Is a Do-it-yourself Opposer entitled to legal costs?

do it yourself

Unipharm, an Israel ‘Branded Generic’ supplier has a long history of successfully opposing and canceling pharmaceutical patents.

In this instance, they successfully opposed IL 164925 titled “Pharmaceutical Compositions and Kits Comprising Combinations of Valsartan, Amlodipine and Hydrochlorothiazide” to Novartis which led to the application being abandoned. Where an Opposer wins such an Opposition proceeding, the opposer is entitled to claim real costs accrued in so doing.

In this instance, Unipharm, represented by their CEO Dr Zebulun Tomer and without legal counsel filed a Notice of Opposition and statement of case directly (without using the services of their outside counsel, Adv Adi Levit).

The opposition resulted in Novartis abandoning Israel Application No. IL 164925 titled “”. As he did not use legal counsel, Dr Tomer asked for an assessment of costs based on the quantity weight of material filed and the number of references that had to be learned, rather than real and actual costs incurred.

Novartis sees things differently. They believe that Unipharm have failed to show any additional work beyond what they usually do regarding every patent application in Israel, and, citing Regulation 516a of the Civil Procedural Law 1984 and various Israel Patent Office Decisions, argued that consequently no costs should be awarded.

Discussion

The Deputy Commissioner Ms Jacqueline Bracha noted that both sides agree that were Unipharm to have engaged professional counsel they would be entitled to real costs incurred provided that, after judicial review, those costs were considered realistic and necessarily incurred in the opposition until the point where the Applicant gave up. The argument in this instance is simply a question as to whether a Do-It-Yourself Opposition conducted by Unipharm’s management entitled them to some sort of compensation for the time spent and work performed on the opposition where they chose not to engage outside counsel.

Ms Bracha noted that without any paper work to go on such as an affidavit from the CEO or the firm’s accountant indicating how many hours were spent by staff and what their time was worth, it is difficult to estimate costs, and even so called ‘estimated costs’ have to be anchored to something.

Unipharm claim that examination of the Statement of Case which was the last filing before the application was abandoned, and comparing to other cases provides prima facie evidence of time spent. In IL 143088 where Unipharm successfully opposed Glaxosmithkline LLC’s patent, Unipharm were awarded 2500 Shekels including the fee for filing the opposition – which was clearly incurred in this instance as well.

Novartis countered that in IL 166621 where Unipharm successfully opposed an application filed by Neurocrie Bionsenses Inc. and requested 110,000 Shekels costs, the Commissioner assessed the costs and noted that the work by the CEO was not proven.  Furthermore, in other precedents, the Israel Patent Office has ruled that employees time that was within the course of the daily work should not be considered as being a recoverable legal expense. In the Neurocrie Bionsenses case, the Commissioner ruled costs of 6000 Shekels by way of estimate – and, in that case, the application was abandoned after evidence was filed.

Ms Bracha ruminated that Costs are not a punishment for the loser, but are compensation for the winner. That said, the opposer is providing a public service [in causing the canceling of a patent application that should not issue on its merits due to lack of novelty, obviousness, etc]. This is very different from most civil cases where a ruling only affects the parties concerned. Ms Bracha considers the public service aspect of more significance than the significance to the opposer themselves.

In 248/95 Fabio Perini SPA vs. Industrie Meccanishe Alberto Consani SPA, President Winograd considered the opposer as being a ‘soldier of the commissioner’. This public good aspect was also recognized in the Opposition proceedings IL 200343 Tzori Naaman Victor LTD vs. Ronen Aharon Cohen, 23 March 2015. MS Bracha then drew a parallel between the Opposer and someone bringing a class-action who is entitled to compensation for the public duty performed.

Weighing up all the above (and, I suspect rolling the dice), costs of 3500 Shekels were awarded to Unipharm.

IL 164925 to Nvartis, Opposed by Unipharm, Ruling re Costs by Jacqueline Bracha, 5 May 2015

COMMENT

Health Warning – It is highly inadvisable to file patent opposition procedures without professional counsel. It is highly inadvisable to forgo legal counsel when going head-to-head with one of Israel’s larger Patent firms representing a multinational company that is ranked by Forbes as the third largest healthcare company worldwide among other rankings that Novartis is proud of.

That said, Dr Zebulun Tomer has handled more patent oppositions than the vast majority of Israeli attorneys-in-law specializing in IP and of Israel patent attorneys.

As to the issue of whether compensation is deserved, one could regard Dr Tomer as saving Novartis real lawyers fees. Certainly Dr Tomer’s time has some value. Nevertheless, I think there is an assumption on Ms Bracha’s part that the result of the patent application being abandoned means that there is merit in Unipharm’s opposition. This may well be the case. They have an impressive track record killing pharma patents as readers of this blog will be aware. But herein lies the rub.

You see, Novartis and others have come to realize that it may be strategically sensible to abandon Israel patent applications that are opposed by Unipharm irather than to fight for them. The Israel market is small. If Unipharm present their evidence and arguments, not just the patent in Israel but the worldwide patent family could be invalidated. This has happened to Smithkline, Lundbeck and others that Unipharm have taken on in recent years.

If Unipharm has not had to win their opposition on its merits, there may be no prima facie basis for assuming that the patent is actually invalid. Indeed, I opposed a patent on behalf of an Israel Government Ministry (the Ministry of Religion) against a subcontractor (offering high density but nevertheless, Halllachically permissible burial solutions), and though the subcontractor explicitly denied all my points he nevertheless decided to abandon the allowed patent rather than to fight the Israel Government who is the major client. In that case I am fairly sure that we had good arguments. In this instance, who knows what Unipharm would have argued?

Public good is also more nuanced. Non-patented medicine is generally cheaper which is generally considered as being in the public interest. However, without the temporary monopoly rights afforded by patent protection, pharmaceutical companies will invariably not undergo clinical trials. Causing a promising drug to be abandoned is not in the public interest. Furthermore, pharmaceutical research is not cheap. Companies like Novartis need sales revenue to be able to develop new drugs.

I suspect that the pharma lobby will be unhappy with this decision, and those that see Unipharm as a Robin Hood pharmacist will applaud it. That as may be, I suspect that neither side will appeal as the costs in so doing will be totally out of proportion to the possible financial benefits.

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