District Court Judge Requires Plaintiff Suing Patent Attorney for Failing to Pay Issue Fees on his Behalf, to Post Bond of 50,000 NIS to Cover Defendant’s Costs

August 15, 2018

Joshua Fischler has sued G.A. Ehrlich ltd (Ehrlich & Fenster Patent Attorneys – henceforth Ehrlich) for failing to pay the issue fee of an Australian Patent, thereby allegedly causing them damage of 21,000,000 Shekels.

For the sake of the court fee, Fischler sued for 5,000,000 Shekels.

Judge Michal Amit Amisman of the Tel Aviv District Court was asked by Ehrlich to order that Yehushua Fischler deposit a bond under Regulation 529 of the Civil Court Regulations 1984.

The plaintiff (Fischler) has sued the defendant (Ehrlich) claiming damages of 5,000,000 Shekels that were caused by breach of contract.

In 2010, Fischler, as owner of 99% of the shares in Koron Industries ltd, approached G.A. Ehrlich  to manage the registration of a patent in a number of jurisdictions, including Australia.

Erhlich could only make a very approximate estimation of the costs for this service since they could not tell in advance how many actions would be required in each of the various jurisdictions, and Fischler was also informed that the estimate did not include the various official fees. Consequently, from time to time, Fischler made various additional payments at Ehrlich’s request.

Fischler claimed that at the end of 2013, he suspected that he was paying additional sums that were not required, and so requested a breakdown of what had been paid for which application, and what additional charges could be expected. However, he did not receive the requested breakdown. Fischler claimed that this led to an agreement between the parties, that he would pay 8962 Shekels in cash, and the balance of the claimed debt of 41,109 Shekels would be checked. He gave a security cheque for this sum, that was post-dated six months.

Fischler claimed that this security cheque was not intended to be banked, but was banked anyway, was not honoured, and a district court proceedings was initiated (number 38702-10-15) that was subsequently combined with this case.

The present case was submitted after the case regarding the security cheque was filed, and it relates to failure to register the patent in Australia.

According to Ehrlich, on 7 August 2014, they informed Fischler that the Australian patent had been allowed and that they had to pay 2100 Shekels + VAT + 635 Australian dollars in official fees and local agent’s fees by 7 November 2014.

Fischler alleges that Ehrlich made their acceptance of the Australian issue fees conditional on Fischler settling the open debt, including that relating to the registration in other jurisdictions that he’d asked them to check.

In consequence of this, the fee was not paid to the Australian Patent Office and the period for registration lapsed. Fischler claims that Ehrlich broke the contract between the parties, and should have allowed the client to pay the issue fees directly or via his credit card (whose number Ehrlich had) and not allowed the patent to be canceled.

Fischler is relying on two opinions. The first states that the patent was relevant and economical for use in Australia, and the second opinion, that failure to register the patent in Australia had resulted in losses of 21 million shekels. However, for the sake of limiting the court fee, he was only claiming damages of 5 million Shekels.

Ehrlich counter-claimed that the effect of this lawsuit was that the plaintiff was asking the court to establish an absurd norm under which a client could make it absolutely clear, after warnings, that he had no intention of paying the requested service charges and official fees, and the service provider would have to bear the burden of paying the costs, instead of the client, to save him from the trouble he’d brought upon himself.

Ehrlich claimed that there was no disagreement that he’d informed the client regarding allowance of the patent in Australia, and to ensure that the patent would issue, he had to pay both local and Australian agent fees and the official issue fees. Similarly, there was no disagreement that Ehrlich had reminded him of the timeline and the fees, and that if the client failed to pay the fee, the application would lapse. It was explained to the client that unless he transferred the money by 7 November 2014, the application would lapse. In their final correspondence, he had informed the client that failure to transfer funds would result in him taking no further action and the application would lapse.

Nevertheless, the client, despite knowing the deadline and the result of not paying, chose not to transfer the required payment and so the issue fees were not paid and the patent lapsed.

Ehrlich claimed that there is no legal obligation for him to pay fees on behalf of a client, and at the time in question, the client owed tens of thousands of shekels, and a cheque that was supposed to cover the debt had not been honoured by the bank. Ehrlich claimed, and considered that the client concurred, that there was no agreement that he would provide  services for free and to pay fees on client’s behalf from his own pocket. He noted that the agreement with the client was that all actions required advanced payment and he was acting in accordance with this agreement.

Ehrlich further noted that the client in this instance was actually Koron and not Fischler himself. Thus even if there was some basis for the charges (which Ehrlich denies), then Fischler has no legal standing but Koron does. Ehrlich has no disagreement with Fischler and this alone is sufficient justification to throw the case out.

Finally, Ehrlich denies making payment of the Australian issue fee conditional on settling the accumulated debt for other legal services. Had Fischler paid for the issuance in Australia, he would have paid the issue fees, regardless of the open debt.

The claims of the parties

The Defendant (Ehrlich) claimed that there is room to require the Plaintiff (Fischler) to deposit a bond to ensure that should he lose, that Ehrlich’s costs be met, since the allegations are ridiculous (in Ehrlich’s opinion) and lack a legal foundation, and so should be simply thrown out.

Ehrlich considers it would be wrong to establish a legal norm wherein when a client makes it clear to a service provided that he will not pay fees and service charges and is warned of the consequences, that the service provider (in this instance, a patent attorney) should be obliged to cover costs himself, and there is no normative source that can serve as a basis for the charges brought.

Ehrlich further claims that the post-dated cheque given to him was not a conditional cheque that should not have been deposited, and it bounced due to insufficient funds in the account, and not because the client had given an order not to honour it. This is indicative of economic difficulties of the client.

Fischler claims to own two real estate properties; one in Shoham and one in Givatayim, owned together with his wife, and failure to cover the cheque was due to a legitimate business disagreement between the parties.

Fischler counter-claims in an affidavit, that the registration of the patents was supposed to be done in his name, and so he himself filed the suit. Fischler further claims that Ehrlich could have used Fischler’s credit-card to pay the official fee, and failure to pay the fee was negligence on the part of Ehrlich.

Ehrlich pointed out that Fischler did not provide documentary evidence for the real-estate that he claimed to own, and reiterated that he was under no legal obligation to pay the fee on behalf of the client, he did not have the client’s credit card details and was anyway forbidden by law to use the client’s credit card without permission.

The Normative Framework

Ehrlich is relying on regulation 519 that requires the plaintiff to post a bond to guarantee funds to cover the defendant’s expenses.

A bond to cover costs

(a) The court or the registrar, can, if deemed appropriate to do so, order the plaintiff to post a bond to cover the costs of the defendant.

The rationale of Regulation 519(a) is to prevent frivolous lawsuits and to ensure that the defendant’s costs will be covered in cases where the likelihood of the defendant prevailing are deemed weak. The case-law establishes that the judge should seek a balance between the rights of the defendant to have his costs covered, and the right of the plaintiff to have access to the courts, such that the bond should not be set too high to cause a difficulty for the plaintiff to sue. See Appeal 5488/16 Netanel vs. Rishan Buiding and Investments ltd, 17 July 2016, Appeal 8575 Hamad vs. Elvatin ltd., 30 December 2015, Appeal 2142/13 Naamat vs. Kramin, 13 November 2013, Appeal 5738/13 Amu Saluk vs. The General Health Service 14 November 2014, and 2142/13 Abraham vs. Jaegerman, 16 January 2013:

We are dealing with a regulation that invites a meeting and clash between important values. On one hand, the request to post a bond can block access to the courts before a plaintiff with few resources, and can seal his fate before he has his day in court. This conceals a real damage to the right to a trial to someone, merely because of poverty. On the other hand, the purpose of the bond is to prevent baseless charges being brought, and to ensure that if they are brought, the defendant can recuperate his costs should he prevail.

In setting this balance, the Case-Law establishes that posting a bond under Section 519 is a rare occurrence and is done only in extreme circumstances, since one should not require the plaintiff to post a bond merely as an aggressive strategy, and it is noted that there is a ‘balance of powers’ between his chance of winning in the proceeding, between the plaintiff’s ability and the right to use the courts, as a normative activity. (see Plony vs. Plony, paragraph 9, 18 February 2016).

When the court comes to rule on whether a bond is appropriate, it has to consider four issues, which the Supreme Court has divided into two groups: The first is where the plaintiff is a foreign entity and where there is no update address of record, and the second is where there is only a slight chance of the plaintiff prevailing, and where the plaintiff is in financial straits.

The two issues relevant in this instance are that the chances of prevailing and financial state of the plaintiff.

As to the chance of prevailing being slight, in re Naamat it was established that “in light of this request, the court has to consider the a priori likelihood of prevailing at a relatively early stage of the proceeding, but is not expected to make a detailed analysis. It is also stated that this consideration alone is insufficient to require a bond to be posted unless the case looks to be totally baseless.  In such cases, it is ruled that “The defendant’s interest not to be distracted by the proceeding and the public interest that the court’s time is not wasted prevails. However, it is also important to ensure that the right of access to the courts is not limited, except in exceptional cases.”

As to the financial condition of the plaintiff, in re Naamat it was established that this consideration is problematic. Particularly as the sole consideration, and even as one of the considerations. Where we are dealing with a plaintiff who is in a poor financial state, one is particularly worried that he may not be able to compensate the defendant for his expenses at the end of the proceeding. Despite this, the court has ruled more than once, that one doesn’t require the plaintiff to deposit a bond merely as a deterrent (see Appeal 544/89 Oykel Industries (1985) ltd vs. Nili Metal Works ltd, p.d. 650, and the Jaegerman case mentioned above). Furthermore, where we are dealing with a party who is resident in Israel, his financial condition does not have to be considered when weighing up whether he should hae to post a bond. The approach is that where a plaintiff is based in Israel, even where the financial state is poor, he is considered an economically viable entity that can be collected from over time (see Abu Keva above). In Judge Amit’s opinion, this approach requires the court to be very careful before ordering a bond be posted. The gates of the court should be open to all litigators, poor or rich, destitute or financially solid, and we cannot allow a situation where it appears that justice is the inheritance of the financially well off.

From the case-law taken together, it appears that requirement for a bond to be posted should reflect the balance between the right of access to the courts of the plaintiff and the property right of the defendant to be protected from baseless law-suits.

Applying the principles to the case in question

Having expressed her preliminary opinion regarding the merits of the case, the defendant’s comments and the plaintiff’s response, and to the law and case-law, Judge Amit doesn’t think that the plaintiff will prevail.

As to the likelihood of the plaintiff winning, Judge Amit Amisman first notes that case-law establishes an interest to avoid frivolous law-suits, and this is not only an interest of the defendant (which should not be sneezed at) but also of the public in that court resources are limited and expensive and should be available for handling significant issues. This itself is part of the importance of ensuring access to the courts (see re Halid, above).

In this instance, the court is not sure that the complaint can fairly be labeled a “completely groundless proceeding”. However, one cannot ignore the defendant’s points regarding the chances of the plaintiff prevailing, notably the lack of legal grounds for claiming that a service provider is obliged to pay fees on behalf of the client. Furthermore, there is no disagreement that the parties had agreed that the fees should be borne by the client, and the plaintiff had received warnings from the defendant that failure to pay the fee would result in the application becoming abandoned (see emails from 20 October and 3 November 2014).

As to the financial standing of the plaintiff, it seems to the judge that lack of cover for the cheque is sufficient grounds to establish a doubt that the plaintiff will pay defendant’s costs if he loses. True, the defendant provided documentation that claimed that he owned real estate, but there were no land registry certificates that proved that the properties were indeed his; are these properties co-owned with his spouse, or are they being used as securities or is there a lien on them? The plaintiff did not submit a valuation of the properties or any indication of his personal wealth.

The defendant has only asked for 53,807 Shekels in the parallel law suit regarding unpaid bills, and this also supports the judge’s decision to accept the request for a bond to be posted.

In this instance, the defendant has stated that should he be required to pay costs, he will do so without trying to wriggle out of them. If so, the defendant has the financial wherewithal to post a bond or to pay the defendant’s costs, and so access to the court will not be denied.

In light of the above, Judge Amit Amisman comes to the conclusion that in this instance, the balance of interests leads to requiring a bond to be placed.

Size of the Bond

When balancing all the interests and those pertinent to the case in question; plaintiff’s right of access to the court, the judge’s preliminary assessment of the case and the right of the defendant to be compensated if the case fails, with a rough estimate of the cost of mounting a defense, the size of the outstanding debt due to the bounced cheque, Judge Amit saw fit for the plaintiff to post a bond of 50,000 NIS, to cover at least part of the defendant’s anticipated costs.

Conclusion

The plaintiff will deposit a bond of 50,000 NIS (cash or index-linked bank guarantee) as guarantee to pay costs should he lose.

IF the bond is not timely paid, the case will be dismissed under regulation 519b.

As an afterword to this decision, but not to the case, the judge considers that the parties should try arbitration to try to bridge the gap between them, outside the court. The parties will respond to this suggestion by 7th July 2018.

Interim ruling by Judge Michal Amit Amisman regarding posting of a bond in Civil Case 13934-07-17 Fishler vs. G.A. Ehrlich (1995) ltd, and Civil Case 38720-10-15 G.A.Ehrlich vs. Fischler, 23 May 2018.

COMMENT

Following this ruling, Fischler requested that Judge Amit Amisman recuse herself as having preconceptions that made it impossible for her to judge the case fairly, and then appealed both the size of the bond and the request that she recuse herself to the Supreme Court.

I will translate and post the appeals. As it is ongoing, I will not comment on the merits of the case at this stage.


IL 221116 – Extending the Period for Reconsideration of a Refused Patent

November 2, 2016

mouth-cleanerIsrael Patent Application No. IL 22116 titled “Mouth Cleaner” was applied for by Yaakov Dichtenberg and Danny Unger who is also a patent attorney.

The Application was rejected. Under Section 21a and 164a of the Israel Patent Law 1967,  within 12 months of a final rejection, the Applicant may request reconsideration by the Commissioner. After that time it is possible to have a closed application reopened, but it is difficult and it is generally necessary to show extreme circumstances resulted in the application becoming abandoned.

weve-movedThis Application was filed on 25 July 2012 and, in accordance with Section 16a of the Law, a Notice of Imminent Publication was sent to the Applicants on 5 January 2014. This notice was sent to the address given on the application form which was the address of the first Applicant, Mr Danny Unger, a patent attorney who represented himself and the his c0-applicant. The Application published on 30 January 2014.

On 2 February 2014 the Applicants received a Notice of Imminent Examination in accordance with Section 18 of the Law and regulation 36 of the patent regulations 1968. Since the Applicants did not respond to this Notice within the period ordained in regulation 36, a reminder was sent on 5 November 2014 to the effect that in absence of a response within 30 days, the Application would be deemed abandoned. Subsequently, on 21 December 2014 a Notice of Rejection issued that also informed the Applicants that they could request reinstatement within 12 months.

On 21 December 2015 a request for reinstatement was received together with a response to the Notice Prior to Examination. The Notice of Reinstatement did not include a signed affidavit as required by Commissioner Circular  026/2014, however the Applicants alleged that they never received the correspondence due to a change of address.

On 15 March 2016 the Deputy Commissioner Ms Jacqueline Bracha requested that the Applicants provide a detailed signed statement of the events leading to the Application becoming abandoned and set a date of 20 April 2016 for a hearing.

On 19 April 2016, one day before the hearing, the Applicants requested a postponement for personal reasons. Despite the lateness of the request and the lack of a doctor’s letter, Ms Bracha agreed to the postponement. Nevertheless, the detailed statement was not submitted.

Applicant and Patent Attorney Unger arrived very late to the rescheduled hearing and claimed that he thought that updating the Ministry of the Interior regarding his change of address was sufficient to automatically update the patent office records. The Applicant was informed that Regulation 16a makes it clear that he should have proactively informed the Israel Patent Office of his change of address and that he still needed to provide an affidavit.

On 25 May 2016 an Affidavit was received in which the Applicant informed the Israel Patent Office that he neglected to inform them of his change of address and consequently never received the correspondence from 2014 to 2016 which was sent to his previous address. He went on to affirm that he never intended to abandon the Application and wanted to continue prosecuting the Application in parallel with the US application.

RULING

Section 21a sets the timetable for requesting reconsideration of a rejected Application as follows:

21A. If the Registrar refused to accept an application under section 21, then he may— on the applicant’s application—reconsider the refusal, on condition that the application be submitted within 12 months after the day on which the Registrar refused to accept it as aforesaid.

Section 164a of the Law enables the Commissioner to extend Section 21a due to reasonable causes:

Where the 12 month period stated in Section 21 has passed, the Commissioner may, nevertheless, reinstate a patent application in exceptional circumstances under Section 164a which states:

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…

As the Deputy Commissioner, Ms Bracha sees it, Section 21a gives the timeline for an Applicant to restore an Application. Section 164a gives the Commissioner sweeping powers to reinstate but has to be applied with consideration of the fine balance between the Applicant’s interest and that of the public; see 2806/04 Commissioner of Patents vs. Recodati Ireland LTD:

The policy regarding different requests to extend deadlines will vary depending on context and the type of proceeding that the extension is requested for.

If the Commissioner agrees to an extension, he is entitled to make the decision dependent on appropriate conditions in the circumstances as detailed in Section 164b:

The Commissioner may make the extension dependent on any conditions as seen fit.

As ruled in the decision concerning IL 157563 ICOS Corporation from 21 October 2013:

Citing Opposition IL 110548 Shmuel Sadovski vs. Hogla Kimberly Marketing LTD. regarding Revivals, the relevant considerations are the time passed and the underlying reasons for the delay. In this regard, the time passed not only provides an indication of the reasonableness of the Applicant’s behaviour, but also affects the likelihood of third parties relying on the case being abandoned, since it is evident that the longer an application remains abandoned, the greater the likelihood that third-parties will have relied upon the invention not having been patented.

In this instance, the period beyond the 12 months automatically  granted by Section 21a of the Law is minimal. The Applicant filed a request on the last day but did not file it properly since no Affidavit was included. The Affidavit was only submitted after the hearing.

However, the behaviour of the Applicant does not conform to that expected of a Patent Attorney, who, in this case, represents not just himself, but also a second Applicant. A Patent Attorney is expected to know that he should provide an address to the Israel Patent Office and that this address will be the one that post is sent to. The Patent Office cannot change the address of record without instruction to do so in a formal request to change the address of record. No such request was submitted. Furthermore, the Applicant found it difficult to conform with the revival instructions after being instructed to provide an affidavit explaining the circumstances leading to the application going abandoned. Nevertheless, it does seem that the Applicant followed the case or he would not have known that he should request revival of the Application.

elephant-and-post-boxIn the circumstances, the Deputy Commissioner ruled that the case should be returned to the Examiner as per Section 21a. However, because of the public interest, the Deputy Commissioner makes revival conditional on anyone relying on the patent lapsing from when it lapsed until when it was reinstated being allowed to continue using the invention, even if a patent should eventually issue.

Notice is given to the Applicant that his address has still not been updated.

Decision by Ms Jacqueline Bracha regarding reinstatement of IL 221116 “”Mouth Cleaner” to Yaakov Dichtenberg and Danny Unger”,  7 September 2016

COMMENT

Apart from being rather surprised that a registered Patent Attorney could forget to update the patent office about his change of address and assume that the Ministry of the Interior would do it automatically, I am at a loss as to why he didn’t bother checking up the progress of the application for his own invention on-line.

Since the request for revival was filed within the 12 month time period, at least, since all yearly and monthly deadlines are to the same calendar day, I think the decision is correct.

chewing-gumI couldn’t resist reviewing the Application as claimed, and note that the first few claims attempt to monopolize apples and chewing gum. Go figure.


Down to Earth Issues That an Israel Code of Practice Should Regulate

September 26, 2016

The following is a list of issues that I would like deliberated by the Ministry of Justice or the Knesset before legislating a Code of Practice for Israel Patent Attorneys. The same issues should be discussed by the IPAA and other relevant fora when considering voluntary codes.

In no particular order:

Patent Attorneys often provide opinions to third parties such as investors.If they have a conflict, maybe they should not be allowed to provide an opinion or should at least be required to announce their interest.

  1. Should patent attorneys that are not employees but outside service providers be allowed to own shares in their clients?
  2. Should patent attorneys that are not employees but outside service providers be allowed to draft applications for shares in their client’s business?
  3. May a patent attorney  that is not an employee but an outside service provider be allowed to jointly own a patent application with his client?
  4. May a patent attorney that is not an employee but an outside service provider be allowed to list himself as an inventor on a patent that he or one of his partners or an employee of the IP firm is filing and prosecuting?

Israel Patent Attorneys are specialists in IP Law but do not have a general legal background (unless, like me, they also have Law Degrees). If they are not licensed to practice law, regardless of their personal knowledge, what are the borders of what services can they legally provide? Attorneys-at-law tend to take a narrower view and patent attorneys a wider view. The border is not clear. Now is an excellent time to provide clarity and guidelines.

  1. May a patent attorney who is not an Attorney-At-Law provide legal information regarding IP related tax issues, the sale of IP, copyright and the validity of Israel patents.
  2. May a patent attorney who is not an Attorney-At-Law provide advice regarding service inventions?

What Patent related services may a self-styled patent expert, patent manager, IP manager, Search expert, IP Paralegal or other IP practitioner who is neither a patent attorney or an attorney-at-law be allowed to practice?

Section 154 of the Israel Patent Law lists the Rights of Patent Attorneys

154.—(a) Patent attorneys have the exclusive right to deal in Israel, for remuneration, with applications for patents, designs and trade marks and with the preparation of any document to be submitted to the Registrar, the office or to an authority for the protection of industrial property in another country, to represent the parties and to handle and represent in any proceeding before the Registrar or in the Office.

(b) This section does not derogate from the right of an advocate or of a State employee to perform the said acts within the scope of his functions.

There are all sorts of people who offer patent related services that are not formally qualified and are not regulated. Section 19 and 20 of the Israel Bar Law and Section 154 of the Patent Law which is reproduced above make this quite clear. The Law does not seem to have teeth, and there are a whole slew of non-patent attorneys that provide such services.  Nevertheless, it is not always clear what the meaning of the Law is. For example:

  1.  Is a graphics person who produces IP drawings for a patent attorney to file preparing a document for submission to the registrar. There are a large number of such  people offering services to patent attorneys on a free-lance basis. I’d argue this should be legal, but is it?
  2. What if a graphics person provides an inventor with such figures for inventor to submit himself?
  3. What if a company, say a prototyping company, produces such drawings and accompanying description for an inventor to submit himself?
  4. What if such a company also provides draft claims?
  5. What about a person who has worked for a patent attorney firm in the past or is moonlighting and still working for a patent firm. I am thinking of a paralegal or a trainee patent attorney or someone else who is neither an attorney-in-law nor a patent-attorney.  Does this happen? Yes. Is it illegal? I think so.
  6. What about a US licensed practitioner who has failed to pass the Israel Patent Bar, and merely helps clients obtain IP rights in the US? Such a person seems to be helping with the preparation of any document to be submitted to the office or to an authority for the protection of industrial property in another country. It seems to be illegal.
  7. But what about companies that are bona fide US firms (or European or other foreign firms) whose attorneys come to Israel a few times a year to meet with their clients? If they accept remuneration for advice given locally or work on an office action whilst here, is this illegal?
  8. What about US firms that operate in Israel and aggressively chase Israeli clients?

I would argue that their operating an office here is illegal and contrary to Section 154. The fact that they do not prosecute patents in Israel does not make their offering IP services to Israel clients directly a legal activity.

Advertising. The Israel Bar Code of Ethics places significant limitations on the type of advertising that Israel Attorneys-at-law are allowed to engage in. The voluntary code of ethics for Israel Patent Attorneys has similar limitations that are voluntary. The response to the Call for Comments that the IPAA sent out last time was drafted by Reinhold Cohn lawyers and called to limit, at least locally in Israel, patent attorneys from using any form of advertising that Attorneys-in-Law cannot use. There is some legitimacy and logic in holding patent attorneys to the same standards as Attorneys-In-Law, but there are counter arguments. If patent attorneys provide services that are hybrids of technical,,scientific and legal services, maybe they should have the option to market themselves in a more high-tech service provider and less legal manner? Note Reinhold Cohn themselves have moved from Legal South Tel Aviv to a High Tech park and moved out of a Bauhaus building and into a modern building in a high-tech park. They’ve changed their logo to something more distinctive and less legal looking, and adopted the high-techy acronym RCIP. Let’s take this one stage further. Reinhold Cohen has a sister firm of attorneys at law to provide complimentary services, handling oppositions, enforcement and the like.  Does this mean that a patent attorney cannot handle these issues? If a patent attorney does not want to handle these issues and wants to brand himself more like a technology service provider, may be he or she should be able to advertise more proactively?

Another corollary of aping the legal profession, is that patent attorneys would have to have  a dedicated premises for meeting clients that is not shared with any other type of business. This limitation of legal practices may be inappropriate to patent attorneys.

  1.   Two or more law firms can share office space without competing, if one handles wills and the other handles litigation, conveyancing (real estate law),  one handles criminal and the other civil, etc. There are 75,000 potential room-mates to share office space with. Patent attorneys don’t have this flexibility. If Reinhold Cohn’s proposal is accepted, they will have to rent a full office, or share with direct competitors. Note – small offices are hard to come by and the rents are usually much higher.
  2. Why shouldn’t a high-tech patent attorney specializing in start-ups rent office space in the offices of a venture capital firm, a high-tech incubator, a start-up trendy premises like We Work? It may not be appropriate for a large IP firm, but it may be a good solution for a sole practitioner or a small firm.
  3. Maybe in the modern world, a patent attorney does not need an office at all? One can have all one’s files on a laptop and work anywhere. I have a number of clients that I visit who have never visited by office. Maybe I don’t actually need an office? The code of ethics for lawyers is a document that was drafted in an earlier age. It has occasionally been updated. It may be inappropriate as a basis for an up-to-date profession that provides services at the cutting edge of technology.

Treatment of trainees and employees

I think trainees should be registered within less than a month of starting their apprenticship. They are entitled to a minimum wage. Percentage based remuneration is not appropriate for trainees.

Should percentage based remuneration be legal for any employee?

Should patent attorney firms be able to demand exclusivity from a licensed practitoner, whilst employing him on the basis of tax invoices for jobs on eat-what-you-kill basis?  I am aware of situations where employers do not fire employees working on a percentage basis but simply close the tap. The employer does not provide redundancy pay.

Some firms make employees sign non-compete clauses, contracts requiring them to stay for at least a year after qualifying, letters explaining that strange employment terms where the employees idea that he insisted on and other shenanigans. I think that the current proposed code of conduct is an ideal opportunity to address all these issues.


Do Israel Patent Attorneys Need a Code of Ethics?

September 25, 2016

legal-ethics

“I don’t believe in God. I do believe in Judaism. I believe in ethics, morals.” Edgar Bronfman, Sr.

On 8 September 2016, the Israel Patent Office and the Ministry of Justice Issued a Call for Comments regarding a Code of Ethics for Israel Patent Attorneys.

The deadline for responding is 26 September 2016. One presumes that no committee is going to do anything until November as, with the Jewish Festivals, there are about 5 working days in October. This combination of facts implies that the authorities do not particularly want responses from the IP industry it is proposing to regulate.

I see this as a shame. The entry-level qualifications for the patent attorney profession in Israel are a science or engineering degree and two years on-the-job training under a licensed patent attorney, exams showing drafting ability, knowledge of the Law and fluency in English and Hebrew. A very large proportion of the profession have at least one of: advanced degrees, 10 or more years of post-qualification experience, ten or more years experience in industry, a law degree, additional languages and a foreign patent attorney license. As a group, we are high achievers. Given a reasonable opportunity and encouragement to do so, I consider it likely that members of the profession could provide interesting feedback and ideas. On the bright side, the Ministry of Justice and the Patent Office did send the Call for Comments to all registered patent attorneys rather than prominently displaying a notice in a locked filing cabinet somewhere, or publishing a notice in the Tulkarem Local Advertiser.

aippiI would like to hope that it is no coincidence that the Call for Comments coincided with the most central biannual international IP conference last week in Milan. This unfortunate coincidence could explain why the esteemed Israel Patent Attorney Association does not seem to have balloted their members or held a meeting on the subject.

ipaaTo be fair, this is not the first time the issue has been raised. Last time, a response drafted by in-house lawyers at Reinhold Cohn responded on behalf of the Israel Patent Attorney Association. Their position was that the Code of Ethics for Patent Attorneys should be based on the Code of Ethics for Israel Attorneys of Law. I do NOT consider this position to represent the needs or interests of the industry as a whole, although it may well represent the interests of an IP group that includes a patent attorneys practice and an IP Law practice.

Do we need a legal code telling us how to behave or can we regulate ourselves?

Laws are like cobwebs, which may catch small flies, but let wasps and hornets break through. Jonathan Swift

Here is a list of things done over the past couple of decades by members of the profession. I am not naming and shaming. Many of you will know who did what. Others will just have to take it on trust that everything listed relates to real incidents:

  • The Business Software Alliance caught a former head of the Ethics Committee running Microsoft Office on a large number of computers, despite having one single-user license.
  • One Israel patent firm is knowingly employing someone who aided and abetted a murderer escape prison in the US. This is a felony. He is wanted by the FBI.
  • As a trainee patent attorney, I was fired when I came back from Compulsory Reserve Army Duty (explicitly against the law) since the supervisor had to finish off open-work. The head of the firm explained that this wasn’t the only reason. The other reason was that I couldn’t write patents and didn’t have what it takes to succeed.
  • There are a number of firms that give work to self-employed subcontractors which may raise issues of confidentiality and employment law.
  • Some firms have trainees working on a percentage basis, they lob off the top for time invested by trainers, not all of whom are licensed professionals themselves. Graduate employees often work full-time and don’t earn the legal minimum wage.
  • A secretary was fired by an IP firm when she went into hospital for a hysterectomy.
  • There is one patent attorney that passes off trainee attorneys as patent attorneys, effectively giving them licenses directly.
  • One patent attorney has put himself down as a co-inventor on applicant’s patent applications.
  • One patent attorney has put liens on client’s patent applications for unpaid debts.
  • One patent attorney was sued by his father for trying to steal the family firm
  • One attorney-in-law, working for an IP Firm killed both parents, his mother being the head of trademarks at the Israel Patent Office.
  • One head of an IP Firm regularly makes support staff work past sundown on Fridays in case he needs their services. We note that the firm does not do outgoing work in other jurisdictions, and the Israel courts and patent office are closed.
  • On behalf of the government in a service invention dispute, one Israel Attorney sued a Fortune 500 Company whose trademark portfolio he represented. (They subsequently transferred the portfolio from him).

I am NOT stating that any or all of the above should necessarily be reason to impose sanctions on one or another attorney or firm or that all of the above are illegal. I am, however, suggesting that they could and should all be considered in a draft of a serious code of ethics, and as a group they amply demonstrates that self-regulation does not work.

History shows that where ethics and economics come in conflict, victory is always with economics. Vested interests have never been known to have willingly divested themselves unless there was sufficient force to compel them. B. R. Ambedkar

There is a separate set of problems that the Code of Ethics does not address. To my mind it should:

  • What activities are legal for a patent attorney who is not an attorney at law to perform?
  • Which activities can be conducted by an attorney-at-law on behalf of his employee, but not on behalf of employee’s clients? In other words, can a patent attorney firm employing an attorney-at-law provide legal services via the employee lawyer that a patent attorney cannot provide directly?
  • Can a patent attorney practice or provide consulting services regarding assignment of ownership? valuation and sale of patents or copyright issues?

At present, due to the lack of commitment required to take on trainees, and the ease of dumping them half-trained, and patent attorneys who have provided some training to people who cannot get licensed and are not licensed due to not having the basic requirements, such as a law, science or engineering degree, there are a number of non-licensed practitioners.

code-of-ethicsShould not the Code of Conduct or Ethics, or whatever we call it clarify what IP services can or can’t be practiced by practitioners who are neither patent attorneys nor attorneys in law?

  • Can someone who is neither an Israel patent attorney nor an attorney at law licensed to practice before the Israel Bar provide IP management services?
  • Can someone who is neither a patent attorney nor an attorney at law licensed to the Israel Bar provide patent drafting services via a patent attorney working for him?
  • Can someone who is neither a patent attorney nor an attorney at law licensed to the Israel Bar provide patent valuation services?
  • Can someone who is neither a patent attorney nor an attorney at law licensed to the Israel Bar provide IP trading services?

Israel is party to a number of international treaties, etc. I am not sure to what extent foreign law firms are allowed to have local presence in Israel. One large US patent firm is actively involved offering patent services directly to Israeli clients.

foreign-invadersI personally think that such firms should not be allowed to operate locally. There are instances where Israeli Law requires the applicant to first file in Israel. Ownership issues are different in each jurisdiction, and even after the American Invents Act, the US system is still the most different from other industrialized countries. The creation and the sale of IP creates tax issues.  I don’t think that people who are not licensed individuals have the knowledge of these issues to be able to competently practice locally. When something goes wrong, who can one turn to???

Advertising is legalized lying. H. G. Wells

The Israel Bar limits the type of advertizing that attorneys-at-law may conduct. The Reinhold Cohn draft that was adopted by (forced upon?) the IPAA suggests that at least in Israel, patent attorneys should have similar limitations to those that attorneys-in-law have.

Is it reasonable that a US firm is running a vigorous advertising campaign that the current voluntary code of conduct for patent attorneys. the draft code proposed by the IPAA and the Israel Bar obligations for Israeli lawyers do not permit. Anyone who uses search engines to get to national patent office databases and the like, gets advertisements from the US firm in Facebook, on YouTube, etc.

I think it is a terrible state of affairs that local licensed IP practitioners are at a disadvantage to practitioners and firms that are not licensed locally in terms of acceptable forms of licensing and services that they are allowed to offer. the proposed Code of Professional Conduct should address this.

If you have religious faith, very good, you can add on secular ethics, then religious belief, add on it, very good. But even those people who have no interest about religion, okay, it’s not religion, but you can train through education. Dalai Lama

Lawyers are the only persons in whom ignorance of the law is not punished. Jeremy Bentham

IPROne issue raised in the Call for Comments related to on-going training. I think that those practitioners who don’t see the need for this are so ignorant that they can’t see where they lack knowledge. However, there is a need to ensure that practitioners can clock up on-going training requirements with relative ease. Should attendance of lectures at AIPPI, INTA and other international conferences be considered appropriate training that can count to legal requirements for on-going education? One of the best local conferences is “Best Practices” run by Kim Lindy and the IP Resources forum. Kim is not a licensed practitioner. Many of her speakers are, in one jurisdiction or another, could attendance of this conference be considered as on-going professional training?

I gravitate toward the law, I think, certainly more times than not, because it’s our best mechanism for legislating human behavior, and morality, and ethics. David E. Kelley

If we desire respect for the law, we must first make the law respectable. Louis D. Brandeis

cowboyWith Basic Laws offering freedom of occupation, it is not unreasonable for cowboy practitioners, non-licensed professionals to argue that the law should allow them to offer a wide range of patent related services. Foreign practitioners may feel the same way. Maybe there are problems with a code-of-ethics that has teeth. Nevertheless I think there are specific concerns that should be addressed when designing and legislating such a code. The current state-of-affairs is less than ideal. It does not protect the clients, employees and trainees or registered and licensed practitioners. This can’t be good.

Comments are encouraged. Please have the decency to post under your name though.

 


Applicant Successfully Has Allowance of Patent Application Cancelled, Following Initiation of Opposition Proceedings

September 12, 2016

reexaminationUsually an Opposition results in an allowed patent being either cancelled, upheld or having its claim-set narrowed. Apparently, not always!

Israel Patent Application No. 240684 titled “GLYCOPYRROLATE SALTS” was filed by Dermira Inc on 19 August 2015. It is the national phase entry of PCT/US2014/19552 and so the effective filing date is 28 February 2014. It claims priority from two provisional applications and from two regular US applications, but the earliest priority claimed was 28 February 2013.

On 18 October 2015, the Applicants petitioned to make special under Section 19(a)(a)(2) of the Patent Law 1967 and requested allowance under Section 17c based on US 9,004,462.

After the application was allowed and published for Opposition purposes, S0l-gel Technologies ltd. opposed the patent issuing. They noted that the case had been allowed under Section 17c, but this was incorrect since the two regular US applications from which priority was claimed were continuations-in-part of US 13/781,390 which published on 15 August 2013.

In the US, the earlier patent application to which material is added in a Continuation-in-Part cannot be cited against the Continuation-in-Part. It is a little like a Patent-of-Addition in Israel.

Since priority is NOT claimed from US 13/781,390 which published 15 August 2013, it is prior art to IL 240684 since its publication precedes the filing of PCT/US2014/19552 on 28 February 2014. Consequently, as far as Israel is concerned, US 13/781,390 could be cited as prior art against IL 240684 and so allowance under Section 17c was wrong, as there is presumption of validity since US 13/781,390 (now US 8,558,008) was not prior art in the US, but is prior art against the Israel application.

Here’s the odd thing. US 13/781,390 was itself filed on 28 February 2013, so the PCT could have claimed priority from it!

In their statement fo case, the Opposer requested that the allowance be cancelled and the case returned to the Examiner for examination on its merits in light of the prior art (including US 13/781,390). The Applicant (represented by Pearl Cohen) agreed with this suggestion.

In his ruling, the Commissioner, Asa Kling, noted that only rarely can an allowed patent be returned to the Examiner. Patent prosecution is a one way street, and after allowance, the Examiner is no longer part of the process. Generally, opposed patents are either invalidated as lacking novelty and inventiveness, or the scope of their claims is narrowed, or, the opposition is overcome or withdrawn and the patent as allowed, is granted.

In this instance, both sides agree to the allowance being withdrawn and to the claims being (re)considered on their merits by the examiner in light of the prior art, including  US 13/781,390, thereby avoiding costly opposition proceedings.

The commissioner noted that agreement of the parties is not generally enough for odd solutions, due to their being a public interest. Generally one does not return an allowed patent application to the Examiners since the public is always third-party to such proceedings. See the ruling on request to cancel allowance of IL 219586 Fritz Collischan GMBH vs. Data Detection Technologies Inc., 9 March 2015, paragraphs 9 and 10 of the ruling.

However, it is clear that the Section 17c assumptions detailed in the Albermarle ruling do not apply here as inventiveness over US 13/781,390 was not considered by the US Examiner as it was not an issue in the States, and so the IPO cannot rely on the US Examiner’s ability, professionalism and integrity in this instance. In the circumstances, for the sake of efficiency, it was deemed appropriate to reexamine rather than to conduct an opposition. The Commissioner allowed the Section 17c allowance to be withdrawn and the case to be returned to the examiners for substantive examination on the merits.

The cancellation of the allowance now publishes for opposition purposes. Costs of 2500 Shekels are awarded to the Opposers; the low sum reflecting the early stage reached.

COMMENT

In this instance, the PCT application could and should have claimed priority from US 13/781,390. The  Opposers could have claimed both invalidity over US 13/781,390 and / or inequitable behaviour in requesting allowance under Section 17c from a continuation in part. There is a public interest in technologies remaining in the public domain. Thus I think this decision could be challenged in an opposition. Still, doing so takes resources and would incur costs. For the same reason that S0l-gel Technologies ltd seem happy with reexamination, I suspect that noone else will file an opposition to this ruling.


Reconsideration of a Patent Extension Term

August 10, 2016

last minute shopping

In an odd development, but not one that without precedent – see here and here – Dr Shlomo Cohen Law Offices has asked the Israel Patent Office to reconsider a judicial ruling.

In this instance, the original ruling relates to the Patent Term Extension (PTE) of IL 169693 to “Bristol Myers Squibb” and Pfizer that issued under section 64(v)5 of the Israel Patent Law. The original ruling issued in September 2015, and granted a patent term extension of 974 days until 18 May 2025. That ruling followed a challenge by the patentees to Examiner’s decision of 5 March 2015.

The way that Patent Term Extensions (PTEs) are calculated in Israel is detailed in Read the rest of this entry »


Hark the Herald Angels

June 22, 2016

anastasia

I attend INTA to meet old friends and to make new ones. In a recent email exchange with UK trademark attorney and Cam-marks director, Dr Roman Cholij, I noted that I had missed him at INTA in Orlando.

He informed me that domestic issues had forced him to stay at home. It turned out that a daughet, Anastasia, was born on 25 December 2015. In the above picture one can see a blessing on her head, Mazal Tov, Mazal Tov.

Dr Cholij organized a conference in Cambridge last September under the auspices of st Edmund’s College, that was titled “Patents on Life: Through the Lenses of Law, Religious Faith and Social Justice – ‘defining the boundaries’” where I was honoured to speak. Previously, he spoke at a conference I organized with Machon Herzog on IP in Jewish Law where he spoke about IP in the Christian tradition.

I believe in ecumenical interfaith dialogue and in seeking knowledge wherever it may be found. I am also delighted to see the Cholij’s are being productive.

It turns out that Professor Jeremy Phillips was also born on Christmas day, but so long ago that he doesn’t remember it. There was apparently a Kat and at least one wise man present.