Adjudicator at Israel Patent Office Rules on Late Filing of Evidence

April 2, 2009

In an Opposition proceedings to the trademark “Foxmind” – Israel Trademark Number 167224, The new adjudicator of Intellectual Property, Yahara, Shoshani Caspi has ruled that though the Commissioner of Patents and Trademarks has the discretion to allow new evidence and arguments to be submitted during an Opposition proceedings, after the mark holder has responded, the Opposer should not generally file new evidence, and that according to Regulations 38 and 40, all the evidence should be filed within two months of filing Notice of Opposition.

Ms. Caspi went on to establish assert that the Opposer had simply changed opposition tactics and ruled that to allow the admission of new evidence would result in a distortion of the law and delay reaching a decision, and concluded that in this case, the new evidence was thus inadmissable.

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Posted by Dr Michael Factor

JMB, Factor & Co. Calls on Government to Appoint a Minister for IP

April 2, 2009

Due to the intrinsic value and peculiar nature of Intellectual Property, which is very different from land or moveables, and underpins perhaps 70% of Israel’s exports, we believe it is necessary to create one government address for IP matters, whether a minister or an inter-ministerial committee.

 

Whilst understanding and sympathising with incoming Prime Minister Netanyahu’s rationale for having a government of 30 ministers, several of which don’t have specific responsibilities, we feel that this is an issue that could be the responsibility of a specific Minister, to the advantage of the country as a whole. 

 

Currently, IP issues are dealt with in an ad hoc manner by the Justice Ministry, the Ministry of Industry, the Finance Ministry, the Health Ministry, the Ministry of Science and the Prime Minister’s Office. Such a state of affairs does not lend itself to long term planning. Every few months, there is an Intellectual Property threat to Israeli interests and the official response tends to be slow and blurred.

  • There generally is no official response
  • There is no official government policy regarding IP
  • There is no one to frame a government policy
  • There is no one empowered to express  a government policy
  • There seems to be no one in the government who understands the need for a government policy or even what a government policy on IP entails

For example, once a year the US Special 301 Report issues. The report is based on investigations made in various countries on behalf of the US Trade Interests. The investigation in Israel includes an annual visit of a delegation from the US Department of Trade.  This document, details IP protection around the world and classes the countries according the standard of IP protection from the perspective of  the US. Trade sanctions may be exercised against consistent violators. Israelis regularly criticized, but many observers consider the problem is Teva’s legitimate business threats to US pharmaceutical industries, and Israeli software developers rather than substandard Israeli behavior. The threat of Israeli manufactured pharmaceuticals to USindustries lowers prices and  tax generated from pharmaceuticals in the States and can adversely affect US employment in the sector. Illegal CDs manufactured in  Palestinian administered territories and distributed in and through Israel adversely affects US software developers.

 

The criticizers from abroad speak in the name of justice, fair rights of IP owners, ethics and intellectual standards and try to make out that Israeli behavior is lacking in all these. At the same time they explain to their public that they are looking after US interests. Without an Israel spokesman who understands the issues, the Israel government tends to accept the USview without question, or is too slow to respond effectively. Within the framework of international treaties, the first object of IP policy is the protection of the local economy, trade, exports, industry and employment. If the current international financial situation leads away from globalization towards national protectionism, and sounds from the US indicate that this is the case, this issue will increase in importance.

 

Salted cheese is marketed in Israelas Fetina – since only genuine Greek Feta may be referred to as Feta – with Feta being considered a national dish. Last year, Lebanondecided to claim humus, falafel and tabouli as authentic Lebanese foods, analogous to Feta cheese, such that only bona-fide Lebanese manufacturers could use the terms to describe their salads. The issue will be addressed by the EU, The story seems trivial, but Israel dominates both the US and the European markets for humus, and this translates into jobs for both Arabs and Jews in the low tech sector, in the periphery. If Israel will lose the right to market chickpea salads as humus, there could be serious economic consequences.

 

Jaffa is Israel’s best known brand. Palestinians claim rights to the term, which precedes the establishment of the State in 1948.

 

Israel is unique among Western countries, in that patent applications do not publish automatically months after the priority filing date. There was a first reading of an amendment to the Patent Law two years ago, and applications are routinely scanned, so making them available on the Internet is technically feasible. The problem is that the issue is not prioritized. Israel’s Copyright Law was passed only last year. The trademark ordinance was last amended in 1972. The Ministry of Justice does not prioritize intellectual property legislation. Israel signed the Madrid trademark Protocol in 2007 and still has not implemented. This disadvantages Israeli firms abroad, making international trademark protection cost prohibitive.

 

Other countries have realized the preeminence of Intellectual Property,. And have created special government positions to promote IP Protection.

 

For example, in May 2006, Sir Digby Jones, the outgoing director-general of the Confederation of British Industry (CBI) – the premier lobbying organisation for UK business – called on the UK Government to appoint a Minister for Intellectual Property:

 

“[...] ‘Intellectual property has become too important to be just one of a number of responsibilities of a minister,’ he said. ‘We need an IP minister to take strategic charge of the issues across government and address the disparate challenges facing the UK.’


The CBI says small businesses need tax breaks to cover the costs of applying for patents. ‘Small and medium-sized firms and individuals wanting to access the patent system continue to be hampered by costs and red tape,’ Sir Digby said. [...]“

 

The UK now has a Secretary of State for Intellectual Property.

 

Japanhas something similar. Since Japan wants to build the nation in the 21st century on IP, they are have a “Central Commission on Intellectual Property” headed by the Prime Minister and managed by a Cabinet Minister, to which end they passed a special law – the IP Basic Law of 2002.

 

Similarly in the US, both houses closed ranks at the end of the Bush administration to set up a new position in the Whitehouse, an intellectual property coordinator, which is a White House-level position to be appointed by the president; some people are calling the new post the IP czar. The IP coordinator will oversee the law-enforcement efforts of some very disparate government agencies — the U.S. Trade Representative, the Department of Homeland Security, the State Department and the Department of Justice — in the area of piracy and IP infringement.

 

One of the bill’s Senate sponsors, Patrick Leahy, called this one of the most important pieces of legislation he ever wrote. As the senator sees it, protecting intellectual property is essential to the economic health of the United States. “We are the envy of the world for the quantity, the quality of our innovative and creative goods and services,” he said in a speech on the Senate floor. “And if we want to continue to lead the world in producing intellectual property, we need to protect Americans’ rights in that property.”

Many governments have departments which frame IP policy and have standing committees for this purpose, including UK, Ireland and Australia).

 

The role of the IP minister should include:

  1. Framing a comprehensive policy applicable to Israel interests, with regard to promoting the economy, trade, exports, technology, employment whilst taking into account foreign interests and pressure and international agreements
  2. Representing Israel on international forums and attending to the expression of Israelinterests with regard to international law and conventions through delegations to forums of the WIPO and WT
  3. Proposing legislation with regard to IP
  4. Ensuring financing and operation of departments and agencies dealing with IP, such as Israel Patent and trademark Office
  5.  Setting up a legal task force to handle IP issues
  6.  Providing reviews of developments and statistics and of the impact of IP on the economy
  7. Being aware of the needs of local industry and public and invite public participation in policy formulation

 If we are going to have 30 Ministers and 9 Deputy Ministers to govern a country the size of Israel, let’s give one of them something to do!

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Posted by Dr Michael Factor

“The Invisible Edge” by Mark Blaxill and Ralph Eckhardt a book review by Dr. Michael Factor

April 2, 2009

The Invisible Edge is a book by Mark Blaxill and Ralph Eckhardt, two Boston Consulting Group Economists, that tries to explain how Intellectual Property can be considered as assets that have very real effects on business valuations.

Starting with an analysis of how materials and design can improve sports performance, the book argues that the Industrial Revolution would not have happened if James Watt had not had a patent on his steam engine design that enabled him to attract investment capital. The book makes a compelling argument that economic growth is fueled by intellectual property and that by considering patents and trademarks as expenses in the balance sheet and profit and loss account instead of as assets, Intellectual property is generally undervalued.

This has a number of ramifications: CEOs tend to leave IP management and R and D to lawyers and scientists respectively, managing directly the relatively minor issues of production and the like. The authors compare this to the captain of a cruise ship busying himself with arranging the deck-chairs.

It is true that understanding the economics of intellectual property is complicated. To contrast IP with tangible assets, the authors use the creative and useful analogy of digital as a pose to analog property. Like any property, the worth is what someone will pay. However, whereas the value of land and traditional commodities fluctuate in a continuous manner, the value of intellectual property is far more erratic, with court rulings, expiration of patents 20 years from filing, or changes in direction by the market resulting in the value of IP assets simply evaporating. That said, virtually all the real value in many industries, including entertainment, information, electronics and pharmaceuticals, is in intellectual property. 

Different IP strategies are presented and contrasted. Gillette is presented as an example of an innovative company that maintains its market position by continuous Research and Development backed by patents and registered designs. Qualcomm, on the other hand, is presented as a company that failed to compete in the market place, and was unable to manufacture in a cost-effective manner. Instead, the company withdrew and, instead of manufacturing, instead chose to develop IP and license their technology. By so doing, Qualcomm became a pure IP player and dominates the mobile phone market. A third company is contrasted, Proctor and Gamble. The manufacturing giant has made a strategic decision to license all patents to all comers including direct competitors. Why? Well by so doing, they ensure a price advantage to their product lines and profit from their competitors sales as well. In this light, the classic Video market is reexamined. Despite Sony losing the standard and having their Betamax video technology rendered obsolete by Pal VHS, the authors point out that Sony continued to make massive profits from the video market due to royalties generated by their patent portfolio. This contrasts nicely with IBM winning the PC standard battle against Apple, but losing the war due to not maintaining an effective IP edge, and thus losing out to Microsoft and Intel. All well known examples, but a different angle and different conclusions.

Network theory is used to show relationships between patents and company, and to get a handle on an industry. Forward citations of patents are used, like citations of academic papers, as an indication of relevance and importance.

The book argues that IP speculators, commonly known as trolls, lubricate the wheels of commerce. Whereas property rights is, since Coase’s work, widely recognized as the prerequisite for trading, as necessary to get maximum value from resources, it is necessary to convert the property into a tradable asset. By analogy to the real estate industry, a compelling argument for creating IP trading markets is presented.

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Posted by Dr Michael Factor

New IP Company Offers Protection Racket.

April 2, 2009

I am one of those cynics, that does not believe in defensive patents as a strategy, nor do I consider trolling an illegitimate business activity, but rather, see IP buyers and licensers as facilitating the best use of IP, in keeping with Coase’s economic models.

Certainly the specific Research in Motion case regarding the Blackberry was an instance where RIM had every opportunity to pay licensing fees to the patentees, and the company that bought up the patents and sued RIM were conducting legitimate business.

We note that Ocean Moto have announced another IP Auction – indicative that like other forms of property, patents are being bought and sold, which is generally a good thing. 

We’ve discovered another business model.  RPX buys patents and licenses to members, thereby preventing them from being sued for infringement.

See: http://bits.blogs.nytimes.com/2009/03/30/trolling-for-patents-to-fight-patent-trolls/

This seems to be some sort of protection racket! It’s a bit like King David asking Nabal for food and victuals since his band of outlaws was protecting Nabal from marauders.

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Posted by Dr Michael Factor