Opposition to Patent on Grounds of Failure to Cite Prior Art Results in Withdrawal and Huge Cost Ruling

tweedledumdee
Orbotech and Camtek are old enemies. Camtek have successfully opposed a number of Orboetch patents from issuing in Israel.

This time, it was Orbotech, represented by Gilat Bareket who successfully opposed Camtek’s patent application No 208585 for “SYSTEMS AND METHODS FOR NEAR INFRA-RED OPTICAL INSPECTION”, and when the application was abandoned, filed a request for 100,400.5 Shekels in legal fees and accumulated costs.

The request was supported by Affidavits and invoices. Orbotech further claimed that Camtek failed to inform the Israel Patent Office of three citations against the corresponding application in China. In Israel, there is a duty of disclosure of relevant prior art. In this case, Orbotech alleges that Camtek knew about these citation in December 2013 and responded to the Chinese patent office in April 2014. However, the citations were not reported to the Israel Patent Office which allowed the patent at the end of November 2014. Orbotech considers that this act of bad faith made the Opposition proceedings necessary and so Camtek should be punished for failing to report the art.

Orbotech opposed the allowed application on 26 February 2015 and requested and received an extension to file their statement of case. On 20 April 2015, they approached Camtek and requested that they abandon the application noting Camtek’s failure to inform the Israel Patent Office of the publications cited in China. Camtek ignored this approach.
On 25 June 2015, Orbotech filed their statement of case. On 21 September 2015, Camtek abandoned the application. Orbotech claimed costs of 100,400.5 Shekels, for learning the application, reviewing the file wrappers in Israel and China and supported the cost analysis with affidavits.

Camtek (represented by Adi Levit) responded that the costs were unreasonable, disproportionate and Orbotech’s counsel’s rates were unreasonable. They alleged that the statement of case included short and irrelevant publications, and argued that it was unreasonable to issue costs as if the opposition was fought to the bitter end. Finally, regarding the Chinese citations, as the case was allowed under Section 17c on the basis of US 8,492,721. Camtek argued that they were not obliged to inform the patent office about the citations in China.

Orbotech countered that in the past similar costs had been awarded for a statement of case that resulted in a patent application being abandoned. They argued that there was nothing to prevent the Patent Office from ruling on Camtek’s behaviour during patent prosecution and noted that Camtek had received costs at a similar hourly rate when they had won previous encounters.

Orbotech was referring to IL 179995 where the agent of record, Reuven Borchovski forgot to challenge the costs submitted by Adi Levit on behalf of Camtek, and so the rather enormous costs of 296,895 Shekels were awarded. See here and here.

In her analysis, the Deputy Commissioner Ms Jacqueline Bracha ruled that there were three issues:

  1.  Reasonable costs for an opposition that resulted in an allowed patent being abandoned after the statement of case was filed.
  2. The duty of disclosure regarding the Chinese citations
  3. Whether Camtek’s failure to disclose the Chinese citations resulted in the Statement of Case being required.

Clearly the three questions are inter-related and the reasonableness of the costs is determined by the extent that the failure to disclose required the statement of case to be submitted and in what detail.

The Deputy Commissioner understands Section 18 as requiring the Applicant to continuously update the Israel Patent Office regarding art cited abroad up until allowance of a case.

This case was allowed on 30 November 2014 and Camtek knew about the citations before this time.

Section 18 does not differentiate between the duty of disclosure for a patent being allowed after examination on its merits under Section 17a and 17b, and a patent allowed under section 17c based on a corresponding application being allowed by an examining jurisdiction that the Israel Patent Office is prepared to rely on.

Furthermore, Section 17d notes that the Israel Patent Office can refuse to allow a patent under Section 17c based on art that they are aware of or is brought to their attention during the examination process. This is seen to counter Camtek’s interpretation of the Duty of Disclosure since regardless of Section 17c during the examination process, i.e. prior to allowance, the Applicant is still obliged to provide the patent office with details of relevant prior art.

Additionally, as clear from IL 219586 Data Detection Technologies vs. Collischan GMBH& Co. (9 March 2015) and from 33666-07-11 Unipharm vs. Sanofi (8 October 2015),  there is a duty n the applicant of candour and equitable behaviour.

Furthermore, the purpose of the duty of disclosure and logic undermine any interpretation that invoking Section 17c removes the obligation to report prior art, and the obligation starts prior to examination so is independent of section 17c.

Thus Camtek’s argument that since allowance was under section 17c, there was no need to inform the patent office about the Chinese citations is rejected.

The timeline makes clear that Camtek’s failure to inform the Israel Patent Office regarding the prior art was an omission that is unacceptable, but since the Applicant abandoned the patent, the issue of applying the sanctions under Section 18c is moot.
In the cancellation request concerning 94634 Israel Industrialists vs. R Roy Calne (26 April 2015) it was ruled that Applicants behavior during an opposition can certainly affect costs. The question remains whether the Applicant’s behavior during the patent prosecution can affect the costs awarded in the opposition proceeding.

Citing BAGATZ 891/05 Tnuva Cooperative vs. The Office for Imports PD 60(1) 600, 615, the Deputy Commissioner reasoned that where applicant’s behavior results in an opposition proceeding being required, it is reasonable to apportion costs accordingly.
The question of whether the patent would have issued had the Chinese patents been made of record is moot as the Applicant finished the prosecution without citing them. However, it was this failure that resulted in the opposition being necessary and this issue being raised.

Camtek’s complaint regarding Gilat Bareket’s hourly rate is not accepted since the rate is similar to that charged by other offices. Examination of the number of meetings and lawyer arguments indicates that they were justified. The only thing not justified was the costs related to the extension for filing the statement of case, and so 1886 Shekels were deleted from the requested costs. Noting that Orbotech did try to bring this case to a close without filing a statement of case by informing Camtek of their failure to report the Chinese citations and giving them an opportunity to withdraw the application, the Deputy Commissioner ruled that 98,514.5 Shekels costs be paid.

COMMENT

Adi Levit does not prosecute patents so did not prosecute this patent and was not responsible for the failure to cite the Chinese patents. He was, however, responsible for the Unipharm vs Sanofi decision, where he successfully argued the duty of candour. This undermines his argument regarding the duty of disclosure when invoking Section 17c.
That said, one wonders to what extent Orbotech needed to simply compare the prior art cited in Israel with that cited abroad and oppose the patent on the grounds of failure to disclose, and to what extent, studying the citations was necessary. 98,514.5 NIS does seem an awful lot of money for a statement of case in an opposition of this kind.

2 Responses to Opposition to Patent on Grounds of Failure to Cite Prior Art Results in Withdrawal and Huge Cost Ruling

  1. Rimma Pugatsch Shendelzon says:

    Dear Michael,

    One of my last ‘projects’ before leaving Reinhold for my current position as an IP Manager in Landa Corp, was an active involvement in this Orbotech-Camtek opposition.

    I therefore feel very comfortable stating that your last passage is simply ridiculous. I don’t know in how many oppositions you were involved, but you probably know very well that no one files an opposition solely on the grounds of Sec. 18, especially when other grounds exist.
    Obviously, most of the work is usually dedicated to sections 4 and 5 and other substantive matters. In this particular case it was extremely time consuming, in particular due to the poor quality disclosure of the application.

    You have neither fair basis nor enough knowledge of the professional work involved in this case to imply that the client paid too much.

    Best regards,
    Rimma

    Rimma Pugatsch Shendelzon

  2. Dear Rimma,

    I did indeed not review the opposition. This is one of 20 Israel Patent Office rulings that I am trying to fairly report this month, and there are also some court decisions and other developments as well.

    I noted that most cases withdrawn after statement of case have much lower awards. My comments were about the costs awarded, not the work done. I don’t think one would oppose only on Section 18, but I can legitimately query if all the work done at this stage was necessary and required, noting that the deputy commissioner evidently thought it was AND that you gave the other side an opportunity to withdraw.

    The additional issues were not discussed in ruling. I don’t know if it is justified to go through and second guess the costs. It seems that there were meetings to discuss the case. If several lawyers each billed for their time, for example, you doing the technical work, a lawyer working opposite you, a senior patent attorney partner who is Orbotech’s contact person, and a senior lawyer partner who signs off on the opposition, one can see how the costs could have mounted up. Could the opposition have been handled more effectively by one attorney with legal and technical ability working alone? Possibly.

    From the ruling and from the ruling only, it appears that the opposition was filed and the application was withdrawn on the basis of the failure to disclose.

    An interesting question is whether Camtek can sue the patent attorney who requested Section 17c and didn’t cite the China patent office citations. Another question is whether they are sufficient to invalidate the US patent (which issued prior to the Chinese office action, so there is no bad faith issues, but the claims may be voidable). Another issue is whether the Statement of Case provides sufficient information to invalidate the US patent on its merits with or without the Chinese citation.

    I did not look into the number of hours billed or the hourly rates charged. Only noted that the Deputy Commissioner thought that they were justified.

    I did not state that studying the citations was not required. I queried to what extent it was required, and noted that 100,000 Shekels is a lot of money. To me it seems to be! It is approximately an average annual salary in Israel (and yes, I also earn more than an average salary and aware that patent attorneys are well paid).

    I don’t think that the remark needs amending or deleting. I will happily post your comment though.

    I HAVE been involved in a few oppositions. I can believe that the patent was poorly written although I did not analyze it and did not relate to the attorney who drafted it beyond noting that Adi Levit was not responsible. In addition to blogging I also do billable work and there is a limit to how much work can be dedicated to a ruling that interests you particularly, but the main interest to the profession is, I believe, the importance of timely disclosure of the prior art. If my report was sufficiently fair that you have not commented on it, only on the ridiculousness of my assertion that the opposition was a lot of money for a statement of case, I feel vindicated that someone intimately involved found the write up of the decision fair!

    Good luck with Landa. I hope the move proves to be a good one for your career.

    Sincerely,

    Michael

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