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February 21, 2008

A View from Tel Aviv

Bernard Frieder is a consultant to technology companies in Israel, miffed at the U.S. Congress for threatening to wreck the U.S. patent system with its Patent Reform Act of 2007.

Because inventors, research organizations and startup ventures around the world rely on US patents to protect the output of their labor, changing the US patent system has global repercussions.

Frieder in the Jerusalem Post, noting the "profound effect" that the Act would have:

Over the past 20 years, a significant proportion of the Israeli economy - and export growth - has been based on our patent-centric technology sector. From essentially a handful of companies, Israel has developed a world-renowned start-up culture and multi-billion venture capital investment engine. In fact, Israel is second only to California's Silicon Valley as a driver of global innovation... Israelis have more American patents, on a per-capita basis, than the citizens of any other country.

The proposed changes would greatly increase the costs of securing a basic US patent and expand filing requirements and processing time, thereby reducing a patent's term of protection. Also, a US patent would no longer be a secure asset since its validity could be challenged during the course of its effective life. There would be no closure. The potential for costly litigation would skyrocket and patent holders would be forced to "lawyer up" - to defend themselves... An established patent could be overturned on a technicality - even if the error was non-intentional and non-material to the issuing of that patent.

Calculation and allocation of damages would likewise be altered in ways that reduce compensation for those whose patents are violated. Deep-pocket challengers would be able to wear down smaller, financially vulnerable entrepreneurial companies, giving unfair advantage to the entrenched global companies over the upstart innovators.

Israel does not publish patent applications unless a patent is granted. Rejected applications are destroyed, allowing inventors to protect their secrets or try again. But this proposed change [to publish all patent applications] would make the US system like that of many other countries. The effect of this publication system in other nations has been devastating. Israeli inventors working in Japan, for instance, regularly have their ideas stolen by intellectual property pirates based in Korea, Russia, and China, who only need to access the Japanese Patent Office's Web site to get all the information they need to reverse-engineer and plagiarize someone else's creation before a patent has been issued.

[M]any of the provisions jeopardize technological progress. That's why various US groups including the National Venture Capital Association; 14 labor unions; the American Bar Association; the National Association of Manufacturers; the Association of University Technology Managers; and the Biotechnology Industry Organization have come out against this legislation.

Posted by Patent Hawk at February 21, 2008 11:37 AM | The Patent System


Gary, how did you find this? Are you a regular JP reader?

Being based in Israel, I'd like to correct a mis-statement in Mr. Frieder's comment about publication of applications in Israel. Applications in Israel are not published until *examination* is complete - but they are then subject to *pre-grant* opposition. Such oppositions are regularly used by several local "serial opposers" to delay the grant of patents. The applicant cannot enforce his patent until it's actually granted. The risk to the opposer is that if he infringes during the opposition, after grant the patentee can obtain damages retroactive to the date of publication, provided that the infringed claims were present in the application as published (and not amended during the opposition process), but that's usually not a deterrent: thanks to the ILPTO's less-than-rocket-docket, I've dealt with literally dozens of cases where the oppositions dragged on so long they reached the point where the applicant just gave up b/c the technology had become outmoded. To add insult to injury, in some cases the applicant had to pay the opposer, b/c Israel is a "loser pays" country. (The amounts awarded were usually paltry, but still...) Moreover, most applicants who file in Israel file in the PCT, Europe, or other early publication countries as well, so parties who want to expropriate the applicants' IP have plenty of other sources for it.

Furthermore, there have been several rulings by the Israel Patents Commissioner in the last few years in which he published decisions relating to as-yet-unpublished patent applications - in clear violation of the statute that prohibits such publication. But no one took the Commissioner to task for this. So while it is the case that if an application is finally rejected - a rare occurrence, since the ILPTO is quite liberal about the give-and-take with the Examiners - the PTO will destroy the file, that's no guarantee that details of the application won't be published, since it's likely that before the PTO kills the app, there will be a hearing before the Commissioner and he'll publish his decision in the matter.

So it's more accurate to state the Israel has a delayed publication system, which provides nominal advantanges to applicants who file only in Israel. In any event, the Justice Ministry, which drafts much of the proposed legislation, has just called for comments on proposed legislation to make Israel an 18-month publication country, so it looks like Israel is on its way to early publication.

BTW, my understanding is that the delayed publication owes to the arab boycott that was in place when the statute was enacted in 1967; the pre-grant opposition provisions were adopted from the 1944 British Statute (and the British jettisoned those provisions in 1977, but Israel still has them).

For the record, although I think Israel should get rid of its opposition process, I'm not against all opposition proceedings - the AIPLA put together a pretty good proposal for an opposition proceeding that addressed all the shortcomings of Israeli oppositions, and I think that a properly designed and implemented opposition system could do the U.S. some good.

Posted by: Dan Feigelson at February 22, 2008 4:20 AM

In answer to Dan's question, I saw the article via Google News (personalized news section for 'patent' news), and had two people write to me pointing it out.

Thanks for your remarks Dan; quite interesting.

Posted by: Patent Hawk at February 22, 2008 10:57 AM