November 8, 2017


LES Israel and IPAA invite you to an event on Wednesday, November 15, 2017, 09:00-
12:30 at ZOA House (אמריקה ציוני בית ,(26 Ibn Gabirol St. (corner of Daniel Frisch St.), Tel
Aviv (The presentations will start at 9:30).
The event will be dedicated to the topic:
Patent Term Extension Peculiarities
Israel and Europe
The topic will be presented by distinguished speakers, as follows:
 Mr. Liad Whatstein (Liad Whatstein, Adv.), Founding Partner of the Israeli law firm Liad
Whatstein & Co.:
Patent Term Extensions under Israeli law – The Eccentricities of The Local System
 Mr. Tjibbe Douma (Tjibbe Douma, Adv.), Senior Associate at the law firm of De Brauw
Blackstone Westbroek NV, The Netherlands; and
Ms. Tessa Malamud-Cohen (Tessa Malamud-Cohen, European and Israeli Patent Attorney),
Director, Patents, Global Intellectual Property of Ferring Pharmaceuticals/Bio-Technology
General (Israel) Ltd.:

SPC Squatting: SPCs Based on Third Party Marketing Authorization
 Mr. Tal Band (Tal Band, Adv.), Head of the IP Practice Group in the Israeli law
firm S. Horowitz & Co.:
Patent Term Extensions in Israel – When is it “Game Over”?

We will allocate some time at the end of the event for discussion and welcome comments
from the audience.
The event is free to LES Israel and IPAA members.
Non-members: NIS 70 charge.

Kindly confirm your participation by return email to les_israel@yahoo.com.

COMMENTS

The speakers are considered distinguished by IPAA and LES. I’ve cut and pasted their notification verbatim. I do not disagree, but merely wish to note, that the adjective is not one I chose. The speaker list is balanced in that Tal represents TEVA who usually are generics opposing patent term extensions (although recently trying to reinvent Copaxone to keep it evergreen). Liad works for the patent developers who try to obtain patent term extensions, and Tessa works in-house in the industry. I do not remember meeting Mr. Tjibbe Douma and suspect with a name like that, I would.

counting-sheepMy extensive practice has not involved patent term extensions since I split with Jeremy Ben-David, whose father, Dr Stanley Davis, drafted the Neurim patents for Circadin, whose UK Patent Term Extension went to the European Court of Justice, see here, here, here, etc, so the event has little interest to me personally, although is clearly important for the pharma crowd. Perhaps we should let sleeping sheep lie.


Retroactive Extension Granted for Reporting a Lecture Disclosing a Patent Application Prior to Filing

October 10, 2017

Background

retroactivePatentability requires that a patent is novel, inventive and useful at the priority date, which is the effective filing date.

The Novelty requirement is absolute, but there are three exceptions given in Section 6 of the Israel Patent Law 1967:

  1. A publication of the invention without consent of the patentee is not novelty destroying, provided that patentee files an patent application promptly on learning about the publication;
  2. Display at a exhibition is not novelty destroying, provided a patent application is filed within six months;
  3. A scientific lecture is not novelty destroying, , provided the registrar was given advanced warning and a patent application is filed within six months.

Section 164 gives the Registrar (Commissioner) wide discretionary powers to extend missed deadlines.

In this ruling, the Deputy Commissioner considers whether the advanced warning of Section 6(3) can be extended retroactively under the discretionary powers given by Section 164, i.e. if the Applicant can inform the Commissioner of a scientific lecture post facto and pay extension fees, so that the lecture by the inventor is not considered as novelty destroying prior art.

The Case

Japan flagOn 6 March 2012, Otsuka Pharmaceutical Co. Ltd. filed Israel Patent Application Number 218495 as a National Phase Entry of PCT/JP2010/053032 titled “Therapeutic Agent for Chronic Pain” that was itself filed on 26 February 2010. The PCT application claimed priority from JP 2009-211021 filed on 11 September 2009.

On 27 August 2009, i.e. before the priority date, the “Conference Proceedings of the 69th Tohoku District Meeting of the Japanese Society of Psychosomatic Medicine” were published. One of these was titled  “An example of complete response of ariprazole against refractory head and neck pain associated with depression”.

A significant amount of the scientific work that was the basis of the patent application and of the conference paper was disclosed in a lecture on 12 September 2009. The Patentee claims that the PCT application was filed within six months of the abstract, and claims priority from the priority application and so the PCT application benefits from the grace period under Section 30 of the Japanese Patent Law.

On 22 July 2010, prior to entering the national stage in Israel, the Agent for Applicant requested an extension to the deadline of Section 6(3). The Head of the PCT Department refused this, since the notification of the publication was not provided in advance, and he considered that only time limits given in the Law can be extended.

On 15 August 2010, the Applicant responded that they would file a second request on entering the national stage into Israel and would provide written and verbal arguments justifying an exception, and, on 16 May 2011, a further notice refusing the extension was issued by the patent office.

On subsequently entering the National Phase into Israel, and with reference to Section 48D(a) of the Law, the Applicant noted that, prior to entering the national phase into Israel, they had requested an extension to Section 6(3), and appended the decision of 16 May 2011.

During the Examination, the abstract from 27 August 2009 was cited against the claimed invention as being novelty destroying. Consequently, the Applicant requested a hearing to discuss whether the Section 6(3) deadline is extendible and, if so, whether the circumstances in question justify the Commissioner retroactively extending the deadline under section 164.

Discussion

Sections 6 and 164 are reproduced below:

  1. The right of the owner of an invention to be granted a patent shall not be affected by publication said in section 4—

(1) if it is proved that the matter published was obtained from him the owner of the invention or his predecessor in title and was published without his consent, and if the patent application was filed within a reasonable time after the publication became known to the applicant; or

(2)(a) the publication was by the owner of the invention or his predecessor in title in one of the following ways:

(i) display at an industrial or agricultural exhibition in Israel or at a recognized exhibition in one of the Convention States, of which official notice was given to the Registrar before its opening;

(ii) publication of a description of the invention at the time of a said exhibition;

(iii) use of the invention for the purposes of the exhibition and at the place of the exhibition;

(b) the publication was by use of the invention, even without its owners’ consent, at the time of the exhibition, at the place of the exhibition or outside it, on condition that the patent application was submitted within six months after the exhibition opened;

(3) publication was by way of a lecture by the inventor before a scientific society or by publication of the lecture in official transactions of the society, on condition that the Registrar was given notice of the lecture before it was delivered and that the patent application is filed within six months after the aforesaid publication.

Section 6(3) lists three conditions, that if fulfilled, render the prior publication as not damaging to the patentability of the patent. The first condition relates to the nature of the publication and to the reasons for it happening. In this instance, it relates to a lecture by the inventor before a scientific society or the publication of the lecture in the formal society conference proceedings. There is no doubt that the publication in question fulfills these conditions.

The third condition relates to the period from which the publication occurs and the date of filing of the patent. The proceedings were published on 27 August 2009, and the international publication was on the 26 February 2010. The Applicant claims that one should see the date of filing of the PCT Application designating Israel, as being the date as far as Section 6(3) is concerned. The Deputy Commissioner, Ms Jacqueline Bracha considers that the Applicant is correct in this regard.

Section 48(c) of the Law is an exception to Section 15 that states that a PCT Application designating Israel, receives a date as per the PCT Convention:

48C. The provisions of this Law shall apply to applications addressed to Israel, with the changes specified in this Chapter and with the changes specified below:

(1) the provisions of sections 11, 14, 15, 17(a) and 20 shall not apply;

(2) the provisions of section 16 shall apply to an application, in respect of which the applicant met the conditions prescribed in section 48D;

(3) the date of the application shall be determined in accordance with the provisions of the Convention;

(4) the provisions of section 165(a) shall not apply to information published under the Convention in respect of applications;

(5) notwithstanding the provisions of section 168(a), documents published according to the Convention in respect of applications shall be open for public inspection.

In accordance with Section 11(3) of the PCT Conventions, the filing date of the PCT application is considered as the National Entry Date in all designated states:

(3)  Subject to Article 64(4), any international application fulfilling the requirements listed in items (i) to (iii) of paragraph (1) and accorded an international filing date shall have the effect of a regular national application in each designated State as of the international filing date, which date shall be considered to be the actual filing date in each designated State.”

In light of this, the effective filing date in Israel is the filing date of the PCT Application designating Israel, and so the Applicant has fulfilled Section 6(3) of the Law.

The Applicant does not dispute that he did not fulfill the second condition requiring informing the Commissioner of the lecture before it happened. However, he alleges that it is within the Commissioner’s Authority to extend this deadline using the powers granted to him under Section 164 of the Law.

Patent Deadlines are generally extendible, apart from the deadline for filing an opposition, the deadline at which a patent lapses (but can be restored), the grace period for renewals, and deadlines relating to patent term extensions. Other than these, the Registrar (Commissioner) has wide discretion to grant extensions. This is clear from Section 164 of the Law, repeated below:

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 the times prescribed in sections 30, 56, 57, 61, 64F, 64M; however, for purposes of section 10—

(1) the Registrar shall not extend the time prescribed by subsection (a)(1), 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;

(2) the Registrar shall extend the time prescribed by subsection (a)(2) only as long as the application has not yet been accepted and if he is satisfied that a mistake was made innocently.

(3)The Registrar may make the extension of times conditional on conditions as he deems fit.

(c) An application for extension of a time may be submitted within the time or after it.

(d)Notwithstanding the provisions of subsections (a) and (b) and the provisions of any other Law, if the last day of the period prescribed in section 10(a)(1) falls on a .day that is not a work day, then the period shall end on the first work day thereafter; this provisions does not derogate from the power to extend beyond the time prescribed in section 10(a)(1).

The Examiner considered that this condition is not a deadline that can be extended and so the Commissioner does not have jurisdiction under Section 164.

The Deputy Commissioner notes that as far as the publication in question is concerned, the Applicant acted in good faith opposite the Patent Office. Firstly, even before entering the national phase the Applicant requested an extension to inform the patent office, when filing, he noted the request on the Application form and listed the reference in the list of disclosed prior art in accordance with the duty of disclosure under Section 18 of the Law. When discussing the requirement in the hearing, the question arose as to whether the Applicant should have appealed Dr Bart’s ruling. Perhaps the Applicant should have Appealed under Section 161 but the Deputy Commissioner does not consider it too late to discuss the issue substantively, nor does she consider the failure to appeal as being inequitable behavior.

The main issue under discussion, is whether the requirement to provide advanced knowledge of a publication is a deadline that can be retroactively extended under section 161, i.e. whether this is an exception to the rule.

To answer this question, it appears appropriate to consider the underlying purpose of the condition and its source. Section 11 of the Paris Convention for the Protection of Intellectual Property 1883 states that the signatory states should provide temporary protection for a period not exceeding that defined in section 4 of the Convention (grace period) for displaying an invention or design at an official exhibition. Indeed, allowing exhibited goods to be protected was one of the aims of the convention:

“(a) Since lack or inadequacy of protection of industrial property at international exhibitions was one of the reasons which promoted the conclusion of the Convention, it is natural that the principle of such protection should already have been included in the original text of the Convention of 1883. It was then the intention to oblige the member States to take necessary legislative measures to that effect but to leave them free in determining the ways and means of achieving this end.”

GHC Bodenhausen Guide to the Application of the Paris Convention for the Protection of Industrial Property, as Revised at Stockholm in 1967 (1968) page 149.

Since the individual states had wide discretion regarding their national legislation and the administrative requirements for obtaining this protection, the basis for the pre-exhibition notice, which is largely unique to Israel, is not part of the convention itself. Additionally, examination of the pre legislative proposed law does not provide an explanation.

The Law in many jurisdictions does not require a pre Exhibition notice of intent to exhibit to be submitted to the patent office. The Japanese Patent Office requires sub mission of the patent application together with a notice within six months of the exhibition. (See Hiroya Kawaguchi “The Essentials of Japanese Patent Law” (2007) p. 31.

A similar requirement for submitting a the notice of an exhibition together with the application is found in Section 55 of the European Patent Convention:

“(1) For the application of Article 54, a disclosure of the invention shall not be taken into consideration if it occurred no earlier than six months preceding the filing of the European patent application and if it was due to, or in consequence of:

(a) an evident abuse in relation to the applicant or his legal predecessor, or

(b) the fact that the applicant or his legal predecessor has displayed the invention at an official, or officially recognized, international exhibition falling within the terms of the Convention on international exhibitions signed at Paris on 22 November 1928 and last revised on 30 November 1972.

(2) In the case of paragraph 1(b), paragraph 1 shall apply only if the applicant states, when filing the European patent application, that the invention has been so displayed and files a supporting certificate within the time limit and under the conditions laid down in the Implementing Regulations.”

In the US, the exhibition of the invention is part of the one year general grace period for inventor disclosures – See §35 US Section 102b of the US Patent Law and Daniel J. Gervais International Intellectual Property: A Handbook of Contemporary Research (2015) p.45.

From here it is clear that the Israel Law is somewhat unique in requiring prior notification. In light of the difference between the Laws and the legislative being silent regarding whether or not this period can be extended, the question of the interest that the Israel Law intended to protect by requiring prior notification of exhibition or lecture becomes important.

There are three possible purposes that come to mind.

  1. One possibility is to protect the inventor who, prior to exhibiting or lecturing, must determine that the exhibit or lecture will not damage his future protection. By providing notification, the Commissioner can obtain the disclosure and will be reminded of the Section 6 exception. If the inventor does not receive the authorization to exhibit, he can quickly file an Application before the publication. This paternalistic rationale, even if a positive thing, is somewhat exceptional on the IP horizon.
  2. Another possible purpose is certainty of the public regarding whether a prior disclosure is legally and not merely factually novelty disclosing or not. In other words, the public wishes to know as early as possible, if an invention is to be patent protected or if it is in the public domain. Even if this is an appropriate aim, it is not achieved by the requirement for earlier registration under section 6(3) of the Law, since such notification is not known to the public prior to the patent application becoming available for public inspection 18 months after filing (and until fairly recently, only on allowance). At the time that the patent file wrapper is available for inspection, it makes no difference if the Patent Office was informed of the exhibition or lecture in advance or after the event. Thus the public reliance on publication is different from the reliance on national phase entry which interested parties can and do follow, see for example, 23511-05-12 Mindcake LLC vs. Israel Commissioner of Patents and Trademarks, 17 January 2013:

Thus, the extension of the national phase entry deadline is a matter of significance, since when this date passes, the invention is immediately transferred from the patentee to the public domain, who is allowed to make use of the invention according to their will.

In this instance, we cannot assume that this reliance is relevant since the public learn about the exhibition approval long after it has issued, so long as it is before the patent wrapper itself is open for inspection.

3.A third aim might be to provide the Commissioner with the tools to determine whether a prior art publication is indeed at a scientific or recognized exhibition or not. For such an aim, the Deputy Commissioner does not consider that prior notice makes much difference. The onus is on the patentee to convince the Commissioner, who is not required to make investigations. So in cases where the Applicant is unable to convince the Commissioner that the exhibition should not be novelty destroying, his request will be refused. From here it is clear that any evidentiary problems will work against the Applicant and we therefore return to the first suggestion that the purpose is to protect the Applicant.

This is not the first time that the Court of the Patent Office has considered this issue. In re IL 68447 to Byong Wha Suh (published on 29 February 1984), the Commissioner was petitioned to extend the Section 6 time-frame. After considering the European Patent Law, the Commissioner reasoned that one could indeed extend the deadline for informing the ILPO and reasoned as follows:

“We state immediately that in our Opinion, section 164a of the Israel Patent Law is sufficiently broad to allow the Section 6(2)(a)(1) deadline to be extended.
The Section allows deadlines that are stated in the Patent Law or the Regulations to be extended, and the wording is not limited to procedural deadlines (such as the deadlines for filing and responding in contentious proceedings), but also allows extensions of deadlines that can affect the validity of a patent. This can be learned from the wording of Section 164 which specifically excludes extending deadlines for paying renewal fees for lapsed patents. This teaches that the legislative body did not see fit to prohibit other deadlines being extended at the Commissioner’s discretion.

It is true that there is no positive reference to Section 6(3) in Section 164 of the Law. Section 164 does, however, allow the Commissioner to retroactively allow extensions. The Applicant is correct in his claim that “so long as the Commissioner receives notification of the lecture before it is given” relates to time limits, even if not explicitly. It is also clear that this time passes with the lecture and so any time thereafter misses the stated deadline for the action.

To the extent that the advanced deadline is paternalistic, prohibiting extending the time limit will not enable the intent to be achieved. From here, the Deputy Commissioner deduces that the Commissioner (and by transfer of powers, she herself) has the authorization to extend the time limit.

It is true that the Commissioner has wide discretionary powers under Section 164, the extent of which changes with circumstances. Application of Section 164(a) to give a retroactive extension will be depend on the nature of the process, the specific circumstances, and the weighing up of the Applicant’s interest and the public’s interest. See Appeal 2826/04 Recordati Ireland Ltd vs. Commissioner of Patents, 28 October 2004.

Section 164 of the Law, cited above, that allows the Commissioner to extend deadlines, does not extend to all of the dictates of the Patent Law (for details of the things that the Commissioner does not have discretion to extend deadlines, see Friedman page 172-178). In this instance, the Court of First Instance correctly noted that the Commissioner can extend deadlines before or after they pass, as stated in section 164(c), so long as he sees a reasonable justification for so doing, but the issue is not one of legal authority, but rather of the correct use of that authority. In Appeal 248/95 Fabio Perini S.P.A v. Industrie Meccaniche Alberto Consani S.P.A., Judge Winograd considered the correct interpretation of Section 164 of the Law (in the original version prior to the third amendment). The Court supported the liberal interpretation granting extensions for filing Oppositions, stating that Opposer serves the public interest and the integrity of the Register, and not merely his own interest by filing Oppositions, and the range of things that the Commissioner is allowed to extend is wide.

As ruled in the IL 110548 Opposition Shmuel Sadovski vs. Hugla Kimberly Marketing Ltd. (12 August 2010), the relevant considerations for deciding that a justification is reasonable is the extent of the delay and the explanation for it. The extent of the delay can affect not just the perceived behavior of the Applicant and whether it is reasonable, but also whether the public can be considered to have relied on that behavior.

In this instance, the Applicant first approached the committee with explanations that do not seem unreasonable. The difference between the Israel Patent Law and that in Japan and many other countries goes a long way to justify the mistake made. Indeed, the Applicant made a submission via their attorneys, prior to entering the national phase so as to address the issue as early as possible. As to third parties relying on the delay, it does not seem that this can be construed as being in any way connected to them not contacting the Patent Office prior to the lecture, as explained hereinabove.

Nevertheless, this ruling is given ex-partes at the request of the Applicant, without the public being represented, and at this stage third parties do not have standing. Third party standing will only occur if and when the patent is allowed. In light of the above, the Deputy Commissioner rules that the application can continue to examination without the prior publication in the form of the lecture acting as novelty destroying prior art, using discretion under Section 164 (b) of the law which states “The Commissioner is authorized to extend deadlines as he sees fit”.

Conclusion

The request is accepted and the deadline for informing the patent office is retroactively extended on condition that a fee be paid from the time of the publication of the Application having been filed on 27 August 2009, until the national phase entry into Israel on 6 March 2012. It is noted that the submitted notice that informed the patent office of the prior disclosure was rejected by the Examiner, and the Applicant could have appealed that decision within 30 days, so extension fees would anyway be due.

The retroactive extension is granted contingent on any Oppositions submitted after allowance being considered on their merit, with the issue of this extension being considered legitimate grounds for inter-partes challenge.

Ruling by Ms Jacqueline Bracha re Section 6 publication of IL 218495, 24 September 2017


An Attempt to Cancel Patent For Breaking GSM Standard Algorithm

September 27, 2017

GSM logoDr Elad Barkan invented or discovered a cryptology method for breaking GSM coded communications and filed a patent application on 30 April 2003 titled “Cryptanalysis Method and System”, which was awarded Israel Patent No. IL 155671 in June 2005. The method was based on the discovery of a fundamental coding flaw in the GSM protocol which caused quite a stir among both telecommunication experts and the cryptology community.

DiscoveryOn 23 June 2015, Rontal Engineering Applications 2001 Ltd applied to have the patent cancelled on various grounds including that it was a discovery and not an invention; that the supplementary tests of inventiveness were met so that there was no inventive step, and that the patent was never implemented. In a long and detailed decision, Deputy Commissioner Ms Jacqueline Bracha considered the various allegations and ruled on the validity of the patent registration.

After the statements of case and the evidence were submitted, a three-day hearing was scheduled in December 2016, and the parties then submitted written summations.

Complicating matters, during the summation stage, the Opposer, Rontal Engineering Applications 2000 Ltd, filed for bankruptcy. Dr Barkan submitted a request that Rontal Engineering post a bond for 200,000 Shekels, to pay his legal fees should he prevail against them. The Deputy Commissioner agreed with his request and a bond was posted duly on 15 July 2017.

Somewhat unusually, the ruling starts with a list of definitions of various words relating to the GSM protocol. Then the decision goes on to rule if the invention relates to patentable subject matter.  In a 46 page ruling with 165 paragraphs, the Deputy Commissioner found that the invention is patentable per se. Furthermore, the invention described is substantially different to the closest prior art so the patent was upheld.

In my conclusions at the end of this article, I conclude that the Opposers could probably have successfully obtained their real objective by negotiating a claim restriction to exclude brute force attacks which were never intended to be covered by the claims anyway.

A summary of the Decision follows.

Glossary

The patent relates to GSM encryption, and to understand the case, a number of terms need to be defined.

GSM NETWORKGSM is an acronym for Global System for Mobile Communications. It is a standard for cellular phone networks developed in 1987 and available since 1992. The standard was published before the priority date. The standard is a digital telecommunication standard and voice is digitized, transmitted and then converted back into sound. GSM is encrypted to prevent third parties from eavesdropping. The communication takes place via base stations.

Read the rest of this entry »


Exams for Wannabee Israel Patent Attorneys

September 13, 2017

The Israel Patent Office has announced the dates of the qualification exams for Israel Patent Attorneys.

Oral Bagrut PicUnless given a dispensation from one, the other, or both, each candidate has to pass a written exam that tests calligraphy and scribal errors patent drafting skills and langauge skills, and an oral exam that tests dental hygiene knowledge of IP Law, particularly but not exclusively, Israeli law.

exam paperThere are two sessions for the written exams. Those wishing to take an examination relating to computer, mechanical or electronic technologies are invited to come on Monday 27 of November 2017. Those wishing to try their hand at biology or chemistry are invited to come on Tuesday 28 November 2017.

The oral exams will be held on 20th and 21st November and candidates will be assigned specific times on registration.

The deadline for registering is one month in advance.


Employee Inventions

August 14, 2017

termination of employment 2Earlier this month, three decisions were published by the tribunal for establishing compensation for employee inventions. The tribunal consists of a judge, the Commissioner and an academic.

The legal basis for the tribunal providing compensation is Section 134 of the Israel Patent Law which states:

In the absence of an agreement that determines whether the inventor is entitled to compensation and what the compensation should be, appropriate compensation will be determined by the Committee for Compensation established under Section VI.

The three decisions follow a Supreme Court Appeal of a decision of this nature  Supreme Court 4353/14 Barzani vs. Isscar Ltd, from 8 July 2015 which makes clear that the committee’s powers are non-cognitive and the parties can come to alternative contractual arrangements. The rulings provide a good indication of how the committee sees its responsibilities, but are censored of details that could reveal the employee or the company but some general guidelines can still be drawn:

  1. If there is an agreement in place, including one for token compensation or for no compensation at all, the committee has no standing.
  2. Registering the application in the name of the company and the inventor filing assignments of the corresponding patent abroad, including for a nominal sum such as one US dollar, is not considered as an agreement and does not disqualify the inventor from receiving compensation from the committee.
  3. Clauses in the employment contract or an NDA signed by the employee whilst a consultant before starting to work on a salary basis, that state that any invention by the employee will be the property of the company do not mean that the committee has no standing and the employee will not be entitled to compensation ruled by the committee.
  4. A termination agreement signed by the employee in which he states that he does not have and will not have any claims against the company is considered a waiver of compensation.
    Unlike labour law where the labour court assumes powers to delete or amend clauses in a contract that contravene standard labour law, the compensation to inventors is dispositive and can be waived. Furthermore, the committee does not have the power to amend agreements. Once it determines that there is an agreement in place, whatever its terms, the committee no longer has any standing.
  5. Union negotiated general contracts are considered binding on the employee.
  6. Efficiency proposals and valuable discoveries are probably not service inventions

The three rulings may be found here, here  and here.

 


A Ruling Concerning Service Invention Compensation by a Worker of a Unionized Industry

August 10, 2017

This is the third decision on employee compensation that issued this month.

In this case, the employee inventor requested that the committee for discussing employee compensation for service inventions rule compensation under Section 134 of the Israel Patent Law. On 22 July 2014, the Company responded by requested three interim rulings:

  1. That the case be thrown out due to the Statute of Limitations.
  2. That the case be thrown out due to tardiness or the employee having given up on receiving compensation
  3. (in absence of above) that the committee set a timetable for the proceeding.

The parties filed responses and further submissions and attended a hearing on 24 December 2015, and the committee decided that the parties should concentrate on the issue of whether or not the committee had standing in this instance.

The Applicant (inventor) submitted his summation on 12 April 2016 and the respondent (company) submitted their summation on 13 December 2016, and a counter response was submitted on 1 March 2017.

The Applicant submitted an affidavit as did Mrs. XXXX (job description not given) and Mr. YYYYY, the head of the patent committee of the respondent.

The facts (censored)

The Applicant started working for the company in 1993 and was employed to_________. In the scope of his duties, he suggested some efficiency improvements and inventions as detailed below.

The company is_____________________.

The applicant detailed eight suggestions that he submitted: Read the rest of this entry »


A second ruling on employee compensation under Section 134

August 8, 2017

This is a second employee invention where the inventor has referred the case to the relevant committee under Section 134 of the Israel Patent Law 1967. The company countered that the case should be thrown out.

Here are the details:

On 25 June 2013, Mr. XXXX, henceforth Ploni (see Ruth 4:1) requested a compensation ruling under Section 134 of the Patent Law for his employee invention, made during his employment at YYYY Ltd, henceforth the company where he worked over the years____________.

On 13 February 2014, the company requested three interim rulings:

  1. That the case be thrown out due to the Statute of Limitations.
  2. That the case be thrown out due to tardiness or the employee having given up on receiving compensation
  3. (in absence of above) that the committee set a timetable for the proceeding.

On 11 March 2014, the Employee Inventor responded to the request for a timetable and on 5 June 2014, requested a timetable himself.

In an interim decision from 15 June 2014 the committee ruled:

After reviewing the documents mentioned above, and also the response of 11 March 2014, the committee with relate to the issue of the employee having apparently given up on compensation in light of the correspondence between the parties. Thus Ploni is given 30 days to respond to the question of giving up of rights within 30 days.

Before a hearing was held, on 4 August 2014, the committee suspended the proceeding pending the Supreme Court’s ruling on Bagatz 4353/14 Barzani vs. Isscar Ltd, regarding the cogent nature of the compensation under section 134.

In that case, the Supreme Court affirmed that the Section 134 compensation was dispositive and on 21 September 2015 the committee ruled that the hearing would focus on whether or not Ploni had given up on rights under Section 134.

Applicant’s claims

Ploni is a mechanic engineer that was employed by the company in the capacity of ___________. The company specializes in ______________.  Ploni claims that during his employment with the company he invented ___________. Ploni considers that he is entitled to compensation for his work in developing the invention which resulted in patent applications in Israel and abroad.

Ploni claims that during his employment, he recognized the need for using ___ with special characteristics_____________. Ploni claims to have taken the initiative of approaching the company to develop these solutions. He claims that he received support and the blessing of the CEO, Mr. YYYYY, and from the head of R&D Mr. ZZZZZZZZ and this resulted in a new research area at the company.

Ploni claims to have developed the _________ with original characteristics_____________ and a patent application was filed on _____________. He claimed that the early development was done at home in his own time, and only later was his boss, WWWW informed.

Ploni claimed that the Company had not developed _________until then, but applied the invention to other areas which were successful. Consequently Ploni claims that due to his development of the invention he is entitled to compensation.

Ploni denies being party to any waiver agreement with the company that relates to his inventions as an employee of the company.

The Company’s Claim

The company claims that Ploni signed a secrecy agreement (NDA) that stated that all inventions would be the sole property of the company. On termination of his employment, Ploni signed a statement to the effect that he had and would not have any monetary claims against the company. Furthermore, Ploni signed assignments of the invention to the company.

Discussion

The legal basis of the committee is defined in Section 134 of the Law as follows:

In the absence of an agreement that determines whether the inventor is entitled to compensation and what the compensation should be, appropriate compensation will be determined by the Committee for Compensation established under Section VI.

The Section opens with the words “in the absence of an agreement…”, thus when there is an agreement for employee compensation, its amount and conditions, the committee does not have authority to relate to the case.

Both parties accept that this was a service invention.

In the Committee ruling concerning Barzani vs. Isscar Ltd from 4 May 2014, which withstood an Appeal to the Supreme Court 4353/14 Barzani vs. Isscar Ltd, from 8 July 2015, it was determined that Section 134 is non-cognitive (dispositive) in that the parties can come to some other arrangement.

“The committee came to the conclusion that Section 134 is not a cogent right and is not employment law that, as socialist rights has special protection. On the face of things, and in line with the wording of the Law, it appears that the committee was correct (the Article states ‘where there is no agreement that sets employee compensation’). That as may be, with the limited right to meddle with committee decisions, the court does not see fit to interfere in this instance.

 The Supreme Court upheld this finding in 4353/14 Barzani vs. Isscar 8 July 2015.

Was there a Waiver of Rights by the Inventor?

Re Barzani ruled that the parties can make their own arrangements regarding compensation, and so the question is whether the contractual employment arrangement agreed to by the parties included or serves as a waiver of inventor compensation.

Prior to commencing employment, on 19 May 1996 Ploni signed a non-compete non-disclosure agreement. Paragraph 7 of this states that:

I hereby declare that all developments, innovations, inventions or improvements of products, materials, machines, equipment processes or manufacturing processes which I will be party to by way of my employment or which I will become aware of through my employment, are the property of the company and I have no rights in them.

We note immediately that as ruled in the Actelis vs. Yishai Ilani rejection of 3 February 2010, this wording is not in and of itself a waiver of section 134 rights.

termination of employment 2At the end of his employment, on 11 November 1999, Ploni signed a further document that was titled “Secrecy Agreement” and  paragraph 4 thereof is written in a similar style to paragraph 7 of the non-compete non-disclosure agreement from 1996:

The end of employment document is titled “Declaration” and states:

I declare in this, that with termination of my employment with the company _______ Ltd, and after being released from obligations to the company _______ Ltd, I am entitled to the social benefits of the workers and the pension rights and deposited by the company and I do not have and will not have any claims for damages or other claims.

In patent applications filed in the US, Canada, UK,  Japan and Hungary, assignments of the patent were made. By way of illustration, in the US, the assignment states:

“in consideration of the sum of One Dollar…we, the said ASSIGNORS, have sold, assigned transferred and set over… unto the ASSIGNEE…our entire right, title and interest in…

The Applicant claims that his signature was forged but the committee does not have the authority to examine such claims.

The Company is relying on three separate documents as the basis of their claim that Ploni has waived his rights:

  1. Engagement terms
  2. End of employment terms
  3. Assignments of the various foreign patent applications

In re Barzani the committee ruled that the end of employment terms are those that should be used to ascertain whether or not there is a waiving of rights:

With respect to the first and third documents we believe, as stated in re Ilani, that these are waiving of rights to the patent in favour of the company and do not constitute a waiver of compensation for the invention. The question of a waiver for compensation is found in the document that relates to the termination of employment. In this regard, it is noted that Ilani did not relate to termination of employment documentation.

Ploni claims that the termination of engagement document relates to rights until that time since the collective work agreements related to freeing of pension funds anyway. However, the committee was not prepared to consider this document as meaningless.

The general nature of the end of engagement document does not exclude service inventions, see re Barzani paragraph 44:

The wording of the end of employment document is clear and unambivalent. The Applicant has no and will not have any claims whatsoever. This wording is general and does not exclude employee inventor rights. The nature of this document is to separate the employee from the company and to terminate all obligations between the parties and that withheld benefits and redundancy payments are released to the worker. This document reflects the joint interest of the parties that there will be no future claims against the employer.

The understanding of the employer regarding what rights are included in the waiving of claims in the termination agreement are not relevant to the current issue. The waiver is a general waiver and is forward looking as discussed in re Barzani:

The committee must consider the intentions of the sides as reflected in the concrete agreements that are before them, and where the parties’ intention was to end their relationship and to prevent future legal issues, their agreement should be recognized. The Applicant claimed that he was unaware of rights under Section 134 of the Patent Law, and so the general waiver cannot include this. This claim is not acceptable. The waiver is general in wording and forward looking “there will not be…” “I will not have…”. So even rights that have not yet materialized, and so there is no specific awareness about them, are considered as included in the general waiver. This includes the right to compensation which is likely to materialize in the future.

This implies that Ploni waived all rights.

 

termination of employmentPloni claims that even if there is a general waiver, it should be voided as being boiler plate text in a standard contract and thus not binding. See Section 3 of the Law of Standard Contracts 1982.

 

 

In re Barzani paragraph 48 it is stated that the committee for compensation and remuneration does not have the right to void individual paragraphs of agreements if there is such an agreement.

In our opinion, the respondent (company) is correct. Although in Rothem vs Teva Medical Ltd 25, July 2005, we ruled that the committee can rule regarding whether it has authority or not, and whether a specific invention is considered an employee service invention, and whether or not there is an agreement regarding compensation. The Court authority found in Section 3 of the Standard Contract Law is not merely declarative, but is constitutive. The court does not consider whether sections of the contract are void or not, but rather actively cancels them or changes them. This committee does not have these powers. As soon as the committee recognizes the existence of an agreement between the parties, its job is done and it is not authorized to interpret or cancel clauses. Furthermore, since Section 134 allows compensation to be rejected there is logic in concluding that section 23(a)2 of the Law of Standard Contracts does apply. See Appeal 825/88 Israel Footballer’s Association vs. The Israel Football Association p.d. 48(5) 89, page 102-103, and paragraph 8(v) of Appeal 1291/03 Shlomo Naomi vs. Mister Mani Ltd, 20 December 2006.

The respondent claims that the statute of limitations applies, but since Ploni is considered as having waived his rights, this is moot.

Under section 134 the committee rules that the Applicant has waived his rights. Considering the relative assets of the parties, each party will bear their own costs.

Ruling by Prof Englehard, Then commissioner Kling and Professor Michael Talinker, 20 April 2017.