The Patent Litigation Law Review: Israel
Patent litigation in Israel is governed by the Patents Law 5727-1967 (as amended) (the Patents Law) and the regulations enacted thereunder, as well as by case law and decisions rendered by the courts and the Israeli Patents Registrar (the Registrar).
According to the Patents Law, patent litigation in Israel comprises three main proceedings:
- opposition, following acceptance of a patent application (pre-grant opposition);
- revocation of a patent; and
- patent infringement lawsuits.
The patentability, and hence the validity of the invention, may be challenged in the framework of each of those proceedings.
In view of the pre-grant opposition regime, patent litigation in Israel is mostly conducted before the Registrar. According to the Annual Report 2020 of the Israel Patent Office (ILPO), approximately 40 oppositions and a few revocation applications were filed annually with the Registrar between 2015 and 2020.2
Research carried out by the ILPO regarding opposition proceedings conducted between 2012 and 2015 reveals that more than 80 per cent of the proceedings that culminated in a final decision resulted in acceptance of the opposition.3
Types of patent
Patents in Israel are national and are granted for a period of 20 years from the date of filing. Patents of addition remain in force throughout the duration of the main patent. The Israeli legal system does not provide protection for utility models, nor are short-term patents available in Israel.
Generally, patents are granted based on a full substantive examination. It is also possible to request abbreviated examination based on a corresponding foreign patent granted in certain jurisdictions (e.g., the European Patent Office or the US Patent Office). In addition, the ILPO has signed several bilateral Patent Prosecution Highway and Patent Cooperation Treaty–Patent Prosecution Highway agreements with various national offices, which permit the usage, under certain circumstances, of search and examination results of those offices.
The Registrar is empowered to extend the term of certain patents for an additional term, and subject to certain conditions the term is capped. A patent extension order may be granted only in respect of 'basic patents'. In general, a basic patent protects either a pharmaceutical product, a substance (an active ingredient in a pharmaceutical product), a process for the manufacture or use of such substance or product, or a medical device for which a marketing authorisation is required in Israel.
Procedure in patent enforcement and invalidity actions
In principle, two judicial authorities cover first instance patent enforcement and invalidity actions: (1) the Registrar, who mostly hears opposition, revocation and amendment proceedings; and (2) the district courts that try patent infringement cases.
Defendants in a pending infringement suit may argue, inter alia, that the patent at issue is invalid (indirect attack) or submit an application for revocation of the patent with the Registrar (direct attack).
The question of whether the invention is patentable is the focus of most opposition proceedings conducted before the Registrar.
The burden to prove the validity of the patent during opposition proceedings rests upon the patent applicant, while in revocation and infringement proceedings, this burden lies with the revocation applicant and the defendant, respectively; hence, there is an advantage in challenging validity by opposing the patent application, rather than submitting an application for revocation of a patent.
Another important consideration that may encourage interested parties to challenge the validity of a patent as early as its acceptance is the fact that the patent cannot be enforced until it is finally granted (after appeal has been exhausted).
The Registrar usually possesses a better understanding of technological and scientific issues when compared with judges. Where necessary, the Registrar is assisted by an examiner in the relevant field.
The Patents Law provides that the court may appoint a scientific adviser. Courts usually appoint advisers in more technologically complicated cases. The scientific adviser may advise the court and assist it in collecting evidence, but should not be involved in the rendering of judgment. The scientific adviser cannot be cross-examined by the litigants.
i Patent infringement procedures
Procedure and means to obtain evidence
Infringement proceedings may be initiated by the patentee or an exclusive licensee, and are conducted before the relevant district court.
Patent infringement proceedings are similar to legal proceedings employed in other civil actions and are governed by the new Israeli Civil Procedure Regulations 5778-2018 (the New Civil Regulations). The New Civil Regulations stipulate that within 30 days of the date of submission of the latest pleadings (and prior to holding a pretrial hearing), the parties should meet and engage in preliminary discussions for the purpose of preparing properly for the pretrial hearing by focusing on the disputed issues and examining possible options for solving the same by means of alternative dispute resolution mechanisms. In addition, the New Civil Regulations provide that the parties should meet with a court-appointed mediator to explore the possibility of resolving their dispute by way of mediation.
If the dispute is not resolved beforehand, a pretrial hearing will be held, which is usually overseen by either the court registrar or the presiding judge, to identify the disputed issues and make the trial process more efficient. During the pretrial hearing, the judge is authorised to issue any procedural order aimed to simplify the procedure and, in particular, consider the parties' pleas and any motions to strike out; join or remove parties; entertain discovery and interrogation requests; rule that further and better particulars be furnished; grant interim relief; and order that evidence in chief be submitted by way of affidavits.
Evidence is generally submitted by way of affidavits presenting factual evidence (including experiments) and written expert opinions, which are all subject to cross-examination during oral hearings. The standard of proof required is that of the balance of probability.
According to the New Civil Regulations, within 30 days of the date of submission of the latest pleadings, the parties should initiate discovery proceedings (by way of exchanging an affidavit disclosing the list of documents relevant to the case that are or were in his or her possession). The documents listed should be provided to the other party for his or her review within 30 days of the date of submission of the affidavit.
In addition, each party may forward a demand for discovery of specific documents, as well as questions relevant to the case by way of interrogatories. The other party should reply within 30 days thereafter.
Another possibility for obtaining and preserving evidence is by the grant of an Anton Piller order, which allows entry to the premises of the defendant, and the search and seizure of all relevant documents and evidence; however, those measures are rarely applied in patent litigation. Upon application of the plaintiff, the court may also appoint a temporary receiver over any property or order an inspection of any property or article in relation to which a question has arisen in the action.
In general, like other civil claims, intellectual property matters are subject to a seven-year limitation period that begins to run on the date of establishment of the cause of action; however, as each act of infringement constitutes a new cause of action with its own period of limitation, an injunction may be filed even where the infringement commenced more than seven years beforehand. Damages, on the other hand, cannot be sought for a period exceeding seven years.
As part of the Designs Law 5777-2017, the legislator deleted a section from the Patents Law that provides that defences to a patent infringement claim (e.g., the invalidity defence) are not time-barred. Nevertheless, it was made clear that this deletion was not meant and is not expected to change the existing law that defence claims are not time-barred.
Often, simultaneously with the submission of a statement of claim, the plaintiff will seek an interlocutory injunction (preliminary injunction) as a form of temporary relief to preserve the status quo until the court renders a decision in the main action. Only in extreme and urgent circumstances will the court be willing to grant an interlocutory injunction prior to the filing of the statement of claim.
The discretion of the court in preliminary injunction proceedings is governed by several principles and considerations. The primary consideration is whether an immediate intervention of the court is essential to prevent irreparable harm.
In addition, the court will consider whether:
- prima facie, the case has merits and whether there is a reasonable chance of the applicant succeeding in the case (patent validity is usually not discussed by the court in interim proceedings);
- the balance of convenience lies in the applicant's favour; namely, the hardship to the applicant if a preliminary injunction is not granted will be greater than the hardship to the defendant or the public interest if an injunction is granted and eventually found to be unjustified;
- no alternative relief exists where harm to the defendant would be less severe but nonetheless achieves the purpose that the preliminary injunction seeks to achieve; and
- the applicant approached the court with 'clean hands' and the relief sought did not entail laches or undue delay.
Preliminary injunctions are the most common form of interim relief in patent infringement proceedings. Additional preliminary remedies that are available under Israeli law include attachment orders, stay of exit orders, Mareva orders (aimed to restrict use of an asset), Anton Piller orders and receivership orders. This list is not exhaustive, and the court may grant other interim relief as it deems appropriate in the circumstances.
As a rule, interim relief proceedings are heard inter partes. Ex parte relief may be granted if the applicant is able to establish, through prima facie evidence, that any delay resulting from an inter partes hearing is likely to cause irreparable or severe damage, or if the court is convinced that notice to the counterparty will defeat the purpose of the order. Applications for an attachment order, a Mareva order or an Anton Piller order are usually heard ex parte.
When granting ex parte relief (other than for attachment orders and Anton Pillar orders), the court will schedule the inter partes hearing no later than 14 days after the date of grant of the ex parte injunction. During preliminary injunction proceedings, the court may determine that, instead of hearing an application for a preliminary injunction, the main action will be expedited. Such determination enables plaintiffs to expedite the enforcement process.
For interim relief to become effective, the applicant must deposit with the court, in an amount determined by it, a personal undertaking and a third-party guarantee (usually a bank guarantee) as security in case the defendant is damaged by the action that is ultimately denied.
The practice of protective letters is not available in Israel. A third party may apply to the court seeking a declaration of non-infringement as a protective measure in proceedings that assume the patent to be valid.
In general, a bona fide attempt to enforce a patent would not impose liability on the patentee (except for costs that the court is authorised to order should the claim be dismissed); however, in a decision rendered on 12 July 2021,4 the Israeli Supreme Court upheld a decision rendered by the Central District Court at the end of 2015,5 and in a precedential decision, correspondingly ruled that misleading the Registrar knowingly and intentionally in an attempt to extend the patent monopoly constitutes a breach of the rules of competition deriving from the patentee's duty under Section 18 of the Patents Law to disclose any material in the field of the invention published prior to the date of the application that may affect the registration. In making its decision, the Supreme Court held that such breach can, in appropriate circumstances, give rise to a case being filed based on the Unjust Enrichment Law 5739-1979 (the Unjust Enrichment Law), thereby entitling the plaintiff to claim all or part of the patentee's profits.
Amendment of specification
Once examined and accepted, the court (or the Registrar in a case before him or her) may permit an amendment of the claims only for one of the following purposes: clarifying, removing an error in the specification or restricting the claims. The amendment may be allowed only if it does not broaden the scope of the claims or add anything to the specification that was not already included therein from the beginning.
Duration and costs
The duration of patent infringement cases varies significantly. The average duration is two to three years.
Costs are also difficult to estimate and may vary significantly, depending on the complexity of the case, the parties involved and the legal representation. Legal fees may range between US$400,000 and US$800,000 for the main claim and US$150,000 to US$300,000 for interim injunction proceedings.
Anyone can oppose a patent application within three months of publication of its acceptance.
Opposition proceedings comprise the following stages: submission of statements of arguments by both the opponent and the applicant, submission of evidence (usually in the form of affidavits and expert opinions), cross-examination hearing and submission of summations.
The Registrar has an inherent authority to order discovery; however, he or she is usually more reluctant to exercise his or her authority in comparison to civil courts.
For details on amendment of specification, see Section III.i.
The duration of opposition proceedings may vary significantly from case to case. The average duration is two years, and six years if the proceedings ensue until a final decision is rendered.
Costs are likewise difficult to estimate. In general, legal fees in opposition proceedings range between US$300,000 and US$700,000 (excluding expert fees and costs).
iii Patent revocation
The patentability of an invention may be challenged in the framework of revocation proceedings, which may be initiated by any person at any time while the patent is in force.
Revocation proceedings are essentially similar to opposition proceedings, except that in the former case, the parties are required to submit their arguments together with supporting evidence (usually by way of affidavits and expert opinions).
If a defendant in a pending infringement lawsuit files a revocation application, the Registrar will entertain it only after receiving the express permission of the court. The court may stay the infringement proceedings for a period and on conditions that it will prescribe. If an infringement suit is filed with the court after an application for revocation has been filed with the Registrar, the Registrar will entertain the application unless otherwise ordered by the court.
The duration and costs of revocation and opposition proceedings are essentially similar. Revocation proceedings may be somewhat shorter because of the joint submission of pleadings and supporting evidence.
Definition of infringement
The Patents Law defines 'infringement' as exploitation of the invention for which a patent has been granted unlawfully or without the permission of the patentee, whether in the manner defined in the claims or in a manner similar thereto and involving the main features, as defined in the claims, of the invention that is the subject matter of the patent.
The definition of 'exploitation of an invention' varies depending on the matter at hand. In relation to:
- an invention that is a product, it is defined as the production, use, offer for sale, sale or import for the purpose of any of the aforementioned acts;
- an invention that is a process, it is defined as the use of the process; and
- a direct product of a process, it is defined as the same activities listed with respect to an invention that is a product.
The Patents Law lists the following exemptions to patent infringement:
- activity that is not on a commercial scale nor of a commercial nature;
- experimental use in respect of an invention for the purpose of improving an invention or developing another invention; and
- experimental use for the purpose of obtaining registration for marketing the product after expiry of the patent if the use was done to obtain registration in Israel or in any other country that permits experimental use for the purpose of obtaining registration before expiry of the patent, and provided that all products manufactured within the framework of this exemption will not be used for any purpose other than obtaining the above registration either during the term of the patent or thereafter (Bolar-like exemption).
While the list of acts constituting exploitation of an invention is a closed list that does not mention exportation, in one case the district court noted that activity conducted in Israel involving or resulting in exportation of the patented invention may be considered exploitation of the invention if it is on a commercial scale or of a commercial nature and interferes with the exclusive right of the patentee to exploit the invention in Israel.6
The scope of the patent is defined by its claims. The claims are interpreted in light of the description in the specification. The claims must be given purposive interpretation. The applicability of file wrapper estoppel was left open by the courts and the Registrar; however, correspondence between the patentee and the ILPO may assist the court in assessing the scope of the patent.7
Infringement may also be found where the invention is exploited in a manner similar to that defined in the claims and making use of the essence of the invention. In this regard, the Supreme Court adopted the doctrines of equivalents or variants (or 'pith and marrow') and noted that a product or process that replaces components or omits immaterial components of a patent may still be considered infringing, as long as the product or process do the same work in substantially the same way and substantially accomplish the same result.8
Liability may be imposed on a person who collaborated with the direct infringer in attaining the infringement. Establishing liability as joint tortfeasors requires showing direct infringement as well as concerted action between the tortfeasors towards the common goal of infringement.9
In the Tsuk Or case,10 the Supreme Court ruled that the company's organs may be liable with the company as joint tortfeasors if the requirements are fulfilled.
The contributory infringement doctrine, which was adopted by the Supreme Court in the Rav Bariach case,11 provides broader applicability. The Supreme Court set the following requirements for establishing contributory infringement:
- the components used by the indirect infringer constitute a material part of the invention;
- the indirect infringer knew, or should have known, that the components had been especially made or especially adapted for use in the infringement of a patent; and
- the components are not staple products that can be substantially used in a non-infringing manner.
The Supreme Court did not clarify whether direct infringement must occur within Israel in order for liability to arise.
ii Invalidity and other defences
Typical defences in patent infringement actions may include the following:
- non-infringement – the defendant may argue that the product or process in dispute is not covered by the claims or that his or her activity is not included in the statutory list of activities amounting to exploitation of an invention. Sometimes the defendant may claim that his or her activity comes under the statutory exemptions to patent infringement (see Section IV.i);
- licence to exploit the patent;
- the defendant is the owner of the invention;
- right based on prior exploitation or actual preparation for exploitation in Israel in good faith on the date the application was submitted in Israel or the date of the priority application. The exploitation or preparation should be on a commercial scale and of a commercial nature;
- statute of limitation (in respect of damages rather than an injunction) or waiver;
- invalidity, for example:
- not a patentable subject matter;
- lack of novelty;
- insufficiency of disclosure; and
- covetous claims – namely, the claims are not fairly based on the description.
The list is non-exhaustive.
The Patent Examination Guidelines published by the ILPO provide that to be patentable an invention must fall within a technological field – namely, it must involve a concrete technological process. Computer programs, as such, are not patentable. If a computer program has the effect of changing any physical properties, causes the computer to work in a new way or establishes connections between system components that did not previously exist, an indication may exist that the invention falls within a technological field.
Similarly, methods of doing business are not patentable as such as they fall within the field of commerce and are, therefore, not considered industrial. Patents will not be granted for methods of therapeutic treatment of the human body or for new varieties of plants or animals, except for microbiological organisms not derived from nature.
According to the Supreme Court's landmark judgment in the Hughes case, a novelty-destroying publication must disclose all elements of the invention. The publication may be read in light of the general common knowledge possessed by persons skilled in the art before the effective date.12 However, in a later decision, the Supreme Court ruled that novelty may be lost as a result of a disclosure containing the essence of the invention.13
Another test for assessing novelty is the infringement test ('that which infringes if later, would anticipate it earlier').14 Case law shows that the courts tend to accept the doctrine of inherency (when following a prior publication would necessarily result in the same invention).
Obviousness is assessed through the eyes of a person skilled in the art who possesses average ability – in other words, no inventive skills. Unlike novelty-destroying disclosure, inventive step may be negated based on multiple publications; however, their combination ('mosaic') must be obvious to a person skilled in the art.
Another test applied in the context of inventive step is 'the obvious to try' test, assessing whether a person skilled in the art would have been motivated, based on the prior art, to undertake the route taken by the patentee with a reasonable expectation of success.15 Objective evidence may also give an indication on the obviousness of the invention. Such evidence (sub-tests) may include evidence of commercial success, long-felt need, failure of others and unexpected results.16
The utility requirement is met if the promised result is achieved when following the information given in the specification. A credible promise of utility is usually sufficient when applying for a patent. The patentee may be required to provide evidence of utility in the framework of opposition or revocation proceedings, where the utility of a given invention is challenged.
The description must enable a person skilled in the art to perform the invention without the exercise of inventive skills. A reasonable degree of routine experiment is permissible and best mode disclosure is not required.
The claims must clearly and precisely define the claimed monopoly. The claims must also reasonably be based on the description included in the specification.
In an obiter dictum, the Supreme Court indicated that it tends to adopt the 'international exhaustion' doctrine and, in any event, held that parallel import does not amount to patent infringement.17
Final remedies for infringement
As in other commercial and civil litigation in Israel, the remedies granted to a successful plaintiff in an infringement case include the following.
When awarding damages, the court will consider the infringing act and the plaintiff's position in consequence of the act. The court may also consider, inter alia, the following:
- the direct damages caused to the plaintiff;
- the extent of the infringement;
- the profits derived by the infringer from the infringement; and
- reasonable royalties that the infringer would have had to pay had he or she been granted a licence to exploit the patent to the extent so infringed by him or her.
Once a patent is granted, the patentee is entitled, retroactively, to full damages for any unauthorised exploitation of the invention committed after acceptance of the patent application. The Patents Law also provides that once a patent is granted, the patentee will be retroactively entitled to damages in the form of reasonable royalties for any unauthorised exploitation of the invention that took place between the date of publication of the patent application and its date of acceptance.
Where damages are claimed, the court may order the defendant to provide an account of the extent of its infringement and the profits gained, or award compensation by way of assessment. A successful party is entitled to reimbursement of its real out-of-pocket costs. However, in practice, the level of costs determined by the courts is usually lower than the costs actually incurred.
Punitive damages may be awarded where an infringement is committed after the patentee or exclusive licensee has warned the infringer of the infringing activity. In this case, the sum of punitive damages cannot exceed the sum of the actual damages, thus amounting to double damages. In practice, the courts do not award punitive damages in infringement suits.
ii Permanent injunctions
If a plaintiff is successful, the court will usually grant a permanent injunction to prevent the infringer from infringing the patent in the future. As a rule, permanent injunctions remain in effect until the patent expires. The question of whether a post-expiry injunction may be granted where the infringement was committed to obtain a springboard into the market after the patent's expiry still remains open.18
Stays are not generally granted while an appeal is pending, except where, absent the stay, the appeal may become academic and there seem to be good chances of succeeding in the appeal.
iii Delivery up of infringing material
The court may, at the request of the seizer of assets, of the receiver or of a party, order what shall be done with the seized assets, including their return to the premises from which they were taken or to their owners; order that assets liable to spoil be sold; order that assets be destroyed or transferred; or give any other order that is justified under the circumstances.
iv Other remedies
In general, courts adjudicating civil matters can grant declaratory judgments, prohibitive orders, orders for specific performance or any other relief, as they deem fit.
Other types of patent proceedings
The examples detailed below are non-exhaustive.
i Declaration of non-infringement
A third party may apply to the court for a declaration that his or her exploitation of the invention does not amount to infringement of the specific patent. The proceedings are conducted before the district court under the assumption that the patent is valid.
ii Proceedings relating to service invention
According to the Patents Law, an invention by an employee, arrived at in consequence of his or her employment and during the period of his or her employment (a service invention), shall, in the absence of an agreement to the contrary between him or her and his or her employer, become the property of the employer. An employer or employee may apply to the Registrar to determine whether a given invention constitutes a service invention.
The Patents Law further provides that in the absence of an agreement determining whether, to what extent and on what conditions an employee is entitled to remuneration for a service invention, the matter shall be decided by the Compensation and Royalties Committee (the Committee), the members of which comprise a justice of the Supreme Court, the Registrar and an additional member from an academic institution with a scientific background. The Committee is also authorised to determine whether a certain invention constitutes a service invention prior to deciding on the matter of remuneration.19
The proceedings before the Committee are held in camera. The Committee is authorised to prescribe its own rules of procedure in so far as they do not exist under the Patents Law. Decisions of the Committee are final but may be challenged by filing a petition to the Supreme Court, sitting as the High Court of Justice.
iii Determination of inventorship or ownership
According to the Patents Law, the owner of the invention is the inventor or whoever is entitled to the invention by operation of the Patents Law, by assignment or by agreement. In addition, the person filing a patent application is deemed the owner of the invention until proven otherwise.
Determination of inventorship or ownership may arise ancillary to opposition, revocation and infringement proceedings, or in the framework of independent proceedings before the district court seeking a declaratory order of patent ownership or inventorship.
In a decision rendered by the National Labour Court, it was noted that the labour courts are also authorised to determine patent inventorship where such determination is required in a matter falling within the labour courts' exclusive jurisdiction; however, it was decided that the labour court of first instance was not authorised to order the employee to sign the documents required for the registration of patents in the name of the employer, in light of the fact that the Registrar has judicial authority in such matters and may permit the employer to sign the documents himself or herself.20
iv Compulsory licences
If the Registrar is convinced that a patentee is abusing his or her monopoly, he or she may grant a compulsory licence to exploit the patented invention to a person applying for that purpose, provided that the application is filed after the expiry of three years of the date of grant of the patent, or four years of the date of filing the patent application, whichever is the later. The licence will be mainly to satisfy the needs of the domestic market and subject to royalties determined by the Registrar.
A compulsory licence may also be granted to enable exploitation of a patent that otherwise would have infringed an earlier patent, provided that the later invention demonstrates considerable progress in respect of the earlier invention. Where the invention in both patents serves the same industrial purpose, a compulsory licence will be granted only if the applicant is willing to grant a similar licence to the owner of the earlier invention.
i Courts of appeal
The district courts of Jerusalem and Tel Aviv hear appeals on decisions given by the Registrar (e.g., decisions given in opposition and revocation proceedings). Appeals may be either by way of right (where the decision of the Registrar concludes the dispute) or by special leave with regard to other decisions (e.g., decisions in intermediate proceedings).
The Supreme Court hears appeals from the district courts, either by right (where the district court rendered a judgment as a court of first instance) or by special leave to appeal.
ii Procedure on appeals
The losing party has a right to appeal within 45 days of delivery of the judgment.
A second appeal (where the district court sat as a court of appeal in infringement proceedings), or an appeal from a decision not being a final judgment, may only be filed if leave to appeal is granted by the court with which the appeal is filed. An application for leave to appeal should be filed within 60 days of the date of the decision.
The notice of appeal should set out the grounds of appeal. Except with special leave of the court, the appellant is not allowed to raise any grounds of objection not specified in the notice of appeal.
As a rule, the appeal is based on the transcript of proceedings, pleadings and evidence submitted in the lower court. In exceptional cases, the court of appeal may allow new evidence. However, in the matter of Gabai, the Supreme Court noted that the court of appeal would be more inclined to allow the submission of new evidence in patent cases than in other civil cases.21 The New Civil Regulations impose more restrictive conditions for allowing the submission of new evidence in an appeal. It thus remains to be seen if this more permissive approach as demonstrated by the court in Gabai will be impacted in so far as patent cases are concerned.
Generally, the court of appeal refrains from interfering with factual findings of the first instance and instead focuses on legal issues.
Furthermore, a court of appeal may decide to hold an oral hearing, in addition to the written material that is presented to it. When the appeal is argued orally, the appellant will argue his or her case and the respondent will then reply. The hearing is much shorter than the hearing in the lower court. The appeal may also be argued in writing (sometimes followed by short oral arguments if the court so wishes, to clarify some aspects of the appeal).
The appellant must provide security for costs of the defendant in an amount set by the court. Generally, the duration of an appeal is one to two years (until a decision is rendered).
The year in review
i Consequences of misleading and withholding information from the Registrar
Sanofi was the owner of an Israeli patent that claimed clopidogrel in all its salt forms and all possible polymorphs. The patent expired on 3 February 2008 (the basic patent). At that time, only one polymorph of clopidogrel bisulfate was known (Form 1).
In the second half of 1997, and close to the completion of the procedures for obtaining marketing approval for Sanofi's drug, a new crystalline polymorph of clopidogrel sulfate, with improved qualities – Form 2 – was accidentally discovered by Sanofi (Form 2). On 11 October 2000, Sanofi consequently filed an additional patent application in Israel claiming Form 2 (the patent application), thus deterring potential competitors from using the more advantageous polymorph. Unipharm filed an opposition to the patent application.
During opposition proceedings, Sanofi announced its abandonment of the patent application owing to commercial reasons.
Unipharm asserted that it had delayed the launch of marketing its generic drug owing to the risk of being liable for retroactive compensation had the patent application been accepted. Unipharm further asserted that Sanofi was liable for the delay, thus entitling it to Sanofi's profits spanning the period commencing from the date of expiry of the basic patent until abandonment of the patent application (the period of delay).
In the decision under appeal, the Central District Court accepted Unipharm's suit. In doing so, it ruled that Sanofi had knowingly misled the Registrar and concluded that the very existence of the misleading patent application was the main reason for Unipharm having delayed the launch of its generic product onto the market and for its increased costs of development.
The District Court then turned to examine Unipharm's entitlement to compensation as well as its scope. After examining several possible legal grounds for establishing Unipharm's entitlement to compensation, including the Patents Law and the Competition Law, the District Court ultimately held that the basis for Unipharm's legal standing in this regard was found to exist in the Unjust Enrichment Law.
The District Court accordingly ruled in favour of Unipharm, stating that it is entitled to the profits reaped by Sanofi during the period of delay. Through this ruling, the District Court demonstrated that awarding compensation to generic companies in the form of the brand manufacturer's profits could incentivise them to combat the phenomenon of 'evergreening'.
In the Unipharm appeal,22 the Supreme Court accepted the factual findings of the District Court. It held that Sanofi consciously decided to include a misleading example in the patent specification to avoid divulging the circumstances involving the discovery of Form 2 (in particular, the fact that Form 2 could have been obtained through a spontaneous conversion of Form 1) and to rely on a priority document that Sanofi had known at the time of filing the patent application was incorrect.
This information was held to be crucial in the sense that had it been disclosed to the Registrar, it could have had an adverse effect on the chances of the patent application being accepted, as well as the duration of the opposition proceedings; thus, the Supreme Court affirmed that Sanofi had knowingly and intentionally misled the Registrar and breached the disclosure obligations set out in Section 18 of the Patents Law.
The Supreme Court affirmed that the basis for Unipharm's legal standing could be found in the Unjust Enrichment Law. It also implemented the rules of competition, and in doing so it held that Section 18 of the Patents Law constituted a rule of competition and that its breach can, in appropriate circumstances, give rise to a suit being brought based on the Unjust Enrichment Law.
The Supreme Court also held that while Section 18 of the Patents Law provides some form of sanction in the event of it being breached (e.g., revocation of a patent or rejection of a patent application), reliance on the Unjust Enrichment Law as a means for enabling generic companies to seek redress in the form of profits reaped by the innovator essentially deters innovators from both acting in bad faith during the course of the prosecution of their patent applications and misleading the Registrar in cases where the misleading act is intended to unnecessarily prolong the prosecution and opposition proceedings (and, consequently, deter competitors from entering the market).
The Supreme Court further held that, generally, a patent applicant may be found liable under the Unjust Enrichment Law only where the misleading act was performed knowingly and intently; however, based on the presumption that an individual intends for the natural consequences of his or her acts to occur, the Court also held that since the natural consequences of including misleading information in the specification of the patent application and withholding relevant information from the Registrar both amounted to the Registrar being misled, Sanofi bears the burden of proving that it did so inadvertently.
ii Judicial notice in tribunals that specialise in patent proceedings
Generally, judicial notice is a rule in the law of evidence whereby the court is able to make an unequivocal finding without the need for the introduction into evidence of any fact or material that is deemed obvious, common sense or well known by an average, well-educated person.
In a decision (in which the undersigned successfully represented Teva), the Deputy Commissioner of Patents outlined the boundaries of judicial notice in patent proceedings.23
On 23 May 2006, Bayer filed a patent application in Israel that claimed a method for the production of a solid, orally applicable pharmaceutical composition. Essentially, the patent application concerned a process for the preparation of a solid, orally administrable pharmaceutical composition, comprising the active ingredient rivaroxaban (Xarelto) in a hydrophilic form. The hydrophilisation method as claimed in the patent application encompassed a two-step wet granulation process: (1) producing the granules comprising the active ingredient by fluidised bed granulation; and (2) converting the granules into a solid pharmaceutical composition.
Within the ambit of the proceedings, Teva argued that given the known properties of rivaroxaban, which has poor aqueous solubility, and given the advantages of the wet granulation process, a person of ordinary skill in the art would have chosen wet granulation as a starting point for developing a pharmaceutical composition of rivaroxaban in general, and fluidised bed granulation in particular.
In rebuttal of Teva's arguments, Bayer claimed that a person of ordinary skill in the art would have chosen direct compression as a starting point for developing a pharmaceutical composition of rivaroxaban. According to Bayer, use of the direct compression method was very common among persons of ordinary skill in the art at the priority date. Among other things, Bayer claimed that this 'fact' falls within the ambit of judicial notice for which no proof is required. In support of its claim citing judicial notice, Bayer attached to its summations two decisions rendered by the Commissioner of Patents, in which reference was made to the direct compression method.
In light of this, Teva filed an application seeking that the new evidence that Bayer attached to the summations be deleted, as well as the deletion of the claims and clauses referring to the purported judicial notice. Within the context of its application, Teva explained that Bayer's claim with regard to the direct compression method being very common among persons of ordinary skill in the art does not meet the required conditions for demonstrating the existence and proof of judicial notice.
The Deputy Commissioner held that the extent of the direct compression method being common among persons of ordinary skill in the art at the priority date does not fall within the realm of judicial notice. According to the Deputy Commissioner, the fact in question is not one that everyone possesses or a fact that can be clarified by reviewing the sources that are not in dispute, since it is the sources for clarifying this claim that are in dispute between the parties.
The Deputy Commissioner further added that the question at hand does not concern a scientific principle that needs to be established; it is a factual-empirical question. It also held that although the Commissioner of Patents is a professional tribunal in the field of patents, he does not possess the scientific knowledge in all fields that are deliberated before him. Moreover, other decisions of the Commissioner of Patents cannot teach about judicial notice as they are based on specific evidence that was filed in other proceedings.
In light of the above, the Deputy Commissioner ordered Bayer to delete both the new evidence, as well as the claims and clauses citing the alleged judicial notice.
i Draft amendment to the Patent Regulations regarding preliminary applications
In February 2021, the Ministry of Justice published the draft Patent Regulations, including an amendment concerning the option of filing an inexpensive 'temporary' application for a patent, similar to the process for filing a provisional patent application that is prevalent in the United States. The purpose of the proposed Regulations is to create a new, different and cheaper route in Israel for submitting a temporary patent application.
ii New Civil Procedure Regulations
The New Civil Regulations entered into effect on 1 January 2021. The New Civil Regulations are relevant for all civil proceedings, including patent infringement proceedings and appeals on decisions rendered by both the Registrar and the district courts.
In general terms, the New Civil Regulations are intended to:
- promote procedural certainty;
- prevent arbitrariness;
- increase accessibility to the public;
- promote the rendering of decisions within a reasonable time;
- impart an active and proactive role for the court;
- prevent abuse of legal proceedings; and
- consider the public interest against the interest of the litigants.
iii Proposal to amend the regulations opposing grant of a patent
On 24 June 2021, it was announced that the Ministry of Justice intends to promote a proposal to amend the regulations dealing with patent opposition proceedings. The purpose of the amendment is to streamline the proceedings, shorten their duration and facilitate the use of the available tools to ensure and maintain the purity of the registry while preserving the rights of both parties. The Ministry of Justice and the Patent Authority accordingly invited the public to submit comments and proposals regarding the contemplated amendment.
1 Tal Band is a senior partner and Dovev Apel is a partner at S Horowitz & Co
2 Available at: http://www.gov.il/en/departments/publications/reports/new-annual-reports (last accessed: 23 September 2021).
3 PowerPoint presentation summarising the research, available at: http://www.justice.gov.il/Units/RashamHaptentim/legalinfo/Pages/Pre-grant_Oppositions.aspx (last accessed: 23 September 2021).
4 CA 2167/16 Sanofi v. Unipharm (published on Nevo, 12 July 2021) (Unipharm appeal).
5 CC (TA) 33666-07-11 Unipharm v. Sanofi (published on Nevo, 8 October 2015).
6 DCA 814/05 (Jer) & CC 7076/05 (Jer) Orbotech Ltd v. Camtech Ltd (published on Nevo, 1 January 2005).
7 CA 407/89 Tsuk Or v. Car Security Ltd  IsrSC 48(5) 661 (Tsuk Or).
8 CA 345/87 Hughes Aircraft Company v. The State of Israel  IsrSC 44(4) 45 (Hughes).
9 CA 1636/98 Rav Bariach v. Havashush Car Accessories Trading House (1987) Ltd  IsrSC 55 (5) 337, 352 (Rav Bariach).
10 Tsuk Or, footnote 7, at 688.
11 See footnote 9.
12 Hughes, footnote 8, at 103.
13 CA 4867/92 Sanitovsky v. Taamas Ltd  IsrSC 50(2) 509, 516.
14 CA 314/77 LM Lipsky Ltd v. Manor  IsrSC 32(1) 205.
15 See, for example, Unipharm Ltd v. Novartis AG, Opposition to patent application 195087 (published on Nevo, 21 February 2017).
16 Hughes, footnote 8, at 110.
17 HCJ 5379/00 Bristol-Myers Squibb Company v. Minister of Health  IsrSC 55(4) 447.
18 CC 1512/93 (TA) Welcome Foundation Ltd v. Teva Pharmaceutical Industries Ltd (published on Nevo, 31 August 1995); CC 881/94 (TA) Eli Lily & Co v. Teva Pharmaceutical Industries Ltd (published on Nevo, 25 November 1998).
19 Rotem v. Teva Pharmaceutical Medical Ltd, application for remuneration for a service invention (discussing the question of whether, according to Section 133 of the Patents Law, an invention that constitutes a service invention should be decided by the Registrar) (published on Nevo, 25 July 2005).
20 LA 29005-07-12 Tvorovsky v. Biona Biotechnology Research Co Ltd (published on Nevo, 26 June 2016).
21 PCA 5041/13 Gabai v. Aminach (published on Nevo, 21 January 2014).
22 See footnote 4.
23 Teva Pharmaceuticals Ltd. v. Bayer Intellectual Property GmbH, opposition to PTE No. 175860 (application for deletion of parts from the applicant's evidence (published on Nevo, 27 January 2021).