An infringement action must involve, on the plaintiff’s side, the patent owner or its exclusive licensee; and, on the defendant’s side, the alleged infringer and any party involved in the infringement whose participation is necessary to efficiently decide all issues of the claim.
Where a patent is co-owned, each co-owner may file an infringement claim. If the other co-owners (or the exclusive licensee) do not join as plaintiffs, the suing co-owner must name them as defendants. This is also true where a patent owner does not join an exclusive licensee’s claim and vice versa.
A patent owner is defined under the Patents Law as “the person registered in the Register as the person to whom a patent was granted or to whom ownership of a patent has passed”; an exclusive licence affords its holder the right to “[exploit the claimed invention] as if it was the owner of the patent” and “prohibits the owner of the patent from exploiting in Israel the invention that is the subject of the patent”.
Any person may submit a motion for revocation, without being required to show any particular interest.
Under Israeli law, a plaintiff must join to their claim all those parties whose participation is necessary to efficiently decide all issues involved in the claim. Where Life Sciences/Pharma cases are concerned, that usually means the manufacturers and/or importers of the infringing products (and/or those parties contributing to the alleged infringement). Other parties, such as health maintenance organisations (HMOs, called “sick funds” in Israel), although dealing in distribution of drugs, are not sued in practice. Doctors who prescribe drugs are not sued and they might be exempted under the rule de minimis non curiat lex or under the so-called private use exemption.
Availability of Preliminary Injunctions and Timing of a Decision
A party bringing an infringement claim may move for the issuance of an interlocutory injunction against the alleged infringer, including ex parte. The plaintiff-applicant would normally file such motion alongside the filing of the case-in-chief, or beforehand, in situations of urgency, on the condition that the case-in-chief would be filed up to seven days following the issuance of a decision in the motion for preliminary injunction.
In urgent matters, motion for a temporary injunction may be filed ex parte, and a decision may be issued without hearing the respondent, within a day or two at most, according to which a hearing would be set as soon as possible, and, in any case, within 14 days. If the court is disinclined to issue a temporary injunction ex parte, it will schedule a hearing as soon as possible, usually immediately after the defendant-respondent filed their response to the motion for interlocutory remedies. Under the Civil Procedure Regulations (CPRs), the hearing will take one day and will include oral summations. The court will then issue its decision immediately after the hearing and, in any case, no later than 14 days following the hearing.
Considerations in Granting Preliminary Injunctions
A court with which a motion for a preliminary injunction has been filed must be convinced that the matter is urgent and will first consider whether the plaintiff-applicant has shown a prima facie case for infringement. While the defendant-respondent may argue non-infringement, they will not be able to challenge validity at that stage unless invalidity of the alleged patent – at a prima facie level – is abundantly clear and could be established without an in-depth review of the evidence.
In addition, the plaintiff-applicant must show that the balance of convenience tilts in their favour, namely that the injury that would be caused to the plaintiff-applicant by non-issuance is more severe than the injury the defendant-respondent would suffer as a result of the issuance of the injunction.
Finally, the court will weigh considerations such as laches (namely whether the plaintiff-applicant acted expeditiously enough to protect their rights upon learning of the need to do so) as well as good faith (namely whether the plaintiff-applicant had acted in an equitable manner and disclosed all pertinent facts).
Prerequisites to Filing a Motion for a Preliminary Injunction
A claim for patent infringement and a motion for a preliminary injunction can only be filed with respect to a granted patent, and the plaintiff-applicant must be able to show that the defendant-respondent has exploited – or is immediately about to exploit – the claimed invention, with such exploitation being defined as either “production, use, offer for sale, sale, or import for purposes of one of the said acts”. Quia timet reliefs are available, provided that a substantial danger of infringement is shown.
Effecting Service of Motions for a Preliminary Injunction
If a motion for a preliminary injunction was filed ex parte, and an interim injunction was issued, the plaintiff-applicant must serve it on the defendant-respondent immediately and, in any case, no later than three days from the day on which it was issued. Usually, the defendant-respondent will be instructed to file a response prior to the hearing taking place.
If no order was issued, or if the motion for a preliminary injunction was filed inter partes, the plaintiff-applicant must immediately serve it on the defendant-respondent. In most cases, the court will set short deadlines to file a response to the motion, and, if no such deadline is provided, the defendant-respondent will have 20 days to file a response.
Both motion and response must be supported by an affidavit or affidavits detailing all those facts alleged by the parties.
A defendant in an infringement claim may – in addition to arguing non-infringement – raise validity arguments in defence. This will not automatically lead to the proceedings’ bifurcation: usually, both infringement and validity are heard concurrently, though the court has the discretion to instruct otherwise.
A defendant may also file a motion for the revocation of the patent with the Patent Office. In such case, the court hearing the infringement claim will decide which instances will hear the issue of validity – the Patent Office or the court itself – and the Patent Office will not hear the revocation motion unless authorised to do so by the court. Where the defendant instituted the revocation proceedings before the plaintiff’s filing of the action with the court, the Patent Office will proceed with the hearing of the revocation, unless the court instructs otherwise. There is no rule that prohibits a person from filing revocation proceedings while there are pending revocation proceedings (oppositions in Israel are conducted before the patent grant, following patent examination).
According to Section 179 of the Patents Law, an infringement action shall be brought only after the patent has been granted; however, once an action for infringement is brought, then the court may ‒ (i) award compensation for exploitation of an invention committed after the date of publication under Section 16A (basically, 18 months from priority date) and before the date of publication under Section 26 (publication for third-party oppositions after allowance); said compensation shall be set at a reasonable rate for royalties which the infringer would have paid had they been granted licence to exploit the invention at the scope in which its aforesaid exploitation was committed; however, said compensation shall not be awarded unless the court finds that it constitutes an infringement of the patent as granted, and on the condition the invention claimed in the application is identical in a substantive manner to the invention claimed in the application published under Section 16A; and (ii) grant relief for an infringement committed after the date of publication under Section 26.
The period of limitations under Israeli law to launch an infringement action is seven years in accordance with the general principles set out in Section 5 of the Limitations Act 1958. If the patentee was not aware of the infringement for reasons beyond their reasonable control, the seven-year limitation period would only begin on the day on which the infringement has become known to the patentee (Section 8 of the Limitations Act). Further, in case of a continuing infringement, the continuing wrong doctrine would apply, and it will save all claims for recovery of damages but only to the extent of infringements committed within the seven-year limitations period. Thus, the patentee will be entitled to an injunction preventing prospective infringement as well as to damages with regard to the part of the infringement that is not subject to limitations.
Conversely, there are no limitation periods with regard to validity challenges, either as a defence against an infringement action or as part of a motion for revocation filed with the Patent Office; as long as a patent is alive, its validity may be challenged.
Even if a given cause of action for infringement has not yet prescribed, it is possible that the defendant will raise an argument of acquiescence against it if the defendant is able to show that the plaintiff had actively provided a representation of waiving its cause of action; it is possible that the action would be rejected due to estoppel.
Effecting Service in Actions Before the Court
Under Israeli law, a court acquires jurisdiction by way of effecting service. There are several ways to effect service on a defendant: a copy of the statement of claim, which includes summons, may be served on the defendant themselves, at their home or at their place of business, either via courier or via registered mail, on an adult family member living with them, on a person authorised to manage their business, or on their counsel. Where the defendant is a company, service is usually effected by delivering a copy of the statement of claim to their registered place of business. In those cases where the defendant is not Israeli, leave for service outside the jurisdiction would need to be secured, though it would also be possible to effect service by serving the claim on the foreign entity’s business manager in Israel (if such exists).
Service should be carried out immediately upon filing and no later than three days from the date of the filing. While a plaintiff may choose to wait the entire three-day period, doing so would mean that the 60-day period to file a statement of defence would be counted from the date of actual service.
Effecting Service in Nullity Proceedings Before the Patent Office
Where proceedings before the Patent Office are concerned, the Patent Office would advise the patent owner of the filing of the motion for revocation using the “address for service” recorded on the Register, and the applicant may do the same, thus effecting service.
Duration of Proceedings on the Merits
Both infringement and nullity proceedings can take anywhere between 24 and 36 months and sometimes even longer.
If the case is heard before a court, the parties would first exchange pleadings (a statement of claim, a statement of defence, and a statement in reply), conduct discovery proceedings, file their evidence, appear for trial (cross-examinations), and then file their summations, following which a decision would be handed down by the court. In addition, motion practice is likely to take place, covering subjects such as discovery disputes, the responsiveness of evidence, filing of additional evidence, production of witnesses and extensions of time.
The exchange of pleadings will take, in most cases, between three and nine months. Discovery may take an additional six months, while the production of evidence would take a year to 18 months. The trial will usually not take more than a week or two, with summations taking up to a year.
Nullity proceedings before the Patent Office would generally take less time than a court action would, as they do not include a discovery stage and unify the exchange of pleadings with the filing of evidence.
Under Israeli law, a patent becomes assertable only once it is granted by the Patent Office, with no additional requirement, such as validation or the deposit of translations. The plaintiff bears the onus to show infringement (both the evidential burden as well as the burden of persuasion), while the defendant bears the onus to show invalidity.
Section 50(b) of the Patents Law provides for a reversal of burden of proof with respect to process patents, stating that “[F]or purpose of an invention that is a production process – in an action for infringement the defendant must prove that the process used by him for the production of an identical product differs from the patent-protected process”. The Patent Law further provides that “an identical product which was produced without the consent of the patentee shall, unless otherwise proven, be deemed a product produced by a patent protected process”, subject to the patentee being unable to find out by reasonable efforts which production process was actually used, and it being highly reasonable that the identical product was produced by the patent-protected process.
The CPRs do not provide for pre-action discovery.
Search and seizure orders are both available under Israeli law.
If filed in the framework of a motion for interlocutory remedies, that motion would be heard ex parte unless the court believes that hearing that motion inter partes would not thwart the purpose of those remedies.
A search and seizure order may not be executed by the applicant’s attorneys, but rather the plaintiff-applicant should request the appointment of a temporary receiver, empowered to enter the defendant’s premises in order to search, seize and assume possession over assets that are attesting to the infringing activity or are otherwise required for adjudicating the action (Anton Piller-type order).
The plaintiff-applicant will need to show – in addition to showing they have a prima facie cause of action – that there is strong prima facie evidence that, without the appointment of a receiver, the assets might be destroyed or otherwise become unavailable, thus thwarting the legal proceeding or the carrying out of the yet-unissued judgment.
Israeli courts are generally empowered to issue declaratory relief if they deem it necessary, and the case law has established two main principles in that respect.
The first principle is that a declaratory order would not be issued if such issuance would result in a bifurcation of a given claim. In other words, the court would not grant a patent owner a declaration of infringement if it would only serve as a precursor to a separate claim for damages.
The second principle is that negative declaratory orders would be issued only in rare cases and subject to the existence of a legitimate interest.
Section 187 of the Patent Law includes specific stipulations regarding the issuance of a declaratory order with respect to non-infringement. Under this specific arrangement, a person intending to exploit any product or process may apply to the court for a declaration that the said exploitation does not constitute an infringement of a given patent.
Section 187 further provides that the court shall not grant the declaration, unless the applicant is able to show that they gave the patent owner full particulars of the product or process they wish to use, have asked them for the declaration for which they apply to the court, and the patent holder has refused to make it or has not made it within a reasonable period. In such proceedings – to which the patent owner and the exclusive licensee must be joined as respondents – the parties’ costs shall be borne by the applicant for the declaration, unless the court orders otherwise, and no argument of invalidity will be heard, nor will its result have any bearing on the issue of validity.
The Patents Law provides that infringement may be established by exploiting the invention as defined in the claims (literal infringement) or by exploiting the “essence of the invention in light of the claims” (non-literal infringements). In order to address non-literal infringements, the Supreme Court of Israel, influenced by the US Supreme Court ruling in Graver Tank & Manufacturing Co v Linde Air Products Co [339 US 605, 70 S Ct 854 (1950)] adopted the so-called Function-Way-Result test, which provides that if the accused device or process performs substantially the same function as the invention, in substantially the same way to reach the same result, it is infringing.
Later decisions employed this doctrine of equivalents with respect to pharmaceutical inventions. In one matter, the plaintiff claimed patent infringement over a formulation of a drug for the treatment of ulcers. The court found that the changes the defendant introduced into the formulation of its manufacture (the adding of an internal layer comprised of a sugar core) could not assist it in evading infringement, as it did not change the functioning of the accused formulation, which is done in the same way as the invention and also achieves the same result by applying the inventive solution of the patent.
Under Israeli law, a person may launch a product “at risk” – namely when there is a patent claiming it – and such a person does not have to first initiate legal proceedings to revoke those patents ostensibly blocking its path, or to obtain a legal opinion of freedom to operate; failing to implement precautions against a finding of infringement could, in certain circumstances, support a contention of infringement.
The use of expert evidence in infringement and nullity proceedings in Israel is commonplace. Expert evidence in patent infringement proceedings is normally filed by each of the parties in the form of expert opinions, with those experts being later cross-examined during the evidentiary hearings (trial). The drafts of such opinions, as well as all communications between an expert and the party by which it was retained, are privileged.
Where the questions in dispute relate to different fields, it is possible that a party will provide evidence from several expert witnesses to address each field separately.
While experts are retained by the parties, they are expected to assist the court in its fact-finding mission rather than serve as advocates for the cause of the party which had retained them.
The court may appoint its own expert in addition to the parties’ experts. The parties may agree that the opinion of the court expert will replace the opinions of the parties’ experts. The parties are entitled to cross-examine the court expert. The court is also empowered to appoint an assessor to advise the court on technical matters.
During both infringement and validity proceedings, it is possible to submit experimental results to show infringement or validity, eg, in support of claims of inventive step, lack of enablement or lack of utility. Such results are filed with a supporting affidavit attesting to the conditions of the experiments and the results.
Under Israeli law, parties to a claim (including an infringement claim) must disclose all relevant documents in their possession or control to the opposing party. Copies of non-privileged documents need to be provided to the other party for inspection, in full or redacted form (eg, in case they contain trade secrets).
A defendant may claim in defence that their activities do not fall within the scope of the claims, and/or that the patent is invalid under any grounds on which the grant of a patent may be opposed, and/or that their activities are permitted for other reasons as explained below.
Any grounds, on which the grant of a patent may be opposed, shall be a good defence in an action for infringement.
Under Israeli law, a patent-eligible invention is defined as “an invention, whether a product or a process in any field of technology, which is new and useful, can be used industrially and involves an inventive step”. In addition, the Patents Law provides that the patent’s disclosure must enable the person skilled in the art to make and use the invention to the full scope of the claim and that the claims must be unambiguous and reasonably arise from the included disclosure.
Defendants in patent infringement proceedings are entitled to challenge the patent’s compliance with any of the above requirements as part of their defence in court proceedings, and they may also file a motion for revocation of the patent at the Patent Office.
In this connection defences such as the so-called Gillette defence or Formstein defence are applicable.
Exclusions From Patentability
The Patents Law excludes from patentability a “method of therapeutic treatment of the human body”. The “method of treatment” exclusion is narrowly interpreted, with only a method, as such, excluded, and products or compositions used for the treatment of the human body allowed. In addition, Section 7(2) of the Patents Law excludes from patentability “new varieties of plants or animals, except microbiological organisms not derived from nature”. As a result, defendants in patent infringement proceedings are entitled to argue that a claimed invention is excluded from patentability.
Fraud on the Patent Office
Under Israeli law, a patent applicant must – until the application is allowed – inform the Patent Office of all references relied upon by foreign Patent Offices examining patent applications for the same invention or those otherwise directly related to the application at hand. If the patent applicant knowingly fails to comply with this duty, the court may revoke the patent, give a licence to exploit the patent or shorten its period.
Section 1 of the Patents Law excludes from the definition of “exploitation of an invention”:
The exploitation of an invention would not be considered an infringement where the use of the invention was both on a non-commercial scale and of a non-commercial nature.
The second exemption – experimental use – relates to “an experimental act in connection with the invention, the objective of which is to improve the invention or to develop another invention”. An act being experimental is insufficient in itself, and the defendant would have to show that the act falls within – or is necessary for – either of the two purposes provided: improving the invention or developing another.
Also exempted are experimental acts with the aim of obtaining regulatory approval. This is a Bolar-type exception.
According to Section 53 of the Patents Law, a defendant, who would have exploited on the determining date, in good faith, in Israel, the invention for which the patent is sought, or if they in good faith made actual preparations towards exploitation, then they shall be entitled to exploit the invention themselves and in the course of their business without consideration. The “determining date” is the filing date in Israel or – if priority right was claimed– the filing date of the priority application. The right under Section 53 cannot be transferred, except together with the business in which the invention was used.
Lapse of Patent
Under Israeli law, a patent should be renewed every several years by way of paying a fee, and if a renewal fee is not paid, the patent shall lapse. Section 58 of the Patents Law provides that if a renewal fee was not timely paid, and if the owner had not cured this within a six-month grace period, then any use of the patent following that grace period will not constitute an infringement.
While the patent owner may yet reinstate the patent even after the grace period has lapsed, the Patents Law provides that any person who began to exploit the invention in Israel or made actual preparations for exploitation after the lapse of the patent was published in the Official Gazette, shall be entitled to continue to exploit the patent only for their business (Section 63). The Patents Law limits this right only to the business owner. In other words, this right “cannot be transferred, devolved or transmitted by inheritance, except together with the business in which that invention was used” (Section 64).
Exhaustion could be raised as a defence to an infringement action, however the metes and bounds of such a defence has not been resolved, especially in cases where an exclusive licensee is recorded on the register. In the latter situation, there is a likelihood that the defence will not be recognised. The matter is not adequately resolved by case law.
A defendant in a patent infringement claim may argue that they were allowed to carry out the allegedly infringing act as licensees. The success of such a defence would likely depend on whether or not the licence agreement in question was breached: if the licensee had exploited the patent in breach of the terms of the licence (eg, field of use limitations), their acts might constitute both patent infringement and breach of contract. However, breaches that are not related to the actual use of the patented invention (eg, failure to pay royalties under the agreement) will probably give rise just to contractual causes of action, as long as the licence agreement is not duly cancelled.
While the Patents Law empowers the Patents Registrar to issue a compulsory licence subject to the satisfaction of statutory criteria, such a licence would only allow the exploitation of a given invention after it is issued and not retrospectively. It so follows that while an infringer may seek a compulsory licence immediately after the claim against them was submitted, doing so ought not serve as a defence against past infringements.
The Patents Law also provides for a number of additional exceptions to infringement.
Under Section 180, “the exploitation of a patented product which was validly forfeited to the State shall not constitute infringement”. Under Section 181(1), the use of a patented invention in the body or accessories of a vessel registered in a WTO state other than Israel “exclusively for the needs of the vessel” while the vessel is “temporarily or incidentally in Israel’s territorial waters” shall not constitute infringement. Similarly, the use of a patented invention in the construction or operation of an aircraft or land vehicle registered in a WTO state other than Israel, or their accessories, while they are “temporarily or incidentally in Israel” shall not constitute infringement (Section 181(2)).
In general, Israeli courts follow the doctrine of lis alibi pendens, according to which the same issue would not be simultaneously heard in two different instances in Israel.
When it comes to patent infringement cases, a court hearing an infringement claim may stay the proceedings pending the Patent Office’s decision in a motion for revocation if such was already pending when the action was first filed. It is also possible for the defendant to file a motion for revocation after the infringement claim was filed. In such a case, the court will decide whether validity issues will be heard by the Patent Office or by the court, and the court may also stay the infringement proceedings pending a decision by the Patent Office.
Foreign proceedings with respect to corresponding patents would raise a claim of lis alibi pendens since patents are territorial. Nonetheless, factual findings in foreign proceedings may establish issue estoppel.
During litigation, the court, upon an application by the patentee, may amend the specification and the claims of the patent (Section 190 of the Patents Law). There is no empirical data available on how common amendments during litigation are, though it is safe to assume they are not a rarity. The court would be receptive to such an amendment application and is empowered to order the amendment of the claims even without the submission of such application.
Patent infringement cases are heard before the district courts, which are intermediary-level courts (between the magistrate courts and the Supreme Court). The Israeli courts do not use a jury system, nor do they employ specialist judges. With that being said, each court usually has one or more judges to which patent litigation cases are usually referred, and the Patents Law further allows the court to nominate an independent scientific adviser (assessor) to assist in hearing the evidence and to advise the court. Judges may reflect different tendencies, but this is not dependent on the location of the court.
Under Israeli law, exploiting an invention claimed in a patent without permission is considered an infringement. “Exploitation” means either of the following:
It so follows that producing a patent-protected product – including a small molecule pharmaceutical product – would be infringing, as well as offering it for sale or actually selling it. While asking for – and even obtaining – a marketing authorisation would not be considered infringement, any attempt to enter the market on the basis of such authorisation during the patent term (even if the actual entry will take place once the patent lapses) would seem to amount to infringement.
Israeli law allows for a fairly short marketing exclusivity (six to six and a half years) and only for new chemical entities (NCEs).
Section 47D of the Pharmacists Ordinance defines an NCE as a “drug which does not contain an active moiety, whether by itself or together with another active moiety, in a registered preparation or a preparation which was registered in the Register”.
According to the Pharmacists Ordinance, the Israeli Ministry of Health will not issue a marketing approval in Israel to a new drug containing the active moiety of an NCE (the registration of which is based on confidential data (safety and efficacy data) filed for a previous drug containing the NCE) unless: “(a) 6 years have lapsed from the registration date of the previous drug containing the NCE in the Israeli Pharmaceutical Register; or (b) 6.5 years from the registration date thereof in a Recognized Country (the U.S., Canada, a member of the European Union, Switzerland, Norway, Iceland, Australia, New Zealand, Israel, and Japan), whichever is earlier.”
The marketing exclusivity is further dependent on the previously registered pharmaceutical preparation being the first registration of the chemical entity it contains. In addition, the marketing exclusivity period may be disregarded if the owner of the previous pharmaceutical preparation gave their consent to use the confidential information; if, in the framework of the registration of the new pharmaceutical preparation, full data to prove the safety, effectiveness, and quality of the new registration was provided; or in case of a national emergency.
It is important to note that the exclusivity provided under Israeli law relates only to the marketing of a follow-on drug, and a third party may seek registration of a follow-on drug on the basis of the data at any time. In general, a third party seeking registration of a follow-on drug product will be required to provide bioequivalence data.
No additional exclusivities exist (eg, orphan drug or paediatric exclusivity).
The 1998 Amendment of the Patents Law introduced a Bolar-type defence as Section 54A of the Patents Act, colloquially known as a “regulatory exemption”.
This “regulatory exemption” applies if a given experimental act – which might otherwise be deemed to infringe the patent – is made in order to obtain regulatory marketing approval prior to the expiration of the patent in Israel or in another country whose laws also contain a Bolar-type defence. The application of this defence is subject to the products manufactured under Section 54A not being used for any purpose other than the obtaining of a regulatory permit.
In respect of this exemption, a (non-binding) district court decision provided that any action that can be reasonably related to the experimental act will also be covered by Section 54A.
Israeli authorities do not rely on the Orange Book, nor do they have an equivalent thereof. The Israeli Ministry of Health operates the online-available Israeli Drug Registry. This website includes data about all the drugs that are registered or were previously registered in the drug register of the State of Israel. The information includes the composition of the active ingredients and their quantity, the indication approved in Israel, the form of administration of the medicine, the dose, the name of the manufacturer and the owner of the registration in Israel, the types of packaging, the registration number and the price. However, that information only becomes available to the public upon entry into effect, meaning that information regarding pending applications is not publicly available. Generally, the information in the database is updated once a week.
In Israel, granting of marketing authorisation is not linked to patent status but rather to whether a given product has already received authorisation in the USA and in the EU. As for pricing and reimbursement, those are also not linked to patent status, but are subject to certain governmental arrangements, which include pricing control and a national reimbursement programme (which is indication-specific). Israeli HMOs are generally not required to purchase non-reimbursed drugs; while legal action over such refusal could theoretically be filed, the chances of success would seem generally slim.
See 2.1 Infringing Acts.
As noted at 2.2 Regulatory Data and Market Exclusivity, the limited marketing exclusivity provided under Israeli law only mentions new chemical entities. This led the Israeli Ministry of Health to adopt the view that biologics would not enjoy marketing exclusivity. The issue is yet to be resolved by way of judicial review. However, the requirements for obtaining marketing authorisation for biosimilars in Israel require former authorisation in one of several other countries – in which there is data exclusivity – leading to a de facto exclusivity.
See 2.3 Acceptable Pre-launch Preparations.
See 2.4 Publicly Available Drug and Patent Information.
See 2.5 Reimbursement and Pricing/Linkage Markets.
Under Israeli law, the term of a pharmaceutical patent may be extended by up to five years via an order called a Patent Term Extension Order (a “PTE order”).
The Patents Law provides that a patent claiming any of the following may be considered a “Basic Patent” eligible for a term extension, subject to the satisfaction of the below-described statutory conditions:
This means that it would not be possible to obtain a PTE order for a combination of previously registered APIs.
Assuming the patent in question claims the eligible subject matter described above and that the application for a PTE order was filed by the applicant of a pending application, the owner of a granted patent, or the exclusive licensee in such, the Patent Office would examine whether the following conditions – listed in Section 64D of the Patents Law – have been met.
Assuming that all of these conditions have been satisfied and that the applicant had acted in accordance with the timeframes and procedures set out in the Patents Law and applying regulations, the term of the patent would be extended.
The duration of an Israeli PTE order shall equal the shortest term of extension in any of the Reference Countries in which PTE or SPC orders were issued and, in any case, would not exceed five years or 14 years from the issuance of the first marketing approval in any of the Reference Countries. In addition, a PTE order would expire upon the revocation of the PTE/SPC orders (or underlying Reference Patents) on the basis on which it was granted in any of the Reference Countries.
Any person may oppose the issuance of a PTE order before such is granted, as well as move for a post-grant revocation of a PTE order, on the basis that the above-listed conditions were not met or that the procedural requirements were not adhered to.
At present, paediatric extensions are not available in Israel.
Under Israeli law, issuance of an interlocutory injunction is conditioned on the deposit of an in personam undertaking by the applicant to compensate the respondent (against which the order is directed) for whatever damages are incurred as a result of the issuance of the injunction if the injunction is revoked or if it is reduced in scope. Such an undertaking must be attached to the motion for interlocutory injunction.
In addition to the in personam guarantee, and in the absence of extraordinary circumstances requiring otherwise, the court shall order the deposit of an in rem guarantee at a sufficient amount at the discretion of the court.
As the interlocutory injunction remains in place until a final judgment is entered (if not revoked beforehand), all securities deposited will remain in effect until such a time.
The injunction would not go into effect until all securities have been deposited, though the court is authorised to instruct otherwise. In addition, where the preliminary injunction was filed for prior to the case-in-chief being submitted, the applicant will have seven days from the decision date to file the main claim, with failure to do so resulting in the preliminary injunctionʼs revocation.
Under Israeli law, an interlocutory injunction is enforceable immediately upon lawful service on the enjoined party, assuming all relevant securities were deposited (if necessary).
The court will usually provide instruction on how the order is to be served on the respondent, but, in the absence of such, there are several ways to effect service: a copy of the decision may be served on the respondent themselves, at their home or at their place of business, either via courier or via registered mail, on an adult family member living with them, on a person authorised to manage their business, or on their counsel. Where the respondent is a company, service is usually effected by delivering a copy of the order to their registered place of business. In those cases where the respondent is not Israeli, leave for service outside the jurisdiction must be secured, though it would also be possible to effect service by serving the order on a business manager in Israel (if such exists).
As for timeframes, the court will usually instruct the applicant to effect service immediately. The applicant is incentivised to do so regardless, as the order would not be enforceable before lawful service is effected.
If a party against which an interlocutory injunction was issued does not abide by that injunction, the prevailing party may seek to compel the losing party to do so by filing a motion under the Contempt of Court Ordinance. Under this ordinance, a non-compliant party is subject to a monetary fine and, in extreme cases, to imprisonment for as long as the breach of the order is taking place.
A party against which interlocutory injunctive relief was issued may seek (alongside filing for leave to appeal) a stay of execution from either the court of first instance or from the court of appeal. If the motion for leave to appeal is yet to be filed, the court of first instance will hear the motion for a stay; if the motion for leave to appeal has been filed, then the court of appeal will hear it. In order to prevail in such a motion, the applicant must demonstrate to the court that it has a good chance of winning the appeal and that, if the injunction enters into effect, it would be either impossible (or very difficult) to go back to the previous state of affairs, or that the applicant would suffer irreparable injury.
A court allowing a stay of execution may make such stay subject to the satisfaction of whichever conditions it deems fit, such as the deposit of a security or the placing of a limitation on the price charged for the now-enjoined product/process.
Enforceability of a Final Injunctive Relief
Under Israeli law, a final injunction is enforceable immediately upon its lawful service on the party which it enjoins – service which can be effected either by the court issuing the order or by the prevailing party, the earlier of which will start the clock on the 60-day term for lodging an appeal.
A final injunctive relief will not require the prevailing party to deposit a bond, as there is no longer a chance that the claim will ultimately be rejected, and there can be no cause of action in tort over the wrongful issuance of the injunction.
If a party against which an injunction was issued does not abide by that injunction, the prevailing party may seek to compel the losing party to do so by filing a motion under the Contempt of Court Ordinance. Under this ordinance, a party failing to comply with a duly issued court order is subject to a monetary fine and, in extreme cases, to imprisonment for as long as the breach of the order is taking place.
A party against which a final injunctive relief was issued may seek – alongside the filing of an appeal – a stay of execution. If the appeal is yet to be filed, the court of first instance will hear the motion for a stay; if the appeal has been filed, then the court of appeal will hear it. In order to prevail in such a motion, the applicant must demonstrate to the court that it has a good chance of winning the appeal and that, if the injunction enters into effect, either it would be impossible (or very difficult) to go back to the previous state of affairs, or the applicant would suffer irreparable injury.
A court allowing a stay of execution may make such stay subject to the satisfaction of whichever conditions it deems fit, such as the deposit of a security or the placing of a limitation on the price charged for the now-enjoined product/process.
The Patents Law provides that a prevailing plaintiff is entitled – as a matter of right – to both an injunction as well as to damages. The language of the Law does not allow the court discretion to award damages in lieu of an injunction. Nonetheless, an injunction relief is a remedy in equity, and the court would have the discretion to refrain from issuing an injunction in rare cases.
Calculation of Damages
A prevailing plaintiff is entitled to damages, with Section 183(b) of the Patents Law providing that in awarding compensation, the court shall take into consideration:
The plaintiff may opt between damages due to loss of profit and the profit made by the defendant amounting to unjust enrichment. Adjudication of reasonable royalties may be warranted where the plaintiff’s business model is to issue licences at arm’s length.
The Patents Law further empowers the court to order the infringer to provide accounts on the basis of which calculation of damage may be effected. If such an order is made, it is possible that a supplementary judgment would be issued, in which only the issue of the damages is addressed. Otherwise, the claim for damages would be heard as part of the main claim.
In addition, Section 183(c) of the Patents Law provides that if an infringement was committed after the patentee or its exclusive licensee warned the infringer, the court may order the infringer to pay punitive damages in an amount that will not exceed the damages adjudicated by the court, thus enabling the adjudication of double damages.
In general, damages accrue from the time when the infringement commenced. However, Section 179 of the Patents Law provides that damages may only be adjudicated from the time the patent application was published under Section 16A of the Patents Law (namely, 18 months from the priority date), with such damages being capped at reasonable royalties until the application was published for oppositions, from which the regular rate of damages provided for in Section 183 of the Patents Law shall apply. However, those reasonable royalties shall not be awarded unless the court finds that the exploitation in question constitutes an infringement of the patent as granted and that the invention claimed in the patent stage is substantively identical to the invention claimed in the application published under Section 16A.
The court may add interest and linkage to any sum it adjudicates as damages, from any date it deems fit (but not earlier than when the cause of action came to be) until the date on which the damages are to be paid (usually within 30 days of the judgment). If the damages are not timely paid, a much higher and compounding arrears interest will apply.
Damages for Revoked Injunctions
If an interlocutory injunction is either revoked or limited in scope, the enjoined party can turn to the guarantees provided by the applicant – in rem and in personam both – to obtain compensation for damages sustained. The defendant may base their claim on the doctrine of the unjust enrichment made by the plaintiff due to their exclusive position in the market, during the preliminary injunction term.
Procedurally, this can be done either by counterclaiming (if the period to do so has not yet lapsed) or by filing a new independent claim. The defendant will need to prove their damages – usually, the profits they have lost during the period they were enjoined – on the basis of factors such as anticipated market share, anticipated sale price for the defendant’s product and average profit margin. The defendant may seek to disgorge the plaintiff of those profits they obtained by virtue of any exclusivity afforded to them by the interlocutory injunction since revoked.
Third parties are unable to seek damages over a revoked injunction, though they could theoretically attempt to seek disgorgement if they were charged a premium as a result of the plaintiff’s de facto exclusivity mentioned above.
Under Chapter 18 of the CPR (Regulations 151–157), the prevailing party is entitled to recover their actual legal costs, with consideration being given to the results of the proceedings, the resources required, and the conduct of the parties.
As a result, Israeli courts are instructed to adjudicate fair and reasonable legal costs at the conclusion of the proceedings unless they have found that there are extraordinary reasons not to do so.
Where attorney’s fees are concerned, the courts are instructed not to go below the minimum rates set by the Israeli Bar Association (unless there are extraordinary reasons to do so), and to take into account:
Where other costs are concerned, the courts are instructed to adjudicate all costs actually made and required for the proceedings, subject to the prevailing party detailing those costs in their summations and providing documentation in support.
In addition, if the court finds that a party has caused the unnecessary elongation of a proceeding (including an interlocutory proceeding), it may order that party – regardless of the result of the action – to pay the costs of that proceeding to either the opposing party or the State of Israel.
In Israel, all legal actions – including the launch of litigation proceedings and the conduct of such – are subject to good faith. Failure to act in good faith may result in the non-granting of equitable relief (such as an interlocutory injunction) or in a limitation on the enforceability of a substantive right (in forms such as reduced damages or an injunction with a delayed entry into force).
Trade mark law in Israel is governed by the Trade Mark Ordinance of 1972, and, to a lesser extent, by the Commercial Torts Law of 1999 (which deals with the law of passing off).
There have been several cases of trade mark disputes relating to the life sciences and pharma sector, centred mostly around naming and get-up – either names or get-ups which were too close for comfort to the name or get-up of an existing, established drug, or names that were too similar to the relevant International Non-proprietary Names (INN), which should remain open to the trade and therefore excluded from trade mark protection.
In respect of the first kind of disputes, the case law provides that where a consumer’s mistake, however unlikely, could bring about severe health hazards – as is the case with pharmaceuticals and medical devices – even a lesser degree of similarity is sufficient to establish the misleading similarity needed for a finding of trade mark infringement. The same is true for passing off, where – subject to a showing of goodwill inured to the benefit of the plaintiff or its product – using misleadingly similar get-up is prohibited.
In respect of the second kind of disputes, the case law provides that INNs or the dominant parts thereof cannot be registered as trade marks, either because those should remain open to the trade (if the preparation is based on the same API) or because they could lead to confusion between different preparations using the same API (albeit differently).
The issue of copyright in Israeli law is governed by the Copyright Law of 2007. The Copyright Law provides, among other things, protection for textual works. Copying of any text which is original and fixed – such as use instructions of a given preparation – could amount to copyright infringement.
A plaintiff in a copyright infringement may pass the burden of proof on to the defendant if they are able to show that the defendant had access to and produced a work similar to the original.
The issue of trade secrets in Israeli law is governed by the Commercial Torts Law of 1999, which forbids the misappropriation of trade secrets, defined therein as “Commercial information of any kind, which is not public knowledge, or which cannot readily and legally be discovered by the public, the secrecy of which grants its owner an advantage over his competitors, provided that its owner takes reasonable steps to protect its secrecy.”
While trade secrets disputes in the life sciences and pharma sector are not common in Israel, there are many types of trade secrets associated therewith – such as lists of clients, lists of providers, and marketing strategy documents – and so such disputes can theoretically arise.
District court decisions may be appealed to the Supreme Court by right. Leave to appeal interlocutory decisions, including decisions in motions for a preliminary injunction, must be obtained. The term for filing an appeal is 60 days from the date the judgment was issued to the appealing party. The same applies to motions for leave to appeal.
There is no specific arrangement in place regarding patent litigation appeals. Assuming the first instance was the district court, an appeal thereon will be heard before three Supreme Court judges, whereas an appeal over an interlocutory decision (for which leave must first be secured) will be heard by one Supreme Court judge.
Once an intellectual property case is filed with a regular civil court – be it a court of first instance or that of appeal – it is governed by the CPRs.
Where nullity proceedings are concerned, they are governed by a separate set of regulations, namely the Patent Regulations, which closely resemble the CPRs and rely thereon.
While the Israeli Customs Authorities are not authorised to seize patent-infringing goods, they are able – and will – seize counterfeit pharmaceuticals, as well as products that infringe the trade marks and/or copyrights of another.
The seizure procedure under Israeli law closely resembles the arrangement provided in Part III, Section 4 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). In addition, the Israeli Customs Authorities may seize and destroy shipments containing trade mark/copyright infringing goods and have set up a simplified procedure whereby they confiscate shipments of infringing goods without requiring the trade mark or copyright owner to take legal action or file a bank guarantee.
Israeli law allows for both mediation and arbitration, though both require the consent of the parties.
Mediation is not binding and could be stopped at any moment, with all information exchanged remaining confidential. Mediation usually takes place before litigation – especially if there is an agreement between the parties so necessitating – or during litigation, at the suggestion of the court. Turning to mediation enables parties to reach a confidential settlement, whereas a court judgment would usually be made public.
Arbitration is different from mediation: once the parties have agreed to arbitration, they are bound by that agreement, with arbitration agreements being vigorously enforced and rarely set aside. In addition, unless a right to appeal is specifically provided for, it is very difficult to set aside an arbitral award, as the criteria to interfere as such are very narrow. Arbitration in Israel – be it local or international, with Israel as either the seat or the governing law – is usually faster than court proceedings and – subject to the agreement of the parties – can be confidential. The parties are free to appoint their arbitrators, as well as to determine every other attribute of the proceedings, such as the procedural law and the degree to which the tribunal would be bound by evidence law or have to reason its decision.
The Economic Competition Law of 1988 prohibits the making of arrangements involving restrictions that are likely to prevent or reduce competition, unless such are cleared in advance by the Israel Competition Authority.
Under Section 3(2) of the Economic Competition Law, arrangements whose restrictions all relate to patent use rights (and other listed intellectual property rights), entered into directly by the patent owner and the party receiving the rights, will not be deemed “restrictive arrangements”.
However, a patent owner or its exclusive licensee may still be accused of abusing their monopolistic power, for example, by charging too high a price. To that end, the relevant market would have to be determined, and, if indeed a finding of a monopoly is reached, it is possible for a patent owner to be found liable for such abuse, as was recently the case with a pharmaceutical company ordered to pay ILS8 million for charging exorbitant prices.
Turning to arbitration in patent disputes did not always come naturally; given the nature of patents as a public right, there persisted a school of thought that patents should not be arbitrable. However, the case law decided for arbitration, and so patent arbitration in Israel has seen a rise, albeit modest, over the years. Recent developments – as well as the impending entry into force of a new law on international commercial arbitration – could mean a significant interest from Israeli and foreign actors in life sciences and pharma in turning to arbitration to solve their disputes.
Arbitrability of Patent Disputes in Israel
Israeli law does not include an express provision on the arbitrability of patent disputes. This was noted by the District Court back in 1994 in the Golan Melechet Machshevet case [Civil Case 1524/93 Golan Melechet Machshevet (1977) Ltd. v Barcho Gold Jewelry et al. (1994)] where the owner of a design contested the arbitrability of its validity, based on the writings of a leading scholar in the field. In its decision, the District Court acknowledged the public interest in having the validity of patents litigated publicly but decided that this interest cannot justify ignoring an agreement to arbitrate or forcing a party to invest the resources required to litigate this issue in court. If the public interest calls for a patent’s revocation, the District Court held, then let the state litigate the matter at the state’s expense. The District Court further held that turning to arbitration in patent disputes does not violate public policy and that the arbitral award, in any case, would only bind the parties to the arbitration so that a finding of invalidity in the arbitration would not prevent the patent owner from enforcing it on others.
Since the decision in the Golan Melechet Machshevet case, patent arbitrations have been held and decided both between Israeli parties as well as between Israeli and international parties, oftentimes following the referral by the court to such proceedings. The latest case in which an award was confirmed was decided in May 2023, when the Central District Court was asked to set aside an arbitral award finding patent invalidity [Leave for Appeal – Arbitration 72838-03-23 Erica Weiss v Rust Oleum Corporation (2023)].
The Central District Court in the Rust Oleum case rejected the motion to set aside and confirmed the arbitrator’s award, in which he found – among other things – that the issuance of a patent by the Patent Office does not prevent the arbitrator from examining de novo its validity, as well as its entitlement to its priority date.
In the Rust Oleum case, the arbitrator did make clear that his findings bind the parties alone but, in a curious move, instructed that his decision be delivered to the Patent Office for consideration. The Central District Court held that since it was not established that the arbitral award was confidential, there was nothing preventing the arbitrator from ordering its sending to the Patent Office. A motion for leave to appeal the Central District Court’s decision was rejected by the Supreme Court in August 2023 [Leave for Civil Appeal 4947/23 Erica Weiss v Rust Oleum Corporation (2023)].
The Patent Registrar, upon reviewing the award, issued a decision according to which the findings made by the arbitrator are not binding on the Patent Office, and so the patent in question would remain valid until revoked in a proceeding before the Registrar.
The main conclusions from this relatively small body of case law are, therefore, that patent disputes are arbitrable under Israeli law, that the courts are likely to honour the parties’ choice to turn to arbitration, and that the award ultimately rendered would only be binding on the parties to the arbitration.
Advantages of Arbitration Doubly True in Life Sciences and Pharma disputes
Arbitrability aside, there can be little doubt of the unique benefits afforded to parties to arbitration proceedings: among other things, the ability of the parties to nominate the arbitrators and hold the proceedings in the manner they see fit are regularly counted as the primary advantages provided by turning to arbitration.
Those benefits are even more pronounced in life sciences and pharma litigation, which tends to be more complex and delicate than the average dispute and necessitates a far greater level of expertise than is usually needed. In particular, the need to introduce a judge – who, in almost all cases, has no scientific background – to the intricacies of the relevant art can be both costly and lengthy, as well as unlikely to succeed. On the other hand, the parties can identify and nominate one or more arbitrators who are not only fluent in patent law but are also savvy in the art concerned, thus expediting the proceedings as well as lowering the likelihood of a mistake and saving costs.
An additional benefit of turning to arbitration in life sciences and pharma litigation is the relative expediency and flexibility characterising arbitration proceedings. While the progress of a court case or proceedings before the Registrar would always be subject to the workload of that instance and to the need to make time for matters that instance deems more urgent, an arbitration would advance more swiftly, with both parties and arbitrators dedicated to doing so. Where prolongation of proceedings is unwanted – such as when it could generate additional risk for the alleged infringer or erode the ability of the owner to charge appropriately –, turning to arbitration could result in an award being entered much more quickly than it would have taken a court, or the Registrar, to issue a decision.
The ability to agree on the arbitration being confidential is desirable in regular cases, and even more so in life sciences and pharma litigation, as it can involve highly confidential proprietary information. Court proceedings are, by default, public, and while under Israeli law, protection can be afforded to trade secrets, other pieces of information – such as the actual existence of the disputes and the facts thereof – could be made accessible to third parties, including competitors of the parties. This is even more salient where proceedings before the Patent Office are concerned, as all documents filed in such are uploaded to an online system accessible to all. Turning to arbitration mitigates those risks, as the parties may agree on a robust confidentiality duty, which could cover all aspects of the dispute and the proceedings, as well as govern how information about the dispute is ultimately provided to the court for the purpose of confirming it (or setting it aside), as all awards must be confirmed by the court before they can be given the effect of a judgment and enforced as such.
In addition, litigating patent validity in open court – or before the Registrar in revocation proceedings – could have limited advantage for the party bringing it forth. If that party is successful, then the invention claimed by the particular patent concerned would become available for use by all actors in the field, regardless of their lack of contribution to that patent being revoked in the first place, thus placing the litigating party at a disadvantage, having to compete with these other actors after it had spent considerable resources to have the patent revoked. Turning to arbitration – especially confidential arbitration – prevents this: a finding of invalidity would serve only the prevailing party and not other competitors in the field. Similarly, patent owners would also enjoy turning to arbitration instead of to court proceedings, as a finding of invalidity reached in the framework of such proceedings would not see them forfeit their patent entirely. The ability to prevent others from piggybacking on the efforts of the parties would also allow the parties to explore settlement options at all times of the arbitration, as there would be a smaller risk of a competitor using invalidity argumentation provided during the proceeding to attempt to have the patent revoked.
Indeed, turning to arbitration is not without risk: it is hard to appeal an arbitral award, and the costs involved could be significant. However, both of these concerns seem to belong mostly in the past; appellate courts are also less prone to intervene in the first instance’s findings, and this is especially the case where that first instance is the Patent Office. What’s more, where the parties are able to nominate the arbitrators, the resulting decision is likely to be of high quality to begin with. As for the increased costs involved, those are mitigated by a smaller investment being required in explaining the relevant art, as well as by the ability to have an award issued faster and, therefore, be in a better position to calculate one’s next step.
Another concern often mentioned with respect to turning to arbitration is that the confidential nature of arbitration might stunt the development of case law relating to intellectual property. This concern, while valid in principle, is often overstated; there already exists a significant body of intellectual property case law, and it would also be possible to publish anonymised versions of arbitral awards in which only the ratio decidendi is included, thus protecting the interests of the parties.
Modern Issues Meet a Modernised Law
The Israeli Arbitration law, in force since the late 1960s, regulates both national and international arbitrations. While it was amended several times – the latest of these amendments coming in 2018 – it is considered to be out of step with current trends in international arbitration, which has resulted in Israeli law being viewed as somewhat less desirable as the governing law for international arbitrations, including those related to patents.
This situation looks as if it is about to change, however, with the proposed International Commercial Arbitration Law, 2023. This Bill, which has made its way past the first of three readings in the Israeli Knesset, is based on the Model Law on International Commercial Arbitration established by the UN Commission on International Trade Law and promises to modernise Israeli law on international commercial arbitrations in more ways than one.
If entered into law, the new Bill will, among other things:
Those changes will make Israel more desirable as a seat for international arbitrations in life sciences and pharma disputes, especially when coupled with the availability of highly regarded scientists from Israel’s various universities to serve as experts and the overall lower costs of litigation in Israel.
Outlook for the Future
As the world of life sciences and pharma litigation becomes more and more sophisticated, and maintaining confidentiality becomes more and more important, parties to disputes would find themselves requiring bespoke dispute resolution mechanisms to best serve their business goals. Arbitration – and, in particular, international commercial arbitration – could be that bespoke mechanism.
It so follows that parties entering into agreements – such as royalty-bearing IP assignment agreements – as well as those parties considering launching IP litigation proceedings – would be well served by exploring the option to enter into an arbitration agreement and enjoy those benefits that turning to arbitration could bring.