Humorless disclaimer: Nothing on this blog is meant to constitute legal advice. This blog doesn’t create an attorney-client relationship. This blog is not soliciting business. The accuracy of statements made in this blog is not guaranteed. The views expressed herein are those of the authors only.
For those weirdos who find the Israel patent regulations to be a scintillating topic for discussion (and for those who are just gluttons for punishment), here are a two more points not mentioned in yesterday’s post.
First, in addition to raising filing fees, many other fees are also going up significantly, effective January 1, 2013. Examples: extension fees will rise from 64 shekels per month to 200 shekels per month; the first renewal fee for a patent (through the end of the 6th year) will go from 157 to 800 shekels, and the second renewal fee (for years 7-10) will rise from 320 to 1600 shekels. (Admittedly, that doesn’t come close, in absolute or percentage terms, to raising the re-examination fee from $2500 to $17,000, as the USA recently did.) There will also be a new excess page fee of 250 shekels for each group of 50 claims, or portion thereof, beyond the first 100 pages of the application; sequence listings won’t count, but no word on whether the Israel filing form or the PCT Request (for national phase filings) are included in the page count.
Second, what is most glaring is what wasn’t included in the new regulations: a fee for making a third party request for expedited examination (TPREE). As reported in a previous post here and in a guest post on PatentDocs, statutory amendments enacted earlier this year will allow third parties to request that someone else’s application be moved to the front of the examination queue (and stay there); that provision comes into effect in mid-January 2013. Such requests must be accompanied by a fee, “if such a fee is established”. One would have thought that such a fee would have been included in the latest set of amendments to the Regulations, alongside all the other new and amended fees, but there’s no mention of a fee for TPREE. The Justice Ministry, which proposes the fees, is on record as supporting a TPREE fee of 25,000 shekels; one surmises that the non-inclusion of this fee in the latest group of fees means that the local generic drug lobby – the same group that lobbied for TPREEs in the first place – wants the fee to be set lower (a conclusion confirmed by a source involved in the discussions regarding these fees).
Prediction: there won’t be a TPREE fee in place come January 13, at which time there will be a flood of TPREE requests, all directed to patent applications in the pharma field. At which point the proverbial excrement will hit the proverbial fan, with Pfizer et al. demanding hearings on the propriety of expediting examination in each case, and the Commissioner have conniptions trying to figure what he needs to do. In the spring, after Knesset elections, TPREE fees will be set in the amount of at least 25,000 shekels per request. And a good time will be had by all, or at least by the lawyers who represent the major players in pharma in Israel.
On November 25, amendments to the Patent Regulations were published; earlier this week the ILPTO published a noticeregarding the new amendments. Both documents make good reading, if counting sheep isn’t working for you; unfortunately for those of us who practice before the ILPTO, they are both required reading. (Yes, there was a spike in sales of amphetamines this week in Israel.) Primarily these amendments revised the Regulations to conform with recent statutory amendments concerning online publication of various notices. Nevertheless, hidden within these soporific missives are a few points of interest:
First, the filing fee for new patent applications has been nearly doubled, from 1075 shekels to 2000 shekels. This wasn’t unexpected. In a populist response to the previous Patent Commissioner’s collecting publication fees for notices that were never published on paper (but were published online, in an understandable but nevertheless ultra vires move), earlier this year the outgoing chairman of the Knesset’s Constitution, Statute and Law committee forced the words “publication fee” out of the statute. But the money has to come from somewhere, so now the filing fee has been raised significantly. Ironically, the same committee that did away with "publication fees" was the one that approved the new fee increase. Go figure.
Second, the fee increase was accompanied by the establishment of a small entity status, of sorts: individuals, or partnerships or companies having an annual turnover of up to 10 million shekels (roughly $2.5 million at current exchange rates) can get a 40% discount on the filing fee and the issue fee – a whole 800 shekels, or about $200 for the former, and 280 shekels, or about $70, for the latter – for “filing for a particular invention a first patent application”. What exactly constitutes a first patent application for a particular invention is anyone’s guess: if it’s disclosed but not claimed and I claim it in later filed divisional, am I entitled to the discount? What if in the first application I claimed a compound and in a later application I claimed a use of that compound (and does it matter if that use was disclosed in the first application or not)? What if I recast my original claim in a slightly different form using different terms, but in a way that effectively claims the same thing? Was anyone who knows anything about patent prosecution involved with the drafting of this new regulation? Beam me up, Scotty.
What is clear is that the savings involved simply aren’t worth arguing about, should the ILPTO assert that you’re not entitled to the discount, since the attorney time alone will eat up the savings.
That drawback is heightened in view of the ILPTO’s statement that in order to qualify for the discount, the applicant will have to submit a sworn statement attesting to entitlement to the small entity status. Just preparing the statement for each case and getting it executed will involve professional time that eats into any potential savings.
Moreover, the imposition of such a requirement, aside from being over-the-top – it should be sufficient for the practitioner of record to assert in an unsworn statement that the applicant is entitled to small entity status, as is the case in the USA – and possibly ultra vires (I don’t think the ILPTO has the authority to require that level of proof of small entity status), also constitutes a stunning contrast to the Office’s supposed policy of transparency. Various Commissioner’s notices and circulars are now distributed in draft versions and the public invited to comment on them before they are finalized. That’s a new policy under the current Commissioner (in office since May 2011) which was put in place in the name of “transparency”. Here, there was no public discussion regarding the appropriate policy for ensuring truthful small entity status claims; the requirement for a sworn statement was put in place by ILPTO fiat.
Which, in truth, isn’t all that different from the way the Commissioner’s circulars and notices work. Because even when comments are solicited beforehand, those comments aren’t made public, the ILPTO doesn’t publicly relate to them, and rarely do the draft versions differ appreciably, if at all, from the final versions. Basically, the distribution of the drafts appears to be a fig leaf meant to provide the appearance of transparency without actually achieving transparency.
Finally, if you’re still awake, you probably need prescription narcotics.
(Actually, there’s one more point pertaining to what’s not in the new regulations, but that will wait for tomorrow’s post.)
In accordance with recently-adopted statutory
amendments, next week the Israel PTO will begin
publishing all pending patent applications that have passed the 18-months-from-earliest-priority date. This includes applications filed under the old law, under which applications were only published (actually, opened to the public) upon conclusion of substantive examination and payment of a publication fee. There is no opt-out provision for applicants who filed before the enactment of the amendments, so short of abandoning their applications a month or so in advance of early publication, applicants who filed under the old law have no way to stop such publication.
Because until now Israel did not have 18-month publication, it was possible to file in both Israel and the USA and to still make a non-publication request in the latter country. Which raises the question, if you’re an applicant who filed in Israel under the old law, and your only other corresponding application was filed in the U.S.A. with a non-publication request, will publication in Israel now subject you to the draconian penalty associated with making an improper non-publication request, viz. abandonment of the U.S. application? In other words, do you now have to inform the USPTO Director of the filing in Israel and/or rescind that non-publication request?
It’s not clear that either step is necessary. The relevant parts of the statute are 35 U.S.C. §122 (b)(2)(B) sub-sections (i), (ii) and (iii):
(B)(i) If an applicant makes a request upon filing, certifying that the invention disclosed in the application has not and will not be the subject of an application filed in another country, or under a multi¬lateral international agreement, that requires publica¬tion of applications 18 months after filing, the application shall not be published as provided in para¬graph (1).
(ii) An applicant may rescind a request made under clause (i) at any time.
(iii) An applicant who has made a request under clause (i) but who subsequently files, in a foreign country or under a multilateral international agreement specified in clause (i), an application directed to the invention disclosed in the application filed in the Patent and Trademark Office, shall notify the Director of such filing not later than 45 days after the date of the filing of such foreign or international application. A failure of the applicant to provide such notice within the prescribed period shall result in the application being regarded as abandoned, unless it is shown to the satisfaction of the Director that the delay in submitting the notice was unintentional.
So per sub-section (i), for the non-publication request to have been proper, it needed to indicate that the invention disclosed in the US application was not the subject of an application in an 18-month publication country, and would not be the subject of such an application. Under our hypothetical, that statement was true at the time the US application was filed and the non-publication request was submitted: Israel was not an 18-month publication country, and since Israel was at the time and remained thereafter the only country apart from the US in which the application was filed, at the time the non-publication request was made there was no filing in an 18-month publication country nor any intent to file in an 18-month publication country. So the certification made along with the non-publication request was truthful, and the requirements of sub-section (i) were met.
The question then becomes, what does the statute say about the applicant’s obligations as a result of things that occur subsequent to the filing of the non-publication request? To the extent that the statute speaks to such situations, it does so in sub-section (iii). But that sub-section only addresses one such situation, namely the case in which, after filing in the US with a non-publication request, the applicant files in an 18-month publication country, in which case the applicant must inform the USPTO Director within 45 days of the foreign filing that such filing has been made. Failure to do so results in the application being regarded as abandoned. But sub-section (iii) is silent as to what happens if someone files in a non-publication country and that country later becomes a publication country – there is no mention of an obligation to report, let alone any penalty associated with a failure to report. That being the case, the logical conclusion is that in our hypothetical, there is no obligation to report to the Director the fact that the Israel application is now going to be published.
It could be argued that while the letter of the law doesn’t cover our hypothetical, the spirit of the law says that the applicant should now inform the Director of the changed situation, or simply rescind the non-publication request, in order to facilitate publication of the US application, since the idea was to enable non-publication in the USA only if there was no 18-month publication elsewhere. And undoubtedly, if the US application is not published until it issues as a patent, that argument will be made by the defense should an attempt to enforce such a patent be made. Nevertheless, that argument does not accord with the actual wording of the statute.
I have not undertaken a study of the legislative history of §122 to see if it sheds any light on the situation. Lawyers tending to be a risk-averse group, I’m guessing that attorneys counseling clients facing this situation would advise them to rescind the non-publication request, if only because, by virtue of market size, US patents tend to be more valuable than Israel patents, making the risk in maintaining non-publication unacceptable. But that’s merely a guess: fortunately for me, I don’t represent anyone whose US non-publication request may be affected by the change in Israel law.
Following the adoption of significant amendments to the Israel patent statute on July 9 and their coming into force (mostly) on July 12, on July 25 the Israel PTO published a notice concerning the implementation of the amendments. Among other things, the ILPTO plans to make new file histories available online about once a month, coincident with the monthly online publication of the Patents Journal (the equivalent of the USPTO Gazette), as soon as possible after 18 months from an application’s earliest priority date have passed. File histories of already-filed applications will also be made available in this manner, although no more than 4500 old applications will be made available per Journal publication.
The plan is for the ILPTO to notify applicants or their legal representatives that the file history will be made public one month prior to this occurrence; if applicants do not wish for this to happen, they will have a week from notification to inform the ILPTO that the application has been abandoned, in which case the file will not be opened to the public. Realizing that one week to respond is short notice, the ILPTO has indicated that applicants may be informed of impending publication by e-mail and may respond to such notices by email. On the one hand, this represents a step forward for the ILPTO, which still is not set up for electronic filing of patent applications (more on this below); on the other hand, there was no notice or comment period for this new procedure, which undermines statements by the ILPTO that it wants its procedures to be transparent.
Interestingly, and commendably, the notice indicated that the ILPTO has adopted the suggestion made in the previous post on this blog, namely that the ILPTO will not open the files of PCT applications that enter the national phase until those applications have been published by WIPO, i.e. until 18 months from the earliest priority date have passed. (According to the amended statutory wording, the opening of the files in such cases should occur within 45 days of national phase entry, irrespective of the earliest priority date, so that early-entry national phase applications would be made public before 18 months had passed.)
The notice also indicates that, exercising powers conferred on the Registrar by the amended statute, patent applicants filing in Israel will be required to submit a copy of the application on CD-ROM or DVD; the CD or DVD will have to contain separate files for the specification, claims, drawings and sequence listings. Given that the notice shows that the ILPTO now understands that notices of abandonment can be filed electronically, why does it insist on requiring physical copies of patent applications to be delivered to the ILPTO? The practice is prejudicial to applicants and practitioners who live or work far from Jerusalem, since they need to send their applications for filing several hours before Jerusalemites do; it’s environmentally unfriendly because it requires delivery by automobile or motorbike; and it aids countries that aren’t friendly toward Israel that supply the gasoline that powers those vehicles. Why not just let people email in their applications, or set up a designated electronic filing portal?
On July 9, the Knesset (Israel’s parliament) passed an amendment to the patent statute that institutes three major changes from current practice: early (18-month) publication of patent applications; third-party requests for expedited examination of patent applications (TPREEs); and third-party submissions of prior art. This post discusses the changes per se; subsequent posts will discuss inter alia issues of statutory construction that may arise, possible legal challenges to the amendments, and an assessment of the amendments’ hits and misses.
18-month publication
The move to 18-month publication was expected and long overdue. There has been consensus for some time that Israel become an 18-month publication country, inter alia because Israel has been a member of PCT since 1996, creating the strange situation in which the national phase file history of a previously-published PCT application remained closed to the public (a situation which also existed in US practice but has largely disappeared since 2001). Moreover, the Israel Trade Minister and the US Secretary of Commerce had agreed to such a change in February 2009. Thus the legislation as adopted (new statutory section 16A) says that 18 months from the earliest priority date, the ILPTO will publish on its web site a list of applications, the file histories of which are available for inspection online. Applications which have been refused or withdrawn before the 18-month date will not be listed and not opened for inspection; applications that have already been accepted (and which therefore have already been opened for public inspection) will not be subject to re-publication under new section 16A.
National phase filings of PCT applications are to be published within 45 days of national phase entry, but curiously, in establishing this timeframe the amendment does not account for the priority date(s) or publication date of the PCT application. Thus, per the wording of the statute as adopted, an application that enters the national phase in Israel at, say, 13 months from the priority date will be published by 14.5 months from the priority date, rather than at 18 months. Strictly speaking, this is something that needs fixing through further statutory amendment, although if the powers-that-be at the ILPTO were to act sensibly until such corrective legislation is enacted, and were to see to it that as a practical matter, in such cases publication does not occur before 18 months from the priority date, it’s doubtful that anyone would complain.
Additionally, section 179 of the statute has been amended so that, to the extent that granted patent claims are “substantially identical” to form in which they are published at 18 months, the patentee will be entitled to a reasonably royalty for infringement of such claims that occurs between 18-month publication and grant.
Third-Party Prior Art Submissions
The provisions for third-party submission of prior art were hotly debated during Knesset committee hearings, and were no doubt the subject of behind-the-scenes lobbying efforts. While the amendment as adopted is milder in at least one way than what lobbyists in favor of the change (primarily the local generic drug industry) would have preferred – the time frame in which such third-party submissions may be made is relatively short – it still marks a significant departure from present practice. Hitherto the statute stated that examiners could ask applicants to provide lists of publications cited against corresponding applications elsewhere, or known to the applicant or its attorneys to be relevant to patentability; under the statute they MUST ask applicants to provide such. In practice this is distinction without a difference, as presently the ILPTO always asks applicants to provide such lists. Furthermore, under the amendment, the power of examiners to ask applicants to provide copies of such documents remains discretionary; in the age of free online access to many publications, such requests are less common today than they were say, 10 years ago.
The significant change wrought by the amendment is the ability of third parties to provide examiners with copies of documents, although the amendment does this in a backhanded way, with the following wording:
18(b) In order to fulfill the dictates of subsection (a)…
(3) The examiner may utilize documents listed in subsections (a)(1)-(4) [i.e. publications relied upon by other patent authorities in examining corresponding applications or other relevant prior art, or lists of such - DJF], even if presented to him by someone who is not the applicant, and for purposes of subsection (a)(2) [relevant prior art not necessarily cited elsewhere but known to the applicant – DJF] even if they were not known to the applicant; said documents will be submitted by a person who is not the applicant if two months from the date on which the applicant responded to a demand per paragraph (1) [viz. a demand for publications relied upon by other patent authorities in examining corresponding applications or other relevant prior art, or lists of such - DJF] have not elapsed.
It will be observed that nothing is stated about whether or not third parties may (or are required) to provide comments with their submissions, or if the third parties need to identify themselves. It is fair to assume that absent an explicit prohibition, third-party submittors of prior art will submit comments in addition to the publications per se, and absent an explicit requirement, they will do so anonymously; it is also fair to assume that applicants will vigorously protest. Applicants’ arguments against anonymous submissions that include comments will be based inter alia on the fact that such practice will effectively give adverse parties two chances to attack applications before grant, once while the application is before the examiner and again after allowance during the pre-grant opposition phase. That goes against the basic notion of fair play that adverse parties get one bite at the apple per dispute. Thus it is anticipated that regulations from the Justice Ministry or internal ILPTO guidelines will eventually be issued that explicitly point one way or the other on these issues, although there’s a non-negligible chance that the matter may end up before the so-called High Court of Justice (a possibility to be discussed in a subsequent post).
Putting the Pace of Examination in the Hands of Your Competitors: Third Party Requests for Expedited Examination
Of the three principal changes enacted last week, it is the enabling of third-party requests for expedited examination (TPREE) that is likely to have the most far-reaching effect. In Israel there is no need to file a request for examination; once a patent application has been filed and the fees paid, it will wait in line for examination, generally on the order of 2-4 years, depending on the field of technology. Nevertheless, until now, in a process similar to the old “petition to make special” practice before the USPTO, applicants were able to expedite the examination of their applications, by attesting to reasons justifying out-of-turn examination, such as imminent launch of a commercial product by the applicant, suspected infringement, or the applicant’s advanced age or poor health. This practice was based in the regulations rather than the statute. The new amendments write this practice into new section 19A of the statute, including explicit establishment of the ILPTO’s longstanding practice of requiring a sworn declaration in support of the request. New section 19A includes an open-ended lists of reasons that justify expediting the examination, among them those mentioned above.
Where the amendments diverge from previous Israel practice (and, to the best of this author’s knowledge, practice anywhere in the world) is that they facilitate TPREEs, as set forth in new subsection 19A(c), which translates as follows:
(c) A person who is not the applicant, is not connected to the applicant does not act on his behalf, may submit to the Registrar a reasoned request, accompanied by a declaration to support the facts, for expedited examination of an application that has been published under section 16A [i.e. 18-month publication – DJF], if one of the following conditions is fulfilled:
(1) There is a basis for a suspicion that examination of the patent application in accordance with the order in which it was filed will cause the applicant for expedited examination in accordance with this sub-section, who deals in the field of the invention, to defer development or production of a product or process that is claimed in the patent application;
(2) the time that has passed since the submission of the patent application to the PTO under section 15 or its entry into the national phase under section 48D is unreasonably long, and included in this is significantly longer in comparison to the time that has transpired until the commencement of examination of other applications of the same class;
(3) the public good;
(4) there are special circumstances that justify it.
Notably, nothing in new section 19A, or any other part of the new amendments, require the third party requestor to notify the applicant of the request to expedite the examination, let alone provide for the applicant to respond to the third-party’s request (although, as will be discussed in a later post, it can be argued that the right to respond exists by virtue of section 159 of the statute).
Moreover, whereas hitherto applicants have been able to obtain extensions of time to respond to office actions without a show of cause, or even to request suspension of the examination with a show of cause (such as the desire to wait for the outcome of prosecution in corresponding cases in the US, the EPO or Japan), the new amendments turn this practice on its head. New subsection 19A(e) establishes that once a TPREE has been granted, the applicant will not be allowed to request suspension of the examination, period; and a showing of a particular type of cause will be required for extensions of time to respond to office actions, because such extensions will not be granted “unless the Registrar found that the extension was necessary for reasons that neither the applicant nor his attorney had control over or the ability to prevent”.
New subsection 19A(d) says that requests for expedited examination (whether by the applicant or a third party) must be accompanied by the appropriate fee, “should one be established”. As will be discussed in a subsequent post, that wording is strange and possibly problematic.
A substantive post on the more notable aspects of last week’s amendments to the Israel patent statute is in progress, but at least one point bears separate discussion: the abolishment of the requirement for the publication of an abstract.
Section 26(b) of the statute says that upon conclusion of substantive examination and payment of the publication fee, the Registrar is to publish certain particulars concerning the application. Until now, subsection 26(b)(5) specifically said that one of these particulars was “a description of the essence of the invention, in the Registrar’s view” – in other words, an abstract – and section 27 said that this description “shall not serve the court or the Registrar as evidence when they come to construe the specification [which includes the claims – DJF] in any legal proceeding”.
In practice, until 2009 the Registrar simply published the first claim to fulfill his duty under 26(b)(5); as discussed in an earlier post, in 2009 the Registrar, acting ultra vires (as usual), decided to require applicants to submit such abstracts.
Both the pre- and post-2009 practices have now been mooted, as sections 26(b)(5) and 27 were removed from the statute as part of last week’s amendments. (Show of hands: how many of you think the ILPTO will continue to exceed its authority and demand the submission of an abstract despite the lack of statutory authority for such a requirement?)
An interesting question arises, however, as to the current effect of previously-published abstracts: does now-cancelled section 27 continue to apply to abstracts that were published under section 26(b)(5), or can such abstracts - to say nothing of abstracts submitted by applicants themselves in the past, even if never published - now be used in claim construction? I’m not going to speculate on the answer to that question, but I am going to advise my clients henceforth to not submit an abstract with patent applications filed in Israel.
As reported in earlier posts (here and here), a bill to amend the Israel patent statute to institute, among other things, 18-month publication of patent applications has been in the works for some time. Last week the Knesset enacted the bill, which became law with its publication on July 12. In addition to establishing publication for all patent applications that are pending as of 18 months from the earliest priority date (including those filed before the bill became law), the amendments officially acknowledge the ability of third parties to submit prior art, and enable third parties to request expedited examination of others' patent applications. A more detailed analysis of the amendments will follow in a later posting.
As of this writing, there is no word from the ILPTO via its web site or its e-mail distribution list about the amendments, but such comment will no doubt be forthcoming: for several months the ILPTO has been preparing for adoption of this legislation by organizing and scanning patent file histories, and as the 18-month publication requirement appears to have immediate effect and does not appear to require implementing regulations, publication of pending applications (i.e. the making available of file histories on-line via the ILPTO's web site) should begin soon.
Last September, Israel went online as part of the Madrid system for trademark registration. This followed the necessary legislative and regulatory amendments to facilitate Israel’s participation in this system.
The Hague Agreement is to designs what the Madrid system is to trademarks: and international filing system that enables an applicant to obtain design protection in several countries at once. As explained on WIPO’s web site,
“This System gives the owner of an industrial design the possibility to have his design protected in several countries by simply filing one application with the International Bureau of WIPO, in one language, with one set of fees in one currency (Swiss Francs). An international registration produces the same effects in each of the designated countries, as if the design had been registered directly with each national office, unless protection is refused by the national office of that country.”
Israel is not a party to the Hague Agreement. Notwithstanding this fact, earlier this month, the head of the ILPTO, Asa Kling, posted a draft circular, in which he proposed to have the ILPTO recognize claims for priority to Hague system applications made in Israel design applications. His reasoning was that many of the Hague system countries are also signatories to the Paris Convention (as is Israel), and since for those countries filing via Hague is equivalent to filing in those countries themselves, he should accord Hague system applicants priority as if he they had filed in their own countries and claimed priority via the Paris Convention.
On its face, there is a certain logic to the Commissioner’s proposal: why should Hague system applicants have to file twice, once in Paris Convention country and once via the Hague system, in order to be able to claim priority in Israel?
But legally the proposal is hard to justify. Treaties only become enforceable in Israel once local legislation has been amended to implement them, so even if Israel had signed the Hague Agreement, it would still need to enact appropriate enabling legislation. Needless to say, in the absence of such accession to the agreement, the legal machinery to recognize Hague Agreement priority claims is not in place. The Commissioner cannot do by internal PTO regulation that which requires action by the Knesset to do. Indeed, he might be doing applicants a disservice by recognizing such priority claims, because an Israel court might later say he acted ultra vires, disallow the priority claim and, if there was internet publication of the design in the interim, void the design registration.
Given that problem, the Commissioner’s proposal is inscrutable from the political perspective: his predecessor was run out of town on a rail for ceasing paper publication of the Patents Journal without getting the Knesset to first enact the necessary legislative changes. Mr. Kling’s proposal is in effect an announcement that he wishes to repeat his predecessor’s folly and usurp the Knesset’s powers.
I don’t know why Mr. Kling seems set on repeating the past, rather than learning from others’ mistakes. I suspect that part of the problem is that he is receiving advice from some of the same people who unwisely counseled his predecessor.
In any event, there is no way to tell from the ILTPO’s web site if Mr. Kling received any comments on his proposal, as to date he has never published any such comments (a lack of transparency that will be the subject of a future post), but the guess here is that this particular proposal will not be implemented.
To the extent I’ve had time to post over the last few months, most of the posts have been devoted to the adoption of legislation enabling 18-month publication of patent applications in Israel, and in particular to the ongoing deliberations in the Knesset’s Constitution, Statute and Law Committee in this regard. Today’s post is no different, since today and tomorrow, the committee will meet again to consider this bill.
Early Publication
At present it appears likely that the bill will pass in a form that requires publication of all patent applications, including those that are presently pending. As I’ve argued before, I think this is unfair to applicants who filed their patent applications under the current, no-publication-until-acceptance-of-the-application system. I have no doubt that the vast majority of applicants have no objection to their presently pending applications publishing, particularly since, in most cases, corresponding applications have published abroad. Nevertheless, I am equally certain that there are a handful of applications that were filed because their owners knew that the contents of the applications would stay secret until the conclusion of substantive examination, and/or whose owners have made business plans in reliance on such secrecy. It’s not fair to change the rules for those applicants in the middle of the game. If one conceives of the patenting process as a contract between the state and the applicant, forcing early publication of an application after telling the applicant that his application will remain secret constitutes a breach of the contract on the part of the state. (For that reason, one wonders if a clause forcing publication of all pending applications would hold up to so-called constitutional scrutiny before the so-called High Court of Justice.)
Rather than requiring publication of all pending applications, the statute should provide an opt-in clause: those applicants who want their pending applications to publish now should be allowed to tell the ILPTO to publish such applications. This would largely achieve the goals of early publication, without adversely affecting those applicants who have relied on the non-publication in making their businesses decisions until this point.
There is, however, another aspect of this legislation that I haven’t previously discussed: the hypocrisy that lies behind this amendment. It’s no secret that the USA, in particular the Department of Commerce and the U.S. Trade Representative, been pressuring Israel for some time to adopt an 18-month publication regime. To this end, the U.S. Commerce Secretary and Israel’s Minister of Trade signed an agreement two years ago that stipulated, inter alia, that Israel would adopt such regime (in exchange for the USA calling Israel a good guy and taking off the USTR’s list of bad guys who don’t honor IP, like China; I’ve written before about the ludicrousness of that comparison).
Now, there are good arguments in favor 18-month publication regimes, which explains why they are the standard in the developed world. Indeed, Israel likely would eventually have adopted such a regime even without prodding from the USA, as there’s no real opposition in Israel to 18-month publication. But in negotiating with the USA, apparently no one on either side checked to the situation regarding 18-month publication in the USA itself before proposing what Israel should do. That, or the Americans feel free to be hypocrites. I say that because, as anyone familiar with US patent law knows, when the USA adopted early publication in 1999, it didn’t make publication compulsory for all applications. Publication only applied for applications filed after a certain date, and even then, applicants could opt out of publication, by signing a statement that no corresponding application had been filed in an early-publication country. The penalties for falsely making such a statement are draconian – you lose your patent – but in principle your application need not be published before it is granted.
That being the case, why on earth has Israel agreed not only to publish all applications in the future, but even to publish currently pending applications? The USA did neither of these things. In this case, what’s good for Uncle Sam should be good enough for Uncle Moshe. I doubt that today and tomorrow, the Knesset committee is going to tell the Americans where can they put their “early publication for all” demands, but it would sure be sweet if it did.
Rescinding A Wrongly-Decided Supreme Court Decision
Israel’s Supreme Court has a reputation as the world’s most activist court. This reputation has been earned primarily in its role as the so-called High Court of Justice, which hears claims against state activity, but the Court’s activism extends to the civil sphere too, including the IP arena. To illustrate:
Imagine you’re a manufacturer of air conditioning vents. You see that a competitor has a very successful model of vent. After doing some research you discover that his vent is a copy of a vent that was invented abroad by someone else many years ago. Or you find that although your competitor developed the vent himself, he never sought to protect it via a patent or registered design, even though such protections are available by statute in Israel. Or that in fact, he patented it, but the patent expired last year. Being a logical person, you would conclude that under the circumstances, not only are you free to manufacture and sell your own version of the vent, but that you can market for a lower price, thus benefitting consumer.
Unfortunately, you’ve overlooked the fact that you’re in Israel, where marriages between logic and public policy are infrequent and purely coincidental. In the present case, we have a flawed 1998 Supreme Court decision, popularly known as the AShI”R decision, that gums up the works. In AShI”R, various parties who produced articles which were not protected by patent or other intellectual property laws – either because the parties hadn’t sought IP protection, or because IP protection wasn’t available (e.g. because the article was already known and therefore not patentable), or because the parties had availed themselves of statutory IP protection but it had expired – sought relief against competitors who copied their products. The Supreme Court ruled that they were entitled to protection. In so doing, the Court turned logic, and the rationale behind the country’s patent and design legislation, on its head. How so? (If you’re an IP practitioner, the next paragraph will be clear to you, so skip ahead.)
Modern patent regimes are based on a quid quo pro: in exchange for disclosing a new and non-obvious invention, in a manner that enables competitors to copy the invention, the state grants the inventor a limited period of exclusivity – currently 20 years from the date of filing the patent application – during which the inventor can prevent others from making, using, selling, or offering to sell the invention. The expected receipt of such a period of exclusivity encourages investment in R&D, particularly in areas where high outlays of capital are necessary to bring a product to market. The grant of the exclusivity, which is a matter of public record, encourages others to develop new, non-infringing ways to compete, which usually leads to more efficient technologies and lower prices. The temporal limitation of the exclusivity ensures that even if no non-infringing alternatives are developed, competition will eventually be possible, along with concomitantly lower prices; it also allows competitors to make business decisions on the basis of predictable dates, viz. the expiration date of the patent. The logic behind design protection is similar, although the investment involved is usually smaller, and the scope and duration of protection more limited.
In AShI”R, the Supreme Court ignored the patent and design statutes and the public policy considerations underlying them, and in effect said that copying per se is bad, even though the Knesset, in accordance with sound economic policy, had already determined that copying per se isn’t bad. As the Aramaic expression goes, kulei alma lo pligei (everyone agrees – except, apparently, Israel’s Supreme Court) that a party that chooses not avail itself of the protection afforded by IP statutes should not be entitled to such protection through the backdoor of the courts; among other things, to provide protection in such cases undermines the predictability that the patent statute seeks to provide, and discourages the public disclosure that the patent statute seeks to obtain.
The egregiousness of the Court’s decision is all the more true in cases in which patent protection isn’t available, either because the article in question isn’t substantively patentable (it was known or is obvious over what was known) – society has no interest in granting exclusivity on something that’s already known – or because patent protection for the article being copied has already been exhausted, in which case the Court’s decision effectively amounts to an extension of the patent term for an indeterminate length of time, and an abrogation of the contract between the state and inventor when the state agreed to give the inventor a 20-year term of protection. (Indeed, the patent statute includes provisions for the extension of patent term, but they apply to a narrow set of circumstances that do not include any of the situations under consideration in AShI”R.)
More than 13 years after the AShI”R decision was handed down, the Knesset may finally be poised to lay this bit of judicial folly to rest. The 18-month publication to be discussed in committee today and tomorrow also contains language that would effectively rescind AShI”R with respect to patents, in so doing reinforcing the patent regime in Israel. According to the bill, a court would be precluded from hearing a claim based on the manufacture, use, sale or offer for sale of an invention that is unpatented, irrespective of the reason why that invention is unpatented.
Of course, it ain’t over till it’s over, so it’s possible that despite unusual consensus in the legal, business and academic communities about the need to rescind AShI”R, political machinations may do their worst, and this provision of the bill may be buried in committee in order to placate the whims of certain individuals with their own agendas. Here’s cautious optimism that the MKs on this committee will do the right thing and restore the patent statute’s primacy in governing the protection of new and non-obvious inventions.
As has been discussed here before, under the leadership of the previous Israel Patents Commissioner, Meir Noam, in 2008 the ILPTO announced that – contrary to what was required at the time by statute – it would no longer publish its notices in paper format, and instead would publish only via its website. Among other things, this resulted in the validity of thousands of patents being left in limbo, since by statute paper publication of certain notices was a prerequisite for patent grant.
Although the problem was solved early last year by a statutory amendment that retroactively approved the online-only publication, the shenanigans of Dr. Noam and the senior PTO staff who supported his moves aroused the ire of Knesset Member David Rotem, the chairman of the committee through which patent-related legislation must past. As a quid quo pro for fixing the mistake of Meir Noam et al., Mr. Rotem required the Justice Ministry to agree to refund the publication fees of patentees and applicants whose applications published during the period in question. The substantive need for such refunds is dubious – the amount of work involved in publishing online was nearly the same as publishing paper copies, and the retroactive legislative amendment dispensed with any uncertainty about the status of any patents otherwise affected by the online publication – but demanding refunds of this nature makes for good political posturing.
After much wrangling and untold wasted man-hours figuring out how the ILPTO would refund the fees, the ILPTO has now announced (in Hebrew only) that refunds of fees for publications and other announcements in the Patents Journal that were published exclusively online between March 20, 2008 and June 30, 2010 will be made available. Affected parties must fill out a form (also only available in Hebrew, and only useful if you have an Israeli bank account), which must be returned to the ILPTO by September 5, 2012.
It’s unclear just how many refunds will be requested. The attorney time involved in notifying clients, requesting refunds and disbursing the money (or even just crediting clients’ account) will likely surpass the amounts in issue, which are only several hundred shekels per instance. Moreover, in what appears to be an obvious effort to reduce the number of refund requests to be filed, the ILPTO has indicated that separate forms must be submitted for each refund requested; each form also requires three different signatures from the requesting party. Given the superfluousness of the refund program, this may be one instance where bureaucratic red tape is welcome – there are better things the clerical staff at the ILPTO could be doing with its time than processing unwarranted refund requests.
As a result of last fall’s amendment of U.S. patent law, during January the USPTO began publishing proposed rules at a torrid pace. (Since there are other blogs, like Patentdocs, that are providing good coverage of those proposed rules, we won’t go into them here.) Not to be outdone, though, Israel has also been active in the IP law amendment area over the past year, and as a result must now implement various corresponding rule changes.
One of the recent statutory amendments moves official publication of ILPTO notices from paper publication by the Government Press Office to the ILPTO web site. Part of the political trade-off (between the Justice Ministry and the chairman of the Knesset’s Constitution, Statute and Law (CSL) committee) for that amendment was the elimination of the expression “publication fee” from most places in the statute. The relevant rules must now be amended correspondingly (and other fees, which are set by rule rather than by statute, must be raised to compensate for the loss of fees termed “publication fees”; if the chairman’s thinking reminds you of Nigel Tufnel saying, “These go to eleven”, you’re not alone.) A draft version of those revised rules, which in order to come into force must receive the approval of the CSL committee and will be considered by the committee at a still undetermined date, was recently circulated.
Interestingly, tucked away in the draft revised rules is a change not necessitated by recent statutory amendment, but which would be a game-changer for Israel’s pre-grant oppositions.
Specifically, the proposed rule change would require parties filing pre-grant oppositions to submit both their statements of arguments and written evidence within 4 months of filing their notice of opposition. For those unfamiliar with Israel’s pre-grant opposition regime, it won’t be readily apparent that this is a big deal, but it is. In order to understand why, we need to look at the current procedural rules governing those pre-grant oppositions, which are as follows:
1. Within 3 months of publication of the fact that the application has been allowed, third parties may file a notice of opposition. The current fee for doing so is 719 shekels – under $200.
2. Within 4 months of the filing of the notice of opposition, the opponent must file its statement of arguments, “in which it shall specify its grounds of opposition, the facts upon which it bases its arguments and the requested remedy”. The opponent may also file its written evidence at that time, or it may do so later, see below.
3. The applicant then has four months to file its own statement of case; if the opponent filed evidence, the applicant must file its evidence at that time.
4. If the opponent didn’t file evidence at step 2, it has three months from the filing of the applicant’s statement of arguments to file its written evidence.
5. The applicant then has three months to file its own written evidence.
6. The opponent then has three months from the filing of the applicant’s written evidence to file limited, written evidence-in-reply.
Only after those steps have taken place does the ILPTO set a hearing date for live cross-examination of the parties’ expert and fact witnesses before one of the three persons authorized to adjudicate the opposition (the Commissioner, the Deputy Commissioner and the Hearing Officer). Even then, the matter isn’t closed: under current rules, either party can introduce new evidence up to ten days before the hearing.
One difficulty with this arrangement is that typically, the process of submitting the written documents takes longer than the minimum time period set forth in the rules, as sides often ask for and are granted extensions; and oppositions that are carried to conclusion can last five years or more. There have even been cases in which opposition proceedings extended beyond 20 years from the filing date.
In addition, under the current rules, the cost of entry into an opposition is low. Although the current rules say that the statement of arguments must “specify [the] grounds of opposition, the facts upon which [the opponent] bases its arguments and the requested remedy” – wording which suggests that an opponent must map out its case in its statement of arguments – it’s common for statements of arguments to run only one or two pages, perfunctorily stating that “The invention lacks novelty and/or is obvious in view of one or more of the following publications”, and to then provide a list of publications, without providing any detailed analysis of how each publication, or combination of publications, applies to each claim. In addition, most statements of arguments laconically state that the specification isn’t enabling and that the claims aren’t supported by the specification, again without providing any detailed explanation; they often state the applicant failed to disclose some piece of prior art that was cited in a corresponding case elsewhere, again without explaining why that matters.
Even if preparing such a document entails a few thousand dollars for prior art searching and analysis, that’s a pittance for the most active infringers. Despite occasional protestations from applicants, the ILPTO has until now been willing to accept such statements of arguments as meeting the requirements of the rules, generally analogizing to civil actions before the courts, in which the courts are extremely reluctant to dismiss any suit at its earliest stages.
Thus, under the current procedure, it’s generally not until some time after an opposition is filed that an opponent needs to spend a significant amount of money preparing affidavits and expert reports. Moreover, the rule allowing late filing of evidence effectively enables opponents to delay even further the expenditure associated with the preparation of evidence.
The result of this is that merely by filing an opposition, a third party can delay the grant of a patent by several years. As (i) the applicant has no enforceable rights until the patent is granted, (ii) no extension of the patent term is given to compensate for the delay in the grant, (iii) the cost for filing the opposition is low and (iv) the assessment of costs against losing opponents is traditionally small (especially when compared to the potential economic benefit the opponent can gain during the opposition period, for example by producing a product and then exporting or otherwise disposing of that product before the opposition concludes, thus escaping liability for infringement), pre-grant oppositions feature prominently in the business models of some local companies.
The proposed rules would combine steps 2 and 4, and steps 3 and 5, respectively, so that opponents would effectively have seven months from publication of the allowance of the application to put their cases together, including written evidence. (As will be discussed below, once Israel moves to 18-month publication, the effective time for opponents to prepare will be longer.) The proposed rules would also do away with the potential for the late filing of evidence.
One need not be a genius to appreciate that these changes would significantly alter the calculus of opposition filing. Instead of shooting first and asking questions later, under the proposed rules potential opponents would have to make an early assessment of whether or not an opposition is necessary in order to meet their business objectives, since a more significant expenditure of resources than is presently required will have to be made soon after the opposition is filed: potential arguments, including documentation and testimony supporting those arguments, would have to be identified much earlier on in the process. The draft rules would cause potential opponents to weigh the merits of their cases very carefully, and to do a cost-benefit analysis prior to filing their oppositions, thereby increasing the likelihood that only parties with skin in the game oppose patent applications or proceed beyond the filing of a notice of opposition.
Presumably, the overall result would be a reduction in the number of oppositions filed, as well as the streamlining of those oppositions that are filed, leading to faster dispositions of those oppositions. Aside from forcing earlier filing of complete arguments and supporting evidence, the proposed procedure would reduce the number of opportunities for parties to request extensions, requests to which the other side usually accedes in the expectation of reciprocity when the tables are turned.
I have no doubt that the companies that have traditionally filed many oppositions (or at least the lawyers who represent those companies and the lawyers who defend the oppositions) will scream, howl, whine, moan, gripe and b--ch about the proposed changes, bandying about phrases like “the purity of the patents register” and telling all who are in earshot that oppositions are a necessary tool because the ILPTO examiners allow far too many invalid patents, and that foreshortening the time they have to put their cases together will hinder their ability to keep the patents register pure. They will no doubt point to their successes in having the claims of allowed patent applications amended during the opposition proceedings, or in having oppositions sustained in toto, as evidence of the success of the present opposition procedure. But that’s specious. The fact is the proposed changes will present a system that’s more efficient than the present system, because unlike the present system it won’t encourage frivolous oppositions. And it seems that until now, while the frequent users of the opposition system have touted the cost to society of bad patents, no one has taken into account the cost to society of failing to timely grant worthy patents, a problem that occurs too often even without oppositions, and which the present opposition system exacerbates. Adverse parties that feel they need more time to prepare will still be able to avail themselves of revocation proceedings before the ILPTO and proceedings before the courts in order to invalidate bad patents. There’s no reason to continue to give those parties a free ride that encourages frivolous oppositions.
Moreover, the new rules, if adopted, will come into force after Israel has already moved to an 18-months-from-priority-date publication regime. This will give potential opponents years to prepare for pre-grant oppositions. (Also, as reported in an earlier post, it appears that Israel is headed toward a situation in which potential opponents will be to file comments with examiners prior to allowance of patent applications, further strengthening their hand.) Under such circumstances, raising the cost of entry into the opposition game, so that only those parties with a real financial interest in doing so will file oppositions, can hardly be seen as being prejudicial to anyone.
Because the proposed rules are sure to be lobbied against heavily, there’s no assurance they’ll be adopted. If they are not adopted, and the ILPTO is concerned about the length of oppositions – and the rumor is that these particular changes were added to the draft rules at the behest of the ILPTO – perhaps the Commissioner will stop granting extensions for opponents to file their statements of case, and will begin to require opponents to adhere to the rules in their present wording, demanding that they provide detailed statements of arguments setting forth exactly which prior art or combinations of prior art apply to which claims and how. While not as effective as the proposed change, such an approach would at least partly raise the cost of filing an opposition to the point where some baseless oppositions will no longer be filed.
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