A ballsy trademark ruling

January 30, 2018

SodKGaA & Henkel AG filed a series of Israel trademark applications (Nos.  258658, 258797, 258798 and 259500 as shown alongside.258658

The marks cover Bleaching preparations and other substances for laundry use, rinsing agents for laundry and tableware, stain removing preparations; cleaning, polishing, scouring and abrasive preparations, chemical agents for cleaning metal, enameled sheet metal, wood, cork, porcelain, ceramic, glass, plastic, leather and textiles; spot remover; soaps not for personal use, perfumery, essential oils in class 3, “Disinfectants and deodorants other than for humans and animals”. In class 5, and Sponges, brushes, cleaning cloths, cleaning purposes, hand-operated cleaning appliances, devices for dispensing sanitary cleaning and fragrance products, partially with the addition of disinfectant, included in class 21.

The Israel Trademark Department refused to register the marks on the grounds that they lacked inherent distinctiveness as indication of source, since they were the shape of the products themselves. The marks were also refused under Section 8(b) of the Ordinance 1972, as not having acquired distinctiveness through use.

The Applicant claimed that the marks are registerable since they serve in practice as a trademark, have acquired distinctiveness through use, and the choice of shape is not a result of real aesthetic or practical considerations. The Applicant requested a hearing, and submitted the following evidence:

  • An opinion by Mr Oshik Roshnik, marketing consultant, who held a public survey regarding how well known the marks were. Mr Roshnik attended the hearing and the survey and his conclusions are detailed below.
  • An affidavit from Ms Danielle Rabinowitz who is the product manager for Henkel Sod ltd, which is fully owned by the Applicant. Her testimony affirmed the sales in Israel and abroad and the investment in advertising and promotional activity. Ms Rabinowitz also attended at the hearing.
  • An Affidavit of Ms Cecile Leroi the International Marketing Manager of the Applicant, who testified regarding sales.

A large quantity of marketing material was appended to the affidavits.

sod balls.jpg

From the evidence it appears that the products are sold in Israel in blister packs that have transparent fronts. The mark Sod appears clearly on the packaging, which is the brand for these and other products of the Applicant in Israel. The Sod mark is recognized as being a leading brand in Israel.

juggling four balls

The Applicant claimed that since January 2014 they have invested 15 million shekels in advertising and marketing in various telecommunication channels, including point-of-sale. As a result of this intense marketing, some 6 million units have been sold, which is 30% of the market. These statistics support the Applicant’s contention that the marks have acquired distinctiveness.

The Applicant’s legal counsel emphasized that the marks were registered in a number of countries, including the EUIPO. The Applicant is also prepared for the mark to be registered under Section 16.

Discussion

toffiffee

The tests for validity of a trademark registration for the shape of an article was given in the Supreme Court ruling 11487/03 August Storck KG vs. Alfa Inuit Food Products LTD, of 23 March 2003. These tests are summarized in Circular 033/2016 Trademarks: Emphasis on Examining trademarks from 15 December 2016 as follows:

  1. The requested shape has to serve as a trademark in practice
  2. The requested shape cannot be significantly aesthetic or practical.
  3. The shape has acquired distinctiveness through use

This topic has been widely discussed in the case-law and literature in Israel and abroad. The tests have been largely adopted due to comparative law, and so we can use foreign rulings to aid us in coming to a conclusion.

Nevertheless, the Deputy Commissioner does not consider that the applied for mark fulfils the Supreme Court’s criteria.

The Mark Does Not Serve As a Trademark in Practice

The question asked in this context is whether the public and the applicant see the shape of the mark separately from other marks that are applied to the product to indicate the source, thereby serving as trademarks. As clarified in Berkeley “Kerly’s Law of Trade Marks and Trade Names“, 15th ed. (2011) p. 197, from a UK decision regarding the registerability of the shape of a container:

The relevant question is not whether the container would be recognised on being seen a second time, that is to say, whether it is of memorable appearance, but whether by itself its appearance would convey trade mark significance to the average customer.”

The things are stated regarding containers, but this is also true regarding the shape of the products themselves, since these are not generally considered as being trademarks by the public, and the packaging includes the well known word mark Sod as a trademark indicating the source of the goods. It is true that sometimes a single object will have more than one trademark on it, each being independently registerable. However, in such cases it is difficult for the manufacturer to demonstrate that the public afford each element weight as a trademark: See J. Thomas McCarthey in McCarthey on Trademarks and Unfair Competition (2011), pages 7-12:

“When a label or advertisement contains a cluttered morass of claimed marks in many words, slogans and designs, no one of these things is likely to make a significant trademark impression on customers. If a given designation is a trademark, that should be immediately evident to the ordinary buyer. If it takes extended analysis and legalistic argument to attempt to prove that a designation has been used in a trademark sense, then it has not.”

kitkatThe need for the public and the manufacturer to rely on the shape of the product as an indication of the source of the product is required for it to be registerable has been discussed recently in the UK decision [2017] EWCA Civ 358 Société des Produits Nestlé SA  v. Cadbury UK Ltd. (Kit Kat). In this ruling, the court affirmed the ruling of two lower courts that the shape of the KitKat snack bar is not registerable. In that case, the issue of the burden of proof for registering a product shape was referred to the CJEU:

The judge thought that the answer to this question was not clear and depended upon what was meant by “use of the mark as a trade mark”. As he put it: does it require the applicant to show that, as a result of the use of the mark, consumers rely on the mark as a trade mark, or is it sufficient that consumers recognise the mark and associate it with the applicant’s goods?”

The UK court considered that the European Court’s position was that the public have to rely on the product shape as a source of origin, and not merely to recognize the product shape:

“Accordingly, I agree with the judge that it is legitimate for a tribunal, when assessing whether the applicant has proved that a significant proportion of the relevant class of persons perceives the relevant goods or services as originating from a particular undertaking because of the sign in question, to consider whether such person would rely upon the sign as denoting the origin of the goods or services if it were used on its own. Further, if in any case it is shown that consumers have come to rely upon the mark as an indication of origin then this will establish that the mark has acquired distinctiveness”

Deputy Commissioner Jacqueline Bracha does not consider that the survey and publicity material in the present case proves the Applicant’s contention.

In all cases, the word mark Sod clearly appears in the publicity material, and the advertisements all include the word Sod a large number of times. So it does not appear that the applicant is relying on the visual appearance of the product to indicate the origin thereof.

The extent in which the shape of the package is capable of serving as a trademark depends on the degree that they are different from that typical in the field. See for example, Israel Trademark Application No. 174402 Diageo North America, Inc. from 13 April 2011. The Applicant notes that they chose the mark to distinguish themselves from their competitors. The Applicant submitted a lot of material that shows that cleaning materials intended to be hung in the toilet bowl come in different shapes, however all of these include a hook and a perforated plastic case so that they can serve their function of hanging over the rim and allowing water to reach the cleaning material on flushing. The product in question is not sufficiently distinctive that it is recognized by the public as being a trademark. From the material submitted and from a personal search of the Internet it appears that such products come in various shapes and sizes including five flowers, three crescents three rectangles and so one. Most of the products are coloured and two colours are combined in a single product… Many are sold in transparent packages that have the manufacturer’s logo on the upper part.

The mark has not attained distinguishing character through use

There is a connection between the question of whether a mark serves as a trademark in practice and whether it has acquired distinctiveness. The Applicant has to demonstrate that through sales, etc., there is public awareness of the mark.

First and foremost, the Applicant has to show that the goods have a reputation, meaning that the public identifies the goods with the applicant or at least with a specific source, even if not identifying the applicant by name.
….
Continuous significant usage is not what is important, but rather the type of use:  if it is a use that identifies the product with the Applicant, see Appeal 18/86 Israel Venetian Glass Factory vs. Les Verries de Saint Gobain p.d. 45(3) 224, 238.

To prove a relationship between the product and supplier, the Applicant submitted Mr Roshinak’s survey. The questions were directed to respondents who admitted to being the purchasers of domestic hygiene goods for their homes. The respondents were first asked if they were familiar with the products for which the trademarks were sought (specifically the product having Israel TM Application No. 258658). It is noted that the respondents were not asked if they had purchased the product and so those who had seen the advertisements also responded positively and some 67% were familiar with the product. Mr Roshnak explained at the hearing that this is significant. In this regard, it is noted that the publicity campaign was conducted close to the survey and may well have affected the results. See Complaint 31706-01-12 Dan Design Center ltd vs. B.R.A.P. Projects ltd 19 June 2012.

survey3.JPGThose respondents  that responded positively to the first question were asked if the product was known in Israel. The Deputy Commissioner considers this is less relevant since it surveys what the respondents thought and not how well known the product was. In the next stage, the respondents were asked if they were familiar with other products of the same manufacturer and 65% were unaware of any other products or were not sure in their response.

The Deputy Commissioner considers this the most significant part of the survey. The purpose of a trademark is to link a product with other products of the same supplier. See Seligsohn Trademark Law and Similar Law 1973 page 1. If this connection does not exist, the shape of the mark does not serve as a trademark in practice.

In this instance, the majority of the public does not consider the product as associated with a particular supplier and this is clear from the fact that they did not know if the supplier sold other goods. In other words, the public surveyed were unaware of the source of the goods and did not connect the balls with other products marketed under the Sod mark. Since the Applicant acknowledges that Sod is a well known mark associated with a wide range of hygiene products, had they associated the product with Sod, they would have made a connection and mentioned other products.

The Applicant claimed that the acquired distinctiveness exists where the public associate a product with some supplier and not necessarily with a supplier by name. This is true. The principle was established in Appeal 18/86 Israel Venetian Glass Factory vs. Les Verries de Saint Gobain p.d. 45(3) 224, 238. However, in this instance, it is claimed that Sod is a ‘quality brand’ and so it is not reasonable to claim that the majority of the public do not know the brand. Furthermore, from the response to this question, it appears that the majority of the respondents do not relate the product with ANY supplier and for this reason cannot answer whether the supplier supplies additional products.

survey.jpgIn the final survey, the respondents were asked who manufactures or markets the product. This was a multiple choice question with the options Henke, Sod, some other supplier SPECIFY and do not know/not sure. This is a closed-ended leading question similar to that discussed in Opposition 112645 Mei Zach (Clear Water) Shlomo Zach vs. Teneh Industries 1991 ltd from 12 July 2007. Two of the four answers were correct. The others required the respondents to admit to not knowing or to suggest an alternative themselves. It is hardly surprising, therefore, that most respondents answered correctly. Furthermore, the respondents who answered correctly were not even required to remember the manufacturer/supplier’s name themselves….

leading questionMr Rohnak was asked about this during the hearing and responded that respondents are not ashamed to answer that they do not know, and so their choosing a correct answer is significant and indicates knowledge. Mr Roshnak did not think that wording the question differently and giving names of other manufacturers of hygiene products would have led to a different result. This response is speculative and is beyond his competence since it does not relate to making surveys and drawing results but rather to anticipating responses to questions not asked. The fact that most respondents elected “Sod” and not “Do not know” certainly raises the suspicion that the respondents answered that way as the question led them to do so, or because the way the survey was constructed led them to believe that this was the desired response.

Deputy Commissioner Bracha concludes that the survey does not prove that the public identifies the product with the source. Furthermore, it really indicates a lack of identification with any source.

By way of comparison, in the KitKat ruling, most respondents recognized KitKat as being an image of the snack without the name being suggested to them. Nevertheless, the court held that the manufacture does not rely on this recognition and the shape is not eligible for registration. In this instance, the public could not identify the source without leading questions that posed the correct response.

In evidence of acquired distinctiveness, the Applicant submitted an affidavit of the product manager. It is not denied that the Applicant invested large sums in promoting the product to the result that they captured a significant 30% of the market. However, this does not show that the public identifies the product with the supplier without the Sod mark clearly shown.

In light of the above, having concluded that the mark does not have distinguishing characteristics, it cannot be registered under Section 16 either.

The mark is therefore refused.

Ruling by Ms Jacqueline Bracha re 4 Balls Shape Mark to KGaA & Henkel AG 258658, 258797, 258798 and 259500, 18 December 2018.


Panthenol – Costs ruling

January 29, 2018

panthanolIsrael Trademark Application No. 278427 for the word PANTHENOL was submitted by by Tetra Pharm ltd and covers Soaps; perfumery; cosmetics; essential oils; cosmetic preparations containing herbal, vitamin, mineral; cosmetic preparations for the treatment of seborrhea; hair and body lotions; bath foams; shampoos; hair conditioners; hair treatment preparations; creams, gels, moisturizers; salts; powders; toiletries; aftershaves; make-up preparations; deodorants for personal use; cosmetic preparations for the treatment and care of the face and the body; after shave lotions; antiperspirants; sunscreen preparations; dentifrices; non-medical dental preparations, namely, non medicated dental rinse and non-medicated whitening and cleaning dental preparations; cosmetic preparations for the treatment of burns; cosmetic preparations for the treatment of skin redness; cosmetic preparations for the treatment of skin irritation; all included in class 3.

exorbitantThe Proctor & Gamble Company opposed the registration. Tetra Pharm ltd abandoned the mark and Proctor & Gamble requested real and actual costs of 29,659,07 Shekels which is about $8,500.

Proctor & Gamble argued that Tetra Pharm ltd’s application was in bad faith since at the time of filing they were well aware that their mark was confusingly similar to Proctor & Gamble’s marks and was also the dictionary name of a chemical.

proctor and gambleProctor & Gamble argued that this was clear since the Applicant abandoned the mark without even attempting to defend it. The actions that Proctor & Gamble request costs for include learning the process, preparing an opposition, time spent in negotiating a settlement that was initiated by the Applicant, legal research, preparing an application for costs, filing fees, couriers, etc.

Proctor & Gamble added that not providing real and actual costs would incentivize the applicant to infringe Proctor & Gamble’s rights in the future.

tetrapharm-logo.jpgTetra Pharm ltd accuses Proctor & Gamble of acting in bad faith, and argues that one should not award costs for attempts to negotiate a compromise or for work performed prior to filing the opposition or for work performed in preparing the request for costs. They allege that the requested costs are exorbitant since a single statement of case was submitted, and the issue was resolved at an early stage in the proceedings.

RULING

One has to balance the entitlement of the winning side to expenses paid out in practice, with the opposing interests, as explained by Adjudicator of IP, Ms Yaara Shashani Caspi in her cost ruling regarding Israel trademark application no. 274115 from 19 September 2017:

It is a general rule that the party winning in court is entitled to real costs as incurred in practice. Nevertheless, the one judging is not obliged to award real costs, since (s)he has to consider the facts of the case and legal policy (see 6793/08 Luar ltd vs. Meshulam Levinstein Engineering and Subcontracting ltd, 28 June 2009.

The case law establishes that the applicant requesting real costs has to prove that they are reasonable, proportional and essential to managing the case in the specific case. (See Bagatz 891/05 Tnuva Cooperative for Marketing Agricultural Produce in Israel ltd vs the Authority for Granting Import Export licenses of the Ministry for Infrastructure, p.d. 50(1) 600, 615 30 June 2005. This limitation to costs, that they should be reasonable and essential is:

To prevent a situation where the costs that are awarded are so high that they will be too much a disincentive on a party, and create an inequality, making legal action unnecessarily expensive, and thus limit access to the courts. See 2617/00 Kinneret Quarries (limited partnership) vs. the Municipal Committee for Planning and Building Nazareth Ilit. p.d. (1) 600 (2005).

In this instance, the Applicant did win the proceedings, and are thus entitled to a refund of costs. However, in the circumstances, Commissioner Ofir Alon does not consider it appropriate to award the actual costs, since they are exorbitant for the preliminary stage that was reached before resolving the issue, and since this is not exactly a complicated issue. After weighing the various considerations, Commissioner Alon considers that 8000 Shekels is reasonable.

The Request to Reconsider the Extension

On 25 September 2017, the Applicant requested an extension to reply to the costs ruling without sending a copy to the Opposer and without appending the Opposer’s response as required by Commissioner’s Circular 006/201. On 28 September 2017, a decision was given that required the Applicant to act in accordance with the procedures and to obtain the Opposer’s position regarding the extension. As per the ruling, on 2 October 2017, the Applicant approached the Opposer to receive their position, and on 3 October 2017, the Applicant’s counsel (Wolff Goller Bregman) requested a further extension in which he noted that the Opposer’s counsel (Shlomo Cohen) had not yet received instructions from their client, but failed to note that they had only informed Opposer’s counsel the day before.

On 4 October 2017, Opposer’s counsel (Shlomo Cohen) informed Applicant’s counsel (Wolff Goller Bregman) that they oppose the extension. However, Applicant’s counsel (Wolff Goller Bregman) did not mention that they had already filed for an extension, and did not inform the Patent Office that the Opposer was opposed to the extension.

Following this, an extension was granted until 15 October 2017 whilst the Opposer’s position was not before the Commissioner. On 17 October 2017 the Opposer requested reconsideration of the Extension and explained the sequence of events, and requested that the extension granted to the Applicant be reconsidered in light of the Applicant’s behaviour.

The Opposer is correct that the Applicant’s behavior is inappropriate. Parties to a legal proceeding before the Patent Office should send each other copies of communications submitted to the patent office. The purpose of the Circular is to enable the adjudicator to rule when the position of all parties is before him or her. In this instance, the Applicant’s behaviour did not allow this.

Although not seeing it fit to change the decision regarding the extension, thereby enabling the cost ruling to be given without consideration of the Applicant’s position, but the Applicant will bear further costs of 3000 Shekels for requiring reconsideration.

In light of the above, the Applicant will bear Opposer’s costs of 11,000 Shekels and out-of-pocket expenses of 1434 Shekels. These sums will be paid within 21 days, or interest will be incurred.

Re Israel Trademark No. 178427 Panthenol; ruling on Costs, Ofir Alon, 6 December 2017. 

COMMENT

Pantene.jpgThe term panthenol is arguably similar to Proctor & Gamble’s leading brand Pantene.

There are, however, differences. More problematic, Panthenol (also called pantothenol) is the alcohol analog of pantothenic acid (vitamin B5), and is thus a provitamin of B5. In organisms it is quickly oxidized to pantothenic acid. It is a viscous transparent liquid at room temperature. Panthenol is used as a moisturizer and to improve wound healing in pharmaceutical and cosmetic products. Indeed Pantene Pro-V is based on Panthanol.

It is true that the mark should not have been registered, and the Examiner should have picked this up. Then again, opposing such a mark is not complicated and 29,659,07 Shekels does seem exorbitant. The basic ruling of 8000 Shekels for filing an opposition, though considerably lower, is also rather high for a trademark opposition.


Counter-claim by Iscar thrown out

January 29, 2018

Background

Israel Patent Application No. “181562” to Hanita is titled “High Performance End Mill” The patent claims:

High Performance end mill comprising a shank portion and at least one cutting portion divided into a plurality of teeth by flutes disposed between said teeth at the cutter extremity and a gash cut profile wherein the maximum axial depth of said gash out measured in the direction parallel to the cutter extremity each having a cutting edge extending outwardly from the center of the tool’s extremity in a positive direction.

HanitaIn May 2013, Hanita sued Iscar for infringing the patent in the Nazareth District Court before Judge Arafat Taha. Iscar attempted to have the patent revoked before the Patent Office, but a settlement was mediated and the request was withdrawn.

On 3 September 2013 the Tel Aviv District Court rejected Hanita Metal Factory’s patent infringement and passing off claims against Iscar. The District Court understood that the claims recites three components and that Iscar’s device does not include the second component and that this is sufficient reason to throw out the infringement ruling.

Nevertheless and beyond that necessary, the District Court further considered other claims of the parties and also concluded that Iscar’s product included the third component (the parties concurred that it included the first component). It also ruled that the claim was void since the components were not new, and nor was the combination, and awarded costs of 50,000 Shekels to Iscar.

Main Appeal

Hanita appealed this ruling and challenged the way the claim was construed by the District Court.  In this Appeal, Hanita has petitioned the Supreme Court to find the patent both valid and infringed.

IscarCounter – Appeal

Iscar has filed a counter-appeal against the finding that their product was within the ambit of the third component.

Request to have the Counter-Appeal thrown out

Hanita then requested that Iscar’s counter-appeal be struck out on the grounds that it did not create any operative results with respect to the findings of the Court of First Instance. Iscar challenges the attempt to cancel the Appeal and argues that canceling the finding that their product is in the ambit of the third component has operative consequences since if the Court of Appeal accepts Hanita’s Appeal without considering the counter-claims if could conclude that Iscar’s product infringes Hanita’s patent to the detriment of Iscar, whereas if they accept the counter-appeal that the product does not include the third component, then even if it concludes that the second component is present and that the claim is valid, the charge of infringement would be dropped.

Ruling

Judge Gilad Lubinsky Ziv ruled that the request to have the Counter-Appeal thrown out should be accepted.

Right of appealThe basis for his ruling is that the condition for filing an appeal or a counter-appeal is that the Appellant is harmed by the ruling and requires an operative change. In other words – one can only appeal if the right sought was not granted by the Court of First Instance or was only partially granted, or that a right sought against the Appellant was granted or partially granted. See Zussman Civil Procedure p. 805 7th edition ed. Levin, 1995). Appeal 1946/01 The Fund for Confidential Trial vs. the Administrator General, p.d. 56(3) 311, 315-316, Civil Ruling 2734/09 Piutrakowsky vs. Arnon (20 June 2010), where the Appeal against that ruling was rejected by Judge N. Hendel on 9 January 2011 in Appeal to Supreme Court 6753/10). Whilst it is true that Regulation 434 of the Regulations Governing Civil Procedure 1984 explicitly allows that a counter-Appeal can be filed if the Respondent wishes to allege that “the Decision of the Court of First Instance requires changing…” the intention is a change in the result that the court has reached (See Appeal 1560/06 Levy vs. Shkalim 17 April 2007).

In this instance, the Appellant claims were rejected in full by the Court of First Instance and it is clear that the Counter-Appellant (respondent) does not want to change the OPERATIVE ruling and cannot be considered “hurt” by it. So even if one were to accept the Iscar’s reservation about their product including the third component, changing this has no operative effect (in isolation of the main Appeal by Hanita) on the ruling of the Court of First Instance which dismissed all charges.  Consequently, Iscar is not allowed to appeal the ruling. Indeed Iscar themselves note that the practical consequence of their counter-appeal is only if Hanita’s appeal is accepted, and this is insufficient to grant the right of appeal, since it is clear that one cannot base the right of appeal (whether as main appellant or counter-appellant on a “what if” “scenario regarding whether the opposing party will appeal or not.

This conclusion does not leave the Appellant without course of action, since the arguments regarding the inclusion of the third element can be raised in the response to Hanita’s Appeal, but an Appellant has to request an operative change for their appeal to be considered. See Levy, Appeal 4691/91 Israel vs. Ozen p.d. 45(5) 695, 699 H. ben Nun and T. Chavkin Civil Appeals p. 408 (4rd Edition 2012, Zussman p. 840-841, and The Fund for Confidential Trial vs. the Administrator General p. 315. Thus contrary to Iscar’s assertion, there is nothing to prevent them claiming in their defense in the Appeal, that their product does not include the third component either, and can thus fight to have the decision of non-enforcement upheld for different reasons to that ruled by the District Court.

Iscar’s Counter Appeal is refused and Iscar is obliged to pay 4000 Shekels costs to Hanita.

Ruling of 15 January 2018 by Judge Ligad Lubinsky Ziv Concerning Iscar’s Counter Appeal against Hanita

COMMENT

Iscar is taking no chances. When Israel Patent Application No. 177336 to Hanita titled “Chatter resistant end mill” was allowed, Iscar opposes it on grounds of lack of novelty, lack of inventive step, and insufficient disclosure as required by Sections 4, 5 and 13 respectively. In that case, the previous commissioner Adv. Kling ruled that the main claim was not-inventive and is not adequately supported. The Opposition was accepted and IL 177336 was rejected.

 


Statute of Limitation for Compensation for an Employee Invention

January 28, 2018

This ruling considers when the seven year Statute of Limitations starts for an employee to turn to the tribunal for service inventions for a ruling regarding appropriate compensation.

Background

10-american-idol-judges

Section 134 of the Israel Patent Law establishes a tribunal comprising a judge, the Patent Commissioner and an academic, whose job it is to determine an appropriate level of compensation for an employee inventor if asked to do so.

The Law is clear that such inventions are the property of the employer. If there is a contractual arrangement regarding compensation it is usually upheld. Nevertheless, the committee has the authority to hear cases and make rulings, and several such rulings have published in recent years.  See re Barzani.

azilect

In this instance, on 20 April 2015 Dr Ruth Levy who was previously employed by Teva Pharmaceuticals, requested that the committee rule compensation for her employee invention of rasagiline which because the active ingredient of AZILECT™.

teva

Teva opposed based on her tardiness in bringing the claims and the Statute of Limitations for such actions. They also requested that the tribunal set out a timetable for discussing the issues, and that they firstly address whether the case should simply be dismissed out of hand due to the time passed.

The witnesses concerned were aged, and Dr Levy opposed the timetable. Eventually it was decided to collect testimony first and then to establish a time-table for everything else.

After the usual preliminary skirmishes, on 30 June 2016 the tribunal ruled that Professor Cohen should be cross-examined at his home on 12 July 2016 and the other witnesses (including Dr Levy) would be cross-examined on 28-30 August 2016 at the Israel Patent Office.

Professor Cohen was cross-examined as scheduled, and the testimony of the other witnesses was postponed unto December 2016 at request and consent of both parties.

On 29 September 2019, the tribunal set a date for discussing initial questions, and delayed the hearing on the stature of limitations and aging of charges until later on.

On 25 October 2019, Dr Levy submitted her response to the initial requests together with affidavits and appendices and submitted that the affidavit of Professor Eldad Melamed which was part of her original submission, be included in the evidence, despite his having passed away in the meantime, making his cross-examination impossible.

swamped

Being swamped with material, the tribunal cancelled the scheduled cross-examinations and decided to relate to whether the case should be thrown out due to the statute of limitations first, so that if they concluded that the application for compensation was filed too late, it would not need to be addressed substantively.

The Main Claims of the Parties

claimsDr Levy has a PhD in microbiology and was employed by TEVA in various capacities relating to the Research and development of drugs from 1986 until retiring in 2013. She claimed that she was an active participant in a number of significant inventions, the most prominent being the active ingredient rasagiline which is used in the treatment of Parkinson’s Disease in the drug AZILECT™ which was marketed in Israel and Europe since 2005 and in the US since 2006.

compensation

TEVA responded that Dr Levy received full compensation for her inventions. I addition to her salary, she received a special grant of _______________ for her contribution to the development of AZILECT™. Teva considers that this grant was beyond that required by law and its acceptance created an implicit agreement between Dr Levy and the company regarding compensation for her inventive contribution. TEVA further claims that all the inventions that Dr Levy requests compensation for were invented over seven years before filing her request for compensation. Even if one counts the time period from when a patent application was filed, this is still seven years previous, and so the statute of limitations applies and she is not entitled to anything else.

Furthermore, Teva contends that by her behavior prior to suing, Dr Levy apparently gave up on any rights to additional compensation by not making any claims beyond her salary and grants, and so the case should be thrown out due to laches.

give up

Dr Levy disagrees. She considers that the special payment or grant that she received from TEVA was an admission that she had inventor rights. Furthermore, she only became aware of the right in 2012, and citing section 9 of the Statute of Limitations argued that the clock only starts ticking from her becoming aware of her rights.

It should be noted that Dr Levy denies that the payments made were compensation for her inventions. However, she claims that the fact that she denies this does not alter the fact that Section 9 of the Statute of Limitations starts with her becoming aware.

Alternatively, Dr Levy claims that if one does not accept the 2012 date, one should consider the period as starting with TEVA acknowledging her rights  which occurs in Paragraph 2.2 of the draft retirement agreement that TEVA drafted and sent her in 2013, and which was not included in the final version that was signed by the parties.

The paragraph remains confidential.

giving-up

Dr Levy claims that had she signed the agreement including paragraph 2.2, this could be considered as being a waiver of her rights. She further alleges that raising the issue of Statute of Limitations is itself an act of bad faith since TEVA failed in their obligation to inform her about her right to compensation and to turn to the tribunal. Furthermore, as long as the parties consider that they have not reached an agreement by not being silent on the compensation issue, and have not performed an action that makes it clear that there remains disagreement between the parties, Section 134 has not been fulfilled and the employee has not yet got the right to claim compensation. So the period for making a concrete claim only starts with her retiring in 2013 when she made her final request for compensation.

Dr Levy considers that section 135(4) of the Patent Law regarding actual exploitation of the invention, is not a necessary condition for the committee under Section 134 to establish grounds for suing. However, it does reset the Statute of Limitations. She considers that there is reciprocity between the exploitation by the employer and the employees right to compensation.

The Applicant bases this assertion on the law under which the statute of limitations for suing for infringement of a patent can only occur from when the infringement first occurs, without any relevance being given to any previous infringements. She considers that every product that exploits a service invention recreates the employee’s grounds for suing. She considers that this is clear from the fact that the tribunal can reconsider its rulings as circumstances change.   Thus there is time limit to when one can approach the tribunal under section 136. Any change in circumstances, such as exploitation of the patent in practice, reestablishes grounds for the employee suing.

window

Were the tribunal to rule differently, pharmaceutical inventions would have two windows, the first within seven years of inventing and the second within seven years of a change of circumstances under section 136. This is inefficient.

Dr Levy further alleges that only after seeking legal advice did she become aware of the her right for compensation under the Israel  Patent Law. She considers that the employer is obliged to explain all rights to employees and should have made a formal approach to her to settle the issue.

Dr Levy further alleges that a narrow window would force the employee to fight the employer during the period of employment and risk dismissal, and would force the negotiation to be from a position of weakness. Furthermore, a narrow seven year period would require her to have fought for each invention separately. This would have required her to approach the tribunal several times sometimes widely spaced, regarding a single pharmaceutical. Finally, she does not acknowledge being a side to any agreement with TEVA regarding employee inventions during her period of employment.

DISCUSSION

The Statute of Limitations does apply to rulings of the Committee for Compensation to Employee Inventors since it is a judicial body, see Appeal 402/77 Goldman vs. Herman, p.d. 32(2) 421 page 428:

When the legislative defined “court” in the Statute of Limitations it bothered to clarify in the definitions section that the term court did not only refer to the law courts or Rabbinic courts but also to any judicial authority, and even to an arbitrator who is not an Authority in that he is not an Institution that generally exists, but is rather an ad hoc authority. This means to say that the legislation specifically opined tat any play where the Law provides judicial authority to any entity, the Statute of Limitations applies.

Section 2 of the Statute of Liberties states that:

A claim for any right is subject to become aged, and if a legal submission is made for an aged right and the one sued claims the defense of the Statute of Limitations, the court need not address the issue, however the Statute of Limitations per say does not cancel the abrogated right.

Section 5 of the Statute of Liberties states that apart from real estate issues, the Statute of Limitations is seven years.

Section 6 of the Statute of Liberties states that:

The period from which seven years is counted starts with the incident that created the grounds for filing the complaint.

conception

In Appeal 10192/07 Pisgat Ashdod Civil Engineering LTD vs. Chen Gal Investments and Trading ltd. (24 May 2010) paragraph 17 of the ruling establishes that the time when a claim is conceived for the purposes of starting the Statute of Limitations clock is when the significant facts that are the basis of the requested claim come together. See Uri Goren “Issues in Civil Law” p. 118, 10th edition, 2009, Appeal 242/66 Jacobson vs. Gez p.d. 21(1) 85, 92 (1967). Estate of Williams p. 271, Appeal 244/81 Patent vs. Histadrut Health Fund p.d. 38(3) 673, 678-679 (1984). However, this definition does not fully cover the concept of when a claim is born. As far as the Statute of Limitations clock is concerned, it is insufficient for the claimant to have grounds for suing; he needs a concrete incident that can be proven in court for him to be able to file his claims and win the sanction he applies for. See 1650/00 Zisser vs. Ministry of Housing, p.d. 57(5) 166, 175 (2003).

monkey tribunal

Section 134 of the Israel Patent Law states that the tribunal has the authority to determine that an employee has the right to compensation for Service Inventions in cases where there is no agreement between the employer and employee:

If there is no agreement that prescribes whether, to what extent and on what conditions the employee is entitled to remuneration for a service invention, then the matter shall be decided by the compensation and royalties committee established under Chapter Six.

The Applicant claims that her rights as an employee come into play when the employee invention is made and she is entitled to compensation for inventing. However, she claims that her concrete right to file her complaint under Section 134 come into play only when there is no agreement between the parties regarding the employees rights. So long as it is not clear that there is no agreement, there is no concrete grounds for suing and thus the clock does not start to tick.

The tribunal rejects this claim. Section 134 states that where there is no agreement that regulates the employee’s right, the employee has the right to turn to the tribunal to determine if the employee is entitled to compensation and if so, how much? The requirement for a lack of agreement is a factual one objective one and is not subjective, as claimed by the complainant. As to when the concrete claim from which the clock starts to tick, this will be addressed below.

working together

Unlike other legal systems, the Israel Patent Law does not require that employer and employee will actively work towards forging an agreement as a preliminary action for Section 134 of the Law to come into effect. There is also no need for the parties to have a disagreement regarding compensation. So in accordance with the conditions laid out in re Ashdod Engineering (above), the plaintiff could have turned to the tribunal before negotiating on retirement, and the tribunal could have ruled that the plaintiff is entitled to compensation. In light of this legal situation, there is no basis for the claim that the employer is obliged to approach the employee and offer compensation. However, it is good for the employer to do so. Similarly, it is fitting for the legislation to consider including an obligation of this nature in light of the respective power of the parties, in light of Judge Rubinstein’s comments in re Barzani which are related to below.

concrete

The time when a concrete obligation was born

It is pertinent to discuss when an employee invention as defined in the Israel Patent Law comes into being for the purposes of the Statute of Limitation. One possibility is that the employee invention comes into being at the moment that the employee informs his employer that he has come up with an invention due to his employment or during his employment, as per Section 131 of the Law and the employer decides to monopolize the Invention under Section 132(a). There is an assumption that the parties do not disagree that this is a service invention. The logic behind this choice is that from the moment that the employee and employer fulfill their obligations under Sections 131 and 132 of the law, the parties are aware that there is a service inventions and have declared their interest regarding ownership, and this is the first opportunity to relate to the question of compensation. It is noted that by this approach the conceptual right and the concrete right.

A second possibility for when the right to compensation starts, is either when a patent application is filed or when a patent issues. These periods are periods when the employer shows interest in the invention. However, these dates are problematic since there are cases when an employee invents something that the employer does not apply for a patent for.

A third possibility for the concrete right is when the employer exploits the patent as per section 135(4) of the law. On the face of it, it seems that until the patent is utilized, it is not clear that the parties can really evaluate the worth of the patent. However, this approach is also problematic: exploitation does not occur in a single unequivocal event but is rather an ongoing process  during which various variables can affect the profitability of the invention. Similarly, it raises the question of whether the worker is entitled to a share in the profits if the employer sells the patent and does not exploit it directly.

That said, both the second option, and particularly the third one raise a further problem which it whether a concrete ground for suing as opposed to a conceptual ground for suing is cause to turn to the tribunal? Perhaps there is a difference from when the clock starts to tick, and the time period when the tribunal has the authority to relate to the employee’s claim for compensation. This means to say that it may be sufficient for there to be a conceptual claim for the tribunal to have authority, but a concrete right is required for the Statute of Limitations clock to start ticking. In the regard one should note that in Actelis Networks vs. Yishai Ilani (3 Feb 2010) discussed below, the tribunal concluded that one can request compensation prior to actual exploitation occurring.

In this instance, the tribunal sees no reason to rule on the issue of when the seven years Statute of Limitations period starts since the Complainant’s case was filed more than seven years after all the candidate dates.  Below claims by complainant to prevent the Statute of Limitations applying are discussed.

The Statute of Limitations as per re Schechter

Seven_year_itch.jpg

The Applicant relates to the decision ruled in217/86 Mordechai Schechter vs. Abmatz LTD, p.d. 44(2) 846, following which Section 73b of the Israel Paten Law was amended to state that the Statute of Limitations does not apply to patent cancellation requests. Dr Levy considers that the Schechter right to request a patent cancellation comes into effect when the Applicant for Cancellation has an interest in the patent being cancelled. So there is no single Statute of Limitations of seven years from when a patent issues, as stated in paragraph 5 of the decision:

When is the point at which the right to sue becomes grounds to sue? If we use a metaphor, what is the point at which a grain of sand in an oyster becomes a pearl? When translating this picture to the issue before us and to answer the question, when does the right to challenge the validity of a patent become grounds for filing a cancellation proceeding that starts the Statute of Limitation clock? In this instance, the cancellation period for filing a cancellation proceeding only starts when the Applicant for cancellation has a personal right to have a patent thrown out of the register.  (which also serves the public interest).  

In re Schechter, Judge Netanyahu explains that the rationale behind the establishment of the time frame in this manner is to enable the public to challenge the validity of the patent. The rationale for this is the purity of the register:

To block the possibility of attacking a patent on grounds of the Statute of Limitations or laches would lead to the result that after the period has passed, the patent would become an absolute right which contradicts the spirit behind The Patent Law. There is no policy or logic to justify a patent becoming inviolate from direct attack by cancellation proceedings after seven  years when the same reasoning allows a patent to be enforced for 27 years or more. What logic is there to make things difficult for a responsible person who wars that applicant to check the status of a patent in advance and to make is easier for someone to defend himself during infringement proceedings for an ‘at risk’ product launch? The logical conclusion from the perspective of Patent Law is that Patent Law is incompatible with laches and Statute of Limitations and does not coexist with it.

Judge Netanyahu explains that the conceptual right is a public right to have patents cancelled. However, only if someone is interested in cancelling the patent is there a concrete right to request for cancellation. The period for so doing starts with the day that the concrete right comes into effect:

This way, that differentiates between the conceptual right and the concrete grounds for an action lead to the following conclusion: The right to cancel a patent is a ‘right open to every person’, it is a fundamental concrete right that remains simple until it aggregates into a concrete right and an issue develops for the Applicant for Cancellation. Only then does the clock start running. So where the cancellation request is filed by a third party, and not the patentee who is owns the invention, the public is drawn in by virtue of their conceptual right to the concrete private claim. However, this is not the claim of the appellant. The claim is made on behalf of the public –that the invention is not patentable. Until there is a private concrete claim to use the patented invention, the clock does not start ticking.

The present case is different. The right to submit for a patent to be cancelled is a right that the Patent Law gives the public; that means to say that anyone can submit a cancellation request. The claims for compensation for inventing is conceptually limited to the employee inventor as a personal right that he has by virtue of inventing. The employer’s obligation is, to the extent that the tribunal decides that it exists, is an in personam contractual right to the specific employee and not a general in rem public right. Thus the conceptual right, i.e. that of compensation and the concrete right, which is that which initiates the seven year period of the statute of limitations- both are private rights that exist between employee and employer and do not extend beyond this relationship.

The reciprocity of the relationship between the Exploiting the Invention and Claims for Compensation

reciprocity

The supplicant Dr Levy claims that there is a reciprocity between the Exploiting the invention by the employer and the ability of the inventor to claim compensation. She claims that as long as the employer exploits the inventions, the worker’s right to compensation is continuously regenerating.

The tribunal rejects the supplicant’s claim in this regard. Such reciprocity does not accord with the wording of the Patent Law and does not accord with the underlying logic.

In re Schechter, Judge Netanyahu stood firm in her belief that the rationale was to allow the public to attack registered patents, and stated that:

As stated previously that the perspective at the base of the patent law and the public aspect is to ensure the ‘purity of the register’. I also explained that since the commissioner has limited tools to test that patents have correctly issued, the system relies on the public and encourages them to submit challenges. However, the most effective challenge is by persons with a personal interest, whether claiming that he is the true inventor, or claiming that he is exploiting the invention and considers that it does not deserve patent protection, and whether he attacks it directly [by cancellation proceedings] or indirectly by at risk product launch, allowing the patentee to sue him, and him being able to use invalidity defense], no one will exert the effort or costs for a thorough inquiry into the questions raised, which may be complicated and require expert testimony, as well as someone with a personal interest.

In parallel with the public right to challenge the validity of a patent, the patentee has the right to claim damages for patent infringement. This right mirrors the right to attack the patent. The patentee has a monopolistic right to the invention but only if it is held to be protected by a valid patent.  Thus he can protect his invention  from infringement, but only as long as there is a valid patent.

In cases of expensive infringement, the infringer infringers the patentee’s rights each time that he uses the patented invention without permission. So each act of infringement is free standing.  However, individual acts of exploitation by the patentee are not individual grounds for the employer inventor to claim compensation that each reset the clock. Section 132 of the Patent Law fixes that a service invention “shall become the property of the employer”.  Due to his contribution, the employee inventor has a right to compensation. So the action creating rights for the inventor is a single event.

Nevertheless, the patent law does not ignore the complicated employer-employee relationship, and the conditions that can develop during the life of an invention.  The inventor can return to the tribunal if it can proven that “the conditions existed at the time of the ruling have changed”.  As stated in Section 136 of the Law, there has to have been an earlier ruling for the worker to be entitled to return to the tribunal. Thus section 136 is a special arrangement that that Law provides the worker, so as not to leave him unprovided for. But one should not assume asymmetry between the employers utilization of a patent and the right of the employee inventor to compensation such that each utilization restarts the Statute of Limitations period.

(The arrangement of Section 136 is similar to the entitlement of the estranged wife to support by the husband pending divorce. The financial support is not final and can be revisited if circumstances change, as, for example in Appeal 442/83 Moshe Pam vs. Deborah Kam, p.s. 38(1) 767 on page 771).

However, this is not really relevant to the issue of finality in the employer-employee case. The issue is when the employee can first request compensation? In marital support, personal law applies and there is a tendency to consider a woman that is tardy regarding claiming support, as giving up on it. In cases where the general law applies, the period of aging is very short in the amendment to Section 11 of the Family Law (Support) 1959. Nevertheless, if there is a submission for support prior to the period of the appropriate Statute of Limitations, the parties can claim for changes due to changes in circumstances.

It is noted that the significance of Section 135 of the Law is not the aggregation of circumstances that makes it possible to sue for compensation for making an employee invention. The purposes is established in the heading “Guidelines for Establishing Compensation”, and these are only the guidelines for the tribune to use when considering compensation:

  1. In making a decision under section 134, the compensation and royalties committee shall also take into account the following factors:
  • the capacity in which the employee was employed;
  • the nature of the connection between the invention and the employee’s work;
  • the employee’s initiative in making the invention;
  • the possibilities of exploiting the invention and its actual exploitation
  • (expenses reasonable under the circumstances incurred by the employee in order to secure protection for the invention in Israel.

One could argue that clause (4) regarding actual exploitation of the invention is forward looking and does not require a certain knowledge that this will be the case. This was why the Legislative also included Section 136 which enables the tribunal to revisit and reconsider cases rule don under section 134 if they consider that the circumstances have changed. From here it can be seen that if a first request was filed during the seven year period, the conditions underpinning the Statute of Limitations apply and both the employee and his employer have certainty that the issue can be reconsidered. This is whilst the tribunal can request possibilities of the invention being utilized at all times, and even early on, before there is practical usage.

As the tribunal ruled in re Actelis Networks vs. Yishai Ilani (3 Feb 2010) in Section 9 of the ruling, that actual usage is not required to give the employee the right of standing before the tribunal:

The claim that the request is theoretical and premature since there is no actual exploitation in practice is rejected. Section 135 states that one of the conditions for determining the amount of compensation is the possibility of implementation if the invention. So there is no need for actual implementation and the request for compensation is not premature.

In the Actiles case it is noted that the previous tribunal considered it had authority to hear the case despite no actual exploitation. The content of the ruling is based on tests in law, and it is possible that the tribunal will postpone ruling until a later date, such as when there is actual exploitation, if this circumstances require this, as per section 136 of the Law.

Not knowing the Law

ignorance.jpg

Contrary to her assertion, the question of whether or not the Applicant had knowledge of her right to turn to the tribunal is not relevant to the concrete basis of her claims under Section 134. Section 8 of the Statute of Liberty states as follows:

If the claimant is not aware of the main grounds for claiming due to reasons beyond claimant’s control, and which with reasonable care, would still have been unable to prevent, the period for calculating the claim aging is calculated from when the claimant was first aware.

However, Appeal 1960/11 Almog vs. General Medical Services, 6 May 2013, page 7 states that Section 8 of the Statute of Limitations includes the objective test regarding when the period starts, but the burden of proof of its existence was only leaned later falls on plaintiff:

This claim is incompatible with the Guy Lipel, Donenfeld and Ganaim rule. It is difficult to argue that the period for reckoning the Statute of Limitations will start with receiving a professional medical opinion or when the law or a precedent becomes known. Otherwise, the clock for the Statute of Limitations is in the plaintiff’s control, which contradicts the rationale underlying the concept of claims aging. Section 8 of the Statute of Limitations gives both objective and subjective tests:

I will also note that since Section 8 of the law is an exception to the general rule of cases becoming aged, the burden of proof regarding retroactive awareness lies with the party claiming it (See Guy Lipel paragraph 41 and appendages.

It is true that not knowing the Law is not comparable to not knowing facts that would could have caused the plaintiff to file their suit; see Appeal 2919/07 State of Israel – Committee for Atomic Energy vs. Edna Guy Lipel, p.d. 64(2) 82, and paragraph 42 of the ruling:

The extent of the revelation: the law contains four conditions:

  • the existence of facts that were concealed from the plaintiff
  • the facts are significant and central to the claim
  • The plaintiff was unaware of these facts for reasons beyond his control
  • The plaintiff could not have prevented these reasons by taking due case

See Yehudai, page 204 and 1164/04 Herzliya vs. Yitzhaki, 5 Dec 2006. And note, the ruling states facts and not law, and so lately becoming aware of one’s legal rights is not considered retroactively becoming aware.

Furthermore, the facts required for the plaintiff to turn to the tribunal were known to her in fact long before the argument broke out on her retirement in 2013. The plaintiff claims a right to compensation for a number of inventions that she invented during her employment, the last being in 2006 at the latest. Dr Levy was aware of her contribution back then, and also was aware that TEVA had filed patent applications for these inventions.

In light of the above, the tribunal concludes that whichever date one considers as the period at which Dr Levy could have sought compensation, over seven years has passed and the complaint is thus aged.

Application of Section 9 of the Statute of Limitations

The Applicant added and claimed that even if the complaint has aged under section 6 of the Statute of Limitations, the defendant has admitted her right in section 2.2 of the agreement, and that some of the right___________________________________. Consequently, the Statute of Limitation should be calculated from when the defendant acknowledged her right.

Section 9 of the Statute of Limitations states that:

If the defendant admits in writing or before a court, whether during the seven year period or subsequently, that the plaintiff has rights, the period for the Statute of Limitations starts with that admission; and an action that pays out some of the rights is considered as such an admission.

In this section, the term ‘admit’ excludes an admission that accompanies the Statute of Limitations.  

expiredThe defendant denies the allegation that the conditions of Section 9 should be implemented. TEVA argues that to reset the clock, they have to admit that the complainant has the right to turn to the tribunal, and has to admit that there is both an employee invention and a lack of agreement regarding appropriate compensation. TEVA considers that these have to be clearly and explicitly stated, both formally and in terms of content. They argue that this remains the case even if some compensation is paid by the defendant.

time out

Under Section 9 of the Statute of Limitations, the new period starts notice. Since the Complainant submitted her case for compensation for her worker invention on 20 April 2015, the notification restarting the clock has to have been submitted in the previous seven years. So the question is whether there was such a notification within the relevant period, such that the seven years have not passed.

Section 2 of the Statute of Limitations states that aging alone does not cancel the right. The question is whether the respondent’s behavior can be considered an admission, in the sense of Section 9 of the Law, that revives the plaintiff’s claim? The tribunal does not consider this to be the case. One should remember that the applicant’s right to sue depends on the fact that there is no agreement between the parties regarding compensation. Thus any time that the defendant claims that there is an agreement, he does not accept the right of the Applicant to turn to the tribunal, and this cancels the authority of the tribunal. The result is that not only does he not agree with the right to file a complaint with the tribunal but he denies the right of the tribunal. Paragraph 3.3 of the draft retirement agreement  that was offered in the negotiations is not an admission of the right to file a complaint to the committee. The draft agreement states “and will not have further monetary demands beyond that paid by TEVA. This means that the claim for compensation is a claim that cancels the committee’s authority.

The Relative Strengths of the Employee and Employer

tug of war.jpg

The Applicant claims that the Statute of Limitations requires that the understanding that the worker should request compensation for the employee invention close to when the invention was conceived forces the worker to enter into a fight with the employer. Such a fight could risk the future employment and this means that the employee is in a weakened position with respect to the employer.

In general, the employer-employee relationship favors the employer, as Head of the Supreme Court Aharon Barak stated in Appeal 6601/96 AES Systems  vs. Saar, p.d. 44(2) 850, paragraph 12:

Not only this. In the contractual relationship, the employer and the employee are not equals The Employer generally has the upper hand, and can dictate the terms of the employment. Judge Berenson discusses “the Employees weakness with respect to the employer who dictates employment terms”  (Appeal 4/75 Berman vs. The Office for Lorry Transport Pardes Chana –Carcur “Amal”” ltd [12] on page 722. The national Labor Court of Appeal stressed that “labor law assumes a basic condition that there is a fundamental lack of equality between employer and employee (re Checkpoint [29] page 312. It will be appreciated that this inequality changes over time. It is affected by the market and the workers’ unions. Nevertheless, as a principle one can state that the worker’s and the public  interest is to protect the employee’s creativity and work.

As to the assumption of inequality between employee and employer in the workplace, see. The words of the Head of Labor Court Steve Adler in Case 164/99 Dan Fromer s. Red-guard ltd. pd”a 34 294 (1999) paragraph 14:

Labor law takes it as granted that there is an inequality between the employer and employee and so certain clauses in the work contract are not upheld by the court, if one can assume that a reasonable worker would not have agreed to them without this coercion. This is similar to the worker signing a waiver of rights he is entitled to under labor law. It is stressed that as a rule, the worker signs such clauses out of lack of choice; since the worker wishes to be accepted to the workplace, since it is reasonable to assume that failure to sign would result in him not be employed.

However, alongside the determination that the worker is in a position of weakness, and the binding nature of the relevant legislation the case-law does recognize a legitimate employer interest, see Red-Guard paragraph 16:

 True, the Employer has his interests, and the worker, his interest. These interests are different from the public interest. However, we are not concerned in the interests of the parties. We are concerned with the legitimate interests of the parties. The legitimacy is determined by general considerations, principles and assumptions of the legal system. The legitimate public interest and the legitimateinterests of the parties are the same. Although one refers to thelegitimate interests of the parties, the intention is the public order in which some of the parties interests are defended and others are not.

It seems that an arrangement based on an assumption that the employee is always in a position of weakness vis a vis the employer will create undesirable results. The purpose of the Patent Law is to incentivize the parties – both employee and employer, to create employee inventions, whilst regulating the property rights of the employer and the monetary rights of the employee. The employee’s rights are protected by a contractual agreement that arranges them or by the Tribunal for Compensation. Section 131 of the Law obliges the worker to inform the employer of the service invention as close to the time of inventing as possible. Section 132(a) of the Law obliges the employer to inform the employee of whether or not they intend to take ownership of the invention within six month of the notification under Section 131.

The arrangement of the Patent Law chooses to incentivize the parties to reach an agreement as early as possible. Neither the language of the law nor the context imply a separation between the period for informing the employer and the time frame for compensation.

One should remember that the employer has a real interest in knowing the employee’s intention to seek compensation for the service invention. This may be significant and can affect the management of the company and should be reflected in the balance sheet. So there is an importance for the employer that there is a Statute of Limitations to prevent the issue of compensation first being raised many years later, which could surprise the employer and cause significant financial difficulties.

It should be noted that the section 134 rights are not cognitive and do not provide social rights requiring special protection see the Application for Compensation (preliminary requests) Gideon Barzani vs. Isscar LTD, 4 May 2015 paragraph 30:

 We consider that section 134 which provides compensation,  are not cognitive. These are not social rights requiring special protection. In this light, but in a different context, the District Court ruled in Appeal 1843/-1 S.G.D. Engineering vs. Baruch Sharon, 25 January 1993, that  the question of employee inventions is not a social right, but a right in the invention under the Patent law. The conclusion that the right is dispositive concurs with the general cognitive nature of the write in re Shocker as ruled by judge Heishin.

In Barzani paragraph 32 it is stated:

Since conceptually the right is not a social right that requires protecting, as testified by Section 135, the legislation did not decide a cognitive right to compensation similar to the right to be named as an inventor under Section 42 of the Law. In these circumstances, the lack of such a condition in the law forces the understanding that the tribunal gives way to any agreement. It is noted that Dr Shlomit Yanivski-Ravid who champions the cause that the employees rights should be cognitive, establishes in her book IP and Innovention at Work, Theory, Practice and Comparative Law 2013, that the law as it is, is dispositive and if there is a contractual agreement, the tribunal does not have the right to intervene (see pages 305, 311).

The Supreme Court decided not to intervene in our ruling on re Barzani See Bagatz 4353/`4 Barzani vs. Isscar ltd. 8 July 2015.

The legislative body chose to apply the regular Statute of Limitations to employee invention compensation. Had it intended something else, it would have written this into the Patent Law, as indeed, some other legal systems have done. Dr Levy has related to special laws in Germany and the UK.  There is also reference to the law in France, Switzerland and Austria. It is accepted that there is interest in the balances found in these laws but it is the job of the legislative body to consider this, and we can only advise the Knesset to consider these arrangements and to adopt them if it finds it appropriate to do so.

We conclude that the request for compensation was submitted too late and the request for a ruling is rejected.

Bearing in mind the conclusion and the relative resources of the parties, each party will bear their own costs.

As a final comment we note that the arguments put forwards by the parties were of great help to the committee in addressing the issues raised which were considered for the first time and the legal counsel of the parties (Richard Luthi for Dr Levy, and Shin Horowitz for Teva) were of great help in understanding and ruling this complicated case.

The decision is of interest and will be published with the names of the parties, but the sides will have seven days to request that certain details remain confidential.

Ruling in Tribunal for Employee Compensation Levy vs. Teva, 25 May 2017 ruling by Prof. Engelhard, (then Commissioner) Asa Kling and Professor Doron Urbach.

COMMENT

I accept that there should be a Statute of Limitations for claiming an employee right but I do not find this ruling particularly convincing in its analysis regarding cancellation of a patent. I think the correct perspective is that an issued patent has a rebuttable assumption of validity but it may be challenged at any time by bringing evidence of lack of novelty or inventiveness, and doing so does not so much as cancel a patent in the way that a trademark is cancelled, but rather it shows that the patent should never have been granted it demonstrates that it is invalid rather than invalidates.


Clarification

January 22, 2018

In my previous article I wrote:

Having worked in close collaboration with leading in-house managers, such as Einav Zilber who was the head of the Association of Israel Patent Attorneys in Israel on a presentation for entrepreneurs that was presented in parallel with the AIPPI Conference, I am aware of the lack of familiarity with local law, regulations and case-law that leading In-House Counsel have.  to put it bluntly, my role in the preparation of the presentation was to red-line slides that were to have been presented that were simply wrong. To put it another way, none of the in-house members of the committee would have passed the qualifying oral exam to be licensed in Israel without extensive revision.

IPAAI intended the in-house members of the committee that put together the presentation for the IPAA seminar held in conjunction with the AIPPI conference held in March 2016. However, I understand from Kim Lindy that the steering committee of her Best Practices conference thought I meant them.

Presentation-1I have the various iterations of the slides and the corrections I made, so fully stand by my contention that the in-house patent attorneys on the ad hoc committee for preparing a presentation for entrepreneurs would not have passed the oral qualifying exam to become patent attorneys in Israel.

Oral Bagrut PicAlthough this blog is opinionated (which is probably the reason that all members of the Best Practice Conference steering committee seems to subscribe), I try to be fair. I would not and did not assert that none of the steering committee of the Best Practices conference would pass the qualifying exam for patent attorneys in Israel for the simple reason that I have no way of judging their knowledge of IP law. There is also an element of luck in oral exams and all practitioners know the answers to some questions. If a group of 10 experienced practitioners who have previously passed the exams were to resit them, I would expect some to pass.

That stated, I note that the presentation given under auspices of the IPAA was on patent basics, and did not cover designs or trademarks. The in-house patent counsels prepared slides that were full of elementary errors. Heidi Brun (who was on the committee) and I do meet with and counsel wannabee entrepreneurs. Not surprisingly, in-house counsel typically do not.

I suspect that many in-house counsel in Israel do not actively prosecute patents in Israel, and most of those that do, do not prosecute designs and trademarks. Some patent attorneys in large service-providing firms do file and prosecute incoming patents and designs from abroad. Others tend to draft and prosecute patents for a small number of clients. Some sole-practitioners and patent attorneys in smaller firms do not handle incoming work from abroad. Others make a living from it and don’t draft new applications. Anyone not actively involved in prosecuting patents or trademarks or designs is unlikely to be up-to-date with the formalities or the substantive law. Nevertheless, those who follow my blog (which apparently includes the entire steering committee of the Best Practices conference) should at least be aware in general terms about the developments.

I do not think that in-house IP counsel are more or less talented that patent attorneys working for IP boutiques. Both groups have a similar distribution of abilities, and each practitioner finds his or her niche. There is a periodicity in perceived ‘best practice’ for industries. Sometimes there is a trend to out-source all but key competences, so computer support, cleaners, accounting and patents are handled by outside companies. Then there is the counter-trend of keeping everything in-house. This, coupled with the occasional take-over of an Israeli company by a multinational, or a decision of a multinational to have the IP concentrated at head-office, results in companies changing policy and in-house counsel sometimes having to find alternative employment. Indeed I know of one in-house counsel who is now an examiner, and have employed another myself, in the past. This is another reason why it is useful for all patent attorneys to keep abreast of developments.

A friend of mine in the Patent Office passed the oral exam first time, but failed and kept failing the written exam that is designed to test patent drafting skills. This is not surprising. He was familiar with formalities and the Israel law but had never drafted patents.

My practice is such that last year 65% of the turnover was from local clients. 35% from abroad. About 8% was generated by designs and about 10% from trademarks. In a small, full service firm such as mine, one gets very wide on-the-job experience in all aspects of the profession. In the larger firms, the cumulative experience is much greater but individual practitioners tend to be pigeon-holed and many patent attorneys will stick to patents and not touch designs or trademarks.

I have advocated instituting advanced training programs for patent attorneys and believe that the proposed Code of Ethics should require participation in annual training events. This idea was not popular with the Reinhold contingent to the meeting at the Patent Office that discussed the proposed Code of Ethics. Their argument was that none of the corresponding professional codes for accountants or attorneys-in-law require this. My contention is that the US does require it from attorneys, and it seems to me to be a good idea.

Kim’s conference is an advanced training program. It does provide ongoing training. where I feel it is deficient is that it has practitioners discussing developments in the US, Europe and the Far East, however not developments in Israel and I see this is a missed opportunity to cover a jurisdiction having importance to companies domiciled or employing locally.

 


Forthcoming Best Practices in Intellectual Property Conference

January 18, 2018

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The sixth Best Practices in Intellectual Property Conference organized by Kim Lindy’s Intellectual Property Resources is scheduled for 12 March 2018 at the Sheraton, Tel Aviv. The event is followed by a morning on master classes on the 13th. 

The conference is designed primarily to update in-house practitioners on IP global issues, trends and legislation that affect their company’s IP.

As usual Kim has lined up some prominent International in house IP managers, including Erich Andersen, the VP IP of Microsoft who will be presenting on “Intellectual Property Dimensions of Artificial Intelligence and the Future of IP”.  There is also a Mock PTAB Hearing on Patent Eligibility with a former PTAB Judge and sessions including:

  • “Selling” Company IP to Senior Management

  • Friend or Foe: Licensing vs. Litigation  The Ups and Downs of Licensing your IP vs. Litigating  

  • Accelerations, Examinations US and EU: Tips and Tricks

  • Bringing Down the Costs: IP Budget Planning. How to negotiate with your patent attorney; Analyzing your patent portfolio 

  • IP Protective Measures: Offensive v. Defensive Strategies

 The conference promises to teach practical tools, methods and new ideas that can then be applied by participants to their own companies. There is a focus on IP Portfolio Management and Strategy, and attendees have the opportunity to interact with the IP decision makers of the world’s most global and successful companies.

I have written up and critiqued previous conferences. See:

I am aware that the conferences have a team of leading in-house counsel that have a say on topics covered, so can only assume that the program is what they want or feel that that their contemporaries need. and as a patent attorney who manages the IP for his clients in a pro-active manner, and deals with trademarks, designs, trade secrets, budget issues, enforcement, and the wider issues, I find the conference valuable. Nevertheless, to my mind there should be a session on IP developments in Israel since the issue is of relevance to all participants, and there are several grudge fights between competitors in the same niche suing each other and opposing each other’s patents, such as Camtek & Orbotech, Hanita and Iscar, Israel Aircraft and Rafael, etc.

 

Having worked in close collaboration with leading in-house managers, such as Einav Zilber who was the head of the Association of Israel Patent Attorneys in Israel on a presentation for entrepeneurs that was presented in parrallel with the AIPPI Conference, I am aware of the lack of familiarity with local law, regulations and case-law that leading In-House Counsel have.  to put it bluntly, my role in the preparation of the presentation was to red-line slides that were to have been presented that were simply wrong. To put it another way, none of the in-house members of the committee would have passed the qualifying oral exam to be licenced in Israel without extensive revision.

The speakers and topics seem to repeat themselves from conference to conference, from year to year. The array of photos of the speakers is a little like flicking through a catalogue of suspect perps in an American cop series. Everyone is familiar. That is not to say that they are not competent. Just there is a feeling of deja-vu.


Trademarks in Mandatory Palestine

January 17, 2018

Michael BirnhackProfessor Michael Birnhack of Tel Aviv University is lecturing to the Israel Patent Office on 24 January 2018 at 10:00 to 11:15 am on “Trademarks during the British Mandate”.

Professor Michael Birnhack is Associate Dean for Research, and a Professor of Law. He is the Director of the S. Horowitz Institute for Intellectual Property in memory of Dr. Amnon Goldenberg, and the Director of the Parasol Foundation International LL.M. He researches, teaches and writes about intellectual property, privacy law, information law, and law and technology.

Everybody is welcome but one has to register by email to Tamar Koby at tamark@justice.gov.il.