the earlier claimed invention.  But here too, if that’s the case why not just say that the later claims are anticipated or obvious?  Moreover, the ILPTO will reject the claims of a divisional application for “overlap” with the claims of the parent application; but since a divisional and its parent share the same priority and filing dates, the parent can’t be cited against the divisional as a basis for anticipation or obviousness. 

So by deduction, if “overlap” isn’t shorthand for rejections under sections 2 (statutory double patenting), 4 (novelty) or 5 (inventive step) of the statute, then what the ILPTO is trying to get at in its clumsy, communication-challenged way when it issues an “overlap” rejection are the same two factors that gave rise to the obviousness-type double patenting doctrine in the USA – the possible extension of the period of exclusivity for some of what is claimed in the first application, and the ability to split ownership of the patents, making life unnecessarily difficult for competitors.  

If “overlap” is meant to be shorthand for “obviousness-type double patenting”, then it follows that the ILPTO has adopted a terminal disclaimer practice like that in the USA, right?  Silly you.  Why be so sensible?  Under current Israel practice, the only way for an applicant to overcome an “overlap” rejection is to convince the examiner there is no overlap, or to excise the offending material from the claims of the later application.  In chemical cases in which large genera of compounds are claimed in both applications, that can involve significant analysis on the part of the applicant or its attorney – i.e. it can both be a pain and cost a lot – and it can lead to the introduction of multiple provisos, which makes ascertaining the scope the claim so amended somewhat difficult.  The introduction of such carve-outs also necessitates significant examiner time checking to make sure that all of the “overlap” has been eliminated.  (I once sat with an examiner for three hours painstakingly going over a proposed amendment to be sure he was satisfied that all "overlap" between two applications had been removed.)  Filing a terminal disclaimer would be a much simpler, less costly and more efficient route to achieve the same end.

Moreover, unlike many of the policies that the (mercifully, now ex-) Commissioner instituted over the past few years, with which he clearly overstepped his authority, the implementation of a terminal disclaimer program is something that is within his purview.  And it’s fairly in keeping with other aspects of Israel patent law: assignments and liens on patents, for example, are recorded at the ILPTO; there’s no reason a stipulation of joint ownership between two patents as a condition for their enforceability couldn’t also be recorded at the ILPTO.

Hopefully the next Commissioner (we’re still waiting for an announcement) will be someone with enough patent experience to appreciate how useful terminal disclaimers can be, and who will be willing to allow their use before the ILPTO.

Civil Servant Gone Wild: The Israel Commissioner of Patents’ End-Run on The Patent Statute

Ok, I know that if made into a video, the subject of this post won’t sell as many copies as Girls Gone Wild, nor are its effects as wide-ranging as, say, Jon Dudas’ lame (and, mercifully, now late) attempts to circumvent the rule-making process in the USA.  But for those of us who practice patent law in this neck of the woods, the Commissioner has displayed a remarkably cavalier attitude toward the very statute that creates the position he now occupies. 

 

First, there was the announcement by the Commissioner that if an examiner has determined that an application contains claimed directed to more than one invention, then that applicant must file a divisional application along with its response to the examiner.  Divisionals filed after the deadline for response will only be accepted upon payment of an extension fee for each month of “lateness” in filing.  The Commissioner asserted that this policy was dictated by the statute, but it’s not clear that the statute really supports him on this point – and indeed, in the 40 or so years prior to the Commissioner’s announcement that the statute had been in force, none of his predecessors adopted this view.  However, since the cost of an extension is only about $16/month, it will almost always be cheaper for an applicant to wait and see if it wants to file a divisional, and then pay the extension fees, than to pay a lawyer to challenge the Commissioner’s view.

 

The next month, as discussed previously in this blog, the Commissioner imposed a requirement to submit an abstract, thus foisting on the applicant a requirement that the statute imposes on the Commissioner himself.

 

Then we had the now-you-see-it, now-you-don’t case of Australia as a country upon which one could piggy-back under §17(c) of the statute to gain allowance of a corresponding Israel application.  In December 2008 the Commissioner announced that he was taking Australia off the list because experience had shown it to be unreliable (i.e. Australian examinations weren’t very good); in September 2009, he reinstated Australia, without providing reasons.  While the statute empowers the Commissioner to list and de-list foreign patent offices in this manner, it presumes he makes such determinations based on objective criteria of the quality of foreign examination.  Here, the quick change of heart, without accompanying reasons, raised eyebrows.  In retrospect, it appears that the change of heart was motivated not by a substantive change in the situation but by politics, as part of the Commissioner’s efforts to get Israel recognized as a PCT search authority.

 

Next came more extensive reporting requirements under §18 of the statute (the rough equivalent of IDS practice in the USA).  §18 empowers the Commissioner to ask an applicant to provide a list of documents cited during the examination of corresponding applications elsewhere, or which are known to the applicant to be relevant to patentabilty, as well as copies of those documents.  The related Rule 36(1) says that pursuant to §18, before beginning examination, the Commissioner will send a letter to the applicant asking that he provide these documents.  Rule 36(2) says that when an applicant responds to such a request, he may include copies of his arguments submitted in response in the foreign jurisdiction(s).  Note that this is purely at the Applicant’s discretion. 

 

But in January of this year, the Commissioner announced that henceforth, applicants would be required to include copies of those answers, insofar as they relate to novelty and inventive step, and that failure to include such arguments would be regarded as failure to respond to the request under §18.  Nevermind that the statute itself does not empower the Commissioner to request copies of arguments filed abroad.  Or that in the cases of Europe and the USA, those documents will almost always be freely available over the internet, and that ILPTO examiners are already adept at finding those corresponding documents.  Better to act ultra vires and impose unnecessary reporting requirements on applicants than to have Israel examiners engage in a few extra mouse clicks.

 

Next up, limits on the number of independent claims.  About two weeks ago the Commissioner circulated another notice, this one informing people that the ILPTO would only accept two independent claims “of each type”, viz. one or independent claims on a product, one or two for a process for making the product, one or two for an apparatus for making the product, and one or two for using the product.  Ostensibly the Commissioner was merely reminding the public of long-standing ILPTO practice, as most recently enunciated in a 2004 decision of this same Commissioner.  However, there really is no basis in law for the arbitrary limitation of the number of independent claims; and in point of fact, I’ve personally prosecuted applications with numerous independent “Swiss” claims, which belies the assertion that this really represents long-standing ILPTO practice.

 

Finally, we come to this week’s gem.  Rather than paraphrase the Commissioner, I translate here his entire missive:

 

Commissioner’s Circular No. MN81

 

15 February 2010, 1 Adar 5770

 

To:    The Community of Applicants, Patent Agents and Lawyers

From:    Dr. Meir Noam, Commissioner of Patents, Designs and Trademarks

Re:   Division of Patent Applications

 

The purpose of this Circular is to inform the public of the interpretation given by the Patent Office to §24(a) of the Patents Statute, 1968 – 5728 [NOTE: this is a typo – the statute was passed in 1967; it is the Rules that were adopted in 1968 and reflect this in their title.  But that’s small potatoes in the present context - DJF].

 

1. §24(a) states the following: “As long as the application has not been accepted [i.e., opened to the public for inspection following completion of substantive examination – similar to publication in the USPTO Gazette in the pre-18-month publication days – DJF], the applicant may demand that it be divided into individual applications.”

 

2. This section is given to two interpretations: one, that the parent application, and it alone, may be divided until the date of acceptance; the other, that the parent, and any application divided therefrom, may be divided until each one has been accepted.

 

3. The Office hereby serves notice that the interpretation which shall be adopted is that it is the parent case, and it alone, that may be divided until the date of acceptance, and this, inter alia, because of the need to conclude examination proceedings in a reasonable time and because of considerations of legal certainty for the general public.

 

4. This circular shall take effect as of the date of its publication on the Patent Office’s web site.

 

There are several difficulties with this circular.  For starters, if one is already going to distinguish between a parent application and a divisional in terms of the ability to further divide, then there are actually three possibilities, not just two as stated in the Circular:

 

A.     Both the parent and divisional can be divided, the parent until its acceptance and the divisional until its acceptance.

B.     Both the parent and divisional can be divided, but the deadline for dividing in both cases is the date of acceptance of the parent application.

C.     Only the parent case can be divided, and the deadline for doing so is its acceptance date.

 

While the Commissioner is trying to rule out A, it’s not clear from the Circular if he’s settled on B or C as the solution.  (One wonders if in drafting this Circular he received assistance from some of the people at the USPTO who drafted the now-defunct claims and continuation rules, which after their publication required various clarifications of the ambiguities inherent therein.)

 

The bigger problem is that the statute simply doesn’t say what the Commissioner says it says.  Other than giving a divisional the same filing date and priority claims as the parent case, the statute does not distinguish between a divisional and any other application; once a divisional has been filed, the statute treats it as an application like any other, including for purposes of §24(a).  Were the Commissioner’s view correct, then the statute would throughout need to distinguish between divisional and parent applications.  But it doesn’t.

 

This can be seen most acutely by comparing §24(a) to §24(b), which states “If an application contains more than one invention, the Commissioner may, as long as he has not accepted the application, order the applicant to divide his application”.  The applicant then divides his application in accordance with §24(a).  Now suppose that I timely file a divisional, then the parent case issues, and now the examiner says my still-pending divisional claims encompass two inventions.  According to one notice already mentioned above, that constitutes an order to divide the application under §24(b).  Yet according to the latest circular, I CAN'T divide the application at that point, since under §24(a) a divisional, if it can be further divided at all, can only be divided until its parent case has been accepted (“application” in §24(a) referring to the first-filed case in the series) and in this scenario I’m already past that stage. 

 

So in this scenario I respond in either one of two ways.  I could say, Mr. Examiner, you’re no longer empowered to issue an order under §24(b) – you missed the deadline to tell me to divide the application, since the parent case was already accepted, and “application” in §24(b) refers to the same parent application as does §24(a).  Or I could respond, Mr. Examiner, you’re empowered to tell me to divide the application, since the terms “application” and “accept”, respectively, in §24(a) and §24(b) mean different things, but now you’ve given an order with which I can’t comply, since §24(a) prohibits me from dividing my application after its parent has already been accepted. 

 

The second answer makes no sense.  Why would the statute use similar phrasing in §24(a) and §24(b), yet have that phrasing mean completely different things in the two contexts?  And why would the statute empower the Commissioner to order an applicant to do something that the statute in the immediately preceding line prohibits? 

 

But the first answer makes no sense either: inasmuch as §8 stipulates that a patent shall be granted on only one invention, clearly the Commissioner must be able to tell applicants to divide their applications whenever he finds that an application is directed to more than one invention.  

In addition to the logical inconsistencies with the Commissioner’s position, it’s also interesting to note that in the over 40 years since adoption of the statute, not once has any previous commissioner or any court ruled that the time limit for filing a divisional of a divisional is the publication date of the parent case, let alone that filing a divisional of a divisional is verboten.  And given the large number of pre-grant patent oppositions filed in Israel, if indeed the filing of a divisional of a divisional was impermissible under the statute, surely someone would have cited this as grounds to oppose the grant of a divisional-of-a-divisional.  But that hasn’t happened either.  How reassuring to know that after 40-some years, this Commissioner has finally gotten it right.  And that he will no doubt have to entertain some opposition or revocation actions against divisionals-of-divisionals on the grounds that they were improperly filed.  (One wonders if he’ll be willing to refund, with interest, all the examination, publication and renewal fees paid by those applicants over the years for those divisionals-of-divisionals that he maintains the ILPTO should never have accepted in the first place.)

 

Finally, we have paragraph 4 of the circular.  This paragraph isn’t problematic so much as telling.  When one enacts a new policy that changes the status quo, that policy needs a starting date.  But if we’re talking about statutory interpretation, jurisprudential theory says that that interpretation has always been the correct one.  If indeed §24(a) says that one can’t file a divisional of a divisional, or that one can but the time limit for doing so is the publication of the grandparent case, then §24(a) has said this since it was adopted and came into force in 1967.  We don’t need to be told the proper interpretation of this section this in 2010, let alone be told when this interpretation will come into force. 

 

Thus the inclusion in the Circular of a paragraph announcing a starting date is a sort of Freudian slip.  This inclusion suggests several things.  It suggests that the Commissioner doesn’t believe what he wrote.  It suggests that that he knows full well that divisionals-of-divisionals are permissible, and that the deadline for filing a divisional from an existing divisional application is the acceptance date of the existing divisional, not of the grandparent case.  And it suggests that that he knows the issue of “interpretation” is merely a fig-leaf meant to mask his disregard for the plain meaning of the statute, and for the democratic process.  I’m not fooled. 

 

I am, however, insulted.  There may be arguments to be made for and against allowing divisionals of divisionals (though I can’t really come up with a good argument against; the fact that the EPO isn’t fond of them means they’re probably a good idea).  But hitherto Israel has allowed them, and the statute that permits such filings remains unchanged.  If anyone feels that the policy embodied in the statute should be changed, they are free to make their arguments in the public sphere and to lobby the Knesset to change the statute.  It is not the place of an unelected bureaucrat, whose position is an administrative and quasi-judicial one, to usurp the prerogatives of the public and the public’s elected representatives, and to arrogate for himself the role of policy-maker.  That Dr. Noam acts as if he may do so constitutes a slap in the face to the Israeli public.

 

Then again, maybe the Commissioner just views this as good business: after convincing the powers-that-be to allow the ILPTO to undertake a significant hiring increase in the last several years, and following a significant drop in the number of new applications filed in Israel in 2009, the Commissioner may be looking for ways to increase the ILPTO’s workload, so all those examiners don’t sit there twiddling their thumbs.  But if that’s the case, why require applicants to do the examiners’ work for them by providing examination reports and responses from abroad?

 

Unlike the Commissioner’s other forays into ultra vires land, I believe that this one has a reasonable chance of being directly challenged.  It’s not inconceivable that a pharmaceutical company will have a third-generation divisional application that it wants to get on file; or perhaps an adverse party will challenge an application or a patent on the grounds that it is a third-generation divisional. 

On the other hand, maybe here too Dr. Noam will side-step the bullet.  Most pharma patents in Israel are handled by a few large offices, who will be more than happy to advise their clients that all divisionals need to be filed before the parent case is accepted – a position that just happens to align with those offices’ interests in cash flow.