Reconsideration of a Bond to Guarantee Costs Ruling to Patentee if Cancellation Proceeding Fails

Bond.jpgPatent cancellation proceedings are expensive. Sometimes the patentee requests that the party requesting cancellation posts a bond to guarantee cost rulings should the cancellation proceeding fail. Such bonds can be requested in other contentious court and inter-partes patent office proceedings as well.

Once a decision issues, it is uncommon for it to be reconsidered, but this can happen if circumstances or perceived circumstances have changed.

The case

bond case.jpgOn 16 January 2019, the Deputy Commissioner rejected a request that the parties applying to cancel these patents deposit a bond to cover patentee’s expenses in the event of the cancelation proceedings failing, ruling as follows:

“In conclusion, after considering the financial details that the party requesting cancellation provided, and without evidence of their financial collapse, and noting the likelihood of the patentee bearing the costs, and the size of the costs likely to be awarded, I don’t think there is justification in making the party requesting cancellation deposit a bond.”

In that ruling, the Deputy Commissioner estimated that the costs would be around 150,000 Shekels.

On 15 September 2019, the patentee requested that this ruling be reconsidered. He claimed that the day after the decision issued, the party requesting cancelation, informed its clients that it was ceasing its activities due to its serious financial circumstances. As supporting evidence, the patentee appended notices sent by the sales representatives of the opposing party to a couple of doctors.

The patentee received a further indication that the requesters of cancellation was ceasing its activities from professor Chaoshu, who was consulting for the requesters of cancellation. The patentees further noted that the website of the requesters was taken down and that the domain name was up for sale. Attempts to contact the company by telephone failed, and the CEO of the company had started working for a different company in a different field. These claims were supported by an Affidavit of the patentee, to which was appended the page of the C.E.O.’s Linked In account. The patentee submitted that changes justified the request for reconsideration.

The party requesting cancelation of the patent did not respond, despite them requesting several delays.

The Deputy Commissioner considers the change in circumstances does indeed justify her changing her earlier ruling and requiring the requester for cancellation to post a bond.

The previous decision was based on the requester for cancellation stating that they were financially stable and that they would deposit cash into their account before the ruling would be given. The fact that the company seems to have totally ceased its activity makes it unlikely that they will settle their bills, and the new evidence justifies reconsidering the decision (see 4935/19 Keshet Eretz Construction and Development ltd vs. David Weinberg (21 August 2019), where the grounds for a court to reconsider its decision are summarized.

The case-law provides two grounds for reconsidering a ruling. The first is not relevant to this case, it is where there are significant changes in circumstances, and the second is where the court realizes it made an erroneous ruling, and particularly where the change does not damage to the right to a fair trial of the opposing party (see Civil Appeal 5691/18 Vedovin vs. the General Receiver paragraph 9, 11 November 2018; Civil Appeal 4081/15 Ophir Entrepreneurship and Investment ltd vs. General Receiver Tel Aviv, paragraph 10 (18 October 2015); Civil Appeal 1574/11 Strauss marketing vs. Orman, paragraph 13, 14 July 2011.

The cancellation proceeding has reached the stage of a hearing to cross-examine the witnesses. The preparation for the hearing requires time and incurs additional expenses for the parties. To ensure that these expenses are not wasted and whilst the requester for cancelation has failed to state that they are still active in Israel, the Deputy Commissioner has deemed appropriate to request that a bond be deposited to guarantee the expenses of the patentee.

The party requesting cancelation shall deposit a bank bond to cover expenses and attorney fees for the cancelation proceeding. The sum of the bond is 150,000 NIS, as per the estimate in the previous ruling. The bond shall be deposited by the 3 December 2019 and will be kept in the safe of the Patent Office.

Deposition of this bond is a condition for the cancellation proceeding to continue.

Maxillent vs. Ben Zion Carmon, Reconsideration of Bond for cancelation proceeding against Israel patents IL 204277 and IL 203981, interim ruling by Ms Bracha, 25 November 2019.



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