Depositing a bond in a patent annulment proceeding

bracket

Moshe Lavi and Shchakim Technologies LTD own Israel Patent No. 157035. After a number of strange patent infringement proceedings brought by them against Zach Maoz Airconditioners LTD., some of which were settled out of court, Zach Raz and Zach Maoz Airconditioners LTD.have filed a cancellation proceeding against the patent which relates to a wall bracket for supporting an air-conditioning unit – see figure.

To make matters even more confusing, Zach Raz filed the cancellation proceedings via the Offices of Dr Eyal Bressler but is now represented by Pearl Office. Moshe Lavi is meanwhile represented by Pearl Cohen Zedek Lazer Baratz now trading as Pearl Cohen.

Perhaps not unreasonably as in previous clashes there were costs awarded by the District Court that have not been paid, the patentees asked for a bond deposit to be made to cover likely costs. The bond requested was 250,000 Shekels. Patentees also argued that the chances of the opposition being successful were very slight and that there were some seven liens against the property of the company. Zach opposed this request noting that the outstanding debts were incurred by his father who is no longer a side in the case. Furthermore, bonds for covering costs are not generally given in patent cancellation proceedings.

Pearl argued that Zach wasn’t a plaintiff in the sense of Regulation 519a and that Section 353a of the Company Law was irrelevant to limited companies. They noted that they were settling their debts and that no bankruptcy actions had been brought against them. Pear Cohen responded that Zach had not shown financial stability and the ability to settle debts.

The commissioner, Adv. Asa Kling ruled that he was authorized to require the posting of a bond to cover costs and did see fit to require a bond in this case, but felt that 50,000 Shekels was adequate.

Since that decision was given, Zach have petitioned for the request and decision to me thrown out, and Pearl Cohen have requested for an extension to respond due to the Jewish Festival season.

COMMENT

I would agree with the plaintiff that the bond of 250,000 Shekels requested is rather high and the level of 50,000 Shekels set by the commissioner seems more reasonable. However, from the activities of the parties by both sides, it does seem that the legal fees are going to escalate rapidly.

Years ago (around 2005 o4 2006) I wrote an expert opinion for Zach arguing that their products didn’t infringe this patent. At that time, Zach was represented by Soroker Agmon. The case was resolved by agreement on the day of the trial so I never gave testimony. Cohen-Zedek told me when we met some time later, that this was one of those cases where neither side can win since the costs of litigation vastly outweigh any possible income from the patent.

I am less confident than Cohen-Zedek that the patent will survive the cancelation proceedings. If it does and Pearl Cohen request costs, I suspect that these will exceed 50,000 Shekels.  Regardless of what the partners agreed with the lawyers who actually handle the case, I don’t expect that they will be paid any more than a percentage of what Pearl Cohen does manage to collect.

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