Source: https://www.iliplaw.com/americaisrael_patent_law/oppositions/
Timestamp: 2019-04-19 09:13:11+00:00

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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.
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.
Israel isn’t long on natural resources, but it does have considerable brainpower. Given the sympathetic reception the modern state of Israel received from its neighbors upon it birth, and continues to be lavished with by those neighbors even today, it should come as no surprise that much of that brainpower has been directed to the defense industry, to try to ensure that Israel maintains a qualitative edge over states for whom Israel’s well-being is anathema.
One of the leaders in the defense industry in Israel is Rafael; the name originally was an acronym for R’shut Pituach Emtza’ei Lehima, which can be translated as the Authority for the Development of Armaments. Rafael is active in many areas, it’s good at what it does, and it’s interested in selling its products and technologies to others. That activity sometimes brings it into competition with much larger industry players. Like Raytheon.
I spent several years dealing with a portfolio of about two dozen oppositions that Rafael had filed against Raytheon patent applications in Israel; eventually we whittled the number of open oppositions down to 3 or 4. As a patent practitioner, my general feeling was many of those oppositions were filed because at the time Rafael didn’t have in-house patent counsel, but instead had patent committee composed of scientists, engineers and business people, and despite the professional competence of those scientists and engineers in their own fields, they tended to read concern into patent claims where none was warranted. That, and the fact that it cost relatively little to file an opposition, and that even if you lost the opposition, the amount you’d have to pay to the patentee was a pittance compared to the patentee’s actual costs.
It was also apparent that as a U.S.-based company, Raytheon would always have the upper hand: even if Rafael were to prevail in a patent opposition in Israel, the U.S. armed forces were always going to be more likely to award a contract to Raytheon than to Rafael. And the U.S. government could stipulate that aid money it provided to Israel be spent on U.S.- rather than Israel-made defense devices.
So it was interesting to read news story earlier this week that Rafael and Raytheon had agreed to cooperate in the marketing of the Iron Dome rocket defense system in the U.S.A. I saw the story in the Jerusalem Post, but Raytheon had a press release. (Curiously, Rafael did not.) Iron Dome was developed by Rafael to deal with the short-range missiles that Hamas likes to send as presents to Israeli civilians. Its effectiveness was proven earlier this year, although at $100K a pop, I wonder if turning Gaza into a parking lot wouldn’t be whole lot cheaper.
It’s good to know that Rafael will be able to sell this system, which was developed completely in Israel using Israeli funds, to the U.S. Army. And from statistics in the Israel PTO’s recently published first-ever Annual Report (in Hebrew), it appears that patent opposition filings by Rafael against Raytheon patent applications are way down. Isn’t cooperation fun?
I’ve complained in this blog about the previous Commissioner’s predilection for exceeding his authority. From a just-published decision of Deputy Commissioner Noah Shlomovitz (released today but dated March 30), we see that the ex-Commissioner isn’t the only person infected with this particular bug.
The decision concerns an opposition to Lilly Icos’ patent application no. 147642, which is a national phase application in Israel of WO 2001/008688. The corresponding U.S. and European patents are US 6,821,975 and EP 1200092; the U.S. patent is one of seven presently listed in the FDA’s Orange Book for Eli Lilly’s drug Cialis for the treatment of erectile dysfunction. The claims as originally allowed by the ILPTO correspond to those of the European patent.
After allowance in 2006, a pre-grant opposition was filed by Teva. Since the ILPTO does not make opposition files available electronically, I assume for the present discussion that the claims remained unchanged during the opposition.
According to the DC’s decision, after both sides submitted their written evidence-in-chief and hearings were held before the DC at which the sides cross-examined each other’s witnesses and experts, the opposition was withdrawn by agreement of the parties.
That should have been the end of the story…but if it was I wouldn’t be writing this blog post, would I?
The rub here is that §34 of the patent statute says that “If an opposition was filed per §30 and cancelled afterward, the Commissioner is allowed to not grant the patent, if as a result of the opposition material was shown to him according to which the patent application should not have been allowed a priori.” In this case, the DC invoked his power under §34 and determined that the application should not have been allowed a priori. And that’s where the problems with the decision begin.
First, Rule 74 says that if the Commissioner exercises his power under §34 of the statute, viz. after cancellation of the opposition he refuses to grant the patent because of material that came to light during the opposition proceedings, he must provide the patent applicant with a detailed explanation of his reasoning. Rule 74 then goes on to say that within 30 days of service of the Commissioner’s reasoned explanation for refusal under §34, the applicant may respond in writing to explain why the Commissioner should not exercise that power, and that if the applicant so responds, the Commissioner must grant the applicant the opportunity to present oral arguments.
The difficulty is that in this instance, rather than provide detailed reasons as required, the Deputy Commissioner stated that he would provide a more reasoned explanation for his decision at a later date. Now, if the DC had said that the 30-day clock would only begin to run upon service of that yet-to-be-delivered detailed explanation, he might be on ok grounds – although since in Israel there’s no mechanism to compensate patentees for time lost off the life of their patents due to oppositions, the DC probably should have either let the patent issue, or provided a detailed explanation of his reasoning. Or at least waited until the detailed reasons were written before informing the applicant that he was going to refuse the application under §34.
Perhaps the DC thought that in doing this, he was being fair to the applicant. He’s correct that putting the matter before another hearing officer would slow things down tremendously, and result in the loss of the impressions of the witnesses that the DC formed during the hearings. But even if he is well-intended, that doesn’t give him the authority to derogate from the procedures and timelines set forth in the rules. Who is he to prejudice the applicant in that way, by foreshortening its time to respond?
If Mr. Shlomovitz felt so strongly that a patent shouldn’t be granted, he should have delayed his departure from his position for long enough to see the job through properly. Alternatively, if he was so intent on leaving office by the end of April, a more fair result would have been for him to have let the patent issue, without saying to anyone why he thought it shouldn’t. I say that because it’s not some amorphous public that would be adversely affected by the grant of an invalid patent, but rather the local competition, viz. the local generic drug companies. But those companies are adept at protecting their own interests and attacking patents they find problematic; Mr. Shlomovitz need not look out for them. Of those companies, only Teva thought it worthwhile to file a pre-grant opposition, and since Teva dismissed its opposition, Mr. Shlomovitz should have let the patent issue – if none the other generic drug companies care about this patent, why should the DC?
The second gaffe on the part of the DC is that he said that per §159 of the statute, he would allow the opponent, Teva, to be involved in the proceedings pursuant to rule 74. §159 says that “The Commissioner shall exercise any power granted him by this statute after an opportunity has been given to any person who, in the Commissioner’s view, might be injured by his decision, to present his arguments before the Commissioner.” But Teva dismissed the opposition. That not only indicates that in Teva’s own view, it will not be injured by the grant of the patent. It means that Teva is now estopped from attacking the validity of the patent, whether in proceedings before the ILPTO or before the courts. The statute does not give the DC the authority to resurrect the legally dead.
Also, reading between the lines, one suspects that at this point in time Teva is as interested as Lilly in the patent being granted: given the late stage at which Teva withdrew the opposition - after the sides had brought witnesses to the Patent Office and conducted cross-examination - and that the withdrawal was by assent of both parties, it's a fair assumption that Teva and Lilly reached an agreement under which Teva received some sort of inducement not to pursue the opposition to the end - a convenant not to sue, or a reverse payment to keep a Teva version of the drug off the market, or something of that nature. So the guess here is that right now Teva would be perfectly happy for Lilly to have a patent to keep Teva's competitors at bay, and would be disappointed were the patent to be denied.
Mr. Shlomovitz would have done well to recall the recent incident in which a former minister was convicted of a crime but received no jail time. Unlike in the USA, in Israel the prosecution may appeal both a finding of not guilty as well as the sentence passed on the convicted. However, at the time the deadline for appeal came up, the prosecutors were on strike, and an appeal against the lenient sentence was not timely filed. When shortly afterward the prosecutors returned to work and asked for an extension to appeal, the courts said, too bad. The guilty ex-minister – whose last name, incidentally, can be scrambled to spell “Hayignov”, which in Hebrew means, appropriately enough, “he who shall steal” – is out free. If the country can suffer a crooked politician out walking free, surely it can suffer a patent that no one except the DC himself has objection to.
Although Mr. Shlomovitz didn’t provide detailed reasons for his refusal, as required under Rule 74, he did say that his reasoning in brief was that the essence of the invention pertained to tadalafil, specifically the problem of its solubility; that the invention solved the problem by breaking the solid bulk tadalafil into very small particles, whereby increase the rate of dissolution to enable “rapid onset” of the effects of the drug; but that according to the material before him, it was obvious to any average professional (he didn’t say in what field) that decreasing particle size would increase the dissolution rate, and that even the prior art that Lilly Icos asserted taught away from the invention actually showed that decreasing particle size was always the first thing one would try in order to increase the rate of solubility.
Not having seen either the parties’ submissions, including the prior art relied upon, or the transcripts of the cross-examinations, and not having seen Mr. Shlomovitz’s still non-existent full reasoning, I won’t comment at this stage on the substance of his decision, save for one point: the brief explanation provided in the March 30 decision doesn’t relate to each claim separately, but only relates to the claims as a whole. But even if one accepts that decreasing particle size is the most obvious way to increase the dissolution rate, that might affect claims 1 and 5 (reproduced below), but how does that necessarily lead one to the specific Cmax and AUC recited in claim 8?
and pharmaceutically acceptable salts and solvates thereof in which the compound is present as solid particles not intimately embedded in a polymeric co-precipitate, wherein at least 90% of the particles have a particle size of less than about 40 microns; and (b) one or more pharmaceutically acceptable carriers, diluents or excipients.
and pharmaceutically acceptable salts and solvates thereof, in which the compound is present as solid particles not intimately embedded in a polymeric co-precipitate; and (b) one or more pharmaceutically acceptable carriers, diluents or excipients, wherein the composition exhibits a Cmax of 180 to 280 micrograms/liter or an AUC of 2280 to 3560 microgram hour/liter, measured using a 10 miligram [sic] dose of the compound.

References: application no. 147642
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