Under the Rules for Disseminating Public Information, the Israel Patent Office has published its annual report for 2014. The report may be found Annual Report 2014_(Hebrew). The English version is not yet available.
The most interesting thing about the report is probably the graphics. Following previous years where the report was decorated with paper airplanes and paper hot air balloons, this year’s report is embellished with paper windmills. Why? The Answer, My Friends, is Blowin in the Wind.
I don’t intend extensively reproducing the graphs. Frankly they are not all that interesting. Instead, here are some observations and possible explanations.
6273 Patent Applications were filed in Israel in 2014 which is slightly up from 6184 in 2013, but still significantly lower than the 6793 applications filed in 2012. Indeed, Apart from 2013, the number of patent filings for 2014 was the lowest in a decade which peaked at 8051 applications in 2007. Applications pending examination are also down and more applications are being allowed. We attribute this to the fact that a precondition for the Israel Patent Office being an International Search and Examination Authority was for there to be a minimum of 100 examiners. This gives a favorable Examiner to application ratio that has resulted in shorter backlogs and more efficient examination.
18% of Applications are filed by local entities in 2014 which is the highest in the past decade. This statistic probably reflects the fact that many of the historic advantages of provisional applications are no longer the case and that small timers paying a reduced filing fee may find filing in Israel cost-effective compared to the US. Of course what this also means is that foreign filings made up a mere 82% of total filings in 2014, down from 88.8%. By a little mathematical manipulation, it seems that the number of foreign patent filings into Israel has dropped by about 250 or by 6.75% in the past year.
In an earlier post, I reported on a study by BdiCoface which found that 3,555 Israel based patents were filed in the US. During this same period, only 1129 cases were filed in Israel by Israeli entities. In other words, Israelis and Israel companies are three times as likely to file in the US as in Israel. Some technologies, such as security related ones have to be first filed in Israel. Some cases, such as methods of treatment, are only patentable in the US. Nevertheless, filing Israel patents is clearly not a priority for Israel based patenting entities. It is certainly true that Israel is a small market. Nevertheless, since enforcement is considerably cheaper in Israel than in the US, I think that companies should consider filing in Israel more seriously. Particularly where there are Israeli employees and business partners.
After a slow start in 2011-2012, There has been a sharp rise in accelerated examination in Israel by suing the Patent Prosecution Highway, with 94 applications being examined via the PPH.
Interestingly, some 22 administrative decisions were made in 2014 to allow late entry into Israel from a PCT application of which 18 were favorable. Israel holds the relatively high standard of allowing late filings in circumstances that are ‘unavoidable’ rather than merely ‘unintentional’. I wonder if the 18 cases were truly missed deadlines due to acts of God, earthquakes, postal strikes and the like, or if the patent office is becoming more lenient in this regard?
Fascinating Bits of Trivia
As usual, the report includes some fascinating statistics such as Israel being the 24th most popular patent filing destination in the world, slightly more popular than the Ukraine, but less popular than New Zealand. When normalized by GNP, Israel remains the 30th most popular destination in 2013, with 480 patents per billion US dollars. This puts Israel ahead of Ireland at 449 patents per billion US dollars, but slightly behind Kazakhstan with 493 patents per billion US dollars. When normalized for population size, Israel comes in at 28th place with 149 patent applications per million residents. This is slightly less than Latvia (151) and Belarus (167) but ahead of Iran (146 patents per million).
There is a rallying in the number of PCT applications filed by Israelis, both in Israel and elsewhere which may indicate that we are pulling out of the effects of the World Wide Recession.
Some 59.4% of PCT applications filed in Israel specify Israel as the International Search Authority, up from 55% in 2013 and probably indicating customer / attorney satisfaction with the International Search Reports issued. In 2014, Israel conducted 9 ISRs for PCT cases outsourced by the USPTO. This was a mere pilot and may become a popular service.
A very significant percentage of patent applications filed in Israel are for pharma technologies. This presumably reflects the strong Israel pharma industry including Teva, Neurim, and generic companies such as Unipharm and Perrigo (technically an Irish company, but largely ran from Israel) rather than Israel’s attractiveness as a market.
The number of design applications filed in Israel last year was 1384 which is slightly higher than 2013 when 1353 design applications were filed, but still lower than for every year from 2004 through 2012. This follows the trend seen with patent applications filed in Israel. Bck in 2008, 1775 design applications were filed, so there is certainly potential for more of this type of work.
We anticipate that plans for Israel joining the international system for filing design applications will probably increase the number of designs filed into Israel, but reduce the billable work for patent attorneys. This is what happened with trademarks, where there has been an overall increase in trademark applications but this is mostly due to the Madrid Protocol applications designating Israel, and there has been a drop in trademark filings filed directly into Israel and thus a similar drop in billable work for patent and trademark attorneys.
With less work coming in, and an increase in both legitimate competition and illegitimate, i.e. licensed practitioners including patent attorneys and attorneys-at-law, encroachment from non-licensed practitioners, including jumped up paralegals, retired examiners, failed patent attorneys, retired US practioners and US companies that operate directly in Israel such as Finnegan et al. and others, there is apparently more people after less work, and things are unlikely to get better quickly.
It is easy to blame the depressing statistics on international trends and to see this as the fall out of the World Wide Depression. Indeed, filings peaked in 2007, and the Lehmann Brothers went bankrupt and things started spiraling out of control in 2008. Nevertheless, it is not impossible that the IPO can do to reverse the trend, or to speed up the recovery. I would suggest that the very fast and significant increases in various Israel Patent Office fees coupled with the relatively strong Shekel may be turning away potential filers. The USPTO and EPO essentially set fees to cover operating costs. The Israel Patent Office is a cash cow that generates income for the Israel Government and which has an income that is apparently twice its operating costs. I would suggest that many fees could be reduced to pre-Greed levels and salaries for Examiners and other IPO staff could also be increased to levels more commensurate with what attorneys in private practice earn. This can only increase the quality of the Israeli examination. With greater motivation, examination periods might become even shorter and standards might increase. This together with reduced filing and other fees could make Israel a more attractive component of potential IP portfolios.