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.

 


An application for a 3D trademark

August 14, 2017

This ruling concerns a 3D trademark application for a novelty lollipop. The mark was opposed after allowance, apparently due to a former business relationship going sour. The applied-for mark does not represent the candy that was previously sold in Israel, and the candy that was sold was previously sold wrapped in clown paper. The Applicant was unable to provide evidence to support claims of massive sales and investment in marketing, and it is not sure what percentage of the candy that was imported was sold in Israel and what percentage was imported into the Palestinian Authority. 

240901Grupo Bimbo S.A.B. de C.V.  applied for Israel TM No. 240901 on 27 September 2011, the mark is for a lollipop representing a paintbrush and was filed for candy on a stick in Class 30. The mark is shown alongside.

The mark was allowed on 26 May 2014 and published for opposition purposes

.On 28 August 2014, two oppositions were submitted, one by Paletas Masa S.A. de C.V. and the other by Sweet Reality Sweet Marketing Company.

The Applicant is a Mexican company that manufactures and distributes food. In 2010 the company bought out Dulces Vero, a Mexican confectionery company.

Paletas Masa S.A. de C.V. is a Mexican confectionary company established in 1983 that manufactures and sells candy. Sweet Reality Sweet Marketing Company is an Israeli importer, marketer and wholesale distributor of candy and beverages.

The Opposer’s evidence included an Affidavit by Ibrahim Adel, the manager of Sweet Reality Sweet Marketing Company and by Mr. Yehoshua (Shuki) Rubin, their import director, and an affidavit from Frederico Bernal Reyna, authorized to speak on behalf of Paletas Masa S.A. de C.V.

The Applicant’s evidence included an Affidivat by Jose Luis Sanchez Medina, the director of a daughter company of Grupo Bimbo S.A.B. de C.V.  known as Organization Barcel, S.A. de C.V. Mr Edel also filed a further Affidavit as a response. On 11 November 2015 a hearing was held wherein the various witnesses were cross-examined.

On  March 2016, when the Applicant’s summation was due and after the Opposer had submitted their summation, the Applicant requested to submit a further piece of evidence. After reviewing the Opposer’s response and the Read the rest of this entry »


Polo

August 11, 2017

256843David Ibgy, who markets fashion goods, submitted Israel Trademark Number 256843 on 26 June 2013 for clothing under Section 25. The mark was allowed on 17 November 2014 and published for opposition purposes.

The mark is shown alongside.

 

82802On 27 February 2017, Lifestyle Equities CV opposed the mark. Lifestyle Equities CV is a Dutch company that has several Israeli distributors that sell clothing under their IL 82802 mark, which was registered in November 1995 in category 25 for clothing, shoes and head coverings. Their mark is shown alongside:

 

The Opposer’s Claims

The Opposer claims that their mark was developed in Los Angeles, USA, in 1982 as a mark that implies quality. Goods were sold under the mark in known chain stores in Israel, such as HaMashbir and Keds Kids, Errocca and in other fashion stores across the country.

The Opposer claims that the dominant element is the horse and rider and so the applied for mark is similar enough to their registered mark that it could be misleading and so is not registerable under Sections 11(6), 11(9) and 11(13) of the Trademark Ordinance.

To strengthen this contention, the Opposer notes that both they and the applicant use the mark for off-the-shelf clothing and consumers have inaccurate recall and so the marks are visually confusingly similar.

The Opposer notes that the two marks are directed to the same goods and that clothing with the marks are sold by the Applicant via similar distribution channels to those used by the Opposer, and the target clientele in both cases is the Israeli clothing and fashion-wearing public.

The Opposer alleges that the two marks share a similar conceptual idea that will confuse the public into thinking that the Applicant’s goods are supplied by the Opposer. Both marks have a side view of a rampant horse mounted by a polo player with a raised mallet within a ring of circles. The Opposer considers the relative proportions between the horse and the circular frame as being almost the same in the two cases.

Furthermore, Opposer alleges that due to their intensive use in Israel and the world, their mark has a reputation and may even be considered as being a well-known mark as defined in the ordinance. Due to the well-known nature of the mark, the likelihood for the public being mislead is increased.

The Opposer [Applicant in ruling, but this is a mistake – MF] therefore concludes that the situation may occur wherein the public will purchase the Applicant’s goods thinking them as being provided by the opposer or somehow connected with the Opposer, and so the pending mark is disqualified from registration by Sections 11(13) and 11(14) of the Ordinance. If the pending mark is registered, it could dilute the Opposer’s registered mark.

The Opposer claims that the Applicant acted in bad faith by choosing the horse and rider and was attempting to free-ride on the Opposer’s reputation which has been carefully established over many years. The Opposer considers the mark as representing unfair competition and is thus contrary to sections 11(6) and 12 of the Ordinance.

Furthermore, the Opposer considers the Applicant’s testimony as untrustworthy and that the Applicant has a long history of copying well-known marks and that the current mark was created by selecting elements from established marks, and so is allegedly non-registerable due to Section 11(5) of the Ordinance.

In the framework of their agreement, the Opposer claims that in addition to the applicant trying to copy the general circular appearance of the Opposer’s marks, he also chose to incorporate the olive branches that were allegedly copied from Israel Registered Trademark No. 227079 to Fred Perry (Holdings Ltd).

The Opposer also considered the applied for mark as lacking distinctive character, and thus contrary to Section 8(a) of the Ordinance, this due to the mark lacking anything unique.

Applicant’s Claims

On 22 April 2015, the Applicant responded with their counter-statement of case.  Applicant considers that there is no danger of confusion of unfair competition because the pending mark has to be considered in its entirety and in addition to the rampant horse and rider of the Opposer, the Opposer’s mark includes the words Beverly Hills and Polo Club, which are not elements of the pending mark. Applicant considers these words as central elements that are engraved in the consumer’s consciousness.

The Applicant adds that the common element of the rampant horse and rider were not created by the Opposer but have a long history in the fashion industry.

The Applicant accuses the Opposer of taking inspiration for their mark from Ralph Lauren, US Polo Association and others, and referred to such marks in use in Israel (see appendices to counter-statement of case and affidavit. The Applicant notes that the fact that the claimed motif is common and in widespread use is accepted by the international case-law.

As to the marks being confusingly similar, the pending mark has the letters PJ and not Polo Club, the marks are pronounced differently; the Opposer’s mark is jumping, whereas the applied for mark has three legs, the Opposer’s mark has a circular ring whereas the applied for mark has olive branches.

The Applicant claims to be targeting the popular market that purchases clothing in shops, bazaars and public markets whereas the Opposer is targeting an exclusive clientele by referring to the Beverly Hills Polo Club. This alone should be enough to differentiate between the Applicant’s and Opposer’s goods and distribution channels.

Finally, the Applicant considers that relating to the olive branches as being confusingly similar to those of the Fred Perry mark was only raised in the summations and is thus an illegitimate widening of the issues beyond the Statement of Case.

The Evidence

On 21 September 2015, an affidavit was submitted by Mr Eli Hadad, the director and owner of the Opposer. Similarly, the Opposer submitted an affidavit by David Bar, the director and owner of Beverly Hills Fashion Ltd which manufacturers, imports and distributes the Opposer’s products since 2008 under a franchise from Lifestyle Licensing.

On 22 November 2015, the Applicant submitted their evidence together with an affidavit. On 11 September 2016, a hearing was held, during which the parties cross-examined each other’s witnesses. The parties submitted their summaries and now the time is ripe to issue a ruling.

The Ruling

The ruling related to the following issues:

  1. Did the Opposer widen their front of attack such that references to Fred Perry and the olive branches should be struck from the record?
  2. Is the Opposer’s mark a well-known mark as defined by the Ordinance?
  3. Is there a danger of the similarity causing confusion?
  4. Did Applicant act in bad-faith in choosing the mark?

Since the argument regarding similarity to the Fred Perry mark was first mentioned in the summation, it is indeed an illegitimate widening and should be struck. However, to bring things to a final conclusion, the Adjudicator addressed this issue substantively.

Is the Opposer’s Mark Well-Known?

The Ordinance defines well-known marks and the Adjudicator went through the usual hoops, citing the Absolut and Pentax cases. The Opposer notes that Lifestyle Equities CV is one of the top 100 licensing companies. However, the Adjudicator noted that this says nothing regarding whether the specific brand and mark is well-known in Israel. The Opposer failed to establish that the brand was widely promoted in Israel. The distributor, Erroca, is widely known, but as a distributor of eye-glasses. Facebook followers and the like were not considered persuasive either. There also remained a problem that even if Beverly Hills Polo Club is a well-known brand, that does not mean that the horse and polo player are well-known.

Is there a danger of the similarity causing confusion?

Here the Adjudicator applied the triple test; the appearance of the marks being the issue rather than their sound since PJ and Polo Club sound rather different.

There is a similarity in that both marks include a horse and rider, but the horse and rider appear different, and there are other elements that are found in only one mark or the other.

Notably, unlike in similar oppositions abroad, the mark in Israel does not include the term Polo Club and the Opposer did not bring a market survey to show the similarity.

Citing the 212574 ,211841  Nautica Inc ruling from 15 February 2012:

Registration of a trademark does not provide a monopoly for a concept, such as someone holding a golf club or riding a horse, but only for the specific rendering of the idea in the mark.

The marks were not considered confusing.

 

Did Applicant act in bad-faith in choosing the mark?

The Opposer suggested that the PJ letters were taken from the trademark number 103307 for Polo Jeans Co. owned by the Polo/Lauren Company, and since the Applicant was a former worker of Polo US he could not claim ignorance of this mark. The Opposer also noted that the Applicant admitted to having a reputation for fake goods.

The Adjudicator did not find the allegations sufficiently compelling. This was also the case with the similarity between the olive branches of the trademark and of Fred Perry, which are both different.

CONCLUSION

The Adjudicator Ms Shoshani Caspi concluded that the alleged similarity between the marks did not pose a danger of misleading the consumers regarding the origin of the goods. This made the existence of absence of distinctive elements moot, since the claim was raised by the Opposer solely to base the claim of misleading similarity.

The Opposition was rejected and, using her powers under Section 69 of the Ordinance, the Adjudicator Ms Shoshani Caspi ordered Lifestyle to pay 7000 Shekels + VAT in costs.

COMMENT

I found the argument that the Applicant’s mark was for the fashion-conscious common polo-playing man, whereas the Opposer’s mark was for smart Beverly Hills playing polo set, rather amusing.

I suspect that Fred Perry’s olive branches and those of the Applicant are actually laurels.

The decision is reasonable. However, it seems contrary to the Tigris ruling. However, in general, there does not seem to be a great deal of consistency with trademark rulings.

There was an interim request by Ivgy that Lifestyle post a bond to cover costs should they lose. This was refused.

 


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.


Employee Inventions – the first of three decisions

August 7, 2017

worker's compensationThere is a procedure by which an inventor can request that a tribunal consisting of a judge, the Commissioner and an academic can consider the appropriate compensation to the inventor for an invention made in the course of his employment.

The most recent and important ruling of this nature concerned the contribution of an inventor working for Isscar. That committee ruling was appealed through the courts. For details of that ruling, see here.

There have been two more rulings that have just published. Presumably they were decided now, as Commissioner Kling came to the end of his term of office. As the identities of the inventors and the companies have been withheld, the rulings lack the juicy details. Nevertheless, I have summarized the two rulings below as they give guidelines regarding how the committee considers the issue following the Supreme Court discussion and the various conferences, etc. that related to the issue, including one that I organized.

In the first ruling Ploni (this is the Biblical term for an unidentified character taken from Ruth 4:1) – i.e. Anon vs. Company.

Ploni requested that the committee rule on appropriate compensation for a service invention under Section 134 of the Israel Law. On 20 November 2014 the company requested that the submission be thrown out, and, following a request from the committee that he do so, Ploni responded on 20 September 2015.

A hearing was held on 11 July 2016, which was attended by the Company, their CEO Mr XXXX, and their attorney Daniel Bostonai. Ploni was not represented.

The Main Facts (censored)

The company was founded in 1999 as a start up company that never got beyond the development stage. The field of activity is withheld.

contractPloni is a mechanical engineer that was employed as an external consultant in July 2002, and became an in-house general manager of the company in December of that year. On 16 December 2012, an employment contract was signed between the company and Ploni. This was intended to formalize the Company’s rights in developments and inventions and Ploni’s compensation for his work. The contract stated that Ploni would have no claims for additional compensation or remuneration. Ploni was also signed onto an options deal under which we would be entitled to some shares immediately, to additional shares after a period of time, and to a third batch of shares that depended on company income from sales. The original options agreement was renegotiated on 31 December 2003, to one that allowed Ploni to purchase 7.5% of the company.

From 2005 onwards, the company made several rounds of investment. In 2006, the company and Ploni exchanged various draft contracts to better define Ploni’s terms of engagement. After four drafts were exchanged and the parties failed to reach agreement, Ploni decided that he was NOT interested in continuing with the company and tendered his resignation on 4 February 2007. This came into effect on 4 March 2007.

Ploni’s Section 134 submission was related to Patent Application Numbers XXXXX and YYY from Date 1 and Date 2. These were both abandoned by the company; one was actively abandoned by applicant deciding not to pay the renewal fee allegedly due to lack of application of the patent, and the other was abandoned prior to it ever issuing.

Prior to requesting that the committee calculate a value for the service inventions, Ploni started a proceeding against the Company in the Labour Court. Essentially Ploni requested that the court order the company to allocate 7.5% of all the shares issued by the company to Ploni. The Labour Court ruled the agreements and draft agreements as relating to 7.5% of the company prior to dilution as a result of fund raising. This was appealed to the Supreme Labour Court, and returned to the Labour Court. More details follow below.

The Company’s Claims

  1. The company claims that since the parties had signed a work agreement that ruled out any additional compensation, the committee has no authority to rule compensation and the case should be dismissed. This claim was strengthened by the practice of the company and Ploni over the years.
  2. Since Ploni had signed agreements with investors that stated that the company had no other obligations, he was estopelled from claiming that the company owed him anything.
  3. The allegations that Ploni was owed something for a service invention should be considered moot in light of the statute of limitations, since the latest date by which any right could be considered was the filing date of the respective patent application.
  4. Thus the request for compensation was filed after a significant delay which indicates that Ploni had given up on any and all claims for compensation. \

Ploni’s Claims

  1. Ploni counter claimed that the signed work contract did not relate to compensation for patentable inventions and the parties did not reach agreement on compensation for these.
  2. The statute of limitations had not passed since the relevant date is Ploni’s final date of employment by the company.
  3. The Company were tardy in requesting that the case be thrown out.

RULING

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.

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-cogent 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.

In this instance, the respondent (Ploni) had the opportunity to purchase company shares. As states in the share option agreement of 16 December 2002, the respondent received his share options as a general manager of the company. As agreed in agreement of 31 December 2002, this was dependent on performance as manager:

“… In the event that vesting of all or any of the Awards is contingent upon fulfillment of certain conditions (“Vesting Conditions”), such as the achievement of certain targets by the Company or Grantee, the details thereof will be set forth in a separate Appendix that will be attached to this Award Agreement as Appendix B.

Appendix B was not submitted. Nevertheless, the respondent agrees that the share allocation was to closely follow the development of the invention by the company. In a hearing on 11 July 2016 the respondent stated that the options were for the profit of the patent.

As stated in the Isscar ruling, the purpose of the arrangement between the parties is understood from the parties’ actions. It is clear that the respondent saw the options as compensation for the service inventions in question. The directives regarding the distribution of options that were signed on 31 December 2003 are understood as being a giving up of any and all other compensation. The court deliberations of the Labour Court may be understood as being the day in court that Ploni was entitled to with respect to options that were not actualized. These ended in a settlement under which Ploni was awarded 40,000 Shekels for options that were not actualized and Ploni himself saw these as the basis for this complaint.

This conclusion renders moot further discussion regarding statute of limitation and estoppels.

The committee accepts that the case should be thrown out. However, as Ploni was unrepresented, they did not award costs against him.


Examiners Required

July 27, 2017

trainee wheelsThe Israel Patent Office has announced 14 vacancies for trainee patent examiners.

Of these, three are reserved for minorities and are available to Circassian, Arab or Druze Israelis. At least one vacancy is reserved for someone with disabilities.

Candidates are expected to have a scientific or engineering degree and may have advanced degrees. They are also expected to be competent in English and Hebrew.

Despite the announcement only being made today, the deadline for applications is 2 August 2017, so readers interested in becoming examiners are advised to get a move on. Applications should be submitted via this link.