Globes, the Israel business newspaper has disclosed that after years of negotiations, an agreement has been reached where researchers at Israeli hospitals will be entitled to a 35% royalty from their invention, the hospital research fund will receive 30%, the hospital itself will receive 25%, and the government’s share will be 10% which will be divided equally by the Office of the Chief Scientist of the Ministry of Health and the Finance Ministry.
Section 132 of the Israel Patent Law states that employee inventions are owned by the employer. Section 137 relates to inventions by government employees and states that their inventions are State property. University researchers in Israel are generally awarded 40%-50% royalties by their university. Medical researchers working at private or trust-owned Israeli hospitals generally received royalties of about 40%. Until the recent agreement reported in Globes, those working for government hospitals typically did not receive anything.
In addition, with many government hospitals, there has been no mechanism in place for drafting and filing patent applications. As a result the patent applications either weren’t filed at all, or they were filed privately by the inventor, often when on sabbatical abroad.
This state of affairs has had serious repercussions for the public good. In 1996, Dr. Zeev Treinin, a veterinarian working for the civil service, discovered a promising treatment for AIDS. There was no mechanism for him to file a patent application and his discovery was published in a scientific journal. Without the possibility of a patent, no drug developer was willing to invest in commercializing the treatment.
Since it is true that hospital researchers are generally civil servants, it could be argued that the employer (the State) should own their intellectual property. Indeed there was a private member’s bill in the Knesset some years ago that took that position, although it offered the inventors a paltry three months salary as a bonus.
Israel’s former Accountant General Gal Zlikeh launched an enquiry into the issue. See Israel Finance Ministry Accountant General Launches Probe into IP missapropriation by Civil Servants.
Last year the Israel government sued for royalties in a patent allegedly invented by a government employee for a medical adhesive with blood-clotting factor in State of Israel vs. Omrix.
In that instance, the Government, represented by the Law Offices of Dr. Shlomo Cohen, sued Omrix and Johnson & Johnson who had bought the company. The medical doctor who claimed to have been the inventor was a witness for the State. Because the complainants alleged inventor fraud the corresponding patent in the US was rendered unenforceable.
We think this carrot approach will be more effective than wielding a stick, particularly as the government seems unable to do so effectively.
We are also happy to see that the 2004 proposal by Ofer Pines Paz and others to restrict royalties to three monthly salaries seems to be off the table. Regardless of whether one is a liberal capitalist or a Marxist, that plan was impractical and it is good that it is buried.
JMB Factor & Co. was instrumental in bringing this issue into the public eye by organizing and cosponsoring a Seminar with Ono Academic College and WIPO on service inventions last year. At the time Dr. Yaron Zelikha, former Accountant General; MK and medical specialist Dr. Rachel Anato MD, and former MK Molly Polishuck Bloch all gave their perspectives. See Whose Invention is it? – A report on a high-profile seminar in Israel, by the IsraKat.