America-Israel Patent Law

How Is The Patent Grant Date Calculated In Israel (i.e. When is the First Maintenance Fee Due)?

In Israel, after the ILPTO allows an application, the applicant pays a fee, and then notice that the application is allowed - the so-called "acceptance of the application" - is published in the Patents Journal.  This now normally occurs on the 1st of the month on the Gregorian calendar, although if the 1st falls on a day when the ILPTO is closed, then the publication occurs on the next day on which the office is open.  Opponents then have three months - non-extendible - to file a notice of opposition.  But by statute, if THAT deadline falls on a day when the ILPTO is closed, that deadline gets pushed off.  Once the opposition deadline passes without an opposition being filed, the patent automatically grants, although the ILPTO sometimes takes a few days to issue the patent certificate. 

The grant date is important, because maintenance (renewal) fees the deadlines for which occurred during the pendency of the application must be paid within three months of grant - minimally, the fee for years 0-6 of the patent, and sometimes for years 7-10 or even for later years.

This year, patent applications for which the "acceptance of the application" was published on July 1 ostensibly became patents on October 2, assuming no opposition was filed by the end of the October 1 deadline. But the ILPTO was closed on October 1 as part of the intermediate days of the Succot festival, and stayed closed until October 8.  So the deadline to file oppositions should have been yesterday, October 8, with unopposed application issuing at patents on October 9, and the maintenance fee deadline

Imagine my surprise, then, when this morning I received patent certificates for several patents that listed the issue date as October 2, 2023 - a date on which the Office was closed.

I don't imagine this shortchanging of my clients a week to pay their maintenance fees will be an issue, as we usually report patent grants immediately, and 12 weeks to pay should be sufficient. But it would be nice if the ILPTO got its dates right.

Follow up: I emailed the head examiner at the ILPTO, Simona Aharonovitch, about this problem.  Turns out that I alerted them to it last year, and they mostly fixed it, but there's still a glitch: the patent certificates got prepared automatically on October 2, but they weren't mailed until October 9. In fact, potential opponents had the ability to file oppositions through October 8.

What blows my mind is that according to Ms. Aharonovitch, I'm the only one who has ever called this mistake to the PTO's attention.  Evidently the big offices are asleep at the wheel.

MOJ and Israel PTO Ask for Suggestions for Amending the Regulations for Patent Oppositions

This morning the MOJ and Israel PTO posted a call for suggestions for changes to the regulations governing patent oppositions in Israel, and the ILPTO sent out an email notifying recipients of this fact.  The deadline for response is June 30, 2021.  A similar call for comments was published in 2016, and while many comments were elicited (posted here), no action resulted.  Apparently the powers-that-be now wish to move ahead with this.  

I've blogged about patent oppositions in Israel before, but for those who aren't familiar with the opposition procedure, it goes roughly like this: the examiner says the application is allowable, the applicant pays an "acceptance" fee, and a notice that the application has been "accepted" is published in the Patents Journal.  Any party then has three months to file an opposition to the grant of the patent, and then another three months to file its statement of case. The applicant then has three months to file its statement of case. Then the opposer has 3 months to file written evidence, the applicant has three months to file its evidence, and then the opposer can file further written evidence to address points raised in the applicant’s evidence.  Then there’s an oral hearing at which the parties cross-examine witness, followed by written summations (oral summations are common in the USA but rarely used in any litigation in Israel).  Eventually the Israel PTO issues a written decision, which is appealable to the district court.  The whole process, without appeal, usually takes a minimum of two years, and in practice longer, since parties (or more accurately, their lawyers or patent agents) often agree to extensions. If the applicant wishes to amend its claims during the opposition, this can further prolong the proceedings.  The applicant has no enforceable rights until it has a patent in hand, viz. until the ILPTO issues a decision upholding the grant of the patent.

One important point to note: the pre-grant oppositions are authorized by the statute, and thus can only be done away with, or modified to post-grant oppositions, by statutory amendment, which requires approval of the full Knesset.  The particular rules governing the opposition procedure are set by regulation, which requires only approval of the relevant Knesset Committee and the Justice Minister, and therefore are a bit easier to adopt.

I reproduce below my own comments from November 2016, which explain many of the problems with the current system.  My views haven’t changed in the interim, so I've yet to decide if I will change anything from what I wrote four-and-a-half years ago.    

Shalom Ayelet.

I write in response to the “קול קורה” asking for comments on the opposition procedure in Israel.  It’s not clear from the request itself if a change from pre-grant to post-grant opposition is going to be considered at this time, but I understand from other sources that the MOJ is interested in comments on making the existing opposition proceedings move along more quickly.  So I’m not going to discuss pre- vs. post-grant oppositions, despite the fact that I think Israel should transition exclusively to a post-grant proceeding, and that it’s inefficient to not discuss such a transition at this time.

By way of background: I’m not being paid by anyone to write these comments.  I deal primarily with helping inventive entities developing strategies for protecting their intellectual property, and I prepare and prosecute patent applications.  I also have a fair amount of experience with oppositions from the side of patent applicants, in several fields, and I’ve worked on behalf of local generic pharmaceutical companies in assessing their positions, or potential positions, in view of pending applications.  In short, I’ve seen the process from both sides, and I have no ulterior motive here: I call it like I see it, based on my experience.

A. It’s too easy to oppose

The single biggest problem I see with the existing opposition regime is that the barrier to entry for opponents is too low.  This leads to the filing of unjustified oppositions and unnecessary prolongation of the patent grant process.  To explain:

Presently, anyone has three months from the date of publication under section 26 to file a notice of opposition.  They then have a period of an additional three months to file their pleadings (כתב טענות).  Typically this document is a pro forma statement that “the claimed invention lacks utility under section 3, lack novelty under section 4 and lacks inventive step under section 5, the description is insufficient under section 12 and the claims do not reasonably arise from the specification under section 13”.  The אגרה for filing a notice of opposition isn’t particularly high, and the attorney fees for preparing a one-page notice of opposition and a one-page כתב טענות are pretty low as well. 

Thereafter, the applicant will file pro forma pleadings of its own within 3 months, denying the opponent’s contentions.  This is supposed to be followed by written evidence from the opponent within 3 months.  Often, however, at this stage, or sometimes even at the stage of the כתב טענות (!), the opponent will request an extension, and usually, the applicant will agree, because the applicant knows that it may later find itself in a situation in which it needs an extension, and therefore wants the opponent to be accommodating in the event that happens.  This is even more true in situations in which the same two parties, represented by the same counsel, have multiple oppositions pending simultaneously, since acquiescence to an extension in one case can be traded for acquiescence to an extension for the other side in a different case. 

If the opponent chooses not to file evidence, it can usually get the applicant to agree to have the opposition dismissed without a request for costs.  More on that below. 

The point here is that it is ridiculously easy for someone to oppose the grant of a patent application, and effectively delay the grant of the patent, at minimal cost to the opponent.  This has to end, and a few changes in the procedure would achieve this result.

1. Require submission of detailed pleadings, and only allow amendment of those pleadings by leave of the Rasham with good cause.

In the old days, when Israel patent applications were only opened to the public upon completion of ex parte examination, there was some sense in giving opponents 3 months to decide whether or not to oppose, 3 months to file pleadings, and additional time to file written evidence.  Not so anymore, with the examination file being open to the public 18 months after the priority date, or, more commonly, shortly after national phase entry.  (The vast majority of patent applications filed in Israel are PCT national phase entries, and I assume that most of the oppositions are filed against national phase applications; I’ve no doubt the ILPTO has statistics on that.) 

Today, interested parties can follow the examination for its duration.  This means they can be ready not only with detailed pleadings, but with written evidence, very soon after the application has published.  Under these circumstances, there is no reason to permit the submission of pro forma pleadings.  At a minimum, opponents should be required to present their detailed pleadings, including complete lists of prior publications upon which they will be relying, at the time the pleadings are due.  Frankly, I think they should be required to provide their evidence as well.  Perhaps, instead of a three-month window to oppose, a 6-month window could be put in place, concomitantly with the requirement that opponents file their detailed pleadings and evidence.  Note that this is similar to the existing rules governing cancellation actions (הליכי ביטול), in which the party seeking cancellation of a patent files pleadings at evidence at the same time.

Additionally, opponents should not be allowed to subsequently introduce or rely on publications or evidence that they could or should have known about at the time they filed their pleadings and evidence; when motioning to introduce new evidence, the opponent should need to show the rasham that the documents that the opponent seeks to introduce could not have been known to the opponent at the time it filed its pleadings and evidence.

The flip side of this, of course, is that the applicant would be required to file its response to the pleadings and evidence in a complete form within a similar, limited amount of time.

2. Require identification of the real party in interest, and introduce estoppel provisions

Currently, any party may oppose a patent application.  Moreover, if that party loses the opposition, and the patent is granted, there is nothing in the statute to prevent that party from raising the same arguments as invalidity contentions in litigation, should that party be sued for infringement by the patentee.  I don’t know if this has ever happened, and if it were to happen, there’s a chance the judge would agree with the patentee that the defendant is estopped from raising the same arguments after having lost at the PTO.  But the fact is that it’s not in the statute.  That’s unfortunate, because the risk of estoppel, when coupled with the requirement to submit complete pleadings and evidence at an early stage, would be one way to reduce the filing of frivolous oppositions. 

Moreover, estoppel normally doesn’t apply to ostensibly unrelated parties that were not part of the prior proceeding – in this case, that were not part of the opposition. 

What would be helpful, therefore, is to require identification of what in US law is called the real party in interest that is opposing the grant of the patent, and to statutorily introduce an estoppel against that party and any parties in privity with that party from raising in later court proceeding any arguments against the validity of the patent that could have been made (not just which were made, but could have been made) in the opposition proceeding.

3. Make it easier to reject oppositions out-of-hand (על הסף)

Opponents should be required to meet a minimum threshold, showing that the case they present goes beyond what was considered by the PTO during ex parte examination.  If an opponent merely cites publications that, taken together, teach no more than the publications considered by the examiner during ex parte examination, then there’s no reason to proceed with the opposition.  In such cases, the applicant should be able to have the opposition summarily dismissed.  The rasham has traditionally been reluctant to use סילוק על הסף as means of disposing of cases before him; perhaps the statute should be amended to make it clear that this is an acceptable remedy when the opponent’s contentions amount to the same contentions considered by the examiner.  This will also cause opponents to carefully consider the arguments to be made in an opposition.

4. Cap or eliminate cost awards

This is discussed in more detail below, but is mentioned here because this step would also reduce the likelihood of frivolous oppositions.

5. Increase the fee for filing oppositions

The usefulness of this step would seem to be self-evident, although if the changes outlined above are adopted, it might not be necessary.

B. Adopt an EPO-like procedure with respect to amendments

I once heard the late Eli Hurwitz say that there’s no patent that can’t be gotten around.  It’s a well-taken point: no matter how worthy of patent protection an invention may be, it’s much more difficult to draft a good patent application than it is to invalidate a patent or oppose its grant.  Moreover, the statute does not impose upon patent applicants a duty to search the prior art themselves before drafting their patent applications; rather, it assigns to the ILPTO the duty to determine the allowability of each of the claims of the patent application.  It’s therefore not surprising that adverse parties will sometimes raise points that were not taken into consideration during ex parte examination. 

In view of this asymmetry, if the application discloses something patentable but the claims do not define that something patentable sufficiently well, the applicant should be given the opportunity to amend its claims to a form in which the claims do define the invention so as to meet the requirements of the statute. 

The present legal framework seeks to allow this, but is deficient in that it treats such amendments as separate proceedings in and of themselves.  Moreover, while it correctly allows applicants to make such amendments as of right, if applicants find themselves having made one set of amendments, then find those amendments opposed by the opponent in the substantive opposition to the grant of the patent, the applicant may need to do another round of amendments.  This obviously slows resolution of the opposition.

A more efficient route would be to adopt the type of approach taken by the EPO: after the parties have presented their arguments and evidence, when it comes time for the oral portion of the proceedings the applicant should be able to present a reasonable number of sets of claims, in its order of preference.  Each set can then be considered by the PTO, with the opponent able to raise its objections, so that if there’s a set of claims that’s acceptable to the applicant and meets the statutory requirements, that fact will be discovered quickly.

C. Treat oppositions as private litigation

An irritating aspect of oppositions is that although they are designed as adversarial proceedings, the ILPTO often views its role as that of an inquisitor, whose job is to protect some amorphous, unidentified “public” from an invalid claims in patents.  That view, which is biased against patent applicants, evinces a misunderstanding of the ILPTO’s role.  The ILPTO’s role is to examine patent applications, to refuse to allow claims that are not new or are obvious over prior publications, or are insufficiently supported by the specification – i.e. that don’t meet the requirements of sections 4, 5, 12 and 13 of the statute – and to allow claims that do meet those requirements.  That’s how innovation is encouraged. 

To the extent that pre-grant opposition is viewed as an extension of patent prosecution, the scales should not be tipped against applicants whose applications happen to have been opposed by third parties, as is presently the case, with the ILPTO assuming a quasi-inquisitorial stance.  Rather, the opposition should be treated as private litigation.  If the opponent has not raised an argument, then it’s not for the patent office to raise that argument for the opponent.  Similarly, if the parties submit a mutually-agreed upon request to an extension for one of the sides to file some paper, this should be granted by the rasham.

D. Eliminate failure to cite prior publications as a ground for oppositions

The statute rightly imposes on applicants a duty to assist the PTO by informing the PTO of publications cited against corresponding applications elsewhere or that are otherwise known to the applicant to be relevant.  However, failure to cite a reference should not per se be grounds for invalidating a patent; such failure should only matter when (a) but for (אלמלא) the omission, the examiner would not have allowed the claims in the form in which they were allowed, and (b) the omission was deliberate, with an intent to deceive the PTO.  While the PTO can readily determine (a), it is in a poor position to determine (b), a task more suited to the courts.  Consequently, failure to comply with section 18 should be removed as a grounds for opposition.  

E. Cap or eliminate cost awards

In the last several years the PTO has gone absolutely berserk in its awards of costs to the prevailing party in inter partes proceedings, granting awards that are far beyond what a party could obtain from a judge in a regular court proceeding.  Applicants for patents should not be punished for unsuccessfully seeking patent protection, and opponents should not enjoy a windfall for convincing the rasham to sustain an opposition; in most instances, if an opponent is successful, the opposition has paved the way to commercial success that will far exceed what it spent on the opposition. 

Since the PTO seems to be unable to restrain its predilection for cost awards out of proportion to cost awards in litigation before the courts, it’s time to statutorily reign in such costs.  Or to do away with them altogether, since for most opponents the cost of the opposition is merely part of the cost of doing business – many of the same parties that regularly file oppositions today were filing them regularly 20 years ago as well, before the PTO starting enriching those parties for having filed those oppositions, which means in the past they really did view it as part of the cost of doing business.  Granting windfalls in the form of cost awards distorts the system.

I’d be happy to discuss these matters, and other points related to oppositions, with you or members of the MOJ staff.

Dan Feigelson

November 15, 2016

If It Ain’t Broke, Don’t Fix It: ILPTO Announces Wrong Deadlines For Filing Patent Oppositions

The USPTO has its Gazette, which publishes faithfully every Tuesday at 12:01 AM (a fact that provided the title for my brother’s entertaining but sadly now mostly-defunct blog).  The Israel PTO has its Patents Journal (and the corresponding Trademarks Journal and Designs Journal), which publishes sometime on the last workday of each Gregorian calendar month (keeping in mind that the ILPTO is open Sundays, and closed on Fridays, Saturdays, Jewish holy days, and certain other days).

One of the important functions of the Patents Journal is that publication in the Journal constitutes “acceptance” of the application under section 26 of the statute, which starts the clock running for the filing of pre-grant oppositions.  By statute, that period runs for three months, and is not extendible, although if the deadline for filing an opposition falls on one of the aforementioned days when the ILPTO is closed, then by statute it gets pushed off until the next day on which the ILPTO is open. If no opposition is filed by the deadline, the patent is automatically granted.

The Patents Journal used to be published as paper hard copies, but for quite a few years now has been published exclusively online, on the ILPTO’s web site.  (Long-time followers of the Israel patents scene will recall an abortive attempt by the then-Commissioner to switch to online-only publishing before the statute permitted that, prompting a lawsuit against the ILPTO.)

In my experience, parties that may have an interest in filing an opposition know about the three-month deadline, know when the Patents Journal publishes, and track the progress of competitors’ patent applications through the online database.  So they don’t really need to be told when a new Journal comes online.  Nevertheless, the ILPTO has made it its practice to send an email to its email list subscribers, notifying them that the latest Journal has come online.

Hitherto, that email has merely noted that the Journal is online, with hyperlinks to the Journal.  Then two months ago, someone at the ILPTO decided to add a sentence to the email that mentions when the deadline for oppositions will fall.  So the email announcements of the February and March 2021 Patents Journals include an ostensible deadline for filing oppositions. Just one problem: whoever wrote the sentence calculated wrong, and wrote that the deadline fell one month later.

Obviously, an erroneous email announcement can’t foreshorten the statutorily-determined opposition filing period, any more than it can lengthen that period. Apparently the error in the February email went unnoticed, but someone caught the error in the March notice, because earlier this week the ILPTO sent out an email noting that the date in the March email notice was incorrect, and mentioning the correct deadline. 

This morning the ILPTO sent out its email announcing publication of the April Patents Journal. It correctly noted that the deadline for filing oppositions is three months from the date of the notice.

But I still wonder: since the people most likely to file oppositions are already aware of the deadline, why mention it at all in the email?  We got along well for years without the email announcement telling us when the opposition deadline falls…and for many, many years before that, without an email announcement at all.

Yet Another Attempt By the Israel PTO to Circumvent the Law: ILPTO Seeks to Expand Its Powers By Fiat, at the Expense of §17(c) of the Statute

I’ve blogged before about how a good thing became less good when it was codified in the statute, specifically §17(c) of the Israel Patent statute, enacted in 1995, which codified what had until then been an Israel PTO practice: you get a corresponding patent allowed in certain other jurisdictions, and if you amend the claims in Israel to correspond to the allowed foreign claims, you can piggy-back on that allowance to gain allowance in Israel. The policy was put in place at a time when the ILPTO was overloaded with work.  And while the ILPTO has in past 10 years significantly decreased its examination backlog, §17(c) remains on the books (at least for now), and for many applicants presents a way lowering their world-wide patent prosecution costs, by allowing them to leverage prosecution in larger, more important jurisdictions, such as the USA, Europe and Japan, to obtain a low-cost allowance in tiny Israel.

As an ILPTO policy, the office had some flexibility in its implementation of this practice. But now that it’s a statutory provision, the office, at least for the past 15 years or so, feels it no longer has such flexibility.  Hence, since the statute says you can piggy-back on a granted patent, but not an allowance, the ILPTO now makes applicants wait for the grant of the foreign patent. Similarly, because of poor statutory drafting, the ILPTO won’t let applicants springboard from a corresponding patent that constitutes a corresponding national phase PCT filing if the PCT application doesn’t claim priority from an earlier application. And whereas in the past you could convert US method-of-treatment claims to Swiss-type or purpose-directed-product claims and still get those claims allowed on basis of the granted US method-of-treatment claims, in the early 2000’s the ILPTO decided it was precluded by the language of §17(c) from doing so.

Now the ILPTO wants to restrict §17(c) even more, but in a way that I don’t think the statute authorizes it to do.  But first some background. 

In Israel, when prosecution on the merits concludes, there are two important dates to keep in mind: the date of acceptance of the application, and the date of grant of the patent.  “Acceptance” occurs after the acceptance fee is paid, when notice that the application has been allowed is published in the Patents Journal under §26.  This begins a three-month period to oppose the grant of the patent.  If an opposition is filed, pre-grant opposition proceedings ensue.  If no opposition is filed (or if the opposition is rejected and no appeal of the decision filed with the district court), the patent automatically grants (§35). So if the acceptance occurs upon publication per §26 on December 31, and no opposition is filed by the end of the day on the following March 31, on April 1 the patent automatically grants.

When §17(c) was enacted, the statute was also amended to include §17(e), which says that up until the time of the grant of the patent, the applicant must inform the ILPTO if opposition or cancellation proceedings were instituted against the foreign patent which served as the basis for the §17(c) request.  §17(e) does not state that the ILPTO may take any steps as a result of being so informed.  Recently, though – viz., November 2020 – someone at the ILPTO decided that if opposition or cancellation proceedings are instituted against the foreign patent prior to the acceptance of the application, that’s sufficient reason to withdraw the allowance, and it wrote this into Commissioner’s Circular notice no. 035/2017. Curiously, when this Circular was first published in early 2017, it didn’t say anything about returning §17(c)-allowed applications to examination.

I’m not sure of the ILPTO’s legal justification for this practice – I don’t recall seeing reasons for the change to this language when it was proposed just two months ago, and no reasons seems to be given on the ILPTO’s web site. I suspect, however, that that justification (and I use the term loosely) resides in §17(d), which says that the Commissioner, his deputy or the chief examiner may refuse to accept an application for which a §17(c) request was made if the application doesn’t meet the requirements of §17(c), or if there is “another special reason not to accept the application”.  The former condition seems obvious: if an application doesn’t meet the requirements of §17(c), then it’s not allowable under §17(c) (duh!), and if an examiner mistakenly concluded that the application met the requirements of §17(c) and so informed the applicant, but it was later discovered (prior to acceptance) that the requirements of §17(c) weren’t fulfilled, the Commissioner has the authority under §17(d) to revoke the allowance per §17(c), and to return the application to regular examination. 

If that was the ILPTO’s rationale or amended Circular 035/2017 in November, then it was flawed reasoning: the filing of an opposition to the foreign patent is irrelevant to the question of whether or not the dictates of §17(c) were fulfilled. 

Alternatively, maybe the Office thinks that the filing of an opposition against the foreign patent constitutes “another special reason not to accept the application”. To the best of my knowledge that phrase has never been clearly defined, and maybe the Office feels it’s free to shoehorn this situation into that rubric.

Whatever the ILPTO’s rationale for the November revision of the Circular, I don’t think anyone would contest that up until the actual publication under §26, viz. until the “acceptance” of the application, the Commissioner has the authority to rescind the notice of allowance (whether allowed under §17(c) or under regular examination) if there is justified cause to do so, even though the statute doesn’t explicitly provide for this.  If it becomes clear, for example, that the claims in fact recite something that defies the laws of physics, that might constitute justified cause to rescind the allowance and return the application to ex parte examination.  During the re-opened prosecution of the application, the applicant will be able to present its case and, if necessary, freely amend the claims.

Having said that, I’m not convinced that the fact per se of the filing of an opposition to a corresponding patent upon which a §17(c) request was based constitutes justified cause to withdraw an allowance.  The opposition might be frivolous. More importantly, if there are third parties that wish to oppose the grant of the patent in Israel, they have a three month window in which to do so following “acceptance” of the application. And they can file for cancellation of the patent after grant, and of course can avail themselves of an invalidity defense in infringement proceedings. If the Commissioner were to examine the prior art cited in the foreign opposition, and on that basis determine that there’s a genuine question of the allowability of one or more claims, that might justify withdrawing the allowance and reverting to examination.  But not the mere filing per se of the opposition.

If that’s the case for withdrawal of an allowance before §26 publication and “acceptance”, it’s all the more so with regard to the period of time after that: the statute simply does not authorize the Commissioner to take any steps against a patent application once that publication occurs, unless a third party files an opposition. 

[The fact that the period after “acceptance” is different than the period before “acceptance” is reflected in the in fact that, prior to “acceptance”, the applicant can amend its application pretty much as it sees fit, even introducing new matter (albeit usually being required to post-date that new matter, per §23), whereas after “acceptance”, amendment to the application is quite circumscribed, permitted on per §29 and §65.] 

And yet, on January 19 – less than two months after aforesaid amendment of Circular 035/2017, the Commissioner published yet another proposed change to that very same newly-introduced sentence of that same Circular, according to which applications which are allowed under §17(c) will be returned to regular examination if after “acceptance” but prior to the grant of the patent, notice is filed with the ILPTO that opposition or cancellation proceedings have commenced against the foreign patent on which the §17(c) is based. 

It seems a little odd that this proposed change is coming so soon on the heels of the previous change.  Be that as it may, I can think of reasons why the ILPTO might want to institute such practice, but the statute simply doesn’t allow it: as explained above, once the application is “accepted”, the patent grants automatically after three months if no opposition is filed.  Nothing in §17(e) abrogates that, or gives the Commissioner the power to withdraw the “acceptance”.   

If the ILPTO wants to change the policy concerning §17(c) practice, then it needs seek that change via amendment of the statute, not by asserting it has powers that it doesn’t have. 

Comments on the draft change to the Circular are due at that ILPTO by February 2 ([email protected]).

On Living in Chelm and The Hiding of Ulterior Motives

Today is the eve of Passover, making this a short work week here in Israel, for those of us fortunate enough to still be working during this COVID-19 thing – a full 25% of working age Israeli adults sought unemployment compensation in the past week.  Nevertheless, for those who have been paying attention, it has been an interesting week in the IP world in Israel.  But first a bit of background.

On March 21 the government of Israel (what in the USA would be called the cabinet, except that under Israel’s parliamentary system it’s the entire cabinet and not just the Prime Minister that decides many executive matters) decided to reduce public sector expenditures across the board.  The result is that many state employees, including many from the patent office, have effectively been furloughed since then.  As we reported earlier, the ILPTO sent out a notice about the steps it was taking to mitigate the effects of this decision. 

Now the Knesset is considering adopting emergency legislation that would push off by 90 days the deadlines for many acts in connection with administration of the state – either decisions or actions that the state is supposed to take, or actions that individuals (people or organizations) need to take.  And the draft legislation would give the government the option to extend those deadlines by an additional three months.

In combination, for those of us with a narrow focus on IP, these two things have created a perfect storm, not so much for applicants or IP owners, but for IP practitioners and for the ILPTO staff. 

Let’s start with the furloughing of ILPTO staff.  As a result of the government’s March 21 decision, many patent examiners and other at the ILPTO have been sitting home since then, doing nothing.  I suspect many of them are not presently getting paid.  Applications going unexamined also contributes to the examination backlog that the ILPTO had for several years hitherto been steadily decreasing, a result that is unfair to all applicants attempting to secure IP rights.  And for IP firms for which the reporting of Office Actions from ILPTO examiners is a significant source of income, this means that an important revenue stream has just dried up.   

But what’s Chelm-like about the March 21 decision being imposed on the ILPTO is that, unlike most state bodies, the ILPTO is self-supporting.  The ILPTO doesn’t run off of taxes paid by Israeli citizens or people transacting business here.  It runs off the fees it collects each year from the parties that utilizes its services, fess that more than offset the ILPTO’s operating budget.  Furthermore, following a program instituted by previous Commissioner Asa Kling, the ILPTO is set up for examiners to work from home, as many of the examiners already did so prior to the corona outbreak.  So by telling examiners they’re not allowed to work, even from home, the government isn’t reducing expenses. It’s reducing revenue – by ensuring a period in which no patent applications will be allowed, thus ensuring no payment of allowance fees, and by not giving patent practitioners work that they can bill to their clients and then pay of portion of to the state in the form of taxes on the payments for that work.  At a time when many parts of the economy are tanking, it’s not only foolish, but inexcusable to shut down an office that generates revenue for the state.

Then we have the draft legislation.  If all it said was that all deadlines falling between dates X and Y would be extended by three months, across the board, that would be easy to implement.  But, of course, some things really shouldn’t be extended.  For example, someone who’s been arrested for an alleged crime deserves a prompt arraignment, but that means that the courts need to be at least partly open for business.  And as soon as you start making exceptions in one area, others jump in clamoring for an exemption from the legislation, insisting that in their particular sphere of operation, it’s important that deadlines not be extended.  In some cases, it may be that deadlines in question really shouldn’t be extended.  But in other cases…

Stepping back for a moment from my position as someone whose clientele includes companies that file patent applications in Israel, and therefore who has a personal interest in keeping the ILPTO running as close to normal as possible, it seems to me that certain deadlines in the ILPTO should not be extended: the deadlines to file notices of opposition to the grant of a patent, and deadlines for the payment of renewal fees. 

I mention the former because (a) opponents of the grant of patent applications, whether those opponents are based in Israel or outside, have generally been following the progress of the applications they are considering opposing, so they know when the opposition deadline is going to arise, (b) all that’s required is to submit a notice of opposition – a one-line letter – plus a fee, with the substantive arguments being due later and with a deadline that the Commissioner has discretion to extend, and (c) the applicant, conversely, has no vested rights until the opposition procedure is concluded and a patent granted, and since the draft legislation doesn’t talk about extending patent rights another three months, it’s important that the institution of oppositions not be delayed, especially since opposition proceedings anyway tend to take time from the life of the patent. 

As to the payment of renewal fees, it seems to me that there’s no reason to extend these deadlines: for the patentee, the deadlines are known years in advance, and the amounts in question are also known; and for competitors who are following the life of a granted patent, it’s important to know if a patentee is no longer interested in protecting a particular technology.

It’s also clear that deadlines for the Israel PTO, acting as PCT receiving office, search authority or examination authority, cannot be unilaterally extended by the Knesset (and any attempt to do so could have adverse consequences for local PCT applicants relying such an extension).  Those deadlines can only be extended by amendment of the PCT itself. 

But I don’t see any harm to applicants in uniformly granting an extension to enter the national phase in Israel: they can still file at 30 months if they wish to do so, but if as a result of the corona situation there’s some difficulty in making filing decisions or in their cash flow, no real harm will come to those applicants from extending the deadline by a few months. 

On the other hand, considering that most patent filings in Israel are national phase filings, granting such an extension might have an impact on the ILPTO’s workflow – in the three months following the statutory extension, there will likely be a higher number of filings to process than usual – and its cash flow, as noted above.  The ones who would be most impacted by such a statutory extension would be those practitioners who rely on such filings as a significant part of their business, a point to which I’ll return below. 

Another deadline that I think could be extended is the deadline for filing patent term extensions for pharmaceuticals.  In such cases, there’s a significant burden on the patentee in terms of the documentation it needs to submit, a burden that could be affected by the corona virus situation.  And since normally such requests are submitted several years before the patent is due to expire, a difference of three months in the filing of the PTE request wouldn’t significantly affect the local generic drug manufacturers which might be impacted by the grant of the PTE (and which will retain the opportunity to oppose such PTE grant before it occurs).

Now back to this week.  On April 5, the Commissioner of Patents held a Zoom session to discuss the draft legislation, which by that point included exemptions for PCT international phase deadlines and the deadlines for payment of renewal fees (i.e. they would not be extended), but not for PCT national phase deadlines (which therefore would be extended).  

From a sociological standpoint the session was interesting.  Among other things, after about a 10 minute introduction from the Commissioner, nine people spoke (some more than once), but that discussion (roughly 2/3 of the time, if not more) was dominated by four partners from the same organization, one of the biggest IP offices in Israel.  Their view, exactly opposite to my own, was that (a) PCT national phase deadlines shouldn’t be extended and (b) renewal fee deadlines should be extended.  They gave various reasons for their positions, e.g. not wanting their offices to deal with a crunch of filings when the extended deadlines expire, and not wanting the ILPTO to be burdened at that point either.  But as noted above, that’s not really the situation: deadlines falling with the period in question – between March 10 and June 30, 2020 – would be extended by 90 days.  That doesn’t mean that come July 1, there will suddenly be a rush of filings to get 90 days’ worth of national phase applications in.  It just means that on July 1, filings that were initially due on both April 1 and July 1 will be due.  So while that may amount to twice as many filings as normal for July 1, it’s not something that can’t be dealt with. They also said if the national phase deadline was extended, docketing programs will need to be adjusted to reflect the extended deadline.  Considering that many docketing services constantly update their systems to reflect changes in the law in various countries, I don’t think a temporary change in Israel would constitute a significant impediment.

As for renewal fees, the assertion was that companies may need more time to make decisions about whether to renew or not.  Yet the possible need for more time to decide whether to file national phase in Israel wasn't mentioned by the four in the discussion of PCT national phase deadlines.

What none of the four explicitly stated was their personal interest in the matter: as partners, they employ many people, and national phase filings are a cash cow for them.  If potential PCT national phase filers are given the option of delaying their filings by 90 days, they might exercise that option, which would keep the firm’s revenue stream lower than usual.  Which might mean having to reduce the partners’ draw during that period. 

As for renewal fees, the office in question has a contract with at least one and possibly more than one of the big renewal fee companies.  What I gathered reading between the lines of what was said is that they don’t demand payment up front, and that paying out renewal fees now when they may not get compensated later could be disastrous for the partners…er, the firm.  (By comparison, I work with a renewal fee company that demands payment in advance.) 

In this respect, for the attuned listener, the Zoom session also highlighted the differences between large firms and small firms.  Small firms tend to have little patent prosecution or renewal fee work in Israel, and tend to concentrate on drafting and filing new applications, which is work that has been less affected by COVID-19.  They don’t have as many salaries to cover, nor are the proprietors likely to be accustomed to as high a style of living.  As Hillel the Elder said, “The more flesh, the more worms.”

We’ll see were things end up.  Yesterday, the heads of three trade associations sent a letter to the Justice Minister Download Letter, encouraging him to reopen the ILPTO for full business, as well as presenting views on the draft legislation that align with the view of the four speakers on Sunday.  I’m in full agreement about getting the ILPTO back up to full examination speed, if possible.  And while I disagree about extending deadlines for PCT national phase entry and renewal fees, ultimately, I don’t feel terribly strongly one way or another about how the matter is resolved.  What will stick with me was the concerted effort to mask ulterior motives, ostensibly in the name of the common good.  It’s a fair bet the people involved won’t tell their clients that they lobbied to maintain PCT national phase deadlines in place.

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

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

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

The Demise of SAWS: PTO Admits No Wrong, And You Still Can’t Connect The Dots

A few months ago, a story broke about a secret program at the USPTO, the “Sensitive Application Warning System”.  The upshot was that the USPTO had a program under which patent applications could, unbeknownst to the applicant, be flagged for heightened scrutiny, leading to delays in prosecution.  The reasons for such flagging of the application were diverse, including reasons like issuance of the patent might cause embarrassment to the PTO.  Remember the patent on “Method of Exercising a Cat”?

After being both criticized (think IRS and Lois Lerner) and ridiculed, as well as being subjected to a Freedom of Information Act request from Dennis Crouch at Patentlyo, yesterday the USPTO relented.  See the announcement here.

I think we’re all glad to see SAWS going by the wayside. But would it have been so hard for the PTO to show just a modicum of contrition in announcing SAWS' demise?  The announcement makes it sound like the program is being discontinued because it's now obsolete, with no acknowledgement that maybe, just maybe, the PTO was out of line in having a secret program, even back in the days before early publication of patent applications.

There's another aspect of the announcement that I found slightly off-putting, but maybe I'm overly sensitive about this topic.  From the announcement:

"And today, unlike when the SAWS program was created, most applications are published eighteen months after submission, exposing them to public scrutiny and the potential for third-party submissions of prior art."

That statement is technically correct but, to the extent that it implies that third parties can now be watchdogs over the prosecution process, a bit misleading:

When the American Inventors Protection Act was adopted in 1999, facilitating 18-month publication, it included a caveat (codified as 35 USC 122(c)) that the Director "shall establish appropriate procedures to ensure that no protest or other form of pre-issuance opposition to the grant of a patent on an application may be initiated after publication of the application without the express written consent of the applicant."  It also fixed a narrow time window (in 35 USC §122(e)) for third parties to submit printed prior art.  The idea was to keep the PTO from being inundated with third-party prior art submissions. Because, you know, over at the EPO, they were just swamped with those third-party submissions, to the point that the EPO couldn't function.  (Wait, they weren't? How 'bout that!)

When the obscenely misnamed “America Invents Act” was enacted in 2011, it created a mechanism for third party submission of prior art - see 35 USC §301 - but kept the language of 35 USC §122 quoted above. There's an obvious tension between these two statutory provisions, the one trying to limit the window in which prior art publications can be submitted and forbidding pre-issuance protests or oppositions, the other intending to facilitate prior art submissions, including statements regarding the relevance of the prior art to the claims.

This tension forced the USPTO into Wise Men of Chelm mode, leading to what I call the USPTO's "You-can-lead-a-horse-to water-but-you-can't-make-him-drink" approach to third-party prior art submissions: you can now provide the PTO with a prior art publication under section §301, outside the time frame listed in §122(e), and you can explain why it's relevant to a particular claim or claims. But if you include the phrase "and therefore what is claimed in claim X lacks novelty/is obvious" or a variation thereof, the PTO will bounce your section §301 submission because it contravenes §122(c). 

The inability to connect all the dots for the USPTO in these §301 requests is a weakness in the system. True, there are now several types of post-grant proceedings available, and they do allow third parties to make substantive arguments about the non-patentability of particular claims in view of particular prior art publications, but those proceedings are expensive.  If the claims aren’t allowable to begin with, it would be most efficient for the USPTO to never issue those claims in the first place. Third party prior submissions, including explanation and arguments, can assist in that process.  (If you’re concerned about abuse of the system, there are solutions, for example limiting the number of bites at the apple, or restricting the temporal window in which such submissions may be made.)

So yes, the dead-SAWS announcement is correct that nowadays third parties can submit printed prior art, or even statements of the applicant made in a Federal Court or before the PTO.  That’s an advance over the situation that prevailed when SAWS was supposedly initiated in 1994. But it’s not the case that those third parties can provide the PTO with what they believe to be the conclusions to be drawn from that prior art with respect to the claims at issue. Repeal of 35 USC §122(c) would seem to be necessary to enable that step.  And given the rate at which USPTO examiners ignore the publications found in PCT searches, it’s clear that it will take a change in the examination culture at the USPTO for examiners en masse to utilize prior art publications found by others.

Fee-shifting, post-grant proceedings and attorneys' fees

So many things going on in the patent world here and in the USA to write about, but so much work, so little time to blog. 

There’s been a lot of talk lately about imposing fee-shifting in US patent cases, with Judge Rader encouraging district court judges to be more liberal about award attorneys’ fees, Supreme Court oral arguments this week about fee-shifting, possible changes to the pleading requirements in patent cases per the Federal Rules of Civil Procedure, and Congress contemplating several bills that would impose some sort of a “loser pays” system in patent cases.  Chances are if you’re reading this blog you’re already familiar with these issues, and if you’re not then have a look at Patentdocs, PatentlyO or one of the other popular patent blogs where these issues have been discussed frequently in recent months.

This post is about a different aspect of the “loser pays” notion, one that I got to thinking about after David Hricik pointed it out a few weeks ago: in post-grant proceedings before the USPTO (formerly called re-examination, now going under a variety of names thanks to the AIA), there’s no provision for fee shifting, and if you think the post-grant proceeding was brought frivolously, you can’t even sue in court for abuse of process or malicious prosecution.  So some people are now saying that a secondary troll market has sprung up, in which patent holders who were victorious in court find themselves being threatened by people or shell corporations, who say they’ll institute post-grant proceedings at the PTO to challenge those same patents unless the patent owners pay tribute.  What goes unsaid is that without the threat of misconduct sanctions in the PTO proceedings, it’s a lot easier to cheat.

Israel has two ways to challenge patents before the PTO: in post-examination, pre-grant oppositions; and in post-grant cancellation proceedings.  The two types of proceedings are basically the same, except that procedurally the post-grant challenger has to come in with all guns blazing – i.e. he opens the proceedings by filing both his pleadings and written evidence at the same time – whereas the pre-grant opponent merely needs to make some generic pleadings and can file his written evidence much later.  In either case though, the ILPTO treats the proceedings as being akin to court proceedings, and imposes costs on the loser (what in the USA are called attorneys’ fees, plus in some cases expert witness fees). 

Traditionally, the ILPTO pretty much treated those costs as lip service, awarding attorneys’ fees far below the actual amounts spent.  Coupled with the low cost of filing an opposition, in certain industries this meant that certain local companies almost routinely opposed patent applications of certain foreign companies.  It just made good business sense: the mere filing of the opposition would delay grant of the patent by a few years, during which time there was no patent for the applicant to enforce, and when all was said and done the opposer would be subject to maybe a few thousand shekels’ penalty, at worst.  At best, the applicant would fold or the ILPTO would determine that a patent shouldn’t be granted, in which case the applicant would have to pay something to the opposer.

In the last 8-10 years, there has been a rise in the amounts the ILPTO has been willing to award. Although I haven’t done an empirical study (any law students out there looking for a good project to research?), it appears to me that the large awards have invariably been given to challengers who prevailed in oppositions to patent applications.  This just gives more impetus to parties here to oppose.  And while there’s not a “shake-down” industry here as far as I know, there’s not really a disincentive to oppose either.

This brings us to a recent decision involving one of Israel’s serial opposers, Unipharm.  Unipharm routinely opposes patent applications of large, foreign pharmaceutical companies.  It’s a strategy that has worked well for Unipharm, and if anyone were to call Unipharm an “opposition troll”, it’s response would probably be, “Our oppositions are meritorious, as evidenced the fact that we win many of them.”  One of the unusual aspects of Unipharm’s oppositions is that it handles many of them largely pro se, at least during the initial phases of the opposition.  In the case at hand, Unipharm opposed Lundbeck’s patent application no. 173788; shortly after Unipharm filed its pleadings, Lundbeck withdrew the patent application.  For purposes of awarding fees, the ILPTO treats such a withdrawal as a loss and says that the applicant has to pay.  (I may post on the propriety of that arrangement another time).  Unipharm then asked for an award of costs: 40,000 shekels for the time of the company’s general manager (for 80 hours of work invested in the opposition), 1500 shekels for secretarial time, and 2000 shekels for the opposition filing fee.  

The Commissioner ruled that Unipharm was only entitled to 3500 shekels, 2000 for the fee and 1500 for secretarial time.  He reached this conclusion on the basis of two primary factors: first, since the GM was a salaried employee, his work on the opposition was part of his regular pay and therefore the company wasn’t entitled to compensation for what he did in connection with the opposition; and second, because Unipharm hadn’t brought any sort of detailed breakdown of the time or expenses involved.

It’s unclear whether this decision represents a temporary departure from the general trend of awarding higher costs to opposers who prevail in ILPTO oppositions, or signals an actual change in the trend in the opposite direction.

Sleep On That: Even When Trying to Help Hapless Pro Se Mattress Inventors, ILPTO Awards Excessive Fees to Well-Funded Opponent

Mr. and Mrs. Gabbai live in Ashdod. They developed a three-layer mattress, which they asserted helps prevent sudden infant death syndrome (SIDS). In 2007 they filed a US patent application on their mattress, which eventually issued as US 8065767. The corresponding Israel case, application no. 179840, didn’t fare as well: although allowed by the Examiner, the application was rejected by the Deputy Commissioner in pre-grant opposition proceedings instituted by Aminach, a well-established local mattress manufacturer. There are several aspects of the decision worth noting: first, the basis on which the application was (and was not) ultimately rejected; and second, the award of attorneys’ fees given to Aminach.

Aminach asserted that the patent shouldn’t be granted because (a) the Gabbais breached their duty of disclosure (by failing to provide the ILPTO with the publications cited by the USPTO examiner), (b) the claims were unclear, (c) the invention was neither novel nor inventive, and (d) the invention lacked utility.

Despite acting pro se (and, unsurprisingly, making numerous mistakes along the way as a result, e.g. attending the hearing at the ILPTO without being prepared to cross-examine one of Aminach’s witnesses), and despite the fact that Aminach was represented by one of the largest IP firms in Israel, the Gabbais managed to successfully parry most of these assertions. With respect to the non-disclosure of the references from the USPTO, the Deputy Commissioner noted that deliberate concealment is one of the requirements for sanctioning an applicant for non-disclosure, and she ruled that since Aminach hadn’t provided any evidence to show that the non-disclosure was deliberate, she had to find for the Gabbais on this point. Likewise, she found that the invention was novel and inventive over the prior art cited by Aminach.

What the Deputy Commissioner found lacking was utility. The Gabbais had asserted in their application that the mattress reduced the incidence of SIDS. Aminach’s expert witness, a physician, pointed out that there was no evidence in the application or even provided by the Gabbais later that showed that the mattress in fact achieved this result. Since the Gabbais were deemed not to have submitted their own evidence (because their evidence was filed as a letter rather than an affidavit), and their cross-examination of Aminach’s expert wasn’t terribly successful, the Deputy Commissioner ruled that that invention lacked utility and was therefore unpatentable.

The difficulty with that determination is, of course, that no one disputes that the mattress actually worked as a mattress. That alone is sufficient to qualify for utility under section 3 of the statute: “An invention, whether a product or process, in any technological field, which is new, useful, susceptible of industrial use and inventive, is a patentable invention.” Whether or not the mattress worked to reduce SIDS is (or should have been) immaterial. By stressing in their patent application that the mattress reduced in the incidence of SIDS, the Gabbais opened themselves to obfuscation of this point by Aminach’s attorneys. Had the application merely described what the invention is – viz., a mattress having a particular construction – without singing its praises, it is doubtful that the Deputy Commissioner would have been duped into agreeing that the invention lacked utility.

(Having determined that the invention lacked utility, the Deputy Commissioner didn’t rule on the clarity of the claims.)

No less remarkable was the awarding of 40,000 shekels (over US $10,000) in attorneys’ fees to Aminach. Aminach actually asked for over 140,000 shekels in fees, but refused to provide its attorneys’ billing sheets on the grounds that these were privileged. The Deputy Commissioner ruled that the billing sheets were not privileged documents, and that their non-production left the Gabbais without an opportunity to challenge the billings; nevertheless, she awarded 40,000 shekels on the basis of “the evidence and pleadings filed by the opponent, the fact that the applicants didn’t file their own evidence, and the great savings incurred by the fact that the summations were presented orally rather than in writing [as is the norm in Israeli legal proceedings – DJF]”.

Perhaps the Deputy Commissioner felt that she was doing the applicants a favor by awarding significantly lower fees than the prevailing party requested, but it’s still a slap in the face: you file a patent application on an invention which is novel and inventive, you nevertheless lose in an opposition, and then you have to pay the other side? It should also be borne in mind that just a few years ago, an award of 40,000 shekels was unthinkable – an award of just 5,000 shekels would have been considered sizeable. The request for 140,000, and the granting of 40,000, are clearly the result of the ILPTO’s trend to grant attorneys’ fees award far in excess of what real courts of law themselves actually award.

If anything, the fee award in this case will discourage inventors with little money from seeking to commercialize their inventions or otherwise disclose them in patent applications – why bother to do so if a better-funded competitor hire some good lawyers to sell the ILPTO a load of baloney not only to prevent you from getting a patent you deserve, but to also convince the ILPTO to tell you have to pay for your competitor’s lawyers?

(For those of you who read Hebrew, the transcript of the hearing before the Deputy Commissioner, as well as the letter the Gabbais sent to her the day after the hearing, both of which can be viewed on the ILPTO’s web site, make good reading if you’re looking to illustrate why acting pro se is usually a bad idea.)

Hey Yankees, We Sabras Want to Play Too! – Proposed New Israel PTO Rules (Or, Will A Measure of Sanity be Injected Into Israel Pre-Grant Patent Oppositions by Rule Changes?)

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.

Snatching Defeat From the Jaws of Victory

As reported in the previous post, the Knesset’s Constitution, Statute and Law Committee met on January 22 to discuss the bill to enable 18-month publication of Israel patent applications.  Reports from someone in attendance (sadly, yours truly couldn’t be there, although that didn’t stop the official minutes from stating that I was in attendance) were that progress continued to be slow, with discussion focusing on what information and documents would become publicly available at 18 months and how that information would be accessible – would the entire file history become available online, as in the USA and Europe, or would only certain pieces of information be available online, with persons interested in the contents of the files needing to either come to the ILPTO to inspect the files or ordering copies of their contents? 

However, the most entertaining (or, depending on your point of view, sad) part was apparently one trade group’s approach backfiring with respect to the question of third party submissions.  In particular, while the wording of the draft legislation isn’t absolutely clear about what kinds of communications third parties would be allowed to have with examiners concerning pending applications, the Justice Ministry’s view is that the amendment would permit third parties to bring to the attention of examiners information that the applicant already had an obligation to disclose, without additional comments from the third party itself.  

According to both the minutes and eyewitness account, the issue was brought up by one of the trade groups opposed to broad third-party involvement, despite the fact that the proceedings had not yet reached the point of discussing this issue.  Not only did this this approach fail to convince the committee chairman of the correctness of the narrow-involvement position, but it actually piqued the chairman’s interest in allowing broader third-party submissions, while effectively precluding the Justice Ministry from arguing the case for narrow involvement.  The issue has not yet been settled, but it seems that in this case, the group’s hired guns scored what the British would call an own goal (or, in Yankee-speak, shot themselves in the foot).

According to the committee’s web page, the committee is scheduled to resume its deliberations on this bill on February 13 and 26.

Salvador Dali Visits the Knesset

A few minutes from now, the Knesset’s Constitution, Statute and Law Committee will continue its consideration of the bill to enable 18-month publication of patent applications. The Committee’s first hearing on this bill took place on December 7, and consisted primarily of grandiose, grandstanding statements by socialist-leaning members of Knesset (who generally made statements about “social justice” which weren’t germane to the issue of 18-month publication) and lawyers for innovator and generic pharmaceutical companies (who also included irrelevant statements), although there were also a few statements from ostensibly neutral people, viz. representatives of the Israel Bar Association (an organization to which all lawyers in Israel must belong) and a volunteer group called the Association of Patent Attorneys in Israel. A colleague who works in-house for the local branch of a global innovator drug company characterized the proceedings as “surreal”.

Very little headway on the substantive provisions was made at the first meeting; presumably such headway will be made today, accompanied by fireworks as the local generic drug industry (which has been lobbying heavily to amend this bill so as to strip the statute of teeth) attempts to impose its will. If the past is any indication, no other industries or even individuals are interested in the goings-on regarding this bill, which is a shame, since, as a law school professor of mine put it, politics is played by those who show up.

A fuller accounting of the bill and the proceedings will follow in future post. However, there is one subtle aspect in which the December 7 proceedings were more surreal than my colleague may have appreciated. That has to with the way in which Supreme Court decisions are used in political discourse in Israel. Specifically, it’s not unusual for politicians to point to statements by the Israel Supreme Court as providing moral grounding for their proposals. (Perhaps in a future post I’ll go into what I see as the sociology of this phenomenon, but in a nutshell it related in part to the fact that the same court sits as the land’s highest appellate court as well as a court of first instance in certain administrative or constitutional law proceedings.) This was certainly the case at the December 7 hearings, in which several of the speakers pointed to statements by the ILSC regarding the need to balance incentives to innovate with the public’s need for cheap drugs.

What I found ironic was that one of the recent Supreme Court cases that contains language to similar effect (Unipharm v Smithkline Beecham, Civil Appeal No. 8802/06) itself support its position by quoting an earlier Supreme Court decision (Civil Appeal By Leave 5768/94, the so-called “AShIR decision”) that the present bill seeks to overturn. AShIR is a 1998 decision in which, under a theory of unjust enrichment based in Israel’s Unjust Enrichment statute, the Court recognized intellectual property rights in certain manufactured goods for which statutory IP rights (patent or design) were not available, either because the manufacturers did not seek such rights, such rights had been obtained but expired, or the items were already known and therefore not susceptible of patent or design protection. The bill currently under consideration would preclude suits such as AShIR from being brought again in the future.

If you’re going to quote someone in support of your position, you probably shouldn’t simultaneously be trying to undermine that person with the very legislation for which you seek support. But memories in the Knesset don’t seem to be very persistent.