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February 22, 2008

Comments

Kevin, being based in Israel, I'd like to correct a mis-statement in Mr. Frieder's comment about publication of applications in Israel. Officially, applications in Israel are not published (actually, open for public inspection) until *examination* is complete - but there are two caveats to this. First, the details of the fact that application was filed are published before examination. This includes priority data and PCT data. Thus, if an Israel application claims priority from, say, a US application that was published, or is a national phase application of a PCT, even before examination competitors can effectively see what's in the Israel application - just check on Inpadoc or Derwent using the priority data.

Second, after examination and publication, Israel applications are then subject to *pre-grant* opposition. Such oppositions are regularly used by several local "serial opposers" to delay the grant of patents. The applicant cannot enforce his patent until it's actually granted. The risk to the opposer is that if he infringes during the opposition, after grant the patentee can obtain damages retroactive to the date of publication, provided that the infringed claims were present in the application as published (and not amended during the opposition process), but that's usually not a deterrent: thanks to the ILPTO's less-than-rocket-docket, I've dealt with literally dozens of cases where the oppositions dragged on so long they reached the point where the applicant just gave up b/c the technology had become outmoded.

To add insult to injury, in some cases the applicant has to pay the opposer, b/c Israel is a "loser pays" country. In the cases I've dealt with, the amounts awarded were usually paltry, but it still seems manifestly unfair that because someone applied for a patent and then, years after he filed the application - examination in Israel is rarely complete less than 5 years after filing, in some technologies 10 years, and there's no compensation for delay in grant - decided that he didn't want to pay to fight an opposition, he now has to pay the opponent. Moreover, the trend is toward higher awards of costs: yesterday the ILPTO published a decision in which the opponent was awarded costs of about $35,000 against Pfizer because - gasp - Pfizer unilaterally abandoned an application that it had already abandoned everywhere else in the world *after* the opponent filed its Notice of Opposition and pleadings, instead of doing so earlier. (I'm guessing that Pfizer got bad advice from its patent agents: apparently the opponent had approached Pfizer offering to settle, but Pfizer didn't budge. If I'd been advising Pfizer, I'd have told them to settle for dropping the case without an award of costs.)

In any event, as I alluded to above, most applicants who file in Israel file in the PCT, Europe, or other early publication countries as well, so parties who want to expropriate the applicants' IP have plenty of other sources for it.

Furthermore, there have been several rulings by the Israel Patents Commissioner in the last few years in which he published decisions relating to as-yet-unpublished patent applications - in clear violation of the statute that prohibits such publication. But no one took the Commissioner to task for this. So while it is the case that if an application is finally rejected - a rare occurrence, since the ILPTO is quite liberal about the give-and-take with the Examiners - the PTO will destroy the file, that's no guarantee that details of the application won't be published, since it's likely that before the PTO kills the app, there will be a hearing before the Commissioner and he'll publish his decision in the matter.

So it's more accurate to state the Israel has a delayed publication system, which provides nominal advantanges to applicants who file only in Israel. In any event, the Justice Ministry, which drafts much of the proposed legislation, has just called for comments on proposed legislation to make Israel an 18-month publication country, so it looks like Israel is on its way to early publication.

BTW, my understanding is that the delayed publication owes to the arab boycott that was in place when the statute was enacted in 1967; the pre-grant opposition provisions were adopted from the 1944 British Statute (and the British jettisoned those provisions in 1977, but Israel still has them).

For the record, although I think Israel should get rid of its opposition process, I'm not against all opposition proceedings - the AIPLA put together a pretty good proposal for a *post-grant* opposition proceeding that addressed all the shortcomings of Israeli oppositions, and I think that a properly designed and implemented opposition system could do the U.S. some good.

Getting back to the the Frieder piece, there are several interesting ironies therein. In opposing the US "patent reform", Frieder writes from the perspective of someone interested in the Israeli high-tech industry. Israel does indeed have a strong high-tech industry, and it does rely heavily on patents. Yet the big players in the *US* high-tech industry are by and large the ones *advocating* for US "patent reform", i.e. watering down of the the US patent laws. I suspect that in large part this is because the goal of most Israeli high-tech entrepeneurs is to stake out a position and then sell out to one of the the big fish. Without patents, they can't stake out the position. So in this sense, the Israeli high-tech sector is akin to the smaller fish in the US, who also tend to be aligned against "patent reform".

Another irony is that in the US, big pharma is against the proposed "patent reform". In Israel, in contrast, it is the established and extremely strong generic drug manufacturers who are generally perceived as anti-patent. This perception is not wholly unfounded: in Israel, it was the generic drug lobby that effected various amendments to weaken patent protection in the last 13 years or so. Thus, for many years, until 1995, Israel generic companies simply relied on liberal granting of compulsory licenses by the ILPTO; when some court decisions in the mid-1990s caused that route to disappear, they successully lobbied to have the law changed to allow them to do everything necessary to go to market the day after patent expiration except for manufacture and stockpile the API...which, after they've done the R&D here, they can do in other countries with even weaker patent protection but with GMP plants. As a quid quo pro for this change, they assented to the granting of limited patent term extensions (PTEs) for pharmaceuticals, but when they saw the new statutory provisions weren't being implemented the way they expected them to, they successfully pushed through further amendments to ensure that such extensions would be as limited in duration as possible, and to ensure that the Commissioner would not be able to grant extensions to file for PTEs. (Contrast this with the provision in the proposed US legislation that would explicitly empower the Commissioner to grant such extensions in such cases.) They also successfully lobbied against data exclusivity provisions, instead succeeding in obtaining much weaker "market exclusivity" legislation, which also bars any other legal avenues for recovery for use of innovators' data. So it's somewhat ironic that, while trying to assert that he's speaking from an Israeli perspective, Frieder belies the position of a significant part of the Israeli private sector. Interestingly, I recently heard Eli Hurwitz, chairman of Teva, state that he thought the tendency among the high-tech companies to sell out was bad, and that they should look to grow and stay independent over the long term.

In the interest of fairness, I should mention that although the *perception* may be that generic companies are anti-patent, that's not exactly true: even Eli Hurwitz admits that the patent system works when it comes to new drugs, and I think he would acknowledge that without patents, the number of new drugs would diminish, and consequently, down the road, so would the generics' profits. As someone who works for both innovators and generic companies, I think it would be more accurate to state that generics have a problem with second- and third-generation pharma patents, that are designed to extend the life cycle of product. Generic companies tend to honor patents on new molecules per se. Rarely have I seen a generic company, Israeli or other, challenge a patent on a new molecule, let alone successfully challenge such a patent, in Israel or the USA.

Dan Feigelson

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