Pending Israel Copyright Amendment to Address Internet Piracy of Audio Visual Works

May 8, 2018

pirate bay

Oh, better far to live and die
Under the brave black flag I fly,
Than play a sanctimonious part,
With a pirate head and a pirate heart.
Away to the cheating world go you,
Where pirates all are well-to-do;
But I’ll be true to the song I sing,
And live and die a Pirate King.

Pirates of Penzance Gilbert & Sullivan

From 2006 to 2014, we have noted that Israel has been on the United States Special 301 priority watch list of countries having allegedly inadequate IP protection. The main criticism was the pharmaceutical extension regime in Israel which was believed to be too liberal to generic manufacturers. The amendment of the amendment was reamended and Israel’s status was upgraded.

A second criticism was that Israel’s copyright regime did not provide tools to hold Internet Service Providers (ISPs) responsible for preventing free access to copyright materials such as songs, movies and television series over the Internet. There are good arguments for and against making service providers responsible. They are not policemen and should not be. There is a perceived problem that without monetary compensation for their creative output, producers and artists will not create.

There is a new copyright bill pending legislation in Israel that addressed this issue, and a copy of which may be found here. The purpose of the bill is to try to reduce copyright piracy on the Internet, particularly of audio-visual works.

The following is an analysis of the proposed amendment. The bill contains four elements:

  1. An expansion of the concept of indirect infringement, to include websites that offer viewers access to unauthorized content such as movies and TV series. The indirect inclusion includes links to an offshore location in cases of actual or constructive knowledge of the act and intent to profit.
    This element will have utility to the extent that the Israeli courts can thereby obtain jurisdiction over the operators of the web site that aggregates the links. However, where this entity is not identified, then this part of the amendment won’t have much real world effect.
  2. Blocking Orders. While some courts have issued these in the past, other courts claim that without specific authorizing legislation they do not have authority to grant blocking orders. Hence the legislation.
    This element is likely to become the best tool for disrupting internet piracy. The proposal also clarifies that the cost of the blocking order will be borne by the applicant and not the Internet Service Provider (ISP). Apparently, there are actual costs in carrying out such blocking order.
  3. Discovery of the identities of up-loaders of infringing content.
  4. Enhanced criminal penalties.

The Tel Aviv Law School (Amnon Goldenberg Institute run by Professor Michael Birnhack) has published their comments on the bill, as have others, and it is scheduled to be debated by the Economics Committee of the Knesset on 21 May 2018.

ISP-1

The goal of the Ministry of Justice in formulating the bill was to find language that would be wide enough to catch pirates, but narrow enough to not cause any unwanted collateral damage. This goal was difficult to achieve in the proposed 48A.

Content developers and rights holders would prefer that the legislator err, if at all, on the side of over-protection, whereas the advocates of fair use and free speech prefer that the legislator err, if at all, on the side of under protection.

What is not included in the Bill, despite calls for such, is:

  • A codified “notice and takedown” type regime; and
  • WIPO style “technological protection measures” legislation.

The “notice and takedown” case-law seems to work, so why fix it? Although we have heard comments from legitimate web sites that a “safe harbour” might help them should 48A prove to broad in practice.

pirate dated

Currently, Israel does not have technical performance measures (TPM), something mandated by the 1996 WIPO treaties and intended for a different era, but which may have some unintended relevance in a world where content is no longer delivered on DVD, but rather through on-line subscription services. The Israel Justice Ministry does not have any a priori objection to either of these matters. However they are both incredibly complex to draft and if drafted improperly can have grave unintended consequences. For example, an overly broad TPM provision might have unintended consequences for tech companies and their developments.

The Justice Ministry considers that both of these issues are worthy of further study, but to move forward with them considers they should get the full legislative process by issuance of a proposal, requesting public comment, the drafting of a bill, and Knesset discussion, rather than a last-minute add-on to a pending bill.

The current bill is cautious and conservative, with the drafters having the perception that it is easier to add measures than to cope with overly broad powers and runaway judges.

 

Comment

The proposed legislation seems balanced and well-considered.

Certainly consumers of content should compensate the developers of the content for their efforts, and have little patience for those that download films and series, arguing that the developers don’t lose anything as they wouldn’t pay for it anyway. Traditionally, Jewish Law did not generally recognize non-tangible property rights, although entertainment, such as a dance, could have value and be used instead of a ring, for marriage purposes. The modern economy and civilization has moved on and IP rights are an essential development. Israel should be a light to the world in judicial matters. However, where there are widely accepted minimum standards of behaviour, it is important that Israeli legislation and private behaviour do not fall behind.  That said, I don’t think that there is any basis for assuming that people write songs or create films for revenue in 70 years’ time or for 50 years after death. The actuarial depreciation of such revenue streams to the time of writing results in such future profits as being negligible. I would prefer that:

  • laws on copyright infringement be coupled with the need to register copyright (as once required in the US, and required for trademarks, patents and designs
  • that the period of protection be significantly shortened to perhaps 10 or 15 years
  • that after initial launch in cinemas or as albums, movies and songs become available for reasonable cost over the Internet by legitimate streaming services, and that viewers can choose between premium advertisement-free access and sponsored access
  • there should be broad fair use exceptions
  • I am very put out that academic papers are developed by public universities and that access often requires payment. I want to see access for all with the universities sponsoring the publication rights, and more journals being exclusively on-line. Knowledge should be in the public domain, but authors should be recognized. There seems no place for commercial publishers of academic journals in the modern world.

Supreme Court Adds Sauce to Temporary Injunction

April 25, 2018

Back in February, we reported regarding a temporary injunction that Barilla obtained in the Tel Aviv District Court against Rami Levy, requiring them to remove packages of pasta that came boxed in blue boxes with cellophane windows and similar packaging to Barilla’s range of pastas.

The image above shows Rami Levy’s packaging under the Olla own-brand on the left, and the Barilla packaging on the right.

Whilst it is true that the Olla packaging does state Rami-Levy – Shivuk HaShikma (Sycamore Packaging), and the name of the pasta is written in Hebrew, it is also true that both brand-names end with the syllable and letters lla, and the fonts are italicized and slope to the right.

Rami Levy appealed the decision to the Supreme Court but Judge Solberg upheld the temporary injunction pending a full trial and ruling, and also widened it to cover pasta sauces, noting that like Barilla, Rami Levy uses glass jars with blue lids for their tomato sauces. Costs of 40,000 Shekels were awarded to Barilla for having to deal with the appeal.

Comment 

We note that Rami Levy has a further own-brand packaging for dried pasta (on the right), where Taaman (whose own packaging is blue) package their pasta for Rami Levy in cellophane bags that seem inspired by Osem’s Perfecto range (on the left) so they can simply pour out the boxes and bag in cellophane, at least until Osem sues them.

steaks

We also note that Rami Levy (on the left) recently jumped into the frying pan with minute steaks, using a packaging scheme not vastly dissimilar from Baladi’s (on the right), and that Judge Avrahami of the Petach Tikveh District Court granted a temporary injunction requiring Rami Levy to adhere a sticker that is not red, white or black to their frozen meat package of minute steaks that should be at least 11 cm by 8.5 cm, that is clearly printed and which states that the product is under Rami Levy’s own label. The sticker must not include the price or the words “Special Offer”, that could dilute the effect of differentiating between the products. The sticker is to be applied to the front of the packaging at the top, under the term “Maadaniyah” (delicatessen).

Appeal 1065/18 and 1521/18 Rami Levy vs. Barilla, 22/4/2018


A Balanced Temporary Injunction Against Rami Levy

April 19, 2018

This case concerns ‘minute steaks’ supplied by Rami Levy – a supermarket chain in own-brand packaging that has some similarity to that of Baladi, a brand that had introduced the product to the frozen meat freezers in Israel. Baladi sued Rami Levy for passing off, copyright infringement and unjust enrichment and tried to obtain a temporary injunction against Rami Levy at what is the start of the Israel barbecue season.

steaks

This case concerns ‘minute steaks’ supplied by Rami Levy – a supermarket chain in own-brand packaging that has some similarity to that of Baladi, a brand that had introduced the product to the frozen meat freezers in Israel. Baladi sued Rami Levy for passing off, copyright infringement and unjust enrichment and tried to obtain a temporary injunction against Rami Levy at what is the start of the Israel barbecue season.

baladi minute steak

The claims of passing off and copyright infringement were considered unlikely to prevail and thus not grounds for a temporary injunction. However, Judge Avrahami saw fit to grant a temporary injunction on the grounds of unjust enrichment. Rather than have Rami Levy’s product removed from the shelves and repackaged which could result in the meat being lost, she ruled that a sticker in a contrasting colour should be attached to the packages indicating that Maadaniya was Rami Levy’s own brand. Rami Levy was also advised to work towards introducing a more different package. The parties were invited to try to settle their differences without the court having to hear the case in its

Baladi makes meat products including minute steak which are thinly sliced steak that can be roasted in a frying pan in one minute. Baladi claims to have designed the packaging that they use for minute steaks.

Rami Levi is a public company that runs supermarkets across Israel. The company stocks known brands and also sells popular products packaged for them under their own label.

Rami Levi sells Baladi products. It also sells minute steaks under their only  own label “Rami Levi’s Sycamore Marketing Delicatessen”. Rami Levi’s own label minute steaks are packaged by TBone Veal.

In a preliminary ruling, Baladi claimed that minute steaks were not sold in supermarkets until they launched this product in November 2017 with a massive and expensive sales campaign. From the launch until 19 March 2018, the product sold well due to the marketing campaign. On 19 March 2018, suddenly, without notice, Rami Levi forbade Baladi to replenish supplies and blocked the product, and instead supplied minute steaks under their own label.

baladi logo

Baladi claims that the own-label brand is packaged in a copycat package of that of their product, and that this was a calculated, organized action of Rami Levi in bad faith, to ride on Baladi’s advertising campaign and product launch, benefiting from their investment. Baladi’s campaign has drawn customers to want to purchase their product. The customers go to the meat refrigerators and find the infringing product that is a copy of their package and are misled into believing that they are purchasing Baladi’s product.

Baladi considers that the case is particularly serious since Rami Levi is a retailer that can block their product whilst offering the competing own-label product. This is particularly problematic since Rami Levi’s product launch was just before Pesach and close to Independence Day which is the start of the Israel barbecue season when sales go up significantly.

In light of the above, on 22 March 2018, Baladi sued for passing off, unfair trade practices, copyright infringement in the product package and unjust enrichment. They filed their case in the Tel Aviv and Jaffa District Court. Baladi requested a permanent injunction, compensation and production of sales data. For the purpose of assessing the court fees, Baladi assess the damages at 2,750,000 Shekels.

Baladi also requested a temporary injunction on Rami Levi to prevent them using the product sold under their private label or at least to prevent them selling the product in the packaging used at the time of filing, and to cease from blocking Baladi’s products, and to enable their products to be sold on an equal basis with other frozen meat products. The Request was supported by an affidavit from Ms Irene Feldman, the VCFO of Baladi, and was filed as an ex-partes action for immediate attention since any delay will cause irreparable damage.

El gaucho minute steak

In response, Yossi Sabato, the VCEO of Rami Levy submitted an Affidavit claiming that Baladi was acting in extreme bad faith by not telling the court that they were conducting a parallel action against El Gaucho which is a label of TBone Veal in the Central District Court as 4347-01-18. In that instance, they made similar accusations which were rejected. This action, in a different court, against a different label, was a type of forum shopping that was indicative of bad faith and should be sufficient for the case to be thrown out. This was simply an attempt to corner the market and to prevent competition. The Ex-partes actions in both the El Gaucho case and in the present instance are cynical exploitations of the legal system designed to get free publicity, and the plaintiff was suing for extreme damages without having first contacted the supermarket chain, which is itself inequitable behavior for which the case should be thrown out.

monopoly

With regards to the complaint itself, Rami Levy claims that Baladi is trying to obtain a monopoly on minute steaks, which is a term known in Israel and abroad and which they did not coin. Baladi also tried to obtain a trademark for this generic term. Minute steaks have been advertised in Israel in the past and are available in restaurants and from butchers, and even from supermarkets. Baladi has not been in the market long enough for minute steaks to be identified with them to the extent that they deserve a monopoly on the term (acquired distinctiveness), and a reputation that is protectable, and even Baladi does not claim to have rights to minute steaks but only to the sound of the name.

Rami Levy

Rami Levy claims that their product package is completely different from Baladi’s, including writing and visual elements, and there is no likelihood of confusion. Baladi advertises their product with their trade-name Baladi clearly written thereon and, in the absence of this term, there is no likelihood of confusion. Rami Levy’s private label HaMaadaniya (literally the delicatessen) is well-known to Rami Levy’s customers as a low price brand, and there is no likelihood of confusion.

“Rami Levy” is written clearly on the front and back of the packaging, and is a super brand that does not need to ride on the reputation of Baladi or anyone else. The difference in price also prevents confusion, and all Rami Levy’s own branded products are clearly sold as such in their stores, and there are loads of examples of private labels being sold alongside branded goods and the public are not misled in any way that they are purchasing something other than the own label.

boycott

As to the issue of marketing Baladi’s products in Rami Levy’s stores, Rami Levy contends that they are under no obligation by general law (in rem) or by contract (in personam) with Baladi, to purchase any of Baladi’s products, including their meat products. Baladi’s goods are available in other chains. At present, Rami Levy stores DO stock Baladi’s minute steaks but, in view of the high price that Baladi dictates for their product, Rami Levy is under no obligation to replenish stocks of something much more

In answer to Rami Levy’s response, Baladi reiterated that their issue is NOT the name ‘minute steak’, but the packaging and the product blocking. On 26 March 2018. a long hearing was held. There were many attempts to bring the parties into an understanding, and the affidavits were reviewed and the parties summarized their arguments. After the hearing the parties still refused to come to an understanding, and so there is no alternative but to reach a verdict in this instance.

Relevant Considerations Regarding Temporary Injunctions

Principles-Governing-Issuance-of-Temporary-Injunction

It is known that the party requesting a temporary injunction has to convince the Court, on the basis of apparently convincing evidence, that there is grounds for the complaint and the Court then has to balance the ease of implementing the different actions, i.e. the damage to the complainant if a temporary restriction order is not issued, vs. the damage to defendant if a temporary restriction order is issued but if it later transpires should not have been. The Court has to ascertain whether the temporary injunction was requested in good faith, and if the injunction is just and fitting in the circumstances and does not unduly damage the defendant – See Regulation 363 of the Civil Procedures Regulation 1984.

interests

The main considerations for requesting a temporary injunction are the likelihood of prevailing and the balance of interests of the two parties, but where the Court considers that the likelihood of prevailing is greater, they will be less concerned about the balance of interests, and the opposite is also true.

When deciding on a temporary injunction, the court also has Read the rest of this entry »


Israel Supreme Court Overturns Ruling Forbidding Copying Fashion Designs

February 21, 2018

necklines

Back in December 2016 Israel fashion designer Gadi Elemelech sued Renuar, a chain selling women’s clothing, for selling clothing that was confusingly similar to his haute couture dress. The dress in question appeared in Elemelech’s 2013 collection, and in Renuar’s 2014 range. The legal grounds for the action were the Israel Trade Related Torts Act 1999. Judge Gidon Ginat ruled that a chain-store that copied a range of designer clothing should cease and desist, and that Renuar should pay damages of 55,000 Shekels and a further 35,000 Shekels legal costs.  Civil Tort 5366-12-14 Elimelech vs. Renuar Ruling by Gidon Ginat, 22 December 2016.

The ruling was appealed to the Israel Supreme Court which overturned it, canceling Judge Ginat’s ruling without costs to either side. Instead of a long detailed ruling, the three judge panel ruling is barely two lines, and simply states that simply copying a product is not enough to obtain a legal sanction against the copier, with a reference to paragraph 18 and citations of the Apropos 945/06 General-Mills vs Meshubach ruling(Bugles).

COMMENT

This ruling essentially means that non-registered designs are in the public domain and cheap copies of various articles, from food snacks to fashion clothing can’t be litigated unless the design is registered, apart perhaps from specific cases where there is some additional issue (A.Sh.I.R.).


New Israel Patent Commissioner Makes Purpose Driven Interpretation of Patent Term Extension Legislation to Transfer Protection from One Drug to Another

December 21, 2017

Wyeth submitted a request for a patent term extension for Israel Patent Number 120701 titled “2 – PHENYL – 1 – [4 – (2 – AMINOETHOXY OR PROPOXY) ) – BENZYL] – INDOLE COMPOUNDS AND PHARMACEUTICAL COMPOSITIONS CONTAINING THEM ” The patent issued on 26 December 2005 and the basic 20 year protection period will run out on 18 April 2019.

CONBRIZAOn 17 June 2012 Conbriza was registered in the Israel register of drugs. Conbriza contains bazedoxifene acetate. This was the first Israeli registration of Bazedoxifene for medicinal purposes and so, on 19 October 2015, a patent term extension order issued for Conbriza, until 14 April 2022.

DuaviveOn 16 November 2016, the drug Duavive which contains bazedoxifene acetate together with conjugated estrogens was registered in the Israeli register. The Applicant explained that Duavive is a more modern version of Conbriza which Pfizer (which owns Wyeth) had developed and is marketing in Israel.

The treatments are both for treating the symptoms suffered during menopause, such as the so-called hot flushes.

calculation

On 22 May 2017, the Wyeth informed the patent office that Conbriza was taken off the drug register and Duavive was registered. Wyeth claimed that the change should not affect the patent term extension since both drugs contained bazedoxifene, and that the patent term extension should be calculated from the first of the registrations.

Following this notification, the Applicant was invited to attend a hearing under section 149 before a ruling issued. The Applicant did want to attend such a hearing and on 5 July 2017 the Commissioner Ophir Alon indicated that in the hearing, which was held on 31 July 2017, the Applicant would explain why they felt that the provisions of Section 64(vii)(3) should not apply in this case.

Ruling

Section ii(1) of Chapter D of the Law deals with patent term extensions. Inter alia, Section 64D of the Law states that:

64D. The Registrar shall not grant an extension order, unless the following conditions have been met:

(1) The material, the process for its production or its use, or the medical preparation that incorporates it or the medical equipment was claimed in the basic patent and the basic patent remains in effect;

(2) In respect of a medical preparation—a medical preparation that incorporates the material is registered in the Register of Medical Preparations under regulation 2 of the Pharmacists Regulations (Medical Preparations) 5746—1986 (hereafter: Pharmacists Regulations);

(3) The registration said in paragraph (2) is the first registration that allows the material to be used in Israel for medical purposes;

(4) No extension order was granted previously in respect of the basic patent or in respect of the material.

From here, it is clear that the condition for giving a patent term extension is that there is a registration of a drug that includes the active ingredient and it is the first registration that allows the active ingredient to be prescribed in Israel, which was not previously subject to a patent term extension.

Section 64L states the cases where a patent term extension lapses. In 64L(3) it is stated that:

64L. An extension order shall laps in each of the following instances:

(3) If registration of the medical preparation that incorporates the material was cancelled—on the day on which the registration was cancelled;

Thus the wording of the black letter law seems to be that if the registration including the active ingredient is cancelled, the Patent Term Extension is cancelled as well.

The Applicant’s claim is that in cases where the company that registered the first drug has a number of registrations for different drugs containing the active ingredient, the Legislators did not intend that the protection period would lapse simply because one of these was cancelled. Rather, the legislators intended that only in cases where at some time after the issuance of the extension period, there are no registrations of drugs including the active ingredient in Israel, the extension period would lapse. In such an instance, where there are no drugs on sale in Israel there is no legitimacy in keeping the patent term extension active and so Section 64L(3) applies.

The Applicant claims that since Duavive contains the active ingredient and was registered before the registration of Condiza was cancelled, one or other preparation containing the active ingredient was continuously registered in Israel and so the patent term extension remains in force.

The Purpose of the Patent Term Extension Regime

As known, the term of a patent is 20 years from filing in Israel [or from the PCT filing date – MF] subject to paying extension fees. This period is the accepted balance between the desire to encourage inventors on one hand, and to enable the population to benefit from technological advances on the other.

balance

This balance has a special regime for pharmaceuticals and medical devices that is given by Section B1 of Chapter 4 of the Law. This regime compensates patentees for delays in registration but allows the generic drug industry to prepare for market entry to the benefit of the population as a whole. Where the conditions of the Law are met, it is possible to extend patents for pharmaceuticals and medical devices by up to five years.

This is how things were presented on page 18 of Appeal 8127/15 Israel Association of Industrialists vs. Mercke Sharpe and Dohme Corp, 15 June 2016:

The purpose of the extension period is to compensate the patentee for the period of patent protection that is de facto lost due to the amendment of the patent law. The period of protection in Israel and other countries having patent term extensions takes into account the period that the patentee takes to register the drug which is longer than the period lost by the patentee. However, in the Draft Amendment by the Committee for Constitution, Law and Justice it is stated that the extension is for the period that the patent for the drug is registered but regulatory approval by the Ministry of Health has not yet occurred, and so the extension is identical to this period. Either way, the main purpose is to provide fair compensation to the patentee.

Explaining section 64L(3)

As stated previously, there are two possible interpretations to Section 64L(3) of the Law. In the first explanation the words “registration of the medical preparation that incorporates the material was cancelled” relates only to the first registration, as defined in Section 64D(2), so that when the first registration is cancelled, the patent term extension ends.

The second explanation, proposed by the Applicant, is that one should understand the words “registration of the medical preparation that incorporates the material was cancelled “ as relating to all drugs that include the active ingredient and not merely the first one to be registered, so that there are no drugs including the active ingredient on the register.

Ofir Alon

The New Commissioner Ophir Alon considers that the interpretation is in line with the rationale of the Law proposed by the Applicant. As stated previously, the intention of the legislator was to compensate the patentee for the period required to register the drug. Section 64D of the law refers to the conditions for granting a patent term extension. The purpose of 64D(2) of the Law is to ensure that the active ingredient has undergone registration, and that of 64D(3) to ensure that that this was the first instance of the active ingredient being registered.

Since these conditions are fulfilled, it does not seem that there is much significance in the first registration specifically, that its cancellation requires cancellation of the patent term extension and cancelling the compensation that the law provides the patentee, whilst the active material remains registered, albeit with other active ingredients.

Registration of more advanced or better drugs that include these active ingredients is desirable.  Such registration is likely to require additional registration by the Ministry of Health. Adopting an interpretation under which the cancellation of the first registration for which the patent term extension period was calculated automatically results in the cancellation of the patent term extension will lead to a situation in which the patentee who has several registrations will have to keep the registration of a drug not being sold in force merely to keep the patent extension in force. This is artificial and not desirable.

However, accepting the second interpretation allows the patentee to cancel or not renew the first registration whilst keeping the patent term extension in place to protect additional drugs subsequently registered. This prevents circumstances where a patent term extension is in place but no drugs are registered for sale in Israel.

In summary, it appears that the correct interpretation of the Law is to compensate the patentee for the period he could not exploit his patent whilst waiting for regulatory approval, which includes protecting the public interest by promoting development of new treatments, and these aims are achieved by the interpretation allowing the extension to stay in force as long as there are drugs that include the active ingredient.

This interpretation serves the purpose of the Law and the public interest as it provides an incentive for the patentee to develop new versions of its drugs, that are more advanced or more efficacious than the original treatment, and allows the cancellation of registrations that are n longer marketed.

The Commissioner is aware that linguistically, the objective pronoun “the medical preparation” apparently relates to the medical preparation mentioned previously. Nevertheless he does not think that a literal reading helps to clarify things in this instance. For example, if we were to take a literalist approach to understanding section 65L(3) we would wonder what the legislator intended by “including the ingredient” at the end of the section, since it is clear that the medical preparation whose registration was the basis of the patent term extension includes the active ingredient, as stated in Section 64D(2):

(2) in respect of a medical preparation—a medical preparation that incorporates the material is registered in the Register of Medical Preparations under regulation 2 of the Pharmacists Regulations (Medical Preparations) 5746—1986 (hereafter: Pharmacists Regulations);

FROM THE GENERAL TO THE SPECIFIC

The cancellation of the Conbriza registration occurred after Duavive was registered, and so in one form or another the active ingredient was continuously registered from when Conbriza was registered until today.

So, by applying a purpose-driven interpretation to Section 64L(3), the registration was never cancelled and from when the patent term extension was issued until today, the medical preparation was under continuous protection.

The medical preparation Duavive includes the bazedoxifene ingredient together with conjugated estrogens. In other words, to create continuity in the registration, the active ingredient has to be identical to the one for which registration was granted. The Patent Term Extension for Israel Patent No. IL 120701 will remain in force subject to the Applicant submitting an Affidavit that the combination of the bazedoxifene ingredient together with the conjugated estrogens does not create a new material. This affidavit must be submitted within 30 days of this ruling.

Ruling concerning the Patent Term Extension for Israel Patent No. IL 120701 for bazedoxifene (Conbriza and Duavive), Ophir Alon, 15 October 2017

COMMENT

This ruling could be a baptism of fire for the new Commissioner.

The main question that the appointment of a new commissioner generates is whether he will favour the drug development industry or the genetic drug industry. The sums of money generated every day of a patent term extension and in supplementary patent protection for variants such as changes in dosage regimes is enormous. In this regard, Israeli companies are involved as both generic players and as drug developers. Despite TEVA being the world’s most successful generic drug provider, It was Teva’s Copaxone falling over the so-called patent cliff that caused the massive drop in share prices and layoffs, rather than lost sales of generics.

Here the Commissioner has taken an analytical approach to the law, trying to understand the rationale rather than the most literal interpretation. This is in line with guidelines penned by Former Chief Justice Aharon Barak who was known for such interpretations, which perhaps less charitably and more formalistically could be described as subverting the Law as legislated to further lofty aims as he saw them. Such creative interpretations coupled with him declaring that Basic Laws were constitutional and reading into them powers that the Knesset never intended, has led to judicial activism that those on the right see as undermining the Knesset as legislator, and those on the left see as saving democracy from the people’s elected representatives.

I remember litigators that represent the drug developing companies saying during Dr Meir Noam’s term as Commissioner, that, until he was replaced, their clients could not get justice. I do not know if this was fair. Dr Noam was a chemist, and generally where he accepted Unipharm’s arguments that an opposed patent application lacked novelty or inventive step, their arguments were persuasive, or at least seemed so to me. Nevertheless, in practice, he did rule in favour of the generic companies, but his rulings held up on Appeal.

At the start of his term in office, the previous Commissioner, Adv. Asa Kling, could not rule on cases where one side was represented by Reinhold Cohn or Gilat Bareket because of a perceived conflict of interest. Centocor Ortho Biotech Inc. received regulatory approval for a pharmaceutical preparation described in IL 154325.

From the affidavits submitted by employees of the agents for applicant (Reinhold Cohn Patent Attorneys) it is clear that, despite the firm being organized and having procedures in place to cover patent term extensions, there was human error. The deadline was missed and this was discovered seven months later.

Section 164 A1 of the patent law states that:

164.—(a) The Registrar may, if he sees reasonable cause for doing so, extend any time prescribed by this Law or by regulations under it for the performance of anything at the Office or before the Registrar, except for…section 64… …unless he is satisfied that the application in Israel was not submitted on time because of circumstances over which the applicant and his representative had no control and which could not be prevented;

The Deputy Commissioner Jacqueline Bracha threw Reinhold Cohn a life-line by ruling that mistakes were unavoidable, thereby allowing a missed deadline for requesting patent term extensions to be retroactively extended despite the Law being unequivocal that the deadline was not extendible. For more details, see here.

The patent term extension legislation has been amended several times, in the third, seventh and eleventh amendments to the Israel Patent Law.

The third amendment was ambiguous and in an ex-partes ruling affecting three patents in what is now known as the Novartis ruling, Then Acting Commissioner Israel Axelrod understood that the amendment was designed to give a real advantage to the drug development companies and they could choose the country to base their patent term extension on.  This was not what the Knesset intended and the amendment was again amended in what was the Seventh Amendment of the Israel Patent Law, to tidy up this and other ambiguities of the original amendment. Israel Axelrod, who was widely expected to be appointed as Commissioner but instead, was side-ways promoted to the Beer Sheva District Court.

In 2006, under intense pressure from the US who put Israel on their special 301 Watch List of countries not properly protecting Intellectual Property, the State of Israel amended their Patent Law again.

Arguably the Commissioner is correct that the purpose of the Law is to strike a balance between the conflicting interests. Arguably, however, as in the Novartis ruling and subsequent amendment, the intention of the legislators remains to provide narrowest possible intention to rules governing patent term extensions, to encourage generic competition, thereby favoring local industry over foreign companies, and providing cheap medicine. We should bear in mind that the legislation was the result of heavy US protectionist pressure, and in the same way that the US government tries to benefit US interests, it is (at least arguably) legitimate that the Israel Law is intended to protect local interests as much as possible.

Teva is not, of course, the only Israel company to bring a drug to market. Neurim managed to patent Circadine which is a treatment for insomnia based on melatonin, and also obtained patent term extensions around the world. In the UK, the patent office refused to grand a patent term extension arguing that the active ingredient was used in a treatment for sheep.  Judge Arnold upheld the patent office’s position, see patent term extensions for Neurim which was appealed to the House of Lords, and Lord Robin Jacobs referred it to the European Court of Justice ECJ in his last ruling on the bench. The ECJ took a similar position to that of the current commissioner, preferring an interpretation that considers the rationale behind the law to a literalist ruling.

The main problem with ex-partes rulings is that arguments of the other side are not heard.  It is not inconceivable that Duavive works and Conbriza didn’t, not because of a new material being developed but because of some symbiotic effect between the bazedoxifene ingredient and the conjugated estrogens. In this instance, Duavive was developed by Wyeth/Pfizer but it is not inconceivable that such a drug could be developed by a third party. If the Conbriza formulation is not on sale and no other drug by the patentee, should Wyeth-Pfizer be entitled to a drug term extension past the main patent lapsing? Another hypothetic question worth considering is that an active ingredient protected by a patent term extension could actually not be so active at all, and could be co-dispensed with a drug that itself is active, but cannot be patented. The combination could be protected by the patent term extension in a scam designed to defraud the public. I am not alleging that this is the case here. I have no ideas what conjugated estrogens do or how they work. I am merely highlighting a slight logical flaw in the Commissioner’s reasoning.

That as may be, this ruling is a brave but reasonable one. Being ex-partes it cannot be challenged directly, but could be challenged by TEVA, Unipharm or some other generic company launching a Bazedoxifene containing formulation during the extension period.  The Knesset could also decide to amend the Patent Extension Law to rule out this interpretation if they deem fit to do so.


Cost Ruling in Moshe Lavi vs. Zach Oz – A failed attempt to get a poorly written patent canceled.

December 20, 2017

Figs for ACMoshe Lavi owns Israel Patent No. 157035 titled “MODULAR SUPPORT BRACKET” which describes  a support bracket for an air-conditioner unit. He’s tried to enforce it in the past against Zach Oz Airconditioners LTD, and the parties came to an out-of-court settlement.

Lavi then sued again, and Zach Oz countered by applying to have the patent cancelled. This attempt was unsuccessful and a ruling upholding the patent issued on 5 March 2017.

Lavi then applied for costs under Circular MN 80. According to Lavi and his attorneys, Pearl Cohen Zedek Latzer Brats, the costs incurred in fighting the Opposition were a fairly massive 526,750.058 Shekels!? We assume that there is a typo here, and the costs requested were just over half a million Shekels and not just over half a billion shekels, as that would be ridiculous even for Pearl Cohen. It seems that they charge in dollars and not Shekels, and are unaware of the need to round up to the nearest 5 agarot.

Lavi claims that he is entitled to the real costs incurred, which are reasonable, necessarily incurred and proportional in the circumstances. He accuses Zach Oz of acting in bad faith by challenging the validity of the patent. His counsel appended a list of legal counsel’s hours, invoices, and an affidavit by Moshe Lavi.

The Respondents Zach Oz, confusingly represented by an Adv. Pearl (not Zeev, even he is aware that fighting both sides of an opposition proceeding is not acceptable) claimed that the costs were unreasonable and some were unnecessary or disproportional. They also claimed that it was Moshe Lavi who acted inequitably. They note that the case-law states that costs are not meant to be a punishment, and the costs in this case were unreasonable and were incurred due to unnecessary wariness by the patentee. Furthermore, the adjudicator is supposed to take into account the public interest and importance in maintaining the integrity of the patent register. Awarding inflated costs in cases that they lose, would discourage people from challenging the validity of patents and would prevent access to legal recourse.

Ruling

The winning party is entitled to costs incurred in legal proceedings. However, the arbitrator is not obliged to rule actual costs, and is required to consider the specifics of the case and judicial policy. See paragraph 19 of Appeal 6793/08 Loar LTD vs Meshulam Levinsten Engineering and Subcontracting Ltd. 28 June 2009.

In the case-law it was ruled that for the Applicant for actual costs to prove that they are reasonable, proportional and necessary in the specific circumstances. See Bagatz 891/05 Tnuva Cooperative for Marketing Agricultural Produce in Israel Ltd. et al. vs. The Authority for granting Import licenses et al. p.d. 70(1) 600, 615 from 30 June 2005. The limitation of costs to being necessary and proportional is:

To prevent a situation wherein the costs awarded are too great, and will discourage parties from seeking justice, will create inequalities and make court proceedings unnecessarily costly, limiting access to the courts. (Appeal 2617/00 Kinneret Quarries ltd. cs. The Nazareth Ilit, Planning and Building Committee, p.d. 70(1) 600, (2005) paragraph 20.

The amount of work invested in preparing submissions, their legal and technical complexity, the stage reached in the proceedings, the behavior of the parties before the court of the patent office and with regard to opposing party, inequitable behavior of the parties, etc. All these are considerations that should be taken into account when considering “the  specifics of the case”.

In this instance, the patentee did win his case and is entitled to recoup costs, and the losing party does not dispute this. However, in this instance, the patentee is not entitled to the requested costs for reasons detailed below.

Firstly, after consideration of the case and the submissions, none of the parties appear to have acted inequitably. It is not irrelevant that neither party has related to the decisions made in this instance, including the main ruling. This is because there is no evidence of inequitable behavior by the parties. Similarly the affidavits are acceptable. In this regard, it is not reasonable to accept the patentee’s allegation that the challenge to their patent was baseless. The file wrapper shows that the challenger made a reasonable and fair attempt to show that the patent was void, based, inter alia, on prior art.

Furthermore, as to the costs requested, the adjudicator, Ms Shoshani Caspi did not think that they were reasonable, essential or proportional, as required by the Tnuva ruling.

The expert opinion of the expert who attended the hearing, costs of 29,685 Shekels including VAT were incurred. This was considered reasonable. It also appears to have been necessarily incurred. However, the Applicants did not need to use lawyers to prepare the expert opinion’s opinion for him, whilst claiming costs for him preparing his opinion as well. This is a double request for costs and should be eradicated.

In his Affidavit, Mr Lavi claimed that the challenge to his patent caused him to spend $137,901.37 including VAT. This is the 499,065.058 Shekels requested by the Applicant, excluding the expert opinion. The Affidavit explains that this sum includes his legal counsel’s work, couriers, printing, etc., however, no evidence of couriers and printing costs were given, and it appears that these incidentals were included in the invoices from his legal representative. To provide evidence for the legal costs incurred, invoices from PCZL were appended which included the hours spent by attorneys working on the case.

One cannot ignore the fact that the list of work done included demanding extensions, attempts to negotiate an out-of-court settlement, interim proceedings that the opposing party won, an appeal of the refusal to throw the case out, https://blog.ipfactor.co.il/2015/03/08/il-157035-if-one-accused-of-infringing-a-patent-does-not-challenge-its-validity-is-the-accused-estoppeled/

and other costs that are not essential and thus not reasonably chargeable to the other side.

double dipThe attempt to roll these unnecessary costs to the losing side and the double charging for the expert witness are inappropriate to use an understatement, and one assumes that these requests were made inadvertently as they were signed by educated attorneys that are well versed in the relevant legal processes.

Furthermore, after a detailed review of the file, Ms Yaara Shashani Caspi concluded that the case was relatively simple and there were neither particularly complicated legal or factual questions. Consequently, it is difficult to accept that the request for costs of 499,065.058 Shekels [sic] including VAT is reasonable, essential or proportional in the circumstances. It will be noted that as ruled in the Tnuva case (paragraph 19). The real costs that the patentee incurred is only the starting point and not the end point of the costs ruling.

It transpires that the time spent in each round was very large. For example, 65 hours was spent on a request to cancel an expert opinion, and 44 hours on the request for costs, etc. The Applicant did not provide an acceptable justification for these figures.

In light of the above, legal costs will be awarded by estimation, and in addition to the 27,685 Shekels (including VAT) to the expert witness, a further 150,000 Shekels (including VAT) are awarded in legal fees.

The deadline for paying the costs is 30 days, then interest will be incurred.

Legal Costs Ruling by Ms Shoshani Caspi in cancellation proceedings of IL 157035 Moshe Lavie vs. Zach Oz, 25 October 2017.

Comment

The whole case was mishandled by Zach Oz, who could and should have won the original infringement case in court, but decided to accept a poorly worded out-of-court settlement. By any reasonable attempt to construe the claims so that the patent was not anticipated by support brackets for shelves, Zach Oz’ supports were not infringing. In other words, they could have used the Gillette defense.

Ms Shoshani Caspi’s criticism of PCZL overcharging and double dipping is appropriate in this instance. The attempt to have the case thrown out on a creative estoppel based on not having challenged the validity of the patent when sued for infringement was ridiculous. Ironically, this patent is not worth the costs spent on litigating it. This is a clear instance of lose-lose by all concerned except the lawyers.


Copyright in Numerology

December 12, 2017

numerologyNumerology is any belief in the divine, mystical relationship between a number and one or more coinciding events. It is also the study of the numerical value of the letters in words, names and ideas. It is often associated with the paranormal, alongside astrology and similar divinatory arts.

gamatriya chartIn gamatriya, each letter of the Hebrew Alphabet is assigned a corresponding number. the first nine letters are numbered 1 to 9, and the next nine are assigned the numbers 10, 20, 30, etc. The final four letters are assigned the values 100, 200, 300, 400.

The word alphabet comes from the Greek Alpha Beta, and the word gamatriya comes from Gamma – t(h)reeya. That said, the Greek alphabet was based on the Hebrew and Phoenician precedents. The Latin letters were derived from the Greek ones.

The issue in question here, is whether copying sections of verbal lectures and publishing them in writing is considered copyright infringement.

In coming to their verdict, the Supreme Court has reviewed the differences between the onld and new, law, what fixation is required and in what circumstnaes a publisher or distributor can be considered as innocently infringing.

The Case

Sharon Ron is a numerology lecturer. In 2002 Ela Shonia attended his numerology course at the Association for Promoting Awareness in Haifa. At the lectures, handouts and exercises were distributed by Ron. In 2003, Shonia and a fellow student called Sarah Vakhnin attended private lessons given by Ron at his home in Kfar Sava.

Numerology 3rd milleniumIn 2004, Shonia published a book titled “Numerology for the third millenium” which went to three editions, the last one in 2010. In 2010 Shonia published a second book titled Combined Numerology. Both books were published by Astrologue Publishing LTD.

Mishkal Publishing & Distribution LTD received the rights for both books in 2010, in a deal between Shonia, Astrologue and Mishkal dated 03/02/2010 [I am writing the date in numeric form as it may portend something – MF]. Ron sued Shonia, Astrologue and Mishkal in the Tel Aviv District Court in Appeal 8822/15, and counter Appeal 8822/15. [No doubt these file numbers have some mystical significance-MF].

On 20 March 2004 and on 3 February 2010, Shonia signed declarations Read the rest of this entry »